Supply Chain Matters highlights yet another senior leadership transition involving a logistics focused B2B Cloud platform provider.
Senior Leadership Change
E2open Parent Holdings, part of a SPARC entity, announced this week that its board of directors and Michael Farlekas reached a mutual decision “that the time is right for new leadership.” Accordingly, the E2open board has retained an executive search firm to initiate an external search process to identify a permanent new CEO.
The company’s board further appointed Andrew Appel as interim chief executive officer effective immediately.
Appel has reportedly served on the company’s advisory board for more than a year. His background includes serving as President and CEO at IRI, a big data, predictive analytics and insights provider along with senior executive roles at Accretive Health, Aon, and McKinsey & Company. The company recently recruited sales executive Greg Randolph to be Chief Commercial Officer.
This development parallels the report of the technology provider’s Fiscal 2024 Q2 quarterly financial performance that included lackluster growth in revenues and profit levels. E2open CFO Marje Armstrong indicated in the earnings announcement: “While we delivered subscription revenue near the high end of our guidance in the second quarter and maintained strong adjusted EBITDA margins, our growth rate remained below our potential. We continue to reposition the company for organic growth and have already taken a number of steps to improve our go-to-market performance and client engagement model in order to reaccelerate growth.”
The company further updated full year fiscal 2024 guidance previously reported in May to reflect Total GAAP Revenues growing on a 3.4 percent year-over-year basis.
Additional Thoughts
After listening to the company’s latest quarterly financial reporting this Editor garnered the impression that the change in executive leadership was spawned from a number of concerns, one being perceptions related to a lack of sales enablement disciple along with either customer push out of deals or closing rates slower than anticipated. Chief Commercial Officer Gregg Randall spoke of achieving deeper customer engagement, a clearer go-to-market focus along with added moves to restructure and refocus the company’s sales teams.
In October of 2020 when this tech provider became a public company under a SPARK arrangement, the valuation was pegged a $2.57 billion. The latest guidance indicates Fiscal 2024 GAAP revenue expected to be in the range of $625 million to $635 million, with Fiscal 2024 Adjusted EBITA expected to be in the range of $215 million to $220 million. In the current investment climate, such numbers are bound to trigger investor concerns.
There were statements indicating that for the past seven years, the company has initiated 14 total acquisitions with a need to assess capabilities that are more in demand from existing or prospective customers.
In the Q&A part of the briefing, equity analysts homed in on the overall makeup of the company’s go-to-market software suites and potential causes as to why subscription revenue growth has been lagging. There was even a question as to whether sales teams have too much to sell, do all of these acquisitions lead to a cohesive set of capabilities, or should the company be divesting of non-core applications. Interim CEO Appel indicated that the company needs to approach the market “by not trying to boil down the ocean” but rather being super focused on value proposition and key capabilities in demand.
From our supply chain industry analyst perspective from observing E2open for many years now, our sense is that this provider’s five outlined solution suites (Channel Collaboration, Global Trade, Logistics, Planning and Supply) include different business challenges to be solved with different technology buying groups undertaking evaluation and assessment. They further involve very different market dynamics.
The logistics and freight sector continues to deal with lower volumes and budget restricted customers, and as we have highlighted on Supply Chain Matters, waves of high-flyer and once well-funded start-ups are now forced to initiate headcount reductions and leadership executive changes. The explosive demand levels expected have not materialized.
In the planning and supply network collaboration sector, industry supply chains have expressed needs for added supplier resiliency and enhanced agility and more timely decision making. This is also a very crowded and competitive field right now with new advanced technology and advanced AI start-ups making their presence.
For all of the above, this tech provider likely needed a fresh set of eyes and a renewed sense of strategic direction.
Bob Ferrari
© Copyright 2023, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
