Enfusion(ENFN) - 2024 Q3 - Quarterly Report

Part I. FINANCIAL INFORMATION Financial Statements This section presents Enfusion, Inc.'s unaudited condensed consolidated interim financial statements for Q3 and nine months ended September 30, 2024 Condensed Consolidated Interim Balance Sheets Total assets increased to $134.9 million as of September 30, 2024, from $109.0 million at year-end 2023, driven by cash growth Balance Sheet Summary (in thousands) | Account | Sep 30, 2024 (Unaudited) | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $134,940 | $108,972 | | Total Current Assets | $85,436 | $69,852 | | Total Liabilities | $38,763 | $31,490 | | Total Current Liabilities | $23,570 | $20,309 | | Total Stockholders' Equity | $96,177 | $77,482 | Condensed Consolidated Interim Statements of Operations Q3 2024 total revenues increased 15.4% to $51.2 million, but net income decreased to $2.0 million from $2.7 million Q3 2024 vs Q3 2023 Performance (in thousands) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $51,166 | $44,357 | 15.4% | | Gross Profit | $34,826 | $29,850 | 16.7% | | Income from Operations | $2,981 | $2,689 | 10.9% | | Net Income | $1,957 | $2,661 | (26.5)% | | Diluted EPS | $0.02 | $0.02 | 0.0% | Nine Months 2024 vs 2023 Performance (in thousands) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $148,673 | $128,049 | 16.1% | | Gross Profit | $100,197 | $86,032 | 16.5% | | Income from Operations | $4,571 | $9,814 | (53.4)% | | Net Income | $3,743 | $8,353 | (55.2)% | | Diluted EPS | $0.03 | $0.06 | (50.0)% | Condensed Consolidated Interim Statements of Cash Flows Net cash provided by operating activities increased to $25.0 million for the nine months ended September 30, 2024, from $19.0 million in the prior year Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $25,009 | $19,048 | | Net cash used in investing activities | ($11,229) | ($7,376) | | Net cash used in financing activities | ($1,403) | ($42,504) | | Net increase (decrease) in cash | $12,695 | ($30,893) | Notes to Condensed Consolidated Interim Financial Statements The notes detail accounting policies, revenue disaggregation, a new convertible note, a credit facility, and increased stock-based compensation expense - The Americas region remains the largest source of revenue, contributing 62.5% of total revenue for the first nine months of 2024, consistent with the prior year[62] - On June 24, 2024, the company loaned $3.0 million to a privately-held technology company via an unsecured convertible promissory note with a fixed interest rate of 5.12% per annum[66] - Stock-based compensation expense for the nine months ended September 30, 2024, increased significantly to $15.3 million from $4.1 million in the same period of 2023, including $3.6 million for vested shares granted under the Annual Bonus Incentive Plan[86] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q3 and nine-month 2024 financial results, highlighting revenue growth, increased operating expenses, and liquidity Results of Operations Q3 2024 revenue grew 15.4% to $51.2 million driven by platform subscriptions, while operating expenses rose 17.2% due to higher payroll and stock-based compensation Q3 2024 vs Q3 2023 Revenue Breakdown (in thousands) | Revenue Type | Q3 2024 | Q3 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Platform subscriptions | $47,786 | $40,857 | $6,929 | 17.0% | | Managed services | $3,078 | $3,028 | $50 | 1.7% | | Total revenues | $51,166 | $44,357 | $6,809 | 15.4% | - The increase in Q3 platform subscription revenue was driven by $5.6 million from upsells and increased users with existing clients, and $4.2 million from new clients, partially offset by $3.1 million in client churn[129] Nine Months 2024 vs 2023 Operating Expenses (in thousands) | Expense Category | Nine Months 2024 | Nine Months 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | | General and administrative | $57,678 | $47,520 | $10,158 | 21.4% | | Sales and marketing | $18,459 | $14,866 | $3,593 | 24.2% | | Technology and development | $19,489 | $13,832 | $5,657 | 40.9% | | Total operating expenses | $95,626 | $76,218 | $19,408 | 25.5% | Liquidity and Capital Resources The company maintains $48.3 million in cash and $99.9 million available credit, sufficient to fund operations for at least the next 12 months - The company's primary sources of liquidity are cash from client collections and its credit facility, with cash and cash equivalents at $48.3 million as of September 30, 2024[153] - The company has a $100.0 million senior secured revolving loan facility, with $99.9 million in available borrowing capacity as of September 30, 2024[163] - Net cash from operating activities for the first nine months of 2024 was $25.0 million, an increase of $6.0 million (31.3%) compared to the same period in 2023[156][157] Quantitative and Qualitative Disclosures About Market Risk No material changes to the company's market risk exposure occurred during the quarter ended September 30, 2024 - There have been no material changes to the company's market risk during the third quarter of 2024[178] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal control over financial reporting - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[180] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[181] Part II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not presently a party to any material legal proceedings[183] Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 have occurred - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023 have occurred[184] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or issuer purchases of equity securities during the period - The company had no unregistered sales of equity securities or issuer purchases of its equity securities during the quarter[184] Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q3 2024 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter[185] Exhibits This section lists exhibits filed with or incorporated by reference into the Quarterly Report on Form 10-Q, including certifications and XBRL documents - The report includes standard exhibits, such as CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL data files[188]