E2open Parent Holdings, Inc.

Greetings. Welcome to the E2 Open Fiscal First Quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A 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 Buell. You may begin.

Good afternoon, everyone. At this time, I would like to welcome you all to the E2 Open Fiscal First Quarter 2025 Earnings Conference Call. I am Dusty Buell, Head of Investor Relations here at E2 Open. Today's call will include recorded comments from our 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 and transcript of this call will be available on the company's Investor Relations website at investors.e2open.com. Information to access this 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 second quarter and full year 2025. These forward-looking statements are subject to known and unknown risks and uncertainties. C2 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. 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-gap-to-gap 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 CEO, Andrew Appel.

Thank you, Dusty, and thanks to everyone for joining today's call. I'll begin with my thoughts on our key accomplishments during the first quarter and what they mean for e2open moving forward. I will then ask Greg to update you on our commercial highlights. And finally, Marie will review our fiscal first quarter results and provide some commentary on our FY25Q2 and our full year outlook. Then we will open up the call for questions. I'd like to reiterate the key factors that make me so optimistic about E2Open's potential for strong, sustainable growth. First, for companies to achieve predictable outcomes in today's volatile global environment, they need visibility into all aspects of their supply chains and the ability to orchestrate a complex web of external supply-related activities and relationships. E2 opens comprehensive software management platform combining networks, data, and applications is purpose-built for today's most complex supply chain challenges. Our network-centric, AI-enabled suite of applications provides a unified set of digital tools for managing and optimizing the end-to-end supply chain from production to delivery. Our highly differentiated products with years of proven functionality make Eat2Open unique in our industry. And this positions us very well to capture a very attractive and fast-growing market opportunity. And second, we enjoy the distinction of having as our clients many of the world's largest and best-known companies. And our software is deeply embedded across these clients' value chains and provides them with enduring, measurable value. Our close partnership with these clients not only validates the mission-critical functionality of our platform, it also provides a large, readily accessible source of white space growth opportunities. If we consistently delight our clients and ensure they receive full value from our relationship and products, then we will enjoy a strong tailwind of cross-sell growth as clients digitize more and more of their supply chain activities. During Q1 FY25, E2 Open continued to execute our plan to reposition the company for sustainable organic growth by emphasizing client centricity, selling differentiated solutions, delivering those solutions in ways that exceed client expectations, and ensuring clients subsequently receive the distinctive value they expect when they purchase the products. I'm pleased to share that we've made notable progress against these objectives that are critical for the company's future growth. And while our Q1 revenue results do not yet reflect this material change in focus, During the quarter, we saw solid evidence that a well-managed, proactive approach to delighting clients will bring E2Open back to solid growth in short order. As I have noted previously, one of my top priorities as CEO has been to improve E2Open's client satisfaction and delivery in order to restore our retention metrics to the high levels that the company enjoyed prior to 2024. I have previously described the successful work we've done around diagnosing the root causes of churn, as well as the discipline internal management cadence we've put in place around renewals and retention. We have implemented repeatable processes to manage every material renewal on an account by account basis, We have introduced new tools such as a risk prediction algorithm to monitor the application's performance and client usage, among other things, which provides us real-time insights into the key indicators of client satisfaction and retention risk. And supporting this management process is a fundamentally new corporate-wide mindset. We are now approaching every renewal as an opportunity to strengthen and expand our important client relationships by finding new ways to work together and new sources of deliverable value for the client. I am pleased to report that in Q1, we executed this client-centric account-by-account approach very consistently and effectively. Overall, we came in ahead of our internal ARR retention targets for the quarter by a meaningful margin and experienced no significant downside surprises. This strong performance included securing several renewals with a number of strategic accounts and laying the foundation for significant year-over-year improvement with our long tail of small clients. Moreover, looking forward, we have clear line of sight into achieving a material sequential improvement in Q2 churn followed by even larger reductions in the second half of the year and into next year. I am confident in this forward-looking view because we have reviewed every renewal over a specific ARR threshold scheduled through the first half of FY26 and individually assessed and scored the renewal risk of each client. For any piece of business assessed to be at risk at all, we are actively engaged with the client on mutually beneficial ways to retain them. This highly disciplined evaluation process is now part of E2Open's standard operating cadence, as we will regularly review a rolling forward schedule of 24 months of renewals to ensure client satisfaction and early renewals. And while we still have work to do to fully execute on our FY25 churn reduction targets, we have turned the corner on our retention challenges. And I am proud of the efforts of so many E2Open colleagues that made this possible. Based on these positive Q1 developments, I am confident that the first quarter represented our peak quarterly level of churn and that by the beginning of next fiscal year, we will return to a baseline run rate that is much more in line with E2 Open's normal historical levels. Given the negative impact that this issue has had on our financial performance over the last six quarters, Putting it behind us is a major milestone and will provide tailwind for revenue growth as we move forward. Moreover, now that we have a disciplined approach to retention management in place and our metrics are moving in the right direction, I look forward to allocating more of my time to growth-related activities such as strategic client development, pipeline expansion, and bookings. I also want to provide a few comments on some other aspects of our Q1 performance, which Greg and Marie will discuss in more detail. Our subscription revenue results for the quarter were relatively solid, but delays in the timing of deal closures prevented us from delivering upside. Although we entered the quarter with a significant pipeline of late-stage deals scheduled for Q1 close, Some large deals ended up slipping out of the quarter due to delays in client-specific decision and approval processes. We have already made significant progress in June in closing those delayed deals. So from a year-to-date bookings perspective, we are quickly getting caught up with our internal plan and remain on track for our full-year targets. While our quarterly results can sometimes vary due to deal timing, the client-centric changes we have made at E2Open are gaining traction and yielding positive results. Having already largely made up for the timing shortfalls we experienced in Q1, we are well-positioned to accelerate bookings as we move through the year and finish FY25 at a material higher growth rate, and as importantly, with a much more strongly committed base of clients. In our professional services business, after entering Q1 with a healthy backlog, we chose to accelerate some unbilled professional services work into the quarter. Although this required us to redirect some resources away from working through existing backlog, which delayed some PS revenue into the future, we expect PS revenues to normalize in subsequent quarters as we rebalance PS activity toward billable work. Moreover, and importantly, these Q1 client investments were the right trade-off to make. Under our new leadership, our PS organization is now focused on delivering improvements in client satisfaction and value realization that are ultimately key to turning our clients into strong net promoters of E2Open and generating sustainable growth. And we know that clients with high satisfaction are the best prospects for us to sell in new high-value solutions. The best reference for a client is the client itself. With our best-in-class portfolio of solutions and high interoperability, I am confident the investments we make now to ensure clients get value from their existing solutions will pay out in dividends as they look for future evolutions of their supply chain software. Before I turn the call over to Greg, I would like to make two additional comments. First, I want to express my sincere thanks to all of my E2Open colleagues for their many contributions to putting our company back on a growth path, and also to our management team for all their work and support on the strategic review, while also running our great business and building a strong future for the company. And second, I want to comment on the strategic review that E2Open announced in March. The review is progressing, and while we will not be taking questions on the review today, we are fully engaged in the process and anticipate its completion in the near future. We look forward to sharing the outcome of the review with our customers, employees, and shareholders as soon as appropriate. With that, I will now ask Greg to provide an update on our go-to-market activities.