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, 2021

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 ☒

There were 301,359,967 shares of common stock, $0.0001 par value per share, issued and outstanding as of January 10, 2022.

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 Loss	7
	Condensed Consolidated Statements of Stockholders’ Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Unaudited Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II.	OTHER INFORMATION	52
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 6.	Exhibits	54
Signatures		55

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
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, requires parties to vote in favor of director nominees recommended by the board of directors, requires the registration of securities within 30 days of September 1, 2021 and limits the transfer of beneficially owned shares of common stock prior to the termination of the Lock-up Period.
LIBOR	London Interbank Offered Rate
Lock-up Period	period commencing on September 1, 2021 and ending on February 28, 2022
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	supply chain management
SEC	U.S. Securities and Exchange Commission
Temasek	Temasek Holdings
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 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:

cyber-attacks and security vulnerabilities;

the outcome of any legal proceedings that may be instituted against us or others following the completion of the BluJay acquisition and any definitive agreements with respect thereto;

the ability to recognize the anticipated benefits of the BluJay acquisition, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitability, maintain relationships with customers and suppliers and retain its management and key employees;

costs related to the BluJay acquisition;

the integration of BluJay and E2open may be more difficult, time-consuming or expensive than anticipated;

the inability to develop and maintain effective internal controls;

the COVID-19 pandemic;

the inability to attract new customers or upsell/cross sell existing customers or the failure to renew existing customer subscriptions on term favorable to us;

failure to renew existing customer subscriptions on terms favorable to us;

risks associated with our extensive and expanding international operations;

the inability to develop and market new and enhanced solutions;

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;

inaccuracies in information sourced for our knowledge databases;

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;

risks associated with our past and prospective acquisitions (including the BluJay acquisition), including the failure to successfully integrate operations, personnel, systems, technologies and products of the acquired companies, adverse tax consequences of acquisitions, greater than expected liabilities of the acquired companies and charges to earnings from acquisitions;

failure to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows; 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, 2021, filed with the SEC on May 20, 2021 (2021 Form 10-K).

4

PART I—Financial Information

Item 1. Financial Statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Balance Sheets

	Successor
(In thousands, except share amounts)	November 30, 2021			February 28, 2021
	(unaudited)
Assets
Cash and cash equivalents	$	56,462		$	194,717
Restricted cash		15,047			12,825
Accounts receivable - net of allowance of $3,224 and $908, respectively		104,643			112,657
Prepaid expenses and other current assets		28,992			12,643
Total current assets		205,144			332,842
Long-term investments		210			224
Goodwill		3,760,136			2,628,646
Intangible assets, net		1,226,512			824,851
Property and equipment, net		55,778			44,198
Operating lease right-of-use assets		26,553			—
Other noncurrent assets		14,845			7,416
Total assets	$	5,289,178		$	3,838,177
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities	$	112,298		$	70,233
Incentive program payable		15,047			12,825
Deferred revenue		147,535			89,691
Acquisition-related obligations		2,700			2,000
Current portion of notes payable		9,112			4,405
Current portion of operating lease obligations		6,626			—
Current portion of financing lease obligations		2,329			4,827
Total current liabilities		295,647			183,981
Long-term deferred revenue		1,848			482
Operating lease obligations		20,784			—
Financing lease obligations		2,093			6,588
Notes payable		867,523			502,800
Tax receivable agreement liability		67,910			50,114
Warrant liability		117,220			68,772
Contingent consideration		66,988			150,808
Deferred taxes		441,340			396,217
Other noncurrent liabilities		1,020			1,057
Total liabilities		1,882,373			1,360,819
Commitments and Contingencies (Note 23)
Stockholders' Equity
Class A common stock; $0.0001 par value, 2,500,000,000 shares authorized;     300,415,025 and 187,051,142 issued and 300,238,371 and 187,051,142 outstanding as of     November 30, 2021 and February 28, 2021		30			19
Class V common stock; $0.0001 par value; 42,747,890 and 40,000,000 shares authorized;     34,682,435 and 35,636,680 issued and outstanding as of November 30, 2021 and     February 28, 2021		—			—
Series B-1 common stock; $0.0001 par value; 9,000,000 shares authorized; 94 and 8,120,367     issued and outstanding as of November 30, 2021 and February 28, 2021		—			—
Series B-2 common stock; $0.0001 par value; 4,000,000 shares authorized; 3,372,184 issued     and outstanding as of November 30, 2021 and February 28, 2021		—			—
Additional paid-in capital		3,348,606			2,071,206
Accumulated other comprehensive (loss) income		(28,277	)		2,388
(Accumulated deficit) retained earnings		(211,192	)		10,800
Treasury stock, at cost: 176,654 shares as of November 30, 2021		(2,473	)		—
Total E2open Parent Holdings, Inc. equity		3,106,694			2,084,413
Noncontrolling interest		300,111			392,945
Total stockholders' equity		3,406,805			2,477,358
Total liabilities and stockholders' equity	$	5,289,178		$	3,838,177

See notes to condensed consolidated financial statements.

5

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Successor			Predecessor			Successor			Predecessor
	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
(In thousands, except per share amounts)	November 30, 2021			November 30, 2020			November 30, 2021			November 30, 2020
Revenue
Subscriptions	$	106,969		$	70,374		$	219,728		$	209,013
Professional services		30,033			13,707			61,680			40,009
Total revenue		137,002			84,081			281,408			249,022
Cost of Revenue
Subscriptions		30,163			15,568			62,917			44,566
Professional services		17,587			11,346			38,694			32,791
Amortization of acquired intangible assets		25,036			4,945			48,885			15,453
Total cost of revenue		72,786			31,859			150,496			92,810
Gross Profit		64,216			52,222			130,912			156,212
Operating Expenses
Research and development		25,000			14,225			56,909			43,212
Sales and marketing		18,101			12,973			41,789			37,275
General and administrative		22,871			10,412			49,989			30,037
Acquisition-related expenses		33,216			5,968			50,168			11,354
Amortization of acquired intangible assets		19,470			8,451			26,843			25,365
Total operating expenses		118,658			52,029			225,698			147,243
(Loss) income from operations		(54,442	)		193			(94,786	)		8,969
Other expense
Interest and other expense, net		(10,769	)		(17,575	)		(22,004	)		(53,255	)
Change in tax receivable agreement liability		(1,470	)		—			(4,606	)		—
Loss from change in fair value of warrant liability		(7,232	)		—			(48,448	)		—
Loss from change in fair value of contingent consideration		(1,140	)		—			(91,180	)		—
Total other expenses		(20,611	)		(17,575	)		(166,238	)		(53,255	)
Loss before income tax expense		(75,053	)		(17,382	)		(261,024	)		(44,286	)
Income tax benefit (expense)		10,764			(9,685	)		3,392			(24,073	)
Net loss		(64,289	)	$	(27,067	)		(257,632	)	$	(68,359	)
Less: Net loss attributable to noncontrolling interest		(5,072	)					(35,640	)
Net loss attributable to E2open Parent Holdings, Inc.	$	(59,217	)				$	(221,992	)
Net loss attributable to E2open Parent Holdings,     Inc. common shareholders per share:
Basic	$	(0.19	)				$	(0.98	)
Diluted	$	(0.19	)				$	(0.98	)

See notes to condensed consolidated financial statements.

6

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

	Successor			Predecessor			Successor			Predecessor
	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
(In thousands)	November 30, 2021			November 30, 2020			November 30, 2021			November 30, 2020
Net loss	$	(64,289	)	$	(27,067	)	$	(257,632	)	$	(68,359	)
Other comprehensive loss, net:
Net foreign currency translation loss		(25,617	)		403			(30,665	)		57
Total other comprehensive loss, net		(25,617	)		403			(30,665	)		57
Comprehensive loss		(89,906	)	$	(26,664	)		(288,297	)	$	(68,302	)
Less: Comprehensive loss attributable to     noncontrolling interest		(8,516	)					(39,882	)
Comprehensive loss attributable to E2open     Parent Holdings, Inc.	$	(81,390	)				$	(248,415	)

See notes to condensed consolidated financial statements.

7

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

	Predecessor
(In thousands)	Members' Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Members' Equity
Balance, February 29, 2020	$	433,992		$	(898	)	$	(218,502	)	$	214,592
Investment by member		1,788			—			—			1,788
Unit-based compensation		2,046			—			—			2,046
Comprehensive loss		—			(291	)		—			(291	)
Net loss		—			—			(23,752	)		(23,752	)
Balance, May 31, 2020		437,826			(1,189	)		(242,254	)		194,383
Investment by member		(10	)		—			—			(10	)
Unit-based compensation		1,971			—			—			1,971
Comprehensive loss		—			(55	)		—			(55	)
Net loss		—			—			(17,540	)		(17,540	)
Balance, August 31, 2020		439,787			(1,244	)		(259,794	)		178,749
Investment by member		1,606			—			—			1,606
Unit-based compensation		1,936			—			—			1,936
Comprehensive income		—			403			—			403
Net loss		—			—			(27,067	)		(27,067	)
Balance, November 30, 2020	$	443,329