We estimate that the net proceeds from our sale of 3,750,000 shares of common
stock in this offering at an initial public offering price of $15.00 per share
after deducting estimated underwriting discounts and commissions and estimated
offering expenses payable by us will be approximately $49.4 million.
We will not receive any proceeds from the sale of shares of common stock by the
selling stockholders.
We intend to use the net proceeds of this offering primarily for general
corporate purposes and other operating expenses, including: capital
expenditures, expenditures relating to the expansion of our operations; sales
and marketing expenses; and general and administrative expenses.
In addition, if appropriate opportunities arise to acquire or invest in
complementary businesses, product lines, products or technologies, we may use a
portion of the net proceeds for such acquisition or investment. However, we are
not currently discussing any such potential acquisition or investment with any
third party. We may also use a portion of the net proceeds for repayment of our
existing indebtedness. The amount and timing of these expenditures will vary
depending on a number of factors, including competitive and technological
developments and the rate of growth, if any, of our business.
Pending their use, we plan to invest our net proceeds from this offering in
short-term, interest-bearing obligations, investment-grade instruments,
certificates of deposit or direct or guaranteed obligations of the U.S.
government.
While we do not believe that any specific competitor offers the breadth of
business network solutions and collaborative capabilities that we do, the
distinct markets that make up the business network space are each rapidly
evolving and highly competitive. We face competition from the following types
of companies:
• ERP vendors. Companies such as Infor, Oracle and SAP offer ERP extension
solutions that provide features similar to a limited subset of our
offerings in the area of trading partner portals. These companies may
include those solutions as part of their larger ERP or business
application offerings. As each trading partner is likely to have some
form of existing ERP system, we are able to provide a common platform
tying these disparate systems together as a business network. Our
solutions generally do not replace the current functionality of existing
ERP systems and therefore tend not to undermine our customers’
investments in their existing business applications. Our customers have
found that our solutions extend and enhance the value of their existing
ERP systems by adding integration, multi-enterprise processes, and real-
time collaboration capabilities. Therefore, we do not believe
traditional ERP vendors view our solutions as a competitive alternative
to their own offerings.
• Multi-enterprise B2B infrastructure vendors. Companies like GXS
Corporation, IBM/Sterling Commerce and SPS Commerce provide point
solutions in the B2B integration space. We do not view these offerings
as competitive with our solutions. While our strategy is to provide a
broader solution which can include B2B integration functionality, we
believe integration platforms as standalone solutions lack the business
processes and analytics that E2open provides.
• Niche applications vendors. Companies like JDA Software Group, Inc. have
specialized functionality for specific process areas such as
transportation management, demand planning or network design. Niche
applications may provide important functionality for enterprises, but
they typically are not built for multi-enterprise process management or
a multi-tier environment.
• Internally developed solutions. Potential customers with large in-house
IT departments are capable of developing applications customized for
their businesses and many have. Typically, these applications lack
complete functionality required to run complex, multi-tier trading
networks.
strategies
and complex trading networks to compete in today’s global economy. They use our
solutions to gain visibility into and control over their trading networks
through the real-time information, integrated business processes and advanced
analytics that we provide. Our solutions enable our customers and their trading
partners to overcome problems arising from communications across disparate
systems by offering a reliable source of data, processes and analytics, which
our customers rely on as the single version of the truth. Our solutions empower
our customers to manage demand they cannot predict and supply they do not
control.
We refer to the combination of our software applications delivered on our
cloud-based platform, the content contributed by our network participants and
our enabling services as the E2open Business Network. The E2open Business
Network has grown to over 32,000 unique registered trading partners. It allows
our network participants to access and share data and execute business
processes in a secure, real-time manner, while providing them with
collaboration tools and analytics so that our customers can make more informed
and efficient decisions. Our customer base includes companies that represent
seven of the top ten supply chains in the world, according to Gartner, Inc.,
and spans several industries including many large multinational companies such
as Boeing, Cisco, Dell, the Gap, GE, Flextronics, IBM, Lab126 (part of the
Amazon.com, Inc. group of companies), Motorola and Vodafone. To date, our
target markets have been Technology, Telecommunications, Aerospace and Defense,
and Consumer Products.
E2open transcends traditional supply chain software categories, which include
business-to-business, or B2B, integration, procurement, forecasting, planning
and execution, by enabling coordination and collaboration among enterprises,
which we call “collaborative execution.” By providing our solutions in an
integrated cloud-based environment, our customers and their trading partners
can easily share detailed and relevant content and data to gain the visibility
they need for collaborative execution across their extended trading network.
Our customers benefit from the following key differentiating features of the
E2open Business Network:
• Cross-network analytics . We provide cross-network analytics for real-
time monitoring and control of large volumes of data to sense and
respond quickly and collaboratively to changes, opportunities or
disruptions in the supply chain.
• Multi-enterprise, multi-tier supply and demand process management . We
support key operational processes, such as forecast, order and inventory
management, for our customers and their multi-tiered supply and demand
trading networks.
• Scalable, secure cloud-based connectivity platform . Our solutions
combine B2B connectivity and integration capabilities that allow our
customers to securely connect, share and act on information across their
trading networks that can include thousands of partners.
• Integration with existing systems . Our highly-configurable solutions
integrate with many Enterprise Resource Planning, or ERP, systems to
efficiently manage complex networks and facilitate the interchange of
transactions.
We believe that the E2open Business Network is strategic to our customers in
that it enables them to increase revenue and productivity, and to reduce
operating expenditures, working capital and cost of goods sold. Our solutions
seamlessly integrate with and enhance our customers’ mission critical business
systems and processes across their trading networks.
We have achieved strong growth as our network has scaled and as we have
expanded our solutions. Our platform originated as a solution to help our
customers connect with their manufacturing and distribution partners in their
trading network. Next, we introduced solutions for multi-enterprise supply
management, and then we introduced solutions to help our customers coordinate
multi-enterprise demand management. Our revenue has grown from $37.7 million in
fiscal 2009 to $44.4 million in fiscal 2010 to $55.5 million in fiscal 2011 and
$59.7 million in fiscal 2012. Revenue increased from $11.2 million for the
three months ended May 31, 2011 to $15.5 million for the three months ended May
31, 2012. Effective March 1, 2011, we adopted new accounting guidance relating
to multiple-element arrangements, which had the effect of increasing fiscal
2012 revenue by $10.9 million more than would have been recognized during the
year had such accounting guidance not been adopted by us. Bookings were $57.5
million for fiscal 2010, $56.9 million for fiscal 2011 and $72.6 million for
fiscal 2012. For the three months ended May 31, 2012, total bookings was $37.8
million compared to $15.8 million for the three months ended May 31, 2011,
representing a 139.1% increase. Additionally, from March 1, 2008 through May
31, 2012, we increased backlog from $24.4 million to $102.6 million,
representing a 320.3% increase.
Operating income (loss) was $(5.8) million in fiscal 2010, $6.9 million in
fiscal 2011 and $0.3 million in fiscal 2012. Net income (loss) was $(6.6)
million in fiscal 2010, $6.6 million in fiscal 2011 and $(0.2) million in
fiscal 2012. Net income (loss) adjusted for interest and other expense, net,
provision for income taxes, depreciation and amortization, and stock-based
compensation expense (Adjusted EBITDA) was $(3.0) million in fiscal 2010, $9.4
million in fiscal 2011 and $2.5 million in fiscal 2012. For the three months
ended May 31, 2012, operating loss was $(2.2) million, net loss was $(2.4)
million and Adjusted EBITDA was $(1.4) million. For the three months ended May
31, 2011, operating loss was $(2.0) million, net loss was $(2.1) million and
Adjusted EBITDA was $(1.5) million. Our accumulated deficit as of February
29, 2012 and May 31, 2012 was $340.6 million and $343.0 million, respectively.
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E2open, LLC commenced operations in 2000 as a venture between a number of
strategic corporate investors, financial investors and advisors. In 2003,
E2open, Inc. was incorporated in Delaware, and merged with E2open, LLC, with
E2open, Inc. becoming the surviving entity in the merger.
Our principal executive offices are located at 4100 East Third Avenue, Suite
400, Foster City, California 94404, and our telephone number is (650) 645-6500.
Our website address is www.e2open.com.