Q1 2026 E2open Parent Holdings Inc Earnings Call
Greetings and welcome to the two open first quarter fiscal year 2026 earnings call. At this time all participants are in a listen only mode. Please note. This conference is being recorded I will now turn the conference over to your host Russell Johnson.
Speaker Change: Head of Investor Relations you may begin.
Speaker Change: Good afternoon, everyone and welcome to the East you opened fiscal first quarter and full year 2026 earnings conference call.
Andrew upheld: Today's call will include recorded comments from our Chief Executive Officer, Andrew upheld and our Chief Financial Officer Marie Armstrong.
Andrew upheld: Due to eat you opened pending acquisition by widespread global as announced on May 22025, we will not conduct a live Q&A session. After today's call or participate in individual post call discussions with analysts and investors in.
Andrew upheld: In addition, we will not continue our past practice of providing quarterly guidance.
Andrew upheld: We will however review our full year fiscal 2026 guidance.
Andrew upheld: A replay and transcript of today's call will be available on the company's Investor Relations website at investors Dot <unk> Dot com.
Andrew upheld: Information to access. This replay is listed in today's press release, which is also available on our Investor Relations website.
Andrew upheld: 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 full year fiscal 2026, and our pending acquisition by <unk> Global.
Andrew upheld: These forward looking statements are subject to known and unknown risks and uncertainties.
Andrew upheld: <unk> cautions that these statements are not guarantees of future performance. We encourage you to review our most recent reports filed with the SEC, 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.
Andrew upheld: And finally, we're not obligating ourselves to revise our results or these forward looking statements in light of new information or future events.
Andrew upheld: Also during today's call, we will 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 don't need to open dot com and with that we'll begin by.
Andrew upheld: Turning the call over to our CEO Andrew upheld.
Speaker Change: Thank you Russell and thanks to everyone for joining today's call.
Speaker Change: I'll begin with some retrospective thoughts on what I see as the key accomplishments of our age who opened team since I assumed the role of permanent CEO about a year and a half ago.
Speaker Change: I'll also share my perspective on the exciting new opportunities for our customers and employees presented by our company's pending acquisition by Y Tec as announced in May.
Speaker Change: I'll then ask Mary to review, our Q1, FY 'twenty six results and our full year FY 'twenty six guidance.
Speaker Change: Over the last year and a half our primary focus at E. Two open has been to put in place the operational and cultural foundation needed for each open a return to organic growth.
Speaker Change: At the core of these efforts was the simple, but powerful principal underlining the performance of all great companies that the lighting your customers and ensuring they receive distinctive value from using your products and services is the key to long term growth in a competitive market.
Speaker Change: I'm pleased to say that our fiscal first quarter results in particular, achieving the first year over year growth in subscription revenue since mid FY 'twenty for our direct evidence of the progress we have made.
Speaker Change: So as a focused efforts and singular commitment of our global E. Two open teams across multiple functional areas. We have succeeded in stabilizing our business and putting it back on a growth trajectory.
Speaker Change: Nowhere is this progress more visible than in the area of client retention, where we have significantly improved our performance through better managed brands and by prioritizing longer term client partnerships over short term gains.
Speaker Change: In addition to improved retention. We have also made notable enhancements over the last year and a half in both our software products and then the way in which we bring these products and associated services to market.
Speaker Change: Driven by continued investment in R&D, we have launched exciting new products such as supply network discovery released generative AI driven tools to augment our industry, leading transportation management and global trade solutions and are on track for additional product announcements in the coming months.
Speaker Change: Thanks to this ongoing focus on innovation execution and client satisfaction, our products continue to enjoy strong demand and market acceptance and our new unique software platform remains deeply embedded across the fortune 1000 universe of companies.
Speaker Change: That carry out a large share of global commerce.
Speaker Change: Our software platform performance mission critical supply chain functions, enabling our clients to scale their business and outperform their peers.
Speaker Change: Despite an increasingly volatile and uncertain business environment.
Speaker Change: And I continue to be impressed by the fact that each and every quarter, we win strategic new logo business and expand our high value relationships with meaningful existing customers.
Speaker Change: Our client list is ultimately our most valuable asset and I'm honored to say that so many leading global businesses continue to place their trust in each open to meet their most complex supply chain needs.
Speaker Change: In summary E. Two opens business is now well positioned for the next chapter of our company's evolution.
Speaker Change: As we announced in late May we have agreed to become part of widespread global.
Speaker Change: A company that likes to open is widely recognized as a leader in the fast growing market for supply chain and logistics software.
Speaker Change: I am tremendously excited that these two great companies will be coming together once we have completed the necessary filings and received all the required approvals.
Speaker Change: In many ways each opening wise tech are ideal partners with many common values that will underpin our future collaboration.
Speaker Change: We each bring a long and distinguished track record of serving clients and we share a passion.
Speaker Change: First software innovation that empowers our customers with highly differentiated capabilities.
Speaker Change: Traditionally <unk> wide techs focus has been on international freight forwarding and logistics and the breakthrough success. They have achieved in those areas is well known throughout the industry by combining with <unk> to open Y Tec will extend its traditional focus to include our company's broad supply chain suite of planning channel and supply.
Speaker Change: Patients and.
Speaker Change: I'd also add highly complementary capabilities in adjacent areas of domestic logistics carrier integration in global trade.
Speaker Change: Following the combination the new company will be uniquely positioned to serve a broader array of clients at all points of the value chain from sourcing to manufacturing from order to fulfillment and from supplier through to added customer.
Speaker Change: Ultimately the success of any new business venture will depend on the people behind it and each opens pending combination with <unk> is as much about people as it is about products.
Speaker Change: Based on my many conversations with our counterparts at Wise Tech I am confident they are acquiring leads you opened not only for the highly complementary software application and.
Speaker Change: And network of connected enterprises, but also for our deep base of knowledgeable and highly experienced employees and our uniquely valuable customer base.
Speaker Change: They see immense value across our entire broad product line as well as in the global teams that develop and deliver our solutions and care for our customers.
Speaker Change: They will rely on the expertise of each opens personnel as well as on the continued confidence of commitments of our many leading clients to reach our shared goal of becoming the operating system for global supply chains.
Speaker Change: I am confident that <unk> employees will embrace this new opportunity with the same passion and energy that you've shown for E. Two opens mission.
Speaker Change: Over the last several years.
Speaker Change: Additionally, I want to note that the process of completing the required filings and receiving the U S regulatory approval needed for the acquisition to close is underway and on schedule. We still expect transaction close by the end of this calendar year until then of course, each opening wise Tech will continue to operate as <unk>.
Speaker Change: The companies.
Speaker Change: As we work towards our close our global team remains focused on the things that have made us successful.
Speaker Change: Namely, putting our clients' needs first delivering our software solutions flawlessly and growing our business.
Speaker Change: In closing as we make progress on joining together with wise back at <unk>.
Speaker Change: Want to thank all of the stakeholders, who have helped E. Two open reach this important milestone in our future development.
Speaker Change: Our shareholders.
Speaker Change: Our executive team and of course, and most importantly, our employees and our clients.
Speaker Change: Exciting times for our company and our industry lie ahead, and we look forward to you joining us on this journey.
Andrew: Thank you Andrew.
Speaker Change: Today, I will discuss our fiscal first quarter results and also review our full year FY 'twenty six guidance.
Andrew: Before doing so.
Andrew: I would like to extend my sincere gratitude to our each opening team members around the world.
Andrew: Our unwavering commitment to eat to opens mission of delivering distinctive value to our clients.
Andrew: Your hard work and dedication have truly made a positive difference that resonates across our whole company.
Andrew: Now on to our reported results.
Andrew: Subscription revenue in the fiscal first quarter 2026 was 132 9 million.
Andrew: Above the high end of our $129 million to $132 million guidance.
Andrew: On a year over year basis.
Andrew: <unk> revenue grew one 1% and 0.9% on a constant currency basis.
Andrew: I'll return to subscription revenue growth in the first quarter was driven by progress on retention and bookings in the second half of FY 'twenty five which has continued in early FY 'twenty six.
Andrew: Professional services and other revenue in the fiscal first quarter was $19 7 million.
Andrew: Year over year decline of 0.1%.
Andrew: While we continue to see potential to grow Rps revenue as we move through the fiscal year.
Andrew: Year over year Q1 performance is another positive indication of recent stabilization in that business.
Andrew: Total revenue for the fiscal first quarter was $152 6 million.
Andrew: Reflecting positive growth of 1.0% over the prior year quarter.
Andrew: Turning to gross profit in the fiscal first quarter of 2026, our non-GAAP gross profit was <unk> two 4 million.
Andrew: <unk>, 2% decrease year over year.
Andrew: non-GAAP gross margin was 67, 1% in Q1 versus 67, 8% in the prior year quarter.
Andrew: Lower <unk> gross margin negatively impacted the Q1 consolidated figure, but as we expect margins to improve throughout the year. It will also translate into improved consolidated gross margin performance.
Andrew: Turning to EBITDA, our first quarter adjusted EBITDA was $52 2 million.
Andrew: Is 34, 2% margin.
Andrew: The extra $50 7 million and 33, 6% margin in the prior year quarter.
Andrew: We continue to be mindful of operational efficiency.
Andrew: We focus on repositioning our business for growth.
Andrew: Our opex spend was down year over year due to ongoing cost discipline and non client facing areas and further savings from optimizing our use of offshore R&D resources.
Andrew: Finishing up on profitability net loss for the fiscal first quarter of 2026 was $15 5 million compared to a net loss of $42 8 million from the year ago comparable period.
Andrew: Now turning to slide 26 cash flow adjusted.
Andrew: Adjusted operating cash flow was $48 zero million.
Andrew: In the fiscal first quarter, driven by strong customer collections and our continued focus on managing working capital efficiently.
Andrew: We ended Q1 with $230 2 million of cash an increase of $33 million from the forest water and marking another quarter of very strong performance on cash generation.
Andrew: This completes my remarks on our fiscal Q1 financial results.
Andrew: At this point I will turn to financial guidance for full year FY 'twenty six.
Andrew: We are confirming all aspects of our full year FY 'twenty six guidance previously provided on April 29.
Andrew: 2025.
Andrew: We still expect subscription revenue to be in the range of $525 million to $535 million, representing a year over year growth rate of negative 1.0 deposit at one zero percent.
Andrew: We still expect FY 'twenty six total revenue to be within the range of $600 million to $618 million, representing a year over year growth rate of negative $1 three to positive one 7%.
Andrew: We still expect FY 'twenty six gross profit margin to be within a range of 68 to 68, 5%.
Andrew: We still expect FY 'twenty six of adjusted EBITDA to be within the range of 200 to 210 million, implying an adjusted EBITDA margin of 33% to 34%.
Andrew: Regarding cash flow. We also still expect FY 'twenty six suggested operating cash flow as a percentage of adjusted EBITDA to be roughly in line with FY 'twenty five.
Andrew: Our net leverage ratio to be approximately three eight times at the end of this fiscal year.
Andrew: In conclusion, as we work to close the <unk> transaction.
Andrew: I'll start and exciting new chapter in each opens growths in development, our business is well positioned to be a strong contributor to the success of the combined company.
Andrew: We look forward to partnering with life Tech to bring further innovation to the supply chain industry to create new levels of value for our many clients.
Andrew: And to continue to provide a great place to work for our talented each opening employees.
Andrew: I want to thank everyone for joining us today. This concludes our call.
Andrew: This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.