What if they gave an earnings call and nobody came?
That was the odd situation that occurred Thursday on what is likely to be the final quarterly earnings call of supply chain software provider E2open, which has agreed to be acquired by Australia’s WiseTech Global.
With the company’s publicly-traded stock set to disappear when the transaction closes–which is projected to be by the end of the year–the price of E2open (NYSE: ETWO) shares have been stuck just below the transaction price of $3.30 since the deal was announced in late May.
Analysts stay away
With management stating up front it was not going to hold an open question and answer session on the earnings call, analysts who might have attended the likely swan song chose to stay away. A transcript of the call showed none having checked in.
And with the sale price of the stock set, there was no market reaction to the company’s announcement of earnings for fiscal 2026’s first quarter ended May 31.
E2open’s stock had fallen as low as $1.75 on April 4, several weeks before the WiseTechnology acquisition was announced. It had rebounded to about $2.55 the day before the deal was disclosed.
E2open will end its time as a publicly-traded company just about five years after going public through a Special Purpose Acquisition Company (SPAC). The initial value of the company in the SPAC was $2.57 billion. Even after the boost in the stock price from the WiseTech acquisition, its market capitalization is now near $1.1 billion. In June 2021, its stock briefly exceeded $14 per share.
Past problems led to CEO dismissal
The company’s woes led to the dismissal of CEO Michael Farlekas in October 2023. He was replaced on an interim basis by software executive Andrew Appel, who then became permanent CEO in February 2024.
Company earnings announced Thursday in conjunction with the earnings call showed that despite numerous pledges by management to turn around a sluggish performance, E2open in the quarter turned in financial numbers that weren’t that much different than in the corresponding quarter a year ago.
Mostly flat numbers
GAAP subscription revenue for the quarter was $132.9 million, which was up just 1.1% from the corresponding quarter a year earlier. However, the company said the revenue was above the high end of earlier guidance it had provided, which was $129 million to $132 million.
Total GAAP revenue was $152.6 million, up just 1% from a year earlier. GAAP gross profit was up 1.3% from a year ago, but non-GAAP gross profit at $102.4 million was down 0.2% from 2024’s fiscal first quarter.
The GAAP gross margin of 48.2% was barely higher than the 48.1% number from a year earlier.
There was improvement in several measures of profitability. The GAAP net loss for the quarter was $15.5 million, compared to a net loss of $42.8 million a year earlier. Adjusted EBITDA of $52.2 million was up 3% from a year earlier. The adjusted EBITDA margin of 24.3% was 60 basis points better than in the corresponding quarter 12 months ago.
On the earnings call, Appel accentuated several positives. The year-over-year growth in subscription revenue was the first since the middle of fiscal 2024. That comparison, he said, is “direct evidence of the progress we have made.”
“We have succeeded in stabilizing our business and putting it back on a growth trajectory,” the CEO said.
Client retention has “significantly improved,” Appel said. The company’s software offerings as well as its methods for delivering them to market have undergone “notable enhancements,” he added.
On the call, CFO Marj Armstrong said the subscription revenue growth was “driven by progress on retention and bookings in the second half of FY ’25, which has continued in early FY ’26.”
“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,” Appel said.
Appel noted that the core activity at WiseTech has been in international freight forwarding, “and the breakthrough success they have achieved in those areas is well known throughout the industry.”
“By combining with E2open, WiseTech will extend its traditional focus to include our company’s broad supply chain suite of planning, channel and supply applications. and also add highly complementary capabilities in adjacent areas of domestic logistics, carrier integration and global trade,” Appel said.
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