March 25, 2022, 4:10 p.m. EDT

10-K: ENJOY TECHNOLOGY, INC./DE

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

(EDGAR Online via COMTEX) -- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations should be read together with our financial statements and related notes and other financial information included in this Report. The following discussion may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report, particularly in Part I, Item 1A, "Risk Factors." Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Table of Contents

Overview

Enjoy started with a simple question, "What if the best of the store could come to you?" Over the last eight years we built and optimized our Mobile Store, a new channel that pairs the convenience of online shopping with the personal touch of an

Over the past twenty five years, eCommerce has disrupted the retail industry in virtually every category, shifting commerce from physical stores to the home. While eCommerce channels greatly expanded choices and increased convenience with fulfillment to customers' doorsteps, they have not addressed the importance of an interactive shopping experience that customers desire for premium products, such as technology. Enjoy provides

We maintain multi-year contractual relationships with leading telecommunications and technology companies, which are our Customers. Our revenue stems from a variety of service,

Enjoy delivers a broad assortment of telecommunications and technology products and accessories, which are provided by our Customers. Our Experts provide set-up,

Consumers initiate their purchase on our Customers' eCommerce sites, service centers or retail locations. The Consumer selects at-home

Our inventory is 100% consigned to us by our Customers and maintained in secure warehouses at our market locations. These warehouse locations also serve as the base of operations for our Mobile Store fleets and as the operating center for the market in which they serve. Our warehouses also provide meeting, training and support services for our Experts. Our warehouses and Mobile Store vehicle fleet are fully leased. We currently operate in over 80 locations which provide access to over 50% of the population in the markets that we serve, representing over 200 million addressable consumers.

Our business is enabled by highly sophisticated, proprietary sets of technology applications, systems and data science tools. To deliver and optimize millions of retail experiences, we built our technology platform from the ground up to support customer integrations, smart logistics and a variety of solutions to empower our Experts in providing the best and most personalized experience for every Consumer.

Our Experts are central to the

We believe Enjoy is positioned to benefit from several long-term trends that will continue to expand the demand for

Table of Contents

work-from-home arrangements, all of which have been accelerated by the







        COVID-19
        pandemic, (3) increasingly connected homes enabled by technology and
        telecommunications and (4) the rapid expansion of subscription-based services
        delivered through online channels.
        


Factors Affecting Our Business

Consumer Discretionary Spending:

Online Consumer Shopping Behaviors and







        COVID-19
        safety protocols materially reduced the percent of our indoor Consumer
        engagements, which negatively impacted our business.
        


Changes in Consumer Behavior and Lifestyles:







        COVID-19
        pandemic has dramatically increased work-from-home arrangements over the past
        year, the underlying trends towards a more flexible work environments and
        telecommuting suggest that these trends will continue. Studies suggest flexible
        work environments create a more productive and happier workforce. Advancements
        in technology have allowed remote workers to collaborate in increasingly
        effective ways. These trends are likely to accelerate
        commerce-at-home.
        


Product Innovation Lifecycles

Changes in Products and Services Offered by Our Customers:

Availability of Inventory from Our Customers:

Table of Contents

guarantee with certainty that we will have adequate inventory at all times to support our business. At times, our business can face disruptions stemming from inventory shortages driven by new product releases with high consumer demand, supply constraints, political, environmental or other factors.

Seasonal Sales Trends:

Recent Developments

Marquee Raine Acquisition Corp. Merger

On October 14, 2021, as contemplated by the Merger Agreement, MRAC filed a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filed a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which MRAC was domesticated and continues as a Delaware corporation, changing its name to "Enjoy Technology, Inc." (the "Domestication").

On October 15, 2021 (the "Closing Date"), Legacy Enjoy consummated the Transactions with New Enjoy as contemplated by the Merger Agreement, and New Enjoy common stock and warrants began trading on Nasdaq under the ticker symbols "ENJY" and "ENJYW", respectively.

In connection with the execution of the Merger Agreement, MRAC entered into subscription agreements (the "Subscription Agreements") with certain investors (collectively, the "PIPE Investors") pursuant to which the PIPE Investors agreed to purchase, in the aggregate, approximately 8 million shares of New Enjoy common stock at $10.00 per share for an aggregate commitment amount of approximately $80 million (the "PIPE Shares"). Pursuant to the Subscription Agreements, New Enjoy agreed to provide the PIPE Investors with certain registration rights with respect to the PIPE Shares. The PIPE investment was consummated substantially concurrently with the closing of the Transactions.

On the Closing Date, certain investors (the "Backstop Investors") purchased, in the aggregate, 5,590,906 shares of New Enjoy common stock (the "Backstop Shares"), for a purchase price of $10.00 per share and an aggregate purchase price of approximately $55,009,060, pursuant to the backstop agreements, dated September 13, 2021 (the "Backstop Agreements"). Pursuant to the Backstop Agreements, New Enjoy agreed to provide certain registration rights to the Backstop Investors with respect to the Backstop Shares.

LCH Transaction:

Table of Contents

Contribution Agreement, immediately prior to the Closing, Mr. Johnson contributed a number of shares of the Company's common stock equal to the quotient obtained by dividing $20.0 million by the product obtained by multiplying $10.00 by the exchange ratio calculated in accordance with the Merger Agreement used to determine that number of shares each share of the Company's common stock will be exchanged for at the closing of the Merger ("Contributed Shares"). In October 2021, as detailed in the Stock Issuance Agreement, Enjoy issued a number of shares equal to the Contributed Shares to LCH.

COVID-19:







        COVID-19
        in several ways. Typically, Consumer interactions occur within their home.
        Social distancing protocols changed the way we interact with Consumers and our
        in-home
        visits fell to zero in the early stages of the pandemic. Depending on the
        geography during certain periods we had no
        in-home
        visits and these visits remained significantly below
        pre-COVID
        levels throughout 2020 and 2021. In addition, the Company furloughed employees
        in the U.K. beginning in April 2020 through August 2020 and again starting
        January 2021 through August 2021. These factors negatively impacted both Daily
        Mobile Store counts and Daily Revenue Per Mobile Store, as defined below. To
        protect our employees and Consumers, we implemented a variety of protocols to
        provide masks, cleaning supplies and other protocols that remain in place.
        


The Company and its Business Partners continue to experience logistic, supply chain, and manufacturing challenges that are expected to continue during 2022. As economies around the world continue to recover, shortages in raw materials and inventory have become more widespread. During the latter half of fiscal year 2021, we experienced shortages in our inventory of recently launched key smartphones. Inventory shortages, and shortages of the raw materials used in the products we sell, have caused and may continue to cause, delays in the supply chain. While we are dedicating significant resources to manage, mitigate, and resolve these issues, we currently expect supply chain challenges to continue to impact our ability to deliver products to our Consumers over the next several quarters.

The Company cannot at this time predict the specific extent, duration, or full impact that the







        COVID-19
        pandemic will have on our financial condition and operations. The full impact of
        the
        COVID-19
        pandemic on management estimates and the financial performance of the Company
        may depend on future developments, including the duration and spread of the
        outbreak including new variants and related governmental advisories and
        restrictions and the effectiveness of the
        COVID-19
        vaccine. In addition, the Company could see some limitations on employee
        resources that would otherwise be focused on operations, including but not
        limited to sickness of employees or their families, desire for employees to
        avoid contact with groups of people, and increased reliance on working from
        home.
        


2021 Convertible Loan:

Table of Contents

Restricted Stock Unit Grants:

In July 2021, the Company granted restricted stock units ("July 2021 RSUs") underlying approximately 900,000 shares of the Company's common stock under the 2014 Equity Incentive Plan. The July 2021 RSUs vest upon the satisfaction of service-based vesting conditions with 25% vesting on the first anniversary of the vesting commencement date, and the remaining 75% vesting in substantially equal quarterly installments for three years thereafter, subject to continued service through each vesting date.

In December 2021, the Company granted restricted stock units ("December 2021 RSUs") underlying approximately 4.4 million shares of the Company's common stock under the 2021 Equity Incentive Plan. The December 2021 RSUs vest upon the satisfaction of service-based vesting conditions either: a) 25% vesting on the first anniversary of the vesting commencement date, and the remaining 75% vesting in substantially equal quarterly installments for three years thereafter; b)

Key Performance Metrics

Management regularly review several metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. The reasons we believe these key performance metrics are useful to investors are provided below.

Daily Mobile Stores:

Daily Revenue Per Mobile Store:

Mobile Store Profit (Loss) and Mobile Store Margin:

Segment Income (Loss):

Adjusted EBITDA:

Table of Contents

and future periods by excluding items that we do not believe are indicative of our core operating performance. Adjusted EBITDA is a non-GAAP

The following tables present our key performance metrics for the periods presented (in thousands except Daily Mobile Stores amounts):







                                                  Year Ended December 31, 2021
                                           North
                                          America          Europe          Consolidated
        Daily Mobile Stores                     496             137                  633
        Daily Revenue Per Mobile Store   $      378       $     251       $          351
        Mobile Store Loss                $  (23,116 )     $  (8,796 )     $      (31,912 )
        Mobile Store Margin                   (33.8 )%        (70.2 )%             (39.4 )%
        Segment Loss                     $ (103,334 )     $ (28,522 )
        Adjusted EBITDA                                                   $     (166,510 )
                                                  Year Ended December 31, 2020
                                           North
                                          America          Europe          Consolidated
        Daily Mobile Stores                     334             130                  464
        Daily Revenue Per Mobile Store   $      382       $     289       $          356
        Mobile Store Loss                $   (7,444 )     $  (4,105 )     $      (11,549 )
        Mobile Store Margin                   (16.0 )%        (29.9 )%             (19.1 )%
        Segment Loss                     $  (64,669 )     $ (18,167 )
        Adjusted EBITDA                                                   $     (106,552 )
                                                                    Year Ended December 31, 2021
                                       First Quarter            Second Quarter           Third Quarter          Fourth Quarter
        Daily Mobile Stores -
        Quarterly Average                          580                       588                    592                     770
        North America                              428                       438                    466                     650
        Europe                                     152                       150                    126                     120
        Daily Mobile Stores -
        Last Month of the
        Quarter Average                            590                       595                    603                     859
        North America                              438                       453                    477                     732
        Europe                                     152                       142                    126                     127
                                                                    Year Ended December 31, 2020
                                       First Quarter            Second Quarter           Third Quarter          Fourth Quarter
        Daily Mobile Stores -
        Quarterly Average                          409                       351                    458                     633
        North America                              291                       274                    316                     452
        Europe                                     118                        77                    142                     181
        Daily Mobile Stores -
        Last Month of the
        Quarter Average                            337                       393                    511                     695
        North America                              242                       287                    361                     498
        Europe                                      95                       106                    150                     197
        


Table of Contents

Results of Operations

Components of Results of Operations

Revenue

Revenue consists of service fees paid to us by our Customers for bringing their products and services to Consumers. These fees are comprised of fixed service . . .

Mar 25, 2022

COMTEX_404775496/2041/2022-03-25T16:09:45

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2022 Cybernet Data Systems, Inc. All Rights Reserved

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.