Enfusion, Inc. [ENFN] Filings

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

Table of Contents

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

☐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

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

Table of Contents

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.

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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.

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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.

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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.

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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.

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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.

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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

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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.

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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)

Enfusion, Inc. [ENFN] Filings
10-Q	[2023-11-07]
10-Q	[2023-08-08]
10-Q	[2023-05-09]
10-K	[2023-03-10]
10-Q	[2022-11-10]
10-Q	[2022-08-10]
10-Q	[2022-05-13]
10-K	[2022-03-30]
10-Q	[2021-12-03]
S-1	[2021-09-17]