What happened
Shares of financial-services software company Enfusion (ENFN -0.54%) surged on Tuesday after the company released financial results for the fourth quarter of 2022. As of noon ET, Enfusion stock was up almost 10%.
So what
During Q4, Enfusion generated revenue of $40.5 million, which was up more than 27% from the same quarter of 2021. This was right at the high end of management's guidance. The company only added nine net new clients during Q4, bringing its total to 819. But management was nevertheless encouraged by its progress.
On the bottom line, Enfusion surpassed management's guidance for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). Management guided for adjusted EBITDA of $6 million at most but delivered adjusted EBITDA of $6.8 million. Moreover, the company was profitable on a nonadjusted basis as well, with net income of $0.8 million.
Now what
For 2023, Enfusion's management expects to generate revenue of $185 million to $190 million. For perspective, it generated $150 million in full-year 2022 revenue, meaning it's guiding for roughly 23% to 27% top-line growth in the coming year. That's a good growth rate.
Moreover, about 98% of Enfusion's revenue is associated with a subscription. Therefore, management has pretty clear revenue visibility, which gives its guidance more credibility.
Enfusion is growing and managing expenses well. However, those interested in the stock should note that the stock isn't as cheap as it might appear. Many third-party sites show a much lower share count for Enfusion than what it is. According to Q4 filings, it has roughly 133 million diluted shares, giving it a market capitalization close to $1.5 billion -- much higher than the market cap of under $1 billion that's shown most places.
This doesn't necessarily mean Enfusion isn't a buy. It's just context to keep in mind when researching this company.
