ENFUSION, INC. Management’s Discussion and Analysis of the Financial Position and Results of Operations (Form 10-Q)

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 final prospectus for our initial
public offering, or IPO, dated as of October 20, 2021 and filed with the
Securities and Exchange Commission, or the SEC, on October 22, 2021 pursuant to
Rule 424(b) under the Securities Act, or the Prospectus. 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 sections titled "Special
Note Regarding Forward-Looking Statements" and "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.

                                    Overview

Enfusion is a global, high-growth software-as-a-service provider focused on
transforming the investment management industry. Our solution is 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.

We believe, by means of our purposefully designed interconnected systems
underpinned by one dataset, we are the only solution that allows clients to see
and interact with all parts of the investment management lifecycle ranging from
portfolio construction, trading, risk management, accounting and operations
through to investor reporting seamlessly in real time, in one screen, in one
solution. As a result, our solution enables clients to better align teams,
optimizing their investment decision-making operations and technology footprint
and lowering operating costs. By harnessing the efficiencies, agility and scale
inherent to our cloud-native, multi-tenant software that is integrated with a
suite of technology-powered services, we believe we have created the industry's
most compelling investment management solution, capable of shaping and
addressing evolving demands of the global investment management landscape.

                               Our Business Model

By virtue of our flexible and open architecture solution, we offer clients the
ability to either replace their investment management systems using the
end-to-end Enfusion solution integrated with technology-powered services or
supplement their legacy systems with select Enfusion systems such as portfolio
management or accounting and over time, expand into using our full solution
offering.

Additionally, our solution's nimble single codebase architecture allows us to
dedicate resources to our clients holistically, driving a superior client
experience that is critical to our business model. When our clients subscribe to
the Enfusion solution, we assign each client a dedicated service team that works
with them from the moment of onboarding and throughout their contract lifetime.
The continuity in the servicing team assigned to each client ensures that our
clients are continuously interfacing with dedicated Enfusion employees that
understand their needs, workflows and product use. It also fosters a partnership
built on ongoing communication and feedback, which continuously informs the
weekly upgrades and functional enhancements that we deliver to each of our
clients. As we continue to scale and add clients, we benefit from an evolving
solution that mirrors the needs and demands of our clients and the market,
leading to a compelling competitive advantage and in turn increased client
retention and revenues from expanded and new business.

Our total net revenues were approximately 99.9% and 98.3% recurring
subscription-based during the three months ended September 30, 2021 and 2020 and
approximately 99.6% and 98.1% during the nine months September 30, 2021 and
2020, respectively. Generally, we charge our clients fees comprised of various
components such as user fees,

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connectivity fees, market data fees and technology-powered service fees, all of
which consider 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. In the fourth quarter of
2021, we plan to open offices in mainland China and Australia to build on our
success in the APAC region and continue to expand our global reach. We continue
to be disciplined and strategic about our investments and as a result have been
consistently profitable while achieving significant growth.

We operate as a single operational and reportable segment, which reflects how our Chief Operating Decision Maker, or CODM, reviews and evaluates our business performance.

Our total net revenues were $29.0 million and $19.8 million for the three months
ended September 30, 2021 and 2020, respectively. Platform subscriptions and
managed service revenues were $29.0 million for the three months ended September
30, 2021, or approximately 99.9% of total net revenues, up approximately 49.2%
from $19.5 million for the three months ended September 30, 2020. We had net
income of $3.3 million and $5.6 million in the three months ended September 30,
2021 and 2020, respectively.

Our total net revenues were $79.8 million and $56.9 million for the nine months
ended September 30, 2021 and 2020, respectively. Platform subscriptions and
managed service revenues were $79.5 million for the nine months ended September
30, 2021, or approximately 99.6% of total net revenues, up approximately 42.4%
from $55.8 million for the nine months ended September 30, 2020. We had net
income of $11.7 million and $16.2 million in the nine months ended September 30,
2021 and 2020, respectively.

                  Key Factors Affecting Our Operating Results

Extent of our clientele

Our future revenue growth depends, in part, on our ability to expand our reach
to new clients. There are significant opportunities to expand our client base
across the various client segments we serve today. We believe we are the leading
cloud-native, SaaS provider to the global emerging fund and hedge fund sector
and expect that as the alternative investment sector grows, we will continue to
extend our position. We expect that our efforts in signing new clients in this
sector benefit from referrals from our existing clients, client stakeholders
when they transit to other or launch new organizations, industry channel
partners and strategic partners. In addition, we continue to extend this growth
through increasing adoption by larger institutional asset management clients due
to increasing acceptance of cloud technology and the robust capabilities of our
solution that better meet their evolving needs and address their existing pain
points. Taking advantage of the unique position that allows us to sell our
products and services through shorter sales cycles and on faster client
implementation timelines, we expect to continue to expand and invest our sales
efforts to capitalize on opportunities in this client segment.

Extension of use with existing customers

We believe there is a significant opportunity to further expand our
relationships with existing clients as they continue to evolve and grow in size
and expand into new markets and strategies or as we provide new functionality or
release new systems or services. We also believe we have a significant
opportunity to expand our relationship with existing clients that were not in a
position to replace all of their systems at once when they first engaged with
us. For those clients that elect to initially utilize some portion of our
solution or only use our solution for a particular strategy or fund, we find
that once they experience the advantages of our end-to-end solution, many seek
opportunities to expand the breadth of their relationship with us to further
help improve their investment management workflows and technology
infrastructure. We expect our revenues from existing clients to continue to
increase as they broaden their use of our solution and expand utilization into
other investment groups within the firm.

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Retention and renewal of existing customers

The growth of our revenues base from expanding relationships with our existing
clients is driven by our ability to retain these clients. Our client retention
also strengthens the stability and predictability of our revenue model,
facilitating better management of business. Our Net Dollar Retention Rate
was 122.0% and 104.0% as of September 30, 2021 and 2020, respectively. We
believe that our delivery of excellent ongoing innovation together with superior
client experience is critical to our client retention and we expect to continue
to invest in both areas.

Geographic Expansion

Our future growth depends, in part, on our ability to grow our client base
through geographic expansion and build on the success internationally. For the
three months ended September 30, 2021, we generated approximately 64.8% of our
total net revenues in the Americas, and approximately 35.2% of our total net
revenues outside of the Americas. For the nine months ended September 30, 2021,
we generated approximately 65.4% of our total net revenues in the Americas and
approximately 34.6% of our total net revenues outside of the Americas. We are
globally situated in nine offices in Chicago, New York, São Paulo, London,
Dublin, Hong Kong, Singapore, Mumbai and Bangalore. We continue to invest in
expanding our presence and capitalize on opportunities in markets such as Latin
America and Asia Pacific. We continue to make investments in our sales and
marketing efforts in regions outside of the Americas to capture the sizeable
revenue opportunity.

Leader in continuous innovation and continued growth investments

We continuously evaluate opportunities to advance our solution through increased
breadth and depth of functionality to better enable our clients to achieve their
investment goals and solve for a broader array of business, operational and
technology challenges. Our ability to lead and compete with a differentiated
solution is dependent upon our pace of innovation. We remain committed to
investing in ongoing innovation which may require increased spend in technology
and development.

Costs of being a Public company

As a newly public company, we will implement additional procedures and processes
to address the standards and requirements applicable to public companies.
Specifically, accounting, legal and personnel-related expenses and directors'
and officers' insurance costs will increase as we establish more comprehensive
compliance and governance functions, establish internal controls over financial
reporting in accordance with the Sarbanes-Oxley Act and prepare and distribute
periodic reports in accordance with SEC rules. Our financial statements for
the year ending December 31, 2021 onward will begin to reflect the impact of
these expenses.

Impact of the COVID 19 pandemic

While the COVID-19 pandemic has significantly affected the global economy, it
has not significantly affected financial results for the three or nine months
ended September 30, 2021. While COVID-19 had a temporary nominal impact on
client dialogue, it altogether reinforced our value proposition and amplified
the need for our clients to be able to operate systems remotely. In terms of
demand, while general economic headwinds have adversely impacted budgets of
clients, we believe actions and restrictions in response to COVID-19 have served
to highlight the criticality of our products, which we expect to drive increased
demand over time as evidenced by a record number of new clients through the end
of September 30, 2021.

As the situation surrounding the COVID 19 pandemic remains fluid, we are
actively managing our response. The extent of the effect on our operational and
financial performance will depend on future developments, including the
duration, spread and intensity of the pandemic and governmental, regulatory and
private sector responses, all of which are uncertain and difficult to predict.

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Effects of reorganization operations on our corporate structure

We were incorporated as Enfusion, Inc. on June 11, 2021 and formed for the
purpose of the IPO. Following the completion of the Reorganization Transactions
(as defined in Note 4 to our Balance Sheets included elsewhere in this report),
we became a holding company and our sole material asset is an indirect ownership
interest in Enfusion Ltd. LLC (the "LLC"). Through our ability to control the
sole member of the LLC, we control all of the business and affairs of the LLC.
All of our business is conducted through the LLC and its subsidiaries and the
financial results of the LLC will be included in the consolidated interim
financial statements of Enfusion, Inc.

The historical results of operations discussed in these sections are those of
the LLC prior to the completion of the Reorganization Transactions, including
the IPO, and do not reflect certain items that we expect will affect our results
of operations and financial condition after giving effect to the Reorganization
Transactions and the use of proceeds from the IPO.

The LLC has been treated as a pass-through entity for U.S. federal and state
income tax purposes and accordingly has not been subject to U.S. federal or
state income tax. After the IPO, the LLC will continue to be treated as a
pass-through entity for U.S. federal and state income tax purposes. As a result
of our ownership of Common Units in the LLC, we are subject to U.S., federal,
state and local income taxes with respect to our allocable share of any taxable
income of the LLC and will be taxed at the prevailing corporate tax rates. In
addition to tax expenses, we also will incur expenses related to our operations
and we will be required to make payments under the Tax Receivable Agreement. Due
to the uncertainty of various factors, we cannot estimate the likely tax
benefits we will realize as a result of LLC Common Unit exchanges and the
resulting amounts we are likely to pay out to LLC Common Unit holders pursuant
to the Tax Receivable Agreement; however, we estimate that such payments may be
substantial. We intend to cause the LLC to make distributions in an amount
sufficient to allow us to pay our tax obligations and operating expenses,
including distributions to fund any ordinary course payments due under the Tax
Receivable Agreement.

                    Components of Our Results of Operations

Income

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 numbers 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. Most platform subscription contracts have a
one-year term and are cancellable with 30 days' notice. Installment payments are
invoiced at the end of each calendar month during the subscription term. We have
a limited number of contracts that are non-cancellable. We have determined the
impact of these contracts is not material on our pattern of revenue recognition.

Managed Services

Managed services revenues primarily consist 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.

Other

Other revenues consist of non-subscription-based revenues, such as sponsor
development of enhancements driven by a particular client but received by all
clients and data conversion and services that integrate a client's historical
data into our solution. We recognize revenues monthly as these services are
performed with invoicing occurring at the end of each month.

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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. 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. As a result of the IPO, we anticipate additional cost of revenues
as a result of the stock-based compensation expenses incurred in the fourth
quarter of 2021 associated with the future issuance of Class A common stock to
former participants in our Change in Control Bonus Plan. The amount of
stock-based compensation expense we expect to recognize within cost of revenues
is not material.

Operating Expenses

We expect to recognize an aggregate amount of approximately $268.5 million in
stock-based compensation expense in the fourth quarter of 2021 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 and to a non-executive
employee in exchange for the termination of the profit sharing agreement
described above. In addition, we expect to recognize approximately $6.3 million,
$25.1 million, and $10.9 million in the remainder of 2021, and in 2022 and 2023,
respectively, in stock-based compensation expense related to restricted stock
units granted in connection with the IPO. We present stock-based compensation
expense within Cost of revenues, General and administrative, Sales and marketing
and Technology and development based on the individual employees' department.

general and administrative

General and administrative expenses consist of personnel costs and related
expenses for executive, finance, legal, human resources, recruiting and
administrative personnel, including salaries, benefits and bonuses fees for
external legal, accounting, recruiting and other consulting services. We expect
these expenses will increase as we continue to expand our client base and our
geographic footprint and as we incur costs associated with being a
publicly-traded company, including additional legal, audit and consulting fees.
As a result of the IPO, we anticipate additional general and administrative
expenses as a result of the stock-based compensation expenses associated with
the future issuance of Class A common stock to former participants in our Change
in Control Bonus Plan, as well as additional stock-based compensation expense
going forward related to the restricted stock units granted in connection with
the IPO, and other equity awards to be made to service providers under our
equity plans.

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. 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. We anticipate additional sales and marketing expenses as a result of
the stock-based compensation expense associated with the future issuance of
Class A common stock to former participants in our Change in Control Bonus Plan,
as well as additional stock-based compensation expenses going forward related to
the restricted stock units granted in connection with the IPO, and other equity
awards to be made to service providers under our equity plans.

Technology and development

Technology and development expenses consist primarily of research and
development activities, non-capitalizable costs of developing content and
certain overhead allocations. 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 in absolute dollars and may
increase as a percentage of our revenues as we continue to enhance our platform
functionality and develop new content and features. Additionally, our technology
and development expense may fluctuate as a percentage of our total net revenues
from period

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to period depending on the timing of development. We will have additional
technology and development expenses as a result of the stock-based compensation
expenses associated with the future issuance of 2,047,064 shares of Class A
common stock to a non-executive employee in exchange for termination of an
agreement pursuant to which such employee was previously entitled to receive a
percentage of our annual net profit. We also anticipate additional technology
and development expenses as a result of the stock-based compensation expenses
associated with the future issuance of Class A common stock to former
participants in our Change in Control Bonus Plan, as well as additional
stock-based compensation expense going forward related to the restricted stock
units granted in connection with the IPO, and other equity awards to be made to
service providers under our equity plans.

Non-operating income (expenses)

Non-operating income (expense) consists of interest expense and other income
(expense). Interest expense consists primarily of interest accrued or paid
associated with our debt, including the amortization of debt issuance costs. We
expect interest expense to vary each reporting period depending on the amount of
outstanding indebtedness and prevailing interest rates. Other income (expense)
consists primarily of foreign currency translation gains and losses.

Income tax

Enfusion Ltd. LLC has historically been treated as an intermediary entity for
we for federal tax purposes and for most applicable state and local income tax purposes. The provision for income taxes represents the tax expense or benefit relating to our foreign operations under the tax laws of the jurisdictions in which we operate.

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 will be taxed at the prevailing
corporate tax rates. Enfusion, Inc. will be treated as a U.S. corporation for
U.S. federal, state and local income tax purposes. Accordingly, a provision for
income taxes will be recorded for the anticipated tax consequences of our
reported results of operations for federal income taxes.

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                             Results of Operations

The results of operations presented below should be reviewed in conjunction with
the consolidated interim financial statements and notes included elsewhere in
this report. The following table sets forth our consolidated results of
operations for the periods shown:




                                             Three Months Ended September 30,           Nine Months Ended September 30,
(in thousands)                                   2021                  2020                2021                  2020

                                                         Unaudited                                 Unaudited
REVENUES:
Platform subscriptions                     $          27,136               18,282              74,323                52,753
Managed services                                       1,890                1,170               5,184                 3,075
Other                                                     19                  333                 340                 1,077
Total net revenues                                    29,045               19,785              79,847                56,905

COST OF REVENUES:
Platform subscriptions                                 6,842                4,792              18,262                12,743
Managed services                                       1,029                  428               2,847                 1,877
Other                                                    224                  173                 572                   580
Total cost of revenues                                 8,095                5,393              21,681                15,200
Gross profit                                          20,950               14,392              58,166                41,705

OPERATING EXPENSES:
General and administrative                             8,546                4,509              22,385                12,574
Sales and marketing                                    4,901                2,068              12,323                 6,615
Technology and development                             2,600                1,642               6,844                 4,521
Total operating expenses                              16,047                8,219              41,552                23,710
Income from operations                                 4,903                6,173              16,614                17,995

NON-OPERATING INCOME (EXPENSE):
Interest expense                                     (1,485)                (365)             (4,287)               (1,092)
Other income (expense)                                    29                    -                  29                     1
Total non-operating income (expense)                 (1,456)                (365)             (4,258)               (1,091)

Income before income taxes                             3,447                5,808              12,356                16,904
Income taxes                                             154                  228                 704                   656
Net income                                 $           3,293                5,580              11,652                16,248




                 Three Months Ended September 30, 2021 and 2020

Revenues




                                Three Months Ended September 30,
                                                   Increase (Decrease)
($ in thousands)            2021        2020        Amount       Percent

Income:

Platform subscriptions    $ 27,136      18,282         8,854        48.4 %
Managed services             1,890       1,170           720        61.5 %
Other                           19         333         (314)      (94.2) %
Total net revenues        $ 29,045      19,785         9,260        46.8 %




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Platform subscriptions

The increase in platform subscription revenues for the three months ended
September 30, 2021 compared to the three months ended September 30, 2020 was
driven by the increase in revenues from new clients of $4.6 million as a result
of our client count increasing from 514 to 657 from September 30, 2020 to
September 30, 2021 and increased revenues generated from existing clients of
$4.3 million, which includes the full-period impact of prior period sales, sales
of new services to existing clients and contractual growth.

Managed Services

The increase in managed services revenues for the three months ended September
30, 2021 compared to the three months ended September 30, 2020 was driven by
increased adoption of our technology-powered services by our existing and
expanding client base.

Other

The decrease in other revenues for the three months ended September 30, 2021
compared to the three months ended September 30, 2020 was driven by a decrease
of non-recurring service fees.

Cost of revenue, gross profit (loss) and gross profit margin

                                     Three Months Ended September 30,
                                                         Increase (Decrease)
($ in thousands)                2021          2020        Amount       Percent
Cost of revenues:
Platform subscriptions       $     6,842       4,792    $    2,050        42.8 %
Managed services                   1,029         428           601       140.4 %
Other                                224         173            51        29.5 %
Total cost of revenues       $     8,095       5,393    $    2,702        50.1 %

Gross profit (loss):
Platform subscriptions       $    20,294      13,490    $    6,804        50.4 %
Managed services                     861         742           119        16.1 %
Other                              (205)         160         (365)     (228.3) %
Total gross profit           $    20,950      14,392    $    6,558        45.5 %

Gross profit margin:
Platform subscriptions              74.8 %      73.8 %
Managed services                    45.6 %      63.8 %
Other                          (1,061.7) %      48.0 %
Total gross profit margin           72.1 %      72.7 %




Platform subscriptions

The increase in cost of platform subscription revenues for the three months
ended September 30, 2021 compared to the three months ended September 30, 2020
was driven by an increase in personnel-related costs resulting from headcount
increases to support our growth as well as an increase in client onboarding
costs driven by new client growth and existing client conversions.

Managed Services

The increase in the cost of revenue from managed services for the quarter ended
September 30, 2021 compared to the three months ended September 30, 2020 was driven by an increase in personnel costs resulting from the increase in headcount to support our growth.

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Other

The decrease in the cost of other income for the closed quarter September 30, 2021 compared to the three months ended September 30, 2020 was driven by an increase in costs allocated to non-recurring service revenues.

Operating Expenses




                                    Three Months Ended September 30,
                                                       Increase (Decrease)
($ in thousands)                2021        2020        Amount       Percent
Operating expenses:
General and administrative    $   8,546      4,509         4,037        89.5 %
Sales and marketing               4,901      2,068         2,833       137.0 %
Technology and development        2,600      1,642           958        58.3 %
Total operating expenses      $  16,047      8,219         7,828        95.2 %




General and administrative

The increase in general and administrative expense for the three months ended
September 30, 2021 compared to the three months ended September 30, 2020 was
driven by the continued evolution of our executive team and additional
professional hires.

Sales and Marketing

The increase in sales and marketing expense for the three months ended September
30, 2021 compared to the three months ended September 30, 2020 was driven by an
increase in expenses related to the growth of our professional sales
organization. These expenses included personnel-related costs resulting from
headcount increases to support our growth. These expense increases also included
commissions paid to our sales professionals.

Technology and development

The increase in technology and development expense for the three months ended
September 30, 2021 compared to the three months ended September 30, 2020 was
driven by an increase in personnel costs as we increased product and developer
headcount to support our growth initiatives and continue our focus on the growth
of our product development group within our organization. The remaining
increases are from higher expenses related to operating our product development
group to drive innovation and overall growth in our business.

Non-operating income (expenses)

                                     Three Months Ended September 30,
                                                        Increase (Decrease)
($ in thousands)                 2021        2020        Amount       Percent
Interest expense               $ (1,485)      (365)        (1,120)      306.8 %
Other (income) expense                29          -             29        N/M
Total non-operating expense    $ (1,456)      (365)        (1,091)      298.9 %




The overall change in non-operating income (expense) for the three months ended
September 30, 2021 compared to the three months ended September 30, 2020 was
driven by an increase of $1.1 million in interest expense.

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                 Nine Months Ended September 30, 2021 and 2020

Revenues




                                 Nine Months Ended September 30,
                                                   Increase (Decrease)
($ in thousands)            2021        2020        Amount       Percent
Revenues:
Platform subscriptions    $ 74,323      52,753         21,570       40.9 %
Managed services             5,184       3,075          2,109       68.6 %
Other                          340       1,077          (737)     (68.4) %
Total net revenues        $ 79,847      56,905         22,942       40.3 %




Platform subscriptions

The increase in platform subscription revenues for the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020 was
driven by the increase in revenues from new clients of $8.4 million as a result
of our client count increasing from 514 to 647 from September 30, 2020 to
September 30, 2021 and increased revenues generated from existing clients of
$13.2 million, which includes the full-period impact of prior period sales,
sales of new services to existing clients and contractual growth.

Managed Services

The increase in revenue from managed services for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was driven by the increased adoption of our technology-based services by our existing and expanding customer base.

Other

The decrease in other income for the nine-month period ended September 30, 2021
compared to the nine months ended September 30, 2020 was driven by a decrease in one-time service charges.

Cost of revenue, gross profit (loss) and gross profit margin

                                    Nine Months Ended September 30,
                                                      Increase (Decrease)
($ in thousands)               2021        2020        Amount       Percent
Cost of revenues:
Platform subscriptions       $ 18,262      12,743          5,519       43.3 %
Managed services                2,847       1,877            970       51.6 %
Other                             572         580            (8)      (1.4) %
Total cost of revenues       $ 21,681      15,200          6,481       42.6 %

Gross profit (loss):
Platform subscriptions       $ 56,061      40,010         16.051       40.1 %
Managed services                2,337       1,198          1,139       95.2 %
Other                           (232)         497          (729)    (146.7) %
Total gross profit           $ 58,166      41,705         16,461       39.5 %

Gross profit margin:
Platform subscriptions           75.4 %      75.8 %
Managed services                 45.1 %      38.9 %
Other                          (68.2) %      46.1 %
Total gross profit margin        72.8 %      73.3 %


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Platform subscriptions

The increase in the cost of revenue from platform subscriptions for the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020 was driven by increased personnel costs resulting from increased headcount to support our growth as well as increased customer onboarding costs driven by new customer growth and existing customer conversions.

Managed service

The increase in the cost of revenue from managed services for the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020 was driven by an increase in personnel costs resulting from the increase in headcount to support our growth.

Other

The decrease in the cost of other income for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 is explained by a drop in non-recurring service revenues.

Operating Expenses




                                     Nine Months Ended September 30,
                                                       Increase (Decrease)
($ in thousands)                2021        2020        Amount       Percent
Operating expenses:
General and administrative    $ 22,385      12,574          9,811       78.0 %
Sales and marketing             12,323       6,615          5,708       86.3 %
Technology and development       6,844       4,521          2,323       51.4 %
Total operating expenses      $ 41,552      23,710         17,842       75.3 %




General and administrative

The increase in general and administrative expenses for the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020 was motivated by the continued evolution of our management team and the hiring of additional professionals.

Sales and Marketing

The increase in sales and marketing expense for the nine months ended September
30, 2021 compared to the nine months ended September 30, 2020 was driven by an
increase in expenses related to the growth of our professional sales
organization. These expenses included personnel-related costs resulting from
headcount increases to support our growth. These expense increases also included
commissions paid to our sales professionals.

Technology and development

The increase in technology and development expense for the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020 was
driven by an increase in personnel costs as we increased product and developer
headcount to support our growth initiatives and continue our focus on the growth
of our product development group within our organization. The remaining
increases are from higher expenses related to operating our product development
group to drive innovation and overall growth in our business.

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Non-operating income (expenses)

                                       Nine Months Ended September 30,
                                                          Increase (Decrease)
($ in thousands)                 2021         2020         Amount       Percent
Interest expense               $ (4,287)      (1,092)        (3,195)      292.6 %
Other (income) expense                29            1             28    2,800.0 %
Total non-operating expense    $ (4,258)      (1,091)        (3,167)      290.3 %

The overall change in non-operating income (expenses) for the nine months ended
September 30, 2021 compared to the nine months ended September 30, 2020 was driven by an increase in $ 3.2 million in interest charges.

                        Liquidity and Capital Resources

To date, we have funded our capital needs through collections from our clients
and issuances of debt. As of September 30, 2021, we had cash of $8.4 million and
$4.8 million in available borrowing capacity under our Revolving Debt. On
October 25, 2021, we completed our IPO, which resulted in the issuance and sale
of 18,750,000 shares of common stock at the IPO price of $17.00, generating net
proceeds of approximately $267.7 million after deducting underwriting discounts
and other offerings costs. On October 25, 2021, we repaid the outstanding
indebtedness under our credit facility, totaling approximately $98.8 million in
aggregate principal amount.  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.

Our future capital requirements will depend on many factors, including our pace
of growth, subscription renewal activity, the timing and extent of spend to
support development efforts, the expansion of sales and marketing activities,
the introduction of new and enhanced services offerings and the continuing
market acceptance of our services. As a result of the IPO, we expect that our
future principal uses of cash will also include paying income taxes and
obligations under our Tax Receivable Agreement. 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.

                                                              Nine Months Ended September 30,
                                                                                   Increase (Decrease)
($ in thousands)                                        2021         2020          Amount       Percent
Net cash provided by operating activities             $   5,494       12,578        (7,084)      (56.3) %
Net cash used in investing activities                   (6,373)      (3,598)        (2,775)        77.1 %
Net cash used in financing activities                   (4,533)      (4,892)            359       (7.3) %
Effect of exchange rate changes on cash                    (94)        (157)             63      (40.1) %
Net increase (decrease) in cash                       $ (5,506)        3,931        (9,437)     (240.1) %

Cash flow generated by operating activities

We generated $5.5 million in cash flows from operating activities during the
nine months ended September 30, 2021, resulting from our net income of $11.7
million, adjusted by non-cash charges of $3.2 million, and offset by $9.3
million of cash used in working capital activities. Cash used by working capital
accounts was due to increases in accounts receivable and accrued expenses and
other liabilities, consistent with our growth.

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We generated $12.6 million in cash flows from operating activities during the
nine months ended September 30, 2020, resulting from our net income of $16.2
million, adjusted by non-cash charges of $1.9 million, and offset by $5.5
million of cash used in working capital activities. Cash used by working capital
accounts was due to increases in accounts receivable and accrued expenses and
other liabilities, consistent with our growth.

The decrease in net cash provided by operating activities of $7.1 million in the
nine months ended September 30, 2021 compared to the nine months ended September
30, 2020 was driven by a decrease in net income of $4.6 million and an increase
in net cash used in working capital activities of $3.8 million.

Cash used in investing activities

The increase in net cash used in investing activities of $2.8 million in the
nine months ended September 30, 2021 compared to the nine months ended
September 30, 2020 was driven by investments of property and equipment costs to
support the expansion of our business.

Cash used in fundraising activities

Net cash used in financing activities were $4.5 million during the nine months
ended September 30, 2021, resulting from payments of member distributions of
$3.3 million and repayment of the term loan of $1.2 million.

Net cash used in financing activities were $4.9 million during the nine months
ended September 30, 2020, resulting from payment of member distributions of $4.6
million and repayment of the term loan of $0.3 million.

Indebtedness

On August 2, 2019, we entered into a credit agreement that provided for a $30.0
million term loan, or the Term Loan, and a $2.0 million revolving debt facility,
or the Revolving Debt. Net proceeds of $24 million were distributed to certain
members of Enfusion Ltd. LLC (see Note 6 to our consolidated interim financial
statements included elsewhere in this report). On April 13, 2020, we drew $1.8
million of the Revolving Debt to expand our liquidity amid the uncertainty of
the COVID-19 pandemic. We repaid the $1.8 million of Revolving Debt principal
(plus de minimis interest) on September 24, 2020. On August 9, 2020, the
Revolving Debt agreement was amended and restated to increase the commitment
amount of the Revolving Debt from $2.0 million to $5.0 million. On December 17,
2020, the Term Loan agreement was amended and restated to increase the
outstanding principal balance to $100.0 million. Net proceeds of $71.1 million
from the Term Loan were distributed to certain Members of Enfusion Ltd. LLC (see
Note 6 to our consolidated interim financial statements included elsewhere in
this report). As discussed below, on September 30, 2021, we repaid the first of
the required payments of $1.25 million of Revolving Debt principal (plus de
minimis interest).

Borrowings under the Term Loan bear interest with a fixed component of 4.25% as
well as a variable component based on LIBOR. The LIBOR rate for the term loan is
subject to a minimum of 1%. The selected one-month LIBOR rate for the term loan
on December 31, 2020 and September 30, 2021 was below the 1% minimum. Thus, the
interest rate for the term loan as of December 31, 2020 and September 30, 2021
was 5.25%. In addition, we are required to pay $1.25 million each quarter of
principal repayment commencing on September 30, 2021, increasing up to $2.5
million starting on March 31, 2024. Any unpaid principal and accrued interest
will be due on December 17, 2025. The credit agreement also states that
beginning in 2022, an excess cash flow recapture payment equal to 25% of excess
cash flow must be made toward the prepayment of the Term Loan for fiscal years
with a leverage ratio greater than 3:1.

The Term Loan 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 for the years ended December 31, 2020
and December 31, 2019 as well as for the nine months ended September 30, 2021
and September 30, 2020, respectively.

We entered into an amended and restated credit agreement immediately as part of
the IPO. The amended and restated credit agreement continues to provide for the
Term Loan in the aggregate principal amount of $100.0 million and the Revolving
Debt in the amount of $5.0 million. The terms of the amended and restated credit
agreement are unchanged

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of the credit agreement and join Enfusion, Inc. as a co-borrower and provide transition and replacement rates for the LIBOR rate.

Obligations and contractual commitments

Our contractual obligations have not undergone any material change from those described in the Prospectus.

Off-balance sheet provisions

We do not have any off-balance sheet arrangements, as defined in Regulation S-K,
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.

Tax Receivable Agreement

As a result of our ownership of Common Units in the LLC, we are subject to U.S.
federal, state and local income taxes with respect to its allocable share of any
taxable income of the LLC and will be taxed at the prevailing corporate tax
rates. In addition to tax expenses, we also will incur expenses related to our
operations and we will be required to make payments under the Tax Receivable
Agreement. Due to the uncertainty of various factors, we cannot precisely
quantify the likely tax benefits we will realize as a result of the LLC Common
Unit exchanges and the resulting amounts we are likely to pay out to LLC Common
Unitholders pursuant to the Tax Receivable Agreement; however, we estimate that
such tax benefits and the related TRA payments may be substantial.

The amount of existing tax basis acquired in the IPO was approximately $110.7
million. If all of the Pre-IPO Common Unitholders were to exchange or sell to us
all of their Common Units, we would recognize a deferred tax asset of
approximately $408.9 million and a liability under the Tax Receivable Agreement
of approximately $347.6 million, assuming: (i) all exchanges or purchases
occurred on the same day, (ii) a price of $17 per share, which was the public
offering price per share of Class A common stock in the IPO, (iii) a constant
corporate tax rate of 32.0%; (iv) that we will have sufficient taxable income to
fully utilize the tax benefits; and (v) no material changes in tax law.

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. Our board of directors may change our
dividend policy at any time.

                   Critical Accounting Policies and Estimates

Our consolidated interim financial statements are prepared in accordance with
U.S. GAAP. The preparation of consolidated interim financial statements requires
management to make estimates and assumptions that affect the amounts of assets
and liabilities at the date of the consolidated interim financial statements and
amounts of revenues and expenses reported during the period. We evaluate our
estimates and assumptions on an ongoing basis. Our estimates are based on
historical experience and various other assumptions that we believe to be
reasonable under the circumstances.

Revenue recognition

Revenue recognition requires judgment and the use of estimates. We derive
revenues primarily from fees for platform subscriptions to our cloud-native
solution and managed service fees which include fees related to client-selected
middle and back-office services on our clients' behalf using our platform. Most
contracts have a one-year term and are cancellable with 30 days' notice.
Revenues are recognized when control of these services is transferred to our
clients in an amount that reflects the consideration we expect to be entitled to
in exchange for these services. Revenues are recognized net of taxes applicable
to service contacts.

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In accordance with the codification of accounting standards 606, Revenue from contracts with customers, or ASC 606, we determine the recognition of revenue according to the following five-step framework:

? Identification of the contract (s) with a client;

? Identification of the performance obligation in the contract;

? Determination of the transaction price;

? Allocation of the transaction price to performance obligations in the

Contract; and

? Revenue recognition when, or as and when performance obligations are met

The estimates and assumptions requiring significant judgment as part of our revenue recognition policy in accordance with ASU 606 are as follows:

Determination of the transaction price

The price of the transaction is determined based on the consideration to which we believe we are entitled in exchange for the transfer of products or services to the customer.

We do not include a financing component in our contracts. The primary purpose of
our invoicing terms is to provide clients with simplified and predictable ways
of purchasing our products and services, not to receive financing from clients
or to provide clients with financing.

Allocation of the transaction price to the performance obligations of the contract

Our service contracts with clients can include multiple performance obligations.
For these contracts, we account for service charges for individual performance
obligations separately if they are distinct. Each of our platform subscription
and managed services contracts are accounted for separately as they are separate
service contracts with distinct performance obligations. For any of our service
contracts with multiple performance obligations, service charges are allocated
to any distinct separate performance obligations of those contracts on a
relative standalone selling price, or SSP, basis.

The determination of SSP involves judgment. We determine the SSP based on
overall pricing objectives, which take into consideration market conditions and
entity-specific factors. This includes a review of historical sales data
relative to the size of the service contracts, the nature of the software
applications and client demographics including the numbers and types of users
permitted by the contracts.

Software Development Costs

Management judgment is required in determining which projects and costs
associated with software development will be capitalized and in assigning
estimated economic lives to the completed projects. Capitalized software costs
consist of costs to purchase software and costs to develop software internally.
Capitalization of purchased or internally developed software occurs during the
application development stage and consists of design, coding and testing.
Management specifically evaluates software development projects, milestones
achieved and the commitments to continue funding the projects. Significant
changes in any of these items may result in discontinuing capitalization of
development costs, as well as immediately expensing previously capitalized
costs.

                        Recent Accounting Pronouncements

See Note 3 to our consolidated interim financial statements included elsewhere
in this report.

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                         Emerging Growth Company Status

We are an "emerging growth company," as defined in 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.

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