Good morning and thank you operator. We welcome you to Enfusion's fourth quarter 2022 earnings conference call.

Hosting today's call are Oleg Movchan, Enfusion's Chief Executive Officer; and Brad Herring, Enfusion's Chief Financial Officer. Please note, our quarterly shareholder letter, which includes our quarterly financial results of all been posted to our IR website.

I'd like to remind you that today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC and are available in the Investor Relations section in our website.

Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of today, and the company does not assume any obligation or intent to update them following today's call, except as required by law.

In addition, today's call may include non-GAAP measures. These measures should be considered as a supplement to and not as a substitute for GAAP financial measures.

Reconciliation to the nearest GAAP measure can be found in today's quarterly shareholder letter, which is available on the company's website. With that, I'd like to turn the call over to Oleg to begin.

Good morning, and thank you all for joining us today to discuss our fourth quarter 2022 results. I'm happy to be here and I'm honored to be addressing you today formal and CEO.

I would like to first thank all of my colleagues for the warm welcome that I received in this new role. I'm looking forward to lead in Enfusion and I'm energized by the opportunity to set that Enfusion is facing today.

I'm also thrilled to welcome Brad Herring as our Chief Financial Officer, who brings along an impressive track record as a public company CFO. I look forward to working with him to position Enfusion for scale as we go through the next stage of our growth.

2022 was a successful year for Enfusion. Despite market volatility and changing demand environment.

We'll end of the year in a position of strength, demonstrating that Enfusion continues to be a combination of high growth and profitability within the vertical SaaS space. We've delivered strong revenue growth, maintain our focus on profitability and margins, expanded into new adjacent markets, and won numerous mandates from our key hedge fund managers, institutional investment managers and asset owners.

Very focused capital allocation for technology, product and client services to prepare the company for scale as we continue our global expansion towards larger and more complex institutional opportunities. Our fiscal discipline in the second half of the year resulted in margin expansion and enable the company to generate positive objective free cash flows.

These outcomes underscore the durability of our business model and demonstrate our ability to deliver exceptional value for our shareholders. With this momentum, heading into 2023, we plan to maintain and enhance revenue growth and deliver a stable and expanded margin profile.

We remain laser focused on delivering exceptionally positive client outcomes powered by the best-in-class, software and services offering. Now let's turn to fourth quarter results.

Were pleased with this quarter's performance, delivering strong growth driven by disciplined capital allocation. Revenue grew 27% to $40.5 million, reflecting ongoing healthy demand and solid execution.

Adjusted EBITDA was $6.8 million and represents a margin of 16.7%. This outcome reflects our progress in further improvement companies margin profile, and are focused on returning Enfusion to its historical profitability.

We generated ARR of 155 million or 30% growth year-over-year. We continue to see strength in new sales across all our products and services.

Excluding involuntary churn, net dollar retention was 115.4%. As we continue to build meaningful commercial expansion within our existing client base, including involuntary churn, the NGI remain at a healthy rate of 111.5%.

Within 39 new clients in the quarter ends in the quarter with a total of 819 clients. Conversions accounted for 51% of new client wins.

As we saw a slight uptick in win rate for hedge fund launches, the launches remained overall down from previous year. Now let's move the client wins that highlight the powerful value proposition we deliver to the global investment management community.

In the Americas revenue again 90% year-over-year, driven by ongoing client demand in the region. One of our new clients we're excited about is the North Carolina based university endowment.

This asset owner is seeking to replace its outdated legacy system with a more efficient end to end platform that supports all asset classes and reduces total cost of ownership. By partnering with Enfusion, the investment manager includes a manual workflow and compliance capabilities.

In EMEA revenue grew 54% year-over-year. Look at the record bookings level for the region and expect this positive momentum to continue in 2023 as well.

I'm pleased to announce that Enfusion one anemia-based multibillion dollar luxury equity hedge fund. This new hedge fund launch is a spinoff from one of the biggest, well-known global hedge fund platforms.

The manager was seeking a robust cloud native platform, which would allow them to accelerate the goal life process and support anticipated and grow as well as increased complexity. Enfusion was chosen for its flexible, comprehensive and modern technology stack coupled with enter as many service.

In addition, this client was particularly interested in our robust reporting framework and API technology to provide them with flexibility to integrate with third-party vendors. I'm also excited to announce that the partner for the newly launched hedge fund base in the Middle East.

This investment manager is supported by multiple sovereign wealth fund and will employ multiple strategies, including equity, fixed income and global macro. The funds collected infusion because of a global reach, and differentiated software and services, particularly our cloud native end to end platform, single data set and robust API technology stack.

Together Enfusion will enable this fund manager to scale and deploy efficient workloads. This one is significant, because it demonstrates our success in expanding into the Middle East, an important destination for both capital allocators and hedge fund managers.

Now, turning to APAC, we grew revenue by 36% year-over-year. As with the healthy demand in the region.

I'm thrilled to announce that we're entered into an agreement with a multibillion dollar Tokyo based alternative investment manager. This plan was seeking to modernize their efficient on premise technology stack, which consisted of disparate, outdated and complicated abilities.

The investment manager selected confusion because of our fully integrated end to end platform. In our deep understanding of region specific functional requirements that continue to drive our success in APEC.

Enfusion will replace their manual error prone infrastructure with OMS, data analytics and accounting capabilities as a direct product of selling digital transformation declined significantly reduce the need for internal technology and operational resources and compressed total cost of ownership. This exciting global will further validate our ability to move upstream across all regions when more convergence and expanded to new adjacent markets, all during times of significant market uncertainty.

Finally, let's talk briefly about a new customer that went live on our platform in the fourth quarter, which is PanAgora Asset Management with over $50 billion of assets under management. PanAgora is a quantitative investment manager that deploys multiple strategies, including active equity and multi asset quantitative investment strategies.

After extensive due diligence, PanAgora collected confusion to replace their longtime OMS member with an objective to reduce the retail technology footprint and improve the functionality for the growing business. Enfusion and PanAgora partner during the onboarding to streamline legacy workflows and enhance the infusion API capabilities.

Now live on the Enfusion platform, PanAgora benefit from frictionless upgrades and a scalable technology that will afford flexibility to continue evolving their business in the years to come. Turning to product and technology.

Innovation is a key pillar for our success and we are committed to deploy new products and next generation solutions by listening closely to client demands and moving steadily through the adjacent portion of our total addressable market. During the quarter we rolled out new enhancements and features across all platforms are continuing ability and scale and expand functionality.

For example, we released a self-service general ledger posting workload, so the class have control over quoting their books at their own discretion. We're also continuing to develop API to allow our clients to quickly and easily integrate with our platform.

For instance, we have made a series of enhancements to our API capability suite to support creating and updating many trade types within our platform. They began cancers were made over the last few quarters that brought our API capability more in line with our UI capability in support our systematically inclined clients to really drive scale and efficiency for the platform at large volumes, and other notable enhancements launch this quarter is the new framework for handling bank debt and credit facilities, as well as support for initial drawdown logic for voters.

Now, Enfusion is one of the few platforms that truly models the long ethical problem from the global amount down to the positions. And we can support many of the complex edge cases, including but not limited to delay counting, cost of carry, draw downs and pay downs, both pro rata and non pro rata.

In aggregate, were well positioned to support our clients trading and leverage credit strategies and this has been driving our success in the segment. All-in-all, we deploy 261 counseling from musicians across our platform during the quarter, further demonstrating our ongoing innovation.

Moving to market dynamics, macroeconomic uncertainty has driven multiple trends to play out in the market. First, we continue to see global asset managers embracing our fully integrated, cost effective and robust capabilities.

The industry is increasingly shifting away from on premise sets of disparate pieces of software, either homegrown or stitched together by competitor acquisitions. Additionally, asset managers are focused on outsourcing both middle and back office operations and trade.

This is where Enfusion comes in. With our cost effective and operationally efficient front to back scalable technology coupled with the best-in-class cloud services.

We believe our business is well positioned not only to weather the ongoing macroeconomic uncertainty, but also benefit from it. On the one hand, the reduction in the number of hedge fund launches in delays in purchase decisions by existing investment firms could reduce opportunity to set and led a sales cycle.

On the other hand, in terms of outside launch a tentative investment platforms and traditional asset managers are optimizing their cost structures by converting their legacy system to Enfusion software and relying on our services to support their business. That's a scenario what we typically saw throughout the history of the firm.

In our city now, it will continue to win convergence in competitive situations. Importantly, we'll continue to see capital shifting away from hedge fund launches in smaller hedge funds toward larger multi-manager platforms and separately managed account structures as investors are looking to attain better performance, reduce operational and key personal risks, and access diversified portfolio of alternative strategies.

This is where we see our current multi strategy and multi manager clients growing rapidly and where we see outside demand to remain strong in the near future. Subsequently, stage platforms continue to spin off and keep the teams that have been successful internally.

Enfusion continues to benefit from such backdoor launches as technology familiarity in operational transition become mature. Now let me turn to our key focus areas for 2023.

We plan to build on our momentum to create value for our clients, partners and shareholders. As such, we focus our capital allocation on technology, product and client service organizations.

Courts are a competitive advantage in driving innovation and responding to our client technology needs in a timely and thoughtful way. By investing in our technology stack and expanding our product portfolio and system functionality, we're able to deliver new capabilities and services, enhance our competitive modes, capture more market share and drive upsell opportunities.

Next, Enfusion's best in class, client service underpins our overall strategy to win new clients. We're focused on enhancing our onboarding and implementation process to improve conversion experience.

Additionally, we'll work on making our account management and manage services teams more operationally efficient by investing in the related technologies. This will enable us to support larger and more complex investments first, while improving our margins.

This investments will bolster our competitive stance, and we'll continue to position Enfusion to deliver high quality software as a service to our clients. As importantly, we're also committed to maintaining infusions path towards margin expansion and operational efficiency as witnessed by this quarter as a result.

High margins coupled with high growth rates have been a staple of our business model. And the management team has focused on the bottom line more than ever.

In summary, work with our execution in the fourth quarter in how the company is set up for success in 2023. Every new customer, every new technology capability, every new feature in our system, every support ticket the result by our team only reinforced the magnitude of the opportunity set in front of Enfusion and our unique position.

I'd be remiss if I didn't acknowledge our talented employees globally for their hard work, and selfless focus on execution. Our results this quarter are simply a reflection of the caliber of our team.

Their passion, dedication, and creativity continue to solve the most challenging problems our customers face and enable our clients to generate superior risk adjusted returns for their investors. Before I turn over the call to Brad, I would like to highlight the steps were made to further strengthen our board with the addition of two new independent directors.

We're pleased to welcome Deirdre Somers, who sits on the audit committee and the nominating and governance committee, and Michael Spellacy, who was appointed our Board Chair. I will now turn the call over to Brad to discuss our financial results in more detail.

Thanks Oleg and thanks, everyone for joining us today. Happy to speak with you today my new role as the CFO of Enfusion.

I look forward to working with Oleg, the executive team and all of our employees here to help lead Enfusion to its next stage of growth. Now on to the numbers, in the fourth quarter, we generated revenue of 40.5 million, an increase of 27% over the same quarter last year.

Growth was driven by continued share wins and client demand for our comprehensive solution. Fourth quarter adjusted gross profit, which excludes stock-based compensation increased by 25% year-over-year to $27.5 million.

This represents an adjusted gross margin of 68%. It's worth noting that these results were impacted by a change in cost allocation methodology, which lowered Q4 adjusted gross margin by approximately 150 basis points.

Excluding this methodology change adjusted gross profit would have been 69.5%. Adjusted EBITDA for the quarter was $6.8 million, up 112% year-over-year.

Against same quarter revenues, this represents an adjusted EBITDA margin of 16.7% of 670 basis points from the same period a year ago. Year-over-year margin expansion was the result of the scalability of our SaaS model combined with prudent cost discipline in the quarter.

One of the changes we're making in our earnings discussion is the Enfusion of an adjusted free cash flow metric, a reconciliation of adjusted free cash flow was included in the appendix of our shareholder letter. For the fourth quarter, we generated adjusted free cash flow of $3.6 million, compared to a negative $3.1 million in the same period a year ago.

Current quarter results represent a 53% conversion rate against our adjusted EBITDA. Free cash conversion was slightly higher than expectations due to the deferral of some CapEx items that will push into 2023.

We exited the fourth quarter with an ARR of $164.7 million, up 30% year-over-year to healthy ARR growth reflects ongoing strength of our customer additions in our ability to win share despite a challenging 2022 for our customers. Net dollar retention excluding involuntary churn was 115.4% down 120 basis points quarter-over-quarter.

The sequential decline is driven by ongoing volatility in the market, as the sector increasingly focuses on right sizing their cost structure. Net dollar retention including in voluntary churn was 111.5% relatively flat from a year ago period.

We signed 39 new logos in the fourth quarter, ending the quarter with 819 total clients. It's worth noting also that the average size of our customers increased approximately 13% compared to the same period last year, as we continue to execute on our strategy to move up market.

Net income for the fourth quarter was $788,000, which includes $4.2 million of stock based compensation. We ended the year in a strong cash position with approximately $63 million in cash and cash equivalents and no debt.

We believe the strength of our balance sheet gives us considerable flexibility to execute on our long-term strategy. Now on the guidance.

Before we get too deep, I want to comment on a change we're making to our guidance practices. After discussions between Oleg and myself and our board, we've had decided to shift from forward quarter guidance to provide an annual guidance with updates during each of our quarterly earnings calls.

We're relevant, I will also be providing insights on the anticipated pasting of our results throughout the year. This change was based on two distinct factors.

First, we wanted to improve the alignment between our financial practices and the philosophies we use to run the business. Our approach has always been to deploy capital to create long-term value for our shareholders and the practice of discussing quarterly guidance is not aligned with that philosophy.

Second, given the combination of macro level uncertainty in the current scale of our business, the practice of providing quarterly guidance is simply not prudent. While we are removing our fourth quarter guidance, we are adding information in our quarterly earnings materials that we feel will be more relevant.

Notably, you will see in our recently revamped 8-K filing the addition of adjusted free cash flow and cash flow conversion metrics. All that said, let's turn to our outlook for 2023.

I'll start with making a few comments to position the year. As mentioned earlier, our clients face considerable challenges in 2022, with underlying markets down significantly and sustained volatility within financial markets.

Given these dynamics combined with macro economic uncertainty, we anticipate that asset managers will continue to look for opportunities to right size their cost structures into the first half of 2023. This has several short-term impacts on our business.

First, it provides us with considerable market advantage to gain share by providing the market with a premium solution with a lower total cost of ownership. Second, we expect new phone launches will continue to lag historical levels until markets stabilize.

And finally, we anticipate continued volatility in our net dollar retention rates, as our current customers continue to monitor their spin in the backdrop of the uncertainties I've mentioned. With regards to our cost structure in 2023, we are investing in two primaries in support of our overall growth strategy.

First, we are making investments in our client services function to provide a scalable and sustainable servicing model that meets our customer's high expectations. Second, we are adding R&D capacity to our product and software development teams to both strengthen our current market leading position as well as open up new addressable market segments.

Combine these investments will put slight short-term pressure on margins. However, we feel that funding these initiatives supports our growth trajectory and positions the business for improved margin expansion going forward.

Based on all these inputs, we are introducing full year 2023 revenue and adjusted EBITDA outlook as follows. We expect revenue to be in the range of $185 million to $190 million, which at the midpoint represents year-over-year growth of 25%.

Referring back to my comments on the uncertain market conditions facing the segment, we anticipate revenue growth rates to be slightly higher in the second half of the year. We expect adjusted EBITDA to be in the range of $32 million to $34 million, which at the midpoint of our ranges represents an adjusted EBITDA margin of 18%.

We project adjusted EBITDA margins to be lowest in the third quarter, before steadily expanding throughout the year and exiting 2023 at approximately 20%. For modeling purposes, we project stock-based compensation of approximately $12 million for the full year.

In summary, we completed 2022 with strong results despite headwinds in the segment. Moving on to 2023, we are building on that foundation to enhance our market leading cloud based end to end investment management platform by making strategic investments in both our product and service and capabilities.

I have great confidence in the long-term trajectory of our business, in our ability to deliver strong revenue growth, while continuing to expand margins and grow free cash flow. With that, I'd like to open up the call to questions.

Operator, please go ahead.

Firstly, I appreciate all the disclosures provided in the shareholder letter really helpful to on the conversion statistic you gave in the deck? How should we think about what appears to be a little bit of slowing conversion momentum given the statistical to be around 50% relative to 6% last quarter and 64% a year ago period?

Is that indicative of that slower pace of decision making as some of your larger clients and should we expect that kind of sales cycle to persist?

Actually, it's twofold from my perspective. This particular number is not indicative of any trend that we expect to perceive going forward as far as our business is concerned.

We believe, we can easily be at what we've seen historically over the last couple of years, we're shooting for probably something like 60% to 65% on conversion side, on average. As far as delay in purchasing decisions, I don't think this is something that will impact that rate of our wins as percentage of the overall book.

Yes, overall, that definitely has an impact on, it could have an impact on the overall growth but as far as percentage of our overall book, I think we will continue to see very stable to increase in share of our business in conversions.

And then, I know you talked about net dollar retention, kind of being volatile, etc. And it's really pretty constructive, at least from our perspective to see, you'll still be able to deliver strong revenue performance, even when we saw a little bit of a decline there.

How should we think about the drivers of net dollar retention and where should that metric be, at least from your perspective in the next one, three and five years? And I guess, as part of that, I know, you're not guiding to specifically in VR, but what's the level that you think you roughly need to be at in order to achieve your revenue outlook?

So I think, a couple of things so tactically and strategically, so let me answer this, the following way. So the volatility that we expect it is driven by the current macroeconomic environment, right.

And as you know, our formula allows us to scale in and out with clients. Clients come in, and they reduce the number of licenses and they came in, and they increased number of licenses.

So that's part of, you want to call it downgrades, and upgrades, is something that we've typically seen in our business, and that actually, from our perspective increases stickiness of our clients, because it's not binary, they don't just have to cancel the relationship, they just stay with us and scale in and out of this relationship. So I would say, our gold standard historically been 120% MDR.

And this is what, from my perspective long-term I don't know, one year, three years, four years, I think that on us, as a company, both in terms of technology capabilities and cloud services to get there. That's what I holding myself accountable to and this is what I'm holding my team accountable to, I think this is best-in-class platform.

And our customers deserve nothing less than world class customer service, in addition to the technology. So in terms of drivers that you asked about, I think there will be a balance between sort of this code downgrade and people trying to scale out and be a little more conservative, with what I mentioned in the prior remarks related to the actual growth in institutional market segments, growth from our perspective, and growth within multi manager and multi strategy platforms.

And we're already seeing some green shoots of our ability to expand our relationship with the clients commercially, very deeply, which I think historically, we haven't really done a good job at and this is something we're paying very close attention to looking at our client base, we're careful in creating value in expanded that footprint.

Is there any way to think about kind of dormant clients in terms of, is there a certain percentage of clients that are active at different times of the year? Is it just headcount any way to think about maybe a lower end of the range where that is today and where that's been historically and does that flex back up?

Just to see, we get a sense of where the optionality sits me within existing accounts, if there's a way to frame that?

I don't know, if there was any seasonality to it. I will say that some of the volatility that Brad mentioned in his remarks definitely, clients are coming off, the whole industry is coming off of a difficult year.

I mean, they, both equities and bonds are down depending on which currency in country are looking at anywhere between 20% and 25%. AMs are down accordingly management, fees are down accordingly people are not even talking about performance fees, in many cases.

So, there's just the economics of the business are changed. So it's not about time of the year.

It's about where the industry is, in the cycle, so to speak. As I mentioned, there is this balance.

We do see some slowdown and decision making, and people reduce the number of licenses. However, as you can see from our financial results, the results and from our guidance, that's what I call downside convexity in this business, this is what we're seeing playing out today.

On one hand, people are reimagined and I'm trying to reexamine what tech that they're sitting on today $10 million, $20 million budgets, 100 people, staff that supporting these disparate legacy systems, and they're coming to us to help and this is where we come in. And the sort of hedge funds, small hedge fund launches.

We've seen counterbalanced with some of the capital, actually a significant amount of capital, that is going into multi strategy funds and multi manager platforms. And this is where we find our sweet spot.

We're good with service and this clients scaling as they scale. And then subsequently, as they spin off and seed managers that have attained success on their platforms, were right there to get them as they launch as I was what I call them door launches.

So again, just to summarize, it's not about seasonality so to speak with dormancy. It's really evolved, like us getting through this little trough related to 2022, which is, again, arguably worst performance year for core asset classes in 40 years, and have positioned ourselves for further growth for this business.

And then you think about the low-end versus the high-end of the range on the revenue and EBITDA. Any thoughts puts and takes what get you to that high end above the range?

Is it to kind of client wins, or just any thoughts around the guidance, which obviously looks really, really good?

Kevin, this is Brad, I'll take that. We felt like the guidance was a good balance.

I think there's a couple of things that will play out over the course of the year. We've talked a couple times about kind of the condition of the segment.

So obviously some better stability in the markets, I think could push us up toward the high end of that. That tends to drive some of the hedge fund launches.

We talked about that, if that has kind of slowed down a little bit. We think that could pick back up with stability come into the market.

We also think some of the product capabilities we're going to be putting out in the next three to six months, put us in positions where we could get higher bookings this year. It doesn't have a huge inure impact, but certainly the sooner we get those out that puts revenue on the table for the current year.

Just quickly moving to the expense side, we've got a lot of levers to pull. We're certainly going to be watching the revenue environment closely as kind of prudent spenders of our capital.

We're going to make sure that, we timed that well. We've got some opportunities for some consolidation, we've got some opportunities for some enhanced tools that improve our scalability.

I mentioned that in our expense efforts on client services, a lot of that has to do with spending some money in 2023 to create some very strong scalability in the next year, it could be some major impacts for that as well.

Maybe, Oleg starting with you. There was a lot of talk around in the software and service evolution in the shareholder letter.

Wondering if you could elaborate again on how you see that kind of client service piece benefiting not only the overall adoption framework and efficiency in these models, but how that can speak to maybe what Brad was just talking about on kind of the pipeline innovation as well, feeling that R&D momentum?

Great question, I'm afraid of my doctor does the whole call talking about this topic. So a couple of things here.

Brad would say that we ended up in the managed services business, and I just want to make the difference between the client service as a whole, which is us supporting the clients on an ongoing basis and resolving issues and customizing the technology and all of that with managed services as a business of doing things for clients on an ongoing consistent basis, like trade affirmations, confirmations racks and things like that. And so as far as overall client service is concerned that just as you know, it's one of the things that I've done, the first thing, when I came in is really revamp and restructure that part of our business to make sure that it's healthy and aligned.

It's aligned much better with our sales process and it's aligned much better with how each client experiences Enfusion. So as one of our recent clients said last week, and I will never forget, that is what's the point of having good software if your client services is not good.

And I'm taking this to heart and this is just way more important for us now than ever. Because historically, you might remember, we've been really focused on smaller and simpler players.

And they support it themselves effectively, right. And software has been so powerful, and still so powerful.

And customers really love using it and kind of torturing it and customizing it. So that we did not actually have to do much, which actually, as a result drove economics.

Now as we go upstream and service much larger and complex managers, by default, they're looking at us as extension of their operating teams. And therefore, they actually expect many of them especially larger one, they expect some kind of white glove service.

And so we're designing our business to actually accommodate that, we feel it's just, it has to happen. And therefore, number one, we have to make sure we have the team aligned in number to make sure this team is operationally efficient.

So we actually use technology to scale and maintain the economics of the business. So our gross margins are 70% plus, this is our target.

And all our net margins as a result are conforming to what we think this business could be a long-term. The second part is, in here, we'll call Brad managed services business.

We ended up in this business by default, rather than by design. And we're currently looking at that very carefully and see if we can really position it in the marketplace, as a separate line of business, which is, where our clients, our incumbent client base, is coming to us and asking us to do that for them as an extension of our relationship today.

And so the question for us is, what can we do, what should we do, how we price it properly, so that we deliver value to the client, and we create value for the shareholders as well. But we have right now about 820 clients and what roughly 120 clients today, actually using managed services.

So that's a huge portion of our entire client base, actually using that part of our capability. And so it behooves us to look deeply and see if we can actually expand that relationship.

And so again, this is this duality between, pure SaaS model and software and the service model where we go and service, institutional clients, like I just mentioned, PanAgora, where there's this assumption, it's a partnership, and they expect us to provide a certain level of service, as a support, as a partnership and ongoing basis. And two other clients expect us to perform or asking us to perform ongoing daily tasks, like managed services, any managed services organization would and there is some interest in economic opportunities for us there.

I hope it makes sense.

Maybe another kind of interesting one, I guess, the higher level to elect. How should we be thinking about some of the recent proposed changes, nice to see relative to settlement cycle compression and other areas, as potential drivers of back office investment automation, as the industry moves, more towards real time processing capabilities?

That right. Again, this is one of those big opportunities for us.

We have a lot of conversations on the subject. The clients are actually looking to contribute to the discourse.

And so we were kind of internally were looking at different ways to address it. And I think we are very well positioned to do so given our software capabilities.

So all this regulatory changes before in a market microstructure changes, the method before compliance, which is another area of us are of great importance, both in terms of software functionality on OMS side, as well as regulatory reporting. This is where we think, we are responding pretty well to the market demand.

So, of course, we will definitely be there to accommodate.

Oleg and Brad, thanks for taking the questions. First one for me is, as you head into 2023, how are you thinking about your go-to-market strategies and focus?

Maybe either from a geography or product perspective that could be different this year when compared to last year?

I don't think there is any difference. We do want to refocus our effort, for example, on regional competitive advantages that we have.

I will just actually highlight EMEA, as an example where the business is getting to the point where it's become an actual relative, what I expected to become relatively stable 20% of our overall revenue mix. And there's a ton of opportunity I highlighted before; we're seeing a lot of opportunity in the Middle East.

That part, we were doing a lot of work on the subject, just like any other region in the world, it has its own nuances, right. It has its own operating nuances.

It has different nuances related to trading, and the risk functionality that are specific to the region. And in fact, this is how we historically won in APAC.

We've had different capabilities within our software that clients actually valued. And we did it exceptionally well head and shoulders above our competition and that's how we won.

It's not just an overall generic value proposition, the fact that it's sort of our traditional position, where cloud native, front-end integrated software, but really thinking about how we can differentiate ourselves, taking into account what I would call local or localized competitive advantages. And so that's what we're thinking as far as global expansion is concerned.

But one, also the client that I mentioned, one of the largest Japanese hedge funds, we've had some success in Australia. And of course, Hong Kong and Singapore continue to be relatively active, both as far as launches and conversions are concerned.

And U.S. is, this is where we see most of the larger institutional asset managers are and we're continuing to position the business.

In that segment in a more aggressive way, in a testament to that our recent wins in for example, the endowment that we recently closed, and a couple of other interest in multi strategy, multi manager funds, that again take into account and capture, the very essence of fourth infusion is all about, which is ability to bring together front end ODMs with portfolio management with a risk management with a backhand and create a framework where people just worry about trading people about worried about risk and capital allocation, and they don't worry about technology or operations. So the go-to-market strategy I would say, there is no really, there was some overarching position and messages that I would send to the market and say the, it remains the same with more focus and continued focus on larger institutional complex clients.

But as far as actual nuance, I would highlight really figuring out what actually works for that particular local market, and really zeroing in on that and then executing against that relentlessly and winning on that basis.

And I wanted to ask a follow-up question on net dollar retention. It sounds like with the commentary from Brad that the involuntary revenue churn was about 4.5%, but customer churn might have been a bit higher than that.

Is that the right characterization on how customer retention shakes out in Q4? And then just thinking more forward, how should we be thinking about involuntary revenue churn and customer churn assumptions that are embedded in the 2023 guidance?

Your numbers and presumptions on churn are right. As I've kind of mentioned, at the back half of 2023, we did see, churn pick up slightly and you think about how we projected 2023 to play out.

We've anticipated a little bit of a residual into 2023 off of those same numbers, but we do think it's going to improve back to kind of more normal levels by midyear. And that's a byproduct of the conversation I had a minute ago around the stability that comes into the market that kind of dries up that churn.

So, we expect a little bit of increased churn for the first half, but we do think it returns back to normal for the back half.

This is Matthew Kikkert on for Parker. To start, what have you learned a successful go-to-market pitch looks like with a larger scale on conversion?

Are these customers landing with just portfolio management system? Are they adding a whole suite of solutions up front as well?

So definitely the holistic approach. We have seen some situations where we are successful in land and expand sort of thing in terms of just selling piece of functionality, and then expanding into the overall stack.

We're also more naturally fit in into what you would call multi asset strategies or liquid outs that those large institutional players actually offer on their platform. As you I'm sure now in the recent, I don't know 10, 15 years, the trend has been to become sort of the supermarket of different strategies and institutional manager of substantial size that trying to offer everything from S&P 500 index strike and ETF for 2 basis points or 1 basis point to very complex strategies from quants to global macro CTA and real estate and private equity.

And so we typically fit into that bucket where they actually hold for liquid else, and some systematic and quantitative strategies. And then as we build more footprint within the organization that manages, I don't know $150 billion to $200 billion.

We expend that relationship in a lot of other things. And some of the functionality I can highlight to you is just from product for broader driven expansion of product driven growth perspective.

Some of our product initiatives include creating capabilities around benchmarks and enabling the managers to rebalance their portfolios either to match the benchmarks or to take active risk with respect to benchmarks as those investors are trying to beat those. And so some of those things related to portfolio construction on one hand and then translating those active bets, or hedging strategies into actual trades and closing that loop, send them that vector of trades orders into our OMS.

And then going back and rinse and repeat, this is why we think the strength of our offer and oil will really shine. So, this is a high-level comments but as far as that particular market segment, we still have a lot of work the job.

Complexity of their business is very high and almost I can say like, if you think about hedge fund the universe, you can sort of stratify it and think about every segments and within every segment, those funds are more or less similar. They're not, of course, the same, but they're similar.

When it comes to those large organizations, every one of those is unique. And we learn quickly, and we adapt, and we see what they need from workflows perspective.

And some of them are very different from what hedge funds are actually doing, both in terms of how OMS and compliance works, in terms of what they're looking for on the back end, in terms of risk requirements, we're actually looking to expand that offering as well, where almost all of our institutional clients want some kind of not just the par for the course, but relatively sophisticated risk management and risk analytics capability.

And then secondly, how large do you envision scaling your managed solution segment over the next year? What impact do you foresee us having on your ability to simultaneously expand margins?

Right, so that's, you sort of asked two questions in one. And that's going to be the second, the second part of your question is going to drive the first.

So as I mentioned, when it was full, when Dylan asked the question, we ended up in this position where we have played a large portion of our business and managed services. And I keep highlighting that.

This is one of those times where, from my perspective, underappreciated assets that this business is sitting on, we have very similar economic relationships with other firms that are providing managed services, and we sell our software to them. And so we're looking at this sort of position in both tactically and strategically trying to figure out how to expand our footprint fair, and be there, again, causing brand by design as a bolster by default.

Now, the trick is in that second, from our perspective, the trick is in the second part of your question, which is how to do that without diluting margins, and that's a big deal. And we actually have done it before.

We did identify some product gaps, and functionality requirements that we actually need to execute on to continue to grow that business without diluting that pure SaaS gross margin, so to speak. And I'm absolutely convinced it's possible.

Everybody is challenging me on that. We have a lot of conversations both externally and internally on the subject.

Everybody sort of knows that managed services as a standalone business is lower margin than pure SaaS business. I'm also aware of that, but this is where we I think we will win because if we figure out the formula that actually has been driving Enfusion's growth, all these years prior to the IPO, and enable the company to be not just role for the company, but the role of ad company, I believe is going to create a key to profitability of the managed services business.

And one more I thought, I would offer in conclusion is what we have seen, actually, in competitive situations is that managed services become the final icing on the cake, where one will replace this piecemeal technology stack, which is our sort of bread-and-butter conversion setting. And we replace a competitor upfront, for example, where portfolio management system were replaced OMS complex were replaced back end.

And then all of a sudden with all of that entire stack. And so they, for example, in this case, they actually use another managed services organization to support that former legacy disparate stack with fold lines in between.

But once we replace it, who is the better, who is best company to actually service and support that technology stack, that is Enfusion other than Enfusion. So what happens is we actually have one was as we win, competitively, those technology replacements, it's a natural extension of the business to actually supplement manage services.

If this set of economics works, what happens as a side effect, the stickiness of the clients also increases and that's right back to that questions that Koji [indiscernible] asked. Does it make sense?

This is Kelly [indiscernible] on for Gabriela. First thing for me is just looking at the average contract value growth of 13% in the quarter on the NRR 115.

How should we think about the impact that NRR is having on an average contract value versus the impact of new customers?

I'll take that. I think, we'll talk about the growth in the customer size first.

And that's completely a byproduct of what we've just walked us through in terms of as we move up market in that whole stack becomes available. That's obviously going to increase contract value, especially as we move up market.

This is bigger asset managers. As it translates into NDR, I think there's a couple of key points there.

One is that entire management services discussion we had, I think that was a really key point to make, in terms of how that plays into contract size, but then also it has a ripple effect into NDR and I think that kind of facilitates always gold standard of 20% of NDR, some of that is going to come from things like adding managed services to that stack. So I think they're very intertwined, but they're not necessarily mutually exclusive.

We've also got scenarios where we go out into up market and our initial contracts may not include the full stack, because the asset managers are in a much larger scale size, you're still going to see an overall increase in contract size.

I just want to compliment that. We know, we don't want to make it sound like managed services is the only way for us to expand the relationship with the clients.

We recently have done a lot of work and I cannot give an upgrade to our technology team to actually sort of in the real time expand our product portfolio and respond to client demands. And as a result, expand commercial relationship with the client.

So this is not just managed services driven. But to Brad's point, those is in some sense, those are the two, on one hand, two sides of the same coin and those two drivers of MDR and stickiness of the business are number one has getting into larger clients is because the ticket sizes are bigger.

And two going deeper within the current client base. And it just, it's really great and valid for the customer.

I mean, there's still situations, frankly where customers are using some other capability. That, not, it's not that we don't have it, but they just don't know that we do it.

And it just, it makes me, makes my blood boil in those situations, right. And so this is what we really like 2023 is really about that false.

It's about not just focusing on the outside, not just being aggressive in growing the business, it's not just about bookings, it's not just about going to whatever name is Sydney, or Dubai or Tokyo, it's about really, really making sure that every single client that we serve today is referenceable, making sure that we raise value every day making sure that even clients that we do not hear from are happy, and continue to proactively engaged with a current client base and great.

And then just as a follow-up any nuances to the environment that you've seen in the start of 2023? We've heard some companies talking about a stronger January and February, get curious, you've seen at the start of the year customers?

Yes, again, I mean, this is I will defer to Brad to comment, from his perspective, what this fee is quantitatively, just from qualitative perspective, this is just a technical thing. I mean, we're walking into 2023 with a very low base.

All asset markets, aside from cash within cash, in this case, U.S. dollar are down, above and beyond their historical norms.

So from that base, the fact that risk assets have been behaving well, in the last couple of months, makes people feel better and makes people breathe better, that's fine. I know, we don't have a crystal ball, we don't know what the markets are going to go today or whatever, in two years.

But we definitely see so that behavioral change that I mentioned a month, can people are just in this wait and see mode sometimes. On the other hand, they're just being active.

In some interesting sense, for us, this uncertainty is okay, but it's what it does result on either side, right, that actually is what we're really come in with a sort of convicted strategy. If things are really not as good as people expect, this is sort of optimal cost optimization and reposition.

If things are great, we will see more launches and more expansion and more budgets being allocated to our customers. But we're not thinking about our business within the time horizon of couple of months, that the focus is long-term shareholder value creation, and we just simply tactically well positioned to capture whatever opportunities will be created in 2023.

I'll just add to that, kind of getting very specific on your question. We're seeing certainly some slight improvements coming out of Q4 as the segment kind of corrected itself into Q3 and Q4 timeframe.

We anticipated, like I mentioned in my prerecorded remarks, those trends to extend a little bit into Q1. We're seeing that continue about what we thought.

But then at the same time, we're also seeing things like our pipeline pickup. Our pipeline has improved significantly from where we were a couple of months ago.

So to always point I think it's a natural diversification in this business. If times are great, we do well, if times are tough, we do well as well.

So I think it's just a great hedge. It's kind of built into the inherent business.

One more, not to bastardize question on this call just one more real quick addition. We'll see some balance and as we go gold filter into law and only strategies.

There might be some potentially additional beta in this business, if you will. But typically, we have seen, performance -- as far as performance degradation of our clients.

We are seeing that hedge fund managers and our platform are actually doing really well given the volatility, some are doing so, well, some are doing well. But also, interestingly enough, because of this compression of risk premium, oftentimes people are redeeming from the funds that they can, not from the funds that they should, and typically, you have situations when somebody used to manage $10 billion or $15 billion and now they manage $3 billion or $4 billion.

And so all of a sudden the economics of the business, especially sometimes give us high watermarks are different. And the decision regarding us at that point becomes almost a no brainer.

Well, thank you all for great questions. Of course, we are always available in real time for any additional questions.

Thank you for the challenge. Thank you for your trust, and we will continue to work relentlessly on behalf of our shareholders.