E2open Parent Holdings, Inc. (NYSE:ETWO) Q2 2024 Earnings Call Transcript October 10, 2023
E2open Parent Holdings, Inc. reports earnings inline with expectations. Reported EPS is $0.04 EPS, expectations were $0.04.
Operator: Greetings. Welcome to the E2open Second Quarter of Fiscal Year 2024 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Dusty Buell, you may begin.
Dusty Buell: Good afternoon, everyone. At this time, I would like to welcome you all to the E2open fiscal second quarter 2024 earnings conference call. I am Dusty Buell, Head of Investor Relations here at E2open. Today’s call will include recorded comments from our Interim Chief Executive Officer, Andrew Appel; our Chief Financial Officer, Marje Armstrong; and our Chief Commercial Officer, Greg Randolph. Following those comments, we’ll open the call for a live Q&A session. A replay of this call will be available on the company’s Investor Relations website at investors.e2open.com. Information to access this replay is listed in today’s press release, which is also available on our Investor Relations website. 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 guidance for our fiscal third quarter and full year 2024.
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These forward-looking statements are subject to known and unknown risks and uncertainties. E2open cautions that these statements are not guarantees of future performance. We encourage you to review our most recent reports, including our 10-Q or any applicable amendments for a complete discussion of these factors and other risks that may affect our future results or the market price of our stock. And, finally, we are not obligating ourselves to revise our results or these forward-looking statements in light of new information or future event. Also, during today’s call, we’ll refer to certain non-GAAP financial measures, reconciliations of non-GAAP to GAAP measures, and certain additional information are included in today’s earnings press release, which can be viewed and downloaded from our Investor Relations website at investors.e2open.com.
And with that, we’ll begin by turning the call over to our Interim CEO, Andrew Appel.
Andrew Appel: Thanks, Dusty. Welcome everyone to the E2open fiscal second quarter 2024 earnings call. Before Marje and Greg jump into results, I want to take this opportunity to introduce myself. As all of you learned earlier, the Board has appointed me as Interim CEO, while they conduct a thorough search to identify E2open’s next leader. For more than a year, I have served as a member of E2open’s Advisory Board and through this work, I’ve met much of the executive team and have developed a strong understanding of the Company’s promising growth potential. I am honored that the Board of Directors has placed their trust in me to lead E2open at this important time in its Company’s history. I have spent the last 30-plus years of my career as a strategic operator focused on B2B technology-centric businesses and serving the world’s leading corporations on their most complex business challenges.
During my 14 years at McKinsey, I advised many of the world’s leading companies on both strategy, operations, and technology programs. During my six years at Aon, where I was the named executive officer, I was the CEO of $2 billion plus divisions, led the operational transformation of the company and was promoted to be Aon’s first-ever Chief Operating Officer. During my tenure at Aon, the stock tripled in value. Following Aon, I served as President and CEO of IRI, now Circana, where I led a team of dedicated individuals as we transformed IRI from an insights provider to a firm leveraging data technology and prescriptive analytics. This enabled our clients to deliver consistent growth by leveraging our capabilities as a technology-focused big data global company.
During this period, revenues nearly tripled and the company’s valuation increased significantly. Over the past 14 months, I’ve had the privilege of serving on as a member of E2open’s advisory board where I was able to interact with management and clients. During that time, I’ve developed immense respect for the company’s people, technology, and solutions as well as introduced its capabilities to a number of major organizations that I had relationships with. As I take this new role, I feel very fortunate to have the opportunity to work with Marje, Greg, and all the other members of the E2open’s strong and experienced leadership team. They’re a talented group of individuals, each with a track record of success at both E2open and a variety of other leading companies.
They enjoy my strong support as well as the full confidence of our Board and I will look to them as an important source of continuing guidance as I dive into all aspects of the business over the coming weeks and months. Before closing, I want to emphasize that I look forward to meeting the full E2open team, our many customers, and partners, and our investment community and to gathering perspectives and sharing views on how we can best build the company and deliver distinctive products and solutions to clients. I am confident that this company has a very bright future with a committed workforce and an engaged management team that are energized by the progress we could make together. With that, I will turn the call over to my new friend and our Chief Financial Officer, Marje Armstrong.
Marje Armstrong: Thank you, Andrew. On behalf of all of E2open, I’d like to welcome you to your new role at the company. Andrew’s extensive experience in the technology industry plus his proven expertise in business strategy and innovation, provide a complete set of skills to accelerate our core strategy and improve our business performance. Andrew is very well versed in all aspects of our business, including the many opportunities we have for profitable growth as well as the concrete steps we need to take to realize that potential. We’re confident that Andrew will quickly make an impact at E2open. Importantly, on behalf of the entire company, I want to recognize and thank Michael Farlekas for his many contributions to E2open over the last eight-plus years.
Under his leadership, E2open acquired 14 companies in seven years and built a unique asset the end-to-end supply chain platform that E2open is today. Michael leaves the company strategically well-positioned within the growing supply chain software space with a proven track record of providing mission-critical software to the world’s largest companies. His hard work and dedication have enabled us to build a strong positioning we have today. I also want to thank our entire E2open team for the focus they’ve exhibited and hard work they’ve done all year long. Our company is in the midst of a strategic transformation with a number of changes happening simultaneously and in this environment, the contributions of every single member of the E2open team matter greatly.
On behalf of the Board of Directors and the management team, I want to extend my sincere gratitude, and thanks to all of you. There’s a lot of positive momentum and change happening that will become apparent in the coming quarters and years. Finally, before moving on to our second-quarter results, I also wanted to extend sincere gratitude and excitement to our many customers and partners. Just last month, we held Connect 2023, which is our annual customer and partner conference in Orlando, Florida. This year’s conference was the largest ever with attendance up over 30% compared to last year. Over 380 customers and partners participated in the three-day event, including several of our major system integrators. The conference demonstrated the strength of E2open’s core client relationships, as well as our customers’ excitement about the ongoing investments we’re making in our products.
The event also highlighted the strength of our partner network, including the growing ecosystem of system integrators. We have already partnered closely with our system integrators on select client wins and we will continue to build on these relationships to grow our partner-led pipeline and access a new tier of client opportunities. Turning to the business results, I’ll begin with a review of our second fiscal quarter. Then I will introduce our new Chief Commercial Officer, Greg Randolph. Greg will outline the concrete steps he has already taken to transform our sales organization to create a repeatable and scalable go-to-market motion as well as changes he is making to better realize cross-sell and up-sell opportunities within our world-class customer base as well as new logo wins.
After that, I will provide updates to our guidance and then we’ll leave time for your questions at the end of the call. Let’s begin with our second quarter performance. Our subscription revenue was $134.7 million, representing 85% of our total revenue and at the high end of our quarterly guidance. However, the 2.4% year-over-year growth rate we achieved was well below our potential. In particular, the Q2 finish was disappointing from a new bookings perspective for several reasons. First, the account coverage changes action at the end of Q1, led to a larger than anticipated temporary disruption to our go-to-market motion. And second, we continued to see large deal closing delays as customers overall are more closely scrutinizing spend and taking longer to sign contracts.
While customer spending is more of a function of the broader macro environment, go-to-market effectiveness is something we have control over and Greg will talk more about improvements we’re making. Given most of our new bookings happen near the end of the quarter, the impact of softer bookings on our Q2 top line was limited. However, this will cause our second-half revenues to be lower than previously expected. Professional services and other revenue in the fiscal second quarter was $23.8 million, reflecting an organic growth rate of negative 18.2%. These results were below expectations as we saw weaker sales of new unattached professional services projects, lower attached services from new subscription bookings, and overall, continued weak spending by large customers on ongoing services projects.
Greg has already taken action to realign the services business as we are determined to reverse the trajectory of our professional services revenues. However, these changes will likely take several quarters to show results as reflected in our lower services outlook for the year. Total revenue for the fiscal second quarter was $158.5 million reflecting organic growth of negative 1.4% over the prior year quarter. Before we move from the topic of top-line growth to the rest of the P&L, I want to hand the call over to Greg to outline the concrete steps we’re taking to fix our commercial execution issues. We’re incredibly pleased to have Greg on board to lead the E2open go-to-market motion in realizing its full potential. With that, I’d now like to turn the call over to E2open’s Chief Commercial Officer, Greg Randolph.
Greg Randolph: Thank you, Marje, and good evening, everyone. Having joined the company on August 1st and officially taken over full leadership of the commercial organization on September 1st, I’d like to share some of my initial thoughts on E2open’s position in the market and what issues need to be addressed to put the company back on a path to sustainable and accelerating growth rates. Let me start by emphasizing that I joined E2open because I truly believe that the company has all the key ingredients needed to drive organic growth including an industry-leading suite of software applications, an impressive customer list of household brands, and a large and growing addressable market to serve. Additionally, the network of connected partners that E2open has built, is unique in the industry and distinguishes us from our competitors.
With our end-to-end platform and extensive network, we are ideally positioned to meet growing market demand for supply chain software solutions. I also believe that my experience leading the commercial functions at software companies with diverse product portfolios, complex sales cycles, and large enterprise clients is a perfect fit for E2open. During my first two months with the company, I’ve had a chance to experience all of these attributes first-hand through numerous meetings with our sales and product teams through many discussions with customers large and small, and through multiple visits to E2open sites. My most important initial observations are twofold. First, the internal focus placed on acquisition integration has led to considerable disruption in the sales organization and our customer base.
The most meaningful impacts have been high sales force turnover combined with significant changes to account coverage while the company has done a commendable job of backfilling sales force gaps with new hires and transfers. I was very surprised to find such a high percentage of sales professionals including people responsible for major clients who are new to E2open, new to the accounts they’re covering or both. In my experience, it is very challenging to execute a world-class consistent sales motion involving a mission-critical software portfolio and large sophisticated customers when salespeople are still learning the products and getting to know the customers they are selling to. Product and industry knowledge, customer intimacy, and time and seek are critical attributes of a high-functioning sales force, and today E2open is behind the curve in these vital areas.
In my view, this disruption in the sales organization has been the primary factor in the top-line weakness that E2open is experiencing this year. Second, the company has not succeeded in developing the level of deep, comprehensive customer engagement that is an absolute requirement, if you’re pursuing a strategy of cross-selling enterprise software to large customers. To a certain extent, the time and seek issue I mentioned earlier, is a factor, but beyond that issue, the company has much work to do to develop a deep consistent level of engagement across our broad base of 600-plus enterprise clients. Since joining E2open, I’ve seen examples where the company has become an embedded trusted partner to some of the world’s leading brand owners.
Deep engagement is the key to cross-selling mission-critical enterprise software to large customers and the whitespace growth we have been able to achieve when we engage deeply with clients is clear evidence of what we can achieve when we make client engagement a top priority. The gap we need to bridge are key to unlocking much higher growth is creating the same depth of engagement across our entire portfolio of enterprise clients. There are multiple best practices around customer engagement that we need to implement at E2open and then execute on consistently across our entire sales organization. Some of the changes we need to make are organizational, others are operational, and some cultural, but the goal is clear. We have to turn customer engagement into a top priority.
Once we do this, we will be in a much stronger position to drive repeat business and successfully cross-sell our large existing customer base, as well as to keep churn at a minimum. The end result we want to achieve and what our investors expect is a much smoother and faster transition from an M&A-focused company to one that drives significant organic growth. Before handing the call back over to Marje, I want to give you a preview of some of the near-term actions we are taking to immediately improve sales force execution and drive more consistent sales attainment. On the professional services side of our business, where our results have been below expectations, we have realigned the organization to both improve service delivery and drive higher attached and unattached services revenue.
Until now, responsibility for service delivery has been split across multiple parts of the business. Accountability for services sales was similarly shared rather than being centralized in a dedicated PS sales organization. Under the realignment, we have combined all PS delivery personnel into a single services delivery organization and we have also created a dedicated PS sales team all under the leadership of the executive team member with sole responsibility for all aspects of professional services. We are confident that these changes will result in more centralized accountability for service delivery and sales, better engagement with our customers, and improved PS revenue performance. Regarding our broader sales function, we have also taken recent steps to flatten the sales organization, optimize spans of control within it, and better align sales leadership roles with key elements of our business while not creating any further account-level coverage changes.
This move is designed to free up critical sales resources and refocus organizational attention on increasing customer engagement. Within a few weeks, we will be kicking off a major project to upgrade our sales enablement function and materials including creation of sales playbooks and battle cards, refreshes of sales aids and collateral and implementation of new training and coaching programs. As we proceed in our efforts to build a world-class sales organization, we will put major focus on our performance management system to make sure that we recruit, develop, and retain a high-performing sales team. In sum, my first two months at E2open have been very busy, and they have made me an even bigger believer in the future potential of this company.
We understand what is holding our go-to-market performance back and are committed to moving quickly to make changes, although it will take some time for these changes to have a measurable impact on E2open’s top line. But the good news is that many of these are standard playbook items for achieving sales excellence. Our near-term focus will be on what I call being brilliant in the basics, which means putting in place the prerequisites for repeatable and accountable sales execution that will increase customer engagement and drive much higher sales productivity. I’ve seen this work many times before in my career. And I’m confident that it can work here at E2open. With that, I’ll hand the call back over to Marje.
Marje Armstrong: Thank you, Greg. It is great to see how quickly Greg has come up to speed on the business and dug into all the opportunities for improvement, closely collaborating with other areas of the company to improve our sales execution and drive organic growth. The sales improvements that Greg is driving go hand in hand with a renewed emphasis we’re placing on transforming our client experience model. Our goal is to make it as easy as possible for customers to work with E2open to incorporate the voice of our customer into everything that we do and to drive deeper levels of customer satisfaction across the board. We started this transformation last year by establishing a new Global Client Experience Organization that brought together all our customer service functions into one unified team.
We also hired new experienced leaders at all levels within this organization and empower them to create a customer-centric culture of operational excellence. Since then, we have reorganized our customer support team into subgroups that directly align with our five software application suites, channel, planning, global trade, logistics, and supply. We have rolled out a new structure for our customer success managers assigned to our top accounts so that our CSMs now have smaller portfolios of key customers. We have put in place new metrics, KPIs, and an improved customer survey process to rigorously track our progress toward higher customer satisfaction. And we will support this entire initiative with certification requirements and comprehensive training for all customer-facing service personnel.
Over time, we’re confident that these changes will enable us to deliver a consistent service excellence at every point of customer contact and ensure that our clients become referenceable champions of E2open. In the coming quarters, we look forward to sharing more with you about how our clients are responding to these important initiatives. We remain committed to investing in our business, customer experience, go-to-market motion, and our product while also staying laser-focused on driving efficiency everywhere we can as evidenced in our continued profitability. Turning back to our financial results. In the fiscal second quarter of 2024, our gross profit was $109.5 million, reflecting a 2.5% increase on an organic basis. Gross margin was 69.1% in the second quarter compared to 66.5% in the prior-year quarter.
The year-over-year increase demonstrates the strength of our business model and our ability to maintain strong gross margin even in a period of lower-than-expected growth. Turning to EBITDA, our second quarter adjusted EBITDA was $56.1 million compared to $48.3 million in the prior year quarter, an increase of 16.1%. Second quarter adjusted EBITDA margin was 35.4% compared to EBITDA margin of 30.1% for the prior-year quarter. This continued year-over-year growth in adjusted EBITDA reflects approximately $5 million in one-time marketing and SI-related spend during Q2 of last year that did not repeat in the second quarter of FY’24. It also reflects additional run-rate cost savings achieved during second quarter of FY’24 related to head count, consulting spend, and other operating items.
As always, we’re maintaining our focus on an efficient cost structure and operational discipline in order to ensure strong and sustainable profitability during the current period of weaker top-line performance. However, accelerating growth remains our number one goal and we’ll continue to invest as needed to drive the top line. Finishing up on profitability, net loss for the fiscal second quarter of 2024 was $38.6 million. The Q2 net loss included a $17.8 million non-recurring expense related to an arbitration ruling received during the second quarter. This ruling pertain to a 2014 customer contract entered into by its predecessor company to BluJay, which as a reminder was approximately seven years prior to our acquisition of BluJay in 2021.
Now turning to cash flow. During the fiscal second quarter, we generated $7.7 million of adjusted operating cash flow and our year-to-date cash flow exclusive of non-recurring expenses, was $45.1 million. As a reminder, on our Q1 call, we noted that second-quarter cash flow would be lower than in the first quarter due to the payment of annual cash bonuses and other seasonal factors. Growth in cash flow continues to be a core objective for our management team as it enables us to continue to fund future organic growth. This completes my remarks on our fiscal Q2 2024 results. At this point, I will turn to a discussion of financial guidance. For the fiscal third quarter, we expect subscription revenue to be in the range of $130 million to $133 million.
This range represents a growth rate of negative 3.6% to 1.4% as compared to the prior year fiscal third quarter. Turning to full fiscal year 2024, we’re updating our full-year guidance largely based on two factors. First, as noted above, our second quarter had a disappointing finish from a booking’s perspective. Several expected deal closings pushed into next quarter while others have pushed out even further. These delayed deal closings will cause our second-half revenues to be below previous expectations and our guidance now assumes that the lower deal close rates during the second quarter will persist for the balance of the year. Second, we previously expected churn in FY ’24 to be notably first-half weighted with significant improvement in second half.
While we still expect second-half churn to improve compared to first half, we’re now taking a more conservative view on second-half churn. This is due to the continuing macro pressure on freight volumes and rates as well as higher churn we’re experiencing in our long tail of small customer contracts, which is an area that has been impacted significantly by the previously discussed sales account coverage changes. As Greg articulated, we’re making across-the-board changes to our go-to-market organization to address our clear and flexible top-line issues. While we are laser-focused on what we need to do to restart our organic growth engine, it will take several quarters to see the results of the actions we’re now taking. Based on the above factors, we are updating our full-year guidance as follows.
We now expect subscription revenue to be in the range of $530 million to $538 million for FY ’24. We expect FY ’24 total revenue to be within the range of $625 million to $635 million. We expect FY ’24 gross profit margin to be within a range of 68% to 70%. And finally, we expect FY ’24 adjusted EBITDA to be within the range of $215 million to $220 million. This range implies an adjusted EBITDA margin of 34% to 35% for FY’24. Emphasizing the strong importance we placed on cash flow generation as a key performance indicator, I would like to provide an update on our cash-related expectations for the year. In terms of key drivers for FY ’24 cash flow, our expectations around full-year CapEx have not changed. We still expect it to be approximately 5% of revenue in FY ’24 versus 7% of revenue in FY ’23, which included M&A-related CapEx. We still plan to drive year-over-year improvements in working capital and expect FY ’24 working capital to be a modest use of cash.
We still expect net cash interest to be within the range of $95 million to $99 million. As a reminder, net cash interest includes the benefit of interest income on excess cash and also cash receipts on interest rate collars we executed during Q2, which are currently in the money. Finally, our expectations for full-year onetime cash costs have increased primarily due to previously mentioned $17.8 million arbitration settlement which we paid in early fiscal Q3 FY ’24 as well as higher severance costs which we expect to incur by year-end. Overall, we now expect full-year FY ’24 onetime cash cost to be slightly above the $29 million that we incurred in FY ’23. Given the above factors which include lower EBITDA guidance as well as reduced expectations around end-of-year cash balances, we now expect ending FY ’24 net leverage to be approximately 4.3 times or below by the end of the fiscal year.
Before turning the call over for your questions, I want to conclude by emphasizing my confidence in the growth platform that we have assembled at E2open. This company possesses clear competitive advantages that make us truly unique among supply chain software vendors including our large customer base of named brand clients, our broad array of industry-leading software applications, and our unique network of interconnected partners, and we’re just getting started with the development of other highly promising growth initiatives including our system integrator strategy, but today we’re far from realizing this growth potential. And it is clear that we need to address our shortfalls around sales execution with a greater degree of urgency. I can assure you that our Board of Directors, our new Interim CEO, and our entire management team are intensely focused on the steps we need to take to put the company back on a long-term growth path.
That concludes our prepared remarks. Thank you all for joining us today and we look forward to continuing the dialog as we move throughout the back half of the year. With that, Andrew, Greg and I are ready to take your questions. Operator, please open up the line and begin the Q&A session.
Operator: [Operator Instructions] And our first question comes from Adam Hotchkiss with Goldman Sachs. Adam, please proceed.
Adam Hotchkiss: Great, thanks for taking my questions. I guess to start. Could you talk a little bit more about what changed at the end of the quarter to drive the bookings weakness? Fully appreciate the commentary around the deal delays but are any of these deals being delayed indefinitely? And what do you think is driving the lack of visibility on your part here? I guess, how much would you break down, how much of the underperformance was macro-driven right at the end of the quarter versus being related to the internal challenges Greg spoke about?
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Q&A Session
Marje Armstrong: Hi, Adam. This is Marje. Thank you so much for the question. So in terms of the second quarter finish, as mentioned in the prepared remarks, it was definitely disappointing, I would say, it’s hard to break down, you know, the specific macro impacts versus the internal issues we’re working through in terms of sales account changes and just overall broader overhaul that we are undertaking under Greg’s leadership for the sales team. In terms of the macro, just to touch on that a little bit, you know, the end markets that we’ve talked about that have been slower for us where we have larger exposure including tech and then transportation and carriers, you know, continued to show weakness. So I would say that that’s continuing.
And I would say the other piece is just our exposure to large deals, right, so really large deals versus smaller deals. The larger deals continue to get scrutinized. I think what was different for Q2 versus Q1 is that we closed, you know, several large deals in Q1 and for Q2, those large deals, more of those got pushed. Some of them – some of the deals that got pushed, you know, we’ve actually closed already and you know, some of them have pushed couple of quarters and further out. I would say overall you know, our close rates were lower than expected, very disappointing for Q2. And as a result, we’ve taken a more conservative view for the balance of the year and you know, applied those similar close rates. Now nothing fundamentally has changed in terms of those deals still being available for us, but we are now expecting that the changes that Greg is making will take a couple of quarters to show results and hence the change to our view in terms of the second half.
Adam Hotchkiss: Okay, great, that’s really helpful. And then I guess philosophically, and this can be for Andrew, Marje, or Greg. Does the calculus around the trade-off between growth and profitability change here? I mean this is a company that’s operated in the mid-30s percentages from an EBITDA margin perspective for a number of years. Do you think there needs to be an investment cycle that needs to happen to get the sales organization back on track? Or is this just a reorientation that you think can be done without significant incremental cost?
Marje Armstrong: Great question, as you know, our stated investment plan and strategy for this year has been the investment in sales team and the go-to-market motion, bringing Greg on board, you know, we’ve cut down on marketing spend for example, that had one-time spikes last year and everywhere else, but we’re still committed to investing in our go-to-market motion as we’ve – you know, we’ve been clear that that’s the plan for this year. In terms of any incremental investment, we don’t think that there’s necessarily more dollars than we already in the current plan needed at this point, but the plan that Greg is evolving is obviously really the focus for the company more broadly, and the area where we are investing this year. And quite frankly, we’re funding it with just finding efficiencies across the board in other teams. And that’s the real focus for us is to also increase sales productivity and that will help the top-line while keeping costs in line.
Adam Hotchkiss: Okay. Really helpful. Thanks, Marje.
Marje Armstrong: Absolutely. Thanks, Adam.
Operator: Okay. The next question comes from Taylor McGinnis with UBS. Taylor, please proceed.
Taylor McGinnis: Yes, hi, thanks for asking my questions. So I want to dive into all the changes that have been made from a leadership perspective. So I’m wondering, can you provide just an update in terms of like where we stand in that evolution. So have you guys made all the changes necessary? You know, are there still more changes to come like within the org whether that’d be, you know, more restructuring on the sales front? Just an update in terms of where we stand with, that would be helpful.
Marje Armstrong: Yes, absolutely. So you know, obviously, you know, in terms of the sales org changes and leadership changes, I’ll let Greg speak to that but, you know, obviously the biggest change that we made this quarter is bringing in Andrew as the Interim CEO. There are no other, you know, sort of big changes planned at this point that we can anticipate. However, you know, within the go-to-market organization, you know, Greg will continue to evaluate and make changes. So, Greg, maybe you can speak to that.
Greg Randolph: Yes. Thank you, Marje, and thank you, Taylor, for the question. So, yes, we made, as I said in my opening remarks, two primary changes to the commercial organization. One is we centralized the PS, the professional services organization to create much more focus around customer engagement, customer delivery, and more repeatability in our services revenue. And then the second piece on the sales side, we – as I mentioned, some of the changes that have been made in the past created some gaps in account coverage. So we wanted to make sure that we didn’t impact account coverage at all, there were obvious efficiencies that we could gain through simple flattening of the organization and addressing some span of control issues.
The net result is creating a sales organization that is laser-focused on driving ARR growth and serving customers. And so I don’t expect significant overarching changes. I think the message that I’m delivering to my team and to our customer base is we’re going to laser focus on near-term execution and as I said, being brilliant in the basics.
Taylor McGinnis: Awesome. Thanks for that. And then my last question is, so now with subscription revenue decreasing quarter over quarter and that’s also implied in the 3Q guide, can you just provide a little bit more color on the source of the churn that you’re seeing in the business? And when we look at 4Q, it seems like there’s going to be – the guide implies a sequential rebound. So, Marje, can you just provide more color on, you know, the churn rate that you’re embedding in the second-half guide versus what you guys are seeing today and why we should expect to see that rebound in 4Q?