Q3 2023 Enfusion Inc Earnings Call

Speaker 1: Please wait, the conference will begin shortly.

Please wait the conference will begin shortly.

[music].

Speaker 2: Good afternoon ladies and gentlemen and thank you for standing by.

Good afternoon, ladies and gentlemen, and thank you for standing by welcome to Infusions third quarter 2023 earnings Conference call. At this time all lines have been placed on mute to prevent any background noise.

Speaker 2: Welcome to Infusion's third quarter 2023 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise. Following the speaker's remarks, we will open the lines for your questions. As a reminder, this call is being recorded.

Blowing the speaker's remarks, we will open the lines for your questions.

As a reminder, this conference call is being recorded.

Speaker 2: I'd now like to turn the call over to Ignatius Njoku, Head of Investor Relations.

I'd now like to turn the call over to Ignacio <unk> head of Investor relations to begin.

Good morning, and thank you operator, we welcome you to infuse US third quarter 2023 earnings conference call.

Speaker 3: Good morning and thank you operator. We welcome you to Infusions third quarter, 2023 earnings conference.

Speaker 3: Hosting today's call are Oleg Mauchian, Ephesians Chief Executive Officer, and Brad Herrin, Ephesians Chief Financial Officer.

Hosting today's call.

Auction and Fusion's, Chief Executive Officer, and Brett Harriss, excuse as Chief Financial Officer.

Speaker 3: Please note, our quarterly shareholder letter, which includes our quarterly financial results, have all been posted to our IR website.

No our quarterly shareholder letter, which includes our quarterly financial results have all been posted to our IR website.

Speaker 3: I would like to remind you that today's call may contain forward-looking statements.

I'd like to remind you that today's call may contain forward looking statements.

Speaker 3: These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filing.

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 on our website extra.

Speaker 3: and are available in the best relations section in our web.

Speaker 3: Extra results may differ materially from any forward-looking statements we make.

Actual results may differ materially from any forward looking statements we make today.

Speaker 3: These forward-looking statements speak only as of today, and the company does not assume any obligation or intent to update them following today's call, except as required by law.

Forward looking statements speak only as of today and the company does not assume any obligation or intent to update them following today's call.

As required by law.

Speaker 3: In addition, today's call may include non-GAAP measures.

In addition, todays call may include non-GAAP measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures.

Speaker 3: These measures should be considered as a supplement to and not a substitute for gap.

Speaker 3: The affiliation to the nearest GAAP measure can be found in today's quarterly shareholder letter, which is available on the company's website. With that, I'd like to turn the call over to Oleg.

<unk> 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 <unk> to begin.

Speaker 4: Good morning, and thank you for joining us today to discuss our results in the third quarter of this year.

Good morning, and thank you for joining us today to discuss our results in the third quarter of this year.

Speaker 4: I'm pleased to announce that Infusion Business delivered another solid quarter for both revenue and profitability.

I am pleased to announce that infusion business delivered another solid quarter for both revenue and profitability.

Daily creation engine is gaining momentum.

Speaker 4: Our disciplined go-to-market strategy is validated by persistent market capture and expansion across target segments in the face of ongoing macroeconomic

Our disciplined go to market strategy is validated by persistent market capture and expansion across target segments in the face of ongoing macroeconomic uncertainty.

Speaker 4: We continue to execute against our large market opportunity, take market share, expand our global footprint, and improve our profitability. Our value.

We'll continue to execute against our large market opportunity take market share expand our global footprint and improve our profitability.

Our value proposition remains intact.

Speaker 4: validated by healthy client additions, improving net dollar retention, increasing average contract value and expanding margin.

Validated by healthy client additions.

Net dollar retention increase in average contract value and expanded margins.

Speaker 4: I'm very excited about the formal launch of Portfolio World.

I am very excited about the formal launch of portfolio workbench, which empowers portfolio managers to seamlessly integrate portfolio construction processes with operational workflows.

Speaker 4: which empowers portfolio managers to seamlessly integrate portfolio construction processes with operational work.

Speaker 4: Innovation is embedded in our culture and is at the core of our strategy.

Innovation is embedded in our culture and is at the core of our strategy.

Speaker 4: This product release not only represents the pivotal moments in our journey to support the largest and most complex institutional clients.

This product really not only represents a pivotal moment in our journey to support the largest most complex institutional clients, but also underscores our commitment to technological development and a best in class client experience.

Speaker 4: also underscores our commitment to technological development in a best-in-class client experience.

I will share more details on this in a moment.

Speaker 4: Although we're not immune to macro headwinds, I'm more optimistic than ever about our...

Although we're not immune to macro headwinds I am more optimistic than ever about our future.

Speaker 4: continue to grow about market rates and take in business from resource intensive, pride methods, and expensive to lose.

We'll continue to grow above market rates, and taking business from resource intensive pragmatically and expensive solutions and.

Speaker 4: If you don't continue to prove that it deserves to be a platform of choice for investment management organizations of any scale and complexity. Ultimately.

<unk> continues to prove that it deserves to be a platform of choice for investment management organizations of any scale and complexity.

Ultimately our results are the evidence that infusion business model, it's truly global scalable and adaptable.

Speaker 4: the fusion business model is surely global, scalable, and adapt.

Speaker 4: Confusion remains well positioned to benefit from secular industry tailwinds, while increasing the resilience to macro-answer.

And Houston remains well positioned to benefit from secular industry tailwind, while increasing the resilience of the macro uncertainties.

Speaker 4: Regardless of market environment, we will continue to operate from a position of strength and iterate towards recapturing our unique growth and profitability profile.

Regardless of market environment, we will continue to operate from a position of strength.

And iterate doors in recapturing, our unique growth and profitability profile.

Speaker 4: Now let me walk you through some of our key financial metrics in the third quarter.

Now, let me walk you through some of our key financial metrics in the third quarter.

Speaker 4: revenue grew 13% to 44.4 million, as we continue to execute on our go-to-market strategy and product roads.

Revenue grew 13% to $44 4 million as we can.

To execute on our go to market strategy and product roadmap.

Speaker 4: adjusted if the Dow was 8.2 million, and represented an 18.5% mark.

Adjusted EBITDA was $8 2 million and represented an 18, 5% margin.

Speaker 4: We continue to improve our margin profile, benefiting from strong expense control and operating leverage.

We're continuing to improve our margin profile benefiting from strong expense control and operating leverage.

We added 37 clients this quarter, bringing the total client count to 842 and increased our HCV to $217000.

Speaker 4: bringing the total climb count to 142, and increased our ACV to 217,000.

Speaker 4: representing 2.4% quarter over quarter and about 8% year over year growth.

Presenting two 4% quarter over quarter and about 8% year over year growth.

Speaker 4: Brad will discuss our financial results in more detail in a few moments. Now, I will.

Brian will discuss our financial results in more detail in a few moments.

Now I would like to share a few multiple client additions validating our execution framework as.

Speaker 4: validating our execution framework as we expand across geographies and market segments.

As we expand across geographies and market segments.

Speaker 4: And the Americans, Raven you grew 10% year over year, reflecting ongoing market share games with larger fund managers, despite macro.

And the Americas revenue grew 10% year over year.

So reflecting ongoing market share gains with larger fund managers, despite macro headwinds.

Speaker 4: I'm thrilled to share that Infusion signed a Boston-based alternative manager with approximately $2.5 billion in Asia.

I am thrilled to share that infusion signed a Boston based alternative manager with approximately $2 5 billion in Asia.

Speaker 4: And from opted out of upgrading its legacy OMF, given the resource challenges. As a result, the system became up to...

The firm update out of upgrading its legacy Oems given the resource challenges.

As a result, the system became obsolete up for several years.

Speaker 4: Unlike the legacy provider, our team was able to understand the complexity of the client's workflow and design a well-suited solution.

Unlike the legacy provider our team was able to understand the complexity of the clients' workflows and designer well suited solution.

Speaker 4: Notably, this conversion resulted in Infusion providing both software and managed services as a much more cost effective alternative compared to using in-house.

Notably this conversion resulted in infusion, providing both software and managed services is a much more cost effective alternative compared to use them in house resources.

Speaker 4: Confusion of the time in your based loan only as a manager focused on emerging and frontier marks

And field and also signed a New York based loan only asset manager focused on the margin in frontier markets.

Speaker 4: In this competitive takeaway, infusion is consolidating the investment manager special work of despair solutions, which required manual processes for communication between.

In this competitive takeaway infusion the consolidator in the investment manager special work of disparate solutions, which required manual processes for communication between systems.

Speaker 4: As a result, the in-house solution became exceedingly complex, draw fire maintenance costs, demand of more.

As a result, Nienhaus solution became exceedingly complex dropped higher maintenance costs and demanded more IP resources.

Speaker 4: By implementing Infusion's platform, the Asset Manager benefits from our fluid front-to-back solutions, inclusive of the new launch portfolio workbench, tightly integrated with both golden source of truth data sets and work.

We implemented an <unk> platform the asset manager benefits from our fluid front and back solution inclusive of the new launched portfolio, one bench tightly integrated with both Golden source of truth, datasets, and workforce, resulting and minimize operational risk and material cost reduction.

Speaker 4: resulting in minimized operational risk and material quarter.

Speaker 4: In the media revenue grew 29% year over year as the market continues to embrace our differentiated offerings. We're excited about

In EMEA revenue grew 29% year over year as the market continues to embrace our differentiated offering.

We're excited about our momentum in the region as we diversify our revenue portfolio moving to larger and more complex markets and expand into new regions.

Speaker 4: we diversify our revenue portfolio, move into larger and more complex markets and expand and the new reach.

Speaker 4: For example, we send with another London-based multi-billion or global institutional effort management.

For example, we signed with another London based multibillion dollar global institutional asset manager.

Speaker 4: The fund manager outgrew its legacy incumbent provider and faced multiple challenges, including manual trade allocation and inadequate cash reconciliation.

Fund manager outgrew its legacy incumbent provider and faced multiple challenges, including manual trade allocation and then adequate cash reconciliations.

Speaker 4: They selected Infusion because of their robust front-to-back platform, allowing them to streamline and automate their workflow and scale as they grow.

They selected infusion because of the robust front to back platform, allowing them to streamline and automate their workflow and scale as they grow.

Speaker 4: In fusion, the client now has a unified view across all farms and products. Can execute swift trade instructions and benefits from our multi-acid class and AV generation capability. Both assign the large newly launched distress debt management. The largest distress specialist launch in recent history.

When children. The clients now has a unified view across all funds and products.

<unk> suite trade instructions and benefits from our multi asset class and a V generation capability.

We also signed a large newly launched it drags that manager.

The largest distress specialist launch in recent history, demonstrating our ongoing success with credit strategies.

Speaker 4: They selected confusion platform because of its flexibility to support the company's future growth and robust nature support across various asset classes as well as workflow.

Based elected on fusion platform because of its flexibility to support the company's future growth and robust nature support across various asset classes as well as workflow automation.

Speaker 4: importantly, we continue to expand our geographic presence in Europe . And thrilled to announce that we're entered into an agreement with Oslo-based Investment Manager that runs a long-only equity strategy.

Importantly, we continued to expand our geographic presence in Europe.

I am thrilled to announce that we entered into an agreement with Oslo based investment manager with wrong, the long only equity strategy.

Speaker 4: The manager is part of a newly formed entity with a large, well-known team with a significant track record.

The amendment here as part of a newly formed entity with a large well known team with a significant track record.

Speaker 4: This particular client will deliver human fusion software and many services.

This particular client we will be leveraging the infusion software and managed services offerings.

Speaker 4: We're also on a mandate from a South-Erica base, long-only fund. This plan plans the leverage and fusion software and services.

We're also won a mandate from a south African based long only funds.

This planned length deleverage infusion software and services to streamline their workflow and realized cost savings.

Speaker 4: And, in fact, we grew revenue by 13% year over year.

In APAC, we grew revenue by 13% year over year.

Speaker 4: We're seeing early signs of improvement in the launch market and getting traction with our up market.

<unk> seen early signs of improvement in the launch market and getting traction with our upmarket motion.

Speaker 4: For example, we sign a Hong Kong-based global macro alternative man.

For example, we signed a Hong Kong based global macro alternative manager.

The fund manager was looking for a platform to enable them to launch quickly with a robust end to end architecture in a single source of truth for data and operations.

Additionally, by partnering with infusion.

Fund manager Leverages infusions, wailea, its risks and other risk measurement and reporting capabilities.

Speaker 4: Finally, we entered into an agreement with another recent fund launch, an Australian alternative asset manager based in Sydney.

Finally, we entered into an agreement with another recent fund launch and Australian alternative asset manager based in Sydney.

Speaker 4: The fund manager chose infusion because they were looking for a flexible platform that would facilitate a time to launch and set up the company for future scale from day one. Let's move to some updates on the product fund. As I've said many times.

<unk> manager chose infusion because they were looking for a flexible platform that would facilitate the timing of launch and set up the company for future scale from day one.

Let's move to some updates on the product pumps.

As I've said many times.

Innovation is one of our core values and have always differentiated infusion from our competition.

Speaker 4: It is embedded in our culture and permeate throughout everything we're doing.

And it's embedded in our culture and permeates throughout everything we do on a daily basis.

Speaker 4: I'm thrilled to announce the recent formal launch of our portfolio work.

I am thrilled to announce the recent formal launch of our portfolio workbench, a highly intuitive capability that enables investment managers through rebalanced their portfolios across multiple strategies and investment vehicles.

Speaker 4: a highly intuitive capability that enables investment managers to rebalance their portfolios across multiple strategies and investment vehicles.

Speaker 4: by leveraging in grid port folder editing and not intuitive user interp.

By leveraging and greet portfolio Edison and an intuitive user interface portfolio Walgreens worked in concert with our Oems functionality and allows teams to easily manage performance and the risks against the benchmark.

Speaker 4: or fully award bench work in concert with our OAMAT functionality and allows PM to easily manage performance and risk against the bench.

Speaker 4: As a result, PMs can test pre-trade compliance rules, monitor post-trade compliance, and model upcoming subscriptions and redemptions across multiple investment vehicles within one user interface without concerns about data integrity.

As a result, BMS can get free trade compliance rules monitor bolster a compliant and model upcoming subscriptions and redemptions across multiple investment vehicle within one user interface without concerns about data integrity.

Speaker 4: The portfolio workbench is a strategic product launch for several weeks.

The portfolio Workbench is a strategic product launch for several reasons.

Speaker 4: First, portfolio workbench is a critical component in our stated strategy to move up market to larger and more complex asset management.

First portfolio Workbenches of critical components, and our stated strategy to move up market to larger and more complex asset managers.

Speaker 4: that expands our traditional operational capabilities into the decision-making segment of the workflows, in a way that is tightly integrated with decision implementation.

It expands our traditional operational capabilities into the decision making segments of the workloads in a way that is tightly integrated with decision implementation.

Speaker 4: Second, it's an intermediate step to support investment managers that deploy both proprietary and third-party risk models, facilitating their portfolio optimization and the risk management framework.

Second it's an intermediate step to support the investment managers with deploy both proprietary and third party risk models, facilitating their portfolio optimization and the risk management frameworks.

Speaker 4: It has important implications for both passive managers that are tracking benchmarks with periodic rebalancing and active managers focused on outperforming benchmarks by taking active.

It has important implications for both best of managers that are tracking benchmarks look periodic rebalancing and active managers focused on outperforming benchmarks by taking active positions.

Speaker 4: This will drive more quantitative and systematic portfolio construction in addition to heuristics and manual portfolio.

This will drive more quantitative <unk> kinetic portfolio construction in addition to heuristic and manual portfolio adjustments.

Speaker 4: Third, portfolio workbench continues to build on infusions all in one product alone.

Third portfolio Workbench continues to build on the infusions all in one product philosophy.

Speaker 4: where we insist on eliminating fault lines across all segments of investment management work.

While we insist on eliminating fault lines across all segments of investment management workflows.

Speaker 4: just another set of functionality that is affluent the natural extension of the existing blood.

Just another set of functionality that is a fluid and natural extension of the existing platform.

Speaker 4: Lastly, it further expands our competitive advantage by widening our mold from legacy competitors, responding to market demand, including quantum retention and expanding infusion-vailure-properties.

Lastly, it further expands our competitive advantage by widening our mold from legacy competitors responding to market demand, increasing client retention and expanding infusing value propositions.

Speaker 4: Here's just one of many examples of corporate labor bench allows us to expand into the loan-owned segments.

Here is just one of many examples of our portfolio workbench allows us to expand into the low known this segment.

Speaker 4: was a key element that helped convert a large emerging markets equities and credit focused manager. The initial event was.

With one of the key elements that helped us convert a large emerging markets equities and credit focused manager that initial wins with one of our competitors.

Speaker 4: In addition to portfolio workbench, infusion rolled out 366 additional enhancement and features across the portfolio management and OAMS.

In addition to portfolio workbench infusion rolled out 366 additional enhancements and features across all our portfolio management and Oems.

The frequency and scope of the software updates.

Speaker 4: is an important dimension of our competitive advantage in value creation next.

As an important dimension of our competitive advantage and value creation mechanism.

Speaker 4: With that, I would like to highlight two other important enhancements, the Team Reliefless Quarter.

With that I would like to highlight two other important enhancements with team released this quarter.

Speaker 4: The first is Bloomberg real-time mobile support, which connects Bloomberg's real-time pricing in their terminal with third-party applications.

The first is Bloomberg real time mobile support which connects Bloomberg's real time pricing and their terminal with third party applications.

Speaker 4: so that the investment team can stay connected, leveraging Infusion's mobile app.

So that the investment team can stay connected leveraging infusions mobile apps.

Speaker 4: The other is native support for an ODC product, iBox.org returns while, which provides investors with a cost effective and optimal way to obtain data as well as a corporate bond and leverage loans.

The other is native support for an OTC products high box total return swaps, which provides investors with a cost effective and optimal way to obtain data exposure to corporate bonds and leveraged loan markets.

Speaker 4: Infusions full front to back platform remains well suited to support complex instruments and so for simplicity that legacy.

Infusion full front to back left form remains well suited to support complex instruments and sulfur simplicity that legacy vendor simply cannot.

Speaker 4: These new features are the result of long term efforts by our product and engineering teams to deliver value-added capabilities highly requested by our clients. Now moving on to market dynamics.

These new features are the result of long term efforts by our product and engineering teams to deliver value added capabilities highly requested by our clients.

Now moving on to market dynamics.

We see some green shoots and manage explained and to launch new hedge fund however.

Speaker 4: However, the overall one to? checking, is the last they are wrong in every way.

However, the overall launch dynamics remained below historic.

Speaker 4: Be that as it may, while we continue to successfully protect and expand our H1 home.

Be that as it may while we continue to successfully protect and expand our hedge fund home turf. Our book of businesses are increasingly less dependent on launches.

Speaker 4: Our book of business is increasingly less dependent on.

Speaker 4: importantly, infusion continues to benefit from secular tailwind as the entire investment management industry is evaluating itself worth tax workloads and related costs and

Importantly, infusion continues to benefit from secular tailwind.

The entire investment management industry.

<unk>, it's software stack workflows and the related costs in our risk.

Speaker 4: Our upmarket motion keeps gaining momentum as we continue to scale our technology, execute our pro-op roadmap and listen to our...

Our upmarket motion keeps gaining momentum as we continue to scale, our technology execute on our product roadmap and listen to our clients.

Speaker 4: All of this is reflected in our recent robust market share gains and continued shift in the revenue mix away from launch of stores and versions in the way from pure hedge fund managers, towards institutional investment managers. The ZX has set multiple.

All of this is reflected in our recent robust market share gains and continued shift in the revenue mix away from launch of store conversions and away from pure hedge fund managers Gordon institutional investment managers.

Does that give said multiple times and fusion as a bank teller multivitamins as.

Speaker 4: as a side benefit of killing all clients' pains, we inflict an increasing amount of pain on our competition. Now let me...

As a side benefit of killing our client's pain, we inflict an increasing amount of pain on our competition.

Now, let me review some key elements of our long term strategy.

Speaker 4: Our strategic position continues to evolve as we unlock new market opportunities and diversifier of client base toward institutional effort managers and effort owners. In fusion.

Our strategic position and continues to evolve as well.

Unlock new market opportunities and diversify our client base Gordon institutional asset managers and asset owners.

Infusion is a business in transition.

Speaker 4: and we continue to prove our business model as we optimize our go-to-market strategy, shorten the sales cycle and increase the velocity of our onboarding.

And we continue to improve our business model as we optimize our go to market strategy shortening the sales cycle and increase velocity of our onboarding process.

Speaker 4: Naturally, all of that drives them expansion, improvement in durability and speed of our growth. Marginic

Measure really all of that drive Tam expansion improvement in durability and speed of our growth.

Margin expansion in client retention.

Speaker 4: Importantly, this framework is designed to protect our business economics from excessive macro head.

Importantly, with framework is designed to protect our business economics from except that macro headwinds.

Speaker 4: And evidence by our performance over the last year, we continue to spread our growth wings globally, shifting our book of business away from money center cities and targeting regions where it can position its pain.

As evidenced by our performance over the last year.

Continued to spread our growth weak globally shifting our book of business away from minus denser cities and targeting regions, where competition is Spain.

Speaker 4: We continue to maintain our focus on returning to the future historical financial.

We continue to maintain our focus on returning to infusions historical financial profile.

Speaker 4: Infusion value creation machine is back to its normal version cycle as we exercise surgical precision in our pipeline generation, operational excellence of our client services, product innovation, optimization of our revenue strategy.

And he isn't value creation machine is back to its normal virtuous cycle as we exercise surgical precision in our pipeline generation operational excellence of our client services.

Product innovation.

Optimization of our revenue strategy and relentless fiscal discipline.

Speaker 5: In conclusion, we delivered solid third quarter.

In conclusion.

We delivered solid third quarter results were.

Speaker 4: We remain focused on sales executions, moving up market and expanding our global.

We remain focused on sales execution, moving upmarket and expanding our global footprint.

Speaker 4: I am very grateful to all my institution colleagues for hard work, fashion, and focus on our plans. I will now turn the call over to...

I am very grateful to all my infusion colleagues are hard work passion and focus on our clients.

I'll now turn the call over to Brad to discuss our financials.

Speaker 6: Thanks, Olig, and thank you everyone for joining us today. Speaking on behalf of the entire Infusion Management team, I'm glad to report yet another quarter of top-line growth combined with strong profitability and cash flow generation.

Thanks, <unk> and thank you everyone for joining us today.

On behalf of the entire infusion management team I'm glad to report yet another quarter of topline growth combined with strong profitability and cash flow generation.

Speaker 6: For the third quarter, we generated revenue of $44.4 million, an increase of 13% over the same quarter last year.

For the third quarter, we generated revenue of $44 4 million, an increase of 13% over the same quarter last year.

Speaker 6: Just as we reported last quarter, these results represent a slowdown and our historical growth.

Just as we reported last quarter. These results represent a slowdown in our historical growth rates. However, we're seeing some positive indicators in our underlying growth algorithm.

Speaker 6: However, we're seeing some positive indicators in our underlying growth algorithm.

Speaker 6: First, bookings in both new fund launches and conversions continue to be strong as the sector continues to look for effective and efficient solutions to manage back office tasks.

First bookings in both new fund launches and conversions continue to be strong as this sector continues to look for effective and efficient solutions to manage back office tasks.

Speaker 6: Second, the quality of our pipeline continues to improve as we expand our market opportunities by deploying new products.

Second the <unk>.

Quality of our pipeline continues to improve as we expand our market opportunities by deploying new product features such as portfolio of benchmarking and additional capabilities around credit.

Speaker 6: such as portfolio benchmarking and additional capabilities around credit.

Speaker 6: Finally, we are starting to see some favorable trends in the underlying revenue drivers within our back.

Finally, we are starting to see some favorable trends in the underlying revenue drivers within our back book.

Speaker 6: Specifically, we are seeing both improvement in net organic growth as well as lower churns.

Specifically, we are seeing both improvement in net organic growth as well as lower churn.

Third quarter, IRR with 177 $9 million.

Speaker 6: $77.9 million up 12% year-to-year and 4% higher than what we reported just last quarter As a result of the

Up 12% year over year, and 4% higher than what we reported just last quarter.

As a result of the trend improvements in the back book I mentioned net dollar retention in the quarter, excluding involuntary churn was 107% while net dollar retention, including in voluntary churn was just over 102%.

Speaker 6: net dollar retention in the quarter, excluding involuntary

Speaker 6: was 107% while net dollar retention, including involuntary churn, was just over 102%. That's the 200,000 always coming to check.

For both the MBR measures. This is the first quarter in the previous four where we've seen <unk> increases with leads to confidence that the headwinds related to the macro challenges facing the sector are either stabilizing or modestly reversing.

Speaker 6: first quarter in the previous four where we've seen NDR increases, which leads to confidence that the headwinds related to the macro challenges facing the sector, are either stabilizing or modestly...

Speaker 6: The adjusted gross profit increased by just over 9% year-over-year to 30.2 million dollars.

Adjusted gross profit increased by just over 9% year over year to $32 million.

Speaker 6: This represents an adjusted gross margin of 68%.

This represents an adjusted gross margin of 68%.

Speaker 6: As we've talked about in previous earnings calls, we expect adjusted gross margins to remain between 68 and 70% for the next several quarters.

As we've talked about in previous earnings calls, we expect adjusted gross margins to remain between 68% and 70% for the next several quarters as we continue to invest in our client onboarding and servicing capabilities in support of our growth strategy.

Speaker 6: as we continue to invest in our client onboarding and servicing capabilities in support of our growth strategy.

Speaker 6: Adjusted EBITDA for the quarter was $8.2 million, up over 50% compared to Q3 of last year.

Adjusted EBITDA for the quarter was $8 $2 million up over 50% compared to Q3 of last year.

Speaker 6: current quarter revenues. This represents an adjusted EBITDA margin of 18.5 percent.

<unk> current quarter revenues. This represents an adjusted EBIT margin of 18, 5% up 460 basis points from the same period, a year ago and this is largely consistent with what we reported in Q2.

Speaker 6: up 460 basis points from the same period a year ago, and this is largely consistent with what we reported in Q2.

Speaker 6: Our in-quarter results represent a 53% pass-through rate on incremental rev-

Our in quarter results represent a 53% pass through rate on incremental revenues.

Speaker 6: For the quarter we generated adjusted free cash flow of $9.5 million compared to $6.9 million in the same period of year ago.

For the quarter, we generated adjusted free cash flow of $9 5 million compared to $6 9 million in the same period a year ago.

Speaker 6: cash flow conversion in the quarter of 116% with higher than normal due to the timing of various cash inflows and outflows that is somewhat typical for the third quarter.

Cash flow conversion in the quarter of 116% with higher than normal due to the timing of various cash inflows and outflows that is somewhat typical for the third quarter.

Speaker 6: While the quarterly conversion rates will fluctuate, we remain confident in our ability to convert approximately 50%.

While the quarterly conversion rates will fluctuate we remain confident in our ability to convert approximately 50% of our adjusted EBITDA into free cash flow on a rolling 12 month basis.

Speaker 6: of our adjusted EBITDA into free cash flow in a rolling 12 months.

Speaker 6: Gap net income for the quarter was $2.7 million compared to $2.6 million in the same period last

GAAP net income for the quarter was $2 7 million compared to $2 6 million in the same period last year.

Speaker 6: against our fully diluted share count of 127.8 million shares, our current quarter net income results in a gap EPS of two cents per share.

Against our fully diluted share count of 127 8 million shares our current quarter net income results in a GAAP EPS of <unk> <unk> per share.

Speaker 6: In respect to our balance sheet and capital considerations, there are a few items from the quarter to discuss.

With respect to our balance sheet and capital considerations. There are a few items for the quarter to discuss.

Speaker 6: First, we ended the quarter with approximately $32 million in cash and cash equivalents and no outstanding debt.

First we ended the quarter with approximately $32 million in cash and cash equivalents and no outstanding debt.

Speaker 6: In our partners at Bank of America, we have recently secured a revolving credit line of $100 million with an additional $50 million available contingent on certain conditions.

Second with our partners at Bank of America, We have recently secured a revolving credit line of $100 million.

With an additional $50 million available contingent on certain conditions.

Speaker 6: This line is exclusively put in place to provide access to liquid capital. Should we identify strategic targets that could help accelerate our growth?

This line will exclusively put in place to provide access to liquid capital should we identify strategic targets that could help accelerate our growth trajectory.

Speaker 6: Finally, we are pleased to say that we completed the distribution of shares to holders of our management incentive units that were connected to our 2021 IPO.

Finally, we are pleased to say that we completed the distribution of shares to holders of our management incentive units that were connected to our 2021 IPO.

Speaker 6: most notable impact of completing these distributions is that all tax withholding obligations related to these shares are now fully satisfied.

The most notable impact of completing these distributions is that all tax withholding obligations related to these shares are now fully satisfied.

Speaker 6: Moving on to guidance, we are reaffirming the revised revenue and adjusted EBITDA figures that we provided in our Q2 earnings discussion.

Moving on to guidance, we are reaffirming the revised revenue and adjusted EBITDA figures that we provided in our Q2 earnings discussion.

Speaker 6: Just to confirm that was a range of 170 to 175 million dollars for full year 2023 revenue. And a range of 30 to 32 million dollars for full year 2023 adjusted even that. With that we'd like to open up the call.

To confirm that was a range of $170 million to $175 million for full year 2023 revenues.

And a range of $30 million to $32 million for full year 2023 adjusted EBITDA.

With that we'd like to open up the call to questions.

Later, please go ahead.

Speaker 2: Thank you. At this time, I would like to remind everyone in order to ask a question, press star in the number one on your telephone.

Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Speaker 2: We'll take our first question from James Sposlet at Morgan's family.

We will take our first question from James Faucette at Morgan Stanley.

Speaker 7: Hi, everyone. It's Michael and Fontaine for James. Thanks for taking our questions. I wanted to ask on Portfolio Workbench, obviously currently in beta, expected to go GA by the end of the year. Oleg, I think you called that out as a driver of a win or two in the quarter, but I'm curious how you would characterize the early feedback thus far from clients and perhaps how it's priced in the potential uplift from an NDR perspective over the medium term.

Hi, everyone. It's Michael on Fontana for James Thanks for taking my questions I wanted to ask on portfolio workbench.

Obviously currently in beta I expect it to go by the end of the year Alright, guys. Thank you called that out as a driver of a win or two in a quarter, but I'm curious how you would characterize the early feedback thus far from clients and perhaps how it's priced and the potential uplift from an MBR perspective over the medium term. Thanks.

Speaker 8: Thanks Michael, great question. So, you know,

Thanks, Michael Great question so.

Speaker 8: This is one of the products. I just want to emphasize it again. It's not something that we want to, our design lab and create it without consulting with our customers. Actually, it's a result of...

This is one of the products that I want to emphasize it again, it's not something that one so the.

Our design lab.

Created without consulting with our customer sexual it's a result of.

Speaker 8: many conversations with simply responding to what market is asking us to do. And on one hand, and on the other hand, it's a part of our deliberate and purposeful strategy to

Many conversations with simply.

Spawn into what market is asking us to do.

On one hand and on the other hand, it's part of our deliberate and purposeful strategy too.

Speaker 8: created product offering for institutional asset managers, and move our traditional portfolio that is a mix as you know, between middle and back office offering, more toward investment decision-making, as opposed to investment decision implementation part. And so that's the strength of the product, where...

Create a product offering for institutional asset managers.

Our traditional portfolio that has a mix of you know between middle and back office offerings more toward investment decision, making as opposed to investment decision implementation part and so that's the strength of the product where.

Speaker 8: It doesn't exist on a standalone basis outside of the core system. Then there is another layer of integration.

It doesn't stand on a stand it doesn't exist on a standalone basis outside of the core system and there is another layer of integration.

Speaker 8: that brings those orders into overall core. It's actually part of the fluid infusion ecosystem. And so once the decision is made, which is what portfolio workbench is all about.

And that brings those orders seem to overall core its actually part of the fluids.

On the ecosystem and so once the decision is made which is what portfolio workbench is all about.

Speaker 8: It's been seamlessly executed within our OMS. So it's basically, again, it's a response to what markets been asking us to do and the result of multiple iterations that the product team and the technology team has performed with our clients. Naturally, we believe it will make it serious.

It's been seamlessly executed within our Oems. So its basically again, it's a response to what the market has been asking us to do and the result of multiple iterations that the product team and the technology team.

This performance with our clients naturally it will we deliver oil.

Serious impact.

Speaker 8: on our client retention capability. I mean, look, the reality of it is, you know, infusion is becoming, as opposed to just operational support platform. It's also becoming a collaboration platform where portfolio managers, you know, the very people that think about how to position the portfolio, the capital, the risk, continue to interact with analysts, continue to interact with...

On our client redemption capability.

Look the reality of it is.

Infusion is big comment as opposed to just operational support platform. It's also becoming a collaboration platform or portfolio managers.

People that think about how to position the portfolio allocate capital allocate risks continue to interact with analytics continue to interact with.

Speaker 8: Front Auto-Steam Sportfolio, excuse me, auto management, capabilities, traders, and so on and so forth. And so that part is facilitating that collaboration, that part is facilitating that interaction. And therefore reinforces the quintessential nature of the platform and thereby translates into the high retention rates.

Franco schemes portfolio excuse me order management.

Capability as traders and so on and so forth and so that part is facilitating that collaboration and thats part of facilitating that interaction and therefore reinforces the.

Quint essential nature of the platform and thereby translates into the high retention rates.

Speaker 7: Got it, makes sense. Maybe just on some of the strategic commentary you made, obviously, good to see the incremental credit facility, the healthier balance sheet, and the free cash flow generation that you guys are having, but how are you thinking about the capacity for near-term M&A, and I'm more curious about the types of assets and or geographies that you would be interested in.

Got it makes sense, maybe just on some of the strategic commentary you made obviously and good to see the incremental credit facility, the healthier balance sheet and the free cash flow generation that you guys are having about how are you thinking about the capacity for near term M&A and I'm Mark here.

Yes about the types of assets and there are geographies that you would be interested in.

Speaker 8: Sure, great question. So we have, I mentioned a couple of quarters ago, first of all, a very deliberate in what we're looking at as far as our M&A target are concerned.

Sure Great question, So yes, we have.

I mentioned a couple of.

The goal.

First of all a very deliberate and what we're looking at as far as our M&A targets are concerned.

Speaker 8: our thesis of all in one system, fluid one fluid coherence out of code, framework, workflows, remains intact. Therefore, the bar for finding something where we have completely blinding the obvious value creation proposition, technology, stack compatibility, and of course, culture feed is pretty challenging.

Our thesis all in one system fluid one one fluid.

<unk> set a cold.

Framework workflows.

Gains in tech and therefore, the bar for find and some kind of where we have completely blind into all this value creation proposition.

Technology stack compatibility and of course culture feet is pretty challenging right.

Speaker 8: On the other hand, because our system is so open and so flexible, it does facilitate interest in place, both in terms of scale, where we can...

On the other hands because of our system is so open and so flexible industrial facilitate interest in place both in terms of scale, where we can.

Speaker 8: brings something on board that will simply accelerate our, either accelerate our travel from growth perspective within the core product strategy or from scope perspective where we would position the business within areas where simply not, such as private equity markets or private credit markets.

Bruce Duncan on board, the dwell simply accelerate our either accelerate our travel.

From a growth perspective within the core.

<unk> strategy or from school perspective, where we would position the business within areas.

We're not such as private equity market, so private credit market.

Speaker 8: But from that perspective, it's not so much geographical approach. We're global. We're looking at things both in Europe and in US. Of course, in the US, there is plenty more to look at.

But from that perspective, it's not so much geographical.

Our approach of our global we're looking at things both in Europe and in U S of course in the U S. There is plenty more to look at.

Speaker 8: But it's more related to a choice, whether it's a scale deal where we look along our vertical and see what our technology platform allows us to bring on board, or we'll look at this from a scope perspective where we're seeing what's available from a modern technology perspective that would allow us to get into.

But it's more related to a choice, whether it's a scale deal where we.

Luca along our vertical and see what our technology platform.

Allows us to bring on board or will look at.

I look at this from school perspective, where we're seeing what's available from modern technology perspective that would allow us to get into.

Speaker 7: to get into areas where infusion is not currently represented or doesn't have capabilities to sell. Got it. Thanks, O.

To get into areas, where infusion is not currently represented or doesn't kept capabilities to sell.

Got it thanks Alec.

Yes.

We will take our next question from Steve Bruner at William Blair.

Speaker 9: Hey guys, thanks for taking my question. Wanted to start on the international side. You guys are seeing strength, especially in a meal. And I was just wondering how you're thinking about this opportunity, how you guys are thinking about allocating resources and your competitive positioning to sustain momentum in these areas.

Hey, guys. Thanks for taking my question I wanted to start on the international side, you guys are seeing strength, especially in EMEA and I was just wondering how you're thinking about this opportunity. How you guys are thinking about allocating resources and your competitive positioning for sustained momentum in these areas.

Speaker 8: Well, big focus for us. Thank you for the question. I mean, as you've seen, you know,

Well big focus for us. Thank you for the question I mean as you've seen.

Speaker 8: For the last couple of quarters, it's been a strong driver for our growth. 29% year on the year growth this quarter.

Well for the last couple of quarters, it's been a strong driver for our growth 29% year on year growth this quarter.

Speaker 8: We see a lot of opportunity there. People typically think about EMEA as one monolithic market. From our perspective, it's anything but. Every country in Europe is relatively unique in terms of go-to-market strategy, in terms of how people think about technology, how people think about buying decisions, who are the gatekeepers in the industry, and so on and so forth. Our strategy is nuanced, and I have to give credit to our...

We are still a lot of opportunity there.

People typically think about EMEA as one monolithic market.

From our perspective, it's innocent, but every country in Europe is relatively unique in terms of go to market strategy in terms of.

How people think about.

Technology of how people think about buying decisions.

Who are the gatekeepers and the industry and so on and so forth and so our strategy is nuanced and actually have to give credit to our.

Speaker 8: uh... both uh... revenue team and product team thinking through those nuances in designing that go to market strategy to attack those markets

Both.

Revenue team and product team thinking through those nuances in designing that go to market strategy to attack those markets. Those markets also from our perspective tend to be.

Speaker 8: Those markets also, from our perspective, tend to be less competitive and less crowded.

Less.

Less competitive and less crowded more.

Speaker 8: stale, slower and therefore in some sense, ripe for disruption by companies like Confusion. They still either rely on a lot of legacy systems, legacy infrastructure, homegrown proprietary or relying on

Sales slower and therefore in some sense right for disruption by by companies like infusion they still either relying on a lot of legacy systems legacy infrastructure.

Homegrown proprietary or relying on.

Speaker 8: relatively clunky, obsolete legacy providers where people are still babysitting capabilities and spending tens of millions of dollars without significant ROI. So we're very excited about the opportunity, both Europe and Middle East, very interesting. And as you've seen, we're gaining traction in multiple countries, France, Norway, you know, of course we're seeing opportunities to take these photos and focus to optimizing the needs of our ADC outcome.

Relatively clunky.

In our obsolete legacy providers, where people are still maybe sit in capabilities and spending tens of millions of dollars without significant. So we're very excited about the opportunity both Europe and middle East very interested in it.

As you've seen we're gaining traction in multiple countries, France, Norway.

Of course, we are seeing opportunities.

Speaker 8: In UK as well, it's still a home turf, we still are obviously controlling pretty large market share around.

In UK as well it is still our home turf was still are obviously controlling large market share around.

Speaker 8: money center cities like London and of course outside EMEA like Hong Kong and New York. But again, our strategy is very deliberate to rebalance portfolio mix away from those centers toward markets where we're much less represented and where our competition is not as high. But also, you know, rebalance our book of businesses. If you track our performance over the last three, four years, this is why the revenue is so stable. Sometimes when, you know, when Asia doesn't work.

Minus centers theaters like London and of course outside EMEA like Hong Kong and in New York, but again, our strategy is very deliberate to rebalanced portfolio mix away from those center store markets, where we're much less represented in the Oregon petition is not as high but also rebalance our book of business as usual if you track our.

Performance over the last three or four years. This is why the revenue stable sometimes.

When Asia doesn't work.

Speaker 8: U.S. picks up slack. When U.S. is slowing down, we're rebalancing towards Europe , and we will continue to do that going forward.

<unk> picks up slack when you ask the slowing down we're rebalancing towards Europe, and we will continue to to do that going forward.

Speaker 9: Very cool. Thanks for the call. And if I could sneak one more in here. Just a lot of strings of high strategy to it. You guys are a beneficiary of capital flows. So, wondering how you're thinking about these fun types of clients and their overall willingness to get infrastructure up and running quick.

Okay cool thanks for the color and if I could sneak one more in here.

Just a lot of strength right strategy to as you guys are a beneficiary of capital flows. So wondering how you're thinking about these types of clients and their overall willingness to get infrastructure up and running quickly.

Speaker 8: I'm so sorry. I did not get the first part of your question. Could you repeat that?

Sorry, I did not get the first part of your question could you repeat that.

Speaker 9: Just as you're continuing to see strength and multi-strategy, you know, asset managers.

This as you're continuing to see strength in multi strategy asset manager Eric.

Speaker 9: of how are you thinking about clients and their willingness to kind of adopt broader solutions.

How are you thinking about clients and their willingness to kind of adopt broader solution.

Speaker 8: I got it. So, you know, that's an interesting one because

I got it so that's an interesting long because.

Speaker 10: you know, the multi-strategy multi-manager.

No.

<unk> multi strategy multi manager businesses.

Speaker 10: businesses, you know, to some extent actually represent the challenge for us because they have.

To some extend actually represent the challenge for us because they have.

Speaker 8: You know, very custom blends of different things and actually to the extent that they're competing for talent.

<unk> costs down.

<unk> of different things and actually to the extent that they're competing for talent.

Speaker 8: Oftentimes, it's nearly impossible for them to impose specific.

Often times, it's nearly impossible for them to impose specific.

Speaker 8: system requirements and people that are coming in with a team that has some kind of history with another system, some kind of a preconceived notion of how they like their workflows to be organized. And so the platform has to be dynamic and flexible enough to absorb the team without necessarily imposing those technical or workflow constraints.

System requirements from people that are coming in with people.

Coming in with a team that has some kind of history with another system, some kind of a preconceived notion holiday like their workflows to be organized and so.

Platform has to be dynamic and flexible enough to absorb the team without necessarily important dose technical workflow constraints.

Speaker 8: On the other hand, precisely because they captured such enormous economies of scale.

On the other hand.

Secondly, because they've captured such enormous economies of scale they.

Speaker 8: They have virtually unlimited technology budgets and therefore their ability to run a lot of proprietary things to satisfy, to develop and run a lot of proprietary things that satisfy their firm-wide requirements. So it's also much higher. And so the cost pressures are, in some sense, a secondary. From my perspective, it's much more driven by what makes sense for the business.

They have virtually unlimited technology budgets and therefore their ability to run a lot of proprietary things to satisfy to develop and run a lot of proprietary things that satisfy their firm wide requirements is also much higher and so the cost pressures are in some signs of secondary there from my perspective.

It's much more driven by what makes sense for the business on the other hand, those firms have become big magnets for talent and therefore, they actually pressing down on the number of launches naturally spm's, who are looking to launch they make a choice whether the.

Speaker 8: On the other hand, those firms have become big magnets for talent and therefore they actually press and down on the number of launches naturally. It's SPMs who are looking to launch, they make a choice. Whether they go into loan and the launcher fund or they go on a platform, like one of those multi-manager platforms and they just get a seat and get capital-allocated and just begin trading. And so from that perspective, we have a pretty strong nucleus of client like that. But in...

They go into law and the launch of fond or are they go on a platform like one of those multi manager platform can I just get a season, we get capital allocated at the end and just begun begin trading and so from that perspective, we have a pretty strong nucleus of clients like that but in some sense.

Speaker 10: You know, this is not a market where...

This is not a market where.

Speaker 10: You know, we see unlimited growth. What is interesting though, and you see some recent announcements on the subject, more traditional, fully integrated asset managers typically start competing with those and actually allocate capital internally. And this is where we come in. This is our blend of multiple capabilities, middle, back and front office actually matters because those guys.

We see unlimited growth what is interesting, though when you see some recent announcements on the subject more traditional.

Fully integrated asset managers, typically start competing with Dallas and actual allocate capital internally and this is where we come in this is we our blend of multiple capabilities middle back and front office actually matters because those guys.

Speaker 7: care about costs and they care about scale and they actually start coming in into those markets with much more palatable cost structure that makes more sense for investors.

Care about cost and they care about scale.

Start coming into those markets with much more palatable cost structure that makes more sense for investors.

Awesome. Thank you guys.

Sure.

We will go next to Alexia <unk> at Jpmorgan.

Speaker 11: Okay, this is a least canner on for Alexi Gogolive. So my question was talking about your average onboarding period, kind of how you plan to reduce this to better compete with other players.

Hi, This is luis counter on for Alexia <unk> from my question was talking about your average Onboarding period kind of how you plan to reduce this to better compete with other players in the space.

Speaker 8: Yep, big area of focus for us, you know, we think about that part as not just cost structure part or pulling revenue forward part, but also as a competitive advantage.

Yes.

Big area of focus for us.

Think about that as part of not just <unk>.

The structure part or pulling revenue, Florida part, but also the competitive advantage.

Speaker 8: Typically our onboarding framework and onboarding cycle is much shorter than that of our competitors in that space, you know, specifically legacy providers that have on-prem installs.

Typically our onboarding framework and on boarding cycle is much shorter than that of our competitors in that space specific legacy providers that can have on prem installs and so even as I mentioned capabilities would typically win business.

Speaker 8: And so even if the matching capabilities would typically win business precisely because our onboarding is much more reliable and much shorter than that of our competition. And in terms of leverage in that, there's only one way to do it. You design the organization the right way and you build technology capabilities around that so that your team is much more effective and efficient. So that's what drives the cost down. This would enhance the velocity of the process.

Precisely because our onboarding is much more reliable and much shorter than that of our competition in.

In terms of <unk>.

Leverage in that there is only one way to do it you designed the organization the right way and you build technology capabilities around that so that your team is much more effective and efficient and so that's what drives the cost down this enhances the velocity of the process.

Speaker 11: Great, thank you so much. And then real quick on EBITDA margins. So I know your guidance remain the same. I was wondering if 20% plus EBITDA margins are sustainable for the next two years and where you see the trajectory of margins going perhaps back to 40%.

Great. Thank you so much and then real quick on EBITDA margin. So I know your guidance remain the same I was wondering if 20% plus EBITDA margins are sustainable for the next year, then where you see the trajectory of margins going perhaps back to 40% from that.

Speaker 6: Yeah, this is Brad. I'll take that question. We've talked about expanding margins. It's also why we mentioned, I mentioned the pass-through rates when we talk about incremental revenue is how much of that is flowing through at EBITDA.

Yes. This is Brad I'll take that question.

We've talked about expanding margins. That's also why we mentioned.

I mentioned the pass through rates when we talk about incremental revenue is how much of that is flowing through to EBITDA.

Speaker 6: So we targeted a 45, 55% pass through rates to what that translates into, certainly, as margin expansion. So we targeted exiting this year around 20%, and we certainly see those numbers not only sustainable, but also show the ability to expand those margins.

So we've targeted a 45, 55% passenger rates so what that translates into certainly is margin expansion. So we've targeted exiting this year around 20% and we certainly see those numbers not only sustainable but also show the ability to expand those margins.

Speaker 6: you know, both in the near term and in the long term. We're not setting necessarily targets to say when we'll get to, you know, 30, 40% margins from an outlook perspective, but we certainly have the ability to take where we'll exit this year and expand those further into 2024.

Both in the near term and in the long term, we're not setting necessarily targets to say when we'll get to 30% 40% margins.

From an outlook perspective, but we certainly have the ability to take where we'll exit this year and expand those further into into 2024.

Got it thank you so much.

Our next question comes from Parker Lane at Stifel.

Speaker 12: Yeah, guys, thanks for taking the question here. Next to the reiterated guide in the improvement in NDR quarter-ever quarter. Brad, curious, as we head into the fourth quarter here and into 2024, what are your expectations around that trend line of NDR? Do you think we get back to the levels we were at? Last year you talked about quality of the pipeline improving and maybe some stabilization out there. Just curious where we should expect that to go.

Hey, guys. Thanks for taking the question here next to the reiterated guide in the improvement.

And Dr quarter over quarter, Brad curious as we head into the fourth quarter here and ended 2024.

What are your expectations around that trend line of MTR do you think we get back to the levels. We were at last year, you talked about quality of the pipeline improving and maybe some stabilization out there just curious where we should expect that to go.

Speaker 6: No, it's a great question. We spent a lot of time looking at it. Just like you, I was very pleased to see that in the archer-jector return in the quarter to start kind of flipping the other direction.

It's a great question, we spent a lot of time looking at it.

Like you I was very pleased to see that in Dr trajectory return in the quarter to start kind of flipping the other direction.

Speaker 6: We posted the 107 number when you exclude in ball. You know, we targeted that number getting back at least to a 110. You know, I think reality is it's probably a number that stabilizes in the 110, the 115 rate over time.

We posted a 107 number when you exclude involved we targeted that number getting back at least to a 110.

I think reality is there's probably a number that stabilizes in the 110 to $1 15 rate over time.

Speaker 6: You know, when it gets there is going to be an interesting question. I certainly am appreciative to see the trend going in the right direction.

When it gets there is going to be an interesting question and I certainly appreciate it to see the trend going in the right direction.

Speaker 6: I think it's probably going to hover around these levels for the next, you know, maybe quarter or two, but I do think that 110-115 number is a sustainable target once we get past that.

I think it's probably going to hover around these levels for the next maybe quarter or two but I do think that 110 115 number is a sustainable target once we get past that Bargar Bullock here. Thank you for the question I just wanted to buy along breast comments.

Speaker 10: Parker, Oleg here. Thank you for the question. I just wanted to pile on Brad's comments.

Another thing is important to think about as we try.

Speaker 8: thing is important to think about is, you know, we try, you know, as hard as we possibly can to control what we can control. And you're absolutely right. You know, big driver here is that we, and again, I have to give credit to our revenue organization and, and client services organization about this.

As hard as we possibly can to control what we can control and you're absolutely right Big driver here is that we and again I have to give credit to our revenue organization and client services organization about this this maniacal focus on on disciplined execution of the sales, making sure we understand the client's problems.

Speaker 10: this maniacal focus on discipline execution of the sales, making sure we understand the client's problems. We, you know, our solution engineering team involved during the early stages.

We announced our solutions nearing team involved at early early during the early stages client services team involved gets involved in early stages and therefore, not just the velocity back to the previous question by let's say not just the velocity of Onboarding.

Speaker 12: Client services team involved gets involved in early stages and therefore, you know, not just the velocity back to the previous question by Alexei, not just the velocity of onboarding is higher, but the quality is higher. And therefore, we continue to reignite this, you know, virtuous cycle of creating happy clients and therefore retention is higher. Thanks for the feedback that thought from me.

Is higher but the quality is higher and therefore, we continue to reignite.

Virtuous cycle upgrades and shape of clients and therefore, our retention is higher.

Yes.

Thanks for the feedback that's all from me.

Thanks Bart.

We'll go next to Crispin Love at Piper Sandler.

Speaker 13: Thanks, good morning everyone. I appreciate taking my questions. I'm just first on revenue growth, which is decelerated recently and just a challenging landscape here. Curious on your views for near to intermediate trends? And if you think that growth may have bottomed in the third quarter, and could begin to less higher in a pro-protein, perhaps the past 20% and 2024, just give them your comments about optimism for the future here.

Thanks. Good morning, everyone. Appreciate you taking my questions just first on revenue growth, which is decelerate recently and just a challenge on <unk> curious on your views for near to intermediate trends and fund that growth.

Growth Miller bottomed in the third quarter I'm could begin to inflect higher than that.

Approach and perhaps surpassed 20% in 2024.

Given your comments about optimism for the future here.

Speaker 10: Thank you for the question. So, you know, we're pretty constructive. I mean.

Thank you for the question so.

We're pretty constructive.

Speaker 8: We think that the bottom is probably, we've seen this. Again, we don't have a crystal ball. I don't know what the macro environment is going to look like in 24.

So we think that the bottom.

Probably we've seen this.

Again, we don't have a crystal ball I don't know what the macro environment is going to look like in 2004.

Speaker 10: What gives me comfort personally is our ability to pivot. As you know, you can grow or sustain this growth rates through multiple sources. And we all know that the asset management industry at large is going to grow in single digits. And maybe at best it's going to be anywhere between four to 5% depending on the segment. So how do you grow? How do you grow at 20% plus? So you can do it two ways. You can...

What gives me comfort personally is.

Our ability to pivot as you know we can grow our sustained growth rates.

Through multiple sources and well know that the the asset management industry. It's large right is going to grow.

In single digits, and maybe invest is going to be anywhere between 4% to 5% dependent on the segment. So how do you grow how do you grow at 20% plus so you can do it two ways you can either.

Speaker 8: create very aggressive market share capture, which is precisely where our focus today, which is also precisely where infusions

Creates very aggressive market share capture which is precisely where our focus today, which is also precisely where infusions.

Speaker 10: sort of what I would call downside convexity has been when, you know, macro headwinds are strong, we always rebalanced and took business away from competition, thereby sustaining the growth and actually capturing market share. And when the market is really good again, you know, assets are flowing and the returns are high, you know, funds are launched, we are back to our, you know, hyper growth stage again.

Sort of what I would call downside kind of exit to has been win.

Macro headwinds are strong, we always sort of balanced and took business away from competition, thereby sustaining the growth in extra we captured market share in one market is really good again.

It's a flaw in the returns are high.

Phones are launched we are.

Back to our hyper growth stage again.

Speaker 8: And so, this is sort of our tactical solution number one. Tactical solution number two could potentially be an M&A strategy, but again, as I said before, we are very careful and surgical about.

So this is sort of our technical solution number one technical solution number two could potentially be an M&A strategy, but again as I said before we are very careful eon surgical about.

Speaker 10: you know that aspect of growth. And at the end of the day, it also is about profitability from our perspective as much as it is about growth. I understand your question is about top line, but what we are trying to do is balance both top line and bottom line and oftentimes, as you know, those are two are connected.

And all of that aspect of growth.

At the end of the day. It also is about profitability from our perspective as much as it is about growth I understand. Your question is about is about top line, but what we're trying to do is balance both topline and Bottomline and often times as you know those two are connected.

Speaker 6: This is Brad. Let me just add, you know, a little bit of ways of the way we look at our growth algorithm, you know, if you think of even if we bottomed out here and call it the mid-teens.

This is Brian let me just add a little bit of ways of the way we look at our growth algorithm. If you think of even if we bottomed out here in call. It the mid teens.

Speaker 6: from a kind of market share and macro level growth rate, which I will kind of chime in, it's still substantially better than our competition because of our share grabs.

A kind of market share and macro level growth rate.

Which I will kind of chime in is still substantially better than our competition because of our share grabs so start off with mid.

Speaker 6: So start off with mid teams. You pick up another three to five hundred basis points out of NDR, because we've mentioned we're running a little bit lower on NDR than we would historically.

Mid teens, you pick up another three to 500 basis points out of India are because we've mentioned, we're running a little bit lower on ADR that we would have historically.

Speaker 6: And then tack on another, you know, three to 500 basis points for, you know, additional product capabilities and additional market opportunities that we're expanding with things like portfolio workbench, with things like credit, with things like new geographies we're going to go into. You know, you compile those numbers. You can easily get back into this, this 20% sustainable growth rate. So that's, that's kind of the way we dissect it and the way we look at it.

And then tack on another $3 to 500 basis points for additional product capabilities and additional market opportunities that we're expanding with things like portfolio workbench with things like credit with things like new geographies, we're going to go into you compile those numbers you can easily get back into this.

20% sustainable growth rate, so that's kind of the way, we dissect it and the way we look at it.

Speaker 13: Thanks. I definitely appreciate the color there and just bouncing the top and bottom one. Um, second question from me is just, can you give an update on net incremental seat license trends at current clients? Are they positive but slowing here? Just curious what you're seeing in the current environment and the drivers there.

Thanks, I'll definitely appreciate the color there and just balancing the top and bottom line second question from me is just can you give an update on that incremental seat license transit current clients are they positive, but slowing here just curious what youre seeing in the current environment and the drivers there.

Speaker 6: Yeah, this is Brad, I'll take that one too. So this is kind of supporting my commentary about a little bit of a trend shift we've seen in that net organic growth. So we actually are starting to see.

Yes. This is Brad I'll take that one too. So this is kind of supporting my commentary about a little bit of a trend shift we've seen in that net organic growth. So we actually are starting to see.

Speaker 6: a term we use called up cells where our existing clients are adding seats at a faster pace than they are declining seats. You know, the last couple of quarters, when we saw those reductions in NDR, we saw that trajectory flip a little bit as most of our customers were resetting our cost base. We are starting to see on a net basis that organic growth number is turning substantially more positive than it has in the last couple of quarters. that.

A term we use called up sells where our existing clients are adding seats at a faster pace than they are declining seats over the last couple of quarters. When we saw those reductions in <unk>, we saw that trajectory flipped a little bit as most of our customers were resetting our cost base. We are starting to see on a net basis that organic <unk>.

Number is turning.

Actually more positive than it has in the last couple of quarters. So.

Speaker 14: They're not necessarily, you know.

They're not new.

<unk>.

Speaker 7: massive increases in seat counts, but we certainly are seeing as clients are expanding their own fund capabilities, they are picking up seats at a much faster pace than they are declining seats. So that's a nice trend that we saw and it's representative in that NDR number picking up 100 basis points.

Massive increases in seat count, but we certainly are seeing.

Clients are expanding their own fund capabilities. They are picking up seats at a much faster pace than they are declining. So that's a nice trend that we saw in this representative in that and Dr number picking up 100 basis points.

Great good to hear I appreciate you taking my questions.

Okay.

We'll move next to Gabrielle Abortus at Goldman Sachs.

Speaker 15: Hi, this is Callie Valenti on for Gabriela. Wanted to start on kind of how you feel about your current investment levels and what kind of macro signals would lead you to increase investments potentially, or are you just comfortable with your current investment level in a world where macro increases and you feel like you can take advantage of that?

Hi, This is Kelly valenti on for Gabriela and wanted to start on kind of how you feel about your current investment levels and what kind of macro signals that would lead you to increase investments.

Potentially or are you just comfortable with your current investment level in a world where macro increases and you feel like you can take advantage of that opportunity.

Speaker 14: That's a great question, Kelly. So it kind of hinges back to always comment a minute ago about balancing top line growth and profitability. We always have a list of investments that we feel like we could prioritize, should the economic environments present the opportunities.

That's a great question Kelly so it kind of can just back to always comment a minute ago about balancing top line growth and profitability. We always have a list of investments that we feel like we could prioritize should the economic environments present the opportunities.

Speaker 6: The good thing about the growth rates that we're able to put out is it allows us to make, you know, not only sustaining the investments we make, but it does allow us to make incremental growth, incremental investments in our P&L, both flowing through OPEX and as well as CAPEX, because as you'll know, some of our investment flows through as CAPS software.

Good thing about the growth rates that we're able to put to put out as it allows us to make not only sustaining and the investments we make but it does allow us to make incremental growth incremental investments in our P&L, both flowing through opex and as well as capex because as you'll know some of our investment flows through as cap software.

Speaker 14: So we do plan, in fact, as we're building out our plan for 2024, we still have meaningful investments.

So we do plan in fact is we're building out our plan for 2024, we still have meaningful investments.

Speaker 8: that we are targeting to make in 2024 based on the growth trajectories we're seeing in the macro environment. So those two things to your point are very intertwined and we pay very close attention to them. And candidly, if economic environments accelerate, that allows us the opportunity to make even more investments. So they work pretty close in tandem. And Kelly, I just want to echo what Brett said and also make another point which is

We are targeting to make in 2024.

Just on the growth trajectory, we're seeing in the macro environment. So those two things to your point are very intertwined.

And we pay very close attention to them.

Diddly, if the economic environment accelerate that allows us the opportunity to make even more investments. So they worked pretty close in Tampa and Kelly I just want to Echo what Brad said and also make another point, which is.

Speaker 10: You know, the good news for us is that we still have a lot of white space In front of us to make investments that actually are here clear and present, you know, not like You know a lot of people follow this hype with AI and machine learning and you know kind of having a lot of solutions Out there, you know in search of problems, so to speak

The good news for US is that we still have a lot of white space.

In front of us to make investments that extra layer clear on presence.

Not like.

A lot of people follow the Skype with AI and machine learning.

<unk> kind of having a lot of solutions out there in search of problems so to speak.

Speaker 10: We have very specific targeted product roadmap, again, credit to our engineering team and product team thinking through it in a very disciplined and careful way where we, again, will listen to the market and therefore those investments that we're making.

We have very specific targeted.

Our product roadmap and credits.

Credit to all our engineering team and product team thinking through it in a very disciplined and careful way, where we again, we've listened to the market and therefore those investments that we're making.

Speaker 10: You know have very high ROI. So it's not just about making investments in our mind. It's looking for investments with highest

We have very high ROI. So it's not just about making investments in our mind, it's looking for investments was highest.

Speaker 8: potential return on equity. And you can look at our return on equity, as you know, it's north of 30%. And this is what we're thinking about every time we deploy a dollar. We think about what we're going to get back. And again, like I said, the good news for us at this point in time is not, you know, what to do with capital. It's, you know, there is a lot of clear and present product opportunities, excuse me, that would, you know, help us capture both growth.

<unk>.

Potential return on equity and you can look at our return on equity as you know, it's north of 30% and this is what we're thinking about every time, we deploy dollar would think about what we're going to get back and again like I said the good news for US at this point in time is not what to do with capital.

There is a lot of clear and present product present product opportunities excuse me.

And that will help us capture both growth and market share.

Speaker 15: That makes sense, thank you. And then second one for me, quick, is just wanted to hear anything about kind of how you're thinking of the portfolio workbench pricing and how that compares to your other modules. You know, it.

That makes sense. Thank you and then second one from me quickly just wanted to hear anything about kind of how youre thinking of the portfolio workbench pricing and how that compares to your other modules.

You know.

I think.

Speaker 8: You know, we still...

Yes.

We still here's an interesting conundrum saw portfolio workbench is not something that was sell separately right. As you know we don't have.

Speaker 8: Here's an interest in conundrum. So portfolio workbench is not something that we sell separately. Right? As you know, we don't have price and package where we sell in order management systems separately from PMS, from accounting in GL capability. And portfolio workbench is something that is just part of the...

Price and package, where we sell an order management system separately from Pms from from accounting NGL kept the capability and.

Portfolio Workbenches Samsung that is just part of the.

Speaker 8: of their own platform right now. Going forward, we are working on different bundles, if you will, that will allow us to maximize commercial relationship with what our clients. Right now, portfolio work banches and this sort of, it's a green shoot of our overall product strategy and we will think through how to

Overall platform right now going forward, we are working on different.

Bundles, if you will that will allow us to sort of maximize commercial relationship with what our clients.

Right now portfolio Workbenches and this sort of.

Green shoots of all our overall product strategy and we will think through.

<unk>.

Speaker 8: how to optimize that entire package. So the point is we're not thinking about product portfolio workbench, you know, as a standalone product at WebPricing, but we're definitely, definitely thinking about number.

How to optimize that entire package. So the point is we're not thinking about product portfolio workbench.

A stand alone product pricing, but but definitely definitely thinking about.

Number one how does how it works is overall in the context of the overall package that our clients to buy and also how that pricing will be driven as a function of what the portfolio workbench is going to work in conjunction with because remember at this point in time because of just the tool is just an.

Speaker 10: how it works as overall, in the context of the overall package that our clients to buy.

Speaker 10: And also, how that pricing will be driven as a function of what the portfolio workbench is going to work in conjunction with. Because remember, at this point in time, it's just a tool, it's just an environment, it's just a framework, right? It still has to be...

<unk>, that's just a framework right.

Deal has to be.

Speaker 10: you know, if you will parameterize and then reached by benchmark data, by risk model data, by market data, and those partnerships in turn, they drive the price and structure of the product. And so there's a lot of dimensions here, and rest assured, Brandon, his team, and, you know.

We'll pair <unk> and enriched by benchmark data by risk model data by market data and those partnerships in turn they drive the pricing structure of the product and so there's a lot of dimensions here in red.

Assured brand and his team on and off.

Speaker 16: hard at work and talking to our revenue team thinking about how to capture that the best possible way. Let me come. Thank you.

But it's working and talking to our revenue team thinking about how to capture that the best possible way.

That makes sense. Thank you.

We will take our next question from Kodiak heater at Bank of America.

Yes.

Speaker 11: Hey, this is Natalie how long for Koji on a CV. So on an absolute basis, it grew this quarter more than it did last quarter, which is good to see. But overall, the past few quarters, the growth rate has been decelerating a bit. Do you see that potentially stabilizing or holding in the upcoming quarters and what can help drive?

Hey, this is Natalie how long from Koji.

ECB so on an absolute basis. It grew this quarter more than it did last quarter, which is good to see but overall the past few quarters. The growth rate has been decelerating a bit do you see that potentially stabilizing our holding in the upcoming quarter and then what could help drive growth there.

Speaker 10: Well, it's a natural, you know, natural, again, extension of our strategy. We're just lending bigger clients, longer contracts, bigger tickets. And we expect this trend to continue. You know, we again, we play very well in

Well, it's a natural unnatural again expansion of our strategy, we're just landon.

Bigger clients longer contracts bigger tickets and we expect this trend to continue again, we play very well in.

Speaker 8: You know, in lower market segments, in very low market segment, just for clarity, we don't conform to price driven competition. We still compete on capabilities, not on price.

And Laurie market segments.

Veda low market segment just for clarity.

We don't conform to price driven competition would still compete on capabilities not on price.

Speaker 10: But we keep seeing a lot of interest and opportunities in this high-A-CV space and so all of our...

But we keep.

<unk>.

A lot of.

And a lot of interesting opportunities in this higher higher HCV space in solar.

Speaker 8: you know, our overall ability to lend clients, you know, three, four, five, $600,000 type range is much stronger than it's been before. And we have an interesting opportunities in pipeline that.

Our overall ability to land clients 345, $600000 type range is much stronger than it's been before and which have an interest and opportunities and pipeline that is already in seven digit type territory and so as we move slowly as I said infusion as a business in transition. This is precisely where that is.

Speaker 8: is already in seven-digit type territory. And so, you know, as we move slowly, as I said, you know, infusion is a business in transition. This is precisely where that transition is happening.

Speaker 12: So as we move towards that segment, you will see more and more of that. Natalie, I would add, you might see some quarterly.

Transition is happening as we move towards that segments, you will see more and more of that.

How do we add you might see some quarterly fluctuations.

Speaker 6: fluctuations in that growth rate just depending on when clients are onboarded. So on a quarterly basis, you can see some bouncing around. You know,

Fluctuations in that growth rate just depending on when clients are on boarded so on a quarterly basis, you could see some bouncing around.

I would I would.

Speaker 6: push you to probably steer a little bit more toward looking at it kind of on a year-to-year basis. You'll get a better number.

Push you to probably steer a little bit more towards looking at it kind of on a year over year basis, Youll get a better number.

Got it. Thank you that's all from us.

Thanks.

Speaker 2: That does conclude today's question and answer session and today's conference call. We thank you for your participation. You may now disconnect.

That does conclude today's question and answer session and today's conference call. We thank you for your participation you may now disconnect.

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