Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 09, 2023 | Jun. 30, 2022 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 001-40949 | ||
Entity Registrant Name | ENFUSION, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 87-1268462 | ||
Entity Address State Or Province | IL | ||
Entity Address, Address Line One | 125 South Clark Street | ||
Entity Address, Address Line Two | Suite 750 | ||
Entity Address, City or Town | Chicago | ||
Entity Address, Postal Zip Code | 60603 | ||
City Area Code | 312 | ||
Local Phone Number | 253-9800 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Interactive Data Current | Yes | ||
Entity Public Float | $ 258.1 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Title of 12(b) Security | Class A common stock, par value $0.001 per share | ||
Trading Symbol | ENFN | ||
Security Exchange Name | NYSE | ||
Entity Central Index Key | 0001868912 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Firm ID | 42 | ||
Auditor Location | Chicago, Illinois | ||
Common Stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 115,272,269 | ||
Common Class A | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 73,073,502 | ||
Common Class B | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 42,198,767 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 62,545 | $ 64,365 |
Accounts receivable, net | 25,855 | 18,223 |
Prepaid expenses | 6,105 | 6,030 |
Other current assets | 2,303 | 1,060 |
Total current assets | 96,808 | 89,678 |
Property and equipment, net | 15,759 | 13,051 |
Right-of-use assets, net | 6,732 | |
Other assets | 4,484 | 3,356 |
Total assets | 123,783 | 106,085 |
Current liabilities: | ||
Accounts payable | 1,685 | 2,528 |
Accrued expenses and other current liabilities | 11,665 | 5,578 |
Current portion of lease liabilities | 4,030 | |
Total current liabilities | 17,380 | 8,106 |
Lease liabilities, net of current portion | 2,959 | |
Other liabilities | 538 | |
Total liabilities | 20,339 | 8,644 |
Stockholders' Equity: | ||
Additional paid-in capital | 244,260 | 226,717 |
Accumulated deficit | (178,863) | (171,209) |
Accumulated other comprehensive loss | (504) | (325) |
Total stockholders' equity attributable to Enfusion, Inc. | 65,007 | 55,296 |
Non-controlling interests | 38,437 | 42,145 |
Total stockholders' equity | 103,444 | 97,441 |
Total liabilities and stockholders' equity | 123,783 | 106,085 |
Common Class A | ||
Stockholders' Equity: | ||
Common stock | 71 | 66 |
Common Class B | ||
Stockholders' Equity: | ||
Common stock | $ 43 | $ 47 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Common Class A | ||
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 70,859,711 | 65,583,289 |
Common stock, shares outstanding | 70,859,711 | 65,583,289 |
Common Class B | ||
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 43,198,767 | 47,470,972 |
Common stock, shares outstanding | 43,198,767 | 47,470,972 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
REVENUES: | |||
Total revenues | $ 150,349 | $ 111,700 | $ 79,565 |
COST OF REVENUES: | |||
Total cost of revenues | 47,100 | 31,845 | 21,358 |
Gross profit | 103,249 | 79,855 | 58,207 |
OPERATING EXPENSES: | |||
General and administrative | 68,764 | 150,614 | 35,888 |
Sales and marketing | 29,286 | 51,725 | 9,927 |
Technology and development | 17,163 | 153,400 | 6,318 |
Total operating expenses | 115,213 | 355,739 | 52,133 |
Income (loss) from operations | (11,964) | (275,884) | 6,074 |
NON-OPERATING (EXPENSE) INCOME: | |||
Interest income (expense) net | 413 | (4,594) | (1,662) |
Other (expense) income | (638) | (1,185) | 82 |
Total non-operating expense | (225) | (5,779) | (1,580) |
Income (loss) before income taxes | (12,189) | (281,663) | 4,494 |
Income taxes | 1,074 | 579 | 433 |
Net income (loss) | (13,263) | (282,242) | 4,061 |
Net income (loss) attributable to non-controlling interests | (5,609) | (123,925) | |
Net income (loss) attributable to Enfusion, Inc. | $ (7,654) | $ (158,317) | 4,061 |
Loss per Class A common share attributable to Enfusion, Inc.: | |||
Loss per Class A common share attributable to Enfusion, Inc., Basic | $ (0.10) | $ (2.26) | |
Loss per Class A common share attributable to Enfusion, Inc., Diluted | $ (0.10) | $ (2.26) | |
Weighted Average number of Class A common shares outstanding: | |||
Weighted Average number of Class A common shares outstanding, Basic | 85,393 | 83,045 | |
Weighted Average number of Class A common shares outstanding, Diluted | 85,393 | 83,045 | |
Platform subscriptions | |||
REVENUES: | |||
Total revenues | $ 138,868 | $ 103,259 | 73,550 |
COST OF REVENUES: | |||
Total cost of revenues | 40,017 | 27,195 | 18,015 |
Managed services | |||
REVENUES: | |||
Total revenues | 9,821 | 7,119 | 4,436 |
COST OF REVENUES: | |||
Total cost of revenues | 6,692 | 4,425 | 2,512 |
Other | |||
REVENUES: | |||
Total revenues | 1,660 | 1,322 | 1,579 |
COST OF REVENUES: | |||
Total cost of revenues | $ 391 | $ 225 | $ 831 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME | |||
Net income (loss) | $ (13,263) | $ (282,242) | $ 4,061 |
Other comprehensive income (loss), net of income tax: | |||
Foreign currency translation (loss) | (327) | (90) | (116) |
Total other comprehensive income (loss) | (13,590) | (282,332) | 3,945 |
Comprehensive income (loss) attributable to non-controlling interests | (5,757) | (123,902) | |
Total comprehensive income (loss) attributable to Enfusion, Inc. | $ (7,833) | $ (158,430) | $ 3,945 |
Consolidated Statements of Pref
Consolidated Statements of Preferred Units, Stockholders' Equity and Members' Deficit - USD ($) $ in Thousands | Preferred Units Class C-1 Units | Preferred Units Class C-2 Units | Preferred Units Class D Units | Preferred Units | Members' Equity | Common Stock Common Class A | Common Stock Common Class B | Additional Paid-in Capital | Accumulated Deficit/Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Total |
Balance at Beginning of period at Dec. 31, 2019 | $ (96) | $ (117,879) | ||||||||||
Balance at Beginning of period at Dec. 31, 2019 | $ (117,783) | |||||||||||
Balance at Beginning of period (in shares) at Dec. 31, 2019 | 54.496 | |||||||||||
Members' Equity (Deficit) | ||||||||||||
Net income (loss) | $ 2,201 | 2,201 | ||||||||||
Redemption of Class A Units | $ (76,634) | (76,634) | ||||||||||
Redemption of Class A Units (in shares) | (6.528) | |||||||||||
Other comprehensive loss | (116) | (116) | ||||||||||
Distributions - loan proceeds | $ (38,607) | (38,607) | ||||||||||
Distributions to members | (2,524) | (2,524) | ||||||||||
Balance at end of period at Dec. 31, 2020 | $ (233,347) | |||||||||||
Balance at end of period at Dec. 31, 2020 | (212) | (233,559) | ||||||||||
Balance at end of period (in shares) at Dec. 31, 2020 | 47.968 | |||||||||||
Balance at Beginning of period at Dec. 31, 2019 | $ 105,073 | |||||||||||
Balance at Beginning of period (in shares) at Dec. 31, 2019 | 45.810 | |||||||||||
Preferred Units | ||||||||||||
Repurchase of units in a non-cash exchange | $ (45,975) | $ (10,538) | ||||||||||
Repurchase of units in a non-cash exchange (in shares) | (3.916) | (0.898) | ||||||||||
Issuance of Class D Units in a non-cash exchange, net of issuance costs | $ 56,376 | |||||||||||
Issuance of Class D Units in a non-cash exchange, net of issuance costs (in Shares) | 4.814 | |||||||||||
Issuance of class units net of issuance cost | $ 93,261 | |||||||||||
Issuance of class units net of issuance cost (in shares) | 7.964 | |||||||||||
Net income (loss) | $ 1,860 | |||||||||||
Distributions - loan proceeds | (32,454) | |||||||||||
Distributions to members | (2,088) | |||||||||||
Balance at end of period at Dec. 31, 2020 | $ 165,515 | |||||||||||
Balance at end of period (in shares) at Dec. 31, 2020 | 53.774 | |||||||||||
Members' Equity (Deficit) | ||||||||||||
Net income (loss) | $ 6,078 | 6,078 | ||||||||||
Distributions to members | (1,476) | (1,476) | ||||||||||
Foreign currency translation | (145) | (145) | ||||||||||
Balance at end of period at Oct. 20, 2021 | (228,745) | |||||||||||
Balance at end of period at Oct. 20, 2021 | (357) | (229,102) | ||||||||||
Balance at end of period (in shares) at Oct. 20, 2021 | 47.968 | |||||||||||
Preferred Units | ||||||||||||
Net income (loss) | $ 6,814 | |||||||||||
Distributions to members | (1,807) | |||||||||||
Balance at end of period at Oct. 20, 2021 | $ 170,522 | |||||||||||
Balance at end of period (in shares) at Oct. 20, 2021 | 53.774 | |||||||||||
Members' Equity (Deficit) | ||||||||||||
Net income (loss) | $ (171,209) | $ (123,925) | (295,134) | |||||||||
Effect of the Reorganization Transactions | $ 228,745 | $ 49 | $ 53 | $ (27,941) | (30,384) | 170,522 | ||||||
Effect of the Reorganization Transactions (in shares) | (47.968) | 48,744,182 | 52,997,579 | |||||||||
Issuance of Class A common stock in the IPO, net of issuance costs | $ 17 | 143,628 | 116,065 | 259,710 | ||||||||
Issuance of Class A common stock in the IPO, net of issuance costs (in shares) | 16,839,107 | |||||||||||
Purchase of common units from Pre-IPO common unit holders and retirement of Class B common shares | $ (6) | (50,956) | (36,884) | (87,846) | ||||||||
Purchase of common units from Pre-IPO common unit holders and retirement of Class B common shares (in Shares) | (5,526,607) | |||||||||||
Stock-based compensation | 161,986 | 117,250 | 279,236 | |||||||||
Foreign currency translation | 32 | 23 | 55 | |||||||||
Balance at end of period at Dec. 31, 2021 | $ 66 | $ 47 | 226,717 | (171,209) | (325) | 42,145 | 97,441 | |||||
Balance at end of period (in shares) at Dec. 31, 2021 | 65,583,289 | 47,470,972 | ||||||||||
Preferred Units | ||||||||||||
Effect of the Reorganization Transactions | $ (170,522) | |||||||||||
Effect of the Reorganization Transactions (Shares) | (53.774) | |||||||||||
Net income (loss) | (7,654) | (5,609) | (13,263) | |||||||||
Stock-based compensation | 15,043 | 10,550 | 25,593 | |||||||||
Share exchange | $ 4 | $ (4) | 5,310 | (5,310) | ||||||||
Share exchange (in shares) | 4,272,205 | (4,272,205) | ||||||||||
Issuance of IPO vested Class A common stock and vested RSUs | $ 2 | (2) | ||||||||||
Issuance IPO vested Class A common stock and vested RSUs (in shares) | 1,593,602 | |||||||||||
Tax withholdings related to net share settlements of stock-based compensation awards | $ (1) | (4,767) | (3,191) | (7,959) | ||||||||
Tax withholdings related to net share settlements of stock-based compensation awards (in shares) | (589,385) | |||||||||||
Foreign currency translation | (179) | (148) | (327) | |||||||||
Other | 1,959 | 1,959 | ||||||||||
Balance at end of period at Dec. 31, 2022 | $ 71 | $ 43 | $ 244,260 | $ (178,863) | $ (504) | $ 38,437 | $ 103,444 | |||||
Balance at end of period (in shares) at Dec. 31, 2022 | 70,859,711 | 43,198,767 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net (loss) income | $ (13,263) | $ (282,242) | $ 4,061 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||
Non-cash operating lease expense | 257 | ||
Depreciation and amortization | 6,344 | 3,975 | 2,291 |
Provision for bad debts | 1,399 | 1,450 | 1,010 |
Amortization of debt-related costs | 26 | 222 | 60 |
Stock-based compensation expense | 24,993 | 289,803 | |
Loss on extinguishment of debt | 1,215 | ||
Net foreign currency losses | 1 | ||
Change in operating assets and liabilities: | |||
Accounts receivable | (9,031) | (7,493) | (4,216) |
Prepaid expenses and other current assets | (1,767) | (6,477) | (1,776) |
Accounts payable | (843) | 2,044 | 41 |
Accrued expenses and other liabilities | 6,041 | (2,815) | 193 |
Net cash provided by (used in) operating activities | 14,156 | (318) | 1,665 |
Cash flows from investing activities: | |||
Purchases of property and equipment | (7,931) | (8,014) | (5,068) |
Net cash used in investing activities | (7,931) | (8,014) | (5,068) |
Cash flows from financing activities: | |||
Proceeds from term loan | 71,211 | ||
Issuance of Class D Units, net of issuance costs | 93,261 | ||
Proceeds from draw on revolving debt facility | 1,800 | ||
Redemption of Class A Units | (76,634) | ||
Distribution of loan proceeds to Members | (71,061) | ||
Repayment of term loan | (100,000) | (300) | |
Repayment of draw on revolving debt facility | (1,800) | ||
Payment of Member distributions | (3,283) | (4,612) | |
Payment of equity issuance costs on non-cash issuance of Class D Units | (137) | ||
Payment of debt issuance and debt facility costs | (169) | ||
Issuance of Class A common stock in the IPO, net of issuance costs | 260,545 | ||
Purchases of common units from Pre-IPO common unit holders | (87,846) | ||
Payment of withholding taxes on stock-based compensation | (7,959) | (10,567) | |
Net cash (used in) provided by financing activities | (7,959) | 58,849 | 11,559 |
Effect of exchange rate changes on cash | (86) | (90) | (116) |
Net (decrease) increase in cash and cash equivalents | (1,820) | 50,427 | 8,040 |
Cash and cash equivalents, beginning of period | 64,365 | 13,938 | 5,898 |
Cash and cash equivalents, end of period | 62,545 | 64,365 | 13,938 |
Supplemental disclosure of cash flow information: | |||
Interest paid in cash | 4,813 | 1,492 | |
Income taxes paid in cash | 1,582 | 407 | 261 |
Supplemental disclosure of non-cash investing activities: | |||
Capitalized stock-based compensation expense | 600 | ||
Supplemental disclosure of non-cash financing activities: | |||
Issuance of Class D Units in a non-cash exchange for Class C-1 and C-2 Units | $ 56,376 | ||
Effect of the Reorganization Transactions | 58,223 | ||
IPO costs included in Accrued expenses and other liabilities | $ 835 | ||
Other | $ 1,959 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Description of Business | |
Organization and Description of Business | Note 1 Organization and Description of Business Enfusion is a leading provider of cloud-based order and execution management, portfolio management and risk systems. Enfusion’s clients include large global hedge fund managers, institutional asset managers, family offices and other institutional investors. Enfusion provides its clients with innovative real-time performance, risk calculations, and accounting capabilities for some of the most sophisticated financial products. The Company is headquartered in Chicago, Illinois and has offices in Chicago, New York, London, Dublin, Hong Kong, Singapore, São Paulo, Mumbai, Bengaluru, and Sydney. Enfusion, Inc. was incorporated in Delaware on June 11, 2021 for the purpose of facilitating an initial public offering, which was completed on October 25, 2021, and other related transactions in order to carry on the business of Enfusion Ltd. LLC. Enfusion, Inc. is a holding company and, through its control over the managing member of Enfusion Ltd. LLC, operates and controls Enfusion Ltd. LLC. Enfusion, Inc.’s principal asset consists of Common Units. Enfusion, Inc. has three wholly-owned subsidiaries: Enfusion US 1, Inc., Enfusion US 2, Inc. and Enfusion US 3, Inc.; as well as a controlling financial interest in Enfusion Ltd. LLC and its majority-owned subsidiary, Enfusion Softech India Private Limited, as well as the wholly-owned subsidiaries of Enfusion Ltd. LLC: Enfusion Systems UK Ltd, Enfusion HK Limited, Enfusion Software Limited, Enfusion (Singapore) Pte. Ltd., Enfusion do Brasil Tecnologia da Informacao Ltda, Enfusion (Australia) Pty. Ltd. and Enfusion (Shanghai) Co., Ltd. Enfusion, Inc., through its control over the managing member of Enfusion Ltd. LLC, manages and operates Enfusion Ltd. LLC’s business and controls its strategic decisions and day-to-day operations. As such, Enfusion, Inc. consolidates the financial results of Enfusion Ltd. LLC, and a portion of Enfusion, Inc.’s net income is allocated to non-controlling interests to reflect the entitlement to a portion of Enfusion Ltd. LLC’s net income by the other common unit holders of Enfusion, Ltd. LLC. As of December 31, 2022, Enfusion, Inc. owned approximately 62% of Enfusion Ltd. LLC. |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2022 | |
Basis of Presentation | |
Basis of Presentation | Note 2 Basis of Presentation Principles of Consolidation These statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany balances and transactions are eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates on historical experience and various other assumptions believed to be reasonable. These estimates and assumptions include, but are not limited to, judgments affecting the measurement of the payable to related parties pursuant to the Tax Receivable Agreement, amortization periods, certain assumptions used in the valuation of stock-based compensation, assessment of the allowance for doubtful accounts, and accounting for income taxes and assessment of valuation allowances. Actual results could differ from those estimates. The Company’s results can also be affected by economic, political, legislative, regulatory and legal actions, including but not limited to health epidemics and pandemics and the resulting economic impact. Economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, and government fiscal policies can have a significant effect on operations. While the Company maintains reserves for anticipated liabilities and carries various levels of insurance, the Company could be affected by civil, criminal, regulatory or administrative actions, claims or proceedings. Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the CODM. While the Company operates in multiple countries, the Company’s business operates as one operating segment because most of the Company’s service offerings are delivered and supported on a global basis, the Company’s service offerings are deployed in a nearly identical way, and the Company’s CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 3 Summary of Significant Accounting Policies The significant accounting policies of the Company and its subsidiaries are summarized below. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an initial maturity date of three months or less to be cash equivalents. Funds held as investments in money market funds are included within cash and cash equivalents. As of December 31, 2022 and 2021, respectively, the Company had approximately $50 million and $0 invested in money market accounts. Accounts Receivable Accounts receivable includes billed and unbilled receivables, net of allowance for doubtful accounts. Billed accounts receivable are initially recorded upon the invoicing to clients with payment due within 30 days. Unbilled accounts receivable represent revenue recognized on contracts for which the timing of invoicing to clients differs from the timing of revenue recognition. As of December 31, 2022 and 2021, unbilled accounts receivable was $2 million and $1.3 million, respectively. The unbilled accounts receivable balance is due within one year. The Company maintains an allowance for doubtful accounts at an amount estimated to be sufficient to provide adequate protection against losses resulting from extending credit to its clients. The Company regularly determines the adequacy of the allowance based on its assessment of the collectability of the accounts receivable by considering the age of each outstanding invoice, the collection history of each client, and an evaluation of current expected risk of credit loss of any clients with known financial difficulties. The Company assesses collectability by reviewing accounts receivable on an aggregated basis where similar characteristics exist and on an individual basis for specific clients with historical collectability issues or known financial difficulties. Increases to the allowance are recognized as a charge to doubtful accounts included in General and administrative expenses in the consolidated statement of operations. Accounts receivable deemed uncollectible are charged against the allowance for doubtful accounts when identified. The Company's allowances are as follows (in thousands): Balance at December 31, 2020 $ 598 Charges to the provision 1,450 Accounts written off, net of recoveries (1,257) Balance at December 31, 2021 791 Charges to the provision 1,158 Accounts written off, net of recoveries (724) Balance at December 31, 2022 $ 1,225 Property and Equipment, Net Property and equipment is stated at historical cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the individual assets, except for leasehold improvements, which are depreciated over the shorter of the estimated useful life of the asset or the underlying lease term. Also included in property and equipment are capitalized costs of software developed for internal use. The useful lives of property and equipment are as follows: Property and Equipment Asset Type Estimated Useful Lives Software development costs 3 years Computers and equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of estimated economic useful life or remaining lease term Maintenance and repairs are expensed as incurred. Upon retirement or disposition, the cost and related accumulated depreciation or amortization is removed from the accounts and any gain or loss is included in operating income. Software Development Costs Capitalized software costs consist of costs to purchase software to be used within the Company and costs to develop software internally. Capitalization of purchased or internally developed software occurs during the application development stage and consists of costs associated with design, coding and testing. Amortization of software development costs is calculated using the straight-line method over the estimated useful lives of the software, which is generally three years. Capitalized software development costs are recorded within property and equipment, net of accumulated amortization, within the consolidated balance sheets. Amortization expense is included in Cost of revenues – platform subscription services in the consolidated statements of operations. Impairment of Long-Lived Assets The Company evaluates the carrying value of long-lived assets in accordance with the accounting standard for impairment or disposal of long-lived assets, which requires recognition of impairment of long-lived assets in the event that circumstances indicate impairment may have occurred and when the net carrying value of such assets exceeds the future undiscounted cash flows attributed to such assets. The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. No impairment of long-lived assets occurred during the years ended December 31, 2022, 2021 and 2020. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. Accounting standards establish a hierarchal framework, which prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on the best information available. Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories: Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 Inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and Level 3 Inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company has investments in money market accounts, which are included in cash and cash equivalents on the condensed consolidated balance sheets. Fair value inputs for these investments are considered Level 1 measurements within the Fair Value Hierarchy, as money market account fair values are known and observable through daily published floating net asset values. The carrying amount of the Company’s other financial instruments, including accounts receivable and accounts payable, approximate fair value due to their short-term nature. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification 606 (“ASC 606”), Revenue from Contracts with Customers. The Company derives its revenues primarily from fees for platform subscription and managed services provided to clients. Revenues are recognized when control of these services are transferred to the Company’s clients in an amount that reflects the consideration the Company expects to be entitled to in exchange for these services. Revenues are recognized net of taxes that will be remitted to governmental agencies applicable to service contracts. Historically, platform subscription contracts have typically had a one-year term and were cancellable with 30 days’ notice. Beginning in the first quarter of 2021, our default platform subscription contract has had a multi-year term and does not allow termination for convenience, though each contract has and can be negotiated with varying term lengths, with or without a termination for convenience clause. Clients are invoiced each month for the services provided in accordance with the stated terms of their service contracts. Fees for partial term service contracts are prorated, as applicable. Payment of fees are due from clients within 30 days of the invoice date. The Company does not provide financing to clients. The Company determines revenue recognition through the following five-step framework: ● Identification of the contract, or contracts, with a client; ● Identification of the performance obligation in the contract; ● Determination of transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, performance obligations are satisfied. Platform subscription revenues Platform subscription revenues consist primarily of fees for providing clients with access to the Company’s cloud-based platform. Platform subscription clients do not have the right to take possession of the platform’s software, and do not have any general return rights. Platform subscription revenues are recognized ratably over the period of contractually enforceable rights and obligations, beginning on the date that the client gains access to the platform. Installment payments are invoiced at the end of each calendar month during the subscription term. Managed services revenues Managed services revenues primarily consist of client-selected middle and back-office services provided on our clients’ behalf using the Company’s platform. Revenue is recognized monthly as the managed services are performed, with invoicing occurring at the end of the calendar month. Other revenues Other revenues consist of non-subscription-based revenues, such as data conversion and services that integrate a client’s historical data into our solution. The Company recognizes revenues as these services are performed with invoicing occurring at the end of each month. Service contracts with multiple performance obligations Our service contracts with clients can include multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The Company has determined that implementation services are not distinct from the ongoing platform subscription services due to the highly specialized knowledge required to execute on our solution. Such services are recognized with the platform subscription services revenue over time. Remaining performance obligations For the Company’s contracts that exceed one year and do not include a termination for convenience clause, the amount of the transaction price allocated to remaining performance obligations as of December 31, 2022 and December 31, 2021 was $31.1 million and $23.4 million, respectively. The Company expects to recognize this amount over the next one Disaggregation of revenue The Company’s total revenues by geographic region, based on the client’s physical location is presented in the following table: Year Ended December 31, 2022 2021 2020 Geographic Region Amount Percent Amount Percent Amount Percent Americas* $ 95,122 63.3 % $ 72,994 65.3 % $ 54,057 67.9 % Europe, Middle East and Africa (EMEA) 20,051 13.3 % 13,491 12.1 % 8,748 11.0 % Asia Pacific (APAC) 35,176 23.4 % 25,215 22.6 % 16,760 21.1 % Total revenues $ 150,349 100.0 % $ 111,700 100.0 % $ 79,565 100.0 % * Includes revenues in the United States (country of domicile) of $92.8 million, $71.9 million and $53.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. Deferred commissions The Company pays sales commissions for initial contracts and expansions of existing contracts with customers. These commissions earned by certain of our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions paid where the amortization period is one year or less are expensed as incurred. All other sales commissions are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be three years. We determined the period of benefit by taking into consideration our standard contract terms and conditions, rate of technological change, and other factors. Amortization expense is included in sales and marketing expense in the accompanying consolidated statements of operations. The balance of deferred commissions as of December 31, 2022 and December 31, 2021 was $2.8 million and $1.7 million, respectively, and is included in Other assets and Other current assets on the Consolidated Balance Sheets. The amount of amortization expense recognized during the years ended December 31, 2022 and 2021 was $845 thousand and $228 thousand, respectively. Cost of revenues Cost of revenues consists primarily of personnel-related costs associated with the delivery of the Company’s software and services, including base salaries, bonuses, employee benefits and related costs. Additionally, cost of revenues includes amortization of capitalized software development costs, allocated overhead and certain direct data and hosting costs. Technology and Development Technology and development expenses consist primarily of employee-related expenses for the Company’s software development. Additional expenses include costs related to the development, maintenance, quality assurance and testing of new technologies, and ongoing refinement of the Company’s existing solutions. Technology and development expenses, other than internal-use software costs qualifying for capitalization, including costs associated with preliminary project stage activities, training, maintenance, and all other post-implementation stage activities are expensed as incurred. Advertising Costs The Company expenses advertising costs as incurred. Advertising costs incurred were approximately $1.5 million, $1.2 million and $1.3 million during the years ended December 31, 2022, 2021 and 2020, respectively. Equity-Based Compensation Prior to the IPO, the Company had a Change in Control Bonus Plan (the “Pre-IPO Plan”) for certain members of the Company’s management (“Plan Participants”) that provided for the payment of a cash bonus based on a specified number of Management Incentive Award Units (“Award Units”) in the event of a change in control (“CiC”) transaction (i.e., a liquidity event), as defined by the Company’s Operating Agreement. As of December 31, 2020, the Company did not record a liability for payments under the Pre-IPO Plan as the timing of any future CiC transaction or amount of Award Units to be paid to Plan Participants was not probable or estimable. In October 2021, the Company's board of managers elected to terminate the Change in Control Bonus Plan (and all Award Units issued thereunder) upon effectiveness of the registration statement for the IPO. In connection with the IPO, we adopted the 2021 Stock Option and Incentive Plan, or 2021 Plan. The 2021 Plan allows our compensation committee to make incentive awards to our officers, employees, directors and service providers. We also adopted the 2021 Employee Stock Purchase Plan, or 2021 ESPP. The Company measures stock compensation expense for its share-based payment awards at fair value on the grant date. The fair value of share-based payment awards is determined using the fair market value of the underlying Class A common stock on the date of grant. The Company applied a discount for lack of marketability, estimated using the Finnerty Model, to the fair value of awards with post-vesting restrictions, which includes the vested shares of Class A common stock and the contingently issuable shares (the “Contingently Issuable Shares”) of Class A common stock issued on the IPO effectiveness date. For RSUs for which vesting is subject to the achievement of a market capitalization hurdle, the Company determines the fair value of these RSUs using a Monte Carlo simulation. The Monte Carlo simulations used to estimate the fair value include subjective assumptions, including the fair value of the underlying common stock, expected volatility of the price of the Company’s common stock, risk-free interest rate, expected dividend yield of common stock, and the Company’s cost of equity capital. We record forfeitures as they occur. The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the consolidated statement of operations based on the estimated fair value of those awards on the grant date or reporting date, if required to be remeasured, and amortized on a straight-line basis over the requisite service period. Loss per share Loss per share is computed by dividing net loss attributable to the Company by the number of weighted average shares of Class A common stock outstanding during the period. Diluted loss per share is computed by dividing net loss attributable to the Company by the number of weighted-average shares of Class A common stock outstanding during the period after adjusting for the impact of securities that would have a dilutive effect on loss per share. See Note 11, Loss Per Class A Common Share All earnings (loss) for the period prior to the IPO were entirely allocable to Enfusion LLC, Ltd. and its historic non-controlling interest. Due to the impact of the Reorganization Transactions, the Company’s capital structure for the pre- and post-IPO periods is not comparable. As a result, the presentation of earnings (loss) per share for the periods prior to the IPO and Organizational Transactions is not meaningful and only loss per share for the period subsequent to the IPO and Organizational Transactions is presented herein. Non-controlling interest Non-controlling interests represent the portion of profit or loss, net assets and comprehensive income of our consolidated subsidiaries that is not allocable to the Company based on our percentage of ownership of such entities. Income Taxes The Company accounts for income taxes under the asset and liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and deferred tax liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that it is believed that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. A valuation allowance is provided if it is determined that it is more likely than not that the deferred tax asset will not be realized. The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination. Measurement (step two) determines the amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more likely-than-not threshold of being sustained. The Company records interest (and penalties where applicable), net of any applicable related income tax benefit, on potential income tax contingencies as a component of Income tax expense in the Consolidated Statements of Operations. Tax Receivable Agreement (TRA) The Company accounts for amounts payable under the TRA in accordance with ASC 450, Contingencies Concentration of Risk Deposits with Financial Institutions The Company has concentrated its credit risk for cash by maintaining deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the Federal Deposit Insurance Corporation (“FDIC”). The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to cash. Accounts Receivable As of December 31, 2022 and 2021, no individual client represented more than 10% of accounts receivable. For the years ended December 31, 2022, 2021 and 2020, no individual client represented more than 10% of the Company’s total revenues. Translation of Foreign Currencies Foreign currency assets and liabilities of the Company’s international subsidiaries are translated using the exchange rates in effect at the balance sheet date. Results from operations are translated using the average exchange rates prevailing throughout the year. The effects of exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated as part of the foreign currency translation adjustment in accumulated other comprehensive loss in the consolidated balance sheets. Foreign currency intercompany balances that remain unsettled at the end of each period are translated using the exchange rates in effect at the balance sheet date. The effects of exchange rate fluctuations on translating foreign currency intercompany assets and liabilities into U.S. dollars are recorded as other (expense) income in the Consolidated Statements of Operations. Recently Adopted Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the guidance in former ASC 840, Leases, to increase transparency and comparability among organizations by requiring recognition of right-of-use assets and lease liabilities on the balance sheet (with the exception of short-term leases) and disclosure of key information about leasing arrangements (with the exception of short-term leases). In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new Leases (Topic 842) standard. ASU 2016-02, as subsequently amended for various technical issues, was effective for private companies and emerging growth companies in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, and early adoption is permitted. The Company elected the optional transition method and adopted the new guidance on January 1, 2022 (“the adoption date”), on a modified retrospective basis, with no restatement of prior period amounts. As allowed under the new accounting standard, the Company elected to apply practical expedients to carry forward the original lease determinations, lease classifications and accounting of initial direct costs for all arrangements at the time of adoption. The Company also elected not to separate lease components from non-lease components and to exclude short-term leases from its Consolidated Balance Sheet. The Company’s adoption of the new standard resulted in the recognition of right-of-use assets of $9.1 million and liabilities of $9.5 million as of the adoption date, with no cumulative effect adjustment to equity as of the adoption date. Adoption of the new standard did not have a material impact on the Company’s Consolidated Statements of Income or Cash Flows. See Note 6 - Leases for additional information. In December 2019, the FASB issued ASU 2019-12, Income Taxes Simplifying the Accounting for Income Taxes Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses Measurement of Credit Losses on Financial Instruments |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, Net | |
Property and Equipment, Net | Note 4 Property and Equipment, Net Property and equipment, net consists of the following (in thousands): December 31, 2022 2021 Computer equipment $ 17,496 $ 14,163 Software development costs 9,406 4,866 Leasehold improvements 1,831 1,947 Furniture and fixtures 433 540 Total property and equipment, cost 29,166 21,516 Less accumulated depreciation and amortization (13,407) (8,465) Total property and equipment, net $ 15,759 $ 13,051 As of December 31, 2022 and 2021, property and equipment, net located in the United States was $13.7 million and $10.4 million, respectively. The remainder was located in our various international locations. Included in property and equipment are the capitalized costs of software developed and maintained for internal use. Software development costs capitalized during the years ended December 31, 2022 and 2021 were $4.5 million and $2.0 million, respectively. Depreciation and amortization expense related to property and equipment, excluding software development costs, was $3.3 million, $2.4 million and $1.5 million for the years ended December 31, 2022, 2021 and 2020, respectively. Amortization expense related to software development costs was $2.2 million, $1.3 million and $759 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. Estimated future amortization of capitalized software development costs are as follows (in thousands): Year ending December 31, Amount 2023 $ 2,376 2024 1,807 2025 648 Total $ 4,831 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | Note 5 Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2022 2021 Accrued compensation $ 10,268 $ 3,180 Accrued expenses and other 1,112 1,182 Accrued taxes 285 1,216 Total accrued expenses and other current liabilities $ 11,665 $ 5,578 The Company’s accrued expenses and other current liabilities consist primarily of employee incentive compensation plans. The Company accrues over the course of the year the annual discretionary bonuses earned by employees during the year but paid in the following year. Accrued compensation includes bonuses due to employees of $7.8 million and $0 as of December 31, 2022 and 2021, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | Note 6 Leases The Company adopted ASU No. 2016-02 “Leases (Topic 842)” on January 1, 2022, resulting in the recognition of right-of-use assets of $9.1 million and lease liabilities of $9.5 million. The Company enters into leases for office space and data centers. A number of the leases include one or more options to renew the lease terms or not terminate the lease. The exercise of these options is at the Company’s discretion and is therefore recognized on the balance sheet when it is reasonably certain the Company will exercise such options. As the Company’s leases typically do not contain a readily determinable implicit rate, the Company determines the present value of the lease liability using its incremental borrowing rate at the lease commencement date. All of the Company’s leases are considered operating leases. The Company had no finance leases as of and for the year ended December 31, 2022. As of December 31, 2022, the Company’s right-of use assets and liabilities for operating leases were as follows: Right-of-use asset, net $ 6,732 Current portion of lease liabilities $ 4,030 Lease liabilities, net of current portion 2,959 $ 6,989 Lease commitments as of December 31, 2022 were as follows: Year Ending December 31, Amount 2023 $ 4,244 2024 2,176 2025 882 Total lease commitments $ 7,302 Less: Interest (313) Present value of lease liabilities $ 6,989 The components of the Company’s operating lease cost for the twelve months ended December 31, 2022 were as follows: Operating lease cost 5,053 Variable lease cost 828 Total lease cost $ 5,881 Variable lease costs are comprised of costs, such as the Company’s proportionate share of actual costs for utilities, common area maintenance, property taxes and insurance, that are not included in the lease liability and are recognized in the period in which they are incurred. As of December 31, 2022, the weighted-average remaining lease term for operating leases was 1.84 years and the weighted-average discount rate for operating leases was 4.43%. December 31, 2022. Supplemental Cash Flow Information Cash paid for amounts included in the measurement of lease liabilities 5,111 Right-of-use assets obtained in exchange for lease liabilities 9,514 Future aggregate minimum rental payments under the noncancelable operating leases and service agreements as of December 31, 2021, prior to the Company’s adoption of the new lease standard, were as follows: Service Years Ending December 31, Operating Leases Agreements Total 2022 $ 4,384 $ 470 $ 4,854 2023 3,291 19 3,310 2024 2,385 — 2,385 2025 901 — 901 Total $ 10,961 $ 489 $ 11,450 Under Accounting Standards Codification 840, the previous lease standard, total expense for lease arrangements was $3.9 million and $3.7 million for the years ended December 31, 2021 and 2020, respectively, and is included in Cost of revenues and Operating expenses. Total expense related to the service agreements was $1.1 million and $841 thousand for the years ended December 31, 2021 and 2020, respectively, and is included in Cost of revenues. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 7 Commitments and Contingencies The Company records accruals for contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. A description of a contingent payment arrangement under the Company’s Tax Receivable Agreement is included in Note 13 – Related Party Transactions. No accruals for contingencies were recorded as of December 31, 2022 and December 31, 2021, respectively. |
Preferred Units, Stockholders'
Preferred Units, Stockholders' Equity and Members' Deficit | 12 Months Ended |
Dec. 31, 2022 | |
Preferred Units, Stockholders' Equity and Members' Deficit | |
Preferred Units, Stockholders' Equity and Members' Deficit | Note 8 Preferred Units, Stockholders’ Equity and Members’ Deficit Prior to the Reorganization Transactions, Enfusion Ltd. LLC was organized as a limited liability company owned by its members, each of whose membership interests consisted of an equal number of: (i) “Economic Units”, which represented a Member’s economic interest in Enfusion Ltd. LLC; and (ii) “Participation Units”, which represented a Member’s right to participate (vote) in the affairs of Enfusion Ltd. LLC. As a limited liability company, Enfusion Ltd. LLC issued more than one class of Units. The Class A Units were considered to be Members’ Equity, whereas all of the other Unit classes were considered to be Preferred Units because of provisions in the Company’s former Operating Agreement that conferred certain rights and privileges to the members owning these Units, such as voting rights, redemption rights and liquidation preferences. Holders of the Class C-1, C-2 and D Preferred Units had the option to require the Company to redeem their Units. In accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity In connection with the Reorganization Transactions, the Amended and Restated Operating Agreement of Enfusion Ltd. LLC (the “LLC Operating Agreement”) was amended and restated to, among other things, modify its capital structure by reclassifying each of the outstanding Class A Units and C-1, C-2 and D Preferred Units into a new class of LLC interests (or “Common Units”) through a stock split on a 1,000,000 to 1 basis. The number of Common Units outstanding following the Reorganization Transaction reflect the 1,000,000 to 1 stock split. Pursuant to the adoption of the LLC Operating Agreement, Enfusion US 1, Inc., a newly-formed wholly owned subsidiary of Enfusion, Inc., was appointed the sole managing member of Enfusion Ltd. LLC. Amendment and Restatement of Certificate of Incorporation The certificate of incorporation of Enfusion, Inc. provides for 1,000,000,000 authorized shares of Class A common stock, 150,000,000 authorized shares of Class B common stock and 100,000,000 shares of preferred stock. Each share of our Class A common stock is entitled to one vote per share and is not convertible into any other shares of our capital stock. Holders of shares of our Class A common stock are entitled to receive dividends when, as and if declared by our board of directors. Upon our liquidation, dissolution or winding up and after payment in full of all amounts required to be paid to creditors, and subject to the rights of the holders of one or more outstanding series of preferred stock, as applicable, having liquidation preferences, the holders of shares of our Class A common stock will be entitled to receive pro rata our remaining assets available for distribution. Each share of our Class B common stock is entitled to one vote per share and is not convertible or exchangeable for a share of Class A common stock or any other security. Holders of our Class B common stock do not have any right to receive dividends or to receive a distribution upon a liquidation, dissolution or winding up of Enfusion, Inc. Preferred Stock Our board of directors have the authority, without further action by our stockholders, to issue up to 100,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting, or the designation of, such series, any or all of which may be greater than the rights of Class A common stock. As of December 31, 2022 and 2021, the Company has not issued any shares of preferred stock nor has our board of directors established the rights and privileges related to any series of preferred stock. |
Management Incentive Plan and S
Management Incentive Plan and Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Management Incentive Plan and Stock-Based Compensation | |
Management Incentive Plan and Stock-Based Compensation | Note 9 Management Incentive Plan and Stock-Based Compensation Prior to the IPO, Enfusion Ltd. LLC had a Change in Control Bonus Plan (the “Pre-IPO Plan”) for certain members of management (“Plan Participants”) that provided for the payment of a cash bonus based on a specified number of Management Incentive Award Units (“Award Units”) in the event of a change in control (“CiC”) transaction (i.e., a liquidity event), as defined by the LLC Operating Agreement. In anticipation of the Company’s IPO, in October 2021 the Company's board of managers elected to terminate the Pre-IPO Plan (and all Award Units issued thereunder) upon effectiveness of the registration statement for the IPO (the “IPO effectiveness date”). Holders of Award Units that were still employed as of the IPO date were granted one or more of the following: ● The vested shares of Class A common stock as of IPO effectiveness date (“IPO vested Class A common stock”) that will be issued to Plan Participants prior to the second anniversary of the IPO. No future service is required to receive the IPO vested Class A common stock. Because there is no ongoing service requirement associated with these awards, the Company recognized stock compensation expense for these awards on the IPO effectiveness date. The amount of stock compensation expense recognized for these awards was $237.3 million in 2021, which is equal to the fair value of the shares of the IPO vested Class A common stock, after applying a discount for lack of marketability due to the post-vesting restriction. ● Shares of Class A common stock that vested within one year of the IPO date are referred to as Contingently Issuable Shares due to continued employment requirements. Of these shares, 7.5% was distributed in 2022. The remaining 92.5% of these shares will be issued prior to second anniversaries of the IPO effectiveness date. Stock compensation expense associated with these awards is recognized by the Company on a straight-line basis over the requisite service period for the entire award, beginning on the IPO effectiveness date. The amount of stock compensation expense recognized for these awards was $10.2 million in 2022 and $16.7 million in 2021, respectively, which is equal to the fair value of the shares of the IPO vested Class A common stock, after applying a discount for lack of marketability due to the post-vesting restriction. ● Restricted stock units (“RSUs”) granted to executive and non-executive employees that will vest ratably over a period of up to four years subject to the Plan Participant’s continued employment. Stock compensation expense associated with these awards is recognized by the Company on a straight-line basis over the requisite service period for the entire award, beginning on the IPO effectiveness date. The amount of stock compensation expense recognized for these awards was $13.2 million in 2022 and $4.5 million in 2021, respectively. ● RSU’s that will vest ratably over a period of up to four years that are subject to a market condition and the Plan Participant’s continued employment. The market condition is the achievement of certain market capitalization targets by the Company at specified measurement dates (“market capitalization hurdle”). The Company determined the fair value of these RSUs using a Monte Carlo simulation. The Company recognizes stock compensation expense on a straight-line basis over the implied service period for each tranche of the award, as if the award were in-substance multiple awards. In addition to the shares of Class A common stock and RSUs granted to employees that were Plan Participants in the Pre-IPO Plan, the Company agreed to issue 2,047,064 shares of Class A common stock to an employee in exchange for termination of a profit sharing agreement. These shares will be issued to the employee between the first and second anniversaries of the IPO effectiveness date. The fair value of these shares, after applying a discount for lack of marketability due to the post-vesting restriction, is $31.2 million. This amount was recognized as compensation expense on the IPO effectiveness date in 2021. For the vested shares of Class A common stock and the Contingently Issuable Shares of Class A common stock issued on the IPO effectiveness date, the Company applied a discount for lack of marketability, estimated using the Finnerty Model, to the fair value of awards with post-vesting restrictions. 2021 Stock Option and Incentive Plan In conjunction with the IPO, the Company established the 2021 Stock Option and Incentive Plan (the “2021 Plan”), which became effective upon the date immediately preceding the IPO effectiveness date. The Company has initially reserved 26,400,000 shares of Class A common stock for the issuance of awards under the 2021 Plan, inclusive of awards granted to Plan Participants of the Pre-IPO Plan. The 2021 Plan provides that the number of shares of Class A common stock reserved and available for issuance under the 2021 Plan will automatically increase on January 1, 2022 and each January 1 thereafter, by 3% of the outstanding number of shares of our Class A and Class B common stock on the immediately preceding December 31, or such lesser number of shares as determined by our compensation committee, or the Annual Increase. The 2021 Plan provides for potential grants of the following awards: (i) stock options, (ii) RSUs, (iii) unrestricted shares, and (iv) stock appreciation rights. Awards granted to date under the 2021 Plan are in the form of RSUs that vest in equal annual installments over four years, subject to the employee’s continued employment. The Company recognizes stock compensation expense for these RSUs on a straight-line basis over the requisite service period for the entire award. The amount of stock compensation expense recognized for these awards was $1.5 million in 2022 and $100 thousand in 2021, respectively. The Company measures stock compensation expense for its share-based payment awards at fair value on the grant date. For RSUs which vesting is not subject to the achievement of a market capitalization hurdle or achievement of a specified share price, the fair value of share-based payment awards is determined using the fair market value of the underlying Class A common stock on the date of grant. The expected term of the Company’s stock options was determined utilizing the simplified method, due to lack of historical exercise data. The expected volatility was determined using a weighted-average of the historical volatility measures of a group of guideline companies and the Company's own historical volatility. During the year ended December 31, 2022, there were 84,000 stock options granted under the 2021 Plan, at a weighted average exercise price of $9.86 per option. During the year ended December 31, 2022, 40,000 stock options were forfeited. As of December 31, 2022, there was approximately $227 thousand of unrecognized equity-based compensation expense related to the remaining stock options issued during 2022, which is expected to be recognized over a weighted-average period of approximately 2.5 years. The total expense for stock options was immaterial for the year ended December 31, 2022. The assumptions used for the options granted under the Plan during the year ended December 31, 2022 were as follows: Expected volatility 64.54% Expected term of award 6.5 years Risk-free rate 3.39% Dividend yield 0.00% Performance-based RSUs For RSUs for which vesting is subject to the achievement of a market capitalization hurdle or specified price of the Company’s shares, the Company determines the fair value of these RSUs using a Monte Carlo simulation. The Monte Carlo simulations used to estimate the fair value include subjective assumptions, including the fair value of the underlying common stock, expected volatility of the price of the Company’s common stock, risk-free interest rate, expected dividend yield of common stock, and the Company’s cost of equity capital. The assumptions used in the Monte Carlo simulations for the RSUs granted on the IPO effectiveness date were as follows: Fair value of common stock (per share) 17.00 Expected volatility 48.20% Risk-free rate 1.65% Dividend yield 0.00% Cost of equity capital 11.20% In the fourth quarter of 2022, 250,000 RSUs were granted. Based on the award agreement, the RSUs will vest following the achievement of specified prices of the Company’s Class A shares. For these RSUs, the assumptions used in the Monte Carlo simulations were as follows: Fair value of common stock (per share) 8.92 Expected volatility 53.40% Risk-free rate 3.98% Dividend yield 0.00% Cost of equity capital 13.50% The following summarizes the Company’s share-based payment award activity for all IPO Vested Class A Common Stock, RSUs and stock options for the year ended December 31, 2022: IPO Vested Class A Common Stock and RSUs Options Number of Units Weighted- Average Grant-Date Fair Value Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Outstanding as of January 1, 2021 - - Granted during the period 22,213,282 $ 15.53 Forfeited during the period (35,139) 16.85 Vested and issued during the period (b) (621,510) 15.27 Outstanding as of December 31, 2021 21,556,633 15.57 - - Granted during the period (a) 1,428,798 10.08 84,000 9.86 Forfeited during the period (c) (1,167,377) 16.34 (40,000) 9.86 Vested and issued during the period (b) (1,593,602) 15.48 - - Outstanding as of December 31, 2022 20,224,452 $ 15.15 44,000 9.86 9.46 Vested as of December 31, 2022 17,225,377 - - Unvested as of December 31, 2022 2,999,075 44,000 9.86 (a) Includes 250,000 performance-based RSUs. (b) Includes shares issued and net settled to satisfy tax withholding obligations . (c) Includes forfeitures upon CEO transition. The Company recognized total stock compensation expense, including RSUs and stock options, for the years ended December 31, 2022 and 2021 of approximately $25 million and $289.8 million, respectively, in the consolidated Statements of Operations. In addition, the Company capitalized $600 thousand of stock compensation to capitalized software development costs for the year ended December 31, 2022. In connection with obligations to issue Class A common stock to former holders of Award Units under the Pre-IPO Plan and holders of vested RSUs, the Company paid approximately $8.6 million and $15.1 million of tax withholding obligations for federal payroll taxes in the years ended December 31, 2022 and 2021, respectively. Of those amounts, approximately $8 million and $10.6 million related to employee payroll tax withholdings and have accordingly been recorded as a reduction to Additional Paid-In Capital in the respective years. The Company’s stock compensation expense was recognized in the following captions within the consolidated statements of operations: (in thousands) Year Ended December 31, 2022 December 31, 2021 Cost of revenues $ 1,421 $ 377 General and administrative 14,130 112,829 Sales and marketing 5,875 36,312 Technology and development 3,567 140,285 Total stock compensation expense $ 24,993 $ 289,803 Total unrecognized stock compensation expense related to unvested RSUs and stock options was $23.1 million as of December 31, 2022, which is expected to be recognized over a weighted-average period of 2 years. In connection with the IPO, we also adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”). The 2021 ESPP initially reserves and authorizes the issuance of up to a total of 150,000 shares of Class A common stock to participating employees. The 2021 ESPP provides that the number of shares reserved and available for issuance will automatically increase on January 1, 2022 and each January 1 thereafter through January 1, 2031, by the lesser of (i) 1% of the outstanding number of shares of our Class A common stock and Class B common stock on the immediately preceding December 31 or (ii) such lesser number of shares of Class A common stock as determined by the administrator of the 2021 ESPP. Under the 2021 ESPP, eligible employees may be granted options to purchase shares of Class A common stock at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. As of December 31, 2022 and 2021, no options were granted to employees under the 2021 ESPP. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefit Plans | |
Employee Benefit Plans | Note 10 Employee Benefit Plans The Company sponsors a 401(k) Plan that covers substantially all full-time United States employees who meet eligibility requirements. The Company makes matching contributions equal to 50% of the wages that are deferred by employees, and the matching contribution is capped at 3% of wages. The Company made contributions of $584 thousand, $452 thousand, and $345 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. The Company also sponsors various other benefit plans for its employees of certain international subsidiaries. The Company’s contributions to these plans are immaterial for the periods presented. |
Loss Per Class A Common Share
Loss Per Class A Common Share | 12 Months Ended |
Dec. 31, 2022 | |
Loss Per Class A Common Share | |
Loss Per Class A Common Share | Note 11 Loss Per Class A Common Share Basic loss per share is computed by dividing net loss attributable to Enfusion, Inc. by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted loss per share is computed giving effect to all potentially dilutive shares. Diluted loss per share for all periods presented is the same as basic loss per share as the inclusion of potentially issuable shares would be antidilutive. Prior to the IPO, the Enfusion, LLC membership structure included Common Units and multiple classes of Preferred Units. The Company analyzed the calculation of earnings per unit for periods prior to the IPO using the two-class method and determined that it resulted in values that would not be meaningful to the users of these Consolidated Financial Statements. Therefore, earnings per share information has not been presented for periods prior to the IPO on October 20, 2021. The basic and diluted earnings per share represent only year ended December 31, 2022, and the period from October 21, 2021 to December 31, 2021. A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share of Class A common stock is as follows: Year Ended (in thousands, except per share amounts) December 31, 2022 December 31, 2021 Net loss $ (13,263) $ (282,242) Less: Net income attributable to Enfusion, Inc. prior to the IPO - (12,892) Less: Net loss attributable to non-controlling interests 5,609 123,925 Net loss attributable to Enfusion, Inc. $ (7,654) $ (171,209) Numerator: Net loss attributable to Enfusion, Inc. $ (7,654) $ (171,209) Adjustment to loss attributable to common stockholders (954) (16,580) Numerator for Basic and Diluted Earnings per Share $ (8,608) $ (187,789) Denominator: Weighted-average shares of Class A common stock outstanding 67,057 65,583 Vested shares of Class A common stock and RSUs 18,336 17,462 Weighted-average shares of Class A common stock outstanding--basic and diluted 85,393 83,045 Net loss per share of Class A common stock--Basic and diluted $ (0.10) $ (2.26) The following number of potentially dilutive shares were excluded from the calculation of diluted loss per share because the effect of including such potentially dilutive shares would have been antidilutive: Year Ended (in thousands) December 31, 2022 December 31, 2021 Class B common stock 43,199 47,471 Contingently issuable shares of Class A common stock - 1,726 Restricted stock units 2,999 2,905 Stock options 44 - 46,242 52,102 Shares of Class B common stock do not share in earnings and are not participating securities. Accordingly, separate presentation of loss per share of Class B common stock under the two-class method has not been presented. Shares of Class B common stock are, however, considered potentially dilutive shares of Class A common stock. After evaluating the potential dilutive effect under both the treasury stock method and if-converted method, shares of Class B common stock were determined to be anti-dilutive and have therefore been excluded from the computation of diluted earnings per share of Class A common stock. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | Note 12 Income Taxes The Company is taxed as a corporation for income tax purposes and is subject to federal, state, and local taxes on the income allocated to it from Enfusion Ltd. LLC based upon the Company’s economic interest in Enfusion Ltd. LLC. The Company is the sole managing member of Enfusion Ltd. LLC and, as a result, consolidates the financial results of Enfusion Ltd. LLC. Enfusion Ltd. LLC. is a limited liability company taxed as a partnership for income tax purposes. Enfusion Ltd. LLC does not pay any federal income taxes, as income or loss is included in the tax returns of the individual members. Additionally, certain wholly-owned entities taxed as corporations are subject to federal, state, and foreign income taxes in the jurisdictions in which they operate, and accruals for such taxes are included in the Consolidated Financial Statements. For periods prior to the IPO, the Company’s taxes represent those of Enfusion Ltd. LLC. The components of income (loss) before income taxes were as follows (in thousands): Year Ended December 31, 2022 2021 2020 U.S. $ (16,201) $ (279,990) $ 3,130 Foreign 4,012 (1,673) 1,364 Total $ (12,189) $ (281,663) $ 4,494 The income before income taxes above includes the pre- and post-IPO periods for the year ended December 31, 2021. Prior to the IPO, the Company, through its subsidiary, Enfusion Ltd. LLC, was structured as a partnership and therefore, was primarily subject to foreign income taxes and generally not subject to U.S. income taxes. As a result of the Reorganization Transactions, the Company is now taxed as a corporation and subject to U.S. federal, state, local and foreign taxes. Significant components of income tax expense (benefit) were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Current U.S. Federal $ - $ - $ - State & Local - - - Foreign 1,347 228 433 Total Current Income Tax Expense 1,347 228 433 Deferred U.S. Federal - - - State & Local - - - Foreign (273) 351 - Total Deferred Income Tax (Benefit) Expense (273) 351 - Total $ 1,074 $ 579 $ 433 A reconciliation of income taxes computed at the U.S. federal statutory income tax rate of 21% to our income tax (expense) benefit was as follows: 2022 2021 2020 At U.S. Federal statutory tax rate 21.00 % 21.00 % 21.00 % State Tax, Net of Federal Benefit 3.14 % 4.28 % - % Noncontrolling Interest (8.85) % (9.20) % - % Foreign Branch Taxes (8.24) % (0.28) % 9.64 % Equity Based Compensation (10.63) % (2.49) % - % Foreign Rate Differential 0.48 % 0.04 % (1.14) % Valuation Allowance 50.56 % (14.51) % - % Change in Tax Rates (59.22) % - % - % Pass-through Loss (Income) - % 0.91 % (19.86) % Return to Provision 4.03 % 0.08 % - % Other (1.08) % (0.04) % - % Total (8.81) % (0.21) % 9.64 % The Company’s effective tax rate for the years ended December 31, 2022, 2021, and 2020 was (8.81)%, (0.21)%, and 9.64%, respectively. The most significant items impacting the effective tax rate are explained below. Pass-through Loss (Income) Prior to the Reorganization Transactions, Enfusion Ltd. LLC was the reporting entity, which is treated as a flow-through entity for U.S. tax purposes. The income or losses generated are generally not taxed at the Enfusion Ltd. LLC level and instead flow through to its various members. The U.S. federal tax impact of the pre-tax book income attributable to Enfusion Ltd. LLC prior to the completion of the IPO was $2.6 million, and $0.9 million for the years ended December 31, 2021 and 2020. Noncontrolling Interest The Company’s sole material asset is a financial interest in Enfusion Ltd. LLC. While the Company consolidates Enfusion Ltd. LLC for financial reporting purposes, the Company will only be taxed on (benefit from) its share of earnings (losses) of Enfusion Ltd. LLC not attributed to the noncontrolling interest holders. Since noncontrolling interest holders will continue to bear (benefit from) their share of income tax expense (benefit) on its allocable earnings (losses) of Enfusion Ltd. LLC, that share of income tax expense (benefit) is not reported by the Company in its consolidated financial statements. The U.S. federal tax benefit not attributable to the Company for the years ended December 31, 2022 and 2021 was $1.1 million and $25.9 million, respectively. Equity-Based Compensation As a result of the Reorganization Transactions, a significant portion of the Company’s certain equity-based compensation expenses will be allocated to the noncontrolling interest holders and therefore will not be deductible to the Company. The remaining portion of these expenses will be subject to the tax deduction limits as established by the U.S. tax law in respect of the executive compensation. The U.S. federal tax impact of the non-deductible equity-based compensation for the years ended December 31, 2022 and 2021 was $1.3 million and $2.5 million, respectively. Valuation Allowance The Company’s net deferred tax benefit (expense) for the years ended December 31, 2022 and 2021 of $(6.2) million and $40.8 million was fully offset by the valuation allowance recorded (released) in the consolidated statement of operations for each respective year. Foreign Branch Taxes The Company has foreign operations that are treated as branches for U.S. tax purposes and are also subject to income taxes in those foreign jurisdictions. For the years ending December 31, 2022, 2021 and 2020 the Company recorded $1.0 million, $0.6 million, and $0.4 million in foreign income taxes related to the pre-tax income of its branches. Return to Provision For the years ended December 31, 2022 and 2021 the Company recorded a tax benefit of $0.5 million and $0.2 million, respectively in relation to its filed or expected to be filed U.S. and foreign income tax returns. These true-up adjustments are attributable to actual results in the Company’s tax filings as compared to the estimates included in our previously issued Consolidated Financial Statements. Change in Tax Rates As of December 31, 2022, the Company reduced its deferred tax assets by $7.2 million to reflect a decrease in the estimated U.S. state tax rate caused by a change in the overall mix of our U.S. earnings by state. The components of deferred tax assets and liabilities are as follows (in thousands): December 31, 2022 2021 Deferred Tax Assets Investment in Enfusion Ltd. LLC $ 86,117 $ 80,124 Equity Based Compensation 37,912 38,362 Net Operating Losses 9,358 5,475 Other 794 565 Total Deferred Tax Assets 134,181 124,526 Valuation Allowance (133,689) (124,526) Total Deferred Tax Assets Net of Valuation Allowance 492 - Deferred tax liabilities - - Property, Plant, and Equipment (77) (351) Total Deferred Tax Liabilities (77) (351) Net Deferred Tax Assets $ 415 $ (351) The Company’s deferred tax assets are comprised primarily of basis difference in Enfusion Ltd. LLC, equity-based compensation expense and tax attribute carryforwards. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income sufficient to utilize the deferred tax assets on the Company’s income tax returns. Management determined that its deferred tax assets are not more likely than not going to be realized due to the Company’s three-year cumulative loss position and the generation of future taxable income is uncertain. Considering this and other factors, the Company recognized a full valuation allowance of $133.6 As of December 31, 2022, the Company had U.S. federal net operating losses of $33.2 million which can be carried forward indefinitely. The Company had state net operating losses of $31.2 million that expire between 2041 and 2042. As of December 31, 2022, the Company is not indefinitely reinvested on undistributed earnings from its foreign operations. Due to the Company's structure, the foreign operations do not qualify for the indefinite reinvestment exceptions under ASC 740-30 as the earnings from the foreign operations are subject to U.S. taxation. However, the exception may still apply to foreign withholding taxes due to dividend distributions of earnings from the Company's foreign affiliates. The Company has no plans to make distributions from its foreign operations in the future and, therefore, a deferred tax liability has not been recognized. A determination of the unrecognized deferred taxes is not practicable. A summary of the Company’s uncertain tax positions is as follows: Year Ended December 31, 2022 2021 2020 Beginning balance $ 119 $ - $ - Increases for tax positions related to the current year - 30 - Increases (decreases) for tax positions of prior years - 89 - Ending balance $ 119 $ 119 $ - Interest and penalties $ 65 $ 65 $ - Our policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2022, we accrued $65 thousand of interest and penalties. We can be subject to routine income tax examinations in the U.S. federal, state, local and foreign jurisdictions for tax years 2017 and forward. At December 31, 2022, the Company is not under income tax audit in any of the jurisdictions in which it operates. CARES Act On March 27, 2020, the President signed the CARES Act to provide emergency relief related to the COVID-19 pandemic. The CARES Act contains federal income tax provisions which, among other things; (i) increases the amount of interest expense that businesses are allowed to deduct by increasing the adjusted taxable income limitation from 30% to 50% for tax years that begin in 2019 and 2020; (ii) permits businesses to carry back to each of the five tax years net operating losses arising from tax years beginning after December 31, 2017 and before January 1, 2021; and (iii) temporarily removes the 80% limitation on net operating losses until tax years beginning after 2020. Tax Receivable Agreement The Company expects to obtain an increase in its share of the tax basis in the net assets of Enfusion Ltd. LLC when Enfusion Ltd. LLC units are redeemed from or exchanged by the Pre-IPO common unit holders. The Company intends to treat any redemptions and exchanges of Enfusion Ltd. LLC units as direct purchases of Enfusion Ltd. LLC units for U.S. income tax purposes. These increases in tax basis may reduce the amounts that the Company would otherwise pay in the future to U.S. federal and state tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. In connection with the IPO, the Company entered into the Tax Receivable Agreement with Enfusion Ltd. LLC, the Continuing Equity Owners and the Blocker Shareholders that will provide for the payment by the Company to the Continuing Equity Owners and the Blocker Shareholders of 85% of the amount of tax benefits, if any, that the Company actually realizes (or in some circumstances is deemed to realize) as a result of (1) the Company’s allocable share of existing tax basis acquired in connection with the Reorganization Transactions (including the Blocker Company’s share of existing tax basis) and increases to such allocable share of existing tax basis; (2) increases in tax basis resulting from (a) the Company’s purchase of LLC Interests directly from Enfusion Ltd. LLC and the partial redemption of LLC Interests by Enfusion Ltd. LLC, (b) future redemptions or exchanges (or deemed exchanges in certain circumstances) of LLC Interests for Class A common stock or cash, and (c) certain distributions (or deemed distributions) by Enfusion Ltd. LLC; and (3) certain additional tax benefits arising from payments made under the Tax Receivable Agreement. The Company may benefit from the remaining 15% of any tax benefits that the Company actually realizes. In the year ended December 31, 2022, the Company purchased an aggregate of 4,272,204 Enfusion Ltd. LLC units in connection with the exchange of those units by the Pre-IPO common unit holders and retirement of six Class B common shares, which resulted in an increase of $48.0 million in the tax basis of the net assets of Enfusion Ltd. LLC that would be subject to the provisions of the Tax Receivable Agreement in the years ended December 31, 2021 and 2022, respectively. As of December 31, 2022 and 2021, the Company has not recorded a liability under the Tax Receivable Agreement related to the tax benefits originating from the Reorganization Transactions, IPO and subsequent purchase of Enfusion Ltd. LLC units as it is not probable that the Company will realize such tax benefits. To the extent we had determined that we would have been able to realize the tax benefits associated with the basis adjustments, we would have recorded a liability under the Tax Receivable Agreement of $83.2 million and $74.7 million as of December 31, 2022 and 2021, respectively. The amounts payable under the Tax Receivable Agreement will vary depending upon a number of factors, including the amount, character, and timing of the taxable income of the Company in the future. Should the Company determine that the Tax Receivable Agreement liability be considered probable at a future date based on new information, any changes will be recorded within income tax expense (benefit) at that time. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | Note 13 Related Party Transactions Parties are considered to be related if one party has the ability to control or exercise significant influence over the other party in making financial or operating decisions. Since transactions with related parties may raise potential or actual conflicts of interest between the related party and the Company, upon the completion of the IPO the Company implemented a related party transaction policy that requires related party transactions to be reviewed and approved by its nominating and corporate governance committee. The Company used the proceeds (net of underwriting discounts) from the issuance In connection with the IPO, the Company entered into the Tax Receivable Agreement with certain of the Pre-IPO Owners, which provides for the payment by Enfusion Inc. of 85% of certain cash tax benefits that Enfusion, Inc. actually realizes, or in some cases is deemed to realize. As of December 31, 2022 and December 31, 2021, the Company has not recorded a liability under the Tax Receivable Agreement related to the tax benefits originating from the Reorganization Transactions, IPO and subsequent purchase of Enfusion Ltd. LLC units during the year ended December 31, 2021 as it is not probable that the Company will realize such tax benefits. Pre-IPO Common Unitholders delivered exchange notices pursuant to Article XII of the LLC Operating Agreement on each of May 6, 2022, October 12, 2022 and November 14, 2022, relating to the respective exchanges of 1,401,818, 1,000,000 and 1,870,386 Common Units and an equal number of shares of class B common stock for an equal number of shares of Class A common stock. On May 13, 2022, October 12, 2022, and November 14, 2022 and pursuant to the terms of the LLC Operating Agreement, the exchanging Pre-IPO Common Unitholders respectively surrendered 1,401,818, 1,000,000 and 1,870,386 Common Units and an equal number of shares of Class B common stock. In connection therewith, the Company respectively issued 1,401,818, 1,000,000 and 1,870,386 shares of Class A common stock to the exchanging Pre-IPO Common Unitholder, canceled an equal number of Class B Common Stock, and received an equal number of Common Units, increasing the Company’s ownership of Common Units by 1,401,818, 1,000,000 and 1,870,386, respectively. On June 1, 2021, the Company entered into a Master Services Agreement (the “MSA”) with Quiet Light Securities, LLC (“QL”), an entity Mr. Movchan is the managing member of. The terms of the MSA were negotiated with QL on an arm’s-length basis and on terms consistent with other clients of Enfusion. The investment management platform services (the “Services”) the Company provides under the MSA to QL are consistent with the Services that the Company provides to its other clients. In exchange for such Services, QL, like the Company’s other clients, pays the Company a fee that corresponds to the specific Services utilized. In the 2022 fiscal year, during which Mr. Movchan was a Director and the CEO of the Company, as well as a beneficial owner of more than 5% of the Company’s issued and outstanding class B common stock, the Company received approximately $204,766 USD from QL under the MSA. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | |
Subsequent Events | Note 14 Subsequent Events Share Exchange On February 13, 2023, a Pre-IPO Common Unitholder delivered an exchange notice pursuant to Article XII of the LLC Operating Agreement. Pursuant to the terms of the LLC Operating Agreement, on February 21, 2023, the Pre-IPO Common Unitholder surrendered 1,000,000 Common Units and an equal number of shares of Class B common stock. In connection therewith, the Company issued 1,000,000 shares of Class A common stock to such Pre-IPO Common Unitholder, canceled an equal number of shares of Class B Common Stock, and received an equal number of Common Units, increasing the Company’s ownership of Common Units by 1,000,000. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation These statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany balances and transactions are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates on historical experience and various other assumptions believed to be reasonable. These estimates and assumptions include, but are not limited to, judgments affecting the measurement of the payable to related parties pursuant to the Tax Receivable Agreement, amortization periods, certain assumptions used in the valuation of stock-based compensation, assessment of the allowance for doubtful accounts, and accounting for income taxes and assessment of valuation allowances. Actual results could differ from those estimates. The Company’s results can also be affected by economic, political, legislative, regulatory and legal actions, including but not limited to health epidemics and pandemics and the resulting economic impact. Economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, and government fiscal policies can have a significant effect on operations. While the Company maintains reserves for anticipated liabilities and carries various levels of insurance, the Company could be affected by civil, criminal, regulatory or administrative actions, claims or proceedings. |
Segments | Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the CODM. While the Company operates in multiple countries, the Company’s business operates as one operating segment because most of the Company’s service offerings are delivered and supported on a global basis, the Company’s service offerings are deployed in a nearly identical way, and the Company’s CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an initial maturity date of three months or less to be cash equivalents. Funds held as investments in money market funds are included within cash and cash equivalents. As of December 31, 2022 and 2021, respectively, the Company had approximately $50 million and $0 invested in money market accounts. |
Accounts Receivable | Accounts Receivable Accounts receivable includes billed and unbilled receivables, net of allowance for doubtful accounts. Billed accounts receivable are initially recorded upon the invoicing to clients with payment due within 30 days. Unbilled accounts receivable represent revenue recognized on contracts for which the timing of invoicing to clients differs from the timing of revenue recognition. As of December 31, 2022 and 2021, unbilled accounts receivable was $2 million and $1.3 million, respectively. The unbilled accounts receivable balance is due within one year. The Company maintains an allowance for doubtful accounts at an amount estimated to be sufficient to provide adequate protection against losses resulting from extending credit to its clients. The Company regularly determines the adequacy of the allowance based on its assessment of the collectability of the accounts receivable by considering the age of each outstanding invoice, the collection history of each client, and an evaluation of current expected risk of credit loss of any clients with known financial difficulties. The Company assesses collectability by reviewing accounts receivable on an aggregated basis where similar characteristics exist and on an individual basis for specific clients with historical collectability issues or known financial difficulties. Increases to the allowance are recognized as a charge to doubtful accounts included in General and administrative expenses in the consolidated statement of operations. Accounts receivable deemed uncollectible are charged against the allowance for doubtful accounts when identified. The Company's allowances are as follows (in thousands): Balance at December 31, 2020 $ 598 Charges to the provision 1,450 Accounts written off, net of recoveries (1,257) Balance at December 31, 2021 791 Charges to the provision 1,158 Accounts written off, net of recoveries (724) Balance at December 31, 2022 $ 1,225 |
Property and Equipment, Net | Property and Equipment, Net Property and equipment is stated at historical cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the individual assets, except for leasehold improvements, which are depreciated over the shorter of the estimated useful life of the asset or the underlying lease term. Also included in property and equipment are capitalized costs of software developed for internal use. The useful lives of property and equipment are as follows: Property and Equipment Asset Type Estimated Useful Lives Software development costs 3 years Computers and equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of estimated economic useful life or remaining lease term Maintenance and repairs are expensed as incurred. Upon retirement or disposition, the cost and related accumulated depreciation or amortization is removed from the accounts and any gain or loss is included in operating income. |
Software Development Costs | Software Development Costs Capitalized software costs consist of costs to purchase software to be used within the Company and costs to develop software internally. Capitalization of purchased or internally developed software occurs during the application development stage and consists of costs associated with design, coding and testing. Amortization of software development costs is calculated using the straight-line method over the estimated useful lives of the software, which is generally three years. Capitalized software development costs are recorded within property and equipment, net of accumulated amortization, within the consolidated balance sheets. Amortization expense is included in Cost of revenues – platform subscription services in the consolidated statements of operations. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates the carrying value of long-lived assets in accordance with the accounting standard for impairment or disposal of long-lived assets, which requires recognition of impairment of long-lived assets in the event that circumstances indicate impairment may have occurred and when the net carrying value of such assets exceeds the future undiscounted cash flows attributed to such assets. The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. No impairment of long-lived assets occurred during the years ended December 31, 2022, 2021 and 2020. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the exit price) in an orderly transaction between market participants at the measurement date. Accounting standards establish a hierarchal framework, which prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the investment. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on the best information available. Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories: Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 Inputs are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; and Level 3 Inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company has investments in money market accounts, which are included in cash and cash equivalents on the condensed consolidated balance sheets. Fair value inputs for these investments are considered Level 1 measurements within the Fair Value Hierarchy, as money market account fair values are known and observable through daily published floating net asset values. The carrying amount of the Company’s other financial instruments, including accounts receivable and accounts payable, approximate fair value due to their short-term nature. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification 606 (“ASC 606”), Revenue from Contracts with Customers. The Company derives its revenues primarily from fees for platform subscription and managed services provided to clients. Revenues are recognized when control of these services are transferred to the Company’s clients in an amount that reflects the consideration the Company expects to be entitled to in exchange for these services. Revenues are recognized net of taxes that will be remitted to governmental agencies applicable to service contracts. Historically, platform subscription contracts have typically had a one-year term and were cancellable with 30 days’ notice. Beginning in the first quarter of 2021, our default platform subscription contract has had a multi-year term and does not allow termination for convenience, though each contract has and can be negotiated with varying term lengths, with or without a termination for convenience clause. Clients are invoiced each month for the services provided in accordance with the stated terms of their service contracts. Fees for partial term service contracts are prorated, as applicable. Payment of fees are due from clients within 30 days of the invoice date. The Company does not provide financing to clients. The Company determines revenue recognition through the following five-step framework: ● Identification of the contract, or contracts, with a client; ● Identification of the performance obligation in the contract; ● Determination of transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, performance obligations are satisfied. Platform subscription revenues Platform subscription revenues consist primarily of fees for providing clients with access to the Company’s cloud-based platform. Platform subscription clients do not have the right to take possession of the platform’s software, and do not have any general return rights. Platform subscription revenues are recognized ratably over the period of contractually enforceable rights and obligations, beginning on the date that the client gains access to the platform. Installment payments are invoiced at the end of each calendar month during the subscription term. Managed services revenues Managed services revenues primarily consist of client-selected middle and back-office services provided on our clients’ behalf using the Company’s platform. Revenue is recognized monthly as the managed services are performed, with invoicing occurring at the end of the calendar month. Other revenues Other revenues consist of non-subscription-based revenues, such as data conversion and services that integrate a client’s historical data into our solution. The Company recognizes revenues as these services are performed with invoicing occurring at the end of each month. Service contracts with multiple performance obligations Our service contracts with clients can include multiple performance obligations. For these contracts, we account for individual performance obligations separately if they are distinct. The Company has determined that implementation services are not distinct from the ongoing platform subscription services due to the highly specialized knowledge required to execute on our solution. Such services are recognized with the platform subscription services revenue over time. Remaining performance obligations For the Company’s contracts that exceed one year and do not include a termination for convenience clause, the amount of the transaction price allocated to remaining performance obligations as of December 31, 2022 and December 31, 2021 was $31.1 million and $23.4 million, respectively. The Company expects to recognize this amount over the next one Disaggregation of revenue The Company’s total revenues by geographic region, based on the client’s physical location is presented in the following table: Year Ended December 31, 2022 2021 2020 Geographic Region Amount Percent Amount Percent Amount Percent Americas* $ 95,122 63.3 % $ 72,994 65.3 % $ 54,057 67.9 % Europe, Middle East and Africa (EMEA) 20,051 13.3 % 13,491 12.1 % 8,748 11.0 % Asia Pacific (APAC) 35,176 23.4 % 25,215 22.6 % 16,760 21.1 % Total revenues $ 150,349 100.0 % $ 111,700 100.0 % $ 79,565 100.0 % * Includes revenues in the United States (country of domicile) of $92.8 million, $71.9 million and $53.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. Deferred commissions The Company pays sales commissions for initial contracts and expansions of existing contracts with customers. These commissions earned by certain of our sales force are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions paid where the amortization period is one year or less are expensed as incurred. All other sales commissions are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be three years. We determined the period of benefit by taking into consideration our standard contract terms and conditions, rate of technological change, and other factors. Amortization expense is included in sales and marketing expense in the accompanying consolidated statements of operations. The balance of deferred commissions as of December 31, 2022 and December 31, 2021 was $2.8 million and $1.7 million, respectively, and is included in Other assets and Other current assets on the Consolidated Balance Sheets. The amount of amortization expense recognized during the years ended December 31, 2022 and 2021 was $845 thousand and $228 thousand, respectively. Cost of revenues Cost of revenues consists primarily of personnel-related costs associated with the delivery of the Company’s software and services, including base salaries, bonuses, employee benefits and related costs. Additionally, cost of revenues includes amortization of capitalized software development costs, allocated overhead and certain direct data and hosting costs. |
Technology and Development | Technology and Development Technology and development expenses consist primarily of employee-related expenses for the Company’s software development. Additional expenses include costs related to the development, maintenance, quality assurance and testing of new technologies, and ongoing refinement of the Company’s existing solutions. Technology and development expenses, other than internal-use software costs qualifying for capitalization, including costs associated with preliminary project stage activities, training, maintenance, and all other post-implementation stage activities are expensed as incurred. |
Advertising Costs | Advertising Costs The Company expenses advertising costs as incurred. Advertising costs incurred were approximately $1.5 million, $1.2 million and $1.3 million during the years ended December 31, 2022, 2021 and 2020, respectively. |
Equity-Based Compensation | Equity-Based Compensation Prior to the IPO, the Company had a Change in Control Bonus Plan (the “Pre-IPO Plan”) for certain members of the Company’s management (“Plan Participants”) that provided for the payment of a cash bonus based on a specified number of Management Incentive Award Units (“Award Units”) in the event of a change in control (“CiC”) transaction (i.e., a liquidity event), as defined by the Company’s Operating Agreement. As of December 31, 2020, the Company did not record a liability for payments under the Pre-IPO Plan as the timing of any future CiC transaction or amount of Award Units to be paid to Plan Participants was not probable or estimable. In October 2021, the Company's board of managers elected to terminate the Change in Control Bonus Plan (and all Award Units issued thereunder) upon effectiveness of the registration statement for the IPO. In connection with the IPO, we adopted the 2021 Stock Option and Incentive Plan, or 2021 Plan. The 2021 Plan allows our compensation committee to make incentive awards to our officers, employees, directors and service providers. We also adopted the 2021 Employee Stock Purchase Plan, or 2021 ESPP. The Company measures stock compensation expense for its share-based payment awards at fair value on the grant date. The fair value of share-based payment awards is determined using the fair market value of the underlying Class A common stock on the date of grant. The Company applied a discount for lack of marketability, estimated using the Finnerty Model, to the fair value of awards with post-vesting restrictions, which includes the vested shares of Class A common stock and the contingently issuable shares (the “Contingently Issuable Shares”) of Class A common stock issued on the IPO effectiveness date. For RSUs for which vesting is subject to the achievement of a market capitalization hurdle, the Company determines the fair value of these RSUs using a Monte Carlo simulation. The Monte Carlo simulations used to estimate the fair value include subjective assumptions, including the fair value of the underlying common stock, expected volatility of the price of the Company’s common stock, risk-free interest rate, expected dividend yield of common stock, and the Company’s cost of equity capital. We record forfeitures as they occur. The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized in the consolidated statement of operations based on the estimated fair value of those awards on the grant date or reporting date, if required to be remeasured, and amortized on a straight-line basis over the requisite service period. |
Loss per share | Loss per share Loss per share is computed by dividing net loss attributable to the Company by the number of weighted average shares of Class A common stock outstanding during the period. Diluted loss per share is computed by dividing net loss attributable to the Company by the number of weighted-average shares of Class A common stock outstanding during the period after adjusting for the impact of securities that would have a dilutive effect on loss per share. See Note 11, Loss Per Class A Common Share All earnings (loss) for the period prior to the IPO were entirely allocable to Enfusion LLC, Ltd. and its historic non-controlling interest. Due to the impact of the Reorganization Transactions, the Company’s capital structure for the pre- and post-IPO periods is not comparable. As a result, the presentation of earnings (loss) per share for the periods prior to the IPO and Organizational Transactions is not meaningful and only loss per share for the period subsequent to the IPO and Organizational Transactions is presented herein. |
Non-controlling interest | Non-controlling interest Non-controlling interests represent the portion of profit or loss, net assets and comprehensive income of our consolidated subsidiaries that is not allocable to the Company based on our percentage of ownership of such entities. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and deferred tax liabilities is recognized in income in the period that includes the enactment date. We recognize deferred tax assets to the extent that it is believed that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted under the tax law, and results of recent operations. A valuation allowance is provided if it is determined that it is more likely than not that the deferred tax asset will not be realized. The Company evaluates and accounts for uncertain tax positions using a two-step approach. Recognition (step one) occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination. Measurement (step two) determines the amount of tax benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more likely-than-not threshold of being sustained. The Company records interest (and penalties where applicable), net of any applicable related income tax benefit, on potential income tax contingencies as a component of Income tax expense in the Consolidated Statements of Operations. |
Tax Receivable Agreement (TRA) | Tax Receivable Agreement (TRA) The Company accounts for amounts payable under the TRA in accordance with ASC 450, Contingencies |
Concentration of Risk | Concentration of Risk Deposits with Financial Institutions The Company has concentrated its credit risk for cash by maintaining deposits in several financial institutions, which may at times exceed amounts covered by insurance provided by the Federal Deposit Insurance Corporation (“FDIC”). The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to cash. Accounts Receivable As of December 31, 2022 and 2021, no individual client represented more than 10% of accounts receivable. For the years ended December 31, 2022, 2021 and 2020, no individual client represented more than 10% of the Company’s total revenues. |
Translation of Foreign Currencies | Translation of Foreign Currencies Foreign currency assets and liabilities of the Company’s international subsidiaries are translated using the exchange rates in effect at the balance sheet date. Results from operations are translated using the average exchange rates prevailing throughout the year. The effects of exchange rate fluctuations on translating foreign currency assets and liabilities into U.S. dollars are accumulated as part of the foreign currency translation adjustment in accumulated other comprehensive loss in the consolidated balance sheets. Foreign currency intercompany balances that remain unsettled at the end of each period are translated using the exchange rates in effect at the balance sheet date. The effects of exchange rate fluctuations on translating foreign currency intercompany assets and liabilities into U.S. dollars are recorded as other (expense) income in the Consolidated Statements of Operations. |
Recently Adopted Pronouncements/Recent Accounting Pronouncements Not Yet Adopted | Recently Adopted Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the guidance in former ASC 840, Leases, to increase transparency and comparability among organizations by requiring recognition of right-of-use assets and lease liabilities on the balance sheet (with the exception of short-term leases) and disclosure of key information about leasing arrangements (with the exception of short-term leases). In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new Leases (Topic 842) standard. ASU 2016-02, as subsequently amended for various technical issues, was effective for private companies and emerging growth companies in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, and early adoption is permitted. The Company elected the optional transition method and adopted the new guidance on January 1, 2022 (“the adoption date”), on a modified retrospective basis, with no restatement of prior period amounts. As allowed under the new accounting standard, the Company elected to apply practical expedients to carry forward the original lease determinations, lease classifications and accounting of initial direct costs for all arrangements at the time of adoption. The Company also elected not to separate lease components from non-lease components and to exclude short-term leases from its Consolidated Balance Sheet. The Company’s adoption of the new standard resulted in the recognition of right-of-use assets of $9.1 million and liabilities of $9.5 million as of the adoption date, with no cumulative effect adjustment to equity as of the adoption date. Adoption of the new standard did not have a material impact on the Company’s Consolidated Statements of Income or Cash Flows. See Note 6 - Leases for additional information. In December 2019, the FASB issued ASU 2019-12, Income Taxes Simplifying the Accounting for Income Taxes Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses Measurement of Credit Losses on Financial Instruments |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Schedule of accounts receivable allowance for credit loss | Balance at December 31, 2020 $ 598 Charges to the provision 1,450 Accounts written off, net of recoveries (1,257) Balance at December 31, 2021 791 Charges to the provision 1,158 Accounts written off, net of recoveries (724) Balance at December 31, 2022 $ 1,225 |
Schedule of property, plant and equipment useful life | Property and Equipment Asset Type Estimated Useful Lives Software development costs 3 years Computers and equipment 5 years Furniture and fixtures 5 years Leasehold improvements Shorter of estimated economic useful life or remaining lease term |
Schedule of total net revenues by geographic region | Year Ended December 31, 2022 2021 2020 Geographic Region Amount Percent Amount Percent Amount Percent Americas* $ 95,122 63.3 % $ 72,994 65.3 % $ 54,057 67.9 % Europe, Middle East and Africa (EMEA) 20,051 13.3 % 13,491 12.1 % 8,748 11.0 % Asia Pacific (APAC) 35,176 23.4 % 25,215 22.6 % 16,760 21.1 % Total revenues $ 150,349 100.0 % $ 111,700 100.0 % $ 79,565 100.0 % * Includes revenues in the United States (country of domicile) of $92.8 million, $71.9 million and $53.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, Net | |
Schedule of Property and equipment, net | Property and equipment, net consists of the following (in thousands): December 31, 2022 2021 Computer equipment $ 17,496 $ 14,163 Software development costs 9,406 4,866 Leasehold improvements 1,831 1,947 Furniture and fixtures 433 540 Total property and equipment, cost 29,166 21,516 Less accumulated depreciation and amortization (13,407) (8,465) Total property and equipment, net $ 15,759 $ 13,051 |
Schedule of estimated future amortization of capitalized software development costs | Estimated future amortization of capitalized software development costs are as follows (in thousands): Year ending December 31, Amount 2023 $ 2,376 2024 1,807 2025 648 Total $ 4,831 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2022 2021 Accrued compensation $ 10,268 $ 3,180 Accrued expenses and other 1,112 1,182 Accrued taxes 285 1,216 Total accrued expenses and other current liabilities $ 11,665 $ 5,578 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Schedule of right-of use assets and liabilities for operating leases | Right-of-use asset, net $ 6,732 Current portion of lease liabilities $ 4,030 Lease liabilities, net of current portion 2,959 $ 6,989 |
Schedule of lease commitments | Year Ending December 31, Amount 2023 $ 4,244 2024 2,176 2025 882 Total lease commitments $ 7,302 Less: Interest (313) Present value of lease liabilities $ 6,989 |
Schedule of components of operating lease cost | Operating lease cost 5,053 Variable lease cost 828 Total lease cost $ 5,881 |
Schedule of supplemental cash flow information | Supplemental Cash Flow Information Cash paid for amounts included in the measurement of lease liabilities 5,111 Right-of-use assets obtained in exchange for lease liabilities 9,514 |
Schedule of future aggregate minimum rental payments | Service Years Ending December 31, Operating Leases Agreements Total 2022 $ 4,384 $ 470 $ 4,854 2023 3,291 19 3,310 2024 2,385 — 2,385 2025 901 — 901 Total $ 10,961 $ 489 $ 11,450 |
Management Incentive Plan and_2
Management Incentive Plan and Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of share-based payment award activity | IPO Vested Class A Common Stock and RSUs Options Number of Units Weighted- Average Grant-Date Fair Value Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Outstanding as of January 1, 2021 - - Granted during the period 22,213,282 $ 15.53 Forfeited during the period (35,139) 16.85 Vested and issued during the period (b) (621,510) 15.27 Outstanding as of December 31, 2021 21,556,633 15.57 - - Granted during the period (a) 1,428,798 10.08 84,000 9.86 Forfeited during the period (c) (1,167,377) 16.34 (40,000) 9.86 Vested and issued during the period (b) (1,593,602) 15.48 - - Outstanding as of December 31, 2022 20,224,452 $ 15.15 44,000 9.86 9.46 Vested as of December 31, 2022 17,225,377 - - Unvested as of December 31, 2022 2,999,075 44,000 9.86 (a) Includes 250,000 performance-based RSUs. (b) Includes shares issued and net settled to satisfy tax withholding obligations . (c) Includes forfeitures upon CEO transition. |
Schedule of stock compensation expense | (in thousands) Year Ended December 31, 2022 December 31, 2021 Cost of revenues $ 1,421 $ 377 General and administrative 14,130 112,829 Sales and marketing 5,875 36,312 Technology and development 3,567 140,285 Total stock compensation expense $ 24,993 $ 289,803 |
Restricted Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of assumptions | Fair value of common stock (per share) 17.00 Expected volatility 48.20% Risk-free rate 1.65% Dividend yield 0.00% Cost of equity capital 11.20% |
Performance-Based Restricted Stock Units ("RSUs") | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of assumptions | Fair value of common stock (per share) 8.92 Expected volatility 53.40% Risk-free rate 3.98% Dividend yield 0.00% Cost of equity capital 13.50% |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of assumptions | Expected volatility 64.54% Expected term of award 6.5 years Risk-free rate 3.39% Dividend yield 0.00% |
Loss Per Class A Common Share (
Loss Per Class A Common Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Loss Per Class A Common Share | |
Schedule of reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share | Year Ended (in thousands, except per share amounts) December 31, 2022 December 31, 2021 Net loss $ (13,263) $ (282,242) Less: Net income attributable to Enfusion, Inc. prior to the IPO - (12,892) Less: Net loss attributable to non-controlling interests 5,609 123,925 Net loss attributable to Enfusion, Inc. $ (7,654) $ (171,209) Numerator: Net loss attributable to Enfusion, Inc. $ (7,654) $ (171,209) Adjustment to loss attributable to common stockholders (954) (16,580) Numerator for Basic and Diluted Earnings per Share $ (8,608) $ (187,789) Denominator: Weighted-average shares of Class A common stock outstanding 67,057 65,583 Vested shares of Class A common stock and RSUs 18,336 17,462 Weighted-average shares of Class A common stock outstanding--basic and diluted 85,393 83,045 Net loss per share of Class A common stock--Basic and diluted $ (0.10) $ (2.26) |
Schedule of effect of dilutive shares antidilutive | Year Ended (in thousands) December 31, 2022 December 31, 2021 Class B common stock 43,199 47,471 Contingently issuable shares of Class A common stock - 1,726 Restricted stock units 2,999 2,905 Stock options 44 - 46,242 52,102 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of components of income (loss) before income taxes | The components of income (loss) before income taxes were as follows (in thousands): Year Ended December 31, 2022 2021 2020 U.S. $ (16,201) $ (279,990) $ 3,130 Foreign 4,012 (1,673) 1,364 Total $ (12,189) $ (281,663) $ 4,494 |
Schedule of components of income tax expense (benefit) | As a result of the Reorganization Transactions, the Company is now taxed as a corporation and subject to U.S. federal, state, local and foreign taxes. Significant components of income tax expense (benefit) were as follows (in thousands): Year Ended December 31, 2022 2021 2020 Current U.S. Federal $ - $ - $ - State & Local - - - Foreign 1,347 228 433 Total Current Income Tax Expense 1,347 228 433 Deferred U.S. Federal - - - State & Local - - - Foreign (273) 351 - Total Deferred Income Tax (Benefit) Expense (273) 351 - Total $ 1,074 $ 579 $ 433 |
Schedule of reconciliation of the U.S. statutory income tax rate to our effective income tax rate | 2022 2021 2020 At U.S. Federal statutory tax rate 21.00 % 21.00 % 21.00 % State Tax, Net of Federal Benefit 3.14 % 4.28 % - % Noncontrolling Interest (8.85) % (9.20) % - % Foreign Branch Taxes (8.24) % (0.28) % 9.64 % Equity Based Compensation (10.63) % (2.49) % - % Foreign Rate Differential 0.48 % 0.04 % (1.14) % Valuation Allowance 50.56 % (14.51) % - % Change in Tax Rates (59.22) % - % - % Pass-through Loss (Income) - % 0.91 % (19.86) % Return to Provision 4.03 % 0.08 % - % Other (1.08) % (0.04) % - % Total (8.81) % (0.21) % 9.64 % |
Schedule of components of deferred tax assets and liabilities | The components of deferred tax assets and liabilities are as follows (in thousands): December 31, 2022 2021 Deferred Tax Assets Investment in Enfusion Ltd. LLC $ 86,117 $ 80,124 Equity Based Compensation 37,912 38,362 Net Operating Losses 9,358 5,475 Other 794 565 Total Deferred Tax Assets 134,181 124,526 Valuation Allowance (133,689) (124,526) Total Deferred Tax Assets Net of Valuation Allowance 492 - Deferred tax liabilities - - Property, Plant, and Equipment (77) (351) Total Deferred Tax Liabilities (77) (351) Net Deferred Tax Assets $ 415 $ (351) |
Schedule of company's uncertain tax positions | Year Ended December 31, 2022 2021 2020 Beginning balance $ 119 $ - $ - Increases for tax positions related to the current year - 30 - Increases (decreases) for tax positions of prior years - 89 - Ending balance $ 119 $ 119 $ - Interest and penalties $ 65 $ 65 $ - |
Organization and Description _2
Organization and Description of Business - IPO and reorganization (Details) | 12 Months Ended |
Dec. 31, 2022 subsidiary | |
Number of wholly-owned subsidiaries. | 3 |
Enfusion LLC | |
Ownership Percentage | 62% |
Basis of Presentation (Details)
Basis of Presentation (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Basis of Presentation | |
Number of operating segments | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Allowances (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Accounts Receivable, Allowance for Credit Loss | ||
Beginning balance | $ 791 | $ 598 |
Charges to the provision | 1,158 | 1,450 |
Accounts written off, net of recoveries | (724) | (1,257) |
Ending balance | $ 1,225 | $ 791 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Useful life of property plant and equipment (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Software development cost | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Computer equipment | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Furniture and fixtures | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Leasehold improvements | |
Property, Plant and Equipment [Line Items] | |
Useful life | Shorter of estimated economic useful life or remaining lease term |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Disaggregation of revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 150,349 | $ 111,700 | $ 79,565 |
Revenues | Geographic Region | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 150,349 | $ 111,700 | $ 79,565 |
Total net revenues percent | 100% | 100% | 100% |
Americas | Revenues | Geographic Region | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 95,122 | $ 72,994 | $ 54,057 |
Total net revenues percent | 63.30% | 65.30% | 67.90% |
Europe, Middle East and Africa (EMEA) | Revenues | Geographic Region | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 20,051 | $ 13,491 | $ 8,748 |
Total net revenues percent | 13.30% | 12.10% | 11% |
Asia Pacific (APAC) | Revenues | Geographic Region | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 35,176 | $ 25,215 | $ 16,760 |
Total net revenues percent | 23.40% | 22.60% | 21.10% |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 92,800 | $ 71,900 | $ 53,000 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2022 | |
Investment in money market accounts. | $ 50,000 | $ 0 | ||
Payment of fees upon invoice | 30 days | |||
Impairment of long-lived assets | $ 0 | 0 | $ 0 | |
Revenue remaining performance obligation | 31,100 | 23,400 | ||
Deferred commissions | 2,800 | 1,700 | ||
Amortization expense | 845 | 228 | ||
Advertising cost | 1,500 | 1,200 | $ 1,300 | |
Right-of-use assets, net | 6,732 | |||
Lease liability | 6,989 | |||
Unbilled accounts receivable | $ 2,000 | $ 1,300 | ||
Major Customer | Revenues | Customer Concentration Risk | ||||
Number of customers | 0 | 0 | 0 | |
Major Customer | Accounts Receivable | Customer Concentration Risk | ||||
Number of customers | 0 | 0 | ||
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||||
Remaining performance obligation satisfaction period | 1 year | |||
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||||
Remaining performance obligation satisfaction period | 5 years | |||
ASU 2016-02 (Topic 842) | ||||
Right-of-use assets, net | $ 9,100 | |||
Lease liability | $ 9,500 | |||
Enfusion LLC | ||||
Ownership Percentage | 62% | |||
Ownership percentage by noncontrolling owners | 38% |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property and Equipment, Net | ||
Total property and equipment, cost | $ 29,166 | $ 21,516 |
Less accumulated depreciation and amortization | (13,407) | (8,465) |
Total property and equipment, net | 15,759 | 13,051 |
Computer equipment | ||
Property and Equipment, Net | ||
Total property and equipment, cost | 17,496 | 14,163 |
Software development costs | ||
Property and Equipment, Net | ||
Total property and equipment, cost | 9,406 | 4,866 |
Leasehold improvements | ||
Property and Equipment, Net | ||
Total property and equipment, cost | 1,831 | 1,947 |
Furniture and fixtures | ||
Property and Equipment, Net | ||
Total property and equipment, cost | $ 433 | $ 540 |
Property and Equipment, Net - N
Property and Equipment, Net - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment, Net | |||
Property and equipment, net | $ 15,759 | $ 13,051 | |
Capitalized software development costs | 4,500 | 2,000 | |
Depreciation and amortization expense | 3,300 | 2,400 | $ 1,500 |
Amortization expense related to software development costs | 2,200 | 1,300 | $ 759 |
United States | |||
Property and Equipment, Net | |||
Property and equipment, net | $ 13,700 | $ 10,400 |
Property and Equipment, Net - E
Property and Equipment, Net - Estimated future amortization of capitalized software development costs (Details) - Software development cost $ in Thousands | Dec. 31, 2022 USD ($) |
Property, Plant and Equipment [Line Items] | |
2023 | $ 2,376 |
2024 | 1,807 |
2025 | 648 |
Total | $ 4,831 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Current Liabilities | ||
Accrued compensation | $ 10,268 | $ 3,180 |
Accrued expenses and other | 1,112 | 1,182 |
Accrued taxes | 285 | 1,216 |
Total accrued expenses and other current liabilities | 11,665 | 5,578 |
Accrued compensation includes bonuses due to employees | $ 7,800 | $ 0 |
Leases - Narratives (Details)
Leases - Narratives (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) lease | Jan. 01, 2022 USD ($) | |
Lessee, Lease, Description [Line Items] | ||
Right-of-use assets, net | $ 6,732 | |
Lease liability | $ 6,989 | |
Option to renew the lease | true | |
Option to terminate the lease | true | |
Number of finance leases | lease | 0 | |
Weighted-average remaining lease term (in years) | 1 year 10 months 2 days | |
Weighted-average discount rate (as percentage) | 4.43% | |
ASU 2016-02 (Topic 842) | ||
Lessee, Lease, Description [Line Items] | ||
Right-of-use assets, net | $ 9,100 | |
Lease liability | $ 9,500 |
Leases - Right-of Use Assets an
Leases - Right-of Use Assets and Liabilities for Operating Leases (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Leases | |
Right-of-use assets, net | $ 6,732 |
Current portion of lease liabilities | 4,030 |
Lease liabilities, net of current portion | 2,959 |
Total lease liability | $ 6,989 |
Leases - Lease Commitments (Det
Leases - Lease Commitments (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Leases | |
2023 | $ 4,244 |
2024 | 2,176 |
2025 | 882 |
Total lease commitments | 7,302 |
Less: Interest | (313) |
Present value of lease liabilities | $ 6,989 |
Leases - Components of Operatin
Leases - Components of Operating Lease Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Leases | |
Operating lease cost | $ 5,053 |
Variable lease cost | 828 |
Total lease cost | $ 5,881 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Supplemental Cash Flow Information: | |
Cash paid for amounts included in the measurement of lease liabilities | $ 5,111 |
Right-of-use assets obtained in exchange for lease liabilities | $ 9,514 |
Leases - Operating Leases and S
Leases - Operating Leases and Service Agreements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2022 | |
Operating leases | |||
2022 | $ 4,384 | ||
2023 | 3,291 | ||
2024 | 2,385 | ||
2025 | 901 | ||
Total | 10,961 | ||
Service agreements | |||
2022 | 470 | ||
2023 | 19 | ||
Total | 489 | ||
Total | |||
2022 | 4,854 | ||
2023 | 3,310 | ||
2024 | 2,385 | ||
2025 | 901 | ||
Total | $ 11,450 | ||
Expense related to lease arrangements | $ 3,900 | $ 3,700 | |
Expense related to service agreements | $ 1,100 | $ 841 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Commitments and Contingencies | ||
Accruals for contingencies | $ 0 | $ 0 |
Preferred Units Stockholders' E
Preferred Units Stockholders' Equity and Members' Deficit (Details) | 12 Months Ended | |
Dec. 31, 2022 Vote shares | Dec. 31, 2021 shares | |
Class of Stock [Line Items] | ||
Preferred stock authorized | 100,000,000 | |
Common Class A | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Number of Voting Rights | Vote | 1 | |
Common Class B | ||
Class of Stock [Line Items] | ||
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Number of Voting Rights | Vote | 1 | |
Common Units | ||
Class of Stock [Line Items] | ||
Stock exchange ratio | 1,000,000 |
Management Incentive Plan and_3
Management Incentive Plan and Stock-Based Compensation - Narratives (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Management Incentive Plans | |||
Total stock compensation expense | $ 24,993 | $ 289,803 | |
Capitalized stock compensation to capitalized software development costs | 600 | ||
Payment of tax withholding obligations for federal payroll taxes | 8,600 | 15,100 | |
Payment for employee payroll tax withholding obligations on stock-based compensation | 7,959 | 10,567 | |
Percentage of Increase in Shares Outstanding Annually | 3% | ||
Unrecognized stock compensation expense | $ 23,100 | ||
Stock based compensation recognition period | 2 years | ||
Restricted Stock Units | |||
Management Incentive Plans | |||
Total stock compensation expense | $ 13,200 | $ 4,500 | |
Vested (in years) | 4 years | ||
Stock options | |||
Management Incentive Plans | |||
Options granted to employees | 84,000 | ||
Weighted average grants in period | $ 9.86 | ||
Stock options forfeited | 40,000 | ||
Unrecognized stock compensation expense | $ 227 | ||
Stock based compensation recognition period | 2 years 6 months | ||
2021 ESPP | |||
Management Incentive Plans | |||
Percentage of Increase in Shares Outstanding Annually | 1% | ||
Options granted to employees | 0 | 0 | |
Stock Option And Incentive Plan 2021 | Restricted Stock Units | |||
Management Incentive Plans | |||
Total stock compensation expense | $ 1,500 | $ 100 | |
Vested (in years) | 4 years | ||
Common Class A | |||
Management Incentive Plans | |||
Common stock reserved for future issuance | 26,400,000 | ||
Common Class A | Share-based Payment Arrangement, Employee | |||
Management Incentive Plans | |||
Number of shares to be received in exchange for terminated employee agreements | 2,047,064 | ||
Fair value of shares to be issued in exchange of termination of employment agreements | $ 31,200 | ||
Common Class A | IPO | |||
Management Incentive Plans | |||
Total stock compensation expense | $ 237,300 | ||
Common Class A | IPO | Contingently Issuable Shares | |||
Management Incentive Plans | |||
Percentage of shares distributed | 7.50% | ||
Percentage of shares to be issued prior to second anniversaries of the IPO effectiveness date | 92.50% | ||
Total stock compensation expense | $ 10,200 | $ 16,700 | |
Vested (in years) | 1 year | ||
Common Class A | 2021 ESPP | |||
Management Incentive Plans | |||
Shares, Authorized | 150,000 | ||
Purchase price of common stock, percent | 85% |
Management Incentive Plan and_4
Management Incentive Plan and Stock-Based Compensation - Assumptions (Details) - $ / shares | 3 Months Ended | 12 Months Ended | |
Oct. 25, 2021 | Dec. 31, 2022 | Dec. 31, 2022 | |
Restricted Stock Units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of common stock (per share) | $ 17 | ||
Expected volatility | 48.20% | ||
Risk-free rate | 1.65% | ||
Dividend yield | 0% | ||
Cost of equity capital | 11.20% | ||
Performance-Based Restricted Stock Units ("RSUs") | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Fair value of common stock (per share) | $ 8.92 | $ 8.92 | |
Expected volatility | 53.40% | ||
Risk-free rate | 3.98% | ||
Dividend yield | 0% | ||
Cost of equity capital | 13.50% | ||
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected volatility | 64.54% | ||
Expected term of award | 6 years 6 months | ||
Risk-free rate | 3.39% | ||
Dividend yield | 0% |
Management Incentive Plan and_5
Management Incentive Plan and Stock-Based Compensation - RSUs and Stock Options (Details) - $ / shares | 2 Months Ended | 3 Months Ended | 12 Months Ended |
Dec. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2022 | |
IPO Vested Class A Common Stock and RSUs | |||
Restricted Stock Units | |||
Beginning balance | 21,556,633 | ||
Granted during the period | 22,213,282 | 1,428,798 | |
Forfeited during the period | (35,139) | (1,167,377) | |
Vested and issued | (621,510) | (1,593,602) | |
Ending balance | 21,556,633 | 20,224,452 | 20,224,452 |
Vested | 17,225,377 | ||
Unvested | 2,999,075 | 2,999,075 | |
Weighted- Average Grant-Date Fair Value | |||
Beginning balance | $ 15.57 | ||
Total granted during the period | $ 15.53 | 10.08 | |
Forfeited during the period | 16.85 | 16.34 | |
Vested and issued | 15.27 | 15.48 | |
Ending Balance | $ 15.57 | $ 15.15 | $ 15.15 |
Performance-Based Restricted Stock Units ("RSUs") | |||
Restricted Stock Units | |||
Granted during the period | 250,000 | ||
Performance-Based Restricted Stock Units ("RSUs") | Chief Executive Officer | |||
Restricted Stock Units | |||
Granted during the period | 250,000 | ||
Stock options | |||
Options | |||
Granted during the period | 84,000 | ||
Forfeited during the period | (40,000) | ||
Ending balance | 44,000 | 44,000 | |
Unvested | 44,000 | 44,000 | |
Weighted Average Exercise Price | |||
Granted during the period | $ 9.86 | ||
Forfeited during the period | 9.86 | ||
Outstanding | $ 9.86 | 9.86 | |
Unvested | $ 9.86 | $ 9.86 | |
Weighted Average Remaining Contractual Term (in years) | 9 years 5 months 15 days |
Management Incentive Plan and_6
Management Incentive Plan and Stock-Based Compensation - Stock Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Management Incentive Plans | ||
Total stock compensation expense | $ 24,993 | $ 289,803 |
Unrecognized stock compensation expense | $ 23,100 | |
Stock based compensation recognition period | 2 years | |
Cost of revenues | ||
Management Incentive Plans | ||
Total stock compensation expense | $ 1,421 | 377 |
General and administrative | ||
Management Incentive Plans | ||
Total stock compensation expense | 14,130 | 112,829 |
Sales and marketing | ||
Management Incentive Plans | ||
Total stock compensation expense | 5,875 | 36,312 |
Technology and development | ||
Management Incentive Plans | ||
Total stock compensation expense | $ 3,567 | $ 140,285 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee Benefit Plans | |||
Contribution percent of employees | 50% | ||
Contribution percent of match | 3% | ||
Employer discretionary contribution Amount | $ 584 | $ 452 | $ 345 |
Loss Per Class A Common Share -
Loss Per Class A Common Share - Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Loss Per Class A Common Share | |||
Net loss | $ (13,263) | $ (282,242) | $ 4,061 |
Less: Net income attributable to Enfusion, Inc. prior to the IPO | (12,892) | ||
Less: Net loss attributable to non-controlling interests | 5,609 | 123,925 | |
Net loss attributable to Enfusion, Inc. | (7,654) | (171,209) | |
Numerator: | |||
Net loss attributable to Enfusion, Inc. | (7,654) | (171,209) | |
Adjustment to loss attributable to common stockholders | (954) | (16,580) | |
Numerator for Basic Earnings per Share | (8,608) | (187,789) | |
Numerator for Diluted Earnings per Share | $ (8,608) | $ (187,789) | |
Denominator: | |||
Weighted-average shares of Class A common stock outstanding | 67,057 | 65,583 | |
Vested shares of Class A common stock and RSUs | 18,336 | 17,462 | |
Weighted-average shares of Class A common stock outstanding--basic | 85,393 | 83,045 | |
Weighted-average shares of Class A common stock outstanding--diluted | 85,393 | 83,045 | |
Net loss per share of Class A common stock--Basic | $ (0.10) | $ (2.26) | |
Net loss per share of Class A common stock--Diluted | $ (0.10) | $ (2.26) |
Loss Per Class A Common Share_2
Loss Per Class A Common Share - Dilutive shares (Details) - shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Antidilutive securities amount | 46,242 | 52,102 |
Common Class B | ||
Antidilutive securities amount | 43,199 | 47,471 |
Contingently issuable shares of Class A common stock | ||
Antidilutive securities amount | 1,726 | |
Restricted Stock Units | ||
Antidilutive securities amount | 2,999 | 2,905 |
Stock options | ||
Antidilutive securities amount | 44 |
Income Taxes - Components of in
Income Taxes - Components of income (loss) before income taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
U.S. | $ (16,201) | $ (279,990) | $ 3,130 |
Foreign | 4,012 | (1,673) | 1,364 |
Income (loss) before income taxes | $ (12,189) | $ (281,663) | $ 4,494 |
Income taxes - Components of _2
Income taxes - Components of income tax expense (benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current tax expense | |||
Foreign | $ 1,347 | $ 228 | $ 433 |
Total current tax expense | 1,347 | 228 | 433 |
Deferred tax (benefit) expense | |||
Foreign | (273) | 351 | |
Total Deferred Income Tax (Benefit) Expense | (273) | 351 | |
Total | $ 1,074 | $ 579 | $ 433 |
Income taxes - Effective income
Income taxes - Effective income tax rate reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
At U.S. Federal statutory tax rate | 21% | 21% | 21% |
State Tax, Net of Federal Benefit | 3.14% | 4.28% | |
Noncontrolling Interest | (8.85%) | (9.20%) | |
Foreign Branch Taxes | (8.24%) | (0.28%) | 9.64% |
Equity Based Compensation | (10.63%) | (2.49%) | |
Foreign Rate Differential | 0.48% | 0.04% | (1.14%) |
Valuation Allowance | 50.56% | (14.51%) | |
Change in Tax Rates | (59.22%) | ||
Pass-through Loss (Income) | 0.91% | (19.86%) | |
Return to Provision | 4.03% | 0.08% | |
Other | (1.08%) | (0.04%) | |
Total | (8.81%) | (0.21%) | 9.64% |
Income taxes - Narratives (Deta
Income taxes - Narratives (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | |||
Tax benefit attributable to noncontrolling interest | $ 1,100 | $ 25,900 | |
Tax impact of equity-based compensation | 1,300 | 2,500 | |
Net deferred tax (expense) benefit | (6,200) | 40,800 | |
Foreign income taxes related to pre-tax income of its branch | 1,000 | 600 | $ 400 |
income tax benefit relating to income tax returns | 500 | 200 | |
Change in tax rates | 7,200 | ||
Valuation Allowance [Abstract] | |||
Valuation allowance | $ 133,689 | 124,526 | |
Valuation allowance recorded in additional paid-in capital | $ 83,100 | ||
Percentage of Other's Share of Tax Benefits Under Tax Receivable Agreement | 15% | ||
Percentage of Entity's Share of Tax Benefits Under Tax Receivable Agreement | 85% | ||
Effective tax rate (as a percent) | (8.81%) | (0.21%) | 9.64% |
U.S. statutory tax rate (as a percent) | 21% | 21% | 21% |
Liability under the Tax Receivable Agreement | $ 83,200 | $ 74,700 | |
Federal | |||
Valuation Allowance [Abstract] | |||
Net loss carryforward | 33,200 | ||
State | |||
Valuation Allowance [Abstract] | |||
Net loss carryforward | $ 31,200 | ||
Enfusion LLC | |||
Operating Loss Carryforwards [Line Items] | |||
Tax impact of the pre-tax book income | 2,600 | $ 900 | |
Valuation Allowance [Abstract] | |||
Number of units purchased in connection with Pre-IPO | 4,272,204 | ||
Tax basis increase in net assets under Tax Receivable Agreement | $ 48,000 | $ 48,000 |
Income taxes - Components of de
Income taxes - Components of deferred tax assets and liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets | ||
Investment in Enfusion Ltd. LLC | $ 86,117 | $ 80,124 |
Equity Based Compensation | 37,912 | 38,362 |
Net Operating Losses | 9,358 | 5,475 |
Other | 794 | 565 |
Total Deferred Tax Assets | 134,181 | 124,526 |
Valuation Allowance | (133,689) | (124,526) |
Total Deferred Tax Assets Net of Valuation Allowance | 492 | |
Deferred tax liabilities | ||
Property, Plant, and Equipment | (77) | (351) |
Total Deferred Tax Liabilities | (77) | (351) |
Net Deferred Tax Assets | $ 415 | |
Net Deferred Tax Liabilities | $ (351) |
Income taxes - Unrecognized def
Income taxes - Unrecognized deferred taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Uncertain tax positions | ||
Beginning balance | $ 119 | $ 0 |
Increases for tax positions related to the current year | 0 | 30 |
Increases (decreases) for tax positions of prior years | 0 | 89 |
Ending balance | 119 | 119 |
Interest and penalties | $ 65 | $ 65 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | |||||
Nov. 14, 2022 | Oct. 12, 2022 | May 13, 2022 | May 06, 2022 | Oct. 20, 2021 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | ||||||
Percentage of Entity's Share of Tax Benefits Under Tax Receivable Agreement | 85% | |||||
Common units exchanged (in shares) | 1,870,386 | 1,000,000 | 1,401,818 | |||
Common units surrendered by Pre-IPO unitholders (in shares) | 1,870,386 | 1,000,000 | 1,401,818 | |||
Increase in common units (in shares) | 1,870,386 | 1,000,000 | 1,401,818 | |||
Master Services Agreement | Mr. Movchan | MSA | ||||||
Related Party Transaction [Line Items] | ||||||
Beneficial ownership percentage | 5% | |||||
Amount received from QL | $ 204,766 | |||||
Common Class A | ||||||
Related Party Transaction [Line Items] | ||||||
Stock issued (in shares) | 1,870,386 | 1,000,000 | 1,401,818 | |||
IPO | ||||||
Related Party Transaction [Line Items] | ||||||
Purchase of Common Units | 5,526,608 | |||||
Payments to acquire newly issued common units | $ 87,800,000 | |||||
Stock issued (in shares) | 5,526,608 |
Subsequent Events (Details)
Subsequent Events (Details) - shares | Feb. 21, 2023 | Nov. 14, 2022 | Oct. 12, 2022 | May 13, 2022 |
Subsequent Event | ||||
Common units surrendered by Pre-IPO unitholders (in shares) | 1,870,386 | 1,000,000 | 1,401,818 | |
Increase in common units (in shares) | 1,870,386 | 1,000,000 | 1,401,818 | |
Common Class A | ||||
Subsequent Event | ||||
Stock issued (in shares) | 1,870,386 | 1,000,000 | 1,401,818 | |
Subsequent Event | ||||
Subsequent Event | ||||
Common units surrendered by Pre-IPO unitholders (in shares) | 1,000,000 | |||
Stock issued (in shares) | 1,000,000 | |||
Increase in common units (in shares) | 1,000,000 |