Prospectus Summary
PROSPECTUS SUMMARY This summary highlights information contained in greater detail elsewhere in this prospectus. This summary does not contain all of the information that you should consider in making your investment decision. Before investing in our Class A common stock, you should carefully read this entire prospectus, including our consolidated financial statements and the related notes thereto and the information set forth under the sections titled “Risk Factors,” “Special Note Regarding Forward-Looking Statements,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case included in this prospectus. Unless the context otherwise requires, the terms “Enfusion,” the “Company,” “we,” “us” and “our” in this prospectus refer to Enfusion, Inc. and its consolidated subsidiaries.Our Mission
Our mission is to help solve investment managers’ evolving business and operational challenges through next-generation technology.
Our Company
Enfusion is a global, high-growth software-as-a-service, or SaaS, provider focused on transforming the investment management industry. Our solution is designed to eliminate technology and information barriers, empowering investment managers to confidently make and execute better-informed investment decisions in real time. We simplify investment and operational workflows by unifying mission-critical systems and coalescing data into a single dataset resulting in a single source of truth. This allows stakeholders throughout the entire client organization to interact more effectively with one another across the investment management lifecycle.
We believe, by means of our purposefully-designed interconnected systems underpinned by one dataset, we are the only solution that allows clients to see and interact with all parts of the investment management lifecycle ranging from portfolio construction, trading, risk management, accounting and operations through to investor reporting seamlessly in real time, in one screen, in one solution. As a result, our solution enables clients to better align teams, optimizing their investment decision-making, operations and technology footprint and lowering operating costs. By harnessing the efficiencies, agility and scale inherent to our cloud-native, multi-tenant software that is integrated with a suite of technology-powered services, we believe we have created the industry’s most compelling investment management solution, capable of shaping and addressing evolving demands of the global investment management landscape.
Existing solutions in the investment management technology industry include a patchwork of “task specific” point solutions from disparate vendors, technology stitched together through acquisitions, internally-developed technology and cost-prohibitive solutions accessible only to the largest investment managers. Where available solutions are cloud-enabled, many were originally designed for on-premises installations and subsequently individually migrated to the cloud via discrete code streams, retaining single-tenant infrastructure limitations that require changes to be made for each client individually instead of delivering changes to all clients simultaneously and leading to laborious and costly maintenance and difficult security requirements. As a result, many investment managers spend considerable time and resources managing legacy, stitched together, or disparate systems, fragmented data, complex communication networks and cumbersome workflows. Designed for the cloud from inception, Enfusion provides a flexible and simplified end-to-end alternative that allows investment managers to focus their time and resources on investment performance. This enables us to build long-term partnerships with our clients, offering a solution that is not only tailored to meet their business needs today, but has the depth and breadth of capability to support them as they grow or enter new markets or asset classes.
Our cloud-native, multi-tenant solution provides:
●Seamless unification and simplification of workflows provided through one cohesive solution;
●A robust, real-time view of a client’s business that can be displayed through countless reports and utilized across client personnel that depend on one another, but have different roles throughout the organization;
●Inherent scalability and extensive integrations via client, third party and proprietary interfaces and application programming interfaces, or APIs;
●Weekly, functional enhancements provided to all clients, eliminating complicated upgrade and version control issues and providing the agility to meet rapidly evolving industry needs;
●Reduced operational risk through granular, user-defined access controls and governance capabilities; and ●Anywhere access across the desktop, the web and mobile devices.
Enfusion’s comprehensive solution cohesively addresses the core components of the investment lifecycle. Our portfolio management system gives clients the ability to construct and analyze portfolios and performance metrics with granularity, enabling better-informed investment decision-making. Once trade decisions are made, clients use our combined order and execution management systems to obtain market insights, run compliance checks and send electronic trade orders directly to executing brokers and exchanges. When orders are executed, execution data flows back to our solution and instantly feeds our systems, including our accounting system, enabling clients to produce a full set of financial statements in real time. The data also feeds our extensive reporting and analytics capabilities, allowing stakeholders across client organizations, including executive management, investment teams, operational support, compliance and investor relations to obtain differentiating insights into their investment activities and better analyze investment performance. The purposefully-designed interconnectedness of our systems removes the need for manual data processing and validating across workflows. Coupled with market data and aggregated transactional and derived data provided to or received from a full suite of a client’s supporting parties, our solution creates a single dataset and source of truth that gives our clients a real-time, comprehensive and consistent view of their data across the investment lifecycle. Altogether, our full lifecycle, single dataset investment management solution, provides investment managers with a tailored suite of tools and investment content to make better-informed decisions, faster and with greater confidence, in one screen and one solution.
In addition to facilitating the full investment lifecycle, our robust and agile solution allows us to serve a diverse client base that ranges in investment strategies, size and geography. Our clients include alternative investment managers such as hedge funds of all types, private equity funds, family offices and corporate investment arms, as well as institutional investment managers such as traditional asset managers and mutual funds:
Our client relationships are built upon reliability, efficiency and proactivity. Our most important goal is to hold a high standard that couples both excellent ongoing innovation and excellent client experience. Our differentiated client-centric approach is made possible by our solution’s nimble single codebase architecture that is delivered in a one-to-many manner. In practice, our structure allows us to dedicate resources to our clients holistically, driving a superior client experience from the point of identifying a sales opportunity to product and services implementation and continuing throughout the client relationship. We measure our success through a combination of retaining clients (2% of clients left voluntarily in 2020), Net Dollar Retention Rate (122.4%, 119.6% and 111.3% as of June 30, 2021, December 31, 2020 and December 31, 2019, respectively), client feedback and external reviews (94% client satisfaction per Aite Group in 2019). As of June 30, 2021, we had 635 global clients, with 106 new clients in 2021. During the year ended December 31, 2020, no client accounted for more than 3% of our total net revenues and our top 10 clients represented approximately 12% of our total net revenues.
We derive the vast majority of our total net revenues (99.4% and 98% for six month period ended June 30, 2021 and the year ended December 31, 2020, respectively) from our recurring subscription-based revenues. We have grown our Annual Recurring Revenue from $33.1 million in 2017 to $93.4 million in 2020 (representing a compound annual growth rate of 41.4%). The highly scalable nature of our business and recurring nature of our revenues drive strong margins and profitability as illustrated by our gross profit margin of 73.3%, 73.2% and 71.3%, net income margin of 16.5%, 5.1% and 21.4%, and Adjusted EBITDA Margin of 26.3%, 31.8% and 35.8%, each for six month period ended June 30, 2021, and the years ended December 31, 2020 and December 31, 2019, respectively. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information on our key business metrics and our non-GAAP financial measures, including reconciliations of these measures to the nearest U.S. GAAP metric.
Industry Overview
The investment management industry is large and growing, with assets under management, or AUM, surpassing $110 trillion globally. According to PwC, global AUM has grown by more than 40% from 2015 through to 2020 and is projected to continue growing as fast as 6% annually, with AUM from alternative investments growing as fast as 8% annually. As the industry continues to grow, the investment management community is at an inflection point, facing multiple, concurrent generational shifts, most notably:
Many solutions on the market today fall short of helping investment managers seamlessly and holistically address the industry dynamics described above. Existing solutions include a patchwork of “task specific” point solutions from disparate vendors, technology stitched together through acquisitions, internally developed technology and cost-prohibitive solutions accessible only to the largest investment managers. These solutions, being cloud-migrated rather than cloud-native, are not sufficiently nimble to allow for scale and often require physical provisioning and rely on large teams of specialized personnel that through time are difficult to hire, face latency issues and increase investment manager tech debt. The result is increased information leakage, lack of data integrity, reduced traceability and reporting, significantly higher costs, more rigid strategies and slower decisions.
Our Market Opportunity
Investment managers spend significant time and resources supporting their business processes, which is intensifying as their industry continues to become more complex and subject to unprecedented pace of change. We believe that Enfusion has a significant advantage in addressing investment managers’ increasing demands for a comprehensive investment lifecycle cloud-native solution that simplifies workflows by unifying mission critical systems and coalescing data into a single dataset.
We estimate that our total addressable market is in excess of $19 billion. According to IDC’s Worldwide Capital Markets IT Spending Guide, the total spend on software and information technology, or IT, services from investment management front office and operations functions was estimated at $11.5 billion in 2020 and is expected to grow 6% annually to $14.4 billion in 2024. Additionally, internal IT spend was estimated at $5.7 billion in 2020. We also believe that there is an incremental opportunity relating to the IDC estimated $2.0 billion spend associated with traditional hardware infrastructure across all investment managers that can be targeted by our solution as our clients migrate their technology and processes to our hosted platform.
The Enfusion Advantage
Our solution is designed to simplify our clients’ workflows and improve decision-making across investment managers of all strategy, size and geography. Our advantage lies in our solution removing information barriers and creating alignment across different actors in the investment lifecycle. We believe superior investment performance and decision-making is driven by our clients’ ability to work in real time as a cohesive team. Our solution does not merely provide systems for the entire investment lifecycle and for all actors; our solution goes further, unifying the systems with one codebase enabling changes made into one system to be reflected in other systems in real time. In practice, this allows teams across our client organizations to benefit from role-based functionality underpinned by a single dataset and single source of truth, enabling each to generate valuable insights while operating on the same real-time information, all governed by appropriate access controls. Consequently, we are expanding the sphere of influences within a client organization that decide and select their choice of technology partners and seeing leaders such as Chief Financial Officers (CFOs), Portfolio Managers (PMs), Chief Investment Officers (CIOs) and Chief Operating Officers (COOs) driving the efforts to use the Enfusion solution.
In a market of disparate solutions stitched together, our competitive advantage is supported by:
Ultimately, our multi-tenant architecture, cloud-native framework and scalable and cost-effective service model allows us to deliver significant value to our clients, while maintaining a strong revenue growth rate and attractive profit margins in a robust and sustainable way. Our team uses the Enfusion solution to address continuously-evolving client needs, which fuels the already rapid pace of innovation and helps us continue to expand our market position in the investment management technology industry.
The Enfusion Solution
Our cloud-native, purposefully-designed end-to-end solution gives our clients the ability to easily access and analyze investment information in real time, perform complex calculations quickly and interact with markets electronically adding up to better, more informed investment decisions and actions. Our solution is highly configurable to different work streams, client segments and asset classes. Rather than relying on large, specialized workforces necessary for local or tenant-by-tenant deployments, modifications to our solution are made remotely within one codebase and without client intervention or interaction. Software enhancements developed for individual sponsoring clients are also made available to all clients at the same time. This process where our community of clients continuously contributes to the ever-evolving nature of our solution strengthens the value of the solution to all of our clients.
Our solution, comprised of mission critical systems integrated with a suite of technology-powered services, serves the full investment lifecycle. We recognize that despite increasing market pressures to the contrary, some clients may not be in a position to replace all of their systems at once. Therefore, we have designed our solution to allow our clients to use some or all of our solution to manage their investment lifecycle workflow and also to augment or integrate into their existing workflows or systems, giving them the flexibility to expand their usage and us the ability to solve their unique needs through time.
Our solution is utilized by variety of users including portfolio managers, traders, compliance officers, operational support staff and executive management, all of whom benefit from role-based functionality underpinned by a single dataset. This single dataset enables each of these users to generate valuable insights while operating on the same real-time information governed by appropriate access controls. The end-to-end functionality our solution provides is detailed below.
Our end-to-end solution comprises:
Our Growth Strategy
We continue to advance our position as a leading technology partner to the investment management industry. The key components of our growth strategy include: