E2open Parent Holdings, Inc. (ETWO, ETWOW)
E2open Parent (NYSE: ETWO) reported FY2025 revenue of $607.7 M, down 4% YoY, driven by subscriptions at $528 M (-2%) and professional services at $79.7 M (-18%). Gross margin compressed to 49.3% (non-GAAP 68.5%). Operating loss was $652 M, primarily due to a $614 M goodwill impairment and $18.5 M...
E2open Parent Holdings, Inc. (ETWO) 2025 10-K Review: A Deep Dive
Key Takeaways
Warren.AI 💰 6.0 / 10
- Annual recurring revenue is flat to down: $528 M subscriptions (-2%), $79.7 M professional services (-18%), total revenue $607.7 M (-4%).
- Gross margin compressed slightly to 49.3% (from 50.1% prior year); non-GAAP gross margin 68.5%.
- Major goodwill impairment of $614 M and intangible asset write-off of $18.5 M, leaving goodwill of $1.21 B and net intangible assets of $673 M.
- Adjusted EBITDA ~ $215.5 M (36% margin), +2% annually, generating $99 M operating cash flow.
- Significant leverage: $1.056 B term loan, undrawn $155 M revolver, net debt $858 M, interest rate ~7.9%.
- Up-C structure creates a $63 M tax receivable agreement liability and 29 M warrants as equity-linked liabilities.
- Focus on expanding within existing clients (white space, 5,600 clients), winning new enterprise accounts and select acquisitions.
1. Company Overview
E2open Parent Holdings (NYSE: ETWO) provides cloud-native, end-to-end Supply Chain Management (SCM) software and network orchestration. Their SaaS platform connects 500,000+ trading partners across four ecosystems (Demand, Supply, Logistics, Global Trade), processing 18 B transactions annually. 5,600 clients include large Fortune 1000 companies in Consumer Goods, Manufacturing, Retail, Technology, Transportation and more.
Business Model & Go-to-Market
- Subscriptions (87% of revenue): fixed annual fees plus minor transaction fees.
- Professional services (13%): implementation, integration and consulting on time-and-material or fixed-fee basis.
- Sales motion: Global direct sales force segmented by deal size and geography, strategic partnerships and system integrators. Long enterprise sales cycles (~3 years average contract term).
2. Industry Trends & Competitive Landscape
- Supply chains have grown more complex amid globalization, COVID-19 disruptions and digital transformation.
- Strong secular tailwinds for cloud-based SCM: visibility, agility, AI-driven planning, resiliency.
- Large TAM (North America & Europe SCM software) with significant whitespace at existing accounts.
- Competition includes SAP, Oracle, Kinaxis, Manhattan Associates, Descartes, JDA, home-grown solutions.
3. 2025 Financial Recap
Revenue & Growth
| Metric | FY ’25 (Feb 28) | FY ’24 (Feb 29) | YoY % |
|---|---|---|---|
| Subscriptions revenue | $528 M | $537 M | –2% |
| Professional services & other | $79.7 M | $97.8 M | –18% |
| Total revenue | $607.7 M | $634.6 M | –4% |
Downward pressure due to macro-drag (inflation, long sales cycles), elevated churn and a focus on client retention over new implementations.
Gross Profit & Non-GAAP Gross Margin
| Metric | FY ’25 | FY ’24 | Change |
|---|---|---|---|
| GAAP gross margin | 49.3% | 50.1% | –0.8 pts |
| Non-GAAP gross margin | 68.5% | 69.4% | –0.9 pts |
Slight contraction driven by higher hosting and data network costs and lower professional services margins.
Operating Expenses
| Area | FY ’25 ($ M) | FY ’24 ($ M) | % of Rev ’25 | % of Rev ’24 |
|---|---|---|---|---|
| R&D | 97.9 | 101.4 | 16.1% | 16.0% |
| Sales & Marketing | 79.3 | 87.7 | 13.1% | 13.8% |
| General & Administrative | 86.2 | 108.0 | 14.2% | 17.0% |
G&A declined 20% (+$17.8 M prior-year legal settlement); marketing lever-down partially offset by brand-building and sponsorship.
Impairments & Other Non-Recurring
- Goodwill impairment: $614 M (FY = $1,214 M remaining)
- Indefinite-lived trademark impairment: $18.5 M
- Cost-method investment write-down: $5.5 M
These reflect macro headwinds, share price declines and strategic reassessments.
Adjusted EBITDA & Cash Flow
| Metric | FY ’25 | FY ’24 | FY ’23 |
|---|---|---|---|
| Adjusted EBITDA ($ M) | 215.5 | 220.3 | 217.1 |
| Adjusted EBITDA margin | 35.5% | 34.7% | 33.3% |
| Cash from operations | $99.1 M | $84.9 M | $68.1 M |
Solid FCF generation despite near-term revenue headwinds.
4. Balance Sheet & Liquidity
- Cash: $197 M
- Term loan: $1,056 M; 7.94% variable interest, maturity Feb 2028
- Revolver availability: $155 M
- Net debt: $858 M (73% of 2025 revenue)
- Tax receivable agreement liability: $63 M
- Warrant liability: $0.6 M
- Contingent consideration: $5.1 M
The $155 M revolver remains a valuable backstop to fund operations or acquisition investments over the next 12 months. Covenant flexibility and refinancings may be needed given high leverage and cyclical risk.
5. Strategic Priorities
- Expand within core accounts: Cross-sell AI, analytics, full suite (Global Trade, Manufacturing, Sustainability). Significant whitespace at 5,600 clients.
- Win new enterprise clients: Partner with SI and ERP integrators, engage C-suite on global supply chain resilience demands.
- Select acquisitions: Complementary offerings in Logistics as a Service, AI-driven forecasting or adjacent network orchestration.
- E2WIN & Sustainability: Continued investment in global culture, R&D on ESG and sustainable supply chain capabilities.
6. Risks & Outlook
- Prolonged macro-slowdown could lengthen sales cycles and tighten enterprise budgets.
- High leverage & interest rate risk: ~8% coupon, limited room for further rate hikes.
- Intense competition from established ERP & new point-solutions.
- Up-C structure: incremental tax receivable burdens ($63 M liability), warrant overhang.
- Near-term headwinds set the stage for stronger 2026 revenue rebound as macro stabilizes and cross-sell initiatives bear fruit.
Investment Thesis: E2open is the only SaaS provider offering end-to-end multi-enterprise SCM orchestration across four ecosystems, paired with strong network effects and AI-driven insights. Despite near-term revenue headwinds, the Company remains free cash flow positive and has the balance sheet capacity to invest in growth initiatives. Its high net retention, installed base, AI roadmap and regulatory tailwinds in global trade compliance underpin a long-term secular growth story.
Key Catalysts:
- Renewed large-account expansions (350+ cross-sell deals).
- Return to high single-digit subscription growth as churn normalizes.
- Margin expansion as amortization & impairment drag fades.
- Leveraged FCF to fund M&A or buybacks.
Risks:
- Macro and budget pressures could result in enterprise slowdowns.
- Continued interest rate volatility may weigh on FCF.
- ERP vendors push deeper into supply chain planning.
Note: Forward-looking statements and risks are outlined in Part I, Item 1A of the 10-K.