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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
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☒ |
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
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☐ |
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)
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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:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Class A Common Stock, par value $0.0001 per share |
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ETWO |
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New York Stock Exchange |
Warrants to purchase one share of Class A Common Stock at an exercise price of $11.50 |
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ETWO-WT |
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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
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 |
|
|