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On Thursday, Goldman Sachs maintained a Neutral rating on E2open Parent Holdings (NYSE:ETWO) with a steady price target of $4.00, following the company's second-quarter fiscal year 2025 earnings report.
E2open's subscription revenue exceeded expectations, but total revenue and professional services fell short as prolonged deal cycles continued to affect performance. Additionally, the management revised its full-year guidance downwards due to persistent delays in closing larger complex deals.
E2open's financial results for the quarter showed mixed outcomes. The company's GAAP subscription revenue reached $131.6 million, surpassing the Goldman Sachs estimate of $130.6 million and the consensus estimate of $130.3 million. However, professional services revenue did not meet the anticipated figures, recording $20.6 million against the expected $24.2 million by Goldman Sachs and $24.0 million consensus.
Total revenue for the quarter came in at $152.2 million, which was below the Goldman Sachs and consensus estimates of $154.9 million and $154.3 million, respectively. The non-GAAP gross profit also fell slightly short at $105.0 million, compared to the $105.5 million Goldman Sachs estimate and the $106.0 million consensus.
Despite these lower revenue figures, E2open's adjusted EBITDA and non-GAAP net income for the quarter were bright spots. The adjusted EBITDA of $54.9 million exceeded the Goldman Sachs estimate of $52.5 million and the consensus of $53.5 million. Non-GAAP net income also beat expectations, coming in at $16.6 million, higher than the Goldman Sachs estimate of $14.7 million.
The company's free cash flow for the quarter showed a significant improvement from the previous year, with $35.9 million reported compared to $5.3 million in the same quarter of the previous fiscal year. After adjusting for non-recurring items, the adjusted free cash flow stood at $39.1 million. Despite the challenges faced in deal closures, E2open's cash flow metrics indicate a robust underlying financial health.
InvestingPro Insights
E2open Parent Holdings' recent financial performance, as highlighted in the article, can be further contextualized with some key metrics from InvestingPro. The company's market capitalization stands at $1.38 billion, reflecting its current market valuation. Despite the challenges in revenue growth, with a -4.04% decline in the last twelve months, E2open maintains a strong gross profit margin of 65.8%, indicating efficient core operations.
InvestingPro Tips shed additional light on the company's financial situation. One tip notes that E2open is "Not profitable over the last twelve months," which aligns with the article's discussion of mixed financial results. However, another tip suggests that "Analysts predict the company will be profitable this year," offering a potentially optimistic outlook that could be of interest to investors following the downward revision of full-year guidance.
For readers seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for E2open Parent Holdings, providing a deeper dive into the company's financial health and market position.
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