Form 10-Q Enfusion, Inc. For: Jun 30
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
EXCHANGE ACT OF 1934
For the quarterly period ended
or
EXCHANGE ACT OF 1934
For the transition period from to
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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As of August 9, 2022, the registrant had
TABLE OF CONTENTS
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations, financial condition, business strategy, plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements are based on management’s current expectations and assumptions about future events, which are inherently subject to uncertainties, risks, and changes in circumstances that are difficult to predict. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements concerning the following:
| ● | our future financial performance, including our revenues, costs of revenues, gross profit or gross profit margin and operating expenses; |
| ● | the sufficiency of our cash, cash to meet our liquidity needs; |
| ● | anticipated trends and growth rates in our business and in the markets in which we operate; |
| ● | our ability to maintain the security and availability of the products and services that comprise our solution; |
| ● | our ability to increase the number of clients using our solution; |
| ● | our ability to sell additional products and services to and retain our existing clients; |
| ● | our ability to successfully expand in our existing markets and into new markets; |
| ● | our ability to effectively manage our growth and future expenses; |
| ● | our market opportunity and the potential growth of that market, our liquidity and capital needs and other similar matters; |
| ● | our ability to maintain, protect and enhance our intellectual property; |
| ● | our ability to comply with modified or new laws and regulations applying to our business; |
| ● | the attraction and retention of qualified employees and key personnel; |
| ● | our anticipated investments in sales and marketing and research and development; |
| ● | our ability to successfully defend litigation brought against us; |
| ● | the increased expenses associated with being a public company; |
| ● | the impact of the COVID-19 pandemic and other global financial, economic, and political events on our business and industry; and |
| ● | our ability to compete effectively with existing competitors and new market entrants. |
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You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in Item 1A. Risk Factors in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q. And while we believe such information provides a reasonable basis for such statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Interim Balance Sheets
(dollars in thousands)
| As of |
| As of | ||||
June 30, 2022 | December 31, 2021 | ||||||
| (Unaudited) |
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ASSETS |
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Current Assets: |
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Cash | $ | | $ | | |||
Accounts receivable, net |
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Prepaid expenses |
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Other current assets | | | |||||
Total current assets |
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Property and equipment, net |
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Other assets |
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Total assets | $ | | $ | | |||
LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable | $ | | $ | | |||
Accrued expenses and other current liabilities |
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Total current liabilities |
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Other liabilities |
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Total liabilities |
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Stockholders' Equity: |
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Class A common stock, $ | | | |||||
Class B common stock, $ | | | |||||
Additional paid-in capital |
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Accumulated deficit | ( | ( | |||||
Accumulated other comprehensive loss |
| ( |
| ( | |||
Total stockholders’ equity attributable to Enfusion, Inc. |
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Non-controlling interests | | | |||||
Total stockholders' equity | | | |||||
Total liabilities and stockholders' equity | $ | | $ | | |||
See Notes to Condensed Consolidated Interim Financial Statements.
5
ENFUSION, INC.
Condensed Consolidated Interim Statements of Operations
(dollars in thousands)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2022 |
| 2021 | 2022 |
| 2021 | |||||||
REVENUES: |
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Platform subscriptions | $ | | $ | | $ | | $ | | |||||
Managed services |
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Other |
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Total revenues |
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COST OF REVENUES: |
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Platform subscriptions |
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Managed services |
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Other |
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Total cost of revenues |
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Gross profit |
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OPERATING EXPENSES: |
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General and administrative |
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Sales and marketing |
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Technology and development |
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Total operating expenses |
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(Loss) income from operations |
| ( |
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| ( |
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NON-OPERATING INCOME (EXPENSE): |
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Interest expense |
| ( |
| ( |
| ( |
| ( | |||||
Other income (expense) |
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| — |
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| — | |||||
Total non-operating income (expense) |
| — |
| ( |
| ( |
| ( | |||||
(Loss) income before income taxes |
| ( |
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| ( |
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Income taxes |
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Net (loss) income | $ | ( | $ | | $ | ( | $ | | |||||
Net loss attributable to non-controlling interests | ( | — | ( | — | |||||||||
Net (loss) income attributable to Enfusion, Inc. | $ | ( | $ | | $ | ( | $ | | |||||
Net loss per Class A common shares attributable to Enfusion, Inc.: | |||||||||||||
Basic and diluted | ( | ( | |||||||||||
Weighted Average number of Class A common shares outstanding: | |||||||||||||
Basic and diluted | | | |||||||||||
See Notes to Condensed Consolidated Interim Financial Statements.
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ENFUSION, INC.
Condensed Consolidated Interim Statements of Comprehensive (Loss) Income
(dollars in thousands)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2022 |
| 2021 | 2022 |
| 2021 | |||||||
Net (loss) income | $ | ( | $ | | $ | ( | $ | | |||||
Other comprehensive loss, net of income tax: |
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Foreign currency translation loss |
| ( |
| ( |
| ( |
| ( | |||||
Total other comprehensive (loss) income | ( | | ( | | |||||||||
Comprehensive loss attributable to non-controlling interests | ( | — | ( | — | |||||||||
Total comprehensive (loss) income attributable to Enfusion, Inc. | $ | ( | $ | | $ | ( | $ | | |||||
See Notes to Condensed Consolidated Interim Financial Statements.
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ENFUSION, INC.
Condensed Consolidated Interim Statements of Preferred Units, Stockholders’ Equity and Members’ Deficit
(dollars in thousands)
(Unaudited)
|
| Accumulated | ||||||||||||||||||
Class A | Class B | Additional | Other | Total | ||||||||||||||||
Common Stock | Common Stock | Paid-in | Accumulated | Comprehensive | Non-Controlling | Stockholders' | ||||||||||||||
| Shares |
| Amount | Shares |
| Amount | Capital | Deficit | Loss | Interest | Equity | |||||||||
March 31, 2022 |
| | $ | | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | |||
Net loss |
| — | — | — | — | — | ( |
| — | ( |
| ( | ||||||||
Stock-based compensation, net of taxes paid | — | — | — | — | | — | — | | | |||||||||||
Share exchange | | | ( | ( | | — | — | ( | — | |||||||||||
Issuance of restricted shares | | — | — | — | — | — | — | — | — | |||||||||||
Foreign currency translation loss |
| — | — | — | — | — | — |
| ( | ( |
| ( | ||||||||
June 30, 2022 |
| | $ | | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | |||
January 1, 2022 | | $ | | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | ||||
Net loss |
| — | — | — | — | — | ( |
| — | ( |
| ( | ||||||||
Stock-based compensation, net of taxes paid | — | — | — | — | | — | — | | | |||||||||||
Share exchange | | | ( | ( | | — | — | ( | — | |||||||||||
Issuance of restricted shares | | — | — | — | — | — | — | — | — | |||||||||||
Foreign currency translation loss |
| — | — | — | — | — | — |
| ( | ( |
| ( | ||||||||
June 30, 2022 |
| | $ | | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | |||
Other | |||||||||||||||
Preferred Units | Members’ Deficit | Comprehensive | Total | ||||||||||||
| Units | Amount |
| Units |
| Amount | Loss | Members’ Deficit | |||||||
March 31, 2021 |
| | $ | | | $ | ( | $ | ( | $ | ( | ||||
Net income |
| — |
| | — |
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| — |
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Foreign currency translation loss | — | — | — | — | ( | ( | |||||||||
Distributions to members |
| — | ( | — |
| ( |
| — |
| ( |
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June 30, 2021 |
| | $ | | | $ | ( | $ | ( | $ | ( | ||||
January 1, 2021 | | $ | | | $ | ( | $ | ( | $ | ( | |||||
Net income |
| — |
| | — |
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| — |
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Foreign currency translation loss |
| — |
| — | — |
| — |
| ( |
| ( |
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Distributions to members |
| — |
| ( | — | ( |
| — |
| ( |
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June 30, 2021 |
| | $ | | | $ | ( | $ | ( | $ | ( | ||||
See Notes to Condensed Consolidated Interim Financial Statements.
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ENFUSION, INC.
Condensed Consolidated Interim Statements of Cash Flows
(dollars in thousands)
(Unaudited)
| Six Months Ended June 30, | ||||||
| 2022 |
| 2021 | ||||
Cash flows from operating activities: |
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Net (loss) income | $ | ( | $ | | |||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
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Depreciation and amortization |
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Provision for bad debts |
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Amortization of debt-related costs |
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Stock-based compensation expense | | — | |||||
Change in operating assets and liabilities: |
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Accounts receivable |
| ( |
| ( | |||
Prepaid expenses and other current assets |
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Accounts payable |
| ( |
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Accrued expenses and other liabilities |
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Net cash (used) provided by operating activities |
| ( |
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Cash flows from investing activities: |
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Purchases of property and equipment |
| ( |
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Net cash used in investing activities |
| ( |
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Cash flows from financing activities: |
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Payment of Member distributions |
| — |
| ( | |||
Payment of withholding taxes on stock-based compensation | ( | — | |||||
Net cash used in financing activities |
| ( |
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Effect of exchange rate changes on cash |
| ( |
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Net decrease in cash |
| ( |
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Cash, beginning of period |
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Cash, end of period | $ | | $ | | |||
Supplemental disclosure of non-cash investing activities: | |||||||
Accrued Property, Plant and Equipment | $ | | $ | — | |||
Supplemental disclosure of cash flow information: |
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Interest paid in cash | $ | — | $ | | |||
Income taxes paid in cash | $ | | $ | — | |||
See Notes to Condensed Consolidated Interim Financial Statements.
9
ENFUSION, INC.
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
Note 1 Organization and Description of Business
Enfusion, Inc. (“Enfusion” or the “Company”) 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 (“IPO”), which was completed on October 25, 2021, and other related transactions in order to carry on the business of Enfusion Ltd. LLC.
Enfusion, Inc. has
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”), and in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the Company’s financial position and results of operations, and all adjustments are of a normal recurring nature. The operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results expected for the full year ending December 31, 2022. The condensed consolidated interim financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The unaudited condensed consolidated interim financial statements include the accounts of Enfusion, Inc. and its wholly or majority-owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation.
Use of Estimates
The preparation of condensed consolidated interim financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated interim financial statements and accompanying notes. Actual results could differ from those estimates. The effect of the change in the estimates will be recognized in the current period of the change.
In order to better align with industry standards, the Company revised the presentation of its condensed consolidated interim statement of operations for the three and six months ended June 30, 2021 to reclassify certain
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immaterial expenses to cost of sales for Platform subscriptions. These expenses were previously classified in cost of sales for Managed services and Other revenues. This change in presentation has no effect on our gross profit or other consolidated results. In addition, the Company revised the presentation of certain credit charges that were previously recorded in Other revenues to reclassify these charges to Platform subscription and Managed services revenues, respectively. This change in presentation has no effect on the Company’s total revenues or other consolidated results.
Note 3 Summary of Significant Accounting Policies
A description of the Company’s significant accounting policies is included in the audited financial statements within its Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes in the Company’s significant accounting policies during the three and six months ended June 30, 2022.
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 contacts.
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 did 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 generally 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.
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Other revenues
Other revenues consists of non-subscription-based revenues, such as software enhancements developed for individual, sponsoring clients, but received by all clients, and 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. However, all distinct performance obligations within a contract are satisfied over a similar period of time with the same measure of progress. Accordingly, each distinct performance obligation within a contract has the same pattern of revenue recognition. 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 June 30, 2022 and December 31, 2021 was $
Disaggregation of revenue
The Company’s total revenues by geographic region, based on the client’s physical location is presented in the following tables (in thousands):
| Three Months Ended June 30, |
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2022 | 2021 |
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Geographic Region | Amount |
| Percent |
| Amount |
| Percent |
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Americas* | $ | |
| | % | $ | |
| | % | |
Europe, Middle East and Africa (EMEA) |
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| | % |
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| | % | |
Asia Pacific (APAC) |
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| | % |
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| | % | |
Total revenues | $ | |
| | % | $ | |
| | % | |
* | The Company’s total revenues in the United States were $ |
| Six Months Ended June 30, |
| |||||||||
2022 | 2021 |
| |||||||||
Geographic Region | Amount |
| Percent |
| Amount |
| Percent |
| |||
Americas* | $ | |
| | % | $ | |
| | % | |
Europe, Middle East and Africa (EMEA) |
| |
| | % |
| |
| | % | |
Asia Pacific (APAC) |
| |
| | % |
| |
| | % | |
Total revenues | $ | |
| | % | $ | |
| | % | |
* The Company’s total revenues in the United States were $
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Accounts Receivable
As of June 30, 2022 and December 31, 2021,
Recent Accounting Pronouncements Not Yet Adopted
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 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, is 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. For leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, lessees and lessors must apply a modified retrospective transition approach. While the Company expects the adoption of this standard to result in an increase to the reported assets and liabilities, it has not yet determined the full impact the adoption of this standard will have on its consolidated financial statements and related disclosures. However, the Company expects the adjustment to retained earnings to be immaterial.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU 2016-13, as subsequently amended for various technical issues is effective for annual reporting periods beginning after December 15, 2022, for private entities and emerging growth companies. The Company is evaluating the impact of this standard on its consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for private entities and emerging growth companies in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, with early adoption permitted, including adoption in an interim period. The Company is evaluating the effect of adopting this new accounting guidance but does not expect adoption will have a material impact on its consolidated financial statements.
Note 4 Property and Equipment, Net
Property and equipment, net consists of the following (in thousands):
| June 30, 2022 |
| December 31, 2021 | ||||
Computer equipment and software | $ | | $ | | |||
Software development costs |
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Leasehold improvements |
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Furniture and fixtures |
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Total property and equipment, cost |
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Less accumulated depreciation and amortization |
| ( |
| ( | |||
Total property and equipment, net | $ | | $ | | |||
As of June 30, 2022 and December 31, 2021, property and equipment, net located in the United States was $
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Depreciation and amortization expense related to property and equipment, excluding software development costs, was $
Note 5 Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
| June 30, 2022 |
| December 31, 2021 | ||||
Accrued compensation | $ | | $ | | |||
Accrued expenses |
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Accrued taxes |
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Total accrued expenses and other current liabilities | $ | | $ | | |||
Note 6 Operating Leases and Service Agreements
Operating Leases and Service Agreements
The Company leases office space in various locations under operating lease agreements in the normal course of business, which expire at various dates through 2025. Certain operating leases are secured with cash security deposits or letters of credit.
The Company has service agreements for the use of data processing facilities. These service agreements expire at various dates through 2023. Monthly base payments as of June 30, 2022 range from $
Future aggregate minimum rental payments under the noncancelable operating leases and service agreements noted above, excluding the Company’s share of real estate taxes and other operating costs, are as follows (in thousands):
| Amount | ||
2022 (remaining six months) | $ | | |
2023 |
| | |
2024 |
| | |
2025 |
| | |
Total | $ | | |
Total expense related to these lease agreements, which is included in Cost of revenues and Operating expenses, was $
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 based on historical claim activity and loss development factors.
Note 8 Preferred Units, Stockholders’ Equity and Members’ Deficit
Prior to the organizational restructuring consummated in connection with the Company’s IPO and the application of the net proceeds therefrom (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
14
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, the 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, outstanding Class C-1, C-2 and D Preferred Units were classified outside of permanent equity and within temporary equity due to their optional redemption features and liquidation preferences.
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
Amendment and Restatement of Certificate of Incorporation
In October 2021, the Company amended its certificate of incorporation. The amended and restated certificate of incorporation of Enfusion, Inc. provides for
Preferred Stock
The Company’s board of directors has the authority, without further action by the Company’s stockholders, to issue up to
Note 9 Stock-Based Compensation
The Company recognized total stock compensation expense for the three and six months ended June 30, 2022 of $
In connection with obligations to issue Class A common stock to former holders of Award Units under the Company’s former Change in Control Bonus Plan, the Company paid approximately $
15
and has accordingly been recorded as a reduction to additional paid-in capital. The Company’s stock compensation expense was recognized in the following captions within the consolidated statements of operations:
(in thousands) |
| Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | |||
Cost of revenues | $ | | $ | | ||
General and administrative | | | ||||
Sales and marketing | | | ||||
Technology and development | | | ||||
Total stock compensation expense | $ | | $ | |
Total unrecognized stock compensation expense related to unvested restricted stock units (“RSUs”) and contingently issuable shares of Class A common stock that will vest within
In connection with the IPO, the Company adopted the 2021 Incentive Plan (the “Plan”). The Plan provides for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock, dividend equivalents, other stock-based awards, substitute awards, annual incentive awards and performance awards intended to align the interests of participants with those of the Company’s shareholders.
During the three months ended June 30, 2022, there were
The assumptions used for the options granted under the Plan during the three months ended June 30, 2022 were as follows:
Assumptions | ||
Expected volatility | ||
Expected term of award | ||
Risk-free rate | ||
Dividend yield |
In connection with the IPO, the Company also adopted the 2021 Employee Stock Purchase Plan (“2021 ESPP”). Under the 2021 ESPP, eligible employees may be granted options to purchase shares of Class A common stock at the lower of
Note 10 Net Income (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.
16
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 Condensed Consolidated Financial Statements. Therefore, earnings per share information has not been presented for periods prior to the IPO on October 20, 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:
Three Months | Six Months | |||||
(in thousands, except per share amounts) |
| Ended June 30, 2022 |
| Ended June 30, 2022 | ||
Numerator: | ||||||
Net loss | $ | ( | $ | ( | ||
Less: Net loss attributable to non-controlling interests | | | ||||
Net loss attributable to Enfusion, Inc. | ( | ( | ||||
Adjustment to income (loss) attributable to common stockholders | ( | ( | ||||
Numerator for Basic Earnings per Share | $ | ( | $ | ( | ||
Denominator: | ||||||
Weighted-average shares of Class A common stock outstanding | | | ||||
Vested shares of Class A common stock and RSUs | | | ||||
Weighted-average shares of Class A common stock outstanding--basic | | | ||||
Net loss per share of Class A common stock--basic and diluted | ( | ( | ||||
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:
Three Months | Six Months | |||||
(in thousands) |
| Ended June 30, 2022 |
| Ended June 30, 2022 | ||
Class B common stock |
| |
| | ||
Contingently issuable shares of Class A common stock | | | ||||
Restricted stock units | | | ||||
Stock options | | | ||||
| | |||||
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.
Note 11 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 Condensed Consolidated Financial Statements. For periods prior to the IPO, the Company’s taxes represent those of Enfusion Ltd. LLC.
17
The Company’s effective tax rate for the three months ended June 30, 2022 and 2021 was (
Note 12 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 of
In connection with the IPO, the Company entered into the Tax Receivable Agreement with the Pre-IPO LLC Members, which provides for the payment by Enfusion Inc. of
On May 6, 2022, a Pre-IPO Common Unitholder delivered an exchange notice pursuant to Article XII of the LLC Operating Agreement, relating to the exchange of
Pursuant to the terms of the LLC Operating Agreement, the Pre-IPO Common Unitholder surrendered
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This discussion and analysis reflect historical results of operations and financial position. The following discussion and analysis is intended to highlight and supplement data and information presented elsewhere in this Quarterly Report on From 10-Q, including our unaudited condensed consolidated interim financial statements and related notes and other financial information, and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on March 30, 2022. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to the historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could results to differ materially from management’s expectations. Factors that could cause or contribute to such differences are discussed in the section titled “Special Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors.” We assume no obligation to update any of these forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on Enfusion’s behalf are qualified in their entirety by this paragraph.
CERTAIN DEFINITIONS
As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires:
| ● | “Award Units” refers to Management Incentive Award Units issued under Enfusion Ltd. LLC’s Change in Control Bonus Plan. |
| ● | “Change in Control Bonus Plan” refers to Enfusion Ltd. LLC’s former Change in Control Bonus Plan for certain members of management that provided for the payment of a cash bonus based on a specified number of Award Units in the event of a change in control transaction, as defined in Enfusion Ltd. LLC’s operating agreement. In October 2021, Enfusion Ltd. LLC’s board of managers elected to terminate such plan (and all Award Units issued thereunder) upon effectiveness of the registration statement for our IPO. |
| ● | “Common Units” refers to the new class of units of Enfusion Ltd. LLC created by the reclassification of the LLC interests of Enfusion Ltd. LLC as part of the Reorganization Transactions. |
| ● | “Enfusion,” the “Company,” “we,” “us” and “our” and similar references refer: (1) following the consummation of the Reorganization Transactions, including our IPO, to Enfusion, Inc., and, unless otherwise stated, all of its direct and indirect subsidiaries, including Enfusion Ltd. LLC and (2) prior to the completion of the Reorganization Transactions, including our IPO, to Enfusion Ltd. LLC and, unless otherwise stated, all of its direct and indirect subsidiaries. |
| ● | “IPO” refers to the Company’s initial public offering, completed on October 25, 2021. |
| ● | “Pre-IPO Owners” refer to the equity holders who were the owners of Enfusion Ltd. LLC immediately prior to the Reorganization Transactions. |
| ● | “Pre-IPO Common Unitholders” refer to Pre-IPO Owners that held Common Units following the Reorganization Transactions. |
| ● | “Reorganization Transactions” refer to our IPO and certain organizational transactions that were affected in connection with our IPO, and the application of the net proceeds therefrom. See “Initial Public Offering and Reorganization Transactions” in Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 for a description of the transactions. |
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.
19
Overview
Enfusion is a global, high-growth, software-as-a-service provider focused on transforming the investment management industry. The products and services that comprise our solution are designed to eliminate technology and information barriers, empowering investment managers to confidently make and execute better-informed investment decisions in real time. We simplify investment and operational workflows by unifying mission critical systems and coalescing data into a single dataset resulting in a single source of truth. This allows stakeholders throughout the entire client organization to interact more effectively with one another across the investment management lifecycle.
Our total revenues were approximately 98.4% and 98.7% recurring subscription-based during the three and six months ended June 30, 2022, respectively, and 98.5% and 98.4% during the three and six months ended June 30, 2021, respectively. Generally, we charge our clients fees comprised of various components such as user fees, connectivity fees, market data fees and technology-powered, managed service fees, all of which take into account client complexity and that is subject to contract minimums. The weekly enhancements and upgrades that we deliver and the dedicated client service are included in the price of the contract.
To support our growth and capitalize on our market opportunity, we continue to invest across all aspects of our business. In research and development, we are focused on developing additional system functionality that will open revenue opportunities across alternative and institutional investment managers. We have also further institutionalized and increased spend in our sales and marketing efforts, both in the United States and internationally.
We operate as a single operating and reportable segment, which reflects the way our chief operating decision maker, (“CODM”) reviews and assesses the performance of our business. Our total revenues were $36.5 million and $70.7 million for the three and six months ended June 30, 2022, respectively, compared to $26.5 million and $50.8 million for the three and six months ended June 30, 2021, respectively. Platform subscriptions and managed services revenues were $36.0 million for the three months ended June 30, 2022, up approximately 38% from $26.1 million for the three months ended June 30, 2021. For the six months ended June 30, 2022, platform and subscriptions revenues were $69.7 million, up 39.4% compared to $50.0 million for the six months ended June 30, 2021. We had net losses of $4.1 million and $16.7 million for the three and six months ended June 30, 2022, compared to net income of $4.3 million and $8.4 million for the three and six months ended June 30, 2021, respectively.
Components of Our Results of Operations
Revenues
Platform subscriptions
Platform subscriptions revenues consists primarily of user fees to provide our clients access to our cloud-based solution. Fees consider various components such as number of users, connectivity, trading volume, data usage and product coverage. Platform subscription clients do not have the right to take possession of the platform’s software and do not have any general return right. Platform subscription revenues are generally recognized ratably over the period of contractually enforceable rights and obligations, beginning on the date that the client gains access to the platform. Historically, our 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 did 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. Installment payments are invoiced at the end of each calendar month during the subscription term.
Managed services
Managed services revenues primarily consists of client-selected middle- and back-office, technology-powered services. We recognize revenues monthly as the managed services are performed with invoicing occurring at the end of the month. Generally, invoices have a 30-day payment period in accordance with the associated contract. There is no financing available.
20
Other
Other revenues consist of non-subscription-based revenues, such as software enhancements developed for individual, sponsoring clients, but received by all clients, and data conversion and services that integrate a client’s historical data into our solution. We recognize revenues as these services are performed with invoicing occurring at the end of each month.
Cost of Revenues
Cost of revenues consists primarily of personnel-related costs associated with the delivery of our 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, and stock-based compensation. Our cost of revenues has fixed and variable components and depends on the type of revenues earned in each period. We expect our cost of revenues to increase in absolute dollars as we continue to hire personnel to provide hosting services and technical support to our growing client base. We anticipate additional expenses as a result of stock-based compensation expenses for the contingently issuable shares of our Class A common stock that will vest within one year of the IPO contingent upon continued employment requirements (the “Contingently Issuable Shares”), restricted stock units granted in connection with the IPO, and other equity awards to be issued under our equity plans.
Operating Expenses
We present stock-based compensation expense within General and administrative, Sales and marketing, and Technology and development expenses based on the individual employee’s department. We anticipate additional expenses as a result of stock-based compensation expenses for the Contingently Issuable Shares, restricted stock units granted in connection with the IPO, and other equity awards to be issued under our equity plans.
General and administrative
General and administrative expenses consist of personnel costs and related expenses for executive, finance, legal, human resources, and recruiting and administrative personnel. These personnel costs and related expenses include salaries, benefits and bonuses, fees for external legal, accounting, recruiting and other consulting services, and stock-based compensation expense. We expect certain expenses to increase as we continue to operate as a publicly traded company and expand our client base and geographic footprint.
Sales and marketing
Sales and marketing expenses consist primarily of personnel and related costs associated with our sales and marketing staff, including base salaries, employee benefits, bonuses and commissions, and stock-based compensation expense. We expect our sales and marketing expenses to continue to increase as we implement new marketing strategies and build our professional sales organization to support our client base growth and geographic expansion.
Technology and development
Technology and development expenses consist primarily of research and development activities, non-capitalizable costs of developing content and certain overhead allocations, and stock-based compensation. These costs include employee-related costs, consulting services, expenses related to the product design, development, testing and enhancements of our subscription services. We expect that our technology and development expenses will increase as we continue to enhance our platform functionality and develop new content and features.
Income Taxes
Enfusion Ltd. LLC has historically been and is treated as a pass-through entity for U.S. federal tax purposes and most applicable state and local income tax purposes. Income tax provision represents the income tax expense or benefit associated with our foreign operations based on the tax laws of the jurisdictions in which we operate.
21
After consummation of the Reorganization Transactions, Enfusion, Inc. became subject to U.S. federal income taxes with respect to our allocable share of any U.S. taxable income of Enfusion, Ltd. LLC and is taxed at the prevailing corporate tax rates. Enfusion, Inc. is treated as a U.S. corporation for U.S. federal, state and local income tax purposes. Accordingly, a provision for income taxes is recorded for the anticipated tax consequences of our reported results of operations for federal income taxes.
Non-Controlling Interests
Non-controlling interests represent the portion of profit or loss, net assets and comprehensive loss of our consolidated subsidiary that is not allocable to the Company based on our percentage of ownership of this entity. Income or loss attributed to the non-controlling interests is based on the Common Units outstanding during the period and is presented on the consolidated statements of operations and consolidated statements of comprehensive income.
22
Results of Operations
The results of operations presented below should be reviewed in conjunction with the condensed consolidated interim financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q.
Comparison of the Three Months Ended June 30, 2022 and 2021
The following table sets forth our consolidated results of operations for the periods shown:
Three Months Ended June 30, |
| ||||||
(in thousands) |
| 2022 |
| 2021 |
| ||
Unaudited | |||||||
REVENUES: |
|
|
|
|
| ||
Platform subscriptions | $ | 33,560 | $ | 24,324 | |||
Managed services |
| 2,396 |
| 1,729 | |||
Other |
| 584 |
| 396 | |||
Total revenues | 36,540 |
| 26,449 | ||||
COST OF REVENUES: |
|
|
|
| |||
Platform subscriptions |
| 9,065 |
| 5,709 | |||
Managed services |
| 1,668 |
| 1,015 | |||
Other |
| 114 |
| 53 | |||
Total cost of revenues |
| 10,847 |
| 6,777 | |||
Gross profit |
| 25,693 |
| 19,672 | |||
OPERATING EXPENSES: |
|
|
|
| |||
General and administrative |
| 18,302 |
| 7,457 | |||
Sales and marketing |
| 7,575 |
| 4,264 | |||
Technology and development |
| 3,722 |
| 2,041 | |||
Total operating expenses |
| 29,599 |
| 13,762 | |||
(Loss) income from operations |
| (3,906) |
| 5,910 | |||
NON-OPERATING INCOME (EXPENSE): |
|
|
|
| |||
Interest expense |
| (1) |
| (1,410) | |||
Other income (expense) |
| 1 |
| — | |||
Total non-operating income (expense) |
| — |
| (1,410) | |||
(Loss) income before income taxes |
| (3,906) |
| 4,500 | |||
Income taxes |
| 219 |
| 249 | |||
Net (loss) income | (4,125) | 4,251 | |||||
Net loss attributable to non-controlling interests | (1,703) | — | |||||
Net (loss) income attributable to Enfusion, Inc. | $ | (2,422) | $ | 4,251 | |||
Revenues
Three Months Ended June 30, |
| |||||||||||
Increase (Decrease) |
| |||||||||||
(in thousands) |
| 2022 |
| 2021 |
| Amount |
| Percent | ||||
Platform subscriptions | $ | 33,560 | $ | 24,324 | $ | 9,236 |
| 38.0 | % | |||
Managed services |
| 2,396 |
| 1,729 |
| 667 |
| 38.6 | % | |||
Other |
| 584 |
| 396 |
| 188 |
| 47.5 | % | |||
Total revenues | $ | 36,540 | $ | 26,449 | $ | 10,091 |
| 38.2 | % | |||
23
Total revenue was $36.5 million for the three months ended June 30, 2022 compared to $26.5 million for the three months ended June 30, 2021, representing an increase of $10.0 million, or 38.2%.
Platform subscriptions
Platform subscriptions revenue increased by $9.2 million or 38.0%, from $24.3 million for the three months ended June 30, 2021 to $33.6 million for the three months ended June 30, 2022. The increase was primarily driven by increased revenues from new clients of approximately $4.4 million. Revenue also increased for existing clients; this increase includes sales of new services and growth from existing contracts due to new users of $5 million and the full-period impact of prior period sales of $1.6 million, partially offset by reductions in revenue due to client churn.
Managed services
Managed services revenue increased by approximately $700 thousand or 38.6%, from $1.7 million for the three months ended June 30, 2021 to $2.4 million for the three months ended June 30, 2022. The increase was primarily driven by revenue from new clients of approximately $600 thousand and increases in revenue from existing clients of approximately $340 thousand, partially offset by reductions in revenue due to client churn.
Other
Other revenues consisting of software enhancements and data conversion services of $600 thousand remained relatively consistent for the three months ended June 30, 2022 over the comparative period.
Cost of Revenues, Gross Profit and Gross Profit Margin
Three Months Ended June 30, |
| |||||||||||
Increase (Decrease) |
| |||||||||||
(in thousands) |
| 2022 |
| 2021 |
| Amount |
| Percent | ||||
Cost of revenues: |
|
|
|
|
|
|
|
| ||||
Platform subscriptions | $ | 9,065 | $ | 5,709 | $ | 3,356 |
| 58.8 | % | |||
Managed services |
| 1,668 |
| 1,015 |
| 653 |
| 64.3 | % | |||
Other |
| 114 |
| 53 |
| 61 |
| 115.1 | % | |||
Total cost of revenues | $ | 10,847 | $ | 6,777 | $ | 4,070 |
| 60.1 | % | |||
Gross profit | $ | 25,693 | $ | 19,672 | $ | 6,021 |
| 30.6 | % | |||
Gross profit margin |
| 70.3 | % |
| 74.4 | % |
|
|
|
| ||
Cost of Revenues
Cost of revenues increased by $4.1 million or 60.1%, from $6.8 million for the three months ended June 30, 2021 to $10.9 million for the three months ended June 30, 2022. The increase was primarily driven by an increase in payroll and payroll-related costs of $2.7 million, largely resulting from headcount additions to support our continued growth. In addition, hosting costs and data fees increased by $550 thousand over the comparative period, reflective of an increased client base and increased usage. Stock-based compensation expense of approximately $341 thousand also contributed to the increase.
Gross profit increased by $6 million, from $19.7 million for the three months ended June 30, 2021 to $25.7 million for the three months ended June 30, 2022. Gross profit margin as a percentage of revenue decreased by 4.1%. The decrease in overall gross profit margin as a percentage of revenues was primarily attributable to increased personnel costs for onboarding and client services.
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Operating Expenses
Three Months Ended June 30, |
| |||||||||||
Increase (Decrease) |
| |||||||||||
(in thousands) |
| 2022 |
| 2021 |
| Amount |
| Percent | ||||
General and administrative | $ | 18,302 | $ | 7,457 | $ | 10,845 |
| 145.4 | % | |||
Sales and marketing |
| 7,575 |
| 4,264 |
| 3,311 |
| 77.7 | % | |||
Technology and development |
| 3,722 |
| 2,041 |
| 1,681 |
| 82.4 | % | |||
Total operating expenses | $ | 29,599 | $ | 13,762 | $ | 15,837 |
| 115.1 | % | |||
General and administrative
General and administrative expenses increased by $10.8 million, from $7.5 million for the three months ended June 30, 2021 to $18.3 million for the three months ended June 30, 2022. The increase in general and administrative expenses was primarily attributable to stock-based compensation expense of approximately $5 million. Professional fees for accounting, consulting, legal, and tax services increased by approximately $1.1 million over the comparative period. These fees were primarily incurred to support our growth and the increased administrative complexity related to our new public company status. The remaining increase in general and administrative expenses is primarily attributable to increased corporate personnel costs and incremental public company costs such as directors and officers insurance.
Sales and marketing
Sales and marketing expenses increased by $3.3 million, from $4.3 million for the three months ended June 30, 2021 to $7.6 million for the three months ended June 30, 2022. The increase was primarily attributable to stock-based compensation expense of $1.5 million. The increase was also attributable to higher personnel costs related to our continued focus on the growth of our professional sales organization, increased marketing spend, and increased commission expenses.
Technology and development
Technology and development expenses increased by $1.7 million, from $2.0 million for the three months ended June 30, 2021 to $3.7 million for the three months ended June 30, 2022. The increase in technology and development expense was primarily attributable to stock-based compensation expense of approximately $900 thousand, with the remaining increase driven by incremental personnel costs to support growth of our product development and client services groups.
Non-Operating Expense
The overall decrease of $1.4 million in non-operating expense from the three months ended June 30, 2021 to the three months ended June 30, 2022 was driven primarily by the decrease in interest expense as result of the repayment in full of the term loan in the fourth quarter of 2021 following the IPO.
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Comparison of Six Months Ended June 30, 2022 and 2021
The following table sets forth our consolidated results of operations for the periods shown:
Six Months Ended June 30, | ||||||
(in thousands) |
| 2022 |
| 2021 | ||
Unaudited | ||||||
REVENUES: |
|
|
|
| ||
Platform subscriptions | $ | 65,111 | $ | 46,747 | ||
Managed services |
| 4,626 |
| 3,263 | ||
Other |
| 944 |
| 792 | ||
Total revenues | 70,681 |
| 50,802 | |||
COST OF REVENUES: |
|
|
|
| ||
Platform subscriptions |
| 18,376 |
| 11,661 | ||
Managed services |
| 3,283 |
| 1,843 | ||
Other |
| 171 |
| 82 | ||
Total cost of revenues |
| 21,830 |
| 13,586 | ||
Gross profit |
| 48,851 |
| 37,216 | ||
OPERATING EXPENSES: |
|
|
|
| ||
General and administrative |
| 40,597 |
| 13,838 | ||
Sales and marketing |
| 16,007 |
| 7,422 | ||
Technology and development |
| 8,524 |
| 4,243 | ||
Total operating expenses |
| 65,128 |
| 25,503 | ||
(Loss) income from operations |
| (16,277) |
| 11,713 | ||
NON-OPERATING INCOME (EXPENSE): |
|
|
|
| ||
Interest expense |
| (7) |
| (2,802) | ||
Other income (expense) |
| 4 |
| — | ||
Total non-operating income (expense) |
| (3) |
| (2,802) | ||
(Loss) income before income taxes |
| (16,280) |
| 8,911 | ||
Income taxes |
| 369 |
| 551 | ||
Net (loss) income | (16,649) | 8,360 | ||||
Net loss attributable to non-controlling interests | (6,962) | — | ||||
Net (loss) income attributable to Enfusion, Inc. | $ | (9,687) | $ | 8,360 | ||
Revenues
Six Months Ended June 30, |
| |||||||||||
Increase (Decrease) |
| |||||||||||
(in thousands) |
| 2022 |
| 2021 |
| Amount |
| Percent |
| |||
Platform subscriptions | $ | 65,111 | $ | 46,747 | $ | 18,364 |
| 39.3 | % | |||
Managed services |
| 4,626 |
| 3,263 |
| 1,363 |
| 41.8 | % | |||
Other |
| 944 |
| 792 |
| 152 |
| 19.2 | % | |||
Total revenues | $ | 70,681 | $ | 50,802 | $ | 19,879 |
| 39.1 | % | |||
Total revenue was $70.7 million for the six months ended June 30, 2022 compared to $50.8 million for the six months ended June 30, 2021, representing an increase of $19.9 million, or 39.1%.
26
Platform subscriptions
Platform subscriptions revenue increased by $18.4 million or 39.3%, from $46.7 million for the six months ended June 30, 2021 to $65.1 million for the six months ended June 30, 2022. The increase was primarily driven by increased revenues from new clients of approximately $7.1 million. Revenue also increased for existing clients; this increase includes sales of new services and growth from existing contracts due to new users of $8.6 million and the full-period impact of prior period sales of approximately $5.5 million, partially offset by reductions in revenue due to client churn.
Managed services
Managed services revenue increased by approximately $1.3 million or 41.8%, from $3.3 million for the six months ended June 30, 2021 to $4.6 million for the six months ended June 30, 2022. The increase was primarily driven by revenue from new clients of approximately $1 million and increases in revenue from existing clients of approximately $770 thousand, partially offset by reductions in revenue due to client churn.
Other
Other revenues consisting of software enhancements and data conversion services of approximately $900 thousand remained relatively consistent for the six months ended June 30, 2022 over the comparative period.
Cost of Revenues, Gross Profit and Gross Profit Margin
Six Months Ended June 30, |
| |||||||||||
Increase (Decrease) |
| |||||||||||
(in thousands) |
| 2022 |
| 2021 |
| Amount |
| Percent |
| |||
Cost of revenues: |
|
|
|
|
|
|
| |||||
Platform subscriptions | $ | 18,376 | $ | 11,661 | $ | 6,715 |
| 57.6 | % | |||
Managed services |
| 3,283 |
| 1,843 |
| 1,440 |
| 78.1 | % | |||
Other |
| 171 |
| 82 |
| 89 |
| 108.5 | % | |||
Total cost of revenues | $ | 21,830 | $ | 13,586 | $ | 8,244 |
| 60.7 | % | |||
Gross profit | $ | 48,851 | $ | 37,216 | $ | 11,635 |
| 31.3 | % | |||
Gross profit margin |
| 69.1 | % |
| 73.3 | % |
|
|
|
| ||
Cost of Revenues
Cost of revenues increased by $8.2 million or 60.7%, from $13.6 million for the six months ended June 30, 2021 to $21.8 million for the six months ended June 30, 2022. The increase was primarily driven by an increase in payroll and payroll-related costs of $5.1 million, largely resulting from headcount additions to support our continued growth. In addition, hosting costs and data fees increased by $1.3 million over the comparative period, reflective of an increased client base and increased usage. Stock-based compensation expense of approximately $695 thousand also contributed to the increase.
Gross profit increased by approximately $11.6 million, from $37.2 million for the six months ended June 30, 2021 to $48.9 million for the six months ended June 30, 2022. Gross profit margin as a percentage of revenue decreased by 4.2%. The decrease in gross profit margin as a percentage of revenues was primarily attributable to increased personnel costs for onboarding and client services.
27
Operating Expenses
Six Months Ended June 30, |
| |||||||||||
Increase (Decrease) |
| |||||||||||
(in thousands) |
| 2022 |
| 2021 |
| Amount |
| Percent |
| |||
General and administrative | $ | 40,597 | $ | 13,838 | $ | 26,759 |
| 193.4 | % | |||
Sales and marketing |
| 16,007 |
| 7,422 |
| 8,585 |
| 115.7 | % | |||
Technology and development |
| 8,524 |
| 4,243 |
| 4,281 |
| 100.9 | % | |||
Total operating expenses | $ | 65,128 | $ | 25,503 | $ | 39,625 |
| 155.4 | % | |||
General and administrative
General and administrative expenses increased by $26.8 million, from $13.8 million for the six months ended June 30, 2021 to $40.6 million for the six months ended June 30, 2022. The increase in general and administrative expenses was primarily attributable to stock-based compensation expense of $13.9 million. Professional fees for accounting, consulting, legal, and tax services increased by approximately $4 million over the comparative period. These fees were primarily associated with our transition to a public entity and the Reorganization Transactions. The remaining increase in general and administrative expenses is primarily attributable to increased corporate personnel costs and incremental public company costs such as directors and officers insurance.
Sales and marketing
Sales and marketing expenses increased by $8.6 million, from $7.4 million for the six months ended June 30, 2021 to $16 million for the six months ended June 30, 2022. The increase was primarily attributable to stock-based compensation expense of $3.5 million. The increase was also attributable to higher personnel costs related to our continued focus on the growth of our professional sales organization, increased marketing spend, and increased commission expenses.
Technology and development
Technology and development expenses increased by $4.3 million, from $4.2 million for the six months ended June 30, 2021 to $8.5 million for the six months ended June 30, 2022. The increase in technology and development expense was primarily attributable to stock-based compensation expense of $2.3 million, with the remaining increase driven by incremental personnel costs to support growth of our product development and client services groups.
Non-Operating Expense
The overall decrease of $2.8 million in non-operating expense from the six months ended June 30, 2021 to the six months ended June 30, 2022 was driven primarily by the decrease in interest expense as result of the repayment in full of the term loan in the fourth quarter of 2021 following the IPO.
Liquidity and Capital Resources
To date, we have funded our capital needs through collections from our clients and issuances of equity and debt. As of June 30, 2022, we had cash of $56.6 million and $5.0 million in available borrowing capacity under our Revolving Debt (as defined below). As of June 30, 2022, the Company was contingently obligated for a letter of credit in the amount of $0.2 million which bears interest at an annual rate of 2%. We believe that our current sources of liquidity, cash flows from operations and existing available cash, together with our other available external financing sources, will be adequate to fund our operating and capital needs for at least the next 12 months.
28
Our future capital requirements will depend on many factors, including those set forth under Item 1A. Risk Factors. As a result of the IPO, we expect that our future uses of cash will also include paying income taxes and obligations under our Tax Receivable Agreement. Further, between October 20, 2022 and October 20, 2023, we estimate that we will issue an aggregate of approximately 18.6 million shares of Class A common stock, in one or more tranches, to former holders of Award Units and a non-executive employee, as previously disclosed in our 2021 Annual Report on Form 10-K under the risk factor entitled “Our obligations to issue Class A common stock to former holders of Award Units under our former Change in Control Bonus Plan could expose us to a variety of risks and will cause us to recognize significant stock-based compensation expense that will substantially impact our net income in the near term.” Their related individual tax withholding obligations will be satisfied, at our discretion, through methods that may include (i) a “sell to cover” arrangement whereby a certain number of shares would be sold into the market with proceeds from such sale remitted to us in an amount that would satisfy the withholding amount, and (ii) our withholding a certain number of the shares with a value that would satisfy the withholding amount due and using our available capital resources to pay the related tax burden, which could have a material impact on our liquidity and capital resources. Refer to Part II, Section 1 A, Risk Factors for further details.
We may in the future enter into arrangements to acquire or invest in complementary businesses, services, which could decrease our cash and cash equivalents and increase our cash requirements. As a result of these and other factors, we could use our available capital resources sooner than expected and may be required to seek additional equity or debt.
Cash Flow Information
The following table presents a summary of our consolidated cash flows from operating, investing and financing activities for the periods indicated.
Six Months Ended June 30, |
| |||||||||||
Increase (Decrease) |
| |||||||||||
(in thousands) |
| 2022 |
| 2021 |
| Amount |
| Percent |
| |||
Net cash (used in) provided by operating activities | $ | (1,207) | $ | 7,803 |
| $ | (9,010) |
| (115.5) | % | ||
Net cash used in investing activities |
| (5,263) |
| (4,401) |
|
| (862) |
| (19.6) | % | ||
Net cash used in financing activities |
| (897) |
| (2,745) |
|
| 1,848 |
| 67.3 | % | ||
Effect of exchange rate changes on cash |
| (439) |
| (80) |
|
| (359) |
| (448.8) | % | ||
Net decrease in cash | $ | (7,806) | $ | 577 |
| $ | (8,383) |
| 1,452.9 | % | ||
Operating activities
We used $1.2 million in cash flows from operating activities during the six months ended June 30, 2022, resulting from our net loss of $16.6 million, adjusted by non-cash charges of $23.8 million (of which $20.4 million is related to stock-based compensation expense), and offset by $8.4 million of cash used in working capital activities. Cash used by working capital accounts was primarily due to increases in accounts receivable, largely related to our revenue growth.
For the six months ended June 30, 2021, we generated $7.8 million in cash flows from operating activities, resulting from net income of $8.4 million, adjusted by non-cash charges of $2.0 million, and offset by $2.6 million of cash used in working capital activities.
Investing activities
Net cash used in investing activities in the six months ended June 30, 2022 was $5.3 million, compared to $4.4 million of net cash used in investing activities in the six months ended June 30, 2021. This increase was driven by investments in property and equipment costs to support the expansion of our business.
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Financing activities
We used $897 thousand in cash flows from financing activities during the six months ended June 30, 2022, resulting from payment of withholding taxes on stock-based compensation. For the six months ended June 30, 2021, we incurred $2.8 million for distributions to members.
Indebtedness
We have a revolving debt facility with Silicon Valley Bank (the “Revolving Debt”). We did not have any outstanding revolving debt as of June 30, 2022 and December 31, 2021. As of June 30, 2022 and December 31, 2021, the available unused commitment of the revolving debt was $5.0 million. The credit agreement governing the Revolving Debt contains certain covenants with which we must comply, including a fixed charge ratio covenant and a leverage ratio covenant. We were in compliance with all loan covenants and requirements as of June 30, 2022.
Contractual Obligations and Commitments and Off-Balance Sheet Arrangements
We have service agreements for the use of data processing facilities. As of June 30, 2022, these service agreements expire at various dates through 2023. We also lease office space under operating lease agreements.
As of June 30, 2022, our contractual obligations consisted of: (i) operating lease obligations of $8.6 million, of which $2.0 million is due in 2022 and $6.6 million is due thereafter, and (ii) service agreement obligations of approximately $130 thousand, a majority of which are due in 2022.
As of June 30, 2022, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that may be material to investors.
Dividend Policy
Assuming Enfusion Ltd. LLC makes distributions to its members in any given year, the determination to pay dividends, if any, to our Class A common stockholders out of the portion, if any, of such distributions remaining after our payment of taxes, Tax Receivable Agreement payments and expenses will be made at the sole discretion of our board of directors. We currently intend to retain all available funds and future earnings and do not anticipate declaring or paying any cash dividends in the foreseeable future. Our board of directors may change our dividend policy at any time.
Tax Receivable Agreement
The payment obligation under the Tax Receivable Agreement is an obligation of Enfusion, Inc. and not of Enfusion Ltd. LLC. We expect that as a result of the size of the existing tax basis and basis adjustments acquired in the IPO, the increase in existing tax basis and the anticipated tax basis adjustment of the tangible and intangible assets of Enfusion Ltd. LLC upon the purchase or exchange (or deemed exchange) of Common Units for shares of Class A common stock or distributions (or deemed distributions) with respect to Common Units and our possible utilization of certain tax attributes, the payments that we may make under the Tax Receivable Agreement will be substantial. We estimate the amount of existing tax basis and basis adjustments acquired in the IPO to be approximately $232.9 million.
There may be a material negative effect on our liquidity if, as a result of timing discrepancies or otherwise, the payments under the Tax Receivable Agreement exceed the actual cash tax benefits that Enfusion, Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement and/or if distributions directly and/or indirectly to Enfusion, Inc. by Enfusion Ltd. LLC are not sufficient to permit Enfusion, Inc. to make payments under the Tax Receivable Agreement after it has paid taxes and other expenses. Late payments under the Tax Receivable Agreement generally will accrue interest at an uncapped rate equal to one-year LIBOR (or its successor rate) plus 100 basis points. The payments under the Tax Receivable Agreement are not conditioned upon continued ownership of us by the Pre-IPO Owners.
30
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated interim financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these condensed consolidated interim financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures in the condensed consolidated interim financial statements. Our estimates are based on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates under different assumptions or conditions and any such difference may be material. For a discussion of how these and other factors may affect our business, see “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.
The critical accounting estimates that we believe affect our more significant judgments and estimates used in the preparation of our condensed consolidated interim financial statements presented in this Quarterly Report on Form 10-Q are described under Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations and in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to our critical accounting policies or estimates from those set forth in our Annual Report on Form 10-K for the year ended December 31, 2021.
Recent Accounting Pronouncements
See Note 3 to our condensed consolidated interim financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (the “JOBS Act”), and, for so long as we continue to be an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to use this extended transition period to enable us to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we: (i) are no longer an emerging growth company; or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes to our market risk during the quarter ended June 30, 2022. For a discussion of our exposure to market risk, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the year ended December 31, 2021.
Item 4. Controls and Procedures.
Limitations on Effectiveness of Controls and Procedures
31
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2022.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended June 30, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
32
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, legal proceedings can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 1A. Risk Factors.
The following is intended to restate and supplement the risk factor entitled “Our obligations to issue Class common stock to former holders of Award Units under our former Change in Control Bonus Plan could expose us to a variety of risks and will cause us to recognize significant stock-based compensation expense that will substantially impact our net income in the near term,” as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021. Other than the risk factor set forth below, there have been no material changes to the risk factors disclosed under the heading “1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021.
Our obligations to issue Class A common stock to former holders of Award Units under our former Change in Control Bonus Plan could expose us to a variety of risks, some of which could cause the price of our stock to decline, and will cause us to recognize significant stock-based compensation expense that will substantially impact our net income in the near term.
We previously adopted a Change in Control Bonus Plan, which provided for the payment of cash amounts to certain eligible employees upon the occurrence of a change in control of our company. The aggregate amount of payment that could have been made to all participants under the Change in Control Bonus Plan may have been as much as 18% of the gross consideration received by us or our stockholders in a change in control transaction. The board of managers of Enfusion Ltd. LLC elected to terminate the Change in Control Bonus Plan (and all Award Units issued thereunder) effective following effectiveness of the IPO registration statement. The value, based on our valuation at the IPO, of all Award Units that are vested at effectiveness of the IPO registration statement and Award Units that would have vested within one year thereafter will be paid to participants in the Change in Control Bonus Plan in the form of vested shares of Class A common stock between the first and second anniversaries of such date of effectiveness. As of June 30, 2022, we will issue approximately 14,914,206 shares of Class A common stock to former holders of vested Award Units and 1,667,852 shares of Class A common stock to former holders of Award Units that would have vested within one year after effectiveness of the of the IPO registration statement, in satisfaction of the obligations described above and subject to further required withholdings under the Federal Insurance Contributions Act. In addition, in exchange for termination of an agreement pursuant to which we were obligated to pay a percentage of our annual net profits to a non-executive employee, we will issue 2,047,064 shares of Class A common stock to such employee between the first and second anniversaries of the effectiveness of the IPO registration statement. As of the date of this report, the number of shares to be issued between the first and second anniversaries of effectiveness of the IPO registration statement in satisfaction of the obligations described above will increase the aggregate number of outstanding shares of our Class A common stock and Class B common stock outstanding by approximately 16.5%, resulting in significant dilution to holders of our capital stock. Any issuance of Class A common stock described above, or the fact of any such impending issuance, may adversely impact the market price of our Class A common stock.
The individual tax withholding obligations to be incurred in connection with the issuance of the shares described above will be satisfied, at our discretion, through methods that may include (i) a “sell to cover” arrangement whereby we would withhold from issuance a certain number of shares, which would then be sold into the market with proceeds from such sale remitted to us in an amount that would satisfy the withholding amount, and (ii) our withholding a certain number of the shares with a value that would satisfy the withholding amount due and using our available capital resources to pay the related tax burden. If we elect to satisfy a significant component of these tax withholding obligations through a sell to cover arrangement, it could cause the sale, at one or more periods of time between October 20, 2022 and October 20, 2023,
33
of a significant number of shares relative to the current average daily trading volume of our Class A common stock. These sales, or the perception that the sales could occur, could cause the price of our stock to decline.
The issuance of shares of our Class A common stock in satisfaction of our obligations to former participants in the Change in Control Bonus Plan has and will result in significant stock-based compensation expense. At the time of the IPO, we recognized stock-based compensation expense of approximately $268.5 million (reflecting a discount for lack of marketability due to the post-vesting restriction because, although fully vested, the shares will not be issued until at least one year after the IPO) in connection with 9 future issuance of shares of Class A common stock to (i) former holders of Award Units under our former Change in Control Bonus Plan and (ii) a non-executive employee in exchange for the termination of a profit sharing agreement. We recognized approximately $16.7 million in 2021 and expect to recognize $10.1 million in 2022 in stock-based compensation expense in connection with the future issuance of shares of Class A common stock to former holders of Award Units under our former Change in Control Bonus Plan that would have vested within one year after the IPO (reflecting a discount for lack of marketability due to the post-vesting restriction because the shares will vest within the next year but will not be issued until at least one year after the IPO). In addition, we recognized approximately $4.6 million in 2021 and expect to recognize approximately $51.0 million through 2025 in stock-based compensation related to restricted stock units granted in connection with the IPO. Further, we expect to recognize approximately $500 thousand in stock-based compensation expense related to stock options issued under the 2021 Incentive Plan. These non-cash charges do not impact our revenues or Adjusted EBITDA; however, they will have a direct and substantial adverse impact on our net income. The impact of these equity-related matters on our net income may adversely affect the trading price of our Class A common stock.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
None.
Use of Proceeds from IPO
On October 20, 2021, our Registration Statement on Form S-1 (File No. 333-259635) was declared effective by the SEC for our IPO. There has been no material change in the use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b) of the Securities Act.
Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
34
Item 6. Exhibits.
The exhibits listed below are filed or incorporated by reference in this Quarterly Report on Form 10-Q.
Exhibit Number | Description |
3.1 | |
3.2 | |
10.1#*† | |
10.2#*† | |
10.3#* | |
10.4#* | |
10.5#* | |
10.6#* | |
10.7#* | |
10.8#* | |
31.1* | |
31.2* | |
32.1** | |
32.2** | |
101.INS* | Inline XBRL Instance Document. |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document. |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document. |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
104* | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
# | Indicates management contract or compensatory plan, contract or agreement. |
* | Filed herewith. |
** | Furnished herewith. The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are deemed furnished and not filed with the SEC and are not to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
35
† | Portions of this exhibit (indicated by asterisks) have been omitted in accordance with the rules of the Securities and Exchange Commission. |
36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ENFUSION, INC. | ||
August 10, 2022 | By: | /s/ Thomas Kim |
Thomas Kim | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
August 10, 2022 | By: | /s/ Stephen P. Dorton |
Stephen P. Dorton | ||
Chief Financial Officer | ||
(Principal Financial and Accounting Officer) | ||
37
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Thomas Kim, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Enfusion, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | [Omitted]; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 10, 2022 | /s/ Thomas Kim |
| Thomas Kim |
| Chief Executive Officer |
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Stephen P. Dorton, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Enfusion, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | [Omitted]; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 10, 2022 | /s/ Stephen P. Dorton |
| Stephen P. Dorton |
| Chief Financial Officer |
| (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas Kim, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Enfusion, Inc. for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Enfusion, Inc.
Date: August 10, 2022 | By: | /s/ Thomas Kim |
| Name: | Thomas Kim |
| Title: | Chief Executive Officer |
| | (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Stephen P. Dorton, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of Enfusion, Inc. for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Enfusion, Inc.
Date: August 10, 2022 | By: | /s/ Stephen P. Dorton |
| Name: | Stephen P. Dorton |
| Title: | Chief Financial Officer |
| | (Principal Financial Officer) |
Certain identified information has been excluded from this exhibit because it is both not material and is the type that the registrant treats as private or confidential. Information that was omitted has been noted in this document with a placeholder identified by the mark “[***]”.
Exhibit 10.1
EMPLOYMENT AGREEMENT
This employment agreement, which shall include and incorporate by reference any appendix attached hereto, now or in the future (collectively “Agreement”), is entered into on September 1. 2021,(“Effective Date”), by and between ENFUSION LTD. LLC (“Enfusion”), with its principal place of business located at 125 SOUTH CLARK STREET, SUITE 750, CHICAGO, ILLINOIS 60603, and Bronwen Bastone, (“Employee”), an individual with their primary address located at: [***] (each a “Party” or collectively, the “Parties”).
WHEREAS, Enfusion is in the business of creating and providing software and related products and services to clients in the investment and financial services industry throughout the United States and Global market with offices in Chicago, IL, New York and affiliate offices in London, Dublin, Hong Kong, Singapore, São Paulo, Mumbai, and Bengaluru;
WHEREAS, Enfusion desires to hire Employee to perform certain services as described in this Agreement and any appendix attached hereto, and Employee desires to be hired by Enfusion to perform certain services described in this Agreement and any appendix attached hereto, each in accordance with the terms and conditions of this Agreement as may be amended or supplemented from time-to-time; and,
NOW THEREFORE, in exchange for good and valuable consideration, the sufficiency and receipt of which is hereby acknowledged, the Parties covenant and agree as follows:
1. | Interpretation. Unless the context of this Agreement otherwise requires: (i) a capitalized word has the meaning assigned to it by this Agreement; (ii) “or” will be construed such that the series may include any of the items, all of the items, or any combination of the items; (iii) words in the singular include the plural, and words in the plural include the singular; (iv) provisions apply to successive events and transactions; (v) “hereof,” “hereunder,” “herein,” and “hereto” refer to the entire Agreement and not any section or subsection; (vi) references in this Agreement to sections or annexes are references to the sections of or annexes attached to this Agreement; (vii) “in writing” refers to in written or printed form, facsimile transmission, or e-mail; (viii) the term “include” does not create an exclusive list and should be interpreted, in any variation, as “includes, but is not limited to;” (ix) the phrase “any reason” should be read as “any reason or no reason;” and, (x) the headings in this Agreement are for reference only and shall not limit or otherwise affect the meaning, interpretation, or construction of this Agreement. |
2. | Employment. Enfusion hereby agrees to employ Employee and Employee hereby agrees to accept Enfusion’s employment offer, each subject to and in accordance with the terms and conditions of this Agreement. |
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3. | Classification of Employment. Employee’s classification as Exempt or Non-Exempt under Fair Labor Standards Act (“FLSA”) shall be determined by Enfusion and any changes to the Employee’s classification shall be communicated by Enfusion to the Employee. |
4. | Duties. Employee’s initial appointment and non-exhaustive description of duties are described on Appendix 1 (Scope of Employment) and are subject to the terms and conditions of this Agreement. Despite the duties described on Appendix 1, Employee understands and acknowledges that Enfusion, at its sole discretion, has the right to modify or redefine Employee’s duties or title at any time, for any reason. |
5. | Work Hours. Enfusion’s ordinary office hours are 8:00AM to 5:00PM, Monday through Friday. Unless otherwise specified on Appendix 1, Employee’s regular workweek shall be forty (40) hours on a schedule of eight (8) working hours per day, Monday through Friday; however, Employee understands and agrees that from time-to-time and subject to applicable law, Employee may be required to work additional hours, including weekends and holidays, as necessary to support Enfusion’s business. Employee understands and agrees, Employee’s work hours and surrounding terms may be modified at Enfusion’s sole discretion to the furthest extent permitted by applicable law. |
6. | Location. Employee’s assigned work location (the “Office”) will be described on Appendix 1. Subject to the terms and conditions of this Agreement and applicable law, Employee is required to be present at the Office during Work Hours (defined on Appendix 1). |
7. | Performance of Duties; Exclusive Service. Employee has a duty of loyalty and care to Enfusion and agrees to perform their obligations faithfully and to the best of their ability. Similarly, Employee hereby agrees to abide by Enfusion’s policies and procedures (as amended from time-to-time) and agrees to devote their business time, attention, and efforts to Enfusion’s business (except for permitted break periods, vacation periods, and reasonable periods of illness or other incapacity). Despite the foregoing sentence, Employee may serve as a director of or otherwise participate in educational, welfare, social, religious, and civic organization, provided that Employee’ service or participation does not: (i) unreasonably interfere with performing their duties; and, (ii) violate any provision of this Agreement. For clarity, while employed by Enfusion, Employee is not allowed to perform duties or services for any other employer, business, or organization (including establishing or maintain their own business or organization) other than as permitted by this Agreement or with the written consent of an Enfusion authorized officer. |
a)Business Ideas/Opportunities. During their employment, Employee may come up with or across potential business opportunities related to Enfusion’s business and services (“Business Opportunity”). If so, Employee agrees to promptly disclose any Business Opportunity to Enfusion so that Enfusion has an opportunity to pursue the Business Opportunity. Employee acknowledges and agrees that pursuing a Business Opportunity for Employee’s or another’s benefit, without first disclosing it and getting Enfusion’s prior written approval would be a violation of their duty of loyalty and care to Enfusion and that Employee is prohibited from pursuing a Business Opportunity, whether for Employee’s or another’s benefit, without Enfusion’s prior written approval. Enfusion’s reserves the right to deny Employee’s request to pursue a Business Opportunity in Enfusion’s sole discretion.
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8. | Compensation and Benefits. Employee is entitled to certain compensation and benefits, which are outlined below and described further on Appendix 1. |
a)Salary. Enfusion agrees to pay Employee for services rendered under this Agreement. Employee’s Salary (as defined on Appendix 1) will be paid in accordance with Enfusion’s normal payroll policies and procedures. To be clear, although Employee is paid an annual salary, Employee’s employment is “at-will” (discussed below). Enfusion, at its sole discretion, may adjust Employee’s Salary after the first twelve (12) months of employment and reserves the right to adjust Employee’s Salary from time-to-time.
b)Benefits. During Employee’s employment, except as otherwise expressly provided herein, Employee will be entitled to participate in all employee health, welfare and other benefit plans and programs (“Employee Benefit Plans”) applicable to similarly situated employees of Enfusion, as in effect from time to time, to the extent consistent with applicable law and the terms of the applicable employee benefit plan. Enfusion reserves the right to amend or cancel any Employee Benefit Plans at any time in its sole and absolute discretion, subject to the terms of the employee benefit plan and applicable law.
c)Vacation. Employee may become entitled to paid vacation days as outlined on Appendix 1, which will be pro-rated based on Employee’s Commencement Date (as defined on Appendix 1). Unaccrued vacation time may not be used without prior written approval from Enfusion in accordance with its policies. Further, subject to and to the extent permitted by Enfusion’s ordinary paid vacation policies, Employee may be entitled rollover unused accrued paid vacation days into the following year. Employee should use their best efforts not to schedule vacation time that will conflict with their duties and when possible, agrees to provide Enfusion with at least two (2) weeks’ prior notice of any planned vacation. Enfusion reserves the right, in its sole discretion, to approve or deny any requested vacation time.
d) | Bonus. |
i. | Discretionary Bonus. Enfusion may, from time-to-time, in its sole discretion, choose to pay Employee additional compensation as a discretionary bonus. Whether and when a bonus is awarded, and the amount (if any) of bonus awarded, will be determined in Enfusion’s sole discretion on whatever basis and after taking into account whatever factors it considers appropriate at the time. Any bonus is not earned until paid. Therefore, to receive any bonus, Employee must be employed by Enfusion and in good standing on the bonus’s payment date and must not have indicated their intent to resign prior to or on such payment date. |
ii. | Other Bonus. If the Employee is eligible to receive a non-discretionary or other type of commission-based compensation, then it will be described on Appendix 1. |
e)Payments. All payments made to Employee in the course of their employment will be paid in accordance with Enfusion’s normal payroll policies and procedures. Further, all compensation payments made in the course of Employee’s employment will be subject to any applicable withholding requirements or other similar obligations.
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f)Expenses. Enfusion will reimburse Employee for out-of-pocket expenses incurred by Employee in the course of their employment pursuant to Enfusion’s reimbursement policy and in each case, subject to applicable law.
g)Consideration. In consideration for Employee agreeing to Sections 11 and 14 of this Agreement, the Company will provide the employee consideration, including, but not limited to, an at-will employment relationship, or continued at-will employment; training; and access to, or continued access to the Company’s Confidential Information and client, customer and business relationships during Employee’s employment. Employee agrees the consideration outlined in this paragraph is sufficient consideration for Employee’s various obligations under Sections 11 and 14 of this Agreement. Employee understands that acceptance of this Agreement is a condition of employment and that the Company would not offer to employ Employee and grant Employee access to its Confidential Information and client and customer relationships, but for Employee’s acceptance of the terms of this Agreement and acknowledgment that the consideration outlined herein is sufficient consideration for Employee’s obligations under Sections 11 and 14 of this Agreement.
9. | Employment Relationship and Termination. “Termination Date” means the date on which Employee ceases work for Enfusion, whether voluntary or involuntary. |
a)“AT-WILL” EMPLOYMENT. EMPLOYEE ACKNOWLEDGES AND AGREES THAT THEIR EMPLOYMENT IS “AT-WILL.” THIS MEANS, BOTH ENFUSION AND EMPLOYEE MAY TERMINATE EMPLOYEE’S EMPLOYMENT AT ANY TIME, FOR ANY REASON OR NO REASON, WITHOUT LIABILITY FOR BREACH OF CONTRACT, PROMISSORY ESTOPPEL, SEVERANCE PAY, OR OTHERWISE.
b)Voluntary Termination. Although Employee has the right to terminate their employment at any time for any reason, Employee agrees to provide Enfusion with at least fourteen (14) day’s prior notice to the date on which Employee intends to cease working for Enfusion.
c)Final Payment. Unless otherwise required by applicable state law, upon Employee’s Termination Date, Enfusion shall provide Employee with a date, no later than Enfusion’s next regular pay date, on which Employee will receive their final payment for all accrued Salary and vested paid vacation time through the Termination Date.
10. | Representations. Employee understands and acknowledges that the following representations and covenants are essential to Enfusion’s decision to enter into this Agreement. Employee represents and warrants to Enfusion as follows: |
a)As of the Effective Date, Employee is not under any contractual or legal duty or obligation, engagement, understanding, restriction, or commitment with any prior employer, other entity or individual other than Enfusion or its Affiliates ("Other Employer”) that would limit, prohibit, or interfere with Employee’s full and faithful performance of this Agreement, including but not limited to, employment, consulting, confidentiality, non-competition, or non-solicitation agreements or restrictive covenants;
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b)Employee does not have any inventions or intellectual property obligations which may affect assignment under Section 13, other than what Employee has disclosed in Appendix 2;
c)If applicable, Employee has disclosed any Other Employers existing as of the Effective Date;
d)If applicable, Employee has complied with all duties imposed on Employee by their former employer with respect to termination of their employment;
e) | Employee is free to enter this Agreement and commence employment with Enfusion; |
f)Employee understands and acknowledges the offer of employment made pursuant to this Agreement is made only to Employee for their personal services, and at no time has Employee been authorized to recruit, induce, entice, or offer employment at Enfusion to any other person;
g)Employee covenants not to use, disclose, or induce the use of, any trade secret, confidential information, or proprietary information that belongs to any third party in the performance of Employee’s employment under this Agreement, unless Employee has prior written consent from the owner of the protected information (which, Employee agrees to provide such written consent to Enfusion); and,
h)Employee is not aware of: (i) any pending internal, criminal, civil, regulatory, or self- regulatory organization investigations involving Employee or any of Employee’s activities at any former employer or in relation to or arising out of Employee’s prior employment ; (ii) any pending customer complaints or customer arbitrations involving any of Employee’s activities at any former employer or in relation to or arising out of Employee’s prior employment; or, (iii) any circumstances that might lead to any of the matters described in this subsection. If Employee is aware of any such issues, Employee has disclosed such in writing to Enfusion’s Chief Human Resources Officer at least seven (7) days prior to the parties entering into this Agreement.
11. | Confidential Information and Confidentiality. |
a)Employee acknowledges and agrees that through their employment, he or she will be provided, obtain, or be exposed to proprietary or non-public information relating to Enfusion’s business, which is confidential in nature. Such information includes, client lists or client related information, information related to or concerning Enfusion’s products and services; fees, costs, and pricing structures; market studies; business plans and investment analyses; designs and specifications; data and analyses; drawings, photographs, and reports; computer software, object code, source code, operating systems, applications, algorithms, and program listings; flow charts, manuals, and documentation, ideas, images, text, music, movies, concepts, video, and websites; databases; accounting and business methods; inventions, devices, new developments, methods, and processes, (whether patentable or non-patentable and whether or not reduced to practice); investor or ownership information, Client and Prospective Client information; copyrightable works; technology and trade secrets; historical financial statements, financial projections, and budgets; personnel training techniques and materials; and any other personal, business, financial, or technical information, data, patents, or ideas relating to the proprietary information observed by,
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or disclosed to, Employee, whether in oral, written documents, memoranda, reports, or correspondence in graphic or machine-readable form, or otherwise in the course of, or in connection with, Employee’s employment with Enfusion (individually and collectively “Confidential Information”).
b)Employee hereby agrees that he or she will not disclose nor use at any time; before, during, or after their employment with Enfusion; any Confidential Information of which Employee is or becomes aware of, whether or not such information is developed by Employee, except to the extent such disclosure or use is directly related to or required for Employee’s performance of their employment duties. Further, Employee agrees he or she will take all reasonable and appropriate steps to safeguard the Confidential Information and to protect it against disclosure, misuse, espionage, loss, or theft and will not disclose or use any Confidential Information except as reasonably necessary to perform Employee's duties for the Company, or as required by law. Employee further agrees not to otherwise transmit or download any Confidential Information to Employee's personal computer, cellular telephone, or other electronic device, or otherwise remove Confidential Information from the Company's premises or Company-owned computer, unless Employee secures the Company's specific authorization in advance and takes appropriate steps to protect such information. Employee understands and agrees that all Confidential Information, including documents, records, and electronic files, to which Employee has access as a result of Employee's employment by the Company are the exclusive property of the Company. Employee also acknowledges and agrees that all Confidential Information, and all copyrights, trademarks, patents and other rights in connection therewith, shall be the sole property of the Company and its assigns. For clarity, nothing herein in is intended to prevent Employee disclosing information that Employee has a legal right to disclose.
c)Exceptions. Confidential Information shall not include any information that: (i) was in the possession of, or demonstrably known by, (in each case without restriction on its use or disclosure) the Employee prior to their receipt of such information; (ii) any information independently known by Employee without access to or reliance upon any Confidential Information, including the general skills, knowledge and experience acquired by the Employee before and/or during employment with the Company; (iii) was lawfully disclosed to Employee following the end of their employment with Enfusion by a third party under no known obligation of confidentiality; (iv) is in the public domain at the time of disclosure, or thereafter becomes in the public domain, other than as a result of disclosure by Employee in violation of this Agreement.
d)In the event Employee is required under a subpoena, court order, statute, law, rule, regulation, or other similar requirement, (“Legal Requirement”) Employee shall do so only to the extent required by the Legal Requirement, must provide prompt written notice to Enfusion of the disclosure to the extent not precluded by law, and must designate the information as Confidential Information when disclosing such information. Further, when legally permissible, the Employee shall notify Enfusion of what Confidential Information was disclosed under such Legal Requirement.
e)Defend Trade Secrets Act of 2016 (DTSA) Notice. Notwithstanding any other provision of this Agreement, pursuant to Section 7 of the DTSA, the Employee cannot be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that: (1) is made: (A) in confidence to a federal, state, or local government official, either directly or indirectly,
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or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. (ii) If Employee files a lawsuit for retaliation by Company for reporting a suspected violation of law, Employee may disclose Company’s trade secrets to Employee’s attorney and use the trade secret information in the court proceeding if Employee: (1) files any document containing the trade secret under seal; and (2) does not disclose the trade secret, except pursuant to court order.
f)Violation of Law. If Employee believes Enfusion has committed or is committing a violation of law, although not required, he or she is asked to first report the possible violation to Enfusion’s upper-management so that Enfusion may take the proper corrective actions. Despite the foregoing, Employee is free to report possible violations, file a charge with, or participate or cooperate with any governmental agency or entity, including but not limited to the EEOC, the Department of Justice, the Securities and Exchange Commission, Congress, or any agency Inspector General, or making any other disclosures that are protected under the whistleblower, anti-discrimination or anti-retaliation provisions of federal, state or local law or regulation; provided further, the Employee does not need the prior authorization of the Company to make any such reports or disclosures, and the Employee is not required to notify the Company that the Employee has made such reports or disclosures.
g)Trading. Employee understands and agrees he or she is not permitted to use Enfusion’s or Clients’ Confidential Information on their behalf, on the behalf of others, or to assist others in trading securities. Employee further acknowledges that to use Enfusion’s or Client’s Confidential Information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only prohibited and unethical, but is also illegal.
12. | Company Property. Upon Enfusion’s request or Employee’s Termination Date, Employee shall, to the extent such materials are in Employee’s possession or under Employee’s control, promptly deliver to Enfusion: (i) all original and any copies of emails, employee training materials, records, agreements, manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, data, tables, or calculations, which are the property of Enfusion or its Affiliates and that relate, in any way, to the business, products, policies, practices, or techniques thereof, including any strategies; (ii) all other Enfusion property, including any Enfusion issued credit cards, identification, keys, computers, cell phone, or other equipment; (iii) all Confidential Information of Enfusion or its Affiliates, including all documents that, in whole or in part, contain any Confidential Information of Enfusion or its Affiliates or their respective clients or licensors; and |
(iv) all proprietary information, intellectual property and trade secrets of Enfusion or its Affiliates or their respective clients or licensors. In addition, if applicable, Employee shall promptly cancel or transfer to himself or herself any telecommunications services for which Enfusion was directly paying. Nothing in this Section shall prohibit Employee from retaining papers or materials that are solely of a personal nature, including copies of documents showing their compensation or reimbursable expenses and a copy of this Employment Agreement.
13. | Intellectual Property. (“Intellectual Property”) means any and all intellectual property in any form or stage of development, including any innovation, discovery, idea, concept, design, prototype, product configuration, invention, improvement, modification, patentable subject matter, |
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method, process, technique, procedure, system, plan, model, program, software or code, source code, algorithms, data, specification, drawing, images, text, music, movies, video, websites, diagram, flow chart, documentation, know-how, work of authorship, copyrightable subject matter, derivative work, trademark or trade name, and any other subject matter, material, or information that qualifies or is considered by Employer to qualify for patent, copyright, trademark, trade dress, trade secret, or any other protection under any law providing or creating intellectual property rights, including the Uniform Trade Secrets Act. Intellectual Property also includes Confidential Information learned, obtained, or developed in connection with Employee’s employment, such as specifications, financial data, personnel information, market information, business arrangements, and other non-public information of Employer described in Section [11] of this Agreement. EMPLOYEE AGREES THAT ANY INTELLECTUAL PROPERTY CONCEIVED OR MADE BY EMPLOYEE, WHETHER ALONE OR WITH OTHER, DURING THE TERM OF EMPLOYEE’S EMPLOYMENT WITH ENFUSION RELATING IN ANY MANNER TO THE BUSINESS, BUSINESS PLANS, OR STRATEGIES OF ENFUSION OR ITS AFFILIATES, SHALL BE THE EXCLUSIVE PROPERTY OF ENFUSION OR SUCH AFFILIATE. WITHOUT LIMITING THE FOREGOING, TO THE EXTENT ANY COPYRIGHTABLE WORK IS INCLUDED IN THE FOREGOING, IT WILL BE DEEMED ‘A WORK MADE FOR HIRE” FOR THE BENEFIT OF ENFUSION OR SUCH AFFILIATE UNDER SECTION 201(b) OF THE 1976 U.S. COPYRIGHT ACT, AS AMENDED, OR OTHER SIMILAR APPLICABLE STATE OR FOREIGN OR INTERNATIONAL LAWS. FURTHER, EMPLOYEE AGREES THAT ALL INVENTIONS, HE OR SHE DEVELOPS OR DEVISES (WHETHER INDIVIDUALLY OR IN CONCERT WITH OTHERS): (i) USING ENFUSION’S EQUIPMENT, SUPPLIES, RESOURCES, OR CONFIDENTIAL INFORMATION; (ii) RESULTING FROM WORK HE OR SHE PERFORMS OR PERFORMED FOR ENFUSION; OR, (iii) RELATING TO ENFUSION’S CURRENT OR PLANNED RESEARCH OR DEVELOPMENT WILL BE ENFUSION’S SOLE AND EXCLUSIVE PROPERTY. ACCORDINGLY, EMPLOYEE HEREBY ASSIGNS ALL INTELLECTUAL PROPERTY RIGHTS, TITLE, AND INTERESTES TO ENFUSION AND WAIVES ANY MOREAL RIGHTS IN THE INTELLECTUAL PROPERTY TO THE FURTHEST EXTENT PERMITED BY LAW.
14. | Restrictive Covenants. Employee understands and recognizes that Enfusion is engaged in a highly competitive business and has spent a considerable amount of time, effort, and resources building its business, products, client base (domestically and internationally), and training its employees. Further, Employee through their employment will receive training regarding and have access to Enfusion’s (and its clients’ and licensors’) Confidential Information (as defined above), trade secrets, and sensitive proprietary business methods or data, customer lists, and other valuable business information. Employee acknowledges and agrees that Enfusion has a legitimate business interest in protecting its goodwill, client and employee base, Confidential Information, trade secrets, and other proprietary information. Accordingly, Employee agrees to be bound by the following restrictive covenants (“Restrictive Covenants”), which are reasonably tailored to protect Enfusion’s legitimate interests from improper and unfair competition, and will not unreasonably impair or infringe on Employee’s right to work or earn a living after Employee’s Termination Date: |
a) | Definitions: For purposes of this section, the following terms are defined as follows: |
i. | (“Client”) means a person or organization who has retained, in writing or otherwise, Enfusion or any of its Affiliates to perform a service for compensation, which is, is |
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related to, or is an extension of Enfusion’s or its Affiliates’ normal line of business and which Employee was involved; and,
ii.(“Prospective Client”) means a person or entity that has not yet retained, in writing or otherwise, Enfusion or any of its Affiliates to perform a service for compensation as described above when defining Clients, but instead, is a person or entity that Enfusion or any of its Affiliates reasonably expect to do so by virtue of Prospective Client’s solicitation of Enfusion or its Affiliates or Enfusion’s or its Affiliates’ targeted, direct solicitation of that person or entity within a six (6) month period immediately prior to Employee’s Termination Date.
b)Non-solicitation of Enfusion’s Employees. Throughout Employee’s employment with Enfusion and for a period of one (1) year, to commence on Employee’s Termination Date, Employee agrees not to: directly or indirectly, through any person or entity, or as an agent for any person or entity, or authorize, encourage, suggest, or approve any person or entity to employ or cause to be employed, entice, induce, or solicit employment or engagement, in any capacity, any person that Employee had contact with and who is employed by Enfusion or any of its Affiliates or was employed or engaged by Enfusion or its Affiliates within three (3) months of the solicitation. While there is no geographic restraint, Employee understands and acknowledges that the restriction prohibiting solicitation of Enfusion employees is necessary and reasonable based upon Enfusion’s global presence and to protect Enfusion’s legitimate interest in its employee base and the resources utilized in training and maintaining such employee base.
c)Non-solicitation of Enfusion’s Clients. Throughout Employee’s employment with Enfusion and for a period of one (1) year, to commence on Employee’s Termination Date, Employee agrees not to: directly or indirectly, through any person or entity, or as an agent for any person or entity, or authorize, encourage, suggest, or approve any person or entity to directly or indirectly, through any person or entity, or as an agent for any person or entity, or authorize, encourage, suggest, or knowingly approve any person or entity to, induce, attempt to induce, or entice any Client (as defined above) or Prospective Client (as defined above), in whole or in part, from doing business with Enfusion or any such Affiliate, regardless of which party initiates the contact or communication; or directly or indirectly, or through any person or entity, or authorize, encourage, suggest, or knowingly approve any person or entity to, solicit, communicate with, contact, sell or render assistance, services or products to any Client or Prospective Client that would interfere with, take away, divert, or urge any Client or Prospective Client to discontinue, in whole or in part, business with Enfusion or any of its Affiliates. While there is no geographic restraint, Employee understands and acknowledges that the restriction prohibiting solicitation of any Enfusion Client or Prospective Client is limited to those Clients or Prospective Clients with whom Employee worked, to whom Employee marketed or sold services or products, or about whom Employee received Confidential Information, as such would give Employee an unfair competitive advantage. Employee agrees this restriction is necessary and reasonable, without regard to geographic constraint, based upon the Employee’s knowledge and/or interaction with the Client or Prospective Client and to protect Enfusion’s legitimate interest in protecting its business relationships.
d)Non-compete. Employee understands and recognizes that: (i) Enfusion has spent a considerable amount of time and resources into training Employee; and, (ii) Employee will gain
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access to or knowledge of confidential and proprietary information and of practices, successes, and failures during the course of their employment; and, (iii) Employee will build relationships with Enfusion clients or prospective clients through their employment with Enfusion, made possible through Enfusion’s brand and resources, each of which Enfusion has a legitimate interest in protecting and Enfusion’s competitors or prospective competitors will gain an unfair advantage by obtaining the benefit of such foregoing investments made into and interests obtained by Employee. Therefore, throughout Employee’s employment with Enfusion and throughout the Restricted Period (as defined below), Employee agrees not to, directly or indirectly, alone or in association with or on behalf of any other person or entity, engage in any Competitive Activity (as defined below) (“Restricted Employment”).
i. | Restricted Period. (“Restricted Period”) means a period of twelve (12) months to commence on Employee’s Termination Date. |
ii.Competitive Activity. (“Competitive Activity”) means:
1. | Engaging in a Competitive Business (as defined below) directly or indirectly, on Employee’s own behalf or on the behalf of another; |
2. | Providing services, similar or related to any services Employee provided to Enfusion while employed by Enfusion, to any person engaged in a Competitive Business, whether as an employee, consultant, officer, director, manager, partner, principal, agent, representative, or in any other capacity; or, |
3. | Controlling (by contract, equity ownership, or otherwise), investing in (except as the owner of up to 3% of the securities of a publicly-traded entity), or providing other financial support to any person engaged in a Competitive Business. |
iii.Competitive Business. (“Competitive Business”) means:
1. | Asset Management Software, including (a) portfolio management system; |
(b) order management system; (c) execution management system; (d) fund accounting system; or (e) fund risk management system, or any combination of the foregoing or any software substantially similar to any new software offering Enfusion offers or proposes to offer during Employee’s employment at Enfusion and in which Employee was involved in or received Confidential Information or trade secrets regarding; or
2. | Any middle- or back-office services or servicing tied to Enfusion’s software that Enfusion offers or proposes to offer during Employee’s employment at Enfusion and in which Employee was involved in or received Confidential Information or trade secrets regarding, or any other similar software that is an alternative to or competes with Enfusion’s managed services offering, whether in whole or in part; or |
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3. | Any other business or extension of a line of business in which Enfusion was engaged at any time during Employee’s employment, or in which Enfusion plans to engage or is considering plans to engage at the time of the Termination Date (as evidenced in writing) and in which Employee was involved or about which Employee received Confidential Information or trade secrets. |
e)Notice. During the Restricted Period, Employee shall notify any other employers or prospective employers of their obligations under this Agreement before Employee begins working for such employer and further, agrees to simultaneously deliver a copy of such notice to Enfusion in accordance with Section 19 (Notices). Further, Employee agrees that Enfusion may also notify such other employers or prospective employers of Employee’s obligations under this Agreement. Employee agrees to inform Enfusion of the name, address, and telephone number of Employee’s supervisor at each subsequent employer to whom Employee reports this Agreement during the Restricted Period.
f)Undue Hardship. If Employee believes in good faith that the provisions in this Section will prevent him or her from obtaining a new job due to its categorization as Restricted Employment, Employee may notify Enfusion in writing, providing reasonable details about the proposed responsibilities of the new job (without disclosing another person’s Confidential Information). The Parties agree to discuss whether appropriate accommodations can be made to balance the protection of Enfusion’s business interests and Employee’s desire to engage in Restricted Employment, and any appropriate adjustments to the payments described above. Except to the extent required by applicable law, Enfusion is under no obligation to modify the restrictions in this Section but may do so in its sole and absolute discretion.
g)General. For the avoidance of doubt, the Restrictive Covenants contained in this Agreement are in addition to, and not in lieu of, any other restrictive covenants or similar covenants or agreements between the Employee and Enfusion. The above-described restrictions are narrowly tailored to protect Enfusion’s legitimate business interests. The restrictions shall only apply to competitive employment in a capacity that is related to or requires the same or similar skills or knowledge necessary to have performed Employee’s duties at Enfusion or any role similar or related to any role held by Employee while employed at Enfusion.
h)Client Competition. Enfusion will spend a considerable amount of time and resources making Employee an expert of Enfusion’s products and service offerings and has a legitimate interest in protecting such investment in Employee. To protect its legitimate interest and to prevent clients from circumventing and eliminating the need for Enfusion’s services, (whether explicitly or under the guise of reverse engineering) through hiring Employee, Employee agrees that for a period of six (6) months to commence on Employee’s Termination Date, Employee will not, directly or indirectly, accept employment or perform services or duties, paid or unpaid, from any of Enfusion’s Clients or Prospective Clients, provided that Employee had contact with during their employment and to the extent such employment would be in a capacity substantially similar the capacity in which the Employee worked for Enfusion. Employee further acknowledges the employment opportunities that Employee could get without violating this Agreement, including the immense number of hedge funds, asset managers, fund administrators, fund of funds, and other financial
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services or investment companies, and that as such he or she will be able to earn a livelihood without violating this Agreement.
i)Extension of Restricted Period. In the event of any violation of any Restrictive Covenant, the restricted period of the covenant that was violated shall be extended by a period of time equal to the period beginning when such violation commenced and ending when the activities constituting such violation have ceased, such that Enfusion gets the full benefit of the bargain with respect to the agreed upon period of restriction.
15. | Remedies. Employee acknowledges and agrees that due to the unique nature of Enfusion’s business, Employee’s breach of any obligation may result in irreparable and continuing harm to Enfusion, for which monetary damages may be inadequate to compensate or make Enfusion whole. Therefore, Employee agrees Enfusion is entitled to seek injunctive relief or specific performance to enforce the terms of this Agreement without the necessity of posting a bond. Employee further agrees Enfusion shall also have any other right or remedy available to it under law or in equity including the right to seek and recover monetary damages for lost profits and other compensable damages. Should any court of competent jurisdiction determine that Employee has breached any of the provisions as contained in this Agreement, Enfusion shall have a right to collect, in addition to any monetary damages awarded to it, all of its reasonable attorneys’ fees and costs incurred in connection with its efforts to enforce this Agreement, including pre-litigation efforts. Employee agrees that, if Enfusion seeks preliminary or emergency injunctive relief, and obtains same in whole or in part, the Company shall be entitled to an award of its attorney fees, expenses, and costs incurred in connection therewith upon the entry of the Order granting said preliminary or emergency injunctive relief, in addition to any such fees and costs that may be incurred and awarded with respect to any subsequent proceedings in said action. |
16. | Voluntary Agreement. Employee represents that Employee has carefully read, considered and understands the scope and effect of the provisions of this Agreement and that Employee is fully aware of the legal and binding effect of this Agreement. This Agreement is executed voluntarily by Employee and without any duress or undue influence on the part or behalf of the Company. Employee further acknowledges and agrees that Employee has been provided sufficient time to review the Agreement and consult with an attorney or legal representative regarding the Employee’s rights and obligations under this Agreement. In doing so, Employee acknowledges and agrees, the restrictions set forth in this Agreement impose a fair and reasonable restriction on Employee, reasonably necessary to protect Enfusion’s and its officers’ directors’, members’, and employees’ interests, business, and goodwill. |
17. | Severability. If any provision of this Agreement is found to be unenforceable or contrary to law; including if any provision concerning time, scope, or geographic restrictions are deemed by a court with competent jurisdiction to be overly broad; the provision in question should be reformed to the minimum extent necessary to correct any invalidity while preserving to the maximum extent, the rights and commercial expectations of the Parties. The remaining portions of this Agreement will remain in full force and effect. Further, every provision of this Agreement shall be construed as independent agreements between Enfusion and Employee. Therefore, any claim or cause of |
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action Employee may have against Enfusion, whether predicated on this Agreement or otherwise, shall not constitute a defense to prohibit the enforcement of any other provision or covenant.
18. | Counterparts. This Agreement, and any amendment thereto, may be executed in one or more counterparts and by the Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together, shall constitute one and the same Agreement. Facsimile, PDF, and any other digital or electronic signatures to this Agreement shall have the same effect as original or wet signatures. If executed in counterparts, this Agreement or any amendment, will not be effective or enforceable until signed by both Employee and an authorized representative of Enfusion. |
19. | Notices. All notices, requests, claims, demands, and other communications under this Agreement, (collectively “Notices”), must be in writing and sent to the person and address designated in this Section. Any Notices must be hand-delivered, sent by an internationally recognized overnight courier service, sent via e-mail, or sent via registered or certified mail with postage pre-paid and return receipt requested. Notices will be considered given or made upon receipt. |
Notices to Enfusion: | Notices to Employee: |
Enfusion, LLC 125 S. Clark Street, Suite 750 Chicago, IL 60603 Attn: Human Resources Phone: 312.253.9800 E-mail: [email protected] | See Appendix 1 (Scope of Employment) |
Employee agrees to provide an updated address to Enfusion at the time of termination and if that address changes during the any period of restriction following the Employee’s termination to provide Enfusion the updated address. In the event Enfusion is unable to locate Employee at their last known residence, Employee agrees Enfusion may seek injunctive relief or specific performance without personal service on Employee, so long as Enfusion uses reasonable efforts to first locate Employee.
20. | Entire Agreement. This Agreement constitute the entire agreement between the Parties with respect to its subject matter and (to the extent permissible by law) supersedes all prior agreements, proposals, communications, representations, writings, negotiations, or understandings with respect to that subject matter. All terms, conditions, and warranties not stated expressly in this Agreement, and which would in the absence of this provision be implied into this Agreement by statute, common law, equity, trade, custom or usage or otherwise, are excluded to the maximum extent permitted by law. |
21. | Governing Law. The legal relations between the Parties hereto and any dispute arising under or in connection with this Agreement, or breach thereof, whether sounding in contract, tort, or |
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otherwise, shall be governed by and construed in accordance with the laws of the United States of America and the State in which the employee’s assigned Office is located (provided in Appendix 1) , regardless of any laws that might otherwise govern under applicable choice-of-law principles. Any claim, legal proceeding, or litigation arising out of or in connection with this Agreement or the relationship between Enfusion and Employee will be brought solely in the jurisdiction in which the Office is located, regardless of any laws or rules that might otherwise govern under applicable forum non conveniens principles. Any claim brought in any other jurisdiction or forum is precluded. ACCORDING, BOTH PARTIES HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED WITHIN THE JURISDICTION IN WHICH THE OFFICE IS LOCATED.
22. | No Waiver. No waiver, of any of the terms of this Agreement, will be valid unless in writing, explicitly stated as such, and signed by the party waiving its rights. Any forbearance or delay by either party to enforce any of its rights under this Agreement will not be construed as a waiver to enforce any such rights pertaining to the occurrence in question or any other occurrence. The waiver, by any Party, of any breach of covenant will not be construed as a waiver of any succeeding breach of the same or any other covenant. |
23. | Assignment. Enfusion may assign this Agreement or its rights under this Agreement to - and Employee may be employed by - any affiliate or subsidiary of Enfusion, or entity that acquires all or substantially all of Enfusion’s assets or acquires a department or line of business of Enfusion that Employee works within, or that is otherwise a successor in interest to Enfusion. This Agreement may not be assigned by Employee, except that Employee’s rights to compensation and benefits hereunder, subject to the limitations of this Agreement, may be transferred by will, by operation of law or as required by the law or a court order. |
24. | Compliance with Section 409A. This Employment Agreement is intended to comply with, (or be exempt from), Section 409A of the Internal Revenue Code of 1986, as amended, to the extent applicable, and shall be administered and interpreted accordingly. To further clarify, this Section is in no way intended to change that bonuses, if any, are earned upon payment. |
25. | Binding Agreement. This Agreement shall be binding upon and shall inure to the benefit of both Enfusion and Employee and their respective successors, assigns, heirs, and legal representatives. |
26. | Terms of Acceptance. This Agreement is conditioned upon and subject to: (i) confirmation that Employee is not a subject to any contractual or other legal restrictions that would prevent or impair their ability to perform the duties of the position offered under this Agreement; (ii) Enfusion’s satisfactory completion of a background investigation, credit check, and reference check (where appropriate); and, (iii) Enfusion’s receipt of Employee’s acceptance of the terms and conditions of this Employment Agreement on or before the close of business on September 10, 2021 |
[Signature Page to Follow]
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Signature Page to the Employment Agreement between Enfusion Ltd. LLC and Bronwen Bastone made effective on September 1, 2021
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the Effective Date written above.
Enfusion Ltd. LLC | Employee | |
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Signature: /s/ Steve Dorton | Signature: | /s/ Bronwen Bastone |
Name: Steve Dorton | Name: | Bronwen Bastone |
Title: Chief Financial Officer | | |
Date: September 1, 2021 | Date: | September 29, 2021 |
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Certain identified information has been excluded from this exhibit because it is both not material and is the type that the registrant treats as private or confidential. Information that was omitted has been noted in this document with a placeholder identified by the mark “[***]”.
Exhibit 10.2
Offer of Employment /
APPENDIX 1 (to Employment Agreement) - Scope of Employment
Offer Letter
Please note that: (1) upon your acceptance of these terms set forth herein, as acknowledged by your signature below, (2) upon your acceptance of the terms contained in the employment agreement (a copy of which is set forth below), as set forth therein and as acknowledged by both your and Enfusion’s signature of that document, and (3) provided all other conditions precedent to employment are satisfied, this Offer of Employment will become a Scope of Employment appendix to your employment agreement.
Benefits
As a full-time employee, you will be able to participate in Enfusion’s generally offered benefits program, which includes, being eligible to participate in Enfusion’s health benefit programs the first day of the first full month following your hire date. Similarly, you will be able to participate in Enfusion’s 401(k) plan following thirty (30) days of employment. Further details on your benefits will be provided to you on your first day.
“At-Will” Employ m ent
Please note, if you choose to accept this offer of employment, your employment will be on an “at-will” basis. Your “at-will” status will be further detailed in the employment agreement; however, for the purposes of this document, “at-will” employment means that both employee and Enfusion will be free to terminate your employment at any time, with or without cause, and with or without notice.
Immigration Reform and Control Act of 1986
In compliance with the Immigration Reform and Control Act of 1986, each new employee, as a condition of employment, must complete an Employment Verification Form I9 and present proof of identity and employment eligibility. If you accept this offer and we enter into an employment agreement (in accordance will all terms set forth herein), you will be required to bring the following necessary documentation on your first day of work:
1. | Social Security card for payroll and benefit purposes. |
Certain identified information has been excluded from this exhibit because it is both not material and is the type that the registrant treats as private or confidential. Information that was omitted has been noted in this document with a placeholder identified by the mark “[***]”.
Exhibit 10.2
2. | Proof that you are presently eligible to work in the United States for I-9 purposes. This includes (1) a driver’s license or state issued ID card with a photograph and either your Social Security card or an original birth certificate or (2) your U.S. passport. |
Conditional Offer
In addition to and not limiting the conditions described in this letter, your offer of employment (as well as continued employment) is subject to final reference checking and satisfactory completion of Enfusion's pre-employment screening process. This Offer of Employment is not binding upon Enfusion until such time that: (i) all conditions precedent have been met to Enfusion’s satisfaction and (2) both employee and Enfusion have executed a valid and binding employment agreement. The starting date may be delayed if all results of the pre-employment screening process have not been received. Further, it is important to note that, despite being an “at-will” employee, your employment will be conditioned on you entering into an employment agreement. Your employment agreement will include customary protections such as confidentiality and intellectual property protections and restrictive covenants.
Scope of Employment
APPENDIX 1 to Employment Agreement
Reference is made to the “Employment Agreement” entered into by and between Enfusion Ltd. LLC (“Enfusion”) and Bronwen Bastone (“Employee”) on September 1, 2021 (as may be amended from time-to- time, the “Agreement”). The Parties hereby agree that this Appendix 1 shall be subject to and controlled by the terms and conditions of the Agreement, which shall be incorporated by reference into this Appendix 1. If there is any inconsistency between the terms of the Agreement and this Appendix 1, the terms of the Agreement shall prevail. Further, all capitalized terms used but not defined in this Appendix 1 shall be construed in accordance with the Agreement.
1. | Commencement Date of Employment. The Employee’s first day of work will be on October 4, 2021 (“Commencement Date”) unless otherwise agreed to by Enfusion and Employee in writing pursuant to the terms of the Employment Agreement. |
2. | Appointment & Duties. Employee shall initially be a member of the Corporate Executive department, serve as Chief People Officer and report to Thomas Kim, Chief Executive Officer. |
3. | Work Hours. During an ordinary work week, Employee shall be present at the Office during Enfusion’s ordinary office hours described under Section 5 of the Agreement (“Work Hours”). |
4. | Office. Employee is initially assigned to Enfusion’s office located in New York, New York. |
5. | Status. Employee will be classified as an Exempt employee, which means Employee will not be eligible for overtime pay for hours worked in excess of forty (40) hours in any given week. |
6. | Pay Cycle. As an exempt employee, Employee will ordinarily receive payment for services rendered once per month, in accordance with Enfusion’s ordinary payroll policies and procedures. |
7. | Salary. Employee agrees to accept, a base salary to be paid at an annualized rate of $450,000 US Dollars (“Salary”). The Salary is paid less applicable deductions and withholdings. Employee’s Salary will be paid in accordance with Enfusion’s normal payroll policies and procedures. |
8. | Other. |
Discretionary Bonus
In addition to Salary, Enfusion may reward exemplary performance through a bonus (less applicable deductions and withholdings). A bonus is not guaranteed; however, when determining if a bonus is warranted, Enfusion may consider a multitude of factors, including, but not limited to, the level of your performance and Enfusion’s performance, as determined by Enfusion at its sole discretion. By way of example only, if all conditions and goals are satisfied a target annual bonus would be $150,000. For 2021, your prorated bonus would be $37,500. In order to be eligible for a bonus, you must be in “active working status” at the time of the bonus payment. “Active working status” means that you have not resigned (or have given notice of your resignation) or been terminated (or been given notice of your termination).
Sign-On Bonus
Following the Commencement Date, Employee will receive a one-time sign-on bonus of $25,000 US Dollars (“Sign-On Bonus”), which shall be subject to deductions for taxes and other withholdings as required by law or the standard and lawful policies of the Company.
Enfusion’s payment of the Sign-On Bonus is conditioned on agreeing to the restrictive covenants in the Employment Agreement and Employee’s continuous employment with Enfusion for a period of one (1) year, beginning on the Commencement Date. If employment is terminated either by Employee or Enfusion, for any reason within the one (1) year period, Employee agrees to repay Enfusion seventy-five percent (75%) the Sign-On Bonus within thirty (30) days of Employee’s Termination Date or such other date as agreed upon by Enfusion in its sole discretion.
Equity Eligibility
In addition to the annual compensation described above and subject to Enfusion’s Board approval, you will be given an opportunity to participate in Enfusion’s shadow equity plan (the “Plan”). Your award will be broken into four components:
(i) | three tenths (0.3) of a unit with a Strike Value at one billion, five hundred million ($1,500,000,000 USD) US Dollars and a Knock-in Value at the same value of one billion, five hundred million ($1,500,000,000 USD) US Dollars that will, subject to the Plan, vest annually in four equal portions of zero tenths, seven hundredths and five thousandths of a point (0.075) unit each year on the anniversary of your Start Date to be fully vested on the fourth (4th) anniversary of your Start Date; |
(ii) | one tenth (0.1) of a unit with a Strike Value at one billion, five hundred million ($1,500,000,000 USD) US Dollars and a Knock-in Value that will vest if Enfusion achieves the equity value in a |
change-in-control event (Liquidity Event as defined under the Plan) is equal to or greater than three billion ($3,000,000,000 USD) US Dollars;
(iii) | one tenth (0.1) of a unit with a Strike Value at one billion, five hundred million ($1,500,000,000 USD) US Dollars and a Knock-in Value that will vest if Enfusion achieves the equity value in a change-in-control event (Liquidity Event as defined under the Plan) is equal to or greater than four billion ($4,000,000,000 USD) US Dollars; |
(iv) | one tenth (0.1) of a unit with a Strike Value at one billion, five hundred million ($1,500,000,000 USD) US Dollars and a Knock-in Value that will vest if Enfusion achieves the equity value in a change-in-control event (Liquidity Event as defined under the Plan) is equal to or greater than five billion ($5,000,000,000 USD) US Dollars. Each component of your award will be subject to a cliff and acceleration. |
Severance
Although Employee’s employment is “at-will”, in the event Employee's employment is terminated without cause during Employee's first year of employment, Enfusion will offer Employee the opportunity to enter into a separate severance agreement describing the parties' post-termination rights and obligations. The severance agreement will at minimum provide for severance pay (i.e. consideration for entering into the severance agreement) in accordance with the following scenario: if the employee is terminated without cause in the first year of employment, Employee will be entitled to nine (9) months' base salary as severance pay, which will be payable in regular installments in accordance with Enfusion’s regular payroll practices and subject to customary withholding. Subject to the foregoing, should Employee obtain subsequent or alternative employment within nine (9) months following the effective date of a severance agreement, Enfusion shall have the unilateral right to cease any remaining severance payments owed to Employee under the severance agreement.
9. | Vacation. |
In accordance with Enfusion’s current vacation policy, which may be amended time to time, Employee is entitled to 20 paid vacation days per calendar year, which will be accrued at a rate of 1.67 days per month. Time off granted in the first calendar year of employment will be on a pro-rata basis.
10. | Notices to Employee. |
Bronwen Bastone
[***]
Acknowledged and Accepted: | | |
| | |
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By Employee | | |
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Signature: | /s/ Bronwen Bastone | |
| | |
Name: | BRONWEN BASTONE | |
| | |
Date: | 9 - 8 - 21 | |
Exhibit 10.3
Amendment to Appendix 1 – Scope of Employment
This document serves as an amendment to the vacation paragraph within your most recent employment agreement appendix. The below paragraph replaces the paragraph related to vacation in its entirety. This amendment does not constitute a new employment agreement or alter any other terms of your employment with Enfusion.
In accordance with Enfusion’s Flexible Time Off policy effective July 1, 2022, which may be amended from time to time, Employee is entitled to flexible time off as needed each calendar year. Flexible Time Off will not accrue or vest and therefore will not be paid out at the time of separation of employment. Any unused and unexpired accrued vacation days that Employee earned under the previous policy will expire on December 31, 2022 if unused by the Employee. If the Employee’s Termination Date is on or before December 31, 2022, the Employee will receive a final payment for all vested paid vacation time through their Termination Date. If the Employee’s Termination Date is on or after January 1, 2023, in accordance with Enfusion’s vacation policy, Employee will not be paid out for any expired accrued vacation days. Any employee beginning employment after July 1, 2022 will not accrue vacation days.
/s/ Bronwen Bastone
Bronwen Bastone
Chief People Officer
July 01, 2022
/s/ Bronwen Bastone
Bronwen Bastone
Exhibit 10.4
Amendment to Appendix 1 – Scope of Employment
This document serves as an amendment to the vacation paragraph within your most recent employment agreement appendix. The below paragraph replaces the paragraph related to vacation in its entirety. This amendment does not constitute a new employment agreement or alter any other terms of your employment with Enfusion.
In accordance with Enfusion’s Flexible Time Off policy effective July 1, 2022, which may be amended from time to time, Employee is entitled to flexible time off as needed each calendar year. Flexible Time Off will not accrue or vest and therefore will not be paid out at the time of separation of employment. Any unused and unexpired accrued vacation days that Employee earned under the previous policy will expire on December 31, 2022 if unused by the Employee. If the Employee’s Termination Date is on or before December 31, 2022, the Employee will receive a final payment for all vested paid vacation time through their Termination Date. If the Employee’s Termination Date is on or after January 1, 2023, in accordance with Enfusion’s vacation policy, Employee will not be paid out for any expired accrued vacation days. Any employee beginning employment after July 1, 2022 will not accrue vacation days.
/s/ Bronwen Bastone
Bronwen Bastone
Chief People Officer
July 01, 2022
/s/ Thomas Kim
Thomas Kim
Exhibit 10.5
Amendment to Appendix 1 – Scope of Employment
This document serves as an amendment to the vacation paragraph within your most recent employment agreement appendix. The below paragraph replaces the paragraph related to vacation in its entirety. This amendment does not constitute a new employment agreement or alter any other terms of your employment with Enfusion.
In accordance with Enfusion’s Flexible Time Off policy effective July 1, 2022, which may be amended from time to time, Employee is entitled to flexible time off as needed each calendar year. Flexible Time Off will not accrue or vest and therefore will not be paid out at the time of separation of employment. Any unused and unexpired accrued vacation days that Employee earned under the previous policy will expire on December 31, 2022 if unused by the Employee. If the Employee’s Termination Date is on or before December 31, 2022, the Employee will receive a final payment for all vested paid vacation time through their Termination Date. If the Employee’s Termination Date is on or after January 1, 2023, in accordance with Enfusion’s vacation policy, Employee will not be paid out for any expired accrued vacation days. Any employee beginning employment after July 1, 2022 will not accrue vacation days.
/s/ Bronwen Bastone
Bronwen Bastone
Chief People Officer
July 01, 2022
/s/ Steve Dorton
Stephen (Steve) Dorton
Exhibit 10.6
Amendment to Appendix 1 – Scope of Employment
This document serves as an amendment to the vacation paragraph within your most recent employment agreement appendix. The below paragraph replaces the paragraph related to vacation in its entirety. This amendment does not constitute a new employment agreement or alter any other terms of your employment with Enfusion.
In accordance with Enfusion’s Flexible Time Off policy effective July 1, 2022, which may be amended from time to time, Employee is entitled to flexible time off as needed each calendar year. Flexible Time Off will not accrue or vest and therefore will not be paid out at the time of separation of employment. Any unused and unexpired accrued vacation days that Employee earned under the previous policy will expire on December 31, 2022 if unused by the Employee. If the Employee’s Termination Date is on or before December 31, 2022, the Employee will receive a final payment for all vested paid vacation time through their Termination Date. If the Employee’s Termination Date is on or after January 1, 2023, in accordance with Enfusion’s vacation policy, Employee will not be paid out for any expired accrued vacation days. Any employee beginning employment after July 1, 2022 will not accrue vacation days.
/s/ Bronwen Bastone
Bronwen Bastone
Chief People Officer
July 01, 2022
/s/ Steve Bachert
Steven (Steve) Bachert
Exhibit 10.7
Amendment to Appendix 1 – Scope of Employment
This document serves as an amendment to the vacation paragraph within your most recent employment agreement appendix. The below paragraph replaces the paragraph related to vacation in its entirety. This amendment does not constitute a new employment agreement or alter any other terms of your employment with Enfusion.
In accordance with Enfusion’s Flexible Time Off policy effective July 1, 2022, which may be amended from time to time, Employee is entitled to flexible time off as needed each calendar year. Flexible Time Off will not accrue or vest and therefore will not be paid out at the time of separation of employment. Any unused and unexpired accrued vacation days that Employee earned under the previous policy will expire on December 31, 2022 if unused by the Employee. If the Employee’s Termination Date is on or before December 31, 2022, the Employee will receive a final payment for all vested paid vacation time through their Termination Date. If the Employee’s Termination Date is on or after January 1, 2023, in accordance with Enfusion’s vacation policy, Employee will not be paid out for any expired accrued vacation days. Any employee beginning employment after July 1, 2022 will not accrue vacation days.
/s/ Bronwen Bastone
Bronwen Bastone
Chief People Officer
July 01, 2022
/s/ Lorelei Skillman
Lorelei Skillman
Exhibit 10.8
Amendment to Appendix 1 – Scope of Employment
This document serves as an amendment to the vacation paragraph within your most recent employment agreement appendix. The below paragraph replaces the paragraph related to vacation in its entirety. This amendment does not constitute a new employment agreement or alter any other terms of your employment with Enfusion.
In accordance with Enfusion’s Flexible Time Off policy effective July 1, 2022, which may be amended from time to time, Employee is entitled to flexible time off as needed each calendar year. Flexible Time Off will not accrue or vest and therefore will not be paid out at the time of separation of employment. Any unused and unexpired accrued vacation days that Employee earned under the previous policy will expire on December 31, 2022 if unused by the Employee. If the Employee’s Termination Date is on or before December 31, 2022, the Employee will receive a final payment for all vested paid vacation time through their Termination Date. If the Employee’s Termination Date is on or after January 1, 2023, in accordance with Enfusion’s vacation policy, Employee will not be paid out for any expired accrued vacation days. Any employee beginning employment after July 1, 2022 will not accrue vacation days.
/s/ Bronwen Bastone
Bronwen Bastone
Chief People Officer
July 01, 2022
/s/ Dan Groman
Daniel (Dan) Groman
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