Loop Capital has maintained its Hold rating and $4.00 price target for E2open Parent Holdings (NYSE: ETWO).
The firm's analysis follows E2open's recent earnings report, which presented mixed results. Subscription revenue reached $131 million and Adjusted EBITDA came in at $55 million, figures that were consistent with Loop Capital's expectations. However, the company fell short of total revenue projections by $4 million.
E2open has also adjusted its total revenue forecast for FY25 downward by $26 million from previous estimates. This revision is a response to continued challenges in bookings and professional services, which have been persistent headwinds for the company.
Despite these setbacks, E2open's management has expressed optimism about improving retention rates and efforts to revitalize the sales structure.
The current outlook for E2open suggests that the near future may not bring significant changes. The company has experienced difficulties in consecutive quarters, and according to Loop Capital, E2open is only one year into what is expected to be a multi-year rebuilding process. With this in mind, the firm anticipates that the upcoming quarters may not show substantial progress.
Loop Capital's reiterated Hold rating indicates a cautious stance on E2open's stock, reflecting the firm's view that while the company's performance could potentially improve as FY25 progresses, the immediate quarters ahead may not yield encouraging results.
In other recent news, E2open, the cloud-based supply chain software solutions provider, reported its Q2 earnings for fiscal year 2025. Despite a slight decline in subscription revenue year-over-year to $131.6 million, the company saw an increase in quarterly subscription bookings. Total revenue was down 4% at $152.2 million, with professional services revenue falling by 13.1% to $20.6 million. However, E2open is optimistic about returning to a double-digit growth trajectory in the long term.
In terms of future expectations, E2open's management anticipates an improvement in services revenue in the second half of FY 2025. They also project Q3 subscription revenue to be between $130 million and $133 million, with full-year guidance revised to $526 million to $532 million. The company expects to maintain a gross profit margin of 68% to 70% and generate strong positive adjusted operating cash flow.
E2open's management is confident in their strategy and anticipates net booking and revenue growth as retention improves and bookings rise.
InvestingPro Insights
E2open Parent Holdings' (NYSE:ETWO) financial landscape, as revealed by InvestingPro data, aligns with Loop Capital's cautious outlook. The company's market capitalization stands at $1.38 billion, reflecting its current market valuation. E2open's revenue for the last twelve months as of Q1 2023 was $625.6 million, with a concerning revenue growth decline of -4.04% over the same period. This negative growth trend supports Loop Capital's observation of persistent headwinds in bookings and professional services.
InvestingPro Tips highlight that E2open has not been profitable over the last twelve months, which is consistent with the company's reported challenges. However, analysts predict that the company will be profitable this year, suggesting potential for improvement in line with management's optimistic outlook on retention rates and sales structure revitalization.
It's worth noting that E2open does not pay a dividend to shareholders, which may be a consideration for income-focused investors. For those seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of E2open's financial position and future prospects.
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