Q2 2022 E2open Parent Holdings Inc Earnings Call
Function.
A replay of this webinar will be available on our website information to access. The replay is listed in today's press release, which is available at <unk> to open dot com in the Investor Relations section.
Speaker 1: A replay of this webinar will be available on our website. Information to access the replay is listed in today's press release, which is available at e2opin.com in the Investor Relations section.
Before we begin I'd like to remind everyone that during today's call, we will be making forward looking statements regarding future events and financial performance.
Speaker 1: Before we begin, I'd like to remind everyone that during today's call, we will be making forward-looking statements regarding future events and financial performance, including guidance for our full fiscal year 2022.
Including guidance for our full fiscal year 2022.
Speaker 1: These forward-looking statements are subject to known and unknown risks and uncertainties. E2Open cautions that these statements are not guarantees of future performance.
These forward looking statements are subject to known and unknown risks and uncertainties.
Two open cautions that these statements are not guarantees of future performance.
Speaker 1: We encourage you to review our most recent reports, including our S1, 10K, and our 10Q, or any ethical amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.
We encourage you to review our most recent reports, including our S. One 10-K, and our 10-Q or any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock.
Speaker 1: And finally, we're not obligating ourselves to revise our results, or these four book statements in light of new information or future events.
And finally, we're not obligating ourselves to revise our results or these forward looking statements in light of new information or future events.
Also during today's call, we will refer to certain non-GAAP financial measures.
Speaker 1: Also during today's call, we'll refer to certain non-GAAP financial measures.
Reconciliations of non-GAAP to GAAP measures and certain additional information are included in today's earnings press release, which can be viewed and downloaded from our investor Relations website.
Speaker 1: Reconciliation of non-GAP to GAAP measures and certain additional information are included in today's earnings press release which can be viewed and downloaded from our Invest Relations website.
Speaker 1: And with that, we'll begin by turning the call over to our CEO , Michael Parluckis.
And with that we'll begin by turning the call over to our CEO Michael <unk>.
Speaker 2: Thank you, Adam, and thank you all for taking time to join us for our second quarter fiscal year 22 earnings call.
Thank you Adam and thank you all for taking time to join us for our second quarter fiscal year 'twenty two earnings call.
Speaker 2: Q2 was a blockbuster quarter for each open across the board. We exceeded our targets on every dimension and accomplished a quarterly organic growth rate of nearly 13 percent. We reached double digit organic growth one quarter earlier than expected and also raised our guidance for the second quarter.
Q2 was a blockbuster quarter for each open across the board we exceeded our targets on every dimension and accomplished a quarterly organic growth rate of nearly 13%.
We reached double digit organic growth one quarter earlier than expected.
And also raised our guidance for the second time in six months.
Speaker 2: E2-Oven will reach an 11% annual organic growth rate on a standalone basis for FY22, as compared to our original projections of 10% growth for this fiscal year.
Each open or reach an 11% annual organic growth rate on a standalone basis for FY 'twenty, two as compared to our original projections of 10% growth for this fiscal year.
Before I provide more detail regarding our recent results I'd like to share my perspective.
Speaker 2: Before I provide more detail regarding our recent results, I'd like to share my perspective on the long-term trends that are contributing to our success and to our accelerating growth rate.
On the long term trends are contributing to our success and to our accelerating growth rate.
Our core client base, a very large global companies demand supply chain visibility and control across their extended supply chain networks there.
Speaker 2: Our core client base and very large global companies demand supply chain visibility and control across their extended supply chain network.
<unk> networks are increasingly complex relying on hundreds if not thousands of trading partners and tens of thousands of people to make and bring goods to market.
Speaker 2: Their networks are increasingly complex. We're lying on hundreds, if not thousands of trading partners, and tens of thousands of people to make and bring goods to market.
The well publicized product shortages port congestion and overall supply chain challenges have created more focus on global supply chains and at any other point in my 30 year career in this industry.
Speaker 2: The well-publicized products where it is, poor congestion and overall supply-tree challenges have created more focus on global supply chains than at any other point in my 30 year career in this industry.
Speaker 2: The trend towards more complex supply change is accelerating.
The trend towards more complex supply chain is accelerating.
Speaker 2: and our core client base are turning to eat open to resolve this complex.
And our core client base are turning to you to open to resolve this complexity.
Supply chain excellence is no longer relegated to functional leaders.
Speaker 2: Supply chain excellence is no longer relegated to functional leaders. It's now firmly a board and CEO imperative.
It is now firmly a board and CEO imperative.
Their focus is on improving the end to end supply chains and to do so they need better software.
Speaker 2: Their focus is on improving their end to end supply chains and to do so they need better soft
We have a tremendous opportunity in front of us as evidenced by a very strong second quarter earnings.
Speaker 2: We have a tremendous opportunity in front of us as evidence by a very strong second quarter earnings, a robust and growing pipeline, expanding yield on that pipeline, and expanding new client win.
<unk> and growing pipeline expanding yield on that pipeline and expanding new client wins.
Speaker 2: Our platform helps fly into void problems on one hand and react to problems more quickly on the other.
Our platform helps clients avoid problems on one hand and react to problems more quickly on the other.
We do this by bringing our company's entire ecosystem of partners one interconnected platform.
Speaker 2: We do this by bringing a company's entire ecosystem of partners into one interconnected platform.
Speaker 2: our approach creates a much more accurate and granular view of future demand while allowing our clients to adapt more quickly to changes they will inevitably encounter.
Our approach creates a much more accurate and granular view on future demand while allowance our clients to adapt quickly to changes they will inevitably encounter.
Speaker 2: The only way to solve these seemingly intractable supply chain problems is to connect real-time data with the world's best algorithms. That...
The only way to solve the seemingly intractable supply chain problems is to connect real time data with.
With the worlds best algorithms.
That is each of OPEC.
Speaker 2: Our largest clients view us as their supply chain.
Our largest clients view us as their supply chain.
While companies require the ability to adapt to rapidly changing environments. They also want more sustainable supply chain.
Speaker 2: While companies require the ability to adapt to rapidly changing environments, they also want more sustainable supply chain.
I am proud of how we are helping our environment by making our customer supply chains more environmentally friendly we do this by reducing waste.
Speaker 2: I'm proud of how we are helping our environment by making our customer supply change more environmentally friendly. We do this by reducing waste and helping our clients use the lowest cost transportation, which typically carries the lowest carbon footprint.
And helping our clients use the lowest cost transportation, which typically carries the lowest carbon footprint.
Speaker 2: think ocean transportation versus air transportation.
Ocean transportation versus air Transportation.
Speaker 2: Ocean transportation is eight times less expensive than air transportation, and cows are there much, much lower carbon footprint.
Ocean Transportation is eight times less expensive than air transportation and comes with a much much lower carbon footprint.
I'll note that we released our first ESG report earlier this week.
Speaker 2: I'll note that we released our first ESF report earlier this week and it's available on our website. Our vision is to become the supply chain operating platform for the world's best and largest companies.
It's available on our website.
Our vision is to become the supply chain operating platform for the world's best and largest companies.
Speaker 2: All brand owners operate for flexify change. Some more complexion others, some more global than others. They all invest heavily.
All brand owners operate flexibly change some more complex than others.
More global than others.
They all invest heavily in supply chain software.
Speaker 2: We believe that current fragment of nature of supply chain technology provides a unique opportunity for each open.
We believe the current fragmented nature of supply chain technology provides a unique opportunity for each of them.
We are quite simply the best positioned company to capitalize on this unique moment in time.
Speaker 2: We are quite simply the best positioned company to capitalize on this unique moment in time.
The supply chain software market is very large over $50 billion.
Speaker 2: The supply chain software market is very large, over $50 billion. This market is now growing at double digits.
This market is now growing at double digits.
And continues to inflect upwards.
Most large brand owners have a significant footprint on premise siloed legacy software.
Speaker 2: Most large brand owners have a significant footprint of on-premise siloed legacy software.
Speaker 2: They need end-to-end software. They need that software in the cloud.
They need end to end software.
They need that software in the cloud.
The move to cloud has clearly begun but it is still in very early innings.
Speaker 2: The move to cloud has clearly begun, but it is still in very early innings.
We are an end to end cloud based software company.
Speaker 2: Most supply chain software companies of our scale are converting to the cloud and provide a silo or singular solution. We have a larger cloud.
Most supply chain software companies of our scale are converting to the cloud.
And provide a siloed or singular solution.
We have a larger trial provider and supply chain software.
Speaker 2: We have a broadest set of functional capabilities, the largest network, and we serve a wider array of industry.
We have the broadest set of functional capabilities, the largest network and we serve.
Wide array of industries.
We have a powerful improving EBITDA.
Speaker 2: We have a powerful, improving M&A engine to further extend our capabilities and our platform.
Engine to further extend our capabilities and our platform.
We are in the process of networking the world's industrial capacity client by client.
Speaker 2: We are in the process of networking the world's industrial capacity, client by client, network by network, function by function.
Network by network function by function.
Speaker 2: Our market perspective informs us on how to capitalize on our unique position.
Our marketing perspective, and informs us on how to capitalize on our unique position.
Our vision is to be the definitive cloud software provider.
Speaker 2: Our vision is to be the definitive cloud software provider that helps the world's largest companies make and bring products to market. Our second quarter was records.
The world's largest companies make can bring products to market.
Our second quarter was record setting on nearly every dimension.
We accelerated our revenue growth of 13% the.
Speaker 2: We accelerated our revenue growth to 13%. The highest revenue growth the company has had in the past six years.
The highest revenue growth the company has had in the past six years.
We reached our goal of over 10% growth one quarter earlier than projected.
Speaker 2: We restart goal of over 10% broke. One quarter earlier than protect.
We generated over $92 million in.
Speaker 2: We generate over $92 million in total non-Gap revenue.
In total non-GAAP revenue.
Speaker 2: Given the strong performance in our first half, in order to September , we announced that Open will be at 11% of our got a growth for fiscal 2022 on a standalone base.
Given the strong performance in our first half September we announced open will be at 11% organic growth for fiscal 2022 on a standalone basis.
Speaker 2: This raised our revenue guides for the second time in six months.
This raised our revenue guidance for the second time in six months.
We raised our revenue guidance again for three reasons, one very high confidence in future revenues, given any 2% of our revenue is derived from.
Speaker 2: We raised our revenue balance again for three reasons. One, very high confidence in future revenues given 82% of our revenue is derived from subscription contracts, most of which are three years or longer.
From subscription contracts, most of which are three years or longer.
Speaker 2: 77% of that revenue is some clients with an average tenure of over 14 years.
77% of that revenue is from clients with an average tenure of over 14 years.
We know our clients.
Two.
Speaker 2: For growth investments, we previously outlined a materializing much, much sooner than we expected, driving increasing revenue in a professional 22. I'll provide more detail on this in a few minutes.
Growth investments, we previously outlined are materializing much much sooner than we expected.
Having increasing revenue for fiscal 'twenty two.
I'll provide more detail on this in a few minutes.
We continue to see net pipeline growth.
Speaker 2: We continue to see net pipeline growth, and our conversion rate and average selling price are meaningfully expanding.
But our conversion rate and average selling price are meaningfully expanding.
Speaker 2: In addition to growth acceleration, we generated strong adjusted EBITDA results for the quarter of nearly $34 million.
In addition to growth acceleration.
We generated strong adjusted EBITDA results for the quarter of nearly $34 million.
We have previously announced building four growth levers this year to drive incremental growth next year.
Speaker 2: We have previously announced building for growth levers this year to drive incremental growth next year.
Those initiatives were bundling and packaging our solutions more effectively.
Speaker 2: Those initiatives were fundalling and packaging our solutions more effectively. Building a-
Building, a new logo sales team.
Speaker 2: Developing and family strategic partnerships and monetizing our network.
Developing and finding strategic partnerships and monetizing our network.
Those growth levers are converting to revenue much much sooner than we had ever imagined.
Speaker 2: Those groups, leathers, are converting to revenue much more procedently than we had ever imagined.
Speaker 2: I'll give you an update on our effectiveness for these four areas.
I'll give you an update on our effectiveness for these four areas.
Bundling and packaging.
Historically.
Speaker 2: Historically, for all contracts that we knew in a year, the average subscription increase from price and upsell has been 14%.
All contracts renew in a year the average subscription increase.
And upsell has been 14%.
On record company bookings for the first half of FY 'twenty two.
Speaker 2: on record company bookings for the first half of FY22. That metric is 22%.
That metric is 22%.
Speaker 2: providing us confidence that our approach to packaging and bundling is driving the intended results.
Providing us confidence that our approach to packaging and bundling is driving the intended results.
New logos.
Speaker 2: At the beginning of this fiscal year, we announced the addition of a new logo sales.
At the beginning of this fiscal year, we announced the addition of a new logo sales team.
Speaker 2: That addition to our go-to-market engine is clearly kicking in, much faster than we had expected.
That addition to our go to market engine, there's clearly kicking in much faster than we had expected on.
Speaker 2: On record first half bookings, our new level composition was 22%. Versus our historical average of six.
On record first half bookings.
Our new logo composition was 22%.
Versus our historical average of 16%.
Partnerships.
Speaker 2: We are particularly into our objective of signing three to four new strategic partnerships. We have now signed two in the first half and have three in total.
We articulated our objective of signing three to four new strategic partnerships. We have now signed two in the first half at three in total.
Speaker 2: The partnership with the Vision is a great example and very strategic.
The partnership with <unk> is a great example.
And very strategic.
Speaker 2: Visient is one of the largest DPOs for the healthcare provider industry, think hostile networks. And we've all seen just how much supply chain improvement the U.S. healthcare system needs.
Louisiana is one of the largest EPS for the health care provider industry Hospital networks, and we've all seen just how much supply chain improvements to U S health care system needs.
And monetizing our network.
Speaker 2: and monetizing on network. Our previously announced partnership with B&B is providing revenue soon and unexpected. We are still in very early in the, in a multi year growth plan.
Our previously announced partnership with Dnb is providing revenue sooner than expected.
And very early innings of a multiyear growth plan.
In summary.
Speaker 2: For these four growth levers, we had a plan. We thought it was real.
For these four growth levers, we had a plan we felt it was realistic.
Speaker 2: It turned out to materialize much more quickly than we'd ever expected.
Going out to materialize much more quickly than we'd ever expected.
Moving to some highlights from our second quarter.
We signed notable new and existing client platform deals this quarter.
Speaker 2: We signed notable new existing client platform deals with Porter.
As a reminder, our platform relationship is where we have strategic alignment to rollout significant portions of the platform across a multi year strategic plan.
Speaker 2: As a reminder, our platform relationship is where we have strategic alignment to roll out significant portions of the platform across a multi-year strategic plan.
An existing global automotive client signed a five year extension more than doubling their $2 million annual subscription.
Speaker 2: An existing global automotive plant trying to find your extension more than doubling their $2 million annual subscription.
Speaker 2: A new logo in the transportation industry signed a $2.5 million annual subscription.
Our new logo in the transportation industry.
Signed a $7.0 million annual subscription.
Speaker 2: On a new logo in the contract manufacturing sector, signed a million dollar annual subscription.
Our new logo and the contract manufacturing sector signed $1 billion annual subscription.
Speaker 2: And a new logo went for nearly $1 million of annual subscription with a leading especially at PowerCom.
And a new logo win for nearly $1 billion of annual subscription with a leading specialty apparel company.
Before I turn it over to Jarrett I'll reflect on our recent recognition by our industry and what we are doing to further build the machinery of our business.
Speaker 2: Before I turn it over to Jared, I'll reflect on our recent recognition by our industry and what we are doing to further build the machinery of our business.
And recognition.
Speaker 2: We are the leader in multi enterprise supply chain management, which is in fact,
We are the leader in multi enterprise supply chain management.
Which is in fact.
Supply chains are.
Speaker 2: We have the number one provider with each analyst as a report in this category. Gardener, ID.
We are the number one provider with each analyst report in this category.
Gartner IDC and nucleus.
In additions to our business on September one we announced the closing of our largest and latest acquisition of <unk> solutions.
Speaker 2: In addition to our business, on September 1st, we announced the posing of our largest and latest acquisition of Bluejack Solutions.
Like the previous 11 combinations, we have made in the past five years, we integrate quickly having already effectively combine the business into one organization and selling platform.
Speaker 2: Like the previous 11 accommodations we have made in the past five years, we integrate quickly, having already effectively combined the business into one organization and selling platform. The first release of the company.
The first release of our combined solutions will occur in February.
Speaker 2: We are well on our way and ahead of pace when we compare to the previous 11 combinations. Jared will speak in more detail about the integration shortly.
We are well on our way and ahead of pace when compared to the previous 11 combinations Jarrod will speak in more detail about the integration shortly.
With the progress that he would open us made achieving its growth target and to capitalize on the momentum in the marketplace.
Speaker 2: With the progress that EAT OpenS made achieving its growth target, and the capitalized momentum in the marketplace, we continue our investment.
We continue our investments in sales and marketing.
Speaker 2: most recently hiring chief marketing officer, Parry Jatavits. Parry joins us from PD Connectivity and is known as an innovative and game changing CMO with a proven track record growing companies and brands.
Most recently hiring a chief marketing officer carriage out of it.
Barry joins us from Te connectivity and is known as an innovative and game changing CFO with a proven track record growing companies and brands.
She will be a vital part of our leadership team is to continue to accelerate growth.
Lastly, as I mentioned in my opening.
Speaker 2: Each open release is inaugural environmental social and governance support this week.
Each opening released its inaugural environmental social and governance report this week.
While our own company's environmental impact is small we believe our software can have an enormous impact by reducing the environmental impact for our clients as they produce transport and distribute their products you.
You can find the report on our website at <unk> Dot com.
Speaker 2: With that, I'll turn over to Jared to provide more detail regarding our financial results. Jared?
With that I'll turn it over to Jarrett to provide more detail regarding our financial results Jarrett.
Thank you as Michael mentioned, we're pleased with our results for the second quarter and we continue to see positive momentum in the market today.
Today I'll begin by giving an update on the Bluejay integration and then review our fiscal second quarter results.
I'll comment on our outlook for the remainder of our full fiscal year 2022, and then finally quickly touch on our long term growth targets thereafter, we will open the call to your questions.
Speaker 3: I'll come in on our outlet for the remainder of our full fiscal year 2022, and then finally quickly touch on our long-term growth targets. Thereafter, we'll open the call to your questions. We'll start with...
I will start with an update on the bluejay integration.
We are deepening the execution phase of our integration of Bluejay solutions, which we closed on September one.
Speaker 3: We are deep in the execution phase of our integration of Blue Day Solutions, which we closed on September 1st.
Speaker 3: Total synergies related to the recent Blue Jay combination are projected to be 25 million or 25% better than previously announced 20 million.
Total synergies related to the recent blue Jay kind of eliminations are projected to be $25 million or totaling 5% better than previously announced $20 million.
The company expects to achieve between 50% to 60% of run rate savings by the end of fiscal 2022.
Speaker 3: The company expects to achieve between 50 to 60% of run rate savings by the end of fiscal 2022.
Speaker 3: The action synergies of 50 to 60% represent the achievement of run rate savings as compared to the total annual synergy value.
The action synergies of 50% to 60% represent the achievement of run rate savings as compared to the total annual synergy value.
Realized synergies of between 25% to 30% will be earned in fiscal 'twenty, two and they represent a portion of those action synergies that have been recognized in earnings during the periods presented.
Speaker 3: Realize synergies of between 25 to 30% will be earned in fiscal 22. And they represent the portion of those action synergies that have been recognized in earnings during the period presented.
We anticipate this metric moves to nearly 90% for fiscal 2023 with 100% of the synergies being executed and just the remaining year over year growth in earnings from those synergies that we anticipate will action in the first half of 2023.
Speaker 3: We anticipate this metric moves to nearly 90% for fiscal 2023, with 100% of the synergies being executed and just the remaining year over year growth and earnings from those synergies that we anticipate will action in the first half of 2023 to come in the following fiscal year.
In the following fiscal year.
As a reminder, one aspect of this transaction I'd like to highlight is that most of our core investors that were subject to a lockup.
Speaker 3: As a reminder, one aspect of this transaction I'd like to highlight is that most of our core investors that were subject to a lockup that was said to expire on August 4th have agreed to extend their lockup as part of the transaction for an additional six months from the closing of the culmination, which occurred on September 1st, including the significant selling shareholders of Blue J. Solution.
To expire on August four have agreed to extend their lockup as part of the transaction for an additional six months from the closing of accommodation which occurred on September one.
Including the significant selling shareholders of <unk> solutions.
Speaker 3: So after me and I'll talk about our results on a non-damp basis, we show a reconciliation of GAAP measures in our press release, which is available in the Investor Relations section of our website at eOpn.com.
This afternoon I'll talk about our results on a non-GAAP basis, we show a reconciliation to GAAP measures in our press release, which is available in the Investor Relations section of our website Etsy to open dot com.
Speaker 3: We generated total revenue in the fiscal second quarter of 92.3 million, representing an increase of 12.8% from the fiscal second quarter of 2021.
We generated total revenue in the fiscal second quarter of $95.0 billion, representing an increase of 12, 8% from the fiscal second quarter of 2021.
As Michael mentioned earlier.
Speaker 3: As Michael mentioned earlier, we're very excited to have achieved this important milestone one quarter earlier than we had planned at the beginning of the year.
Excited to have achieved this important milestone one quarter earlier than we had planned at the beginning of the year.
Broken down by reporting segment subscription revenue was $84.0 million up 10% over the prior year period.
Speaker 3: Roking down by reporting segment, since fits in revenue with 75.9 million, 10% over the prior year period.
Speaker 3: Our professional services revenue was 16.4 million, a 27.9% increase from the fiscal second quarter in 2021.
Our professional services revenue was $20.0 million or 27, 9% increase from the fiscal second quarter in 2021.
Speaker 3: The principal non-GAP adjustment to revenue in the period is related to the amortization of the fair value adjustments to our deferred revenue balances, resulting from the business combination with CCNB1 in February . We expect to have a similar adjustment related to the acquisition of BlueJay.
The principal non-GAAP adjustments to revenue in the period as it related to the amortization of a fair value adjustment to our deferred revenue balances, resulting from the business combination with <unk>. One in February we expect to have a similar adjustment related to the acquisition of Blue.
Speaker 3: The increase in subscription revenue was mainly due to new organic sales and prior periods across our customer portfolio. The increase in services revenue reflects a return to normal for our business as the prior year quarter was impacted by delayed delivery of services due to the COVID-19 pandemic.
The increase in subscription revenue was mainly data new organic sales in prior periods across our customer portfolio. The.
The increase in services revenue reflects the return to normal for our business as the prior year quarter was impacted by delayed delivery of services due to the COVID-19 pandemic.
Our services margin also improved and was due to this return into more pre COVID-19 levels, but was partially offset by a ramping of head count for increased services demand that we're currently seeing in the business and projecting in the back half of this year.
Speaker 3: Our services margin also improved and was due to this return to more pre-coded levels, who was partially offset by our ramping of head count for increased services demand that we are currently seeing in the business and projecting in the back half of this year.
Continuing down the income statement gross profit was $69.0 million in the fiscal second quarter up 16, 5% from the prior year period.
Speaker 3: Continuing down the income statement, gross profit was 68.1 million in the fiscal second quarter, up 16.5% from the prior year period.
The increase in adjusted gross profit was primarily related to new subscription sales from the prior year, coupled with the return to normal of our services business.
Speaker 3: The increase in adjusted gross profit was primarily related to EC-13 sales from the prior year, coupled with the return to normal of our services business.
Speaker 3: Gross margins improved to 73.8% for the second quarter of fiscal 2022, from 71.5% for the second quarter of fiscal 2020 is only one.
Gross margins improved to 73, 8% for the second quarter of fiscal 2022 from 71, 5% for the second quarter of fiscal 'twenty to 'twenty one.
Speaker 3: Adjusted EBITDA was 33.5 million compared to 26.2 million in the prior years fiscal second quarter.
Adjusted EBITDA was $38.0 million compared to $28.0 million in the prior year's fiscal second quarter.
Adjusted EBITDA margin improved to 36, 3% for the second quarter of fiscal 2022 compared to 32% for the second quarter of fiscal 2021.
Speaker 3: Adjust the EBIT out margin improved to 36.3% for the second quarter of fiscal 2022 compared to 32% for the second quarter of fiscal 2021.
Speaker 3: And as a direct result of strong operating results related to organic revenue growth, coupled with the leverage we built in our business around scaling up our costs.
And as a direct result of strong operating results related to organic revenue growth coupled with the leverage we've built into our business around scaling up our costs.
Speaker 3: Also, we are just beginning the returns in normal as it relates to travel and certain office related expenses.
So we are just beginning the return to normal as it relates to travel in certain office related expenses.
Now I'd like to reaffirm our non-GAAP revenue guidance and increase our guidance for adjusted EBITDA for the remainder of fiscal year 2022.
Speaker 3: Now I'd like to reaffirm our non-gap revenue guidance and increase our guidance for Justin Yvdalfe for the remainder of fiscal year 2022. For the full fiscal year 2022, we expect total non-gap revenue to range from 470 to 474 million, representing an organic revenue growth rate of over 10%, and up from the initial guidance of 456 million on a like-to-like base.
For the full fiscal year 2022, we expect total non-GAAP revenue to range from 470 to 474 million, representing an organic revenue growth rate of over 10% and up from the initial guidance of $466 million on a like for like basis.
Speaker 3: Adjusted EBITDA is expected to be in the range of 161 to 163 million, an increase of 3 to 5 million from the 158 million guidance provided at the announcement of the Blue Gate Transaction, again on a like for like base.
Adjusted EBITDA is expected to be in the range of $62.0 million to $163 million.
An increase of $3 million to $5 million from the 158 billion guidance provided at the analysis of the bluejay transaction again on a like for like basis.
Non-GAAP gross profit margin is expected to be in the range of 70% to 72%.
Speaker 3: NGAP gross profit margin is expected to be on the range of 70 to 72%.
To provide the appropriate comparison of our actual results. We've included in the press release tables that were held back forward projected pro forma performance of the business, including Blue Jay for the full fiscal year 2022.
We have for comparison purposes shown our full fiscal 2021 for EDA opened in the period September one 2020 through February 28, 2021 for Blue Jay.
Speaker 3: We have for comparison purposes shown the full fiscal 2021 for ETA Open and the period 5th, 1th, 2020 through February 28th, 2021 for Blue J.
Similarly for the as reported guidance, we are incorporating the full year of <unk> to open in the period from closing September one 2021 through February 28, 2022 based on our original acquisition model.
Speaker 3: Similarly, for the AS reported guidance, we are incorporating the full year of ETA open in the period from closing September 1st, 2021 through February 28th, 2022, based on our original acquisition model. We are increasing our guidance based on the F anticipated performance of the combined business.
We're increasing our guidance based on the anticipated performance of the combined business.
Speaker 3: I want to finally quickly touch on our long-term growth target and remind everyone what we said last year and how we are progressing towards them today.
I wanted to finally quickly touch on our long term growth targets I will remind everyone. What we said last year and how we are progressing towards them today.
Speaker 3: Because of our momentum and progress, we are confident in reaffirming our long-term growth objectives. We believe we can grow in the low double digits for a very long time. And this quarter, we achieve that important milestone. We have a lot of operating leverage in our business, which you can see in our margins, like we will operate in the mid 70s for growth margin, and mid 30s for our even on margin.
Because of our momentum and progress we are confident in reaffirming our long term growth objectives. We believe we can grow in the low double digits for a very long time and this quarter, we achieved that important milestone.
We have a lot of operating leverage in our business, which you can see in our margins, which we will operate in the mid seventy's for gross margin.
And mid thirties for our EBITDA margin we.
Speaker 3: We will continue to invest in our ability to grow faster as we grow larger, balanced with the appropriate return on those investments.
We will continue to invest in our ability to grow faster as we grow larger balanced with the appropriate return on those investments.
Speaker 3: We will continually reevaluate these targets and update you as our business expands. And as we continue to invest in the company to accelerate our growth rate. In summary, Edo Hopen had a fantastic second quarter from both of the financial and operating perspectives. We remain laser focused on executing our growth strategies to capitalize on our multi-billion dollar market opportunity.
We will continually reevaluate these targets and update you as our business expands and as we continue to invest in the company to accelerate our growth rate.
In summary.
<unk> had a fantastic second quarter from both a financial and operating perspective.
We remain laser focused on executing our growth strategies to capitalize on our multibillion dollar market opportunity.
Speaker 3: With that, we would now like to take your questions. And we're ready to begin the Q&A session after a brief pause.
With that we would now like to take your questions. Adam we're ready to begin the Q&A session. After a brief pause.
Thanks, Sharon please give us a moment to turn our camera zone and get situated and as a reminder, if you have a question to ask.
Speaker 1: Thanks, sir. Please give us a moment to turn our cameras on and get situated. And as a reminder, if you have a question to ask, please chat me directly to be placed in the queue or you
Please champney directly.
To be placed in the queue or use the raising function.
Yeah.
Okay.
And our first question will be from Taylor Mcginnis.
Speaker 1: And our first question will be from Taylor McGuinness, from UBS Taylor, your line should be open. Great. Can you hear me?
From UBS Taylor your line should be open.
Great can you hear me.
Yeah.
Perfect.
Speaker 4: Hi everyone. So, congrats on the quarter and thanks for taking my question. Maybe to start, I think you mentioned booking's growth of 22%, which I think compared it to 80% last quarter. So since we don't have much visibility into the trend historically, can you maybe bridge the gap between the two, like whether it was an easier compare or if there was a difference in large steel volume? And...
Hi, Ryan so.
Congrats on the quarter and thanks for taking my question maybe to start I think you mentioned bookings growth of 22%.
Which I think compares to 80% last quarter.
Have much visibility into the trends historically can you maybe bridge the gap between the Q like whether it was an easier compare or if there was a different than large deal volume and and also maybe on that Q. I know you guys made some pricing and packaging changes. So curious if that's starting to kick in trucking at all.
Speaker 4: And also maybe on that too, I know you guys made some pricing and packaging changes. So, curious if that started to contribute at all.
Speaker 2: Yeah, that bookings number is not the bookings growth overall. That was to compare upsell from the previous periods, which to historically ran 16% in historical periods and now is running a 22%. And that's a result of our effectiveness in packaging and pricing on just the upsell. So that's not our entire bookings number. That's just one of the focus on that one area of growth.
That bookings number is not the bookings growth overall that was to compare.
Upsell.
From the previous periods, which historically around 16%.
Periods and now is running about 22% not as a result, our ifs.
<unk> and <unk>.
<unk> and pricing just the up sells and that's not our entire bookings number I just wanted to.
Focus on that one.
Our growth.
Got it are you able to Brian maybe like color.
Speaker 4: Got it. Are you able to ride maybe like color or even directionally, you know, how the business has been trending?
Or even directionally, how the business has been trending.
Speaker 4: on like a bookings perspective or a pipeline perspective relative to what we saw last quarter? Sure, the pipeline continues to expand and we've seen that through the first half and it continues to expand even, you know, to start the third quarter as well as our yield is expanding as well. So we had a record first quarter and a record second quarter and we're getting on all cylinders and working. So very positive results in the book.
From a bookings perspective or pipeline perspective relative to what we saw last quarter sure.
<unk> continues to expand and.
And we've seen that through the first half and confused even start the third quarter.
As well as our.
Our yield is expanding as well so we had a record first quarter and a record second quarter.
We're hitting on all cylinders and booking so very positive.
On the booking side.
Got it and maybe my last one just on Blue Jay now that it's part of the business can you talk a little bit more about the cross sell potential and overlap between the two businesses and maybe anything that could be embedded in the guide or what could be potential upside going forward.
Speaker 4: I thought it, and maybe my last one just on Blue J. Now that it's part of the business, can you talk a little bit more about the cross sell potential and overlap between the two businesses and maybe anything that could be embedded in the guide or what could be potential upside going forward. And then there's a part two to that just on the the ebidob margin raise and the additional synergies can you just provide a little bit more color on what is the drivers there.
And then there's the part two to that just on the EBITDA margin.
And the additional synergies can you just provide a little bit more color on.
What are the drivers there.
Speaker 2: Yeah, I don't want to take, I mean, sorry, Chad, I don't think the second question that I'll spend back into the first. Yeah, absolutely. So just a quick update, Taylor, on, you know, where we are on the synergies, we've executed all of the people, synergies and communications during the month of September .
Yes.
Sorry, Chad.
Second question, then I'll spin.
In the first.
Yeah, absolutely so.
Just a quick update Taylor on where we were where we are on the synergies we've executed all of the people.
Synergies and communications during the month of September.
Speaker 3: And in finalizing all those plans and putting the right people in the right seats and the signing.
And finalizing all those plans and putting the right people in the right seats in the signing.
Speaker 3: reps to accounts and the like we ended up doing better than we had originally built into arc forecast model to to underwrite the deals so we ended up landing on total run rate savings of 25.
Reps two accounts and the like we ended up doing better than we had originally built into our.
Forecast model to underwrite the deals. So we ended up landing on total run rate savings of 25.
Speaker 3: Part of that is reflective in the upping the EBITDA guidance. Part of that is just from the normal health of the business doing better than we had anticipated at the beginning of the year. It's a little blend of both.
Part of that is reflective in the upping the EBITDA guidance part of that is just from the normal health of the business is doing better than we had anticipated at the beginning of the year. So it is a low blend of both.
Speaker 3: the bulk of the synergy realization will happen next year.
The bulk of the synergy realization will happen next year.
Speaker 3: And then there's a little bit of year over year that will benefit from looking 23 versus 24. But all of the synergies will be done in our next fiscal year in terms of achieving that run rate save.
And then there is a little bit of year over year.
And that will benefit from looking two three versus 24.
There are all of the synergies will be done in our next fiscal year.
In terms of achieving that run rate saves.
Speaker 2: And on the opportunity with BlueJ, our acquisition strategy, combination strategy is predicated on functional physicians, where we don't like to think about overlapping products. And this is no different. BlueJ has about 250 or 300 enterprise customers, and that's the same number we have. There is very little overlap, maybe 10%. And BlueJ had primarily the TMS focused on that enterprise that starts to move from one product.
And on the opportunity with our acquisition strategy accomplishes strategy is predicated on functional additions.
Where we don't like to think about overlapping products and this is no different.
Bluejay has about 250 to 300 enterprise customers and that's the same number we have there.
There is very little overlap, maybe 10% and Buda have primarily the Tms.
On that enterprise class customers one product.
Speaker 2: We have seven other product families. So we think the upsell, cross-sell is opportunity is extraordinary because they sell to the same types of customers that are large over $10 billion in revenue and have the complexity and need for all of our products.
Seven other product families. So we think the up sell cross sell opportunity is extraordinary.
They sell to the same types of customers that are large over $10 billion in revenue and have the complexity of a need for all of our products. So that process starts immediately.
Speaker 2: So that process starts immediately. We reset the team to one good-of-market platform, starting on September 22nd, and we are actively pursuing opportunities as we speak. So we think there's a tremendous opportunity for us to continue cross-selling, upselling, just into a much larger overall customer base.
We reset the team to one go to market platform starting on November since September 22nd and we are actively pursuing opportunities as we speak. So we think there's a tremendous opportunity.
For us to continue cross selling up selling just into a much larger overall customer base.
Great. Thanks, so much.
Thank you.
Speaker 1: All right, our next question is from Andrew Olvin, of Bank of America. Andrew, your line should be open.
And our next question is from Andrew <unk> of Bank of America, Andrew Your line should be open.
Yeah.
Andrew I think you're still on mute.
Okay can you hear me now yeah Andrew.
Speaker 2: Okay, can you hear me now? Yeah, I am Drew. Hey, Darn it.
Andrew.
Sure.
Let's try to zoom thing.
Speaker 5: Let's try the zoom thing. So I guess one of the questions in terms of client response to supply chain pressures, have you seen any noticeable shift in the sales cycle? Basically, clients speeding up, slowing down over the last six months.
So I guess one of the questions in terms of client response to supply chain pressures.
Have you seen any noticeable shift in the sales cycle.
Basically our clients speeding up or slowing down over the last six months.
I think I think overall projects.
Speaker 2: Yeah, I think overall projects are moving through our customer's system faster. And I think that shows up in our new logo uptick. Usually those cycles take much longer and we're seeing those kind of actually happen more quickly. You know, we know this one on a motor customer and we're gonna start with the chip side and we're thinking it a great amount of opportunity to help them move out some of those issues.
Projects are moving through our customers' systems faster.
And I think that shows up in our new logo uptick.
Usually those cycles take much longer and we're seeing those kind of actually happening more quickly we noticed one automotive customer and we're going to start with the chip side.
We think we get great amount of opportunity to help them smooth out some of those issues. So I do think things are moving faster and the big reason is.
Speaker 2: So I do think things are moving faster and the big reason is this is now a much more cross functional decision at a much higher point in the organization. So no longer are our sales cycles at functional levels most.
This is now a much more cross functional decision at a much higher point in the organization so no longer sales cycles that functional levels, mostly.
Speaker 2: They're much higher and that would be at the board and CEO level. And those projects tend to move faster than, you know, if functionally are trying to drive a project. So we do see kind of acceleration in our overall sales.
They are much higher and that would be at the board and CEO level and those projects tend to move faster than you thought.
So we are trying to drive our projects. So we do see acceleration in our overall sales cycles.
And I'd add that I think you can see some of that too in clients.
Speaker 3: And I'd add that I think you can see some of that too in, you know, where clients would have bought in three parts are now buying in one part. And we're, you know, we don't have enough data points yet, Andrew to say it's a complete trend. But the ASP and the number of things that are being bought together has, I believe, increased so far in this fiscal year.
Clients would've bought in three parts are now buying in one part.
Don't have enough data points, yet Andrew to say, it's a complete trend, but the ASP and the number of things that are being bought together.
I believe increased so far in this fiscal year.
Speaker 5: And maybe among the seven product groups, sort of just to talk about demand across solutions, what's seen the strongest uplift in demand currently versus the start of the year?
Got you and maybe among the seven product groups.
Sort of just to talk about demand across solutions, what seeing the strongest uplift in demand currently versus the start of the year.
Speaker 2: Yeah, I think of transportation logistics for sure. And then we're also seeing a pretty big uplift in our collaboration side of our business.
Yes, I think our transportation logistics for sure.
And then we're also seeing a pretty big uplift in our collaborations side of our business.
Speaker 2: That part of our business connects the supply base to the manufacturers and multi-gears. And we've seen significant traction in that area. So those are two big areas. Demand sensing process is a very different year product. And that always has a high demand. But I think from an update from maybe nine months ago, I think those two areas are much more beautiful.
That's part of our business connects the supply base.
To the manufacturers and multi tiers, we're seeing significant traction in that area. So those are two big areas demand sensing process, a very differentiated product and that always is a high demand I think from an uptick from maybe nine months ago. I think those two areas I mentioned will be the greatest uplift.
Speaker 5: And I'm gonna be very selfish. And you know, it's, but it's just the question I get asked every day. When do you guys think supply chain pressures will get better? Oh, you know, they're gonna get incrementally better as I'm taking time. And I know that, you know, obviously the president made some comments today about focus on ports, which will be helpful. But you know, you essentially have a supply domain and balance going on at this point. And it's gonna take a while for that to work its way through the system.
And I'm gonna be very selfish and.
It's but it's just a question I get asked every day when do you guys think supply chain pressures will get better.
<unk>.
You know theyre going to get incrementally better.
<unk>.
And I know that you know obviously the president made some comments today about focus on ports, which will be helpful.
But you essentially have a supply demand imbalance going on at this point and it's going to take a while for that to work its way through the system.
Speaker 2: So I think this issue is going to be here with us for six, nine months at least. I think the implication for us is that people need a different kind of infrastructure to manage a more complex applied.
So I think.
This issue is going to be here with us for six to nine months at least.
I think the implication for us is that.
People need a different kind of infrastructure to managing more complex supply chain and what companies really want to do is understand demand more clearly and then be able to react to problems more quickly.
Speaker 2: And what companies really want to do is understand, demand more clearly, and then be able to react to problems more quickly. And our platform does just that. So I think companies that invest in these areas will do better. The ones that don't will continue to serve.
And our platform that is just not something I think companies that invest in these areas will be better the ones that don't.
This model.
I really appreciate your questions. Thank you.
Speaker 5: Really appreciate your questions. Thank you.
Thanks, Andrew.
Speaker 1: Our next question comes from Mark Shabell with Luke Apple.
Our next question comes from Mark Chapell with loop capital.
Speaker 6: Mark, your line is open. Mark. Hey, hey guys, can you hear me okay? Yeah. How you doing Mark? I'll stop wearing this job in the corner. Congratulations and thanks for taking my question here. Some of my questions are already been answered, but Michael, starting with you, given the growing headlines around the world, James, we're seeing in the US courts, are you seeing increased interest in your inter-ocean shipping platform along that front?
Mark Your line is open.
Hey, guys can you hear me, Okay, Yeah, how you doing mark.
Very nice job on the quarter, congratulations and thanks for taking my question here.
Some of my questions have already been answered, but Michael starting with you given the growing headlines around the logjams reform in drug courts are you seeing increased interest in your platform.
Platform, all along that path.
More on the visibility side. So we already are a pretty you'll have the.
Speaker 2: more on the visibility side. So we already are pretty, you have the very large percentage of ocean bookings and that continues. But we definitely see visibility being one of the very hot topics. So companies obviously, if they don't know where their products are in the cycle, they want to understand first where it is. And then you also want to link that to what the order was. So they can start to understand what implications they have upstream and down.
A very large percentage of ocean bookings and that continues but we definitely see visibility being one of the very hot topics. So companies. Obviously, if they don't wear their products are in the cycle. They want to understand first where it is and then you also want to link that to what the order was so they can start to understand.
What implications that have upstream and downstream so companies ship product for a specific reason and our platform allows them to understand not only where the product is but also understand why were shipped in the first place.
Speaker 2: So companies ship product for specific reasons. And our platform allows them to understand not only where the product is, but also understand why we're shipped in the first place. And then what that means is they can react more proactively to try to meet the needs of the business on ongoing basis.
And then what that means is they can react more proactively to try to meet the needs of the business on an ongoing basis.
Great. Thanks on that.
Speaker 7: Well, I'm on the ocean shipping theme. You know, on the partner front, I realize it's still early days, but I was wondering if you could just give us an update on your partnership with Shipping Giant on there.
On the Ocean shipping on the partner front I realize it's still early days, but I wanted to just kind of an update on your partnership with shouldn't giant.
Speaker 8: Going really well, going really well. And I think we're seeing a lot of positive momentum and upkicks. We are in the process of kind of calibrating for, you know, what they see is very, very large demand. And we're super excited about what that means to us on a very long-term basis. So couldn't be any happier with that partnership and couldn't be any happier with the reception in the marketplace for that product.
Doing really well.
Well I think we are.
Im seeing a lot of positive momentum in uptick.
We are in the process of kind of calibrating for what they see is very very large demand.
And we're super excited about what that means to us on a very long term basis, so couldn't be any happier with our partnership and couldn't be any happier with the reception in the marketplace for four for.
For that product.
Great and then and then finally to your point of view.
Speaker 7: And then finally here at 20, we just calm a little bit on pipeline yields. And they have been growing throughout the last couple of quarters, which is good. And I assume it's fair to assume that pipeline yields continue to improve for you.
Tom a little bit on pipeline yields I mean, they have done.
Growing up in the last couple of quarters, which is good.
I assume it's fair to assume that pipeline.
Yes.
Speaker 2: Yeah, we measure pipeline and yield very carefully. The pipeline size gives us an indication of what the future is going to hold. Pipeline continues to grow even though we're having very large booking quarters and we're getting incrementally better yield on other larger pipeline. So we see that as very positive for our business and very positive for next level quarters. you're hoping we make that into the future Council and we're going to start the process in stock.
Yeah, I mean, we measure our pipeline and yields very carefully.
Pipeline size gives us an indication of.
What the future's going to hold.
<unk> continues to grow even though we're having very large booking quarters.
And we're getting incrementally better yield on the larger pipeline. So we see that as very positive for our business.
And very positive for the next several quarters.
Okay, Great. That's all for me. Thank you.
Mark.
Our next question comes from will <unk> from elevation.
Speaker 1: Our next question comes from Wilka IV from Elevation.
William.
Speaker 9: I will. Hey guys, I'm grassin' the results. Thanks. Thank you. So you mentioned this year some new logo and partnerships this year. And I guess what I would consider less represented industries for you to open historically. I guess healthcare was mentioned this is most recent quarter. Maybe talk about what you're seeing from a more broad base, basis and demand from those industries and how large this might be potentially.
Well, hey, guys congrats on the results.
Thank you.
So you mentioned this year, some new logo wins and partnerships this year and I guess, what I would consider less represented industries for you to open historically.
I guess healthcare was mentioned this most recent quarter.
Maybe talk about what youre seeing from more broad base basis and demand from those industries and how large this might be potentially.
Yes, it could be very large for us we expect it to be and it will take time, because what we're really identifying or markets that really need our platform.
Speaker 2: Yeah, it could be very large for us. We expect it to be and it'll take time because what we're really identifying are markets that really need our platform, but are a little off center for us in terms of our core market presence. And we identify companies that have large market presence in those areas, but don't have technology solutions, but we'd like to offer.
There are little off center for us in terms of our core market presence and we identify companies that have large market presence in those areas, but don't have technology solutions, but look we'd like to offer them.
Speaker 2: So for us, it's a matter of developing a much more larger indirect channel and allowing us to participate in markets more quickly than we otherwise could. So we think we can add these partnerships sequentially over time and we think they grow larger as they go. So we think there's a compounding element.
So for us, it's a matter of developing a much more larger indirect channel and allowing us to participate in markets more quickly than we otherwise could so we think we can add these partnerships sequentially over time, and we think that grow larger as they go. So we think there's a compounding element.
Speaker 2: To these partnerships and we, you know, Marsch is the one where we signed earliest.
Through these partnerships and we masked is the one where we signed earliest and we're actually seeing that compounding opportunity happening.
Speaker 2: And we're actually seeing that compounding opportunity happening as we enter the quarter. So we're super excited about those. And we have several more of those types of partnerships in the pipeline that we're actively pursuing.
In the quarter. So we're super excited about those and we have several more of those types of partnerships in the pipeline that we're actively pursuing.
Great. Thank you.
Okay that concludes our conference call. This afternoon.
Speaker 1: Okay, that concludes our conference call this afternoon. Thank you, everyone for attending. Thank you all. Have a great day.
Thank you everyone for attending thank you all have a great team.
Okay.
Yeah.