Q3 2025 E2open Parent Holdings Inc Earnings Call
Speaker Change: Greetings welcome to the E. Two open third quarter fiscal year 2025 earnings call.
Speaker Change: At this time, all participants are in English and only mode.
Speaker Change: Question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Speaker Change: Please note. This conference is being recorded I will now turn the conference over to your host Russell Johnson Senior Vice President Treasurer, and head of Investor Relations you may begin.
Speaker Change: Good afternoon, everyone and welcome to the two opened fiscal third quarter 2025 earnings Conference call. Today's call will include recorded comments from our Chief Executive Officer, Andrew <unk>, Our Chief Commercial Officer, Greg Randolph and our Chief Financial Officer Marie Armstrong.
Speaker Change: Following these comments, we will open the call for a live Q&A session, a replay and transcript of this call will be available on the company's Investor Relations website at investors <unk> E. Two open dotcom infill.
Speaker Change: Information to access. This replay is listed in today's press release, which is also available on our Investor Relations website.
Speaker Change: 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 fiscal fourth quarter and full year 2025. These forward looking statements are subject to known and unknown risks and uncertainties.
E. Two open cautions that these statements are not guarantees of future performance. We encourage you to review our most recent reports, including our 10-K 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 Change: And finally, we're not obligating ourselves to revise our results or these forward looking statements in light of new information or future events.
Speaker Change: 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 at investors Dot E. Two open dot com.
Andrew upheld: And with that we'll begin by turning the call over to our CEO Andrew upheld.
Thank you Russell and thanks to everyone for joining today's call I'll begin with comments on our fiscal third quarter performance and recent developments in our plan to return <unk> to open to strong consistent growth.
Andrew upheld: I'll, then ask Greg to update you on commercial highlights.
Andrew upheld: Finally, Murray will review, our Q3 results as well as our Q4 and full year guidance.
Andrew upheld: Then we will open up the call.
Andrew upheld: Question.
Andrew upheld: Overall, our third quarter subscription revenue was solid and up modestly versus Q2.
Andrew upheld: While subscription revenue still declined year over year the rate of decline improved as compared to the four previous quarters.
While we still have work to do to realize the full growth potential of our business I'm encouraged that our strong focus on client satisfaction.
Andrew upheld: Implementation.
Andrew upheld: <unk> retention and go to market execution.
Andrew upheld: Is making progress in stabilizing our subscription business.
Andrew upheld: I'm also pleased that during Q3, we closed several strategically important subscription deals with both existing and new clients.
But what continues to impress me.
Andrew upheld: The global scale and the caliber of the clients who select us.
Andrew upheld: As their partner of choice.
Andrew upheld: It is clear to me that clients choose to open four solutions.
Andrew upheld: Not only for their current supply chain needs, but also for the opportunity to grow with us to transform their supply chains to the expanded use of our solutions over time that will deliver significant economic and customer value for them.
Andrew upheld: Through our long term partnerships.
Andrew upheld: It is also clear that demand for sophisticated next generation supply chain solutions remains healthy and this demand is driven by many durable tailwind in the quarters ahead. Our goal is to build on the positive change we have made it easy to open and.
Andrew upheld: And to capture our fair share of this attractive market.
Andrew upheld: Today I'm confident that the changes we are making are gaining traction in that our subscription bookings are moving in the right direction.
As I've noted before an equally important factor and eat two openings growth equation.
Andrew upheld: Is achieving a sustainable and significant turnaround in retention.
I am pleased to report that our Q3 retention results were.
Andrew upheld: Were positive and consistent with our internal targets. This continued progress follows the significant improvements we delivered in Q2.
Andrew upheld: Given the multi quarter gains we've made in this important area I remain confident that we are past peak churn, which as a reminder, our occurred in Q1 of this fiscal year and that gross retention has stabilized and is moving up towards industry benchmarks.
Andrew upheld: Our clear success on the retention front as a result of the strong operational cadence, we put in place around renewals as well as our companywide embrace of a client centric mindset that makes the lighting clients and delivering value of our top priority.
Andrew upheld: Historically <unk> been enjoying very strong retention. However, our performance in this vital area of weakened over the past two years and has become a major factor in our growth slowdown.
Andrew upheld: As far as our process for example, we now evaluate all renewals over a certain threshold out 18 months in advance.
Andrew upheld: And have much better controls and processes on those renewables and a bias towards growing the relationships with the goal of not only returning our retention metrics to their strong historical levels or better.
Andrew upheld: But to continue to grow the depth of our relationships with those clients.
Andrew upheld: As we make further progress on top of it the stronger retention will become a growth tailwind.
Andrew upheld: Next fiscal year and beyond.
Andrew upheld: Now I'd like to update you on our recently announced steps to broaden into opens management team and build on our strength as a software leader.
Last month, we announced that Paul <unk> Joshi, who was previously our EVP of product management and strategy moved into the new role of Chief strategy Officer.
Speaker Change: Taiwan has been with you two opened since 2003.
Speaker Change: And has been instrumental in building our company from a small technology startups, serving a handful of clients into the scaled industry leader that we are today. He is widely recognized as a leading supply chain expert and has been a key architect of eat you opened a distinctive platform that powers the operations of some of the worlds.
Speaker Change: Leading brand owners.
Speaker Change: In his new role pilot and I will work together to develop and execute into open strategy and key growth initiatives.
Speaker Change: I'll also engaged deeply with our most important clients, bringing his decades of supply chain and innovation experience.
Speaker Change: To bear on the challenges faced by our largest and most complex global customers.
Speaker Change: Given his deep technology background power will also serve as quote the voice of the client as we develop and execute our product roadmap, making sure that our innovation efforts meet the operational needs of the clients we serve.
Speaker Change: Alan and I will work closely together in a co innovation capacity as well.
Speaker Change: In my time at Heathrow Open C O power and it's been an indispensable partner to me.
Speaker Change: In designing and implementing all aspects of our transformation plan tremendously excited that is assuming this new role.
Speaker Change: We also announced last month that Rochet Rowhani has joined into open as our chief product and Technology Officer reporting to me Raj. It brings an impressive track record of leading high performing product development engineering teams at multiple global high growth software companies such as pay larceny.
Speaker Change: Atlassian and into it.
Speaker Change: In the newly created C. P T O role.
Speaker Change: Roger will have full responsibility for E. Two opens product management engineering and SaaS infrastructure activity.
Speaker Change: Will oversee a unified organization that combines these functions under one leader to accelerate the pace of our innovation.
Speaker Change: I look forward to partnering closely with ratchet.
Speaker Change: As we take a fresh look at into opens R&D strategy and accelerate our product roadmap.
Speaker Change: I am confident that these steps to broaden and strengthen our executive team will allow us to open to maximize the growth potential inherent in our technology.
Speaker Change: To open is widely recognized in our industry for having built a unique software platform through years of M&A combined with in house integration and development. We were the pioneer of the use of that applied artificial intelligence and supply chain.
Speaker Change: And the first vendor to achieve that network benefit of collected hundreds of thousands of supply chain partners into a single integrated <unk>.
Speaker Change: <unk> and network platform.
Speaker Change: Thanks to these and other innovations E. Two open software has become deeply embedded across the fortune 1000 universe of companies that conduct a large share of global commerce.
Speaker Change: As we move forward, our pace of innovation less continued to match or exceed the speed at which global business moves and evolves.
Speaker Change: Global companies are contending with an ever growing list of supply chain challenges. These include the traditional wireless such as port congestion transit delays labor disruptions.
And newer ones, such as compliance and trade sanctions.
Speaker Change: <unk> labor rules.
Speaker Change: And we now have a new U S administration that promises to use tariffs and other trade policy measures to pursue economic and political goals. This will likely lead to increases in the complexity of global business.
Speaker Change: E. Two open solutions, which span from planning to execution provide visibility and traceability deep into manufacturing sub tiers and sales channels.
Speaker Change: Our ideal for managing complexity and uncertainty.
Speaker Change: Today, our comprehensive product platform empowers users to quickly and holistically identify issues assess business impacts evaluate alternatives and and take corrective actions.
Speaker Change: In emerging technologies, such as generative AI, which we are actively incorporating into our products. We would have the potential to make our applications even more powerful.
And Ive to open we continued to expand our use of both traditional and generative AI at high value functionality to our software within our logistics applications. For example, we are embedding AI to help shippers make better tendering decisions.
Speaker Change: By incorporating carrier acceptance rates and on time performance history into the evaluation of carrier pricing.
Speaker Change: And in global trade AI has many promising applications. These include unstructured processing of global trade documents natural language based query agents automated goods classification and more accurate compliance screening we will continue to share our AI related development work across our portfolio as we move forward.
Speaker Change: As we move forward with our growth strategy, we will continue to focus on clients.
Speaker Change: We will focus on innovations.
Speaker Change: To ensure that our platform is easy to deploy provides a fantastic user experience and delivers performance and delight, our clients and meet their most demanding operational needs.
Speaker Change: Doing so will provide a strong foundation for <unk> to open the sustainable growth and ensure that we remain a technology leader for years to come.
Speaker Change: Before completing my remarks, I want to add that our strategic review that we initiated in March of last year is still ongoing as with prior quarters, we will not take questions or comment further on our review today.
Speaker Change: With that I'll now ask Greg to provide our commercial update.
Greg Randolph: Thank you Andrew during the third quarter each opens commercial organization continued to execute our plan to return each opened to strong consistent revenue growth.
Greg Randolph: Our work to accelerate bookings remains focused on improving sales productivity through sales execution attainment and pipeline growth at the same time. Our sales team is partnering very closely with EQ opens professional services and client experience teams to drive higher customer satisfaction and maximize renewals.
Greg Randolph: Our performance in both critical areas. During Q3 is further evidence of the progress we are making to position <unk> to open for future growth.
Greg Randolph: While we continue to see a trend of large deals taking longer to close customer interest in our solutions remains extremely healthy.
Greg Randolph: And what appears to be a reaction to recent headlines about the incoming U S. Administration's trade policy. We have recently had many in depth discussions with clients about how our logistics and global trade management applications can help them better manage the increasingly volatile environment around global business.
Greg Randolph: More broadly we continue to see our focus on delighting clients as sparking exciting new dialogues with many new existing E. Two open clients about how we can expand our relationships.
Greg Randolph: During Q3, we performed well on the cross sell front and demonstrated our ability to expand the scope and value of major client relationships upon renewal of legacy pieces of business.
Greg Randolph: And our sales teams utilized our broad product family.
Greg Randolph: As of advantage during the quarter by closing new business across a wide variety of applications.
Greg Randolph: And one, particularly important third quarter deal we renew the household name manufacturer of industrial equipment is a long time user of our supply planning and collaboration solutions and also expanded the scope of our relationship representing a significant piece of new upsell business. This global company.
Greg Randolph: <unk> operates in nearly 200 countries and uses our software to manage a highly complex supply chain.
Also in Q3, we cross sold and integrated planning and supplier collaboration solution to an existing consumer goods client the storefront and brand logo arent iconic presence across the U S as well as internationally.
Greg Randolph: This important legacy client will now implement several applications that will enable it to improve forecast accuracy automate manual planning work streamline collaboration with suppliers and trading partners and reduced supply lead times and shortages.
Greg Randolph: Closing these two deals alone made Q3, a successful quarter for our planning family suite of applications, which is a very competitive area due to the large number of point solution providers.
Greg Randolph: Our clients place, a particularly high value on each who opened unique ability to link planning with supplier collaboration and industry leading execution capabilities.
Providing a single source of truth linking forecast supplier orchestration and transportation to ensure a seamless flow of goods to their customers.
Greg Randolph: Our strong capabilities in planning received additional confirmation during the third quarter as each you opened was once again named the leader in the 2020 for IDC market scape worldwide supply chain planning overall vendor assessment.
Greg Randolph: On the new logo front in the third quarter, we added another well known multinational manufacturer of industrial equipment to our roster of major customers.
Greg Randolph: This high value deal combines our core transportation management application with last mile parcel capability.
And logistics support services.
Greg Randolph: This new customer operates in over 50 countries with a diverse network of manufacturing distribution and servicing capabilities around the globe.
Greg Randolph: And in another new logo win during Q3, a major consumer retail group with extensive U S and European operations, Josie two opens multimode dms solution to optimize planning booking.
Greg Randolph: Execution tracking and settlement of all ocean shipments.
Greg Randolph: Our industry, leading solution will allow this important new clients to efficiently manage inbound container movements. So the items consistently reached stores on time to meet promotion schedules and consumer expectations.
Greg Randolph: Winning these new logo deals is important not simply for the revenue contribution that they bring but also because large firms with complex global supply chains are an ideal fit for E. Two opens broad end to end software platform.
Greg Randolph: Adding new clients of this tight provides a valuable source of cross sell opportunities for years to come.
These important wins as well as other new business that we closed during Q3 demonstrate the type of hard work and commitment to execution that are required to return each who opened a strong consistent growth.
Greg Randolph: They also reflect the continued healthy demand environment for each open solutions that we see in the marketplace.
Greg Randolph: Our client base with existing and potential clearly understands the value that can be achieved by replacing homegrown manual processes and siloed applications with a cloud native network powered platform.
Greg Randolph: Macro trends such as supply chain complexity, ERP cloud migrations and vendor consolidation should underpin demand and our end markets for many years to come. It is the job of Btu opens commercial team to ensure that our solutions are clearly positioned in the market for both our high functionality as well as.
Greg Randolph: They're compelling return on investment.
Greg Randolph: Looking ahead my number one priority continues to be putting in place all the elements of a high performing sales culture at <unk> to open.
Greg Randolph: While we have seen incremental progress in growing our subscription bookings as a result of this work we still have a significant opportunity ahead of us to further enhance our sales productivity and to improve the size and velocity of our pipeline.
We are building a solid foundation for future bookings growth.
Greg Randolph: While also staying focused on hitting our internal retention improvement targets.
Greg Randolph: It is progress in both of these areas that will drive future growth.
Greg Randolph: Turning to professional services, we continue to see Rps business, playing a very important role in delighting, our customers and supporting our long term subscription revenue growth.
Greg Randolph: During the third quarter <unk> revenue was pressured by several ongoing factors.
Greg Randolph: These factors include the delayed close of several large subscription deals as well as the mix of subscription deals booked in Q3, which came with somewhat lower attach PS revenue.
Greg Randolph: Also as we noted last quarter, we completed work on several large projects during Q2 and the roll off of these projects had a continuing revenue impact on Q3.
Greg Randolph: Finally during Q3, we continue to dedicate some resources on an unbilled or reduce rate basis to securing high value renewals and strengthening key implementations.
Greg Randolph: While the level of these investments has moderated from its Q1 peak, we still have several important client projects of this type that we will be completing over the next 12 to 18 months.
Greg Randolph: Broadly speaking, we still expect our PS organization to return to growth over time as these impacts to began to moderate.
Greg Randolph: More specifically as we catch up on closing deals that were pushed out of Q3, we expect to see some sequential P. S revenue uplift in the fourth quarter.
Greg Randolph: During the third quarter, we also strengthened our sales leadership in mid market business development.
Greg Randolph: This is an area of tremendous potential for each open, but our track record of adding and retaining clients. In this market segment has been very mixed due to the lack of a focused growth strategy and appropriate client engagement model.
Greg Randolph: It will take some time to develop our capability and take full advantage of this market segment.
Greg Randolph: But I believe there is much to gain by diversifying each opens traditional focus on large complex customer engagements to include a consistently growing base of more homogeneous small and mid size deals.
Greg Randolph: Looking forward I continue to believe that each you opened is well positioned to accelerate growth as Andrew noted.
We've made significant progress on the retention front and as a result, our commercial teams are able to spend more time on our central sales activities, such as growing our pipeline and closing deals also our work with key strategic integrator partners is gaining traction and our list of high value opportunities that we have jointly identified.
Are these partners continues to grow.
Greg Randolph: And in particular I'm very excited to have my colleague Pawan Joshi, assuming a new role more client facing role.
Speaker Change: As a longtime senior leader in supply chain expert Pawan has a unique and invaluable ability to deeply engage with clients at the C suite level, which increasingly is where the most strategic supply chain decisions are made.
Murray: With that I'll turn the call over to Murray.
Murray: Thank you, Greg and happy new year, everyone.
Murray: Subscription revenue in the fiscal third quarter 2025 132.0 million.
Murray: Above the midpoint of our $130 million to $133 million guidance.
Murray: Subscription revenue declined <unk>, 6% year over year.
Murray: <unk> was a significant improvement compared to the Q2 year over year decline.
Murray: This better growth performance was driven by our continued progress on retention and overall net new air are again, improving year over year and sequentially.
Murray: Professional services and other revenue in the fiscal third quarter was $19 $7 million.
Murray: A year over year decline of 24%.
Murray: As Gregg mentioned Q3 P. S revenue performance continues to be negatively impacted by P. S related investments in client satisfaction and renewals as well as certain large projects ending in the prior quarter.
Murray: The product mix of Q3 subscription bookings and delays in closing subscription deals with large attached P. S work put additional pressure on Q3 P. S revenue.
Murray: Total revenue for the fiscal third quarter was $151 $7 million.
A decline of three 7% over the prior year quarter.
Murray: Turning to gross profit in the fiscal second quarter of 2025, our non-GAAP gross profit was $104 $3 million or four 9% decrease year over year.
Murray: non-GAAP gross margin was 68, 8% in Q3 versus 69, 6% in the prior year quarter.
Murray: The reduction in third quarter gross margin was due to lower professional services revenue during Q3, which impacted margins in our pes business for that time period.
Murray: Q3 subscription gross margin was flat year over year at 76, 1%.
Turning to EBITDA.
Murray: Our third quarter, adjusted EBITDA was $53 $6 million.
Murray: 35, 3% margin compared to $55 $4 million and a 35, 1% margin in the prior year quarter.
Murray: Our continued strong adjusted EBITDA margin.
Murray: Reflect our ongoing commitment to operational efficiency.
Murray: Q3, G&A expenses were lower year over year due to actions, we have taken to streamline non client facing support functions.
Murray: Troll discretionary spend such as <unk> and further rationalize the global real estate footprint, we inherited through past M&A.
Murray: Likewise, we have refocused our marketing spend around a smaller set of more productive client centric activities.
Murray: Incrementally investing in our sales expense line as we continue to up level our commercial team.
Murray: In R&D, we continue to achieve cost efficiencies without impacting staffing levels or R&D hours by prudently managing the onshore and offshore head count mix within our broader development organization.
Murray: Finishing on profitability net loss for the third quarter was $381 $6 million. This net loss includes a non cash goodwill impairment charge of $369 1 million.
Murray: Similar to impairments, we recorded in FY 'twenty FY 'twenty four.
Murray: Trigger event for this latest impairment was a decline in our share price during the third quarter.
Murray: Now turning to cash flow.
Murray: Adjusted operating cash flow in Q3 was 21 $1 million.
Murray: And year to date, adjusted operating cash flow was $54 $7 million.
Murray: Q3 cash flow improved sequentially from the second quarter.
Murray: Which we expected given that Q2 is typically our low point for cash generation due to normal seasonal factors.
We ended Q3 with $151 $2 million of cash and cash equivalents, an increase of $9.0 million from the second quarter.
Murray: Q3 cash balance.
Murray: Increased by $49 million year over year, demonstrating the strong cash generation capability of our business.
Murray: This completes my remarks on our fiscal Q3 financial results.
Murray: At this point I'd like to turn to our fourth fiscal quarter and full year guidance discussion.
Murray: For the fourth fiscal quarter of FY 'twenty five we expect subscription revenue in the range of $131 million to $134 million, representing a decline of two 5% to decline of <unk>, 3% as compared to the prior year fiscal fourth.
Murray: In the quarter.
Murray: Our Q4 subscription revenue guidance incorporates a negative impact from the recent strengthening of the U S dollar.
Murray: Which is an approximately 800000 dollar headwind for Q4, when compared to our full year subscription guidance update last quarter.
Murray: For FY 'twenty five we're revising the full year guidance that we provided on October nine 2024.
Murray: As follows.
Murray: We expect FY 'twenty five subscription revenue to be in the range of $526 million to $529 million.
Representing a year over year growth rate of negative 2.0% to negative one 5%.
This guidance range includes one $1 million of negative FX headwind from the last quarter when we updated guidance.
Murray: We expect FY 'twenty five total revenue to be within the range of $607 million to $611 million Rep.
Murray: Representing a year over year growth rate of negative four 3% to negative three 7%.
Murray: We are narrowing our FY 'twenty five revenue guidance range to reflect the impact of recent U S dollar strengthening and weaker than expected Q3 P. S. Robyn.
Murray: We still expect FY 'twenty five gross profit margin to be within the range of 68% to 70%.
Murray: In line with comments made last quarter.
We also still expect FY 'twenty five adjusted EBITDA just finished near the low end of the original guidance range provided on April 29 2024.
Murray: $215 million to $225 million and full year, adjusted EBITDA margin to be approximately 35%.
Murray: As we execute our return to growth plan, we remain focused on running our business as efficiently as possible.
Murray: While continuing to prudently invest in areas that are key to achieving our top line growth targets.
Murray: We still expect to generate strong positive adjusted operating cash flow in FY 'twenty five although our lower revenue. This fiscal year is incrementally impacted cash generation.
Murray: Partially offset by lower interest expense due to the decline in interest rates and our overall focus on cost efficiency.
Murray: Consistent with our comments last quarter, we still expect second half cash flow to be significantly higher than in the first half of the year, which is consistent with a typical seasonal pattern of our business.
Murray: We now expect year end FY 'twenty five net leverage to be around four one times.
Murray: The underlying cash generation capability of our business.
Murray: Remained very healthy and continues to be a high priority focus area for us.
Murray: In conclusion.
Murray: During the fiscal third quarter, we continued to make progress in repositioning each open strong consistent future revenue growth.
Murray: Our efforts to improve retention has been a clear success.
Murray: With our retention metrics once again moving in the right direction and our customer base responding very positively to our win win approach to client engagement and.
Murray: And securing renewals of legacy business.
Murray: Bookings have picked up in both Q2 and Q3 compared to the low point, we saw in Q1 of this year.
Murray: Despite the longer sales cycles for larger more complex deals that we had experienced in FY 'twenty five.
Murray: Improved retention and incremental progress in subscription bookings.
Murray: While not yet sufficient to drive double digit growth.
Murray: Are helping stabilize our subscription revenue.
Murray: It has moved us closer to an inflection point, where our growth turns positive again.
Which will be a very important milestone.
This progress as well as the exceedingly high quality of the business we win each quarter.
Murray: US confidence as we continue executing our growth plan.
Murray: Before closing I want to thank all our Ito open team members for your dedication to the success of our many clients and partners.
Murray: The commitment to excellence that you show every day.
Murray: Is the foundation of our company's success.
Murray: As we start the new calendar year I'm tremendously excited by the opportunity we have to create a brighter future for E. Two open.
Speaker Change: And I'm sure all of our employees will join me in congratulating Paul on his new role and welcoming ratchet as he joins each open.
Speaker Change: We all look forward to the great things Youll accomplish individually and collectively in the areas of client success.
Speaker Change: And innovation.
Speaker Change: That concludes our prepared remarks, operator, please open the line and begin the Q&A session.
Speaker Change: Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Chris Quintero: Your first question for today is from Chris Quintero with Morgan Stanley.
Greg Murray: Hey, Andrew Greg Murray, Thanks for taking our questions here.
Chris Quintero: I wanted to ask about the <unk>.
Chris Quintero: Subscription billings based on our calculations it seemed like that was up 8% year over year and similarly deferred revenue was up 6% year over year and those are both pretty nice improvement from the previous couple of quarters. So just curious if theres anything you would call out there for those two.
Chris Quintero: Hey, Chris This is Andrew I, just wanted to say that before we got started with the Q&A that we wanted to take a moment to express our condolences and support for all those that have been impacted by these horrific fires.
Chris Quintero: In Los Angeles, which happens to also be my hometown so.
Speaker Change: And with that I'll pass it to Marie I believe for the actual questions, but thanks for the question Chris good to catch up.
Speaker Change: Thank you, Chris and thank you Andrew.
Happy new year everyone.
Speaker Change: And we got improvement in billings and deferred revenue year over year.
Speaker Change: No, it's bad billings and deferred revenue year over year increase in Q3.
Speaker Change: It was mainly driven by timing related to Daniel and building of large deals relative to prior timing. So you will see some of the timing offset in Q4.
Speaker Change: And as that normalizes, but again good improvement.
Speaker Change: Got it that's super helpful Marie.
Greg: Then maybe maybe one for Greg here.
Speaker Change: I know you I think it was back in the Q4 call, but you talked about three new kind of growth initiatives cross selling.
Speaker Change: New system Integrator channel and then driving new logos, just curious kind of if you could stack rank those in terms of which ones are kind of seeing the earlier success. So far.
Chris Quintero: Yeah, Hey, Chris Gregg to talk with you and happy new year.
Speaker Change: Thanks, Rob for memory.
Speaker Change: Q4 of last year and look I think I made a couple of comments in my opening remarks about both cross sell and new logo we had.
Speaker Change: Two significant wins in both <unk> and <unk>.
Speaker Change: Q3, and in terms of just how I look at the future and then obviously I also commented about the progress, we're making with the systems integrators.
Speaker Change: But near term, we're getting significant momentum.
Speaker Change: And the cross sell motion that we implemented and that's evidenced by the two wins.
Speaker Change: We had in Q3 and the pipeline growth that we're experiencing and will continue to laser focus on that opportunity. The beauty of the breadth of our portfolio allows us to have multiple different entry points.
Speaker Change: To work to drive cross sell growth for our existing client base.
Speaker Change: There is tremendous momentum.
Speaker Change: In new logo North America in particular, we have a really strong team.
Incredibly experienced and supply chain and.
Speaker Change: They are veterans.
Speaker Change: I'm going to open.
Speaker Change: And they can change to create significant momentum.
Speaker Change: Obviously with new logos, it's really about pipeline generation. So there is continued focus on.
Speaker Change: Consistently driving.
Speaker Change: Both.
Speaker Change: The overall, new and upsell bookings pipeline, but the number of transactions is another key focus.
Speaker Change: So without any comments.
Andrew on the ESI progress, we are certainly making progress there.
Speaker Change: Well.
Speaker Change: We I think we made significant progress initially part of as I think I've said on other calls.
Speaker Change: Additionally, we prioritized one of the bigger ones.
Speaker Change: And said look let's get one right.
Speaker Change: And we've had I think.
Speaker Change: Probably gone from like five discussions collective way with their account teams to 20 to 30.
Speaker Change: So.
Speaker Change: First name probably spoken to.
Every industry leader in every client later with a different partnership approach right.
Speaker Change: Our joint goal is to develop a supply chain transformations.
Speaker Change: At major corporations versus.
Speaker Change: I think the prior idea was that there might be.
Speaker Change: Mentor of our services and our view is yes.
Speaker Change: We can add more value to them.
Speaker Change: By helping them.
Speaker Change: When large transformation partner.
Speaker Change: So that's going very well.
Speaker Change: The ASI side.
Speaker Change: A couple of hours.
Speaker Change: Hi.
Speaker Change: I agree that there should be the year, where we have five joy.
Speaker Change: Clive.
Speaker Change: Initiatives within Asia for industry group strikes that we work with them, they're already identified and we're going to start developing account plans.
Speaker Change: Big.
Speaker Change: Yeah.
Speaker Change: Cloud providers.
Speaker Change: We're also doing the same thing right, we're off and running.
Speaker Change: One of the big three.
Speaker Change: With Joy.
Speaker Change: Go to market or whatever their particular marketplace partnerships.
So we're excited about kind of the call. The early pipeline right. That's our early pipeline the joint dialogues.
Speaker Change: The proactive nature of it frankly right.
Speaker Change: We're going proactive wage.
<unk> with that let's talk about <unk>.
Speaker Change: <unk> versus like responding to specific situations in rfps and stuff.
Speaker Change: Excellent thanks that helps compression for the year.
Chris Quintero: Thanks, Chris.
Chris Quintero: Your next question for today is from Adam Hotchkiss with Goldman Sachs.
Speaker Change: Great. Thanks, so much for taking the questions I wanted to touch a little bit more on the mid market. You had mentioned that you had some mixed results in the past around.
On the go to market there, but thats a renewed focus can you just talk a little bit more about what needs to happen. There from a success perspective is this product innovation is it changes in go to market is it.
Speaker Change: Being more active with with customers in that that piece of that segment of the market. How would you sort of describe what needs to happen there.
Speaker Change: Sure.
Speaker Change: Yeah. Thanks, Adam good to talk with you.
Speaker Change: So we brought in a new leader.
Speaker Change: Yes.
Speaker Change: Literally.
Speaker Change: About 60 days ago.
Ron mid market and Theres really kind of three.
Three fold view on what we need to do there number one is <unk>.
Speaker Change: Stabilize.
Speaker Change: Sure.
Renewal yield a retention in that base of business if you reflect back on.
Speaker Change: What we've commented on.
Speaker Change: <unk> churn is the long tail here is a totally different motion a different set of challenges.
Speaker Change: And it's not something that we've been.
As effective.
Resolving as we have kind of the larger base of business.
Speaker Change: So number one is.
Speaker Change: Continue to stabilize the level of quote unquote long tail retention business. The new leader we brought in has got a deep experience of doing this.
Speaker Change: In an effective way.
Speaker Change: And so that's job one number two is we have products today.
Debt.
The reason why we created the long tail, because we have products that apply to that market and so what we're doing is we're dedicating sales capacity for new pursuits.
Speaker Change: And very specific targeted products like global trade as you know from the momentum.
Speaker Change: His comment around the new administration in the U S. There's tremendous focus on global trade and that provides a significant opportunity for us to drive what I would characterize as a volume and velocity.
Speaker Change: These are very they're lower asps as you know Adam and.
Speaker Change: And we create volume.
Speaker Change: Transactions through targeted prana.
Speaker Change: Product sales campaigns.
Speaker Change: The other piece is in.
Speaker Change: In logistics with the acquisitions that we've made in the past we had a very strong mid market business.
Speaker Change: And our logistics space and we're creating more focus on dedicated sales capacity there and so if you think about any successful.
Speaker Change: High growth Enterprise software company that does both enterprise and mid market incredibly well and that's we're looking long term at creating this consistent.
Speaker Change: Momentum around kind of our low Asps high volume.
Speaker Change: Segment of the market.
Speaker Change: Yeah.
Speaker Change: Okay, Great. That's really helpful color and then just on the trade policy uncertainty that you mentioned could you just give us maybe a little bit of a.
Speaker Change:
Speaker Change: Any examples of historical precedents around really volatile or or quickly changing environments and what typical customer behavior looks like from enterprise and mid market folks in your deal conversations how does that inform how youre thinking about the opportunity as we head into the new administration.
Speaker Change: Yeah, Yeah. So if you think about.
Speaker Change: I think in the in the <unk>.
Speaker Change: Initial Trump administration when he.
Now tariffs it created obviously the need to anyone who is moving product globally to we can calculate what that means to their cost of managing the <unk>.
Speaker Change: Flow of goods and so.
Speaker Change: And what we've seen.
Speaker Change: Since the election is significant preparation by our large existing clients and several new logos to begin to start to prepare for what's to come and you think about our global trade platform. We have the largest reach of any provider in the market. We cover 200 <unk>.
Speaker Change: 30 countries.
No one else has the ability to do that so we've got the broadest set.
Speaker Change: Capabilities to help clients really assess the impact of what's to come that clearly there's a lot of talk Adam as you know and.
So that's kind of a wait and see what actually happens from a policy perspective, but it is creating a tremendous amount of demand for us in terms of conversations and preparation. That's also helping create new opportunities for professional services as well as clients engage.
Speaker Change: Yes.
Speaker Change: I would just add I'll just add that.
Speaker Change: Because I think you asked about parallel situations right and I think the better.
Speaker Change: Parallel.
In some sense was covered right so colgate disrupted supply chains it led to.
Speaker Change: Years of life.
<unk> related to making supply chain more effective.
Speaker Change: I think the events of kind of global uncertainty being at risk.
Speaker Change: Now.
Speaker Change: Illustrative policy.
Speaker Change: Yes, arent going to be like.
Speaker Change: Yes.
Speaker Change: Like we just had a specific six month window October where supply chain like supply of goods and services work.
Speaker Change: And critical in the survival countries right and so that propagated and events focus on supply chain I think what youre going to see as it.
Speaker Change: That's probably half the response over a longer period right.
Dave: Thanks, Dave.
Speaker Change: A lot of the work.
Speaker Change: Medium term right about changing your supply area of factory production structures and plans all of that leads to.
Speaker Change: Having to reevaluate your supply chain when you're moving.
Speaker Change: 10% of your goods raw materials from one country to another which doesn't happen that way.
Speaker Change: So it happens in a couple of years.
Okay really helpful. Thanks, so much.
Speaker Change: Your next question is from Mark Chapell with loop capital.
Mark Chapell: Alright. Thank you for taking my question Andrew in your prepared remarks.
Speaker Change: As noted that.
Speaker Change: Large deals could you take longer to close.
Speaker Change: Was wondering if you just talk about whether youre seeing sales cycles lengthen from say the prior quarter.
Speaker Change: And also with respect to the slip deals from the August quarter could you just speak to whether any of those deals have since closed.
Speaker Change: Yes, I think both Greg and I talk about this a lot I would say that.
Speaker Change: Yes.
Speaker Change: The length of time closed periods for the larger more transformational deals.
Speaker Change: The lower.
Speaker Change: Lengthened, but similar second any longer it's very similar right, we're still in a pretty.
Speaker Change: Neutral to slightly positive economic environment, and so there is still a bias.
Speaker Change: Just to spend money on supply chain I think there is just a.
Speaker Change: Yes. It is elevated is important and that always lengthened sales cycle rate as something gets to this exact level CEO level, then theres more people and decision process.
Speaker Change: It was just <unk>.
Speaker Change: Decision made by <unk>.
Speaker Change: What was the second question again, sorry second half of the question.
Speaker Change: With respect to the slipped deals in the August quarter could you just talk about if any of those deals have since closed.
Speaker Change: Yeah.
Speaker Change: Look we've had I can I'm very familiar with the split of the deal data and analytics for the last three quarters I don't have in front of me the August.
Speaker Change: So the Q3, but our close rate.
Speaker Change: Slipped deals is a very strong multiples.
Multiples of our conversion of our average deal. So we've as we've looked at Q1 Q2.
Speaker Change: I haven't looked in Q3 for about a month, but we're talking well above our average conversion rate most of.
Speaker Change: Close how about that.
And so.
Speaker Change: It's a very high once it gets to that point, where we call it a slipped deal.
Speaker Change: In most cases, it's just timing.
Speaker Change: I am working out one specifically that just.
Speaker Change: Yes.
Speaker Change: There were enough decision makers and the client that they just delay the decision and then it goes into Christmas.
Speaker Change: And that particular industry.
Speaker Change: This is a busy time and here we are back in January and we're relatively close to.
Speaker Change: Closing it and send it to a large deal.
Speaker Change: Great. Thanks, and then.
Speaker Change: Macro science out there that suggests the domestic trucking market may be bottoming after a long trucking.
Speaker Change: Trucking recession.
Speaker Change: Can you just talk about some of the demand trends that youre seeing in your in your Tms in your parcel delivery businesses.
Speaker Change: Yeah. Thanks for the question Mark and good to talk with you in 2025 I think thats.
Speaker Change: And an astute observation and we're seeing that.
Speaker Change: And as you reflect back on kind of the structure of our company you know we've had.
Speaker Change: Yes.
As a percentage of our revenue that is volumetric based.
Speaker Change: And.
Speaker Change: Clearly that had been under pressure.
Speaker Change: As a result of what you are.
Speaker Change: Referring to we'd stabilize that part of the business and we're starting to see growth.
Speaker Change: And in addition to that if you think if you reflect back on the last two quarters. Some of the specific wins I've highlighted have been in this space and so we are absolutely seeing.
Speaker Change: More demand.
Speaker Change: Companies to better optimize the logistics.
Speaker Change: And use it.
Speaker Change: The increase in demand on their side.
Speaker Change: To create more efficiencies.
Speaker Change: The unique offering that we provide in terms of the broad capabilities to be able to provide the tms capability with a last mile delivery capability.
Speaker Change: And the services.
Speaker Change: Capability along with visibility.
Speaker Change: And overall collaborations has been incredibly compelling and unique in the marketplace.
Speaker Change: Why we're starting to see more big wins in that space.
Speaker Change: And certainly our pipeline as it was positively impacted by it as well.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: I'd add.
Greg Murray: And then Greg correct me, if I'm wrong, but I think in times of volatile pricing, which is what's been going on in the trucking market.
Speaker Change: Yes.
Speaker Change: Kind of.
Speaker Change: Kind of model of gay.
Speaker Change: Carrier shipper centric right.
It is quite valuable right and so theres more call it.
Speaker Change: Opportunity.
Speaker Change: To run an efficient and effective shipped.
Shipping function.
Speaker Change: So yes.
Speaker Change: And those periods of high pricing volatility, we see more demand for advice and services and software.
Speaker Change: Because we're actually we're not tied to it.
Speaker Change: Again.
Speaker Change: And that part of the business, we're not tied to the volume or the price tag to providing the best.
Speaker Change: Solution for each.
Speaker Change: Chip.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: We have reached the end of our question and answer session and I will now turn the call over to Andrew upheld for closing remarks.
Speaker Change: We just want to.
Speaker Change: I think one say thank you for taking the time with US morning, a big shout out to the team at <unk> to open.
Speaker Change: Continues to work extremely hard on a variety of things that we have.
Speaker Change: Our new leadership team and the leadership teams have a tendency to create a lot of new initiatives. So we have people simultaneously focusing on retention significantly new material retention processes, while at the same time all of them are catalog bookings.
Speaker Change: And so.
Speaker Change: But we're.
Speaker Change: Yes.
Speaker Change: Excited about our progress.
Speaker Change: The thing is ever fast enough as a CEO, so we'd love it to be happening faster, but.
Speaker Change: But we feel like.
Speaker Change: Across the.
Speaker Change: Across the spectrum of initiatives, particularly this year. This past year has been around operating priorities.
Speaker Change: Next year is going to be around.
Speaker Change: Best Medicine strategic priorities and we're Super excited.
And Raj its joining us who has a lot of deep experience and kind of.
Speaker Change: <unk> product development.
Speaker Change: That powers.
Speaker Change: Is now our chief strategy officer is going to help us set our direction. So the combination of the two is going to be really powerful.
Speaker Change: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.