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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39272

 

 

E2open Parent Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

86-1874570

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

9600 Great Hills Trail, Suite 300E

Austin, TX

78759

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (866) 432-6736

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

 

ETWO

 

New York Stock Exchange

Warrants to purchase one share of Class A Common Stock

 at an exercise price of $11.50

 

ETWO-WT

 

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of January 5, 2023, E2open Parent Holdings, Inc. had Class A common stock, $0.001 par value per share, of 302,452,552 shares issued and 302,275,898 shares outstanding.

 

 


 

Table of Contents

 

 

 

Page

Glossary

 

3

Forward-Looking Statements

4

PART I.

 

5

Item 1.

Financial Statements (Unaudited)

5

 

Condensed Consolidated Balance Sheets

5

 

Condensed Consolidated Statements of Operations

6

 

Condensed Consolidated Statements of Comprehensive Income (Loss)

7

 

Condensed Consolidated Statements of Stockholders' Equity

8

 

Condensed Consolidated Statements of Cash Flows

10

 

Notes to Unaudited Condensed Consolidated Financial Statements

11

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

36

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

55

Item 4.

Controls and Procedures

55

PART II.

Other Information

56

Item 1.

Legal Proceedings

56

Item 1A.

Risk Factors

56

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

56

Item 6.

Exhibits

56

Signatures

57

 

 

2


 

Glossary of Terms

 

Abbreviation

 

Term

ASC

 

Accounting Standards Codification

 

 

 

BluJay

 

BluJay TopCo Limited, a private limited liability company registered in England and Wales which owns BluJay Solutions, a cloud-based logistics execution platform company

 

 

 

BluJay Sellers

 

BluJay and its subsidiaries

 

 

 

CC Capital

 

CC NB Sponsor 1 Holdings LLC

 

 

 

Class A Common Stock

 

Class A common stock, par value $0.0001 per share

 

 

 

Class V Common Stock

 

Class V common stock, par value $0.0001 per share

 

 

 

Common Units

 

common units representing limited liability company interests of E2open Holdings, LLC, which are non-voting, economic interests in E2open Holdings, LLC. Every economic common unit is tied to one voting share of Class V Common Stock of E2open Parent Holdings, Inc.

 

 

 

Forward Purchase Agreement

 

agreement dated as of April 28, 2020, by and between CCNB1 and Neuberger Berman Opportunistic Capital Solutions Master Fund LP

 

 

 

Forward Purchase Warrants

 

5,000,000 redeemable warrants purchased pursuant to the Forward Purchase Agreement

 

 

 

Insight Partners

 

entities affiliated with Insight Venture Management, LLC, including funds under management; controlling unitholder of E2open Holdings, LLC

 

 

 

Investor Rights Agreement

 

agreement amended and restated on September 1, 2021 providing Insight Partners, CC Capital, Francisco Partners and Temasek the right to nominate members to the board of directors and requires parties to vote in favor of director nominees recommended by the board of directors.

 

 

 

LIBOR

 

London Interbank Offered Rate

 

 

 

Logistyx

 

Logistyx Technologies, LLC, a private limited liability company headquartered in Chicago, Illinois, which connects top retailers, manufacturers and logistics providers to more than 550 in-network carriers with strategic parcel shipping and omni-channel fulfillment technology.

 

 

 

nm

 

not meaningful

 

 

 

NYSE

 

New York Stock Exchange

 

 

 

PIPE

 

private investment in public equity; financing from institutional investors

 

 

 

Purchase Agreement

 

Share Purchase Deed entered into on May 27, 2021 with BluJay

 

 

 

RCU

 

restricted common units representing Series 1 and Series 2 of E2open Holdings, LLC

 

 

 

SCM

 

omni-channel and supply chain management

 

 

 

SEC

 

U.S. Securities and Exchange Commission

 

 

 

Temasek

 

Temasek Holdings (Private) Limited

 

 

 

U.S. GAAP

 

generally accepted accounting principles in the United States

 

 

 

VWAP

 

daily per share volume-weighted average price of the Class A Common Stock on the NYSE as displayed on the Bloomberg page under the heading Bloomberg VWAP

 

3


 

Forward-Looking Statements

This Quarterly Report on Form 10-Q (Quarterly Report) contains "forward-looking statements" within the meaning of the federal securities law. These forward-looking statements give E2open Parent Holdings, Inc.'s (we, our, us, Company or E2open) current expectations and include projections of results of operations or financial condition or forecasts of future events. Words such as "may," "can," "should," "will," "estimate," "plan," "project," "forecast," "intend," "expect," "anticipate," "believe," "seek," "target" and similar expressions are used to identify forward-looking statements. Without limiting the generality of the forgoing, forward-looking statements contained in this document include our expectations regarding our future growth, operational and financial performance and business prospects and opportunities.

These forward-looking statements are based on information available as of the date of this Quarterly Report and management's then current expectations, forecasts and assumptions, and involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside our control and our directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. We do not undertake any obligation to update, add or to otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

the effect of the volatile, negative or uncertain economic and political conditions, including the invasion of Ukraine by Russia, the related sanctions and other measures that have been and continue to be imposed in response to the conflict, inflation, fluctuations in foreign currency exchange rates and the potential effects of these factors on our business, results of operations and financial condition as well as our clients' businesses and levels of business activity;
changes in market interest rates particularly on our variable rate debt, including the recent significant increases in market interest rates experienced so far in fiscal 2023 and that may continue to increase;
the inability to develop and market new product innovations and monetize our network;
risks associated with our past and prospective acquisitions (including the BluJay and Logistyx acquisitions), including the failure to successfully integrate operations, personnel, systems and products of the acquired companies, adverse tax consequences of acquisitions, greater than expected liabilities of the acquired companies, charges to earnings from acquisitions, the ability of the combined company to grow and manage profitability, maintain relationships with clients and suppliers and retain its management and key employees and the ability to recognize the anticipated benefits of the acquisition;
the inability to develop and maintain effective internal controls over financial reporting;
the inability to attract new clients or upsell/cross sell existing clients or the failure to renew existing client subscriptions on term favorable to us;
risks associated with our extensive and expanding international operations, including the risks created by geopolitical instability;
the failure of the market for cloud-based SCM solutions to develop as quickly as we expect or failure to compete successfully in a fragmented and competitive SCM market;
the inability to adequately protect key intellectual property rights or proprietary technology;
the diversion of management's attention and consumption of resources as a result of potential acquisitions of other companies;
failure to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows;
cyber-attacks and security vulnerabilities; and
certain other factors discussed elsewhere in this Quarterly Report.

For a further discussion of these and other factors that could impact our future results and performance, see Part I, Item 1A., Risk Factors in our Annual Report on Form 10-K for the fiscal year ended February 28, 2022, filed with the SEC on April 29, 2022 (2022 Form 10-K).

 

4


 

PART I—Financial Information

Item 1. Financial Statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Balance Sheets

 

(In thousands, except share amounts)

 

November 30, 2022

 

 

February 28, 2022

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

85,688

 

 

$

155,481

 

Restricted cash

 

 

13,130

 

 

 

19,073

 

Accounts receivable - net of allowance of $5,003 and $3,055 as of November 30, 2022 and
    February 28, 2022, respectively

 

 

149,457

 

 

 

155,341

 

Prepaid expenses and other current assets

 

 

26,461

 

 

 

26,243

 

Total current assets

 

 

274,736

 

 

 

356,138

 

Goodwill

 

 

3,306,233

 

 

 

3,756,871

 

Intangible assets, net

 

 

1,095,762

 

 

 

1,181,390

 

Property and equipment, net

 

 

73,104

 

 

 

65,937

 

Operating lease right-of-use assets

 

 

21,022

 

 

 

28,102

 

Other noncurrent assets

 

 

21,525

 

 

 

17,017

 

Total assets

 

$

4,792,382

 

 

$

5,405,455

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

111,202

 

 

$

128,544

 

Channel client deposits payable

 

 

13,130

 

 

 

19,073

 

Deferred revenue

 

 

173,580

 

 

 

190,992

 

Payable to Logistyx sellers

 

 

1,068

 

 

 

 

Current portion of notes payable

 

 

20,962

 

 

 

89,097

 

Current portion of operating lease obligations

 

 

8,093

 

 

 

7,652

 

Current portion of financing lease obligations

 

 

2,002

 

 

 

2,307

 

Income taxes payable

 

 

9,768

 

 

 

2,702

 

Total current liabilities

 

 

339,805

 

 

 

440,367

 

Long-term deferred revenue

 

 

2,400

 

 

 

1,141

 

Operating lease obligations

 

 

17,462

 

 

 

21,202

 

Financing lease obligations

 

 

 

 

 

1,950

 

Notes payable

 

 

1,042,459

 

 

 

863,577

 

Tax receivable agreement liability

 

 

58,176

 

 

 

66,590

 

Warrant liability

 

 

30,375

 

 

 

67,139

 

Contingent consideration

 

 

27,808

 

 

 

45,568

 

Deferred taxes

 

 

255,207

 

 

 

413,038

 

Other noncurrent liabilities

 

 

973

 

 

 

712

 

Total liabilities

 

 

1,774,665

 

 

 

1,921,284

 

Commitments and Contingencies (Note 27)

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

Class A common stock; $0.0001 par value, 2,500,000,000 shares authorized;
    
302,452,552 and 301,536,621 issued and 302,275,898 and 301,359,967 outstanding as of
    November 30, 2022 and February 28, 2022, respectively

 

 

30

 

 

 

31

 

Class V common stock; $0.0001 par value; 42,747,890 shares authorized; 33,092,007
    and
33,560,839 issued and outstanding as of November 30, 2022 and February 28, 2022,
    respectively

 

 

 

 

 

 

Series B-1 common stock; $0.0001 par value; 9,000,000 shares authorized; 94 shares
    issued and outstanding

 

 

 

 

 

 

Series B-2 common stock; $0.0001 par value; 4,000,000 shares authorized; 3,372,184 issued
    and outstanding

 

 

 

 

 

 

Additional paid-in capital

 

 

3,374,388

 

 

 

3,362,219

 

Accumulated other comprehensive loss

 

 

(77,732

)

 

 

(19,019

)

Accumulated deficit

 

 

(530,215

)

 

 

(154,976

)

Treasury stock, at cost: 176,654 shares

 

 

(2,473

)

 

 

(2,473

)

Total E2open Parent Holdings, Inc. equity

 

 

2,763,998

 

 

 

3,185,782

 

Noncontrolling interest

 

 

253,719

 

 

 

298,389

 

Total stockholders' equity

 

 

3,017,717

 

 

 

3,484,171

 

Total liabilities and stockholders' equity

 

$

4,792,382

 

 

$

5,405,455

 

See notes to unaudited condensed consolidated financial statements.

5


 

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended November 30,

 

 

Nine Months Ended November 30,

 

(In thousands, except per share amounts)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Subscriptions

 

$

134,884

 

 

$

106,969

 

 

$

396,052

 

 

$

219,728

 

Professional services and other

 

 

30,009

 

 

 

30,033

 

 

 

89,898

 

 

 

61,680

 

Total revenue

 

 

164,893

 

 

 

137,002

 

 

 

485,950

 

 

 

281,408

 

Cost of Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Subscriptions

 

 

35,931

 

 

 

30,163

 

 

 

105,367

 

 

 

62,917

 

Professional services and other

 

 

20,417

 

 

 

17,587

 

 

 

63,446

 

 

 

38,694

 

Amortization of acquired intangible assets

 

 

24,402

 

 

 

25,036

 

 

 

73,869

 

 

 

48,885

 

Total cost of revenue

 

 

80,750

 

 

 

72,786

 

 

 

242,682

 

 

 

150,496

 

Gross Profit

 

 

84,143

 

 

 

64,216

 

 

 

243,268

 

 

 

130,912

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

24,939

 

 

 

25,000

 

 

 

73,088

 

 

 

56,909

 

Sales and marketing

 

 

20,448

 

 

 

18,101

 

 

 

67,348

 

 

 

41,789

 

General and administrative

 

 

23,073

 

 

 

22,871

 

 

 

66,774

 

 

 

49,989

 

Acquisition-related expenses

 

 

1,969

 

 

 

33,216

 

 

 

14,313

 

 

 

50,168

 

Amortization of acquired intangible assets

 

 

19,965

 

 

 

19,470

 

 

 

62,523

 

 

 

26,843

 

Goodwill impairment

 

 

 

 

 

 

 

 

514,816

 

 

 

 

Total operating expenses

 

 

90,394

 

 

 

118,658

 

 

 

798,862

 

 

 

225,698

 

Loss from operations

 

 

(6,251

)

 

 

(54,442

)

 

 

(555,594

)

 

 

(94,786

)

Other income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest and other expense, net

 

 

(21,270

)

 

 

(10,769

)

 

 

(54,732

)

 

 

(22,004

)

Gain (loss) from change in tax receivable
    agreement liability

 

 

2,697

 

 

 

(1,470

)

 

 

9,089

 

 

 

(4,606

)

Gain (loss) from change in fair value of warrant
    liability

 

 

16,150

 

 

 

(7,232

)

 

 

36,764

 

 

 

(48,448

)

Gain (loss) from change in fair value of contingent
    consideration

 

 

6,300

 

 

 

(1,140

)

 

 

17,760

 

 

 

(91,180

)

Total other income (expense)

 

 

3,877

 

 

 

(20,611

)

 

 

8,881

 

 

 

(166,238

)

Loss before income tax provision

 

 

(2,374

)

 

 

(75,053

)

 

 

(546,713

)

 

 

(261,024

)

Income tax benefit

 

 

7,877

 

 

 

10,764

 

 

 

130,010

 

 

 

3,392

 

Net income (loss)

 

 

5,503

 

 

 

(64,289

)

 

 

(416,703

)

 

 

(257,632

)

Less: Net income (loss) attributable to
    noncontrolling interest

 

 

698

 

 

 

(5,072

)

 

 

(41,464

)

 

 

(35,640

)

Net income (loss) attributable to E2open
    Parent Holdings, Inc.

 

$

4,805

 

 

$

(59,217

)

 

$

(375,239

)

 

$

(221,992

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

302,201

 

 

 

308,132

 

 

 

301,822

 

 

 

227,186

 

Diluted

 

 

302,359

 

 

 

308,132

 

 

 

301,822

 

 

 

227,186

 

Net income (loss) attributable to E2open Parent
    Holdings, Inc. common shareholders per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

$

(0.19

)

 

$

(1.24

)

 

$

(0.98

)

Diluted

 

$

0.02

 

 

$

(0.19

)

 

$

(1.24

)

 

$

(0.98

)

 

See notes to unaudited condensed consolidated financial statements.

6


 

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

 

 

 

Three Months Ended November 30,

 

 

Nine Months Ended November 30,

 

(In thousands)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net income (loss)

 

$

5,503

 

 

$

(64,289

)

 

$

(416,703

)

 

$

(257,632

)

Other comprehensive loss, net:

 

 

 

 

 

 

 

 

 

 

 

 

Net foreign currency translation income (loss),
    net of tax of ($
5,395) and $10,274 as of
    November 30, 2022

 

 

14,369

 

 

 

(25,617

)

 

 

(58,086

)

 

 

(30,665

)

Net deferred losses on cash flow hedges

 

 

(420

)

 

 

 

 

 

(627

)

 

 

 

Total other comprehensive income (loss), net

 

 

13,949

 

 

 

(25,617

)

 

 

(58,713

)

 

 

(30,665

)

Comprehensive income (loss)

 

 

19,452

 

 

 

(89,906

)

 

 

(475,416

)

 

 

(288,297

)

Less: Comprehensive income (loss) attributable
    to noncontrolling interest

 

 

2,112

 

 

 

(8,516

)

 

 

(47,306

)

 

 

(39,882

)

Comprehensive income (loss) attributable to
    E2open Parent Holdings, Inc.

 

$

17,340

 

 

$

(81,390

)

 

$

(428,110

)

 

$

(248,415

)

 

See notes to unaudited condensed consolidated financial statements.

 

7


 

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

 

(In thousands)

 

Common
Stock

 

 

Additional
Paid-In
Capital

 

 

Accumulated
Other
Comprehensive
Income

 

 

Retained
Earnings
(Accumulated
Deficit)

 

 

Treasury Stock

 

 

Total
E2open
Equity

 

 

Noncontrolling
Interest

 

 

Total
Equity