ETWO E2open Parent Holdings Inc

Delaware

001-39272

86-1874570

(State or other jurisdiction of incorporation)

(Commission File Number)

(IRS Employer Identification No.)

14135 Midway Road, Suite G300

Addison, TX

(address of principal executive offices)

75001

(zip code)

866-432-6736

(Registrant’s telephone number, including area code)

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

ETWO-WT

New York Stock Exchange

Exhibit

Number

Description

99.1*

—

Press release, dated October 9, 2024

104

—

Cover Page Interactive Data File (formatted in Inline XBRL)

E2open Parent Holdings, Inc.

Date: October 9, 2024

By:

/s/ Susan E. Bennett

Susan E. Bennett

Interim Executive Vice President and General Counsel

Three Months Ended August 31,

(In thousands, except per share amounts)

2024

2023

Revenue

Subscriptions

 $ 131,555

 $ 134,734

Professional services and other

                 20,637

                 23,754

Total revenue

               152,192

               158,488

Cost of Revenue

Subscriptions

                 36,317

                 36,780

Professional services and other

                 16,531

                 17,844

Amortization of acquired intangible assets

                 24,699

                 24,698

Total cost of revenue

                 77,547

                 79,322

Gross Profit

                 74,645

                 79,166

Operating Expenses

Research and development

                 25,979

                 24,945

Sales and marketing

                 20,325

                 21,551

General and administrative

                 21,579

                 38,550

Acquisition-related expenses

                   1,720

                        18

Amortization of acquired intangible assets

                 20,143

                 19,993

Goodwill impairment

                        —

                        —

Intangible asset impairment

                        —

                        —

Total operating expenses

                 89,746

               105,057

Loss from operations

               (15,101)

               (25,891)

Other income (expense)

Interest and other expense, net

               (25,150)

               (25,517)

Gain (loss) from change in tax receivable agreement liability

                   2,908

                   7,927

Gain from change in fair value of warrant liability

                   4,399

                   1,489

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

                   2,040

                   1,260

Total other expense

               (15,803)

               (14,841)

Loss before income tax provision

               (30,904)

               (40,732)

Income tax (expense) benefit

                 (1,949)

                   2,103

Net loss

               (32,853)

               (38,629)

Less: Net loss attributable to noncontrolling interest

                 (2,990)

                 (3,757)

Net loss attributable to E2open Parent Holdings, Inc.

 $ (29,863)

 $ (34,872)

Weighted-average common shares outstanding:

Basic

               308,059

               303,220

Diluted

               308,059

               303,220

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

Basic

 $ (0.10)

 $ (0.12)

Diluted

 $ (0.10)

 $ (0.12)

(In thousands)

August 31, 2024

February 29, 2024

Assets

Cash and cash equivalents

 $ 142,164

 $ 134,478

Restricted cash

                    16,593

                    14,560

Accounts receivable, net

                  112,592

                  161,556

Prepaid expenses and other current assets

                    35,974

                    28,843

Total current assets

                  307,323

                  339,437

Goodwill

               1,858,263

               1,843,477

Intangible assets, net

                  753,166

                  841,031

Property and equipment, net

                    65,167

                    67,177

Operating lease right-of-use assets

                    17,658

                    21,299

Other noncurrent assets

                    29,903

                    29,234

Total assets

 $ 3,031,480

 $ 3,141,655

Liabilities, Redeemable Share-Based Awards and Stockholders' Equity

Accounts payable and accrued liabilities

 $ 82,234

 $ 90,594

Channel client deposits payable

                    16,593

                    14,560

Deferred revenue

                  170,990

                  213,138

Current portion of notes payable

                    11,283

                    11,272

Current portion of operating lease obligations

                      6,746

                      7,378

Current portion of financing lease obligations

                      2,171

                      1,448

Income taxes payable

                      8,756

                         584

Total current liabilities

                  298,773

                  338,974

Long-term deferred revenue

                      1,513

                      2,077

Operating lease obligations

                    13,563

                    17,372

Financing lease obligations

                      4,209

                      3,626

Notes payable

               1,034,389

               1,037,623

Tax receivable agreement liability

                    62,760

                    67,927

Warrant liability

                      6,553

                    14,713

Contingent consideration

                    18,268

                    18,028

Deferred taxes

                    48,952

                    55,586

Other noncurrent liabilities

                      1,052

                         602

Total liabilities

               1,490,032

               1,556,528

Commitments and Contingencies

Redeemable share-based awards

                      1,710

                          —

Stockholders' Equity

Class A common stock

                          31

                          31

Class V common stock

                          —

                          —

Series B-1 common stock

                          —

                          —

Series B-2 common stock

                          —

                          —

Additional paid-in capital

               3,425,542

               3,407,694

Accumulated other comprehensive loss

                   (32,178)

                   (46,835)

Accumulated deficit

              (1,942,428)

              (1,873,703)

Treasury stock, at cost

                    (2,473)

                    (2,473)

Total E2open Parent Holdings, Inc. equity

               1,448,494

               1,484,714

Noncontrolling interest

                    91,244

                  100,413

Total stockholders' equity

               1,539,738

               1,585,127

Total liabilities, redeemable share-based awards and stockholders' equity

 $ 3,031,480

 $ 3,141,655

Six Months Ended August 31,

(In thousands)

2024

2023

Cash flows from operating activities

Net loss

 $ (75,641)

 $ (399,513)

Adjustments to reconcile net loss to net cash from operating activities:

Depreciation and amortization

107,058

107,168

Amortization of deferred commissions

4,400

2,758

Provision for credit losses

1,054

1,294

Amortization of debt issuance costs

2,640

2,640

Amortization of operating lease right-of-use assets

3,492

3,890

Share-based compensation

24,710

11,887

Deferred income taxes

(7,865)

(72,721)

Right-of-use assets impairment charge

576

549

Goodwill impairment charge

—

410,041

Indefinite-lived intangible asset impairment charge

—

4,000

Loss (gain) from change in tax receivable agreement liability

1,066

(5,467)

Gain from change in fair value of warrant liability

(8,160)

(16,169)

Loss (gain) from change in fair value of contingent consideration

240

(10,260)

Gain on operating lease termination

(126)

(189)

Loss (gain) on disposal of property and equipment

78

(147)

Changes in operating assets and liabilities:

Accounts receivable

47,910

51,394

Prepaid expenses and other current assets

(9,482)

(3,338)

Other noncurrent assets

(5,069)

(4,172)

Accounts payable and accrued liabilities

(16,827)

(7,825)

Channel client deposits payable

2,033

11,451

Deferred revenue

(42,711)

(33,296)

Changes in other liabilities

(949)

(2,714)

Net cash provided by operating activities

28,427

51,261

Cash flows from investing activities

Capital expenditures

(12,277)

(16,057)

Net cash used in investing activities

(12,277)

(16,057)

Cash flows from financing activities

Repayments of indebtedness

(5,617)

(5,587)

Repayments of financing lease obligations

(841)

(2,243)

Proceeds from exercise of stock options

155

—

Net cash used in financing activities

(6,303)

(7,830)

Effect of exchange rate changes on cash and cash equivalents

(128)

2,885

Net increase in cash, cash equivalents and restricted cash

9,719

30,259

Cash, cash equivalents and restricted cash at beginning of period

149,038

104,342

Cash, cash equivalents and restricted cash at end of period

 $ 158,757

 $ 134,601

(in millions)

Q2

Q2

$ Var

% Var

 FY2025

 FY2024

PRO FORMA REVENUE RECONCILIATION

Total GAAP Revenue

152.2

158.5

(6.3)

(4.0%)

Constant currency FX impact (1)

-

-

-

n/m

Total non-GAAP revenue (constant currency basis) (2)

$152.2

$158.5

($6.3)

(3.9%)

GAAP Subscription Revenue

131.6

134.7

(3.1)

(2.3%)

Constant currency FX impact (1)

-

-

-

n/m

Non-GAAP subscription revenue (constant currency basis) (2)

$131.6

$134.7

($3.1)

(2.3%)

GAAP Professional Services and other revenue

20.6

23.8

(3.1)

(13.1%)

Constant currency FX impact (1)

-

-

-

n/m

Non-GAAP professional services and other revenue (constant currency basis) (2)

$20.6

$23.8

($3.1)

(13.1%)

PRO FORMA GROSS PROFIT RECONCILIATION

GAAP Gross profit

74.6

79.2

(4.5)

(5.7%)

Depreciation and amortization

28.2

28.8

(0.6)

(2.0%)

Share-based compensation (3)

1.8

1.1

0.7

57.9%

Non-recurring/non-operating costs (4)

0.3

0.4

(0.1)

(23.3%)

Non-GAAP gross profit

$105.0

$109.5

($4.5)

(4.1%)

Non-GAAP Gross Margin %

69.0%

69.1%

Constant currency FX impact (1)

(0.1)

-

(0.1)

n/m

Total non-GAAP gross profit (constant currency basis) (2)

$104.9

$109.5

($4.6)

(4.2%)

Non-GAAP Gross Margin % (constant currency basis) (2)

68.9%

69.1%

PRO FORMA ADJUSTED EBITDA RECONCILIATION

Net income (loss)

(32.9)

(38.6)

5.8

n/m

Interest expense, net

24.5

24.7

(0.2)

(0.9%)

Income tax benefit

2.0

(2.1)

4.1

n/m

Depreciation and amortization

53.5

53.9

(0.4)

(0.7%)

EBITDA

$47.0

$37.8

$9.2

24.4%

Share-based compensation (3)

12.9

7.4

5.5

73.7%

Non-recurring/non-operating costs (4)

2.0

3.6

(1.6)

(44.7%)

Acquisition-related adjustments (5)

1.7

-

1.7

n/m

Change in tax receivable agreement liability (6)

(2.9)

(7.9)

5.0

(63.3%)

Change in fair value of warrant liability (7)

(4.4)

(1.5)

(2.9)

195.3%

Change in fair value of contingent consideration (8)

(2.0)

(1.3)

(0.8)

61.9%

Right-of-use assets impairment charge (9)

0.6

0.2

0.4

205.3%

Legal settlement (10)

-

17.8

(17.8)

n/m

Adjusted EBITDA

$54.9

$56.1

($1.2)

(2.2%)

Adjusted EBITDA Margin %

36.1%

35.4%

Constant currency FX impact (1)

(0.2)

-

(0.2)

n/m

Total adjusted EBITDA (constant currency basis) (2)

$54.7

$56.1

($1.4)

(2.5%)

Adjusted EBITDA Margin % (constant currency basis) (2)

35.9%

35.4%

(1) Constant Currency refers to pro-forma amounts excluding the impact of translating foreign currencies into U.S. dollars. To calculate foreign currency translation on a constant currency basis, operating results for the current year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the exchange rates in effect during the comparable period of the prior year (rather than the actual exchange rates in effect during the current year period).

(2) Constant Currency refers to pro forma amounts excluding translation and transactional impacts from foreign currency exchange rates.

(3) Reflects non-cash, long-term share-based compensation expense.

(4) Primarily includes non-recurring expenses such as the non-acquisition severance related to cost reduction initiatives, reorganizations and executive transition costs; foreign currency transaction gains and losses; systems integrations; legal entity rationalization and non-recurring consulting and advisory fees.

(5) Primarily includes advisory, consulting, accounting and legal expenses incurred in connection with the strategic review.

(6) Represents the fair value adjustment at each balance sheet date for the Tax Receivable Agreement along with the associated interest.

(7) Represents the fair value adjustment at each balance sheet date of the warrant liability related to our warrants.

(8) Represents the fair value adjustment at each balance sheet date of the contingent consideration liability related to the restricted B-2 common stock and Series 2 RCUs.

(9) Represents the impairment on our operating lease ROU assets and leasehold improvements due to vacating certain facilities.

(10) Represents the $17.8 million litigation settlement for the unfavorable arbitration ruling related to the Kewill customer case.

Fiscal Second Quarter 2025

(in millions)

GAAP

Non-recurring(1)

Depreciation & Amortization

Share-Based Compensation

Non-GAAP (Adjusted)

% of Revenue

Impairment
Charges(2)

COST OF GOODS

Subscriptions

36.3

(0.2)

-

(3.3)

(1.1)

31.7

24.1%

Professional services and other

16.5

(0.2)

-

(0.2)

(0.7)

15.5

74.9%

Amortization of intangibles

24.7

-

-

(24.7)

-

-

Total cost of revenue

$77.6

($0.3)

-

($28.2)

(1.8)

$47.2

31.0%

Gross Profit

$74.6

$0.3

-

$28.2

$1.8

$105.0

69.0%

OPERATING COSTS

Research & development

26.0

(0.6)

-

(4.6)

(2.5)

18.3

12.0%

Sales & marketing

20.3

(0.2)

-

(0.3)

(2.3)

17.5

11.5%

General & administrative

21.6

(0.1)

(0.6)

(0.2)

(6.4)

14.4

9.4%

Acquisition related expenses

1.7

(1.7)

-

-

-

 -

Amortization of intangibles

20.1

-

-

(20.1)

-

-

Total operating expenses

$89.7

($2.6)

($0.6)

($25.3)

($11.1)

$50.1

32.9%

(1) Primarily includes non-recurring expenses such as the non-acquisition severance related to cost reduction initiatives, reorganizations and executive transition costs; foreign currency transaction gains and losses; systems integrations; legal entity rationalization and non-recurring consulting and advisory fees.

(2) Represents the impairment on our operating lease ROU assets and leasehold improvements due to vacating certain facilities.

(in millions, except per share amounts)

Q2 25

GAAP Net income (loss)

(32.9)

Interest expense, net

24.5

Income taxes benefit

2.0

Depreciation & amortization

53.5

EBITDA

$47.0

Share-based compensation

12.9

Non-recurring/non-operating costs

2.0

Acquisition-related adjustments

1.7

Change in tax receivable agreement liability

(2.9)

Change in fair value of warrant liability

(4.4)

Change in fair value of contingent consideration

(2.0)

Right-of-use assets impairment charge

0.6

Adjusted EBITDA

$54.9

Depreciation

(8.6)

Interest and other expense, net

(24.5)

Normalized income taxes (1)

(5.2)

Adjusted Net Income

$16.6

Adjusted basic shares outstanding

345.3

Adjusted earnings per share

$0.05

(in millions)

Q1 25

Q2 25

Q2 YTD

GAAP operating cash flow

35.9

(7.5)

28.4

Add: Non-recurring cash payments (1)

4.3

2.9

7.2

Add: Change in channel client deposits payable (2)

(1.2)

(0.9)

(2.0)

Adjusted operating cash flow

$39.1

($5.5)

$33.6

Capital expenditures

(6.1)

(6.2)

(12.3)

Adjusted free cash flow

$33.0

($11.6)

$21.3

(1) Primarily includes non-recurring expenses such as the non-acquisition severance related to cost reduction initiatives, reorganizations and executive transition costs; foreign currency transaction gains and losses; systems integrations; legal entity rationalization and non-recurring consulting and advisory fees.

(2)   Channel Client Deposits Payable represents client deposits for the incentive payment program associated with the Company's channel shaping application. The Company offers services to administer incentive payments to partners on behalf of the Company’s clients. The Company’s clients deposit these funds into a restricted cash account with an offset included as a liability in incentive program payable in the Consolidated Balance Sheets.

Description

Shares (000's)

Notes

Shares outstanding as of August 31, 2024

308,605

Shares outstanding

Common Units

30,692

Units issued in the Business Combination that have not been converted from common units to Class A common stock (Common units are represented by Class V shares).

Series B-2 Shares (unvested)

3,372

Represents the right to acquire shares of Class A common stock when the 20-day VWAP reaches $15.00 per share.

Restricted Common Units Series 2 (unvested)

2,628

Represents the right in E2open Holdings, LLC that converts into common units when the 20-day VWAP reaches $15.00. Upon conversion to common units, the holders can elect to convert the common units to Class A common stock.

Adjusted Basic Shares

345,297

Warrants

29,080

Outstanding warrants with an exercise price of $11.50.

Options (vested/unreleased and unvested)

6,305

Options issued to management under the long-term incentive plan.

Restricted Shares (vested/unreleased and unvested)

17,802

Restricted shares issued to employees, management and directors under the long-term incentive plan.

Fully Converted Shares

398,484