Enfusion, Inc.

We welcome you to Infusion's second quarter 2024 earnings conference call. Hosting today's call are Oleg Movchin, Infusion's chief executive officer, Brad Herring, Infusion's chief financial officer, and Neil Pawar, Infusion's chief operating officer. 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 obligations 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 measures should be considered as a supplement to and not a substitute for GAAP financial measures. Reconciliation to the nearest GAAP measures can be found in today's quarterly shareholder letter, which is available on the company's website. During the second quarter, we had the pleasure of interacting with many of our investors who attended the William Blair Conference in May and the Morgan Stanley and Jefferies Conferences in June. We're grateful for a terrific turnout and hope that everyone walked away from those engaging discussions with as many insights as we did. For those of you who couldn't make it to the William Blair or Morgan Stanley conferences, a webcast can be found on the investor relations section of our website. You can also find the full investor day presentation from earlier this year on the investor relations section of our website. With that, I'd 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 second quarter of 2024. I would like to personally thank all shareholders for their vote of confidence at our annual shareholder meeting on June 12th. It's a great privilege to represent Infusion as both a board member and a CEO, and I greatly appreciate all your trust and support. We believe we have the right management team in place with the ability to execute on our long-term strategy. As you know from our second quarter 2024 earnings release published earlier this morning, we reported a solid quarter and reiterated our 2024 full year guidance. We also remain on track to deliver on our medium term guidance, which is to achieve a revenue growth rate of 20 plus percent over the 2025-2027 period. On the call today, we will share several proof points that confirm Infusion's continued move up market, adding new clients from the outside of the hedge fund segment in the insurance and banking sectors, while deepening our relationship with our existing client base. I'm also pleased to share that similar to last quarter, our client onboarding satisfaction scores continue to remain at three-year highs. As the company scales over the next several quarters, we plan to invest in our services platform, empowering our clients, and enhancing our service delivery model as we move up market. We have more than 1,100 employees working to ensure that Infusion's platform will be the last upgrade our clients will ever need. Now let me walk you through some key financial highlights from the second quarter. Our economic trajectory remained on track in Q2 24 with $49.5 million in revenue, representing 16% year-over-year growth q2 2024 adjusted ebitda total 10.1 million dollars translating into a healthy adjusted ebitda margin of 20.5 bread will provide a deeper dive on financials later we signed 39 new clients in q2 2024 up from 33 last quarter this brings our total client count to 879. During the quarter, the seasonally strong launch market in Q1 2024 carried through and accelerated. Many of these funds were naturally drawn to Infusion's platform. Hence, 64% of our wins in the second quarter were launches, including four wins from established firms. We continue to expect the launch and conversion mix to balance out more with a higher percentage of conversions in the back half of 2024. Q2 ATV increased sequentially from 226,000 to $228,000, another firm record, representing 7.5% year-over-year growth. Fund launches this quarter were strong, resulting in healthy bookings growth on a both sequential and annual basis. We believe that Infusion remains the go-to platform provider of the hedge fund community due to high client satisfaction, best-in-class service, and a strong referral base. Fund conversions which have higher SIP counts and higher AUM, are typically larger and more complex firms with higher ACVs. Our strategy is to move up market, win in larger asset managers, providing a more stable revenue profile, and offering additional product functionality and managed services. While targeting larger and more complex firms, we intend to continue to protect our core hedge fund segments of the market as these firms come to us organically, translating in lower customer acquisition costs. Shifting gears, let me provide you with a few notable client wins across geographies from this quarter. In the Americas, revenue grew 15% year over year, in line with Q2 2023. We're pleased to report that we saw the pickup in U.S. fund launches from Q1 continue into Q2. Just like last quarter, this trend is more than compensated for closures and consolidations witnessed earlier. When put together, the U.S. market has shown broad resiliency, with specific call-out to credit fund launches. On that note, we had a strong year of credit wins in 2023, and at the end of Q2, we're running slightly ahead of that pace year-to-date. Beyond the US market, Canada has been showing notable strength in Q2 2024, bringing in larger account wins, and we're seeing an improved pipeline there. Now, let me highlight several exciting cases of new client wins that serve as proof points of Infusion's ability to expand our market share in the institutional asset management segment. For example, I'm thrilled to announce that Infusion signed a US-based health and life insurance company that will move approximately $2 billion of internally managed AUM to the Infusion platform. Infusion's mobile app will allow the investment team to make decisions, regardless of their location, while providing the operations team a real-time view into the trading activity. We believe that the unification of these workflows across the teams into one consolidated framework provides this client with a platform to enable collaboration and scale their internally managed assets. In particular, Infusion improves the transition process to T plus one settlement and automates regulatory compliance oversight. We have stated throughout the year, we have been pushing hard to win more institutional asset managers, and our team has been delivering great execution of this strategy. Today, I'm excited to announce that Infusion signs strategic global advisors, SGA, as a client. SGA is a Newport Beach, California-based, women-owned institutional asset management firm with around $3 billion in AUM and AUA. SGA employs a bottom-up quantitative investment process across several loan-only equity strategies. SGA selected Infusion as their team was looking for a new technology partner to help them drive operational efficiencies across the front office that could scale with them into the future. SGA will utilize Infusion's OEMS broadly, including portfolio workbench for cash flow rebalancing, pre-trade compliance, systematic APIs, as well as newly released cash letter reporting. This is a very exciting win as we continue to build momentum in the institutional asset management space. SGA chose to leave their long-term technology provider because of Infusion's modern test native technology architecture, commitment to partnership, and more predictable total cost of ownership. Turning to Asia Pacific, revenue grew 10% year over year, which compares to 14% growth last year and 13% growth in Q1 24. As you recall, last quarter we called out some geopolitical and macroeconomic headwinds in APAC. Despite these regional headwinds persisting, we maintain our growth trajectory by expanding market share and gaining more traction with large traditional asset management firms, both standalone and captive. For example, we're very excited to announce that one of the largest banks in China became an Infusion client in Q2 2024. This client is an asset management division of one of the top 10 banks by total assets in China, top 20 in Asia, and top 30 globally. This partnership represents a proof point that the Infusion platform can serve clients beyond typical asset managers and hedge funds. The client will initially focus on fixed income and will eventually expand to other asset classes on their platform. This bank has undergone a very rigorous evaluation of providers and has selected Infusion as the required true front-to-back solution that will provide a lower total cost of ownership versus in-house and third-party solutions. Infusion was able to complete phase one of their requirements within three weeks' time, including integration with an external system, demonstrating the agility, equality of our onboarding process. As part of our expansion at APEC this quarter, I am pleased to share another milestone for Infusion. We won our first client in New Zealand, a global equity investment management firm with close to $1 billion under management, which evaluated Infusion for almost two years, and after a very thorough due diligence process, decided to onboard Infusion and stop using one of our largest competitors. This win is a reflection of our continued effort to expand our APAC book of business and make it less reliant on Hong Kong in light of the macro headwinds referenced earlier this year. I'm also happy to note that several recent wins in APAC have allowed us to further diversify and improve our client base, as two-thirds of the wins in APAC in Q2 2024 were outside of the hedge fund segment. We diversified our overall portfolio mix in APEC significantly over the past several quarters. While alternative asset managers represented 81% of our APEC portfolio at the year end 2023, this now accounts for only 45% of our client base at the end of Q2 2024. Turning towards EMEA, Revenue grew 28% year-over-year in Q2 2024, as we continue to expand our business in the region, significantly above average trends and above our internal historical trends. Our EMEA team maintains this strong momentum, which results in expanding the client base, which in turn will drive greater brand awareness and upsell opportunities, as well as a more balanced global growth profile. It is important to note that our EMEA business growth mix becomes increasingly diversified geographically as we have deliberately expanded our book of business to make it less UK-centric and capture the expanding opportunity set in the continental Europe, Middle East, and Africa. Europe remains a very diverse, yet opportunistic market as reflected by our strong results over the past few quarters. We specifically called out Scandinavia last quarter for continued strength, and we are now seeing success in Switzerland for two quarters in a row. I am pleased to share our continued expansion in Switzerland this quarter. 2x Ideas is among the latest Swiss investment managers to partner with Infusion and enhance their investment operations. 2x Ideas is a Swiss-based independent, partner-owned investment firm focused on liquid mid-cap stocks with $1.2 billion AUM. Infusion has been selected as the primary technology and services provider for 2x Ideas to help grow and scale their loan-only equity business while taking advantage of Infusion's highly experienced managed services team to help with their middle and back office operations. Let me turn to Africa as another proof point of our ability to expand our EMEA footprint outside of the UK and strengthen our global franchise. AG Capital is among the latest South African investment managers to partner with Infusion and enhance their investment operations. AG Capital provides intermediary financial services to institutions, funds, and professional investors. They offer trading and execution solutions, hedge funds, and hedge fund incubation services, as well as prime services. Infusion has been selected to run AG Capital's hedge fund business, which includes funds across local and domestic, direct and alternative investments, with strategies across launcher equity, fixed income, and global macro. Furthermore, Infusion has enhanced our partnership with Apex, the largest alternative fund administrator in the country, easing a major pain point for some managers transitioning from other platforms. Overall, we view the region as a promising tactical opportunity. At this time, I'd like to have Neil Pawar, our COO, make a few comments on product and partnerships.

Thank you, Oleg. As many of you know from Investor Day, my focus since joining Infusion has been to execute on our upmarket strategy. We believe we will succeed by addressing the full investment process needs of our clients, which includes expanding functionality to allow Infusion to become more deeply relied upon and providing clients with the last upgrade they will ever need. As you may have seen, we issued a product announcement on August 2nd that highlighted the latest portfolio management functionalities released within our portfolio workbench tool. The newest version adds support for rebalancing across multiple models, seamless integration with portfolio optimizers, and innovative mobile functionality, giving PMs the ability to easily manage performance and risk against benchmarks and model portfolios from a single screen on any device. Our mobile offering is gaining popularity with our clients, and we are continuously enhancing its capabilities. This portfolio workbench release reinforces Infusion's commitment to innovation and user-centric design, enhancing PM's decision-making processes to achieve better performance. The new features to Portfolio Workbench include several new enhancements and use cases around how PMs rebalance portfolios across multiple models, as well as optimized decision-making and advanced functionalities. We're very excited to provide these highly requested features to all our clients, including both alternative and traditional asset managers. As a reminder, If you're a client, you know that every week Infusion releases its SaaS software to all clients. In the second quarter of 2024, we released a total of 267 software enhancements, including portfolio workbench enhancements, expanded functionality for fixed income rebalancing, an innovative cash ladder report, and much, much more. The beauty of the Infusion Cash Ladder is that it is fully integrated into our front-to-back platform and synthesizes on-hand cash balances, the impact of unsettled trades, upcoming corporate actions and asset servicing, forward subscriptions and redemptions, and more importantly, models the impact of unexecuted orders sitting in the OEMS. Altogether, this is an example of better decision analytics to help our clients make better portfolio construction decisions. And the cash ladder functionality was requested by clients and prospects, particularly in the institutional asset management space. Keep in mind that all our clients benefit from these enhancements simultaneously, ensuring everyone is constantly running the latest version of our platform. Our multi-tenanted SaaS model is based on one investment book of records, and it's a competitive edge that cannot be understated. As part of our upmarket strategy, we are investing in our software and services platform to improve service delivery and have made several key hires year to date. Developing our enterprise support model allows us to support a larger institutional client base and improve the capabilities we deliver to our clients. We have several initiatives completed and underway to enhance the client model, optimizing workflows by relentlessly focusing on lowering the number of clicks, manual steps, and interactions with Infusion's team to perform common functions. This initiative should empower our customers and our employees to spend their time on higher value tasks. Our culture of innovation has been a talent magnet for us, as it allows Infusion to be an attractive destination for world-class talent. We have recently added two experienced hires to our team, Chris Durhan and Daniel Gastel. Chris joins us as our Chief Product Officer, having most recently worked at Axiom of SimCorp and previously worked at Barclays, Bloomberg, and BlackRock. Daniel joins as our Head of Transformation, also from BlackRock. I'd now like to hand it back to Oleg to discuss market dynamics and strategy.