Good afternoon everyone. At this time, I'd like to welcome everyone to the E2open Fiscal First Quarter 2022 Earnings Conference Call. I'm Adam Rogers, Senior Director of Investor Relations here at E2open.

Today's will include comments from our President and Chief Executive Officer, Michael Farlekas; followed by our Chief Financial Officer, Jarett Janik. And then, we'll open the call for a live Q&A session. A replay of this webinar will also be available on our website.

Information to access the replay is listed in today's press release, which is available at e2open.com in the Investor Relations section.

Before we begin, I'd like to remind everyone that during today's call, we will be making forward-looking statements regarding future events and financial performance, including the pending acquisition of BluJay Solutions and guidance for our full fiscal year 2022..

Thank you, Adam. And thank you for taking time today to joining us for our first quarter earnings call for fiscal year '22. We had an extremely strong start to our year. In fact, this was the best Q1 the company has had since I joined the business in 2015. Here's some highlights.

Our team in India organized vaccine campaigns where we vaccinated over 900 team members and their families. Revenue, gross margin and EBITDA are all above target to our FY '22 plan. We had very strong Q1 bookings quarter. Q1 bookings was well above our FY '22 plan on both the gross and net basis.

In fact, Q1 FY '22 gross and net bookings represented 80% increase versus Q1 of the previous year. We're having great success with new logos, highlighted by our recent announcement of a large win with Tesco. This is interesting, because it was a very competitive way of a new logo in the retail sector, which is a newer market for us.

We signed two new strategic partnerships, one with Dun & Bradstreet to build new products related to our network. And the second with a leader in healthcare procurement and supply chain services to help digitize the medical supply chain. We're on track to sign three to five strategic partnerships per year for the foreseeable future.

As we have discussed, strategic partnerships is one of the four growth levers we are pursuing this year to generate increasing growth rates in FY '23. In the case of partnerships, each one becomes its own individual growth engine for E2open. We signed two platform contracts, where we doubled the subscription revenue for each of those clients.

A platform relationship is where we have strategic alignment to rollout significant portions of the platform across a multiyear strategic plan. We are seeing great momentum in this category. Simply put, we have 300 plus enterprise clients, all of which have the potential to become platform clients.

And of course, we announced the combination of BluJay Solutions and have begun the permissible integration planning work..

Thank you, Michael. As Michael mentioned, we're very happy with our results for the first quarter and we continue to see positive momentum in the market. Today I'll begin by giving an update on the BluJay combination, then review our fiscal first quarter results. And finally, I'll comment on our outlook for the full fiscal year 2022.

Thereafter, we'll open the call to your questions. .

Thank you, Jared. If everyone can please give us a moment so we can turn our cameras on and get situated. Okay. So our first question will come from Mark Schappel from Benchmark. Go ahead, Mark..

Thank you for taking my question. And I guess my first question is around the bookings. And I was wondering, Michael, if you could provide some additional color around the bookings in the quarter? Specifically, how has it being defined since it isn't a metric that you typically talk about.

And then also, why not discuss bookings each quarter?.

Yes, thanks for your question, Mark. We kind of measure obviously bookings on a gross and net basis. And our bookings definition generally is, one year of subscription revenue and it has to meet certain criteria in terms of fixed contracts of certain duration. So we measure them specifically and have been doing that for some time.

And the reason we don't give a bookings guidance in the future is that, it's a number that can change pretty dramatically from one quarter to the next, based on the deal is signed in, one, the 29th of the month or the 1st of the following month.

And that does really -- it has really no meaning in terms of our financial performance because of the subscription nature of our business. So, we feel it’s best to give projections on an annual basis and to give guidance on that basis..

Thank you. That's helpful.

And then, Michael, from a product perspective, I was wondering if you could just discuss the parts of the supply chain space, where you saw particular strength in the quarter within your product line?.

Yes. It's a great question. Not just in the quarter, but also our pipeline, I think it's consistent and has been for the last couple of quarters in really three areas. One is, logistics and visibility. And that's really been an area that's been growing consistently over the past three or four quarters.

The one new logo we talked about it in our press release yesterday, specifically in that area. Global trade has been very good in terms of people wanting to understand global trade. And then demand sensing is one thing that has been a really strong performer throughout.

One thing of note, however, is the supplier collaboration part of our platform, which was originally to open is getting more and more momentum. It's a longer sales cycle, if you think about the complexity of that type of solution where you're connecting multiple suppliers to one platform.

But that is resurging in a really big way and across multiple industries. We see that in CPG, we're seeing that in certain industrial categories, as well as traditionally the high tech. So those sort of the areas I'd say our platform has performed. It's not one area or the other.

And I think it's one of the reasons we're so confident about our performance of growing to a 10% plus company even more beyond is that we see strength in all areas..

And then just one last question with respect to your global trade products and business.

Now, how much of this business is being helped by the new customs and compliance rules from Brexit this year?.

I'd say some, but I don't think it's driven by that one initiative. I think it’s, more companies really have to really understand what the different trade regulations are. And we see more companies trying to take advantage of trade regulations, which really speak to landed costs.

I think it’s more companies are really just getting more sophisticated overall about global trade. And the second piece of that is compliance. There are a lot of regulations and rules around who you can ship to under what circumstances and country-to-country. So I think, for those two reasons, we see that as a strong area.

I don't think it's just Brexit, although that obviously helps..

Our next question comes from Yun Kim with Loop Capital..

Hey congrats on a solid quarter, especially on the strong bookings. Michael, obviously, as you pointed out, subscription revenue is really a lagging indicator, or a metric of your bookings. So, we're going to focus on the bookings part of your business.

So in terms of the strong bookings that you saw, obviously, you did face easy comp year-over-year basis, but what was the driver behind that 80% bookings growth? Was that a couple of those two platform deals you mentioned? Or one new customer win that you mentioned? Or is it really a combination a lot of different growth drivers?.

I think it's, we measure our pipeline growth very specifically, every quarter. And we also measure the yield that we get on the pipeline that we think we can close within a quarter. And what we saw with the pandemic is that the pipeline continued to grow.

But as companies really started focusing on their own specific needs in the here now, the yield on pipeline had dropped as you would expect. And I think it's because all those opportunities that have been pending, really, our yield on pipeline is returning to not quite than what we expect had before the pandemic, but inching closer.

But the bigger reason is that the pipeline is growing. And even though we had a very strong Q1, our pipeline growth exceeded what we've closed and lost. And that's one of the key metrics I focus on is, is the pipeline growing faster than what you close or don't win. And in our case, it has been for the last several quarters.

So it's more the demand we're seeing, and then our ability to execute on that demand..

So that kind of leads to my next question.

Can you share with us what has been the initial feedback that you're getting from your customers regarding the BluJay acquisition? And I think you mentioned it, but since the announcement of the acquisition, have you seen your pipeline grow as a result, not just BluJay product, but just really your core product as well from existing customers? And then also any feedback that you're getting from your partners regarding the BluJay acquisition, and whether or not the acquisition may potentially change your current partnering strategy?.

Overall, very positive. Some of our customers are their customers. And they’re those we have talk to, we don't -- we can't talk to their customers for obvious reasons as we're not closed yet. But where we have our customers reach out to us has been overwhelmingly positive. And they can see that the solutions are completely complementary.

And they can see how we can associate very robust logistics and transportation capability to our platform and I think that's been really very, very well received. In terms of the partner ecosystem, yes, in fact we've had a lot of interest in the partner ecosystem.

And we have -- I think we talked about a growth lever of strategic partnerships, we talked about that. One of the things that we're very focused on is building a more robust, integrator partner ecosystem. And we see that as very strategic to us over the next year to 18 months.

Having more capabilities and having more clients means that we have more opportunity for those integrators. And I think that's attracting a lot of attention. So that's something that we'll be talking about more as the quarters go on.

But that's a key initiative that we are working on now that will help us create incremental capabilities for ourselves down the road..

Great. And I have one last question for Jarett. CapEx came in a little bit high. I am assuming that there's a onetime event item that's in there.

Can you just explain that Jarett?.

Yes, absolutely and good point. And we had some payments related to accruals at year-end that flowed through the first quarter making the first quarter from a cash flow statement higher than our model would be. And those were mainly related to some enhancements in our security infrastructure for our data centers, which we're always enhancing.

But this was a fairly significant upgrade that we did at the very tail end of last year where the invoices got settled in the first quarter of this year. So not a run rate, more of a timing issue as well as a significant kind of one-off upgrade..

Our next question comes from Taylor McGinnis with UBS..

Thanks for taking the question. So one, to what you were talking about earlier, you talked about really strong bookings growth, a couple platform deals. And I don't know, last quarter, you guys mentioned that you had 95% visibility to the full year revenue guide.

So I guess why the reaffirm? Maybe you can talk about some of the assumptions embedded in that guide, and what might be some of the areas of caution?.

Yes, Jarett, do you want to take that one?.

Yes, absolutely. So, we had a good first quarter. We still have great visibility, even better than the 95%.

Now, the professional services is kind of an area, that's the biggest piece of that last 5% Taylor and that's an area that has been initially in the year somewhat impacted by the sicknesses in India, where we provide a lot of those professional services. So we're inching towards higher in the 90s in terms of visibility.

I'd say services is really kind of the one area that still has some variability into it, as we are working through completing our second quarter..

Got it. And then my second question is just I know, you guys have talked in the past about organic growth being around 7% pre-pandemic. So anything you can provide on why you believe that 10% plus organic growth is more durable longer term.

So curious if you're able to give any update maybe on how dollar based net expansion rate has trended more recently versus the you guys have given out prior?.

Yes.

So I think one of the biggest keys Taylor is that, that 7% historic was a number that was influenced and impacted, and it was a pro forma number for several of the significant acquisitions we did where we layered in their growth rates for periods before we hit on those businesses, when they didn't have the cross-sell/upsell opportunity that we have, once we bring them into the platform.

We saw our ARR growth in excess of 10% as we exited fiscal '20. And then we had the pause from a financial performance perspective from COVID, where the -- as Michael noted, pipeline continued to grow, but the conversion of that into contracts had slowed down.

And so as we work through this year, we have great visibility obviously into the back half of the year where we would exceed the 10% growth rate to get to an annual total 10% growth rate.

But we're still kind of working off the vacancy, for lack of a better word, of some of the bookings that in a normal year we would have gotten in Q1, Q2, Q3 that are kind of bleeding through the revenue recognition model now.

Does that make sense?.

Yes, that makes sense. And then just my last question is just on to the really strong bookings performance. And I know you talked about some -- like some bigger deals in there.

So, can you just talk about like, I guess, the visibility, and when you guys are looking at the pipeline, like to these platform deals, I know that you guys have very long sales cycles.

So is this -- like, was this more of an anomaly quarter, right, where maybe some of those deals -- some of these larger deals fell in? Is this something that you guys see as that you have more visibility to going forward? Can you maybe just comment on that?.

Yes, I'd be happy to. And this is something that's been ongoing across our client base and as our customers -- our strategy is to add capabilities to the use of our platform for our clients.

And what we found is as they go from one product family to two product families, they -- our customers start to think about a much longer term strategic alignment. And we've seen more and more of that, where three years ago, it was really an anomaly. And now it's, several per quarter we're talking about doing that.

And those transactions look more like we agree on a three to five year plan. We put in a multi-year plan on what we're going to roll out now and then what we’ll roll out next. And those type of transactions is where we believe all of our clients will eventually end up.

I think that's what really gives us a tremendous amount of confidence to our long-term growth rate being in excess of 10%. Because the subscription expansion is pretty dramatic when that happens, it usually doubles or triples for each customer.

And as we said we have 300 clients that will expand over 600 with BluJay, all of which have the opportunity to take that really kind of explosive growth within each client. So, way to think about our business is, every client represents its own growth engine that will grow really rapidly.

And I think that's what's given us a tremendous amount of clients. We're seeing more and more of that happening on a more repeatable basis. And we're really excited about that. That's kind of been the plan all along. And we're really seeing it manifest itself, not just in bookings, but also in the opportunities we see with our clients.

Now, it's not easy. And many times customers take a long time, months and months, and years to get to that point. And we talk about it for months. But we really are encouraged by the amount of pipeline activity we have in that category.

The other thing I'll note, and we talked about the new logo success we had, we've had other new logos, obviously, in the quarter.

What we’re seeing there is that they're starting out from a larger dollar amount in this first quarter, where normally the first time client purchases subscription from us is in the $300,000 category, and I think three this year, this quarter were over $800,000.

And that just tells me we're having more success selling more into that initial client to start with..

Thanks, Taylor. Our final question this afternoon will be from Chris Merwin with Goldman Sachs. Go ahead, Chris..

I wanted to first ask about, it’s related to the BluJay acquisition, in particular their sales force, Part of the plan, I think there was with that sales force, you've got a team that was more focused on new logo additions and -- existing E2open sales force was more focused on expansions.

How do we think about the process of integrating those sales forces? And maybe when we might start to see the benefit of BluJay kicking out in the form of more new logo acquisition? Thanks. .

Yes, I think it'll show up in two places. One is new logos and also increasing cross-sell/upsell. So, the strategy is underpinned by our platform and our seven product families being available to BluJay's 300 plus enterprise clients.

So, we have a very strong upsell motion for their clients where in their solutions that they only have one or two additional packages. So, we have a lot more to offer to their clients. So, we'll see the uptake not just from new logos, but also from the ability of being able to market and sell our solutions back into that client base.

That's very powerful. And then obviously, we have the additional ability to sell new logos. Our go-to-market, as you mentioned, has been mostly focused on that upsell/cross-sell. Certainly in place we have a process and the strategy and the structure to support that. And as we bring these two organizations together, we're going to continue that.

So, we'll put a lot more attention on their existing customer base as well as be able to get a lot of hunters that are of different profile onto our structure.

So, we expect that at the time we close we are hopeful that we'll be able to have all the team members in their territories, all accounts assigned, kind of plans in place and really to hit the ground running. We would expect to be able to show combined solutions to clients in a demo format within 90 days.

And the uptake in bookings will happen in a little later than that. We would think in six to nine months, given the sales cycles are three to six months long. We would expect that to start kicking in terms of pipeline growth in the first, call it, four months and then closing starting in the back half of eight or nine months from now.

So, we've done this 11 times and they all kind of run the same pattern, which is get the sales forces operating as one immediately, be able to show the product in a demo form within a very short amount of time, and then the pipeline grows and then the bookings grow. So, we expect that to happen in that same form pretty quickly..

Yes, Michael, if I can add that, there is an important organizational element too, whereby we will continue to have dedicated people going after new logos, and then the rest of the sales organization is organized around customers, not products, Chris. So, we don't have multiple sellers going into the same account, trying to sell different products.

We have sellers that have a very small dedicated group of accounts that they then go through that cross-sell/upsell motion with..

Okay, perfect. Thank you. And then my last question was just around, some of the new product attach, I guess. I think, Michael, you spoke to like bigger deal sizes with some of your lands.

Are there any other metrics you could share with us just to give us a sense of with those new lands, like how many products are taken now versus a year ago as your suite continues to expand? Just anything you could share there would be helpful. Thanks..

Yes. Let's -- I don't have them resolved now, but I'll talk with Jarett and see if we can give some more color in terms of growth of number of solutions per client might be a good metric for us. We'll take that back as a suggestion, Chris, I think that will be valuable information.

I can tell you however that, 80% of our new bookings come from existing customers and we are not, strictly a volumetric type of solution. So, most of that means they're buying additional solutions from us. So, we know we're growing and expanding our footprint within our clients because of that 80% as a top level metric.

And as we've said before, the new logos for us represent not what they buy initially, but what they represent to us is what that will grow to over a two to three year period.

And typically, as I've mentioned before, customers will purchase something in the $300,000 to $400,000 range, but we expect that customer to grow 2 million or 3 million over a two or three year period. So, the new logos are very impactful to the current view, but even more impactful to our long-term growth strategy..

That concludes our conference call this afternoon, and we'd like to thank everyone for attending. You can disconnect now. .

Thank you all. Have a good day..

Thanks, everybody..