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E2open Announces Second Quarter of Fiscal Year 2014 Results

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E2open Announces Second Quarter of Fiscal Year 2014 Results E2open, Inc. (EOPN), a leading provider of strategic, cloud-based software solutions for collaborative planning and execution across global trading networks, today announced financial results for the quarter ended August 31, 2013.

Mark Woodward, E2open's President and CEO, said, “We showed strong growth once again in our non-GAAP subscriptions and support revenue during the second quarter. We were also pleased to have completed the acquisition of ICON-SCM (ICON), a market leader in supply chain planning and collaboration, which expands our market opportunity substantially. In addition, we continue to make significant progress with our partner enablement efforts. We remain uniquely positioned in the collaborative planning and execution market, which is still in the early stages of its growth.”

Second Quarter Financial Highlights:

  • GAAP Revenue: Total GAAP revenue was $18.0 million for the second quarter of fiscal 2014; subscriptions and support revenue was $13.4 million, and professional services revenue was $4.6 million.
  • Non-GAAP Revenue: Non-GAAP revenue for the second quarter of fiscal 2014 includes $0.5 million from the impact of a previous contract amendment that accelerated revenue from future periods to the second quarter of fiscal 2013, and $0.1 million from the impact of a purchase accounting adjustment to deferred revenue in connection with the ICON acquisition in the second quarter of fiscal 2014. Total non-GAAP revenue was $18.6 million, an increase of 1% compared to $18.4 million for the second quarter of fiscal 2013 and an increase of 15% compared to $16.1 million for the first quarter of fiscal 2014. Subscriptions and support revenue was $13.6 million, an increase of 30% compared to $10.4 million for the second quarter of fiscal 2013 and an increase of 10% compared to $12.4 million for the first quarter of fiscal 2014. Professional services revenue was $5.0 million, a decrease of 37% compared to $7.9 million for the second quarter of fiscal 2013 and an increase of 34% compared to $3.7 million for the first quarter of fiscal 2014.
  • GAAP Income (Loss) from Operations: GAAP income (loss) from operations was ($5.9) million compared to $4.8 million for the second quarter of fiscal 2013 and ($5.4) million for the first quarter of fiscal 2014.
  • Non-GAAP Income (Loss) from Operations: Non-GAAP income (loss) from operations was ($2.8) million compared to $0.7 million for the second quarter of fiscal 2013 and ($4.1) million for the first quarter of fiscal 2014.
  • GAAP Net Income (Loss): GAAP net income (loss) was ($5.9) million compared to $4.6 million for the second quarter of fiscal 2013 and ($5.4) million for the first quarter of fiscal 2014. GAAP net income (loss) per share was ($0.23), based on 26.0 million weighted-average shares outstanding, compared to $0.19 per share, based on 24.4 million weighted-average shares outstanding, for the second quarter of fiscal 2013 and ($0.21) per share, based on 25.6 million weighted-average shares outstanding, for the first quarter of fiscal 2014.
  • Non-GAAP Net Income (Loss): Non-GAAP net income (loss) was ($2.8) million compared to $0.5 million for the second quarter of fiscal 2013 and ($4.0) million for the first quarter of fiscal 2014. Non-GAAP net loss per share was ($0.10), based on 27.5 million weighted-average shares outstanding, compared to $0.02, based on 24.4 million weighted-average shares outstanding, for the second quarter of fiscal 2013 and ($0.15), based on 27.2 million weighted-average shares outstanding, for the first quarter of fiscal 2014.
  • Adjusted EBITDA: Adjusted EBITDA was ($2.3) million compared to $1.1 million for the second quarter of fiscal 2013 and ($3.6) million for the first quarter of fiscal 2014.
  • Cash Flow: Cash flow from operations was ($4.1) million and free cash flow was ($3.9) million after deducting $0.0 million of capital expenditures and adding back acquisition-related expenses of $0.2 million. This compares to cash flow from operations of ($5.6) million and free cash flow of ($6.0) million after deducting $0.4 million of capital expenditures for the second quarter of fiscal 2013.
  • Balance sheet: Cash and investments was $21.6 million, a decrease of $22.4 million compared to $44.0 million at the end of the first quarter of fiscal 2014, owing primarily to the use of cash in the acquisition of ICON.

Second Quarter & Recent Business Highlights:

  • Acquired ICON, a market leader in supply chain planning and collaboration.
  • Added 21 new customers (including 18 from ICON) during the quarter and expanded our relationship with several other customers.
  • Ended the quarter with 101 customers, 37,048 unique registered trading partners, and 117,212 unique registered users on the E2open network.
  • Named as one of the 100 Great Supply Chain Partners for 2013 by SupplyChainBrain in their 11th annual survey.
  • Appointed Michael Linder as Vice President and General Manager for EMEA.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below, under the heading “Non-GAAP Financial Measures.”

Guidance:

As of October 10, 2013, E2open is providing guidance for its third quarter of fiscal 2014 as well as the full fiscal year 2014.

  • Third Quarter Fiscal 2014 Guidance: Total GAAP revenue is expected to be in the range of $17.4 million to $17.9 million. Non-GAAP revenue is expected to be in the range of $18.1 million to $18.6 million, which includes a $0.7 million impact to revenue, due to the aforementioned acceleration of revenue in the second quarter of fiscal 2013 in connection with a contract amendment and the impact of a purchase accounting adjustment to deferred revenue acquired in the second quarter of fiscal 2014. Within total non-GAAP revenue, we expect subscriptions and support revenue of $14.3 million to $14.5 million and professional services revenue of $3.8 million to $4.1 million. Non-GAAP loss from operations is expected to be in the range of ($5.5) million to ($5.0) million. Non-GAAP loss per share is expected to be in the range of ($0.21) to ($0.18) based on approximately 27.9 million weighted-average shares outstanding. Adjusted EBITDA is expected to be in the range of ($4.9) million to ($4.4) million.
  • Full Year Fiscal 2014 Guidance: Total GAAP revenue is expected to be in the range of $70.9 million to $71.9 million, including a $2.4 million impact to revenue, due to the aforementioned acceleration of revenue in the second quarter of fiscal 2013 in connection with a contract amendment and the impact of a purchase accounting adjustment to deferred revenue acquired in the second quarter of fiscal 2014. Excluding the aforementioned contract amendment and the purchase accounting adjustment to deferred revenue, total non-GAAP revenue is expected to be in the range of $73.2 million to $74.2 million. Within total non-GAAP revenue, we expect subscriptions and support revenue of $56.7 million to $57.1 million and professional services revenue of $16.5 million to $17.1 million. Non-GAAP loss from operations is expected to be in the range of ($15.2) million to ($14.2) million. Non-GAAP loss per share is expected to be in the range of ($0.57) to ($0.53) based on approximately 27.7 million weighted-average shares outstanding. Adjusted EBITDA is expected to be in the range of ($13.1) million to ($12.1) million. Free cash flow is expected to be in the range of ($12.6) million to ($11.6) million. New and upsell bookings are expected to be roughly $91.5 million, representing growth of approximately 30% compared to fiscal 2013.

With respect to the Company's expectations under “Guidance” above, the Company has not reconciled non-GAAP loss from operations or non-GAAP loss per share to GAAP income (loss) from operations and GAAP income (loss) per share because these items are out of the Company's control and/or cannot be reasonably predicted.

Conference Call Details:

  • What: E2open financial results for the second quarter of fiscal 2014 and outlook for the third quarter of fiscal 2014 and the full year of fiscal 2014
  • When: Thursday, October 10, 2013 at 2PM PT (5PM ET)
  • Dial in: To access the call in the U.S., please dial (877) 407-3982, and for international callers dial (201) 493-6780. Callers may provide confirmation number 10000251 to access the call more quickly, and are encouraged to dial into the call 10 to 15 minutes prior to the start to prevent any delay in joining.
  • Webcast: http://investor.e2open.com/ (live and replay)
  • Replay: A replay of the call will be available via telephone for seven days, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial (877) 870-5176, and for international callers dial (858) 384-5517 and enter access code 10000251.

About E2open

E2open is a leading provider of cloud-based, on-demand software solutions enabling enterprises to procure, manufacture, sell, and distribute products more efficiently through collaborative planning and execution across global trading networks. Enterprises use E2open solutions to gain visibility into and control over their trading networks through the real-time information, integrated business processes, and advanced analytics that E2open provides. E2open customers include Celestica, Cisco, HGST, IBM, Lenovo, L'Oréal, LSI, Motorola Solutions, Seagate, and Vodafone. E2open is headquartered in Foster City, California with operations worldwide.

“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements about expected GAAP revenue, non-GAAP revenue, non-GAAP income (loss) from operations, non-GAAP income (loss) per share, and adjusted EBITDA for the third quarter of fiscal 2014 and the full fiscal year, and free cash flow and new and upsell bookings for the full fiscal year. These forward-looking statements include the statements that relate to ICON expanding our market opportunity substantially, the significant progress we are making with our partner-enablement efforts, and E2open being uniquely positioned in our market which is still in the early stages of growth. The achievement or success of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove incorrect, the Company's results could differ materially from the results expressed or implied by the forward-looking statements we make.

The risks and uncertainties referred to above include, but are not limited to, risks associated with the Company's growth strategy; the Company's plans for future products; the Company's operating results; the Company's ability to anticipate future market demands and future needs of its customers; the Company's customer concentration; the Company's ability to effectively manage its growth; the Company's expectations regarding its use of proceeds from its initial public offering; the Company's expectations regarding expenses, sales and operations; anticipated trends and challenges in the markets in which the Company operates; the Company's competition; the Company's ability to successfully enter new markets and manage its international expansion; the Company's ability to integrate the ICON acquisition; and the Company's intellectual property.

Further information on these and other factors that could affect the Company's financial results is included in the filings made with the Securities and Exchange Commission, including the Company's annual report on Form 10-K and the Company's quarterly report on Form 10-Q. These documents are available on the SEC Filings section of the Investor Relations section of the Company's website at: investor.e2open.com.

E2open, Inc. assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

Non-GAAP Financial Measures

Our reported results include certain non-GAAP financial measures, including bookings, non-GAAP revenue, non-GAAP income (loss) from operations, non-GAAP net income (loss), weighted-average shares outstanding, non-GAAP net income (loss) per share, adjusted EBITDA, and free cash flow. Bookings represent the full value of customer orders or contracts signed during a reporting period. Non-GAAP income (loss) from operations and non-GAAP net income (loss) exclude expenses related to stock-based compensation expense, amortization of acquired intangibles, acquisition-related expenses, and noncash income taxes, as they are often excluded by other companies to help investors understand the operational performance of their business and, in the case of stock-based compensation, can be difficult to predict. In addition, stock-based compensation expense varies from period to period and company to company due to such things as differing valuation methodologies and changes in stock price. Non-GAAP revenue, non-GAAP income (loss) from operations and non-GAAP net income (loss) also exclude the impact of certain accelerated revenue recognized in connection with a contract amendment in the second quarter of fiscal 2013 and the impact of a purchase accounting adjustment to deferred revenue acquired in the second quarter of fiscal 2014. Adjusted EBITDA is defined as net income (loss), adjusted for accelerated revenue from a contract amendment, the impact of a purchase accounting adjustment to deferred revenue, depreciation and amortization, stock-based compensation expense, interest and other expense, net, provision for income taxes, amortization of acquired intangibles, and acquisition-related expenses. Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures, which consist of purchases of property, equipment and software, and excluding acquisition-related expenses. Reconciliation tables are provided in this press release. Management believes that the use of non-GAAP financial measures provides consistency and comparability with our past financial performance, facilitates period to period comparisons of results of operations, and also facilitates comparisons with other peer companies, many of which use similar non-GAAP financial measures to supplement their GAAP results. Non-GAAP results are presented for supplemental informational purposes only for understanding our operating results. The non-GAAP results should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.

E2open, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
                         
Three Months Ended Six Months Ended
August 31,

2013

May 31,

2013

August 31,

2012

August 31,

2013

August 31,

2012

Revenue
Subscriptions and support $ 13,433 $ 12,292 $ 11,131 $ 25,725 $ 20,945
Professional services and other   4,579     3,307     11,760     7,886     17,419  
Total revenue 18,012 15,599 22,891 33,611 38,364
 
Cost of revenue
Subscriptions and support (1) 2,645 2,528 1,998 5,173 4,037
Professional services and other (1) 4,486 4,057 3,664 8,543 7,317
Amortization of acquired intangibles   58     -     -     58     -  
Total cost of revenue 7,189 6,585 5,662 13,774 11,354
 
Gross profit
Subscriptions and support 10,788 9,764 9,133 20,552 16,908
Professional services and other 93 (750 ) 8,096 (657 ) 10,102
Amortization of acquired intangibles   (58 )   -     -     (58 )   -  
Total gross profit 10,823 9,014 17,229 19,837 27,010
 
Gross margin
Subscriptions and support 80 % 79 % 82 % 80 % 81 %
Professional services and other   2 %   -23 %   69 %   -8 %   58 %
Total gross margin 60 % 58 % 75 % 59 % 70 %
 
Operating expenses
Research and development (1) 4,533 4,073 3,557 8,606 7,649
Sales and marketing (1) 8,752 7,899 6,628 16,651 12,775
General and administrative (1) 2,641 2,448 2,277 5,089 4,059
Acquisition-related expenses 791 - - 791 -
Amortization of acquired intangibles   25     -     -     25     -  
Total operating expenses   16,742     14,420     12,462     31,162     24,483  
Income (loss) from operations (5,919 ) (5,406 ) 4,767 (11,325 ) 2,527
 
Interest and other expense, net   31     51     (169 )   82     (264 )
Income (loss) before income taxes (5,888 ) (5,355 ) 4,598 (11,243 ) 2,263
 
Income tax provision   (35 )   (39 )   (32 )   (74 )   (75 BUSINESS WIRE ©2014 Business Wire

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