Enfusion, Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Infusion's first quarter 2023 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise. Following the speaker's remarks, we will open the lines for questions. As a reminder, this conference call is being recorded. I'd now like to turn the call over to Ignatius Joku, head of investor relations, to begin.

Good morning, and thank you, operator. We welcome you to Infusion's first quarter 2023 earnings conference call. Hosting today's call are Oleg Movchin, Infusion's chief executive officer, and Brad Herring, Infusion's chief financial officer. Please note, our quarterly shareholder letter, which includes our quarterly financial results, have all been posted to our IR website. I'd 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 and are available in the investor relations section in 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. In addition, today's call may include non-GAAP measures. These GAAP measures should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliation to the nearest GAAP measure can be found in today's quarterly shareholder letter, which is available on the company's website. With that, I'd like to turn the call over to Oleg to begin.

Good morning, and thank you all for joining us today to discuss our first quarter 2023 results. I'm happy to announce another strong quarter for Infusion. Our business performed in line with our expectations for both revenue and profitability, despite ongoing macroeconomic and market uncertainty. Infusion continues to capture hearts and minds of both new and existing clients across all investment strategies, asset classes, and regions. We're focused on enhancing and protecting our unique competitive advantage centered around the best-in-class software and services offering. This model is the strategic foundation of our ability to unlock new and adjacent market segments within alternative investment space, increase our market share with traditional investment managers, and expand our global footprint. Despite historically extreme negative performance across all asset classes last year and ongoing macroeconomic uncertainty, our business has delivered strong outcomes this quarter. However, we are seeing now, in real time, a more challenging environment for the investment management industry, as it is dealing with unique market dynamics. Predictably, the managers are recalibrating budgets, reviewing technology spending, and delaying their purchasing decisions. As anticipated and discussed on the last quarter's earnings call, all these factors contributed to some short-term headwinds in our business. Importantly, however, this market environment is not unfamiliar to us. It is precisely during times like this when Infusion's business model tends to prove its flexibility and resilience, and we tend to use these situations as opportunities to amplify growth and accelerate market share expansion. This year is no exception. We'll continue to take business away from stale, inefficient, and expensive legacy technologies in competitive situations. We're doubling down on scaling our competitive edge by delivering unparalleled technology and best-in-class client experience to the investment managers and asset owners globally. Our ability to execute on this strategy will unquestionably drive exceptional shareholder value for many years to come. Now, let me walk you through the key highlights of our financial performance for the quarter. Revenue grew 20% to $41 million, reflecting resilient client demand for our software and services. Adjusted EBITDA was $5.7 million, and represented a margin of 13.9%. ARR grew 21% year over year to 167 million. I will let Brett Herring unpack our financial results and provide more color. I'm especially proud of our team's focus on driving operational excellence, optimizing operational efficiencies, and ongoing expense discipline. All these efforts combined with the built-in business flexibility enabled us to maintain our strong margin profile. Now, I would like to highlight a few strategic new wins that bring our vision to life across all regions. In the US, revenue grew 16% year over year, which reflects the market dynamics outlined above. I'm delighted to announce that we signed an agreement with a multi-billion dollar new hedge fund, one of the largest hedge fund launches year to date. The firm was looking for a technology platform that supports its unique special situations investment framework, which includes strategies such as loan origination and direct lending, and involves equities, equity derivatives, corporate debt, and credit derivatives. The fund manager partnered with Infusion because of our ability to support their investment mandate across a broad set of asset classes and instrument types, platform flexibility, and its comprehensive and fully integrated end-to-end architecture. This partnership delivers more evidence of our ability to win large and complex hedge fund launches in this environment. In EMEA, revenue grew 37% year over year, driven by solid sales execution and aided by ongoing strength in the region, particularly in the Middle East. I'm excited to announce that we signed a marquee deal with a London-based investment management arm of a well-known global venture capital fund. This alternative investment manager with over 20 billion in AUM manages multiple portfolios of late stage private and public companies. In this conversion, Infusion is replacing the pieced together outdated technology mix with our fully integrated and robust cloud native offering that supports all front, middle, back office requirements of the client. The fund manager selected Infusion because of our ability to support both public and private investments cloud capabilities, and managed services offering. In addition, I'm also pleased to announce that we entered into an agreement with a newly launched global macro and credit fund to provide a powerful solution that offers a complete set of front-to-back functionality. We're particularly excited about this deal because it was the first fund sourced through a broader relationship with a dedicated managed account platform in a cap global investment management. In a cap, is another example of how dedicated separately managed account platforms can quickly and efficiently launch new alternative investment vehicles using Infusion's scalable and flexible cloud-native end-to-end technology. As a result, the client can focus on generating alpha and, in a cap, can direct their efforts on investment sourcing and structuring, portfolio construction, risk management, and dedicated account management. We believe this is one of many investment managers that will be sourced through our relationship with INACAP. And we continue to see investor demand for scalable multi-manager or multi-strategy products delivered through either SMAs or commingled vehicles. In APAC, revenue grew by 20% year over year. We continue to see success across the region. For example, we signed one of the largest Asian longshore equity hedge funds in Singapore to update their legacy platform with Infusion software. The investment manager was using an incumbent legacy provider with limited functionality, which resulted in the use of manual and error-prone processes. This win demonstrates our continuing expansion into the APAC region and highlights the value our clients see in Infusion's best-in-class software and services. Shifting to product strategy, I'd like to share with you how we have continued to broaden our partner ecosystem, and in doing so, allowed our clients to use our platform as an operating system to access unique software capabilities of our technology partners and drive meaningful improvements in how clients interact with our platform as a result. Specifically, I'm thrilled with our new strategic partnership with Quantigo to deliver Infusion's clients Quantigo Axioma Risk, an enterprise-level risk management solution. With Axioma Risk, our clients can benefit from multi-asset class risk capabilities, including exposure management, multi-factor risk models, scenario analytics, and risk attribution. As a result, fund managers of all sizes can make better investment in portfolio construction decisions informed by a comprehensive view of their risk profiles. With Axioma's robust and comprehensive risk capabilities, Infusion further enhances the value we deliver to our clients. Importantly, this partnership showcases Infusion's ongoing commitment to leverage our open architecture and MAKO offering a ubiquitous platform for the investment management industry that facilitates not only operational workflows, but also investment decision-making. We continue to invest in developing the best-in-class, enterprise-grade SaaS platform. For our clients, that means continuous improvement, lower cost of ownership, increased productivity, and ever-expanding functionality. In the first quarter, Infusion rolled out 320 enhancements and features. For example, we added support for order entry for asset swap convertible option transaction in our OMS, which enriches a set of capabilities for clients who employ convertible arbitrage strategies. We also added a new enhancement for clients that trade credit, both cash bonds and credit derivatives. Our team developed a new tool that supports fixed and floating rate bond trading. Foreign Fusion is just another day in the office. We continue to deploy these enhancements and new capabilities on a weekly basis and to improve client experience at the highest rate in the industry. Now let's turn to market dynamics. While our team continues to execute at a high level, the sustained macroeconomic headwinds have challenged the investment management space. However, we remain encouraged as we see signs of stabilization and expect a reduction in macro uncertainty to drive materially better dynamics in the back half of the year. For instance, Recent industry data suggests a significant uptick in new hedge fund launches year to date. Given our differentiated offering, we have an opportunity to capture a significant share of upcoming new fund launches. In fact, we have won an outside share of the largest hedge fund launches so far this year. Further, we see several themes that will position us to emerge from this current market environment in a stronger competitive position. First, secular tailwinds remain in our favor. The industry is in the early innings of digital transformation forms, disparate legacy systems to robust end to end client native solutions. Second, our qualified pipeline for conversions and upmarket opportunities remains healthy. Recent market volatility has pushed fund managers to reimagine their technology infrastructure. As a result, these managers look at infusion to help optimize their cost structure and improve productivity. Third, we continue to focus on our strategy to increase the share of our customer wallet. As our clients are realizing the value added and lower cost of the fully integrated solution, we are capturing this opportunity to expand our client relationships from PMS only to OEMS, NGL, and accounting capabilities. Along the same lines, with the tremendous potential for expanding our managed services offering in conjunction with our core software offering. Importantly, not only does it drive a better economic relationship with our clients on a win-win basis, but also enhances durability of our financial profile and makes Infusion more competitive when it comes to complex conversions for larger hedge funds and institutional managers. Finally, we're investing in the future readiness of our business. by bringing more scale and robustness to our core platform, introducing new functionality, and streamlining our onboarding, client support, and managed services. We view these investments as critical to sustaining and expanding our competitive advantage and generating exceptional growth rates and profitability profile of our franchise. To conclude, despite market challenges, our business fundamentals remain strong, durable, and scalable. Infusion continues to demonstrate exceptional product differentiation that drives value creation for our customers and our shareholders. Since Infusion was founded, we have navigated several challenging market environments and economic cycles. Even still, we grew through them and came out stronger, better, more resilient, and impossible to kill. This current climate is no different, and today we leverage and grow what made us good in the first place, unique technology, passion for our clients, pride in our brand, and our one Infusion culture of integrity and operating excellence. Infusion continues to create unparalleled value for our clients. From new H1 launches to large, complex, multi-manager platform, institutional investment managers, wealth managers, family offices, and asset owners. We remain convinced that our clients, both current and future, we'll see in crystallized infusion undeniable value proposition, which will translate into accelerated and durable long-term value creation for our shareholders. I will now turn the call over to Brad Herring to discuss our financials.