Q3 2021 Clearwater Analytics Holdings Inc Earnings Call
Through our successful initial public offering in late September.
Joining me in the call today or Sunday to high Chief Executive Officer, and Jim Cox, Chief Financial Officer. After their remarks, we opened the call up to a question and answer session.
I'd like to remind all participants that during this conference call any forward looking statements are made pursuant to the safe Harbor provision on the private Securities Litigation Reform Act of 1995.
Expressions of future goals, including business outlook expectations for future financial performance and similar items, including without limitation expressions using the terminology may will can expect and believe and expressions, which reflects something other than historical facts are intended to identify forward looking statement.
Forward looking statements involve a number of risks and uncertainties.
Including those discussed in the risk factors section of our islands with the SEC.
Actual results may differ from any forward looking statements.
Undertakes no obligation to revise our update any forward looking statements in order to reflect events that may arise. After this conference call, except as required by law.
For more information please refer to the cautionary statements and our earnings press release.
Lastly, I'll metrics discussing this call are non-GAAP unless otherwise noted a reconciliation can be found in our earnings press release that is now posted on our Investor Relations website.
With that I'll turn the call over to our Chief Executive Officer, Some pizza.
Thank you Joe and welcome everyone continue walking immunity to exchange quarter pollution results conference call.
It was a publicly traded company.
I wanted to start the painting on a future you continue to influence computer work.
You truly appreciate it.
The ultra excited I'm incredibly proud of the team and the company that you're a baby.
General modest beginning the company is drew organically more than 200 employees to cross Gen offices seven countries.
Little bumps housing plans.
Daily basis, you process over 516 trillion dollars in assets are not Blackstone.
I don't feel like we are just getting started.
I wanted to start by laying out the five pillars that represent two logos business marketing strategy.
The first pillar is cumulative consistent durable growth that.
That we have successfully achieved with a several years.
We have 100% Victorian Red the model and have multiple years to Tinker consistent analyze your total revenue growth of more than 20%.
The company has workshops gross revenue retention rate of 98%.
Have any consecutive quarters.
Because you provide a very sticky solution.
That our clients use of your day.
We have a solid net revenue retention rate for Calcimeter you 110.
Absolutely would you expect.
What drives these metrication is our ability to capitalize on land and expand opportunities with existing clients client EUM growth and modest price increase.
The second pillar is a high quality business and financial model, but also has room to expand.
A recurring revenue model and hydro's retention provides stability and predictability your business.
A non-GAAP gross margins approximately 75%.
Gives us room to continue making investments, while generating reasonable EBITDA margins and free cash flow.
They are committed to maintaining optic logical leadership and expect to continue to make significant investments in R&D, which currently comprises approximately 25% of revenue.
Third.
<unk> has a disruptive technology Blackstone deep competitive months.
Our SaaS based platform in the cloud.
Free of the constraints faced by legacy technology solutions.
On our platform Securities a model and processed one time.
Induced but everyone who owns such security.
Dana connections added one can use all the rights to that data.
The media industry specific nuances and regulatory reports I'll set up one time induced by all this.
Resulting in Boston Metro contracts.
Each client adds to the power to the platform and the same single these teams Multitenant platform.
Is used across industrious and with client organizations of all sizes.
Every day, our platform delivers a comprehensive view of our clients investment portfolio that is multi multi basis multi cards.
The four by four strategy is all multiple drivers so contributed future growth, which we have laid out and what we do is all true horizons.
People came orders of market disruptor in a competitive environment shows with legacy incumbents.
You have relatively low market penetration in a full buckets that can over the next few years sustained more than 20% top line growth because you've been approximately 80% of the time, we'd like to propose.
They believe that we can build a 1 billion dollar business given the $4.7 billion of total adjustable market the vehicle identified in these markets.
In the short term our Verizon one.
Focused on getting a relationship with existing clients gaining market share within cool buckets and clients and continuing to grow our business in Europe.
In the medium term, what we refer to as regards in too.
We expect to make investments speckled secure wins and adjacent client and markets.
And deliver adjacent solutions such allowed so growth acceleration in Europe and Asia.
Let me see these opportunities to add to the total at this world market with additional solutions to extend that technology lead as well as gain additional traction with government pension funds and solving bolts funds.
The longer term opportunities.
Or horizon three include delivery insight for current and future plans of a platform from a growing data set of more than $5 six trillion dollars of assets, which are processed on a flexible.
Additionally, while we have focused on a purely organic approach.
Flexibility essentially from a recent IPO.
That will provide opportunities to explode MMA methotrexate goats.
The first and final pillow his client focus which is embedded in the DNA of our culture.
Boise, who are infused the company, it's a compassionate customer first mindset.
And we are working but simply delight subtypes.
Are offering which combines the platform and our people improves the lives of our clients operations on the counting teams and radically simplifies the process of producing the information they need to run their business every day.
K Mart is world class 60, plus neck promoter store.
Reflects our clients recognition are far differentiator time service.
Turning to our times.
It will be days of pure water.
We focused solely.
At times.
Finance and Treasury departments, London investment accounting and reporting processes and reconciling the investment data to a web based platform.
Instead of two manual labor intensive stretching.
In 2012, the expanded our client base.
Also include insurance companies.
And two years later, we added asset bandages.
Do you have continued to evolve the platform to serve the needs of various industries in Delaware investment accounting and Relocates regulatory compliance.
So why are clients maybe dropped actual.
Trying to call markets are facing grueling challenges driven by low yield.
And then increasingly complex and evolving regulatory inbox.
This is like to them investing and increasingly complex assets and.
Investing globally.
Organizations authenticate solving these challenges, but by an asset specific and regional specific solutions, and then building massive data warehouses and hiring armies of people to run slow.
Editorial processes.
But there is an easy way.
You want a variety simplifies and you also wanted counting on analytics youth.
Using a purpose both single instance, multitenant platform.
Adjusted these challenges in a fundamentally different way.
First we start by going directly to the source of all of our client data.
Creating an enhancing universal security monster.
That allows us to reconcile the data once every gay capably and without duplication we've.
We didn't run a reconciler data.
Sure proprietary multiasset accounting and analytics engine.
Before presenting the output to a client Joe Morton customizable that portal.
A black Swan please up our clients of the onerous burden of managing multiple legacy software products and supporting data Street.
I'll also delighting, the counting and climbed servicing tapes.
Okay, and what a platform ultra creates a netbook effect.
Every new client, we add increases the security in Africa coverage Universal Security Boston.
Further strengthening our ability to add client value all.
All of that set.
Clear what his mission is to be the world's most trusted incomprehensive technology platform for investment in accounting and under medics.
And do you believe that we can leverage our technology.
Sensually revolutionized the proud of word of investing.
Now that I have set the stage for how Clearwater operates is accompanying and how we are positioning ourselves for future growth.
Let's turn to our third quarter of 2021 financial results.
Do you want to achieve solid.
You're an annualized recurring revenue growth.
We achieved consistent margin.
Even with our investments and growth.
Those investments are starting to show promising results.
When we signed multiple audible trying to once a.
A few will be Charles.
A recent triumph rates in North America Denver.
Demonstrate our ability to achieve consistent reliable and durable growth.
New clients include some large asset management firms, a large number of large insurers and reinsurers.
Quotation spanning multiple industries include.
Including Pharmaceuticals, energy, Hi, Tech and consumer goods.
And a large west coast based city and county.
We also recently expanded into the real estate investment Trust the market and signed that first week declined another investment Corporation.
However chose the Clearwater platform to replace the legacy system.
Manage the accounting of the complex assets.
Provide data reconciliation validation.
Since simplify regulatory reporting.
As I mentioned before we.
We had a disruptive SaaS based technology platform that addresses industry specific nuances.
And is used across industries, regardless of organization sites or number of assets under management.
In the third quarter.
82 year old Global investment management firm Neuberger Berman as a new client because the firm was seeking a platform to replace legacy systems, which one that could provide a single source of accurate and transferring data flexible and integrated.
Building an auto nation.
Okay and what is currently on board, a new burgers bereavement both CIL.
Outsource Chief investment office and trust.
And what business labs.
Okay, and what is the technology company to reinvest 25% of our revenues into R&D.
This means that we continue to integrate the platform and protocols changed the latest machine learning tools.
A key focus here is talented engagement.
In the last 18 months, we have completed the build out of the workshops management team, who collectively brain not just tremendous experience to the roads, but also.
Terrible passion.
In the third quarter, we added two incredible technology vetoes to round out our teams.
Jody Kosowsky oppression of product and technology spent most of it's 25 years building and running the product group at one of the largest competitors.
Brazil, Mcdonalds joined us as the Chief Technology Officer billions experiencing try <unk> and.
And senior engineering adults at Paypal.
Fitz few capital one auto finance.
International expansion being one of the key drivers for our growth acceleration in the third quarter.
We built this moment into Cubans with one of the fastest growing insurance firms across Asia.
Ah first seven figure Asia Pacific Clark.
In addition to a European insurer Indian sharp.
The UK based property and casualty inshallah and others.
As an example of are deeply embedded client focus.
Two orders annual North American user conscience Clearwater connect last week.
The second intervals, so virtual conscience due to Kobe.
Our clients and prospects attended sessions that covered trending topics important to our clients.
Including ESG investing.
Our insurance clients survey findings LIBOR and platform specific updates.
We plan to hold all European user confidence in the first quarter of 2022.
Another example of how we want to leverage technology to revolutionize the broader world of investing.
The amount of a partnership with one United back the largest black owned bank in the us and Kelsey.
Under the sponsorship shearwater has enhanced the interface on SaaS platform, which now allows currently departments visiting a large corporate client base easily track can manage the deposits in minority on backs.
Who in turn provide needed capital minority communities.
This partnership has the potential to help as many as 500 corporations invest in minority communities.
We continue to execute on a five pillars of gunk and are very pleased with the progress we have made on this last quarter.
And now to provide more color and details on this quarter's performance.
Withdraw chief Financial Officer, Jim costs.
Thanks Sandy.
And thank all of you for joining us on our first earnings conference call.
We're very excited to complete our initial public offering last quarter and I want to thank my team and truly that thousands of others throughout the three months.
As for my remarks to that.
Start with an overview of the business and financial them all.
Review, our financial results for the third quarter, and finally wrap up of guidance for the fourth quarter and full.
2021.
Our business model example.
100 per cent recurring revenue model.
Ability enabled buyer consistently high wrecks Avenue.
With combination create an incredibly terrible business.
Operating at scale.
Which allows us to reinvest back into our platform and our team.
Truly drive long term growth.
Our mission critical capitalism and focus on the lighting are fine, although outta consistently win new business by displacing legacy software manual.
An annual Papa.
The peer clients or.
Mmm clients happy leading to a consistent growth revenue retention rate 98%.
Each and every one of the last 11 quarters.
Our unique platform.
Or many year.
Leverages proprietary technology manage and reconcile our clients investments data.
Benefit from an intervention allow.
Allowing us to generate approximately 75% non-GAAP gross margin.
Eastern growth Martin provide us with the opportunity.
And that's in our solution.
With approximately 25% of revenue invested back into research and development.
We believe we have the best solution.
And a significant investment in R&D only deepen our competitiveness.
A strong margin profile.
And confidence in our offerings from our 80% when right when Nevada proposal.
To increase our investment in our operation and go to market capability in recent quarters.
Enabled.
Mexico and globally, while still maintaining compelling adjusted EBITDA market.
We operated at 10.1 billion dollar call addressable market with our core market The Corporation insurance company and asset managers in North America and Europe.
$4.7 billion and Tan.
Large and diverse ham.
A long runway to continue consistent growth.
Our sales cycle vary across the various market vertical.
<unk>.
In range from one to two months the smaller client.
Two year for the largest and more complex.
Typically find monthly evergreen contract with that line.
You've been a basic point pricing model, which allows us to grow our revenues and our clients.
In Q3.
Net revenue retention rate of 111%.
That client continued to add to the platform.
In summary, we.
I believe our model align their water interest with that of our clients.
I'll also enabling our land and expand strategy. Once we have established an initial relationship.
That predictable nature of our revenue.
By our high revenue retention rate.
Strong gross margin allows us to confidently invest back into the business, helping to lead to long term durable growth and ultimately compiling returned.
Report detailing our core financial resolved.
First address two items impacting year over year comparability of our gap.
<unk>, you'll notice that we recorded a hen 3 million dollar law on the Englishman at that in the third quarter.
After you some of the proceeds from our initial public offering to retire alright in that.
While at the same time, securing $55 million new debt financing at more attractive interest rate.
Next you'll know.
We recorded seven 7 million dollar of equity based compensation has been in the third quarter of 2021.
Presenting a $6 million increase over the third quarter of 2020.
The increase in equity based compensation.
Mary increased equity Brant activity and the increase in granting fair value as well as a modification of equity award.
In connection with or Ikea.
Nah I want like one minute on earnings per share.
Given our structure and the restructuring that occurred in connection with or Ikea.
R Q3 gap loss per share of five.
But.
The last seven days of the quarter.
The period between our IPO in September 30th.
And that period is impacted by the 10 million dollar law on extinguishment of debt in connection with the iced yet.
Given the shortened periods, we do not provide a non-GAAP EPS.
And two four and going forward.
To provide both that and none of that.
Moving to our third quarter financial recall.
Please note that our robots will be discussed on a non-GAAP or adjusted basis.
Otherwise.
Revenue in the third quarter was $64.5 million.
21% year over year.
At the strong sales momentum we experienced in the first half of the year continued into the third quarter.
To date.
<unk> 23 per cent.
As of September 30th 2021 annualized.
Annualized recurring revenue or are are reached.
$257 million and $12 million increase over June 30th 2021, and a 20% increase year over year.
As I mentioned before gross revenue retention with strong at 98%.
In the 11th consecutive quarter reported gross revenue retention.
98%.
The net revenue, replacing right with a heartbeat, 111%.
220 basis points in the third quarter of 2020.
We see our clients continues to grow their business.
In Clearwater.
Gross profit in the quarter was $48 1 million dollar and gross margin in <unk>.
Four 5%.
We are in the input on.
Onboarding of new clients today, and support strong pipeline of new kind of opportunity.
Q4.
Although the hulking remained committed to increasing gross margin over the long term.
Expect to continue to invest in this area.
Quarter of 2022.
In anticipation of the continued strong new client demand across the globe.
Specifically, we've added 20 resources in eastern Europe, with French and German language skills.
<unk> our clients.
Market.
Notwithstanding these investments we continue to target steady snake gross margins for new time.
Over 80% over the long term.
Research and development expenses in the quarter were $16 million for 2004, 8% of revenue in line with our expectation.
We are targeting our investment in RMB at 25% of revenue over the coming quarter.
We believe will allow us to continue to drive.
And a core market.
While also been on the adjacent growth opportunity.
Mentioned earlier in this anymore.
Or hiring.
Does he does smart developers send them our way.
Sales and marketing expense in the quarter what.
Eight $4 million for 13% of revenue.
480 basis points Euro for Ya.
And continue to invest heavily in a corner market capability, both domestically and internationally and we are incredibly excited by the prospect. These new things are making and expect to continue to increase our investment in the area heading into early 2022.
With a heavy emphasis in further building up I'll present internationally.
General and administrative expenses in the quarter or $6.6 million or 10.2% of revenue.
280 basis points, you are over a year.
That started to absorb incremental call public.
Public company.
We expect the general and administrative expenses will remain elevated as a percentage of revenue in the short term.
We annualize the impact of a public company.
However.
Expect to be able to scale back office functions overtime, providing operating leverage.
The business and the longer term.
Adjusted EBITDA or earnings before interest taxes, depreciation and amortization in the quarter.
$17 $1 million or 26.5% of revenue down.
One $9 million from the third quarter of 2020.
Primarily due to increased investment in operation and pale and and marketing in addition to incremental public company call.
Turning now for the balance sheet, we ended the quarter with over $245 million in cash and cash equivalents.
And just under $54 million in debt.
We receive IPO cause the net at the underwriter discounted Commission.
582 million.
Opening now on guidance for the fourth quarter of 2021.
We expect revenue to be in the range of 66 million.
$67 million.
Representing 21, and 22% year over year growth.
Fourth quarter of 2020.
That's right the total revenue guidance for the year, two 248.3 million.
$249.3 million or approximately 22% year over year growth.
It's at the fourth quarter adjusted EBITDA margin to be approximately 26% as we continue to make investments while also absorbing incremental public companies.
To summarize.
We're pleased with the performance of the business in the third quarter.
We are delivering the unique value to our client I'll continue profitably grow our business.
As I mentioned earlier.
Operating a large addressable market.
Penetration is still very low.
Really believes in early stages of a long road.
And then the new business momentum we are seeing today.
Lined with investments we are making.
Really.
Long term durable and profitable growth.
With that I'll turn it over to sandy to provide rosenthal.
Thank you Jim.
I will forward at the beginning of the call.
What what is the problem for me, even more excited about our future the.
Pumpings commencement authority.
The New York Stock Exchange in September 24th.
<unk>.
The bulk of it to premium.
The opening ball over the amazing milestone.
For everyone in the country.
Omission can be the most most plus.
And comprehensive technology platform.
That's what I think.
Without guiding principle.
All told quarter financial performance, along with the explosion of business model that includes strategy.
To demonstrate how come with a b R to achieving this mission.
He's movable Gemini it's all of the shares the two little story with you and we look forward to discussing up the phones and strategy for the company.
Now, let me turn it over to the operator questions.
Thank you if you would like to ask a question you can do set by pressing stuff for like by one on your kind of thing to add.
Our first question today comes from Jackson.
J P. Morgan. Please go ahead Jackson your line is my life then.
Alright, that's taking my questions guys and welcome to the public markets.
The first question I have is.
Maybe.
Maybe booking is there any kind of seasonality, we should be expecting in terms of maybe.
Net new AOR in December quarter, virtually the September quarter versus the March quarter that we should be thinking about as we head towards the end of the year.
No. Thank you.
Yeah.
Okay.
Go ahead go ahead.
Oh goodness.
Sure Jackson, Thanks for the question.
So.
So there's a couple of mechanisms so one and like typical.
Enterprise software companies there is.
More kind of contract signing in the fourth quarter. However, when you think about how our roles out not only are we signing those contracts, but we're also onboarding those customers throughout that period of time so that.
Trend is abated somewhat because of because of that but we feel.
We feel really great about the pipeline, we have going into the fourth quarter and we're excited to execute against.
Okay, Great and then.
Since then we've seen mentioned or maybe maybe issues and I can't remember.
On the <unk>.
Seven eight.
<unk> at customer I think it was the first one in the region that seems to be how to schedule I don't I don't remember really thinking about the APEC region, just yet becoming material.
So I'm just curious.
What kind of resources and staffing you actually have there in order to serve customers in that region.
Yeah. Thank you for the question back soon.
A little ahead on schedule would actually be ranked yes, we have a small presence in Singapore.
And we expected them to be able to get.
Some initial attraction, but we are delighted that they got this seven figures client.
From a really fast growing insurance company. So yes. This seems to be a little bit ahead of schedule and we will continue to build up that office.
Those faster than the torque.
Okay, great that makes one thank you.
Thank you next question today comes from Michael correct from well. Okay. Please can I have my call. Your line is now Langton.
Hey, there. Thanks I appreciate you taking the question I figure out some of the first quarter as a public company.
<unk> keeps creeping up here, 111% Q3 continues.
Speak to what's driving that steady improvement and we get questions on market exposure, giving you mentioned more than five and a half trillion in a room on the platform could you just help those endure to the story frame out with some of the reasons. Your model has proven more resilient even in a volatile environment. Thank you.
Thanks, Thanks, so much Michael it so we do have that.
Based pricing model, it's a gentle tailwind.
Two are.
The two then of our pricing and just to hit the kind of market volatility question straight on the head.
86% of the assets on our platform.
Are fixed income and structured products. So they just don't have that equity market volatility, we just don't see that in our business.
Now look we're really pleased to see some momentum kind of over the last few quarters we've been.
Nine 110 to 111 in this quarter, one quarter does not a trend make.
But when you look at some of the underlying drivers of what's driving that kind of modest expansion 220 basis points.
That's what's really interesting and exciting and that's where we really have to focus as a business to think about strategically over the long run how we continue to grow that an expanded even further let me give you. Two examples that are really the majority of those drivers one.
Is with our what we call a strategic asset management client is there a global asset managers, they're using.
And we're continuing to see the ability to land and expand with those clients as they grow their business. They are looking to us to grow their business.
And that's in have consistently been the case in the strategic asset management market for us.
Another example, which is more Nathan and were encouraged by it but again, we need to continue to.
Execute to be able to continue to drive this expansion.
I'll use an example of a large insurance company that has as a fundamental driver of their growth to go out and acquire other businesses and we had multiple large insurers on our platform who are able to really.
Execute upon that expansion strategy.
One is we started onboarding the client had $70 billion in assets by the time, they finished had over $120 billion and so.
When I think about what.
Or if I want a double my business.
As the CFO I worry.
About well how am I going to do that and so what Clearwater allowed that CFO to do is worry about it on.
It's unclear water shoulders to burden that and so that enables one to be really free to think about there.
Strategic.
Options there and then the last thing I think I'll say is underpinning that 111.
It's easy to get to 111, when you're always at 98 without gross retention, that's a really world class number and so driving to that.
Hello, Sir.
Particularly just add to that then.
Jamie Oliver.
Although the platform a little bit.
This time it was talking about were going from 70 billion to 120 billion.
The onboard anytime didn't change at all.
Platform, just simply draw big move done and that'll be value I to be bring our clients that when they grow.
It's fairly effortless, alright, and that is not even listening rooms, and multi vitamin C. I am sure we will talk to you about.
That's very helpful. Thank you both.
And then you wanted.
Southern.
No pickles on next question today comes from Kevin K from Credit Suisse. Please go ahead, Kevin Your line is now I return.
Great you. Thank thank you so much and let me add my congratulations as well.
Yeah.
I wanted to talk a little bit about the data insights.
Is that scales is there a certain level of asset I mean at 5.6 trillion, what does that need to be to to really drive the incremental data insights across the business or is it a function of client duration, just as we think about incremental growth drivers will be on the business more around data insight.
Yep. Thank you for your question so firstly.
That's the business, we're in right she'll be driving sites for clients today.
Every day, we would come out and talk to them about how the portfolios are doing the business is the compliance issues are because data insights on a broader scale frankly, we do for.
Clients today, and we hope to do to cross clients over time. So this is nothing we devise a new revenue from would be investing RMB dollars and trying to believe that capability.
Is sort of over the next several years, but we do think Kevin of that as a Verizon.
So there's nothing you expecting to do or sort of get meaningful revenue from 22 or 23, but over time, you see that as.
Really really powerful value we could break.
That's helpful and then just.
<unk> talked about kind of complexity versus geography.
How do we think about that in terms of the incremental client needs is it the complexity versus the geographical reach is that evenly split or.
Just from a client perspective in the scale is you scale up crusher existing client base.
I didn't think about complexity in the North American market I don't think there is complete.
Continue to see a gradual increase in complexity and thank you you have seen it coming from the last several years. So I expect that to continue to grow.
Only because of try and complex as it continues to go quicker than the private assets.
But.
We go out in Europe, and now in Asia that is different.
Cause they are more asset classes, there, which are unique to those markets.
There's also some data sources, which are unique to that market.
And you didn't want to do that because what that does is make sense a comprehensive provider. So.
You could have assets frankly.
Around the world and we would be able to report on that we would be able to get the regulatory reporting on it. So we we want to be back but that does add more will work Ah do some of the short term.
If I can just also add that.
If you go back several years here, we have the same issue here in North America.
And now you think about North America.
Most of the day the connections we have most of the reporting sticking care of and we continue to be that out to Europe.
Just the U.
Thank you very much.
Alright.
You too.
Our next question today comes from James Forfeit for Morgan Stanley. Please go ahead James Your line is now and then.
Hey, good afternoon, good afternoon, Jim.
I wanted to ask a couple of follow up questions first.
First back on on the.
The retention rate like obviously, great performance there.
And you gave a lot of reasons for why you're retention rate should be so good I am wondering just as a quick follow up should we expect that level of of retention too.
<unk> to improve or or even at least remain at these levels and what are the things that maybe from a seasonal basis or or other factors could move it around a little bit.
Yeah. Thanks change this is Jim so.
So as you've noticed there's no seasonality to address retention rate the last 11 quarters, 98%.
When you think about so then let me also say long term and I do mean, it's like strategically and in the long term.
Now.
Call. We're we're effectively a single product company at this point.
So as you think about offering more to your clients and expanding and thinking about modularized any offering those are all.
Rational reasonable reasons to see that.
Retention rate grow over time.
If we look at it kind of over the next few.
Few quarters or so.
I think that there are.
There are tailwind around deriving asset aggregation as well and I don't.
Can't think of specific seasonality around.
Why do insurance companies choose to do in M&A are they doing it in Ah in Q1, 222324, I don't I don't see that much difference.
And so I see that that trend kind of.
Is pretty pretty normal throughout.
Those.
Kind of the account throughout the calendar year.
I think it comes down to.
How could that accelerating the short term.
It could be driven by the timing of some price increases which are typically annualize based on when a client.
And it is kind of sign their initial contract and so if you assume contracts grow a little bit in the fourth quarter, there's relatively more new contract signed in the fourth quarter than there are in the other three that could be a slight hill in there.
Got it got it.
And then.
Yeah, sorry, sorry to interrupt go ahead.
I want to place.
Oh, no no I was going to be another.
Okay.
[laughter], Yes, hi, I think I think.
Okay, I sound like I'm in a trash thing.
And Sunday extend another I'm sorry go ahead.
Please.
But what I was going to add one team. So when you think about how the company has traditionally done this is his head.
Single price for the entire platform. So if you've got a client for years back the.
Price and said what the price was what would be a obviously continued to add a whole new set of functionality nearly spent that much money in other news from the obviously develop it but we just have never.
Structure weird part about.
Modernisation of a black film and what you saw it differently and those are Avenue is about how you could <unk>.
Truly improve the new protection right that makes sense.
It does it does and I want to go back.
You were talking about kind of the benefits.
As you expand internationally and incorporating other types of.
Assets and as well as data sources, I'm really how that benefits everybody and and I think that explanation is is quite compelling I'm wondering if if you're also seeing any notable wisdom and other verticals or adjacent market yet like state and local governments are those kinds of things are how we should.
Think about kind.
Kind of the expansion beyond just international into some.
Nearby opportunities, even if it's in different types of organizations.
Yeah.
That we continue to see we will not be.
One thing which is.
Two months of Blackstone, it's a feedback from right. So you're obviously Novak is similar to contact entity, but it's been applicable to local and state governments, absolutely now do you have to build a little bit.
Think about your body needs, which are specific to a state government or local government, yes, but that's reasonably reasonably easy we did semi sweet this quarter. So that was interesting is.
A reason to Ah read.
We've found that our solution is fully capable of meeting that need. So those are two markets will be a contingency we should continue to see growth.
Listen to think about pensions in southern funds as Verizon to opportunity.
And it sounds like a platform kind of aggressive today. It just that we just don't have the same.
<unk> to go to the market when 80% of the time. So that's what he sort of pink about these markets as a sort of Verizon to.
Compared to authorize the one sort of.
Markets, which is insurance as a management integrations right, where frankly, we win.
Percent of the time.
So so that's how we see but those new markets are definitely interested in the North American.
That's great. Thank you very much.
Thank you. Thank you.
Our next question today comes from Brian Schwartz <unk> Oppenheimer and company. Please go ahead, Brian Your line is now I can.
Oh good. Thank you very much hey, congratulations sandy been gym really a great quarter here.
Two questions. The first question I wanted to follow up on on it was the first question about the queue for a pipeline seasonality.
You signed up a lot of big deals here. This quarter, you talked about the one in Asia or the one in.
In Newburgh or.
Can you shed any light in terms of how the big opportunities are looking in the pipeline here for Q4 I just wanted to make sure you've been draining it here in Q3, and then I have a follow up.
Uhm.
Brian Thank.
Thank you for that question here.
We do continue to see really good move out of the pipeline. So when you think about the pipeline. Obviously, we have invested over the last two quarters pretty significantly in sales and marketing.
So let me think about first street insurance and asset management.
To medical confused two hours that we.
You see lots of attraction in Europe.
Thanks, a bunch of attraction in Continental Europe too.
And so.
We do see a really robust pipeline.
Mentioned.
We are trying to get the operations ready to mutual we are we are.
Respected in Onboarding them as they come in like.
Jim said.
This is nanobees isn't quite then is queue for a little bit bigger.
Oh, that's cute for all and price of the company that gets raped and but it's not like it shows up in here right away because of dawn boredom.
Add anything to that.
That I think.
Just to be blunt.
Did not drain the pipes right we feel.
That's why we're making the investments that we're making in an operation and.
And if you think about it we made investments in the leadership in sales and marketing and we've built out those team.
But that's taking the whole year to do that so.
You understand how it takes time for salespeople to become productive and filled out teams and so.
We're optimistic.
And I appreciate that color and then the one follow up I had it's a newer product, but I was wondering if you can give any update on the prism analytics I'm just kind of curious if that was part of any of these big deals that you want in the quarter and just how the reception.
It has been for that newer.
Technology. Thanks.
Yeah.
There's some deeper Brian.
Presumably so exciting.
Exciting because.
This whole open architecture allows us to go off to a market reached.
Which we would have which would have taken longer for us to broaden address right.
So we have three climbed relies on it which is significant.
We have a pipeline were just continues to go there, but our ability to.
Two position this in multiple industries is really interesting.
The new Doctor earlier, we talked about.
This being a big mover in the asset management group.
But really what are you also finding is.
It is a lot of receptivity in the insurance sector.
And the reason for that is the largest insurers.
Have other accounting engines and the counter please all of them at the same time.
And so so bad.
That conversation being able to have those conversations now.
I think it is.
Very very helpful.
So I've been on contest just presumed deals as much as.
How do you do.
Or in the pipeline forward.
And build a pipeline, even if I had trouble building otherwise.
Thank you for taking my questions. This afternoon.
Thank you.
Our next question today comes from Cabriolet broadcast from Goldman Sachs. Please go ahead comprehend at your line is now I can.
Cut off man, thanks for taking the passion and congrats on the Ikea in the corner.
And if I want to follow up on some of the commentary provided on the documents and not America in particular could you share with us a little bit of detail on what you are seeing what the size of the deal models of what you typically see an insurance.
And then any time, a component environment, what that looks like today.
Yes. Thank you Gabriel that's my question here. So they do different types of when you think about asset management.
More random expand them, an insurance company alright, so a lot of the net revenue retention number comes from there.
But I'm going to say that our constant management business just continue to do really well.
Especially in North America.
We obviously had announced due out in the UK earlier.
An asset management should we continue to see good growth in that.
And the.
The insurance clients, obviously more one time.
Normally unless you have acquisition with those as Jim laid out.
What else would you add anything else that you want to talk about yeah, Gabrielle we talk about how.
In general we're getting the entire book right at the at the insurance company.
In in the asset management space, where nibbling at at to use the neuberger burden.
Berman example, right <unk> and wealth pieces of their business right and and winning now those are.
Significant because we haven't AUN based it's all driven by the total AUN.
To say that that's a small piece of business by any stretch but.
The point the point is in Tibet in typical fashion once we're in at a firm like that we will.
Work together and we have some other example asset management clients were they brought us into one piece of their business, it's working well, they're bringing us into the next piece those are typically.
They are six figure deals that they wouldn't be.
The seven figure deals that you typically get at a large insurance company.
Well that makes sense and then the follow ups on me.
<unk> market volatility earlier, and having very little expression of that how about on a fixed income Sai how do we think about the potential risks Q and you and I are rising rate environment.
Yeah. So insurance companies are doing book accounting, Brian as as well. So I think they are pretty limited I think on the fixed income side.
No doubt.
And that's possible.
Also remember we're managing a whole book so as a hedge those things are playing out as well within our.
Okay.