Supply chain software provider E2open reported negative second-quarter earnings, leading to a heavy sell-off of stock by investors. Despite management’s attempt to paint a positive outlook, the stock dropped by 18.4% to $3.32 per share, not reaching a 52-week low. Subscription revenue for the quarter was $131.6 million, falling within the company’s guidance range. However, the company’s future guidance caused concern, with expectations of a decline in subscription revenue for the third quarter and fiscal year 2025.
E2open’s ongoing weak performance follows a strategic review initiated earlier in the year, prompted by activist investor Elliott Management’s involvement. CEO Andrew Appel mentioned that the strategic review is still ongoing, highlighting the company’s commitment to exploring all available options. The company’s previous CEO was replaced amid poor performance, and Appel took over in February.
Despite E2open’s stock being higher than a year ago, it remains well below its 52-week high. The company’s recent losses in earnings per share and total revenue were below market expectations. Appel expressed hope for improvement in the subscription business in the upcoming quarters, but acknowledged the slow pace of deal signings within the software sector.
An analyst report from Bank of America Merrill Lynch downgraded E2open to underperform, citing concerns about the company missing out on industry growth. Competitors like Manhattan Associates were highlighted for their strong performance, raising doubts about E2open’s viability. The company’s acquisition strategy was questioned, with competitors making significant acquisitions to enhance their offerings.
Overall, E2open continues to face challenges in meeting market expectations and sustaining growth, prompting investors and analysts to question the company’s long-term prospects.
