Q4 2023 Clearwater Analytics Holdings Inc Earnings Call

Operator: Good day, everyone. Thank you for standing by. Welcome to Clearwater Analytics' fourth quarter 2023 earnings conference. During today's presentation, all parties will be in a listen-only mode.

Good day, everyone. Thank you for standing by welcome.

Welcome to Clearwater analytics fourth quarter 2023 earnings conference call.

During todays presentation, all parties will be in a listen only mode.

Operator: Following the presentation, the call will be open for questions. I would now like to turn the call over to Joon Park, Head of Investor Relations at Clearwater Analytics. Joon, please go ahead.

Following the presentation the call will be opened for questions.

I would now like to turn the call over to June Park head of Investor Relations at Clearwater analytics. Zhu. Please go ahead.

Joon Park: Thank you and welcome everyone to Clearwater Analytics' fourth quarter and full year 2023 financial results conference. Joining me on the call today are Sandeep Sahai, Chief Executive Officer, and Jim Cox, Chief Financial Officer. After their remarks, we will open the call to a question and answer session. I would like to remind all participants that, during this conference call, any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1992. Expressions of future goals, intentions, and expectations, including in relation to business outlook, future financial and product performance, and similar items, including without limitation, expressions using the terminology may, will, can, expect, and believe, as well as expressions which reflect something other than historical facts, are intended to identify forward-looking statements. Such forward-looking statements involve a number of risks and uncertainties, including those discussed in the risk factors section of the filings with the SEC

Thank you and welcome everyone to Clearwater analytics fourth quarter and full year 2023 financial results Conference call. Joining me on the call today are sand needs to high Chief Executive Officer, and Jim Cox Chief Financial Officer.

After their remarks, we will open the call to a question and answer session.

I would like to remind all participants that during this conference call any forward looking statements are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.

Expressions of future goals intentions and expectations.

Including in relation to business outlook, future financial and product performance and similar items, including without limitation expressions using the terminology may will can expect and believe in.

And expressions, which reflect something other than historical facts are intended to identify forward looking statements.

Forward looking statements involve a number of risks and uncertainties, including dose discussed in the risk factors section of our filings with the SEC.

Joon Park: Our show results may differ materially from any forward-looking statement. The company undertakes no obligation to revise or update any forward-looking statement 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 statement included in our earnings press release.

Actual results may differ materially from any forward looking statements.

Company undertakes no obligation to revise or 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 included in our earnings press release.

Joon Park: Before the market opens tomorrow morning, we plan to file with the SEC a Form 10-K for the fiscal year ended December 31st, 2020. 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 30, 2022, unless otherwise noted. A reconciliation of gap results can be found in the earnings press release that we have posted on our investor relations website. With that, I'll turn the call over to our Chief Executive Officer, Sandeep Sahai. Thank you, June, and thank you all for joining us.

Before the market opens tomorrow morning, we plan to file with the SEC a Form 10-K for the fiscal year ended December 31 2023.

Lastly, all metrics discussed on this call are presented on a non-GAAP or adjusted basis and include the results of jumped technology since the acquisition on November 30th 2022, 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. So hot.

Thank you Joe and thank you all for joining us.

Sandeep Sahai: Let me start by saying that I'm incredibly proud of what we have achieved as a company over the last five years. We are on a mission to be the world's most trusted and comprehensive technology platform that simplifies the entire investment management lifecycle and eventually revolutionizes the world of investment. While we are very ambitious, we want to build a durable business that grows consistently while improving Unit Economics, Margin, EBITDA, and Cash. That's why 2023 was a great year. Revenue grew 21.3%, and gross margin was 139 basis points better than the previous year. Adjusted EBITDA was 203 basis points higher than the previous year.

Let me start by saying that I'm incredibly proud.

Well, what we have achieved as a company.

Over the last five years.

We are on a mission to be the world's most trusted and comprehensive technology platform that simplifies the entire investment management lifecycle.

And eventually revolutionize the world of investing.

While we're very ambitious we wanted to build a durable business.

That grows consistently.

While improving unit economics margin EBITDA and cash flow.

That's why 2023 was a great here.

Revenue grew 21, 3%.

Gross margin was 139 basis points better than the previous year.

Adjusted EBITDA was 203 basis points higher than the previous year.

Sandeep Sahai: And finally, cash flow for the year increased by 57.2%. We have often talked about the power of a single instance multi-tenant platform and the network effect it produces. But growth in Europe, and then in Asia.

And finally our.

Our cash flow for the year increased by 57, 2%.

We have often talked about the power of a single instance, multi tenant platform.

And the network effect it produces.

But the growth in Europe.

And then in Asia.

Sandeep Sahai: And finally, new asset classes have masked the true impact. We're delighted to note that in 2023, we grew our revenue 21% without adding a single net new employee to our operations team. Reflecting the True Power. The Network Effect. Aided by Jenny.

And finally, new asset classes have mask the true impact.

We are delighted to note that in 2023.

We grew our revenue 21%.

Without adding a single net new employees to our operations team.

Reflecting the true power.

The network effect.

Aided by Jimmy I.

Sandeep Sahai: We have always insisted that it was not just about cost efficiency. Clients would be happier because the network effect made our data better, and they would get the data fast. No surprise then that even though we did not add any operational headcount, we grew NPS, and improved our Employee Satisfaction Score. Finally, we are taking the Gen-AI power technology we have been using internally to a custom.

We have always insisted there.

It was not just about cost efficiency.

Clients would be happier.

The network effect made our data better.

And they would get the data faster.

No surprise then.

That even though we did not add any operational head count.

We grew N P S.

And improved employee satisfaction score.

Finally.

We are taking the journey AI powered technology we.

Have been using internally.

To our customers.

Sandeep Sahai: And we launched Clearwater's Intelligent Console this month. Clearwater's success starts with disruptive technology. AttaCore, We believe that the level of complexity across the investing world is incredibly high and is a moving target. The emergence of new asset classes, new geographies, new rules and regulations surrounding investments, And finally, regulatory reporting, all continue to add to complexity. You simply cannot solve this effectively with Batchwork Legacy Technology.

And we launched clear waters intelligence console this month.

Clearwater success starts with disruptive technology.

At our core.

We believe that the level of complexity across the investing world is incredibly high.

And it's a moving target.

The emergence of new asset classes.

Yagur fees.

Rules or regulations surrounding investments.

And finally regulatory reporting Hello.

Continue to add the complexity.

You simply cannot solve this effectively.

With patchwork legacy technology.

That is why we believe that our prospects.

Sandeep Sahai: That is why we believe that prospects need to move to a modern technology like Clearwater, and our platform, which is truly disruptive, has never been more ready to scale. We completed the transition to the public cloud in less than a year, with little to no disruption to the operating teams or clients, thereby meaningfully altering our ability to scale the business. And because it is a single instance multi-tenant platform, there is no migration.

To move to a modern technology like.

Clearwater.

And our platform.

Which is truly disruptive.

Has never been more ready to scale.

We completed the transition to the public cloud in less than a year.

With little to no disruption to the operating teams of clients.

Thereby meaningfully altering our ability to scale the business.

And because.

It is a single instance, multi tenant platform.

There is no migration.

Sandeep Sahai: All, not most, but all of our clients are automatically on the public cloud. Let me pause here. For much of our industry, such a migration would have been a multi-year endeavor. Not for us, because we are a single-instance, multi-tender platform. Make no mistake, this endeavor took much of last year and involved more than half of the R&D team. With that completed... We are really excited that we can now devote more than 60% of all R&D capacity to growth-related product development. And while new products take some time to build, and Kick2Market.

Paul.

Not most but all of our clients are automatically on the public cloud.

Let me pause here.

For much of our industry.

Subtle migration would have been a multi year endeavor.

Not for us because we are a single instance, multi tenant platform.

Make no mistake this endeavor.

Much of last year and involved more than half.

Of our R&D team.

With that completed.

We're really excited that we can now devote more than 60% of all R&D capacity.

The growth related product development.

And while new products take some time to build.

And take to market.

We have the track record with Prism and L. P X the show that we know how to innovate effectively.

Sandeep Sahai: We have the track record with PRISM and LPX to show that we know how to innovate effectively. Look at the journey towards NRR 115 as an incredibly strategic endeavor, and investing in new products that we deliver to our current customers is absolutely integral to our plan. More specifically, we are working jointly with our customers to innovate in five different areas. Number one.

We view the journey towards N around 115.

As an incredibly strategic endeavor.

And investing in new products that we deliver to our current customers is absolutely integral to our plans.

More specifically, we are working jointly with our customers to innovate in five different areas.

Number one.

Sandeep Sahai: Investment Data Consolidation, which includes our Clearwater Prism product, which offers a centralized hub of investment data, which can then be used for client analytics and reporting, thereby helping our clients grow fast. An example is a win with a large private investment firm. They were struggling with custodial feeds, reconciliation, and accurate tax slot data, and wanted a holistic view of the custody, brokerage, and alternative asset act by pulling data from their accounting system, their CRM, and their general ledger. We proved that Clearwater's combined offering of an accounting platform and a next-gen investment data hub has the capacity to make the business much more efficient and competitive. Number two, asset class and fund expansion, like a Clearwater LPX and MLX product and other solutions that allow clients to dive deeper into those assets and analyze the underlying assets in much greater detail. Let me give you some real-life examples for Q4. We have continued to win LPX and LPX Clarity Leagues. As you know, late last year, we launched Clearwater MLX, a comprehensive all-in-one solution for mortgage loan investors.

Investment data consolidation.

Which includes all three of what our prism product.

That offers a centralized hub of investment data.

Which can then be used for client analytics and reporting.

Thereby helping our clients grow faster.

An example is a win with a large private investment for them.

They were struggling with custodial feeds reconciliation and accurate tax slot data.

And wanted a holistic view of their cost to the brokerage and alternative assets.

My pulling data from their accounting system, the CRM and the general Ledger.

We proved that to what is combined offering offered accounting platform and.

Our Nextgen investment data hub has the capacity to make the business much more efficient and competitive.

Number two asset class and fund expansion.

Like our Clearwater L P X and <unk> products and other solutions that allow clients to dive deeper into those assets.

And analyze the underlying assets in much greater detail.

Let me give you some real life examples for Q4.

We have continued to win LPX LPX clarity deals.

As you know late last year, we launched Clearwater MLS.

Comprehensive all in one solution for mortgage loan investors.

In 2023, we partnered with one of our REIT clients.

Sandeep Sahai: In 2023, we partnered with one of our REIT clients, who is now transitioning the business purpose loans to MLM. Before choosing Clearwater, this client struggled with a competing product that couldn't handle draws on construction loans. After reviewing the available solutions in the market, they opted for Clearwater MLX. And we are delighted to count them as another satisfied Greek class. Number three, a front and middle office solution that allows customers to get a full front to back solution from Clearwater in a modular architecture by including Clearwater Core. Jump, Performance Plus, and Rest. This opens up new time within and outside our current customer base. An example of this is a recent win with CCR, a leading reinsurer in Europe, that selected Clearwater's platform for the entire investment lifestyle. Number four.

Who is now transitioning the business purpose loans to MLS.

Before choosing Clearwater.

This client has struggled with a competing product.

That couldnt handle draws on construction loans.

After reviewing the available solutions to the market the.

We opted for Clearwater MLS.

And we are delighted to count them as another satisfied REIT client.

Number three <unk>.

And middle office solutions that allow customers.

To get a full front to back solution from Clearwater.

In a modular architecture by including Clearwater core.

Jump performance, plus and risk plus.

This opens new Tam within and outside our current customer base.

An example of this is our recent win with TCR.

<unk> is a leading reinsurer in Europe.

That selected tier where does platform called the entire investment lifecycle.

Number four.

Sandeep Sahai: Platform innovations that provide our existing clients specialized add-on modules for their accounting and reporting needs. These include region-specific, country-specific gap accounting, customized data feeds, and Toolkits that Support a Client's Unique Period-End Closed Equipment Number five, new frontiers that allow us to apply advanced technology like generative AI and machine learning to the investment world, both for internal benefit and for clients. These solutions take the manual work out of things like book yield calculations, perform income validations, verify long-term procedures are correct, and more.

Platform innovations that provide our existing clients specialized add on modules for that accounting and reporting needs.

These include regional specific country specific GAAP accounting.

Customized data feeds.

And toolkits that support our clients' unique period and closed requirements.

Number five.

New frontier that allow us to apply advanced technology like generative AI.

And machine learning.

So the investment World, both Brian total benefit.

And for client to us.

These solutions take the manual work out of things like book yield calculations.

Form income validation verify long term procedures are correct and more.

You can think of this as the intersection of process and technology.

Sandeep Sahai: You can think of this as the intersection of process and technology that empowers people to move faster while still ensuring quality. And while it is early days for the innovative products we are bringing to market, there are some very good initials.

That empowers people to.

To move faster, while still ensuring quality.

And while it is early days for the innovative products, we are bringing to market.

There are some very good initial signs.

Sandeep Sahai: Let me begin with a leading insurer in North American insurance. This client is an excellent example of successfully integrating the Clearwater platform with our Jump OMS solution to provide a comprehensive platform. During the search for an OMS to comply with new regulations mandating a T plus one trading system, this insurer evaluated other solutions in the industry.

Let me begin with a leading insurer in the North American insurance market.

This client is an excellent example of successfully integrating the play of what a platform with a jump Oems solution to provide a comprehensive platform.

During the search for and Oems to comply with new regulations mandating a T plus one trading system.

This insurer evaluated other solutions in the industry.

Sandeep Sahai: The Clearwater Jump OMS proved how it can optimize each step of the trade workflow, specifically with our accounting system as an ideal connection point. We met all the requirements for this insurer, instilling the confidence and trust necessary for them to partner with us. Another example is the progress we have made in the stable value of funds domain and Q4, a global investment management firm operating with fully homegrown systems, causing significant strain on the IT resources and the manual work from the operations team. With the rapid expansion into new contract types, asset classes, and clients, the teams operated on different platforms and relied heavily on email for Data Exchange. The front office group lacked insight into the underlying investments of their contract, hindering the ability to evaluate new potential strategies and differentiate themselves in the market.

The Clearwater jump Oems proved how it can optimize each step of the trade workflow.

Specifically without accounting system is an ideal connection point.

We met all the requirements for this and sugar instilling the confidence and trust necessary for them to.

To partner with us.

Another example is the progress we've made in the stable value funds domain.

In Q4.

Global investment management firm.

Operating with fully homegrown systems.

They are significant screen on the ITV sources and the man will work from the operations team.

With the rapid expansion into new contract types asset classes and clients.

The team's operated on different platforms and relied heavily on email.

Well data exchange.

The front office group.

<unk> insight into the underlying investments of their contracts.

Hindering the ability to evaluate new potential strategies and differentiate themselves in the market.

Sandeep Sahai: The back office team struggled to meet the demands of the front office group in a timely manner, resulting in a flood of emails reaching issuers, sub-advisors, internal trade desks, fund accountants, and other stakeholders. Clearwater provided the best in class solution they needed. Both teams now operate on the same system, enabling easy access to data for end users and significantly reducing the strain and risk across the organization. A client sought a vendor whose platform would become an industry gold standard, and they identified Clearwater as precisely that. Our ability to showcase a stable value product capable of supporting front, middle, and back office functions outperformed other competing products they evaluated. In Q4, a leading retirement and life insurance company chose Clearwater to Power an Automated Solution for the European Taxonomy Report, thus fulfilling its ESG reporting requirements. This client is working with Clearwater to integrate the new data set, including non-native Clearwater ABAR portfolios, and further streamline the client's ESG reporting process. Clearwater Prism, Ingest, Portfolio Data, including separate account investments not on Clearwater, and Richard Witt, with ESG data, RUNS calculation, and Generates a Required ESG Deposit.

The back office team struggled.

Meet the demands of the front office group in a timely manner.

Resulting in a flood of e-mails, reaching insurers sub advisors internal trade desks fund accountants and other stakeholders.

Clearwater provided the best in class solution they need it.

Both teams now operate on the same system.

Enabling easy access to data for end users.

And significantly reducing the strain and risk across the organization.

Our client sort of window, whose platform would become an industry gold standard.

And they identified two water is precisely that.

Our ability to showcase our stable value product capable of supporting front.

Middle and back office functions outperformed other competing products they evaluated.

In Q4, a leading retirement and life insurance company chose Clearwater.

To power an automated solution for the European taxonomy reporting.

Thus fulfilling its ESG reporting requirements.

This client is working with the Clearwater to integrate the new datasets.

Including non native Clearwater ABR portfolios.

And further streamline the client's ESG reporting process.

Clearwater Prism ingests portfolio data.

Including separate account investments not unclear water.

And witches it with.

With ESG data runs calculation.

And generates a acquired ESG reports.

Sandeep Sahai: The client is very pleased with our world-class Fine Services Team, and we consistently demonstrate the agility and commitment to address our client's custom requirements, thereby achieving the goal. Looking ahead, we want to do the following. Number one, focus on innovation leading to increased back-to-base sales, and thereby continue to make progress on a path towards NRR 150. We're investing heavily and expect to see some results in 2024 and a more robust return on investment in 2025. Second, grow our presence in Europe and Asia more aggressively. Towards that end, we are excited to welcome Keith Viverito to our executive team. Keith has a deep understanding of the industry, has over 20 years of experience in high-growth companies serving financial markets, and is a perfect fit to lead Clearwater's expansion internationally in EMEA and APEC.

The client is very pleased with our world class.

Client services team and.

We consistently demonstrate the agility and commitment.

To address our clients' customer requirements, thereby achieving the goals.

Looking ahead, we wanted to do the following.

Number one.

Our focus on innovation, leading to increased back to base sales.

And thereby continue to make progress on our path towards an hour or $1 15.

We are investing heavily and I expect to see some results in 2024.

And a more robust return on investment in 2025.

Second grow our presence in Europe, and Asia more aggressively.

Towards that end, we are excited to welcome Keith with retail to our executive team.

He has a deep understanding of the industry.

Has over 20 years of experience in high growth companies selling financial markets.

Sandeep Sahai: Number three, investment accounting technology accounts for roughly one BIP client spend, and we want to add capabilities and products that allow us to address the other three, which constitutes a full investment management space. To help that transition, we are very happy to welcome Shane Aykroyd to our team.

And it's a perfect fit to.

Leave Clearwater is expansion internationally in EMEA and APAC.

Number three invest when the counting technology accounts for roughly one big client spend.

And we want to add capabilities and products.

That allow us to address the other three bps.

Which constitute yourself full investment management space.

Sandeep Sahai: Shane is our Chief Strategy Officer and as we grow the market, and then IHS market, and finally S&P, to Organic Growth and M&A, focus on continued operational excellence via increased use of Gen-AI. As a summary, we continue to delight our customers and are grateful for the trust they have in us. We have an exciting multi-product roadmap along the five vectors I just described. We have a team of industry experts who ensure our client success.

To help that transition, we're very happy to welcome.

Seen acaroid to our team.

C N as a chief strategy officer and has helped grow market.

And then IHS markit.

And finally S&P.

Through organic growth and M&A.

Fourth.

Focus on continued operational excellence.

We are increase views of journey II.

James S. Cox: And we are capitalizing on the latest technologies to improve both our internal operations and deliver unparalleled scale and growth opportunities for so many critical companies around the world. With that, I'd like to turn it back to Jim to cover our detailed metrics and guide. Thanks, Sandeep. And thank you all for joining us.

As a summary, we continue to delight, our customers and are grateful for the trust they have in us.

We have an exciting multi product roadmap.

Along the five vectors I just described.

We have a team of industry experts.

Who ensure client success.

And we are capitalizing on the latest technologies.

James S. Cox: On the heels of Q3 strong results, I'm happy to report robust results where we beat guidance on the top and bottom line for both Q4 and the full year 2022. Full year revenue grew at 21% year over year while expanding margin with Q4 EBITDA margin at 30.3% and full year EBITDA margin at 28.8%, which was higher than the prior year's full year EBITDA margin by 200 Basin. At our Investor Day, we announced our plan to expand EBITDA margin by 200 basis points in 2024 and by another 200 basis points in 2025. We expect to over-deliver on this margin expansion by delivering over 31% EBITDA margin for the full year 2024. Now turning to revenue in the quarter and full year 2023 results.

To improve both our internal operations.

And deliver unparallel scale and growth opportunities for so many critical companies around the world.

With that I'd like to turn it back to Jim to cover our detailed metrics and guidance.

Thanks, Sandeep and thank you all for joining us.

On the heels of Q3's strong results I'm happy to report robust results, where we beat guidance on the top and bottom line for both Q4 and the full year 2023.

Full year revenue grew at 21% year over year.

While expanding margin with Q4, EBITDA margin at 33% and full year EBIT margin at 28, 8%.

Which was higher than the prior year's full year EBIT margin by.

200 basis points.

At our Investor Day, we announced our intent to expand EBIT margin by 200 basis points in 2024 and by another 200 basis points in 2025.

James S. Cox: In 2023, we're proud to have delivered year-over-year revenue growth of 21.3%, with full-year revenue of $368.2 million, despite the challenging macro environment in the overall FinTech industry. In Q4 2023, we delivered $99.0 million in revenue, which translates to 19.8% year-over-year revenue growth. In addition, our clients continue to remain with us with a world-class gross retention rate of 98%. This really reflects our best-in-class customer satisfaction. We have achieved this 98% gross retention for 19 out of the last 20 quarters. Our path to NRR 115 is based on our solid as bedrock Gross Revenue Returns. Although the 98% is so routine for us that it's not really newsworthy, these gross retention numbers are truly exceptional across any business.

We expect to over deliver on this margin expansion by delivering over 31% EBITA margin for the full year 2024.

Now turning to revenue in the quarter and full year 2023 results.

In 2023, we're proud to have delivered year over year revenue growth of 21, 3%.

With full year revenue of $368 $2 million.

Despite the challenging macro environment in the overall <unk>.

Tech industry.

In Q4, 2023, we delivered 99.0 million in revenue, which translates to 19, 8% year over year revenue growth.

In addition.

Our clients continue to remain with us with a world class gross retention rate of 98%.

This really reflects our best in class customer satisfaction.

James S. Cox: Our net revenue retention rate continued to remain healthy at 107 as of December 31, 2023, which is higher than last year's 106. Heading into 2024, we continue to be focused on our path towards an NRR of 115 or beyond through the upsell of new products and modules to existing clients. The successful rollout of Clearwater LPX, MLX, PRISM, and the jump solutions in 2023 has been a good harbinger of our pathway to the NRR 115 level. And now that we have allocated more than 60% of our R&D capacity for growth. We look forward to reaping the rewards of additional upsell capabilities in the future, also in 2023. We have set the foundation for our go-to-market strategy to more efficiently upsell our product offering. And our clients are excited about Clearwater's dynamic ability to meet their specific needs in an ever-changing investment world.

We have achieved this 98% gross retention for 19 out of the last 20 quarters.

Our path to NR or $1 15 is based on our solid as bedrock.

Gross revenue retention.

Although the 98% is so routine for us that it's not really newsworthy.

These gross retention numbers are truly exceptional across any business.

Our net revenue retention rate continued to remain healthy at 107 as of December 31, 2023.

Which is higher than last year's 106.

Heading into 2024.

We continue to be focused on our path towards NR or of $1 15 or beyond.

Through upsell of new products and modules to existing clients.

The successful rollout of Clearwater L. P X M L Ax prism and the jumped solutions in 2023.

That's been a good harbinger of our pathway to the N R. R $1 15 level.

James S. Cox: Annualized Recurring Revenue or ARR at the end of December 2023 was $379.1 million, representing a year-over-year increase of 17.2 percent and an increase of 80 basis points over 2022's annual growth, as of December 31, 2023. The Clearwater Platform processes and reports on $7.3 trillion in assets daily.

And now that we have allocated more than 60% of our R&D capacity for growth.

We look forward to reaping the rewards of additional upsell capabilities in the future.

Also in 2023.

We set the foundation for our go to market to more efficiently upsell, our product offerings and our clients are excited about clearwater dynamic ability to meet their specific needs in an ever changing investment world.

James S. Cox: This represents an increase of almost $1 trillion over the prior year. This reflects business growth from new clients as well as existing clients. We grew the number of clients with over $1 million in ARR to 86, which represents an impressive 28% year-over-year growth and proves that we are helping the most sophisticated clients with their most significant problems. Now, let's turn to profitability. We're pleased to report that both our gross margin and EBITDA margin remained strong in Q4, following upon the strong profitability from the prior quarter. In Q4, we achieved gross profit of $76.2 million, which is 77% of gross market.

Annualized recurring revenue or <unk> at the end of December 2023 was $379 $1 million.

Representing a year over year increase of 17, 2%.

An increase of 80 basis points.

Ofer.

2020, two's annual growth rate.

As of December 31, 2023 that.

The Clearwater platform processes and reports on seven three trillion in assets daily.

This represents an increase of almost one trillion dollars over the prior year.

This reflects business growth, both from new clients as well as existing clients.

James S. Cox: This shows that we are on our way to our long-term gross margin goal of 80% and reflects the operational improvements we have made over the prior two years. In addition, we reported $30 million in adjusted EBITDA, which is 30.3% EBITDA margin in the fourth quarter, and Comfortably Be. Our Q4 EBITDA guidance, and it improved over the prior year by 80 basis points and 360 basis points better than our Q1 2023 EBITDA model. Just like in the prior quarter. Our outperformance in revenue flowed straight through to EBITDA as we continue to enjoy tangible efficiency gains within the operations and R&D teams utilizing our machine learning and Gen AI technology. We are proud to have achieved 21% year over year growth rate in full year 2023 revenue, while increasing total headcount across all our departments by less than 2% during the. We have learned to deliver more efficiently with greater productivity throughout our company to support our clients. With respect to our R&D spend as a percentage of revenue, it increased for the full year 2023 to 26.4%. That's up from our prior years, when the amount spent on R&D was 24.7%. We expect to continually increase the aggregate amount spent on R&D each year.

We grew the number of clients with over $1 million in a R. R to 86, which.

Which represents an impressive 28% year over year growth and proves that we are helping the most sophisticated clients.

With their most significant problems.

Now, let's turn to profitability.

We're pleased to report that both our gross margin and EBIT margin remained strong in Q4.

Following upon the strong profitability from the prior quarter.

In Q4, we achieved gross profit of $76 $2 million, and which is 77% gross margin.

This shows that we are on our way towards our long term gross margin goal of 80%.

And reflects the operational improvements we have made over the prior two years.

In addition, we reported $30 million and adjusted EBITA.

Which is 33% EBITDA margin in the fourth quarter.

And comfortably be.

Our Q4, EBITDA guidance and improved over the prior year by 80 basis points.

And 360 basis points better than our Q1 2023 EBITDA margin.

James S. Cox: However, the percent of revenue spent on R&D is expected to moderate down in the future since we've already completed our migration to the public cloud. In Q4, equity-based compensation was $23.7 million.

Just like in the prior quarter.

Our outperformance in revenue flows straight through to EBITDA as we continue to enjoy.

<unk> efficiency gains within the operations and R&D teams utilizing our machine learning engine AI technology.

James S. Cox: A decrease of $7.6 million from Q3. This decrease was primarily attributable to the reversal of 6.9 million of expense related to jump performance. Although Jump grew, it did not achieve the result necessary to vest in the performance awards related.

We are proud to have achieved 21% year over year growth rate in full year 2023 revenue.

While increasing total head count across all our departments.

James S. Cox: 2020. In Q4, we recorded an $8.3 million tax receivable agreement expense, bringing total expense for the year to $14.4 million. This compares to 11.6 million in 2020. As a reminder, this expense is paid in lieu of the income tax the company would have paid if the company did not receive the benefit of tax deductions from exchanges from its historical owners. In general, the tax receivable agreement expense is 85% of the income. The company would have paid, but for such deductions, providing a 15% benefit to the company. Now let me turn to the balance sheet in cash. We ended the quarter with $317.7 million in cash, cash equivalents, and investments.

By less than 2% during the year.

We have learned to deliver more efficiently with greater productivity throughout our company to support our clients.

With respect to our R&D spend as a percentage of revenue it increased in the full year 2023 to 26, 4%.

That's up from our prior years 24, 7%.

We expect to continually increase the aggregate amount spent on R&D each year.

However, the percent of revenue spent on R&D.

Is expected to moderate down in the future.

Since we've already completed our migration to the public cloud.

In Q4.

Equity based compensation was $23 $7 million, a decrease of $7 $6 million from Q3.

James S. Cox: This represents a healthy 24.3% increase year over year. Total debt was $48 million, thereby resulting in net cash holdings of approximately $270 million. Free cash flow was $22.5 million in Q4 and $79 million for the full year. Free cash flow for the full year 2023 represented a conversion rate of EBITDA to free cash flow of 75%, higher than our previously mentioned steady state level of Seventy that accounts for seasonality in pre-cash flow between the quarters. Our accounts receivable balance remains $92 million, consistent from September to December. These strong collections and lower unbilled AR contributed to our strong Q4 free cash flow number. In addition, for the first time, we paid $8 million related to the tax receivable agreement expenses.

This decrease was primarily attributable to the reversal of $6 9 million of expense related to jump performance shares.

Although jumped grew it did not achieve the result necessary to vast in the performance awards related.

2023.

In Q4, we recorded an $8 3 million dollar tax receivable agreement expense, bringing total expense for the year to $14 $4 million. This compares to $11 6 million in 2022.

As a reminder, this expense is paid in lieu of the income tax the company would have paid if the company did not receive the benefit of tax deductions.

<unk> exchanges from its historical owners.

In general the tax receivable agreement expense is 85%.

The income tax.

That company would have paid.

James S. Cox: So those working capital changes offset each other. Now, let's turn to the guides. For the full year 2024, we expect revenue to be in the range of $431 to $437 million, representing approximately 17 to 19% year-over-year growth. This guidance assumes that our NRR remains in that same 106 to 108 range that we've experienced this year. In the first quarter 2024, we expect revenue to be $100.5 million, representing first quarter revenue growth of 19%. For the full year 2024, we expect our adjusted EBITDA to be in the range of $135 to $137 million.

But for such deductions.

Providing a 15% benefit to the company.

Now, let me turn to the balance sheet and cash flow.

We ended the quarter with $317 $7 million in cash cash equivalents and investments this.

This represents a healthy 24, 3% increase year over year.

Total debt was $48 million, thereby resulting in net cash holdings of approximately $270 million.

Free cash flow was $22 $5 million in Q4 and $79 million for the full year.

Free cash flow for the full year 2023 represented a conversion rate of EBIT to free cash flow of 75%.

James S. Cox: This reflects an approximately 250 basis point improvement from 2023. This 28% year-over-year increase in adjusted EBITDA is even greater than our announced improvement of 200 basis points per year that we just announced at our September Investor Day. This is all the more impressive when you consider that both Q3 and Q4 adjusted EBITDA margins significantly outperformed our guide. We have this confidence in our margin improvement because of the significant efficiencies we are seeing throughout the business. These include machine learning and artificial intelligence activity but truly demonstrate the power of the network effect. In the first quarter of 2024, we expect adjusted EBITDA to be $28.8 million, or 28.7% EBITDA margin, which is approximately 200 basis points better than the first quarter of 2024. For 2024, total equity-based compensation is expected to be approximately $106 million, a slight decrease from the $108 million recorded in 2020.

Higher than our previously mentioned steady state level of.

Of 70%.

That accounts for seasonality in free cash flow between the quarters.

Our accounts receivable balance remained $92 million consistent from September to December the.

The strong collections and lower Unbilled AR contributed to our strong Q4 free cash flow numbers. In addition for the first time, we paid $8 million related to the tax receivable agreement expenses.

So those working capital changes offset each other nicely.

Now, let's turn to guidance for.

For the full year 2024, we expect revenue to be in the range of $431 million to $437 million, representing approximately 17% to 19% year over year growth.

This guidance assumes.

That are N. R. R remain in that same 106 to 108 range that we've experienced this year.

In the first quarter 2024, we expect revenue to be $105 million, representing first quarter revenue growth of 19%.

James S. Cox: And as a percentage of revenue, this would be a 5% reduction. Depreciation and amortization expense is expected to be approximately 11 million, and our full year non-GAAP affected tax rate is expected to be 25%.

For the full year 2024, we expect our adjusted EBITDA to be in the range of $135 million to $137 million.

Sandeep Sahai: After a strong year of delivering results in 2023, in 2024, we're focused on driving consistent revenue while flexing; our Margin Expansion Must Go On. With that, I'll turn it over to Sandeep to provide some closing. Thanks, Jim. I'm very excited about Clearwater's journey through the last five years.

This reflects an approximately 250 basis point improvement from 2023.

This 28% year over year increase in adjusted EBITDA is even greater than our announced improvement of 200 basis points per year that we just announced at our September Investor Day.

This is all the more impressive when you consider that both Q3 and Q4 adjusted EBITDA margins.

Sandeep Sahai: And we look forward with renewed confidence and determination. We are building a track record of setting goals and exceeding them. Each goal we set, we meet. We set out to be durable.

Significantly outperformed our guidance.

We have this confidence in our margin improvement because of the significant efficiencies we are seeing throughout the business. These.

Sandeep Sahai: We are. We set out to demonstrate growth, and we have.

Operator: We set out to drive improved gross margin, EBITDA, and cash flow. And we have done just that. And as we look to 2024, they're committed to continuing the success. Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If for any reason you would like to remove that question, please press star followed by 2.

These include machine learning and artificial intelligence activities.

But truly belie the power of the network effect.

In the first quarter of 2024, we expect adjusted EBITDA to be $28 $8 million or 28.7% EBITA margin, which is approximately 200 basis points better than the first quarter of 2023.

Kevin Damien McVeigh: Again, to ask a question, press star 1. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. The first question is from the line of Kevin McVeigh with UBS. Go on, is that open? Great, thanks so much. And congratulations on really just exceptional execution. Really across the board.

For 2024 total equity based compensation is expected to be approximately $106 million a slight decrease from the $108 million recorded in 2023.

And as a percentage of revenue.

This would be a 5% reduction.

Depreciation and amortization expense is expected to be approximately $11 million.

Sandeep Sahai: Sandy, the leverage or Jim in R&D, seems pretty special in terms of it sounds like you're allocating more based on the leverage. Is there any way to think about that in terms of how that translates to growth? I wanted to start there. Hey, Kevin, thank you for the question. So I think the best way to think about that might be that 50% of our only capacity last year was devoted to moving to the public class, and that is now completed. So we are now devoting 60% of capacity really to innovation and growth. Now, this is five programs. Two of those are already being run, but these three programs are new.

And our full year non-GAAP effective tax rate is expected to be 25%.

After a strong year of delivering results in 2023.

In 2024, we're focused on driving consistent revenue, while flexing our margin expansion muscle.

With that I'll turn it over to sandy to provide some closing thoughts.

Thanks, Jim.

I'm very excited about Clearwater journey through the last five years.

And we look forward with renewed confidence and determination.

We are building a track record of setting goals and exceeding them.

Each go reset we meet.

We set out to be durable we are.

We set out to demonstrate growth we have.

We set out to drive improved gross margin EBITDA and cash flow.

And we have done just that.

Sandeep Sahai: But just like any other product innovation, we expect impact in 2024 in the second half, and really a more substantial impact in 2024. But we feel like we have to make these investments. You know, investment in PRISM is doing really well; investment in LPX and LPX Clarity, and MLX is doing well. So we feel we have to have this pipeline of products if we're going to drive towards a sustained NRR of 115. And that's the Holy Grail.

And as we look to 2020 four.

We're committed to continuing these successes.

<unk>.

If you'd like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you don't like to removed a question. Please press star followed by two again to ask a question press Star one as a reminder, if you're using a speaker phone. Please remember to pick up your handset before asking a question will follow.

You briefly as questions registered.

The first question is from the line of Kevin Mcveigh with UBS. Your line is now open.

Great. Thanks, so much and congratulations on really just exceptional execution.

Sandeep Sahai: And so these investments are really for that. That's helpful. And then I know it's still relatively early, but have you seen any kind of behavioral changes in clients in terms of, you know, initiatives around gen AI, where they're looking for certain modules or leaning into certain things more than others, because it's, you know, so transformational? I wonder if there's anything you're seeing from a client perspective that you just kind of highlight, even though it's relatively early. Yeah, There is no question about that.

Really across the board.

Sandeep, the leverage or Jim in the R&D seems pretty special in terms of it sounds like you're allocating more based on the leverage is there any way to think about that in terms of how that translates to growth.

I wanted to start there.

Hey, Kevin. Thank you for the question. So I think the best way to think about that might be the other.

50% of.

Our R&D capacity last year.

Was devoted to moving to the public cloud and that has been now completed.

So we now are devoting 60% of capacity really.

Onto innovation and growth now this is five <unk>.

Grams.

Two of those are already being run but these three programs are new.

But just like any other power generation, we expect impact in 2024 in the second half.

Sandeep Sahai: Are the clients excited about it? Yes. Every time we roll out a feature or a functionality, clients are really happy to try it, do beta testing, and provide input to our development team. But when you think about what we are doing, Kevin, with Gen AI, there are three things you could do. One is If you allow clients to ask the question themselves, All teams don't even understand... So this is what you refer to as client deflection.

Really a more substantial impact in 2025.

But we feel like we have to make these investments.

Last one and I presume is doing really well the investment in <unk> clarity and emulex is doing well. So we feel we have to have this pipeline of products. If they are going to drive towards a sustained and IRR of 115, and that's the Holy Grail.

And so these investments are really.

For that purpose.

That's helpful. And then I know, it's still relatively early but have you seen any kind of behavioral changes.

Sandeep Sahai: So the inquiries which come in, or questions people have about the data, if they can answer a certain portion themselves, then obviously those questions don't even come to us, and therefore you need less capacity to answer them. The second one is just our ability to respond. So when you take an experienced client services person, they can respond in a certain fashion. But Genii allows more junior people to also provide an answer at a similar level of expertise. And thirdly, because of GNI, you can provide a faster and more comprehensive service. So something which would take three or four back and forth to the client.

And clients in terms of.

Initiatives around Gen AI, where they're looking for certain modules are leaning into certain things more than others. Because it is so transformational that.

I Wonder if theres anything youre seeing from a client perspective that you just kind of highlight even though relatively early.

Yeah, Kevin look I do completely completely think that generate every eye and machine learning together.

It's fully transformative and disruptive there is no question about that.

Other clients excited about it yes every time, we rolled out a feature or a functionality.

Clients are really happy to try a debater testing.

Sandeep Sahai: You can now answer more comprehensively because Jenny sort of does that for you and says what the follow-on question is likely to be. So I do feel there is a lot of excitement, and you might have read We took our internal product, if you will, and launched it last week for clients to use. And so look, the excitement is there, our clients asking us proactively, no, I think at this point, we are, I think we have, a strong position in the client's minds about a company which is sort of leading it a little. So I don't think this is a position where the clients are pushing us. I think they look to us to innovate, and that makes perfect sense.

And provide input to our development teams, but when you think about what we are doing Kevin with Jennie O.

Essentially three things you could do one is.

If you allow clients to ask the question themselves.

Our teams don't even get the question.

So this is what you referred to as client deflection.

So the inquiries, which come in or questions people have about the data if they can answer a certain portion themselves.

Obviously, those don't questions don't even come to us and therefore need less capacity to answer that.

The second one.

It's just the ability to respond to questions.

So when you take an experienced client services person they can respond in the second fashion.

But Jimmy I allows.

A much.

More junior person to also provide an answer of the similar level of expertise.

And thirdly.

Because of Ginnie, how you can provide a faster and more comprehensive answer so something which would take three or four back and forth with the client.

Kevin Damien McVeigh: Thank you. Thank you for your question. The next question is from the line of James Faucette with Morgan Stanley. Your line is now open. Hi, everyone. It's Michael Infante on behalf of James.

You can now onto more comprehensive comprehensively.

Jenny I set up does that for you that says what the following question is likely to be so I do feel there is a lot of excitement and you might have read.

We took our internal and total product if you will and launched it last week for clients to us and say look the excitement is there are clients asking us proactively no I think at this point we are.

James Eugene Faucette: Thanks for taking our question. I just wanted to ask about the revenue outlook, and particularly jump. I mean, given the fact that we're now lapping jump, what is the implication that jump was probably contributing a bit more to revenue than you initially had thought? And the reason I asked that question is because, Jim, you reiterated this about jump revenue growth, sort of not meeting the thresholds for RSU vesting. So I just want to think about the pairing of those two dynamics; any color there would be helpful.

I think we have a <unk>.

Strong position on our clients' minds.

About a company, which is sort of leading it a little so I don't think this is a position where the clients are pushing us I think they look to us to <unk>.

Right.

That makes perfect sense. Thank you.

Okay.

Thank you for your question.

Next question is from the line of James Faucette with Morgan Stanley. Your line is now open.

Hi, everyone. It's Mike <unk> on for James Thanks for taking my question I just wanted to ask on the revenue outlook.

James S. Cox: Sure. Thanks, Michael. This is Jim.

And particularly job I mean, given the fact that we're now.

James S. Cox: So, first of all, look at the guidance for Q1. And I would say that's a full apples-to-apples comparison, right?

Lapping jump.

Is the implication that jump was probably contributing a bit more to revenue than you. Initially had thought and the reason I asked that question because if I look at the release and Jim you reiterated this about jump revenue growth sort of not meeting our thresholds for RSV investing so just wanted to think about the pairing of those two dynamics.

James S. Cox: And so I think that that's an appropriate way to think about, um, that as we think about it. Uh-huh. As it relates to Jump, Jump did grow this year.

James S. Cox: We're very happy with how it performed. But as part of the acquisition process, we mutually agreed to ambitious growth targets for that business to achieve, you know, that performance share or not. And so they did not. They did not achieve that.

Any color there would be helpful.

Sure. Thanks, Michael.

Jim.

So.

First of all look at the guidance for Q1, and I would say that's a full apples to apples comparison right and so I think that that's an inappropriate.

James S. Cox: And so that's the reflection in the equity. And I think that the picture for the growth rate just shows what Q1 stands for. Sandeep, would you like to add anything? That's helpful.

Way to think about.

That as weak as we think about it.

As it relates to John jumped did grow this year, we're very happy with how it performed but its part of the acquisition process. We.

James S. Cox: Well, that's good. Thank you. Right. And maybe just a quick follow up on that. Maybe just on some of the new product contributions: you obviously cited LTX, MLS, Prism, Jump, etc. And the commentary about NRR sort of in that 106, 108 range is helpful. Is it fair to assume that, like, as you think about the go-to-market motion, that in addition to sort of driving that NRR over time, that new product contribution is becoming a bit more impactful to the growth algorithm than it historically has been? Just any directional color there would be helpful.

We mutually agreed too ambitious.

Our growth targets for that business to achieve.

You know that those performance share units and so they did not.

They did not achieve that and so that's the reflection in the.

Equity.

And I think that the picture for the growth rate just a Q1 stands for itself.

Sandeep would you like to add anything on that.

Helpful.

So that's good thank you.

Right.

And maybe just a quick follow up on that.

Just on some of the new product contribution you, obviously cited L. T X MLS prism, John et cetera.

Michael Nicholas Infante: Thanks, guys. Yeah, thank you, Michael. This is Sandeep.

And the commentary about <unk> sort of in that 1618 range is helpful.

Sandeep Sahai: Look, I think that once we completed the movement to the public cloud, which was very late last year, That's when we launched these additional innovation programs. We obviously have experience with LPX and PRISM, and therefore we expect them to have some impact. NH2 of this here, but really a more robust impact in 2025. So I think Jim said in his comments that our current guidance assumes the 106 to 108 NRR.

Is it fair to assume that like as you think about the go to market motion that in addition to sort of driving that enter all over time that new product contribution is becoming a bit more impactful to two the growth algorithm than it historically has been just any any directional color there would be helpful. Thanks guys.

Yeah. Thank you Michael of the Sunday.

Look I think that once we completed the move into the public cloud, which is very late last year.

That's when we launched these additional innovation programs.

We obviously have experience with RPX and prism and therefore, we expect them to have some impact.

Sandeep Sahai: So really, you can see that we expect a marginal impact in 2024. But we also think that the growth from NRR 108 to 115 is almost entirely made up of new products and services we can take to market. So we have a lot of high expectations, also because these are not ideas we came up with. Many of these ideas were developed jointly with, So we feel pretty, pretty good about it. But we just don't expect, in the current forecast and guidelines, to be majorly impactful in 2025. Appreciate that. Thank you both.

In H two of this year, but really a more robust impact in 2025.

So I think Jim said in his comments that.

Our current guidance assumes.

The 106 to one and wait an hour or so so really from that you can you can see that we expect marginal impact in 2024, but we also think that the growth from and all of our 108 to 115 is almost entirely made up of new products and services, we can take to market.

So we have a lot of.

High expectations.

Because these are not <unk>.

Ideas, we came up with it.

Many of these ideas where.

Developed jointly with clients, so we feel pretty pretty good about it but we just don't expect in the current forecast and guides.

Michael Nicholas Infante: Thank you for your question. The next question is from the line of Alexei Gogolev with J.P. Morgan. Your line is now open. Hi, this is Elle Smith on behalf of Alexei Gogolev.

Two we do immediately impactful in 2024.

I appreciate that thank you Beth.

Thank you for your question.

Next question is from the line of Alexia <unk> with Jpmorgan. Your line is now open.

Hi, This is Alex Smith on fair like I say go go on thank you for taking our question.

Alexei Gogolev: Thank you for taking our question. For the first question, I was hoping to ask about the OMS and the PMS applications that JEMF brought. Are those still mostly products for European customers? How's the traction for bringing them to the United States? Hello, this is Sandeep.

The first question I was hoping to ask about the O M. S. N. The pmi's applications. The jackpot are those still mostly products for European customers How's the tracks from bringing them to the United States.

Hey, Hello.

Sandeep Sahai: So look at, if you think about jump, you just sort of step back and think about jump. We thought it would give us a better presence in Europe. And it has. But the other one was, would it expand our offering to the asset management industry? And frankly, it has.

So somebody so look at the if you think about jumping just sort of step back and think about jump we thought they would give us better presence in Europe and they have.

But the other one was would they expand our offering to the asset management industry and frankly they have.

Sandeep Sahai: But the OMS-PMS, like you pointed out, was a little bit more directed at North America. Because we had the clients, we did not have an order management system and a portfolio management system, and Jump was going to bring those in. So I think in Q4, we announced two different wins, where you had the OMS, PMS from Jump, and the core Clearwater platform working together and sold together to solve an end-to-end need of a client. So I think it's working exactly like we thought. Do we think would we have wanted it to be faster?

But the oil Minister Pms like you pointed out was a little bit more directed at North America.

Because he had the clients did not have an order management system and a portfolio management system and jump was going to bring that in so I think in the 10.

Q4, we announced two different wins, where do you have the Oems BMS from jump and the core clear what our platform working together and sold together too.

To solve an end to end.

In need of a client so I think that's looking exactly likely Clark do we think would we had wanted it to be faster, yes, but is it is it working like we thought it would work in the OEM Sps for insurance market I think exactly so.

Sandeep Sahai: Yes. But is it, is it working like we thought it would work in the OMSPS for insurance market? I think exactly. Got it.

Eleanor Osgoode Smith: That makes a lot of sense. Thank you. And for my second question, I want to ask about the net revenue retention rate. Obviously, there's always some noise and fluctuations there, but it's been going down for the past few quarters. I was wondering if there's anything to call out there.

Got it that makes a lot of sense. Thank you Andrew.

And for my second question I wanted to ask around the net revenue retention rate.

Obviously, theres always some noise and fluctuations there, but it's.

And gone down for the past few quarters I was wondering if there's anything to call out there.

James S. Cox: Thank you. Thanks, Ella. This is Jim.

Thank you.

Thanks Ella.

This is Jim.

James S. Cox: So I think there's nothing to call out there. If you recall, it just rounded up slightly to 109. So, so 108, 107 in that area, you know, 1% here, is there any matter of reasons for that to change? The core kind of algorithm now is, you know, 98% gross retention, a couple percent from price increases, a couple percent from asset additions, and profitability at our clients, and a few percent in the existing products that we're selling today. Then you extend that algorithm to say, Oh, how does that go from this level to the 115 that we see in the future. And that is all around the product initiatives that Sandeep was describing. We think there's much more product to sell across our client base, and we're building it, and Jump is a great example of where we have bought items. As Sandeep says, it takes time. We're very impatient, and we would always like it to go faster.

So I think there's nothing to call out there if you recall it just rounded to a.

Slightly to 109, so two.

101 of seven in that area, 1% here or there is is there is any matter of hum.

Of reasons for that to change the core.

Kind of algorithm now is 98% gross retention.

Percent.

From price increases a couple of percent from.

Set additions and profitability at our clients and a few percent.

In the existing products that we're selling today then.

And then you extend that algorithm to say Oh, how does that go from this level to the $1 15 that we see in the future and that is all around the product initiatives that.

Sandeep was describing we think there is much more product to sell across our client base and we're building it and jump is a great example of where we have bought items at.

As Sandeep says it takes time.

Inpatient and we would always like it to go faster, but I think we see the opportunity.

James S. Cox: But I think we see the opportunity to really broaden our footprint within our existing clients in the insurance space, as well as in asset management. But that's kind of the journey for 2014 and 2015 as these products come online. 2024, Jim, and 2025.

To really broaden our footprint within our existing clients in the insurance space as well as in the asset management space.

But that's kind of the journey for 2014.

And 2015 as these products come online.

Well I mean 24 zim in 'twenty and clarify thank you so much for 2025 sorry.

James S. Cox: Thank you. 2024, 2025. Sorry, what did I do?

Okay. Thank you.

James S. Cox: Sorry. Thank you. Great, thank you so much. Thank you. Thank you for your question. Next question is from the line of Peter Heckmann with D.A. Davidson.

Oh.

Great. Thank you so much thank you.

Thank you for your question.

Next question is from the line of Peter Heckmann with D. A Davidson your line is now open.

Peter James Heckmann: Your line is now open. Good afternoon. Thanks for taking the question. I didn't hear it as much now. Sometimes I miss a lot of data there, but I didn't hear as much out of the Asia Pacific regional market in the fourth quarter. Can you give us an update there and how you're kind of thinking about that in terms of contribution to total revenue in 24? This is Sandeep. So look, I don't think we were clear, and we should have been, that Shane Ackroyd obviously joined us only this year, and he's based in Hong Kong, and he's obviously been in Hong Kong for several years, and he understands the market really well, and so we are looking, as we had said, in Q3 and Q4 to make a real push in that industry in that market. And that is So have we got a lot more deals there? Not really.

Good afternoon, and thanks for taking the question I didn't hear as much now sometimes I Miss a lot of data there, but I didn't hear as much out of it.

The Asia Pac a re.

As you know market in.

The fourth quarter can you give us an update there and how you kind of think about that in terms of that.

Contribution.

Total revenue in 2004.

This is sandeep so look.

I don't think we were clear when we should've been that.

Shane Acaroid, obviously joined us.

Early this year and he's based in Hong Kong.

And he's obviously been in Hong Kong for several years on the sensor market really well and so we are looking as we have said I think in Q3 and Q4 to make a real push in that industry in that market.

And that is really driven by our success we have had.

With large insurers in that market so heavy got.

Lot more deals there.

Sandeep Sahai: Do we have a really high-quality pipeline there? Yes, we do. So I just think it is obvious.

No do we have a really high quality pipeline that yes, we do.

So I just think it is obviously.

James S. Cox: A really small market for us right now, but we do expect that to sort of grow meaningfully this year itself. That's the best, I think, from the APAC side. I think you're building a team with a senior executive at the ELT level sitting in Hong Kong. Jim, would you add anything to that? I mean, and so thanks, Pete. Yeah, I think obviously the commitment is there. We didn't mention anything specifically this quarter, but kind of when you look overall at 2023 versus 2022, the US and North America grew faster in 2023 than they did in 2022. The EMEA market grew faster as well, and also faster than North America. And Asia grew fastest, albeit off of a very small base.

A really small market for us right now, but we do expect that to sort of grow meaningfully this year itself.

That's the best I think in the APAC side I think you are building a team with a senior executive at the ELT level sitting in Hong Kong and Jim would you add anything to that.

And so thanks, Pete and Yeah, I think obviously the commitment is there we didn't mention anything specifically this quarter, but kind of when you look overall at 2023 versus 2022.

The U S and North America grew faster in 2023 than it did in 2022.

The EMEA market.

Grew faster.

<unk> as well, but and also faster than North America, and Asia grew fastest albeit off of a very small base and so.

James S. Cox: And so for 2023, international revenue is going to be 18% of total revenue, but nice acceleration across all regions. That's, that's really helpful. And then, if you could just maybe not necessarily predict, but how are you feeling about landing some of the additional kind of top 25 global insurance carriers in 2024? I know you've been working on some of those pretty hard.

And then for 2023 international revenue is going to be 18% of total revenue.

But nice acceleration across all regions.

That's really helpful. And then if you could just maybe not necessarily prediction, but how are you feeling about.

Landing some of the additional kind of top 25 global insurance carriers.

And in 2024, I know you've been working on some of those pretty hard.

Peter James Heckmann: Yeah, Pete, we feel really good. I'm not sure I can say more than that, except to say we feel really, really good. You know, clients who would not have talked to us three years ago continue to engage with us very constructively. We continue to make solid progress. So we feel really good about our ability to go out and land large, large logos. Okay, so we should just stay tuned.

Yeah, we feel really good.

And that's what I can say more than that except to say, we feel really really good I think.

Clients, who would not have talked to a three and three years back.

Continuing to engage with us we're very constructively.

We continue to make solid progress so we feel really good about.

About our ability to go out and land large large logos.

Okay. So we should just stay tuned.

Peter James Heckmann: Yes. All right. I appreciate it. Thank you. Thank you for your question. The next question is from the line of Rishi Jaluria with RBC. Do you know why it's not open? Oh, wonderful. Hey, Sandeep.

Yes.

Alright I appreciate it. Thank you. Thank you.

Thank you for your question.

The next question is from the line of Rishi Julio with RBC. Your line is now open.

Oh wonderful Hey, Sandeep. Thanks, so much for taking my question I wanted to start maybe first.

Rishi Nitya Jaluria: Hey, Jim, thanks so much for taking my question. I wanted to start maybe first, you know, you're having good signs of success with the jump. There is obviously more work to get done there. Maybe how should we be thinking about your view of M&A, helping you add more product functionality to kind of get that for points of uplift from spending that you've talked about historically, and I've got a quick follow-up. Yeah, Rishi, look... We are really serious about what we said at Investor Day. We think we have to be disciplined. It's got to work.

You're you're you're having good signs of success with that win with John.

We've seen more work to get done there maybe how would you how should we be thinking about your view of M&A, helping you add more product functionality.

Get that for you now.

Points of uplift from spending that you've talked about historically and I've got a quick follow up.

Yeah, Richard look up.

We are really serious about what we said at Investor Day, We think we have to be disciplined as gutter work M&A has to work more programmatically.

Sandeep Sahai: M&A has to work more programmatically. And it has to be something we can take back to our current customers. So when you put it in that construct, we thought we could do something off and on. But what we did was we went and hired and brought in Shane Aykroyd to the team. Sheen worked for a long time at Market, which then became IHS Market and then became S&P.

And it has to be something we can take back to our current customers. So when you put it in that construct.

We probably could do something off and on but what we did was we went and hired and brought in chain ackroyd to the team.

She has worked.

A long time at market with them it became IHS Markit and then became S&P.

And the growth in those those two companies. If you will recall was half organic and half inorganic so they really honed.

Sandeep Sahai: And the growth in those two companies, if you recall, was half organic and half inorganic. So they really hold the ability to do that; they know how to do that. And Shane brings a wealth of experience, not necessarily in investment accounting but in the other three. So he joined us, and he's already really hard at work. And what we hope to do is more programmatically look at this where we, by Asset, which we can take to our current client base. So we expect to be much more aggressive, if you will, this year and the next few years. As we try and are attacked at three BIPs.

The ability to do that didn't know how to do that and Shane brings just a wealth of experience not necessarily a new investment accounting.

But in the other three bps.

So he joined us he's already.

The hard work and what we hope to do is more programmatically look at this very.

By assets.

Which we can take to our current client base. So we expect to be much more.

Aggressive if you will in this here in the next few years as we try and.

Attacked that three bps organically also so like we talked about these five programs some of the mazo organic but we also appreciate that we're not going to be able to build everything ourselves. Some of that's something we're excited about we think you will hear more through 2024 and.

Sandeep Sahai: Also, like we talked about these five programs, some of them are organic, but we also appreciate that we're not going to be able to build everything ourselves. So that's something we're excited about. We think you will hear more through 2024 and also 2025 and from that time on. Got it. That's really helpful.

Ultra drilling 25 and four.

At that point.

Got it that's really helpful. Maybe a follow up to that philosophically. So you know what it healthier historically against a lot of your legacy competitors has been people appreciate its a single platform a single pane of glass works together, well, whereas a lot of your competitors have kind.

Rishi Nitya Jaluria: Maybe a follow-up to that philosophically. So, you know, what has helped you historically against a lot of your legacy competitors has been that people appreciate it's a single platform, a single pane of glass that works together well, whereas a lot of your competitors have kind of a Franken stack where it's a bunch of different assets that aren't integrated. How do you avoid falling into the trap that a lot of your competitors have fallen into that has turned them into share donors and allowed you to be certain Yeah, no, I completely look at it. We are very, very thoughtful about that. But when you think about the technology stack, it revolves around the security master and the data flow. So if you create multiple... Security Masters for all kinds of reasons, and you have two sets of data, three sets of data, and four sets of data. Then you go into this Frankenstein architecture you speak of, right?

Frank in stack, where it's a bunch of different assets that that aren't integrate and how do you avoid falling into the trap that a lot of your competitors how that is.

Nevertheless share donors and allow you to grow yes.

Yes, no I completely look we are very very thoughtful about that but when you think about the technology stack. It revolves around the security master.

And the data flow.

So if you create multiple.

Security Masters all kinds of reasons and you have two sets of data in three sets of data and full sets of data. Then you go into this brand casino architecture, you speak too right.

Sandeep Sahai: And but, If you do something where data goes out of the Clearwater platform, there are some business functions that get done, and it comes back to the Clearwater platform, then, then, of course, you haven't muddied the data, the security master, and the architect. So yes, we have to be very thoughtful about it. Because once you go down that path, you sort of, then you do Maria.

And but.

If you did something where data goes out of the clear what our platform. There are some business functions that got done and it comes back to the Clearwater platform. Then then of course you haven't.

Muddied the data of the security Master and the architecture. So yes, we have to be very thoughtful about it because I want to go down that path you sort of.

Then you do money so yeah, so philosophically I'm completely in agreement with you that we would have to be very powerful about the architecture.

Sandeep Sahai: So yeah, so philosophically, I'm completely in agreement with you that we would have to be very thoughtful about the architecture. And, you know, it makes a big difference because we are single instance multi-tenant, we are cloud native, all that matters. And so we expect ourselves to be very careful with that. Got it. Really helpful. Thank you so much.

I mean, it makes a big difference because we are a single instance, multi tenant where cloud data of OLED mattos.

And so we expect us to be very careful with that.

Got it really helpful. Thank you so much.

Rishi Nitya Jaluria: Thank you, Rishi. Thank you for your question. The next question is from the line of Michael Turrin with Wells Fargo. Your line is now open. Hey, thanks. It's David Unger.

Thank you this year.

Thank you for your question.

The next question is from the line of Michael Caron with Wells Fargo. Your line is now open.

Hey, Thanks, it's David on for Michael Caron Tonight, I appreciate you taking the questions.

Michael James Turrin: I'm from Michael Turrin tonight. Appreciate you taking the questions. This this $1 million plus customer stab, which is great 20% growth year on year. I'm curious, just like how much of it was, you know, new wins versus AUM growth versus cross out a little bit of color there. Thanks. Thanks. Thanks, David. This is Jim. So it was a nice combination of all of those and, as well as one other factor, right, which is, as we're onboarding clients, and they, we might have a situation where we're charging them some rate during the onboarding process, and then they step up to be million-dollar customers once they're fully live and on the platform. So it would be across all of those three vectors.

This $1 million plus customer stat, which is great at 20% growth year on year I'm curious.

Like how much of it was new wins versus growth versus cross sell up a little bit of color there. Thanks.

Thanks.

Thanks, David This is Jim so it was a nice combination of all of those and and as well as one other factor right, which is as we're onboarding clients and they are we might have a situation, where we're charging them. Some rate would during the onboarding and then they step up to be a million dollar customers. Once they are full.

They live and on the platform. So it would be it would be across all of those three vectors.

James S. Cox: Okay, appreciate that, Jim. And then any changes you're seeing in terms of pipeline conversion this quarter versus historical trends? Thanks. Yeah, this is Sandeep.

Okay I appreciate that Jim and then any changes youre seeing in terms of pipeline conversion this quarter versus historical trends.

Yeah. This is somebody said look at your Q4.

Sandeep Sahai: So look at your Q4: it was good, albeit it was more heavily in December. So our bookings were much heavier in December, which is not always the case. More often than not, you see it spread out across Q4. It was very heavy in December.

Was good, albeit it was more heavily in December saw booking was much heavier in December.

Which is not always the case more often than not you'll see spread out across Q4. It was very heavy in December our booking for the year was the highest its ever been in our history. So the booking continues to grow nicely.

Sandeep Sahai: Our booking for the year was the highest it's ever been in our history, so the booking continues to grow nicely. In our pipeline, we saw pretty significant growth throughout the year. We ended the year with significant growth in our pipeline. The sharpest increase, though, was in asset management, and we saw that in Frankly, maybe a little bit aided by John, because we can now provide the more comprehensive solution. And you can provide the earlier solutions in asset management, insurance. While answering another question, I also spoke about the very large clients or prospects, pardon me, who are now in the pipeline, who, frankly, had never been in the pipeline before. So we feel like the pipeline grew robustly, and we feel the booking was, like I said, the highest it's been in the company's history.

Our pipeline, we saw really significant growth throughout the year, we ended the year with a significant growth in our pipeline.

The sharpest increase though was in asset management.

And we saw that in.

Frankly, maybe a little bit aided by jump because we can now provide a more comprehensive solution and you can provide the earliest solutions and asset management insurance.

While answering another question also spoke about the very large.

Clients or prospects pardon me.

Who are now in the pipeline, who frankly have never been in the pipeline before so we feel like the pipeline grew robustly and feel the booking was like I said the highest it's been in the company's history and then.

Sandeep Sahai: And then The only other issue was your new logos versus non-new logos, if you will. And if you go back, it was roughly half and half new logos versus non-new logos. And in 2023 versus 2022, the new logo contribution was just a little bit higher than it was in 2022. So no real material change in the distribution of the booking or the pipe, but just slightly higher on the logos.

The only other issue was as you know new logos versus non new logos, if you will.

And if you go back it was roughly half and half new logos versus own.

In 2023 worst is going according to the new logo.

Contribution was just a little bit higher than it was in 2022, so no real material change in the distribution of the booking or the pipe, but just slightly higher on new logos.

David B. Unger: I appreciate all that detail, Cindy. Thank you. Next question is from the line of Gabriela Borges with Goldman Sachs. Your line is now open. Hi, good afternoon.

I appreciate all that detail sandeep. Thank you.

Thank you for your question.

Next question is from the line of Gabriela Borges with Goldman Sachs you wanted to open.

Hi, good afternoon, and thank you Sandy Chen I know how connected you aren't that clean water is a 20% plus and maybe even 25% plus non life Science company.

Gabriela Borges: Thank you. Sandeep and Jim, I know how convicted you are that Clearwater is a 20% plus, and maybe even 25% plus normalized growth. Help us understand the starting point for our new guidance this year. I know you said guidance that you want to outperform on, but help us think about the overhang to revenue growth this year that's leading you to set an initial starting point that is below the 20% plus that I know you aspire to. Do you want to go and take that?

Help us understand the starting point for any guidance here and any items that you'd want to have it outperformed.

But how about help us think about the overhang to that and you've got this year that you didn't need to sell on a national starting point.

Below the 20% plus and I know you aspire to.

Jimmy I can take that or sure sure yeah, Yeah, Yeah, Gabriel Yeah happy to take that.

James S. Cox: Sure. Sure. Yeah. Yeah. Yeah. Gabrielle.

James S. Cox: Yeah. Happy to take that. So, you know, Gabriela, it's a bit of the same story as last year, right?

So you know Gabriele it's a bit of the same story as last year right, we guided and.

James S. Cox: We guided and drove forward off of that guidance. As I recall, last year, Q1 was lower than the full year guide. And the feedback was, how are you going to ramp up in the second half of the year? And we said, hey, we have these things coming on board, and feel a lot of confidence about that. And that worked out. As Sandeep just mentioned. We were in Q4, and the bookings were heavy in December versus throughout the whole quarter. And these are also large programs as well.

And drove.

Drove forward off of that guidance as I recall last year Q1 was lower than the full year guide and.

The feedback was how are you going to ramp in the second half of the year and we said Hey, we have these things coming on board.

And feel a lot of confidence about that and that worked out.

I'm pretty well.

As we as Sandy just mentioned.

We were in Q4, the bookings were heavily in December versus throughout the whole quarter.

And these are also large programs as well and so when you start to look at those having just closed.

James S. Cox: And so when you start to look at those, having just closed, and looking at kind of, you know, the periods for when that client will go live and get those implementations up and running, you just have to be thoughtful about the variety of outcomes that could occur as it relates to that. So I think we're, [inaudible] We try and guide confidently. And so we thought about it in that sense. In addition, but I think we also have to be prudent and deliver throughout the period. Yeah, the one data point I might add is, "OK." Yeah, you know, one item I might add, Gabriela, is that if you look at ERR growth through the end of 2022, it was 16.4%, and we delivered what we did in 23. At the end of last year, the error growth rate was 17.2%.

And looking at kind of.

The periods for when that client will go live and getting those implementations up and running.

You just have to be thoughtful.

About the variety of outcomes that could occur as it relates to that.

I think we're.

<unk> com.

Content, we try and guide.

Guide confidently.

And until we thought about it in that sense.

And in addition, but I think we also have to be prudent and and deliver.

Throughout the period.

Yeah, the one datapoint I might add is okay.

Cool.

Yeah, but you know one one item I might add give you though is that if you look at.

Here our growth.

Through the end of 2022.

Was 16, 4%.

And we delivered what we did in 'twenty three.

At the end of last year. The growth was 17, 2%, so really 80 basis points better.

Sandeep Sahai: So really 80 basis points better than how we entered 2023. Now, you can just take that one data point and sort of extrapolate all the way. But we feel like we are starting in a good spot. These large programs make us a little bit more cautious because they tend to be more lumpy, if you will. But did the business grow nicely? We think it did.

Than how we entered 2023 now you can't just take that one data point and sort of extrapolate all the way.

And we feel like.

We are we are starting in a good spot.

These large programs make us a little bit more cautious because they tend to be more.

Lumpy, if you will but did the business grow nicely, we think of it.

Gabriela Borges: That's helpful, Carla. Thank you. And Jim, I want to follow up on your commentary on NRR and particularly the contributions that you can get from pricing. I believe in your prepared remarks, you made a couple of comments about AUM and the AUM trends for the business being favorable or at least more favorable than what they were in 2020. So help us understand with the new pricing model that you implemented in 2022, are you now still seeing a benefit and a tailwind to your revenue growth from being able to do the AUM plus a more nuanced pricing model because you now have AUM growing on the platform again after what may have been a more volatile 2022? In other words, can you underwrite pricing contributing more to the growth algorithm now than you could a year ago?

That's helpful color. Thank you and just maybe one follow up on you know how.

How much are you on an IRR and because you can only the contributions that you can get from pricing.

Believe in the prepared remarks, you made a couple of comments about Amy Latin.

The England trends of the business being favorable are more favorable than what they were in 2022.

So help us understand what the new pricing model that you implemented from 2022.

Now just seeing a benefit in a tailwind to your new garage from being able to do the a M class someone wants to buy small because you now have any of them growing them. Apart from again, what may have been him about how can we try to in other words.

When you underwrite pricing contributed a more typical growth algorithm now than a year ago.

So the <unk> component of growth. So so you're right Gabriele in the base plus model, we do always have the upside from AUM growth.

James S. Cox: So the AUM component of growth, so you're right, Gabriela, in the base plus model, we do always have the upside from AUM growth. And obviously, we mitigated that on the downside through the base plus model but have tried to maintain that on the upside going forward. And so we do have that optionality. But when we think about what we're underwriting for growth, we don't think about market conditions changing in that way. But you are absolutely right. It was a significant headwind in 2022. And it was not in 2023.

And.

And obviously, we mitigated that on the downside through the base plus model, but have tried to maintain that on the upside going forward and so we do have that.

Optionality when we think about what we're underwriting for growth, we don't think about market conditions changing in that way, but you are absolutely right. It was a significant headwind in 2022 and it was not in 2023.

Gabriela Borges: But we haven't contemplated any, Um, you know, you could hypothesize that there could be rate changes that could change asset levels at some point in the future. We haven't taken a viewpoint on that, Gabriela, at this point, but it would be an opportunity. [inaudible] should those occur. Okay, thank you very much.

But we haven't contemplated any.

You know you could you could hypothesize that there could be rate changes that could change asset levels at some point in the future. We havent taken a viewpoint on Capri Ela at this point, but it would be.

An opportunity.

Ship.

Should those occur.

Okay. Thank you very much.

Gabriela Borges: Thank you. Thank you for your question. The next question is from the line of Brian Schwartz with Oppenheimer. Your line is now open.

Thank you.

For your question.

Next question is from the line of Brian Schwartz with Oppenheimer. Your line is now open.

Brian Jeffrey Schwartz: Yeah, hi, thanks for taking my question, Stephanie. And congratulations on a great year in 2023. I have one question, I just wanted to take a high-level question just about the macro and the demand environment. You know, maybe Sandeep with from, the customers that you're talking to and their appetite to invest more in your technologies and how you're thinking about budget growth from those customers, does it feel like that is loosening up that appetite to spend compared to last quarter, the second half of last year? Or Jim, maybe it's just a high-level question asking the assumption underlying the macro and kind of end market budget growth with your 2024 guidance. Thank you very much. So why don't I just start by saying that we were a little surprised by how much movement we got in December, just a fact where we did not. So it felt like something loosened up towards the end of last year.

Yeah, Hi, Thanks for taking my question. This afternoon, congratulations on a great year.

In 2023.

I have one question I just wanted to take a high level question, just about the macro and the demand environment.

Maybe sandeep with from the.

The customers that you're talking to and their appetite to invest more in your technology, then how youre thinking about budget growth from those customers does it feel like that is it loosening up.

That appetite to spend compared to last.

Last quarter, the Q3 second half of last year and our Jim maybe it's just a high level question asking be assumption underlying the macro and you kind of end market deposit growth with your 2024 guidance. Thank you very much.

Yes, Jim.

Well why don't I, just start by saying that.

We were a little surprised with.

How much movement, we got in December.

Correct.

We did not so dependent like something loosened up.

Towards the end of last year.

Sandeep Sahai: Do we continue to see that? I think we have reasonable expectations, but we don't see anything dramatically different. The macro and things like that. We simply just don't take a point of view because we think anything is likely to be positive for us. Right. So when you think about interest rates, we think, you know, at, we think if anything does happen there, we think it'll likely be positive. So we don't we don't build that into a model.

Do we continue to see that.

We have reasonable.

<unk>, but we don't see anything dramatically different.

The macro and things like that we simply just don't take a point of view because we think if anything.

It's likely to be positive to us right. So when you think about even interest rates, we think it'll at.

You know, we think if anything does happen there we think it'll be likely positive. So so we don't we don't build that into our model.

Sandeep Sahai: Do you want to comment on anything about that? Yeah, I would say that Brian and I are pretty neutral vis-a-vis, you know, the overall macro environment because there are reasons to buy. Clearwater.

Oh, okay.

Your commentary on that I would say, Brian we are pretty neutral vis vis the overall macro environment, because there's reasons to buy.

Clearwater.

James S. Cox: When times are good, and companies are going public, we add lots of clients. And when a lot of our asset management clients are thinking of us as a way to create efficiency and scale. And so there's a lot of different reasons why clients vis-a-vis there are many, many different reasons why clients select Clearwater, as it relates to the kind of overall macro environment. Our sales team is pretty agile at modifying to the specific needs of those clients, which may be more impacted by the overall macro environment.

When times are good and and companies are going public we add lots of clients.

When a a lot of our asset management clients are thinking of us as a way to create efficiency and scale and so there's a lot of different reasons why clients are these would be there are many many different reasons why clients select Clearwater.

As it relates to the kind of overall macro environment.

Our sales team is pretty <unk>.

Chile at modifying to the specific needs of those clients, which may be more impacted by the overall macro environment.

James S. Cox: And so I think we I think we see an opportunity to continue to win share in any of those market conditions. Thank you. Thank you for your question. Next question is from the line of Dylan Becker with William Blair. Your line is now open. Hey, gentlemen.

So I think we I think we see an opportunity.

To continue to win share in any of those market conditions.

Thank you.

Thank you for your question.

Next question is from the line of Dylan Becker with William Blair. Your line is now open.

Hey, gentlemen.

Dylan Tyler Becker: Appreciate it. Here, maybe, Sandeep, for you, there's been kind of a lot of evolution in the regulatory landscape and environment across different geographies here over the last several years. So I wonder how that evolution maybe plays into incremental emphasis from the customer base on data integrity, transparency around that reporting capability, and that kind of compounding complexity, maybe how GMAI plays into that and what that can mean from a workflow perspective, not only from the reporting angle, but also how that flows into compliance as well. Yeah, we love it.

I appreciate it here maybe.

Sandeep for you there has been kind of a lot of evolution and the regulatory landscape and environment across kind of geographies here.

Over the last several years I wonder how that evolution, maybe plays into incremental emphasis from the customer base on data integrity transparency around that reporting capability and that kind of compounding complexity, maybe how G&A I plays into that and what that can mean from a workflow perspective not only for.

From a reporting angle, but also how that flows into compliance as well.

Yeah, We love it we absolutely love the complexity I'm actually out in Edinburgh right now than we were speaking to their sales team.

Sandeep Sahai: We absolutely love the complexity. I'm actually out in Edinburgh right now, and we were speaking to the sales team. And every time, regulations change or they become more complex, data quality becomes even more important, and if clients have a patchwork of legacy systems, it becomes really hard.

And every time.

Regulations change or they become more complex.

Data quality becomes even more important.

And if clients have patchwork of legacy systems.

It becomes really hard.

Sandeep Sahai: And the Clearwater value proposition shines every time regulation becomes more complex, or you have new asset classes, or alternative assets, or people invest globally, or people invest in different regions. So yeah, I think the short answer is those are very high-quality impetus for us to go out and get clients to move to our platform. So we love it. Okay, super helpful.

The Clearwater value proposition signs.

Every time regulations become more complex or you have new asset classes alternative assets or people invest globally or pupil invest in different regions. So yeah. I think the short answer is those are very high quality impetus for us.

To go out and.

Get clients to move to a platform so we love it.

Okay Super helpful and that makes it got it thanks, and then maybe to ask.

Dylan Tyler Becker: That makes a ton of sense. And then maybe two, outside of reporting, obviously, risk management is key for some of your customer bases, maybe in particular insurance, they've seen some pressure on their models. But again, that risk management evolution, maybe the reinsurance landscape, again, the adaptability there to anything you guys are seeing in that particular end segment or in the market. Yeah, I think in my prepared remarks, we spoke about a reinsurer. So you're exactly right. Frankly, these are questions exactly on the money because it is an issue. When you think about the rest, there is a whole mathematical side of risk, which is there, but there's also the other side, which is your data in a consumable fashion by these risk models.

A lot of reporting obviously risk management.

As key for some of your customer base is maybe in particular reinsurance they've seen some pressure in their models.

But again that rich management evolution.

The reinsurance landscape again, the adaptability there to anything you guys are seeing.

In that particular end segment or end market.

Yes, I think in my prepared remarks, you spoke about a reinsurer. So youre exactly right frankly diesel questions exactly on the money because it is an issue.

When you think about risk.

There is a whole mathematical side of risk.

Which is there but theres also the other side, which is is your data in a consumable fashion.

These risk models, so either of those to help us and so I shouldn't say, we like it but the fact is that.

Sandeep Sahai: So either of those two help us. And so I shouldn't say we like it, but the fact is that higher regulations, or more complicated reporting needs, and more complicated risk management, all of those helped make the case for a movement to a clear water platform. Great. Thanks, Sandy. I appreciate it.

Higher regulations.

More complicated reporting needs and more complicated risk management all of those.

Help make the case for our move into Clearwater like platform.

Great. Thanks, Andy appreciate it thank.

Dylan Tyler Becker: Thank you. Thank you for your question. The next question is from the line of Yun Kim with Loop Capital Markets. Your line is now open. Okay, great. I'll make it pretty quick.

Thank you.

Thank you for your question.

Next question is from the line of Yun Kim with loop capital markets. Your line is now open.

Okay, Great I'll make it pretty quick how should we think about sales capacity this year and the timing of the ramp any focus on.

Yun Suk Kim: How should we think about sales capacity this year and the timing of the ramp-up? Any focus on ramping up international sales capacity this year? Yes, this is Sunil here.

International sales capacity this year.

Yep.

This is something yes.

Sandeep Sahai: A lot. So we continue to make very significant investments, both in Europe and in Asia Pacific, behind the leadership of Keith, as we spoke about, and also Shane. So we expect to make significant investments, and we are already making significant investments in Europe and Asia. But we do think we can accelerate growth in these markets. And I do think, like Jim pointed out, they have grown nicely.

A lot. So we'll continue to make very significant investments.

In Europe and in Asia Pacific now behind the leadership of Keith like we spoke about and also Shane So we expect to make significant investments and we are making already significant investments in Europe and Asia, because we do think we can accelerate growth in these markets.

I do think like Jim pointed out they have grown nicely.

Sandeep Sahai: And we do continue to believe that there will be outsized growth in these markets in the years to come. So yes, we do continue to think that there's strong GTM investment. And, you know, that's why you have more moderated.

And we do continue to believe that there will be outsize growth in these markets in the years to come. So yes. We do continue to think that there is strong GPM investments.

And.

That's why you have more moderated.

Sandeep Sahai: You've been out forecasting because we believe we have to continue to invest in R&D, and we believe we have to continue to increase our investments in GTM. And we, Because of the efficiency of our system, we feel we can do both of those things while delivering an improved EBITDA number. And we are guiding to 250 basis points this year. So we think you can do all three, and it really comes from the capabilities of the platform.

EBITDA forecasting because we believe we have to continue to invest in R&D.

And we believe we have to continue to increase our investments in G. T M.

And we.

Because of the efficiency in our system, we feel we can do both of those things while delivering an improved EBITDA number and we are guiding to 250 basis points. This year. So we think you can do all three and really it comes down the capabilities of the platform.

Sandeep Sahai: I don't know, Jim, would you add something to that? No, well said. Thank you for your question. There are no additional questions waiting at this time, so I'll pass the call back to Sandeep for any closing remarks. I just want to thank everyone for your continued interest in our company. We have spent another year, another year has gone by, and we remain really confident about what we can build here.

Hello, Jim would you add something to that well site masa.

Thank you for your question there are no additional questions waiting at this time, so I'll pass the call back to Sandeep for any closing remarks.

I just wanted to thank everyone for your continued interest in our company.

We have.

Spent time of the year and other years gone by and we remain really confident about what we can build here and we really thank you for your indulgence.

Sandeep Sahai: And we really thank you for your indulgence and your questions here. Thank you. That concludes the call. Thank you for joining me. Now disconnect your lines.

And your questions here. Thank you.

That concludes the call. Thank you for joining you may now disconnect your lines.

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Yeah.

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