Q1 2025 Clearwater Analytics Holdings Inc Earnings Call
Okay.
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the clean water analytics first quarter 2025 financial results Conference call. At this time all participants are in a listen only mode. After the speaker presentation, there will be a.
Speaker Change: Question and answer session and now I'd like to turn the conference over to Jim part head of Investor Relations to begin the conference John. Please proceed.
Speaker Change: Thank you and welcome everyone to Clearwater analytics first quarter 2025 financial results Conference call.
Speaker Change: Joining me on the call today are <unk>, Chief Executive Officer, and Jim <unk>, Chief Financial Officer. After their remarks, we will open the call to a question and answer session.
Speaker Change: 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.
Speaker Change: Freshens it feature goals intentions and expectations, including in relation to business outlook future financial product performance expectations for the acquisition of the infusion Beacon M bistro and their expected benefits and similar items, including without limitation expressions using the terminology may will can expect nimbly and <unk>.
Speaker Change: Prescience, which reflect something other than historical facts are intended to identify forward looking statements forward.
Speaker Change: Forward looking statements involve a number of risks and uncertainties, including dose discussed in the risk factors section of our filings with the SEC.
Speaker Change: Actual results may differ materially from any forward looking statements company.
Speaker Change: 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.
Speaker Change: For more information 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, unless otherwise noted.
Speaker Change: 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, Sandy So high.
Speaker Change: Thank you June.
Sandy So: I'm pleased to report that Q1 marked another quarter of strong execution and continued progress.
Sandy So: Let me share some highlights that underscore our strong performance.
Sandy So: Revenue for the quarter was $126 9 million.
Sandy So: 23, 5% year on year growth.
Sandy So: <unk> was $493 9 million.
Sandy So: 22, 7% year on year.
Sandy So: Our adjusted EBITDA of 45.1 million.
Sandy So: Was 35.5% of revenue.
Sandy So: And up.
Sandy So: 40% year over year.
Sandy So: Gross margin was 78.9%.
Sandy So: Very close to our long term target of 80%.
Sandy So: In today's environment of heightened market complexity.
Sandy So: New proposition has never been more relevant.
In times like these.
Sandy So: Institutional investors.
Sandy So: Want to make ongoing adjustments to the global portfolios.
Sandy So: Which in turn requires a comprehensive view of their assets.
Sandy So: And the ability to perform advanced analysis at a much higher frequency.
Managing investments so disconnected legacy systems is no longer merely inefficient.
Sandy So: It has become an existential risk.
Sandy So: Data silos across legacy platforms.
Sandy So: Slow decision, making.
Sandy So: The mass critical risks.
Sandy So: And introduce unnecessary costs precisely.
Sandy So: When agility and transparency.
Sandy So: Most essential.
Sandy So: Take regulatory reporting next.
Sandy So: Conforming with the new NTIC mandate.
Sandy So: Often requires extensive work.
Sandy So: And most of the industry is in various stages of planning and execution.
Sandy So: But most of key orders clients are already compliant.
Sandy So: We made changes to our platform in a timely manner.
Sandy So: And it was immediately available to all our customers.
Sandy So: And the effort required to comply was dramatically reduced.
Sandy So: The single instance, multi tenant model is.
Sandy So: Simply superior.
Sandy So: This is the last quarterly call focused almost entirely on clear water.
Sandy So: Before these acquisitions.
Sandy So: It is therefore, a good time to take stock.
Sandy So: And reflect on what we have achieved over the past few years.
Sandy So: And what lies ahead.
Sandy So: Looking back.
It is clear to us.
Sandy So: These enduring financials are not just a matter of chance.
Sandy So: We have been focused on improving the quality of our business.
Sandy So: Very programmatically.
Sandy So: And methodically and have exuded with rigor.
Sandy So: Let's start with revenue growth.
Sandy So: We have grown.
Sandy So: 20% plus.
Sandy So: For each of the last six years.
Sandy So: Our platform is clearly disruptive.
Sandy So: And our win rate of 80%.
Sandy So: G R R of 98% plus.
Sandy So: NPS of 60% plus.
Sandy So: Are all testimony to that fact.
Sandy So: Our single instance, multi tenant platform.
Sandy So: With a single security Mostow.
Sandy So: Is simply the right technology to address the complex global portfolios that our clients have.
Sandy So: We believe that all clients will migrate to this architecture in the days and years ahead.
Sandy So: And I'm confident.
Sandy So: In our competitive position versus the legacy platforms most of our major competitors have.
Sandy So: But we did not stop there.
Sandy So: We launched a large commercial contract restructuring program in 2022.
Sandy So: That aimed to dampen <unk>.
Sandy So: Revenue downside in times of a AUM decline.
Sandy So: While still retaining a majority of the revenue upside when there is any EUM tailwind.
Sandy So: This was again apparent in Q1 of this year.
Sandy So: Markets are very volatile, but a R argue 22, 7% year on year.
Sandy So: Looking back.
Sandy So: Growth and sustained growth.
Sandy So: Powered by investment in innovation and the development of new functionality.
Sandy So: Helped us become more responsive to clients while increasing.
Sandy So: Increasing tam.
Sandy So: Add to that superior client servicing and operations.
Sandy So: And finally, a balanced commercial model and you'll get sustained durable growth.
Sandy So: Looking ahead now we believe that this playbook can be applied almost in its entirety to.
Sandy So: Both infusion and beacon.
Sandy So: The finance and legal teams.
Sandy So: Have already been integrated under common leadership.
Sandy So: And we will start work on this almost immediately.
Sandy So: Let's discuss gross margin and unit economics next.
Sandy So: Firstly.
Sandy So: The key to consistently improving both of these metrics starts with a focused on client satisfaction and in flooring.
Sandy So: Consistency and reliability in our operations.
Sandy So: Essential ingredients to earning the trust of our clients and in delighting them.
Sandy So: We use M P S and cease that extensively.
Sandy So: To track and measure progress at a team level.
Sandy So: At an industry level and at the company level.
Sandy So: We use a metrics driven approach to measure productivity.
Sandy So: And drive constant improvement.
Sandy So: Not rocket science.
Sandy So: But relentless execution is what sets us apart.
Sandy So: Second and as importantly.
Sandy So: We invest in technology to make our workflows and processes much more efficient.
Sandy So: We developed a proprietary reconciliation tool Helios.
Sandy So: To modernize how we aggregate and process daily investment data from.
Sandy So: From custodians clients asset managers and brokers.
Sandy So: And given the single security Master.
Sandy So: And single data ingestion system.
Sandy So: We have led the charge.
Sandy So: On generative AI.
Sandy So: The financial expression of these programs have been very strong.
Sandy So: Gross margin has grown from 75.1% in fiscal year 2022.
Sandy So: 278.9%.
Sandy So: In Q1 of 2025.
Sandy So: The 370 basis point improvement.
Sandy So: We discuss gross margin improvement at our Investor Day Conference in September 2023.
Sandy So: And forecast a 50 bps per year improvement.
Sandy So: From 75.8% gross margin.
Sandy So: In the first half of 'twenty quality, just before the conference.
Sandy So: We have grown gross margin by 300 basis points in less than two years.
Sandy So: Far exceeding the 100 bps improvement investors should have expected.
Sandy So: We have taken that technology and piloted the use of Helios.
Sandy So: To drive efficiency across infusions operations.
Sandy So: And the early signs are very positive.
Sandy So: Similar improvement in client Onboarding.
Sandy So: A single security Master has enabled us to reduce the average time to onboard a client to just 5.5 months.
Sandy So: A remarkable achievement.
Sandy So: When you consider other similar platforms.
Sandy So: Once again, we expect to bring these technologies and capabilities to infusion in Beacon and.
Sandy So: And drive meaningful <unk>.
Sandy So: Most margin improvement.
Sandy So: To facilitate this all operations and client servicing teams have been brought under one common leadership.
Sandy So: And we'll be operating as one integrated team.
Sandy So: R&D and operations I increasingly seen.
Sandy So: As partners in rote.
Sandy So: And we were very excited to have restocked and all of our target of 115 at the end of 2024.
Sandy So: A full year ahead of our January 2026 goal.
Sandy So: Finally, then let me discuss EBITDA expansion.
Sandy So: Here again.
Sandy So: We continue to meaningfully outpace the goals we set for ourselves.
Sandy So: Q1, 2025 generated 35, 5% adjusted EBITDA.
Sandy So: Which was 420 basis points better than Q1 of 2024.
Sandy So: Which in turn was.
Sandy So: 470 basis points better than Q1 of 2023.
Sandy So: That is extraordinary.
Sandy So: And when you consider the organic growth we have been driving.
Sandy So: While improving profitability.
Sandy So: It should give you a very high confidence in our ability to execute.
Sandy So: None of this would have been possible.
Sandy So: Without the infectious passion.
Sandy So: Active collaboration.
Sandy So: And striving for excellence that my partners in.
Sandy So: And the leadership team have displayed.
Sandy So: Over the last several years that we have been together.
Sandy So: Our entire team.
Sandy So: Works tirelessly to be client advocates.
Sandy So: And we have been fortunate to have built an extraordinary team across the globe.
Speaker Change: I could not be more painful.
Speaker Change: Before we move on.
Speaker Change: I'd like to highlight some of the notable strategic wins from Q1.
Speaker Change: A magnificent seven tech leader.
Speaker Change: Selected our prism solution to integrate the investment data into their snowflake cloud environment. So.
Speaker Change: According boat immediate liquidity management needs.
Speaker Change: And longer term plans to consolidate the investment operations infrastructure.
Speaker Change: In Europe, we secured a pivotal win.
Speaker Change: With a leading German insurance company.
Speaker Change: The first step in replacing our competitors' middle to back office solution.
Speaker Change: This validates our expansion strategy.
Speaker Change: And opens up significant market opportunity and Tam in Europe.
Speaker Change: With potential replacements for firms managing over five trillion dollars in AUR and collectively.
Speaker Change: A global asset manager expanded their partnership to include both L. P X and <unk> solutions to support the insurance client's book of record accounting and regulatory reporting needs.
These wins demonstrate our ability to solve very complex operational challenges.
Speaker Change: Across diverse clients.
Speaker Change: While also showing strong cross sell momentum for our prism LPX Anammelech solutions as well as our generally react capabilities.
Speaker Change: Now, though let's look ahead.
Speaker Change: Our strategic acquisitions of infusion Beacon and bistro possess.
Speaker Change: Position us.
Speaker Change: To deliver what the market has long demanded.
Speaker Change: And what is increasingly necessary to manage a complex global portfolio.
Speaker Change: The industry's first.
Speaker Change: Fully cloud native investment platform.
Speaker Change: It seamlessly integrates.
Speaker Change: The front middle and back office operations.
Speaker Change: By combining.
Speaker Change: Clearwater is trusted middle and back office infrastructure.
Speaker Change: With infusions industry, leading front office platform.
Speaker Change: Because next generation risk and quantitative analytics.
Speaker Change: And be straws visualization capabilities focused on alternative assets.
Speaker Change: We aim to eliminate the fragmentation that has plagued the industry.
Speaker Change: Our single instance, multi tenant architecture is already disruptive in our industry.
Speaker Change: But what sets us apart.
Speaker Change: Now and in the future.
Speaker Change: Will be our ability to create a single security master and a single data plane for all asset classes.
Speaker Change: Public and private.
Speaker Change: We believe that the business value.
Speaker Change: Of this will be completely transformative.
Speaker Change: Number one.
Speaker Change: The platform will provide a comprehensive glue.
Speaker Change: Global view of a client's assets public and private.
Speaker Change: This is incredibly hard to do when you think about lp's mortgages loans private credit derivative structured products etsy.
Speaker Change: Et cetera, along with equities and fixed income instruments.
Speaker Change: Number two drill down to understand real exposure.
Speaker Change: To accompany an industry or geography.
Speaker Change: And most importantly across asset classes.
Speaker Change: You must know what isn't every CLO every MBS every LP investments every real estate portfolio and so on and so forth.
Speaker Change: To generally understand real exposure.
Speaker Change: Number three understand overall risk.
Speaker Change: Very tough to model.
Speaker Change: Because it is difficult to ensure that the assumptions are consistent across asset classes.
Speaker Change: Risks.
Speaker Change: Across asset classes often compound.
Speaker Change: And or cancel each other.
Speaker Change: Making it important to understand overall risk.
Speaker Change: Model cash flows.
Speaker Change: Thermal shock analysis and scenario review across your entire portfolio.
Speaker Change: Number for all of this will lead us to an event driven platform.
Speaker Change: Actions taken anywhere in the trade lifecycle.
Speaker Change: Immediately reflected across the front to back platform.
Speaker Change: Fully integrated.
Speaker Change: Our platform is Delaware this.
Speaker Change: And will completely revolutionize the industry.
Speaker Change: Integration does not happen overnight.
Speaker Change: What gives us high confidence is the fact that all these platforms use modern cloud technologies and are operating at scale.
Speaker Change: Secondly, and perhaps more importantly.
Speaker Change: Large sophisticated clients already use these platforms together.
Speaker Change: With one stellar example.
Speaker Change: Being Blackstone building bistro.
Speaker Change: And wireless vision is very exciting.
Speaker Change: We also want to deliver in the short and medium term.
Speaker Change: Given the complexity and time needed to launch new products.
Speaker Change: Enter new markets and geographies.
Speaker Change: We have developed a roadmap for execution that has three phases.
Speaker Change: In phase one.
Speaker Change: The focus will be on maximizing the potential of each standalone business as it relates to the 2025 goals.
Speaker Change: We want the G T M and operations teams.
Speaker Change: To do what they were doing before these acquisitions.
Speaker Change: But.
Speaker Change: Doing incrementally better.
Speaker Change: For Clearwater, the ability to provide industry, leading front office functionality.
Speaker Change: Cutting edge risks and market, leading alternative assets visualization.
Speaker Change: Should make the market proposition stronger.
Speaker Change: And help growth incrementally.
Speaker Change: For Beacon.
Speaker Change: They will have the ability to take their platform to over 1400 Clearwater clients and.
Speaker Change: And over 900 infusion clients.
Speaker Change: And that should help them grow incrementally fast.
Speaker Change: For infusion.
Speaker Change: A joint ability to invest in R&D and G T M.
Speaker Change: For both hedge funds and separately for.
Speaker Change: For asset management.
Speaker Change: And to date the solution to over 1400 Clearwater clients should also hub them draw.
Speaker Change: Drive incrementally higher growth.
Speaker Change: Phase two consists of a robust cross sell strategy across the combined organization.
Speaker Change: Building on the successful model, we developed with our virtual cross sell team.
Speaker Change: We are creating a dedicated organization to capitalize on the need for a comprehensive platform for investment management across our client base.
Speaker Change: This approach will not only drive revenue growth.
Speaker Change: But also deliver enhanced value to our clients.
Speaker Change: In the third phase.
Speaker Change: We're going to bring our long term vision of one platform to fruition.
Speaker Change: The R&D operations and G. T M efforts to drive all these phases.
Speaker Change: We'll start in earnest right away.
Speaker Change: This includes developing a single security master on a unified data plane that will form the foundation for the industry's most comprehensive front to back platform.
Speaker Change: This integration is our goal.
Speaker Change: And its success will be built on the momentum we generate from our immediate focus on standalone growth.
Speaker Change: And cross selling initiatives, that's the strategic opportunity.
Speaker Change: But on the financial side.
Speaker Change: We think these transactions create.
Speaker Change: And extraordinary opportunity for shareholders.
Speaker Change: We have issued shares that lead to dilution of approximately 15%.
Speaker Change: But have added a little over 50% in revenue there.
Speaker Change: Though.
Speaker Change: Not at the same level of profitability.
Speaker Change: But we are very confident about our ability to execute.
Speaker Change: And drive incrementally higher growth.
Speaker Change: Higher gross margin.
Speaker Change: And meaningfully improve profitability to get these businesses to financial metrics that are similar to ours.
Speaker Change: Taken together.
Speaker Change: All of these actions should power 20% growth.
Speaker Change: 50 basis point gross margin improvement.
Speaker Change: 200 basis point EBITDA expansion per year.
Speaker Change: All very consistent with our earlier guidance.
Speaker Change: Finally, we began this chapter as one integrated team.
Speaker Change: Strengthened by the addition of executive and exceptional leadership and talent.
Neel Kumar: I'm delighted to welcome Neel Kumar.
Neel Kumar: Former CEO of infusion and corrupt sing.
Neel Kumar: <unk>, former CEO of Beacon to our leadership team.
Neel Kumar: That expertise envision will be invaluable.
Neel Kumar: As we execute an ambitious roadmap.
Neel Kumar: To the infusion and beacon teams joining us welcome to Clearwater.
Neel Kumar: And to all our employees.
Speaker Change: Thank you for your unwavering dedication and collaborative spirit.
Speaker Change: That have established Clearwater as a global leader.
Speaker Change: Together, we are doubling down on our commitment to innovation and operational excellence.
Speaker Change: As we built the industry's most comprehensive cloud native investment management platform.
Speaker Change: The future has never been brighter for our clients.
Speaker Change: Our shareholders and our entire Clearwater team.
Speaker Change: With that I'll hand, the call over to Jim to dive deeper into our financial results.
Jim Part: Thanks, Sandeep, we delivered another excellent set of quarterly results in Q1, 2025, which continued the impressive trajectory that we enjoyed in 2024.
Jim Part: We achieved revenue of $126 $9 million with year over year growth of 23, 5%, which comfortably beat our guidance by $1 $9 million and grew sequentially from Q4.
Jim Part: This is impressive as we noted in our earnings call last quarter that $3 million in incremental revenue from NTIC services. Originally expected to be recognized this quarter was recognized last quarter in Q4.
Jim Part: Annualized recurring revenue or <unk> at the end of Q1 was a record $493 $9 million, representing strong year over year increase of 22.7% from the $402 3 million in Q1 of the prior year.
Jim Part: Now, let's turn to unit economics and profitability.
Jim Part: Our robust margin expansion is anchored in our consistent incremental improvement in gross margin.
Jim Part: Which in Q1 was at a record high of 78.9%.
Jim Part: For comparison.
Jim Part: Our gross margin was 76, 5% for fiscal year 2023 win at our September 2023, Investor Day, we committed to improving gross margins by 50 basis points per year.
Jim Part: In Q1 were 240 basis points better.
Speaker Change: In one and a half years not five years as we committed.
Jim Part: This dramatic improvement was achieved notwithstanding bullet.
Jim Part: But with grit and the achievement of many efforts to incrementally improve but the economics and the efficiency of our operations.
Jim Part: Teams across operations sales and development have collaborated across many programs.
Jim Part: Each of these individual programs contributed to incremental improvements to achieve these results and it is gratifying to see the team's successes reflected in our numbers.
Jim Part: We've continued our stellar EBITA margin expansion path by delivering.
Jim Part: <unk> $45.1 million in EBITDA in Q1, with an impressive year over year growth rate of 40%.
Jim Part: And a record EBITDA margin of 35.5%.
Jim Part: Now I'm going to turn to GAAP results.
We achieved a GAAP net income for the fifth quarter in a row with GAAP net income of $6 $9 million in Q1.
Jim Part: We have seen the scale of this business our crew.
Jim Part: Benefits to both shareholders and clients.
Jim Part: For example in the first quarter alone, we spent $37.4 million on R&D.
Jim Part: This is more than double the amount we spent on.
Jim Part: On R&D, when we became public in 2021.
Jim Part: Yet as a percentage of revenue R&D has become 21, 6% of revenue on a non-GAAP basis desk.
Jim Part: This reflects leverage of more than 320 basis points since we became public.
Jim Part: Free cash flow in Q1 was $23 million, which represent a year over year increase of 168% from our prior year's Q1 of $8 6 million.
Jim Part: Total cash and cash equivalents at the end of Q1 was $282 $9 million with net cash of $237.6 million.
Jim Part: Our net revenue retention rate was 114% in Q1, which was a step down from the prior quarters and our or of 116.
Jim Part: As the AUM growth within our clients was less of a tailwind.
Jim Part: However, the key elements to drive to N. R. R. 115 remained strong with new product growth low churn and.
Jim Part: And price increases remaining steady.
Jim Part: In terms of gross revenue retention rate in Q1, it remained at a solid 98%.
Jim Part: In Q1 equity based compensation and related payroll taxes was $27.6 million, which represented 21, 7% of Q1 revenue.
Jim Part: This metric has become meaningfully lower as a percentage of revenue and as a percentage of EBITDA as we have scaled.
Jim Part: Before we turn to the future and guidance. Please.
Jim Part: Please forgive me for a moment of reflection.
Jim Part: When I try and Sandeep in 2019, I don't think either of US envisioned we would find ourselves in this moment today.
Speaker Change: Between adding private investors in 2020 to going public in 2021 to navigating COVID-19 and to all the inevitable market excitement in between.
Jim Part: We.
Jim Part: And all of us at Clearwater have experienced so many changes.
Jim Part: During this time we've.
Jim Part: We've added so many great people along the way and all of US have learned how to get better time and again.
Jim Part: Even when we thought we were already pretty good.
Jim Part: There may have been exciting moments along the way.
Jim Part: But none of them are more exciting than the opportunity that lies in front of us today.
Jim Part: We can give you our assurance that we will remain ever focused on clients and our employees and on our shareholders.
Jim Part: As we have been all along this journey.
Jim Part: With these acquisitions completed.
Jim Part: We can also assure shareholders that.
Jim Part: That we will not pursue further M&A activities until the benefits of these acquisitions are truly apparent too.
Jim Part: Two investors clients and employees and we have sufficiently de leveraged the business.
Jim Part: Now, let's turn to guidance.
Speaker Change: Q1 will be our last.
Speaker Change: Reporting quarter in which we are showing our historical business results as.
Speaker Change: As we closed the infusion transaction on April 21st and the Beacon transaction today.
Speaker Change: As a result, we have provided guidance for Q2 2025 for our historical business and summarized the expected contribution from the acquired businesses.
Speaker Change: For the entire year, we are providing combined consolidated guidance for the full year 2025.
Speaker Change: For everyone's context infusions preliminary revenue for Q1 2025.
Speaker Change: It was $54 $5 million as we expected.
Speaker Change: Which is a 13% increase over Q1 of 2024.
Speaker Change: For the second quarter of 2025.
Speaker Change: Before considering the impact of bistro infusion and beacon acquisitions.
Speaker Change: We expect revenue to be $129 million, representing a year over year growth rate of approximately 21%.
Speaker Change: In addition, we expect a combined revenue contribution from the date of acquisition of infusion and Beacon.
Speaker Change: Of $45 million to the quarter.
Speaker Change: And a total expected revenue.
Speaker Change: $174 million in the second quarter of 2025.
Speaker Change: This represents total year over year growth of approximately 63%.
Speaker Change: In terms of adjusted EBIT guidance for the second quarter of 2025.
Speaker Change: Before considering the impact of the acquisitions, we expect EBITDA to be $45 million.
Speaker Change: Representing an adjusted EBITA margin of 35% or approximately 360 basis points higher than our prior year Q2.
Speaker Change: Additionally, we expect the acquired businesses to contribute approximately $8 million in EBITDA in Q2.
Speaker Change: At an EBITDA margin of 18%.
Speaker Change: On a consolidated basis, the EBITDA margin is 35%.
Speaker Change: Or approximately 250 basis points higher.
Speaker Change: Then 2024.
Speaker Change: Additionally in Q2.
Speaker Change: Below EBITDA, we expect $6 million of one time cash costs related to transition activities and $16 million of one time equity based compensation expense, resulting from the double trigger of awards granted at the legacy.
Speaker Change: Companies.
Speaker Change: We expect interest expense for Q2 to be $15 million.
Speaker Change: For the full year 2025 on a combined basis, we expect revenue to be between $720 million to $728 million.
Speaker Change: Representing a year over year growth rate of approximately 59% to 61%.
Speaker Change: We also expect EBITDA to be $230 million to $235 million for the full year 2025.
Speaker Change: Representing an adjusted EBIT margin of approximately 32%.
Speaker Change: For the year.
Speaker Change: For the full year, although we are still finalizing our purchase accounting work. We currently expect depreciation and amortization expense to be in the range of $100 million to $120 million we.
Speaker Change: We expect the combined company will have equity based compensation expense of approximately $139 million, including the $16 million of one time costs I described in Q2.
Speaker Change: This equates to equity based compensation expense of approximately 19% of revenue.
Speaker Change: This is slightly less than the 20% of revenue in Clearwater <unk> initial full year guidance.
Speaker Change: We expect net interest expense to be approximately $40 million.
Speaker Change: For 2025.
Speaker Change: Share count for the year is expected to be approximately 303 million shares.
Speaker Change: And although we will pay a limited amount and cash taxes, we will continue to utilize our non-GAAP tax rate of 25% for 2020.
Sandeep: With that I'll turn it over to Sandeep to provide some closing thoughts before questions.
Sandeep: Thank you Jim.
Sandeep: Before we open the call for questions. Let me leave you with this taught.
Sandeep: We are working backwards from a future where fragmented investments systems.
Sandeep: We'll be as obsolete as people edges.
Sandeep: Our future.
Sandeep: With the worlds most sophisticated investors will see.
Sandeep: Analyze and act on their entire portfolio.
Sandeep: Public and private.
Sandeep: Simple or complex.
Sandeep: Through a single pane of glass in near real time.
Speaker Change: Q1 strong results are meaningful and foundation for what we are building.
Speaker Change: Which goes much beyond and integrated platform.
Speaker Change: We are eliminating an entire category of problems that the investment industry has accepted us unchangeable.
Speaker Change: Over a decade.
Speaker Change: That's the future we see.
Speaker Change: That's the future we're building.
Speaker Change: And that's the future we will deliver.
Speaker Change: Thank you.
Speaker Change: At this time, we'll begin our Q&A session. If you will.
Speaker Change: To ask a question. It is followed by one on your telephone keypad. If any reason you would like to remove that question. It is star followed by Tim again to ask a question. It is stone one as a reminder, failures a speakerphone. Please pick up my headset before asking your question, possibly for his questions registered.
Speaker Change: Our first question comes from Kevin Mcveigh with with the company UBS Kevin Your line is now open.
Speaker Change: Great. Thank you so much and let me congratulate you obviously Amit.
Speaker Change: Transactions, but also the execution that I imagine there was a lot of.
Speaker Change: On the deals and to be able to put the core.
Speaker Change: Numbers are really really impressive.
Speaker Change: I think he can give a lot of really really helpful context.
Speaker Change: As we're modeling I don't know if dish for Jim or Sandeep.
Speaker Change: Is there any way to think of another 20% there is longer term, but in twenty-five pretty clear, but any sense of how we should think about maybe 26 and 27.
Speaker Change: From just a top line perspective, and then just the pacing of the margins.
Jim Part: Sure thing Kevin This is Jim hope you're doing well thanks for that let me let me start here.
Jim Part: If it's okay with 2025, just said that everybody is grounded in the same say because I know, there's lots of lots of moving pieces here, but simply the way we've.
Speaker Change: Done our 2025 guidance yes.
Speaker Change: We've always said Clearwater grows 20% we're committed fabric.
Speaker Change: We also then said Hey, we're gonna grow beacon, 20% just like that.
Speaker Change: If you can see infusion in Q4 and in Q1 grew about 13%.
Speaker Change: And so those are the components that we use to come to our guidance.
Speaker Change: Obviously, we will continue that longer term commitment to the 20% topline growth remains <unk>.
Speaker Change: Sandeep described the three phases that will step through as we're looking for an incremental improvement and so I think as we look to those levels. We would expect that infusion business to move from that 13% up a few percent.
Speaker Change: Each year as we drive to that.
Speaker Change: 8% topline rate.
Speaker Change: In addition, I think it's impressive when you look at 2025 and you look at the full year.
Speaker Change: EBIT guide that we are able to to grow that as a consolidated entity and so I think when we when we talked about the acquisition in January we talked about the incremental improvement in the infusion business.
Speaker Change: EBITDA margin growing.
Speaker Change: And we've also always talked about consistently thinking about 200 basis points improvement in EBIT margin in our business historically and how that is our that is our that is our mantra and I think we feel very comfortable with the idea that we can expand the larger kind of consolidate.
Speaker Change: Enterprise at that same EBITA margin expansion over that period Cindy Paul.
Speaker Change: Add here, Kevin that we especially well about the infusion growth rate.
Speaker Change: I think we had said before the acquisition that is starting up at about 13%.
Speaker Change: And we expect to Reaccelerate growth through 20% in two years. So obviously the transaction just closed 10 days back and so we expect to get some improvement this year, but very little we expect to see some real acceleration. If you will in 2026 and by the time, we get to Q2 of 2027.
Speaker Change: We expect that to be growing at the pace. We grow so just in team in terms of scaling into how this might go in the outer years, that's how we think.
Speaker Change: Very very helpful. Sandeep I know you talked about kind of the three phases of the execution of the first one being you know that.
Speaker Change: The go to market of banking clients to Clearwater in an infusion and then no infusion of clear water can you just remind us how does bistro fit into that and does that come across the same optionality of a beacon or just how do we think about Easter within the mosaic of beacon in an infusion.
Speaker Change: Yeah.
Kevin Mcveigh: Yes, Thank you Kevin.
Speaker Change: Simply put when you think about beacon it is visualization of alternative assets.
Kevin Mcveigh: And I'm sure you'll agree that.
Kevin Mcveigh: A lot of the inefficiency in the world in this world comes from processing and dealing with alternative assets.
Kevin Mcveigh: And so our Beacon will do is based upon we will do is provide that capability across.
Speaker Change: Asset management hedge funds.
Speaker Change: Insurance companies and other asset owners, so we see that as a horizontal capability, which is applicable to all of the vertical markets. We operator.
Kevin Mcveigh: And while on the subject Kevin.
Speaker Change: We think of.
Beacon almost the same thing mill risk and analytics is not restricted to any one of these industries and we expect it'll be a horizontal well take it to the 1400 clients of clear water, we will take it to the 900 plus clients solve infusion and frankly to their own market segments, which is.
Speaker Change: Energy and other areas. So how we expect these two capabilities to be horizontal.
Speaker Change: Going forward.
Speaker Change: Thank you so much.
Speaker Change: Thanks, Ken.
Speaker Change: Okay.
Speaker Change: Go ahead, our next question.
Speaker Change: Yeah.
Speaker Change: Operator can you queue. The next question please.
Speaker Change: The company Oppenheimer. Your line is now open.
Speaker Change: Yeah, Hi, Thanks for taking my questions. This afternoon Sandy I'm wondering if you can give us.
Speaker Change: Maybe a heads up on what you are saying in terms of demand out there.
It seem like the macro impact.
Speaker Change: And one kiln.
Speaker Change: But what are you, saying now since the Terra and the market turmoil took hold.
Jim Part: And then with Jim and you put in any potential macro read.
Speaker Change: And into the guidance and then I have got.
Brian: Yeah. Thank you for the question Brian So.
Brian: I don't think we saw very much in Q1, and we literally in the day today looked at April to see churn to see booking to see items, which may reflect.
Brian: A slowdown, but when you think about revenue though.
Brian: Our revenue is very well protected from the downside.
Brian: So have the prices of.
Brian: Asset classes gone down generally speaking I think that's true.
Brian: But has a revenue gone down like it did in 'twenty, two or any other time not so so I think the overall revenue growth of the company was solid in Q1.
I think we looked at John we looked at hedge fund we looked at each of these markets.
Brian: Obviously Q1 is solid what we are saying in Q1 as April is very preliminary but we've seen nothing here, which affects our revenue of the business.
Brian: What was the earnings is a completely different story and earnings outpaced.
Speaker Change: Any kind of guidance you provided.
Speaker Change: And so that's how we think about Q1 and April very preliminary.
Speaker Change: I don't know give me a second.
Speaker Change: Second question.
Speaker Change: On the guidance I think it's the framework that we just described are as far as thinking about those businesses and.
Speaker Change: And the relative contributions of those based on the information that we have.
Speaker Change: <unk>.
I would say on the margin right NR ours down slightly in Q1 from Q4.
Speaker Change: But you know all of the things that are entirely in our control.
Speaker Change: That churn price increase cross sell of product upsell was a little bit lighter and that can be because asset growth is a little less and that tailwind of a U S was a little bit less as well to contrast from Q4 to Q1.
Speaker Change: But that but it was I would characterize it as less of a tailwind rather than ahead.
Speaker Change: I think that's a fair point, which I don't think a stressed enough was there was a tailwind and that helps revenue a percent to 2% and that tailwind just did not show up like we expected and that's why we always cautious about guidance, because who knows what the tailwind is gonna be but we are much better.
Speaker Change: Protected against headwinds and that's what you saw in Q1 is there was no.
Speaker Change: Prices went down but guess what the revenue growth was still totally solid but is it down.
Speaker Change: Were sent compared to what it would have been with the good tailwind, yes, I think that's fair.
Speaker Change: And the follow up question I had was just on the consolidated guidance and just thinking about how fast.
Speaker Change: We've got going on achieving the top line and cost synergies.
Speaker Change: If I look at it.
Speaker Change: The consolidated guidance and just considering the acquired companies. They are are the upside that you did in Q1, it doesn't seem like you're baking in much synergies with these acquisition so.
Speaker Change: The question is kind of coming back to how fast do you think you can get going and working to achieve both top line and the cost synergies from the deal rationale. Thanks again for taking my questions.
Speaker Change: Thank you Brian.
Speaker Change: Look I think they are two different things one is revenue growth.
Speaker Change: Which is what.
Speaker Change: It is really important and we think we reaccelerate into it so that's number one.
Speaker Change: On the cost side I think we said we will improve gross margin 200 basis points in year, one and another 400 basis points are needed to and we will take out.
Speaker Change: $20 million in cost synergy.
Speaker Change: Assuming as we do right now.
Speaker Change: We feel very very confident that.
Speaker Change: We can deliver on all of those three items.
Speaker Change: And so we see nothing having changed from the time, we provided you with our thoughts about these acquisitions.
Speaker Change: I do want to also add that.
Speaker Change: Many of these.
Speaker Change: Synergies related to G&A and <unk>.
Speaker Change: <unk> already been acted on and they were acted on.
Speaker Change: Earlier this week.
Speaker Change: And.
Speaker Change: We expect them to play out of work history in Q4.
Speaker Change: Our next question comes from Michael Influenza with company Morgan Stanley Michael Your line is now open.
Michael Influenza: Alright, Thanks for taking my question match at all Jim I, just wanted to ask if I run that pro rata Calix based on the acquisition close date seven fusion M. B can even if I assume roughly even seasonality throughout the year I'm getting there roughly.
Speaker Change: $170 million of inorganic for the full year, if you sort of backed that out in our net plant and getting to call. It 23% organic for Clearwater, which seems a touch higher in relation to the <unk> guide of 21.
Speaker Change: Is there any nuance you would address frequent seasonality perspective for infusion or became <unk> or whether or not you're baking any cross sell synergies into that number.
Speaker Change: Yes.
Speaker Change: Yeah, I'm, just just grabbing my numbers to try and look I have a little bit more in the inorganic then you're once I think I heard you say 170 is trying to pull up my numbers here, it's a little bit more than that but that.
Speaker Change: Organic number sounds a chance.
Speaker Change: Consistent with what we've worked well we were looking at at the beginning of the year and including the good Q1 that we have.
Michael I would just add that.
Michael Influenza: Like we said the first deal flows tender is back in the second one is literally closed in the morning today.
Michael Influenza: These teams are going to be integrated immediately.
Michael Influenza: Because we do believe that risk can be sold.
Michael Influenza: Horizontally and he can sell even the front office horizontally to all of our client base and you can sell bistro horizontally. So we'll integrate them really quickly.
Michael Influenza: At that point there'll be hard to tease out exactly.
Speaker Change: What good controller, but we do feel that our guidance is as <unk>.
Speaker Change: All it and obviously the Clearwater numbers already ground up.
Speaker Change: We do a very rigorous process of things you've spent a lot of time with infusion to make sure we understand it and up and the same with beacon. So it had been built ground up and when it comes to US really if you model, 20% or slightly better.
Speaker Change: For boat Beacon, then Clearwater and you modeled at 13% for infusion well, that's why you will roughly come up.
Speaker Change: Got it that's helpful. Sandeep I asked last quarter on infusion pricing I wanted to ask the same question again I know, it's only been part of that part of the company for nine days now, but any incremental detail you could share just in terms of your conversations with customers and are now.
Speaker Change: Our largest in terms of how you're thinking about pricing and contract structure than whether or not that might be playing into your assumptions for a few points of growth acceleration that infusion next year. Thanks.
Sandeep: Yeah. Thank you Michael listen I had a whole paragraph four you then go to the script actually huntsman to whole paragraph, making sure I address your point Budless up what I would tell you is this one is <unk>.
Sandeep: Super High receptivity at infusion to come up with the commercial model, which is similar to what we have done. So that's question number one so if we talk about Ebola and his desire to build a more stable commercial model skyhigh. So that's number one.
Sandeep: Number two what we did was we took the entire finance organization.
Sandeep: The legal organization with drives these initiatives.
Sandeep: From all three businesses and brought it under Jim right away.
Sandeep: That transition has already occurred.
Sandeep: And the point being let's go out and drive that centrally and sort of purposefully, but I do want to caution.
Sandeep: One thing.
Sandeep: The last time, we did it we went through a four month exercise to build a model, which was going to work and endure.
Sandeep: What we don't want to do is get 8%. This year and then 2% next year, we don't want do that we want a consistent 4% to 5% growth from price, which I think is durable, but if your group price, 8% to 9% I don't think it's durable and so we want to build the model correctly. So do we think it adds to growth in Q2.
Sandeep: Two in Q3, we don't do we think it might add to booking in Q4, yes, do we think will add to revenue in Q4, I don't think so so would you see impact in 2026, yes, we do believe that but this is a big initiative for US we want to get the commercial model right. We don't want this constant move.
Sandeep: Went up and down.
Sandeep: We've done it before we think it can be executed and I've got to tell you. The infusion team is completely behind that.
Alicia Loria: Our next question comes from Alicia Loria with a company RBC Ritchie. Your line is now open.
Alicia Loria: Wonderful. Thanks, so much for taking my questions nice to see the deals close maybe one one for you Jim and one for you Sandeep.
Speaker Change: Jim just to go back to the numbers it sounds like you're.
Kevin Mcveigh: Supporting the idea that organic growth or core Clearwater growth will remain above 20%. Just can you give us a sense for what would the inorganic contribution and a bistro is immaterial, but from beacon and infusion be for the year. Just so we can all aligner numbers, because if I just take kind of your.
Speaker Change: Our Q2 guide and then take consensus for Q3, and Q4 I'm going to come up with a number that's much lower than 20% organic so maybe just can you walk us through that and then I've got a follow up for some David.
Kevin Mcveigh: Okay.
Kevin Mcveigh: Sure. So I think what we said was there was $45 million of combined contribution.
Kevin Mcveigh: Right in and that's basically two thirds of the second quarter right. So if you lay that out you can.
Kevin Mcveigh: You can then expand that into Q3 and Q4.
Kevin Mcveigh: So take the pro rata from the in intra quarter into a full quarter of <unk>.
Kevin Mcveigh: Start to look at that in those areas.
Kevin Mcveigh: Yamaguchi I think if you look at okay regarding revenue Rishi.
Kevin Mcveigh: Okay great.
Kevin Mcveigh: Go ahead.
Kevin Mcveigh: Go ahead.
Speaker Change: Yes, I was just going to say if we look at the revenue for 'twenty 'twenty four for Clearwater and for infusion. That's obviously fully publicly available and we've given you guidance of what Beacon was you just take those metrics and say, 20% growth for Clearwater, 20% growth for Beacon in the 13 ish percent gross for infusion and that's the guide I think the core.
Speaker Change: Meeting will shake out a little bit because we aren't going to be around in that book today.
Speaker Change: Like I said one deal flows in the morning today, So the quarterly may move up and a little bit, but I do think that at a <unk>.
Speaker Change: Year level, we feel really good about our guidance.
Speaker Change: Okay got it.
Speaker Change: Helpful.
Speaker Change: And then to leave for you you know one of the things that I think gets me really excited about the infusion deal along with everything else that you've stated is really the ability for clearwater overtime to get deeper into equities right and it feels like that's especially given your large asset manager customer base it feels like a big opportunity.
Speaker Change: You can go go after maybe can you walk us through kind of your road map over time I understand it's not going to happen. This year, probably not going to happen next year, but for you to really get deeper on the equities polka portfolio, especially.
Speaker Change: Especially for your largest asset management clients and maybe what that can look like in terms of the growth driver for it now the combined Clearwater. Thank you.
Speaker Change: Thank you as I said, that's a big piece right ratio. When you think about the work infusion does is very different profile for what we do we think about what headphones trade in and what asset managers trade in your REIT equity is a much bigger component than in the general accounts up insurance companies.
Speaker Change: So we get that expertise, where the technological needs of any different is near real time. It is very low latency. So the technology and the platform requirements hold to a different.
Speaker Change: What this does for US is it brings.
Speaker Change: All the intellectual property you need.
Speaker Change: Under one roof.
Speaker Change: But that doesn't mean has done what it does mean is all of these are cloud native modern technologies under one roof.
Speaker Change: New clients already use it together lots of clients use it together today, so people have clearwater and infusion Clearwater and beacon and so on and so forth.
Speaker Change: So even without us being together clients have been able to pull this together. So we feel very confident about that though the final vision, though is can you create.
Speaker Change: A single security Master.
Speaker Change: Which is across all asset classes.
Speaker Change: And across all functionality.
Speaker Change: If you do that I believe that's the Holy Grail of investment management time.
Speaker Change: Single data ingestion system single aggregation system single reconciliation system, but a singular dealers. So a singular security master, which is used by the front office.
Speaker Change: He used my risk is used for regulatory reporting is used for accounting.
Speaker Change: <unk>.
Speaker Change: I feel we have a ledger devoted model legitimised right too.
Speaker Change: Two trial.
Speaker Change: And all of the intellectual property, while not integrated is under one roof.
Speaker Change: Now, we don't Wanna get.
Speaker Change: Or <unk>.
Speaker Change: Excited about trying to take all of our energy and put it behind that and that's why we had the three phase approach of less sell things incrementally and better. So we protect them do well on 2025, and then in the medium term cross sell much more aggressively and therefore improved 25 and 26, but yes, we do expect after that.
Speaker Change: For this full front to back platform.
Speaker Change: And if we can get there.
Speaker Change: I think it will completely revolutionize how people think about investment management technology.
Speaker Change:
Speaker Change: Our next question comes from Andrew Schmidt with a company Citi. Andrew Your line is now open.
Speaker Change: Alright, Sandeep hi, Jim. Thank you for the details and it's good to hear the progress report card here.
Speaker Change: Maybe with the still didn't do infusion for a moment and just the hedge fund and market.
Speaker Change: Just talk a little about what you're seeing in the market is kind of tabs on to a prior question around just the environment, but what are you seeing in the hedge fund and market in terms of just client health a hedge fund starts and things like that and then perhaps a corollary to that sandy.
Speaker Change: Sandeep, you mentioned phase one some tactics tactical blocking and tackling.
Speaker Change: Current run rate of that business plus some improvements.
Speaker Change: Finer points on.
Speaker Change: What the sort of near term improvements you can make.
Speaker Change: The infusion business that would be helpful. Thank you so much.
Speaker Change: Sure So maybe just.
Speaker Change: Just for context, just to be transparent with everybody. If you go back to Q1 of 'twenty 'twenty four infusion had.
Speaker Change: About $4 million of churn in Q2, they had between three and a half and $4 million in Q3 that $3 million in Q4 that two and a half million dollars a chair and in Q1, they had $3 million a share. So again looking at a full quarter basis, yeah that.
Speaker Change: Profile is identical I'd also say, we just checked in a to see how April looked in April looks.
Speaker Change: I would say consistent with our normal pattern.
Speaker Change: And so.
Speaker Change: So we haven't seen anything.
Speaker Change: With regard to that.
Speaker Change: The things to think about with infusion and a real focus for the team that they are increasingly becoming more and more successful with is not only winning in the new hedge fund market, but hedge fund conversions and when we dig under the covers and look at some of the good work that they did in Q1.
Speaker Change: There are a number of hedge fund conversions as well that went through in that quarter.
Speaker Change: Yes, Andrew I would just add that if you look at the work Neel Kumar and his team have done.
Speaker Change: They migrated away from very small hedge funds.
Speaker Change: And frankly, if we look at the volatility it comes from a very small hedge funds they come in and out of the market.
Speaker Change: So I think that migration makes our business somewhat stickier, which is why you've seen the churn level off completely now just like you have been looking also and trying to see what does Q1 look like what does.
Speaker Change: April looked like.
Speaker Change: And it is completely consistent with everything we saw in 2024, so we feel.
Speaker Change: We are very watchful, but we don't see anything yet, which would say to us there's something has changed or something is trending in a certain way. So the question I think the other question was what can we do to help infusion grow incrementally faster.
Speaker Change: And the most simple thing is.
Speaker Change: Clearwater, obviously has 1400 clients.
Many of them need a front office system and a middle office system.
Speaker Change: Most people would agree infusion is best in class.
Speaker Change: And so could you take that and sell it to those clients.
Speaker Change: I think that would increase their growth incrementally is that X percent is hard to tell today, but yes that we see as a major component of growth that's one.
Speaker Change: The second thing is.
Speaker Change: And fusion has traditionally invested.
Speaker Change: A lot lower in R&D.
Speaker Change: And they always have to make a choice do you.
Speaker Change: You invest in hedge funds that invest in asset managers.
Speaker Change: Clearwater will be able to do right away is pool our resources there.
Speaker Change: Resources, Veeva deploying behind asset manager and pull them together.
Speaker Change: Put it under the joint leadership of many of the war.
Speaker Change: And I think that will help quite dramatically their bandwidth to focus incrementally on growth.
Speaker Change: And so we expect.
Speaker Change: Them to grow faster does it happen tomorrow, no, but we do think like we said we expect that into years, there should be at the growth rate of 20%.
Speaker Change: And we absolutely expect to do with it.
Speaker Change: Thank you.
Speaker Change: That's extremely helpful. Thank you so much thank you both.
Speaker Change: Maybe I'll just ask about the.
Speaker Change: The New foundation, the single security Master, obviously hugely beneficial and important part of this the the process here if you're talking about just the R&D intensity associated with building that out and then on the flip side when you do get that live in the future.
Speaker Change: Deprecate technology assets and drive higher levels of scale.
Speaker Change: We think about that new combined security master. Thank you so much.
Speaker Change: Yes, Thank you silke.
Speaker Change: I can just say, yes, yes, and very loudly. So I think those are exactly right, but I do think that we should just consider for a second what the architecture of Clearwater is.
Speaker Change: It is a single security massive system today.
Speaker Change: Let me go to ask yourself, what's the architecture of infusion.
Speaker Change: And it is a single security Master a different security master, but architecturally a single security Master.
Speaker Change: And then you got to think about Beacon. So the benefit we have is.
Speaker Change: Each of these systems are architected.
Has a single security master use.
Speaker Change: Use the same security master.
Our front office applications for Oems, and Pms and them risk and then accounting and then.
Speaker Change: Regulatory reporting.
Speaker Change: And what you do is you completely get rid of this notion of reconciliation.
Speaker Change: And all of us on the call know that.
Speaker Change: We have teams after teams after teams of people reconciling within an asset class between front office Middle Office Middle Office and back office and it goes on and on.
Speaker Change: And then you put in other asset classes and other countries.
Speaker Change: And best of luck.
Speaker Change: Reconcile and reconcile and reconcile so I think the single security Master.
Speaker Change: Would completely change the game.
Speaker Change: Of how people think about investment management technology. So yeah, we're very excited about it.
Speaker Change: We think that.
Speaker Change: Architecturally we are set up to do it well.
Speaker Change: But it doesn't mean as gets done in six months I think it takes time.
Speaker Change: One last point on the R&D.
Speaker Change: We have the.
Speaker Change: The drawing integrated company has a thousand people in R&D.
Speaker Change: And so we think there's a lot of synergy there, but we don't expect it.
Speaker Change: At a dollar level to reduce R&D expense, but we do expect us to be able to fund these initiatives without adding too much of cost.
Sandeep: Very helpful. Thank you so much sandeep. Thank you.
Speaker Change: The next question comes from Aleksey <unk> with accompanying Jpmorgan Aleksey. Your line is now open.
Allen: Good evening Sandeep and Jim This is Allen on for like say, Thank you for taking our question.
Allen: First total thank you like everyone else on the call asked about the infusion acquisition, which brings significant equities exposure T L. But even tend to manage this new branch as it relates to care pricing.
Speaker Change: Yes, Hello. Thank you for the question, but remember this rethink a lot about AUM.
Speaker Change: When you talk about just core Clearwater.
Speaker Change: Yeah.
Speaker Change: Infusion doesn't price, let other chemo.
Speaker Change: So they aren't subject to the vagaries of the market growing 5% up on purpose them down, but I do think ela that the commercial model.
Speaker Change: Needs to be report.
Speaker Change: Within the commercial model.
Speaker Change: We don't think is best in class right now I think the infusion platform is completely best in class.
Speaker Change: And there's really no reason they shouldn't have a commercial model, which is best in class, but we do expect to launch that effort very quickly, but we do think it takes us four months before we go to the market with it and then it'll take a little bit of time to get people to convert to it but we will switch all new clients to the new commercial motor right away and I think clients are like it.
Speaker Change: Don't expect plans to be resistant to it because we hope it aligns to how they run their pets. So look we feel it is a journey.
Speaker Change: But it's a journey we've been on before so we feel pretty confident about it and if I can if I can refer you to the deck, we put out when we closed the infusion transaction I think you'll see the client segments. We can attack I think something that was really compelling.
Speaker Change: To me and frankly, probably should have understood it but.
Speaker Change: It really popped out at me.
Speaker Change: Was.
Speaker Change: After the consolidation.
Speaker Change: We have about half.
Speaker Change: Our revenues are asset owners and have our asset managers and have those asset managers, 23% our hedge funds. So it's about it's less than a quarter of our exposure.
Speaker Change: Across all of that to hedge funds and yet we still have that incredible blend of both asset owners and asset managers and I think it uniquely positions us from a financial stability perspective, but also from a strategic perspective, when we think about being able to see both sides of the market.
Speaker Change: Okay.
Speaker Change: That's really clear. Thank you both and is it really quick follow up I wanted to ask Bob Pease Trail, how is that embedded in your guidance and how do you think about it forward growth opportunities. Since you acquired it is of no revenue asset yeah.
Speaker Change: Yeah. It's thank you for reminding everybody of that it was it was an asset acquisition and there arent revenues associated with it should deep described how it is a horizontal.
Speaker Change: It has provided us a horizontal use case and and so I think as we as we continue to build that out we'll look for evolution there.
Speaker Change: Yes, I would just say all of it.
Speaker Change: There aren't any good solutions in the market.
Speaker Change: Which is goes across alternative assets other complex assets with there really isn't a platform, which you can look at private credit and private debt and all of these asset classes together.
Speaker Change: And.
Speaker Change: Do we think about the biggest player in the world in this area.
Speaker Change: Blackstone.
Speaker Change: And they built it but they built it.
Speaker Change: Using some of the technology of Clearwater and some of the technology of Beacon and the developed on top of that too.
To build something which could be used by.
Speaker Change: My dad desks across the company. So I think it is a very unique asset.
Speaker Change: And for us to build it would have taken a long time, but more importantly, our access to the domain expertise.
Speaker Change: Would be really hard to get me.
Speaker Change: I mean, they use it on a daily basis. So we are.
Speaker Change: Gonna stay abreast of everything that happens in that market and I think that alternative assets is such a big part of the whole story that it'll really help accelerate growth for all three companies, including Clearwater infusion and B.
Speaker Change: Makes a lot of sense, Thank you Jim and Sandeep.
Speaker Change: Excellent.
Speaker Change: Our next question comes from Dylan Becker with the company William Blair Delaney Your line is now open.
Speaker Change: Hey, Sandeep, Jim Joon. Thanks for taking the question I'll just ask one for the sake of time, you've kind of hinted at it.
Speaker Change: Sandeep you guys have obviously undergone can I have a similar transition throughout the call Clearwater business over the last five years and out.
Speaker Change: Executed or outperformed kind of expectations, there I guess I wonder how that kind of breeds confidence in your ability to run the same playbook and if there are any parallels.
Speaker Change: That you would make as kind of a starting point, we look at today relative to where water was five years or so.
Speaker Change: Yeah.
Speaker Change: Thank you for the question Bill.
Speaker Change: Everything we have seen to low super high confidence.
Speaker Change: We have moved very quickly to integrate all the operations under so we say T was a new chief operating officer and <unk>.
Speaker Change: We should be able to play the exact playbook again, and if you think about and look at the integrated margin.
Speaker Change: And how we got from there to another three years back to where we are today, we think we can play.
Speaker Change: We can just execute on the same playbook. The advantage. This time will be two things one is the technology of Helios already exists. So you don't have to build it.
Speaker Change: And we know how to drive it so our level of confidence in driving gross margin improvement is really high.
Speaker Change: Our ability to execute on the synergy is really high and so we believe that.
Speaker Change: We will do what we have guided to or spoken about at the time of acquisition Super high confidence in that.
Speaker Change: I don't know Jim with you. Thanks, Dylan Thanks Todd.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Michael turn with the Company Wells Fargo. Michael Your line is now open.
David Undrawn: Hey, Thanks for taking our question that David Undrawn for Michael Caron Tonight, just one from us.
Speaker Change: So I think we all know that Clearwater has very strong win rates.
Speaker Change: And revenue per quota carrying rep metrics, just wondering how should we think about when rates themselves, especially as you work through the integration going forward. Thank you.
Speaker Change: Yeah, I would just say that if you look at the launches of hedge funds and you look at the conversion infusion when rates are really high they are really disruptive platform and when people go out and look for a platform I think they are the platform of choice now.
Speaker Change: I think as we get into the business more I think we will reevaluate where exactly their losses, rather than lose why did the news. So I think a little bit early for us today to say what do we think about the long term trend, but obviously, there's been a public company.
Speaker Change: And.
Speaker Change: The one very very consistently so look we feel really confident about it but I don't think we're really in a position today to be able to dive into all of it I don't know Jim whether it is the only thing other thing our experience has taught us that cross selling.
Speaker Change: We have great win rates cross selling win rates are even higher and I think that's not a controversial thing across all businesses and this.
Speaker Change: The combination of strategic combination of all of these firms together enable that cross sell motion much more strongly than we had two weeks ago.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from.
Speaker Change: Yung Kim with the company made capital market Union. Your line is now open.
Speaker Change: Okay great.
Speaker Change: Of time I'll just ask one quick question to Gen. Four modeling infusion business I think it would help us see if you can give us some insights into what.
Speaker Change: What they'll be needle seasonality is like within that business either heavily geared towards Q4, which implies that some of the uptick in revenue to come in Q4 weather didn't linearly through Q3 Q4.
Speaker Change: Yes.
Speaker Change: That's right that's right two triggers within their business.
Speaker Change: Is one is there is an annual elements to it in the renewal cycle and as more of their business was one in fourth quarters year over year over year, there's there's more business in Q4.
They also had a cadence where at the beginning of the year they would they would make certain changes and.
Speaker Change: So so that Q4 Q1 timeframe is it is a step change.
Speaker Change: Okay, great. Thank you so much.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: At this time there are no more questions in queue again, if you'd like to ask a question. It is star followed by one like your telephone keypad.
Speaker Change: Okay.
Speaker Change: Just want to say just thank you for your continued interest and we look forward to meeting many of you over the next few days and weeks.
And on the next call in about a quarter from now thank you.
Speaker Change: Take care.
Speaker Change: That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.