E2open(US:ETWO)2025-07-10 20:27PART I. Financial Information Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the quarter ended May 31, 2025, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes, showing a net loss of $15.5 million and total assets of $2.38 billion Condensed Consolidated Balance Sheet Highlights (as of May 31, 2025) | Metric | May 31, 2025 ($ in thousands) | February 28, 2025 ($ in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | 230,197 | 197,350 | | Total current assets | 383,928 | 379,596 | | Goodwill | 1,243,848 | 1,213,794 | | Total assets | 2,377,809 | 2,371,035 | | Total liabilities | 1,476,985 | 1,493,865 | | Total stockholders' equity | 900,657 | 876,979 | Condensed Consolidated Statement of Operations Highlights (Three Months Ended May 31) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Total revenue | 152,610 | 151,163 | | Gross Profit | 73,591 | 72,660 | | Loss from operations | (2,447) | (16,845) | | Net loss | (15,523) | (42,788) | | Net loss per share (Diluted) | (0.05) | (0.13) | Condensed Consolidated Statement of Cash Flows Highlights (Three Months Ended May 31) | Metric | 2025 ($ in thousands) | 2024 ($ in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 41,795 | 35,916 | | Net cash used in investing activities | (7,326) | (6,084) | | Net cash used in financing activities | (3,896) | (3,006) | Notes to the Unaudited Condensed Consolidated Financial Statements The notes provide detailed explanations for the financial statements, including the pending acquisition by WiseTech Global Limited for $3.30 per share, an amendment to the Tax Receivable Agreement for a $52.5 million settlement resulting in a $20.7 million gain, and remaining performance obligations of $916.2 million - On May 25, 2025, the company entered into an agreement to be acquired by WiseTech Global Limited for $3.30 per share in cash41 - In connection with the WiseTech merger, the Tax Receivable Agreement (TRA) was amended to be settled for a fixed sum of $52.5 million, resulting in a recorded gain of $20.7 million for the quarter507781 - No impairment charge was taken for goodwill or intangible assets during the three months ended May 31, 2025, following a significant impairment of $614.1 million for goodwill and $18.5 million for intangibles in the prior fiscal year6469 - As of May 31, 2025, the company had $1.05 billion in outstanding term loans, and its revolving credit facility was amended, extending maturity to February 2028 and reducing availability to $123.8 million858791 - Total remaining performance obligations, representing future revenue from existing contracts, were approximately $916.2 million as of May 31, 2025114 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, highlighting a 1% YoY revenue increase to $152.6 million, a narrowed net loss due to a $20.7 million gain from the Tax Receivable Agreement liability revaluation, and a 3% increase in Adjusted EBITDA to $52.2 million, with sufficient liquidity of $230.2 million in cash Results of Operations Total revenue for Q1 FY2026 increased by 1% YoY to $152.6 million, with gross profit slightly increasing to $73.6 million, while operating expenses decreased significantly due to a $14.5 million reduction in amortization of acquired intangibles, contributing to a reduced net loss of $15.5 million Revenue Breakdown (Three Months Ended May 31) | Revenue Type | 2025 ($ in thousands) | 2024 ($ in thousands) | % Change | | :--- | :--- | :--- | :--- | | Subscriptions | 132,870 | 131,404 | 1% | | Professional services and other | 19,740 | 19,759 | 0% | | Total revenue | 152,610 | 151,163 | 1% | - Operating expenses decreased, driven by a 72% reduction in amortization of acquired intangible assets within operating expenses (from $20.1 million to $5.6 million YoY)188189 - Acquisition-related expenses increased to $5.5 million from $0.3 million YoY, primarily due to costs associated with the strategic review and the announced merger with WiseTech188 - A gain of $20.7 million was recorded from the change in the Tax Receivable Agreement liability, driven by the TRA Amendment related to the WiseTech merger, contrasting with a loss of $4.0 million in the prior-year period191 - A loss of $12.1 million was recorded from the change in fair value of contingent consideration, an increase from a $2.3 million loss in the prior year195 Non-GAAP Financial Measures The company uses Non-GAAP measures like Adjusted EBITDA and Non-GAAP gross profit to evaluate core performance, with Adjusted EBITDA at $52.2 million (a 3% increase YoY) and Non-GAAP gross profit at $102.4 million for Q1 FY2026 Adjusted EBITDA Reconciliation (Three Months Ended May 31) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net loss | (15,523) | (42,788) | | EBITDA | 45,436 | 33,605 | | Adjustments | 6,796 | 17,120 | | Adjusted EBITDA | 52,232 | 50,725 | Non-GAAP Gross Profit Reconciliation (Three Months Ended May 31) | ($ in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Reported gross profit | 73,591 | 72,660 | | Adjustments | 28,797 | 29,893 | | Non-GAAP gross profit | 102,388 | 102,553 | - Adjusted EBITDA increased 3% YoY to $52.2 million, with an Adjusted EBITDA margin of 34.2% for Q1 FY2026, compared to 33.6% in the prior year205 Liquidity and Capital Resources As of May 31, 2025, the company had $230.2 million in cash and cash equivalents and $123.8 million available under its revolving credit facility, with net cash from operations increasing to $41.8 million and the $1.05 billion term loan and amended Tax Receivable Agreement (to be settled for $52.5 million) detailed - The company had $230.2 million in cash and cash equivalents and $123.8 million of unused borrowing capacity under its 2021 Revolving Credit Facility as of May 31, 2025208 - Net cash provided by operating activities increased by $5.9 million to $41.8 million for the quarter, primarily driven by an increase in subscriptions revenue and changes in working capital217 - The Tax Receivable Agreement liability is expected to be settled for $52.5 million in cash upon the closing of the WiseTech merger, with the full amount now classified as a current liability222223 Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes in its market risks from those disclosed in its Annual Report on Form 10-K for the fiscal year ended February 28, 2025 - There have been no material changes in market risks since the last Annual Report (Form 10-K for fiscal year ended February 28, 2025)250 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of May 31, 2025, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report252 - No material changes were identified in the company's internal control over financial reporting during the quarter ended May 31, 2025253 PART II. Other Information Legal Proceedings The company is subject to contingencies that arise in the ordinary course of business but does not currently believe the resolution of any such matters will have a material adverse effect on its financial statements - The company states that it is not currently subject to any legal proceedings that are expected to have a material adverse effect on its financial condition or results of operations255 Risk Factors This section highlights new risks specifically related to the proposed merger with WiseTech, including uncertainties affecting business operations, the potential failure to complete the merger (which could result in a $37.5 million termination fee), limitations on pursuing alternative transactions, restrictions on business conduct, and the possibility of merger-related lawsuits - Uncertainties related to the pending merger with WiseTech could disrupt business, vendor, customer, and employee relationships258259 - Failure to complete the merger could cause the stock price to decline and may require the company to pay a termination fee of $37.5 million to WiseTech260261 - The merger agreement restricts the company's ability to solicit alternative acquisition proposals and imposes limitations on its business operations until the merger is complete263264 - The company may face lawsuits related to the merger, which could be costly and divert management's attention265 Other Information The company reports that none of its directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter ended May 31, 2025 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter266 Exhibits This section lists the exhibits filed with the Form 10-Q, including the merger agreement with WiseTech, an amendment to the credit agreement, an amendment to the tax receivable agreement, and CEO/CFO certifications - Key exhibits filed include the Agreement and Plan of Merger with WiseTech, Amendment No 5 to the Credit Agreement, and Tax Receivable Agreement Amendment No 1268