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Quarterly Report for Quarter Ending November 30, 2024 (Form 10-Q)

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01/10/2025 | Press release | Distributed by Public on 01/10/2025 06:51

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, 2024


☐	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.)
14135 Midway Road, Suite G300 Addison, TX	75001
(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 7, 2025, E2open Parent Holdings, Inc. had 309,346,106shares of Class A common stock outstanding.

Table of Contents


		Page
Glossary		3
Forward-Looking Statements	4
PART I.		6
Item 1.	Financial Statements (Unaudited)	6
	Condensed Consolidated Balance Sheets	6
	Condensed Consolidated Statements of Operations	7
	Condensed Consolidated Statements of Comprehensive Loss	8
	Condensed Consolidated Statements of Stockholders' Equity	9
	Condensed Consolidated Statements of Cash Flows	11
	Notes to the Unaudited Condensed Consolidated Financial Statements	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
PART II.	Other Information	48
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
Signatures	50

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

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

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

RCU		restricted common units representing Series 2 of E2open Holdings, LLC

SCM		omni-channel and supply chain management

SEC		U.S. Securities and Exchange Commission

SOFR		Secured Overnight Financing Rate

SONIA		Sterling Overnight Index Average

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-LookingStatements

This Quarterly Report on Form 10-Q (Quarterly Report) contains "forward-looking statements" within the meaning of the federal securities laws, and are subject to the safe harbor created under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and generally can be identified by the use of words such as "may," "can," "should," "will," "estimate," "plan," "project," "forecast," "intend," "expect," "anticipate," "believe," "seek," "target" and similar expressions or future or conditional verbs. 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 E2open Parent Holdings, Inc.'s (we, our, us, Company, E2open) control and outside the control of our directors, officers and affiliates. Accordingly, we can give no assurance that any expectation or belief will result or will be achieved or accomplished. Investors therefore should not place undue reliance on forward-looking statements.

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 macro-economic and political conditions, inflation, fluctuations in foreign currency exchange rates and the potential effects of these factors on our business, our slowing growth rate, 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 in fiscal 2023 and 2024;

•

the inability to realize the value of the goodwill and intangible assets, which could result in the incurrence of material charges related to the impairment of those assets;

•

the inability to develop and market new product innovations and monetize our network;

•

the slowing of our growth rate due to lower than anticipated new bookings and higher than expected churn;

•

risks associated with our past 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 terms 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 diversion of management's attention and consumption of resources as a result of the strategic alternatives process;

•

the inability to adequately protect key intellectual property rights or proprietary technology;

•

failure to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows;

•

cyber-attacks and security vulnerabilities;

•

inability to retain key employees; and

•

certain other factors discussed elsewhere in this Quarterly Report.

More information on factors that could cause our actual results or events to differ from those expresses in forward-looking statements in included from time to time in our reports filed with the SEC including in Part I, Item 1A, Risk Factorsin our Annual Report on Form 10-K for the fiscal year ended February 29, 2024, filed with the SEC on April 29, 2024 (2024 Form 10-K).

All forward-looking statements speak only as of the date of this Quarterly Report and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this Quarterly Report. 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 required by law.

PART I-Financial Information

Item 1. Financial Statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Balance Sheets


(In thousands, except share and per share amounts)	November 30, 2024			February 29, 2024
	(Unaudited)
Assets
Cash and cash equivalents	$	151,213			$	134,478
Restricted cash		17,221				14,560
Accounts receivable, net of allowance of $7,103 and $6,587 as of November 30, 2024 and February 29, 2024, respectively		133,960				161,556
Prepaid expenses and other current assets		31,159				28,843
Total current assets		333,553				339,437
Goodwill		1,467,584				1,843,477
Intangible assets, net		711,569				841,031
Property and equipment, net		63,045				67,177
Operating lease right-of-use assets		16,627				21,299
Other noncurrent assets		29,766				29,234
Total assets	$	2,622,144			$	3,141,655
Liabilities, Redeemable Share-Based Awards and Stockholders' Equity
Accounts payable and accrued liabilities	$	77,129			$	90,594
Channel client deposits payable		17,221				14,560
Deferred revenue		187,526				213,138
Current portion of notes payable		11,288				11,272
Current portion of operating lease obligations		6,597				7,378
Current portion of financing lease obligations		2,207				1,448
Income taxes payable		7,360				584
Total current liabilities		309,328				338,974
Long-term deferred revenue		2,581				2,077
Operating lease obligations		12,335				17,372
Financing lease obligations		3,643				3,626
Notes payable		1,032,770				1,037,623
Tax receivable agreement liability		60,627				67,927
Warrant liability		1,660				14,713
Contingent consideration		9,568				18,028
Deferred taxes		41,999				55,586
Other noncurrent liabilities		1,035				602
Total liabilities		1,475,546				1,556,528
Commitments and Contingencies (Note 22)
Redeemable share-based awards		2,481				-
Stockholders' Equity
Class A common stock; $0.0001 par value, 2,500,000,000 shares authorized; 309,349,775 and 306,237,585 issued and 309,173,121 and 306,060,931 outstanding as of November 30, 2024 and February 29, 2024, respectively		31				31
Class V common stock; $0.0001 par value; 42,747,890 shares authorized; 30,692,235 and 31,225,604 shares issued and outstanding as of November 30, 2024 and February 29, 2024, respectively		-				-
Series B-1 common stock; $0.0001 par value; 9,000,000 shares authorized; 94 shares issued and outstanding as of November 30, 2024 and February 29, 2024		-				-
Series B-2 common stock; $0.0001 par value; 4,000,000 shares authorized; 3,372,184 shares issued and outstanding as of November 30, 2024 and February 29, 2024		-				-
Additional paid-in capital		3,433,910				3,407,694
Accumulated other comprehensive loss		(54,523	)			(46,835	)
Accumulated deficit		(2,289,338	)			(1,873,703	)
Treasury stock, at cost: 176,654 shares as of November 30, 2024 and February 29, 2024		(2,473	)			(2,473	)
Total E2open Parent Holdings, Inc. equity		1,087,607				1,484,714
Noncontrolling interest		56,510				100,413
Total stockholders' equity		1,144,117				1,585,127
Total liabilities, redeemable share-based awards and stockholders' equity	$	2,622,144			$	3,141,655

See notes to the 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)	2024			2023			2024		2023
Revenue
Subscriptions	$	132,000			$	132,800		$	394,959		$	402,437
Professional services and other		19,655				24,697			60,051			73,668
Total revenue		151,655				157,497			455,010			476,105
Cost of Revenue
Subscriptions		35,640				36,689			109,056			110,013
Professional services and other		16,546				17,642			49,829			55,014
Amortization of acquired intangible assets		23,727				24,590			73,078			73,918
Total cost of revenue		75,913				78,921			231,963			238,945
Gross Profit		75,742				78,576			223,047			237,160
Operating Expenses
Research and development		23,259				24,937			74,035			75,748
Sales and marketing		21,529				22,583			62,850			63,692
General and administrative		20,831				24,739			65,753			85,414
Acquisition-related expenses		187				9			2,190			416
Amortization of acquired intangible assets		5,611				20,014			45,840			60,135
Goodwill impairment		369,100				687,700			369,100			1,097,741
Intangible asset impairment		10,000				30,000			10,000			34,000
Total operating expenses		450,517				809,982			629,768			1,417,146
Loss from operations		(374,775	)			(731,406	)		(406,721	)		(1,179,986	)
Other income (expense)
Interest and other expense, net		(25,423	)			(24,643	)		(75,946	)		(75,886	)
Gain from change in tax receivable agreement liability		2,530				2,888			1,464			8,355
Gain from change in fair value of warrant liability		4,893				2,617			13,053			18,786
Gain from change in fair value of contingent consideration		8,700				5,100			8,460			15,360
Total other expense		(9,300	)			(14,038	)		(52,969	)		(33,385	)
Loss before income tax provision		(384,075	)			(745,444	)		(459,690	)		(1,213,371	)
Income tax benefit		2,431				5,413			2,405			73,827
Net loss		(381,644	)			(740,031	)		(457,285	)		(1,139,544	)
Less: Net loss attributable to noncontrolling interest		(34,734	)			(72,475	)		(41,650	)		(111,721	)
Net loss attributable to E2open Parent Holdings, Inc.	$	(346,910	)		$	(667,556	)	$	(415,635	)	$	(1,027,823	)

Weighted average common shares outstanding:
Basic		308,904				303,848			307,894			303,188
Diluted		308,904				303,848			307,894			303,188
Net loss attributable to E2open Parent Holdings, Inc. common shareholders per share:
Basic	$	(1.12	)		$	(2.20	)	$	(1.35	)	$	(3.39	)
Diluted	$	(1.12	)		$	(2.20	)	$	(1.35	)	$	(3.39	)

See notes to the unaudited condensed consolidated financial statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)


	Three Months Ended November 30,			Nine Months Ended November 30,
(In thousands)	2024			2023			2024		2023
Net loss	$	(381,644	)		$	(740,031	)	$	(457,285	)	$	(1,139,544	)
Other comprehensive income (loss), net:
Net foreign currency translation (loss) gain, net of tax		(22,502	)			1,339			(5,979	)		20,271
Net deferred (losses) gains on foreign exchange forward contracts		-				(4	)		(46	)		729
Net deferred gains (losses) on interest rate collars		157				(1,028	)		(1,663	)		1,711
Total other comprehensive (loss) income, net		(22,345	)			307			(7,688	)		22,711
Comprehensive loss		(403,989	)			(739,724	)		(464,973	)		(1,116,833	)
Less: Comprehensive loss attributable to noncontrolling interest		(36,774	)			(72,449	)		(42,350	)		(109,494	)
Comprehensive loss attributable to E2open Parent Holdings, Inc.	$	(367,215	)		$	(667,275	)	$	(422,623	)	$	(1,007,339	)

See notes to the 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 (Loss) Income		Accumulated Deficit		Treasury Stock			Total E2open Equity			Noncontrolling Interest		Total Equity
Balance, February 28, 2023	$	30		$	3,378,633		$	(68,603	)	$	(803,679	)		$	(2,473	)	$	2,503,908		$	223,012		$	2,726,920
Share-based compensation		-			4,441			-			-				-			4,441			-			4,441
Vesting of restricted stock awards, net of shares withheld for taxes		-			(1,830	)		-			-				-			(1,830	)		-			(1,830	)
Other comprehensive income		-			-			8,170			-				-			8,170			-			8,170
Net loss		-			-			-			(325,395	)			-			(325,395	)		(35,489	)		(360,884	)
Balance, May 31, 2023		30			3,381,244			(60,433	)		(1,129,074	)			(2,473	)		2,189,294			187,523			2,376,817
Share-based compensation		-			7,426			-			-				-			7,426			-			7,426
Vesting of restricted stock awards, net of shares withheld for taxes		-			(100	)		-			-				-			(100	)		-			(100	)
Other comprehensive loss		-			-			14,234			-				-			14,234			-			14,234
Net loss		-			-			-			(34,872	)			-			(34,872	)		(3,757	)		(38,629	)
Balance, August 31, 2023		30			3,388,570			(46,199	)		(1,163,946	)			(2,473	)		2,175,982			183,766			2,359,748
Share-based compensation		-			6,845			-			-				-			6,845			-			6,845
Conversion of Common Units to common stock		-			836			-			-				-			836			(836	)		-
Vesting of restricted stock awards, net of shares withheld for taxes		-			(1,129	)		-			-				-			(1,129	)		-			(1,129	)
Impact of Common Unit conversions on Tax Receivable Agreement, net of tax		-			36			-			-				-			36			-			36
Other comprehensive income		-			-			307			-				-			307			-			307
Net income		-			-			-			(667,556	)			-			(667,556	)		(72,475	)		(740,031	)
Balance, November 30, 2023	$	30		$	3,395,158		$	(45,892	)	$	(1,831,502	)		$	(2,473	)	$	1,515,321		$	110,455		$	1,625,776


(In thousands)	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Treasury Stock			Total E2open Equity			Noncontrolling Interest		Total Equity
Balance, February 29, 2024	$	31		$	3,407,694		$	(46,835	)	$	(1,873,703	)		$	(2,473	)	$	1,484,714		$	100,413		$	1,585,127
Share-based compensation		-			11,768			-			-				-			11,768			-			11,768
Conversion of Common Units to common stock		-			1,311			-			-				-			1,311			(1,311	)		-
Vesting of restricted stock awards, net of shares withheld for taxes		-			(3,873	)		-			-				-			(3,873	)		-			(3,873	)
Impact of Common Unit conversions on Tax Receivable Agreement, net of tax		-			(493	)		-			-				-			(493	)		-			(493	)
Issuance of common stock upon exercise of stock options		-			150			-			-				-			150			-			150
Reclassification of stockholders' equity to redeemable share-based awards		-			(930	)		-			-				-			(930	)		-			(930	)
Other comprehensive income		-			-			2,494			-				-			2,494			-			2,494
Net loss		-			-			-			(38,862	)			-			(38,862	)		(3,926	)		(42,788	)
Balance, May 31, 2024		31			3,415,627			(44,341	)		(1,912,565	)			(2,473	)		1,456,279			95,176			1,551,455
Share-based compensation		-			11,940			-			-				-			11,940			-			11,940
Conversion of Common Units to common stock		-			942			-			-				-			942			(942	)		-
Vesting of restricted stock awards, net of shares withheld for taxes		-			(2,144	)		-			-				-			(2,144	)		-			(2,144	)
Impact of Common Unit conversions on Tax Receivable Agreement, net of tax		-			(43	)		-			-				-			(43	)		-			(43	)
Reclassification of stockholders' equity to redeemable share-based awards		-			(780	)		-			-				-			(780	)		-			(780	)
Other comprehensive income		-			-			12,163			-				-			12,163			-			12,163
Net loss		-			-			-			(29,863	)			-			(29,863	)		(2,990	)		(32,853	)
Balance, August 31, 2024		31			3,425,542			(32,178	)		(1,942,428	)			(2,473	)		1,448,494			91,244			1,539,738
Share-based compensation		-			10,244			-			-				-			10,244			-			10,244
Vesting of restricted stock awards, net of shares withheld for taxes		-			(1,177	)		-			-				-			(1,177	)		-			(1,177	)
Impact of Common Unit conversions on Tax Receivable Agreement, net of tax		-			72			-			-				-			72			-			72
Reclassification of stockholders' equity to redeemable share-based awards		-			(771	)		-			-				-			(771	)		-			(771	)
Other comprehensive loss		-			-			(22,345	)		-				-			(22,345	)		-			(22,345	)
Net loss		-			-			-			(346,910	)			-			(346,910	)		(34,734	)		(381,644	)
Balance, November 30, 2024	$	31		$	3,433,910		$	(54,523	)	$	(2,289,338	)		$	(2,473	)	$	1,087,607		$	56,510		$	1,144,117

See notes to the unaudited condensed consolidated financial statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended November 30,
(In thousands)	2024			2023
Cash flows from operating activities
Net loss	$	(457,285	)		$	(1,139,544	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization		144,896				160,758
Amortization of deferred commissions		6,921				4,452
Provision for credit losses		2,087				2,657
Amortization of debt issuance costs		3,961				3,961
Amortization of operating lease right-of-use assets		4,932				5,454
Share-based compensation		35,124				18,728
Deferred income taxes		(13,060	)			(79,791	)
Right-of-use assets impairment charge		576				619
Goodwill impairment charge		369,100				1,097,741
Indefinite-lived intangible asset impairment charge		10,000				34,000
Gain from change in tax receivable agreement liability		(1,464	)			(8,355	)
Gain from change in fair value of warrant liability		(13,053	)			(18,786	)
Gain from change in fair value of contingent consideration		(8,460	)			(15,360	)
Gain on operating lease termination		(126	)			(187	)
Loss (gain) on disposal of property and equipment		135				(16	)
Changes in operating assets and liabilities:
Accounts receivable		25,509				44,822
Prepaid expenses and other current assets		(4,482	)			(3,972	)
Other noncurrent assets		(7,453	)			(7,351	)
Accounts payable and accrued liabilities		(23,676	)			(16,712	)
Channel client deposits payable		2,661				8,349
Deferred revenue		(25,108	)			(27,244	)
Changes in other liabilities		(5,588	)			(7,568	)
Net cash provided by operating activities		46,147				56,655
Cash flows from investing activities
Capital expenditures		(18,465	)			(22,301	)
Net cash used in investing activities		(18,465	)			(22,301	)
Cash flows from financing activities
Repayments of indebtedness		(8,427	)			(8,366	)
Repayments of financing lease obligations		(1,370	)			(2,432	)
Proceeds from exercise of stock options		155				-
Net cash used in financing activities		(9,642	)			(10,798	)
Effect of exchange rate changes on cash and cash equivalents		1,356				2,040
Net increase in cash, cash equivalents and restricted cash		19,396				25,596
Cash, cash equivalents and restricted cash at beginning of period		149,038				104,342
Cash, cash equivalents and restricted cash at end of period	$	168,434			$	129,938

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	151,213			$	110,279
Restricted cash		17,221				19,659
Total cash, cash equivalents and restricted cash	$	168,434			$	129,938

See notes to the unaudited condensed consolidated financial statements.

E2open Parent Holdings, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Organization and Basis of Presentation

Organization and Description of Business

CC Neuberger Principal Holdings I (CCNB1) was a blank check company incorporated in the Cayman Islands on January 14, 2020 for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. CCNB1's sponsor was CC Neuberger Principal Holdings I Sponsor LLC, a Delaware limited liability company (Sponsor). CCNB1 became a public company on April 28, 2020 through an initial public offering.

On February 4, 2021 (Closing Date), CCNB1 and E2open Holdings, LLC and its operating subsidiaries (E2open Holdings) completed a business combination (Business Combination) contemplated by the definitive Business Combination Agreement entered into on October 14, 2020 (Business Combination Agreement). The Business Combination was accounted for as a business combination under ASC 805, Business Combination(ASC 805), and due to the change in control, was accounted for using the acquisition method with CCNB1 as the accounting acquirer and E2open Holdings as the accounting acquiree.

In connection with the finalization of the Business Combination, CCNB1 changed its name to "E2open Parent Holdings, Inc." and changed its jurisdiction of incorporation from the Cayman Islands to the State of Delaware (Domestication). Immediately following the Domestication, various entities merged with and into E2open, with E2open as the surviving company. Additionally, E2open Holdings became a subsidiary of E2open with the equity interests of E2open Holdings held by E2open and existing owners of E2open Holdings. The existing owners of E2open Holdings are considered noncontrolling interests in the unaudited condensed consolidated financial statements.

We are headquartered in Addison, Texas. We are a world-class connected supply chain software platform that enables the largest companies to transform the way they make, move and sell goods and services. With the broadest cloud-native global platform purpose-built for the modern supply chains, we connect manufacturing, logistics, channel and distributing partners as one multi-enterprise network. Our software as a service (SaaS) platform anticipates disruptions and opportunities to help companies improve efficiency, reduce waste and operate sustainably.

Basis of Presentation

These unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Investments in other companies are carried at cost. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation have been included. The unaudited operating results for interim periods reported are not necessarily indicative of the results for the entire fiscal year. For further information, refer to the consolidated financial statements and notes thereto included in our 2024 Form 10-K.

Fiscal Year

Our fiscal year ends on the last day of February each year.

Use of Estimates

The preparation of our unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported results of operations during the reporting period. Such management estimates include allowance for credit losses, goodwill and other long-lived assets, estimates of standalone selling price of performance obligations for revenue contracts with multiple performance obligations, share-based compensation, valuation allowances for deferred tax assets and uncertain tax positions, tax receivable agreement liability, warrants, contingent consideration and contingencies. These estimates are based on information available as of the date of the unaudited condensed consolidated financial statements; therefore, actual results could differ from management's estimates.

Seasonality

Our quarterly operating results have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control, including seasonality in our business as a result of client budget cycles, with higher sales typically in the third and fourth fiscal quarters. As a result, our past results may not be indicative of our future performance and comparing our operating results on a period-to-period basis may not be meaningful.

2. Accounting Standards

Recent Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosuresto improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 expands public entities' segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment's profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods for fiscal years beginning after December 15, 2024, and should be applied on a retrospective basis to all periods presented. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2023-07 on our disclosures. We do expect to have additional disclosures, but do not expect the adoption to have a material impact on our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosuresto enhance income tax information primarily through changes in the rate reconciliation and income taxes paid information. ASU 2023-09 also requires income (loss) from continuing operations before income taxes expense (benefit) to be separated between domestic and foreign and income tax expense (benefit) from continuing operations to be separated between federal, state and foreign. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis. Early adoption is permitted. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements or disclosures.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE)which requires an entity to disclose, in the footnotes, information at each interim and annual reporting period information about expenses by the nature of the expense. Entities are required to include the following relevant expense captions: purchase of inventory, employee compensation, depreciation, intangible asset amortization and depreciation, depletion and amortization recognized as part of oil and gas producing activities. ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027 on a prospective basis with the option for retrospective application. Early adoption is permitted. We will be required to have additional disclosure, but we do not expect the adoption of this standard to have a material impact on our consolidated financial statements or disclosures.

3. Accounts Receivable

Accounts receivable, net consisted of the following:


($ in thousands)	November 30, 2024			February 29, 2024
Accounts receivable	$	122,342			$	144,253
Unbilled receivables		18,721				23,890
Less: Allowance for credit losses		(7,103	)			(6,587	)
Accounts receivable, net	$	133,960			$	161,556

Unbilled receivables represent revenue recognized for performance obligations that have been satisfied but for which amounts have not been billed, which we also refer to as contract assets.

Account balances are written off against the allowance for credit losses when we believe that it is probable that the receivable balance will not be recovered.

4. Prepaid and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


($ in thousands)	November 30, 2024		February 29, 2024
Prepaid software and hardware license and maintenance fees	$	10,435		$	9,599
Income and other taxes receivable		5,746			4,759
Prepaid insurance		1,597			1,667
Deferred commissions		9,457			7,421
Prepaid marketing		529			1,073
Security deposits		1,086			1,251
Other prepaid expenses and other current assets		2,309			3,073
Total prepaid expenses and other current assets	$	31,159		$	28,843

Amortization of software licenses held under financing leases is included in cost of revenue and operating expenses. Prepaid maintenance, services and insurance are expensed over the term of the underlying agreements.

5. Goodwill

We test goodwill for impairment on an annual basis or whenever events or changes occur that would more-likely-than-not reduce the fair value of a reporting unit below its carrying value between annual impairment tests. As we have only onereporting unit, any goodwill impairment assessment is performed at the Company level.

During the third quarter of fiscal 2025 and the first and third quarters of fiscal 2024, the market price of our Class A Common Stock and market capitalization declined significantly. We also experienced slowing growth and lowered projections for net sales and net operating income due to lower than anticipated new bookings. Additionally, in fiscal 2024, we experienced lower revenue from tiered contracts, higher than expected churn and macroeconomic impacts primarily in the technology, freight and transportation sectors. These factors resulted in us determining that triggering events occurred, and goodwill impairment assessments were performed.

The fair value of E2open was calculated using an equally weighted combination of three different methods: discounted cash flow method, guideline public company method and guideline transaction method. The discounted cash flow method was based on the present value of estimated future cash flows which were based on management's estimates of projected net sales, net operating income margins and terminal growth rates, taking into consideration market and industry conditions. The discount rate used was based on the weighted-average cost of capital adjusted for the risk, size premium and business-specific characteristics related to projected cash flows. Under the guideline public company method, the fair value was based on our current and forward-looking earnings multiples using management's estimates of projected net sales and adjusted EBITDA margins with consideration of market premiums. The unobservable inputs used to measure the fair value included projected net sales, forecasted adjusted EBITDA margins, weighted average cost of capital, normalized working capital levels, capital expenditures assumptions, profitability projections, determination of appropriate market comparison companies and terminal growth rates. Under the guideline transaction method, the fair value was based on pricing multiples derived from recently sold companies with similar characteristics to E2open taking into consideration management's estimate of projected net sales and net operating income margins.

The three approaches indicated that the fair value of E2open's equity and goodwill was less than its carrying amounts. Therefore, we recognized an impairment charge of $369.1million and $687.7million during the three months ended November 30, 2024 and 2023, respectively. We recognized an impairment charge of $369.1million and $1,097.7million during the nine months ended November 30, 2024 and 2023, respectively.

The following table presents the changes in goodwill:


($ in thousands)	Amount
Balance, February 28, 2023	$	2,927,807
Impairment charge		(1,097,741	)
Currency translation adjustment		13,411
Balance, February 29, 2024		1,843,477
Impairment charge		(369,100	)
Currency translation adjustment		(6,793	)
Balance, November 30, 2024	$	1,467,584

6. Intangible Assets, Net

We test our indefinite-lived intangible asset for impairment on an annual basis or whenever events or changes occur that would more-likely-than not reduce the fair value of the indefinite-lived intangible asset below its carrying value between annual impairment tests. As we have only one reporting unit, any indefinite-lived intangible asset assessment is performed at the Company level.

During the third quarter of fiscal 2025 and first and third quarters of fiscal 2024, the market price of our Class A Common Stock and market capitalization declined significantly. We also lowered our projections for net sales and net operating income due to lower than anticipated new bookings. Additionally, in fiscal 2024, we experienced lower revenue from tiered contracts, higher than expected churn and macroeconomic impacts primarily in the technology, freight and transportation sectors. These factors resulted in us determining that triggering events occurred, and an interim indefinite-lived intangible asset impairment assessment was performed.

The fair value of the indefinite-lived intangible asset was calculated using the relief from royalty payments method which is based on management's estimates of projected net sales and terminal growth rates, taking into consideration market and industry conditions. The royalty rate used was based on royalty rates of companies with similar characteristics to E2open. The discount rate used was based on the weighted-average cost of capital adjusted for the risk, size premium and business-specific characteristics related to projected net sales.

The interim assessment indicated that the fair value of our indefinite-lived intangible asset was less than its carrying amount; therefore, during the three months ended November 30, 2024 and 2023, we recognized an impairment charge of $10.0million and $30.0million to intangible assets, net for the indefinite-lived trademark / trade name, respectively. We recognized an impairment charge of $10.0million and $34.0million to intangible assets, net for the indefinite-lived trademark / trade name during the nine months ended November 30, 2024 and 2023, respectively.

Intangible assets, net consisted of the following:


	November 30, 2024
($ in thousands)	Weighted Average Useful Life in Years	Cost		Accumulated Amortization			Net
Indefinite-lived:
Trademark / Trade name	Indefinite	$	66,000		$	-		$	66,000
Definite-lived:
Client relationships	14		501,751			(234,785	)		266,966
Technology	7		690,307			(342,582	)		347,725
Content library	10		50,000			(19,122	)		30,878
Trade name	1		4,018			(4,018	)		-
Backlog	3		800			(800	)		-
Total definite-lived			1,246,876			(601,307	)		645,569
Total intangible assets		$	1,312,876		$	(601,307	)	$	711,569


	February 29, 2024
($ in thousands)	Weighted Average Useful Life in Years	Cost		Accumulated Amortization			Net
Indefinite-lived:
Trademark / Trade name	Indefinite	$	76,000		$	-		$	76,000
Definite-lived:
Client relationships	14		502,722			(194,001	)		308,721
Technology	7		691,573			(270,051	)		421,522
Content library	10		50,000			(15,372	)		34,628
Trade name	1		3,997			(3,997	)		-
Backlog	3		800			(640	)		160
Total definite-lived			1,249,092			(484,061	)		765,031
Total intangible assets		$	1,325,092		$	(484,061	)	$	841,031

The e2open trade name and various trademarks are indefinite-lived. Acquired trade names are definite-lived as over time we rebrand acquired products and services as e2open.

Amortization of intangible assets is recorded in cost of revenue and operating expenses in the Unaudited Condensed Consolidated Statements of Operations. We recorded amortization expense related to intangible assets of $29.3million and $44.6million for the three months ended November 30, 2024 and 2023, respectively. We recorded amortization expense related to intangible assets of $118.9million and $134.1million for the nine months ended November 30, 2024 and 2023, respectively.

Future amortization of intangible assets is as follows as of November 30, 2024:


($ in thousands)	Amount
December 2024 - February 2025	$	29,241
2026		116,965
2027		116,965
2028		92,170
2029		69,507
Thereafter		220,721
Total future amortization	$	645,569

7. Property and Equipment, Net

Property and equipment, net consisted of the following:


($ in thousands)	November 30, 2024			February 29, 2024
Computer equipment	$	68,954			$	63,416
Software		26,560				27,038
Software development costs		67,380				53,613
Furniture and fixtures		1,876				2,719
Leasehold improvements		8,834				9,063
Gross property and equipment		173,604				155,849
Less accumulated depreciation and amortization		(110,559	)			(88,672	)
Property and equipment, net	$	63,045			$	67,177

Computer equipment and software include assets held under financing leases. Amortization of assets held under financing leases is included in depreciation expense. See Note 20, Leasesfor additional information regarding our financing leases.

Depreciation expense was $8.5million and $9.0million for the three months ended November 30, 2024 and 2023, respectively. Depreciation expense was $26.0million and $26.7million for the nine months ended November 30, 2024 and 2023, respectively.

We recognized $3.3million and $2.4million of amortized capitalized software development costs for the three months ended November 30, 2024 and 2023, respectively, and $9.3million and $6.7million for the nine months ended November 30, 2024 and 2023, respectively.

8. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following:


($ in thousands)	November 30, 2024		February 29, 2024
Accrued compensation	$	26,624		$	34,982
Trade accounts payable		27,110			29,678
Accrued professional services		5,270			5,712
Client deposits		2,649			2,558
Accrued severance and retention		307			1,530
Accrued litigation		-			1,399
Current portion of tax receivable agreement liability		6,301			1,791
Other		8,868			12,944
Total accounts payable and accrued liabilities	$	77,129		$	90,594

9. Tax Receivable Agreement

The Tax Receivable Agreement will continue until all such tax benefits have been utilized or expire unless E2open Holdings exercises its right to terminate the Tax Receivable Agreement for an amount representing the present value of anticipated future tax benefits under the Tax Receivable Agreement or certain other accelerated events occur.

Quarterly tax distributions will be paid to the holders of Common Units on a pro rata basis based upon an agreed upon formula related to the taxable income of E2open Holdings allocable to holders of Common Units. Generally, these tax distributions will be computed based on the taxable income of E2open Holdings allocable to each holder of Common Units (based on certain assumptions), multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for a U.S. corporation organized under the laws of the State of Delaware, taking into account all jurisdictions in which we are required to file income tax returns together with the relevant apportionment information and the character of E2open Holdings' income, subject to various adjustments.

Significant inputs and assumptions were used to estimate the future expected payments including the timing of the realization of the tax benefits, a tax rate of 24.1% and an imputed interest rate of 7% based on our cost of debt plus an incremental premium at the closing of the Business Combination. Changes in any of these or other factors are expected to impact the timing and amount of gross payments. The fair value of these obligations will be accreted to the amount of the gross expected obligation. In addition, if E2open Holdings were to exercise its right to terminate the Tax Receivable Agreement or certain other acceleration events occur, E2open Holdings will be required to make immediate cash payments. Such cash payments would be equal to the present value of the assumed future realized tax benefits based on a set of assumptions and using an agreed upon discount rate, as defined in the Tax Receivable Agreement. The early termination payment may be made significantly in advance of the actual realization, if any, of those future tax benefits. Such payments would be calculated based on certain assumptions, including that E2open Holdings has sufficient taxable income to utilize the full amount of any tax benefits subject to the Tax Receivable Agreement over the period specified therein. The payments that E2open Holdings will be required to make will generally reduce the amount of the overall cash flow that might have otherwise been available, but we expect the cash tax savings it will realize from the utilization of the related tax benefits will exceed the amount of any required payments.

The Tax Receivable Agreement liabilitywas $66.9million and $69.7million as of November 30, 2024 and February 29, 2024, respectively, which represents the current and long-term portion of the liability. The current portion of the Tax Receivable Agreement liability was $6.3million and $1.8million as of November 30, 2024 and February 29, 2024, respectively. The determination of current and long-term portion is based on management's estimate of taxable income for the fiscal year and the determination that a Tax Receivable Agreement payment is due and payable within the next twelve months.

The tax rate used in the calculation was 23.7% as of November 30, 2024 and February 29, 2024. The discount rate used for the ASC 805 calculation was 9.5% and 9.0% as of November 30, 2024 and February 29, 2024, respectively, based on the cost of debt plus an incremental premium. During the three months ended November 30, 2024 and 2023, again of $2.5million and $2.9million, respectively, was recorded as a change in the tax receivable agreement liability related to the ASC 805 discounted liability. During the nine months ended November 30, 2024 and 2023, a gain of $1.5million and $8.4million, respectively, was recorded as a change in the tax receivable agreement liability related to the ASC 805 discounted liability. During the nine months ended November 30, 2024 and 2023, the Tax Receivable Agreement liability under ASC 450 increased by $0.5million and a negligibleamount, respectively, related to exchanges of Common Units for Class A Common Stock with a corresponding charge to equity.

During the nine months ended November 30, 2024, we paid $1.8million to Tax Receivable Agreement holders. We did not make any payments to Tax Receivable Agreement holders prior to fiscal 2025.

10. Notes Payable

Notes payable outstanding were as follows:


($ in thousands)	November 30, 2024			February 29, 2024
2021 Term Loan	$	1,059,016			$	1,067,238
Other notes payable		518				748
Total notes payable		1,059,534				1,067,986
Less unamortized debt issuance costs		(15,476	)			(19,091	)
Total notes payable, net		1,044,058				1,048,895
Less current portion		(11,288	)			(11,272	)
Notes payable, less current portion, net	$	1,032,770			$	1,037,623

2021 Term Loan and Revolving Credit Facility

In February 2021, E2open, LLC, our subsidiary, entered into a credit agreement (Credit Agreement) that provided for $525.0million in term loans (2021 Term Loan) and $75.0million in commitments for revolving credit loans (2021 Revolving Credit Facility) with a $15.0million letter of credit sublimit. In September 2021, the Credit Agreement was amended to include a $380.0million incremental term loan, an increase in the letter of credit sublimit from $15.0million to $30.0million and an increase in the 2021 Revolving Credit Facility from $75.0million to $155.0million. In April 2022, the Credit Agreement was amended to include a $190.0million incremental term loan.

The 2021 Revolving Credit Facility will mature on February 4, 2026. E2open, LLC can request increases in the revolving commitments and additional term loan facilities, in minimum amounts of $2.0million for each facility. Principal payments are due on the Credit Agreement the last day of February, May, August and November commencing August 2021. The Credit Agreement is payable in quarterlyinstallments of $2.7million. The Credit Agreement is payable in full on February 4, 2028.

The interest rates applicable to borrowings under the Credit Agreement are, at E2open, LLC's option, either (1) a base rate, which is equal to the greater of (a) the Prime rate, (b) the Federal Reserve Bank of New York rate plus 0.5% and (c) the adjusted Eurocurrency Rate for a one month interest period plus 1%or (2) the adjusted Eurocurrency rate equal to the adjusted Eurocurrency rate for the applicable interest period multiplied by the statutory reserve rate, plus in the case of each of clauses (1) and (2), the Applicable Rate. The Applicable Rate (1) for base rate term loans ranges from 2.25% to 2.50% per annum, (2) for base rate revolving loans ranges from 1.50% to 2.00% per annum, (3) for Eurodollar term loans ranges from 3.25% to 3.50% per annum and (4) for Eurodollar revolving loans ranges from 2.50% to 3.00% per annum, in each case, based on the first lien leverage ratio. E2open, LLC will pay a commitment fee during the term of the Credit Agreement ranging from 0.25% to 0.375% per annum of the average daily undrawn portion of the revolving commitments based on the First Lien Leverage Ratio which represents the ratio of the Company's secured consolidated total indebtedness to the Company's consolidated EBITDA as specified in the Credit Agreement.

Beginning July 1, 2023, the Eurocurrency Rate ceased to be applicable and was replaced by the SOFR Rate. The adjusted SOFR Rate shall be the SOFR Rate plus 0.11448% for a one-month interest rate loan, 0.26161% for a three-month interest rate loan and 0.42826% for a six-month interest rate loan.The Applicable Rate for SOFR Rate term loans shall range from 3.25% to 3.50% and revolving loans shall range from 2.50% to 3.00% based on the first lien leverage ratio. We can also borrow using a SONIA Rate. The Applicable Rate for SONIA Rate revolving loans shall range from 2.50% to 3.00%.

The Credit Agreement is guaranteed by E2open Intermediate, LLC, our subsidiary, and certain wholly owned subsidiaries of E2open, LLC, as guarantors, and is supported by a security interest in substantially all of the guarantors' personal property and assets. The Credit Agreement contains certain customary events of default, representations and warranties as well as affirmative and negative covenants.

As of November 30, 2024 and February 29, 2024, there were $1,059.0million and $1,067.2million outstanding under the 2021 Term Loan, respectively, at an interest rate of 8.19% and 8.95%, respectively. The interest rates on the 2021 Term Loan were based on SOFR plus 350basis points as of November 30, 2024 and February 29, 2024. As of November 30, 2024, we had $0.2million of accrued unpaid interest on our 2021 Term Loan recorded in accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets. There were nooutstanding borrowings, no letters of credit and $155.0million available borrowing capacity under the 2021 Revolving Credit Facility as of November 30, 2024 and February 29, 2024.

We were in compliance with the First Lien Leverage Ratio for the Credit Agreement as of November 30, 2024 and February 29, 2024.

Beginning in March 2023, we entered into zero-cost interest rate collars in the notional amount of $300.0million to hedge our exposure to fluctuations in interest rates on the variable ratedebt on a portion of our 2021 Term Loan. The $200.0million notional interest rate collar has an executed cap of 4.75% and a floor of 2.57%. The 100.0million notional interest rate collar has an executed cap of 4.50% and a floor of 2.56%. Both interest rate collars mature on March 31, 2026.

11. Contingent Consideration

Business Combination

The contingent consideration liability is due to the issuance of Series B-2 common stock and Series 2 RCUs of E2open Holdings as part of the Business Combination. These shares and units were issued on a proportional basis to each holder of Class A shares in CCNB1 and Common Units of E2open Holdings. These restricted shares and Common Units are treated as a contingent consideration liability under ASC 805 and valued at fair market value. The contingent consideration liability was recorded at fair value on the acquisition date and is remeasured at each reporting date and adjusted if necessary. Any gain or loss recognized from the remeasurement is recorded in gain (loss) from the change in fair value of contingent consideration on the Unaudited Condensed Consolidated Statements of Operations as nonoperating income (expense) as the change in fair value is not part of our core operating activities.

There were 3,372,184shares of Series B-2 common stock outstanding as of November 30, 2024 and February 29, 2024. The Series B-2 common stock will automatically convert into Class A Common Stock on a one-to-one basisupon the occurrence of the first day on which the 20-day VWAP is equal to at least $15.00per share; provided, however, that the reference to $15.00per share shall be decreased by the aggregate per share amount of dividends actually paid in respect of a share of Class A Common Stock following the closing of the Business Combination. If any of the Series B-2 common stock does not vest on or before the 10-yearanniversary of the Closing Date, such common stock will be canceled for no consideration.

There were 2,627,724shares of Series 2 RCUs outstanding as of November 30, 2024 and February 29, 2024. Similar to the Series B-2 common stock, the Series 2 RCUs will vest (a) at such time as the 20-day VWAP of the Class A Common Stock is at least $15.00per share; however, the $15.00per share threshold will be decreased by the aggregate amount of dividends per share paid following the closing of the Business Combination; (b) upon the consummation of a qualifying change of control of us or the Sponsor or (c) upon the qualifying liquidation defined in the limited liability company agreement.

Upon the conversion of an RCU, the holder of such RCU will be entitled to receive a payment equal to the amount of ordinary distributions paid on an E2open Holdings unit from the Closing Date through (but not including) the date such RCU converts into an E2open Holdings unit. If any of the RCUs do not vest on or before the 10-yearanniversary of the Closing Date, such units will be canceled for no consideration, and will not be entitled to receive any Catch-Up Payments.

We have not paid any dividends to date and do not expect to in the future.

12. Fair Value Measurement

Our financial instruments include cash and cash equivalents; investments; accounts receivable, net; notes receivable, accounts payable; notes payable; and financing lease obligations. Accounts receivable, net, notes receivable and accounts payable are stated at their carrying value, which approximates fair value, due to their short maturity. We measure our cash equivalents and investments at fair value, based on an exchange or exit price which represents the amount that would be received for an asset sale or an exit price, or paid to transfer a liability in an orderly transaction between knowledgeable and willing market participants. Certificates of deposit are valued at original cost plus accrued interest, which approximates fair value. We estimate the fair value for notes payable and financing lease obligations by discounting the future cash flows of the related note and lease payments. As of November 30, 2024 and February 29, 2024, the fair value of the cash and cash equivalents, restricted cash, certificates of deposit, notes payable and financing lease obligations approximates their recorded values.

The following tables set forth details about our investments:


($ in thousands)	Cost		Gross Unrealized Gains			Gross Unrealized Losses		Fair Value
November 30, 2024
Asset-backed securities	$	162		$	41		$	-	$	203

February 29, 2024
Asset-backed securities	$	162		$	45		$	-	$	207

The asset-backed securities are included in other noncurrent assets on the Condensed Consolidated Balance Sheets.

Observable inputs are based on market data obtained from independent sources. Unobservable inputs reflect our assessment of the assumptions market participants would use to value certain financial instruments. This hierarchy requires us to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

Our assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy are summarized as follows:


	November 30, 2024
($ in thousands)	Level 1		Level 2			Level 3		Total
Assets:
Investments:
Asset-backed securities	$	-		$	203		$	-	$	203
Total investments		-			203			-		203
Other assets:
Interest rate collar agreements		-			167			-		167
Total other assets		-			167			-		167
Total assets	$	-		$	370		$	-	$	370

Liabilities:
Interest rate collar agreements	$	-		$	-		$	-	$	-
Cash-settled restricted stock units		11			-			-		11
Tax receivable agreement liability		-			-			47,791		47,791
Warrant liability		1,197			-			463		1,660
Contingent consideration		-			-			9,568		9,568
Total liabilities	$	1,208		$	-		$	57,822	$	59,030


	February 29, 2024
($ in thousands)	Level 1		Level 2			Level 3		Total
Assets:
Investments:
Asset-backed securities	$	-		$	207		$	-	$	207
Total investments		-			207			-		207
Other assets:
Forward currency contracts		-			46			-		46
Interest rate collar agreements		-			1,830			-		1,830
Total other assets		-			1,876			-		1,876
Total assets	$	-		$	2,083		$	-	$	2,083

Liabilities:
Cash-settled stock units	$	34		$	-		$	-	$	34
Tax receivable agreement liability		-			-			50,964		50,964
Warrant liability		11,012			-			3,701		14,713
Contingent consideration		-			-			18,028		18,028
Total liabilities	$	11,046		$	-		$	72,693	$	83,739

Cash-Settled Restricted Stock Units

Cash-settled restricted stock units (RSUs) form part of our compensation program. The fair value of these awards is determined using the closing stock price of our Class A Common Stock on the last day of each balance sheet date which is considered an observable quoted market price in active markets (Level 1).

Contingent Consideration

The following table provides a reconciliation of the beginning and ending balances of the contingent consideration using significant unobservable inputs (Level 3):


($ in thousands)	November 30, 2024			February 29, 2024
Beginning of period	$	18,028			$	29,548
Gain from fair value of contingent consideration		(8,460	)			(11,520	)
End of period	$	9,568			$	18,028

The change in the fair value of the contingent consideration is recorded in gain (loss) from change in fair value of contingent consideration in the Unaudited Condensed Consolidated Statements of Operations.

Tax Receivable Agreement

Our Tax Receivable Agreement liability is measured under both ASC 805 at fair value on a recurring basis using significant unobservable inputs (Level 3) and ASC 450 at book value. The following table provides a reconciliation of the portion of the tax receivable agreement liability measured at fair value under Level 3:


($ in thousands)	November 30, 2024			February 29, 2024
Beginning of period	$	50,964			$	53,154
Payments		(1,709	)			-
Gain from fair value of tax receivable agreement liability		(1,464	)			(2,190	)
End of period	$	47,791			$	50,964

The change in the fair value of the Tax Receivable Agreement liability is recorded in gain from change in tax receivable agreement liability in the Unaudited Condensed Consolidated Statements of Operations.

Warrants

Our warrant liability is measured at fair value on a recurring basis using active market quoted prices (Level 1) and significant unobservable inputs (Level 3). The following table provides a reconciliation of the warrant liability:


($ in thousands)	November 30, 2024			February 29, 2024
Beginning of period	$	14,713			$	29,616
Gain from fair value of warrant liability		(13,053	)			(14,903	)
End of period	$	1,660			$	14,713

The change in the fair value of the warrant liability is recorded in gain from change in fair value of warrant liability in the Unaudited Condensed Consolidated Statements of Operations.

The fair values of our Level 1 financial instruments, which are traded in active markets, are based on quoted market prices for identical instruments. The fair values of our Level 2 financial instruments are based on daily market foreign currency rates, interest rate curves and quoted market prices for comparable instruments or model-driven valuations using observable market data or inputs corroborated by observable market data.

Our contingent consideration is valued using a Monte Carlo simulation model. The assumptions used in preparing this model include estimates such as volatility, contractual terms, discount rates, dividend yield and risk-free interest rates. This valuation model uses unobservable market input, and therefore the liability is classified as Level 3.

Our public warrants are valued using active market quoted prices, which are Level 1 inputs. The private placement warrants are valued using a binomial pricing model when the warrants are subject to the make-whole table, or otherwise are valued using a Black-Scholes pricing model. The 5,000,000redeemable warrants purchased pursuant to the Forward Purchase Agreement are valued utilizing observable market prices for public shares and warrants, relative to the present value of contractual cash proceeds. The assumptions used in preparing these models include estimates such as volatility, contractual terms, discount rates, dividend yield, expiration dates and risk-free interest rates. These valuation models use unobservable market input, and therefore the liability is classified as both Level 1 and Level 3.

There were notransfers of financial instruments between the levels of the fair value hierarchy during the three and nine months ended November 30, 2024 and 2023.

13. Revenue

We primarily generate revenue from the sale of subscriptions and professional services. We recognize revenue when the client contract and associated performance obligations have been identified, transaction price has been determined and allocated to the performance obligations in the contract, and performance obligations have been satisfied. We recognize revenue net of any taxes collected from clients, which are subsequently remitted to governmental authorities. Other revenue is recognized when the service is delivered to the client.

Total Revenue by Geographic Locations

Revenue by geographic regions consisted of the following:


	Three Months Ended November 30,		Nine Months Ended November 30,
($ in thousands)	2024		2023			2024		2023
Americas	$	130,121		$	133,018		$	389,154	$	401,842
Europe		16,607			19,404			51,111		58,678
Asia Pacific		4,927			5,075			14,745		15,585
Total revenue	$	151,655		$	157,497		$	455,010	$	476,105

Revenues by geography are determined based on the region of our contracting entity, which may be different than the region of the client. Americas revenue attributed to the United States was 85% during the three and nine months ended November 30, 2024 and 84% during the three and nine months ended November 30, 2023. No other country represented more than 10% of total revenue during these periods.

Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied. It includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods and does not include contracts where the client is not committed. The client is not considered committed when they are able to terminate for convenience without payment of a substantive penalty under the contract. Additionally, as a practical expedient of ASC 606, Revenue from Contracts with Customers,we have not disclosed the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. As of November 30, 2024 and February 29, 2024, approximately $931.3million and $863.1million of revenue was expected to be recognized from remaining performance obligations, respectively. These amounts are expected to be recognized within the next five years.

Contract Assets and Liabilities

Contract assets primarily represent revenues recognized for performance obligations that have been satisfied but for which amounts have not been billed. Contract assetswere $18.7millionand $23.9million as of November 30, 2024 and February 29, 2024, respectively. Contract liabilities consist of deferred revenue which includes billings in excess of revenue recognized related to subscription contracts and professional services. Deferred revenue is recognized as revenue when we perform under the contract. Deferred revenue was $190.1million and $215.2million as of November 30, 2024 and February 29, 2024, respectively. Revenue recognized during the three and nine months ended November 30, 2024, included in deferred revenue on the Condensed Consolidated Balance Sheets as of February 29, 2024, was $41.9million and $188.0million, respectively.

Sales Commissions

With the adoption of ASC 606 and ASC 340-40, Contracts with Customers,in March 2019, we began deferring and amortizing sales commissions that are incremental and directly related to obtaining client contracts. Amortization expense of $2.5million and $1.7million was recorded in sales and marketing expenses in the Unaudited Condensed Consolidated Statements of Operations for the three months ended November 30, 2024 and 2023, respectively. Amortization expense of $6.9million and $4.5million was recorded in sales and marketing expenses for the nine months ended November 30, 2024 and 2023, respectively. Sales commissions that would have an amortization period of less than one year are expensed as incurred in sales and marketing expenses. As of November 30, 2024 and February 29, 2024, we had a total of $25.5million and $21.4million of capitalized sales commissions included in prepaid expenses and other current assets and other noncurrent assets in the Condensed Consolidated Balance Sheets, respectively.

14. Warrants

As of November 30, 2024 and February 29, 2024, there were an aggregateof 29,079,872warrants outstanding. Each warrant entitles its holders to purchase one share of Class A Common Stock at an exercise price of $11.50per share. The warrants expire five yearsafter the Closing Date, or earlier upon redemption or liquidation. The warrants are currently exercisable and redeemable when various conditions are met, such as specific stock prices, as detailed in the specific warrant agreements. However, the 10,280,000private placement warrants are nonredeemable so long as they are held by our Sponsor or its permitted transferees. The warrants are recorded as a liability in warrant liability on the Condensed Consolidated Balance Sheets with a balance of $1.7million and $14.7million as of November 30, 2024 and February 29, 2024, respectively. During the three months ended November 30, 2024 and 2023, a gain of $4.9million and $2.6million was recognized in gain from change in fair value of the warrant liability in the Unaudited Condensed Consolidated Statements of Operations, respectively. During the nine months ended November 30, 2024 and 2023, a gain of $13.1million and $18.8million was recognized in gain from change in fair value of the warrant liability, respectively.

15. Stockholders' Equity

Class A Common Stock

We are authorized to issue 2,500,000,000Class A common stock with a par value of $0.0001per share. Holders of our Class A Common Stock are entitled to onevote for each share. As of November 30, 2024 and February 29, 2024, there were 309,349,775and 306,237,585shares of Class A Common Stock issued, respectively, and 309,173,121and 306,060,931shares of Class A Common Stock outstanding, respectively.

Class V Common Stock

We are authorized to issue 42,747,890Class V common stock with a par value of $0.0001per share. These shares have no economic value but entitle the holder to one vote per share. As of November 30, 2024 and February 29, 2024, there were 30,692,235and 31,225,604shares of Class V Common Stock issued and outstanding, respectively, and 12,055,655and 11,522,286shares of Class V Common Stock held in treasury, respectively.

The holders of Common Units participate in net income or loss allocations and distributions of E2open Holdings. They are also entitled to Class V Common Stock on a one-for-one basis to their Common Units which in essence allows each holder one vote per Common Unit.

The following table reflects the changes in our outstanding stock:


	Class A		Class V		Series B-1	Series B-2
Balance, February 29, 2024		306,060,931		31,225,604		94	3,372,184
Conversion of Common Units (1)		533,369		(533,369	)	-	-
Issuance of common stock upon exercise of options		32,391		-		-	-
Vesting of restricted awards, net of shares withheld for taxes (2)		2,546,430		-		-	-
Balance, November 30, 2024		309,173,121		30,692,235		94	3,372,184

(1)

Class A Common Stock issued for the conversion of Common Units settled in stock. Class V Common Stock are retired on a one-for-one basis when Common Units are converted into Class A Common Stock or settled in cash.

(2)

The Class A Common Stock withheld for taxes revert back to the 2021 Incentive Plan, as defined below, and are used for future grants.

16. Noncontrolling Interest

Noncontrolling interest represents the portion of E2open Holdings that we control and consolidate but do not own. As of November 30, 2024 and February 29, 2024, the noncontrolling interest represents a 9.0% and 9.3% ownership in E2open Holdings, respectively. As part of the Business Combination, E2open Parent Holdings, Inc. became the owner of E2open Holdings along with the existing owners of E2open Holdings through Common Unit ownership. The existing owners of E2open Holdings are shown as noncontrolling interest on the Condensed Consolidated Balance Sheets and their portion of the net income (loss) of E2open Holdings is shown as net income (loss) attributable to noncontrolling interest on the Unaudited Condensed Consolidated Statements of Operations.

Generally, Common Units participate in net income or loss allocations and distributions and entitle their holder to the right, subject to the terms set forth in the Third Amended and Restated Limited Liability Company Agreement of E2open, LLC (Third Company Agreement), to require E2open Holdings to redeem all or a portion of the Common Units held by such participant. At our option, we may satisfy this redemption with cash or by exchanging Class V Common Stock for Class A Common Stock on a one-for-onebasis.

During the three months ended November 30, 2024, there were noconversions of Common Units into Class A Common Stock. During the nine months ended November 30, 2024, there were 533,369Common Units converted into Class A Common Stock with a value of $2.3million based off the 5-day VWAP. This activity resulted in a decrease to noncontrolling interests of $2.3million during the nine months ended November 30, 2024.

During the three and nine months ended November 30, 2023, there were 269,087Common Units converted into Class A Common Stock with a value of $0.8million based off the 5-day VWAP. This activity resulted in a decrease to noncontrolling interest of $0.8million during the three and nine months ended November 30, 2023.

As of November 30, 2024 and February 29, 2024, there were a total of 30.7million and 31.2million Common Units held by participants of E2open Holdings.

We follow the guidance issued by the FASB regarding the classification and measurement of redeemable securities. Accordingly, we have determined that the Common Units meet the requirements to be classified as permanent equity.

17. Other Comprehensive Loss

Accumulated other comprehensive loss in the equity section of our Condensed Consolidated Balance Sheets includes:


($ in thousands)	Foreign Currency Translation Adjustment			Unrealized Holding Gains (Losses) on Foreign Exchange Forward Contracts			Unrealized Holding Gains (Losses) on Interest Rate Collar Agreements		Total
Balance, February 29, 2024	$	(48,711	)		$	46		$	1,830		$	(46,835	)

Other comprehensive loss		(5,979	)			(46	)		(1,663	)		(7,688	)
Other comprehensive loss		(5,979	)			(46	)		(1,663	)		(7,688	)
Balance, November 30, 2024	$	(54,690	)		$	-		$	167		$	(54,523	)

There were noincome taxes recorded to other comprehensive loss during the three and nine months ended November 30, 2024.

The effect of amounts reclassified out of unrealized holding losses on derivatives into net loss was as follows:


	Three Months Ended November 30,		Nine Months Ended November 30,
($ in thousands)	2024		2023			2024		2023
Reclassifications:
Cost of revenue	$	-		$	36		$	1	$	127
Research and development		-			35			2		119
Sales and marketing		-			2			-		6
General and administrative		-			15			1		53
Total	$	-		$	88		$	4	$	305

The effect of amounts reclassified out of unrealized gains for interest rate collars as an offset to interest expense was as follows:


	Three Months Ended November 30,			Nine Months Ended November 30,
($ in thousands)	2024			2023			2024		2023
Reclassifications:
$100 million notional interest rate collar	$	(109	)		$	(208	)	$	(531	)	$	(463	)
$200 million notional interest rate collar		(102	)			(290	)		(693	)		(596	)
Total	$	(211	)		$	(498	)	$	(1,224	)	$	(1,059	)

Accumulated foreign currency translation adjustments are reclassified to net loss when realized upon sale or upon complete, or substantially complete, liquidation of the investment in the foreign entity.

18. Earnings Per Share

Basic earnings per share is calculated as net loss available to common stockholders divided by the weighted average number of shares of common stock outstanding during the applicable period. Diluted earnings per share is computed by using the basic earnings per share plus any dilutive securities outstanding during the period using the if-converted method, except when the effect is anti-dilutive. The following is a reconciliation of the denominators of the basic and diluted per share computations for net loss:


	Three Months Ended November 30,			Nine Months Ended November 30,
(in thousands, except per share data)	2024			2023			2024		2023
Net loss per share:
Numerator - basic:
Net loss	$	(381,644	)		$	(740,031	)	$	(457,285	)	$	(1,139,544	)
Less: Net loss attributable to noncontrolling interest		(34,734	)			(72,475	)		(41,650	)		(111,721	)
Net loss attributable to E2open Parent Holdings, Inc. - basic	$	(346,910	)		$	(667,556	)	$	(415,635	)	$	(1,027,823	)

Numerator - diluted:
Net loss attributable to E2open Parent Holdings, Inc. - basic	$	(346,910	)		$	(667,556	)	$	(415,635	)	$	(1,027,823	)
Net loss attributable to E2open Parent Holdings, Inc. - diluted	$	(346,910	)		$	(667,556	)	$	(415,635	)	$	(1,027,823	)

Denominator - basic:
Weighted average shares outstanding - basic		308,904				303,848			307,894			303,188
Net loss per share - basic	$	(1.12	)		$	(2.20	)	$	(1.35	)	$	(3.39	)

Denominator - diluted:
Weighted average shares outstanding - basic		308,904				303,848			307,894			303,188
Weighted average shares outstanding - diluted		308,904				303,848			307,894			303,188
Diluted net loss per common share	$	(1.12	)		$	(2.20	)	$	(1.35	)	$	(3.39	)

Potential common shares are shares that would be issued upon exercise or conversion of shares under our share-based compensation plans and upon exercise of warrants that are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive. All potential common shares are anti-dilutive in periods of net loss available to common stockholders.

The following table summarizes the potential common shares excluded from the calculation of diluted loss per common share as their effect would be anti-dilutive:


	Three Months Ended November 30,		Nine Months Ended November 30,
	2024		2023		2024	2023
Series B-1 common stock		94		94		94	94
Series B-2 common stock		3,372,184		3,372,184		3,372,184	3,372,184
Restricted common units Series 2		2,627,724		2,627,724		2,627,724	2,627,724
Warrants		29,079,872		29,079,872		29,079,872	29,079,872
Common Units		30,692,235		32,879,559		30,692,235	32,954,797
Performance-based options		3,850,135		1,334,919		3,850,135	1,215,252
Time-based options		2,300,919		1,038,513		2,300,919	901,246
Performance-based restricted stock units		3,625,095		3,837,349		3,625,095	3,514,740
Time-based restricted stock units		12,312,167		8,449,869		12,312,167	9,778,141
Time-based restricted stock awards		-		187,824		-	408,881
Units/Shares excluded from the dilution computation		87,860,425		82,807,907		87,860,425	83,852,931

19. Share-Based Compensation

2021 Incentive Plan

The E2open Parent Holdings, Inc. 2021 Omnibus Incentive Plan, as Amended and Restated (2021 Incentive Plan), allows us to make equity and equity-based incentive awards to officers, employees, directors and consultants. There were 15,000,000shares of Class A Common Stock reserved for issuance under the 2021 Incentive Plan as of February 28, 2022. The "evergreen" provision of the 2021 Incentive Plan provides for an annual automatic increase to the number of shares of Class A Common Stock available under the plan. As of March 1, 2022, 2023 and 2024, an additional 4,849,684, 7,304,646and 12,301,706shares were reserved for issuance under the "evergreen" provision, respectively. Shares issued under the 2021 Incentive Plan can be granted as stock options, restricted stock awards, restricted stock units, performance stock awards, cash awards and other equity-based awards. No award may vest earlier than the first anniversary of the date of grant, except under limited conditions.

The following table presents the awards granted for Class A Common Stock:


	Nine Months Ended November 30,
	2024		2023
Awards granted
Options		1,811		1,232
RSUs		8,165		12,235
Cash-settled RSUs		7		24
Total awards granted		9,983		13,491

Options

Options are granted to our executive officers and senior management. These awards are recorded as equity awards within the Unaudited Condensed Consolidated Statements of Stockholders' Equity. The fiscal 2024 options were time-based with one-third of the options vesting at the end of the first year with the remaining options vesting ratably each quarter over the remaining two-years.

During the nine months ended November 30, 2024, we issued 32,391shares of Class A Common Stock resulting from the exercise of stock options with a total intrinsic value of $0.2million based on the market value on the date of exercise.

As of November 30, 2024, there were 3,850,135unvested options that previously vested based on performance and will vest to the employee based on time and 2,300,919unvested time-based options with an unrecognized compensation cost of $7.6million.

RSUs

The RSUs are either performance-based or time-based. These awards are recorded as equity awards within the Unaudited Condensed Consolidated Statements of Stockholders' Equity. The fiscal 2024 performance-based RSUs were measured based on obtaining organic constant currency subscription revenue growth, constant currency adjusted EBITDA and net bookings targets over a one-yearperiod. The performance target for these awards was finalized in April 2024 with actual results below 100%. The fiscal 2025 performance-based RSUs are measured based on obtaining an organic subscription revenue growth and constant currency adjusted EBITDA targets over a one-yearperiod. For the fiscal year 2024 and 2025 performance-based RSUs, a quarter of the RSUs that have obtained the performance metric will vest at the end of the performance period and then the remaining shares will vest equally over the following three years.

The time-based RSUs for executive officers, senior management and employees granted during fiscal 2022 and 2023 vest ratably over a three-yearperiod. Beginning in fiscal 2024, the time-based RSUs for executive officers, senior management and employees vest one-third at the end of the first year and then ratably each quarter over the remaining two years. The time-based RSUs for non-employee directors of our board of directors have a one-yearvesting period.

As of November 30, 2024, therewere 3,625,098performance-based RSUs and 12,312,167time-based RSUs unvested and expected to vest with an unrecognized compensation cost of $50.8million.

Redeemable Share-Based Awards

Mr. Andrew Appel, Chief Executive Officer (CEO), was awarded performance-based RSUs with a market condition based on the closing price of our stock for 20 days out of 30 consecutive trading days during the performance period. The stock hurdles range from $3.50to $15.00with $3.50generating an 8% attainment and $15.00producing a 200% attainment. The performance period will be for the three-yearsof the grant and be measured at each vesting date. The performance-based options will time vest up to one-third after the first year and up to one-twelfth each of the following seven quarters with the remaining earned shares vesting on the third anniversary of the grant.

If there is a change in control, the award will immediately vest under the performance condition based upon the appropriate stock hurdle and automatically time-vest. The vested RSU will be paid in the form of cash and/or equity in a ratio substantially similar to the ratio received by the other shareholders in connection with the change in control. Additionally, the cash portion of the award will be equal to at least 50%. As this award has a redemption feature for the change in control and cash value component, it is recorded as redeemable share-based awards on the Condensed Consolidated Balance Sheets.

Mr. Appel was also awarded time-based RSUs that vest one-third after the first year and vest ratably each quarter over the remaining two-years. If there is a change in control, the award will immediately vest and be paid in the form of cash and/or equity in a ratio substantially similar to the ratio received by the other shareholders in connection with the change in control. Additionally, the cash portion of the award will be equal to at least 50%. As this award has a redemption feature for the change in control and cash value component, it is recorded as redeemable share-based awards on the Condensed Consolidated Balance Sheets.

The amount presented in the mezzanine as redeemable share-based awards will be the redemption amount as of the grant date, multiplied by the portion of the requisite service period that has elapsed. The redemption amount is based on the number of shares that would vest if a change in control occurred at the grant date multiplied by the grant date stock price. Once the RSUs have vested, the associated redemption value will be reclassified from the redeemable share-based award to additional paid-in capital on the Condensed Consolidated Balance Sheets.

Restricted Stock Awards

The restricted stock awards (RSAs) are time-based and granted to participants with the associated Class A Common Stock issued on the day of grant. The Class A Common Stock is issued subject to various restrictions, but carries voting rights. When the applicable vesting terms have been met, the restrictions are removed from the Class A Common Stock.

As part of Mr. Andrew Appel's compensation as interim CEO, he received an initial RSA grant in October 2023 valued at $0.7million, or 275,101shares, under our 2021 Incentive Plan which vested after six monthsof issuance, or April 12, 2024.

Mr. Appel's Chief of Staff, Mr. McIndoe, was awarded an RSA grant in November 2023 valued at $0.4million, or 133,780shares, under our 2021 Incentive Plan which vested after five monthsof issuance, or April 12, 2024.

As of November 30, 2024, all of the RSAs are fully vested.

Liability Awards

For employees based in China, they are awarded cash-settled RSUs. The cash-settled RSUs issued during fiscal 2023 vest ratably over a three-yearperiod.Beginning in fiscal 2024, the cash settled RSUs vest one-third at the end of the first year and then ratably each quarter over the remaining two years. The cash-settled RSUs must be settled in cash and are accounted for as liability-type awards. The fair value of these cash-settled RSUs equals the value of our Class A Common Stock on the date of grant and is remeasured at the end of each reporting period at fair value. The change in fair value is recorded in share-based compensation expense in the Unaudited Condensed Consolidated Statements of Operations. The liability for the cash-settled RSUs was negligible as of November 30, 2024 and February 29, 2024 and is included in accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheets. As of November 30, 2024, there were 27,875unvested cash-settled RSUs with unrecognized compensation cost of $0.1million.

As of November 30, 2024, there were 12,152,072shares of Class A Common Stock available for grant under the 2021 Incentive Plan.

With the departure of our Executive Vice President and General Counsel, a Separation and Release Agreement was entered into under which the General Counsel provided transition services through May 31, 2024. As a result of the General Counsel's departure, a portion of her options, time-based RSUs and performance-based RSUs were accelerated to June 10, 2024 resulting in 9,121options and 204,511time-based and performance-based RSUs vesting as of June 10, 2024.

The table below sets forth the functional classification in the Unaudited Condensed Consolidated Statements of Operations of our equity-based compensation expense:


	Three Months Ended November 30,		Nine Months Ended November 30,
($ in thousands)	2024		2023			2024		2023
Cost of revenue	$	1,505		$	1,304		$	4,511	$	3,059
Research and development		1,066			1,665			5,476		4,177
Sales and marketing		1,749			1,556			5,574		3,444
General and administrative		6,094			2,316			19,563		8,048
Total share-based compensation	$	10,414		$	6,841		$	35,124	$	18,728

20. Leases

We account for leases in accordance with ASC 842, Leases,which requires lessees to recognize lease liabilities and right-of-use (ROU) assets on the balance sheet for most operating leases.

Real Estate Leases

We lease our primary office space under non-cancelable operating leases with various expiration dates through September 2031. Many of our leases have an option to be extendedfrom twoto five years, and several of the leases give us the right to early cancellation with proper notification. Additionally, wehave fivesubleasesof our office leases as of November 30, 2024.

Several of the operating lease agreements require us to provide security deposits. As of November 30, 2024 and February 29, 2024, lease deposits were $3.2million and $3.4million, respectively. The deposits are generally refundable at the expiration of the lease, assuming all obligations under the lease agreement have been met. Deposits are included in prepaid and other current assets and other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the nine months ended November 30, 2024, we incurred a $0.6million impairment on our operating lease ROU assets and leasehold improvements due to vacating one location. We did not incur any impairments during the three months ended November 30, 2024 on our operating lease ROU assets and leasehold improvements. During the three and nine months ended November 30, 2023, we incurred a $0.1million and $0.6million impairments on our operating lease ROU assets and leasehold improvements, respectively, due to vacating three and seven locations, respectively, with the intent to sublease them. The impairments were recorded in general and administrative expenses in the Unaudited Condensed Consolidated Statements of Operations.

During the second quarter of fiscal 2025, we terminated an operating lease as of March 2025 with an original lease expiration date of July 2028. We incurred an early termination feeof $0.6million and recognized a $0.1million gain on the write-off of the remaining ROU asset and liability beyond March 2025. ROU impairments were taken on this lease during August 2022 and 2023. During the second quarter of fiscal 2024, we terminated an operating lease early with a lease expiration date of February 2026. We paid an early termination fee of $0.2million and recognized a $0.2million gain on the write-off of the remaining ROU asset and liability. An ROU impairment was taken on this lease during August 2022.

Vehicle Leases

We lease vehicles under non-cancelable operating lease arrangements which have various expiration dates through October 2028. We donot have the right to purchase the vehicles at the end of the lease term.

Equipment Leases

We purchase certain equipment under non-cancelable financing lease arrangements related to software and computer equipment and which have various expiration dates through November 2028. We have the right to purchase the software and computer equipment anytime during the lease or upon lease completion.

Balance Sheet Presentation

The following tables present the amounts and classifications of our estimated ROU assets, net and lease liabilities:


($ in thousands)	Balance Sheet Location	November 30, 2024		February 29, 2024
Operating lease right-of-use assets	Operating lease right-of-use assets	$	16,627		$	21,299
Finance lease right-of-use asset	Property and equipment, net		5,998			5,150
Total right-of-use assets		$	22,625		$	26,449


($ in thousands)	Balance Sheet Location	November 30, 2024		February 29, 2024
Operating lease liability - current	Current portion of operating lease obligations	$	6,597		$	7,378
Operating lease liability	Operating lease obligations		12,335			17,372
Finance lease liability - current	Current portion of finance lease obligations		2,207			1,448
Finance lease liability	Finance lease obligations		3,643			3,626
Total lease liabilities		$	24,782		$	29,824

Lease Cost and Cash Flows

The following table summarizes our total lease cost:


	Three Months Ended November 30,			Nine Months Ended November 30,
($ in thousands)	2024			2023			2024		2023
Finance lease cost:
Amortization of right-of-use asset	$	491			$	135		$	1,298		$	1,319
Interest on lease liability		108				23			282			124
Finance lease cost		599				158			1,580			1,443
Operating lease cost:
Operating lease cost		1,949				1,722			6,170			5,452
Variable lease cost		674				823			1,828			2,674
Sublease income		(211	)			(209	)		(635	)		(440	)
Operating net lease cost		2,412				2,336			7,363			7,686
Total net lease cost	$	3,011			$	2,494		$	8,943		$	9,129

Supplemental cash flow information related to leases was as follows:


	Nine Months Ended November 30,
($ in thousands)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	5,945		$	6,378

The following table presents the weighted-average remaining lease terms and discount rates of our leases:


	Nine Months Ended November 30,
	2024			2023
Weighted-average remaining lease term (in years):
Finance lease		2.97			4.14
Operating lease		3.41			3.98
Weighted-average discount rate:
Finance lease		7.01	%		7.66	%
Operating lease		7.32	%		6.95	%

Lease Liability Maturity Analysis

The following table reflects the undiscounted future cash flows utilized in the calculation of the lease liabilities as of November 30, 2024:


($ in thousands)	Operating Leases			Finance Leases
December 2024 - February 2025	$	2,171			$	637
2026		7,299				2,446
2027		5,856				1,869
2028		3,241				1,007
2029		1,422				561
Thereafter		1,455				-
Total		21,444				6,520
Less: Present value discount		(2,512	)			(670	)
Lease liabilities	$	18,932			$	5,850

21. Income Taxes

We calculate the provision for income taxes during interim periods by applying an estimate of the forecasted annual effective tax rate for the full fiscal year to ordinary income or loss (pretax income or loss excluding discrete items) for the reporting period. Our provision for income taxes was a benefit of $2.4million, or 0.6%, for the three months ended November 30, 2024compared to a benefit of $5.4million, or 0.7%, for the three months ended November 30, 2023. Our provision for income taxes was a benefit of $2.4million, or 0.5% for the nine months ended November 30, 2024compared to a benefit of $73.8million, or 6.1%, for the nine months ended November 30, 2023.

The loss before income taxes of $384.1million and $745.4million resulted in a $2.4million and $5.4million income tax benefit for the three months ended November 30, 2024 and 2023, respectively. The loss before income taxes of $459.7million and $1,213.4million resulted in an income tax benefit of $2.4million and $73.8million for the nine months ended November 30, 2024 and 2023, respectively. For the three and nine months ended November 30, 2024, the expected tax benefit was reduced due to higher deferred tax assets on entities that carry a valuation allowance and the goodwill impairment charge. The discrete impact of the goodwill impairment taken during the first and third quarters of fiscal 2024 resulted in a $3.7million and $67.6million income tax benefit, net of a valuation allowance of $154.5million and $179.9million for the three and nine months ended November 30, 2023, respectively.

As of November 30, 2024 and February 29, 2024, total gross unrecognized tax benefits were $2.5million. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of November 30, 2024 and February 29, 2024, the total amount of gross interest and penalties accrued was $0.2million, which is classified as other noncurrent liabilities in the Condensed Consolidated Balance Sheets.

22. Commitments and Contingencies

From time to time, we have exposure and are subject to contingencies that arise in the ordinary course of business for a variety of claims. We record an accrual for a contingency when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We do not currently believe the resolution of any other such contingencies will have a material adverse effect upon our Unaudited Condensed Consolidated Balance Sheets, Statements of Operations or Statements of Cash Flows.

23. Supplemental Cash Flow Information

Supplemental cash flow information and non-cash investing and financing activities are as follows:


	Nine Months Ended November 30,
(In thousands)	2024		2023
Supplemental cash flow information - Cash paid for:
Interest	$	71,407		$	76,748
Income taxes		4,978			6,232
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities		1,590			1,053
Right-of-use assets obtained in exchange for operating lease obligations		533			8,708
Shares withheld for taxes on vesting of restricted stock		7,194			3,059
Conversion of Common Units to Class A Common Stock		2,253			836
Redeemable share-based awards		2,481			-

24. Subsequent Events

On December 16, 2024, Ms. Susan Bennett transitioned from Interim Executive Vice President and General Counsel to Chief Legal Officer and Secretary. As part of that transition, Ms. Bennett was granted various stock awards under our 2021 Incentive Plan as of December 20, 2024. Ms. Bennett was awarded time-based RSUs with a value of $1.5million, or 570,343shares, which vest one-third at the end of the first year and then ratably each quarter over the remaining two years. Ms. Bennett was also awarded performance-based RSUs with a value of $0.9million, or 342,206shares, which vest one-third at the end of the first year and then ratably each quarter over the remaining two years. The performance-based RSUs are measured based on obtaining an organic subscription revenue growth and constant currency adjusted EBITDA targets over a one-yearperiod which are the same performance targets as the other performance RSUs granted during fiscal 2025.On January 7, 2025, Ms. Bennett was awarded time-based options with a value of $0.5million, or 164,836 shares, with an exercise price of $2.73which vest one-third on January 7, 2026 and then ratably each quarter over the remaining two years. The options will expire if unexercised at the end of ten years.

On December 20, 2024, Mr. Rachit Lohani was hired as the Chief Product and Technology Officer. As part of his onboarding, he was granted various stock awards under our 2021 Incentive Plan. Mr. Lohani was awarded time-based RSUs with a value of $3.0million, or 1,102,942shares, which vest ratably over a four-yearperiod. Mr. Lohani was also awarded time-based RSUs with a value of $2.5million, or 919,118shares, which vest one-third at the end of the first year and then ratably each quarter over the remaining two years.Additionally, Mr. Lohani was awarded performance-based RSUs with a value of $1.0million, or 367,648shares, which time vest one-third at the end of the first year and then ratably each quarter over the remaining two years. The performance-based RSUs measurement will be determined by the board of directors in fiscal 2026. Mr. Lohani will not be eligible for additional stock grants until fiscal 2027.

Item 2. Management's Discussion and Analysis ofFinancial Condition and Results of Operations.

This item contains a discussion of our business, including a general overview of our business, results of operations, liquidity and capital resources as well as quantitative and qualitative disclosures about market risk.

The following discussion should be read in conjunction with Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operationsof our 2024 Form 10-K and the unaudited condensed financial statements and related notes beginning on page 5. This Item 2 contains "forward-looking" statements that involve risks and uncertainties. See Forward-Looking Statements at the beginning of this Quarterly Report.

Overview

We are a world-class end-to-end supply chain software platform that enables the world's largest companies to transform the way they make, move and sell goods and services. Our SaaS platform spans many key strategic and operational areas including channel, planning, global trade, logistics and supply. With the broadest cloud-native global SaaS platform purpose-built for modern supply chains, we connect manufacturing, logistics, channel and distributing partners as one multi-enterprise network. Our SaaS platform anticipates disruptions and opportunities to help companies improve efficiency, reduce waste and operate sustainably. In aggregate, we serve clients in all major countries in the world across a wide range of end-markets, including consumer goods, food and beverage, manufacturing, retail, industrial and automotive, aerospace and defense, technology and transportation, among others.

We operate in what we believe is an attractive industry with strong secular tailwinds and a total addressable market which includes significant whitespace within our current client base. This upsell opportunity within our existing client base is largely driven by their current technology solution which is often a combination of legacy point solutions and home-grown applications which could be a combination of manual processes and spreadsheets. As manufacturing continues to evolve, supply chains have grown more complex creating the need for a modern cloud-based solution. We believe our cloud-based, end-to-end software platform offers a differentiated and more connected solution for clients that provides all the mechanisms needed to run a fully integrated supply chain solution with visibility at every point. If our clients initially purchase portions of our software, they can add on additional modules as the need arises.

Recent Events

In October 2024, we lowered our projections for net sales and net operating income due to lower than anticipated new bookings, and the market price of our Class A Common Stock and market capitalization declined significantly. These declines resulted in a triggering event, and interim goodwill and indefinite-lived intangible asset impairment assessments were performed.

The fair value of E2open was calculated using an equally weighted combination of three different methods: discounted cash flow method, guideline public company method and guideline transaction method. The discounted cash flow method was based on the present value of estimated future cash flows which were based on management's estimates of projected net sales, net operating margins and terminal growth rates, taking into consideration market and industry conditions. Under the guideline public company method, the fair value was based on current and forward-looking earnings multiples using management's estimates of projected net sales and adjusted EBITDA margins with consideration of market premiums. Under the guideline transaction method, the fair value was based on pricing multiples derived from recently sold companies with similar characteristics to ours taking into consideration management's estimates of projected net sales and net operating income margins. The three approaches generated similar results and indicated that the fair value of E2open's equity and goodwill was less than its carrying amount. Therefore, during the three and nine months ended November 30, 2024, we recognized an impairment charge of $369.1 million to goodwill. See Note 5, Goodwill to the Notes to the Unaudited Condensed Consolidated Financial Statements.

The fair value of the indefinite-lived intangible asset was calculated using the relief from royalty payments method which was based on management's estimates of projected net sales and terminal growth rates, taking into consideration market and industry conditions. The interim assessment indicated that the fair value of E2open's indefinite-lived intangible asset was less than its carrying amount; therefore, during the three and nine months ended November 30, 2024, we recognized an impairment charge of $10.0 million to intangible assets, net for the indefinite-lived trademark / trade name. See Note 6, Intangible Assets, Net to the Notes to the Unaudited Condensed Consolidated Financial Statements.

Results of Operations

The following table is our Unaudited Condensed Consolidated Statements of Operations for the periods indicated:


	Three Months Ended November 30,			Nine Months Ended November 30,
($ in thousands, except per share amounts)	2024			2023			2024		2023
Revenue	$	151,655			$	157,497		$	455,010		$	476,105
Cost of revenue		(75,913	)			(78,921	)		(231,963	)		(238,945	)
Total gross profit		75,742				78,576			223,047			237,160

Operating Expenses
Research and development		23,259				24,937			74,035			75,748
Sales and marketing		21,529				22,583			62,850			63,692
General and administrative		20,831				24,739			65,753			85,414
Acquisition-related expenses		187				9			2,190			416
Amortization of acquired intangible assets		5,611				20,014			45,840			60,135
Goodwill impairment		369,100				687,700			369,100			1,097,741
Intangible asset impairment		10,000				30,000			10,000			34,000
Total operating expenses		450,517				809,982			629,768			1,417,146
Loss from operations		(374,775	)			(731,406	)		(406,721	)		(1,179,986	)
Interest and other expense, net		(25,423	)			(24,643	)		(75,946	)		(75,886	)
Gain from change in tax receivable agreement liability		2,530				2,888			1,464			8,355
Gain from change in fair value of warrant liability		4,893				2,617			13,053			18,786
Gain from change in fair value of contingent consideration		8,700				5,100			8,460			15,360
Total other expense		(9,300	)			(14,038	)		(52,969	)		(33,385	)
Loss before income tax provision		(384,075	)			(745,444	)		(459,690	)		(1,213,371	)
Income tax benefit		2,431				5,413			2,405			73,827
Net loss		(381,644	)			(740,031	)		(457,285	)		(1,139,544	)
Less: Net loss attributable to noncontrolling interest		(34,734	)			(72,475	)		(41,650	)		(111,721	)
Net loss attributable to E2open Parent Holdings, Inc.	$	(346,910	)		$	(667,556	)	$	(415,635	)	$	(1,027,823	)
Net loss attributable to E2open Parent Holdings, Inc. Class A common stockholders per share:
Basic	$	(1.12	)		$	(2.20	)	$	(1.35	)	$	(3.39	)
Diluted	$	(1.12	)		$	(2.20	)	$	(1.35	)	$	(3.39	)
Weighted-average common shares outstanding:
Basic		308,904				303,848			307,894			303,188
Diluted		308,904				303,848			307,894			303,188

Three Months Ended November 30, 2024 compared to Three Months Ended November 30, 2023

Revenue


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Revenue:
Subscriptions	$	132,000			$	132,800		$	(800	)	-1	%
Professional services and other		19,655				24,697			(5,042	)	-20	%
Total revenue	$	151,655			$	157,497		$	(5,842	)	-4	%
Percentage of revenue:
Subscriptions		87	%			84	%
Professional services and other		13	%			16	%
Total		100	%			100	%

Subscriptions revenue was $132.0 million for the three months ended November 30, 2024, a $0.8 million, or 1%, decrease compared to subscriptions revenue of $132.8 million for the three months ended November 30, 2023. The decrease in subscriptions revenue was primarily due to lower new bookings and elevated churn over the last twelve months.

Professional services and other revenue were $19.7 million for the three months ended November 30, 2024, a $5.0 million, or 20%, decrease compared to $24.7 million for the three months ended November 30, 2023. The decrease in professional services and other revenue was due to lower billable hours partially driven by a higher focus of resources on retention and customer satisfaction and a decline in new bookings.

Our subscriptions revenue as a percentage of total revenue increased to 87% for the third quarter of fiscal 2025 compared to 84% for the third quarter of fiscal 2024. This increase was primarily due to a decline in professional services revenue. Our professional services and other revenue as a percentage of total revenue was 13% for the third quarter of fiscal 2025 compared to 16% for the third quarter of fiscal 2024.

Cost of Revenue, Gross Profit and Gross Margin


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Cost of revenue:
Subscriptions	$	35,640			$	36,689		$	(1,049	)	-3	%
Professional services and other		16,546				17,642			(1,096	)	-6	%
Amortization of acquired intangible assets		23,727				24,590			(863	)	-4	%
Total cost of revenue	$	75,913			$	78,921		$	(3,008	)	-4	%

Gross profit:
Subscriptions	$	72,633			$	71,521		$	1,112		2	%
Professional services and other		3,109				7,055			(3,946	)	-56	%
Total gross profit	$	75,742			$	78,576		$	(2,834	)	-4	%

Gross margin:
Subscriptions		55	%			54	%
Professional services and other		16	%			29	%
Total gross margin		50	%			50	%

Cost of subscriptions was $35.6 million for the three months ended November 30, 2024, a $1.0 million, or 3%, decrease compared to $36.7 million for the three months ended November 30, 2023. This decrease was primarily driven by a $1.4 million decrease in personnel costs when compared to the prior year.

Cost of professional services and other revenue was $16.5 million for the three months ended November 30, 2024, a $1.1 million, or 6%, decrease compared to $17.6 million for the three months ended November 30, 2023. The decrease was mainly due to a decrease of $1.3 million in personnel costs when compared to the prior year.

Amortization of acquired intangible assets was $23.7 million and $24.6 million for the three months ended November 30, 2024 and 2023, respectively.

Our subscriptions gross margin was 55% and 54% in the third quarter of fiscal 2025 and 2024, respectively.

Our professional services gross margin decreased in the third quarter of fiscal 2025 to 16% compared to 29% in the third quarter of fiscal 2024 primarily driven by our lower revenue in the third quarter of fiscal 2025.

Research and Development


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Research and development	$	23,259			$	24,937		$	(1,678	)	-7	%
Percentage of revenue		15	%			16	%

Research and development expenses were $23.3 million for the three months ended November 30, 2024, a $1.7 million, or 7%, decrease compared to $24.9 million for the three months ended November 30, 2023. The decrease was mainly due to a $1.5 million decrease in personnel costs mainly due to an increased mix in offshore resources when compared to the prior year period.

Sales and Marketing


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Sales and marketing	$	21,529			$	22,583		$	(1,054	)	-5	%
Percentage of revenue		14	%			14	%

Sales and marketing expenses were $21.5 million for the three months ended November 30, 2024, a $1.1 million, or 5%, decrease compared to $22.6 million in the prior year. The decrease was driven by a decline in consulting, marketing and travel expenses partially offset by an increase in personnel costs as compared to the prior year period.

General and Administrative


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
General and administrative	$	20,831			$	24,739		$	(3,908	)	-16	%
Percentage of revenue		14	%			16	%

General and administrative expenses were $20.8 million for the three months ended November 30, 2024, a $3.9 million, or 16%, decrease compared to $24.7 million in the prior year. The decrease was the result of $3.3 million of lower personnel costs and $1.9 million of lower consulting expenses partially offset by $3.8 million of higher share-based compensation expense with the majority of the increase related to awards for onboarding our CEO.

Other Operating Expenses


	Three Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Acquisition and other related expenses	$	187		$	9		$	178		nm
Amortization of acquired intangible assets		5,611			20,014			(14,403	)		-72	%
Total other operating expenses	$	5,798		$	20,023		$	(14,225	)		-71	%

Acquisition and other related expenses were $0.2 million and negligible for the three months ended November 30, 2024 and 2023, respectively. The increase in expenses was a result of our strategic alternatives review.

Amortization of acquired intangible assets was $5.6 million and $20.0 million for the third quarter of fiscal 2025 and 2024, respectively. The decrease in amortization expense was due to certain intangible assets being fully amortized.

Goodwill Impairment


	Three Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Goodwill impairment	$	369,100		$	687,700		$	(318,600	)	-46	%

During the third quarter of fiscal 2025 and 2024, the market price of our Class A Common Stock and market capitalization declined significantly. These declines resulted in us determining that triggering events occurred, and interim goodwill impairment assessments were performed. The result of the impairment assessments was the realization of a $369.1 million impairment charge in fiscal 2025 and a $687.7 million impairment charge in fiscal 2024.

Intangible Asset Impairment


	Three Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Intangible asset impairment	$	10,000		$	30,000		$	(20,000	)	-67	%

The decline in our stock price and market capitalization during the third quarter of fiscal 2025 and 2024 were also triggering events which resulted in interim indefinite-lived intangible asset impairment assessments. The result of these impairment assessments was the realization of a $10.0 million impairment charge in fiscal 2025 and a $30.0 million impairment charge in fiscal 2024.

Interest and Other Expense, Net


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Interest and other expense, net	$	(25,423	)		$	(24,643	)	$	(780	)	3	%

Interest and other expense, net was $25.4 million for the three months ended November 30, 2024, a $0.8 million, or 3%, increase compared to $24.6 million in the prior year. The increase was driven by higher realized exchange losses partially offset by lower interest expense on our debt due to normal principal payments and lower interest rates as well as additional interest income from money market funds in fiscal 2025 compared to fiscal 2024.

Gain from Change in Tax Receivable Agreement


	Three Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Gain from change in tax receivable agreement liability	$	2,530		$	2,888		$	(358	)	-12	%

During the three months ended November 30, 2024, we recorded a gain of $2.5 million related to the change in the fair value of the tax receivable agreement liability, including interest, compared to $2.9 million during the three months ended November 30, 2023. We have calculated the fair value of the tax receivable agreement payments and identified the timing of the utilization of the tax attributes. The tax receivable agreement liability, related to exchanges as of the Business Combination date, is revalued at the end of each reporting period with the gain or loss as well as the associated interest reflected in gain (loss) from change in tax receivable agreement liability in the Unaudited Condensed Consolidated Statements of Operations in the period in which the change occurred.

In addition, under ASC 450, transactions with partnership unit holders after the acquisition date will result in additional Tax Receivable Agreement liabilities that are recorded on a gross undiscounted basis. During the three months ended November 30, 2024 and 2023, the Tax Receivable Agreement applicable to this guidance decreased by $0.1 million and increased by a negligible amount, respectively.

Gain from Change in Fair Value of Warrant Liability


	Three Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Gain from change in fair value of warrant liability	$	4,893		$	2,617		$	2,276	87	%

We recorded a gain of $4.9 million during the three months ended November 30, 2024, a $2.3 million increase compared to a gain of $2.6 million in the prior year for the change in fair value on the revaluation of our warrant liability associated with our warrants. We are required to revalue the warrants at the end of each reporting period and reflect in the Unaudited Condensed Consolidated Statements of Operations a gain or loss from the change in fair value of the warrant liability in the period in which the change occurred.

Gain from Change in Fair Value of Contingent Consideration


	Three Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Gain from change in fair value of contingent consideration	$	8,700		$	5,100		$	3,600	71	%

We recorded a gain of $8.7 million during the three months ended November 30, 2024, a $3.6 million increase compared to a gain of $5.1 million in the prior year for the change in fair value on the revaluation of our contingent consideration associated with our restricted B-2 common stock and Series 2 RCUs. We are required to revalue the contingent consideration at the end of each reporting period or upon conversion and reflect in the Unaudited Condensed Consolidated Statements of Operations a gain or loss from the change in fair value of the contingent consideration in the period in which the change occurred.

Income Tax Benefit


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Loss before income taxes	$	(384,075	)		$	(745,444	)	$	361,369		-48	%
Income tax benefit		2,431				5,413			(2,982	)	-55	%

Income tax benefit was $2.4 million, or 0.6%, for the three months ended November 30, 2024 compared to an income tax benefit of $5.4 million, or 0.7%, for the three months ended November 30, 2023. The change in the income tax expense is due to a lower estimated tax benefit for fiscal 2025 and the goodwill and indefinite-lived intangible impairment charges.

Nine Months Ended November 30, 2024 compared to Nine Months Ended November 30, 2023

Revenue


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Revenue:
Subscriptions	$	394,959			$	402,437		$	(7,478	)	-2	%
Professional services and other		60,051				73,668			(13,617	)	-18	%
Total revenue	$	455,010			$	476,105		$	(21,095	)	-4	%
Percentage of revenue:
Subscriptions		87	%			85	%
Professional services and other		13	%			15	%
Total		100	%			100	%

Subscriptions revenue was $395.0 million for the nine months ended November 30, 2024, a $7.5 million, or 2%, decrease compared to subscriptions revenue of $402.4 million for the nine months ended November 30, 2023. The decrease in subscriptions revenue was primarily due to lower new bookings and elevated churn over the last twelve months.

Professional services and other revenue were $60.1 million for the nine months ended November 30, 2024, a $13.6 million, or 18%, decrease compared to $73.7 million for the nine months ended November 30, 2023. The decrease in professional services and other revenue was due to lower billable hours partially driven by a higher focus of resources on retention and customer satisfaction and a decline in new bookings.

Our subscriptions revenue as a percentage of total revenue increased to 87% for the nine months of fiscal 2025 compared to 85% for the nine months of fiscal 2024. This increase is primarily due to a decline in professional services revenue. Our professional services and other revenue as a percentage of total revenue was 13% for the nine months of fiscal 2025 compared to 15% for the nine months of fiscal 2024 as professional services and other revenue declined.

Cost of Revenue, Gross Profit and Gross Margin


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Cost of revenue:
Subscriptions	$	109,056			$	110,013		$	(957	)	-1	%
Professional services and other		49,829				55,014			(5,185	)	-9	%
Amortization of acquired intangible assets		73,078				73,918			(840	)	-1	%
Total cost of revenue	$	231,963			$	238,945		$	(6,982	)	-3	%

Gross profit:
Subscriptions	$	212,825			$	218,506		$	(5,681	)	-3	%
Professional services and other		10,222				18,654			(8,432	)	-45	%
Total gross profit	$	223,047			$	237,160		$	(14,113	)	-6	%

Gross margin:
Subscriptions		54	%			54	%
Professional services and other		17	%			25	%
Total gross margin		49	%			50	%

Cost of subscriptions was $109.1 million for the nine months ended November 30, 2024, a $1.0 million, or 1%, decrease compared to $110.0 million for the nine months ended November 30, 2023. This decrease was primarily driven by a $4.0 million decline in personnel costs and $1.6 million decrease in depreciation expense when compared to the prior year. These decreases were partially offset by increases of $3.4 million in software costs, $1.2 million for hosting costs and $1.1 million in share-based compensation expenses when compared to the prior year.

Cost of professional services and other revenue was $49.8 million for the nine months ended November 30, 2024, a $5.2 million, or 9%, decrease compared to $55.0 million for the nine months ended November 30, 2023. The decrease was mainly due to a $4.5 million decline in personnel costs when compared to the prior year.

Amortization of acquired intangible assets was $73.1 million and $73.9 million for the nine months ended November 30, 2024 and 2023, respectively.

Our subscriptions gross margin was 54% in the nine months of fiscal 2025 and 2024.

Our professional services gross margin decreased in the nine months of fiscal 2025 to 17% compared to 25% in the nine months of fiscal 2024 primarily driven by our lower revenue in fiscal 2025.

Research and Development


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Research and development	$	74,035			$	75,748		$	(1,713	)	-2	%
Percentage of revenue		16	%			16	%

Research and development expenses were $74.0 million for the nine months ended November 30, 2024, a $1.7 million, or 2%, decrease compared to $75.7 million for the nine months ended November 30, 2023. This decrease was primarily the result of a $4.5 million decline in personnel costs due to higher research and development software capitalization and an increased mix in offshore resources as compared to the prior year period. These decreases were partially offset by a $1.3 million increase in share-based compensation and $1.9 million increase in depreciation expense.

Sales and Marketing


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Sales and marketing	$	62,850			$	63,692		$	(842	)	-1	%
Percentage of revenue		14	%			13	%

Sales and marketing expenses were $62.9 million for the nine months ended November 30, 2024, a $0.8 million, or 1%, decrease compared to $63.7 million in the prior year. The decrease was mostly driven by a $1.2 million reduction in marketing expenses and a decrease in consulting expenses partially offset by a $2.1 million increase in share-based compensation expenses and $1.3 million increase in personnel costs when compared to the prior year.

General and Administrative


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
General and administrative	$	65,753			$	85,414		$	(19,661	)	-23	%
Percentage of revenue		14	%			18	%

General and administrative expenses were $65.8 million for the nine months ended November 30, 2024, a $19.7 million, or 23%, decrease compared to $85.4 million in the prior year. The decrease was mainly a result of the $17.8 million accrual during the second quarter of fiscal 2024 as a result of an unfavorable arbitration ruling and settlement related to a 2014 contract between Kewill (a predecessor of BluJay) and a customer regarding Kewill's performance under the agreement. Additionally, we incurred lower spend for personnel costs of $4.4 million, consulting expenses of $3.4 million, depreciation of $1.0 million and facilities of $1.3 million for such items as rent and building maintenance due to office closures resulting from moving to a more remote workforce. These decreases were partially offset by $11.5 million of higher share-based compensation expense with the majority of the increase related to awards for onboarding our CEO when compared to the prior year period.

Other Operating Expenses


	Nine Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Acquisition and other related expenses	$	2,190		$	416		$	1,774		nm
Amortization of acquired intangible assets		45,840			60,135			(14,295	)		-24	%
Total other operating expenses	$	48,030		$	60,551		$	(12,521	)		-21	%

Acquisition and other related expenses were $2.2 million and $0.4 million for the nine months ended November 30, 2024 and 2023, respectively. The increase in expenses was a result of our strategic alternatives review.

Amortization of acquired intangible assets was $45.8 million and $60.1 million for the nine months ended November 30, 2024 and 2023, respectively. The decrease in amortization expense was due to certain intangible assets being fully amortized.

Goodwill Impairment


	Nine Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Goodwill impairment	$	369,100		$	1,097,741		$	(728,641	)	-66	%

During the third quarter of fiscal 2025 and the first and third quarters of fiscal 2024, the market price of our Class A Common Stock and market capitalization declined significantly. These declines resulted in us determining that triggering events occurred, and interim goodwill impairment assessments were performed. The result of the impairment assessments was the realization of a $369.1 million impairment charge in fiscal 2025 and a $1,097.7 million impairment charge during fiscal 2024.

Intangible Asset Impairment


	Nine Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Intangible asset impairment	$	10,000		$	34,000		$	(24,000	)	-71	%

The decline in our stock price and market capitalization during the third quarter of fiscal 2025 and the first and third quarters of fiscal 2024 were also triggering events which resulted in interim indefinite-lived intangible asset impairment assessments. The result of these impairment assessments was the realization of a $10.0 million impairment charge in fiscal 2025 and a $34.0 million impairment charge in fiscal 2024.

Interest and Other Expense, Net


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Interest and other expense, net	$	(75,946	)		$	(75,886	)	$	(60	)	0	%

Interest and other expense, net was $75.9 million for the nine months ended November 30, 2024 and 2023, respectively. The stability in interest and other expense, net was driven by higher realized exchange losses partially offset by additional interest income from money market funds in fiscal 2025 compared to fiscal 2024.

Gain from Change in Tax Receivable Agreement


	Nine Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Gain from change in tax receivable agreement liability	$	1,464		$	8,355		$	(6,891	)	-82	%

During the nine months ended November 30, 2024, we recorded a gain of $1.5 million related to the change in the fair value of the tax receivable agreement liability, including interest, compared to a gain of $8.4 million during the nine months ended November 30, 2023. We have calculated the fair value of the tax receivable agreement payments and identified the timing of the utilization of the tax attributes. The tax receivable agreement liability, related to exchanges as of the Business Combination date, is revalued at the end of each reporting period with the gain or loss as well as the associated interest reflected in gain (loss) from change in tax receivable agreement liability in the Unaudited Condensed Consolidated Statements of Operations in the period in which the change occurred.

In addition, under ASC 450, transactions with partnership unit holders after the acquisition date will result in additional Tax Receivable Agreement liabilities that are recorded on a gross undiscounted basis. During the nine months ended November 30, 2024 and 2023, the Tax Receivable Agreement applicable to this guidance increased by $0.5 million and a negligible amount, respectively.

Gain from Change in Fair Value of Warrant Liability


	Nine Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Gain from change in fair value of warrant liability	$	13,053		$	18,786		$	(5,733	)	-31	%

We recorded a gain of $13.1 million during the nine months ended November 30, 2024, a $5.7 million decrease compared to $18.8 million in the prior year for the change in fair value on the revaluation of our warrant liability associated with our warrants. We are required to revalue the warrants at the end of each reporting period and reflect in the Unaudited Condensed Consolidated Statements of Operations a gain or loss from the change in fair value of the warrant liability in the period in which the change occurred.

Gain from Change in Fair Value of Contingent Consideration


	Nine Months Ended November 30,
($ in thousands)	2024		2023			$ Change		% Change
Gain from change in fair value of contingent consideration	$	8,460		$	15,360		$	(6,900	)	-45	%

We recorded a gain of $8.5 million during the nine months ended November 30, 2024, a $6.9 million decrease compared to a gain of $15.4 million in the prior year for the change in fair value on the revaluation of our contingent consideration associated with our restricted B-2 common stock and Series 2 RCUs. We are required to revalue the contingent consideration at the end of each reporting period or upon conversion and reflect in the Unaudited Condensed Consolidated Statements of Operations a gain or loss from the change in fair value of the contingent consideration in the period in which the change occurred.

Income Tax Benefit


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Loss before income taxes	$	(459,690	)		$	(1,213,371	)	$	753,681		-62	%
Income tax benefit		2,405				73,827			(71,422	)	-97	%

Income tax benefit was $2.4 million, or 0.5%, for the nine months ended November 30, 2024 compared to an income tax benefit of $73.8 million, or 6.1%, for the nine months ended November 30, 2023. The change in the income tax benefit between periods was primarily due to the increased goodwill and indefinite-lived intangible impairment charges in fiscal 2024.

Non-GAAP Financial Measures

This document includes Non-GAAP gross profit, Non-GAAP gross margin, EBITDA and Adjusted EBITDA, which are non-GAAP performance measures that we use to supplement our results presented in accordance with U.S. GAAP. We believe these non-GAAP measures are useful in evaluating our operating performance, as they are similar to measures reported by our public competitors and are regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. These non-GAAP measures are not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.

We calculate and define Non-GAAP gross profit as gross profit excluding depreciation and amortization, share-based compensation and certain other non-cash and non-recurring items. We define and calculate EBITDA as net income or losses excluding interest income or expense, income tax expense or benefit, depreciation and amortization and Adjusted EBITDA as further adjusted for the following items: goodwill impairment charge, indefinite-lived intangible asset impairment charge, right-of-use assets impairment charge, transaction-related costs, gain (loss) from change in the tax receivable agreement liability, (gain) loss from changes in the fair value of the warrant liability and contingent consideration, share-based compensation and certain other non-cash and non-recurring items as described in the reconciliation below. We also report Non-GAAP gross profit and Adjusted EBITDA as a percentage of Non-GAAP revenue as additional measures to evaluate financial performance.

We include these non-GAAP financial measures because they are used by management to evaluate our core operating performance and trends and to make strategic decisions regarding the allocation of capital and new investments. These non-GAAP measures exclude certain expenses that are required in accordance with U.S. GAAP because they are non-recurring (for example, in the case of transaction-related costs, litigation settlements, goodwill impairment charge, indefinite-lived intangible asset impairment charge and right-of-use assets impairment charge), non-cash (for example, in the case of depreciation, amortization, gain (loss) from change in the tax receivable agreement liability, (gain) loss from changes in the fair value of the warrant liability and contingent consideration and share-based compensation) or are not related to our underlying business performance (for example, in the case of interest income and expense). There are limitations to non-GAAP financial measures because they exclude charges and credits that are required to be included in the U.S. GAAP financial presentation. The items excluded from U.S. GAAP financial measures such as net income or loss to arrive at non-GAAP financial measures are significant components for understanding and assessing our financial performance. As a result, non-GAAP financial measures should be considered together with, and not alternatives to, financial measures prepared in accordance with U.S. GAAP.

The table below presents our Non-GAAP gross profit reconciled to our reported gross profit, the closest U.S. GAAP measure, for the periods indicated:


	Three Months Ended November 30,			Nine Months Ended November 30,
($ in thousands)	2024			2023			2024		2023
Gross profit
Reported gross profit	$	75,742			$	78,576		$	223,047		$	237,160
Depreciation and amortization		27,034				28,681			83,742			86,102
Non-recurring/non-operating costs (1)		44				1,099			578			3,269
Share-based compensation (2)		1,504				1,305			4,511			3,068
Non-GAAP gross profit	$	104,324			$	109,661		$	311,878		$	329,599
Gross margin		49.9	%			49.9	%		49.0	%		49.8	%
Non-GAAP gross margin		68.8	%			69.6	%		68.5	%		69.2	%

(1)

Primarily includes other non-recurring expenses such as the non-acquisition severance related to cost reduction initiatives and reorganizations, systems integrations, consulting and advisory fees.

(2)

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

The table below presents our Adjusted EBITDA reconciled to our net loss, the closest U.S. GAAP measure, for the periods indicated:


	Three Months Ended November 30,			Nine Months Ended November 30,
($ in thousands)	2024			2023			2024		2023
Net loss	$	(381,644	)		$	(740,031	)	$	(457,285	)	$	(1,139,544	)
Adjustments:
Interest expense, net		23,401				24,941			72,565			73,889
Income tax benefit		(2,431	)			(5,413	)		(2,405	)		(73,827	)
Depreciation and amortization		37,838				53,590			144,896			160,758
EBITDA		(322,836	)			(666,913	)		(242,229	)		(978,724	)
EBITDA Margin		-212.9	%			-423.4	%		-53.2	%		-205.6	%
Goodwill impairment charge (1)		369,100				687,700			369,100			1,097,741
Intangible asset impairment charge (2)		10,000				30,000			10,000			34,000
Right-of-use assets impairment charge (3)		-				70			576			619
Acquisition-related adjustments (4)		187				9			2,190			416
Gain from change in tax receivable agreement liability (5)		(2,530	)			(2,888	)		(1,464	)		(8,355	)
Gain from change in fair value of warrant liability (6)		(4,893	)			(2,617	)		(13,053	)		(18,786	)
Gain from change in fair value of contingent consideration (7)		(8,700	)			(5,100	)		(8,460	)		(15,360	)
Non-recurring/non-operating costs (8)		2,832				8,254			7,382			17,180
Legal settlement (9)		-				-			-			17,750
Share-based compensation (10)		10,415				6,841			35,125			18,744
Adjusted EBITDA	$	53,575			$	55,356		$	159,167		$	165,225
Adjusted EBITDA Margin		35.3	%			35.1	%		35.0	%		34.7	%

(1)

Represents the goodwill impairment taken in the third quarter of fiscal 2025 and the first and third quarters of fiscal 2024.

(2)

Represents the indefinite-lived tradename / trade name impairment taken in the third quarter of fiscal 2025 and the first and third quarters of fiscal 2024.

(3)

Represents the impairment of our operating lease ROU assets and leasehold improvements due to vacating certain facilities.

(4)

Primarily includes advisory, consulting, accounting and legal expenses and severance incurred in connection with merger and acquisition activities and the strategic alternatives review.

(5)

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

(6)

Represents the fair value adjustment at each balance sheet date of the warrant liability related to the public, private placement and forward purchase warrants.

(7)

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.

(8)

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.

(9)

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

(10)

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

Three Months Ended November 30, 2024 compared to Three Months Ended November 30, 2023

Gross Profit


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Gross profit	$	75,742			$	78,576		$	(2,834	)	-4	%
Gross margin		49.9	%			49.9	%

Gross profit was $75.7 million for the three months ended November 30, 2024, a $2.8 million, or 4%, decrease compared to $78.6 million for the three months ended November 30, 2023. Subscriptions gross profit was up 2% while professional services and other gross profit was down 56%. Gross margin was 50% for the third quarter of fiscal 2025 and 2024.

Non-GAAP Gross Profit


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Non-GAAP gross profit	$	104,324			$	109,661		$	(5,337	)	-5	%
Non-GAAP gross margin		68.8	%			69.6	%

Non-GAAP gross profit was $104.3 million for the three months ended November 30, 2024, a $5.3 million, or 5%, decrease compared to $109.7 million for the three months ended November 30, 2023. The decrease in Non-GAAP gross profit was primarily due to a decline in total revenue partially offset by $1.8 million in lower personnel costs. The Non-GAAP gross margin was 69% and 70% in the third quarter of fiscal 2025 and 2024, respectively.

EBITDA


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
EBITDA	$	(322,836	)		$	(666,913	)	$	344,077	-52	%
EBITDA margin		-212.9	%			-423.4	%

EBITDA was a negative $322.8 million for the three months ended November 30, 2024, a $344.1 million increase compared to a negative $666.9 million for three months ended November 30, 2023. EBITDA margin was a negative 213% for the third quarter of fiscal 2025 compared to a negative 424% in the prior year. The increase in EBITDA and EBITDA margin was primarily related to the reduction in the impairment on goodwill of $318.6 million and indefinite-lived intangible asset impairment of $20.0 million between the third quarter of fiscal 2025 and 2024. Additionally, there was a $2.3 million increase in the gain for the fair value adjustment for the warrant liability and $3.6 million increase in the gain for the fair value adjustment for the contingent consideration liability related to the restricted Series B-2 common stock as compared to prior periods.

Adjusted EBITDA


	Three Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Adjusted EBITDA	$	53,575			$	55,356		$	(1,781	)	-3	%
Adjusted EBITDA margin		35.3	%			35.1	%

Adjusted EBITDA was $53.6 million for the three months ended November 30, 2024, a $1.8 million, or 3%, decrease compared to $55.4 million for the three months ended November 30, 2023. Adjusted EBITDA margin was 35% for the third quarter of fiscal 2025 and 2024. The decrease in Adjusted EBITDA was primarily a result of lower revenue and gross profit, partially offset by lower operating expenses compared to prior periods.

Nine Months Ended November 30, 2024 compared to Nine Months Ended November 30, 2023

Gross Profit


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Gross profit	$	223,047			$	237,160		$	(14,113	)	-6	%
Gross margin		49.0	%			49.8	%

Gross profit was $223.0 million for the nine months ended November 30, 2024, a $14.1 million, or 6%, decrease compared to $237.2 million for nine months ended November 30, 2023. Subscriptions gross profit was down 3% while professional services and other gross profit was down 45%. Gross margin was 49% for the nine months of fiscal 2025 compared to 50% for the nine months of fiscal 2024.

Non-GAAP Gross Profit


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Non-GAAP gross profit	$	311,878			$	329,599		$	(17,721	)	-5	%
Non-GAAP gross margin		68.5	%			69.2	%

Non-GAAP gross profit was $311.9 million for the nine months ended November 30, 2024, a $17.7 million, or 5%, decrease compared to $330.0 million for the nine months ended November 30, 2023. The decrease in Non-GAAP gross profit was primarily due to a decline in total revenue as well as $3.4 million in higher software costs and $1.5 million in additional hosting expenses in subscription costs of revenue. These decreases in non-GAAP gross profit were partially offset by $6.4 million in lower personnel costs. The Non-GAAP gross margin was 69% for the nine months of fiscal 2025 and 2024.

EBITDA


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
EBITDA	$	(242,229	)		$	(978,724	)	$	736,495	-75	%
EBITDA margin		-53.2	%			-205.6	%

EBITDA was a negative $242.2 million for the nine months ended November 30, 2024, a $736.5 million increase compared to a negative $978.7 million EBITDA for the nine months ended November 30, 2023. EBITDA margin was a negative 53% for the nine months of fiscal 2025 compared to a negative 206% in the prior year. The increase in EBITDA and EBITDA margin was primarily related to the reduction in the impairment on goodwill of $728.6 million and indefinite-lived intangible asset impairment of $24.0 million between fiscal 2025 and fiscal 2024. We also incurred a $17.8 million litigation settlement for the unfavorable arbitration ruling related to the Kewill customer case in fiscal 2024. Additionally, there was a $5.7 million increase in the gain for the fair value adjustment for the warrant liability and a $6.9 million increase in the gain associated with the fair value adjustment for the contingent consideration liability related to the restricted Series B-2 common stock as compared to prior periods. These increases were partially offset by the decrease in gross profit.

Adjusted EBITDA


	Nine Months Ended November 30,
($ in thousands)	2024			2023			$ Change		% Change
Adjusted EBITDA	$	159,167			$	165,225		$	(6,058	)	-4	%
Adjusted EBITDA margin		35.0	%			34.7	%

Adjusted EBITDA was $159.2 million for the nine months ended November 30, 2024, a $6.1 million, or 4%, decrease compared to $165.2 million for the nine months ended November 30, 2023. Adjusted EBITDA margin was 35% for the nine months of fiscal 2025 and 2024. The decrease in Adjusted EBITDA and EBITDA margin was primarily a result of lower revenue and gross profit, partially offset by lower operating expenses compared to prior periods.

Liquidity and Capital Resources

We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital, capital expenditure needs, contractual obligations and other commitments, with cash flows from operations and other sources of funding. Current working capital needs relate mainly to employee compensation and benefits, as well as interest and debt. Our ability to expand and grow our business will depend on many factors, including working capital needs and the evolution of our operating cash flows.

We had $151.2 million in cash and cash equivalents and $155.0 million of unused borrowing capacity under our 2021 Revolving Credit Facility as of November 30, 2024. See Note 10, Notes Payableto the Notes to the Unaudited Condensed Consolidated Financial Statements. We believe our existing cash and cash equivalents, cash provided by operating activities and, if necessary, the borrowing capacity under our 2021 Revolving Credit Facility will be sufficient to meet our working capital, debt repayment and capital expenditure requirements for at least the next twelve months.

In the future, we may enter into arrangements to acquire or invest in complementary businesses. To facilitate these acquisitions or investments, we may seek additional equity or debt financing.

Debt

2021 Term Loan and Revolving Credit Facility

In February 2021, E2open, LLC, our subsidiary, entered into the Credit Agreement which provided for the 2021 Term Loan in the amount of $525.0 million and the 2021 Revolving Credit Facility for $75.0 million. In September 2021, the Credit Agreement was amended to include a $380.0 million incremental term loan, an increase in the letter of credit sublimit from $15.0 million to $30.0 million and an increase in the 2021 Revolving Credit Facility from $75.0 million to $155.0 million. In April 2022, the Credit Agreement was amended to include a $190.0 million incremental term loan bringing our total borrowing under the term loans to $1,095.0 million.

The 2021 Revolving Credit Facility will mature on February 4, 2026. E2open, LLC can request increases in the revolving commitments and additional term loan facilities, in minimum amounts of $2.0 million for each facility. Principal payments are due on the Credit Agreement the last day of February, May, August and November. The Credit Agreement is payable in quarterly installments of $2.7 million. The Credit Agreement is payable in full on February 4, 2028.

The 2021 Term Loan has a variable interest rate resulting in an interest rate of 8.19% and 8.95% as of November 30, 2024 and February 29, 2024, respectively, which was based on SOFR plus 350 basis points. As of November 30, 2024 and February 29, 2024, the 2021 Term Loan had a principal balance outstanding of $1,059.0 million and $1,067.2 million, respectively. There were no outstanding borrowings, no letters of credit and $155.0 million available borrowing capacity under the 2021 Revolving Credit Facility as of November 30, 2024 and February 29, 2024.

Beginning in March 2023, we entered into zero-cost interest rate collars to reduce our exposure to the variability of our interest rate associated with our outstanding debt. By keeping interest rates within the executed bands, or caps and floors, of the collars, we are able to reduce exposure to the interest rate risk. Effective March 31, 2023, we entered into an interest rate collar with a notional amount of $200.0 million and a maturity date of March 31, 2026. The executed cap was 4.75% and the floor was 2.57%. Effective April 6, 2023, an additional interest rate collar was executed with a notional amount of $100.0 million and a maturity date of March 31, 2026. The executed cap was 4.50% and the floor was 2.56%.

Cash Flows

The following table presents net cash from operating, investing and financing activities:


	Nine Months Ended November 30,
($ in thousands)	2024			2023
Net cash provided by operating activities	$	46,147			$	56,655
Net cash used in investing activities		(18,465	)			(22,301	)
Net cash used in financing activities		(9,642	)			(10,798	)
Effect of exchange rate changes on cash and cash equivalents		1,356				2,040
Net increase in cash, cash equivalents and restricted cash		19,396				25,596
Cash, cash equivalents and restricted cash at beginning of period		149,038				104,342
Cash, cash equivalents and restricted cash at end of period	$	168,434			$	129,938

Three Months Ended November 30, 2024 compared to Three Months Ended November 30, 2023

As of November 30, 2024, our consolidated cash, cash equivalents and restricted cash was $168.4 million, a $19.4 million increase from our balance of $149.0 million as of February 29, 2024.

Net cash provided by operating activities for the nine months ended November 30, 2024 was $46.1 million compared to $56.7 million for the nine months ended November 30, 2023. The $10.5 million decrease in cash was primarily driven by less cash provided by working capital items in fiscal 2025 from such items as the following:

•

a decrease in revenue and cash collected on accounts receivable;

•

a decrease in cash from channel client deposits; and

•

an increase in the cash used for accounts payable and accrued liabilities which includes items such as accrued compensation and trade accounts payable.

Net cash used in investing activities was $18.5 million and $22.3 million for the nine months ended November 30, 2024 and 2023, respectively, which represented cash used for the acquisition of software and property related to our data centers.

Net cash used in financing activities was $9.6 million and $10.8 million for the nine months ended November 30, 2024 and 2023, respectively. Repayments under the 2021 Term Loan were consistent between periods at $8.2 million. Additionally, we paid $1.1 million in additional finance lease payment in fiscal 2024 than in fiscal 2025.

Tax Receivable Agreement

Concurrently with the completion of the Business Combination, we entered into the Tax Receivable Agreement with certain selling equity holders of E2open Holdings. The Tax Receivable Agreement provides for the payment by the Company of 85% of certain tax benefits that are realized or deemed realized as a result of increases in tax, utilization of pre-existing tax attributes of certain sellers and realization of additional tax benefits attributable to payments under the Tax Receivable Agreement. The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless we exercise our right to terminate the Tax Receivable Agreement for an amount representing the present value of anticipated future tax benefits under the Tax Receivable Agreement or certain other acceleration events occur. We will retain the benefit of the remaining 15% of these cash savings.

Amounts payable under the Tax Receivable Agreement will be contingent upon, among other things, our generation of taxable income over the term of the Tax Receivable Agreement. If we do not generate sufficient taxable income in the aggregate over the term of the Tax Receivable Agreement to utilize the tax benefits subject to the Tax Receivable Agreement, we would not be required to make the related payments under the Tax Receivable Agreement. Although the amount of any payments required to be made under the Tax Receivable Agreement may be significant, the timing of these payments will vary and will generally be limited to one payment per member per year. During the nine months ended November 30, 2024, we paid $1.8 million to Tax Receivable Agreement holders of E2open Holdings. We did not make any payments to Tax Receivable Agreement holders of E2open Holdings prior to fiscal 2025.

The liability related to the Tax Receivable Agreement was $66.9 million and $69.7 million as of November 30, 2024 and February 29, 2024, respectively, assuming (1) a corporate tax rate of 23.7% as of November 30, 2024 and February 29, 2024, (2) no dispositions of corporate subsidiaries, (3) no material changes in tax law and (4) we do not elect an early termination of the Tax Receivable Agreement. However, due to the uncertainty of various factors, including: (a) the timing and value of future exchanges, (b) the amount and timing of our future taxable income, (c) changes in our tax rate, (d) no future dispositions of any corporate stock, (e) changes in the tax law and (f) changes in the discount rate, the likely tax savings we will realize and the resulting amounts we are likely to pay to the selling equity holders of E2open Holdings pursuant to the Tax Receivable Agreement are uncertain. Interest accrued on the portion of the Tax Receivable Agreement liability recorded under ASC 805 at a rate of LIBOR plus 100 basis points through June 30, 2023. Beginning July 1, 2023, interest will accrue at SOFR plus the applicable spread for the quarter. The portion of the Tax Receivable Agreement liability under ASC 450 is recorded on a gross undiscounted basis. These transactions, such as a conversion of Common Units to Class A Common Stock, result in a change in the Tax Receivable Agreement liability and a charge to equity.

The liability recorded on the balance sheet does not include an estimate of the amount of payments to be made if certain sellers exchanged their remaining interests in E2open Holdings for our common stock, as this amount is dependent on several future variables, including timing of future exchanges, stock price at date of exchange, tax attributes of the individual parties to the exchange and changes in future applicable federal and state tax rates.

In addition, if we exercise our right to terminate the Tax Receivable Agreement or certain other acceleration events occur, we will be required to make immediate cash payments. Such cash payments will be equal to the present value of the assumed future realized tax benefits based on a set of assumptions and using an agreed upon discount rate, as defined in the Tax Receivable Agreement. The early termination payment may be made significantly in advance of the actual realization, if any, of those future tax benefits. Such payments will be calculated based on certain assumptions, including that we have sufficient taxable income to utilize the full amount of any tax benefits subject to the Tax Receivable Agreement over the period specified therein. The payments that we would be required to make will generally reduce the amount of the overall cash flow that might have otherwise been available to us, but we expect the cash tax savings we will realize from the utilization of the related tax benefits will exceed the amount of any required payments.

As of November 30, 2024 and February 29, 2024, we had a current Tax Receivable Agreement liability of $6.3 million and $1.8 million, respectively, which was recorded in accounts payable and accrued liabilities on the Condensed Consolidated Balance Sheets. The determination of current and long-term is based on management's estimate of taxable income for the fiscal year and the determination that a Tax Receivable Agreement liability payment is due and payable within the next twelve months. To the extent the estimate differs from actual results, a reclass may be required for portions of the Tax Receivable Agreement liability between current and long-term.

We are entitled to receive quarterly tax distributions from E2open Holdings, subject to limitations imposed by applicable law and contractual restrictions. The cash received from such tax distributions will first be used to satisfy any tax liability and then make any payments required under the Tax Receivable Agreement. We expect that such tax distributions will be sufficient to fund both our tax liability and the required payments under the Tax Receivable Agreement.

Warrant Liability

As of November 30, 2024 and February 29, 2024, there were an aggregate of 29,079,872 warrants outstanding. Each warrant entitles its holder to purchase one share of our Class A Common Stock at an exercise price of $11.50 per share. The warrants are recorded as a liability in warrant liability on the Condensed Consolidated Balance Sheets with a balance of $1.7 million and $14.7 million as of November 30, 2024 and February 29, 2024, respectively. During the three months ended November 30, 2024 and 2023, a gain of $4.9 million and $2.6 million was recognized in gain from change in fair value of the warrant liability in the Unaudited Condensed Consolidated Statements of Operations, respectively. During the nine months ended November 30, 2024 and 2023, a gain of $13.1 million and $18.8 million was recognized in gain from change in fair value of the warrant liability, respectively.

Contingent Consideration

The contingent consideration liability was $9.6 million and $18.0 million as of November 30, 2024 and February 29, 2024, respectively. The fair value remeasurements resulted in a gain of $8.7 million and $5.1 million for the three months ended November 30, 2024 and 2023, respectively. The fair value remeasurements resulted in a gain of $8.5 million and $15.4 million for the nine months ended November 30, 2024 and 2023, respectively. The change in the contingent consideration is recognized in gain (loss) from change in fair value of the contingent consideration in the Unaudited Condensed Consolidated Statements of Operations. The contingent liability represents the Series B-2 common stock and Series 2 RCUs.

Leases

We account for leases in accordance with ASC 842, Leases,which requires lessees to recognize lease liabilities and ROU assets on the balance sheet for contracts that provide lessees with the right to control the use of identified assets for periods of greater than 12 months.

Our non-cancelable operating leases for our office spaces and vehicles have various expiration dates through September 2031. Under these leases, our undiscounted future cash flows utilized in the calculation of the lease liabilities as of November 30, 2024 were: $2.2 million for December 1, 2024 through February 28, 2025, $7.3 million for fiscal 2026, $5.9 million for fiscal 2027, $3.2 million for fiscal 2028, $1.4 million for fiscal 2029 and $1.5 million thereafter. These numbers include interest of $2.5 million.

Our non-cancelable financing lease arrangements relate to software and computer equipment and have various expiration dates through November 2028. We have the right to purchase the software and computer equipment anytime during the lease or upon lease completion. Under these leases, our undiscounted future cash flows utilized in the calculation of the lease liabilities as of November 30, 2024 were: $0.6 million for December 1, 2024 through February 28, 2025, $2.4 million for fiscal 2026, $1.9 million for fiscal 2027, $1.0 million for fiscal 2028 and $0.6 million for fiscal 2029. These numbers include interest of $0.7 million.

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Preparation of the financial statements requires management to make judgments, estimates and assumptions that impact the reported amount of revenue and expenses, assets and liabilities and the disclosure of contingent assets and liabilities. We consider an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on our unaudited condensed consolidated financial statements. Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies to the Notes to the Consolidated Financial Statements in our 2024 Form 10-K.

There have been no changes to our critical accounting policies and estimates during the three and nine months ended November 30, 2024 from those previously disclosed in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operationsin our 2024 Form 10-K.

Recent Accounting Pronouncements

Recently issued and adopted accounting pronouncements are described in Note 2, Accounting Standardsto the Notes to the Unaudited Condensed Consolidated Financial Statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in the market risks during the three and nine months ended November 30, 2024 from those previously disclosed in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk of our 2024 Form 10-K.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We have disclosure controls and procedures in place to ensure that information required to be disclosed in our reports filed or submitted under the Securities and Exchange Act of 1934, as amended (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. These controls and procedures are accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by the Quarterly Report. In designing and evaluating these disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal controls over financial reporting during the quarter ended November 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We review our disclosure controls and procedures, which may include internal controls over financial reporting, on an ongoing basis. From time to time, management makes changes to enhance the effectiveness of these controls and ensure that they continue to meet the needs of our business over time.

PART II-Other Information

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

There have been no material changes in our risk factors during the three and nine months ended November 30, 2024 from those previously disclosed in Part I, Item 1A, Risk Factors of our 2024 Form 10-K. You should carefully consider the risk factors discussed in our 2024 Form 10-K, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or future results.

Item 5. Other Information

Rule 10b5-1 Trading Arrangements

During the quarter ended November 30, 2024, none of our directors and officers adopted, modifiedor terminateda Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).

Item 6. Exhibits.

Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).


Exhibit Number		Description
3.1		Certificate of Incorporation of E2open Parent Holdings, Inc. (incorporated by reference to Exhibit 3.2 of E2open Parent Holdings, Inc.'s Form 8-K (File No. 001-39272) filed with the SEC on February 10, 2021).
3.2		Amendment to the Certificate of Incorporation of E2open Parent Holdings, Inc. (incorporated by reference to Exhibit 3.3 of E2open Parent Holdings, Inc.'s Form S-1 (File No. 333-259562) filed with the SEC on September 15, 2021).
3.3		Bylaws of the E2open Parent Holdings, Inc. (incorporated by reference to Exhibit 3.3 of E2open Parent Holdings, Inc.'s Form 8-K (File 001-39272) filed with the SEC on February 10, 2021).
4.1		Form of Warrant Certificate of CC Neuberger Principal Holdings I (incorporated by reference to Exhibit 4.3 of CCBN1's Form S-1/A (File No. 333-236974), filed with the SEC on April 17, 2020).
4.2		Warrant Agreement, dated April 28, 2020, between Continental Stock Transfer & Trust Company and CC Neuberger Principal Holdings I (incorporated by reference to Exhibit 4.1 of CCNB1's Form 8-K (File No. 001- 39272), filed with the SEC on April 28, 2020).
4.3		Description of the Registrant's Securities Registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.3 to Form 10-K, filed with the SEC on May 1, 2023).
10.1*		Employment Letter Agreement, by and between E2open Parent Holdings, Inc. and Susan E. Bennett, dated December 9, 2024.
10.2*		Employment Letter Agreement, by and between E2open Parent Holdings, Inc. and Rachit Lohani, dated December 20, 2024.
31.1*		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)

* Filed herewith

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	E2open Parent Holdings, Inc.

Date: January 10, 2025	By:	/s/ Andrew M. Appel
		Andrew M. Appel
		Chief Executive Officer

Date: January 10, 2025	By:	/s/ Marje Armstrong
		Marje Armstrong
		Chief Financial Officer

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