10-Q 1 enfn-20230930x10q.htm 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-40949

Enfusion, Inc.

(Exact name of registrant as specified in its charter)

Delaware

  

87-1268462

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

125 South Clark Street, Suite 750

Chicago, Illinois 60603

(Address of Principal Executive Offices)

(312) 253-9800

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of Exchange on which registered

Class A common stock, par value $0.001
per share

ENFN

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No  

As of November 5, 2023, the registrant had 127,478,377 shares of common stock outstanding, consisting of 88,279,610 outstanding shares of Class A common stock and 39,198,767 outstanding shares of Class B common stock.

TABLE OF CONTENTS

    

    

Page

GLOSSARY

3

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

4

Part I.

FINANCIAL INFORMATION

6

Item 1.

Condensed Consolidated Interim Financial Statements (Unaudited)

6

Condensed Consolidated Interim Balance Sheets

6

Condensed Consolidated Interim Statements of Operations

7

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

8

Condensed Consolidated Interim Statements of Stockholders’ Equity

9

Condensed Consolidated Interim Statements of Cash Flows

11

Notes to Condensed Consolidated Interim Financial Statements

12

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

34

Item 4.

Controls and Procedures

35

Part II.

OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

36

Item 3.

Defaults Upon Senior Securities

36

Item 4.

Mine Safety Disclosures

36

Item 5.

Other Information

36

Item 6.

Exhibits

37

Signatures

38

2

GLOSSARY

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires:

“Award Units” refers to Management Incentive Award Units issued under Enfusion Ltd. LLC’s Change in Control Bonus Plan.

“Change in Control Bonus Plan” refers to Enfusion Ltd. LLC’s former Change in Control Bonus Plan for certain members of management that provided for the payment of a cash bonus based on a specified number of Award Units in the event of a change in control transaction, as defined in Enfusion Ltd. LLC’s operating agreement. In October 2021, Enfusion Ltd. LLC’s board of managers elected to terminate such plan (and all Award Units issued thereunder) upon effectiveness of the registration statement for our IPO.
“Common Units” refers to the new class of units of Enfusion Ltd. LLC created by the reclassification of the LLC interests of Enfusion Ltd. LLC as part of the Reorganization Transactions.
“Enfusion,” the “Company,” “we,” “us” and “our” and similar references refer: (1) following the consummation of the Reorganization Transactions, including our IPO, to Enfusion, Inc., and, unless otherwise stated, all of its direct and indirect subsidiaries, including Enfusion Ltd. LLC and (2) prior to the completion of the Reorganization Transactions, including our IPO, to Enfusion Ltd. LLC and, unless otherwise stated, all of its direct and indirect subsidiaries.
“IPO” refers to the Company’s initial public offering, completed on October 25, 2021.
“Pre-IPO Owners” refer to the equity holders who were the owners of Enfusion Ltd. LLC immediately prior to the Reorganization Transactions.
“Pre-IPO Common Unitholders” refer to Pre-IPO Owners that held Common Units following the Reorganization Transactions.
“Reorganization Transactions” refer to our IPO and certain organizational transactions that were affected in connection with our IPO, and the application of the net proceeds therefrom. See “Initial Public Offering and Reorganization Transactions” in Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 for a description of the transactions.

3

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations, financial condition, business strategy, plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks, and changes in circumstances that are difficult to predict. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements concerning the following:

our future financial performance, including our revenues, costs of revenues, gross profit or gross profit margin and operating expenses;
the sufficiency of our cash and cash equivalents to meet our liquidity needs;
anticipated trends and growth rates in our business and in the markets in which we operate;
our ability to maintain the security and availability of the products and services that comprise our solution;
our ability to increase the number of clients using our solution;
our ability to sell additional products and services to and retain our existing clients;
our ability to successfully expand in our existing markets and into new markets;
our ability to effectively manage our growth and future expenses;
our market opportunity and the potential growth of that market, our liquidity and capital needs and other similar matters;
our ability to maintain, protect and enhance our intellectual property;
our ability to comply with modified or new laws and regulations applying to our business;
the attraction and retention of qualified employees and key personnel;
our anticipated investments in sales and marketing and research and development;
our ability to successfully defend litigation brought against us;
the increased expenses associated with being a public company;
the impact of global financial, economic, and political events on our business and industry; and
our ability to compete effectively with existing competitors and new market entrants.

4

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q, as well as in our Annual Report on Form 10-K for the year ended December 31, 2022. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q. And while we believe such information provides a reasonable basis for such statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

5

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ENFUSION, INC.

Condensed Consolidated Interim Balance Sheets

(dollars and shares in thousands, except per share amounts)

    

As of

    

As of

September 30, 2023

December 31, 2022

    

(Unaudited)

    

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

31,652

$

62,545

Accounts receivable, net

 

24,855

 

25,855

Prepaid expenses

 

4,079

 

6,105

Other current assets

1,459

2,303

Total current assets

 

62,045

 

96,808

Property and equipment, net

 

18,136

 

15,759

Right-of-use-assets, net

15,734

6,732

Other assets

 

5,825

 

4,484

Total assets

$

101,740

$

123,783

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

1,341

$

1,685

Accrued expenses and other current liabilities

10,629

11,665

Current portion of lease liabilities

 

4,403

 

4,030

Total current liabilities

 

16,373

 

17,380

Lease liabilities, net of current portion

12,090

2,959

Total liabilities

 

28,463

 

20,339

Stockholders’ Equity:

 

  

 

  

Preferred stock, $0.001 par value; 100,000 shares authorized, no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

Class A common stock, $0.001 par value; 1,000,000 shares authorized, 88,217 and 70,860 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

88

71

Class B common stock, $0.001 par value; 150,000 shares authorized, 39,199 and 43,199 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

39

43

Additional paid-in capital

 

224,710

 

244,260

Accumulated deficit

(173,555)

(178,863)

Accumulated other comprehensive loss

 

(548)

 

(504)

Total stockholders’ equity attributable to Enfusion, Inc.

 

50,734

 

65,007

Non-controlling interests

22,543

38,437

Total stockholders’ equity

73,277

103,444

Total liabilities and stockholders’ equity

$

101,740

$

123,783

See Notes to Condensed Consolidated Interim Financial Statements.

6

ENFUSION, INC.

Condensed Consolidated Interim Statements of Operations

(dollars and shares in thousands, except per share amounts)

(Unaudited)

    

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

    

2022

    

2023

    

2022

REVENUES:

 

  

 

  

  

 

  

Platform subscriptions

$

40,857

$

35,953

$

118,465

$

101,064

Managed services

 

3,028

 

2,504

 

8,717

 

7,130

Other

 

472

 

694

 

867

 

1,638

Total revenues

 

44,357

 

39,151

 

128,049

 

109,832

COST OF REVENUES:

 

  

 

  

 

  

 

  

Platform subscriptions

 

12,745

 

10,077

 

36,943

 

28,453

Managed services

 

1,604

 

1,776

 

4,789

 

5,059

Other

 

158

 

121

 

285

 

292

Total cost of revenues

 

14,507

 

11,974

 

42,017

 

33,804

Gross profit

 

29,850

 

27,177

 

86,032

 

76,028

OPERATING EXPENSES:

 

  

 

 

  

 

  

General and administrative

 

16,721

 

13,094

 

47,520

 

53,691

Sales and marketing

 

5,503

 

7,278

 

14,866

 

23,285

Technology and development

 

4,937

 

3,864

 

13,832

 

12,388

Total operating expenses

 

27,161

 

24,236

 

76,218

 

89,364

Income (loss) from operations

 

2,689

 

2,941

 

9,814

 

(13,336)

NON-OPERATING INCOME (EXPENSE):

 

  

 

  

 

  

 

  

Payment to related party

(1,501)

Loss on extinguishment of debt

(78)

(78)

Other income (expense), net

 

417

 

(56)

 

1,069

 

(59)

Total non-operating income (expense)

 

339

 

(56)

 

(510)

 

(59)

Income (loss) before income taxes

 

3,028

 

2,885

 

9,304

 

(13,395)

Income taxes

 

367

 

287

 

951

 

656

Net income (loss)

2,661

2,598

8,353

(14,051)

Net income (loss) attributable to non-controlling interests

833

1,059

2,951

(5,903)

Net income (loss) attributable to Enfusion, Inc.

$

1,828

$

1,539

$

5,402

$

(8,148)

Net income (loss) per Class A common shares attributable to Enfusion, Inc.:

Basic

$

0.02

$

0.02

$

0.06

$

(0.11)

Diluted

$

0.02

$

0.02

$

0.06

$

(0.11)

Weighted Average number of Class A common shares outstanding:

Basic

87,739

85,156

88,175

84,508

Diluted

127,841

131,760

130,049

84,508

See Notes to Condensed Consolidated Interim Financial Statements.

7

ENFUSION, INC.

Condensed Consolidated Interim Statements of Comprehensive Income (Loss)

(dollars in thousands)

(Unaudited)

    

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

    

2022

    

2023

    

2022

Net income (loss)

$

2,661

$

2,598

$

8,353

$

(14,051)

Other comprehensive income (loss), net of income tax:

 

 

 

 

Foreign currency translation loss

 

(252)

 

(152)

 

(63)

 

(591)

Total other comprehensive income (loss)

2,409

2,446

8,290

(14,642)

Comprehensive income (loss) attributable to non-controlling interests

751

997

2,932

(6,147)

Total comprehensive income (loss) attributable to Enfusion, Inc.

$

1,658

$

1,449

$

5,358

$

(8,495)

See Notes to Condensed Consolidated Interim Financial Statements.

8

ENFUSION, INC.

Condensed Consolidated Interim Statements of Stockholders’ Equity

(dollars and shares in thousands)

(Unaudited)

    

  

Accumulated

Class A

Class B

Additional

Other

Total

Preferred Stock

Common Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Non-Controlling

Stockholders’

Shares

Amount

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Loss

    

Interest

    

Equity

July 1, 2023

$

 

82,212

$

82

41,199

$

41

$

223,766

$

(175,383)

$

(378)

$

24,115

$

72,243

Net income

 

1,828

 

833

 

2,661

Stock-based compensation

1,901

882

2,783

Share exchange

2,000

2

(2,000)

(2)

1,183

(1,183)

Issuance of IPO vested Class A common stock and share-based awards

3,005

3

607

(610)

Issuance of Class A common stock, net of issuance costs

1,000

1

5,412

2,217

7,630

Tax withholdings related to net share settlements of stock-based compensation awards

(8,159)

(3,629)

(11,788)

Foreign currency translation

 

 

(170)

(82)

 

(252)

September 30, 2023

$

 

88,217

$

88

39,199

$

39

$

224,710

$

(173,555)

$

(548)

$

22,543

$

73,277

January 1, 2023

$

70,860

$

71

43,199

$

43

$

244,260

$

(178,863)

$

(504)

$

38,437

$

103,444

Net income

 

5,402

 

2,951

 

8,353

Stock-based compensation

3,081

1,465

4,546

Share exchange

4,000

4

(4,000)

(4)

2,559

(2,559)

Issuance of IPO vested Class A common stock and share-based awards

11,157

11

1,708

(1,719)

Issuance of Class A common stock, net of issuance costs

2,200

2

12,401

4,919

17,322

Cumulative impact of adopting ASU 2016-13

(94)

(55)

(149)

Tax withholdings related to net share settlements of stock-based compensation awards

(39,096)

(20,772)

(59,868)

Foreign currency translation

 

(44)

(19)

 

(63)

Other

 

(203)

(105)

(308)

September 30, 2023

$

 

88,217

$

88

39,199

$

39

$

224,710

$

(173,555)

$

(548)

$

22,543

$

73,277

9

ENFUSION, INC.

Condensed Consolidated Interim Statements of Stockholders’ Equity

(dollars and shares in thousands)

(Unaudited)

  

Accumulated

Class A

Class B

Additional

Other

Total

Preferred Stock

Common Stock

Common Stock

Paid-in

Accumulated

Comprehensive

Non-Controlling

Stockholders’

Shares

Amount

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Loss

    

Interest

    

Equity

July 1, 2022

$

 

67,002

$

67

46,069

$

46

$

240,501

$

(180,896)

$

(582)

$

40,670

$

99,806

Net income

 

1,539

 

1,059

 

2,598

Stock-based compensation

544

374

918

Issuance of restricted shares

7

Foreign currency translation

 

 

(90)

(62)

 

(152)

September 30, 2022

$

 

67,009

$

67

46,069

$

46

$

241,045

$

(179,357)

$

(672)

$

42,041

$

103,170

January 1, 2022

65,583

$

66

47,471

$

47

$

226,717

$

(171,209)

$

(325)

$

42,145

$

97,441

Net loss

 

(8,148)

 

(5,903)

 

(14,051)

Stock-based compensation

11,875

8,496

20,371

Share exchange

1,402

1

(1,402)

(1)

2,453

(2,453)

Issuance of restricted shares

24

Foreign currency translation

 

 

(347)

(244)

 

(591)

September 30, 2022

$

 

67,009

$

67

46,069

$

46

$

241,045

$

(179,357)

$

(672)

$

42,041

$

103,170

See Notes to Condensed Consolidated Interim Financial Statements.

10

ENFUSION, INC.

Condensed Consolidated Interim Statements of Cash Flows

(dollars in thousands)

(Unaudited)

    

Nine Months Ended September 30, 

    

2023

    

2022

Cash flows from operating activities:

 

  

 

  

Net income (loss)

$

8,353

$

(14,051)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

Non-cash lease expense

5,231

3,823

Depreciation and amortization

 

6,472

 

4,654

Provision for credit losses

 

1,390

 

1,261

Amortization of debt-related costs

 

17

 

19

Loss on extinguishment of debt

78

Stock-based compensation expense

4,054

20,788

Other operating activities

16

Change in operating assets and liabilities:

 

 

Accounts receivable

 

(538)

 

(12,030)

Prepaid expenses and other assets

 

79

 

2,246

Accounts payable

 

(342)

 

(1,383)

Accrued compensation

(2,191)

5,665

Accrued expenses and other liabilities

 

1,162

 

(497)

Lease liabilities

(4,733)

(3,860)

Net cash provided by operating activities

 

19,048

 

6,635

Cash flows from investing activities:

 

  

 

  

Purchases of property and equipment

 

(7,376)

 

(6,185)

Net cash used in investing activities

 

(7,376)

 

(6,185)

Cash flows from financing activities:

 

  

 

  

Payment of debt issuance and debt facility costs

(1,151)

Settlement of tax receivable acquired in reorganization transactions

1,501

Issuance of Class A common stock, net of issuance costs

17,322

Payment of withholding taxes on stock-based compensation

(59,868)

(917)

Other financing activities

(308)

Net cash used in financing activities

 

(42,504)

 

(917)

Effect of exchange rate changes on cash and cash equivalents

 

(61)