Q2 2023 Enfusion Inc Earnings Call
Good morning, ladies and gentlemen, and thank you for standing by walking to infusion second quarter 2023 earnings conference call. At this time all lines have been placed on mute to prevent any background noise. Following the Speakers' remarks, we will open the lines for your questions. As a reminder, this conference.
Call's being recorded I would now like to turn the call over to eating a jokey head of Investor relations to begin.
Good morning, and thank you operator.
You're welcome you to infusion second quarter of 2023 earnings conference call hosting todays call are OLED Marchand, Fusion's, Chief Executive Officer, and Brad Harry refuses Chief Financial Officer.
Please note our quarterly shareholder letter, which includes our quarterly financial results have all been posted to our IR website.
I'd like to remind you that today's call may contain forward looking statements. These forward looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC.
And are available in the Investor Relations section at our website.
Actual results may differ materially from any forward looking statements. We make today. These forward looking statements speak only as of today and the company does not assume any obligation or intent to update sounds fall into this call.
As required by law. In addition, todays call may include non-GAAP measures. These measures should be considered as a supplement to and not as substitutes for GAAP financial measures reconciliation to the nearest GAAP measure can be found in todays quarterly shareholder letter, which is available on the companys website with that.
I'd like to turn the call over to OLED to begin.
Good morning, and thank you for joining us today to discuss our results in the second quarter of the year.
I'm happy to announce another solid quarter balanced between our top and bottom lines.
Given the current macro environment and industry dynamics, our business continues to exhibit strength and agility infusion provides an obvious differentiated alternative to existing legacy technology and operational capabilities.
Especially valuable in the context of ongoing revenue pressures experienced by investment managers.
The accelerating quarter on quarter client additions healthy bookings trajectory increase in average contract value and expanding margins are a testament to the resiliency of our business.
While I am pleased with our level of engagement with existing and prospective clients economic uncertainty and industry dynamics have created some short term headwinds for our business.
Macro uncertainty and challenging performance backdrop, because the investment managers to compress expenses in the near term.
As a result.
Some of our clients have reduced their spending on our platform and delayed fund launches impacting our net dollar retention and topline growth.
As we remain consistent with our strategy to open up traditional investment management segment, and expand our market share and more complex catch for managers, our sales cycles and the resultant implementations become somewhat longer.
Lastly, while we see pockets of improvement in the catch upon launch market. This year. So overall fund launches continue to experience one of the most challenging environments in the record.
Despite the headwinds will continue to take market share expand our geographic footprint drive profitability and deliver superior client outcomes.
We've demonstrated in the past our business model tends to be durable and resilient during challenging times.
It is precisely in such times, when we capture opportunities to deepen our moat take business away from our competitors and position our brand to enhance growth trajectory and financial profile.
Now, let me walk you through the key highlights of our financial performance for the quarter.
Revenue grew 17% to $42 7 million as we continue to see client demand for our software and services.
Adjusted EBITDA was $8 million and represented an 18, 6% margin.
I will let Barry discuss our financial results in more detail and provide some more color in a few moments.
Our financial performance. This quarter is a case study of flexibility and agility of infusion business model.
It demonstrates our ability to modulate between the revenue growth and profit margins, which is exceedingly important in this context of shifting industry dynamics.
As our business evolves and achieved has been higher scale.
We'll never take our eyes of maintaining our operating leverage as we balance our long term growth objectives with capital allocation discipline.
It is precisely that operating leverage that allowed us to exceed EBITDAX expectations. This quarter and will set us up for further growth acceleration without sacrificing durability of infusions value creation machine.
Now I would like to highlight several compelling wins, demonstrating the broadening demand for our solutions across all the regions.
In the U S revenue grew 14% year over year, reflecting the challenging macro environment I outlined earlier.
I am pleased to announce that we have welcomed Ark investment management.
Florida based investment firm to our platform.
<unk> offers a range of investment products focused on disruptive innovation and delivered mostly via Etfs.
Managers sought to replace its multiple incumbent providers with our comprehensive software platform.
Infusion disclaimed benefits for more automated and streamlined workflows elimination of operational for clients across multiple vendors in a more robust compliance system.
This conversion further validates our ability to expand our Tam into this exciting segment.
It has become vehicles of choice to deliver both passive and active investment strategies.
In addition, I am thrilled to announce that we signed an agreement with the liquid markets arm of one of the worlds largest global alternative asset managers.
This firm operates a platform that offers private equity credit real estate infrastructure and other strategies to global institutional clients.
Infusion will provide a scalable and reliable end to end solution that supports multiple verticals of complex derivative strategies.
Our open architecture will allow for a smooth integration with clients' proprietary systems via Apis in realtime aggregated views across all strategies.
Additionally, our platform will enable a much higher level of customization and will support further growth of the business by leveraging the infusions high touch client service.
In EMEA revenue grew 33% year over year, driven by our unique value proposition strongly differentiate it against incumbent legacy competitors.
I'd like to stress that EMEA remains a key tactical focus for infusion and we're getting increasingly excited about maintaining our ability to expand our market share in both continental Europe and the middle East.
This region is very important for us in terms of maintaining growth momentum for our global revenue mix and expanding our serviceable addressable market into traditional asset management.
A marquee win in Europe includes a $15 billion, London based institutional asset management.
This long only managers struggled with the legacy providers product limitations.
<unk> ability to handle complex workflows, all of which drove unreasonably high technology spending.
The client decided to overhaul the best work of disparate solutions and capture the benefits of the cohesiveness and flexibility of our platform and our front to back capabilities.
This one is also a special to us because it was sourced through our partnership agreement with Northern Trust.
It is also important to emphasize that this new client engagement is a great example of infusions product led growth strategy.
As we continue our journey to capture the traditional asset management segment, we see increasing demand for portfolio construction and risk management capabilities.
Along these lines our team has implemented the framework that allows active portfolio managers to design their portfolios and express their views interactively within the system.
This use could include sector country affect our exposures as well as security specific bets.
Differentiated from many other competitive offerings. This capability is tightly integrated with the rest of infusions platform, allowing the portfolio construction process to flow smoothly into order management and execution and further downstream.
In addition, I am pleased to announce that infusion site in agreement with the London based hedge fund that utilizes various trading strategies that include both public and private credit and distressed assets.
The fund manager selected infusion because of our deep and comprehensive capabilities that support cash and derivative credit strategies and our attractive total cost of ownership.
I am proud of this deal for several reasons first the fund manager initially chose another competitor soon realize the competitor solutions had several shortcomings, including lack of domain expertise in the credit space mineral trade processing and non existing trade allocation functionality.
Second it demonstrates the pattern we're increasingly seen.
Infusion continues to be a solution of choice for asset managers investing across capital structure and going well beyond equities as an asset class.
Finally, we will continue to expand our geographic presence in continental Europe by signing an alternative asset manager based in Norway with strategies include both equity and fixed income asset classes.
As we continue to dominate the fund launch market. This mandate is consistent with our go to market strategy and positioning within Europe that is a target rich environment for the traditional asset management segment.
In APAC revenue grew by 14% year over year.
While top line growth came in slightly below our expectations for the quarter were encouraged by ongoing market share gains in competitive takeaways.
For example, I am thrilled to announce that we entered into an agreement with a Hong Kong based event driven alternative investment manager.
The fund manager struggled with the legacy provider sluggish crude trade compliance workflow and limited in quantity pre trade allocation process.
By partnering with infusion they consolidate many disjointed technologists on one platform in an intuitive interface and more frictionless and functional trade execution capability.
We're also signed a new agreement with the Singapore based family office, which manages equities and fixed income.
The client was looking to overhaul the infrastructure to support the multi manager setup based.
They selected infusion because of its flexibility in setting up a multi manager architecture and it's easy to use fully integrated end to end platform.
Infusion will replace its manual error prone infrastructure with our Pms Oems and accounting capabilities, resulting in streamlined operational processes and the reduction in total cost of ownership.
Infusion continues to distinguish itself as a provider of choice for multi manager platforms, where complexity both at the business ownership level and at the strategy level matters to the stakeholders.
Now I'd like to discuss our continued focus on building our partner ecosystem and delivering new innovative products to widen the gap between infusion and our competition.
I am excited to announce a new partnership with Everest technologists to provide powerful automated workforce to infusion clients.
Everest workflows to extend functionality and use cases available throughout the infusion platform.
The workforce can be quickly customize and deploy via API connectivity.
This partnership represents a significant enhancement to our ability to execute on bespoke requirements in the time efficient manner without the burden of custom development.
This is a prime example of how our team continues to leverage our open architecture and deliver innovation in a way that sets us apart from legacy providers and allows us to maintain our technological edge and widen our competitive moat.
Reiterating my previous comments I'm also excited to highlight that we signed two more institutional managers during this quarter, who will be using and leveraging our portfolio construction capabilities.
We plan to formally released it in the third quarter.
The rebalancing engine will enable portfolio managers to design and implement a target set of our portfolio exposures relative to various passive benchmarks and seamlessly integrated process with our Oems functionality, including pre and post trade compliance and trade allocation.
We will be able to share some more details on this at an appropriate time.
Aligned with our ongoing efforts to streamline the investment manager experience infusion rolled out 309 enhancements and features in the second quarter, our cloud native architecture enables us to be nimble by releasing product updates on a weekly basis and stay aligned and sometimes ahead of what our clients are expecting us to deliver.
Now I would like to provide some color on market dynamics.
While we're encouraged by the uptick in the high profile hedge fund launches this year and our ability to win in that segment.
They're all launch market continues to be challenging and remains well below historical levels.
Emerging hedge fund managers are confronted with probably the toughest fundraising and cost environment in the record.
Resulting in suppressed and delayed launches.
However, this is old news, while we continue to maintain and expand our dominance in the large and complex hedge funds segment.
Expect conversions to drive an increasing portion of our overall organic growth as we continue to win hearts and minds of the traditional asset managers.
Now, let me review some of the key elements of our strategy going forward.
First let me address our strategic positioning.
All investment managers, both traditional and alternative continued to embrace digital transformation.
Global AAM compression challenging performance environment, and ongoing industry consolidation collide to accentuate the need to optimize operating costs across the board.
With our comprehensive front to back solution shorter onboarding cycles attractive value proposition and open architecture and fusion is very well positioned to continue to expand its market share while our competition finds itself out of position.
He will remain a painkiller as opposed to a vitamin and our technology starts delivering value within six months to 12 months since the beginning of engagements where our competition takes 18 to 24 months.
Second we will continue to run a profitable and growing business.
This quarter is a testament of the flexibility of our engine our ability to make money in the face of challenging market conditions.
Disciplined capital allocation and expense management has always been a staple of our execution style and that will not change.
Focus on profitability and margin expansion in the remains paramount to successful execution.
Our leading product capabilities allow us to drive margins, while delivering exceptional value to our clients.
Importantly, it puts us in a position to avoid competing on price as we optimize our pricing strategies and grow outside of our core market segments.
Third we will continue to unlock growth by executing on what our current and future clients are asking us to do.
To that end, we view delivery of portfolio construction and risk management solutions is key to our successful expansion into the traditional asset management segment, where benchmark aware portfolio management is the norm.
Here, we maintain our all in one product philosophy by delivering this capability and tight integration with all operational workflows and leveraging our open architecture to allow our clients to choose optimization and the risk models and accommodate their proprietary investment strategies in the same environment as order management and execution.
<unk> performance in the risk reported.
Interestingly absolute return managers also see benefits of infusions fully integrated benchmark centric capabilities as they proactively manage risk across various dimensions, including country sector currency duration and factor risks.
Importantly, we continue to go where nobody else does.
As evidenced by our performance this quarter, our efforts to expand in Europe , and the middle East, especially Continental Europe are gaining momentum.
Highly concentrated competitive playing field outdated incumbent technology, and our client base higher to fund <unk> and expensive implementations, both extremely well for our ability to compete in the region.
We see robust high quality pipeline, there and our team continues to execute against this opportunity set.
Our unique model allows us to protect our core market segment from emerging niche players and purposefully expand into adjacencies and unlock new opportunities.
We continue to make investments to enhance our competitive stance and with more institutional mandates as well update our product on a weekly basis infusions competitive edge gets sharper in our mall gets stronger while.
While competition steel migrates to cloud.
The increased flexibility of our workforce in turn infusion into an open platform are unparalleled flexibility and scale.
Stable and expanded more supports our focus on market share expansion without unnecessary distractions.
To conclude the prepared remarks, our business has demonstrated the resiliency of our economic model against the backdrop of macro and industry specific challenges that have created uncertainty for our clients.
Fusion continues to grow our profit margins and expand and deepen its footprint across all market segments and regions.
I will now turn the call over to Brett to discuss our financials.
Thanks, Alex and thank you to everyone for joining us today from.
I am happy to report yet another quarter of market, leading growth and margin expansion, while serving an end market that continues to waver against the backdrop of economic uncertainty.
For the first quarter, we generated revenue of $42 7 billion, an increase of 17% over the same quarter last year.
While this quarter's revenue growth represents a slowdown from previous quarters. There are a few points I want to highlight.
On a positive note.
We've mentioned that our new customer bookings were up 44% compared to last quarter that we added 39, new customers in the quarter.
This solidifies our ability to win new business in a market that is looking for economically viable single source solutions.
Second we continue to see some return to normality and other key revenue drivers such as downgrades and involuntary churn.
With regards to headwinds we saw two distinct items in the quarter first.
Macro forces have continued to slow or organic growth as asset managers look for more certainty before adding incremental seat licenses or broker connections.
Second as a byproduct of converting more upmarket customers two infusions full stack.
Experiencing longer implementation times between signing and monetization.
This is due to the additional complexities of conversions such as data conversion and prioritization challenges within our customers and compliance teams.
Second quarter, IRR was $171 2 million.
Up 15% year over year, and $4 $2 million higher than what we reported last quarter.
Net dollar retention, excluding in voluntary churn was 106% down 441 basis points from the previous quarter.
Net dollar retention, including in voluntary churn was 102% in the quarter.
We've discussed previously that in Dr with experienced some volatility in the near term as asset managers remain focused on optimizing their cost structures in reaction to the macro level uncertainties.
When compared to historical <unk>, the largest item negatively affecting <unk> in the quarter was a slowdown in net incremental seat licenses at broker connections that I talked about earlier.
Once the macro environment begins to stabilize we feel that <unk>, excluding in voluntary churn.
I will return to historical levels of approximately 110%.
Our reported adjusted gross profit, which excludes stock based compensation increased by 10% year over year to $28 7 billion.
This represents an adjusted gross margin of just over 67%.
It's worth noting that there was a nonrecurring technology charge in the quarter that negatively affected adjusted gross margins by approximately 100 basis points.
As we've mentioned in previous discussions we expect adjusted gross margins to remain between 68% and 70%.
Over the next several quarters as we continue to invest in our client onboarding and servicing capabilities in support of our growth strategy.
We still expect long term adjusted gross margins to hover at or above 70%. Once we've completed these current cycle of investments.
Adjusted EBITDA for the quarter was $8 million up over 51% compared to Q2 of last year.
Against our revenues of $42 7 million. This represents an adjusted EBITDA margin of 18, 6% up 410 basis points from the same period a year ago.
And 470 basis points higher than the previous quarter.
These results represent a 43% pass through rate on incremental revenues from last year.
Year over year margin expansion was generated by a combination of these high pass through rates matched with prudent expense management as we continue to balance our long term vision of delivering superior revenue growth and expanding profitability.
For the quarter, we generated adjusted free cash flow of $3 8 million compared to 0.8 million in the same period a year ago.
Adjusted free cash flow for the quarter was negatively impacted by a nonrecurring one 5 billion payment, which we distributed to one of our primary shareholders related to a pre IPO tax consideration.
This payment was funded by our cash deposit in the same amount that was reflected in our Q1 ending cash balance.
On a recurring basis, we continue to track to our rolling 12 months adjusted free cash flow conversion rate of approximately 50%.
GAAP net income for the quarter was $1.0 million compared to a loss of $4 1 billion in the same period last year.
We ended the quarter with approximately $28 million in cash and cash equivalents and no debt.
In the quarter, we used approximately $29 million of company cash settled federal and state tax withholding obligations related to our management incentive shares that were granted during our IPO and distributed in the current quarter.
This transaction decreased our fully diluted share count by approximately $3 7 million shares.
Let me now talk about our guidance for 2023.
While we observed indicators in Q1 in the first few weeks of Q2 that gave us confidence in our full year revenue guide by the Middle of Q2, and the first few weeks of Q3 top line trends did not provide enough momentum to support our existing revenue guidance.
The main drivers for the reset are as mentioned before the slowdown in our customer's deployment of incremental spend and the additional time it is taking to monetize our customer conversions.
That said, our new revenue estimates for the full year or between 170 and $175 million.
Mid point of this revised guidance puts our year over year revenue growth at approximately 15%.
With regard to EBITDA, we remain confident in our ability to maintain our profitability targets. Despite the reduction in our revenue projections.
We are therefore, only reducing our full year adjusted EBITDA guidance by $2 million to.
To an expected range of $30 million to $32 million.
At the midpoint of our revised revenue and EBITDA guidance, our margins are 18%, which is consistent with our previous guidance.
Also consistent with previous guidance, we expect to exit 2023 with margins of 20% or greater.
Lastly for modeling purposes, we are revising the projection of stock based compensation for the full year to approximately $8 million from $10 billion as previously described.
With that wed like to open up the call for any questions. Operator. Please go ahead.
Okay.
The floor is now open for your questions to ask a question at this time. Please press star one on your telephone keypad, if any point you'd like to withdraw from the queue. Please press star one again.
We will now take a moment to compile our roster.
Our first question comes from the line of Kevin Mcveigh from Credit Suisse. Please go ahead.
Great. Thanks, so much hey.
I Wonder can you give us a little bit just more color on what allowed you to maintain clearly much stronger margin targets.
Relative to where some of the adjustments on the revenue came in because it looks like at the midpoint actually margins go up pardon me 40 basis points for the full year. So I wanted to start there if we could.
Sure Hi, Kevin Good morning.
So look I mean, we've talked about this.
A couple of quarters ago on last quarter.
My objective has always been to get this business to the margin levels, which have been historically staple of infusions financial profile, which is north of 20% to 25% as you know historically we have been.
Even the running the business for quite a while at about 40% margins. So.
We're basically balancing.
Capital allocation and expense management.
Given the market environment, given what we're seeing but just as importantly, given what we are looking to do on the investment side. So were accentuated in our investments in products and technology.
Keating capital away from.
Okay.
Like marketing or.
Just operational capabilities that are not technologically scalable. So just natively this business should be long term.
North of 20%.
Easy probably at 25% EBITDA margin.
Great managed <unk> shipped more towards kind of the asset managers are like how are you thinking about implementations.
Because it sounds like.
A little bit more involved on the implementation side from a monetization perspective within the context of the pricing overall.
No question so.
Good news and the bad news right, if we want to operate within that market segment. We.
<unk>.
Really need to protect that elements. So I view that on one hand to the switching cost therefore, we need to make sure we minimize the switching caused by.
Making by streamlining the Onboarding implementation process for.
Traditional asset managers, so of course that more complex of course, they'll longer and Thats kind of this this is what manifested itself in our current and guided revenue profile.
From my perspective, it's still obviously somewhat delay, but there certainly is not going anywhere and it's just a sticky is it.
Yeah.
We assume you would assume however, I also would say.
I sort of think about this issue also.
Not just as a switching but also a competitive advantage in a sense that.
Just like in that.
Famous joke, you don't have to all around the Bay area have drawn the next guy and sold in so far as our Onboarding is March.
More efficient and shorter period of time than many of our competitors that typically take.
18 to 24 months to onboard similar clients, we should be in good shape.
Thank you.
Our next question comes from the line of Parker Lane from Stifel. Please go ahead.
Yeah, Hi, guys good morning, and thanks for taking the questions.
Brad I was curious if you could square the comments you've made about the hedge fund launch environment and the greater emphasis on conversions driving organic growth longer term with the step down we saw in conversion as a percentage of total I think it was down year over year and quarter over quarter. So could you just walk us through a little bit of that dynamic and what your expectations are going into the rest.
Of the year.
So extra with Parker in terms of number of funds.
<unk> been the case, but as a percentage of revenue conversions are still in the same in the same ballpark it's 59%.
And it's over or the quarter. So it's 58% to seven give or take so it will continue to go up so it will probably be.
North of 60% for a while and as we shift away from launches it will be 65 and above toward the next several quarters.
Great.
<unk> the color there and then Brian you mentioned that.
Some clients are reducing spend here im curious what youre seeing is the primary driver of that is that is primarily a downtick and see the people actually ripping out certain aspects of this solution is there a general trend that youre seeing there thats most prominent.
No Hey, Parker. Good question, no, we're not seeing anybody rip out different components of the stack, it's primarily manifested itself in reduced seat counts or reduce connection counts, but one of the things. We have started to see as those trends where the asset managers went through about a.
Nine to 12 month window of trying to optimize that.
The downward trends all of that has started to stabilize so that's that's an indicator that we'd like to see.
So now we're just looking for when that inflection point takes place to when they start adding seat counts and adding connections again, but at minimum we have seen at least.
A pretty slow a pretty good slowdown if not stabilization and the fact that they're not pulling down seat licenses or pulling down connections anymore.
Yes, yes understood alright appreciate it guys. Thanks.
Thanks Carter.
Our next question comes from the line of Michael <unk> from Morgan Stanley . Please go ahead.
Hey, guys. This is James <unk>.
I wanted to ask about <unk>.
And Dr and we saw some sequential improvement in client count and definitely that's constructive, but how should we be thinking about <unk> I understand.
<unk> challenging but last quarter, you had mentioned you had confidence in 110% level being.
Potential trough and now we're a little bit below that at 106, I think what are you seeing in terms of.
Other areas are drivers from MBR outlook from here.
So obviously there is two drivers there.
So one is.
Voluntary and the second one is in voluntary and so all we can control.
Is voluntary churn and Upsells right.
That perspective.
We spend most of the time on.
Protecting the perimeter and making sure the clients are satisfied and happy and we've done enormous amount of work and actually that work.
Translated into very significant results.
As you remember that's the first thing I have focused on and I have done.
Since joining infusion as CEO about a year ago and web <unk>.
Those efforts are bearing fruits, and we monitor client's health.
Frequently and all.
All the scores NPS scores and indicators are trained and up and very close to where we think they should be so that definitely will translate into higher levels lower levels I should say of voluntary churn and from up sell perspective, and sort of thats somewhat correlated with.
Involuntary churn.
From macro perspective, we just need to do a better job of understanding our clients' business.
And opportunities for creating value.
And capturing higher share of markets.
Clients' wallet.
On that front, we're also thinking through.
Some of the strategies to optimize our pricing both to create value for the clients and capture.
The integrated nature of our offering while at the same time.
<unk> out of our economics.
Got it got it.
<unk>.
Back on the point around conversions.
You talked a little bit about like integrations and that.
That makes sense, but have.
Have you seen anything in terms of the competitive environment or how youre your debt that may be impacting.
That part of the business at all or.
Even just a switch in prioritization from the customers of how they think about what they want to sequence.
Can you clarify the left party prioritization question, yes.
Yes, just like yes, just wondering if the customers are saying Hey, this is <unk>.
We definitely want to move forward at some point, but they may be focused on other parts of their own businesses.
Oh, so so the last part is it has to do more it's not so much conversion I.
I would say, it's actually more launches were.
Even even the clients that launch there are some delays either related to their operational issues or in terms of Linden capital and kind of making sure everything is funded and actually start trading and that oftentimes spills over into our implementation of broker connectivity and so on and so forth.
From a conversion perspective that slippage is dense to be relatively minimal as specialists will go toward larger more complex clients and institutional clients typically the onboarding and implementation takes anywhere between six to nine months.
Within the next six to maybe seven months, we may see.
Tom.
Some revenue elevated from a client so.
That's.
That's why we are and I think thats, where we should spend more time on for my previous comment to Parker, that's our competitive advantage.
And.
In so far as we are better and faster and smoother than our competition, we will win and I don't see anything in the space where.
Our competition is doing a better effect our job in fact in that market segment there was.
Literally three.
Three players that we have.
<unk> seen competitively.
Just because of the nature of their architecture and set up which is mostly on prem.
It's just by definition, that's much more difficult to onboard.
Great Thanks for that.
Sure.
Again as a reminder, the floor is now open for your questions to ask a question at this time. Please press star one on your telephone keypad.
Okay.
Our next question comes from the line of Gabrielle Borges from Goldman Sachs. Please go ahead.
Hi, This is Kelly on for Gabriela first one from me is just can you provide any color on the magnitude of this day count impact that you're seeing kind of what's the typical tailwind you would get from Cowen and what kind of headwind are you seeing now.
Yeah, Hey, Kevin This is Brad I'll take that.
Normally if you think of like at the <unk> level, you'd see a couple of percentage points come from.
Call it the organic growth of the incremental account ads.
Our existing client base.
Call It two to 400 basis points of India our growth.
At all we're seeing right now.
Not.
It's not a negative number we're just not seeing that 2% to 4% that we would have seen otherwise.
Hope that answers your question.
Yes very helpful. Thank you and then just second one from me how much visibility do you have into back half numbers like what has to go right for you to meet our numbers for the whole year.
From a bookings perspective, or just timing of implementation.
No. It's a great question, we obviously spent a lot of time on there.
On our back half revenue projections, we ran.
I feel like we're in a really good space with what we've guided towards we run several different scenarios, we pressure tested it's six to eight different ways.
It's not necessarily a.
There is a coin politically we're having to have six or eight things go right. We're just having to look through.
Kind of the current trends play those out and then at the same time some of the initiatives that we know we have in place.
That will that will start to develop in the back half of the year. So I feel like we've got really good visibility to it I.
I feel like we've modeled it prudently pressure tested enough different ways that we can get very comfortable with what we've put out there now.
Okay. Thank you.
Our final question comes from the line of Dylan Becker from William Blair. Please go ahead.
Hey, guys.
Maybe kind of touching are asking some of the earlier questions a different way digging into some of the cautious sentiment you guys are seeing is there a sense of how much runway. There is for further optimizations across these asset managers I think Brad you mentioned started going down on nine or 12 months.
Im sure Youre talking to these customers everyday OLED.
But maybe how much of this has an impact of kind of some of the flow through of what we've seen historically maybe versus further deterioration in that segment.
Just to clarify youre asking about optimizing the time off.
Revenue capture or optimizing the market share maybe can you clarify.
Yes, the <unk> dynamics and kind of the optimizations of the cost structures that they are seeing that is kind of weighing on the growth profile.
Got you so interestingly enough with them within that space. So I would think about it.
In several buckets actually primarily too so we have a.
Situation when we serve larger more complex hedge fund our multi strategy platforms.
Or even long only clients with a little more complexity to them, especially related to pre and post trade compliance and trade allocation and all of that.
There the seat counts maybe important for multi shred multi manager platforms in doesn't have to be important.
For more static loan only type managers, who by the way.
<unk>.
Multiple investment vehicles that they actually used to.
Deliver the strategy. So it can be a hedge fund format that can be uses format that can be Michelle fund and Thats, where we are also capturing some revenue to the extent that we're charging for that kind of framework given number of funds given number of accounts and that's what I was telling Jim earlier, that's something we're actually thinking through really.
Really looking at really closely and thinking hard about how we package the pricing right on one hand to deliver value to the customer, but also stay competitive and ste.
Mccleave viable and economically prudent as a business from traditional investment management perspective, we see an interesting opportunity I think I mentioned this couple of times of my in my prepared remarks, where as you know all of our traditional buying persona has been.
Either middle office or back office type person or.
Somebody on the front office side like head of trading or trader that pile.
Pilots Oems so to speak now, we're seeing more and more demand for.
Given the system to investment decision makers right portfolio managers risk managers and this is where additional.
Additional seats and additional client counts will come from.
Especially from traditional asset management perspective, and for multi strat multi manager platforms.
The same pms that are looking to make investment decisions as opposed to just <unk>.
Execute trades around middle office ops or.
Ron Ron GL and accounting stuff, they will be the ones that will want to use the system more and we will look at it as another potential expansion of our time.
Got it Okay. That's super helpful.
And then switching to Brad from a metric perspective seems like Theres a lot of kind of encouraging momentum you guys are seeing although there are some crosscurrents right.
Net new clients Youre seeing margin leverage bookings growth contract values et cetera can you help us kind of level set that with the revised outlook, maybe what gives you confidence and it seems like some of the implementation staff as mark and are contractually structured than than fundamental weakness in a given confidence in that revised outlook.
Enough.
Yeah, Great question, So a lot of it stems from kind of what we've talked about before is the.
The fact that the headwinds kind of hit the back book and.
The front book is the beneficiary of the tailwind.
So when we modeled this out.
One of the things we tried to be very prudent on is making sure that we are.
Our smart about how we reset guidance and give us enough room.
Just to make sure. This is a one and done deal for us resetting expectations, we have seen some some decent trends on the back book. They certainly have played out as we thought they would.
Three call it six months ago.
But we are seeing some trends that at minimum has stabilized now we're just looking for those to improve but at the same time like I mentioned a minute ago.
With Goldman I don't need to I don't need some huge hockey stick of performance improvement on the back book to.
To help make these numbers with regard to the front book is kind of the same concept, we have a schedule anybody who's boarded anybody who signed up for the service, we have a pretty clear pretty clear visibility into the schedule of windows start to implement it and where those will start to monetize.
As we go through that then we take even some conservative approaches for your particular slips or anything else that might happen. So.
For us it was about running those different scenarios I mentioned to make sure that this becomes a one and done for us in terms of resets.
Got it and just.
Yes, and John just to pile up on this and on another important element that gives us a little more comfort in.
Just looking forward has to do with some of the markets I mentioned earlier and going deeper into them, which is in APAC going outside Hong Kong, which is typically Hong Kong as you are.
And our home turf.
In a market that we're very comfortable in control without sort of being complacent.
As well as in Europe . So we are very disciplined and much more disciplined now than ever in terms of.
Qualifying leads and scrubbing the pipeline and that translates into excuse me translates into much higher win rate.
And so that's another strategy.
Accident, if you will.
We were leaning in leaning out and as you saw revenue in EMEA grew 33% and so that helps stabilize the overall portfolio mix, if one region or one segments exhibit some kind of weakness, we pivot and accentuate the other.
Got it very helpful. Thank you guys.
Thanks.
I would now like to turn the call over to OLED motion for closing remarks.
Thank you. Thank you all for for good questions for.
For insights.
Fully we were helpful in providing some visibility into our past and future financial results and the business model and the strategy.
Look forward to.
Executing on behalf of our investors and clients.
Thank you ladies and gentlemen, this does conclude today's call. Thank you for your participation you may now disconnect.
Okay.
Okay.