Gilmore Says.... |
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But then there are the perils of being a public company. The WiseTech acquisition comes as E2Open’s stock price has collapsed over the past three years.
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I never heard of them. They make shipping software.
By my estimates – and perhaps surprising to many of you – E2open is the fourth largest best-of-breed supply chain software company, with sales of $608 million in the fiscal year ended February.
That is exceeded, I believe, only by Blue Yonder, Manhattan Associates, and procurement-oriented Coupa, all in the billion-dollar club.
E2open has an interesting history. It has its roots in the Trade Matrix platform developed by the former i2 Technologies, with a system that provided multi-tier visibility for customers, largely in the high tech sector.
In 2016, I wrote a column on “three supply chain software companies on the move.” Here is what I wrote then:
“The company [E2poen] has its roots in the EDI space where years back a predecessor firm [Trade Matrix] achieved connectivity to a large number of OEMs and suppliers, largely but not exclusively in the high tech arena.
Flash forward a few years, and E2open builds a unique, multi-level visibility and collaboration solution that allows the OEMs, such as Dell, to really see their supply chains across tiers operating in real time.
It would take more space to well describe this than I have here, but if an OEM say has an opportunity for 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 tool for discrete manufacturers.
Sounds good, yes? Just one problem: the company, which went public, was spending like drunken sailors for a while (thankfully, SCDigest got some of it) and simply was not paying much attention to the bottom line, which bled red ink for many quarters.
In 2015, the company was taken private, and my friend Michael Farlekas was named CEO. Farlekas is a smart guy, but I think he would agree the first steps weren't rocket science. In a company that relies almost exclusively on subscription revenues, meaning the top line can be pretty well estimated for a given year, the solution is just to get expenses nicely back down under the revenue number.”
E2open eventually went public again in 2020. Before and after that, it made a number of acquisitions. Those deals include: BluJay Solutions (TMS), INTTRA (ocean shipping), Cloud Logistics (TMS), Zyme (channel partner integration), Steelwedge (demand planning), and Terra Technology (demand sensing), among others.
But then there are the perils of being a public company. The WiseTech acquisition comes as E2Open’s stock price has collapsed over the past three years from about $13.00 per share in mid-2021 to about $2.50 recently before the deal was announced. That deal values e2Open at $3.30 per share. (See chart below),
E2open Stock Price Last 5 Years
I have said in the past it has seemed to me that E2Open seemed to punch a bit below its weight. I know so little about WiseTech it is hard for me to conjecture about the likely success of this deal.
But when your stock goes from $13.00 to $2.50, something is going to happen.
We’ll keep track of how this plays out over the next couple of years.
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