E2open Parent Holdings, Inc. (NYSE:ETWO) Q1 2024 Earnings Call Transcript

Michael Farlekas: Yeah, we’ve done a lot of analysis on this and we kind of looked at it on page of Sunday, Fred. So we have a very specific way of understanding where our clients are and we have a pretty strong conviction that in the back half of this year and into next that churn normalizes. And remember, we have a world class churn that it ticked up a bit, it just happened that it happened having to happen in Q4 and in the first half of this year. So we expect it to normalize and then kind of be back where we were, and then obviously that has an impact for revenue as a lagging indicator and we expect that to kind of get better as we go into next year.

Operator: Okay. The next question comes from Mark Schappel with Loop Capital. Mark, please proceed.

Mark Schappel: Hi. Good afternoon. Thank you for taking my question. Michael starting with you. I was wondering, if you could just give a little more comments or details on the Ford win. I appreciate your comments, but I was wondering if you could provide additional details on maybe some of the products or solutions that you’re using? And also what were some of the drivers for their decision to — it looks like deepen the relationship with them?

Michael Farlekas: Yeah, it was a great win, they’re a great company obviously, iconic company and couldn’t be any happier, they’re super important to us, have been and are obviously now. Unfortunately, we’re not really able to kind of go into more details. We are thankful for them to allow us to use their name. That was a big lift, a big appreciation I have for them. Mark, I can speak a little bit about the automotive industry, what I see there, from a supply chain perspective. This is a generalized comment about automotive supply chains. Automotive supply chains are multi-tier and everyone knows this Tier 1, 2 and 3 suppliers. And for a long time, automobiles that made with readily available materials, I need aluminum, I need tires, I need things that are made in mass and readily available.

The change that has happened in the last three years is that the supply materials and componentry is much more constrained on a global basis. So understanding deeper into a company supply chain, what their constrained supply is has a really big impact to what they can actually produce every day on a production line. And the further they can look out into what that supply base looks like, the more of the confidence we’ll have to be able to not have a car that’s 99.9% complete, but doesn’t have the right chip has to be reworked. This is the same problem that the high-tech industry saw literally 20 years ago, which it, has to do with making a much more network-based connected supply chain. So that’s an industry — automotive industry perspective that I have and I’ve been talking to many automotive companies.

So I just want to give you that perspective in terms of the auto industry and kind of the change that is happening within the auto industry, but Ford’s a great company and I really can’t speak any more about what we’re doing with them other than our comments I’ve made in the press release.

Mark Schappel: I appreciate your comments there. And then secondly, in your prepared remarks, you noted that subscription growth well above guidance was still below what you thought was the company’s potential. I was wondering if you just add some clarity to those remarks, was there something you saw in the quarter that led you to that or is this just going back to prior quarters?