E2open Parent Holdings, Inc.

Greetings. Welcome to the E2 Open third quarter fiscal year 2024 earnings call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Dusty Beal. You may begin.

Good afternoon, everyone. At this time, I would like to welcome you all to the E2 Open Fiscal Third Quarter 2024 Earnings Conference Call. I am Dusty Buell, Head of Investor Relations here at E2 Open. Today's call will include recorded comments from our Interim Chief Executive Officer, Andrew Appel, our Chief Commercial Officer, Greg Randolph, and our Chief Financial Officer, Marie Armstrong. Following those comments, we'll open the call for a live Q&A session. A replay of this call will be available on the company's investor relations website at investors.e2open.com. Information to access the replay is listed in today's press release, which is also available on our investor relations website. 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 2024. These forward-looking statements are subject to known and unknown risk and uncertainties. E2 open cautions that these statements are not guarantees of future performance. We encourage you to review our most recent reports, including our 10Q 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. And finally, we are 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'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.e2open.com. And with that, we'll begin by turning the call over to our interim CEO, Andrew Appel.

Thank you, Dusty, and thanks to everyone for joining today's call. I'll begin with a high-level review of what I've been focused on since joining E2Open as the interim CEO three months ago. I'll provide my perspective on changes we need to make to put the company back on a sustainable growth path. I'll then ask Greg to update you on the work he is leading to transform our commercial function and improve our sales execution. Finally, Marie will review our third quarter financial results and guidance. And then we'll open up the call for your questions. I'll start my comments with a simple but important note. I believe that E2Open possesses the key ingredients to be a successful, high-performing company that delivers unparalleled value for clients, generates healthy organic growth, and generates attractive shareholder returns. And it can remain an amazing and engaging place for our team members to work. Based on my experience in leading the company for the last three months and being an advisor prior to that, I believe the ingredients that position E2Open for success are the following. First, we have a software portfolio that is unique in its breadth, execution capabilities, and ability to leverage connected networks and data. This strong product offering has made us trusted partners to many of the world's leading companies and has enabled our clients to make step-change improvements in their increasingly complex supply chain. Our connected solutions are recognized by third-party analysts as industry-leading, and they provide a powerful, ready-built foundation for growing our business. Second, the addressable market for E2Open's product is large and growing. As the global business environment grows ever more complex, major brand owners are embracing cloud-based, SaaS-delivered software to make their supply chains more transparent, flexible, and secure. For leading software vendors such as E2Open, this presents a major market opportunity. And finally, I'm very impressed with the people of E2Open. They are the world's supply chain experts with a deep understanding of our clients' operating models and a passion for collaborating to deliver reinvention and impact. But while E2Open has the right ingredients to succeed our growth performance this year, it has been below that of our software peers and far short of our potential. In my view, this stems largely from solvable gaps in how we serve our clients. As we all know, building a scaled company through M&A requires much management time and attention. E2Open's focus on acquisition integration over the last several years distracted us from the company's core mission of delighting clients. and the impact on our growth was significant. So now our task is to re-accelerate growth by moving back to an approach that leverages our client-centric DNA. From my perspective, the first priority is to lower our churn rate back to historical norms. Since the fourth quarter of FY23, we've experienced higher churn that has negatively impacted our revenue. As we have noted previously, the main drivers of this higher churn have been soft high-tech spending, M&A impacts, lower ocean freight volumes, and our long tail of smaller customers. I am closely partnering with Greg to address all aspects of client engagement and satisfaction as part of a broader effort to ensure that we are delighting our customers. Therefore, one of my key objectives is to drive a quote-unquote no-churn mindset across all our customer-facing activities, including sales, professional services, and customer service. and do whatever it takes at all levels to retain existing revenue. Over the past six weeks, I have conducted multiple in-depth, half-day reviews of every situation where there is a risk of churn to the end of FY25. Our visibility into this issue has now greatly improved, and we have action plans in place to turn most of these clients into net promoters of E2Open in short order. In addition to controlling churn, An equally important priority is to win more new business. To do this, we will start by communicating the client impact that our solutions are uniquely capable of delivering. And then follow this up with strong sales execution. I am very confident that in Greg Randolph, we now have the right commercial leader to make this happen. Greg is off to a fast start and has truly energized and refocused our sales organization. And while there is still work to do, I am pleased to say that Greg's first full quarter in the role, we saw encouraging signs of positive momentum and better sales execution. After a soft second quarter, in Q3, our conversion rates improved and we closed a number of large and strategically important subscription software deals. But even beyond what Greg and his team are doing, our approach to driving sustainable higher growth must be a holistic, company-wide effort that will ultimately impact many aspects of how we run our business. For example, whereas the supply chain industry is traditionally marketed solutions based on features and functionality, I believe E2Open has much to gain by quantifying and clearly communicating the unique operational and financial impact that our solutions can drive for clients. Adopting this approach can differentiate us within the industry and improve our competitive position. Even more broadly, we must reorient our core revenue-related activities, including product development, sales engagement, solution implementation, and customer service to focus on the singular goal of delighting our clients. As we invest further in our products, we must ensure this development work aligns tightly with client needs and expectations, and we must pursue Flawless delivery of every solution implementation and service project so that we always meet or exceed our commitments to customers. We have work to do in all these areas, but I am confident that a renewed commitment to client satisfaction in all areas of our business can set off a virtuous circle of growth benefits. It can help reduce churn, and it can facilitate far better execution of our land and expand strategy to drive new cross-sell and up-sell business with our world-class client base. And it can generate more referenceable clients, both companies and individuals, that will serve as powerful advocates for E2Open as we seek to win new logos or expand into white space and existing customers. In sum, my first three months at E2Open have been busy, enlightening, and productive. The observations I've shared with you today are a snapshot of where we stand and where we need to go. But I believe that we are just getting started with leveraging improvement opportunities. And as we further refine our growth strategy and execute on key steps, we look to implement new operating efficiencies wherever possible. Our goal has not changed. We aim to achieve both strong growth as well as high profitability and cash flow. In the meantime, I'm very proud of the way our teams are pulling together and collaborating towards a common goal. And I'm encouraged by the early signs of positive momentum and business performance that we are seeing. Most of all, I am very excited about the clear opportunity we have in front of us to create value for our clients and our shareholders. At this time, I'd like to turn it over to Greg for an update on our go-to-market activities.