Clearwater Analytics Holdings Inc. Q1 2023 Earnings Call
For more information please refer to the cautionary statements included in our earnings press release.
Lastly, all metrics discussed on this call are presented on a non-GAAP or adjusted basis and include the results of jump technology since the acquisition on November 32022, unless otherwise noted.
A reconciliation to GAAP results can be found in the earnings press release that we have posted to our Investor Relations website.
With that I'll turn the call over to our Chief Executive Officer Sandeep side.
Thanks, Joon and welcome all to our Q1 earnings call.
We delivered a solid Q1.
Let me start by discussing our revenue.
As a SaaS based solution.
Onboarding clients successfully and making them lives on our platform is key.
Two driving revenue and EBITDAR growth.
As you know over the last few years, we've invested in setting up a scalable onboarding capability across the board.
And we are now consistently delivering <unk>.
Notable programs concurrently.
We were successful in bringing 29 clients live this quarter.
Some with hundreds of billions of dollars and others with a few hundred million.
Simply put revenue is better than Q1, because we continue to successfully onboard new clients and the lifestyle.
Clients like a tour of Corvid peak, Derek UBS and many others went live on our platform under the leadership of our Chief client officer will be.
Safety.
She has built an organization that delivers consistently and repeatedly.
Clients small and large.
Centres in Boise.
And then do the.
We're closely with program leaders in London.
Boston San Francisco and.
And other offices to bring new clients on board often in less than four months.
And then the vast majority of the time in less than nine months.
The expanding network effect.
The single instance, architecture allows us to continue to make gains on the onboarding effort required to bring new customers lives.
In general, though you had a critical business solutions provider.
As I'm sure you're acutely aware.
The volatility of the investment landscape continues.
And it's in times like these.
That our platform shines brighter.
And our customers need us even more.
One perfect example of this is as we'd be asset management.
When Silicon Valley Bank, the parent company closes door than.
More than 2000 clients.
That received Clearwater reporting on their assets through <unk> will activate a flux.
After the news broke.
<unk> servicing and technology teams worked over the weekend to provide these clients direct access to the <unk> platform and to the portfolios.
Couldnt turn allowed them to understand their positions and investments.
We supported the ability.
To not only get to the data, but also help them understand the exposure and risk.
When SCB landed with citizens bank, we seamlessly.
Turned access back to the new entity.
The fact is we care very deeply.
About the success of our clients.
Whether they're direct or indirect.
We believe that this focus and commitment.
Allows new clients to come to the Clearwater platform the confidence.
Speaking of new clients.
We continue to find new logos and are very excited to announce that.
Bank of America private bank.
In Maryland, and our clients for the company.
Asset managers continue to migrate to the Clearwater platform to grow their business.
By offering their customers comprehensive and timely reporting.
Across asset classes and countries.
And while doing that they also dramatically improve.
The efficiency of the operations.
We're excited to announce several other new logos, including Robinhood.
Better capital Management at award Indemnity company, elastic and Pacific Biosciences of California.
We continue to see acceptance across market segments and geographies.
On the product side, we're excited about the continuing maturity of our prism platform.
Building on the success of the seven figure presumed deal in Europe announced during the last quarter.
We closed another significant presumed deal.
I will provide a comprehensive report.
On over 50 building of our clients' assets.
Here again, they will use the platform for high quality and.
Inclusive client statements and reports.
This is exciting because this is another proof point that prism is allowing us to become the client reporting platform of choice.
As we continue to invest in R&D and our multi product strategy.
Very excited about the progress.
Turning to asset initiative has made in 2023.
Our focus on the alternative asset space has been instrumental.
And winning new logos and data.
Testament to that is the fact.
But in the last 12 months.
Approximately 40%.
Of the net ADR matter on our platform.
Has been alternative assets.
Based on feedback from our clients. We believe we are already delivering.
Best in class solution, but we are not satisfied.
We will continue to invest in this program as we seek to bring disruptive solutions for Lp's mortgages derivate of bank loans and other asset classes.
We have already integrated gap.
For the 11th largest global market into our platform.
And we are developing additional six basis, which will support our global Pos.
Finally, we are also investing in capabilities like insight and self service.
Which will likely bear fruit in 2024 and beyond.
A vast majority of our investments.
Have been focused on ensuring that the platform continues to scale across client segments.
Asset classes and geographies.
This has been very successful NBA.
And we expect to reduce the investments needed on that front as we close out 2023.
Next I would like to talk about the global opportunity.
In Q1, I personally spent time in Europe and Asia.
As our teams customers and prospects.
I was struck by the commonality of opportunities and issues.
Client base in this market.
If anything.
The diversity of the accounting standards and regulations.
Make the demand for our solution even more compelling.
The problems by exactly the same across markets and our platform has proven to be as capable of providing a disruptive solution in Europe and Asia.
As it has been in North America.
In support of this we appointed Scott Erickson as a chief revenue officer to lead sales globally.
Scott already lead dysfunction for North America, Asia, and now add Europe towards portfolio.
He has embarked on unifying our global sales organization.
Ensuring consistency in the approach.
Assets and messaging.
Our other operating functions.
Our already well globally.
So we take a lease operations.
And so it does lead technology.
This structure allows us to move faster and deliver informative.
As one clear water across the globe.
The integration of jumped technology is proceeding very well.
We have an excellent partner and then Manuel.
The jump technology founder and precedent.
And are working actively.
To provide a comprehensive solution for asset managers of all sizes and complexity.
Integrated technology sales and product teams have been working together since the beginning of the year.
Lastly, let me talk about the team.
We continue to hire across every office in line with the growth of the business.
In Q1, we expanded our return to office policy.
And my visit the different offices I'm inspired by the enthusiasm.
And collaboration that I see within our team.
And it only comes.
From being together in the office every day.
As I interact with the team I am continually pleased that our focus on building an outstanding engaged.
Shine through each person.
I'm very proud of this team and the passion and customer focus they bring to the office every single day.
With that let me turn it over to Jim to talk in more detail about our numbers.
Thanks Candy and.
And thank all of you for joining us I'm.
I am happy to report good Q1, 2023 result.
Let me start with the top line and the metrics that drive revenue.
In Q1, 2023, we delivered 20% year over year revenue growth.
Spike a macro market environment that certainly felt the impact from the challenges with regional banks, which happened to comprise approximately 2% of our revenues.
In Q1.
First quarter revenue was.
$84 6 million or $1 $6 million higher than we expected when we provided our guidance we were able to deliver this revenue and beat our guidance based on the successful and faster than anticipated onboarding of new client assets during the first quarter.
We reported annualized recurring revenue or <unk>.
End of the first quarter.
337, $4 million, an increase of 17, 5% year over year.
While we were heartened by the Reacceleration of growth in a R. R.
And the Q1 sequential growth of $13 $9 million, which was better than the first quarter of both 2022.
And 2021, we.
We won't be satisfied until returning growth to 20% plus.
As of March 31, 2023.
The gross revenue retention rate rounded to 97%.
Actually to be specific it was 97, 4%.
This was the first time that gross revenue retention dipped below 98% in 17 quarters.
And this was due to a confluence of churn related to acquisitions, among our corporate insurance and asset management clients in Q1 of 2023.
In general our clients are more likely the acquire but when our clients are not.
We will have our sales teams stay close to the acquiring company to be ready when they need better reporting.
In the first quarter net revenue retention remained the same as the prior quarter at 106%.
We were assured by this good number because it aligned with our expectations.
But of course, we strive to do better.
As we indicated last quarter.
We expect net revenue retention to remain near these levels as we build out our multi product offerings.
It's also worth noting.
We've made our new commercial model are de facto standard of contract.
And in this quarter essentially all of our new clients signed at base cost contract.
As a reminder.
The base plus contract framework includes a base fee for our prospective clients existing book of business.
Plus in incremental fee for increases in assets on the platform.
The base plus model includes annual increases in the base fee and enables us to charge additional fees for supplemental services or additional products should the client subsequently select to utilize those services.
This base cost structure has the effect of limiting the downside volatility and our asset based fees.
Over the next 90 days, we will rollout our new market specific offering bundles. This is an important next step in our journey to becoming a multi product company.
And we look forward to updating you on that initiative at our next earnings call.
Now.
Let's turn to our profitability results.
We reported $22 $5 million and adjusted EBITA.
And 26, 6% EBITA margin in the first quarter.
Solid results and better than our guidance based on the revenue beat and prudent expense management.
Gross profit in the first quarter was $64 $2 million and gross margin came in at 75, 9%.
Which is a significant improvement from the 74, 2% in the first quarter of 2022.
Gross margin continues to be robust, even as we continue to invest to build our global scale.
Research and development expenses in the quarter were $22 $7 million or 26, 8% of revenue an increase of $2 6 million from Q4.
R&D expenses include three months of jumped expense in Q1 compared to the single month in Q4.
Sales and marketing expenses in the quarter were $10 2 million, an increase of 18, 4% year over year and that equates to 12, 1% of revenues.
Sales and marketing expenses typically ramp up throughout the year as annual quota achievement bonuses are earned and there is more marketing spend in Q2 and Q3.
General and administrative expenses in the quarter were $8 8 million or 10, 4% of revenue an increase of $1 million from Q4 based primarily on the timing of professional services fees.
On a GAAP basis, there was a $6 $4 million increase in G&A expenses from Q4 to Q1 <unk>.
The primary driver of the increase.
Is the $3 3 million.
Of equity based compensation associated with the jump acquisition.
As well as a $1 3 million increase in equity based compensation to management.
And a <unk> $9 million increase in transaction fees associated with the secondary offering.
The Jamba equity based compensation was negotiated as part of the acquisition of <unk> technology.
Speaking of the jump acquisition.
Sandeep mentioned previously we continue the integration process have jumped in the first quarter and we are happy with the progress.
We've created joint teams to merge our development efforts and business functions and we are excited by the pipeline.
We see demand from our existing client base.
And with investment management prospects in North America that desire and end to end solution. In fact, we're also excited to announce that in early Q2, our first Clearwater client selected jumped technology to augment their clearwater solution with intra day portfolio management supported by chance.
Let's turn to the balance sheet and cash flow.
We ended the quarter with $256 $8 million in cash cash equivalents and investments and $49 $9 million in total debt.
Resulting in a net cash holdings of approximately $207 million.
During the quarter, we began investing our excess cash and fixed income securities for excess yield.
Perhaps it goes without saying but of course, our team is yet another happy user of the Clearwater system for our investment portfolio.
Free cash flow for the first quarter was $6 2 million representing year over year growth of 33%.
Free cash flow also included $1 7 million of capital expenditures.
EBITA to free cash flow conversion is lower in the first quarter of each year as we typically pay yearend bonuses and commissions.
Within the financing activities of the statement of cash flow you will notice that we used $7 $3 million to pay taxes related to the net settlement of shares.
We elected to net settle certain rsum and options to limit the dilution to shareholders from equity based compensation.
Now, let's turn to guidance.
On guidance for the second quarter of 2023.
We expect revenue to be $87 $5 million and adjusted EBITDA to be 22.
$8 million.
In Q2, we expect an adjusted EBITDA margin of approximately 26%.
For the full year 2023, we have increased the low end of the revenue guidance range from $361 million to $362 million and now expect revenue for the year to be in the range of 362 million to $364 million.
Which represents approximately 19% to 20% year over year growth.
The guidance, we provided previously for all other measures remain unchanged.
After another quarter of strong execution in Q1.
We look forward to continuing to Reaccelerate revenue growth by building on our leading competitive positioning with.
With further integration of John .
And the execution of our full multi product solution.
With that I'll turn it over to sandy to provide some closing thoughts.
Thank you Jim we appreciate your interest and Clearwater analytics.
We continue to be focused on execution and remain cautiously optimistic despite the macroeconomic conditions.
As always.
We've been relentlessly focused on our clients' long term success.
And supporting them as the benefit from a technologies powerful network effect.
With that let me turn it over to the operator for questions.
If you'd like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two again to ask a question. Please press star one as a reminder, if you are using a speaker phone. Please remember to pick up your handset before ask.
And your question.
We will pause here briefly ask questions are registered.
The first question comes from the line of Kevin Mcveigh of Credit Suisse. Please proceed.
Great. Thanks, so much and congratulations on just really really terrific results.
And the environment we're in.
Hum.
The full year guidance really good is there any impact in that guidance from those regional banks you highlighted I think you said about 2% of revenue.
Would it have been that much higher or are those clients kind of still there or just trying to get a sense sense about that just given some of the volatility we've seen.
Well. Thank you Kevin for the question. So Im just talking about regional banks, we just wanted to provide some perspective, so including as phebe.
Which we said earlier was about a point to point to the house it.
It is about our exposure to regional banks is about 3% of Anr.
So we don't really have much of an exposure there.
I also wanted to talk about those two specific cases, one is seb.
The reality is that they are a customer.
Ended up with first citizens Bank, who is also a customer.
So the impact on our business.
Isn't really that high.
The second one obviously is first Republic bank and here again.
The acquired by JP Morgan largely most of the assets were acquired by JP Morgan and again both of those are customers and we don't see them, having much impact on our operations. So when you think about guidance and you think about revenue in the year.
We think that impact is quite muted actually just given the size of our exposure to regional banks and the fact that the.
The impact that has on our revenue base is really going to be the method.
Terrific and then just really the gross margins were exceptional.
Maybe help us understand that a little bit and did jump helped or hurt those margins.
Sure.
Really jumps a pretty small piece of the whole puzzle Kevin So really what helped the gross margin was really the successful onboarding.
Faster than we expected of those clients. So as you think about it as we're onboarding clients, we're putting obviously, a disproportional amount of effort into getting them live and going and also to the extent that.
We were going to provide discounts we would do it during that Onboarding period, and so we see a nice lift from.
The onboarding onto what we call the steady state of the gross margin of our clients and that mix shift.
That helped with respect to that.
<unk>, then more than junk, particularly.
Great. Thanks.
The last thing I'll say about it is if you think about it.
I think it's too early to claim.
SaaS here, where we're not at the finish line on this but if you recall ever since we went public.
We've been making a concerted effort to really grow our global footprint expanding in Edinburgh, expanding in India, and expanding kind of in our client servicing model.
And I think we're starting to see we're still making investments there, but I think we're starting to see the maturity.
And we've been promising moving to that 80% gross margin over the long term and I think we're starting to see now it's not going to be a straight line just to manage your expectations.
But I think we're seeing.
The fruits of all of those lasers.
Totally agree thank you.
Thank you.
Next question comes from receipt deloria.
Of RBC. Please proceed.
Wonderful thanks, guys. So much for taking my questions nice to see continued resilience in the business.
Wanted to start by asking about prism, a little debt sandeep.
You've called out some pretty big deals with prism really great to see that that continued success there.
What do you think is kind of the end game with these customers who are on prism is it that they continue to expand and kind of stay there is there some sort of motion.
To get them to become full blown clearwater platform customers and potentially even bigger over time, maybe help us out.
Understand what is that glide path looks like and what's the potential with some of these customers and then I've got a quick follow up.
Thank you Rajeev for that question and frankly, its really rewarding for us this move to the multi product world I think.
Potent way to get to high MLR numbers, so I'm happy to discuss it.
Also the number of issues that the first product we invested in outside the core plus prison.
So it's not a surprise that presume has getting to maturity and then starting to see six figure deals seven figure deals. So we are really excited about where this could go.
So when you think about our vision for prism.
Is to be a timely reporting portal.
All functions a client wants to see.
So we tend to want to see all kinds of things, including comprehensive reporting they want to see analytics.
ESG they wanted to.
See the previous teams, which clients care about.
Although you might ask what is the size of this way could this be.
I was thinking receive that as we sort of think about $1 billion company.
We hope to get excited about ideas that are $50 million to $100 million of size things.
Things have to be at that level for us to get excited about delivering results over the next three to four years. So that's how we think about prism. We think is the furthest one along and we think it's starting to have a meaningful impact on the bookings we have every year.
Obviously, you know about alternatives and Thats. The next big one for us is.
When we think about LP is quite a bit with the word mortgages with things like bank loans and things like that and that is another source of.
All of the investments we are making.
And frankly really seen really really good success already I think I pointed out earlier wish you that.
40% of our net AUM growth.
In the last 12 months was from alternatives.
It just gives you a sense of how much.
Alternatives are helping us are capable of in alternatives.
Are helping us win new deals. So look I think we're quite excited about this move to multi products as long as you remember that this is still pretty early in terms of getting real revenue for anything outside prison, presumably starting to be a real source of revenue and the others are helping us.
Smaller deals, but also in terms of maturity.
Sorry for that long winded answer here, but this is one which I think is really important for the company as you think out.
About $2 billion in revenue.
No absolutely that's super helpful really appreciate all the detail.
Maybe I wanted to go back to thinking about the kind of banking crisis, we've seen.
Maybe from my seat it it feels like if anything this is illustrating more of the need for your solutions as companies need to have a better view into their investments into real time pricing. It's a better understanding risk is that something you've seen as you've been talking to both customers and prospects that there is just increased aware.
Turning off the need for these sort of solutions given everything thats going on or is there a way to get from your vantage point that you can leverage that is kind of event.
Just drive more demand.
So asset management, it's all people are buying right now as you know the asset management cost structure is a little bit of challenge. So it's very hard to go sell new things, but when it comes to.
The one growth is driven by governor electronic voting.
We announced as you know we announced what we did with UBS to come on line, We announced bank of America Private Bank, We also announced Merrill Lynch. So we actually see not just conversation but.
Wins and go lives with asset managers, and I think youre exactly right I don't think it's driven by and bank clients demanding more and more transparency more and more cash flow forecasting more and more risk forecasting. So really we think that that is a winner and we feel we.
You just have the right technology in terms of presume or being able to sort of really help our clients scale.
Our wonderful really helpful. Thank you so much.
Thank you.
Thank you. The next question comes from James Faucette of Morgan Stanley You May proceed.
Yeah.
Hi, guys, it's Michael on for James Thanks for taking our question.
Jim I think I heard you say that almost all of the incremental wins were on the new pricing model.
Is that right and if so can you sort of help put the guardrails in place as to the characteristics of a client that may be a better fit under the previous pricing model.
Yeah, I think it was I think the specific number was 96%. So we're talking about one deal and I would say that it is more a function of.
When we started the conversation with that client and show them the paper for the first time.
I'd love to I think everyone as in as were engaging with clients.
And talking about this model for the first time.
Folks are accepting it and moving forward with it and then probably a follow up is then what's happening with your existing clients and we continue we have an annual cadence, where we're talking about price increases and those sorts of things with clients and as those come around and we're talking to clients about.
About the option.
Round around base, plus but again.
We're past the importance of that within the existing client base and its just how we go to market going forward.
Understood that's helpful.
Maybe just on the on the Bank of America Private Bank deal, specifically I understand you you'd likely can't disclose what our particular customers ACB. So maybe just more generally could you could you sort of speak to how <unk> for some of your larger client wins have generally been trending over time.
So maybe let's not talk about that but last year.
We talked about.
Two mega insurers and obviously wins.
One in the third quarter and one in the fourth quarter of last year.
And obviously those are.
It's surprising for people to understand that those are seven figure deals, but we continue to see lots of six and seven figure deals and I think we're really excited about the pipeline.
For those Mega insurers in 2023, and we think that there is.
Theres more of those to talk about as we move throughout the year.
Yes, Michael I think it would be I think it's fair to say that when you think about asset managers.
So internally driven right now by how do they grow their business and that almost always is.
Superior client reporting analytics and more comprehensively, we can provide that the more digitally and otherwise the more they can sort of slice and dice the data.
And produce reports quickly I think that's what makes the difference so those deals tend to be bigger and there is sometimes start somewhat smaller and then add more and more book so.
We've seen that happen, but generally generally speaking the size of the BDC. So ive seen in the market continue to grow.
And you would expect that.
Perfect. Thank you both.
Thanks, Mike.
Thank you. The next question comes from Michael <unk> of Wells Fargo. You May proceed.
Hey, Thanks, it's David Unger filling in for Michael and I have just one for me.
Thought I heard your comments in the prepared remarks, just talking about reducing investments exiting the year.
Any areas in Opex that I have the best actually optimize near term maybe anything related to AI. Thank.
Thank you.
And so now you're one of my favorite topics. Thank you David for that question is really.
But two things David.
Yes.
But there was two things one is.
We obviously have gone from largely being focused in north America to grow into and to Europe and to growing into Asia.
So we have spent.
Really large share of our R&D dollars on that business are making it scalable and making a global.
But once you have built it then.
And then you don't have to keep building it right. So we do expect I think in the prepared remarks that towards the end of 2023 use and be able to take that investment down meaningfully right.
So that's what we think now will that also opened in 2023 currently none of it but by the end of 'twenty three we should be able to see much of that benefit start to flow through so that's what we think about about.
The R&D thing the second one is.
But we are really excited about.
Mmm can do.
<unk> language models.
Super helpful on the operation side.
Specifically reconciliation and aggregation it can be very helpful. In the cloud services side and what we do as you know is somewhat sophisticated.
It was not just answering the phone it is.
Understanding the accounting.
And therefore, <unk> can really help.
In making our teams much much more productive.
But it is a bit of a journey.
Is something which is exciting.
We want to really push on it we've been trying many many teams and the results in each one of those cases has been Wow is this possible and so again, it's too early to predict what we would go with it and what the financial impact would be but I do think it is a really interesting technology.
Which will which will also have quite a few markets.
Many many solution providers.
Thanks Sandeep.
Thank you.
Yeah.
The next question comes from Jackson Ader of SDB.
Mofette Nathan Please proceed.
Great. Thanks for taking our questions guys.
The first one is on the macro impacts we kind of keep talking about how it's a challenging macro environment and you mentioned some data.
<unk> management cost structure being a challenge. So can you just spell out what is the challenge and how is it impacting not asset.
Level for asset values, but impacting actually bookings.
Sure. So maybe Jackson welcome good to talk to you again.
So.
So maybe just maybe maybe why don't I do this why don't I talk about how I'm thinking about it and then Cindy can talk about how it's how it's impacting bookings if at all.
And there is multiple directions, there, but I think the simplest way to think about it is right hey, we're starting to Reaccelerate, our IRR at 17, 5%, that's still not 'twenty, but if you historically go back to 2021, right. We were averaging NR of kind of $1 10.
Right and and these last two quarters, we've been at 106, and we trust even below that.
So you can see kind of.
That impact kind of flowing through right and so that's kind of a quantitative way that we are observing some of that market disruption.
We still see.
The path to $1 15, and further aspirational eight is is through the multi product strategy and we think we've done a lot with the commercial model to mitigate those risks about that but let's just be clear.
It's different.
And that's about four points different.
In Indiana.
But I think thats, the easiest way to see kind of some of that.
Flowing through.
As it relates to bookings I think theres definitely.
Pros and cons.
Just kind of speak to that.
So Jackson.
Big question, So I'll try and answer a couple parts of that one is what about the macroeconomic why do we keep saying it while we mostly keep saying it because all of you keep saying right.
Just a watchful because.
Everybody keeps talking about.
The macroeconomic environment and we are concerned we are very watchful about it but as you noticed our revenue guidance is largely unchanged.
Our earnings guidance is largely unchanged and therefore, we just simply going to continue to execute till we see something change on the demand side or on the book.
Until we see that we are just going to continue to sort of execute to our plan.
Being somewhat cautious making sure that we're not.
Youre optimistic about something.
Specifically on demand, though if you just talk about just demand botox.
I would like to say one is.
Basically nothing has really changed its not like there is a change in the competitive environment. So that's point number one point number two is that.
We really see very good momentum.
And Mega cap insurers.
We closed two large mega cap insurers last year.
We have.
Good confidence that we'll continue to do that and better this year, so that feels really good.
So when you think about asset managers.
Quite excited that we won.
Banco ramp up our bank and we also are more linked to this quarter and so that.
That feels really good from a asset management point of view.
Europe is doing.
Reasonably well it sounds like the last quarter with the number of deals this year this quarter by me.
We talked about Dave.
Announced two cros.
Cross sell deals and so thats always.
Encouraging when you do an acquisition.
<unk>.
So we feel like we've got demand the way you expected is it better than me talk node is not is it what our plan is yes, we seem to be close to plan and Thats, how we define publicly.
How do we think about the year right now.
So you've got a really long answer that.
Four.
Yeah, Yeah, no. That's that's helpful. I'll sneak just one more quick one in.
So it sounds like then.
The guidance for the most part for the year unchanged I mean should we think about it.
Maybe upping kind of your coverage for the rest of the year rather than.
Kind of a really good first quarter, but now we're feeling worried about the rest of the year.
So Jack.
Jackson.
Our next one is.
There.
The Onboarding that got completed in Q1 and were strong we were we were planning for them to come online.
So there is some some obviously there has helped in the quarter, but then how does that flow through to the year.
It was it wasn't like.
It came out of nowhere the other thing I would say is just to be honest people gave me a little stick about hey, the second half of the year looks looks quite ambitious and now maybe it doesn't look as ambitious after we delivered the first quarter.
And you can interpret that from.
Got it.
From a coverage perspective, how you wish.
Okay cool.
Noted thank you.
Hey, Jeff.
Yeah.
Thank you. The next question comes from Gabriela Borges.
Of Goldman Sachs You May proceed.
Good afternoon. Thank you Sandeep I'll follow up on your comments on the momentum and Mega cap insurance maybe.
Maybe give us a little bit more color on how youre prioritizing the sales team go to market and then sometimes they're in.
When you look at the wins and Mega cap insurance.
How much do the tightening is occurring you are cycles matter.
I imagine that your sales team has a pretty good answer.
Which which contracts are for annual one of the largest customer and maybe give us a little color on how you see that progressing over the next 12 24 months. Thank you.
Yes.
Sure. Thank you for the question I think Youre exactly right I think what's happened is that.
Last year, we announced two mega deals and I think that has really helped.
Go to market.
Literally all 25, thank you.
Laid out we know exactly when the contracts are coming up in other pain points, we know what they're concerned about some are concerned about alternatives somewhat concerned about the ability to report on risk. Some are concerned about the ability to do audits correctly. So there is a whole list of key endpoints. If you will but we also fully aware of when their contracts.
So coming up for renewal.
I've got to sit with the first time in the last five years the inbounds.
Are people, saying, hey, it was a nationwide <unk> rapid.
So we have had been very happy to have inbounds.
All of the Mega insurers.
Have active marketing campaign going on as we speak now some of them are now going to convert the photo here. Some may be next year. Some this year. So we feel really good about.
Our position and our value proposition for the major insurers and.
We expect to.
When many more than our fair share I think and to your point on the GCN caveat backup.
Backup in 2021, we carved out.
Yeah, Hi team.
Including some great salespeople, and and and and and they got to work in 2021.
And the fruits of those labors came to fruition in 2022.
And now we're seeing that working so a lot of these investments.
Yes.
Had been put in place and it's great to see the fruition of that Mega cap, we're making those same investments globally.
So these are elephant hunters as you must have seen another company. This will not somewhere you can go sell a $1 million deal and also for elephant. So this organization to London focuses on Mega Mega cap insurers do only dose. So they don't look at half a million dollars and $1 million deals. We're looking at several million dollars.
To make it to their pipeline, which really is the top 25 large mega insurers.
That makes sense. Thank you.
Thanks, Kevin.
Okay. Thank you. The next question comes from Dylan Becker of William Blair You May proceed.
Hey, gentlemen, nice job here, maybe sticking with kind of some of that similar commentary I think Jim you made a notes around kind of market specific bundles.
And kind of domain expertise specialization, maybe rolling into the back half of the year, but how do you see that kind of playing out from a sales efficiency reference ability standpoint.
Kind of moving forward some of these cross sell efforts and maybe also benefiting from a streamlining perspective, and some of that accelerated onboarding capability you talked about.
Alright, Thanks, Sterling and thanks welcome.
Wow.
So I think the first thing to remember is even though our commercial model in our bundles are there we still have that single.
We saw the benefits of a single platform.
And.
The single Global security model that we have.
I think as it relates to some of the go to market activities, we talked about the peanut.
I got a team that we started investing in it in 2021, we have a team that is solely.
Focus on those banks out at.
And we've seen lots of success with them delivering on the alternatives.
Solutions. So so when you think about kind of what are the alternatives sure Youre already accounting for your Lps and your other alternatives, but maybe you want to.
Look through and see what the underlying Saar.
And understanding that that's the next level of detail, but we have a solution for that as well and so how do we then.
We have a team that's been.
Going to market and and delivering on that and we see kind of as all of these build outs.
Throughout the year and both kind of.
The product maturity occurs.
Market momentum occurs where we have more and more reference for clients and then we have the team in place to try and deliver for that.
Got it that's super helpful and maybe going back to.
The topic of kind of AI outside of kind of maybe some of the internal optimization capabilities I think sandeep you, maybe even mentioned.
The capabilities and opportunity on the insights offering right you have six five trillion almost across the platform that gives you a very unique perspective to deliver value for customers, but how are you thinking about emphasizing that on the R&D side and kind of prioritizing that.
Support some of those expansion initiatives, maybe not maybe not as much in 'twenty, three but but longer term there as well thanks.
Yes sure.
So look we continue to obviously make investments for growth.
2024, and 2025 and some in 2006 and I do believe one of the most exciting one is insights and that is actually being run directly by June <unk>.
A dedicated team, which is going to be focused on this and all we're trying to do is derive insights which are helpful to our clients now the good news is the clients are always coming to us already.
Looking for insights Hey, how did I do against the industry and things of that nature, and we feel that we're in exactly the right spot to do it because you have a similar to multi tenant platform how to amortize. This hardware report on that what kind of things are needed for this so we do have just the nature of the platform.
Allows us to provide that input to our clients. So how do we do with.
Organized fashion, which is monetize them is something that we're working on very actively but I don't think youll get any revenue from that in 'twenty, three and perhaps even the first half of 'twenty four but two to three years out, but we do think it'll be it'll.
It will be a really important part of tier one.
Got it very helpful. Yes, definitely an exciting long term opportunity. Thanks again guys.
Thank you.
Yeah.
Thank you. The next question comes from the line of Brian Schwartz of Oppenheimer. You May proceed.
Hey, this is Ari Friedman sitting in for Brian Schwartz I was wondering if you could talk about a little bit about the demand you're seeing internationally.
I guess like today in comparison to prior quarters.
Thank you.
Yes, so look I think firstly, just the facts related to the international revenue. This year. This quarter pardon me was 17% versus Q1 of last year. So international continues to grow really nicely and quickly for us I do think the largest once we see our.
In the insurance space in Europe .
Sales volumes, but by far.
The largest.
Pipeline those deals tend to be large so these are not.
Implemented in all the million dollar deals tend to be.
Tend to be large deals and large opportunities.
Before they take work, but if I want to just talk about demand and revenue success. It is in large insurers in Europe .
Really really nice win in Asia, which kimberlite.
And the last quarter. So I think that is what I would point to is the largest one asset management is the other one which is doing well in Europe .
To do much with that an Asian physical vision, a little bit further behind compared to Europe .
It helps them you would add to that I'd say as I think international the one thing that still.
Still coming to fruition I think thus far we've had success cross selling jump within our North American client base and we have a few joint opportunities internationally as well that comes together and.
It's still early days, there, but we clearly see demand.
So that combined offering.
Alright, thank you.
Yeah.
Thank you.
Thank you so much.
Thank you. The next question comes from noon Kim of loop capital markets. You May proceed.
Congrats on a solid quarter in your prepared remark you mentioned that some of the revenue upside in the quarter was driven by the faster.
Faster onboarding.
Just curious on whether that was a more customer specific situation or is that some process improvement.
And going forward.
I just like to think it is a little bit of both I think we executed flawlessly on quarter. One. So just the team was able to do a good job with a whole host of clients and Thats why in my prepared remarks, I said concurrently we seem to be.
Able to deliver multiple programs. So we think we're really excited about that.
So have.
A separate program, which investigate how we onboard.
It takes time and what technology can be used to compress that time right. So that is a 18 month program and that is also bearing fruits in terms of how the assortment of time make sure. Your level of accuracy is high in the first time round. So I think it's a little bit of both and frankly very excited about the <unk>.
Loading capability and Thats why in my prepared remarks has started with that because I do think it's a it's a gift.
It gives customers a lot of confidence when we can onboard them quickly and they talk about that to other clients and other prospects and that just sort of hopes.
Our skill.
Okay, Great and then just a just one second.
And then just curious on.
Given the current uncertainty in the banking industry.
Has your go to market motion changed or introduce some steps to kind of take advantage of the situation.
Are you seeing a lot more inbound interest or even the velocity of your.
Deals at the top of the funnel improving outlook.
As a result.
So two things just on the current funds we have.
The intensity with which client services is engaging with them is much higher so we want to stay very very close with them. That's one for the clients that are somewhat impacted I think we were speaking in the prepared remarks Ed.
We have tried to do everything we can.
So don't just take care of their potential needs, but also indirect clients of those for example, we were talking about the SCB and the Suntrust SCB.
The 2000 clients they have.
Using let's say order platform, so we think that getting that.
Focusing on those clients rating is important just on the demand environment I do see them.
On the systems, we having with asset managers has definitely increased and we did announce.
Due to large and meaningful wins in Q1, and the asset management space.
<unk> Bank of America private bank and also.
And also Merrill Lynch for the ultimate excited to announce that UBS on the client servicing side on the client reporting quarter pardon me.
In Q1, so you are really exciting.
Growth in the asset management business.
Okay, great. Thank you so much.
Thanks very much.
Okay.
Thank you there are currently no additional questions registered at this time, so I would like to pass the conference back over to the management team for any closing remarks.
Yes, I just wanted to thank all of you for your interest in pure water, we try to build something special here and your enrollment with doses. So very much appreciate it. Thank you.
Goodbye.
And with that we will conclude today's call. Thank you for participating you may now disconnect your line.
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