UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, ~~2021~~2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39272

E2open Parent Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	86-1874570
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
9600 Great Hills Trail, Suite 300E Austin, TX	78759
(Address of principal executive offices)	(Zip Code)

~~Registrant’s~~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 ☒

~~There were~~ ~~301,359,967~~ ~~shares~~As of January 5, 2023, E2open Parent Holdings, Inc. had Class A common stock, ~~$0.0001~~$0.001 par value per share, of 302,452,552 shares issued and ~~outstanding as of January 10, 2022.~~302,275,898 shares outstanding.

Table of Contents


		Page
Glossary		3
Forward-Looking Statements		4
PART I.		5
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss)	7
	Condensed Consolidated Statements of ~~Stockholders’~~Stockholders' Equity	8
	Condensed Consolidated Statements of Cash Flows	910
	Notes to Unaudited Condensed Consolidated Financial Statements	1011
Item 2.	~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	3336
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5155
Item 4.	Controls and Procedures	5155
PART II.	~~OTHER INFORMATION~~Other Information	5256
Item 1.	Legal Proceedings	5256
Item 1A.	Risk Factors	5256
Item 22.	Unregistered Sales of Equity Securities and Use of Proceeds	5356
Item 6.	Exhibits	5456
Signatures		5557

Glossary of Terms


Abbreviation		Term
ASC		Accounting Standards Codification

BluJay		BluJay TopCo Limited, a private limited liability company registered in England and Wales which owns BluJay Solutions, a cloud-based logistics execution platform company

BluJay Sellers		BluJay and its subsidiaries

CC Capital		CC NB Sponsor 1 Holdings LLC

Class A Common Stock		Class A common stock, par value $0.0001 per share

Class V Common Stock		Class V common stock, par value $0.0001 per share

Common Units		common units representing limited liability company interests of E2open Holdings, LLC, which are non-voting, economic interests in E2open Holdings, LLC. Every economic common unit is tied to one voting share of Class V Common Stock of E2open Parent Holdings, Inc.

Forward Purchase Agreement		agreement dated as of April 28, 2020, by and between CCNB1 and Neuberger Berman Opportunistic Capital Solutions Master Fund LP

Forward Purchase Warrants		5,000,000 redeemable warrants purchased pursuant to the Forward Purchase Agreement

Insight Partners		entities affiliated with Insight Venture Management, LLC, including funds under management; controlling unitholder of E2open Holdings, LLC

Investor Rights Agreement		agreement amended and restated on September 1, 2021 providing Insight Partners, CC Capital, Francisco Partners and Temasek the right to nominate members to the board of directors and requires parties to vote in favor of director nominees recommended by the board of directors, requires the registration of securities within 30 days of September 1, 2021 and limits the transfer of beneficially owned shares of common stock prior to the termination of the Lock-up Period.directors.

LIBOR		London Interbank Offered Rate

Logistyx		Logistyx Technologies, LLC, a private limited liability company headquartered in Chicago, Illinois, which connects top retailers, manufacturers and logistics providers to more than 550 in-network carriers with strategic parcel shipping and omni-channel fulfillment technology.
~~Lock-up Period~~		~~period commencing on September 1, 2021 and ending on February 28, 2022~~

nm		not meaningful

NYSE		New York Stock Exchange

PIPE		private investment in public equity; financing from institutional investors

Purchase Agreement		Share Purchase Deed entered into on May 27, 2021 with BluJay

RCU		restricted common units representing Series 1 and Series 2 of E2open Holdings, LLC

SCM		omni-channel and supply chain management

SEC		U.S. Securities and Exchange Commission

Temasek		Temasek Holdings (Private) Limited

U.S. GAAP		generally accepted accounting principles in the United States

VWAP		daily per share volume-weighted average price of the Class A Common Stock on the NYSE as displayed on the Bloomberg page under the heading Bloomberg VWAP

Forward-Looking Statements

This Quarterly Report on Form 10-Q (Quarterly Report) contains ~~“forward-looking statements”~~"forward-looking statements" within the meaning of the federal securities law. These forward-looking statements give E2open Parent Holdings, Inc.'s (we, our, us, Company or E2open) current expectations and include projections of results of operations or financial condition or forecasts of future events. Words such as "may," "can," "should," "will," "estimate," "plan," "project," "forecast," "intend," "expect," "anticipate," "believe," "seek," "target" and similar expressions are used to identify forward-looking statements. Without limiting the generality of the forgoing, forward-looking statements contained in this document include our expectations regarding our future growth, operational and financial performance and business prospects and opportunities.

These forward-looking statements are based on information available as of the date of this Quarterly Report and ~~management’s~~management's then current expectations, forecasts and assumptions, and involve a number of judgments, known and unknown risks and uncertainties and other factors, many of which are outside our control and our directors, officers and affiliates. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. We do not undertake any obligation to update, add or to otherwise correct any forward-looking statements contained herein to reflect events or circumstances after the date they were made, whether as a result of new information, future events, inaccuracies that become apparent after the date hereof or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

•

~~cyber-attacks~~the effect of the volatile, negative or uncertain economic and ~~security vulnerabilities;~~political conditions, including the invasion of Ukraine by Russia, the related sanctions and other measures that have been and continue to be imposed in response to the conflict, inflation, fluctuations in foreign currency exchange rates and the potential effects of these factors on our business, results of operations and financial condition as well as our clients' businesses and levels of business activity;

•

changes in market interest rates particularly on our variable rate debt, including the recent significant increases in market interest rates experienced so far in fiscal 2023 and that may continue to increase;

•

the ~~outcome of any legal proceedings that may be instituted against us or others following~~inability to develop and market new product innovations and monetize our network;

•

risks associated with our past and prospective acquisitions (including the ~~completion~~BluJay and Logistyx acquisitions), including the failure to successfully integrate operations, personnel, systems and products of the ~~BluJay acquisition and any definitive agreements with respect thereto;~~



~~the ability to recognize the anticipated benefits~~acquired companies, adverse tax consequences of acquisitions, greater than expected liabilities of the ~~BluJay acquisition, which may be affected by, among other things, competition,~~acquired companies, charges to earnings from acquisitions, the ability of the combined company to grow and manage ~~growth~~ profitability, maintain relationships with ~~customers~~clients and suppliers and retain its management and key ~~employees;~~



~~costs related~~employees and the ability to recognize the ~~BluJay~~anticipated benefits of the acquisition;



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

•

the inability to develop and maintain effective internal ~~controls;~~controls over financial reporting;



~~the COVID-19 pandemic;~~

•

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



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

•

risks associated with our extensive and expanding international ~~operations;~~operations, including the risks created by geopolitical instability;



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

•

the failure of the market for cloud-based SCM solutions to develop as quickly as we expect or failure to compete successfully in a fragmented and competitive SCM market;



~~inaccuracies in information sourced for our knowledge databases;~~

•

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

•

the diversion of ~~management’s~~management's attention and consumption of resources as a result of potential acquisitions of other companies;



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

•

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

•

cyber-attacks and security vulnerabilities; and

•

certain other factors discussed elsewhere in this Quarterly Report.

For a further discussion of these and other factors that could impact our future results and performance, see Part I, Item 1A., Risk Factors in our Annual Report on Form 10-K for the fiscal year ended February 28, ~~2021,~~2022, filed with the SEC on ~~May 20, 2021 (2021~~April 29, 2022 (2022 Form 10-K).

PART I—Financial Information

Item 1. Financial Statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Balance Sheets


	Successor
(In thousands, except share amounts)	November 30, 2021			February 28, 2021		November 30, 2022			February 28, 2022
	(unaudited)					(Unaudited)
Assets
Cash and cash equivalents	$	56,462		$	194,717	$	85,688		$	155,481
Restricted cash		15,047			12,825		13,130			19,073
Accounts receivable - net of allowance of $3,224 and $908, respectively		104,643			112,657
Accounts receivable - net of allowance of $5,003 and $3,055 as of November 30, 2022 and February 28, 2022, respectively							149,457			155,341
Prepaid expenses and other current assets		28,992			12,643		26,461			26,243
Total current assets		205,144			332,842		274,736			356,138
Long-term investments		210			224
Goodwill		3,760,136			2,628,646		3,306,233			3,756,871
Intangible assets, net		1,226,512			824,851		1,095,762			1,181,390
Property and equipment, net		55,778			44,198		73,104			65,937
Operating lease right-of-use assets		26,553			—		21,022			28,102
Other noncurrent assets		14,845			7,416		21,525			17,017
Total assets	$	5,289,178		$	3,838,177	$	4,792,382		$	5,405,455
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities	$	112,298		$	70,233	$	111,202		$	128,544
Incentive program payable		15,047			12,825
Channel client deposits payable							13,130			19,073
Deferred revenue		147,535			89,691		173,580			190,992
Acquisition-related obligations		2,700			2,000
Payable to Logistyx sellers							1,068			—
Current portion of notes payable		9,112			4,405		20,962			89,097
Current portion of operating lease obligations		6,626			—		8,093			7,652
Current portion of financing lease obligations		2,329			4,827		2,002			2,307
Income taxes payable							9,768			2,702
Total current liabilities		295,647			183,981		339,805			440,367
Long-term deferred revenue		1,848			482		2,400			1,141
Operating lease obligations		20,784			—		17,462			21,202
Financing lease obligations		2,093			6,588		—			1,950
Notes payable		867,523			502,800		1,042,459			863,577
Tax receivable agreement liability		67,910			50,114		58,176			66,590
Warrant liability		117,220			68,772		30,375			67,139
Contingent consideration		66,988			150,808		27,808			45,568
Deferred taxes		441,340			396,217		255,207			413,038
Other noncurrent liabilities		1,020			1,057		973			712
Total liabilities		1,882,373			1,360,819		1,774,665			1,921,284
Commitments and Contingencies (Note 23)
Commitments and Contingencies (Note 27)
Stockholders' Equity
Class A common stock; $0.0001 par value, 2,500,000,000 shares authorized; 300,415,025 and 187,051,142 issued and 300,238,371 and 187,051,142 outstanding as of November 30, 2021 and February 28, 2021		30			19
Class V common stock; $0.0001 par value; 42,747,890 and 40,000,000 shares authorized; 34,682,435 and 35,636,680 issued and outstanding as of November 30, 2021 and February 28, 2021		0			0
Series B-1 common stock; $0.0001 par value; 9,000,000 shares authorized; 94 and 8,120,367 issued and outstanding as of November 30, 2021 and February 28, 2021		0			0
Series B-2 common stock; $0.0001 par value; 4,000,000 shares authorized; 3,372,184 issued and outstanding as of November 30, 2021 and February 28, 2021		0			0
Class A common stock; $0.0001 par value, 2,500,000,000 shares authorized; 302,452,552 and 301,536,621 issued and 302,275,898 and 301,359,967 outstanding as of November 30, 2022 and February 28, 2022, respectively							30			31
Class V common stock; $0.0001 par value; 42,747,890 shares authorized; 33,092,007 and 33,560,839 issued and outstanding as of November 30, 2022 and February 28, 2022, respectively							—			—
Series B-1 common stock; $0.0001 par value; 9,000,000 shares authorized; 94 shares issued and outstanding							—			—
Series B-2 common stock; $0.0001 par value; 4,000,000 shares authorized; 3,372,184 issued and outstanding							—			—
Additional paid-in capital		3,348,606			2,071,206		3,374,388			3,362,219
Accumulated other comprehensive (loss) income		(28,277	)		2,388
(Accumulated deficit) retained earnings		(211,192	)		10,800
Treasury stock, at cost: 176,654 shares as of November 30, 2021		(2,473	)		—
Accumulated other comprehensive loss							(77,732	)		(19,019	)
Accumulated deficit							(530,215	)		(154,976	)
Treasury stock, at cost: 176,654 shares							(2,473	)		(2,473	)
Total E2open Parent Holdings, Inc. equity		3,106,694			2,084,413		2,763,998			3,185,782
Noncontrolling interest		300,111			392,945		253,719			298,389
Total stockholders' equity		3,406,805			2,477,358		3,017,717			3,484,171
Total liabilities and stockholders' equity	$	5,289,178		$	3,838,177	$	4,792,382		$	5,405,455

See notes to unaudited condensed consolidated financial statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Successor			Predecessor			Successor			Predecessor
	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended			Three Months Ended November 30,						Nine Months Ended November 30,
(In thousands, except per share amounts)	November 30, 2021			November 30, 2020			November 30, 2021			November 30, 2020			2022			2021			2022			2021
Revenue
Subscriptions	$	106,969		$	70,374		$	219,728		$	209,013		$	134,884		$	106,969		$	396,052		$	219,728
Professional services		30,033			13,707			61,680			40,009
Professional services and other														30,009			30,033			89,898			61,680
Total revenue		137,002			84,081			281,408			249,022			164,893			137,002			485,950			281,408
Cost of Revenue
Subscriptions		30,163			15,568			62,917			44,566			35,931			30,163			105,367			62,917
Professional services		17,587			11,346			38,694			32,791
Professional services and other														20,417			17,587			63,446			38,694
Amortization of acquired intangible assets		25,036			4,945			48,885			15,453			24,402			25,036			73,869			48,885
Total cost of revenue		72,786			31,859			150,496			92,810			80,750			72,786			242,682			150,496
Gross Profit		64,216			52,222			130,912			156,212			84,143			64,216			243,268			130,912
Operating Expenses
Research and development		25,000			14,225			56,909			43,212			24,939			25,000			73,088			56,909
Sales and marketing		18,101			12,973			41,789			37,275			20,448			18,101			67,348			41,789
General and administrative		22,871			10,412			49,989			30,037			23,073			22,871			66,774			49,989
Acquisition-related expenses		33,216			5,968			50,168			11,354			1,969			33,216			14,313			50,168
Amortization of acquired intangible assets		19,470			8,451			26,843			25,365			19,965			19,470			62,523			26,843
Goodwill impairment														—			—			514,816			—
Total operating expenses		118,658			52,029			225,698			147,243			90,394			118,658			798,862			225,698
(Loss) income from operations		(54,442	)		193			(94,786	)		8,969
Other expense
Loss from operations														(6,251	)		(54,442	)		(555,594	)		(94,786	)
Other income (expense)
Interest and other expense, net		(10,769	)		(17,575	)		(22,004	)		(53,255	)		(21,270	)		(10,769	)		(54,732	)		(22,004	)
Change in tax receivable agreement liability		(1,470	)		—			(4,606	)		0
Loss from change in fair value of warrant liability		(7,232	)		0			(48,448	)		0
Loss from change in fair value of contingent consideration		(1,140	)		0			(91,180	)		0
Total other expenses		(20,611	)		(17,575	)		(166,238	)		(53,255	)
Loss before income tax expense		(75,053	)		(17,382	)		(261,024	)		(44,286	)
Income tax benefit (expense)		10,764			(9,685	)		3,392			(24,073	)
Net loss		(64,289	)	$	(27,067	)		(257,632	)	$	(68,359	)
Less: Net loss attributable to noncontrolling interest		(5,072	)					(35,640	)
Net loss attributable to E2open Parent Holdings, Inc.	$	(59,217	)				$	(221,992	)
Gain (loss) from change in tax receivable agreement liability														2,697			(1,470	)		9,089			(4,606	)
Gain (loss) from change in fair value of warrant liability														16,150			(7,232	)		36,764			(48,448	)
Gain (loss) from change in fair value of contingent consideration														6,300			(1,140	)		17,760			(91,180	)
Total other income (expense)														3,877			(20,611	)		8,881			(166,238	)
Loss before income tax provision														(2,374	)		(75,053	)		(546,713	)		(261,024	)
Income tax benefit														7,877			10,764			130,010			3,392
Net income (loss)														5,503			(64,289	)		(416,703	)		(257,632	)
Less: Net income (loss) attributable to noncontrolling interest														698			(5,072	)		(41,464	)		(35,640	)
Net income (loss) attributable to E2open Parent Holdings, Inc.													$	4,805		$	(59,217	)	$	(375,239	)	$	(221,992	)

Net loss attributable to E2open Parent Holdings, Inc. common shareholders per share:
Weighted average common shares outstanding:
Basic	$	(0.19	)				$	(0.98	)					302,201			308,132			301,822			227,186
Diluted	$	(0.19	)				$	(0.98	)					302,359			308,132			301,822			227,186
Net income (loss) attributable to E2open Parent Holdings, Inc. common shareholders per share:
Basic													$	0.02		$	(0.19	)	$	(1.24	)	$	(0.98	)
Diluted													$	0.02		$	(0.19	)	$	(1.24	)	$	(0.98	)

See notes to unaudited condensed consolidated financial statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Comprehensive ~~Loss~~Income (Loss)

(Unaudited)

Successor

Predecessor

Successor

Predecessor

Three Months Ended

Three Months Ended

Nine Months Ended

Nine Months Ended

(In thousands)

November 30, 2021

November 30, 2020

November 30, 2021

November 30, 2020

Net loss

$
(64,289
)

$
(27,067
)

$
(257,632
)

$
(68,359
)
Other comprehensive loss, net:

Net foreign currency translation loss

(25,617
)

403

(30,665
)

57

Total other comprehensive loss, net

(25,617
)

403

(30,665
)

57

Comprehensive loss

(89,906
)

$
(26,664
)

(288,297
)

$
(68,302
)
Less: Comprehensive loss attributable to
noncontrolling interest

(8,516
)

(39,882
)

Comprehensive loss attributable to E2open
Parent Holdings, Inc.

$
(81,390
)

$
(248,415
)


	Three Months Ended November 30,						Nine Months Ended November 30,
(In thousands)	2022			2021			2022			2021
Net income (loss)	$	5,503		$	(64,289	)	$	(416,703	)	$	(257,632	)
Other comprehensive loss, net:
Net foreign currency translation income (loss), net of tax of ($5,395) and $10,274 as of November 30, 2022		14,369			(25,617	)		(58,086	)		(30,665	)
Net deferred losses on cash flow hedges		(420	)		—			(627	)		—
Total other comprehensive income (loss), net		13,949			(25,617	)		(58,713	)		(30,665	)
Comprehensive income (loss)		19,452			(89,906	)		(475,416	)		(288,297	)
Less: Comprehensive income (loss) attributable to noncontrolling interest		2,112			(8,516	)		(47,306	)		(39,882	)
Comprehensive income (loss) attributable to E2open Parent Holdings, Inc.	$	17,340		$	(81,390	)	$	(428,110	)	$	(248,415	)

See notes to unaudited condensed consolidated financial statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of ~~Stockholders’~~Stockholders' Equity

(Unaudited)

Predecessor

(In thousands)

Members' Capital

Accumulated
Other
Comprehensive
Loss

Accumulated
Deficit

Total
Members'
Equity

Balance, February 29, 2020

$
433,992

$
(898
)

$
(218,502
)

$
214,592

Investment by member

1,788

—

—

1,788

Unit-based compensation

2,046

—

—

2,046

Comprehensive loss

—

(291
)

—

(291
)
Net loss

—

—

(23,752
)

(23,752
)
Balance, May 31, 2020

437,826

(1,189
)

(242,254
)

194,383

Investment by member

(10
)

—

—

(10
)
Unit-based compensation

1,971

—

—

1,971

Comprehensive loss

—

(55
)

—

(55
)
Net loss

—

—

(17,540
)

(17,540
)
Balance, August 31, 2020

439,787

(1,244
)

(259,794
)

178,749

Investment by member

1,606

—

—

1,606

Unit-based compensation

1,936

—

—

1,936

Comprehensive income

—

403

—

403

Net loss

—

—

(27,067
)

(27,067
)
Balance, November 30, 2020

$
443,329

$
(841
)

$
(286,861
)

$
155,627


(In thousands)	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings (Accumulated Deficit)			Treasury Stock			Total E2open Equity			Noncontrolling Interest			Total Equity
Balance, February 28, 2021	$	19	$	2,071,206		$	2,388		$	10,800		$	—		$	2,084,413		$	392,945		$	2,477,358
Share-based compensation		—		2,043			—			—			—			2,043			—			2,043
Other comprehensive income		—		—			1,475			—			—			1,475			—			1,475
Net loss		—		—			—			(142,258	)		—			(142,258	)		(27,097	)		(169,355	)
Balance, May 31, 2021		19		2,073,249			3,863			(131,458	)		—			1,945,673			365,848			2,311,521
Share-based compensation		—		2,509			—			—			—			2,509			—			2,509
Business Combination purchase price adjustment		—		1,666			—			—			—			1,666			1,299			2,965
Conversion of Common Units to common stock		—		27,228			—			—			—			27,228			(43,995	)		(16,767	)
Conversion of Series B-1 shares to common stock		1		174,999			—			—			(2,473	)		172,527			—			172,527
Impact of Common Unit conversions on Tax Receivable Agreement, net of tax		—		(7,512	)		—			—			—			(7,512	)		—			(7,512	)
Other comprehensive loss		—		—			(6,523	)		—			—			(6,523	)		—			(6,523	)
Net loss		—		—			—			(20,517	)		—			(20,517	)		(3,471	)		(23,988	)
Balance, August 31, 2021		20		2,272,139			(2,660	)		(151,975	)		(2,473	)		2,115,051			319,681			2,434,732
Share-based compensation		—		3,982			—			—			—			3,982			—			3,982
Issuance of common stock for BluJay Acquisition		7		730,847			—			—			—			730,854			—			730,854
Issuance of common stock for BluJay Acquisition PIPE financing, net of offering costs		3		292,897			—			—			—			292,900			—			292,900
Conversion of Common Units to common stock		—		14,498			—			—			—			14,498			(14,498	)		—
Exercise of warrants		—		1			—			—			—			1			—			1
Deferred taxes related to issuance of common stock for BluJay Acquisition		—		36,805			—			—			—			36,805			—			36,805
Impact of Common Unit conversions on Tax Receivable Agreement, net of tax		—		(2,563	)		—			—			—			(2,563	)		—			(2,563	)
Other comprehensive loss		—		—			(25,617	)		—			—			(25,617	)		—			(25,617	)
Net loss		—		—			—			(59,217	)		—			(59,217	)		(5,072	)		(64,289	)
Balance, November 30, 2021	$	30	$	3,348,606		$	(28,277	)	$	(211,192	)	$	(2,473	)	$	3,106,694		$	300,111		$	3,406,805

Successor

(In thousands)

Common
Stock

Additional
Paid-In
Capital

Accumulated
Other
Comprehensive
Income (Loss)

Retained
Earnings
(Accumulated
Deficit)

Treasury Stock

Total
E2open
Equity

Noncontrolling
Interest

Total
Equity

Balance, February 28, 2021

$
19

$
2,071,206

$
2,388

$
10,800

$
—

$
2,084,413

$
392,945

$
2,477,358

Share-based compensation

—

2,043

—

—

—

2,043

—

2,043

Other comprehensive income

—

—

1,475

—

—

1,475

—

1,475

Net loss

—

—

—

(142,258
)

—

(142,258
)

(27,097
)

(169,355
)
Balance, May 31, 2021

19

2,073,249

3,863

(131,458
)

—

1,945,673

365,848

2,311,521

Share-based compensation

—

2,509

—

—

—

2,509

—

2,509

Business Combination
    purchase price
    adjustment

—

1,666

—

—

—

1,666

1,299

2,965

Conversion of Common
    Units to common
    stock

—

27,228

—

—

—

27,228

(43,995
)

(16,767
)
Conversion of Series B-1
    shares to common
    stock

1

174,999

—

—

(2,473
)

172,527

—

172,527

Impact of Common Unit
    conversions on Tax
    Receivable Agreement

—

(7,512
)

—

—

—

(7,512
)

—

(7,512
)
Other comprehensive loss

—

—

(6,523
)

—

—

(6,523
)

—

(6,523
)
Net loss

—

—

—

(20,517
)

—

(20,517
)

(3,471
)

(23,988
)
Balance, August 31, 2021

20

2,272,139

(2,660
)

(151,975
)

(2,473
)

2,115,051

319,681

2,434,732

Share-based compensation

—

3,982

—

—

—

3,982

—

3,982

Issuance of common stock
    for BluJay Acquisition

7

730,847

—

—

—

730,854

—

730,854

Issuance of common stock
    for BluJay Acquisition
    PIPE financing, net of
    offering costs

3

292,897

—

—

—

292,900

—

292,900

Conversion of Common
    Units to common
    stock

—

14,498

—

—

—

14,498

(14,498
)

—

Exercise of warrants

—

1

—

—

—

1

—

1

Deferred taxes related to
    issuance of common
    stock for BluJay
    Acquisition

36,805

36,805

36,805

Impact of Common Unit
    conversions on Tax
    Receivable Agreement

—

(2,563
)

—

—

—

(2,563
)

—

(2,563
)
Other comprehensive loss

—

—

(25,617
)

—

—

(25,617
)

—

(25,617
)
Net loss

—

—

—

(59,217
)

—

(59,217
)

(5,072
)

(64,289
)
Balance, November 30, 2021

$
30

$
3,348,606

$
(28,277
)

$
(211,192
)

$
(2,473
)

$
3,106,694

$
300,111

$
3,406,805

See notes to unaudited condensed consolidated financial statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(Continued)

(Unaudited)


(In thousands)	Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Treasury Stock			Total E2open Equity			Noncontrolling Interest			Total Equity
Balance, February 28, 2022	$	31		$	3,362,219		$	(19,019	)	$	(154,976	)	$	(2,473	)	$	3,185,782		$	298,389		$	3,484,171
Share-based compensation		—			3,188			—			—			—			3,188			—			3,188
Conversion of Common Units to common stock		—			195			—			—			—			195			(195	)		—
Vesting of restricted stock awards, net of shares withheld for taxes		—			(1,330	)		—			—			—			(1,330	)		—			(1,330	)
Other comprehensive loss		—			—			(30,700	)		—			—			(30,700	)		—			(30,700	)
Net loss		—			—			—			(11,356	)		—			(11,356	)		(1,265	)		(12,621	)
Balance, May 31, 2022		31			3,364,272			(49,719	)		(166,332	)		(2,473	)		3,145,779			296,929			3,442,708
Share-based compensation		—			5,154			—			—			—			5,154			—			5,154
Conversion of Common Units to common stock		—			989			—			—			—			989			(2,386	)		(1,397	)
Vesting of restricted stock awards, net of shares withheld for taxes		—			76			—			—			—			76			—			76
Impact of Common Unit conversions on Tax Receivable Agreement, net of tax		—			(176	)		—			—			—			(176	)		—			(176	)
Other comprehensive loss		—			—			(41,962	)		—			—			(41,962	)		—			(41,962	)
Net loss		—			—			—			(368,688	)		—			(368,688	)		(40,897	)		(409,585	)
Balance, August 31, 2022		31			3,370,315			(91,681	)		(535,020	)		(2,473	)		2,741,172			253,646			2,994,818
Share-based compensation		—			4,797			—			—			—			4,797			—			4,797
Conversion of Common Units to common stock		—			625			—			—			—			625			(625	)		—
Vesting of restricted stock awards, net of shares withheld for taxes		(1	)		(339	)		—			—			—			(340	)		—			(340	)
Impact of Common Unit conversions on Tax Receivable Agreement, net of tax		—			(1,010	)		—			—			—			(1,010	)		—			(1,010	)
Other comprehensive income		—			—			13,949			—			—			13,949			—			13,949
Net income		—			—			—			4,805			—			4,805			698			5,503
Balance, November 30, 2022	$	30		$	3,374,388		$	(77,732	)	$	(530,215	)	$	(2,473	)	$	2,763,998		$	253,719		$	3,017,717

See notes to unaudited condensed consolidated financial statements.

E2open Parent Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Successor			Predecessor
	Nine Months Ended			Nine Months Ended			Nine Months Ended November 30,
(In thousands)	November 30, 2021			November 30, 2020			2022			2021
Cash flows from operating activities
Net loss	$	(257,632	)	$	(68,359	)	$	(416,703	)	$	(257,632	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization		91,496			51,176			159,831			91,496
Amortization of deferred commissions		861			3,121			2,878			861
Provision for credit losses								315			527
Amortization of debt issuance costs		2,389			3,236			3,783			2,389
Amortization of operating lease right-of-use assets		8,290			0			5,813			8,290
Share-based and unit-based compensation		8,534			5,953
Change in tax receivable agreement liability		4,606			0
Loss from change in fair value of warrant liability		48,448			0
Loss from change in fair value of contingent consideration		91,180			0
(Gain) loss on disposal of property and equipment		(233	)		35
Share-based compensation								13,139			8,534
Deferred income taxes								(143,012	)		(17,768	)
Right-of-use assets impairment charge								4,137			—
Goodwill impairment charge								514,816			—
(Gain) loss from change in tax receivable agreement liability								(9,089	)		4,606
(Gain) loss from change in fair value of warrant liability								(36,764	)		48,448
(Gain) loss from change in fair value of contingent consideration								(17,760	)		91,180
Loss (gain) on disposal of property and equipment								537			(233	)
Changes in operating assets and liabilities:
Accounts receivable, net		41,847			79,309
Accounts receivable								10,876			41,320
Prepaid expenses and other current assets		(7,586	)		(4,765	)		4,311			(7,586	)
Other noncurrent assets		(4,489	)		(3,048	)		(4,094	)		(4,489	)
Accounts payable and accrued liabilities		5,871			(4,335	)		(12,946	)		(6,892	)
Incentive program payable		2,222			12,392
Channel client deposits payable								(5,943	)		2,222
Deferred revenue		19,927			(67,847	)		(26,899	)		19,927
Changes in other liabilities		(27,549	)		23,186			(4,075	)		2,982
Net cash provided by operating activities		28,182			30,054			43,151			28,182
Cash flows from investing activities
Payments for acquisitions - net of cash acquired		(774,232	)		—			(179,243	)		(774,232	)
Capital expenditures		(24,627	)		(12,048	)		(40,473	)		(24,627	)
Minority investment in private firm								(3,000	)		—
Net cash used in investing activities		(798,859	)		(12,048	)		(222,716	)		(798,859	)
Cash flows from financing activities
Proceeds from PIPE investment		300,000			0			—			300,000
Offering costs related to issuance of common stock in connection with PIPE investment		(7,100	)		—			—			(7,100	)
Proceeds from sale of membership units		0			3,384
Proceeds from warrant exercise		1			0			—			1
Proceeds from indebtedness		395,000			15,574			215,000			395,000
Repayments of indebtedness		(18,860	)		(21,891	)		(103,174	)		(18,860	)
Repayments of financing lease obligations		(6,457	)		(5,145	)		(2,312	)		(6,457	)
Repurchase of common stock		(2,473	)		0			—			(2,473	)
Repurchase of Common Units		(16,767	)		0			(1,397	)		(16,767	)
Payments of debt issuance costs		(10,357	)		—			(4,766	)		(10,357	)
Net cash provided by (used in) financing activities		632,987			(8,078	)
Net cash provided by financing activities								103,351			632,987
Effect of exchange rate changes on cash and cash equivalents		1,657			101			478			1,657
Net (decrease) increase in cash, cash equivalents and restricted cash		(136,033	)		10,029
Net decrease in cash, cash equivalents and restricted cash								(75,736	)		(136,033	)
Cash, cash equivalents and restricted cash at beginning of period		207,542			48,428			174,554			207,542
Cash, cash equivalents and restricted cash at end of period	$	71,509		$	58,457		$	98,818		$	71,509

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	56,462		$	17,132		$	85,688		$	56,462
Restricted cash		15,047			41,325			13,130			15,047
Total cash, cash equivalents and restricted cash	$	71,509		$	58,457		$	98,818		$	71,509
Supplemental Information - Cash Paid for:
Interest	$	18,461		$	49,898
Income taxes		2,890			1,225
Non-Cash Investing and Financing Activities:
Capital expenditures financed under financing lease obligations	$	0		$	11,076
Capital expenditures included in accounts payable and accrued liabilities		2,376			25
Right-of-use assets obtained in exchange for operating lease obligations		25,825			0
Prepaid software, maintenance and insurance under notes payable		0			892
Conversion of Common Units to Class A Common Stock		41,727			0
Conversion of Series B1 common stock to Class A Common Stock		175,000			0
Business Combination purchase price adjustment		2,965			0
Issuance of common stock for BluJay Acquisition		730,854			—
Deferred taxes related to issuance of common stock for BluJay Acquisition		36,805			—

See notes to unaudited condensed consolidated financial statements.

910

E2open Parent Holdings, Inc.

Notes to 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~~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 (IPO).~~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). In connection with the finalization of the Business Combination, CCNB1 changed its name to ~~“E2open~~"E2open Parent Holdings, Inc.”" (E2open) 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 condensed consolidated financial statements.

We are headquartered in Austin, Texas. We are a leading provider of cloud-based, end-to-end omni-channel and supply chain management software. Our software combines networks, data and applications to provide a deeply embedded, mission-critical platform that allows ~~customers~~clients to optimize their supply chain by accelerating growth, reducing costs, increasing visibility and driving improved resiliency. Given the business-critical nature of our solutions, we maintain deep, long-term relationships with our ~~customers~~clients across a wide range of end-markets, including technology, consumer, industrial and transportation, among others.

Basis of Presentation

As a result of the Business Combination, for accounting purposes, the Company is the acquirer and E2open Holdings is the acquiree and accounting predecessor. The financial statement presentation includes the financial statements of E2open Holdings as “Predecessor” for periods prior to the Closing Date and of the Company as “Successor” for the periods after the Closing Date, including the consolidation of E2open Holdings.

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. Investments in other companies are carried at cost. See Note 10, Investments for additional information. 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. Operating results for the three ~~and nine~~ months ended November 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the fiscal year ending February 28, ~~2022.~~2023. For further information, refer to the consolidated financial statements and notes thereto included in our ~~2021~~2022 Form 10-K.

Use of Estimates

The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts inof assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and ~~accompanying notes. Actual~~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 the accounting for business combinations. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from ~~those~~management's estimates.

Reclassifications

~~Financing lease obligation were previously included~~During the second quarter of fiscal 2023, we began reporting deferred income taxes as a separate line as part of operating activities in the Condensed Consolidated Statements of Cash Flows. As a result, we reclassed a use of cash of $17.8 million from the change in other liabilities to deferred income taxes for the nine months ended November 30, 2021.

During the third quarter of fiscal 2023, we began reporting current ~~portion of notes~~income taxes payable ~~and capital lease obligations~~ as ~~well as notes payable and capital lease obligations~~a separate line on the Condensed Consolidated Balance Sheets. ~~Beginning March 1, 2021, capital lease obligations became financing lease obligations~~As a result, we reclassed $2.7 million from accounts payable and ~~were presented separately on the Consolidated Balance Sheets. Additionally, financing leases are no longer presented with notes~~accrued liabilities to current income taxes payable in the ~~notes~~February 28, 2022 balance sheet. We also combined the long-term investments line of $0.2 million with the other noncurrent assets line in the February 28, 2022 balance sheet. The incentive program payable was renamed to channel client deposits payable to better describe the ~~financial statements as all leases~~payable associated with the restricted cash deposits. Channel client deposits are ~~presented together in one note. These reclassifications and changes did not affect~~deposits that we receive from certain channel shaping clients to reimburse, on our ~~net income, total assets, liabilities, equity or cash flows.~~clients' behalf, market development expenditures made by our client channel partners.

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 ~~customer~~client budget cycles and customary European vacation schedules, 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

~~Recently Adopted Accounting Guidance~~

~~In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02,~~ ~~Leases (Topic 842). The core principle of ASC 842,~~ ~~Leases~~ is that a lessee should recognize the assets and liabilities that arise from leases. For operating leases, a lessee is required to recognize a right-of-use (ROU) asset and a lease liability, initially measured at the present value of the lease payments, in the balance sheet. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The accounting applied by a lessor is largely unchanged from that applied under previous U.S. GAAP. This standard is effective for calendar fiscal years beginning after December 15, 2021. Earlier application is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. We ~~adopted~~ ~~this standard as of~~ ~~March 1, 2021~~ utilizing the modified retrospective approach and elected a set of practical expedients that allowed us not to reassess whether contracts are or contain leases, lease classification or initial direct costs for existing leases. See Note 21, ~~Leases~~ ~~for more information related to our leases.~~

~~In October 2018, the FASB issued ASU 2018-17,~~ ~~Consolidated (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities~~. This standard is intended to improve the accounting when considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. ASU 2018-17 is effective for fiscal years beginning after December 15, 2020, and interim periods within those years. All entities are required to apply this standard retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. We ~~adopted~~ ~~this standard as of~~ ~~March 1, 2021~~ ~~and it did~~ no~~t have a material impact on our consolidated financial statements.~~

~~In October 2021, the FASB issued ASU 2021-08,~~ ~~Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers~~, which requires contract assets and contract liabilities such as deferred revenue acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, ~~Revenue from Contracts with Customers~~. Generally, ASU 2021-08 will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. Historically such amounts were recognized by the acquirer at fair value in acquisition accounting. ASU 2021-08 should be applied prospectively to acquisitions occurring on or after the effective date. ASU 2021-08 is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods. We ~~adopted~~ this guidance as part of the BluJay Acquisition, defined below, which resulted in the deferred revenue being recognized under ASC 606 instead of fair value at the acquisition date. There were no other impacts due to the adoption of this guidance on our consolidated financial statements as the BluJay Acquisition was our only acquisition during the nine months ended November 30, 2021.

Recent Accounting Guidance Not Yet Adopted

In ~~June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments – Credit Losses (ASC 326)~~, which is intended to provide financial statement users with more useful information about expected credit losses on financial assets held by a reporting entity at each reporting date. This standard replaces the existing incurred loss impairment methodology with an approach that requires consideration of a broader range of reasonable and supportable forward-looking information to estimate all expected credit losses. This standard is effective for the fiscal year beginning after December 15, 2022, and all interim periods within. Early adoption is permitted. We do not expect the adoption of this standard to have a material impact on our consolidated financial statements.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~. This standard provides guidance on accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. The amendments in this standard should be applied either retrospectively or prospectively to all implementation costs incurred after the adoption date. The standard is effective for fiscal years beginning after December 15, 2021, and interim periods within those years. Earlier application is permitted. We do not expect the adoption of this standard will have a material impact on our consolidated financial statements.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Simplifying Accounting for Income Taxes,~~ as part of its initiative to reduce complexity in the accounting standards. The guidance amends certain disclosure requirements that had become redundant, outdated or superseded. Additionally, this guidance amends accounting for the interim period effects of changes in tax laws or rates and simplifies aspects of the accounting for franchise taxes. ASU 2019-12 is effective for annual periods beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted. Management is currently evaluating the effect of these provisions on our financial position and results of operations.

In March 2020, the ~~FASB~~Financial Accounting Standards Board (FASB) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting to simplify the accounting for contract modifications made to replace LIBOR or other reference rates that are expected to be discontinued because of the reference rate reform. The guidance provides optional expediates and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criterion are met. The optional expedients and exceptions can be applied to contract modifications made until December 31, 2022. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The amendments in ASU 2021-01 are elective and apply to our debt instruments that may be modified as a result of the reference rate reform. We are continuing to evaluate these standards, as well as the timing of the transition of various rates in our debt instruments affected by reference rate reform.

3. Acquisitions

Logistyx Acquisition

On March 2, 2022, E2open, LLC acquired all of the issued and outstanding membership interests of Logistyx for a purchase price of $185 million, with an estimated fair value of $183.4 million, including $90 million paid in cash at closing (Logistyx Acquisition). An additional $95 million, which was subject to standard working capital adjustments and other contractual provisions, was paid in two installments on May 31, 2022 and September 1, 2022. We had the option to finance the remaining payments, at our discretion, through cash or a combination of cash and Class A Common Stock. The May 31, 2022 payment of $37.4 million was paid in cash.

On August 15, 2022, E2open, LLC and the sellers of Logistyx agreed to extend the final payment to September 1, 2022 allowing both parties to finalize working capital adjustments and other contractual provisions. On September 1, 2022, E2open, LLC made a cash payment of $54.0 million to Logistyx as the final installment payment for the Logistyx Acquisition which reflected a working capital adjustment of $3.6 million. The Logistyx sellers disputed the working capital adjustment pursuant to the terms of the Membership Interest Purchase Agreement. During October 2022, the parties agreed to a working capital adjustment of $2.6 million. The additional payment for working capital was made to Logistyx on December 5, 2022.

The Logistyx Acquisition was accounted for as a business combination under ASC 805, Business Combinations.

The following summarizes the consideration paid for the Logistyx Acquisition.


($ in thousands)	Fair Value
Cash consideration to Logistyx at fair value	$	153,090
Cash repayment of debt		29,777
Cash paid for seller transaction costs		489
Working capital adjustment		(2,550	)
Estimated consideration paid for the Logistyx Acquisition	$	180,806

We recorded the preliminary allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of March 2, 2022. The preliminary purchase price allocation is as follows:


($ in thousands)	Preliminary Purchase Price Allocation			Adjustments (3)			Updated Preliminary Purchase Price Allocation
Cash and cash equivalents	$	1,563		$	—		$	1,563
Account receivable, net		5,332			—			5,332
Other current assets		3,335			—			3,335
Property and equipment, net		144			—			144
Intangible assets		67,200			(400	)		66,800
Goodwill (1)		125,896			(2,150	)		123,746
Non-current assets		619			—			619
Accounts payable		(5,897	)		—			(5,897	)
Current liabilities		(3,931	)		—			(3,931	)
Deferred revenue (2)		(10,747	)		—			(10,747	)
Non-current liabilities		(158	)		—			(158	)
Total assets acquired and liabilities assumed	$	183,356		$	(2,550	)	$	180,806

(1)

Goodwill represents the excess of the purchase price over the estimated fair value of the identifiable net assets acquired in the Logistyx Acquisition. Goodwill associated with the Logistyx Acquisition is deductible for tax purposes at the U.S. entity level.

(2)

The deferred revenue was recorded under ASC 606 in accordance with ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers; therefore, a reduction in deferred revenues related to the estimated fair values of the acquired deferred revenues was not required.

(3)

The adjustments primarily relate to the $0.4 million change in fair value of the intangible assets due to a change in the deferred revenue and $2.6 million working capital adjustment.

The fair value of the intangible assets is as follows:


($ in thousands)	Useful Lives	Fair Value
Trade name	1	$	500
Developed technology (1)	6.4		33,500
Client relationships (2)	13		32,000
Backlog (3)	2.5		800
Total intangible assets		$	66,800

(1)

The developed technology represents technology developed by Logistyx and acquired by E2open, which was valued using the multi-period excess earnings method, a form of the income approach considering technology migration.

(2)

The client relationships represent the existing client relationships of Logistyx and acquired by E2open that was estimated by applying the with-and-without methodology, a form of the income approach.

(3)

The backlog represents the present value of future cash flows from contracts with clients where service has not been performed and billing has not occurred.

The preliminary allocation of the purchase price is based on preliminary valuations performed to determine the fair value of the net assets as of March 2, 2022. This allocation is subject to revision as the assessment is based on preliminary information subject to refinement.

We incurred $4.0 million ($0.7 million as of February 28, 2022) of expenses directly related to the Logistyx Acquisition through November 30, 2022 which are included in acquisition-related expense in the Condensed Consolidated Statements of Operations. Included in these expenses were $1.6 million acquisition-related advisory fees which were incurred on March 2, 2022. At the closing of the Logistyx Acquisition, we paid $0.5 million of acquisition-related advisory fees and other expenses related to the Logistyx Acquisition on behalf of Logistyx. These expenses were part of the purchase price consideration and not recognized as expense in our or Logistyx's Condensed Consolidated Statements of Operations.

BluJay Acquisition

On May 27, 2021, we entered into a Purchase Agreement with the BluJay Sellers to acquire all of the outstanding equity of BluJay. On September 1, 2021 (Acquisition Date), we completed the acquisition of BluJay (BluJay Acquisition). The BluJay Acquisition was accounted for as a business combination under ASC 805, Business Combinations.

The cash consideration in the BluJay Acquisition was provided by $380.0 million in proceeds from the issuance of an incremental term loan, $300.0 million in PIPE financing from institutional investors for the purchase of an aggregate of 28,909,022 shares of our Class A Common Stock and cash on hand. ~~PIPE financing proceeds of $280.0~~ ~~million were received in advance of the BluJay Acquisition.~~

The following summarizes the consideration paid for the BluJay Acquisition.


($ in thousands)	Fair Value
Equity consideration paid to BluJay (1)	$	730,854
Cash consideration to BluJay		350,658
Preference share consideration paid to BluJay (2)		86,190
Cash repayment of debt		334,483
Cash paid for seller transaction costs		26,686
Estimated consideration paid for the BluJay Acquisition	$	1,528,871

(1)

Equity consideration paid to BluJay equity holders consisted of the following:


(In thousands, except per share data)	Consideration
Common shares subject to sales restriction		72,383
Fair value per share	$	10.097
Equity consideration paid to BluJay	$	730,854

(2)

Represents the liability and dividends owed related to the BluJay preference shares at the date of the acquisition.

We recorded the ~~preliminary~~ allocation of the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the Acquisition ~~Date.~~Date and adjusted certain items as noted below. The ~~preliminary~~final purchase price allocation is as follows:


($ in thousands)	Fair Value			Preliminary Purchase Price Allocation			Adjustments (4)			Final Purchase Price Allocation
Cash and cash equivalents	$	23,773		$	23,773		$	—		$	23,773
Account receivable, net		33,834			33,834			(12	)		33,822
Other current assets		10,352			10,352			865			11,217
Property and equipment, net		6,503			6,503			—			6,503
Operating lease right-of-use assets		9,018			9,018			—			9,018
Intangible assets		484,800			484,800			—			484,800
Goodwill (1)		1,152,084			1,152,084			(2,218	)		1,149,866
Non-current assets		2,200			2,200			(2,016	)		184
Accounts payable		(11,773	)		(11,773	)		143			(11,630	)
Current liabilities (2)		(33,530	)		(33,530	)		10,652			(22,878	)
Deferred revenue (3)		(39,283	)		(39,283	)		—			(39,283	)
Deferred taxes					(101,936	)		(7,414	)		(109,350	)
Non-current liabilities		(109,107	)		(7,171	)		—			(7,171	)
Total assets acquired and liabilities assumed	$	1,528,871		$	1,528,871		$	—		$	1,528,871

(1)

Goodwill represents the excess of the purchase price over the estimated fair value of the identifiable net assets acquired in the BluJay Acquisition. Goodwill associated with the BluJay Acquisition is not deductible for tax purposes.

(2)

Current liabilities ~~includes~~include a $2.7 million deferred acquisition liability that was acquired related to a prior acquisition by BluJay. The deferred acquisition liability iswas a fixed amount that was determined at the closing of the acquisition and payable after a certain period of time. The deferred acquisition liability was paid in December 2021.

(3)

(4)

The adjustments primarily relate to the jurisdictional netting of income taxes, impact of a tax rate change on the deferred balance and the reinstatement of income tax receivables along with the true-up of accrued liabilities.

The fair value of the intangible assets is as follows:


($ in thousands)	Useful Lives	Fair Value		Useful Lives	Fair Value
Trade name	1	$	3,800	1	$	3,800
Developed technology (1)	5.9		301,000	5.9		301,000
Customer relationships (2)	2.5		180,000
Client relationships (2)				3		180,000
Total intangible assets		$	484,800		$	484,800

(1)

The developed technology represents technology developed by BluJay and acquired by E2open, which was valued using the multi-period excess earnings method, a form of the income approach considering technology migration.

(2)

The ~~customer~~client relationships represent the existing ~~customer~~client relationships of BluJay and acquired by E2open that was estimated by applying the with-and-without methodology, a form of the income approach.

The preliminary allocation of the purchase price is based on preliminary valuations performed to determine the fair value of the net assets as of September 1, 2021. This allocation is subject to revision as the assessment is based on preliminary information subject to refinement.

We incurred $33.7 million ($~~12.1~~ ~~million as of August 31, 2021)~~ of expenses directly related to the BluJay Acquisition ~~from March 1, 2021 through November 30, 2021~~during the year ended February 28, 2022, which are included in acquisition-related ~~expense~~expenses in the Condensed Consolidated Statements of Operations. Included in these expenses were $13.4 million acquisition-related advisory fees which were incurred on the Acquisition Date. In addition, we paid $10.4 million of debt issuance costs associated with the $380.0 million incremental term loan on the Acquisition Date which were capitalized and recorded as a reduction of the outstanding debt balances. At the closing of the BluJay Acquisition, we paid $7.1 million in fees related to the $300.0 million PIPE financing which were recorded as a reduction to the proceeds from the issuance of Class A Common Stock in the Condensed Consolidated Statements of Stockholders' ~~Deficit.~~Equity. Additionally, we paid $26.7 million of acquisition-related advisory fees and other expenses related to the BluJay Acquisition on behalf of BluJay. These expenses were part of the purchase price consideration and not recognized as expense in our or BluJay's Condensed Consolidated Statements of Operations.

13Additionally, the Investor Rights Agreement was amended and restated to add certain of BluJay's existing stockholders as parties, including certain affiliates of Francisco Partners and Temasek.

The Investor Rights Agreement provides Francisco Partners and Temasek the right to nominate one member each to our board of directors. Mr. Deep Shah, nominated by Francisco Partners, and Mr. Martin Fichtner, nominated by Temasek, became new directors on September 1, 2021.

Unaudited Pro Forma Operating Results

The following unaudited pro forma combined financial information presents the results of operations as if the ~~Business Combination on February 4, 2021~~BluJay and ~~BluJay Acquisition~~Logistyx acquisitions happened as of March 1, ~~2020.~~2021. The unaudited pro forma results may not necessarily reflect actual results of operations that would have been achieved, nor are they necessarily indicative of future results of operations. The unaudited pro forma results reflect the step-up amortization adjustments for the fair value of intangible assets acquired, ~~a reduction in revenues related to the estimated fair value of the acquired deferred revenue in the Business Combination,~~ the elimination of historical interest expense incurred by ~~E2open Holdings~~BluJay and ~~BluJay~~Logistyx on its debt and the incurrence of interest expense related to the issuance of debt in connection with the ~~Business Combination~~BluJay and ~~BluJay Acquisition,~~Logistyx acquisitions, transaction expenses, nonrecurring post-combination compensation expense and the related adjustment to the income tax provision.


	Fiscal Year Ended			Three Months Ended			Nine Months Ended
($ in millions)	February 28, 2021			November 30, 2021			November 30, 2021
Total revenue	$	449.8		$	147.5		$	407.4
Net loss		(216.9	)		(69.0	)		(326.6	)
Less: Net loss attributable to noncontrolling interest		(27.4	)		(7.2	)		(35.9	)
Net loss attributable to E2open Parent Holdings, Inc.	$	(189.5	)	$	(61.8	)	$	(290.7	)

Additionally, the Investor Rights Agreement was amended and restated to add certain of BluJay's existing stockholders as parties, including certain affiliates of Francisco Partners and Temasek as well as include a ~~six month~~ ~~lock-up period from September 1, 2021 through February 28, 2022 for certain equity holders of E2open and BluJay.~~The Investor Rights Agreement also provides Francisco Partners and Temasek the right to nominate one member each to our board of directors. Mr. Deep Shah and Mr. Martin Fichtner became new directors on September 1, 2021.

4. 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, debt repayments, capital expenditures and operating expenses. Our ability to expand and grow our business will depend on many factors, including working capital needs and the evolution of operating cash flows.

We had $~~56.5~~85.7 million in cash and cash equivalents as of November 30, ~~2021.~~2022. We believe our existing cash and cash equivalents, cash provided by operating activities, and, if necessary, the borrowing capacity of up to $~~155.0~~145.0 million available under our 2021 Revolving

Credit Facility (see Note ~~10,~~13, Notes Payable) 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.

5. Accounts Receivable

Accounts receivable, net consisted of the following:


($ in thousands)	November 30, 2022			February 28, 2022
Accounts receivable	$	125,940		$	143,799
Unbilled receivables		28,520			14,597
Less: Allowance for credit losses		(5,003	)		(3,055	)
Accounts receivable, net	$	149,457		$	155,341

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.

The allowance for credit losses was comprised of the following:


($ in thousands)	Amount
Balance, February 28, 2021	$	(908	)
BluJay Acquisition		(1,779	)
Additions		(1,917	)
Write-offs		1,549
Balance, February 28, 2022		(3,055	)
Logistyx Acquisition		(267	)
Additions		(2,667	)
Write-offs		986
Balance, November 30, 2022	$	(5,003	)

6. Prepaid and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


($ in thousands)	November 30, 2022		February 28, 2022
Prepaid software and hardware license and maintenance fees	$	11,319	$	6,022
Income and other taxes receivable		4,638		4,544
Prepaid insurance		1,082		3,401
Deferred commissions		4,169		2,867
Prepaid marketing		939		1,124
Security deposits		2,663		1,044
Other prepaid expenses and other current assets		1,651		7,241
Total prepaid expenses and other current assets	$	26,461	$	26,243

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.

7. Goodwill

During the fourth quarter of each fiscal year, we assess our goodwill for potential impairment. This impairment testing is applied more frequently if we become aware of events or circumstances since the last impairment testing that might call into question whether the current balances are fairly recorded. During the second quarter of fiscal 2023, the market price of our Class A common stock and market capitalization declined significantly. This decline resulted in us determining that a triggering event occurred and an interim goodwill impairment assessment was performed.

We performed a qualitative "Step 0" goodwill impairment assessment during the second quarter of fiscal 2023 which indicated that a quantitative "Step 1" impairment analysis needed to be performed as well. The fair value of E2open was determined using a discounted cash flow method, guideline public company method and guideline transaction method using an income-based and market-based approach.

We calculated the fair value of E2open under 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 revenue growth rates and net operating income margins, 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 the business's ability to execute on the projected cash flows. Under the guideline public company method, the fair value was based on forward-looking earnings multiples derived from comparable publicly traded companies with similar market position and size. The unobservable inputs used to measure the fair value included projected revenue growth rates, the weighted average cost of capital, the normalized working capital level, capital expenditures assumptions, profitability projections, control premium, the 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 ours. 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, in the second quarter of fiscal 2023, we recognized an impairment charge of $514.8 million to goodwill.

We did not record a goodwill impairment charge for the three months ended November 30, 2022 or the three and nine months ended November 30, 2021.

The following table presents the changes in goodwill:

($ in thousands)

Predecessor

Balance, February 28, 2019

$
482,378

Acquisitions:

Amber Road

263,317

Averetek

7,191

Currency translation adjustment

(130
)
Balance, February 29, 2020

752,756

Currency translation adjustment

33

Balance, February 3, 2021

$
752,789


($ in thousands)	Amount
Balance, February 28, 2021	$	2,628,646
Business Combination purchase price adjustment (1)		407
BluJay Acquisition (2)		1,155,321
Currency translation adjustment		(27,503	)
Balance, February 28, 2022		3,756,871
BluJay Acquisition adjustment (2)		(5,455	)
Logistyx Acquisition (3)		123,746
Impairment charge		(514,816	)
Currency translation adjustment		(54,113	)
Balance, November 30, 2022	$	3,306,233

($ in thousands)

Successor

Balance, February 4, 2021 (1)

$
2,628,964

Currency translation adjustment

(318
)
Balance, February 28, 2021

2,628,646

Business Combination purchase price adjustment (2)

4,267

BluJay Acquisition (3)

1,152,084

Currency translation adjustment

(24,861
)
Balance, November 30, 2021

$
3,760,136

(1)

~~Represents the opening balance of goodwill as of February 4, 2021 due to the Business Combination.~~

~~(2)~~

Consists of the post-closing adjustment of consideration and associated tax adjustments required as part of the merger transaction pursuant to Section 3.5 of the Business Combination Agreement. On July 6, 2021, we issued additional Class A Common Stock and Common Units valued at $3.0 million in total pro rata to ~~each E2open Holdings member.~~the various parties who received consideration in February 2021 at the closing of the Business Combination in the form of shares of Class A Common Stock, Common Units and cash. Additional tax adjustments were required during the third quarter of fiscal year 2022.

~~(3)~~(2)

Represents the goodwill acquired in the BluJay Acquisition as of September 1, 2021 and subsequent purchase price adjustments. See Note 3, ~~BluJay Acquisition~~Acquisitions for additional information.

(3)

Represents the goodwill acquired in the Logistyx Acquisition as of March 2, 2022 and subsequent purchase price adjustments. See Note 3, Acquisitions for additional information.

6.8. Intangible Assets, Net

Intangible assets, net consisted of the following:


	Successor
	November 30, 2021								November 30, 2022
($ in thousands)	Weighted Average Useful Life	Cost		Accumulated Amortized			Net		Weighted Average Useful Life	Cost		Accumulated Amortized			Net
Indefinite-lived:
Trademark / Trade name	Indefinite	$	109,998	$	—		$	109,998	Indefinite	$	110,000	$	—		$	110,000
Definite-lived:
Customer relationships	13.4		477,009		(27,130	)		449,879
Client relationships									13.8		500,907		(100,021	)		400,886
Technology	7.3		666,694		(48,777	)		617,917	7.3		688,858		(145,544	)		543,314
Content library	10.0		50,000		(4,122	)		45,878	10.0		50,000		(9,122	)		40,878
Trade name	1.0		3,689		(849	)		2,840	1.0		3,811		(3,687	)		124
Backlog									2.5		800		(240	)		560
Total definite-lived			1,197,392		(80,878	)		1,116,514			1,244,376		(258,614	)		985,762
Total intangible assets		$	1,307,390	$	(80,878	)	$	1,226,512		$	1,354,376	$	(258,614	)	$	1,095,762

Successor

February 28, 2021

($ in thousands)

Weighted Average
Useful Life

Cost

Accumulated
Amortized

Net

Indefinite-lived:

Trademark / Trade name

Indefinite

$
109,924

$
—

$
109,924

Definite-lived:

Customer relationships

20.0

300,107

(1,248
)

298,859

Technology

8.5

370,106

(3,621
)

366,485

Content library

10.0

50,000

(417
)

49,583

Total definite-lived

720,213

(5,286
)

714,927

Total intangible assets

$
830,137

$
(5,286
)

$
824,851


	February 28, 2022
($ in thousands)	Weighted Average Useful Life	Cost		Accumulated Amortized			Net
Indefinite-lived:
Trademark / Trade name	Indefinite	$	109,998	$	—		$	109,998
Definite-lived:
Client relationships	13.6		476,584		(45,467	)		431,117
Technology	7.3		666,160		(72,414	)		593,746
Content library	10.0		50,000		(5,372	)		44,628
Trade name	1.0		3,705		(1,804	)		1,901
Total definite-lived			1,196,449		(125,057	)		1,071,392
Total intangible assets		$	1,306,447	$	(125,057	)	$	1,181,390

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

During the three months ended August 31, 2022, gross client relationships and technology were reduced by $0.3 million and $0.1 million, respectively, due to the Logistyx purchase price adjustments.

Amortization of intangible assets is recorded in cost of revenue and operating expenses in the Condensed Consolidated Statements of Operations. We recorded amortization expense related to intangible assets of $~~44.5~~44.4 million and $~~13.4~~44.5 million for the three months ended November 30, ~~2021~~2022 and ~~2020,~~2021, respectively. We recorded amortization expense related to intangible assets of $~~75.7~~136.4 million and $~~40.8~~75.7 million for the nine months ended November 30, 2022 and 2021, ~~and 2020,~~ respectively.

7.9. Property and Equipment, Net

Property and equipment, net consisted of the following:


	Successor
($ in thousands)	November 30, 2021			February 28, 2021			November 30, 2022			February 28, 2022
Computer equipment	$	27,619		$	14,707		$	47,445		$	33,228
Software		32,565			21,141			58,515			43,821
Furniture and fixtures		3,501			1,828			3,149			3,509
Leasehold improvements		8,972			7,722			10,493			9,067
Gross property and equipment		72,657			45,398			119,602			89,625
Less accumulated depreciation and amortization		(16,879	)		(1,200	)		(46,498	)		(23,688	)
Property and equipment, net	$	55,778		$	44,198		$	73,104		$	65,937

Computer equipment and software include assets held under financing leases. Amortization of assets held under financing leases is included in depreciation expense. See Note ~~21,~~25, Leases for additional information regarding our financing leases.

Depreciation expense was $~~6.0~~8.1 million and $~~3.9~~6.0 million for the three months ended November 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Depreciation expense was $~~15.8~~23.4 million and $~~10.4~~15.8 million for the nine months ended November 30, 2022 and 2021, respectively.

We had capitalized software costs of $32.0 million and ~~2020,~~$20.9 million as of November 30, 2022 and February 28, 2022, respectively. We recognized $1.4 million and $0.8 million of amortized capitalized software development costs for the three months ended November 30, 2022 and 2021, respectively, and $3.6 million and $2.0 million for the nine months ended November 30, 2022 and 2021, respectively.

10. Investments

On February 4, 2022, we made a minority investment of $2.5 million in a private firm focused on supply chain financing. We made the required second investment of $2.5 million on May 5, 2022 along with $0.5 million of transaction fees.

This minority investment does not have a readily determinable fair value; therefore, we elected the measurement alternative for our minority investment. The investment is measured at cost, less impairment and adjusted for qualifying observable price changes and recorded in other noncurrent assets in the Condensed Consolidated Balance Sheets.

We regularly evaluate the carrying value of our investment for impairment and whether any events or circumstances are identified that would significantly harm the fair value of the investment. In the event a decline in fair value is less than the investment's carrying value, we will record an impairment charge in other income (expense) in the Condensed Consolidated Statements of Operations. We have not recorded any impairment charges related to this minority investment.

8.11. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following:

Successor

($ in thousands)

November 30, 2021

February 28, 2021

Accrued compensation

$
43,707

$
34,298

Accrued severance and retention

4,305

349

Trade accounts payable

21,374

17,858

Accrued professional services

4,589

2,938

Restructuring liability

918

1,639

Taxes payable

14,656

1,892

Interest payable

2,205

1,293

Customer deposits

2,020

1,811

Other

18,524

8,155

Total accounts payable and accrued liabilities

$
112,298

$
70,233


($ in thousands)	November 30, 2022		February 28, 2022
Accrued compensation	$	38,939	$	63,101
Accrued severance and retention		2,536		1,909
Trade accounts payable		33,287		33,158
Accrued professional services		3,634		5,440
Restructuring liability		230		778
Interest payable		18,257		2,398
Client deposits		2,483		2,214
Other		11,836		19,546
Total accounts payable and accrued liabilities	$	111,202	$	128,544

In the 2022 Form 10-K, $0.8 million of accrued expenses related to accrued severance and retention were reflected in accrued compensation. These amounts have been reclassified to accrued severance and retention to correspond to the current year presentation. See Note 18, Severance and Exit Costs for additional information.

9.12. Tax Receivable Agreement

E2open Holdings entered into a Tax Receivable Agreement with selling equity holders of E2open Holdings that requires us to pay 85% of the tax savings that are realized ~~as a result~~because of increases in the tax basis in E2open ~~Holdings’ assets as a result of~~Holdings' assets. This increase is either from the sale ~~of E2open Holdings units and~~or exchange of the ~~E2open Holdings units~~Common Units for shares of Class A Common Stock and cash, as well as ~~certain other tax benefits related to entering into the Tax Receivable Agreement, including~~from tax benefits attributable to payments under the Tax Receivable Agreement. We will retain the benefit of the remaining 15% of these cash savings. The Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired 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 Company's estimate of 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 the Company is 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 ~~initially~~ 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 Date. 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 weE2open Holdings were to exercise ~~our~~its right to terminate the Tax Receivable Agreement or certain other acceleration events occur, weE2open Holdings 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~~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 weE2open 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 we will realize from the utilization of the related tax benefits will exceed the amount of any required payments.

Pursuant to ASC 805, Business Combination and relevant tax law, we have calculated the fair value of the tax receivable agreement payments related to the transaction at the acquisition date and identified the timing of the utilization of the tax attributes. Under ASC 805, the Tax Receivable Agreement liability, as of the acquisition date, will be revalued at the end of each reporting period with the gain or loss as well as the associated interest reflected in the gain (loss) from change in tax receivable agreement liability in the Condensed Consolidated Statements of Operations in the period in which the event occurred. Interest will accrue on the tax receivable agreement liability at a rate of LIBOR plus 100 basis points. In addition, under ASC 450, Contingencies 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.

The Tax Receivable Agreement liability was $~~67.9~~58.2 million and $~~50.1~~66.6 million as of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, respectively. The ~~increase~~tax rate used in the ~~Tax Receivable Agreement~~calculation was 24.2% and 24.1% as of November 30, 2022 and February 28, 2022, respectively. The discount rate used for the ASC 805 calculation was 10.4% and 8.2% as of November 30, 2022 and February 28, 2022, respectively, based on our cost of debt plus an incremental premium. During the three months ended November 30, 2022 and 2021, a gain of $2.7 million and a loss of $1.5 million, respectively, was recorded as a change in the tax receivable agreement liability ~~was due~~related to ~~an increase in~~ the ASC 805 discounted ~~liability of $4.6~~ ~~million and increase in the ASC 450 liability of $13.2~~ ~~million during~~liability. During the nine months ended November 30, ~~2021. The~~2022 and 2021, a gain of $9.1 million and a loss of $4.6 million, respectively, was recorded as a change in the ~~fair value of~~tax receivable agreement liability related to the ASC 805 discounted liability. During the nine months ended November 30, 2022 and 2021, the Tax Receivable Agreement liability ~~was~~under ASC 450 increased by $~~1.5~~0.7 million and $~~4.6~~13.2 million, ~~during the three and nine months ended November 30, 2021, respectively, and recorded in change in tax receivable agreement liability on the Condensed Consolidated Statements of Operations.~~respectively.

~~10.~~13. Notes Payable

Notes payable outstanding were as follows:


	Successor
($ in thousands)	November 30, 2021			February 28, 2021			November 30, 2022			February 28, 2022
2021 Term Loan	$	901,425		$	525,000		$	1,080,941		$	899,163
2021 Revolving Credit Facility								10,000			80,000
Other notes payable		62			688			—			47
Total notes payable		901,487			525,688			1,090,941			979,210
Less unamortized debt issuance costs		(24,852	)		(18,483	)		(27,520	)		(26,536	)
Total notes payable, net		876,635			507,205			1,063,421			952,674
Less current portion		(9,112	)		(4,405	)		(20,962	)		(89,097	)
Notes payable, less current portion, net	$	867,523		$	502,800		$	1,042,459		$	863,577

2021 Term Loan and Revolving Credit Facility

OnIn February 4, 2021, E2open, LLC, our subsidiary, entered into a credit agreement (Credit Agreement) that provided for $525.0 million in term loans (2021 Term Loan) and $75.0 million in commitments for revolving credit loans (2021 Revolving Credit Facility)~~. On~~ with a $15.0 million letter of credit sublimit. In September 1, 2021, the ~~2021~~ 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.

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 commencing August 2021. The Credit Agreement was payable in quarterly installments of $1.3 million beginning in August 2021; however, the payments were increased to $2.3 million with the addition of the incremental term loan beginning in November 2021. The payment increased to $2.7 million with the addition of the $190.0 million incremental term loan beginning in May 2022. The Credit Agreement is payable in full on February 4, 2028.

The proceeds from the $190.0 million incremental term loan were used to repay the $80.0 million outstanding balance under the 2021 Revolving Credit Facility incurred to finance the initial payment for the Logistyx Acquisition. The additional cash was used to pay the $37.4 million payment due to Logistyx in May 2022 and for general corporate purposes.

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’~~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, ~~2021~~2022 and February 28, ~~2021,~~2022, the 2021 Term Loan had a variable interest rate of ~~4.00~~6.64% and ~~3.69~~4.00%, ~~respectively,~~respectively. There were $10.0 million outstanding borrowings at an interest rate of 6.77%, no letters of credit and $0145.0 ~~outstanding borrowings~~million available borrowing capacity under the 2021 Revolving Credit ~~Facility.~~Facility as of November 30, 2022. There were $80.0 million borrowings outstanding at an interest rate of 5.25%, no letters of credit and $75.0 million available borrowing capacity under the 2021 Revolving Credit Facility as of February 28, 2022. We were in compliance with the First Lien Leverage Ratio for the Credit Agreement as of November 30, ~~2021~~2022 and February 28, ~~2021.~~2022.

~~11.~~14. Contingent Consideration

Business Combination

The contingent consideration liability is due to the issuance of Series B-1 and B-2 common stock and Series 1 restricted common units (RCUs) 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 will be remeasured at each reporting date and adjusted if necessary. Any gain or loss recognized from the remeasurement will be recorded in gain (loss) from the change in fair value of contingent consideration on the Condensed Consolidated Statements of Operations as a nonoperating income (expense) as the change in fair value is not part of our core operating activities.

The contingent consideration liability was $~~67.0~~27.8 million and $~~129.4~~45.6 million as of November 30, ~~2021~~2022 and February 28, 2022, respectively. The fair value remeasurements resulted in a gain of $6.3 million and loss of $1.1 million for the three months ended November 30, 2022 and 2021, respectively. The fair value remeasurements resulted in a ~~loss~~gain of $~~1.1~~17.8 million and loss of $77.5 million for the ~~three and~~ nine months ended November 30, 2022 and 2021, respectively. ~~There was~~ 0 ~~gain or loss for the three and nine months ended November 30, 2020 as the contingent consideration liability was not recorded until February 4, 2021.~~

The 8,120,367 shares of Series B-1 common stock, including the Sponsor Side Letter shares noted below, automatically convert into our Class A Common Stock on a one-to-one basis upon the occurrence of the first day on which the 5-day VWAP of our Class A Common Stock is equal to at least $13.50 per share; provided, however, that the reference to $13.50 per 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.

As of June 8, 2021, the 5-day VWAP of our Class A Common Stock exceeded $13.50 per share which was the triggering event for the Series B-1 common stock to automatically convert into our Class A Common Stock on a one-to-one basis. As such, 8,120,273 shares of Series B-1 common stock converted into 8,120,273 shares of Class A Common Stock. There were 94 shares of Series B-1 common stock pending conversion as of November 30, ~~2021.~~2022.

There were 3,372,184 shares of Series B-2 common stock outstanding as of November 30, ~~2021.~~2022 and February 28, 2022. The Series B-2 common stock will automatically convert into our Class A Common Stock on a one-to-one basis upon the occurrence of the first day on which the 20-day VWAP is equal to at least $15.00 per share; provided, however, that the reference to $15.00 per 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.

~~The~~21

Similar to the Series B-1 common stock, the 4,379,557 shares of Series 1 RCUs vest and become Common Units of E2open Holdings at such time as the 5-day VWAP of the Class A Common Stock is at least $13.50 per share; however, the $13.50 per share threshold will be decreased by the aggregate amount of dividends per share paid following the closing of the Business Combination.

As of June 8, 2021, the 5-day VWAP of our Class A Common Stock exceeded $13.50 per share which was the triggering event for the Series 1 RCUs to vest and become Common Units of E2open Holdings. As such, 4,379,557 Series 1 RCUs became 4,379,557 Common Units of E2open Holdings along with entitling the holders of the newly vested common units to 4,379,557 shares of Class V Common Stock. Catch-Up Payments were not required as a result of the Series 1 RCU vesting.

There were 2,627,724 shares of Series 2 RCUs outstanding as of November 30, ~~2021. The~~2022 and February 28, 2022. 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 $15.00 per share; however, the $15.00 per 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 and (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-year anniversary 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.

Sponsor Side Letter

In connection with the execution of the Business Combination Agreement, the Sponsor, certain investors and ~~CCNB1’s~~CCNB1's Independent Directors entered into the Sponsor Side Letter Agreement with CCNB1. Under the Sponsor Side Letter Agreement, 2,500,000 Class B ordinary shares of CCNB1 held by the Sponsor and ~~CCNB1’s~~CCNB1's Independent Directors automatically converted into 2,500,000 shares of Series B-1 Common Stock, which, collectively, are referred to as the Restricted Sponsor Shares. The vesting conditions of the shares of Series B-1 Common Stock ~~mirrored~~mirror the Series 1 RCUs.

These restricted shares were 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 remeasured at each reporting date and adjusted if necessary. Any gain or loss recognized from the remeasurements was recorded in gain (loss) from the change in fair value of contingent consideration on the Condensed Consolidated Statements of Operations as a nonoperating income (expense) as the change in fair value was not part of our core operating activities.

As of June 8, 2021, the 5-day VWAP of our Class A Common Stock exceeded $13.50 per share which was the triggering event for the ~~Sponsor Side Letters shares~~Series B-1 common stock to automatically convert into our Class A Common Stock on a one-to-one ~~basis. As such, all of the Sponsor Side Letter shares converted into our Class A Common Stock and are included in the~~ basis~~8,120,273~~ ~~Class A Common Stock discussed above.~~

~~The contingent consideration liability was $21.4~~ ~~million as of February 28, 2021.~~. The fair value remeasurements through June 8, 2021 resulted in a loss of $13.7 million for the nine months ended November 30, 2021. ~~There was~~

0 ~~gain or loss for the three and nine months ended November 30, 2020 as the Sponsor Side Letter was not entered into until February 4, 2021.~~15. Financial Instruments

~~Averetek~~

~~E2open Holdings purchased Averetek, LLC (Averetek)~~We recognize derivative instruments as either assets or liabilities in ~~May 2019. The purchase agreement for Averetek included contingent payments of up to $2.0~~ million in consideration contingent upon successful attainment of revenue related criteria that extended up to two years subsequent to closing. The earn-out liability was recorded on the acquisition date in acquisition-related obligations on the Condensed Consolidated Balance Sheets ~~and remeasured~~ at ~~each reporting date and adjusted if necessary. At the acquisition date, the~~ fair value and provide qualitative and quantitative disclosures about such derivatives. We have international operations that expose us to potentially adverse movements in foreign currency exchange rates. To reduce our exposure to foreign currency rate changes on forecasted operating expenses, we enter into hedges in the form of foreign currency forward contracts related to changes in the U.S. dollar/foreign currency relationship. We do not use foreign currency forward contracts for speculative or trading purposes. Our derivative contracts are governed by an International Swaps and Derivatives Association master agreement that generally includes standard netting arrangements.

We are exposed to credit loss in the event of non-performance by counterparties to our derivative contracts. We actively monitor our exposure to credit risk, enter into foreign exchange forward contracts with high credit quality financial institutions and mitigate credit risk in derivative transactions by permitting net settlement of transactions with the same counterparty. We have not experienced any instances of non-performance by any counterparties.

The assets or liabilities associated with the forward contracts are recorded at fair value in prepaid expenses and other current assets, other noncurrent assets, accounts payable and accrued liabilities or other noncurrent liabilities in the Condensed Consolidated Balance Sheets. The accounting for gains and losses resulting from changes in fair value depends on the use of the ~~contingent consideration was $~~foreign currency forward contract and whether it is designated and qualifies for hedge accounting. The cash flow impact upon settlement of the derivate contracts will be included in net cash from operating activities in the Condensed Consolidated Statements of Cash Flows.

Cash Flow Hedging Activities

Our foreign exchange forward contracts are designed and qualify as cash flow hedges. The contracts currently hedge the U.S. dollar/Indian Rupee relationship with the duration of these forward contracts ranging from ~~2.0~~one-month ~~million.~~to 24-months at inception. These contracts cover a portion of our spend in Indian Rupee. We ~~determined there was no change~~have not hedged our exposure to revenue or expenses in other currencies.

To receive hedge accounting treatment, all hedging relationships are formally documented at the inception of the hedge, and the hedges must be highly effective in offsetting changes in future cash flows on the hedged transactions. The related gains or losses resulting from changes in fair value of these hedges is initially reported, net of tax, as a component of other comprehensive income (loss) in stockholders' equity and reclassified into operating expenses when the ~~contingent consideration~~hedge is settled. As of November 30, 2022, our foreign exchange forward contracts have durations of approximately 21 months or less.

Our exposure to the market gains or losses will vary over time as a function of ~~February 28, 2021 or prior~~currency exchange rates. The amounts ultimately realized upon settlement of these financial instruments, together with the gains and losses on the underlying exposures, will depend on actual market conditions during the remaining life of the instruments.

The following table represents the Condensed Consolidated Balance Sheets location and amount of the derivative instrument fair values:


($ in thousands)	November 30, 2022
Accounts payable and accrued liabilities	$	(480	)
Other noncurrent liabilities		(147	)

We estimate the $0.5 million, net of tax, of losses on forward exchange currency derivatives instruments included in other comprehensive loss will be settled and reclassified into earnings within the next twelve months.

We report our foreign exchange forward contract assets and liabilities on a net basis in the Condensed Consolidated Balance Sheets when a master-netting arrangement exists between us and the counterparty to ~~payment.~~the contract. A standard master netting agreement exists between us and the counterparty to the foreign exchange forward contract entered into in August 2022. The ~~earn-out~~agreement allows for multiple transaction payment netting and none of the netting arrangements involve collateral. As of November 30, 2022, all of the foreign exchange forward contracts are in a liability ~~was earned in May 2021 and paid in July 2021.~~position.

See Note 22, Other Comprehensive Loss for additional information regarding our cash flow hedges.

~~12.~~16. Fair Value Measurement

Our financial instruments include cash and cash equivalents; investments; accounts receivable, net; accounts payable; acquisition-related obligations; notes payable; and financing lease obligations. Accounts receivable, net; accounts payable; and acquisition-related obligations 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. 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, ~~2021~~2022 and February 28, ~~2021,~~2022, the fair value of the cash and cash equivalents, restricted cash, 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		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
November 30, 2021 (Successor)
November 30, 2022
Asset-backed securities	$	162	$	48	$	—	$	210	$	162	$	30	$	—	$	192

February 28, 2021 (Successor)
February 28, 2022
Asset-backed securities	$	162	$	62	$	—	$	224	$	162	$	46	$	—	$	208

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.

1923

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:


	Successor
	November 30, 2021								November 30, 2022
($ in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market	$	4	$	—	$	—	$	4
Total cash equivalents		4		—		—		4
Investments:
Asset-backed securities		—		210		—		210	$	—	$	192	$	—	$	192
Total investments		—		210		—		210		—		192		—		192
Total assets	$	4	$	210	$	—	$	214	$	—	$	192	$	—	$	192

Liabilities:
Forward currency contracts									$	—	$	627	$	—	$	627
Cash-settled restricted stock units										8		—		—		8
Tax receivable agreement liability										—		—		41,179		41,179
Warrant liability	$	47,334	$	—	$	69,886	$	117,220		10,902		—		19,473		30,375
Contingent consideration		—		—		66,988		66,988		—		—		27,808		27,808
Total liabilities	$	47,334	$	—	$	136,874	$	184,208	$	10,910	$	627	$	88,460	$	99,997


	February 28, 2022
($ in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market	$	4	$	—	$	—	$	4
Total cash equivalents		4		—		—		4
Investments:
Asset-backed securities		—		208		—		208
Total investments		—		208		—		208
Total assets	$	4	$	208	$	—	$	212

Liabilities:
Tax receivable agreement liability	$	—	$	—	$	50,268	$	50,268
Warrant liability		27,324		—		39,815		67,139
Contingent consideration		—		—		45,568		45,568
Total liabilities	$	27,324	$	—	$	135,651	$	162,975

Cash-Settled Restricted Stock Units

Successor

February 28, 2021

($ in thousands)

Level 1

Level 2

Level 3

Total

Assets:

Cash equivalents:

Money market

$
4

$
—

$
—

$
4

Total cash equivalents

4

—

—

4

Investments:

Asset-backed securities

—

224

—

224

Total investments

—

224

—

224

Total assets

$
4

$
224

$
—

$
228

Liabilities:

Acquisition-related obligations

$
—

$
—

$
2,000

$
2,000

Warrant liability

25,806

—

42,966

68,772

Contingent consideration

—

—

150,808

150,808

Total liabilities

$
25,806

$
—

$
195,774

$
221,580

Cash-settled restricted stock units (RSUs) form part of our compensation program. The ~~warrant liability was previously categorized as a Level 3 liability. The public warrants have been valued~~fair value of these awards are determined using ~~publicly traded prices~~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 since the IPO of CCNB1; therefore, the portion of the warrant liability associated with the public markets has been reclassed from Level 3 to Level 1 in the above tables to better reflect its fair value categorization.(Level 1).

Contingent Consideration

The following table provides a reconciliation of the beginning and ending balances of acquisition related accrued earn-outs and contingent consideration using significant unobservable inputs (Level 3): from March 1, 2022 through November 30, 2022 and March 1, 2021 through February 28, 2022:


	Successor
($ in thousands)	November 30, 2021			February 28, 2021			November 30, 2022			February 28, 2022
Beginning of period	$	152,808		$	2,000		$	45,568		$	152,808
Acquisition date fair value of contingent consideration		—			184,548
Conversion to Class A Common Stock		(175,000	)		—			—			(175,000	)
Cash payments		(2,000	)		—			—			(2,000	)
Loss (gain) from fair value of contingent consideration		91,180			(33,740	)
(Gain) loss from fair value of contingent consideration								(17,760	)		69,760
End of period	$	66,988		$	152,808		$	27,808		$	45,568

The change in the fair value of the earn-out is recorded in acquisition-related expenses while 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 Condensed Consolidated Statements of Operations.

2024

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 from March 1, 2022 through November 30, 2022 and March 1, 2021 through February 28, 2022:


($ in thousands)	November 30, 2022			February 28, 2022
Beginning of period	$	50,268		$	50,114
Gain (loss) from fair value of tax receivable agreement liability		(9,089	)		154
End of period	$	41,179		$	50,268

The change in the fair value of the tax receivable agreement liability is recorded in gain (loss) from change in tax receivable agreement liability in the 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 from ~~February 4,~~March 1, 2022 through November 30, 2022 and March 1, 2021 through February 28, ~~2021 and February 28, 2021 through November 30, 2021:~~2022:

Successor

($ in thousands)

November 30, 2021

February 28, 2021

Beginning of period

$
68,772

$
91,959

Loss (gain) from fair value of warrant liability

48,448

(23,187
)
End of period

$
117,220

$
68,772


($ in thousands)	November 30, 2022			February 28, 2022
Beginning of period	$	67,139		$	68,772
Gain from fair value of warrant liability		(36,764	)		(1,633	)
End of period	$	30,375		$	67,139

The change in the fair value of the warrant liability is recorded in gain (loss) from change in fair value of warrant liability in the 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 quoted market prices for comparable instruments or model-driven valuations using observable market data or inputs corroborated by observable market data.

Our earn-out liabilities and contingent consideration are valued using a Monte Carlo simulation model. The assumptions used in preparing these models include estimates such as volatility, contractual terms, discount rates, dividend yield and risk-free interest rates. These valuation models use unobservable market input, and therefore the liabilities are classified as Level 3.

Our public warrants are valued using active market quoted prices, which are Level 1 ~~imputes.~~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 Forward Purchase Warrants 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.

~~13.~~17. Revenue

We primarily generate revenue from the sale of subscriptions and professional services. We recognize revenue when the ~~customer~~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 ~~customers,~~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:


	Successor		Predecessor		Successor		Predecessor
	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended		Three Months Ended November 30,				Nine Months Ended November 30,
($ in thousands)	November 30, 2021		November 30, 2020		November 30, 2021		November 30, 2020		2022		2021		2022		2021
Americas	$	110,690	$	81,768	$	248,910	$	239,567	$	139,468	$	110,690	$	410,100	$	248,910
Europe		20,367		1,607		22,989		4,304		20,120		20,367		59,049		22,989
Asia Pacific		5,945		706		9,509		5,151		5,305		5,945		16,801		9,509
Total revenue	$	137,002	$	84,081	$	281,408	$	249,022	$	164,893	$	137,002	$	485,950	$	281,408

Revenues by geography are determined based on the region of our contracting entity, which may be different than the region of the ~~customer.~~client. Americas revenue attributed to the United States was 8183% and 9781% during the three months ended November 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Americas revenue attributed to the United States was 8983% and 9689% during the nine months ended November 30, 2022 and 2021, ~~and 2020.~~respectively. No other country represented more than 10% of total revenue during these periods.

~~As a result of~~During the ~~BluJay Acquisition, additional revenue has been obtained in both our subscriptions and professional services revenue. For the~~ three ~~and nine~~ months ended November 30, ~~2021, BluJay contributed $40.3~~ ~~million to subscriptions revenues~~2022 and $~~11.4~~ ~~million to professional services revenue. BluJay's total revenues represent~~ 10~~% of Americas,~~ 7~~% of Europe and~~ 1~~% of Asia Pacific revenue for the nine months ended November 30, 2021.~~

~~During the three and nine months ended November 30,~~ 2021, we recorded a $~~10.4~~0.1 million and $~~47.1~~10.4 million reduction to revenue to amortize the deferred revenue fair value adjustment that resulted from the purchase price allocation in the Business Combination, respectively. During the nine months ended November 30, 2022 and 2021, we recorded a $0.4 million and $47.1 million reduction to revenue to amortize the deferred revenue fair value adjustment, respectively. With the early adoption of ASU 2021-08, a fair value adjustment to deferred revenue is no longer required; therefore, an adjustment to deferred revenue was not made for the BluJay ~~Acquisition.~~or Logistyx acquisitions.

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 ~~customer~~client is not committed. The ~~customer~~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, ~~2021~~2022 and February 28, ~~2021,~~2022, approximately $~~730.8~~795.1 million and $~~555.7~~767.9 million of revenue was expected to be recognized from remaining performance obligations, respectively. These amounts are expected to be recognized ~~over~~within the next five years.

Contract Assets and Liabilities

Contract assets primarily represent ~~contractual receivables~~revenues recognized for performance obligations that have been satisfied but for which amounts have not been billed. Contract assets were $~~20.6~~28.5 million and $~~13.4~~14.6 million as of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, 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 $~~149.4~~176.0 million and $~~90.2~~192.1 million as of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, respectively. Revenue recognized during the three and nine months ended November 30, ~~2021,~~2022, included in deferred revenue on the Condensed Consolidated Balance Sheets as of February 28, ~~2021,~~2022, was $~~26.4~~29.7 million and $~~73.8~~154.7 million, respectively.

As of February 4, 2021, a fair value adjustment of $60.7 million was recorded to reduce our deferred revenue to its fair value as part of the Business Combination. As deferred revenue is recognized, any fair value adjustment related to the deferred revenue is also recognized as a reduction to revenue. As of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, the fair value adjustment to reduce deferred revenue as part of the Business Combination was $~~6.9~~0.1 million and $~~54.0~~0.5 million, respectively. With the early adoption of ASU 2021-08, a fair value adjustment to deferred revenue is no longer required; therefore, an adjustment to deferred revenue was not made for the BluJay ~~Acquisition.~~and Logistyx acquisitions.

Sales Commissions

With the adoption of ASC 606 and ASC 340-40, Contracts with Customers ~~as of~~in March 1, 2019, we began deferring and amortizing sales commissions that are incremental and directly related to obtaining ~~customer~~client contracts. As part of the Business Combination in February 2021, the prepaid commissions were revalued resulting in a reduced balance on the Condensed Consolidated Balance Sheets and lower amortization expense during fiscal year 2022 as compared to fiscal year 2021.

Amortization expense of $~~0.5~~1.0 million and $~~1.1~~0.5 million was recorded in sales and marketing expense in the Condensed Consolidated Statements of Operations for the three months ended November 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Amortization expense of $~~0.9~~2.9 million and $~~3.1~~0.9 million was recorded in sales and marketing expense for the nine months ended November 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Certain sales commissions that would have an amortization period of less than aone year are expensed as incurred in sales and marketing expense. As of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, we had a total of $~~8.9~~14.3 million and $~~1.6~~12.2 million of capitalized sales commissions included in prepaid expenses and other current assets and other noncurrent assets in the Condensed Consolidated Balance Sheets, respectively.

~~14.~~18. Severance and Exit Costs

In connection with acquisitions, we ~~conducted~~conduct pre and post-acquisition related operational reviews to reallocate resources to strategic areas of the business. The operational reviews resulted in workforce reductions, ~~certain real estate leases~~lease obligations related to properties that were vacated and other expenses.Severance and exit costs included in acquisition-related expenses in the Condensed Consolidated Statements of Operations were as follows:


	Successor		Predecessor		Successor		Predecessor
	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended		Three Months Ended November 30,				Nine Months Ended November 30,
($ in thousands)	November 30, 2021		November 30, 2020		November 30, 2021		November 30, 2020		2022		2021		2022		2021
Severance	$	4,545	$	303	$	5,199	$	1,963	$	534	$	4,545	$	4,224	$	5,199
Lease exits		767		1,586		1,583		2,590		81		767		316		1,583
Total severance and exit costs	$	5,312	$	1,889	$	6,782	$	4,553	$	615	$	5,312	$	4,540	$	6,782

In addition, during the second quarter of fiscal 2023, we accrued $0.8 million in severance expense related to an executive who left the Company. The expense was recorded in general and administrative expense in the Condensed Consolidated Statements of Operations and in the Condensed Consolidated Balance Sheets in accounts payable and accrued liabilities in the accrued severance and retention liability. The severance payment was paid during the third quarter of fiscal 2023.

Included in accounts payable and accrued liabilities as of November 30, ~~2021~~2022 and February 28, ~~2021 is~~2022 was a restructuring liability balance, primarily consisting of lease related obligations, of $~~0.9~~0.2 million and $~~1.6~~0.8 million, respectively, and a restructuring severance liability of $~~4.3~~2.5 million and $~~0.3~~1.9 million, respectively. We expect these amounts to be substantially paid within the next 12 months.

The following table ~~provides a reconciliation of~~reflects the changes in the severance and exit cost accruals from ~~February 4,~~March 1, 2022 through November 30, 2022 and March 1, 2021 through February 28, ~~2021 and February 28, 2021 through November 30, 2021 :~~2022:

Successor

($ in thousands)

November 30, 2021

February 28, 2021

Beginning of period

$
1,988

$
3,730

Payments

(2,967
)

(6,463
)
Impairment of right-of-use assets

(580
)

—

Expenses

6,782

4,721

End of period

$
5,223

$
1,988


($ in thousands)	November 30, 2022			February 28, 2022
Beginning of period	$	2,687		$	1,988
Payments		(5,125	)		(7,302	)
Impairment of right-of-use assets		(421	)		(580	)
Expenses		5,625			8,581
End of period	$	2,766		$	2,687

In the 2022 Form 10-K, $0.8 million of accrued expenses related to accrued severance and retention were reflected in accrued compensation. This amount has been reclassified to accrued severance and retention to correspond to the current year presentation.

~~15.~~19. Warrants

As of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, there were an aggregate of 29,079,872 ~~and~~ ~~29,079,972~~warrants outstanding, ~~respectively,~~ which include the public warrants, private placement warrants and Forward Purchase Warrants. Each warrant entitles its holders to purchase one share of Class A Common Stock at an exercise price of $11.50 per share. The private placement warrants became exercisable with the Domestication. The Forward Purchase Warrants became exercisable upon the effectiveness of our Form S-1 ~~which was initially filed on~~in March ~~5, 2021 and deemed effective on March 29,~~ 2021. The public warrants became exercisable onin April ~~28,~~ 2021. The public warrants, private placement warrants and Forward Purchase Warrants ~~will~~ expire five years after the Closing Date, or earlier upon redemption or liquidation. Once the warrants became exercisable, we have the option to redeem the outstanding warrants when various conditions are met, such as specific stock prices, as detailed in the specific warrant agreements. However, the 10,280,000 private 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 $~~117.2~~30.4 million and $~~68.8~~67.1 million as of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, respectively. During the three ~~and nine~~ months ended November 30, 2022 and 2021, a gain of $16.2 million and a loss of $7.2 ~~million and $48.4~~ million was recognized in gain (loss) from change in fair value of the warrant liability in the Condensed Consolidated Statements of Operations, respectively. During the nine months ended November 30, 2022 and 2021, a gain of $~~100~~36.8 ~~warrants were exercised~~million and loss of $48.4 million was recognized in gain (loss) from change in fair value of the warrant liability, respectively.

20. Stockholders' Equity

Class A Common Stock

We are authorized to issue 2,500,000,000 Class A common stock with a ~~total exercise price~~par value of $~~1,150~~0.0001. per share. Holders of our Class A Common Stock are entitled to

23one

vote for each share. As of November 30, 2022 and February 28, 2022, there were

~~16. Stockholders’ Equity~~302,452,552 and 301,536,621 shares of Class A Common Stock issued, respectively, and 302,275,898 and 301,359,967 shares of Class A Common Stock outstanding, respectively.

Class V Common Stock

We were authorized to issue 40,000,000 Class V common stock with a par value of $0.0001 per share. ~~As of~~In August ~~19,~~ 2021, the number of shares authorized for issuance ~~was~~ increased to 42,747,890 Class V common stock with a par value of $0.0001. These shares have no economic value but entitle the holder to one vote per share. As of November 30, 2022 and February 28, 2022, there were 33,092,007 and 33,560,839 shares of Class V Common Stock issued and outstanding, respectively, and 9,655,883 and 9,187,051 shares 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~~Common Stock on a one for one ~~basis.~~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 28, 2021

187,051,142

35,636,680

8,120,367

3,372,184

Conversion of Series B-1 common stock (1)

8,120,273

—

(8,120,273
)

—

Conversion of Series 1 RCUs (2)

—

4,379,557

—

—

Business Combination post-close adjustment
issuance (3)

133,322

92,690

—

—

Issuance of common stock for BluJay Acquisition (4)

72,383,299

—

—

—

Issuance of common stock for BluJay Acquisition
PIPE financing (5)

28,909,022

—

—

—

Conversion of Common Units (6)

3,817,867

(5,426,492
)

—

—

Exercise of warrants (7)

100

—

—

—

Repurchase shares (8)

(176,654
)

—

—

—

Balance, November 30, 2021

300,238,371

34,682,435

94

3,372,184


	Class A		Class V			Series B-1		Series B-2
Balance, February 28, 2022		301,359,967		33,560,839			94		3,372,184
Conversion of Common Units (1)		249,941		(468,832	)		—		—
Vesting of restricted awards, net of shares withheld for taxes (2)		665,990		—			—		—
Balance, November 30, 2022		302,275,898		33,092,007			94		3,372,184

(1)

~~As of June 8, 2021, the~~ 5~~-day VWAP of our Class A Common Stock exceeded $13.50~~ ~~per share which was the triggering event for the~~ ~~Series B-1 common stock to automatically convert into our Class A Common Stock on a one-to-one basis. See Note 11,~~ ~~Contingent Consideration~~ ~~for additional information.~~

~~(2)~~

~~As of June 8, 2021, the 5-day VWAP of our Class A Common Stock exceeded $13.50~~ ~~per share which was the triggering event for the~~ ~~Series 1 restricted common units to automatically convert into Common Units and the holders receive one share of Class V Common Stock. See Note 11,~~ ~~Contingent Consideration~~ ~~for additional information.~~

~~(3)~~

~~On July 6, 2021, pursuant to Section 3.5 of the Business Combination Agreement, we issued additional Class A Common Stock and Common Units valued in total at $3.0~~ ~~million to each E2open Holdings member as part of the post-closing adjustment of consideration required as part of the merger transaction.~~

~~(4)~~

~~On September 1, 2021, we issued~~ ~~72,383,299~~ ~~shares of Class A Common Stock as part of the purchase consideration for the BluJay Acquisition.~~

~~(5)~~

~~On September 1, 2021, we secured $300~~ ~~million in PIPE financing from institutional investors for the purchase of an aggregate of~~ ~~28,909,022~~ ~~shares of our Class A Common Stock in connection with the BluJay Acquisition.~~

~~(6)~~

Class A Common Stock issued for the conversion of Common Units settled in stock. During the nine months ended November 30, ~~2021,~~2022, we paid $~~16.8~~1.4 million in cash for the repurchase of ~~1,619,864~~218,891 Common Units that were converted into cash instead of stock at our option. Class V Common Stock isare retired on a one-for-one basis when Common Units are converted into Class A Common Stock or settled in cash. ~~As a result of Common Unit conversions prior to August 19, 2021,~~

~~11,239~~(2) ~~Class V Common Stock related to Common Unit conversions to~~

The Class A Common Stock ~~were not issued and subsequently retired due~~withheld for taxes revert back to the ~~limitation~~2021 Incentive Plan, as defined below, and are used for future grants.

Share Repurchase Program

On January 20, 2022, the board of ~~authorized shares.~~

~~(7)~~

~~On November 19, 2021,~~ directors approved a $~~100~~100.0 ~~warrants were exercised~~million share repurchase program (2022 Share Repurchase Program). Stock repurchases may be made from time to time in the open market, in privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means. The 2022 Share Repurchase Program is subject to market conditions and other factors and does not obligate us to repurchase any dollar amount or number of our Class A Common Stock and the program may be extended, modified, suspended or discontinued at $any time, without prior notice.

~~11.50~~We will record all share repurchases based on the trade date. Shares of our Class A Common Stock repurchased under the 2022 Share Repurchase Program will be recorded as treasury stock, at cost, but may from time to time be retired.

~~per warrant and converted into~~ ~~100~~No shares of Class A Common ~~Stock.~~

~~(8)~~

~~On July 13, 2021, our board of directors waived the Lock-up Period solely in respect of withholding shares~~Stock have been repurchased to ~~cover taxes upon the issuance of Class A Common Stock to the executive officers upon the conversion of the Series B-1 and Series B-2 common stock. The shares were repurchased at an average price of $14.00~~ ~~per share, or $2.5~~ ~~million, to cover withholding taxes associated with the Series B-1 conversion to Class A Common Stock. See Note 11,~~ ~~Contingent Consideration~~ ~~for additional details on the conversions.~~

~~See Note 3,~~ ~~BluJay Acquisition~~ ~~for information regarding additional Class A Common Stock issuances and the lock-up period.~~

~~Membership Units~~

Prior to the Business Combination, E2open Holdings had three classes of units: Class A, Class A-1 and Class B. Class A units were the only units with voting rights. Holders of Class A and Class A-1 units were entitled to priority distributions until each unit received $~~1.00~~ per unit. Remaining distributions, if any, were made pro rata to all units. Class B units were incentive, profit-interest units issued to management, which participated as long as E2open Holdings made distributions to any Class A units equal to the participation level of the applicable Class B units.

~~During the nine months ended November 30, 2020, we received $3.4~~ ~~million in proceeds from the sale of membership units.~~date.

~~17.~~21. Noncontrolling Interests

Noncontrolling interest represents the portion of E2open Holdings that we control and consolidate but do not own. As of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, the noncontrolling interests represent a ~~10.4~~9.9% and ~~16.0~~10.0% 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 interests 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 Condensed Consolidated Statements of Operations.

Generally, ~~common units of E2open Holdings~~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 limited liability agreement, to require E2open Holdings to redeem all or a portion of the ~~common units~~Common Units held by such participant. At our option, we may satisfy this redemption with cash or by exchanging Class V Common Stock for ~~our~~ Class A Common Stock on a 1one-for-1one basis.

~~On June 8, 2021,~~During the three months ended November 30, 2022, ~~4,379,557~~ ~~Series 1 RCUs vested and became Common Units along with entitling the holders of the newly vested common units to~~ ~~4,379,557~~ ~~shares of Class V Common Stock.~~

~~On July 6, 2021, pursuant to Section 3.5 of the Business Combination Agreement, we issued~~ ~~103,929~~ additional Common Units in total to each E2open Holdings member in a pro rata amount reflecting the number of Common Units they received at the closing of the Business Combination as part of the post-closing adjustment as consideration required as part of the merger transaction.

~~As part of the Business Combination, certain individuals were party to the Lock-Up Period which expired on August 4, 2021. As a result,~~ ~~1,194,458~~ ~~and~~ ~~3,817,867~~100,000 Common Units were converted into Class A Common Stock with a value of $~~14.5~~ ~~million and $41.7~~0.6 million based off the 5-day ~~VWAP for~~VWAP. During the ~~three and~~ nine months ended November 30, ~~2021, respectively. Additionally,~~2022, ~~1,619,864~~249,941 Common Units were converted into Class A Common Stock with a value of $1.8 million based off the 5-day VWAP. A total of 218,891 Common Units were settled ~~with the payment~~in cash of $~~16.8~~1.4 million ~~of cash~~ during the nine months ended November 30, ~~2021.~~ ~~NaN~~ ~~Common Units were settled in cash during the three months ended November 30, 2021.~~2022. This activity resulted in a decrease to noncontrolling interests of $~~14.5~~0.6 million and $~~58.5~~3.2 million during the three and nine months ended November 30, ~~2021,~~2022, respectively.

~~See Note 24,~~ ~~Subsequent Events~~ ~~for information on additional Common Unit conversions.~~

~~As part of the BluJay Acquisition, certain individuals who are parties to the Investor Rights Agreements entered into a new lock-up period that will expire on February 28, 2022.~~

As of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, there were a total of ~~34.7~~33.1 million and ~~35.6~~33.6 million Common Units held by participants of E2open Holdings, respectively.

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

~~18.~~22. Other Comprehensive ~~(Loss) Income~~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 Derivatives			Total
Balance, February 28, 2022	$	(19,019	)	$	—		$	(19,019	)

Other comprehensive loss		(68,360	)		(627	)		(68,987	)
Tax effects		10,274			—			10,274
Other comprehensive loss		(58,086	)		(627	)		(58,713	)
Balance, November 30, 2022	$	(77,105	)	$	(627	)	$	(77,732	)

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


($ in thousands)	Three Months Ended November 30, 2022		Nine Months Ended November 30, 2022
Reclassifications:
Losses on cash flows hedges, net of tax
Cost of revenue	$	105	$	105
Research and development		94		94
Sales and marketing		3		3
General and administrative		48		48
Total	$	250	$	250

We did not reclass any items to the Condensed Consolidated Statements of Operations from accumulated other comprehensive ~~(loss) income~~loss during the three and nine months ended November 30, ~~2021 and 2020.~~2021.

Accumulated ~~other comprehensive~~foreign currency translation adjustments are reclassified to net income (loss) ~~income~~when realized upon sale or upon complete, or substantially complete, liquidation of the investment in the ~~equity section of our Condensed Consolidated Balance Sheets includes:~~

Successor

($ in thousands)

November 30, 2021

February 28, 2021

Foreign currency translation adjustment

$
(28,277
)

$
2,388

Accumulated other comprehensive (loss) income

$
(28,277
)

$
2,388

foreign entity.

See Note 15, Financial Instruments for additional information related to our derivative instruments.

~~19.~~23. Earnings Per Share

Basic earnings per share is calculated as net income (loss) divided by the average number of shares of common stock outstanding. Diluted earnings per share assumes, when dilutive, the issuance of the net incremental shares from options and restricted shares. The following is a reconciliation of the denominators of the basic and diluted per share computations for net ~~income:~~income (loss):


	Successor
	Three Months Ended			Nine Months Ended			Three Months Ended November 30,					Nine Months Ended November 30,
(in thousands, except per share data)	November 30, 2021			November 30, 2021			2022		2021			2022			2021
Net loss per share:
Numerator - basic:
Net loss per share:	$	(64,289	)	$	(257,632	)
Less: Net loss attributable to noncontrolling interests		(5,072	)		(35,640	)
Net loss attributable to E2open Parent Holdings, Inc. - basic	$	(59,217	)	$	(221,992	)
Net income (loss) per share:							$	5,503	$	(64,289	)	$	(416,703	)	$	(257,632	)
Less: Net income (loss) attributable to noncontrolling interests								698		(5,072	)		(41,464	)		(35,640	)
Net income (loss) attributable to E2open Parent Holdings, Inc. - basic							$	4,805	$	(59,217	)	$	(375,239	)	$	(221,992	)

Numerator - diluted:
Net loss attributable to E2open Parent Holdings, Inc. - basic	$	(59,217	)	$	(221,992	)
Add: Net loss and tax effect attributable to noncontrolling interests		—			—
Net loss attributable to E2open Parent Holdings, Inc. - diluted	$	(59,217	)	$	(221,992	)
Net income (loss) attributable to E2open Parent Holdings, Inc. - basic							$	4,805	$	(59,217	)	$	(375,239	)	$	(221,992	)
Add: Net income (loss) and tax effect attributable to noncontrolling interests								—		—			—			—
Net income (loss) attributable to E2open Parent Holdings, Inc. - diluted							$	4,805	$	(59,217	)	$	(375,239	)	$	(221,992	)

Denominator - basic:
Weighted average shares outstanding - basic		308,132			227,186			302,201		308,132			301,822			227,186
Net income per share - basic	$	(0.19	)	$	(0.98	)
Net income (loss) per share - basic							$	0.02	$	(0.19	)	$	(1.24	)	$	(0.98	)

Denominator - diluted:
Weighted average shares outstanding - basic		308,132			227,186			302,201		308,132			301,822			227,186
Weighted average effect of dilutive securities:
Shares related to Common Units		—			—
Time based restricted stock								158		—			—			—
Weighted average shares outstanding - diluted		308,132			227,186			302,359		308,132			301,822			227,186
Diluted net income per common share	$	(0.19	)	$	(0.98	)
Diluted net income (loss) per common share							$	0.02	$	(0.19	)	$	(1.24	)	$	(0.98	)

Potential common shares issuable to employee or directors upon exercise or conversion of shares under our share-based compensation plans and upon exercise of warrants 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 weighted-average potential common shares excluded from diluted ~~loss~~income (loss) per common share as their effect would be anti-dilutive:


	Successor
	Three Months Ended		Nine Months Ended		Three Months Ended November 30,				Nine Months Ended November 30,
	November 30, 2021		November 30, 2021		2022		2021		2022		2021
Shares related to Series B-1 common stock		94		60		94		94		94		60
Shares related to Series B-2 common stock		3,372,184		3,372,184		3,372,184		3,372,184		3,372,184		3,372,184
Shares related to restricted common units Series 2		2,627,724		2,627,724		2,627,724		2,627,724		2,627,724		2,627,724
Shares related to warrants (1)		29,079,959		29,079,968		29,079,872		29,079,959		29,079,872		29,079,968
Shares related to Common Units		34,885,501		36,404,078		33,126,073		34,885,501		33,350,756		36,404,078
Shares related to options		2,573,978		2,533,856		4,832,802		2,573,978		3,986,158		2,533,856
Shares related to restricted stock		2,243,739		1,513,856
Share related to performance based restricted stock						2,101,221		937,381		2,059,595		688,494
Shares related to time based restricted stock						2,303,641		1,306,358		2,404,272		825,362
Units/Shares excluded from the dilution computation		74,783,179		75,531,726		77,443,611		74,783,179		76,880,655		75,531,726

(1)

The warrants include the public warrants, private placement warrants and Forward Purchase Warrants.

2630

~~20.~~24. Share-Based ~~and Unit-Based~~ Compensation

2021 Incentive Plan

The E2open Parent Holdings, Inc. 2021 Omnibus Incentive Plan (2021 Incentive Plan) became effective on the Closing Date with the approval of ~~CCNB1’s~~CCNB1's shareholders and ~~the~~ board of directors. The 2021 Incentive Plan allows us to make equity and equity-based incentive awards to officers, employees, directors and consultants. There ~~are~~were 15,000,000 shares of Class A Common Stock reserved for issuance under the 2021 Incentive Plan ~~which~~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, an additional 4,849,684 shares were reserved for issuance under the "evergreen " provision. 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, expect under limited conditions. ~~The 2021 Incentive Plan replaced the 2015 Plan and 2015 Restricted Plan, as defined below.~~

Our board of directors have approved the grant of options and RSUs under the 2021 Incentive Plan.

~~Currently, all~~The fiscal year 2022 options ~~are~~were performance based and ~~are~~ measured based on obtaining an organic growth target over a one-year period with a quarter of the options vesting at the end of the performance period and the remaining options vesting equally over the following three years. ~~Our executive officers and senior management have been granted these~~The fiscal year 2023 options are performance based ~~options. The performance target was originally set at~~ ~~100%. In November 2021, the performance target was reviewed with a best estimate adjusted made for exceeding the~~ ~~100% target. The probability of meeting the performance target is remeasured each quarter~~ and ~~adjusted as needed.~~

~~The RSUs are either performance based or time based. The performance based RSUs are~~ measured based on obtaining an organic growth, ~~target~~adjusted EBITDA and net booking targets over a one-year period with a quarter of the options vesting at the end of the performance period and the remaining ~~RSU's~~options vesting equally over the following three years. Our executive officers and senior management are granted these performance based options. The performance target is set at 100% at the grant date, and the probability of meeting the performance target is remeasured each quarter over the performance period and adjusted if needed. The performance target for the options granted during May 2021 was finalized in April 2022 above 100% and adjusted accordingly. As of November 30, 2022, there were 4,259,741 unvested performance based options.

The RSUs are either performance based or time based. The fiscal year 2022 performance based RSUs were measured based on obtaining an organic growth target over a one-year period with a quarter of the RSUs vesting at the end of the performance period and the remaining RSUs vesting equally over the following three years. The fiscal year 2023 performance based RSUs are measured based on obtaining an organic growth, adjusted EBITDA and net bookings target over a one-year period with a quarter of the RSUs vesting at the end of the performance period and the remaining RSUs vesting equally over the following three years. The performance target ~~was originally~~is set at 100%~~. In November 2021,~~ at the ~~performance target was reviewed with a best estimate adjustment made for exceeding~~date of grant, and the~~100% target. The~~ probability of meeting the performance target is remeasured each quarter over the performance period and adjusted asif needed. The performance target for the performance based RSUs granted during May 2021 was finalized in April 2022 above 100% and adjusted accordingly. The time based RSUs for executive officers, senior management and employees vest ratably over a three-year period while the time based RSUs for non-employee directors of our board of directors have a one-year vesting period. As of November 30, ~~2021,~~2022, there ~~are~~were ~~912,832~~2,051,628 ~~unvested~~ performance based RSUs and ~~1,340,647~~4,566,069 time based RSUs that were vested or expected to vest with a total intrinsic value of $39.0 million.

During fiscal 2023 our board of directors approved a company-wide share-based compensation program under our 2021 Incentive Plan. Under the program, approximately 3,800 employees are eligible to receive an annual stock award subject to approval by the board of directors as part of their annual compensation package. As part of the fiscal 2023 annual compensation package, our board of directors approved a grant on October 1, 2022 of 1,653,982 time based RSUs to the employees who had not previously received a fiscal year 2023 equity grant. For those employees based in China, 25,045 cash-settled RSUs were granted. The time based and cash-settled RSUs will vest ratably over a three-year period.

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 will be recorded in share-based compensation expense in the Condensed Consolidated Statements of Operations. The liability for the cash-settled RSUs was negligible as of November 30, 2022 and is included in accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheets. As of November 30, 2022, there were 25,045 unvested ~~time based RSUs.~~cash-settled RSUs with a total intrinsic value of $0.1 million.

As of November 30, ~~2021,~~2022, there were ~~10,188,963~~8,444,185 shares of Class A Common Stock available for grant under the 2021 Incentive Plan.

As previously disclosed in our 2022 Form 10-K in Item 9B., Other Information, our former Chief Financial Officer entered into a Transition Agreement in which all of his outstanding stock awards accelerated vesting to August 31, 2022. Additionally, the exercise period for his options was extended from 90 days to one year with exercises permitted through August 31, 2023.

Activity under the 2021 Incentive Plan related to options was as follows:

Successor

Number of Shares
(in thousands)

Weighted Average Exercise Price Per Share

Weighted Average Remaining Contractual Life (in years)

Balance, February 28, 2021

0

$
0

—

Granted

2,583

9.86

Forfeited

(26
)

10.86

Balance, November 30, 2021

2,557

$
9.85

9.3


	Number of Shares (in thousands)			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)
Balance, February 28, 2022		2,524		$	9.83		9.0
Granted		3,275			7.76
Forfeited/Expired		(966	)		9.85
Balance, November 30, 2022		4,833		$	8.42		8.7

Vested and exercisable as of November 30, 2022		573		$	9.82		5.2


	Number of Shares (in thousands)			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (in years)
Balance, February 28, 2021		—		$	—		—
Granted		2,583			9.86
Forfeited		(26	)		10.86
Balance, November 30, 2021		2,557		$	9.86		9.5

As of November 30, ~~2021,~~2022, there was $~~4.7~~7.2 million of unrecognized compensation cost related to unvested options. The aggregate intrinsic value of outstanding stock option awards and the vested and exercisable stock option awards was zero as of November 30, 2022 since our Class A Common Stock price was less than the exercise price of the stock option awards.

Activity under the 2021 Incentive Plan related to RSUs was as follows:

Successor

Number of Units
(in thousands)

Weighted Average Grant Date Fair Value Per Unit

Weighted Average Remaining Recognition Period (in years)

Balance, February 28, 2021

0

$
0

—

Granted

2,408

12.70

Forfeited

(155
)

12.87

Balance, November 30, 2021

2,253

$
12.69

2.9


	Number of Units (in thousands)			Weighted Average Grant Date Fair Value Per Unit		Weighted Average Remaining Recognition Period (in years)
Balance, February 28, 2022		2,103		$	12.47		2.7
Granted		5,645			7.45
Added by performance factor		300			12.87
Released		(870	)		12.12
Canceled and forfeited		(560	)		10.00
Balance, November 30, 2022		6,618		$	8.46		2.6


	Number of Units (in thousands)			Weighted Average Grant Date Fair Value Per Unit		Weighted Average Remaining Recognition Period (in years)
Balance, February 28, 2021		—		$	—		—
Granted		2,408			12.70
Forfeited		(155	)		12.87
Balance, November 30, 2021		2,253		$	12.69		2.9

As of November 30, ~~2021,~~2022, there was $~~24.0~~42.0 million of unrecognized compensation cost related to unvested RSUs. The aggregate intrinsic value of the RSUs was $39.0 million as of November 30, 2022 which is the outstanding RSUs valued at the closing price of our Class A Common Stock on November 30, 2022.

2732

Activity under the 2021 Incentive Plan related to cash-settled RSUs was as follows:


	Number of Units (in thousands)		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Recognition Period (in years)
Balance, February 28, 2022		—	$	—		—
Granted		25		6.07
Balance, November 30, 2022		25	$	6.07		2.8

As of November 30, 2022, there was $0.1 million of unrecognized compensation cost related to unvested cash-settled RSUs. The aggregate intrinsic value of the cash-settled RSUs was $0.1 million as of November 30, 2022 which is the outstanding cash-settled RSUs valued at the closing price of our Class A Common Stock on November 30, 2022.

The estimated grant-date fair values of the options granted during the nine months ended November 30, ~~2021~~2022 were calculated using the Black-Scholes option-pricing valuation model, based on the following assumptions:


Expected term (in years)		6.25
Expected equity price volatility		~~46.39% -~~ ~~46.65~~44.17%
Risk-free interest rate		~~0.96% -~~ ~~1.12~~2.91%
Expected dividend yield		0%

~~See Note 24,~~ ~~Subsequent Events~~ ~~for information related to additional RSU grants.~~

Prior to the Business Combination, we had unit-based compensation plans that authorized (a) the discretionary granting of unit options and (b) the discretionary issuance of non-vested restricted units.

~~Unit Options~~

In 2015, E2open Holdings adopted the 2015 Unit Option Plan (2015 Plan). Under the 2015 Plan, E2open Holdings issued Series A unit options to certain employees eligible to participate in E2open Holdings unit option plan. The options issued under the 2015 Plan were subject to certain transfer restrictions and were initially deemed unvested. With respect to options issued to certain employees, options either vested 25~~% in the first year, and quarterly thereafter over a~~ ~~four-year~~ period (Time-Based Units) or based upon an exit event (Exit-Based Units). The vesting of both the Time-Based Units and Exit-Based Units were subject to the employee’s continued employment with the E2open Holdings.

Fair value of the unit options was determined on the date of grant using a pricing model affected by E2open Holdings’ unit price, as well as by certain assumptions including E2open Holdings’ expected equity price volatility over the term of the awards, actual and projected employee option exercise behavior, risk-free interest rates and expected dividends. E2open Holdings did 0~~t grant any new options during the periods from March 1, 2020 through February 3, 2021.~~

~~E2open Holdings was authorized to issue~~ ~~46.0~~ ~~million unit options under the 2015 Plan. As of February 3, 2021, outstanding unit options were~~ ~~19.9~~ ~~million. Unit options available for grant were~~ ~~2.7~~ ~~million as of February 3, 2021; however, the 2015 Plan was terminated as part of the Business Combination.~~

~~Activity under E2open Holdings’ unit option plan was as follows:~~

Predecessor

Number of Units
(in thousands)

Weighted Average Exercise Price Per Unit

Weighted Average Term (in years)

Balance, February 29, 2020

22,001

$
1.51

1.9

Exercised

(1,350
)

1.45

Forfeited

(645
)

1.65

Balance, November 30, 2020

20,006

$
1.51

1.2

~~As of February 3, 2021, there was $2.4~~ ~~million of unrecognized compensation cost which was expected to be recognized over a weighted-average period of~~ ~~1.1~~ ~~year. The weighted-average contractual life of options outstanding was~~ ~~6.7~~ ~~years and the weighted-average contractual life of options exercisable was~~ ~~6.4~~ ~~years as of February 3, 2021.~~

~~We did~~ 0~~t recognize any compensation expense for Exit-Based units for the three and nine months ended November 30, 2020 as these awards were not probable of vesting during these time periods.~~

~~On January 24, 2021, the board of directors accelerated the vesting of all unvested unit options outstanding under the 2015 Plan as of the completion of the Business Combination on February 4, 2021.~~

~~Restricted Equity Plan~~

In 2015, E2open Holdings established the 2015 Restricted Equity Plan (2015 Restricted Plan) that was adopted for certain officers eligible to participate in the 2015 Restricted Plan. The units issued under the 2015 Restricted Plan were subject to certain transfer restrictions and were initially deemed unvested. With respect to units issued to certain officers, Class B units either vested 25~~% annually over a~~ ~~four-year~~ period (Time-Based Units) or based upon an exit event (Exit-Based Units). The vesting of both the Time-Based Units and Exit-Based Units were subject to the employee’s continued employment with E2open Holdings. E2open Holdings authorized ~~32.0~~ ~~million units under the 2015 Restricted Plan. As of February 3, 2021 and February 29, 2020, outstanding restricted units were~~ ~~22.0~~ ~~million.~~ ~~NaN~~ ~~restricted units were available for grant as of February 3, 2021. The 2015 Restricted Plan was terminated as part of the Business Combination.~~

~~Activity under E2open Holdings’ 2015 Restricted Plan was as follows:~~

Predecessor

Number of Units
(in thousands)

Weighted Average Grant Date Fair Value Per Unit

Weighted Average Remaining Term (in years)

Balance, February 29, 2020

8,955

$
1.40

1.5

Released

(2,893
)

1.48

Balance, November 30, 2020

6,062

$
1.49

0.5

~~The aggregate fair value of units vested during the three and nine months ended November 30, 2020 was $1.0~~ ~~million and $2.9~~ ~~million, respectively. Unrecognized compensation expense related to the Class B units was $5.4~~ ~~million as of the February 3, 2021, which was expected to be recognized over a weighted-average period of approximately~~ ~~one year. E2open Holdings did~~ 0~~t recognize any compensation expense for Exit-Based Units for the three and nine months ended November 30, 2020.~~

On January 24, 2021, the board of directors accelerated the vesting of all unvested unit options outstanding under the 2015 Restricted Plan as of the completion of the Business Combination on February 4, 2021.

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

Successor

Predecessor

Successor

Predecessor

Three Months Ended

Three Months Ended

Nine Months Ended

Nine Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

November 30, 2021

November 30, 2020

Cost of revenue

$
399

$
181

$
856

$
406

Research and development

648

265

1,345

557

Sales and marketing

727

255

1,487

631

General and administrative

2,208

1,235

4,846

4,359

Total share-based and unit-based
compensation

$
3,982

$
1,936

$
8,534

$
5,953


	Three Months Ended November 30,				Nine Months Ended November 30,
($ in thousands)	2022		2021		2022		2021
Cost of revenue	$	545	$	399	$	856	$	856
Research and development		938		648		2,181		1,345
Sales and marketing		901		727		2,560		1,487
General and administrative		2,413		2,208		7,542		4,846
Total share-based compensation	$	4,797	$	3,982	$	13,139	$	8,534

~~21.~~25. Leases

~~Effective March 1, 2021, we began accounting~~We account for leases in accordance with ASC 842, Leases, which requires lessees to recognize lease liabilities and ~~ROU~~right-of-use (ROU) assets on the balance sheet for most operating leases. ~~Prior to March 1, 2021, we accounted for leases in accordance with ASC 840,~~ ~~Leases, under which operating leases were not recorded on the balance sheet.~~

We made the accounting policy election not to apply the recognition provisions of ASC 842 to short-term leases which are leases with a lease term of 12 months or less. Instead, we ~~will~~ recognize the lease payments for short-term leases on a straight-line basis over the lease term. ~~We currently do not have any short-term leases.~~

~~Upon adoption of ASC 842, we recognized an operating lease liability of $23.0~~ ~~million, a ROU operating asset of $22.4~~ ~~million and~~ 0 change to retained earnings. The lease liability is calculated based on the remaining minimum rental payments under current leasing standards for existing operating leases and the ROU asset is calculated the same as the lease liability, reduced for a $~~0.6~~ ~~million impairment related to an office lease we had exited as of February 28, 2021. We did not include any optional extension periods or cancelations in the valuation.~~

Operating lease liabilities reflect our obligation to make future lease payments for real estate locations. Lease terms are comprised of contractual terms. Payments are discounted using the rate we would pay to borrow amounts equal to the lease payments over the lease term (our incremental borrowing rate). We do not separate lease and non-lease components for contracts in which we are the lessee. ROU assets are measured based on lease liabilities adjusted for incentives and timing differences between operating lease expense and payments, recognized on a straight-line basis over the lease term. Operating lease expense is recognized on a straight-line basis over the lease term, while variable lease payments are recognized as incurred. Common area maintenance and other executory costs are the main components of variable lease payments. Operating and variable lease expenses are recorded in general and administrative expense in the Condensed Consolidated Statements of Operations.

Real Estate Leases

We lease our primary office space under non-cancelable operating leases with various expiration dates through ~~August 2029~~June 2030. Many of our leases have an option to be extended from two to five years, and several of ~~our~~the leases give us the right to cancel early with proper notification. Additionally, we have ~~a sublease on one~~two subleases of our office ~~leases.~~leases as of November 30, 2022.

Several of the operating lease agreements require us to provide security deposits. As of November 30, ~~2021,~~2022, and February 28, ~~2021,~~2022, lease deposits were $~~3.5~~5.0 million and $~~2.9~~3.6 million, 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 three and nine months ended November 2022, we incurred a $1.8 million and $4.1 million impairment, respectively, on our operating lease ROU assets and leasehold improvements due to vacating three and seven locations, respectively, with the intent to sublease them. The impairments were recorded in general and administrative expense in the Condensed Consolidated Statements of Operations.

Vehicle Leases

We lease vehicles under non-cancelable operating lease arrangements which have various expiration dates through ~~June 2025~~October 2026. We do not 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 which are primarily related to software and computer equipment and which have various expiration dates through October 2023. 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 ~~presents~~present the amounts and classifications of our estimated ROU assets, net and lease liabilities:


		Successor
($ in thousands)	Balance Sheet Location	November 30, 2021		Balance Sheet Location	November 30, 2022		February 28, 2022
Operating lease right-of-use assets	Operating lease right-of-use assets	$	26,553	Operating lease right-of-use assets	$	21,022	$	28,102
Finance lease right-of-use asset	Property and equipment, net		4,400	Property and equipment, net		2,254		3,719
Total right-of-use assets		$	30,953		$	23,276	$	31,821

Successor

($ in thousands)

Balance Sheet Location

November 30, 2021

Operating lease liability - current

Current portion of operating lease obligations

$
6,626

Operating lease liability

Operating lease obligations

20,784

Finance lease liability - current

Current portion of finance lease obligations

2,329

Finance lease liability

Finance lease obligations

2,093

Total lease liabilities

$
31,832


($ in thousands)	Balance Sheet Location	November 30, 2022		February 28, 2022
Operating lease liability - current	Current portion of operating lease obligations	$	8,093	$	7,652
Operating lease liability	Operating lease obligations		17,462		21,202
Finance lease liability - current	Current portion of finance lease obligations		2,002		2,307
Finance lease liability	Finance lease obligations		—		1,950
Total lease liabilities		$	27,557	$	33,111

Lease Cost and Cash Flows

The following table summarizes our total lease cost:

Successor

Three Months Ended

Nine Months Ended

($ in thousands)

November 30, 2021

November 30, 2021

Finance lease cost:

Amortization of right-of-use asset

$
717

$
2,308

Interest on lease liability

79

496

Finance lease cost

796

2,804

Operating lease cost:

Operating lease cost

1,008

3,500

Variable lease cost

2,022

4,001

Sublease income

(189
)

(722
)
Operating net lease cost

2,841

6,779

Total net lease cost

$
3,637

$
9,583


	Three Months Ended November 30,						Nine Months Ended November 30,
($ in thousands)	2022			2021			2022			2021
Finance lease cost:
Amortization of right-of-use asset	$	508		$	717		$	1,686		$	2,308
Interest on lease liability		35			79			161			496
Finance lease cost		543			796			1,847			2,804
Operating lease cost:
Operating lease cost		2,239			1,008			5,505			3,500
Variable lease cost		510			2,022			3,810			4,001
Sublease income		(46	)		(189	)		(482	)		(722	)
Operating net lease cost		2,703			2,841			8,833			6,779
Total net lease cost	$	3,246		$	3,637		$	10,680		$	9,583

~~We currently do not have any~~Short-term lease expense was immaterial for the three and nine months ended November 30, 2022. There was no short-term ~~leases.~~

~~Rent~~lease expense for the three and nine months ended November 30, ~~2020 was $~~2021.

~~1.7~~34

~~million and $5.9~~ ~~million which was recognized under ASC 840,~~ ~~Leases~~.

Supplemental cash flow information related to leases was as follows:


	Successor
	Nine Months Ended		Nine Months Ended November 30,
($ in thousands)	November 30, 2021		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	5,272	$	7,365	$	5,272

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


	~~Successor~~
	~~Nine Months Ended~~
	~~November 30, 2021~~
~~Weighted-average remaining lease term (in years):~~
~~Finance lease~~		~~1.58~~
~~Operating lease~~		~~4.29~~
~~Weighted-average discount rate:~~
~~Finance lease~~		~~9.20~~	%
~~Operating lease~~		~~4.40~~	%


	Nine Months Ended November 30,
	2022			2021
Weighted-average remaining lease term (in years):
Finance lease		0.69			1.58
Operating lease		3.77			4.29
Weighted-average discount rate:
Finance lease		9.20	%		9.20	%
Operating lease		5.43	%		4.40	%

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, ~~2021:~~2022:

($ in thousands)

Operating Leases

Finance Leases

December 1, 2021 to February 28, 2022

$
2,737

$
385

2023

8,200

2,272

2024

6,932

2,105

2025

4,859

0

2026

3,020

0

Thereafter

4,121

0

Total

29,869

4,762

Less: Present value discount

(2,459
)

(340
)
Lease liabilities

$
27,410

$
4,422


($ in thousands)	Operating Leases			Finance Leases
December 2022 - February 2023	$	2,561		$	74
2024		8,897			2,014
2025		6,951			—
2026		4,370			—
2027		3,026			—
Thereafter		2,475			—
Total		28,280			2,088
Less: Present value discount		(2,725	)		(86	)
Lease liabilities	$	25,555		$	2,002

~~Future minimum lease payments under non-cancelable operating leases as of February 28, 2021, prior to the adoption of the new lease standard discussed in Note 1,~~ ~~Organization and Description of Business~~ ~~were as follows for the fiscal years ended:~~

($ in thousands)

Amount

2022

$
8,507

2023

6,540

2024

5,555

2025

4,204

2026

3,218

Thereafter

5,434

Total minimum lease payments

$
33,458

~~22.~~26. 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”~~"ordinary" income or loss (pretax income or loss ~~or loss~~ excluding ~~unusual or infrequently occurring~~ discrete items) for the reporting period. Our provision for income taxes was a benefit of $7.9 million, or 331.8%, for the three months ended November 30, 2022 compared to a benefit of $10.8 million, or ~~negative~~ 14.3%, for the three months ended November 30, ~~2021 compared to an expense of $9.7~~ ~~million, or~~ ~~55.7%, for the three months ended November 30, 2020.~~2021. Our provision for income taxes for the nine months ended November 30, 2022 was a benefit of $130.0 million, or 23.8%, compared to a benefit of $3.4 million, or ~~negative~~ 1.3%, for the nine months ended November 30, ~~2021 compared to an expense~~2021.

The loss before income taxes of $~~24.1~~2.4 million or and $~~54.4~~546.7~~%, for the nine months ended November 30, 2020.~~

~~The change in the provision for income taxes~~ million for the three and nine months ended November 30, ~~2021 as compared to~~2022, respectfully, resulted in a $7.9 million and $130.0 million income tax benefit, respectively. These benefits primarily resulted from the ~~three and nine months ended November 30, 2020 was primarily due to an~~goodwill impairment taken in the second fiscal quarter of 2023. Additionally, the increase ~~in loss from continuing operations included~~ in the tax ~~provision for November 30, 2021 that was previously attributable to affiliates as of November 30, 2020. This~~ benefit was ~~partially offset by nondeductible mark-to-market~~due to changes in the impact of book income and losses ~~associated with contingent liabilities and certain equity consideration liabilities~~of affiliates on the carrying amount of our partnership investment and changes in the ~~valuation allowances~~mark-to-market gains and losses on certain contingent liabilities offset by changes in book losses in certain jurisdictions ~~within~~for which we operate as well as the impact to fiscal 2022 of losses attributable to our noncontrolling interest in our affiliate. In accordance with ASC 740-20-45-11, we accounted for the tax effect of the step-up in income tax basis related to transactions with or among shareholders and recognized a deferred tax asset and corresponding increase in stockholders' equity of $~~36.8~~ ~~million.~~no benefit can be recognized.

As of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, total gross unrecognized tax benefits were $~~2.7~~2.6 million. We recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, the total amount of gross interest and penalties accrued was less than $~~0.3~~0.1 million which is classified as other noncurrent liabilities in the Condensed Consolidated Balance Sheets.

Inflation Reduction Act of 2022

On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy. The alternative minimum tax is effective for taxable years beginning after December 31, 2022 and the excise tax applies to stock repurchases after December 31, 2022. The alternative minimum tax would not be applicable in our next fiscal year as it is based on a three-year average annual adjusted financial statement income in excess of $1 billion. We will evaluate any impact related to the excise tax on net stock repurchases based on our relative activity.

~~23.~~27. Commitments and Contingencies

From time to time, we are subject to contingencies that arise in the ordinary course of business. 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 such contingencies will have a material adverse effect upon our Condensed Consolidated Balance Sheets, Statements of Operations or Statements of Cash Flows.

~~24.~~28. 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)	2022		2021
Supplemental cash flow information - Cash paid for:
Interest	$	29,325	$	18,461
Income taxes		7,669		2,890
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities		263		2,376
Right-of-use assets obtained in exchange for operating lease obligations		2,559		25,825
Shares withheld for taxes on vesting of restricted stock		1,593		—
Conversion of Common Units to Class A Common Stock		1,809		41,727
Conversion of Series B1 common stock to Class A Common Stock		—		175,000
Business Combination purchase price adjustment		—		2,965
Issuance of common stock for BluJay Acquisition		—		730,854
Deferred taxes related to issuance of common stock for BluJay Acquisition		—		36,805

29. Subsequent Events

On ~~December 8, 2021,~~ ~~1,121,596~~ ~~Common Units were converted into an equivalent number of Class A Common Stock with a value of~~January 9, 2023, we repaid the outstanding $~~13.2~~10.0 million ~~based off~~balance on our 2021 Revolving Credit Facility. After this repayment, our available borrowing capacity under the 2021 Revolving Credit Facility is $5~~-day VWAP.~~

~~On January 1, 2022, certain executives and management were granted an aggregate of~~ ~~33,301~~155.0 ~~RSUs with a grant date fair value of $11.26~~ ~~per share. All of these RSUs are service based which will vest ratably over a~~ ~~three-year~~ ~~period.~~million.

Item 2. ~~Management’s~~Management's Discussion and Analysis of Financial 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 ~~and~~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~~Management's Discussion and Analysis of Financial Condition and Results of Operations of our ~~2021~~2022 Form 10-K and the unaudited condensed financial statements and related notes beginning on page 5. This Item 2 contains ~~“forward looking”~~"forward looking" statements that involve risks and uncertainties. See Forward-Looking Statements at the beginning of this Quarterly Report.

Overview

We are a leading provider of cloud-based, end-to-end SCM software. Our platform spans many key strategic and operational areas including omni-channel, demand sensing, supply planning, global trade management, transportation and logistics and manufacturing and supply management. Our software combines networks, data and applications to provide a deeply embedded, mission-critical platform that allows ~~customers~~clients to optimize their channel and supply ~~chain~~chains by accelerating growth, reducing costs, increasing visibility and driving improved resiliency. Given the mission-critical nature of our solutions, we maintain ~~deep,~~ long-term relationships with our ~~customers,~~clients, which is reflected by our high gross retention and ~~customer~~long client tenure. 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, technology and transportation, among others.

Recent Events

On March 2, 2022, E2open, LLC acquired Logistyx for a purchase price of $185 million, with an estimated fair value of $183.4 million, including $90 million paid in cash at closing. An additional $95 million was paid in two installments on May 31, 2022 and September 1, ~~2021, we completed~~2022. We had the ~~BluJay Acquisition with~~option to finance the ~~issuance~~remaining payments, at our discretion, through cash or a combination of ~~72,383,299 shares of~~cash and Class A Common ~~Stock~~Stock. The May 31, 2022 payment of $37.4 million was paid in cash. On September 1, 2022, E2open, LLC made a cash payment of $54.0 million to Logistyx as the final installment payment for the Logistyx Acquisition which reflected a working capital adjustment of $3.6 million. The Logistyx sellers disputed the working capital adjustment pursuant to the ~~BluJay Sellers and~~terms of the Membership Interest Purchase Agreement. During October 2022, the parties agreed to a working capital adjustment of $2.6 million with the additional payment ~~of $774.2 million of cash which includes the repayment of BluJay's debt facility. The total purchase consideration~~ for ~~the BluJay Acquisition was $1.5 billion.~~working capital made to Logistyx on December 5, 2022.

~~In connection with~~During the ~~completion~~second quarter of fiscal 2023, the ~~BluJay Acquisition, we secured $300 million in PIPE financing from institutional investors for the purchase of an aggregate of 28,909,022 shares~~market price of our Class A Common ~~Stock.~~Stock and market capitalization declined significantly. This decline resulted in a triggering event, as such an interim goodwill impairment assessment was performed. We ~~also obtained a $380.0 million incremental term loan~~calculated the fair value of E2open under 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 revenue growth rates and net operating income margins, taking into consideration market and industry conditions. Under the guideline public company method, the fair value was based on forward-looking earnings multiples derived from comparable publicly traded companies with similar market position and size. Under the guideline transaction method, the fair value was based on pricing multiples derived from recently sold companies with similar characteristics to ~~our 2021 Term Loan~~ours. The three approaches generated similar results and ~~increased our 2021 Revolving Credit Facility by $80.0~~indicated that the fair value of E2open's equity and goodwill was less than its carrying amount. Therefore, in the second quarter of fiscal 2023, we recognized an impairment charge of $514.8 million to ~~$155.0 million. In addition,~~goodwill. See Note 7, Goodwill to the ~~letter of credit sublimit was increased from $15.0 million~~Notes to ~~$30.0 million upon completion of~~ the ~~BluJay Acquisition.~~Unaudited Condensed Consolidated Financial Statements.

Additionally, the Investor Rights Agreement was amended and restated to add certain of BluJay's existing stockholders as parties, including certain affiliates of Francisco Partners and Temasek as well as include a six month lock-up period from September 1, 2021 through February 28, 2022 for certain equity holders of E2open and BluJay. The Investor Rights Agreement also provides Francisco Partners and Temasek the right to nominate one member each to our board of directors. Mr. Deep Shah and Mr. Martin Fichtner became new directors on September 1, 2021.

3337

Results of Operations

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


	Successor			Predecessor			Successor			Predecessor
	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended			Three Months Ended November 30,						Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			November 30, 2021			November 30, 2020			2022			2021			2022			2021
Revenue	$	137,002		$	84,081		$	281,408		$	249,022		$	164,893		$	137,002		$	485,950		$	281,408
Cost of revenue		(72,786	)		(31,859	)		(150,496	)		(92,810	)		(80,750	)		(72,786	)		(242,682	)		(150,496	)
Total gross profit		64,216			52,222			130,912			156,212			84,143			64,216			243,268			130,912

Operating Expenses
Research and development		25,000			14,225			56,909			43,212			24,939			25,000			73,088			56,909
Sales and marketing		18,101			12,973			41,789			37,275			20,448			18,101			67,348			41,789
General and administrative		22,871			10,412			49,989			30,037			23,073			22,871			66,774			49,989
Acquisition-related expenses		33,216			5,968			50,168			11,354			1,969			33,216			14,313			50,168
Amortization of acquired intangible assets		19,470			8,451			26,843			25,365			19,965			19,470			62,523			26,843
Goodwill impairment														—			—			514,816			—
Total operating expenses		118,658			52,029			225,698			147,243			90,394			118,658			798,862			225,698
(Loss) income from operations		(54,442	)		193			(94,786	)		8,969
Loss from operations														(6,251	)		(54,442	)		(555,594	)		(94,786	)
Interest and other expense, net		(10,769	)		(17,575	)		(22,004	)		(53,255	)		(21,270	)		(10,769	)		(54,732	)		(22,004	)
Change in tax receivable agreement liability		(1,470	)		—			(4,606	)		—
Loss from change in fair value of warrant liability		(7,232	)		—			(48,448	)		—
Loss from change in fair value of contingent consideration		(1,140	)		—			(91,180	)		—
Total other expenses		(20,611	)		(17,575	)		(166,238	)		(53,255	)
Loss before income taxes		(75,053	)		(17,382	)		(261,024	)		(44,286	)
Income tax benefit (expense)		10,764			(9,685	)		3,392			(24,073	)
Net loss		(64,289	)	$	(27,067	)		(257,632	)	$	(68,359	)
Less: Net loss attributable to noncontrolling interest		(5,072	)					(35,640	)
Net loss attributable to E2open Parent Holdings, Inc.	$	(59,217	)				$	(221,992	)
Net loss attributable to E2open Parent Holdings, Inc. Class A common stockholders per share - diluted	$	(0.19	)				$	(0.98	)
Weighted-average common shares outstanding - diluted		308,132						227,186
Gain (loss) from change in tax receivable agreement liability														2,697			(1,470	)		9,089			(4,606	)
Gain (loss) from change in fair value of warrant liability														16,150			(7,232	)		36,764			(48,448	)
Gain (loss) from change in fair value of contingent consideration														6,300			(1,140	)		17,760			(91,180	)
Total other income (expenses)														3,877			(20,611	)		8,881			(166,238	)
Loss before income tax provision														(2,374	)		(75,053	)		(546,713	)		(261,024	)
Income tax benefit														7,877			10,764			130,010			3,392
Net income (loss)														5,503			(64,289	)		(416,703	)		(257,632	)
Less: Net income (loss) attributable to noncontrolling interest														698			(5,072	)		(41,464	)		(35,640	)
Net income (loss) attributable to E2open Parent Holdings, Inc.													$	4,805		$	(59,217	)	$	(375,239	)	$	(221,992	)
Net income (loss) attributable to E2open Parent Holdings, Inc. Class A common stockholders per share:
Basic													$	0.02		$	(0.19	)	$	(1.24	)	$	(0.98	)
Diluted													$	0.02		$	(0.19	)	$	(1.24	)	$	(0.98	)
Weighted-average common shares outstanding:
Basic														302,201			308,132			301,822			227,186
Diluted														302,359			308,132			301,822			227,186

~~Our~~In the discussion of our results of operations, we may quantitatively disclose the impact of our acquired products and services to the extent they remain ascertainable. Revenue and expense contributions from our acquisitions for the respective period comparisons generally were not separately identifiable due to our strategy of rapid integration ~~strategy and methodology is unique in that we rapidly and completely integrate acquired~~of these businesses into our platform and go-to-market activity. As such, costs attributable to an acquisition become impractical to separate post-closing of a business combination. For example, we may elect to terminate a redundant position from either the target company, or our own company. Additionally, because of our unique technology with our E2Net application framework, we are able to rapidly deploy acquired products into our platform. With the acquisition of BluJay, we have restructured the entire go-to-market of both businesses into new sales teams, each focused on different customer groups. As such, we are unable to separate the costs of BluJay from E2open.existing operations.

Three Months Ended November 30, ~~2021~~2022 compared to Three Months ~~Balance at~~Ended November 30, ~~2020~~2021

Revenue


	Successor			Predecessor
	Three Months Ended			Three Months Ended								Three Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change			2022			2021			$ Change			% Change
Revenue:
Subscriptions	$	106,969		$	70,374		$	36,595		52	%	$	134,884		$	106,969		$	27,915			26	%
Professional services		30,033			13,707			16,326	nm
Professional services and other													30,009			30,033			(24	)		0	%
Total revenue	$	137,002		$	84,081		$	52,921		63	%	$	164,893		$	137,002		$	27,891			20	%
Percentage of revenue:
Subscriptions		78	%		84	%							82	%		78	%
Professional services		22	%		16	%
Professional services and other													18	%		22	%
Total		100	%		100	%							100	%		100	%

Subscriptions revenue was $134.9 million for the three months ended November 30, 2022, a $27.9 million, or 26%, increase compared to subscriptions revenue of $107.0 million for the three months ended November 30, ~~2021, a $36.6 million, or 52%, increase compared to subscriptions revenue of $70.4 million for the three months ended November 30, 2020.~~2021. The increase in subscriptions revenue was primarily due to the ~~BluJay~~Logistyx Acquisition and new organic subscription sales predominantly driven by increases in products utilized across our current ~~customer portfolio. These increases were partially offset by~~client portfolio, as well as the $10.4 million amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business ~~Combination.~~Combination in the third quarter of fiscal 2022. With the early adoption of ASU 2021-08, a fair value adjustment to deferred revenue for the BluJay ~~Acquisition~~and Logistyx acquisitions was not recorded; therefore, amortization of the fair value adjustment to deferred revenue similar to the Business Combination adjustment ~~will~~did not occur for the BluJay ~~Acquisition.~~and Logistyx acquisitions.

Professional services and other revenue was flat between periods at $30.0 million for the three months ended November 30, ~~2021, a $16.3 million increase compared to $13.7 million for the three months ended November 30, 2020.~~2022 and 2021. The increase in professional services and other revenue was ~~primarily related to~~a result of the ~~BluJay~~Logistyx Acquisition ~~new~~offset by lower revenue driven by our strategic focus on system integrator partnership initiatives, incremental data subscription sales and ~~customers delaying projects in fiscal year 2021 due to~~macroeconomic impact from the ~~COVID-19 pandemic resulting in favorable year-over-year growth.~~technology sector.

Our subscriptions revenue as a percentage of total revenue ~~decreased~~increased to 82% for the third quarter of fiscal 2023 compared to 78% for the third quarter of fiscal ~~year~~2022. The third quarter of fiscal 2022 included $10.4 million amortization related to the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination, reducing subscription revenue as a percentage of total revenue for that period.

Cost of Revenue, Gross Profit and Gross Margin


	Three Months Ended November 30,
($ in thousands)	2022			2021			$ Change			% Change
Cost of revenue:
Subscriptions	$	35,931		$	30,163		$	5,768			19	%
Professional services and other		20,417			17,587			2,830			16	%
Amortization of acquired intangible assets		24,402			25,036			(634	)		-3	%
Total cost of revenue	$	80,750		$	72,786		$	7,964			11	%

Gross profit:
Subscriptions	$	74,551		$	51,771		$	22,780			44	%
Professional services and other		9,592			12,445			(2,853	)		-23	%
Total gross profit	$	84,143		$	64,216		$	19,927			31	%

Gross margin:
Subscriptions		55	%		48	%
Professional services and other		32	%		41	%
Total gross margin		51	%		47	%

Cost of subscriptions was $35.9 million for the three months ended November 30, 2022, a $5.8 million, or 19%, increase compared to ~~84%~~$30.2 million for the three months ended November 30, 2021. This increase was primarily driven by a $3.9 million increase in software and hosting costs, predominately related to the Logistyx Acquisition.

Cost of professional services and other revenue was $20.4 million for the three months ended November 30, 2022, a $2.8 million, or 16%, increase compared to $17.6 million for the three months ended November 30, 2021. Personnel costs such as salaries increased $1.1 million, primarily due to the Logistyx Acquisition in March 2022. Additionally, consulting expenses increased $2.3 million when compared to the prior year, primarily driven by our investment in strategic system integrator partnership initiatives.

Amortization of acquired intangible assets was $24.4 million for the three months ended November 30, 2022, a $0.6 million, or 3%, decrease compared to $25.0 million for the three months ended November 30, 2021, driven primarily by the Logistyx Acquisition in March 2022.

Our subscriptions gross margin was 55% for the third quarter of fiscal ~~2021 driven~~2023 compared to 48% for the third quarter of fiscal 2022 primarily ~~by amortizing~~due to the $10.4 million amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination in ~~addition to~~fiscal 2022 offset by the ~~increase in professional services revenue.~~

~~Cost of Revenue, Gross Profit and Gross Margin~~

Successor

Predecessor

Three Months Ended

Three Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

$ Change

% Change

Cost of revenue:

Subscriptions

$
30,163

$
15,568

$
14,595

94
%
Professional services

17,587

11,346

6,241

55
%
Amortization of acquired intangible assets

25,036

4,945

20,091

nm

Total cost of revenue

$
72,786

$
31,859

$
40,927

nm

Gross profit:

Subscriptions

$
51,771

$
49,863

$
1,908

4
%
Professional services

12,445

2,359

10,086

nm

Total gross profit

$
64,216

$
52,222

$
11,994

23
%

Gross margin:

Subscriptions

48
%

71
%

Professional services

41
%

17
%

Total gross margin

47
%

62
%

~~Cost of subscriptions was $30.2 million for~~additional revenue from the three months ended November 30, 2021, a $14.6 million, or 94%, increase compared to $15.6 million for the three months ended November 30, 2020. This increase was driven by $13.6 million related to the BluJay Acquisition and an increase in personnel costs for items such as salaries and incentive compensation, $0.7 million was related to depreciation expense on capital expenditures for the expansion of our data centers and $0.2 million for share-based compensation.

Cost of professional services revenue was $17.6 million for the three months ended November 30, 2021, a $6.2 million, or 55%, increase compared to $11.3 million for the three months ended November 30, 2020. The BluJayLogistyx Acquisition in fiscal ~~year 2022 and increases personnel costs such as salaries and incentive compensation accounted for $5.7 million of the increase in cost of professional services revenue.~~

Amortization of acquired intangible assets was $25.0 million for the three months ended November 30, 2021, a $20.1 million increase compared to $4.9 million for the three months ended November 30, 2020, driven primarily by the revaluation and change in the composition of the intangible assets as part of the Business Combination in February 2021 and the BluJay Acquisition in September 2021.

Our subscriptions gross margin was 48% in the third quarter of fiscal 2022 as compared to 71% for the third quarter of fiscal 2021 due to the BluJay Acquisition and the amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination.2023. With the early adoption of ASU 2021-08, the BluJay and Logistyx deferred revenue was recorded under ASC 606 and not at fair value at the acquisition date; therefore, amortization of the fair value adjustment to deferred revenue similar to the Business Combination adjustment ~~will~~did not occur for the BluJay ~~Acquisition.~~or Logistyx acquisitions.

Our professional services gross margin ~~increased to 41%~~was down for the third quarter of fiscal ~~2022 from 17%~~2023 at 32% compared to 41% in the third quarter of fiscal ~~2021~~2022 primarily due to ~~the BluJay Acquisition~~our investment in ~~fiscal 2022 and new subscription sales, in addition to customers delaying projects in fiscal year 2021 due to the COVID-19 pandemic, which resulted in favorable year-over-year growth.~~strategic system integrator partnership initiatives.

Research and Development


	Successor			Predecessor
	Three Months Ended			Three Months Ended								Three Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change			2022			2021			$ Change			% Change
Research and development	$	25,000		$	14,225		$	10,775		76	%	$	24,939		$	25,000		$	(61	)		0	%
Percentage of revenue		18	%		17	%							15	%		18	%

Research and development expenses were ~~$25.0~~$24.9 million for the three months ended November 30, ~~2021,~~2022, a ~~$10.8~~$0.1 million ~~or 76%, increase~~decrease compared to ~~$14.2~~$25.0 million in the prior year. The ~~increase~~decrease was primarily due to ~~$9.8~~a $2.7 million ~~related~~decrease in incentive compensation, partially offset by a $1.1 million increase in depreciation expense as compared to the ~~BluJay Acquisition as well as major strategic partnership initiatives around product development efforts during fiscal~~prior year 2022, which resulted in net increased personnel costs such as salaries and incentive compensation and consulting expenses. Additionally, there was an increase to share-based compensation expense of $0.4 million and depreciation expense of $0.5 million related to capital expenditures for software.period.

Sales and Marketing


	Successor			Predecessor
	Three Months Ended			Three Months Ended								Three Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change			2022			2021			$ Change		% Change
Sales and marketing	$	18,101		$	12,973		$	5,128		40	%	$	20,448		$	18,101		$	2,347		13	%
Percentage of revenue		13	%		15	%							12	%		13	%

Sales and marketing expenses were ~~$18.1~~$20.4 million for the three months ended November 30, ~~2021,~~2022, a ~~$5.1~~$2.3 million, or ~~40%~~13%, increase compared to ~~$13.0~~$18.1 million in the prior year. The increase was primarily driven by a $1.8 million increase in digital and social marketing related to the ~~BluJay Acquisition in fiscal 2022 as well as additional expenses associated with creating a~~launch of our new ~~logo sales team~~website, company store and ~~additional marketing resources. Furthermore, share-based compensation increased by $0.5 million and travel and entertainment expenses increased by $0.3 million.~~

new brand.

General and Administrative


	Successor			Predecessor
	Three Months Ended			Three Months Ended						Three Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change	2022			2021			$ Change		% Change
General and administrative	$	22,871		$	10,412		$	12,459	nm	$	23,073		$	22,871		$	202		1	%
Percentage of revenue		17	%		12	%					14	%		17	%

General and administrative expenses were ~~$22.9~~$23.1 million for the three months ended November 30, ~~2021, an $12.5~~2022, a $0.2 million increase compared to ~~$10.4~~$22.9 million in the prior year. ~~The~~During the third quarter of fiscal 2023, we incurred a $1.8 million impairment on our operating lease ROU assets and leasehold improvements due to vacating locations with the intent to sublease them. This increase was ~~primarily attributable~~partially offset by a $1.5 million decrease in personnel costs such as salaries and incentive compensation compared to the prior year period and $1.1 million decrease due to the BluJay ~~acquisition and costs related to us becoming a public company that were not incurred~~Acquisition in ~~the prior year.~~September 2021.

Other Operating Expenses


	Successor		Predecessor
	Three Months Ended		Three Months Ended					Three Months Ended November 30,
($ in thousands)	November 30, 2021		November 30, 2020		$ Change		% Change	2022		2021		$ Change			% Change
Acquisition and other related expenses	$	33,216	$	5,968	$	27,248	nm	$	1,969	$	33,216	$	(31,247	)		-94	%
Amortization of acquired intangible assets		19,470		8,451		11,019	nm		19,965		19,470		495			3	%
Total other operating expenses	$	52,686	$	14,419	$	38,267	nm	$	21,934	$	52,686	$	(30,752	)		-58	%

Acquisition and other related expenses were $2.0 million for the three months ended November 30, 2022, a $31.2 million decrease compared to $33.2 million for the three months ended November 30, ~~2021, a $27.2 million increase compared to $6.0 million for the three months ended November 30, 2020.~~2021. The ~~increase~~decrease was mainly related to legal and consulting expenses associated with the BluJay Acquisition in fiscal 2022.

Amortization of acquired intangible assets were $20.0 million for the three months ended November 30, 2022, a $0.5 million, or 3%, increase, compared to $19.5 million for the three months ended November 30, ~~2021, an $11.0 million~~2021. The increase ~~compared~~was due to ~~$8.5~~the Logistyx Acquisition in March 2022.

Goodwill Impairment

We did not incur a goodwill impairment charge during the third quarter of fiscal 2023 or 2022.

Interest and Other Expense, Net


	Three Months Ended November 30,
($ in thousands)	2022			2021			$ Change			% Change
Interest and other expense, net	$	(21,270	)	$	(10,769	)	$	(10,501	)		98	%

Interest and other expense, net was $21.3 million for the three months ended November 30, ~~2020.~~2022, a $10.5 million increase compared to $10.8 million in the prior year. The increase was ~~a result of~~primarily driven by the additional term loans used for the BluJay Acquisition in September 2021 ~~partially offset by the revaluation~~ and ~~change~~Logistyx Acquisition in ~~the composition of the intangible assets associated with the Business Combination in February 2021.~~

~~Interest and Other Expense, Net~~

Successor

Predecessor

Three Months Ended

Three Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

$ Change

% Change

Interest and other expense, net

$
(10,769
)

$
(17,575
)

$
6,806

-39
%

Interest and other expense, net was $10.8 million for the three months ended November 30, 2021, an $6.8 million, or 39%, decrease compared to $17.6 million in the prior year. The decrease was primarily driven by the reduction in outstanding debt,March 2022, as well as ~~the associated~~higher interest ~~rate on the debt refinanced~~rates in ~~the Business Combination in February 2021.~~fiscal 2023.

Gain (Loss) from Change in Tax Receivable Agreement


	Three Months Ended November 30,
($ in thousands)	2022		2021			$ Change		% Change
Gain (loss) from change in tax receivable agreement liability	$	2,697	$	(1,470	)	$	4,167	nm

During the three months ended November 30, ~~2021,~~2022, we recorded a ~~$1.5~~gain of $2.7 million ~~expense~~ related to the change in the fair value of the tax receivable agreement liability, including ~~interest.~~interest, compared to a $1.5 million expense during the three months ended November 30, 2021. Pursuant to ASC 805, Business Combination and relevant tax law, we 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 event occurred. ~~We did not have a tax receivable agreement prior to the Business Combination.~~

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. ~~The increase in~~During the three months ended November 30, 2022 and 2021, the Tax Receivable Agreement liability under ASC 450 ~~for the three months ended November 30, 2021 was~~increased by $0.4 million and $3.1 ~~million.~~million, respectively.

~~Loss~~Gain (Loss) from Change in Fair Value of Warrant Liability


	Three Months Ended November 30,
($ in thousands)	2022		2021			$ Change		% Change
Gain (loss) from change in fair value of warrant liability	$	16,150	$	(7,232	)	$	23,382	nm

We recorded a ~~loss~~gain of ~~$7.2~~$16.2 million during the three months ended November 30, ~~2021~~2022, a $23.4 million increase compared to a loss of $7.2 million in the prior year for the change in fair value on the revaluation of our warrant liability associated with our public, private placement and forward purchase 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. ~~We did not have outstanding warrants prior to the Business Combination.~~

~~Loss~~Gain (Loss) from Change in Fair Value of Contingent Consideration


	Three Months Ended November 30,
($ in thousands)	2022		2021			$ Change		% Change
Gain (loss) from change in fair value of contingent consideration	$	6,300	$	(1,140	)	$	7,440	nm

We recorded a ~~loss~~gain of ~~$1.1~~$6.3 million during the three months ended November 30, ~~2021~~2022, a $7.4 million increase compared to a loss of $1.1 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.~~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. ~~We did not have restricted Series B-2 common stock prior to the Business Combination.~~

Provision for Income Taxes


	Successor			Predecessor
	Three Months Ended			Three Months Ended							Three Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change			% Change	2022			2021			$ Change			% Change
Loss before income taxes	$	(75,053	)	$	(17,382	)	$	(57,671	)	nm	$	(2,374	)	$	(75,053	)	$	72,679			-97	%
Income tax benefit (expense)		10,764			(9,685	)		20,449		nm
Income tax benefit												7,877			10,764			(2,887	)		-27	%

Loss before income taxes was $2.4 million for the three months ended November 30, 2022, a $72.7 million decrease compared to $75.1 million for the three months ended November 30, ~~2021, a $57.7 million increase compared to $17.4 million for~~2021. The decrease in the ~~three months ended November 30, 2020. This increase is~~loss was primarily related to a $19.9 million higher gross profit due to the ~~$27.2 million acquisition related expenses for the BluJay~~Logistyx Acquisition ~~an $11.0 million increase~~and a decrease in the amortization of the intangible assets, a loss of $7.2 million for the fair value adjustments for the warrant liability, a loss of $1.1 million associated with the fair value adjustments for the contingent consideration liability related to the restricted Series B-2 common stock along with the $10.4 million amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business ~~Combination.~~Combination as well as a $31.2 million reduction in acquisition and other related expenses due to the BluJay Acquisition in September 2021. Additionally, there was a $23.4 million increase in the gain associated with the change in the fair value of the warrant liability and a $7.4 million increase in the gain associated with the fair value adjustments for the fair contingent consideration liability related to the restricted Series B-2 common stock and Series 2 RCUs when compared to the prior year. These ~~expenses~~gains were partially offset by ~~$6.8~~$10.5 million of ~~lower~~higher interest ~~expense in the third quarter of fiscal 2022 compared to the same period of the prior year.~~expense.

Income tax benefit was ~~$10.8~~$7.9 million, or 331.8%, for the three months ended November 30, ~~2021~~2022 compared to ~~a $9.7~~$10.8 million, ~~expense~~or 14.3%, for the three months ended November 30, ~~2020.~~2021. The change in our effective tax rate between periods was ~~primarily~~ due to ~~an increase in loss from continuing operations included~~changes in the ~~tax provision~~impact of book income and losses of affiliates on the carrying amount of our partnership investment, year-over-year changes in book losses in certain jurisdictions for which no benefit can be recognized and changes in the mark-to-market gains and losses on certain contingent liabilities. For the three months ended November 30, 2021, that s previously attributable to affiliates as of November 30, 2020. This benefit was partially offset by nondeductible mark-to-market losses associated with contingent liabilities and certain equity consideration liabilities and changes in ~~certain jurisdictions within which we operate as well as the impact to fiscal 2022 of losses attributable to our noncontrolling interest in our affiliate. In~~ accordance with ASC 740-20-45-11, we accounted for the tax effect of the step-up in income tax basis related to transactions with or among shareholders and recognized a deferred tax asset and corresponding increase in stockholders' equity of $36.8 million.

Nine Months Ended November 30, ~~2021~~2022 compared to Nine Months Ended November 30, ~~2020~~2021

Revenue


	Successor			Predecessor
	Nine Months Ended			Nine Months Ended								Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change			2022			2021			$ Change		% Change
Revenue:
Subscriptions	$	219,728		$	209,013		$	10,715		5	%	$	396,052		$	219,728		$	176,324		80	%
Professional services		61,680			40,009			21,671		54	%
Professional services and other													89,898			61,680			28,218		46	%
Total revenue	$	281,408		$	249,022		$	32,386		13	%	$	485,950		$	281,408		$	204,542		73	%
Percentage of revenue:
Subscriptions		78	%		84	%							82	%		78	%
Professional services		22	%		16	%
Professional services and other													18	%		22	%
Total		100	%		100	%							100	%		100	%

3842

Subscriptions revenue was $396.1 million for the nine months ended November 30, 2022, a $176.3 million, or 80%, increase compared to subscriptions revenue of $219.7 million for the nine months ended November 30, ~~2021, a $10.7 million, or 5%, increase compared to subscriptions revenue of $209.0 million for the nine months ended November 30, 2020.~~2021. The increase in subscriptions revenue was primarily due to the BluJay Acquisition, ~~in fiscal 2022~~Logistyx Acquisition and new organic subscription sales predominantly driven by increases in products utilized across our current ~~customer~~client portfolio, ~~partially offset by~~as well as the $47.1 million amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business ~~Combination.~~Combination in the first nine months of fiscal 2022. With the early adoption of ASU 2021-08, a fair value adjustment to deferred revenue for the BluJay ~~Acquisition~~and Logistyx acquisitions was not recorded; therefore, amortization of the fair value adjustment to deferred revenue similar to the Business Combination adjustment ~~will~~did not occur for the BluJay ~~Acquisition.~~and Logistyx acquisitions.

Professional services and other revenue was $89.9 million for the nine months ended November 30, 2022, a $28.2 million, or 46%, increase compared to $61.7 million for the nine months ended November 30, ~~2021, a $21.7 million, or 54%, increase compared to $40.0 million for the nine months ended November 30, 2020.~~2021. The increase was primarily related to the BluJay Acquisition ~~new subscription sale~~ and ~~customers delaying projects in fiscal year 2021 due to the COVID-19 pandemic resulting in favorable growth year over year.~~Logistyx Acquisition.

Our subscriptions revenue as a percentage of total revenue ~~decreased~~increased to 82% for the first nine months of fiscal 2023 compared to 78% for the first nine months of fiscal ~~year~~2022. The first nine months of fiscal 2022 ~~compared~~included $47.1 million amortization related to ~~84% for fiscal 2021 driven primarily by the BluJay Acquisition and the amortizing~~ the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination, ~~in addition to the increase in professional services revenue.~~reducing subscription revenue as a percentage of total revenue for that period.

Cost of Revenue, Gross Profit and Gross Margin


	Successor			Predecessor
	Nine Months Ended			Nine Months Ended									Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change			% Change			2022			2021			$ Change		% Change
Cost of revenue:
Subscriptions	$	62,917		$	44,566		$	18,351			41	%	$	105,367		$	62,917		$	42,450		67	%
Professional services		38,694			32,791			5,903			18	%
Professional services and other														63,446			38,694			24,752		64	%
Amortization of acquired intangible assets		48,885			15,453			33,432		nm				73,869			48,885			24,984		51	%
Total cost of revenue	$	150,496		$	92,810		$	57,686			62	%	$	242,682		$	150,496		$	92,186		61	%

Gross profit:
Subscriptions	$	107,927		$	148,995		$	(41,068	)		-28	%	$	216,816		$	107,927		$	108,889	nm
Professional services		22,985			7,217			15,768		nm
Professional services and other														26,452			22,985			3,467		15	%
Total gross profit	$	130,912		$	156,212		$	(25,300	)		-16	%	$	243,268		$	130,912		$	112,356		86	%

Gross margin:
Subscriptions		49	%		71	%								55	%		49	%
Professional services		37	%		18	%
Professional services and other														29	%		37	%
Total gross margin		47	%		63	%								50	%		47	%

Cost of subscriptions was $105.4 million for the nine months ended November 30, 2022, a $42.5 million, or 67%, increase compared to $62.9 million for the nine months ended November 30, ~~2021, a $18.4~~2021. This increase was primarily driven by $28.3 million ~~or 41%,~~related to the BluJay and Logistyx acquisitions and an increase ~~compared~~in personnel costs for items such as salaries and incentive compensation. Additionally, there was an increase of $13.9 million for software and hosting costs. Most of this increase related to ~~$44.6~~the BluJay and Logistyx acquisitions.

Cost of professional services and other revenue was $63.4 million for the nine months ended November 30, ~~2020. The BluJay Acquisition and increased personnel costs for salaries and incentive compensation accounted for $14.6~~2022, a $24.8 million, ~~of this increase. Additionally, depreciation expense increased by $2.9 million related~~or 64%, increase compared to ~~capital expenditures for the expansion of our data centers.~~

~~Cost of professional services revenue was~~ $38.7 million for the nine months ended November 30, ~~2021, a $5.9~~2021. The BluJay Acquisition in fiscal 2022, Logistyx Acquisition in fiscal 2023, increased personnel costs such as salaries and incentive compensation, our investment in strategic system integrator partnership initiatives and increased travel accounted for $24.1 million ~~or 18%,~~of the increase ~~compared to $32.8~~in the cost of professional services and other revenue.

Amortization of acquired intangible assets was $73.9 million for the nine months ended November 30, ~~2020. The BluJay Acquisition in fiscal year~~ 2022, ~~and an~~a $25.0 million, or 51%, increase ~~in personnel costs for salaries and incentive compensation accounted for $5.5 million of this increase. There was also an additional $0.2 million in increased consulting services.~~

~~Amortization of acquired intangible assets was~~compared to $48.9 million for the nine months ended November 30, 2021, ~~a $33.4 million increase compared to $15.5 million for the nine months ended November 30, 2020,~~ driven ~~primarily~~ by the BluJay Acquisition in September 2021 and ~~revaluation and change~~Logistyx Acquisition in ~~the composition of the intangible assets as part of the Business Combination in February 2021.~~March 2022.

Our subscriptions gross margin was 55% for the first nine months of fiscal 2023 as compared to 49% for the first nine months of fiscal 2022 ~~as compared to 71% for fiscal 2021 mainly~~primarily due to ~~the BluJay Acquisition and~~ the amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business ~~Combination.~~Combination offset by the additional revenue from the BluJay and Logistyx acquisitions in fiscal 2023. With the early adoption of ASU 2021-08, the BluJay and Logistyx deferred revenue was recorded under ASC 606 and not at fair value at the acquisition date; therefore, amortization of the fair value adjustment to deferred revenue similar to the Business Combination adjustment ~~will~~did not occur for the BluJay ~~Acquisition.~~or Logistyx acquisitions.

3943

Our professional services gross margin ~~increased~~was down to 29% for the first nine months of fiscal 2023 compared to 37% for the first nine months of fiscal 2022 ~~from 18% in the first nine months of fiscal 2021,~~ primarily due to ~~the BluJay Acquisition, new subscription sales and customers delaying projects~~our investment in ~~fiscal year 2021 due to the COVID-19 pandemic, which resulted in favorable year-over-year growth.~~strategic system integrator partnership initiatives.

Research and Development


	Successor			Predecessor
	Nine Months Ended			Nine Months Ended								Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change			2022			2021			$ Change		% Change
Research and development	$	56,909		$	43,212		$	13,697		32	%	$	73,088		$	56,909		$	16,179		28	%
Percentage of revenue		20	%		17	%							15	%		20	%

Research and development expenses were ~~$56.9~~$73.1 million for the nine months ended November 30, ~~2021,~~2022, a ~~$13.7~~$16.2 million, or ~~32%~~28%, increase compared to ~~$43.2~~$56.9 million in the prior year. The increase was primarily due to $13.6 million related to the BluJay ~~Acquisition in fiscal year 2022~~ and Logistyx acquisitions as well as major strategic partnership initiatives around product development efforts during fiscal year 2023, which resulted in net increased personnel costs ~~for~~such as salaries and incentive compensation and consulting expenses as compared to the prior year period. Additionally, there was an increase of ~~$11.3 million. Additionally, share-based compensation expense of $0.8~~$1.0 million ~~and depreciation expense of $1.7 million related to capital expenditures~~ for software ~~contributed to the increase.~~and hosting costs.

Sales and Marketing


	Successor			Predecessor
	Nine Months Ended			Nine Months Ended								Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change			2022			2021			$ Change		% Change
Sales and marketing	$	41,789		$	37,275		$	4,514		12	%	$	67,348		$	41,789		$	25,559		61	%
Percentage of revenue		15	%		15	%							14	%		15	%

Sales and marketing expenses were ~~$41.8~~$67.3 million for the nine months ended November 30, ~~2021,~~2022, a ~~$4.5~~$25.6 million, or ~~12%~~61%, increase compared to ~~$37.3~~$41.8 million in the prior year. The increase was primarily driven by a $21.8 million increase due to the BluJay Acquisition in fiscal 2022 and Logistyx Acquisition in fiscal 2023 as well as additional expenses associated with our new corporate branding, digital and social marketing related to the launch of our new brand and website, company store and integrated marketing experience as well as hiring additional marketing resources. Additionally, there was an increase of $1.6 million for travel and entertainment and $1.1 million in share-based compensation.

General and Administrative


	Nine Months Ended November 30,
($ in thousands)	2022			2021			$ Change		% Change
General and administrative	$	66,774		$	49,989		$	16,785		34	%
Percentage of revenue		14	%		18	%

General and administrative expenses were $66.8 million for the nine months ended November 30, 2022, a $16.8 million, or 34%, increase compared to $50.0 million in the prior year. The increase was primarily attributable to $8.4 million related to the BluJay and Logistyx acquisitions. Additionally, there was an increase of $2.7 million for share-based compensation. During fiscal 2023, we incurred a $4.1 million impairment on our operating lease ROU assets and leasehold improvements due to vacating locations with the intent to sublease them.

Other Operating Expenses


	Nine Months Ended November 30,
($ in thousands)	2022		2021		$ Change			% Change
Acquisition and other related expenses	$	14,313	$	50,168	$	(35,855	)		-71	%
Amortization of acquired intangible assets		62,523		26,843		35,680		nm
Total other operating expenses	$	76,836	$	77,011	$	(175	)		0	%

Acquisition and other related expenses were $14.3 million for the nine months ended November 30, 2022, a $35.9 million, or 71%, decrease compared to $50.2 million for the nine months ended November 30, 2021. The decrease was mainly related to legal and consulting expenses associated with the Logistyx Acquisition in fiscal 2023 and BluJay Acquisition in fiscal 2022.

Amortization of acquired intangible assets was $62.5 million for the nine months ended November 30, 2022, a $35.7 million increase, compared to $26.8 million for the nine months ended November 30, 2021. The increase was a result of the BluJay Acquisition in September 2021 and Logistyx Acquisition in March 2022.

Goodwill Impairment

As indicated above, the market price of our Class A Common Stock and market capitalization declined significantly during the second quarter of fiscal 2023. This decline resulted in us determining that a triggering event occurred and an interim goodwill impairment assessment was performed. The result of the impairment assessment was the realization of a $514.8 million impairment charge. We did not have an impairment charge in the prior year.

Interest and Other Expense, Net


	Nine Months Ended November 30,
($ in thousands)	2022			2021			$ Change			% Change
Interest and other expense, net	$	(54,732	)	$	(22,004	)	$	(32,728	)	nm

Interest and other expense, net was $54.7 million for the nine months ended November 30, 2022, a $32.7million increase compared to $22.0 million in the prior year. The increase was primarily driven by the additional term loans used for the BluJay Acquisition in ~~fiscal~~September 2021 and Logistyx Acquisition in March 2022, and the investment in our new logo sales and marketing resources resulting in additional expenses of $5.4 million. Additionally, share-based compensation increased by $0.9 million. These were offset by a reduction in commissions expenses associated with the revaluation of prepaid commissions as a result of the Business Combination in February 2021.

~~General and Administrative~~

Successor

Predecessor

Nine Months Ended

Nine Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

$ Change

% Change

General and administrative

$
49,989

$
30,037

$
19,952

66
%
Percentage of revenue

18
%

12
%

General and administrative expenses were $50.0 million for the nine months ended November 30, 2021, a $20.0 million, or 66%, increase compared to $30.0 million in the prior year. The increase was primarily attributable to the BluJay acquisition and costs related to us becoming a public company that were not incurred in the prior year.

~~Other Operating Expenses~~

Successor

Predecessor

Nine Months Ended

Nine Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

$ Change

% Change

Acquisition and other related expenses

$
50,168

$
11,354

$
38,814

nm

Amortization of acquired intangible assets

26,843

25,365

1,478

6
%
Total other operating expenses

$
77,011

$
36,719

$
40,292

nm

Acquisition and other related expenses were $50.2 million for the nine months ended November 30, 2021, a $38.8 million increase compared to $11.4 million for the nine months ended November 30, 2020. The increase was mainly related to legal and consulting expenses associated with the acquisition of BluJay in fiscal 2022.

~~Amortization of acquired intangible assets was $26.8~~million for the nine months ended November 30, 2021, a $1.5 million, or 6%, increase, compared to $25.4 million for the nine months ended November 30, 2020. The increase was a result of the BluJay Acquisition and the revaluation and change in the composition of the intangible assets associated with the Business Combination in February 2021.

~~Interest and Other Expense, Net~~

Successor

Predecessor

Nine Months Ended

Nine Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

$ Change

% Change

Interest and other expense, net

$
(22,004
)

$
(53,255
)

$
31,251

-59
%

Interest and other expense, net was $22.0 million for the nine months ended November 30, 2021, a $31.3 million, or 59%, decrease compared to $53.3 million in the prior year. The decrease was primarily driven by the reduction in outstanding debt, as well as ~~the associated~~higher interest ~~rate on the debt refinanced~~rates in ~~the Business Combination in February 2021.~~fiscal 2023.

Gain (Loss) from Change in Tax Receivable Agreement


	Nine Months Ended November 30,
($ in thousands)	2022		2021			$ Change		% Change
Gain (loss) from change in tax receivable agreement liability	$	9,089	$	(4,606	)	$	13,695	nm

During the nine months ended November 30, ~~2021,~~2022, we recorded a ~~$4.6~~gain of $9.1 million ~~expense~~ related to the change in the fair value of the tax receivable agreement liability, ~~under~~including interest, compared to a $4.6 million expense during the nine months ended November 30, 2021. Pursuant to ASC 805, ~~including interest. We have~~Business Combination and relevant tax law, we 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 event occurred. ~~We did not have a tax receivable agreement prior to the Business Combination.~~

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. ~~The increase in~~During the nine months ended November 30, 2022 and 2021, the Tax Receivable Agreement liability under ASC 450 ~~for the nine months ended November 30, 2021 was~~increased by $0.7 million and $13.2 ~~million.~~million, respectively.

~~Loss~~Gain (Loss) from Change in Fair Value of Warrant Liability


	Nine Months Ended November 30,
($ in thousands)	2022		2021			$ Change		% Change
Gain (loss) from change in fair value of warrant liability	$	36,764	$	(48,448	)	$	85,212	nm

We recorded a ~~loss~~gain of ~~$48.4~~$36.8 million during the nine months ended November 30, ~~2021~~2022, a $85.2 million increase compared to a loss of $48.4 million in the prior year for the change in fair value on the revaluation of our warrant liability associated with our public, private placement and forward purchase 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. ~~We did not have outstanding warrants prior to the Business Combination.~~

~~Loss~~Gain (Loss) from Change in Fair Value of Contingent Consideration


	Nine Months Ended November 30,
($ in thousands)	2022		2021			$ Change		% Change
Gain (loss) from change in fair value of contingent consideration	$	17,760	$	(91,180	)	$	108,940	nm

We recorded a ~~loss~~gain of ~~$91.2~~$17.8 million during the nine months ended November 30, ~~2021~~2022, a $108.9 million increase compared to a loss of $91.2 million in the prior year for the change in fair value on the revaluation of our contingent consideration associated with our restricted ~~Series B-1 and~~ B-2 common stock and ~~Sponsor Side Letter.~~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. ~~The Series B-1 common stock converted into Class A Common Stock on June 8, 2021. We did not have restricted Series B-1 and B-2 common stock prior to the Business Combination.~~

Provision for Income Taxes


	Successor			Predecessor
	Nine Months Ended			Nine Months Ended							Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change			% Change	2022			2021			$ Change			% Change
Loss before income taxes	$	(261,024	)	$	(44,286	)	$	(216,738	)	nm	$	(546,713	)	$	(261,024	)	$	(285,689	)	nm
Income tax benefit (expense)		3,392			(24,073	)		27,465		nm
Income tax benefit												130,010			3,392			126,618		nm

Loss before income taxes was $546.7 million for the nine months ended November 30, 2022, a $285.7 million increase compared to $261.0 million for the nine months ended November 30, ~~2021, a $216.7 million increase compared to $44.3 million for the nine months ended November 30, 2020.~~2021. This increase isin the loss was primarily related to the ~~$33.7~~$514.8 million ~~acquisition~~impairment on goodwill taken in the second quarter of fiscal 2023. The remaining increase was related to $58.3 million of higher operating expenses, ~~for~~$32.7 million of higher interest expense and a $35.7 million increase in the amortization of the intangible assets when compared to the prior year. These expenses were partially offset by a $112.4 million higher gross profit due to the BluJay ~~Acquisition, a loss of $48.4 million for the fair value adjustments for the warrant liability~~ and ~~$91.2 million associated with the fair value adjustments for the contingent consideration liability related to the Sponsor Side Letter and restricted Series B-1 and B-2 common stock~~Logistyx acquisitions along with a decrease in the ~~$47.1 million~~ amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business ~~Combination. These expenses were partially offset by $31.3~~Combination of $47.1 million. Additionally, there was a $85.2 million ~~of lower interest expense~~gain on the change in ~~fiscal 2022~~the fair value adjustments for the warrant liability and a $108.9 million gain associated with the fair value adjustments for the contingent consideration liability related to the restricted Series B-2 common stock and Series 2 RCUs when compared to ~~fiscal 2021.~~the prior year.

Income tax benefit was ~~$3.4~~$130.0 million, or 23.8%, for the nine months ended November 30, ~~2021~~2022 compared to ~~expense of $24.1~~$3.4 million, or 1.3%, for the nine months ended November 30, ~~2020.~~2021. The change in our effective tax rate between periods was primarily due to ~~an increase~~the reduction in ~~loss from continuing operations included~~our deferred tax liability as a result of the goodwill impairment, year-over-year changes in book losses in certain jurisdictions for which no benefit can be recognized, changes in the ~~tax provision for November 30, 2021 that was previously attributable to~~impact of book income and losses of affiliates ason the carrying amount of ~~November 30, 2020. This benefit was partially offset by nondeductible mark-to-market losses associated with contingent liabilities and certain equity consideration liabilities~~our partnership investment, and changes in ~~valuation allowances in~~the mark-to-market gains and losses on certain jurisdictions within which we operate as well as the impact to fiscal 2022 of losses attributable to our noncontrolling interest in our affiliate. In accordance with ASC 740-20-45-11, we accounted for the tax effect of the step-up in income tax basis related to transactions with or among shareholders and recognized a deferred tax asset and corresponding increase in stockholders' equity of $36.8 million.contingent liabilities.

Non-GAAP Financial Measures

~~We have included below~~This document includes Non-GAAP revenue, Non-GAAP subscriptions revenue, 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 revenue and Non-GAAP subscriptions revenue as revenue excluding ~~amortization~~the impact of the deferred revenue fair value adjustment related to the purchase price allocation in the Business Combination. We calculate and define Non-GAAP gross profit as gross profit excluding amortization of the deferred revenue fair value adjustment, 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: amortization of the deferred revenue fair value adjustment, goodwill impairment charge, right-of-use assets charge, transaction-related costs, ~~changes~~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, goodwill impairment charge, right-of-use assets charge and amortization of the deferred revenue fair value adjustment), non-cash (for example, in the case of depreciation, amortization, ~~changes~~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 amortization of the deferred revenue fair value adjustment) 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 revenue reconciled to our reported revenue, the closest U.S. GAAP measure, for the periods indicated:


	Successor		Predecessor		Successor		Predecessor
	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended		Three Months Ended November 30,				Nine Months Ended November 30,
($ in thousands)	November 30, 2021		November 30, 2020		November 30, 2021		November 30, 2020		2022		2021		2022		2021
Subscriptions revenue	$	106,969	$	70,374	$	219,728	$	209,013	$	134,884	$	106,969	$	396,052	$	219,728
Business Combination adjustment (1)		10,394		—		47,099		—		—		10,394		—		47,099
Non-GAAP subscriptions revenue		117,363		70,374		266,827		209,013		134,884		117,363		396,052		266,827
Professional services revenue		30,033		13,707		61,680		40,009
Professional services and other revenue										30,009		30,033		89,898		61,680
Non-GAAP revenue	$	147,396	$	84,081	$	328,507	$	249,022	$	164,893	$	147,396	$	485,950	$	328,507

(1)

~~Amortization~~Includes the amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination. As of February 28, 2022, the remaining balance of the deferred revenue purchase price adjustment was $0.5 million which results in an immaterial quarterly amortized amount reported in the Unaudited Condensed Consolidated Statements of Operations; therefore, an amount will not be presented for fiscal 2023.

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:


	Successor			Predecessor			Successor			Predecessor
	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended			Three Months Ended November 30,						Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			November 30, 2021			November 30, 2020			2022			2021			2022			2021
Gross profit
Reported gross profit	$	64,216		$	52,222		$	130,912		$	156,212		$	84,143		$	64,216		$	243,268		$	130,912
Business Combination adjustment (1)		10,394			—			47,099			—			—			10,394			—			47,099
Depreciation and amortization		27,771			6,994			56,823			20,373			28,388			27,771			85,447			56,823
Non-recurring/non-operating costs (2)		506			263			1,090			467			513			506			2,115			1,090
Share-based and unit-based compensation (3)		482			239			1,012			525
Share-based compensation (3)														542			482			862			1,012
Non-GAAP gross profit	$	103,369		$	59,718		$	236,936		$	177,577		$	113,586		$	103,369		$	331,692		$	236,936
Gross margin		46.9	%		62.1	%		46.5	%		62.7	%		51.0	%		46.9	%		50.1	%		46.5	%
Non-GAAP gross margin		70.1	%		71.0	%		72.1	%		71.3	%		68.9	%		70.1	%		68.3	%		72.1	%

(1)

~~Amortization of~~Includes the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination. As of February 28, 2022, the remaining balance of the deferred revenue purchase price adjustment was $0.5 million which results in an immaterial quarterly amortized amount reported in the Unaudited Condensed Consolidated Statements of Operations; therefore, an amount will not be presented for fiscal 2023.

(2)

Primarily includes ~~foreign currency exchange gain and losses and~~ other non-recurring expenses such as systems integrations ~~legal entity simplification,~~and consulting and advisory ~~fees and expenses related to retention of key employees from acquisitions.~~fees.

(3)

Reflects non-cash, long-term share-based ~~and unit-based~~ compensation expense, primarily related to senior management.

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


	Successor			Predecessor			Successor			Predecessor
	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended			Three Months Ended November 30,						Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			November 30, 2021			November 30, 2020			2022			2021			2022			2021
Net loss	$	(64,289	)	$	(27,067	)	$	(257,632	)	$	(68,359	)
Net income (loss)													$	5,503		$	(64,289	)	$	(416,703	)	$	(257,632	)
Adjustments:
Interest expense, net		9,981			16,974			22,161			52,999			19,509			9,981			52,411			22,161
Income tax expense		(10,764	)		9,685			(3,392	)		24,073
Income tax benefit														(7,877	)		(10,764	)		(130,010	)		(3,392	)
Depreciation and amortization		50,496			17,310			91,496			51,176			52,451			50,496			159,831			91,496
EBITDA		(14,576	)		16,902			(147,367	)		59,889			69,586			(14,576	)		(334,471	)		(147,367	)
EBITDA Margin		-10.6	%		20.1	%		-52.4	%		24.0	%		42.2	%		-10.6	%		-68.8	%		-52.4	%
Business Combination adjustment (1)		10,394			—			47,099			—			—			10,394			—			47,099
Acquisition-related adjustments (2)		33,216			5,968			50,168			11,354
Change in tax receivable agreement liability (3)		1,470			—			4,606			—
Loss from change in fair value of warrant liability (4)		7,232			—			48,448			—
Loss from change in fair value of contingent consideration (5)		1,140			—			91,180			—
Non-recurring/non-operating costs (6)		2,987			2,982			5,486			3,401
Share-based and unit-based compensation (7)		4,027			2,403			8,961			6,724
Goodwill impairment charge (2)														—			—			514,816			—
Right-of-use assets impairment charge (3)														1,761			—			4,137			—
Acquisition-related adjustments (4)														1,969			33,216			14,313			50,168
Gain (loss) from change in tax receivable agreement liability (5)														(2,697	)		1,470			(9,089	)		4,606
(Gain) loss from change in fair value of warrant liability (6)														(16,150	)		7,232			(36,764	)		48,448
(Gain) loss from change in fair value of contingent consideration (7)														(6,300	)		1,140			(17,760	)		91,180
Non-recurring/non-operating costs (8)														3,189			2,987			7,563			5,486
Share-based compensation (9)														4,797			4,027			13,157			8,961
Adjusted EBITDA	$	45,890		$	28,255		$	108,581		$	81,368		$	56,155		$	45,890		$	155,902		$	108,581
Adjusted EBITDA Margin		31.1	%		33.6	%		33.1	%		32.7	%		34.1	%		31.1	%		32.1	%		33.1	%

(1)

(2)

Represents the goodwill impairment taken in the second quarter of fiscal 2023.

(3)

Represents the impairment on 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 mergers and acquisitions activities including ~~related valuation, negotiation and integration costs and capital-raising activities, including~~ costs related to the ~~acquisition of Amber Road, Inc., the~~ Business Combination, BluJay Acquisition and ~~the BluJay~~Logistyx Acquisition.

~~(3)~~(5)

Represents the ~~expense related to the change in the~~ fair value ofadjustment at each balance sheet date for the ~~tax receivable agreement liability, including~~Tax Receivable Agreement along with the associated interest.

~~(4)~~(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.

~~(5)~~(7)

Represents the fair value adjustment at each balance sheet date of the contingent consideration liability related to the restricted Series B-1 and B-2 common stock, ~~and~~ Sponsor Side ~~Letter.~~Letter and Series 1 and 2 RCUs. The Series B-1 common stock, Sponsor Side Letter and Series 1 RCUs were automatically converted into our Class A Common Stock on a one-to-one basis as of June 8, 2021.

~~(6)~~(8)

Primarily includes ~~foreign currency exchange gain and losses and other~~ non-recurring expenses such as systems integrations, legal entity ~~simplification~~rationalization and consulting and advisory fees. In addition, the fiscal 2023 includes $0.8 million for executive severance.

~~(7)~~(9)

Reflects non-cash, long-term share-based ~~and unit-based~~ compensation expense, primarily related to senior management. For the three months ended November 30, 2022 and 2021, share-based compensation included less than $0.1 million expense attributable to certain unit-based awards in connection with the Amber Road, Inc. acquisition in 2019. For the nine months ended November 30, 2022 and 2021, share-based compensation included less than $0.1 million and $0.4 million expense, respectively, attributable to certain unit-based awards in connection with the Amber Road, Inc. acquisition

Three Months Ended November 30, ~~2021~~2022 compared to Three Months Ended November 30, ~~2020~~2021

Non-GAAP Subscriptions Revenue


	Successor		Predecessor
	Three Months Ended		Three Months Ended							Three Months Ended November 30,
($ in thousands)	November 30, 2021		November 30, 2020		$ Change		% Change			2022			2021			$ Change		% Change
Non-GAAP subscriptions revenue	$	117,363	$	70,374	$	46,989		67	%	$	134,884		$	117,363		$	17,521		15	%
Percentage of Non-GAAP revenue											82	%		80	%

Non-GAAP subscriptions revenue was $134.9 million for the three months ended November 30, 2022, a $17.5 million, or 15%, increase compared to $117.4 million for the three months ended November 30, ~~2021, a $47.0 million, or 67%, increase compared to $70.4 million for the three months ended November 30, 2020.~~2021. The increase in Non-GAAP subscriptions revenue relates to the ~~BluJay~~Logistyx Acquisition and new organic subscription sales predominately driven by increases in products utilized across our ~~customer portfolio alongside strategic partnership initiatives.~~

client portfolio.

Non-GAAP Revenue


	Successor		Predecessor
	Three Months Ended		Three Months Ended							Three Months Ended November 30,
($ in thousands)	November 30, 2021		November 30, 2020		$ Change		% Change			2022		2021		$ Change		% Change
Non-GAAP revenue	$	147,396	$	84,081	$	63,315		75	%	$	164,893	$	147,396	$	17,497		12	%

Non-GAAP revenue was $164.9 million for the three months ended November 30, 2022, a $17.5 million, or 12%, increase compared to $147.4 million for the three months ended November 30, ~~2021, a $63.3 million, or 75%, increase compared to $84.1 million for the three months ended November 30, 2020.~~2021. The increase in Non-GAAP revenue was mainly due to ~~the $47.0 million~~an increase in our subscriptions revenue related to the ~~BluJay~~Logistyx Acquisition and new organic sales driven by increases in products utilized across our current ~~customer~~client portfolio. Additionally, $16.3 million of the increase was due to an increase in our professional services revenue primarily related to the BluJay Acquisition, new subscription sales and customers delaying projects in fiscal year 2021 due to the COVID-19 pandemic, which resulted in favorable year-over-year growth.

Gross Profit


	Successor			Predecessor
	Three Months Ended			Three Months Ended								Three Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change			2022			2021			$ Change		% Change
Gross profit	$	64,216		$	52,222		$	11,994		23	%	$	84,143		$	64,216		$	19,927		31	%
Gross margin		46.9	%		62.1	%							51.0	%		46.9	%

Gross profit was ~~$64.2~~$84.1 million for the three months ended November 30, ~~2021,~~2022, a ~~$12.0~~$19.9 million, or ~~23%~~31%, increase compared to ~~$52.2~~$64.2 million for three months ended November 30, ~~2020.~~2021. The increase in gross profit was primarily due to the ~~BluJay~~Logistyx Acquisition ~~partially offset by~~as well as the $10.4 million amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination. Gross margin was 47% for the third quarter of fiscal 2022 compared to 62% for the third quarter of fiscal 2021.

~~Non-GAAP Gross Profit~~

Successor

Predecessor

Three Months Ended

Three Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

$ Change

% Change

Non-GAAP gross profit

$
103,369

$
59,718

$
43,651

73
%
Non-GAAP gross margin

70.1
%

71.0
%

Non-GAAP gross profit was $103.4 million for the three months ended November 30, 2021, a $43.7 million, or 73%, increase compared to $59.7 million for the three months ended November 30, 2020. The increase in adjusted gross profit was due to increase in Non-GAAP subscriptions revenue and professional services revenue as discussed above. The Non-GAAP gross margin was slightly down in the third quarter of fiscal 2022 at 70% compared to 71% in the third quarter of fiscal 2021.

~~EBITDA~~

Successor

Predecessor

Three Months Ended

Three Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

$ Change

% Change
EBITDA

$
(14,576
)

$
16,902

$
(31,478
)

nm
EBITDA margin

-10.6
%

20.1
%

EBITDA was a loss of $14.6 million for the three months ended November 30, 2021, a $31.5 million decrease compared to $16.9 million for three months ended November 30, 2020. EBITDA margins decreased to a negative 11% for the third quarter of fiscal 2022 compared to 20% in the prior year. The decrease in ~~EBITDA and EBITDA margin was primarily related to~~ the ~~$10.4 million~~ amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination of $10.4 million. Gross margin was 51% for the ~~loss~~third quarter of ~~$7.2~~fiscal 2023 compared to 47% for the third quarter of fiscal 2022.

Non-GAAP Gross Profit


	Three Months Ended November 30,
($ in thousands)	2022			2021			$ Change		% Change
Non-GAAP gross profit	$	113,586		$	103,369		$	10,217		10	%
Non-GAAP gross margin		68.9	%		70.1	%

Non-GAAP gross profit was $113.6 million for the ~~fair value adjustment~~three months ended November 30, 2022, a $10.2 million, or 10%, increase compared to $103.4 million for the ~~warrant liability~~three months ended November 30, 2021. The increase in adjusted gross profit was primarily due to the Logistyx Acquisition. The Non-GAAP gross margin decreased in the third quarter of fiscal 2023 to 69% compared to 70% in the third quarter of fiscal 2022 due to our investment in strategic system integrator partnership initiatives as well as increased hosting and ~~loss~~labor costs.

EBITDA


	Three Months Ended November 30,
($ in thousands)	2022			2021			$ Change		% Change
EBITDA	$	69,586		$	(14,576	)	$	84,162	nm
EBITDA margin		42.2	%		-10.6	%

EBITDA was $69.6 million for the three months ended November 30, 2022, a $84.2 million increase compared to $14.6 million for three months ended November 30, 2021. EBITDA margin increased to 42% for the third quarter of ~~$1.1~~fiscal 2023 compared to a negative 11% in the prior year. The increase in EBITDA and EBITDA margin was primarily related to higher revenues in fiscal year 2023, $7.4 million increase in gain associated with the fair value adjustment for the contingent consideration liability related to the restricted Series B-2 common stock and $23.4 million increase in gain on the ~~additional $27.2~~change in fair value of the warrant liability in fiscal 2023 as compared to fiscal 2022. Additionally, there was a decrease of $10.4 million in the amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination and $31.2 million of ~~acquisition related~~acquisition-related expenses ~~incurred during the third quarter of fiscal 2022 mainly~~ related to the BluJay Acquisition ~~partially offset by higher revenues in~~when compared to fiscal 2022.

Adjusted EBITDA


	Successor			Predecessor
	Three Months Ended			Three Months Ended								Three Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change			2022			2021			$ Change		% Change
Adjusted EBITDA	$	45,890		$	28,255		$	17,635		62	%	$	56,155		$	45,890		$	10,265		22	%
Adjusted EBITDA margin		31.1	%		33.6	%							34.1	%		31.1	%

Adjusted EBITDA was $56.2 million for the three months ended November 30, 2022, a $10.3 million increase compared to $45.9 million for the three months ended November 30, ~~2021, a $17.6 million, or 62%, increase compared to $28.3 million for the three months ended November 30, 2020.~~2021. Adjusted EBITDA margin was ~~lower at~~34% for the third quarter of fiscal 2023 compared to 31% for the third quarter of fiscal 2022 ~~compared to 34% for the third quarter of fiscal 2021. The Adjusted EBITDA decline was~~ primarily due to ~~public company costs and the BluJay Acquisition for which synergy savings are not fully realized.~~higher revenues combined with reduced operating expenses as a percentage of revenue yielding increased operating leverage.

Nine Months Ended November 30, ~~2021~~2022 compared to Nine Months Ended November 30, ~~2020~~2021

Non-GAAP Subscriptions Revenue


	Successor		Predecessor
	Nine Months Ended		Nine Months Ended							Nine Months Ended November 30,
($ in thousands)	November 30, 2021		November 30, 2020		$ Change		% Change			2022			2021			$ Change		% Change
Non-GAAP subscriptions revenue	$	266,827	$	209,013	$	57,814		28	%	$	396,052		$	266,827		$	129,225		48	%
Percentage of Non-GAAP revenue											82	%		81	%

Non-GAAP subscriptions revenue was $396.1 million for the nine months ended November 30, 2022, a $129.2 million, or 48%, increase compared to $266.8 million for the nine months ended November 30, ~~2021, a $57.8 million, or 28%, increase compared to $209.0 million for the nine months ended November 30, 2020.~~2021. The increase in Non-GAAP subscriptions revenue relates to the BluJay ~~Acquisition~~and Logistyx acquisitions and new organic subscription sales predominately driven by increases in products utilized across our ~~customer portfolio alongside strategic partnership initiatives.~~client portfolio.

Non-GAAP Revenue


	Successor		Predecessor
	Nine Months Ended		Nine Months Ended							Nine Months Ended November 30,
($ in thousands)	November 30, 2021		November 30, 2020		$ Change		% Change			2022		2021		$ Change		% Change
Non-GAAP revenue	$	328,507	$	249,022	$	79,485		32	%	$	485,950	$	328,507	$	157,443		48	%

Non-GAAP revenue was $486.0 million for the nine months ended November 30, 2022, a $157.4 million, or 48%, increase compared to $328.5 million for the nine months ended November 30, ~~2021, a $79.5 million, or 32%, increase compared to $249.0 million for the nine months ended November 30, 2020.~~2021. The increase in Non-GAAP revenue was mainly due to the ~~$57.8~~$129.2 million increase in our subscriptions revenue related to the BluJay ~~Acquisition~~and Logistyx acquisitions and new organic sales driven by increases in products utilized across our current ~~customer~~client portfolio. Additionally, ~~$21.7~~$28.2 million of the increase was due to an increase in our professional services revenue primarily related to the BluJay ~~Acquisition, new subscription sales~~ and ~~customers delaying projects in fiscal year 2021 due to the COVID-19 pandemic, which resulted in favorable year-over-year.~~

Logistyx acquisitions.

Gross Profit


	Successor			Predecessor
	Nine Months Ended			Nine Months Ended									Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change			% Change			2022			2021			$ Change		% Change
Gross profit	$	130,912		$	156,212		$	(25,300	)		-16	%	$	243,268		$	130,912		$	112,356		86	%
Gross margin		46.5	%		62.7	%								50.1	%		46.5	%

Gross profit was ~~$131.0~~$243.3 million for the nine months ended November 30, ~~2021,~~2022, a ~~$25.3~~$112.4 million, or ~~16%~~86%, ~~decrease~~increase compared to ~~$156.2~~$130.9 million for nine months ended November 30, ~~2020.~~2021. The ~~decrease~~increase in gross profit was primarily due to the BluJay and Logistyx acquisitions as well as the decrease in the amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination of $47.1 million. Gross margin was 50% for the first nine months of fiscal 2023 compared to 47% for the first nine months of fiscal 2022.

Non-GAAP Gross Profit


	Nine Months Ended November 30,
($ in thousands)	2022			2021			$ Change		% Change
Non-GAAP gross profit	$	331,692		$	236,936		$	94,756		40	%
Non-GAAP gross margin		68.3	%		72.1	%

Non-GAAP gross profit was $331.7 million for the nine months ended November 30, 2022, a $94.8 million, or 40%, increase compared to $236.9 million for the nine months ended November 30, 2021. The increase in adjusted gross profit was primarily due to the BluJay and Logistyx acquisitions. The Non-GAAP gross margin percentage decreased in the first nine months of fiscal 2023 to 68% compared to 72% in the first nine months of fiscal 2022 due to our investment in strategic system integrator partnership initiatives as well as increased hosting and labor costs.

EBITDA


	Nine Months Ended November 30,
($ in thousands)	2022			2021			$ Change			% Change
EBITDA	$	(334,471	)	$	(147,367	)	$	(187,104	)	nm
EBITDA margin		-68.8	%		-52.4	%

EBITDA was a loss of $334.5 million for the nine months ended November 30, 2022, a $187.1 million increase compared to a loss of $147.4 million for nine months ended November 30, 2021. EBITDA margins were a negative 69% for the first nine months of fiscal 2023 compared to a negative 52% in the prior year. The decrease in EBITDA and EBITDA margin was primarily related to the $514.8 million goodwill impairment taken in the second quarter of fiscal 2023. This expense was partially offset by a decrease of $47.1 million in the amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination. ~~Gross margin was 47% for the first nine months of fiscal 2022 compared to 63% for the first nine months of fiscal 2021.~~

~~Non-GAAP Gross Profit~~

Successor

Predecessor

Nine Months Ended

Nine Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

$ Change

% Change

Non-GAAP gross profit

$
236,936

$
177,577

$
59,359

33
%
Non-GAAP gross margin

72.1
%

71.3
%

Non-GAAP gross profit was $236.9 million for the nine months ended November 30, 2021, a $59.4 million, or 33%, increase compared to $177.6 million for the nine months ended November 30, 2020. The increase in adjusted gross profit was due to increase in Non-GAAP subscriptions revenue and professional services revenue as discussed above. The Non-GAAP gross margin increased to 72% for the first nine months of fiscal 2022 from 71% for the first nine months of fiscal 2021.

~~EBITDA~~

Successor

Predecessor

Nine Months Ended

Nine Months Ended

($ in thousands)

November 30, 2021

November 30, 2020

$ Change

% Change
EBITDA

$
(147,367
)

$
59,889

$
(207,256
)

nm
EBITDA margin

-52.4
%

24.0
%

~~EBITDA~~Additionally, there was a ~~loss of $147.4 million for the nine months ended November 30, 2021, a $207.3~~$35.8 million decrease ~~compared to $59.9~~in acquisition related expenses, higher revenues in fiscal 2023, a $85.2 million for the nine months ended November 30, 2020. EBITDA margins decreased to a negative 52% for the first nine months of fiscal 2022 compared to 24% in the prior year. The decrease in EBITDA and EBITDA margin was primarily related to the $47.1 million amortization of the fair value adjustment to deferred revenue related to the purchase price allocation in the Business Combination, a loss of $48.4 millionhigher gain for the fair value adjustment for the warrant liability and a ~~loss of $91.2~~$108.9 million higher gain associated with the fair value adjustment for the contingent consideration liability related to the ~~Sponsor Side Letter and~~ restricted Series ~~B-1 and~~ B-2 common stock ~~and the additional $33.7 million of acquisition related expenses incurred during fiscal 2022 related~~when compared to the ~~BluJay Acquisition, partially offset by higher revenues in~~first nine months of fiscal 2022.

Adjusted EBITDA


	Successor			Predecessor
	Nine Months Ended			Nine Months Ended								Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			$ Change		% Change			2022			2021			$ Change		% Change
Adjusted EBITDA	$	108,581		$	81,368		$	27,213		33	%	$	155,902		$	108,581		$	47,321		44	%
Adjusted EBITDA margin		33.1	%		32.7	%							32.1	%		33.1	%

Adjusted EBITDA was $155.9 million for the nine months ended November 30, 2022, a $47.3 million, or 44%, increase compared to $108.6 million for the nine months ended November 30, ~~2021, a $27.2 million, or 33%, increase~~2021. Adjusted EBITDA margin was 32% for the first nine months of fiscal 2023 compared to ~~$81.4 million for the nine months ended November 30, 2020. Adjusted EBITDA margins were consistent at~~ 33% for the first nine months of fiscal 2022 primarily due to a lower gross margin driven by our investment in strategic system integrator partnership initiatives as well as increased hosting and ~~2021.~~labor costs.

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 ~~$56.5~~$85.7 million in cash and cash equivalents and ~~$155.0~~$145.0 million of unused borrowing capacity under our 2021 Revolving Credit Facility as of November 30, ~~2021.~~2022. See Note ~~10,~~13, Notes Payable to 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 and share repurchases 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.

Share Repurchase Program

On January 20, 2022, our board of directors approved the 2022 Share Repurchase Program. Share repurchases may be made from time to time in the open market, in privately negotiated transactions, pursuant to other Rule 10b5-1 trading plans or other available means. The 2022 Share Repurchase Program is subject to market conditions and other factors and does not obligate us to repurchase any dollar amount or number of Class A Common Stock and the program may be extended, modified, suspended or discontinued at any time, without prior notice. We plan to fund this program with cash on hand.

No shares of Class A Common Stock have been repurchased to date.

Debt

2021 Term Loan and Revolving Credit Facility

OnIn February 4, 2021, ~~as part of the Business Combination,~~ E2open, LLC, our subsidiary, entered into the Credit Agreement which provided for the 2021 Term Loan ~~for~~in the amount of $525.0 million and the 2021 Revolving Credit Facility for $75.0 million. OnIn September 1, 2021, ~~as part of~~ the ~~BluJay Acquisition, the 2021~~ 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. On April 6, 2022, the Credit Agreement was amended to include a $190.0 million incremental term loan.

The ~~2021 Term Loan will mature on February 4, 2028, while 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 commencing August 2021. The Credit Agreement was payable in quarterly installments of $1.3 million beginning in August 2021; however, the payments were increased to $2.3 million with the addition of the incremental term loan beginning in November 2021. The payment increased to $2.7 million with the addition of the $190.0 million incremental term loan beginning in May 2022. The Credit Agreement is payable in full on February 4, 2028.

The 2021 Term Loan has a variable interest rate which was ~~4.00%~~6.64% and ~~3.69%~~4.00% as of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, respectively. ~~Principal payments of $1.3 million are due on the last day of each February, May, August and November commencing August 2021.~~ As of November 30, ~~2021~~2022 and February 28, ~~2021,~~2022, the 2021 Term Loan had a principal balance outstanding of ~~$901.4~~$1,080.9 million and ~~$525.0~~$899.2 million, ~~respectively,~~respectively. There were $10.0 million outstanding borrowings at an interest rate of 6.77%, no letters of credit and ~~there were no amounts drawn on~~$145.0 million available borrowing capacity under the 2021 Revolving Credit Facility as of November 30, 2022. These borrowings were used for general operating activities. There were $80.0 million of borrowings outstanding at an interest rate of 5.25%, no outstanding letters of credit and $75.0 million available borrowing capacity under the 2021 Revolving Credit Facility as of February 28, 2022.

On January 9, 2023, we repaid the outstanding $10.0 million balance on our 2021 Revolving Credit Facility. After this repayment, our available borrowing capacity under the 2021 Revolving Credit Facility is $155.0 million.

The average interest rate on our 2021 Term Loan was impacted by changes in market interest rates, which was attributed to the Federal Open Market Committee (FOMC) of the Federal Reserve repeatedly raising their target benchmark interest rate in the first nine months of fiscal 2023, resulting in subsequent prime rate increases of 375 basis points between March and November 2022. Based on our current outstanding 2021 Term Loan, this increase would result in an additional $40.5 million of interest expense per year.

Cash Flows

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


	Successor			Predecessor
	Nine Months Ended			Nine Months Ended			Nine Months Ended November 30,
($ in thousands)	November 30, 2021			November 30, 2020			2022			2021
Net cash provided by operating activities	$	28,182		$	30,054		$	43,151		$	28,182
Net cash used in investing activities		(798,859	)		(12,048	)		(222,716	)		(798,859	)
Net cash provided by (used in) financing activities		632,987			(8,078	)
Net cash provided by financing activities								103,351			632,987
Effect of exchange rate changes on cash and cash equivalents		1,657			101			478			1,657
Net (decrease) increase in cash, cash equivalents and restricted cash		(136,033	)		10,029
Net decrease in cash, cash equivalents and restricted cash								(75,736	)		(136,033	)
Cash, cash equivalents and restricted cash at beginning of period		207,542			48,428			174,554			207,542
Cash, cash equivalents and restricted cash at end of period	$	71,509		$	58,457		$	98,818		$	71,509

4852

Nine Months Ended November 30, ~~2021~~2022 compared to Nine Months Ended November 30, ~~2020~~2021

As of November 30, ~~2021,~~2022, our consolidated cash, cash equivalents and restricted cash was ~~$71.5~~$98.8 million, a ~~$136.0~~$75.7 million decrease from our balance of ~~$207.5~~$174.6 million as of February 28, ~~2021.~~2022.

Net cash provided by operating activities for the nine months ended November 30, ~~2021~~2022 was ~~$28.2~~$43.2 million compared to ~~$30.1~~$28.2 million for the nine months ended November 30, ~~2020.~~2021. The ~~$1.9~~$15.0 million ~~decrease~~increase in cash was primarily driven by ~~expenses related~~the additional gross profits contributed by BluJay and Logistyx as well as organic growth partially offset by the use of $86.3 million of cash for working capital items such as the decrease in cash provided by accounts receivable, the increase in cash for accounts payable and accrued liabilities and the recognition of deferred revenue in the first nine months of fiscal 2023 compared to the ~~BluJay Acquisition offset by additional revenue from BluJay, organic growth and customers delaying projects in~~first nine months of fiscal ~~year 2021 due to the COVID-19 pandemic.~~2022.

Net cash used in investing activities was ~~$798.9~~$222.7 million and ~~$12.0~~$798.9 million for the nine months ended November 30, ~~2021~~2022 and ~~2020,~~2021, respectively. During fiscal year ~~2022, $774.2~~2023, net cash of $179.2 million was used for the Logistyx Acquisition while $774.2 million of cash was used for the BluJay ~~Acquisition.~~Acquisition during fiscal 2022. Additionally, we made a $3.0 million minority investment in a private firm during the first quarter of fiscal 2023. During the nine months of fiscal ~~year~~2023 and 2022, ~~and 2021, $24.6~~$40.5 million and ~~$12.0~~$24.6 million were used for the acquisition of ~~property~~software and ~~software~~property related to our data centers, respectively.

Net cash provided by financing activities for the nine months ended November 30, ~~2021~~2022 was ~~$633.0~~$103.4 million compared to ~~net cash used of $8.1~~$633.0 million for nine months ended November 30, ~~2020.~~2021. The ~~increase~~decrease in cash provided by financing activities was mainly due to the following:

•

We received $300.0 million in PIPE investment proceeds and obtained additional borrowings of $380.0 million for the BluJay Acquisition ~~and $15.0 million~~ under the 2021 Revolving Credit Facility in fiscal ~~2022. We only~~2022 compared to the $190.0 million incremental term loan for the Logistyx Acquisition in fiscal 2023;

•

During fiscal 2023 we borrowed ~~$15.6~~an additional $10.0 million ~~during the first nine months of fiscal 2021. During the first nine months of fiscal 2021 we received $3.4 million of proceeds from the sale of membership units. We~~and repaid ~~$3.0~~$80.0 million more on the 2021 Revolving Credit Facility when compared to fiscal 2022;

•

We paid an additional $4.5 million on the 2021 Term Loan during fiscal 2023 when compared to fiscal 2022;

•

During fiscal 2023, we paid $4.8 million in debt issuance costs related to the $190.0 million term loan compared to $10.4 million in debt issuance costs related to the additional borrowings in fiscal ~~2021 than in fiscal 2022. The repayment~~2022;

•

We paid an additional $15.4 million more for the repurchase of ~~financing lease obligations was $1.3 million higher in~~Common Units upon conversion to cash during fiscal 2022 than we did in fiscal ~~2021. Additionally,~~2023;

•

During fiscal 2022, we paid $2.5 million for the repurchase of common stock to pay withholding ~~taxes, $16.8 million for the repurchase of Common Units upon conversion,~~taxes; and

•

We paid $7.1 million of offering costs associated with the PIPE investment financing ~~and $10.4 million in debt issuance costs related to the additional borrowings in~~during fiscal 2022.

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. Pursuant~~Holdings that requires us to ~~the Tax Receivable Agreement, we will~~ pay ~~certain sellers, as applicable,~~ 85% of the tax savings that ~~we realize from~~are realized because of increases in the tax basis inof E2open ~~Holdings’ assets as a result of~~Holdings' assets. This increase is either from the sale of ~~E2open Holdings’ equity interests, the future~~Common Units or exchange of ~~the~~ Common Units for shares of Class A Common Stock ~~(or cash), certain pre-existing tax attributes of certain sellers~~ and ~~certain other tax benefits related to entering into the Tax Receivable Agreement including~~cash, as well as tax benefits attributable to payments under the Tax Receivable ~~Agreement.~~Agreement, We will retain the benefit of the remaining 15% of these cash savings. 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. ~~The amount of such payments is also generally limited to the extent we are unable to utilize the full amount of any tax benefits subject to the Tax Receivable Agreement in a given period.~~

The liability related to the Tax Receivable Agreement was ~~$67.9~~$58.2 million and $66.6 million as of November 30, ~~2021, consisting of Tax Receivable liabilities recorded under ASC 805 of $54.7 million~~2022 and ~~$13.2 million under ASC 450,~~February 28, 2022, respectively, assuming (1) a ~~constant~~ corporate tax rate of 24.2% as of November 30, 2022 and 24.1%, as of February 28, 2022, (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, ~~and~~ (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 ~~Sellers~~Holdings pursuant to the Tax Receivable Agreement are uncertain. Additionally, interest will accrue on the portion of the Tax Receivable Agreement liability recorded under ASC 805 at a rate of LIBOR plus 100 basis points. The portion of the Tax Receivable Agreement liability under ASC 450 is recorded on a gross undiscounted basis.

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 not readily determinable and 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 ~~are~~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.

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.

~~Conversion of~~ Contingent Consideration

The contingent consideration liability was ~~$67.0~~$27.8 million and ~~$150.8~~$45.6 million as of November 30, ~~2021~~2022 and February 28, 2022, respectively. The fair value remeasurements resulted in a gain of $6.3 million and loss of $1.1 million for the three months ended November 30, 2022 and 2021, respectively. The fair value remeasurements resulted in a gain of $17.8 million and a loss of ~~$1.1 million and~~ $91.2 million for the ~~three and~~ nine months ended November 30, 2022 and 2021, respectively. ~~There was no gain or loss for the three and nine months ended November 30, 2020 as the contingent consideration liability was not recorded until February 4, 2021.~~ The contingent liability represents the Series B-1 common stock, Series B-2 common stock, Series 1 RCUs and Series 2 RCUs.

As of June 8, 2021, the Series B-1 common stock and Series 1 RCUs were no longer reflected as a contingent consideration liability as the 5-day VWAP of our Class A Common Stock exceeded $13.50 per share. This triggering event resulted in the 8,120,273 Series B-1 common stock converting into Class A Common Stock and 4,379,557 Series 1 RCUs becoming 4,379,557 Common Units of E2open Holdings along with entitling the holders of the newly vested common units to 4,379,557 shares of Class V Common Stock.

Logistyx Acquisition

On March 2, 2022, E2open, LLC acquired Logistyx for a purchase price of $185 million, and an estimated fair value of $183.4 million, including $90 million paid in cash at closing. An additional $95 million was paid in two installments on May 31, 2022 and September 1, 2022. We had the option to finance the remaining payments, at our discretion, through cash or a combination of cash and Class A Common Stock. The May 31, 2022 payment of $37.4 million was paid with cash. On September 1, 2022, E2open, LLC made a cash payment of $54.0 million to Logistyx as the final installment payment for the Logistyx Acquisition which reflected a working capital adjustment of $3.6 million. The Logistyx sellers disputed the working capital adjustment pursuant to the terms of the Membership Interest Purchase Agreement. During October 2022, the parties agreed to a working capital adjustment of $2.6 million. The additional payment for working capital was made to Logistyx on December 5, 2022.

Leases

~~Effective March 1, 2021, we began accounting~~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. ~~Upon adoption of ASC 842, we recognized an operating lease liability of $23.0 million, a ROU operating asset of $22.4 million and no change to retained earnings.~~

Our non-cancelable operating leases for our office spaces and vehicles have various expiration dates through ~~August 2029.~~June 2030. Under these leases, our undiscounted future cash flows utilized in the calculation of the lease liabilities as of November 30, ~~2021~~2022 were: ~~$2.7~~$2.6 million for December 1, ~~2021~~2022 through February 28, ~~2022, $8.2 million for fiscal~~ 2023, ~~$6.9~~$8.9 million for fiscal 2024, ~~$4.9~~$7.0 million for fiscal 2025, $4.4 million for fiscal 2026, $3.0 million for fiscal ~~2026~~2027 and ~~$4.1~~$2.5 million thereafter. These numbers include interest of ~~$2.5~~$2.7 million.

Our non-cancelable financing lease arrangements relate to software and computer equipment ~~as well as vehicles~~ and have various expiration dates through ~~June 2025.~~October 2023. We have the right to purchase the software and computer equipment anytime during the lease or upon lease completion. ~~We do not have the right to purchase the vehicles.~~ Under these leases, our undiscounted future cash flows utilized in the calculation of the lease liabilities as of November 30, ~~2021~~2022 were: ~~$0.4~~$0.1 million for December 1, ~~2021~~2022 through February 28, ~~2022, $2.3 million for fiscal~~ 2023 and ~~$2.1~~$2.0 million for fiscal 2024. These numbers include interest of ~~$0.3~~$0.1 million.

~~Off-Balance Sheet Arrangements~~

We are responsible for reimbursement of outstanding obligations related to any letters of credit issued under our $30.0 million available letters of credit accessible under our $155.0 million 2021 Revolving Credit Facility. We do not have any other material off-balance sheet arrangements or contingent commitments. There were no outstanding letters of credit or borrowings under the 2021 Revolving Credit Facility as of November 30, 2021 and February 28, 2021.

Critical Accounting Policies and Estimates

Our 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 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 ~~2021~~2022 Form 10-K.

There have been no changes to our critical accounting policies and estimates during the three and nine months ended November 30, ~~2021~~2022 from those previously disclosed in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our ~~2021~~2022 Annual Report.

Recent Accounting Pronouncements

~~For information related to recent~~Recently issued and adopted accounting ~~pronouncement and our anticipated impact, see~~pronouncements are described in Note 2, Accounting Standards to 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, ~~2021~~2022 from those previously disclosed in Part II, Item 7A., Quantitative and Qualitative Disclosures About Market Risk of our ~~2021~~2022 Form ~~10-K, except as described below.~~

~~Foreign Currency Exchange Rate Risk~~

The functional currency of our foreign subsidiaries is generally the local currency. Assets and liabilities are translated into U.S. dollars at the exchange rate in effect as of the consolidated balance sheet date.

As a result of the BluJay Acquisition, our foreign operations have substantially increased resulting in significant expenses, assets and liabilities denominated in foreign currencies. The currencies of our operations are now the Australia dollar, British pound, Canada dollar, Danish krone, the Euro, Hong Kong dollar, Malaysia ringgit, People's Republic of China renminbi and the Singapore dollar. As a result, our operating results, profitability and cash flows are impacted when the U.S. dollar fluctuates relative to these foreign currencies. We translate our foreign currency-denominated results of operations, assets and liabilities for our foreign subsidiaries to U.S. dollars in our unaudited condensed consolidated financial statements. Increases and decreases in the value of the U.S. dollar compared with such foreign currencies will affect our reported results of operations and the value of our assets and liabilities on our unaudited condensed consolidated balance sheets, even if our results of operations or the value of those assets and liabilities has not changed in its original currency. These transactions could significantly affect the comparability of our results between financial periods or result in significant changes to the carrying value of our assets, liabilities and shareholders' equity.

~~We cannot give any assurances as to the effect that future changes in foreign currency rates will have on our financial position, operating results or cash flows.~~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~~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 ~~Securities and~~ Exchange ~~Act of 1934, as amended)~~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.

5155

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, ~~2021~~2022 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 ~~activities~~ over time.

PART II—Other Information

Item 1. Legal Proceedings.

From time to time, we are subject to contingencies that arise in the ordinary course of business. 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 such contingencies will have a material adverse effect upon our Unaudited Condensed Consolidated Balance Sheets, Statements of Operations or Statements of Cash Flows.

Item 1A. Risk Factors.

There have been no material changes in our risk factors during the three and nine months ended November 30, ~~2021~~2022 from those previously disclosed in Part I, Item 1A., Risk Factors of our ~~2021 Form 10-K, Part II, Item 1A., Risk Factors of our May 31, 2021 Form 10-Q filed with the SEC on July 16, 2021 (Q1~~ 2022 Form ~~10-Q) and Part II, Item 1A., Risk Factors of our August 31, 2021 Form 10-Q filed with the SEC on October 13, 2021 (Q2 2022 Form 10-Q), other than set forth below.~~10-K. You should carefully consider the risk factors discussed in our ~~2021~~2022 Form 10-K, ~~Q1 2022 Form 10-Q and Q2 2022 Form 10-Q,~~ 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.

~~Risks Related to Our Business Model~~

~~Cyber-attacks and security vulnerabilities could result in serious harm to our reputation, business and financial condition.~~

Threats to network and data security are constantly evolving and becoming increasingly diverse and sophisticated. Our products and services, servers and computer systems and those of third parties that we rely on in our operations could be vulnerable to cybersecurity risks. As such, we may be subject to risks inherent to companies that process client data for client mission critical systems like SCM solutions.

As we continue to grow and as threat actors have become more sophisticated, we have observed increased threat activity to our products and systems. We are the target of attempts on a regular basis to identify and exploit system vulnerabilities and/or penetrate or bypass our security measures in order to gain unauthorized access to our systems. To mitigate these risks, we employ multiple methods at different layers of our systems to defend against intrusion and attack. We do not have visibility into all unauthorized incursions, however, our systems could experience incursions of which we are not aware. When we become aware of unauthorized access to our systems, we take steps intended to identify and remediate the source and impact of the incursions. Despite our efforts to keep our systems secure and remedy identified vulnerabilities, future attacks could be successful and result in contractual liability to clients or loss of client trust and ultimately client business.

We may experience breaches of our security measures due to human error, system errors or vulnerabilities. In particular, our platform and the other systems or networks used in our business may experience an increase in attempted cyber-attacks, targeted intrusion, ransomware and phishing campaigns. We maintain errors, omission and cyber liability insurance policies covering security and privacy damages. However, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all.

In December 2021, the Apache Software Foundation publicly disclosed a remote code execution (RCE) vulnerability in its Log4j 2 product (Log4j), an open-source component widely used in Java-based software applications to log and track error messages. In the subsequent weeks, the foundation disclosed several additional RCE vulnerabilities, expanding the opportunities for bad actors and attackers to remotely access a target using Log4j and potentially steal data, install malware or take control of the target's system. Certain applications in the E2open product suite and infrastructure did utilize the affected versions of Log4j. Although in accordance with our cybersecurity incidence response protocol, we identified and remediated all areas with known Log4j vulnerabilities, we expect the risk of additional vulnerabilities and potential attacks to continue for several months given the complexity and widespread nature of the situation.

In addition, while we are continually taking steps to enhance our cybersecurity defenses, increased investments, coordination, and resources are required to achieve our objective of ensuring over time that our cybersecurity infrastructure meets or exceeds evolving industry standards. Achieving this objective will require continued effort and vigilance, including sustained investment of money and management resources in order to support the ongoing development and maintenance of systems that meet these standards.

At present, we believe the regulatory and private action risks related to personal data we process as part of our business-to-business supply chain solutions are low. We process a limited amount of personal data, typically business contact information, supplied by our clients. Regulations surrounding personal data are rapidly changing and that makes global compliance challenging and unpredictable. Failure to comply with regulations may subject us to regulatory investigations, reputational harm, contractual liability to clients and potential liability to data subjects.

~~Risks Related to the Global Pandemic~~

~~Mandatory COVID-19 vaccination of employees or testing of employees could impact our workforce and have a material adverse effect on our business and results of operations.~~

In September 2021, President Biden announced a proposed new rule requiring all employers with at least 100 employees to require that their employees be fully vaccinated or tested weekly. In November 2021, the U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) issued an emergency temporary standard (ETS) to carry out this mandate. The ETS is subject to multiple legal challenges, which have delayed its implementation. Due to the uncertainty of the outcome of the legal challenges to the ETS, as well as the uncertainty in implementation details, we cannot anticipate the precise impact it might have on our business Any such mandate could have a material adverse impact on our business and results of operations, including workforce restraints and increased costs.

As a global company, it is anticipated that we would be subject to COVID-19 vaccination and testing mandates should the ETS or similar regulations go into effect in other jurisdictions in which we operate. Implementation of these requirements by us may result in employee attrition, including attrition of critically skilled labor, absenteeism within our skilled labor force, challenges securing future labor needs, inefficiencies connected to employee turnover and costs associated with implementation and on-going compliance, which could have a material adverse effect on our business, financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Issuer Purchases~~On January 20, 2022, the board of ~~Equity Securities~~directors approved a $100.0 million share repurchase program (2022 Share Repurchase Program). Stock repurchases may be made from time to time in the open market, in privately negotiated transactions, pursuant to Rule 10b5-1 trading plans or other available means. The 2022 Share Repurchase Program is subject to market conditions and other factors and does not obligate us to repurchase any dollar amount or number of our Class A Common Stock and the program may be extended, modified, suspended or discontinued at any time, without prior notice.

~~There were no~~No shares ~~withheld by us and transferred~~of Class A Common Stock have been repurchased to ~~treasury shares in connection with tax withholdings upon the conversion or exercise of any stock, award or warrant during the third quarter of fiscal year 2022.~~

date.

Item 6. Exhibits.

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


Exhibit Number		Description
~~2.1†~~		Share Purchase Deed dated as of May 27, 2021, by and among E2open Parent Holdings, Inc. and BluJay TopCo Limited and the other parties thereto (incorporated by reference to Exhibit 2.1 of E2open Parent Holdings, Inc.’s Form 8-K (File No. 001-39272) filed with the SEC on June 1, 2021).
~~2.2†~~		Management Warranty Deed dated as of May 27, 2021, by and among E2open Parent Holdings, Inc. and the other parties thereto (incorporated by reference to Exhibit 2.2 of E2open Parent Holdings, Inc.’s Form 8-K (File No. 001-39272) filed with the SEC on June 1, 2021).
~~2.3†~~		Tax Warranty Deed dated as of May 27, 2021, by and among E2open Parent Holdings, Inc. and the other parties thereto (incorporated by reference to Exhibit 2.3 of E2open Parent Holdings, Inc.’s Form 8-K (File No. 001-39272) filed with the SEC on June 1, 2021).
3.1		Certificate of Domestication of the CC Neuberger Principal Holdings I (incorporated by reference to Exhibit 3.1 of E2open Parent Holdings, Inc.’s Form 8-K (File No. 001-39272), filed with the SEC on February 10, 2021).
~~3.2~~		Certificate of Incorporation of the E2open Parent Holdings, Inc. (incorporated by reference to Exhibit 3.2 of E2open Parent Holdings, Inc.’s's Form 8-K (File No. 001-39272) filed with the SEC on February 10, 2021).
~~3.3~~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).
~~3.4~~3.3		Bylaws of the E2open Parent Holdings, Inc. (incorporated by reference to Exhibit 3.3 of E2open Parent Holdings, Inc.’s's Form 8-K (File 001-39272) filed with the SEC of February 10, 2021).
~~10.1~~		~~Form of Subscription Agreement (incorporated by reference to Exhibit 10.5 of E2open Parent Holdings, Inc.’s Form 8-K (File No. 001-39272) filed with the SEC on June 1, 2021).~~
~~10.2~~		~~Form of Lock-up Agreement (incorporated by reference to Exhibit 10.2 of E2open Parent Holdings, Inc.'s Form 8-K (File No. 001-39272), filed with the SEC on September 3, 2021).~~
~~10.3~~		Amendment No. 2 to Credit Agreement, dated September 1, 2021, by and among E2open Intermediate, LLC, E2open, LLC, Goldman Sachs Bank USA, and the financial institutions parties thereto as lenders and issuing banks (incorporated by reference to Exhibit 10.4 of E2open Parent Holdings, Inc.'s Form 8-K (File No. 001-39272), filed with the SEC on September 3, 2021).
31.331.1		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
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File

* Filed herewith.

† Schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Registration S-K. The Registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request

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 ~~12, 2022~~9, 2023	By:	/s/ Michael A. Farlekas
		Michael A. Farlekas
		Chief Executive Officer

Date: January ~~12, 2022~~9, 2023	By:	/s/ ~~Jarett J. Janik~~Marje Armstrong
		~~Jarett J. Janik~~Marje Armstrong
		Chief Financial Officer

5557


	Predecessor
(In thousands)	Members' Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Members' Equity
Balance, February 29, 2020	$	433,992		$	(898	)	$	(218,502	)	$	214,592
Investment by member		1,788			—			—			1,788
Unit-based compensation		2,046			—			—			2,046
Comprehensive loss		—			(291	)		—			(291	)
Net loss		—			—			(23,752	)		(23,752	)
Balance, May 31, 2020		437,826			(1,189	)		(242,254	)		194,383
Investment by member		(10	)		—			—			(10	)
Unit-based compensation		1,971			—			—			1,971
Comprehensive loss		—			(55	)		—			(55	)
Net loss		—			—			(17,540	)		(17,540	)
Balance, August 31, 2020		439,787			(1,244	)		(259,794	)		178,749
Investment by member		1,606			—			—			1,606
Unit-based compensation		1,936			—			—			1,936
Comprehensive income		—			403			—			403
Net loss		—			—			(27,067	)		(27,067	)
Balance, November 30, 2020	$	443,329		$	(841	)	$	(286,861	)	$	155,627


($ in thousands)	Predecessor
Balance, February 28, 2019	$	482,378
Acquisitions:
Amber Road		263,317
Averetek		7,191
Currency translation adjustment		(130	)
Balance, February 29, 2020		752,756
Currency translation adjustment		33
Balance, February 3, 2021	$	752,789


($ in thousands)	Successor
Balance, February 4, 2021 (1)	$	2,628,964
Currency translation adjustment		(318	)
Balance, February 28, 2021		2,628,646
Business Combination purchase price adjustment (2)		4,267
BluJay Acquisition (3)		1,152,084
Currency translation adjustment		(24,861	)
Balance, November 30, 2021	$	3,760,136


	Predecessor
	Number of Units (in thousands)			Weighted Average Exercise Price Per Unit		Weighted Average Term (in years)
Balance, February 29, 2020		22,001		$	1.51		1.9
Exercised		(1,350	)		1.45
Forfeited		(645	)		1.65
Balance, November 30, 2020		20,006		$	1.51		1.2

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company