E2open Parent Holdings, Inc. [ETWO] Filings

E2open Parent Holdings, Inc. [ETWO] Filings

E2open Parent Holdings, Inc. [ETWO-WT] Filings

10-Q 1 etwo-20221130.htm 10-Q 10-Q

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


☐	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.

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

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

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).

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.

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.

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.

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

E2open Parent Holdings, Inc. [ETWO] Filings
E2open Parent Holdings, Inc. [ETWO-WT] Filings
10-Q	[2023-01-09]
10-Q	[2022-10-11]
10-Q	[2022-07-11]
10-K	[2022-04-29]
10-Q	[2022-01-12]
10-Q	[2021-10-13]
S-1	[2021-09-15]
10-Q	[2021-07-15]
10-K	[2021-05-20]
10-K	[2021-05-05]
S-1	[2021-03-08]
10-Q	[2020-11-16]
10-Q	[2020-08-14]
10-Q	[2020-06-05]
S-1	[2020-03-06]

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company