Q3 2024 Enfusion Inc Earnings Call
Operator: Good morning, ladies and gentlemen. standing by.
Good morning, ladies and gentlemen.
Operator: Welcome to Enfusion's third quarter 2024 earnings Next time, all lines have been placed on mute to prevent any background noise. Following the speaker's remarks, we will open the floor for questions. As a reminder, this conference call is being.
Speaker Change: Standing by and welcome to infusion third quarter 'twenty 'twenty four 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 floor for questions. As a reminder, this conference call is being recorded.
Bill Wright: And now I'd like to turn the call over to Bill Wright, Head of Investor Good morning and thank you, operator. We welcome you to Enfusion's third quarter 2024 earnings conference. Hosting today's call are Oleg Movchan, Enfusion's Chief Executive Officer, Brad Herring, Enfusion's Chief Financial Officer, and Neal Pawar, Enfusion's Chief Operating Officer.
Speaker Change: I'd now like to turn the call over to Bill rate head of Investor relations to begin.
Bill rate: Good morning, and thank you operator, we welcome you to <unk> third quarter 2024 earnings conference call hosting todays call are not yet infusion Chief Executive Officer, Brad hearing infusing, Chief Financial Officer, and Neil poor Infusions, Chief operating officer.
Bill Wright: Please note, our quarterly shareholder letter, which includes our quarterly financial results, has been posted to our investor relations website. I would 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, which are available in the investor relations section of 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 them following today's call, except as required by law.
Please note our quarterly shareholder letter, which includes our quarterly financial results has been posted to our Investor Relations website.
I would 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, which are available in the Investor Relations section of our website.
Speaker Change: 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 them. Following today's call except as required by law.
Bill Wright: In addition, today's call may include non-GAAP measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliation to the nearest gap measures can be found in today's quarterly shareholder letter, which is available on the company's website.
Speaker Change: 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.
Conciliation to the nearest GAAP measure can be found in today's quarterly shareholder letter, which is available on the company's website.
Oleg Movchan: And now I would like to turn the call over to Oleg to begin. Good morning, and thank you for joining us today to discuss our results for the third quarter of 2020. This quarter was about execution of our long-term strategy. We're pleased to see that our initiatives over the past several quarters are aligning and starting to add up. Throughout the year, we have been delivering new products that allow us to attract and retain larger upmarket clients in line with our strategy to expand into higher value market sectors. We will discuss some of these product developments and subsequent wins, or proof points, on our call today.
Speaker Change: And now I would like to turn the call over to Ali to begin.
Ali: Good morning, and thank you for joining us today to discuss our results for the third quarter of 2024.
Ali: This quarter was about execution of our long term strategy.
Speaker Change: We're pleased to see that our initiatives over the past several quarters are aligning and starting to add up.
Speaker Change: Throughout the year, we have been delivering new products that allow us to attract and retain larger upmarket clients in line with our strategy to expand into higher value market segments.
Speaker Change: We will discuss some of its product development and subsequent twins or proof points on our call today.
Oleg Movchan: As you can see from our third quarter 2024 earnings release published earlier this morning, we reported a strong quarter with 15% top-line growth and narrowed our 2024 full-year guidance.
Speaker Change: As you can see from our third quarter 2024 earnings release published earlier this morning.
Speaker Change: <unk> reported a strong quarter with 15% topline growth and narrowed our 2020 for full year guidance, which Brad will discuss later.
Oleg Movchan: The bread we'll discuss later. We also remain on track to deliver on our medium term guidance of 20 to 22% revenue growth rate over the 2025-2027 period. Our confidence in achieving our mid-term guidance is based on our ability to win new business by broadening our product offering to capture upmarket opportunities.
We also remain on track to deliver on our medium term guidance of 22, 1% to 2%.
Speaker Change: Our revenue growth rate or the 20 to $25 102007 period.
And achieving our mid term guidance is based on our ability to win new business by broadening our product offering to capture market opportunities. While we further expanded our geographic footprint.
Oleg Movchan: while further expanding our geographic I believe we can accomplish this, because we are already doing it, as our investments in platform capabilities result in broad product adoption. We are capturing new business today that was previously out of reach due to our expanded products.
Speaker Change: I believe we can accomplish this because we are all ready to do that at our investments and platform capabilities result in broad product adoption.
Speaker Change: Capturing new business today that was previously out of reach due to our expanded product suite and global reach.
Oleg Movchan: and Global Vision. Our more than 1,100 employees are constantly striving to deliver the last upgrade our clients will ever need.
Speaker Change: Our more than 1100 employees are constantly striving to deliver the last upgrade our clients will ever need.
Oleg Movchan: Now let me walk you through some key financial highlights from the third quarter. We delivered $51.2 million in revenue in Q3 2024, representing 15% year-over-year growth. Third quarter adjusted EBITDA totaled $11.1 million, translating to a healthy adjusted EBITDA margin of 21.8%.
Speaker Change: Now, let me walk you through some key financial highlights from the third quarter.
We delivered $51 $2 million in revenue in Q3, 2024, representing 15% year over year growth.
Speaker Change: Third quarter, adjusted EBITDA totaled $11 1 million translating to a healthy adjusted EBITDA margin of 21, 8%.
Oleg Movchan: Brad will provide a deeper dive on financials later. We signed 38 new clients in Q3 2024, up from the 37 signed in Q3 2023. This brings our total client count to 894, another firm record.
Speaker Change: <unk> will provide a deeper dive on financials later.
We signed 38, new clients in Q3 2024 up from the 37 signed in Q3 2023.
This brings our total client count to 894 another firm record.
Oleg Movchan: The strong U.S. launch market we highlighted in the first half of the year continued into Q2. We captured 8 new launches, totaling 31 year-to-date in the Americas. which puts us on track for our best year since 2021, which has 35 new ones. Fund launch wins tend to originate from portfolio managers that have a strong loyalty to Enfusion brand from their previous firm. From a customer account standpoint, in Q3, launches represent 53% of new clients versus 47% for conversion. However, from a booking standpoint, launches represent 38% while conversions represent 62% of the total.
Speaker Change: The strong U S launch market was highlighted in the first half of the year continued into Q3.
Speaker Change: We captured eight new launches totaling 31 year to date in the Americas, which puts us on track for our best year since 2021, which had 35 new launches.
Speaker Change: Fund launch winds down to originate from portfolio managers that have a strong loyalty to infusion brand from their previous firms.
Speaker Change: From a customer count standpoint in Q3 launches represent 53% of new clients versus 47% for conversions. However.
Speaker Change: However from a booking standpoint launches represent 38% while conversions represent 62% of bookings as conversions are typically much larger accounts overall.
Oleg Movchan: as conversions are typically much larger. Overall ACV for the firm rose to $229,000. which is another firm record and it represents 5.7% year over year growth. Several of our new account wins this quarter are a direct result of our expanded product shelf and continued client adoption. As you have heard me say many times, our new product rollout this year, including our Portfolio Workbench tool, has been central to our strategy in expanding our market. leading to larger and more profitable relationships with more stable revenue profits. The second release of our Portfolio Workbench tool in Q2 included additional enhancements that expanded our serviceable time and allowed us to win accounts in the third quarter that were previously out of We're very excited to see this effort's material.
Speaker Change: Overall I see here for the firm. We're also $229000 in Q3, which is another firm record and represents five 7% year over year growth.
Speaker Change: Several of our new account wins this quarter are a direct result of our expanded product shelf and continued client adoption.
Speaker Change: As you have heard me say many times, our new product rollout this year, including our portfolio of work that still has been central to our strategy and expanding up market.
Speaker Change: Leading to larger and more profitable relationships with more stable revenue profile.
Speaker Change: The second release of our portfolio Workbench tool in Q2 included additional in catchments, but expanded our serviceable Tam and allowed us to win accounts in the third quarter that were previously out of reach.
Speaker Change: Excited to see this efforts materialize importantly, as we rollout of premium features that enhance our offer and portfolio construction, we expect it to revenue expansion in both the front and back book.
Oleg Movchan: And most importantly, as we roll out premium features that enhance our offering and portfolio construction, we expect to see revenue expansion in both the front and back.
Oleg Movchan: Allow me to provide you with a few notable plant wins across geographies from this In the Americas, revenue grew 17% year over year, up significantly from 10% last year, and up from 15% last quarter. The following wins illustrate how the product investment has been unlocking new clients for Enfusion. Credit fund formations have remained strong this year and we continue expanding our market share in this segment.
Allow me to provide you with a few notable client wins across geographies from this quarter.
Speaker Change: In the Americas revenue grew 17% year over year up significantly from 10% last year and up from 15% last quarter.
Speaker Change: The fallen wins illustrate called the product investments has been unlocking new clients for infusion.
Speaker Change: Credit Fund formation remained strong this year and we continue expanding our market share in this segment.
Oleg Movchan: I'm thrilled to announce that Enfusion signed Agile Investment Management. Agile Investment Management is a Florida-based institutional asset management fixed income firm with about $650 million in assets under management and assets under administration. The Agile investment process combines top-down and bottom-up analysis with the team's commitment to comprehensive risk management. and identifying opportunities to generate attractive The Edge LTE maintains the constant focus on risk management that has defined in Genesys signature style for almost 40 years. When Agile was appointed sub-advisor to the IA Clarington Core Plus bond fund, they needed to ensure that they had a technology partner that was able to drive operational efficiencies across the front office while operating on a modern platform that could scale with them into.
Speaker Change: Thrilled to announce that infusion signed NGL investment management Agila investment management is a Florida based institutional asset management fixed income firm with about $650 million and assets under management and assets under administration.
Speaker Change: The NGL investment process combines top down and bottom up analysis, but the team's commitment to comprehensive risk management.
Speaker Change: And identifying opportunities to generate attractive income streams. The NGL team maintains the constant focus on the risk management that has defined and Genesis signature style for almost 40 years.
Speaker Change: Hey, Joe was appointed sub adviser to the IAA client and core plus bond fund.
Speaker Change: They needed to ensure that the head of technology partner that was able to drive operational efficiencies across the front office, while operating on a modern platform that could scale with them into the future.
Oleg Movchan: They've chosen... Agile will utilize Enfusions OMS broadly. including Portfolio Workbench for cash flow rebalancing, pre-trade compliance, cash letter reporting and managed services. This is a very exciting win as we continue to grow our momentum in the institutional asset management.
<unk> infusion.
Speaker Change: Hey, John will equalize infusions, Oems broadly, including portfolio workbench for cash flow rebalancing pre trade compliance cash later reporting and managed services offering.
Speaker Change: This is a very exciting win as we continue to grow our momentum in the institutional asset management space.
Oleg Movchan: Another notable win-up market this quarter, which I am pleased to share, demonstrates our continued expansion in the institutional asset management. Frontier Global Partners is among the latest to partner with Enfusion and enhance their investment trading and operations. Frontier strategies invest not only in frontier markets, but also global, international, and international small cap equity markets, and it was imperative that they partner with a firm that has the security coverage. Frontier was an opportunity we nearly lost two years ago, but we stayed in contact with them periodically. Then recently, unhappy with their existing provider, they came back to us realizing their business needs lined up with Enfusion's build of our Portfolio Workbench, which allows dynamic portfolio rebalancing workflows coupled with a robust, compliant financial system.
Speaker Change: Another notable win up market this quarter, which I am pleased to share demonstrates our continued expansion in the institutional asset management space Frontier Global partners is among the latest to partner with infusion and enhance their investment trading and operations.
From a tier strategies invest not only in frontier markets, but also global international and international small cap equity markets and it was imperative that they partner with a firm that has a security coverage.
Speaker Change: There was an opportunity we never really lost two years ago, but we stayed in contact with them periodically than recently unhappy with their existing provider. They came back to us realizing their business needs lineup with infusion build of our portfolio workbench, which allows dynamic portfolio rebalancing workflows, coupled with a robust.
Compliance engine.
Oleg Movchan: The compliance engine provides transparency into the data, which their legacy provider could not. This is a very exciting win with a prestigious and well-known asset manager in the institutional asset management. As we've stated throughout the year, we have made a concerted effort to win more institutional asset management. And I'm pleased with the team's effort, execution, and most importantly, results.
Speaker Change: The compliance engine provides transparency into the data, which their legacy provider could not support.
This is a very exciting win with a prestigious and well known asset manager and institutional asset management space.
Speaker Change: As I stated throughout the year, we have made a concerted effort to win more institutional asset management.
Speaker Change: And I am pleased with the team's effort execution and most importantly results.
Oleg Movchan: Turning towards EMEA, revenue grew 22% year over year in Q3 2024, down modestly from the last quarter, as we saw an unusually high amount of involuntary churn at the end of Q2 and beginning of Disclosures impacted the growth trajectory for the quarter, but Q3 was also the best quarterly bookings in the EMEA in our history. Signing several large new asset managers is a positive leading indicator for future growth. As a reminder, Europe has a diverse mix of financial institutions. Scandinavia continues to be a growth region for us.
Speaker Change: Turning towards EMEA revenue grew two 1% to 2% year over year in Q3, 2024 down modestly from the last quarter as we saw an unusually high amount of involuntary churn at the end of Q2 and beginning of Q3.
Speaker Change: This closures impacted the growth trajectory for the quarter, but Q3 was also the best quarterly bookings in EMEA in our history.
Speaker Change: Signing several large new asset managers as a positive leading indicator for future growth.
Speaker Change: As a reminder, Europe has a diverse mix of financial institutions, and Scandinavia continues to be a growth region for us, but one another account and Norway. This quarter with fairly asset management. This is a newly formed asset management arm of a stroke currently ask and we'll be trading long short equity and credit.
Oleg Movchan: But one another account in Norway. with Fearnley Asset Management. This is a newly formed asset management arm of Astro Fearnley AS and will be trading long short equity and credit. The Asterok Tierney Group represents over a century of history, growth, and excellence in the areas of shipping and offshore services. Enfusion's presence continues to expand within the Norwegian assets management.
Speaker Change: The extra apparently group represents over a century of history growth and excellence in the areas of shipping and offshore services.
Speaker Change: Infusions presence continues to expense within the region asset management industry.
Oleg Movchan: As mentioned in our Q2 call, we have been focused on the Middle East. Specifically, Dubai. As a result of these efforts, I'm happy to share that we closed another account in Dubai. We are pleased to announce that Magellan Capital, a prolific several hundred million dollar multi-strategy launch in Dubai, has selected Enfusion to support their complex asset classes and workflow requirements. This win is a further testament that Enfusion's success and continued growth precedence in Middle East.
Speaker Change: As mentioned in our Q2 call where have been focused on the middle East and specifically Dubai.
Speaker Change: As a result of this efforts I am happy to share that we closed another account in Dubai were.
We're pleased to announce that Magellan capital a prolific several hundred million dollars multi strategy to launch in Dubai has selected the infusion to support their complex asset classes and the workflow requirements.
Speaker Change: This win is a further testament that infusion success and continued growth presence in middle East.
Oleg Movchan: Lastly, with our London space, we're proud to announce that TT International, an alpha-driven specialist investment manager, has selected Enfusion as their strategic partner for PMS, OEMS, accounting, and portfolio construction and rebalancing. Fallen and Thorough Market Evaluation. Their decision to replace multiple existing systems with our front-to-back solution underscores their confidence in our platform. The partnership is set to boost operational efficiency, streamline workflows, and enhance straight-through process.
Lastly, with our London space, we're proud to announce the TT International and Alpha driven specialist investment manager has selected confusion as their strategic partner for Pms.
Speaker Change: S accounting and portfolio construction and rebalancing.
Speaker Change: Following a thorough market evaluation.
Speaker Change: The decision to replace multiple existing systems with our front to back solution underscores our confidence in our platform the.
Speaker Change: The partnership was set to boost operational efficiency, streamline workflows and enhance straight through processing.
Oleg Movchan: Turning to Asia-Pacific, revenue grew 6% year-over-year, moderating from 10% year-over-year growth last quarter. As you may recall, we have highlighted the capital outflows and geopolitical trends in APEC for the past few quarters. And given those macro headwinds, we're pleased with this result. We continue to sustain healthy growth through the market share gains among traditional and hybrid asset managers, as we weather the macro conditions that are impacting hedge fund markets.
Turning to Asia Pacific revenue grew 6% year over year moderating from 10% year over year growth last quarter.
Speaker Change: As you May recall, we have highlighted the capital outflows and jet political trans and apex for the past few quarters and given those macro headwinds we're pleased with these results.
Speaker Change: We will continue to sustain healthy growth through the market share gains among traditional and hybrid asset managers as we weather the macro conditions that are impacting hedge fund market.
Oleg Movchan: The following client win is a good representation of how we continue to diversify our business. GoSN is among the latest institutional asset managers to partner with Enfusion and enhance their investment management operations. Guo Sen is a Chinese financial services company with services from sell side, sales and trading, research, investment banking, to buy side, asset management and private equity investment. Enfusion was selected as the primary technology and services provider to help them grow and scale their asset management division. The advantage they see from Enfusion is our all-in-one design to help seamlessly connect their front-office trading and operation teams, and it allows them to replace two of their incumbent systems, including their order management system and accounting.
Speaker Change: The following client win is a good representation of how we continue to diversify our business.
Speaker Change: <unk> is among the latest institutional asset managers to partner with infusion and enhance their investment management operations.
Speaker Change: <unk> is a Chinese financial services company with services from sell side sales and trading research and investment banking to buy side asset management and private equity investments in.
Speaker Change: <unk> fusion was selected as the primary technology and services provider to help them grow and scale their asset management Division.
Speaker Change: The advantage they see from infusion is our all in one design to help seamlessly connect their front office trading and operation teams and it allows them to replace two of the incumbent systems, including their order management system, and accounting system, which will optimize our total cost of ownership.
Oleg Movchan: which will optimize their total cost of ownership. It is among the latest investment managers to partner with Enfusion to enhance their investment operations. Enfusion has been selected as the primary technology and services provider to help them grow and scale their investment. They chose Enfusion due to the functionality of our EMS feature within the mobile app and also pre-trade compliance checks, helping ensure they're always trading within their compliance and regulations.
Speaker Change: Another key win this quarter and proof point, demonstrating our continued market leadership position in Hong Kong was a $500 million AUR long short equity manager with offices in China and Hong Kong.
Speaker Change: It is among the latest investment managers to partner with infusion to enhance their investment operations infuse.
Speaker Change: Infusion has been selected as the primary technology and services provider to help them grow and scale their investment business.
Speaker Change: They chose infusion due to the functionality of our Ams Fisher within the mobile App and also pre trade compliance checks, helping ensure they're always trading within their compliance and regulation.
Neal Pawar: At this time, I'd like to have Neal Pawar, our COO, to make a few comments on product. Thank you, Oleg. This month marks my first full year at Enfusion. Over the past year, a major area of focus for us has been to add capacity to our product and engineering. so that we can increase the velocity of adding new capabilities for our climate. This is key so that we have more tools to unlock new client opportunities, helping our front book, as well as capabilities to offer our existing clients, helping grow our back. This past quarter, we have added several product enhancements for the Portfolio Work including most recently native rebalancing of fixed income portfolios.
At this time I would like to have Neal Fuller, our CFO to make a few comments on product and services.
Neal Fuller: Thank you <unk>.
Neal Fuller: This month marks my first full year as infusion.
Over the past year, a major area of focus for us has been to add capacity to our product and engineering teams. So that we can increase the velocity of adding new capabilities for our clients.
Speaker Change: This is key so that we have more tools to unlock new client opportunities, helping our front book as well as capabilities to offer our existing clients, helping grow our back book.
Speaker Change: This past quarter, we have added several product enhancements for the portfolio workbench, including most recently native rebalancing of fixed income portfolios.
Neal Pawar: A great advantage of our weekly release cadence is that we are routinely pushing out new features to clients. something that is extremely helpful, especially when developing a new product like the Portfolio Workbook. We can also report a strong rate of mobile adoption for the workbench, which is a good reminder that portfolio managers are increasingly looking for ways to manage their portfolios while they're on the road. As you heard from Oleg, the Workbench continues to play a part in Enfusion landing several new asset management clients this quarter, for whom some of the Workbench capabilities were table stakes.
Speaker Change: A great advantage of our weekly release cadence is that we are routinely pushing out new features to clients is something that is extremely helpful, especially when developing a new product like the portfolio workbench.
Speaker Change: We can also report a strong rate of mobile adoption for the workbench, which is a good reminder, that portfolio managers are increasingly looking for ways to manage their portfolios. While they were on the road.
Speaker Change: As you heard from old leg. The workbench continues to play a part in infusion landing several new asset management clients this quarter for whom some of the workbench capabilities with table Stakes.
Neal Pawar: The addition of these customers is a nice proof point of how the workbench is helping us grow our front book and it's expanding our serviceable We have also delivered the first in a series of upgrades to our managed service. As we've mentioned previously, our managed services provides our clients a dedicated team that operates as an extension of the client's organization. providing accounting and operational support for the client's shadow account. This quarter, we beta-released a highly visual and intuitive set of dashboards for managed service clients to better track and measure their team's work process. This release went out to a subset of our managed service clients and is the first significant technical enhancement we've made to this service since it was first launched.
Speaker Change: The addition of these customers is a nice proof points of how the workbench is helping us grow our front book and it's expanding our serviceable Tam.
Speaker Change: We have also delivered the first in a series of upgrades to our managed service offerings as.
As we've mentioned previously our managed services provides our clients a dedicated team that operates as an extension of the clients organization, providing accounting operational support for the clients Shadow accounts.
Speaker Change: This quarter, we beta released a highly visual and intuitive set of SaaS ports for managed service clients to better track and measure their teams work product.
Speaker Change: This release went out to a subset of our managed service clients and is the first significant technical enhancements. We've made to this service since it was first launched.
Neal Pawar: It is by no means the last. We are adding a number of new features to our managed service platform in the coming months. We're very focused on improving both the client and operations user experience while also increasing productivity and hence margins for the managed service business. These enhancements will also give us new product capabilities for us to upsell to clients who do not leverage our managed services today.
Speaker Change: This is by no means the loss we are adding a number of new features to our managed service platform in the coming months, we are very focused on improving both the clients and operations user experience, while also increasing productivity and hence margins for the managed service business.
These enhancements will also give us new product capabilities for us to up sell to clients, who do not leverage our managed services today.
Neal Pawar: We have also released a complete reboot to our online documentation, a system we call Violet. We have over 75 clients in the beta release of Violet and the feedback loop this has generated is helping prioritize what we will cover next. Having all of our documentation in Violet has given us the opportunity to leverage AI so clients and employees can ask questions through the search and get answers along with links to source documents to solve the problem. Violet is broadly regarded as a huge upgrade over our previous documentation and we will be closing the beta and rolling it out to all clients in Q3.
Speaker Change: We have also released a complete reboot to our online documentation a system we call violent.
We have opened 75 clients in the beta release of Violet and the feedback loop. This has generated is helping prioritize what we will cover next.
Speaker Change: Having all of our documentation and violent has given us the opportunity to leverage AI, so clients and employees can ask questions through the search and get answers along with links to source documents.
To solve the problems.
Speaker Change: Violet is broadly regarded as a huge upgrades over our previous documentation and we will be closing the beta and rolling it out to all clients in Q4.
Neal Pawar: Over the past year, you've also heard about some of the talent we've brought into the firm. We have added several senior hires to the product team, investing in key areas, including compliance, OEMS, data, user experience, and analytics. Of course, product works in lockstep with our engineering team, where we've also been investing more capacity. We recently announced the appointment of Arman Artuk to head of engineering. Arman will oversee the continued scaling of our engineering teams as they work on delivering our product, Rodent. Armand comes to us from Instanet, where he served as Managing Director, Global Head of Liquidity Technologies, leading the development of low latency algorithmic trading Armand's arrival is at the perfect time, as we have grown our engineering organization by 40 people here today.
Over the past year, you've also heard about some of the talent we brought into the firm.
Speaker Change: We have added several senior hires to the product team investing in key areas, including compliance Oems data user experience and analytics.
Of course product works in lockstep with our engineering team, while we've also been investing more capacity.
We recently announced the appointment of our monarch two head of engineering.
<unk> will oversee the continued scaling of our engineering teams as they work on delivering our product roadmap.
Speaker Change: Demand comes to us from Instinet, where he served as managing director global head of liquidity technologies, leading the development of low latency algorithmic trading systems are months arrival is at the perfect time as we have grown our engineering organization by 40 people year to date.
Neal Pawar: Overall, we are pleased with the new velocity that we're gaining in our product and engineering throughput. And as you can see, we're putting it to good use. We remain committed to continuing to enhance our platform so we can provide our clients with the last upgrade they will ever need.
Speaker Change: Overall, we are pleased with the new velocity that we're gaining in our product and engineering throughput and as you can see we're putting it to good use we remain committed to continuing to enhance our platform. So we can provide our clients with the lost upgrades they will ever need.
Oleg Movchan: And with that, let me turn it back over to Oleg.
And with that let me turn it back over to OLED.
Oleg Movchan: Thank you, Neal. As for market dynamics, the strong U.S. launch market has continued, and we're on track to have our highest U.S. launch win count since 2021. As you may expect, the Americas is our largest region. and generated a 200-basis-point sequential improvement, which we see as a big contribution.
OLED: Thank you Neil.
OLED: First for market dynamics, the strong U S launch market has continued and we are on track to have our highest U S launch win count since 2021.
As you May expect.
OLED: The Americas is our largest region.
And generated a 200 basis points sequential improvement, which we see as a big contributor.
Oleg Movchan: I'm excited to share that our EMEA sales team recorded its highest ever new client quarterly bookings in the third quarter with an average deal size in EMEA at two times the average deal size from as recently as the first quarter of 2020. Looking beyond our core markets of the U.S., U.K. and Hong Kong, we continue to generate healthy geographic... In particular, 32% of our new clients added in the third quarter came from outside of the score markets, well above our previous average of 19% since Q1 2021. From a product standpoint, we saw 84% of new clients choosing to include our OEM app.
OLED: I'm excited to share our EMEA sales team recorded its highest ever new client quarterly bookings in the third quarter with an average deal size in EMEA at two times. The average deal size from as recently as the first quarter of 2023.
OLED: Looking beyond our core markets of the U S U K and Hong Kong will continue to generate healthy geographic expansion in particular, 32% of our new clients added in the third quarter came from outside of this core markets well above our previous average of 19% since Q1, 2020 one.
From a product standpoint, we saw 8% to 4% of new clients choosing to include our Oems.
Oleg Movchan: the highest quarterly average since Q4 21 and well above our historic average of 75%. Hence, new accounts are growing in size on the front of it. which improves unit economics and quality and growth of the front.
OLED: Highest quarterly average since Q4, 'twenty, one and well above our historic average of 7% to 5%.
OLED: Hence new accounts are growing in size on the front office side, which improved unit economics and quality and growth of the front book.
Oleg Movchan: As our growth momentum in the Middle East continues to be strong, as reflected in our recent wins, we have been evaluating an expansion of our corporate footprint in Dubai. We view the region as strategically important for its... as we follow the flaws of talent and capital.
OLED: As our growth momentum in the Middle East continues to be strong as reflected in our recent wins.
OLED: We have been evaluating an expansion of our corporate footprint in Dubai.
OLED: We view the region is strategically important for infusion as we follow the flows of talent and capital.
Oleg Movchan: Additionally, our team continues to work on designing our product roadmap to capture the private credit temps. We view credit instrument data as the main pain point for the market participants. and we'll build our new product roadmap in private markets around an integrated data strategy and related work.
OLED: Additionally, our team continues to work on designing our product roadmap to capture the private credit <unk> segment.
We view credit instrument data as the main pain point for the market participants and we will build our new product roadmap and private markets around the integrated data strategy and the related workflows.
Oleg Movchan: In conclusion, everything we have been doing the past several quarters is aligning and adding up. As you just heard from Neal, we're executing on our product roadmap an upmarket strategy, which we laid out at our investor day early this year. Our successful execution is reflected by increased ACVs, revenue growth, and expansion of our footprint in the institutional market segment, as evidenced by our marquee clients. The products we've rolled out in 2024 have been well received by existing clients and have positioned our sales team to bring in new upmarket clients. The key new multi-billion dollar clients who have won this quarter, such as TT International, were previously out of reach.
OLED: In conclusion, everything we have been doing the past several quarters is aligning and Ed enough.
Speaker Change: As you just heard from Neil we're executing on our product roadmap and upmarket strategy, which we laid out at our Investor day early this year.
Our successful execution as reflected by increased <unk> revenue growth and expansion of our footprint in the institutional market segment as evidenced by our marquee client wins.
OLED: The products, we've rolled out in 'twenty to 'twenty four have been well received by existing clients and have positioned our sales team to bring in new upmarket clients.
The key new multibillion dollar clients with one this quarter such as TT International were previously out of reach and now serve as proof points of infusion product adoption and enhance our growth and institutional asset management segments.
Oleg Movchan: They now serve as proof points of Enfusion product adoption and hence our growth in the institutional asset management sector.
Brad Herring: And now, I will turn the call over to Brad to discuss our financials. Thanks, Oleg, and thank you, everyone, for joining us this morning. For the third quarter, we generated revenue of $51.2 million, an increase of 15% over the same quarter last year. Referring to the same descriptors we used in our discussions at Investor Day and on previous calls, our 15% growth for the quarter consisted of 14% from the front book and 1% from the back. Our front book continues to show strength as our value proposition continues to resonate across our growing TAM sector. Specifically, our year-to-date bookings are running 16 percent over where they were at the same time last year and continue to represent a good mix of new launches and conversions off of our competitors.
Speaker Change: And now I will turn the call over to Brad to discuss our financials.
OLED: Thanks to all again, thank you everyone for joining us this morning.
For the third quarter, we generated revenue of $51 2 million, an increase of 15% over the same quarter last year.
Referring to the same descriptor as we used in our discussions at Investor day and on previous calls our 15% growth for the quarter consisted of 14% from the front book and 1% from the back book.
OLED: Our front book continues to show strength as our value proposition continues to resonate across our growing Tam segments. The.
OLED: Specifically our year to date bookings are running 16% over where they were at the same time last year and continue to represent a good mix of new launches and conversions off of our competitors.
Brad Herring: Additionally, we continue to see our product initiatives, such as Portfolio Workbench, bearing fruit and allowing us to win accounts that previously passed on Enfusion as a provider. The back book contributed 1% growth in Q3 on a year-over-year basis. Moderation in the back book is coming from two primary sources. First, in Asia, we are seeing a lower net between upsells and downgrades, which we refer to as our net organic growth. There shouldn't be a surprise given the recent geopolitical headwind. We are also seeing general softness and organic growth amongst our domestic hedge fund clients. The feedback we have heard is that our clients have put extra scrutiny on their OPEC spend ahead of the uncertainty with the upcoming election.
OLED: Additionally, we continue to see our product initiatives, such as portfolio workbench bearing fruit and allowing us to win accounts that previously passed on infusion is it providers.
OLED: The back book contributed 1% growth in Q3 on a year over year basis.
Moderation in the back book is coming from two primary sources first in Asia, we are seeing a lower net between Upsells and downgrades, which we refer to as our net organic growth.
OLED: Which shouldnt be a surprise given the recent geopolitical headwinds.
We are also seeing general softness in organic growth amongst our domestic hedge fund clients. The feedback we have heard is that our clients have put extra scrutiny. Other opex spend ahead of the uncertainty with the upcoming election.
Brad Herring: Despite recent slowdowns, we continue to expect that BackBook growth will contribute 3-5% of our overall growth going forward, just as I communicated at our Investor Day earlier this year. Going forward, we believe this temporary softness in our backbook will be more than offset by the upcoming product deployment Neal spoke of, as well as accelerated pricing actions across our customer Third quarter ARR was $202.7 million, up 14% year over year, and 4% higher than what we reported in Q2. We're proud to say that this represents the first time our ARR has crossed the $200 million Our NDR for the quarter was 102%, which is down one percentage point from the previous quarter.
OLED: Despite recent slowdowns, we continue to expect it back but growth will contribute 3% to 5% of our overall growth going forward just as our communicated at our Investor day earlier this year.
OLED: Going forward, we believe this temporary softness in our back book will be more than offset by the upcoming product deployment, Neil spoke of as well as accelerated pricing actions across our customer base.
OLED: Third quarter, <unk> was $202 $7 million up 14% year over year, and 4% higher than what we reported in Q2.
OLED: We're proud to say that this represents the first time, our IRR has crossed the $200 million Mark.
OLED: Our ADR for the quarter was 102%, which is down one percentage point from the previous quarter.
Brad Herring: Consistent with the discussion on revenues for the quarter, NDR was negatively impacted by the lower growth from the back book, as well as by consolidation of two large broker-dealer customers, which reduced our NDR by approximately 60 basis points in the quarter. As a reminder, that impact will roll off in Q4 of this year. Our adjusted gross profit increased by 17% year-over-year to $35.2 million. This represents an adjusted gross margin in the quarter of 68.8%, which is up 79 basis points over Q3 of last year, and represents the third quarter of sequential expansion in adjusted gross margin.
OLED: System with a discussion on revenues for the quarter <unk> was negatively impacted by the lower growth from the back book as well as by consolidation of two large broker dealer customers, which reduced <unk> by approximately 60 basis points in the quarter.
OLED: As a reminder, that impact will roll off in Q4 of this year.
OLED: Our adjusted gross profit increased by 17% year over year to $35 $2 million. This.
OLED: <unk> adjusted gross margin in the quarter of 68, 8%, which is up 79 basis points over Q3 of last year and represents the third quarter of sequential expansion in adjusted gross margins.
Brad Herring: We are pleased by this performance, which is in line with our expectations, given the investments we made in early 2023 in client service. Adjusted EBITDA for the quarter was $11.1 million, up 36% compared to the same quarter last year. This represents an adjusted EBITDA margin of 21.8%, which is up over 320 basis points from the same period a year ago. The improvement over Q3 of last year was due to continued scale from our SG&A functions and lower corporate costs. Adjusted free cash flow for the quarter was $13.7 million for a free cash flow conversion in the quarter of 123%.
OLED: We are pleased by this performance, which is in line with our expectations given the investments we made in early 2023 and client services.
OLED: Adjusted EBITDA for the quarter was $11 1 million up 36% compared to the same quarter last year.
OLED: This represents an adjusted EBITDA margin of 21, 8%, which is up over 320 basis points from the same period a year ago.
OLED: The improvement over Q3 of last year was due to continued scale from our SG&A functions and lower corporate costs.
OLED: Adjusted free cash flow for the quarter was $13 7 million for a free cash flow conversion in the quarter of 123%.
Brad Herring: This pattern of over 100% conversion in the quarter is consistent with Q3 results over the past few years and is driven by normal cyclicality of our net working capital. For the trailing four quarters, our adjusted free cash flow conversion was at 53%. Gap net income for the quarter was $2.0 million, which on an average share count of 129 million shares results in a gap EPS of two cents per share. adjusted net income of $5.9 million on the same share count produces an adjusted EPS of five cents per share. We ended the quarter with approximately $48 million in cash and cash equivalents with no outstanding debt.
OLED: This pattern of over 100% conversion in the quarter is consistent with Q3 results over the past few years and is driven by normal cyclicality of our net working capital.
OLED: For the trailing four quarters, our adjusted free cash flow conversion was at 53%.
OLED: GAAP net income for the quarter was $2 8 million, which on an average share count of 129 million shares resulted in a GAAP EPS of <unk> <unk> per share adjusted net.
OLED: Net income of $5 9 million on the same share count produces an adjusted EPS of <unk> <unk> per share.
OLED: We ended the quarter with approximately $48 million in cash and cash equivalents with no outstanding debt.
Brad Herring: Our cash balance combined with 100 million of capacity on our revolver continues to give us adequate liquidity to support both our organic and inorganic growth objectives that we discussed at our investor day in March.
OLED: Our cash balance combined with $100 million of capacity on our revolver continues to give us adequate liquidity to support both our organic and inorganic growth objectives that we discussed at our Investor day in March.
Brad Herring: Moving on to guidance, I want to take a minute to summarize year-to-date performance and tighten up our estimates for the full year. I mentioned for the last two quarters a few important trends that highlight our current year revenue performance. So to summarize, new client wins continue to drive strong growth, while our back-book growth is temporarily moderated. I've mentioned in previous calls that while new customer signings in the front book take several quarters to convert into booked revenue, the moderation in back-book trends have more near-term impact. With that context and given visibility into Q4, we are tightening our full-year revenue guidance to a range of $202 to $205 million.
OLED: Moving onto guidance I want to take a minute to summarize year to date performance and tightened up our estimates for the full year.
OLED: I've mentioned for the last two quarters, a few important trends that highlight our current year revenue performance.
OLED: To summarize new client wins continue to drive strong growth, while our backlog growth is temporarily moderated I've mentioned in previous calls that while new customer signings in the front book take several quarters to convert into booked revenue.
OLED: The moderation and back book trends have more near term impact.
OLED: With that context, and given visibility into Q4, we are tightening our full year revenue guidance to a range of $202 million to $205 million.
Brad Herring: Our trends in profitability continue to improve due to disciplined cost management and investment decisions. We are therefore tightening our EBITDA guidance to land between $41 and $45 million. At the midpoint, this represents an EBITDA margin of 21.1%, which is consistent with our original full-year guide. With regard to free cash flow conversion, we are reiterating our original guidance range of 50 to 55 percent. We're not tightening this range given the variability we typically see in cash inflows and outflows at year-end. For modeling purposes, we continue to expect stock-based compensation for 2024 to land between $19 and $20 million.
OLED: Our trends in profitability continued to improve due to disciplined cost management and the investment decisions. We're therefore tightening our EBIT guidance to land between 41% and $45 million.
OLED: At the midpoint. This represents an EBITDA margin of 21, 1%, which is consistent with our original full year guide.
OLED: With regard to free cash flow conversion, we are reiterating our original guidance range of 50% to 55%.
OLED: We're not tightening this range given the variability we typically see a cash inflows and outflows at year end.
OLED: For modeling purposes, we continue to expect stock based compensation for 2024 to land between 19% and $20 million, we'd now like to open up the call to questions. Operator. Please go ahead.
Operator: We'd now like to open up the call to questions. Operator, please go ahead. Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join If you would like to withdraw your question, simply press star 1. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset to ensure that your phone is not on mute when asking a question. Thank you.
Speaker Change: Thank you the floor is now open for questions. If you have dialed in and we would like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue.
Speaker Change: If you would like to withdraw your question simply press Star one again.
OLED: If you are called upon to ask a question and are listening via loud speakers on your device. Please pickup your handset to ensure that your phone is not on mute when asking a question.
Speaker Change: Hey, guys just a moment for your first question.
Michael Infante: Your first question comes from the line of Michael Infante of Morgan Stanley. Hey, guys, thanks for taking my question. I just wanted to first start with the exploration of strategic alternatives. It's clear the business isn't being valued like a high-teens grower with really strong margin expansion.
Speaker Change: Your first question comes from the line of Michael <unk> of Morgan Stanley. Your line is open.
Michael: Hey, guys. Thanks for taking my question I just wanted to first start with the exploration of strategic alternatives to clear the business isn't being valued like a high teens grower with really strong margin expansion. So all lag be great to get your thoughts just on the state of the business today and how.
Oleg Movchan: So, Oleg, it'd be great to get your thoughts just on the state of the business today and how you think about some of the boundary conditions that might dictate your decision on whether or not the business stays public or private. Thanks.
You think about some of the boundary conditions that might dictate your decision on whether or not that business days public or private thanks.
Oleg Movchan: Thanks, Michael. You know, to start, as a matter of policy, we don't comment on the rumors, as I've been saying all along. And this remains to be true today.
Speaker Change: Thanks, Michael.
OLED: To start as a.
Speaker Change: <unk> policy, we don't comment on the rumors.
Speaker Change: As I've been saying all along.
OLED: This remains to be true today.
Oleg Movchan: The management team, the board are focused on creating shareholder value long term. And that's what we're focused on.
OLED: The management team and the board are focused on creating shareholder value long term and that's what we're focused on.
Michael Infante: Understood.
Michael Infante: Two-part question on 25 here, to the extent I can. Obviously, you alluded to confidence in the release and the midterm outlook, but maybe just given some of the back-book trends, I know, Brad, you mentioned confidence in being able to recover to that 3% to 5% range, but to the extent that we don't get back there, how do you think about the combination of some of the accelerated pricing actions and the new product developments you alluded to to deliver on the medium-term outlook for next year specifically? And even if we don't deliver on that two-handle for next year and it's something like high teens, the incremental margins for this year at 39%, even if you hold those assumptions steady for next year, seems like you should still be able to deliver on outperformance in terms of rule of 40 for next year.
OLED: Understood.
Speaker Change: Two part question on 25 here to the extent I can obviously, you alluded to to confidence in or at least in the midterm outlook.
Speaker Change: But maybe just given some of the back book trends I know, Brad you mentioned confidence in being able to recover to that 3% to 5% range, but to the extent that we don't get back there. How do you think about the combination of some of the accelerated pricing actions in our new product developments you alluded to to deliver on the medium term outlook for next year specifically.
Speaker Change: And even if we don't deliver on that on that two handle for next year and it's something like high teens.
OLED: Incremental margins for this year at 39%, even if you hold those assumptions steady for next year. It seems like you should still be able to deliver on our performance in terms of rule of 40 for next year is that generally fair or what nuance would you add to that.
Brad Herring: Is that generally fair or what nuance would you add to that?
Brad Herring: Thanks.
Brad Herring: Hey, Michael. It's Brad. Thanks for the question.
OLED: Hey, Michael it's Brad Thanks for the question couple part so one when you think about 2025, what are the things that I mentioned was that gives us the confidence that we've got so many more levers to pull when we go into 2025 I want to I want to pause just for a second to make sure everybody can understand the impact of some of the hires.
Brad Herring: A couple parts. So, one, when you think about 2025, you know, one of the things that I mentioned was that gives us the confidence that we've got so many more levers to pull when we go into 2025. I want to pause just for a second to make sure everybody can understand the impact of some of the hires that Neal has made on his team, whether it's the product team, whether it's the transformation team, whether it's new heads of managed services, new heads of engineering. We've got a very different team on the field going into 2025 than we had starting in 2024.
OLED: Neil is made on his team whether it's the product team, whether it's the transformation team where theres new heads of managed services new heads of engineering, we've got a very different.
OLED: A very different team on the field going into 2025, and we had starting in 2024, so that gives us a lot of confidence of knowing that we've got opportunities to get product in the market.
Brad Herring: So, that gives us a lot of confidence of knowing that we've got opportunities to get products in the market. You know, we've got opportunities to explore the pricing opportunities I mentioned. You know, there's also a dynamic around, you know, when you go up market, we've got much more white space in our customers. So, that gives us a much more, you know, bigger TAM to work with internally on our back book. So, at the end of the day, we've got a number of levers to pull going into 2025 that, candidly, we didn't have going into 2024.
OLED: Got opportunities to explore the pricing opportunities I mentioned.
OLED: And then there is also a dynamic around when you go up market, we've got much more white space in our customers. So that gives us a much more bigger tam to work with internally on our back book.
OLED: At the end of the <unk>.
OLED: We've got a number of levers to pull going into 2025 that candidly, we didn't have going into 2024, So I think more levers to pull it gives us much more confidence going in.
Brad Herring: So, I think more levers to pull, you know, gives us much more confidence going in, in terms of back book performance for 2025.
OLED: In terms of back book performance for 2025.
Brad Herring: Going into your question around profitability, I agree 100%. We've always focused on our pass-through rates. We've always focused on allowing a fair amount of our incremental revenue to flow through into margins, so we still stand by picking up those couple hundred basis points of margin improvement into 2025 just based on that continued philosophy that we all use internally.
OLED: Going into your question around profitability I agree, 100%, we've always focused on our pass through rates, we've always focused on allowing.
OLED: Fair amount of our incremental revenue to flow through into margins. So we still standby picking up.
OLED: Couple of hundred basis points of margin improvement into 2025, just based on that continued philosophy that we all use internally.
Dylan Becker: This question comes from the line of Dylan Becker of William Blair.
Speaker Change: Your next question comes from the line of Dylan Becker of William Blair. Your line is open.
Oleg Movchan: Hey, gentlemen, appreciate the question, maybe sticking on that thread from Brad, but posing it for Oleg or Neal, kind of with that recent slew of new key hires, how you think about kind of the evolution of the executive team, and maybe the importance in the background that each of those have kind of doing this at scale as you think about kind of incremental confidence, and your push up marketing kind of the economic shift of the model. Yep, so let me cover the high-level executive hires and, you know, Neal may comment more on a deeper level of the organization.
Dylan Becker: Hey, gentlemen, I appreciate the question, maybe sticking on that thread from Brad but.
Dylan Becker: Closing it for all of your Neil kind of with that recent slew of new key hires how do you think about kind of the evolution of the executive team and maybe the importance in the background that each of those have kind of doing this at scale as you think about kind of incremental confidence and your push upmarket and kind of the economic shift the model here.
Speaker Change: Yes, So let me cover the high level executive hires in.
Neil: Neil My comments more on <unk>.
Speaker Change: The deeper level of the organization one big.
Oleg Movchan: One big issue that I highlighted is that as we are thinking about expanding into institutional asset management market, we will have to think through our brand design and brand positioning and corresponding go-to-market strategy. So looking for senior hires on marketing side is one of the top priorities. The same goes for, you know, some elements of the product revenue organization, basically aligning the firm to be able to capture that opportunity set as well as possible. Yeah, and with a lot of the new hires, senior hires have come in over the past year, you know, we're seeing the ability now for us to make a good investment in, you know, improvements to our managed services, continuing to build out our workbench, and also continuing to build out our marketplace where we offer, you know, partnerships to companies that have capabilities that are of interest to our clients that we can sell to them through a revenue share with Enfusion.
OLED: The issue that I highlighted is that as we are thinking about expanding into institutional asset management market.
OLED: You have to think through our brand design and brand positioning and correspond in go to market strategy and so.
OLED: Looking for senior hire some marketing side is one of the top priorities.
Speaker Change: Same goes for.
Speaker Change: Some elements of the product revenue organization basically align in the firm to be able to capture that opportunity set.
OLED: Well its possible.
Speaker Change: Yes, and with a lot of the new hires senior hires you've come in over the past year.
Speaker Change: We're seeing.
Speaker Change: The ability now for us to make a good investment in <unk>.
Speaker Change: Movements to our managed services continuing to build out our workbench and and also continuing to build out our marketplace, where we offer.
OLED: Partnerships to companies that have capabilities that are of interest to our clients that we can sell to them through a revenue share.
Oleg Movchan: So we're rocking the shelves of, you know, the product organization, so that we have a lot more product on the shelf to sell to our existing clients, and we expect that to have a positive uplift on the back book as we look into 2025.
OLED: With infusion so we're king the shelves.
OLED: The product organization, so that we have a lot more products on the shelf to sell to our existing clients and we expect that to have a positive uplift on the back book as we look into 2025.
Oleg Movchan: Okay, great. And then you guys did call out as well, too, again, being included in more RFPs as this trend up market continues. Wondering, and you called out kind of the bookings momentum, too, but if you could give us kind of a general sense of kind of pipeline trajectory there, how you're seeing the conversion trends as well, too, so being included in those those conversations, understanding they're naturally a bit more elongated sales cycles by nature, but how you think about kind of the evolution of the conversion trends there as well as the platform continues to mature and the value proposition continues to compound.
Speaker Change: Okay, Great and then you guys did call out as well too again being included in more Rfps as this trend up market in 10 years wondering and you called out kind of the bookings momentum too, but if you could give us kind of a general sense of.
Speaker Change: Pipeline trajectory, there how youre seeing the conversion trends as well these are being included in those.
Speaker Change: Those conversations understanding you're naturally a bit more elongated sales cycles by nature, but how do you think about kind of the evolution of the conversion trends there as well as the platform continues to mature and the value proposition continues to compound. Thank you.
Neal Pawar: Thank you. Yeah, we're seeing roughly around, you know, 30-40% conversion for qualified opportunities in the upmarket space. And in particular, what's been very helpful there in terms of opening up those opportunities has been the workbench. And I think as Oleg highlighted earlier in the call, specific functionality in the workbench has unlocked individual client opportunities. And bear in mind, some of these are features that have only been released in the last few months. And so one of the great advantages, again, and I know I often say this, but one of the great advantages of having that regular cadence of being able to push out new features weekly is that you will not see the growth in these areas as a step change.
Speaker Change: Yes.
Speaker Change: Roughly around 30% 40%.
Speaker Change: Conversion for qualified opportunities in the upmarket space.
Speaker Change: In particular, what's been very helpful. There in terms of opening up those opportunities has been the workbench and I think as <unk> highlighted earlier in the call.
Speaker Change: Specific functionality and the workbench has unlocked individual client opportunities and bear in mind. Some of these are features that have only been released in the last few months and so one of the great advantages again, and I know I, often say this but one of the great advantages of having that regular cadence of being able to push out new features weekly.
Speaker Change: Is that you will not see the growth in these areas as a step change youre going to see numerous incremental proof points that show that we're executing on the strategy and able to win those clients that perhaps we wouldn't have been able to win two or three years ago.
Neal Pawar: You're going to see numerous incremental proof points that show that we're executing on the strategy and able to win those clients that perhaps we wouldn't have been able to win two or three years ago.
Neal Pawar: And just one layer on top of this, you know, this is not just about conversions and move upmarket. You know, the product design and strategy that Neil's team is executing on also lays the foundation for eventual premium products and price increases. So actually create value for the firm that way as opposed to simply using it as a mechanism to unlock new market segments.
Speaker Change: Just one one layer on top of this.
Speaker Change: This is not just about conversions and move up market.
Speaker Change: Design.
Speaker Change: Strategy I think neil's team is executing on also lays the foundation for eventual premium products and price increases so actually create value.
Speaker Change: For the firm that way as opposed to simply using that as a mechanism to unlock new market segments.
Neal Pawar: Thanks guys. Appreciate it.
Speaker Change: Okay. Thanks, guys appreciate it.
Speaker Change: Of course.
Parker: Your next question comes from the line of Parker. Yeah, hi, guys. Thanks for taking the question this morning. Neal, you talked about a series of upgrades in the managed services piece. I think that's the first stuff you've done since it was launched. Is that in response to feedback you're getting out there from clients? Or is that more about going on offense and identifying opportunities to do more and potentially extract some additional revenue from that?
Speaker Change: Your next question comes from the line of Parker Lane of Stifel. Your line is open.
Parker Lane: Yeah, Hi, guys. Thanks for taking the question this morning.
Parker Lane: Neal you talked about a series of upgrades in the managed services.
Parker Lane: So I think thats the first stuff you've done since it was launched that in response to feedback youre getting out there from clients or is that more about going on offense and identifying opportunities to do more and potentially extract some additional revenue from that.
Neal Pawar: That's a great question. It's a combination of both. We've been talking to all of our managed service clients and getting feedback on what they want to see more of. And, you know, in general, we've heard from them that they want more visual and more interactive ways of working with the team that's an extension of their own team. And so a lot of the tech upgrades that are coming out are very much in response to that.
Speaker Change: That's a great question, it's a combination of both we've been talking to all of our managed service clients and getting feedback on what they want to see more often in general we heard from them that they.
Speaker Change: They want more visual and more interactive ways of working with the team Thats an extension of their own team and so a lot of the tech upgrades that are coming out are very much in response to that but at the same time, you know and we talked about this a little bit in the Investor day earlier. This year. We also acknowledged that the way we built the managed service business.
Neal Pawar: But at the same time, you know, and we talked about this a little bit in the investor day earlier this year, we also acknowledge that the way we built the managed service business still has some elements that are more manual than frankly, we would like. And so we've been investing over the past year in improving the tooling. So not only the client experience improves, but also our employees that work on it, their experience improves. And most importantly, their productivity improves, which also means that we'll be able to get much better margins out of that business as well.
Speaker Change: We'll have some elements that are more manual than frankly, we would like and so we've been investing over the past year at improving the tooling. So not only the client experience improves but also our employees that work on it they're experienced improved and most importantly, their productivity improves which also means that we will be able to get much better March.
Speaker Change: <unk> out of that business as well.
Parker: Got it.
Brad Herring: One quick follow up for Brad. Looking at the HCV distribution by the size of client you have here, you've had a really solid trend towards those 500k cohort customers. Should we think about that trend line just continuing here? Should there be any reasons for that to moderate based on the lead distribution you have and what's in the pipeline today?
Speaker Change: Got it and one quick follow up for Brad.
Speaker Change: Looking at the HCV distribution by the size of the client you have here, you've got a really solid trend towards those 500 K.
Speaker Change: Cohort customers should we think about that trend line just continuing here should there be any reasons for that to moderate based on the lead distribution you have and whats in the pipeline today.
Brad Herring: No, Parker. In fact, that's, you know, it's a slide we're trying to get people to focus on. I think it's, um, we certainly expect those trends to continue.
Speaker Change: No partner in fact.
Speaker Change: Slide we're trying to get people to focus on I think it's we certainly expect those trends to continue and I think one of the big <unk>.
Brad Herring: And I think, you know, one of the big points we want to make sure, you know, people leave, you know, this call and reading that page, you know, take away is that this is not a new trend, right? This has been going on for some time, and we expect that trend to continue. Got it.
Speaker Change: Points, we want to make sure people leave this call and reading that page take away is this is not a new trend right. This has been going on for some time and we expect that trend to continue.
Brad Herring: Thank you. Yeah, sure.
Speaker Change: Got it thank you.
Speaker Change: Your next question comes from the line of Kevin Mcveigh of UBS. Your line is open.
Kevin Mcveigh: Great. Thanks.
Kevin Mcveigh: Is there any way to think about.
Kevin Mcveigh: How many modules you're bringing to market today.
Kevin Mcveigh: Oleg I guess as opposed to maybe at the time of IPO and what that could mean in terms of.
Kevin Mcveigh: All in.
Kevin Mcveigh: Clients reduce the mall, what that would mean as opposed to maybe at the time of IPO just to try to dimensionalize that a little bit.
Oleg Movchan: So, you know, you rewind three years back, and we basically, you know, our modular, you know, the nature of our product wasn't that modular, right? We have core EMS offering. And then, you know, we had an OEMS product on top of it. And that was basically was two ways for us to, to make money. And then the third one was managed services, right?
Speaker Change: Yeah sure. So you rewind three years back and we basically our modular.
Speaker Change: The nature of our product wasn't bad modular right with chef.
<unk> offering them.
Speaker Change: It had an Oems.
Speaker Change: On top of it and Thats, what basically was two ways for us to to.
Speaker Change: Money and then the third one was managed services right today, we're setting the foundation for doing more than that we don't lag kind of expressed the value that our system delivers as modular. However, you know clients get the platform and then they sort of expand our footprint within the platform from BMS. They integrate the accounting module and then.
Oleg Movchan: Today, we're setting the foundation for doing more than that, you know, we don't like to kind of express the value that our system delivers as modular. However, you know, clients, you know, get the platform, and then they sort of expand the footprint within the platform from PMS, you know, they integrate the accounting module, and then accounting capability, and then they expand the presence with OEMS and other things.
Speaker Change: Accounting capability, and then they expand presence with Oems and other things.
Oleg Movchan: The path forward, as Neal articulated earlier, is not just about that, it's about building new products and capabilities. So first foray is a portfolio workbench on the front. But at some point, we will be more aggressive in, number one, creating premium features including portfolio risk management, optimization, factor attribution, you know, things like that. So everything that happens both pre and post investment decision making, you know, reach your functionality on AMS. In fact, it's sort of been a bit more offensive as far as OMS is concerned and actually offering a standalone product.
Speaker Change: The best forward as Neil articulated earlier, it's not just about that it's about building new products and capability to solve first for a portfolio workbench on that front, but at some point, we will be more aggressive in number one creating premium features included.
Speaker Change: Portfolio risk management optimization sector retribution things like that so everything that happens both pre and post investment decision making.
Speaker Change: <unk> functionality <unk>.
Speaker Change: It's sort of been a bit more sensitive as far as CMS is concerned and actually oil sands as a standalone.
Speaker Change: Product and other things Neil mentioned, a couple of things about marketplace. So were gearing up on great and the more universal comprehensive framework. So we don't just build out.
Oleg Movchan: Then other things, you know, Neal mentioned a couple of things about marketplace, so we're gearing up on creating a more universal comprehensive framework so we don't just build our own products and distribute it using our network but also bring external partners and have this kind of revenue sharing or partnership agreements where we can enrich client's experience and create value. You know, we did not say anything, you know, I had several conversations with clients, I mean, people are positioned, I think, well, you know, as you know, price, markets are pretty efficient in terms of pricing and so bearing any, you know, world is sort of falling apart post-election, I think people are just thinking ahead and, you know, what will happen.
Speaker Change: We built our own products and distributor network, but also bringing external partners.
Speaker Change: You have this kind of revenue sharing or partnership agreements, where again in reach clients experience and create value.
Speaker Change: And then just in terms of the client's hesitancy around the election was there anything that they pointed to just more recently obviously theirs.
Speaker Change: We've been an election cycle for a couple of quarters now just anything that they were highlighting the concern in terms of switching.
Speaker Change: We did not see anything.
Speaker Change: I said several conversations with clients I mean people are positioned I think well see an oil price, where our markets are pretty efficient in terms of pricing and so bearing any.
Speaker Change: <unk>.
Speaker Change: So the world has sort of fallen apart post election, I think people are just thinking ahead in.
Oleg Movchan: I will say, you know, the conversations about interest rate environments, just lead to more and more consensus around elevated volatility levels in the marketplace, which is good for all constituents, including hedge funds.
Speaker Change: What will happen I will say the conversations about the interest rate environment, just lead to more and more consensus around elevated volatility levels in the marketplace, which is good for us.
Alexei Gogolev: So they're just one color I can offer at Your next question comes from the line of Alexei Gogolev of J.P.
Speaker Change: All constituents, including hedge funds. So then just one color I can offer at this point.
Speaker Change: Okay.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Alexia <unk> of Jpmorgan. Your line is open.
Elyse Kanner: Morgan.
Elyse Kanner: This is Elyse Kanner on Furluck. My first question was, can you discuss where you're at? Yeah, absolutely. We've been, if you go onto our public social media feed, you'll see we've been actually hosting webinars with a number of the system integrators. So it's an education process where on the one hand, obviously, we need to make sure that the integrators understand Infusion's capabilities. We're newer to some of them, so we're spending a lot of time with them so that as they manage RFPs on behalf of their clients, they know where to insert Infusion into the process and perhaps where not to.
Speaker Change: This is a lease Canada on for Alexia overlap. My first question. Mike can you just ask rate where you're at in terms of conversations with third party consultants and system integrator with Athene.
Speaker Change: Michael.
Michael: Yes, absolutely.
Speaker Change: We've been if you go onto our public social media feeds you'll see we've been actually hosting webinars with a number of the system integrators. So.
Speaker Change: It's an education process, where on the one hand, obviously, we need to make sure that the integrators understand.
Speaker Change: Infusions capabilities, we're newer to some of them. So we are spending a lot of time with them. So that as they manage rfps on behalf of their clients, they know where to insert an infusion into the process and perhaps we're not two so that's been going really well and we've been using the opportunity to.
Elyse Kanner: So that's been going really well and we've been using the opportunity to talk to their clients through these webinars that we've done with them. And we're starting to see the fruits of that. We've got a few opportunities that they've brought to us and likewise opportunities that we've brought to them. So still in the early innings, but up to a really positive start. And we recognize that this is going to be a super important channel for us as we continue that upmarket move in 2025.
Speaker Change: Talk to their clients through these webinars that we've done with them and we're starting to see the fruits of that we've got a few opportunities that are that they've brought to us and likewise opportunities that we brought to them. So it's still in the early innings, but off to a really positive start and we recognize that this is going to be a super important channel for us as we continue that.
Speaker Change: Move in 2025.
Elyse Kanner: Got it, thank you.
Speaker Change: Got it. Thank you and then for my second question and Thank you 24, there wasn't really much sequential growth of <unk> TV could you provide more color on this dynamic that's typically quite around two points of occupancy percent sequential ACB growth.
Brad Herring: And then for my second question, in 3Q24, there wasn't really much sequential growth of ACV, could you provide more color on this dynamic? Typically, you report around 2.5 to 3% sequential ACV growth in a given Yeah, ACV is going to move around a little bit. It's not going to be as linear on a quarterly basis. That's why, you know, if you look at the charts we put out of the earnings material, we go back four quarters. There's going to be some bouncing around. You know, it's a question of. you know, who comes in, who churns, who starts to monetize, because remember, even a big booking doesn't start to get included in that ACV or ARR calc until they're in the modernization mode.
Kevin Mcveigh: Kevin Thank you.
Kevin Mcveigh: Yes, ACP is going to move around a little bit it's not going to be as linear on a quarterly basis Thats why if you look at the chart, we put out earnings material. We go back four quarters.
Speaker Change: You've got to be some bouncing around it's a question of.
Speaker Change: Who comes in who churned, who starts to monetize because remember even a big booking doesn't start and get included into that ACB or IRR calc. It there in the modernization mode. So there'll be a little bouncing around across the quarters, but over of over four quarter trends youre still going to see that expansion.
Brad Herring: So, there'll be a little bouncing around across the quarters, but over four-quarter trends, you're still going to see that expansion.
Oleg Movchan: Yeah, and, you know, just one more element to that, I mean, investments that Neal mentioned that we're making in managed services, you know, the framework that Brett helped us set out in front and back book dynamic, the managed services piece should help us accelerate the front book monetization. So, as we get more and larger complex clients, we should be able to onboard them quicker and more efficiently, which should then, of course, translate it back book and create higher ACV quicker.
Speaker Change: And just one more element to that investments that you mentioned that we are making in managed services.
Speaker Change: Work that.
Speaker Change: Brett help us set out in France shrunk back book dynamic the managed services can help us accelerate the front book monetization. So as we get more and larger complex clients, we should be able to onboard them quicker and more efficiently, which should then of course translated back book and create higher ICD quicker.
Oleg Movchan: Thank you.
Speaker Change: Got it thank you.
Gabriela Borges: Your next question comes from the line of Gabriela Borges of Goldman Sachs. Hi, good morning. Thanks for taking the question.
Speaker Change: Your next.
Speaker Change: Comes from the line of Gabriella boards of Goldman Sachs. Your line is open.
Gabriella: Hi, good morning, Thanks for taking my question.
Neal Pawar: I have for Neal, for Oleg, I think about the success you've had with Portfolio Workbench and how much of a needle mover that with landing upmarket. Maybe expand that for us a little bit as we think about the cadence of our talking about for the last 45 minutes, what are the one or two products that we should be looking at or product enhancements that we should be looking at that you think move the needle most with your move up market over the next Yeah, thanks for the question. Let me outline a couple of things. First of all, you know, and we've talked about this a little bit in the past, but to share some more color on it, as we think about the workbench, and as you've seen from some of the opportunities that the workbench has helped us unlock, we've still very much been playing catch up in some of that functionality and adding capabilities, you know, that some of the clients that we've been winning believe are table stakes.
Speaker Change: Neil.
Speaker Change: I think about the success, you've had with Apollo and how much of a needle move it up to speed.
Speaker Change: Landing of Marc maybe expand a little bit as we think about the Tam.
Speaker Change: You've been talking about for the last 45 net one of them wanted to products that we should be looking at a product enhancement initiative working at bank of America.
Speaker Change: I think on March 2nd move up market over the next couple of years.
Speaker Change: Yes that would be.
Speaker Change: Thanks for the question, let me, let me outline a couple of things first of all and we've talked about this a little bit in the past but to share some more color on that as we think about the war expansion as you've seen from some of the opportunities that the workbenches helped us unlock we still very much been playing catch up in some of that functionality and adding.
Speaker Change: <unk>.
Speaker Change: Some of the clients that we've been winning believes are table Stakes in 2025, we see that trends moving more into offense and defense, where we start to offer capabilities and the workbench, mostly around more complex portfolio construction to use use of capabilities like back to models and optimizes for portfolio construction, where we saw.
Neal Pawar: In 2025, we see that trend moving more into offense than defense, where we start to offer capabilities in the workbench, mostly around more complex portfolio construction, the use of capabilities like factor models and optimizers for portfolio construction, where we start to charge for those incremental features. So that's one example through the lens of the workbench.
Michael: Not to charge for those incremental features so thats. One example through the lens of the workbench I think outside of the workbench other products, where we're busy at work also aside from managed services, which we've already talked about I will talk a little bit about our analytics and data platform, we're just seeing more and more feedback from clients that.
Neal Pawar: I think outside of the workbench, other products where we're busy at work, also aside from managed services, which we've already talked about, I would talk a little bit about our analytics and data platform. We're just seeing more and more feedback from clients that they want to run more complex analytics on their own data. Enfusion, like most systems, is a transactional based system. And so we don't encourage clients to run really large, complex analytics, including the type of analytics you run for artificial intelligence against a transactional data store. And so we are encouraging them to move to use our data warehouse and our analytics product, which is hosted inside of Google's cloud.
Michael: They want to run more complex analytics on their own data infusion like like most systems as a transactional base system and so we don't encourage clients to run really large complex analytics, including the type of analytics you run for artificial intelligence against a transactional data store and so we.
Michael: Encouraging them to move to use our data warehouse and our analytics product, which is hosted inside of Google's cloud and obviously it has an additional upsell component with that as well. The last thing I'll say is the marketplace, while still in its early innings has tremendous potential for us as it allows us.
Neal Pawar: And obviously, there's an additional upsell component with that as well.
Neal Pawar: The last thing I'll say is, you know, the marketplace, while still in its early innings, has tremendous potential for us, as it allows us to offer our clients a much wider range of complementary products that don't compete with the core Enfusion platform, but give clients additional capabilities around, for example, treasury and collateral management and margin calculation that they can add on to Enfusion with a revenue share to Enfusion in the process.
Michael: To offer our clients a much wider range of complementary products that don't compete with the core infusion platform, but give clients additional capabilities around for example, treasury collateral management and margin calculation that they can add on to infusion with a revenue share to infusion in the <unk>.
Michael: Yes.
Gabriela Borges: Absolutely, that makes sense.
Speaker Change: Absolutely that makes sense and the follow up.
Oleg Movchan: The follow up is for Oleg and Brad. So I'm thinking about some of the leadership changes that you've made over the last year. And then Oleg, I think you just mentioned Brad introducing the front book versus back book dynamics. What I want to ask you is how that's changing some of your planning and some of your forecasting processes for 2025. So we'd love any commentary that you're willing to provide on how the planning process, how the forecasting process has evolved over the last year or two, and some of the things that maybe you are more focused on now versus in prior.
Speaker Change: So in talking about leadership.
Speaker Change: Leadership changes that you've made over the last year and then alright. Thank you just mentioned bottom shifting that top box niches backup dynamics, but I wanted to ask you how that's changing some of your planning.
Speaker Change: <unk> cost for 2025, we'd love any commentary that you are willing to provide on how the planning process.
Speaker Change: Our forecasting process.
Speaker Change: Over the last year, our Q and some of the things that maybe are more Pakistan now recently, yes. Thank you.
Michael: Yes.
Brad Herring: Great question, Gabriela, because that is certainly a process that changes pretty substantially as a byproduct of all these hires. What it's done is it's opened up much more kind of cross-corporate involvement in our planning processes. We get much more visibility of what we think is happening, and that's both from a front book and a back book perspective, right? I mean, I think when you think about what we're looking at in terms of pipeline, what we're looking at in terms of closure rates, we've opened up a lot of our sales force capabilities, we've got different modules in there that we're utilizing, and then how it translates into much more specific timeframes around product rollout, the sequencing of how that product rollout begins to monetize.
Speaker Change: Great question, Gabriele because that is certainly a process that changes pretty substantially as a byproduct of all these hires what it is.
Michael: What is done is opened up much more kind of cross corporate involvement in our planning processes, we get much more visibility of what we think is happening and that's both from a front book and back book perspective, right. I mean, I think when you think about what we're looking at in terms of pipeline, what we're looking at in terms of clothes.
Michael: Your rates, we've opened up.
Michael: Lot of our sales force capabilities, we've got different modules in there that we're utilizing.
Michael: And then how it translates into much more specific timeframes around product rollout and the sequencing of how that pro out that product rollout begins to monetize.
Brad Herring: It's really strongly a byproduct of a lot of these folks that Neal has brought in, which is why I mentioned them as to a key driver, not only a front book, I'm sorry, back book opportunities, but also in terms of just our visibility to see it, our ability to measure it, and our ability to deploy on a much more kind of granular basis. So your point is spot on. We will have better visibility on forecasting, we will have better visibility on product rollout, and we will have better visibility on how we guide the markets accordingly.
Michael: It's really strongly a byproduct of a lot of these folks that deal was brought in which is why I mentioned them as two a key driver not only of book Im sorry back book opportunities, but also in terms of just our visibility to see it our ability to measure it and our ability to deploy.
Michael: <unk>.
Michael: On a much more kind of granular basis. So your point is spot on we will have better visibility better visibility on forecasting we will have better visibility on product rollout, we will have better visibility on how we got the market's accordingly, and we're just beginning I mean were going to youre going to see a much more.
Oleg Movchan: And we're just beginning. I mean, you're going to see a much broader universe of talent that comes to Infusion from our competitors, from buy side, sell side, that bring a lot of mistakes from their past lives, track record, and just as important, a culture, which we're very, very focused on Infusion. So we actually need to infuse Infusion in the past and move forward with people that actually have experience executing an institutional asset management market and executing at scale. As we add revenue to the business, we need operators that were in their seats growing the business from $200 million revenue to $300,000, $400,000, $500,000.
Michael: Much broader universe of talent that come to infusion from our competitors from buy side sell side that bring a lot of mistakes from their past lives track record in.
Michael: It is important that culture, which will be very focused on infusion. So we actually need to.
Michael: Fuse since you have in the past and move forward with people that actually.
Michael: <unk> experienced executed in institutional asset management market and executing at scale as we add revenue to the business.
Michael: The operators that.
Michael: Where we are in their seats growing the business from $200 million revenue to $3 $500 million.
Gabriela Borges: That makes sense.
Speaker Change: That makes sense. Thank you for the detail.
Operator: Thank you for the detail. Yeah, good morning.
Speaker Change: Your next question comes from the line of Koji Ikeda Bank of America. Your line is open.
Koji Ikeda: Yes, good morning, Hey, guys. Thanks for taking the questions I wanted to ask a question on <unk> and the fact that when I listen to the prepared remarks.
Koji Ikeda: Hey guys, thanks for taking the questions. I wanted to ask a question on ARR and the fact that when I listen to the prepared remarks, the New Deal commentary sounds really strong, but when I look at ARR, it did decelerate in the quarter to slightly below 13% from slightly above in the last quarter. So maybe you could talk about what are some of the underlying drivers or metrics outside of ARR that's giving you the confidence in the revenue growth acceleration that's embedded in the guide? You know, I heard earlier, maybe that 500k ACV metric, is that one of the key metrics we should be looking at?
Speaker Change: The new deal commentary sounds really strong, but when I look at <unk>. It did decelerate in the quarter to slightly below 30% from slightly above in the last quarter. So maybe you could talk about what are some of the underlying drivers are metrics outside of Ah, that's giving you the confidence in the revenue growth acceleration that's embedded in the guy.
Speaker Change: Did I heard earlier, maybe that 500, K AC ECB metric is that one of the key metrics, we should be looking at thanks.
Brad Herring: Yeah, hey Koji, this is Brad. Yeah, I'll take that. So, when you look at ARR, you know, remember it's a snapshot in time. So, you're right. We've seen a lot of really strong bookings. We saw some really strong bookings in Q3, for example, but if those bookings haven't started to monetize yet, which may take 30 to 60 days when the implementation fees will start, that would not be included in ARR yet. So, there's a little bit of a timing impact of how some of these bookings kind of manifest themselves in ARR, but they will be in ARR very soon.
Speaker Change: Yeah, Hey, Koji this is Brad I'll take that so when you look at IRR remember, it's a snapshot in time, so you're right. We've seen a lot of really strong bookings. We saw some really strong bookings in Q3 for example, but if those bookings haven't started to monetize yet which may take 30, 60 days, where the implementation fees will start that would not be included in <unk>.
Yet so there's a little bit of a timing impact of how some of these bookings kind of manifest themselves, but they will be an IRR very soon in fact, we monitor another statistic internally called car.
Brad Herring: In fact, we monitor another statistic internally called CAR, which is a contracted ARR, and that's where you can kind of see the difference between those two. So, ARR is important, but I think when you look at it over any sequential quarter, you can get a little bit of noise just based on timing.
Speaker Change: Car, which is a contracted IRR.
Speaker Change: That's where you can kind of see the difference between those two so.
Speaker Change: Yes.
Speaker Change: <unk> is important but I think when you look at it over.
Speaker Change: Sequential quarter, you can get a little bit of noise just based on timing when you look at going forward with the guide I think.
Brad Herring: When you look at going forward with the guide, I think I'll reiterate a couple of those points. When you go into next year, there's a couple of things that really give us conviction about getting back into our, primarily our back book targets in the mid-teens, because that's where kind of our current gap sits. I would be paying close attention to that overall ACV number. I would be paying attention to a net organic growth number, which we'll be talking about. I'll be paying attention to churn, which has returned largely to historical levels, so I feel good about that number.
Speaker Change: Reiterate a couple of those points. When you go into next year Theres, a couple of things that really give us conviction about getting back into our.
Michael: Primarily our back book targets in the mid teens.
Michael: That's where kind of our current our current GAAP sits.
Michael: I would be paying close attention to.
Michael: So that overall ACB number I would be paying attention to our net organic growth number which will be talking about.
Michael: I'll be paying attention to churn, which is returned largely to historical levels. So I feel good about that number but to grow that number I think youre looking at penetration in managed services, which we'll be talking about we're going to be talking about product deployment.
Brad Herring: But to grow that number, I think you're looking at penetration and managed services, which we'll be talking about. We're going to be talking about product deployment and cross-sell within our base.
Brad Herring: It just boils down to the comment I made a minute ago, which we have so many more tools in the toolbox going into 2025 than we had in 2024, that that puts us in a very offensive position rather than kind of sitting back in more of a defensive position against seeing what clients do in a macro environment. Got it, Brad.
Michael: And cross sell within our base.
Michael: It just boils down to the comment I made a minute ago, which we have so many more tools in the toolbox going into 2025 that we had in 2020 forward that that puts us in a very offensive position rather than kind of sitting back in more of a defensive positioning against.
Michael: Seeing what clients do in a in a macro environment.
Speaker Change: Got it thanks, so much for that and just one follow up here when I look at <unk>.
Brad Herring: No, thanks so much for that.
Koji Ikeda: And just one follow-up here. When I look at net revenue retention, you know, listen to all the commentary, the Q&A, it does seem to imply that net revenue retention is potentially bottom tier in the third quarter. Just curious in looking at the guidance and kind of the factors of the next several quarters, is that a fair assumption? Or if it is going to contract, you know, what are some of the things that we should be aware of?
Speaker Change: Net revenue retention listen to all the commentary the Q&A. It does seem to imply that net revenue retention is potentially bottomed here in the third quarter just curious in looking at the guidance and kind of the factors of the next several quarters is that a fair assumption or if it is going to contract what are some of the things that we should be aware of.
Brad Herring: Thank you so much.
Speaker Change: Thank you so much for taking the questions.
Brad Herring: No, great question. I think, you know, I would say with the last couple quarters, we've seen it, you know, 102, 103. We haven't seen it dip below that. So, I feel like it's reached a bottom point. We have seen some trends start to improve, or at least stabilize. You know, we've seen, I've mentioned the upsells have kind of slowed down to some degree. Downgrades have largely stabilized, churn has largely stabilized to even starting to improve. You know, it's hard to bet going forward, but given what we're seeing today, we certainly don't see it dropping anymore from here.
Michael: Quick question I think.
Speaker Change: I would say with the last couple of quarters, we've seen one or two 1% three we haven't seen it dipped below that so I feel like it's reached a bottom point, we have seen some trends start to improve or at least stabilize we've seen.
Speaker Change: I've mentioned, the Upsells has kind of slowed down to some degree.
Michael: Downgrades of largely stabilize start churn has largely stabilized even starting to improve.
Speaker Change: It's hard.
Speaker Change: Going forward, but given the what we're seeing today, we certainly don't see it dropping anymore from here and that's also why we pay attention a little bit more to that back book component I'll offer up to this call that India or because the way our client growth has been so rapid it actually represents about 80% of our clients. So you get a little bit of SKU in India. Our number just based on what <unk>.
Brad Herring: And that's also why, you know, we pay attention a little bit more to that back book component. I'll offer up to this call that, you know, NDR, because the way our client growth has been so rapid, it actually represents about 80% of our clients. So, you get a little bit of skew in NDR number just based on what client pools are in a 12-month look back versus the back book, which is 100% inclusion. And don't forget also, Koji, we will get about 60 basis points of pickup in Q4 when that UBSCS impact rolls off. So, you know, I think in the next quarter, you know, we should certainly see a slight pickup.
Michael: Pools or in a 12 month look back versus the back book, which is 100% inclusion.
Michael: And don't forget also because we will get about 60 basis points a pick up in Q4 when that UBS impac.
Michael: Impact rolls off so I think in the next quarter.
Michael: We should certainly see a slight pickup we're trying to figure out.
Brad Herring: We're trying to figure out, you know, we've got targets for a bigger pickup than just the 60 basis points.
Michael: We've got targets for a bigger pickup in just the 60 basis points.
Brad Herring: And then going into 2025 is where we start to see that number really start to accelerate for all those reasons we walked through. Got it.
Michael: And then going into 2025 is where we're starting to see that number really start to accelerate for all those reasons, we walk through.
Michael: Yeah.
Operator: Thank you so much for taking the questions. Really appreciate it.
Speaker Change: Got it. Thank you so much for taking the questions really appreciate it.
Speaker Change: And your last question comes from the line of Christian Love Piper Sandler Your line is open.
Operator: Thanks, guys.
Crispin Love: Good morning, everyone. Just first off, you said the Americas are on track for the best launch market since 2021. Just curious if you could parse that out a little bit. Is this the best launch market for Enfusion or the industry more generally?
Christian: Thanks, Scott good morning, everyone.
Christian Love: Just first off you said the Americas are on track to the best launch markets. Since 2021, just curious if you can parse that out a little bit better.
Christian Love: <unk> launch market for infusion or that the industry more generally and then can you discuss what you believe some of the factors are that are driving an increase in launches and if you think that could be sustainable over the next few quarters. Thank you.
Oleg Movchan: And then can you discuss what you believe some of the factors are that are driving an increase in launches and if you think that could be sustainable over the next few quarters? Thank you.
Oleg Movchan: Hi, Crispin.
Oleg Movchan: Oleg here. Happy to take the questions. So, there's nothing more granular than that from my perspective. So, this is just a regional thing, as we discussed. People are just deploying capital in Americas much more aggressively and taking capital away from APAC. We do see some more, you know, interesting capital deployments in Europe as well, but America is interesting, you know, one of the most interesting environments for launches we've ever seen. You know, I've spoken with some, you know, some of the people in the industry. Looks like people are looking to put capital to work in strategies where, you know, volatility is a friend, as well as private credit, you know, credit strategies are typically short volatility strategies, but it's a very hot area.
Speaker Change: Hi, Christine I'll call. It here to take your questions. So theres nothing more granular than that from my perspective. So this is just the original plan as we discussed.
Speaker Change: People are just deploying capital in Americas, much more aggressively on taking capital away from from APAC, We do see some more interest and capital deployments in Europe as well, but America is interest in one of the most interesting environments, where launches we'll have ever seen.
Speaker Change: I've spoken with some.
Speaker Change: Some of the people in the industry looks like people are looking to put capital to work in strategies, where volatility is a friend.
Speaker Change: As well as private credit credit strategies that typically short volatility strategies, but it's a very hot.
Oleg Movchan: A lot of people are either looking to launch new funds or deploying private credit strategies within their hedge fund offerings or within vehicles. And, you know, typical sort of launches that trade macro or multi-strat that typically, you know, tend to be longer volatility than other strategies are involved. So, you know, this is sort of the high-level picture. I think overall, you know, it's good for us. It's good for the market. And, you know, we just kept sharing it. We're a de facto default system for launches in many different cases, as you know, but for us, it's just at this point, it's a current perimeter.
Michael: Hot area a lot of people are either looking to launch new funds or.
Michael: Deploy and private credit strategies within their hedge fund offerings within vehicles.
Michael: Typical sort of launches that trade macro or multi strat that typically.
Michael: Tend to be a longer volatility another strategists are in bulk. So this is this is sort of the high level picture I think overall.
Michael: Good for us good for the markets.
Christian: <unk>.
Christian: We just kept sharing are de facto default system for launches in many different cases as you know but for US. It is just at this point its occurrence perimeter. It's a co homeland. So to speak are either on the future and we're looking at that marketplace not just on a standalone basis, but then part of the overall portfolio of strategy.
Oleg Movchan: It's a homeland, so to speak.
Oleg Movchan: Our eyes are on the future. And we're looking at that marketplace, not just on a standalone basis, but then part of the overall portfolio of strategies and products that the institutional asset management industry offers alongside with loan-only, fixed income equities, liquid asset classes, and then the liquid private equity and private credit.
Christian: Products set to institutional asset management in the stool for us alongside with low normally.
Christian: Fixed income equities liquid asset classes, and then the illiquid private equity and private credit.
Oleg Movchan: Great, I appreciate the color there. Oleg, thank you.
Speaker Change: Great I appreciate the color there I'll, let Ken thinking that Thats It for me.
Speaker Change: Okay.
Oleg Movchan: That concludes our I will now turn the conference back over to Oleg Movchan for closing remarks. Thank you all for very thoughtful questions. I thought it was helpful and I look forward to reconnecting with you shortly for the follow-ups.
Speaker Change: That concludes our Q&A session I will now turn the conference back over to OLED Malkin for closing remarks.
Speaker Change: Thank you all for their thoughtful questions I thought it was helpful and we look forward to reconnecting with you shortly for the follow ups.
Thank you for attending today's conference call.
Speaker Change: This concludes today's conference call you may now disconnect.
Speaker Change: Please wait.
Speaker Change: France will begin shortly.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Michael: [music].
Michael: Sure.
Michael: Okay.
Michael: Yes.
Michael: Okay.
Michael: Sure.
Michael: [music].
Michael: Yes.
Michael: [music].