Oleg Movchan: Parker, Oleg here. Thank you for the question. I just want to pile on Brad’s comments. So another thing is important to think about is we try as hard as we possibly can to control what we can control. And you’re absolutely right. Big driver here is that we — again, I have to give credit to our revenue organization and client services organization about this maniacal focus on disciplined execution of the sales, making sure we understand the clients’ problems. We — our solutions engineering team involved during the early stages, client services team involved — gets involved in early stages and therefore, not just the velocity — back to the previous question by Alexei, not just the velocity of our onboarding is higher, but the quality is higher. And therefore, we continue to reignite this virtuous cycle of creating happy clients, and therefore, retention is higher.
Operator: We’ll go next to Crispin Love at Piper Sandler.
Crispin Love: Just first on revenue growth, which is decelerated recently and just a challenging landscape here. Curious on your views for near to intermediate trends, and if you think that growth may have bottomed in the third quarter and could begin to inflect higher in approach and perhaps surpass 20% in 2024, just given your comments about optimism for the future here.
Oleg Movchan: Thank you for the question. So we’re pretty constructive. I mean, we think that the bottom is probably — we’ve seen this. Again, we don’t have a crystal ball. I don’t know what the macro environment is going to look like in ’24. What gives me comfort personally is our ability to peel it, as you know, you can grow or sustain this growth rates through multiple sources. And we all know that the asset management industry at large, right, is going to grow in single digits. And maybe at best is going to be anywhere between 4% to 5% depending on the segment. So how do you grow at 20% plus so you can do it 2 ways. You can either create very aggressive market share capture, which is precisely where our focus today, which is also precisely where Enfusion’s sort of what I would call downside convexity has been when macro headwinds are strong, we always rebalanced and took business away from competition, thereby sustaining the growth and actually captured market share when the market is really good again.
Assets are flowing and the returns are high. Funds are launched. We are back to our hyper growth stage again. And so this is sort of our tactical solution number 1. Tactical solution number 2 could potentially be an M&A strategy. But again, as I said before, we are very careful and surgical about that aspect of growth. At the end of the day, it also is about profitability from our perspective as much as it is about growth. I understand your question is about top line. But what we are trying to do is balance both top line and bottom line and oftentimes, as you know, those 2 are connected.
Brad Herring: This is Brad. Let me just add. A little bit of ways of the way we look at our growth algorithm. If you think of — even if we bottomed out here and caught the mid-teens, from a kind of market share and macro level growth rate, which I will kind of chime in, is still substantially better than our competition because of our share grabs. So start off with mid-teens, you pick up another 300 to 500 basis points out of NDR because we’ve mentioned we’re running a little bit lower on NDR than we would have historically. And then tack on another 300 to 500 basis points for additional product capabilities and additional market opportunities that we’re expanding with things like portfolio workbench with things like credit, with things like new geographies we’re going to go into. You compile those numbers, you can easily get back into this 20% sustainable growth rate. So that’s kind of the way we dissect it and the way we look at it.
Crispin Love: I definitely appreciate the color there and just balancing the top and bottom line. Second question for me is just can you give an update on net incremental seat license trends at current clients, are they positive but slowing here? Just curious what you’re seeing in the current environment and the drivers there.
Brad Herring: Yes, this is Brad. I’ll take that one, too. So this is kind of supporting my commentary about a little bit of a trend shift we’ve seen in that net organic growth. So we actually are starting to see, a term we use called upsells, where our existing clients are adding seats at a faster pace than they are declining seats. Over the last couple of quarters, when we saw those reductions in NDR, we saw that trajectory flip a little bit as most of our customers were resetting their cost base. We are starting to see on a net basis, that organic growth number is turning substantially more positive than it has in the last couple of quarters. So they’re not necessarily massive increases in seat counts, but we certainly are seeing, as clients are expanding their own fund capabilities, they are picking up seats at a much faster pace than they are declining seats. So that’s a nice trend that we saw and it’s representative in that NDR number picking up 100 basis points.
Operator: We’ll move next to Gabriela Borges at Goldman Sachs.
Callie Valenti: This is Callie Valenti on for Gabriela. I wanted to start on kind of how you feel about your current investment levels and what kind of macro signals would lead you to increase investments potentially? Or are you just comfortable with your current investment level in a world where macro increases, and you feel like you can take advantage of that opportunity?
Brad Herring: That’s a great question, Callie. So it kind of hinges back to Oleg’s comment a minute ago about balancing top line growth and profitability. We always have a list of investments that we feel like we could prioritize should the economic environments present the opportunities. The good thing about the growth rates that we’re able to put out is, it allows us to make not only sustaining the investments we make, but it does allow us to make incremental growth — incremental investments in our P&L both flowing through OpEx and as well as CapEx because as you’ll note some of our investment flows through is CAP software. So we do plan, in fact, as we’re building out our plan for 2024. We still have meaningful investments that we are targeting to make in 2024 based on the growth trajectories we’re seeing in the macro environment.
So those 2 things, to your point, are very intertwined. And we pay very close attention to them. And candidly, if the economic environments accelerate, that allows us the opportunity to make even more investments. So they work pretty close in tandem.
Oleg Movchan: And Callie, I just want to echo what Brad said and also make another point, which is — the good news for us is that we still have a lot of white space in front of us to make investments that actually are here clear and present, not like a lot of people follow this hype with AI and machine learning and kind of having a lot of solutions out there in search of problems, so to speak. We have very specific targeted product road map, again, credit to our engineering team and product team thinking through it in a very disciplined and careful way, where we, again, will listen to the market, and therefore, those investments that we’re making, have very high ROI. So it’s not just about making investments in our mind. It’s looking for investments with highest potential return on equity.
