Enfusion(ENFN) - 2023 Q4 - Annual Results

Disclaimer and Forward-Looking Statements This section provides disclaimers and outlines the nature of forward-looking statements and associated risks Forward-Looking Statements This section outlines forward-looking statements, their basis in current assumptions, potential for differing actual results, and safe harbor coverage - Forward-looking statements are identified by words such as "anticipates," "believes," "estimates," and are intended to be covered by safe harbor provisions of the Securities Act and Exchange Act[2] - Actual results may differ materially from forward-looking statements due to a variety of risks and factors beyond the company's control, as detailed in SEC filings[3] Shareholder Letter & Q4 2023 Highlights This section presents the CEO's letter highlighting 2023 financial performance and Q4 2023 business achievements CEO Letter The CEO expresses satisfaction with Enfusion's excellent financial performance in 2023, highlighting increased momentum into 2024 - Enfusion ended 2023 with excellent financial performance and increased momentum, exceeding expectations for operating margin improvement and customer wins[5] - The company anticipates continued double-digit revenue growth in 2024, allowing investment in best-in-class technology while simultaneously improving profitability[7] Q4 2023 Business Highlights Enfusion's economic profile strengthened in Q4 2023, with 14.7% YoY revenue growth and adjusted EBITDA margins expanding to 21.1% Q4 2023 Economic Trajectory | Metric | Q4 2023 | YoY Change | | :--------------------- | :------ | :--------- | | Revenue Growth | 14.7% | Up | | Net Income Margin | 1.9% | Unchanged | | Adjusted EBITDA Margin | 21.1% | Up from 16.7% | - Achieved 45 new client wins in Q4 2023, the largest number since 2022, indicating increased business predictability[8] Q4 2023 Regional Revenue Growth | Region | YoY Revenue Growth | | :------- | :----------------- | | EMEA | 24.4% | | Americas | 15.3% | | Asia Pacific | 7.4% | - Product strategy over the past 18 months expanded support for non-equity trading strategies and enhanced portfolio construction capabilities, leading to 2.5 times more sales to credit investment managers in 2023 compared to the prior year[8] Company Overview This section details Enfusion's mission, its solution for investment management, client base, and competitive advantages Mission Enfusion's mission is to empower all investment workflows through unparalleled technology, relentless innovation, and a dedicated focus on clients - Enfusion's mission is to power all investment workflows with unparalleled technology, relentless innovation, and dedicated client focus[9] Investment Management Lifecycle Simplification Enfusion simplifies and unifies the complex investment management lifecycle by empowering teams to operate in concert across various functions - Enfusion simplifies and unifies the investment management lifecycle, enabling teams to operate in concert across functions like orders, fills, reconciliations, and reporting[10][11] Client Base Enfusion serves a diverse range of clients across the investment management industry, including alternative and institutional investment managers Client Segments Served | Alternative Investment Managers | Institutional Investment Managers | | :------------------------------ | :-------------------------------- | | Hedge Funds | Traditional Asset Managers | | Private Equity | Wealth Managers | | Private Credit | Sovereign Wealth Funds | | Family Offices | Mutual Funds | End-to-End Solution Enfusion offers a purpose-built, end-to-end solution integrating PMS, OEMS, and Accounting/General Ledger with technology-powered services - Enfusion provides a purpose-built, end-to-end solution integrating PMS, OEMS, and Accounting/General Ledger, offering a single dataset and source of truth[14][15] - The solution offers real-time Investment Book of Record (IBOR) and Accounting Book of Record (ABOR), supported by expert teams for administrative tasks[15] Competitive Advantages Enfusion's competitive advantages include its single end-to-end solution, client-centric approach, open architecture, and multi-tenant SaaS model - Key competitive advantages include a single end-to-end solution with one dataset, a client-centric approach, open/flexible architecture, rapid delivery, and a multi-tenant SaaS model[17] - Enfusion's unique ability lies in leading with a single solution that adjusts to client complexity, scales with size, evolves with workflows, and adapts to business dynamics[18] Q4 2023 Financial Performance This section summarizes Enfusion's strong Q4 2023 financial results, highlighting revenue growth, profitability expansion, and client metrics Key Financial Highlights Enfusion reported strong Q4 2023 financial results, characterized by a highly attractive SaaS model combining scale, growth, and profitability Q4 2023 Key Financial Highlights | Metric | Value ($ in millions) | YoY Growth / Margin | | :-------------------------- | :-------------------- | :------------------ | | Total Revenue | $46.5 | 14.7% YoY Growth | | Gross Profit | $30.9 | 66.4% Gross Margin | | Adjusted Gross Profit | $31.1 | 66.9% Adjusted Gross Margin | | Net Income | $0.9 | 1.9% Net Income Margin | | Adjusted EBITDA | $9.8 | 21.1% Adjusted EBITDA Margin | | Operating Cash Flow | $6.6 | 14.2% OCF Margin | | Adjusted Free Cash Flow | $4.3 | 43.8% FCF Conversion | Revenue Growth Enfusion demonstrated strong revenue growth, with Q4 2023 revenue reaching $46.5 million, a 14.7% increase year-over-year Quarterly Revenue Trend | Quarter | Revenue ($ in millions) | | :-------- | :---------------------- | | 4Q22 | $40.5 | | 1Q23 | $41.0 | | 2Q23 | $42.7 | | 3Q23 | $44.4 | | 4Q23 | $46.5 | Quarterly Gross Profit and Adjusted Gross Profit Trend | Quarter | Gross Profit ($ in millions) | Adjusted Gross Profit ($ in millions) | | :-------- | :--------------------------- | :------------------------------------ | | 4Q22 | $27.2 | $27.5 | | 1Q23 | $27.7 | $27.9 | | 2Q23 | $28.5 | $28.7 | | 3Q23 | $29.9 | $30.2 | | 4Q23 | $30.9 | $31.1 | Profitability Expansion Enfusion significantly expanded its profitability in Q4 2023, with Net Income reaching $0.9 million and Adjusted EBITDA growing to $9.8 million Quarterly Net Income and Adjusted EBITDA Trend | Quarter | Net Income ($ in millions) | Adjusted EBITDA ($ in millions) | | :-------- | :------------------------- | :------------------------------ | | 4Q22 | $0.8 | $4.7 | | 1Q23 | $1.0 | $5.7 | | 2Q23 | $2.7 | $6.8 | | 3Q23 | $0.9 | $8.2 | | 4Q23 | $0.9 | $9.8 | Quarterly Operating Cash Flow and Adjusted Free Cash Flow Trend | Quarter | Operating Cash Flow ($ in millions) | Adjusted FCF ($ in millions) | | :-------- | :---------------------------------- | :--------------------------- | | 4Q22 | $7.5 | $5.8 | | 1Q23 | $6.0 | -$1.6 | | 2Q23 | $9.5 | $3.8 | | 3Q23 | $12.1 | $9.5 | | 4Q23 | $6.6 | $4.3 | Client & Contract Metrics Enfusion continued to scale through organic client growth and expansion, with ARR reaching $185.1 million and a Net Dollar Retention Rate of 101.7% Annual Recurring Revenue (ARR) Trend | Quarter | ARR ($ in millions) | YoY Growth | | :-------- | :------------------ | :--------- | | 4Q22 | $164.7 | 29.5% | | 1Q23 | $167.0 | 21.4% | | 2Q23 | $171.2 | 15.2% | | 3Q23 | $177.9 | 12.1% | | 4Q23 | $185.1 | 12.4% | Net Dollar Retention Rate (NDR) Trend | Quarter | NDR | | :-------- | :---- |