E2Open, one of the largest "best of breed" software firms focused on the supply chain sector yet still not well known, hopes to change that after going public last week, in a deal that values the company at more than $2 billion.
Supply Chain Digest Says...
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The company went public using the increasingly popular tactic of an agreement with what is called a “blank-check company,” bypassing the traditional path to a Wall Street listing culminating in an IPO |
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The company has its roots in the EDI space, where years back a predecessor firm (the "Freight Matrix" solution from then i2 Technologies) achieved connectivity to a large number of OEMs and suppliers, largely but not exclusively in the high tech arena.
E2Open used that foundation to build a multi-level visibility and collaboration platform that allows the customers, such as Dell, to really see their supply chains across tiers operating in real time. For example, if a tech firm has an opportunity to sell 10,00 new units, it can see if it has the supply commitments needed to make the customer order promise, and then see if those commitments are achieved on-time during execution.
To greatly over simplify, E2open thus provides is a multi-level supply chain dashboard and decision-support tools.
E2Open was a public company once before, but spent its way into trouble, bleeding red ink for a few years.
In 2015, the company was taken private, with Michael Farlekas named new CEO. Since then, the company has made a number of acquisitions.
Soon after Farlekas took over the CEO role, E2open acquired "demand sensing" vendor Terra Technology and Orchestro, which provided a "demand signal repository" across retailers.
In 2018, the company acquired TMS provider Cloud Logistics and ocean freight management provider INNTRA. Then in its largest acquisition, E2Open acquired Global Trade Management software vendor Amber Road, after that company for a while spurned E2Open’s interests.
The overall strategy has certainly paid off.
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 The company estimated its revenue in the financial year that closes in February will be $335 million, up from $305 million a year before. The estimate for fiscal 2022 is $367 million.
E2Open says that 80% of its revenue is currently subscription-based, and it expects this metric to climb to 83% by fiscal 2022.
The company is also solidly profitable. It had $69 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) in its fiscal year ending Feb. 2020. It expects to make $121 million in EBITDA in 2022.
For all that, E2Open is far from a household name, especially outside the tech sector, an area CEO Farlekas has said in the past was a key opportunity for investment.
The company went public using the increasingly popular tactic of an agreement with what is called a "blank-check company," bypassing the traditional path to a Wall Street listing culminating in an IPO. This involved in effect being acquired by a special-purpose acquisition company (SPAC), which is a publicly traded company that exists only to rapidly take a company public when the firms merge.
The transaction is expected to close in the fourth quarter, with the company to be listed on the New York Stock Exchange under the symbol ETWO.
The deal values the company at about $2.57 billion.
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