Q1 2024 Clearwater Analytics Holdings Inc Earnings Call

Operator: Thank you and welcome everyone to Clearwater Analytics' first quarter 2024 financial results conference. Joining me on the call today are Sandeep Sahai, Chief Executive Officer, and Jim Cox, Chief Financial Officer.

Thank you and welcome everyone to Clearwater analytics first quarter 2024 financial results Conference call.

Joining me on the call today are Sandeep, <unk>, Chief Executive Officer, and Jim Costa Chief Financial Officer.

Operator: 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 limitations, Expressions using the terminology may, will, can't, expect, and believe, and expressions which reflect something other than historical facts are intended to identify forward-looking statements. Four look-in statements involve a number of risks and uncertainties, including those discussed in the risk factors section of our filings with the SEC. After results may differ materially from any four look-in statements.

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

Operator: The 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 cost center statement included in our earnings press release. Lastly, all metrics discussed on this call are presented on a non-GAAP or adjusted basis unless otherwise noted. The 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 Sahai.

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 performance and similar items, including without limitations.

<unk> using the terminology may will and expect and believe 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 those discussed in the risk factors section of our filings with SEC actual results may differ materially from any forward looking statement.

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.

We're more mission. Please refer to the cautionary statement included in our earnings press release.

Lastly, all metrics discussed on this call are presented on a non-GAAP or adjusted basis.

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 Si.

Sandeep Sahai: Thank you, June, and thank you all for joining us. Building a durable business that grows consistently while improving gross margin, EBITDA, and cash flow has always been our stated goal. I'm pleased to report that Q1 2024 delivered on all those goals. Revenue grew 21% year over year to $102.7 million in the quarter. And our EBITDA grew 42.9% year-over-year to $32.2 million, or 31.3% of our revenue. Let's discuss revenue growth, which was purely organic, in some more detail. It starts with NPS.

Sandeep Sahai: Thank you Joan and thank you all for joining us.

Sandeep Sahai: Building, a durable business that grows consistently while improving gross margin EBITDA and cash flow has always been a seated endeavor.

Sandeep Sahai: I am pleased to report that Q1 2020 for Delaware them all those goals.

Sandeep Sahai: Revenue grew 21% year over year.

Sandeep Sahai: $102 $7 million in the quarter and our EBITDA grew 42, 9% year over year to $32 2 million.

Sandeep Sahai: Or 31, 3% of our revenue, let's discuss revenue growth, which was purely organic in some more detail. It starts with NPS. We believe our NPS scores are industry, leading and we have taken to reporting it as 60, plus because the numbers are even higher.

Sandeep Sahai: We believe our NPS scores are industry-leading, and we have taken to reporting them as 60-plus because the numbers are even higher. As a direct consequence, we had incredibly low churn, and gross revenue retention grew from an already outstanding 98% to an incredible 99%. Next, revenue growth was widespread across geography. North America grew 20%, and Europe and Asia grew faster to deliver the aggregate 21% growth.

Sandeep Sahai: As a direct consequence, we had incredibly low chart and gross revenue retention.

Sandeep Sahai: Growth from an already outstanding 98% to an incredible 99% next.

Sandeep Sahai: Next the revenue growth was widespread across geographies North America grew 20%.

Sandeep Sahai: In Europe, and Asia drove faster to Delaware, the aggregate 21% growth.

Sandeep Sahai: ARR growth year-on-year re-accelerated to 19.3%. The multiproduct journey continues to gather momentum, and new products introduced over the last two quarters delivered solidly, contributing to an NRR of 110 for the quarter.

Sandeep Sahai: Here, our growth year on year re accelerated to 19, 3%.

Sandeep Sahai: The multi product journey continues to gather momentum.

Sandeep Sahai: And new products introduced over the last two quarters delivered solid wins.

Sandeep Sahai: Contributing to an <unk> of 110 for the quarter. The Clearwater jumped platform had a very strong quarter and added six significant clients in the quarter.

Sandeep Sahai: The Clearwater Jump Platform had a very strong quarter and added six significant clients in the quarter. Finally, our win rate continues to be 80% when a proposal is written, and it stands testimony to the disruptive power of a platform. A plan for sustained growth is founded on two strategic pillars. Number one:

Sandeep Sahai: Finally, our win rates continues to be 80% when the proposal as Rick.

Sandeep Sahai: And Stan <unk> testimony to the disruptive power of our platform.

Sandeep Sahai: Plan for sustained growth is founded on two strategic pillars number one.

Sandeep Sahai: Continued acquisition of new logos across an increasing breadth of industries and geographies. And number two, growing NRR to 115. Let's take some actual wins in Q1 to substantiate the progress we are making.

Sandeep Sahai: Continued acquisition of new logos across an increasing breadth of industries and geographies.

Sandeep Sahai: Number two growing in all our 215.

Sandeep Sahai: Let's take some actual wins in Q1 to substantiate the progress we are making we welcomed a publically traded healthcare company with multiple subsidiaries and $40 billion in AUR to the Clearwater community. This quarter the decision to transition to us came after.

Sandeep Sahai: We welcomed a publicly traded healthcare company with multiple subsidiaries and $40 billion in AUM to the Clearwater community at this event. The decision to transition to us came after growing frustration with the previous legacy technology provider, and On-Site Devil, followed by an RFP process that demonstrated our ability to comprehensively address multiple asset classes on a single instance multi-tenant platform. Several reference calls that attested to our ability to onboard efficiently and provide exceptional service sealed the deal.

Sandeep Sahai: Rowing frustration with the previous legacy technology provider and onsite Devil.

Sandeep Sahai: Born out by an RFP process demonstrated our ability to comprehensively address multiple asset classes on a single instance, multi tenant platform. Several reference calls that attests to our ability to onboard efficiently and provide exceptional service sealed the deal.

Sandeep Sahai: Our ever-growing solutions for alternatives continues to help us win deals and do more with current clients. We continue to see growth in these assets on our platform. A newly introduced innovation, the Clearwater Intelligence Console, or QuickLPX solution, a generative AI-based solution for LPs, is now delivering investment insights to our clients on demand. Institutional investors can leverage QUIC LPX to easily extract actionable insights from accounting data and performance metrics, even translating general partner documentation into 96 different languages.

Sandeep Sahai: Our ever growing solutions for alternatives continues to help us win deals and do more with current clients. We continue to see growth in these assets on our platform.

Sandeep Sahai: Our newly introduced innovation, the Clearwater intelligence console or quick LPX solution, our generative EIB solution for Lps.

Sandeep Sahai: <unk> is now delivering investment insights to our clients on Tibet.

Sandeep Sahai: Institutional investors can leverage quick LPX easily extract actionable insights from accounting data and performance metrics, even translating general partner documentation into 96 different languages.

Sandeep Sahai: Let's discuss a recent win driven by our capabilities in alternative. One of our clients has been growing very rapidly, but the complexity and size of the operations outpace their ability to manage investment operations effectively. An acquisition added a significant number of LPs to the portfolio, and they relied on a legacy platform for its processing. Hence, to get a comprehensive picture of the portfolio, they would have had to build a brand new deal warehouse.

Sandeep Sahai: Let's discuss our recent win driven by our capabilities in alternatives.

Sandeep Sahai: One of our clients have been growing very rapidly where the complexity and size of the operations outpaced the ability to manage investment operations effectively and acquisition added a significant number of Lps to the portfolio and they relied on our legacy platform points processing to get a comprehensive picture of the poor.

Sandeep Sahai: Foleo they would've had to build a brand new data warehouse a detailed demonstration of our platform showcased how clearwater could streamline their processes for all asset classes into one single instance, multi tenant platform they decided to adopt Clearwater LPX and Clearwater LPX clarity.

Sandeep Sahai: A detailed demonstration of our platform showcased how Clearwater could streamline their processes for all asset classes into one single-instance, multi-tenant platform. They decided to adopt Clearwater LPX and Clearwater LPX Clarity, in addition to the Clearwater core platform that they had already been using.

Sandeep Sahai: In addition to the Clearwater core platform that they had already been using we've discussed prism. Many times before this product has become a real winner for us across geographies and market sectors, We signed US asset management part of US Group Bank AG one of the lead.

Sandeep Sahai: This product has become a real winner for us across geographies and market sectors. We signed URST Asset Management, part of URST Group Bank AG, one of the leading asset managers in Central and Eastern Europe, managing €70 billion in assets for a broad client base, including pension plans. They join our fast-growing community of European buy-side clients. This win demonstrates Clearwater Prism's uniqueness and its ability to deliver a comprehensive view of their client's portfolio, attracting asset flows that are so vital for asset managers in this challenging market. Talking about international markets, we signed new contracts in APAC, Germany, France, and the UK, all in the same quarter. We feel really good that the new leadership we announced last quarter is already adding value.

Sandeep Sahai: Adding asset managers in central and Eastern Europe, managing 70 billion euros and asset for a broad client base, including pension plan. They join a fast growing community of European buy side clients. This win demonstrates Clearwater prisms uniqueness and its ability.

Sandeep Sahai: To deliver a comprehensive view of their clients' portfolio attracting asset flows that are so vital for asset managers in this challenging market talking about international markets, We signed new contracts in APAC, Germany, France, and the U K all in the same quarter.

Speaker Change: Feel really good.

Sandeep Sahai: That the new leadership, we announced last quarter is already adding value.

Sandeep Sahai: We have identified new pockets of applicability for the platform and are excited about the buildup of a pipeline. I'd like to talk about Clearwater for stable value. In Q1, we proudly announced that Tiro Price selected that platform to support the firm's growing stable value fund. The core platform already addressed a vast majority of the need, but a purpose-built addition for that market allowed us to address the complex needs of stable value funds. Streamlining trade ticket processes for investment contract issuers and other third parties

Sandeep Sahai: We have identified new pockets of applicability for our platform and are excited about the buildup of our pipeline I'd like to talk about Clearwater for stable value products. In Q1, we proudly announced that T. Rowe price selected our platform to support their phones growing stable value fund based.

Sandeep Sahai: The core platform already addressed a vast majority of the need but a purpose built addition for that market.

Sandeep Sahai: Allowed us to address the complex needs of stable value funds streamlining treat ticket processes for investment contract insurers and other third party stable value fund providers will benefit from our unified SaaS solution that offers daily reconciled investment data to both front and back office teams.

Sandeep Sahai: Stable value front providers will benefit from a unified SaaS solution that offers daily reconciled investment data to both front and back office. Following up on that win, we now have another significant client on this platform. We have also introduced Clearwater for pooled funds.

Sandeep Sahai: Following up on that when we now have another significant find on this platform. We also introduced Clearwater for pooled funds this quarter. It equips steep treasuries in the pool participants with a user friendly web based portal that integrates seamlessly with pay what is accounting.

Sandeep Sahai: It equips state treasuries and report participants with a user-friendly web-based portal that integrates seamlessly with Clearwater's accounting and reporting platform. Again, a vast majority of the need was already addressed, but we have added a purpose-built solution to address the specific, already regarded as a best-in-class investment accounting platform for state treasurer's offices. Our new participant portal simplifies navigation of local government investment pools, providing participant portal logins and statement preparation all within one platform.

Sandeep Sahai: And reporting platform again, a vast majority of the need was already addressed but we have added a purpose built solution to address the specific needs already regarded as a best in class investment accounting platform for state treasurers offices.

Sandeep Sahai: A new participant portal simplifies navigation of local government investment pools provide.

Sandeep Sahai: Providing participant portal logins and staple preparation.

Sandeep Sahai: All within one platform.

Sandeep Sahai: One of Clearwater Jump Platform's wins is a company based in France and Luxembourg that manages assets including equity, fixed income, and private. Prior to partnering with us, they lacked full functional coverage for front, middle, and back office operations and depended on extensive manual processing.

Sandeep Sahai: One of Clearwater jumped platform wins is a company based in France, and Luxembourg that manages assets, including equity fixed income and private debt prior to partnering with us they lacked full functional coverage.

Sandeep Sahai: For front middle and back office operations.

Sandeep Sahai: And depended on extensive manual processes.

Sandeep Sahai: Clearwater Jump closes these gaps by enhancing data accuracy, reducing manual processes through automation, and providing regulatory compliance. Another plan specializing in fund and wealth management, primarily in equity and fixed income, embraces Clearwater Jump as its end-to-end asset management platform and the seamless coverage it provides across their front, middle, and back office investment operations. This new client will use Clearwater to connect seamlessly with all its counterparties, leveraging critical market data, and Optimizing Trading Process.

Sandeep Sahai: Clearwater jump clauses these gaps by enhancing data accuracy.

Sandeep Sahai: Reducing manual processes through automation.

Sandeep Sahai: And providing regulatory compliance.

Sandeep Sahai: Other clients specializing in fun and wealth management.

Sandeep Sahai: Primarily in equity and fixed income embraced Clearwater jump.

Sandeep Sahai: As its end to end asset management platform and the seamless coverage it provides across their front middle and back office investment operations.

Sandeep Sahai: This new client will use clearwater to connect seamlessly with all its counterparties leveraging critical market data and.

Sandeep Sahai: And optimizing trading processes.

Sandeep Sahai: Our newest corporate cash client, one of the world's largest pharmaceutical companies, enlisted our expertise to oversee the rapidly expanding, Separately Managed Account Program. As their investment operations have grown to include multiple asset managers, custodians, and money market fund portal partnerships, they now depend on the Clearwater platform for streamlined operations and a consolidated view of the portfolio. We trust that these examples illustrate the very meaningful progress we are making on both the acquisition of new logos across an ever-increasing number of industries and geographies.

Sandeep Sahai: Our newest corporate cash client.

Sandeep Sahai: One of the world's largest pharmaceutical companies and listed our expertise to oversee the rapidly expanding separately managed account program.

Sandeep Sahai: Has that investment operations have grown to include multiple asset managers custodians and money market fund poultry partnerships.

Sandeep Sahai: Now depend on the Clearwater platform for streamline operations and a consolidated view of the portfolio.

Sandeep Sahai: We trust that these examples illustrate the very meaningful progress we are making on both the acquisition of new logos across an ever increasing number of industries and geographies.

Sandeep Sahai: And secondly, in our continued journey towards becoming a multi-product company that can deliver a sustained NRR of 115 and beyond. Switching gears, let me discuss progress on the addition of capabilities that will allow us to address more of the technology spend across the investment management lifecycle and not just investment accounting. We started with the acquisition of Jump.

Sandeep Sahai: Secondly, in our continued journey towards becoming a multi product company that can deliver a sustained and there are a 115 and beyond.

Sandeep Sahai: Switching gears, let me discuss progress on the additional capabilities that will allow us to address more of the technology spend.

Sandeep Sahai: Across the investment manager lifecycle, and not just investment accounting, we started with the acquisition of <unk>.

Sandeep Sahai: And the Clearwater Jump platform is doing well and responding with our clients in precisely the way we thought it would. We won six clients this quarter and are now able to offer solutions for the front, middle, and back. This quarter, we are thrilled to announce that we completed the acquisition of the RISC performance and analytics platforms of Wilshire Advice, Wilshire Axiom, Wilshire Atlas, Wilshire Abacus, and Wilshire IQ Composite. These will now be integrated with Clearwater Solutions in the risk and performance space to create a powerful and compelling product for our clients.

Sandeep Sahai: And the Clearwater jumped platform is doing well and resonating with our clients in precisely the way we thought it would.

Sandeep Sahai: We won six clients this quarter and are now able to offer solutions for the <unk>.

Sandeep Sahai: Front middle and back office.

Sandeep Sahai: This quarter, we were thrilled to announce that.

Sandeep Sahai: We completed the acquisition of the risk performance analytics platforms overshot advice will show axial Wiltshire, Atlas will show Abacus and we'll share.

Sandeep Sahai: Hugh composite Wil.

Sandeep Sahai: We will now be integrated with Clearwater solution in the risk and performance space to.

Sandeep Sahai: To create a powerful and compelling product for our clients.

Sandeep Sahai: We are integrating these new capabilities into our risk and performance analytics platform, enhancing our capabilities in many ways. We can now offer our clients significantly enhanced capabilities that would have taken us years to develop in-house. Risk and performance models need to establish credibility through extensive use, and it often takes years or even decades to achieve that.

Sandeep Sahai: We are integrating these new capabilities into our risk and performance analytics platform and.

Sandeep Sahai: Enhancing our capabilities many full.

Sandeep Sahai: We can now offer our clients significantly enhanced capabilities.

Sandeep Sahai: That would have taken us years to develop in house.

Sandeep Sahai: Risk and performance models.

Sandeep Sahai: To establish credibility by extensive use and it often takes years or even decades to achieve that simply part. This acquisition allows us to capture additional Tam immediately and scale the business our clients will benefit from our comprehensive suite of modular tools for portfolio.

Sandeep Sahai: Simply put, this acquisition allows us to capture additional time immediately and scale the business. Our clients will benefit from a comprehensive suite of modular tools for portfolio construction, quantitative performance attribution, risk analysis, Trust Testing, and Portfolio Analytics, all using the same underlying data from the core Clearwater platform. Our vision is to create the preeminent investment management platform for firms around the world, and by partnering with Wilshire and bringing their robust, time-tested models into our platform, we are one step closer to that goal.

Sandeep Sahai: Construction quantum.

Sandeep Sahai: Quantitative performance attribution risk analysis stress testing and portfolio analytics.

Sandeep Sahai: Using the same underlying data from the core <unk> platform.

Sandeep Sahai: Our vision is to create the preeminent investment management platform performance around the world and by partnering with Wilshire and bringing their robust time tested models into our platform. We are one step closer to that vision with the jump in Wiltshire acquisitions, we are building people technology and markedly.

Sandeep Sahai: With the JUMP and Wilshire acquisitions, we are building people, technology, and market leadership to establish Clearwater as the definitive enterprise platform for the entire investment management process. Shifting to unit economics, we are very pleased to report that we have achieved this revenue growth while simultaneously increasing our gross margin to a new record high for the company at 78%. Our generative AI programs have started to positively impact our ability to deflect customer inquiries and enable our client servicing teams to deliver faster and more comprehensive responses.

Sandeep Sahai: The ship to establish Clearwater has the definitely the enterprise platform for the entire investment management process ship.

Sandeep Sahai: Shifting to unit economics, we are very pleased to report that we have achieved this revenue growth while simultaneously increasing our gross margin to a new record high for the company at 78%.

Sandeep Sahai: Generally the VA programs have.

Sandeep Sahai: Started to positively impact our the ability to deflect customer inquiries and enable our client servicing teams to deliver faster.

Sandeep Sahai: And more comprehensive responses.

Sandeep Sahai: We feel very confident about our march towards our stated long-term goal of achieving 80% gross margin, although perhaps meaningfully. Thank you for your continued support, and we look forward to sharing more about our product offerings and the latest innovations at Clearwater Connect in London on June 19. A great event where we expect hundreds of institutional investors will gather to learn about new technologies and solutions that can help grow their business. With that, I will turn it over to Jim to review our financial results in more detail.

Sandeep Sahai: Feel very confident about our March towards our stated long term goal of achieving 80% gross margin.

Sandeep Sahai: Perhaps meaningfully faster.

Sandeep Sahai: Thank you for your continued support and we look forward to sharing more about our product offerings and the latest innovations at Clearwater connect in London on June 19th a great event, where we expect hundreds of institutional investors will gather to learn about new technologies and solutions that can help grow their.

Sandeep Sahai: With that let me turn it over to Jim to review, our financial results in more detail.

Jim Costa: Thanks, Sandeep and.

James S. Cox: And thank you all for joining us. I'm delighted to report that 2024 is off to a great start with exceptional results in Q1 across various key metrics. In the first quarter, we decisively beat guidance for revenue by $2.2 million and adjusted EBITDA by $3.4 million. Our organic revenue growth re-accelerated to 21.4% in Q1 of 2023. Revenue in the quarter was helped by incredibly low churn, resulting in a best ever reported gross retention rate of 99%.

Jim Costa: And thank you all for joining us I'm delighted to report that 2024 is off to a great start with exceptional results in Q1 across various key metrics in the first quarter, we decisively beat guidance for revenue by $2 $2 million.

Jim Costa: And adjusted EBITDA by $3 4 million, our organic revenue growth Reaccelerate. It to 21, 4% over Q1 of 2023 revenue in the quarter was helped by incredibly low churn, resulting in a best ever reported gross retention rate of 99%.

James S. Cox: In addition to limited churn, we also expanded our relationships with our existing clients through cross-selling of products, increasing our share of our clients' investment books on Clearwater, and growth in our clients' AUM. When you put that together, it results in net revenue retention of 110% and solid revenue growth. The impressive improvement in both net revenue retention rate and gross retention rate is reflective of our market-leading competitive position. Our single instance multi-tenant product was stronger than ever in the first quarter versus legacy tech incumbents.

Jim Costa: In addition to limited churn, we also expanded our relationships with our existing clients through cross sell of products, increasing our share of our clients' investment books unclear water and growth in our clients' AUM when you put that together it results in net revenue retention of 110.

Jim Costa: <unk> and solid revenue growth the impressive improvement in both net revenue retention rate and gross retention rate is reflective of our market leading competitive positioning our single instance, multi tenant product was stronger than ever in the first quarter versus legacy Tech.

Jim Costa: Incumbents the strong revenue results flowed through to both gross margin and adjusted EBITDA, We achieved adjusted gross margin of 78% and in the adjusted EBIT margin of 31, 3%, which.

James S. Cox: The strong revenue results flowed through to both gross margin and adjusted EBITDA. We achieved an adjusted gross margin of 78% and an adjusted EBITDA margin of 31.3%, which is a stunning increase of 470 basis points from the first quarter of 2023. The unit economics of this single instance multi-tenant platform are simply phenomenal.

Jim Costa: Which is a stunning increase of 470 basis points from the first quarter of 2023. The unit economics of the single instance, multi tenant platform are simply phenomenal.

James S. Cox: When you compare the EBITDA growth over the last year to the growth in revenue... The marginal EBITDA expansion is 53% over a year. And during that time, we increased research and development spend by 13%.

Jim Costa: When you compare the EBIT growth over the last year to the growth in revenue.

Jim Costa: The marginal EBITDA expansion is 53% over a year.

Jim Costa: And during that time, we increased research and development spend by 13%. So we are investing more in developing new products.

James S. Cox: So we are investing more in developing new products and generating more than 50 cents of EBITDA for every incremental dollar of revenue. With profitability characteristics like that, investors can have high confidence in our long-term EBITDA targets of $40. It was also satisfying to see tangible progress on our path to NRR 1 and 2, with our net revenue retention rate increasing to 110% as of March 31, 2024. I want to remind investors that we expect our NRR 115 pass to progress directionally upwards in future quarters, but not necessarily in a linear fashion.

Jim Costa: And generated more than 50 of EBITDA for every incremental dollar of revenue.

Jim Costa: With profitability characteristics like that.

Jim Costa: Investors can have high confidence.

Jim Costa: And our long term EBIT target of 40%.

Jim Costa: It was also satisfying to see tangible progress on our path to NR. One in 15 with our net revenue retention rate increasing to 110% as of March 31, 2024, I want to remind investors that we expect our NR or $1 15 path too.

Jim Costa: Two progress directionally upwards in future quarters, but not necessarily in a linear fashion. The first quarter continued to show good signs of progress in up selling and.

James S. Cox: The first quarter continued to show good signs of progress in upselling, and we believe that the positive momentum in upselling should continue to increase beginning in the second half of this year as we roll out new products and modules. Developed by more than 60% of R&D capacity, we are focusing on these growth. In addition, Jump progressed nicely in Q1, with the key booking wins as Sunday mentioned.

Jim Costa: And we believe that the positive momentum and Upselling.

Jim Costa: Should continue to increase beginning in the second half of this year as we rollout.

Jim Costa: New products and modules.

Jim Costa: <unk> by the more than 60% of R&D capacity, we are focusing on these growth initiatives. In addition.

Jim Costa: Jumped progressed nicely in Q1.

Jim Costa: With the key booking wins as Sandeep mentioned.

James S. Cox: JMP has proven to be a good proof point as our first ever acquisition, and we continue to explore tuck-in acquisitions like JMP and Wilshire platforms that can allow us to harness strategic functionalities adjacent to our core strength and bring those functionalities to market more quickly for our clients. As of March 31, 2024, ARR increased to $402.3 million, representing a re-accelerated year-over-year increase of 19.3%. From the prior years, 337.4 million. This year-over-year growth is purely organic.

Jim Costa: <unk> has proven to be a good proof point as our first ever acquisition and we continue to explore tuck in acquisitions like John and Wilshere platforms that can allow us to harness strategic functionalities adjacent to our core strength and bring those functionalities to market more quickly for <unk>.

Jim Costa: Our clients.

Jim Costa: As of March 31, 2024.

Jim Costa: Our increased to $402 $3 million.

Jim Costa: <unk>, a re accelerated year over year increase of 19, 3%.

Jim Costa: From the prior year's $337 4 million.

Jim Costa: This year over year growth is purely organic Furthermore, <unk> grew sequentially.

James S. Cox: Furthermore, ARR grew sequentially by $23.2 million, our highest ever sequential quarterly growth in ARR. Now, let's turn to the profitability results. On the heels of blockbuster results in margin expansion throughout 2023, we made further tangible progress on our margin expansion path in the first quarter of 2024. This displays the power of our profitable unit economy and shows the true leverage of our business, and the clear pathway towards our long-term adjusted even margin goal of 40%. In Q1, we achieved a gross profit of $80.2 million and a 78% gross margin.

Jim Costa: $23 2 million, our highest ever sequential quarterly growth in IRR.

Speaker Change: Now, let's turn to profitability results.

Jim Costa: On the heels of blockbuster results and margin expansion throughout 2023.

Jim Costa: We made further tangible progress on our margin expansion path in the first quarter of 2024. This displays the power of our profitable unit economics and shows the true leverage of our business.

Jim Costa: And the clear pathway towards our long term adjusted EBITDA margin goal.

Jim Costa: A 40% in Q1.

Jim Costa: We achieved gross profit of $80 $2 million and 78% gross margin an increase of 210 basis points over Q1 of 2023.

James S. Cox: An increase of 210 basis points over Q1 of 2023. This demonstrates that we are progressing quite nicely towards our long-term gross margin goal of 80%. In addition, we reported $32.2 million in adjusted EBITDA and a 31.3% adjusted EBITDA margin in the first quarter, which handily be, are EBITDA guidance expectants, and are an improvement over the prior year's EBITDA margin by 470 basis points. In line with prior quarters, the outperformance in our revenue flowed straight through to, and having already achieved our EBITDA margin full-year guidance target of 31% in the first quarter, we expect to moderate the EBITDA margin expansion in the second quarter of 2024 to prudently reinvest.

Jim Costa: This result demonstrates that we are progressing quite nicely towards our long term gross margin goal of 80%. In addition, we reported $32 $2 million in adjusted EBITA.

Jim Costa: And 31, 3% adjusted EBITDA margin in the first quarter.

Jim Costa: Which handedly beat.

Jim Costa: Our EBIT guidance expectation.

Jim Costa: And improve over the prior year's EBITA margin by.

Jim Costa: 470 basis points in line with prior quarters, the outperformance in our revenue flowed straight through to EBITDA, having already achieved our EBITA margin full year guidance target of 31% in the first quarter, we expect to moderate the EBIT.

Jim Costa: Margin expansion in the second quarter of 2024.

Jim Costa: To prudently reinvest some of that excess profitability.

James S. Cox: Some of that excess profitability back into our growth initiatives in R&D, including the integration of the acquisition of the Wilshire platform, which recently closed on April 22nd. Additionally, we will continue to lean heavily on the investments in international go-to-market activity. They are producing results, and we see an addressable market that is right for the same disruption we've been able to achieve in North America.

Jim Costa: Back into our growth initiatives in R&D, including the integration of the acquisition of the Wilshire platform, which recently closed on April 27. Additionally, we will continue to lean heavily into the investments in international go to market activity. They are producing results and we see an addressable.

Jim Costa: Market that is right for the same disruption we have been able to achieve in North America. As we have indicated in the prior quarters earnings call R&D spend as a percent of revenue will continue to moderate over time since we have already completed our migration to the public cloud last year.

James S. Cox: As we have indicated in the prior quarter's earnings call, R&D spend as a percent of revenue will continue to moderate over time since we have already completed our migration to the public cloud last year. In Q1, R&D dollar expense was up 13%, but as a percentage of revenue, it decreased to 24.9%, which was 190 basis points lower than Q1. In Q1, equity-based compensation was $28.5 million, a decrease of $4 million from Q1 of 2023.

Jim Costa: In Q1, R&D dollar expense was up 13%, but as a percentage of revenue it decreased to 24, 9%, which was 190 basis points lower than Q1 2023 in Q1 equity based compensation was $28 $5 million at <unk>.

Jim Costa: Decrease of $4 million from Q1 of 2023 as we noted in our Investor Day presentation. In September 2023, the high watermark of equity based compensation as a percentage of revenue is behind us going forward in future years, including 2024. This percentage should continue to.

James S. Cox: As we noted in our Investor Day presentation in September 2023, the high watermark of equity-based compensation as a percentage of revenue is behind us. Going forward, in future years, including 2024, this percentage should continue to trend down.

Jim Costa: Trend down.

James S. Cox: Lower equity-based compensation expense, as well as lower income tax and tax receivable agreement expense, in the first quarter contributed to GAAP net income being positive in the first quarter. Now, let's turn to the balance sheet and cast some light on the results. Operating cash flow was $10 million in Q1, a 26.5% increase year over year. Free cash flow was $8.6 million in Q1, which again was a year-over-year improvement of 38.3%. Due to the seasonality of free cash flow, the conversion rate of EBITDA to free cash flow is generally lower in Q1 than in other quarters.

Jim Costa: Lower equity based compensation expense as well as lower income tax and tax receivable agreement expense in the first quarter contributed to GAAP net income being positive in the first quarter.

Jim Costa: Let's turn to the balance sheet and cash flow operating cash flow was $10 million in Q1, a 26, 5% increase year over year.

Jim Costa: Free cash flow was $8 6 million for Q1.

Jim Costa: Which again was a year over year improvement of 38, 3% due to the seasonality of free cash flow the conversion rate of EBITA to free cash flow is generally lower in Q1 than other quarters. However, as previously mentioned when looking at this conversion rate on an annual Bay.

James S. Cox: However, as previously mentioned, when looking at this conversion rate on an annual basis, the steady state should be approximately 70 percent, taking into account quarterly seasonality in pre-cash. We ended the quarter with $296.5 million in cash, cash equivalents, and investments. This total cash amount reflects the payment of $28.8 million in taxes for the NED Settlement of Equity Awards, which is a financing cash and was completed to reduce share count dilution from the issuance of equity awards. Total debt was $47.9 million, thereby resulting in net cash holdings of approximately $249 million.

Jim Costa: The steady state should be approximately 70% taking into account quarterly seasonality at free cash flow. We ended the quarter with $296 $5 million in cash cash equivalents and investments. This total cash amount reflects the payment of $28.

Jim Costa: $8 million in taxes for the net settlement of equity awards, which is a financing cash flow and was completed to reduce share count dilution from the issuance of equity awards total debt was $47 9 million, thereby resulting in net.

Jim Costa: Cash holdings of approximately $249 million, we closed the wilshire risk and performance product acquisition on April 22nd and we paid $40 million from our bank even with this payment we have plenty of dry powder should we choose to execute another tuck in acquisition.

James S. Cox: We closed the Wilshire Risk and Performance Product Acquisition on April 22nd, and we paid $40 million from our bank. Even with this payment, we have plenty of dry powder should we choose to execute another tuck-in acquisition. Now, let's turn to guidance.

James S. Cox: For the full year 2024, we have meaningfully raised our revenue guidance to $438 million to $442 million dollars, representing an improved year-over-year growth rate of approximately 19 to 20%. This represents an increase at the lower end of $7 million and at the higher end of $5. This full year guidance has incorporated both the outperformance in revenue in the first quarter and the forecasted uplift of revenue from the Wilshire acquisition. When we announced the acquisition, we indicated that the asset run rate was approximately $7 million.

Jim Costa: Now, let's turn to guidance for the full year 2024, we have meaningfully raised our revenue guidance to $438 million to $442 million, representing an improved year over year growth rate of approximately 19% to 20%.

Jim Costa: This represents an increase at the lower end of $7 million and at the higher end of $5 million. This full year guidance as incorporated both the outperformance in revenue in the first quarter and the forecasted uplift of revenue from the Wilshire acquisition, when we announced the.

Jim Costa: Position, we indicated the asset run rate was approximately $7 million. So you can assume two thirds of that amount or four and a half million dollars have been incorporated into our 2020 for annual guidance.

James S. Cox: So you can assume two-thirds of that amount, or $4.5 million, have been incorporated into our 2024 annual guidance. For the second quarter of 2024, we expect revenue to be in the range of $105 to $106 million, representing a year-over-year growth rate of approximately 17 to 18 percent. Q2 2023 is a tough comparable, as a very large client went live in April of last year, resulting in 22 percent growth last year. For the full year 2024, we have also raised our EBITDA guidance by $2 million to $137 million at the low end to $139 million at the high end, which provides an adjusted EBITDA margin of 31% and an uplift of approximately 260 basis points from 2023.

Jim Costa: For the second quarter of 2024, we expect revenue to be in the range of $105 million to $106 million, representing a year over year growth rate of approximately 17% to 18% Q2 2023 is a tough comparable as a very large client went live in <unk>.

Jim Costa: For all of last year, resulting in 22% growth last year.

Jim Costa: For the full year 2024, we have also raised our EBIT guidance by $2 million to $137 million at the low end to $139 million at the high end, which provides an adjusted EBITA margin of 31% and an uplift of approximately.

Jim Costa: <unk> 260 basis points from 2023, we continue to have confidence in our margin improvement for the remainder of 2024 because of the significant efficiency improvements we are continuing to see throughout the business, including our Gen AI activity in this.

James S. Cox: We continue to have confidence in our margin improvement for the remainder of 2024 because of the significant efficiency improvements we are continuing to see throughout the business, including our Gen AI activities. For the full year, we expect adjusted EBITDA to be $31 million or approximately 29 to 30% adjusted EBITDA margin.

Jim Costa: Second quarter of 2024, we expect adjusted EBITA to be $31 million or approximately 29% to 30% adjusted EBIT margin for the full year, we remain committed to our 31.

James S. Cox: We remain committed to our 31 plus percent EBITDA margin, and we can remain committed to greater than 200 basis points improvement in EBITDA margin over 2023. In summary, we're excited about our very clean first quarter in 2020 and look forward to utilizing this excellent start to build on our revenue growth, continue on our NRR 115 path, and deliver on margin expansion for the rest of 2020. With that, I'll turn it over to Sandeep to provide some closing remarks. Thank you, Jim. As we reflect on our Q1 results,

Jim Costa: Plus percent EBITA margin and we can remain committed to greater than 200 basis points improvement in EBIT margin over 2023.

Jim Costa: In summary, we are excited about our very clean first quarter in 2024 and look forward to utilizing this excellent start to build on our revenue growth.

Jim Costa: <unk> on our <unk> 115 path and deliver on margin expansion for the rest of 2024.

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

Sandeep Sahai: As we reflect on our Q1 results, I want to express my deep gratitude to all of you for being such a dedicated team at Clearwater. The tireless efforts and commitment to innovation have allowed us to delight our customers and partner with them to build new products. Achievements highlight not only our dedication to client success but also our ability to grow and evolve.

Sandy: Thank you Jim.

Sandy: We reflect on our Q1 results I want to express my deep gratitude.

Sandy: To a dedicated team of tier one.

Sandy: The tireless efforts and commitment to innovation.

Sandy: Has allowed us to delight, our customers and partner with them to build new products.

Sandy: Our achievements highlight.

Sandy: Not only our dedication to client success.

Sandeep Sahai: We are more excited than ever about the future and remain focused on a strategic path of customer-driven innovation, operational excellence, and market expansion. As we push ahead into the second quarter and beyond, I'm confident in our company's ability to maintain its momentum. Managing Director of Strategic Acquisitions, John van Wiltshire, has laid the groundwork for continued growth and expansion into new markets. Together with our industry-leading client retention rates and growing portfolio of innovative offerings, we believe the company is uniquely positioned in the market. Our focus continues to be on creating meaningful value for our shareholders, clients, and employees.

Sandy: But also the ability to grow and evolve we are more excited than ever about the future and remain focused on our strategic part of customer driven innovation operational excellence and market expansion.

Sandy: As we push ahead into the second quarter and beyond.

Jim Costa: I am confident in our company's ability to maintain its momentum.

Jim Costa: Our strategic acquisitions and gaucher.

Jim Costa: Have laid the groundwork for continued growth and expansion into new markets.

Jim Costa: Together with our industry, leading client retention rates and growing portfolio of innovative offerings. We believe the company is uniquely positioned in the market.

Jim Costa: Our focus continues to be on creating meaningful value for our shareholders clients and employees.

Operator: We will now start our Q&A session. If you would like to ask a question, please dial * followed by one on your telephone keypad. If you change your mind, please dial star followed by two to exit the queue. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally. Our first question today is from the line of Rishi Jaluria of RBC. Rishi, your line is open. Please go ahead.

Speaker Change: We will now start our Q&A session. If you would like to ask a question. Please dial star followed by one on your telephone keypad if.

Rishi Nitya Jaluria: After a relatively successful acquisition with Jump, and I've got a quick follow-up. Yeah, thank you.

Jim Costa: If you change your mind Christophe stall followed by two to exit the Q and.

Jim Costa: And finally, when preparing to ask your question. Please ensure that youll find is unmatched it locally.

Sandeep Sahai: Yeah, thank you Rishi. So about the virtual platform acquisition. So the first thing is, strategically, we want to address more of the investment management technology versus just investment accounting. So if we go back to investor day, we talked about changing our ability to address full-bid, on what a client spends instead of just one. One large pocket of that is risk and performance. And if you think about risk and performance, it needs to reconcile accurate and timely data. And we do that already.

Jim Costa: Our first question today is from the line of Rishi generate RBC ratio line is open. Please go ahead.

Sandeep Sahai: Now, we could have built it. But building risk and performance is expensive and cumbersome. But the most important point is, Rishi, that these models have to be out in the market for a period of time, people have to use them quite extensively, and then they mature. And that could take you years, it could take you decades, to get the right amount of respect, if you will, in the market. So given all of that, we had the opportunity to partner with Wilshire and go and buy this. We found it was, frankly, a no-brainer.

Rishi: Our wonderful thanks, Sandeep, thanks for taking my questions nice to see that.

Rishi: At our uptick again this quarter on maybe to first ask.

Rishi: Maybe you can think they take a little bit until we'll share on the acquisition made there strategically can you help us understand kind of what it brings to the table that you felt developing in house.

Rishi: I guess with superior to developing something in house and what's the path to integrate the assets you are buying there, especially given the learnings that you have after a relatively successful acquisition with job and I've got a quick follow up.

Speaker Change: Yeah. Thank you Rishi.

Speaker Change: But the virtual platform acquisition.

Speaker Change: So the first thing is strategically we want to address more of the investment management technology versus just investment accounting.

Rishi: So if you go back to the Investor day, we talked about changing our ability to address four bps over our clients spend instead of one.

Rishi: One large pocket of that.

Speaker Change: As risk and performance.

Speaker Change: And if you think about risk and performance.

Speaker Change: Need to reconcile accurate and timely data and we do that already.

Speaker Change: Now we could have built it but building risk and performance is expensive and cumbersome, but the most important point is we see that these models have to be out in the market for a period of time people have to use it quite extensively and then the mature.

Speaker Change: And that particular years, particularly for decades.

Speaker Change: To get the right amount of respect if you will in the market.

Speaker Change: So given all of that we had the opportunity to partner with Azure and Google and by this we felt it was frankly a no brainer.

Sandeep Sahai: One of the items we were planning to build was risk and performance. So we can now take that, and integrate it into the work we already do. So we already do risk and performance for our clients. This just takes it to a completely different level. So it felt super strategic, and we really could not be more delighted with being able to close this deal earlier this month, or, pardon me, last month.

Speaker Change: And one of the items you were planning to build was risk and performance. So we can now take that.

Rishi Nitya Jaluria: All right, wonderful. That's really helpful, Sandeep. And then maybe one for, I guess, both Jim and Sandeep, just thinking through the guide, especially for Q2.

Speaker Change: Integrated into what we already do so we already do risk and performance for our clients. This just takes it to a completely different level. So it's super strategic.

Speaker Change: We are really could not be more delighted with being able to close this deal.

Speaker Change: Earlier this month.

Speaker Change: Thus far.

Sandeep Sahai: Jim, I understand your comments on, you know, having a tougher comp in Q2 of last year. But I mean, factually, right, we saw ARR accelerate this quarter to, you know, a really healthy level. We saw NRR tick up. And when I look at the guide, you're talking about an organic two-year CAGR. That still implies meaningful deceleration from what you saw in Q1. Were there any one-time factors? Or maybe can you help us understand the puts and takes of the Q2 guide? Thank you. Okay, so look, I'll give you my perspective, and Jim, maybe,

Speaker Change: Alright wonderful that's necessarily help us and then maybe one for I guess both of them and Felipe just.

Speaker Change: Thanks for the guide, especially for Q2 came I understand your comment on having a tougher comp in Q2 of last year, but.

Speaker Change: And factually right, we saw air or accelerate this quarter to a really healthy level, we saw MLR tick up.

Speaker Change: And when I look at the guide you're talking about an organic two year CAGR.

Speaker Change: That still implies meaningful deceleration from what you saw in Q1 were there any one time factors or maybe can you help us understand the puts and takes of the Q2 got it. Thank you.

Speaker Change: Okay.

Sandeep Sahai: Okay, so look, I'll give you my perspective, and Jim, maybe you can add to that. So firstly, we feel really confident about our annual Now, in Q1, churn was meaningfully lower. You've never seen churn this low, and it's lower than the 2% historical number. So it's not like we expect churn to go up, but we just don't model this kind of churn. The third thing was that one of our larger clients was expected to go live in Q2, but they went live in February.

Speaker Change: Okay. So look I'll give you my perspective, and Jim maybe you can add to that so firstly, we feel really confident about our annual guidance.

Speaker Change: While in Q1 churn was meaningfully lower.

Speaker Change: Never seen it John this slow and it's lower than the 2% historic number. So it's not like we expect churn to go up but we can sort of model this kind of churn.

Jim Costa: Third thing was that one of our larger clients, we expected to go live in Q2.

Jim Costa: And they went live in February instead, so thats good news, but it pulled some revenue from Q2 into Q1.

Sandeep Sahai: So that's good news, but it pulls some revenue from Q2 into Q1. Now, having said all of that, Obviously, the NRR is a contributing factor, and that is driven mostly, Rishi, by new products. So I went through a whole litany of examples, but the point is, we just feel that new products are a little bit difficult to predict. [inaudible] I don't know, Jim, what would you add? But it's great.

Speaker Change: Now having said all of that.

Speaker Change: Obviously <unk> is a contributing factor and that is driven mostly received by new products.

Speaker Change: Went through a whole litany of examples but the point is we just feel that new products are a little bit difficult to predict.

Speaker Change: Exactly when it will happen it will happen in the aggregate we feel yes. This revenue annual guide is really good.

Speaker Change: But quarter by quarter, we are still a little bit.

Speaker Change: We feel concerned about projecting too high a cumulative as Greg said I think the $100.

Speaker Change: If I remember correctly, when we came in with a really good number.

Speaker Change: So we do feel we should be.

Speaker Change: And so we do on a quarterly level, while feeling really confident.

Speaker Change: I'll begin with yet.

Speaker Change: Okay.

Speaker Change: Wonderful thank you.

Speaker Change: Thanks Rich.

Dylan Tyler Becker: Our next question today is from the line of Dylan Becker from William Blair. Dylan, your line is open. Please go ahead.

Speaker Change: Our next question today is from the line of Dylan Becker of William Blair.

Dylan Tyler Becker: Line is open. Please go ahead.

Faith: Hey guys, it's Faith on for Dylan. If I could start with maybe a more high-level question, but as we move back to base sales and engineering talent and the prioritization of platform innovation, how should we think about the ramp cadence of these different initiatives and how to benchmark the success and progress of them throughout both this year and beyond?

Dylan Tyler Becker: Hey, guys, it's faced Entre Dylan if I could start with maybe more high level question, but asked.

Dylan Tyler Becker: We move back to base sales and engineering talent and the prioritization of the platform innovation, how should we think about the ramp cadence of these different initiatives.

Dylan Tyler Becker: Benchmark the success and progress.

Dylan Tyler Becker: Well this year and beyond.

Sandeep Sahai: Yeah, so Jim, why don't you take the question, but I do want to just say something quickly, which is, I don't think there's any let-down in choosing a new logo. We don't see any difference in the market.

Speaker Change: Yes, so you want to hit the question, but I did want to just say something quickly which is I don't think there's any let up in chasing new logos. We don't see any difference in the market. We continue to see a demand for new logos to be to require.

Dylan Tyler Becker: Quite high and robust.

James S. Cox: We continue to see a demand for new logos to be quite high and robust. And the question is, should we also be building new products, which we can take to current clients and also use them to create new logos? Jim can provide a little bit more detail about the products we're investing in and just the size of those, and what they could be.

Dylan Tyler Becker: The question is should we also be building new products, which we can take to current clients and also use them to open new logos, Jim can provide little bit more detail about the products. We are investing in and just the size of those and what it could be.

James S. Cox: Yeah, thanks Faith. So just at the high level, think about one of the key elements of driving to NRR 115 is really adding these incremental products back into our client base. And we have four products, of the many that we're developing, that are in the market now. And we feel like we're getting good traction with that. You won't be surprised by these names because you've heard these names before. LPX, Sandeep talks about the good traction we're getting there. Prism. Sandeep talked about the big win we had in PRISM in Europe. Riff.

Jim Costa: Yeah. Thanks, David So so just at the high level think about one of the key elements of driving to NR $1 15.

Jim Costa: Is really adding these incremental products back into our client base and we have four products.

Jim Costa: Many that we're developing that are in market now and we feel like we're getting good traction with that.

Jim Costa: You won't be surprised by this because you've heard these names before L.

Jim Costa: L P X sandy talked about the good traction we're getting there.

Jim Costa: Prism.

Jim Costa: Sandy you talked about the big win we had in prison in Europe.

Jim Costa: Risk that's very aligned to the wheelchair acquisition, but also we're already delivering on that and John which was an acquisition from 2022 those are in the market and we see that is doing very well.

James S. Cox: That's very aligned to the Wilshire acquisition, but we're already delivering on that and Jump, which was an acquisition from 2020. Those are in the market. And we see those doing very well. And as we see those continue to grow, we will continue to see, ultimately, NR115, you know, that metric tracking, tracking there. But those aren't the only R&D initiatives that we're driving. There's a couple that are more focused on new low, where we actually have a great solution.

Jim Costa: As we see those continue to grow we will continue to see ultimately and our $1 15 that metric traction tracking that but those arent the only.

Jim Costa: R&D initiatives that we are driving to Theres a couple that are more focused on new logos.

James S. Cox: One of the best things about the Clearwater platform is that it is so flexible and has proven to be market-leading not only in corporates and insurance companies and asset managers and now in governments, and we move forward from there. There are two areas where as we add incremental functionality to the platform, it opens up those new TAM areas. And two of those examples that Sandeep spoke about.

Jim Costa: There, we actually have a great solution one of the best things about the Clearwater platform is that it is so flexible and has proven to be market, leading not only incorporates at an insurance company and an asset managers and now in governments and we move forward from there.

Jim Costa: There's two areas, where as we add incremental functionality at the platform. It opens up those new Tam areas and two of those examples that sandeep spoke to.

James S. Cox: One is the pooled funds, right? The second is stable value funds. And those are, in one instance, in the pooled fund area, that facilitates state and local governments interacting better together and opens up that government market. In the stable value fund market, that's another element within the broader asset management complexes that we're able to offer. So we'll see what, you know, you'll continue to see traction, and you'll listen to us as we talk about those new logos in those

Jim Costa: One is the pooled funds right.

Jim Costa: Is stable value funds and those are in one instance in a pooled fund very.

Jim Costa: Area that facilitates state and local governments interacting better together and opens up that government market and the stable value fund market. That's another.

Jim Costa: Element within the broader.

Jim Costa: Asset management complex is that we're able to drop so we'll see what youll continue to see traction.

Jim Costa: Annual listened to us as we talk about those new logos in those markets and you'll also be able to see traction through <unk> and <unk>.

James S. Cox: And you'll also be able to see traction through seeing NRR once. At the highest level, you might say, hey, wait a second, what's, you know what? What are the sizes of those markets? And I think we've talked about that. We get excited about hundred million dollar markets. So as you think about those, many of those are $100 million markets, but others of them are smaller, like, for example, stable value, but we are so close to being able to achieve it that it makes sense for us to add that incremental functionality to add those one data points that are just a reference point in Q1, about 25% of our total bookings in Q1 were related to these Go initiatives.

Jim Costa: At the highest level you might say, hey, wait a second.

Jim Costa: What what are the size of those markets I think we've talked about we get excited about $100 million markets and so as you think about those many of those are $100 million markets, but others of them are smaller but.

Jim Costa: For example, stable value, but we are so close to being able to achieve that that it makes sense for us to add that incremental functionality to add.

Jim Costa: Those customers one one data point that just just as a reference point in Q1.

Jim Costa: About 25%.

Jim Costa: Of our total bookings in Q1 were related to these go initiatives. So we won't share that all the time.

James S. Cox: We won't share that all the time. We don't want to get into desegregating all of that information, but I think that it's useful for you to understand the pleasant trajectory we're seeing from these developments. What else would you add? It's good.

Jim Costa: Because we don't want to get into disaggregated and all of that information, but I think that useful for you to understand.

Jim Costa: That plus a trajectory we're seeing from these development initiatives.

Speaker Change: What else would you add.

Faith: No, that was all super helpful. Thank you guys.

Speaker Change: No that was all Super helpful. Thank you guys.

Speaker Change: And then with a quick follow up question that by Perry just curious with the shift to the cheapest one settlement coming up at the end of May.

Perry: How might this be causing any stress to the capabilities of legacy systems, and workflows and you've been seeing anything from a pipeline perspective about this change is that causing any anxiety with customer or is there any incentive may be pushed through transformation and innovation a little bit quicker.

Sandeep Sahai: Yeah, that's a great call out. And yes, it does. Obviously, that is helpful, right?

Faith: Um, and then with a quick follow-up question, if I've heard correctly, just curious about the shift to the T plus one settlement coming up at the end of May. How might this be causing any stress to the capabilities of legacy systems and workflows? And have you seen anything from a pipeline perspective about this change? Is it causing any anxiety with customers or any incentives to maybe push through some transformation and innovation a little bit quicker? Yeah, that's it.

Speaker Change: Yeah.

Speaker Change: A great callout and yes it does.

Sandeep Sahai: But it's one of a million different changes, regulatory changes, and environmental changes that our clients, and more importantly, our prospects, are feeling every day. Another one, for example, is there are huge changes to NAIC reporting that we're helping our clients prepare for. T plus one is also important for folks. And so, I would say that it's just another example of this long-term trend. You know, prospects not on Clearwater Solutions feel more pain. And the more pain, the better we feel about our ability to solve it.

Speaker Change: Obviously that is helpful.

Speaker Change: One of a million different changes regulatory changes and environmental changes that our clients and more importantly, our prospects are feeling.

Speaker Change: Every day. Another one for example is there are huge changes to NTIC reported that we're helping our clients build for.

Speaker Change: T plus one is also important.

Speaker Change: So I would say that it's just another example.

Speaker Change: This long term trend.

Speaker Change: Prospects not unclear water solutions feel more pain and the more pain, the better we feel about our ability to solve it.

Faith: All right. Awesome. Thank you. That's it for me. Thank you.

Speaker Change: Alright awesome. Thank you that's it for me.

Speaker Change: Thank you.

James Eugene Faucette: Our next question today is from the line of James Faucette of Morgan Stanley. Please go ahead. Your line is open.

Speaker Change: Our next question today is from the line of James Faucette of Morgan Stanley. Please go ahead. Your line is open.

Michael Nicholas Infante: Hi everyone, it's Michael Infante for James. Thanks for taking our question. Jim, you had previously mentioned last quarter that your objectives for NRR for 2024 were roughly in line with 23 levels, sort of in that 106-107 range. Obviously, a really strong result in NRR this quarter. Do you think that the 106-107 level is conservative at this stage? I know you call that quarterly variability, but it would be great to hear how you're thinking about it.

James Eugene Faucette: However on its micron Fan-tan for James Thanks for taking our question. Jim You had previously mentioned last quarter.

James Eugene Faucette: That your objectives for NR for 2024 were roughly in line with 23 levels sort of in that one our six 107 range, obviously really strong result.

James Eugene Faucette: And then our this quarter do you think that 1617 level is conservative at this stage I know you called out quarterly variability, but would be great to hear how you're thinking about it.

James S. Cox: Yeah, I think if I can just help clarify, it was my fault. You know, I said, hey, as we thought about our annual guide, right, for the year, we thought about NRR looking like that. And obviously, we were very happy with the result that we saw in Q1. And we feel optimistic about the whole year. Having said that, Michael, you're exactly right. We don't draw a straight line anywhere. But we are definitely trending, and I think it is fair to say that we feel like 106 or 107 would be conservative.

James S. Cox: Yeah, I think if I can just help.

Speaker Change: Yes, I think if I can just help clarify it was my fault.

Speaker Change: Hey, as we thought about our annual guide for the year, we thought about and are are looking like that and and.

Speaker Change: Obviously, we were very happy with the result that we saw in Q1, and we feel optimistic about the whole year, having said that Michael Youre exactly right don't draw straight line anywhere.

Speaker Change: But we are definitely trending and I think it is fair to say that we feel like 106 107 would be conservative at this point.

Michael Nicholas Infante: Got it, that's helpful. Maybe Sandeep, one for you, really nice win with Agon on the Prism side. I was just hoping you could level with us in terms of the customer profile or the use case on the Prism side today and sort of how that's incremental functionality to the core Clearwater platform. Thanks. Yeah, thank you, Michael.

Speaker Change: Got it that's helpful. Maybe just on Dave one for you not really nice win with Aegon on our Prism side I was just hoping you could level set with us in terms of the customer profile that use case.

Dave: On the prism side today, and sort of how that's incremental functionality to the core Clearwater platform. Thanks.

Sandeep Sahai: Yeah, thank you, Michael. Essentially, the functionality helps. Asset managers provide a better service to their clients, and they are improving AUMN. So in that use case, it is really... Prism is helping build client reporting functionality for its clients. And so really, if you think about the data that comes in and makes up our entire client report, there's data from internal systems, there's data from accounting systems, and risk systems, and several other components from within the company.

Dave: Thank you Michael essentially the functionality helps.

Dave: Asset managers provide a better service to their clients and thereby improving AUR.

Speaker Change: Inflow so in that use case it is really.

Dave: Presumably is helping build.

Dave: <unk> reporting functionality for their clients.

Dave: And so really if you think about data that comes in and makes up.

Dave: Planned to report those data from internal systems as data from accounting systems of this systems and several other components from within the company.

Sandeep Sahai: And what PRISM does is takes all of that, intermingles what Clearwater does and other parties do, and comes up with one comprehensive view of data and one comprehensive report. So, as you can imagine, it makes the client's reporting very easy. And when you can do that, people tend to give you more assets, if you will, when you go in for the. So again, it's something which helps clients, improves client service, and therefore attracts more clients. Thank you both.

Dave: And what prison doses takes all of that.

Dave: Into intermingled, what Clearwater does and other parties do and come up with one comprehensive view of data and one comprehensive report.

Dave: As you can imagine it makes the clients reporting very easy when you can do that people tend to provide gives you more assets. If you will go into the RFP.

Dave: It's something which helps clients.

Dave: Improved client service.

Dave: And therefore attract more murat.

Speaker Change: Got it. Thank you both thank you.

Michael James Turrin: Our next question today is from the line of Michael Turrin of Wells Fargo. Please go ahead. Your line is now open.

Speaker Change: Our next question today is from the line of Michael churn off.

Michael Nicholas Infante: Wells Fargo. Please go ahead. Your line is now open.

Michael Nicholas Infante: Hey, guys. Thanks for taking the question David I'm glad for Michael turn Tonight.

Michael Nicholas Infante: One for me guys. So you mentioned in the prepared remarks, you're seeing.

Michael Nicholas Infante: Then our investments having a positive impact.

Michael Nicholas Infante: Can you just remind us how we should think about the percentage of spend of <unk>, that's going to revenue versus expense efficiencies. Thanks.

Dave: Yeah, look, you know, thank you for your question, Dave. Look, I think that Gen AI is a really to really strategic initiative within the company. And like you pointed out, there are two different streams. One is, can it make us more? And that we've continued to see progress on that. And if you notice, what we said on investor day about gross margin and the improvement we thought we would get, we had talked about 50 basis points of improvement every year. And we already have 78%, which is what we thought we would be in 2025.

Speaker Change: Yes. Thank.

Speaker Change: Thank you my question, Dave look I think that journey is really.

Speaker Change: It's a really strategic initiative within the company and like you pointed out there's two different streams. One is can it make us more efficient.

Speaker Change: And that we are continuing to see progress on that and if you notice what we said on Investor day about gross margin and the improvement we talked we looked at we had talked about 50 basis point improvement every every year and.

Speaker Change: We already have 78%, which is what we thought we would be in 2025.

Sandeep Sahai: And definitely some of that is coming from Geneva. So what does it really do for us? The two points. One is: can it deflect, find, and create?

Speaker Change: And definitely some of that is coming from <unk>.

Speaker Change: So what does it really do for us the two points one is.

Speaker Change: Kenneth deflect find inquiries.

Sandeep Sahai: So when a client has a question, can they go to the Gen AI tool they have and get that question answered and, therefore, not even ask? That obviously makes us more... And the second one is, when they ask a question, can GNI sort of propose a response to our client service? said This is a fully comprehensive response, and the client service team reviews it and feels it's the right one; they can click on it, so much more.

Speaker Change: And our clients has a question 10 gig can they go to the agenda item they have.

Sandeep Sahai: Get that question answered and therefore don't even ask us that.

Sandeep Sahai: That obviously makes us more efficient in.

Sandeep Sahai: And the second one is when they ask a question Ken Jimmy I propose a response to our client service Rep.

Sandeep Sahai: This is a fully comprehensive response and the client service reviews. It feels is the right one they can ticket so much more efficient so the case for helping us improve gross margin is very clear frankly going a whole lot faster than we talk that you are starting to see a little bit.

Sandeep Sahai: So the case for helping us improve gross margin is very clear, and frankly, going a whole lot faster than we thought, which you have started to see a little bit on the P&L. The second one is this quick suite of products, with applicability across various personas in various industries.

Speaker Change: On the P&L itself.

Sandeep Sahai: The second one is just quick suite of products.

Speaker Change: Applicability across various personas and various industries.

Sandeep Sahai: That you haven't started to see, in the sense that they are being built so that we can drive revenue. So right now, they are very much in the client design stage, which means we have got client partners who are helping us design this product and bring value from it. So that, I would say, is still several quarters out of being able to say meaningful improvement in revenue. So I think, if you remember, Jim spoke about six products and didn't mention quick, because of that.

Sandeep Sahai: That you haven't started to see though.

Speaker Change: In the sense that they are being built so that we can drive revenue.

Speaker Change: So right now they are very much in the plan design stage, which means we have got client partners, who are helping US design this product and bring value from it. So that I would say is still several quarters out of being able to see a meaningful improvement in revenue.

Speaker Change: Think of it remember Jim spoke about six products.

Sandeep Sahai: It is a big area of investment for revenue growth. Also, it is just that it is not getting traction from a revenue point of view today. Do we expect that in three and four quarters? Absolutely. But do we expect that in Q2 and Q3? We don't. So that just gives you a wholesome response, if that makes sense.

Sandeep Sahai: Dan mentioned quick because of that it is a big area of investment for revenue growth also.

Speaker Change: They did not getting traction from a revenue point of view today do we expect that in three and four quarters, absolutely, but do we expect that in Q2 and Q3, we adopt.

Speaker Change: Could you hold them responsible that makes sense.

Dave: I appreciate that detail. Thank you.

Speaker Change: I appreciate that detail. Thank you.

Brian Jeffrey Schwartz: Our next question today is from the line of Brian Schwartz of Oppenheimer. Please go ahead. Your line is open. Hey, this is Ari Friedman sitting in for Brian Schwartz. Um, I was wondering what

Ari Max Friedman: Our next question today is from the line of Brian Schwartz of Oppenheimer. Please go ahead. Your line is open.

Dave: Our next question today is from the line of Brian Schwartz of Oppenheimer. Please go ahead. Your line is open.

Speaker Change: Hey, this is Ari Friedman sitting in for Brian Schwartz.

Ari Max Friedman: I was wondering like what.

Ari Max Friedman: Well sure transaction could you talk a little bit more about the customer profile of that.

Ari Max Friedman: We're kind of getting from.

Ari Max Friedman: The wheelchair advisors.

Ari Max Friedman: Are they similar to the client that you guys already have a little bit different is there a good opportunity there to tell them on like more of the Clearwater.

Ari Max Friedman: Thanks.

Brian Jeffrey Schwartz: Thanks, Ari. This is Jim.

Ari Max Friedman: Thanks, Alright. This is Jim so so that is one of the very interesting attributes obviously, the most interesting elements are those models.

Jim: Time tested and stress tested over time to really benefit us there, but less than 20%.

James S. Cox: So, that is one of the very interesting attributes. Obviously, the most interesting elements are those models. Time-tested and stress-tested over time to really benefit us there. But less than 20% of their clients are also Clearwater clients. So, to your point, we have initiatives to how do we cross-sell Clearwater to their clients and how do we then, obviously, cross-sell those Wilshire solutions to our clients once there's integration. R. Dutt

James S. Cox: Their clients are also Clearwater clients. So to your point, we have initiatives to how do we cross sell Clearwater to their clients and how do we then obviously cross sell those water solutions into our clients' once those integrations are done.

Sandeep Sahai: Yeah, I think the interesting part here is that when you think about risk models and performance models, they're used by asset owners. So asset owners may use them for exactly that performance and attribution, but they may also use them for regulatory reporting. So we feel like this could be taken to a wide swath of Clearwater clients. Same thing with RISC. RISC obviously is used pretty extensively across the entire universe of clients.

Rishi Nitya Jaluria: Yes, I think the also the interesting part here is when you think about risk models and performance models.

Sandeep Sahai: They're used by asset owners.

Sandeep Sahai: They use them for exactly that performance of attribution, but also use it for regulatory reporting.

Sandeep Sahai: So we feel like it could be taken to a wide swath of Kyoto clients.

Sandeep Sahai: Tim addressed risk, obviously is used pretty extensively across the entire universe of clients. So we feel like there is strong.

Sandeep Sahai: So we feel like there's strong applicability of these models to the Clearwater client base. But we also think that we could take the Clearwater platform and send it to the current clients of Venture Analytics. So we think there is a potential to do both. But what we expect to do is not what we expected. We've already merged these two businesses and come out with one comprehensive reporting around risk, performance, and action. So we feel like we have a really strong proposition for our clients here. Thank you. Thank you.

Sandeep Sahai: Applicability of these models to the Clearwater client base, but we also think that we could take to play with our platform and sell it to the current lines of Russia analytics. So we think there is a potential to do both but what we expect to do is not expecting all the mood board these too.

Sandeep Sahai: Businesses and coming out with one comprehensive reporting around risk performance and attribution. So we feel like we have a real strong proposition for our clients.

Speaker Change: Thank you.

Speaker Change: Thank you Laurie.

Alexei Gogolev: Our next question today is from the line of Alexei Gogolev of J.P. Morgan. Please go ahead. Your line is open.

Sandeep Sahai: Our next question today is from the line of Alexia <unk> of Jpmorgan. Please go ahead. Your line is open.

Ella: Sorry, Ella. I'm so excited about it. I'm all choked up.

Ella: Hi, This is Alan Smith on Alexi's team, calling in thanks for taking our question.

Alexei Gogolev: So first Tim I know you said, many times before that and RR will fluctuate quarter to quarter, but I was wondering if there was anything to call out for that 110%.

Sandeep Sahai: So number one, obviously, we always have tremendous gross revenue retention at 98%, but we got an additional one. Additional percent to 99%, the best ever, and really terrific there. So that helped, you know, in the market. Secondly, we saw a nice uptick in the cross-sell of those solutions that we were discussing. Like I mentioned earlier, it was about 25% of our bookings in the quarter. Now, not all of that is reflected in the NRR because we have to onboard and get those assets flowing.

Alexei Gogolev: Sorry Elliot.

Alexei Gogolev: I'm so excited about it I'm all choked up.

Sandeep Sahai: Sorry.

Sandeep Sahai: So number one obviously.

Sandeep Sahai: We always had tremendous.

Sandeep Sahai: <unk>.

Sandeep Sahai: We always had tremendous gross revenue retention at 98%, but we got an additional one.

Sandeep Sahai: [laughter] additional percent to 99% the best ever.

Sandeep Sahai: And really terrific there so that that helped on the March <unk>.

Sandeep Sahai: Secondly, we saw a nice uptick of the cross sell of those solutions that we were discussing I think I mentioned earlier it was about 25%.

Sandeep Sahai: Bookings in the quarter now not all of that is reflected in the NRI, because we have to onboard and get those assets flowing but.

Sandeep Sahai: But that was another important element. And then, as we have always historically done, we've grown as our clients have grown. And so, we were able to help with those additional asset expansions as well. And the last thing I would say is that we were not hurt by the market changes at our client. And over the last few years, they, we certainly weren't helped dramatically by that, but we weren't hurt, which was helpful. Very clear.

Sandeep Sahai: That was that was another important piece and then the third element is as.

Sandeep Sahai: As we have always historically done we've grown as our as our clients that have growth and so we were able to.

Sandeep Sahai: Help with those additional asset expansion.

Sandeep Sahai: Expansion as well and the last thing I would say is we were not hurt.

Sandeep Sahai: With the market changes at our client base over the last few years, we certainly werent helps dramatically by that but Oh, we weren't hurt which was helpful as well.

Sandeep Sahai: Very clear thanks, so much for that Jim and Cynthia maybe for you. So earlier, Jim had mentioned that you have enough cash on hand for additional tuck ins. How are you thinking about your decision framework moving forward of that when you buy versus organically building new technology.

Sandeep Sahai: Yeah, thank you for that. So, as you know, we haven't done this programmatically and systemically, but we did announce two really senior executives we've brought in to do this on a more systematic basis. And so when you think about... How do we look at these things?

Speaker Change: Thank you for that so.

Sandeep Sahai: As you know we haven't done this programmatically and systematically but we did announce two.

Sandeep Sahai: <unk> really seen the executives they brought into the company to do this on a more systematically.

Speaker Change: And so when you think about.

Sandeep Sahai: How we look at these things first remember the ball is always very high.

Sandeep Sahai: First, remember, the bar is always really high because we don't want to mess up the really clean business model that we have. But would we do it in the service of improving Dan? Yes. Would we do it in the service of improving geography coverage? Yes. Would we do it in the service of improving one bit to four bits? Yes.

Sandeep Sahai: Because we don't want to mess up.

Sandeep Sahai: Really clean business model that we have but what we do it in the service of improving Dan Yes.

Sandeep Sahai: What are you doing with service improving geography coverage, yes.

Sandeep Sahai: We do it in the service of improving one bps to four groups yes.

Sandeep Sahai: So I don't think we have changed anything here, but we just expect to become more programmatic. So I think you should expect us to do, you know, that two tuck-ins in a year, whatever that number is, but do it in the service of what our clients want. And the basis of it is:

Sandeep Sahai: So I don't think we haven't changed anything here, but we just expect to become more programmatic about.

Sandeep Sahai: So I think you should expect us to do is.

Sandeep Sahai: Two tuck ins in a year or whatever that number is but do it in the service all what our clients want and the basis of it is.

Sandeep Sahai: We have a really satisfied client base, you know, really high-end people. So they would like us to do more. And so we have to, I feel our job is to go find out what causes them the most pain, and can we develop things to go solve that?

Sandeep Sahai: We have a really satisfied client base really high NPS.

Sandeep Sahai: So they would like us to do more.

Sandeep Sahai: And so we have to.

Sandeep Sahai: Our job is to go find out what causes them to boost fee.

Sandeep Sahai: And can be developed teams to go solve that now.

Sandeep Sahai: Now, our first instinct, unfortunately, is always to build it. But sometimes we also realize that building it will take too long. And when that happens, then we tell the M&A team, you've got to go find something. And the problem is often you can't find things which sort of fit nicely. So we don't want to just do deals because we want to do deals, but we do expect programmatically to do such stuff.

Sandeep Sahai: First instinct, Unfortunately is always to build it but.

Sandeep Sahai: But sometimes they recognize also that building it will take too long and when that occurs then we tell the M&A team that you've got to go find something of the problem is often a financing which sort of fits nicely. So we don't want to just do deals because we wanted to do deals, but we do expect programmatically to do do such stuff.

Sandeep Sahai: Yes.

Speaker Change: Very clear thank you so much.

Sandeep Sahai: Okay.

Gabriela Borges: Our next question today is from the line of Gabriela Borges of Goldman Sachs. Please go ahead. Your line is open.

Goldman Sachs: Our next question today is from the line of the cap rate on a portion of Goldman Sachs. Please go ahead. Your line is open.

Gabriela Borges: Thank you. Sandeep and Jim, over the course of the last several months, you've announced a handful of high-profile leaders, particularly in your go-to-market functions. I'd love to hear the feedback that these leaders are giving you as they get in the weeds and as they talk to customers. And in particular, are there a couple of initiatives where you've got some of the leadership team coming back and saying, we should be doing ABC to really jumpstart the next phase of our

Gabriela Borges: And thank you Sandy and Jen.

Gabriela Borges: A couple of months, even though the hassle of high profile media, particularly the heck out of market assumptions at Lucky here as I think back over into Pennsylvania.

Gabriela Borges: They get in the weeds.

Speaker Change: Thank you.

Gabriela Borges: Are there a couple of initial but we've got a leadership team coming back and so we should be doing anything to really jump start the next phase of HOKA.

Gabriela Borges: Sorry, you broke up a little with Gabriela. So, Sandeep, I think you said new sales leaders, new high-profile leaders. What's the early feedback? What's the early, what are the observations? Yeah, thank you, Gabriel. I think there is...

Speaker Change: Sorry, you broke up a little Gabriele so.

Sandeep Sahai: So suddenly if I could just add new sales leaders new high profile leaders what's that.

Sandeep Sahai: Early feedback on what's the early.

Sandeep Sahai: What are the observations.

Sandeep Sahai: Thank you Kevin I know today I think there is well there's no question that the first order of business is to continue the growth in North America.

Sandeep Sahai: There is no question that the first order of business is to continue growth and autonomy. So we were quite excited to say, look, North America this quarter, you're on a year basis due at 20%. So we feel good about that. Now the question is, where else do we see progress?

Sandeep Sahai: So we were quite excited to say.

Sandeep Sahai: North America this quarter year on year basis due at 20%. So we feel good about that now the question is where else do we see progress So Europe is.

Sandeep Sahai: So Europe is really, really interesting because of the immediate applicability of what our platform can do and the proof points we have already sort of produced and sort of announced. So we feel Europe is priority one, if you will. Asia also is a really high priority, especially with, you know, a really strong leader we brought in last quarter. So we feel like those two priorities are really going to drive growth for us for a period of time.

Sandeep Sahai: Really really interesting because of the immediate applicability.

Sandeep Sahai: What our platform can do and the proof points, we have already sort of produced and sort of announced so we feel Europe is priority one if you will.

Sandeep Sahai: Asia.

Sandeep Sahai: So, it's a really high priority, especially with.

Sandeep Sahai: You know really strong leader we brought in.

Sandeep Sahai: Quarter, So we feel like those two priorities already.

Sandeep Sahai: We're going to drive growth for us would be overtime.

Sandeep Sahai: So, you know, those are the two now in terms of what products or what areas customers are most concerned about alternative assets. So we talked about LPX for that. You know, comprehensive reporting for clients. We talked about PRISM. Lots and lots of discussions about risk, performance, and attribution. So, you know, the wheelchair should help with that.

Sandeep Sahai: Those are the two now in terms of what.

Sandeep Sahai: So what is our.

Sandeep Sahai: Customers are most concerned about alternative assets. So we talked about RPX for that.

Sandeep Sahai: Comprehensive reporting for clients, we talked towards Brazil.

Sandeep Sahai: Lots and lots of discussions about risk performance and attribution. So the ultrashape hosted that obviously, the Oems Pms and so John functionality. So just top of mind, we think about North America. The only thing about Europe, we think about Asia somewhat LPX prism risk and performance.

Sandeep Sahai: Obviously, the OMS, PMS, and so on functionality. So, just top of mind, we think about North America, then we think about Europe, we think about Asia, think about LPX, PRISM, risk and performance, and finally jump. So if you were to ask me, what are the biggest ones you worry about, those are the six things I sort of think about of what we can do to drive growth.

Gabriela Borges: Got it. Thank you. And Jim, as a follow-up, you mentioned about 25% of total booking statistics related to cross-line issues. Could you just clarify for us how you're calculating that or what products are in that? And I know you said you're not going to give it to us in person, so I'll take the opportunity to ask what it has been historically or give us some kind of grounding in history so we can understand the measure of success that you're reporting.

Gabriela Borges: And finally job. So if you were to ask me what are the biggest ones, but those are the six I sort of think about what it can do to drive that.

Gabriela Borges: Thank you. Yeah, I know. Good, good call out Gabriella. And that's very fair. So why would we crow about 25%?

Gabriela Borges: Got it. Thank you in general for a follow up you mentioned that about 25% of total bookings related to cross selling initiatives. It should qualify for higher calculating that'll what products are in that and I know you said, you're not Gonna go ahead Tom.

Speaker Change: I'll take the opportunity in the us.

Gabriela Borges: Why hasn't been historically I'd give us some kind of bottoming in history. So they can understand and measure their offline. Thank you yeah I know.

James S. Cox: It's because it's been about, if you look back, and what are those? What are those? Okay, it's LPX. It's, it's, you know, it's the same that he just said, identify LPX, Prism, Jump, portfolio management, middle office, etc, etc.

Speaker Change: Good good callout, Gabriele and Thats very fair. So why would we grow about 25% it's kind of it's been about 10%. If you. If you looked at and what are those what are the potash. Okay. It's L T X.

James S. Cox: Uh huh.

James S. Cox: Yeah.

James S. Cox: It's the fact that he just identify <unk> Chris.

James S. Cox: John.

James S. Cox: Portfolio management Middle office does et cetera et cetera.

James S. Cox: It's a little, you know, Gabriela, it's just a little bit earlier than we thought. As Joon said, just because you sell something doesn't mean it shows up in AR.

Speaker Change: Yes, it's a little it'll give you a view it as a little bit earlier than we thought and.

James S. Cox: As Jim said, just because you sell something doesn't mean it shows up in the air or right away, but yes. We are absolutely use the term sort of booking to sort of show that we're making progress but yeah.

James S. Cox: Right away, but yeah, we definitely use the term sort of booking to sort of show that we're making progress. But yeah, you know, it's just that with innovation, it's always choppy.

James S. Cox: We'll always be happy about where we are. But you know, we're also worried about people drawing a straight line. So it's not there's no reason to be cautious. It's just we feel it's the right way to make sure investors know

James S. Cox: So innovation is always shopping we're obviously happy about where we are but.

James S. Cox: So worried about people drawing a straight line. So it's not there's no reason to be cautious. It's just we feel is the right way to to make sure investors know that.

Michael: and Michael. Congratulations on the quarter. Thank you. Thank you.

James S. Cox: And therefore.

Speaker Change: She is on the quarter. Thank you.

Michael: Thank you.

Yun Suk Kim: Our next question today is from the line of Yun Kim of Loop Capital. Please go ahead; your line is open.

Speaker Change: Our next question today is from the line of <unk> Kim of <unk> Capital. Please go ahead. Your line is open.

Yun Suk Kim: Thank you. First, congrats on a strong execution.

Sandeep Sahai: Sandeep, last year was marked by the influx of alternative assets. I believe that you mentioned that 40% of new AUM came from alternative assets. Do you see that trend continuing this year? And is that also driving multi-product adoption?

Yun Suk Kim: Thank you first congrats on a strong execution Sandeep last year was marked by the influx of alternative assets I believe that you mentioned that 40% of new a U N was.

Sandeep Sahai: It came from that from the alternative assets do you see that trend continuing this year and is that also driving the multi product.

Sandeep Sahai: Product adoption.

Sandeep Sahai: Yeah, thank you so much for that question. So, I don't have a percent for you.

Sandeep Sahai: Yeah. Thank you so much for that question. So I don't have a <unk>.

Sandeep Sahai: But I do know that in the sales process, almost the first thing clients talk about is the difficulty in managing alternative assets. So a lot of our sales are some discussions about how do I merge alternative asset reporting with public securities and give a comprehensive view. So I still think it's really, really important for our business. And if you look at it, one of the first products we always talk about is LPX, which are limited partnerships, and how do you process them more effectively?

Sandeep Sahai: Percent for you, but I do know that in the sales process.

Sandeep Sahai: Most of the first things client talk about is the difficulty in managing alternative assets. So a lot of our sales are.

Sandeep Sahai: Some of the discussions about how do I large alternative asset reporting with public securities and give a comprehensive view so I still think it's.

Sandeep Sahai: Really really important for our business and if we look at it what are the first product we always talk about is Lps.

Sandeep Sahai: Which has limited partnerships and how do you process a more effectively so look we continue to believe that that is a really important one.

Sandeep Sahai: So I continue to believe that that is a really important one. And then Prism, what it does is it brings public and private all of it together and gives you one comprehensive view. So we continue to see a really big impact from the growth of alternative assets among our clients. I just don't have a percent of how much it grew in the last quarter, but we can get it.

Sandeep Sahai: And then prison what it does is it brings.

Sandeep Sahai: Private all of it together and it gives you one comprehensive deal. So we continue to see a really big impact from the growth of alternative assets.

Sandeep Sahai: I just don't have a percent off.

Sandeep Sahai: How much it grew in the last quarter, we can get you that.

Speaker Change: Okay great.

Yun Suk Kim: Okay, great. I think the word alternative assets was not mentioned as much this time around, but just last year, so that's why I asked. If you can also talk about the mix between asset managers and insurance companies, is that mix skewing towards one or the other, and is that changing your go-to-market strategy at all?

Sandeep Sahai: Because I think a Billboard alternative assets Bernard mentioned as much this time around but there's lots of areas that I ask it.

Yun Suk Kim: You can also talk about the mix between asset managers and insurance companies is that mix skewing towards one or the other and is.

Yun Suk Kim: Is that changing your go to market motion at all.

Sandeep Sahai: Yeah, I just let Jim add to it. I don't think it's changing very meaningfully at all. But is it moving up 2% this way? Yes, it is. So I think that these are quarterly numbers. From a market perspective, we think it hasn't moved very much at all. But would it be 2 percentage points higher in one sector versus another sector for the given quarter? Absolutely. Yeah, I was going to say that it remains very consistent.

Yun Suk Kim: Yeah.

Yun Suk Kim: Suddenly began I'll, let Jim.

Sandeep Sahai: I don't think it's changing very meaningfully at all but is it moving up 2%.

Sandeep Sahai: Yes. It is so I think that these are quarterly numbers.

Sandeep Sahai: From a market perspective, we think it it hasn't moved very much at all but would it be two percentage points up in one sector versus another factor for the given quarter absolutely.

James S. Cox: Yeah, I was going to say that it remains very consistent; that same trend remains very consistent. But one notable thing is that, you know, we talked a little bit about these, um, Portals, right, the investment portal at the government agency. And I think we've seen nice momentum where that's off of a small number; it's growing nicely as a percentage.

Speaker Change: Yes, I can say that it remains very consistent that same trend remains very consistent but one notable thing is that we talked a little bit about the.

James S. Cox: Portals right the investment portal at the government level.

James S. Cox: Agency and I think we've seen nice momentum, where that's off of a small number its growing nicely.

James S. Cox: As a percentage of revenue.

James S. Cox: State and local.

James S. Cox: Governments.

Yun Suk Kim: Okay, great. Thank you so much. Thank you so much.

Speaker Change: Okay, great. Thank you so much thank you so much.

Operator: Thank you. With no further questions in the queue, this will bring us to the end of the Q&A. At this time, I would like to hand over to Sandeep for any closing remarks.

Yun Suk Kim: Thank you with no further questions in the queue. This will bring us to the end of Q&A at this time I would like to hand back to Sandeep <unk> for any closing remarks.

Operator: Yeah.

Sandeep Sahai: Yeah, we would like to thank all of you for your continued support and interest in Clearwater. We'd also like to acknowledge Tremendous partnership we've had with Welsh Classroom 12, which invested in Clearwater in 2016 and fully exited the position in March of 2024. We note that they continue to have a significant investment through Welch Carson 13, which invested in our company in 2020. Thank you all, and we really appreciate the support of Clearwater.

Sandeep Sahai: Yeah, we would like to thank all of you for your continued support and interest in tier one.

Sandeep Sahai: We would also like to acknowledge the tremendous partnership we've had with Welsh Carson 12.

Sandeep Sahai: Which invested in clear water in 2016 and fully exiting their position in March of 2024.

Sandeep Sahai: They know that they continue to have a significant investment.

Sandeep Sahai: The Welsh Carson 13, which invested in our company in 2020.

Sandeep Sahai: Thank you all and we really appreciate the support of cable.

Operator: This concludes today's conference call. Thank you all for joining us. You may now disconnect your lines.

Speaker Change: This concludes today's conference call. Thank you all for joining you may now disconnect your lines.