Why Connected Supply Chain Software Platform E2open Shares Are Higher Today

E2open Parent Holdings Inc ETWO shares are rising by around 11% after the company reported Q3 FY24 results.

Revenue declined 4.5% Y/Y to $157.5 million, beating the consensus of $154.3 million. GAAP subscription revenue fell 1.5% Y/Y to $132.8 million in the quarter.

Adjusted gross profit declined 3.4% Y/Y to $109.7 million, with a margin of 69.6% vs. 68.9% a year ago.

Adjusted EBITDA decreased 1.4% Y/Y to $55.4 million, with margins of 35.1% (vs. 34.1% prior year).

Adjusted EPS of $0.04 was in line with the consensus.

Year-to-date, adjusted operating cash flow, exclusive of non-recurring expenses, stood at $79.0 million.

As of November 30, 2023, cash and cash equivalent stood at ~$130 million.

Outlook: For FY24, the company tweaked its guidance for revenue to $628 million to $633 million (from $625 million to $635 million) vs consensus $629.53 million, reflecting a decrease of 3.3% year-over-year decrease at the mid-point.

ETWO now expects subscription revenue to be $533 million to $536 million (from $530 million to $538 million), reflecting organic growth of 0.3% at the mid-point.

For FY24, ETWO projects adjusted gross margin of 68%-70% and adjusted EBITDA of $215 million-$220 million, reflecting an implied margin of 34% to 35%.

For Q4, the company expects subscription revenue of $131 million-$134 million, reflecting a 3.2% Y/Y decrease at the mid-point.

Marje Armstrong, chief financial officer, said, "Although we still have work to do to transform our go-to-market and client engagement model, and conditions in some end-markets remain uncertain, our improved third quarter execution gives us confidence in the steps we are taking to re-accelerate e2open's growth."

Price Action: ETWO shares are up 11.2% to $4.27 premarket on the last check Wednesday.