Clearwater Analytics Holdings, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by, and welcome to the Clearwater Analytics Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in listen mode only. After the speaker's presentation, there will be a question and answer session. And now, I would like to welcome Jun Park, Head of Investor Relations, to begin the conference.

Thank you, and welcome everyone to Clearwater Analytics Second Quarter 2023 Financial Results Conference Call. Joining me on the call today are Sandeep Sahai, Chief Executive Officer, and Jim Cox, Chief Financial Officer. After their remarks, we will open the call to a question and answer session. I would like to remind all participants that during this conference call, any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Expressions of future goals, intentions, and expectations, including in relation to business outlets, future financial and product performance, and similar items, including without limitation, expressions using the terminology may, will, can, 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 statements. 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 cautionary statement included in our earnings press release. Lastly, all metrics discussed in this call are presented on a non-GAAP or adjusted basis and include the results of Jump Technology, since the acquisition on November 30th, 2022, unless otherwise noted. A reconciliation to GAAP results can be found in the earnings press release that we have posted to our investor relations website. With that, I'll turn the call over to our Chief Executive Officer, Sandeep Sahai.

Thank you, June, and welcome to our Q2 earnings call. Allow me to start by saying that I'm incredibly proud of the entire Clearwater team for our outstanding execution in Q2. There are four key areas where we executed very well. One, we successfully brought both large and small clients live. And even more impressively, we saw best ever customer satisfaction and NPS scores. Second, the sales team had a very good quarter and they continue to win against competitors who largely offer legacy solutions. Third, we continue to see positive impact from the commercial model we rolled out last year. And fourth, we continue to innovate and deliver products that address our customers' pain points. Let's dive into each of these. First, let's start with operational excellence. We have been investing in increasing maturity and scalability of our onboarding team, and Q2 was a testament to how far they have come. Aviva is fully live on our platform. As you know, Aviva is a leading UK provider of insurance, wealth, and retirement products, serving over 18 million customers. They have their global assets on our platform, and we provide a daily comprehensive view of the portfolio consisting of more than 350 billion pounds in AUM. Achieving this milestone is very significant because we had to build unique functionality specific to Europe, including asset class coverage, coverage for local accounting standards, and regulatory reporting for countries across Europe. With this accomplishment, we have proven to the market that we can handle the highest level of complexity in Europe. Combined with the multi-country onboarding of FWD in Asia, our platform is now used by large, sophisticated customers across the world. Other major goal lives in Q2 included Amica Mutual Insurance, Greenwich Investment Management, and Highmark Health, to name just a few. In Q2, we saw our average go-live time decrease, with average time taken to bring customers live on our platform was approximately six months. The network effect of our single-instance multi-tenant platform allows us to continue improving this process and bring value to clients faster. As you all know, our NPS is one of the highest you will find in the industry and it is a metric we are incredibly proud of. In Q2, we exceeded our already industry-leading numbers and recorded our highest NPS to date. To me, it says that our customers are happy with the platform the access we provide to best practices, and an acknowledgement of the care our client services and onboarding teams provide. It is a giant team effort, and we are thrilled that our customers acknowledge that and place their trust in us. That allows us to continue growing with significant support from references provided by our current clients. Second, let's discuss the demand environment. The pain our customers feel while working with legacy systems in the industry is significant. We continued to close deals and saw our pipeline build throughout the first half of 2023. Our growth has been fairly even across our key industries of insurance, asset management, corporates, and government. In the second quarter, We expanded our footprint with existing clients and added marquee clients such as Apollo Syndicate, Covenant Capital, Delta Dental of Wyoming, Finance Incorporated Limited, Intellia Therapeutics, Medical Protection Society Limited, Omnicap Group, Viridian Therapeutics, Invest in Asset Mortgage Capital Corporation. we announced a strategic partnership with JPMorgan Asset Management, integrating our platform with the Morgan Money Global Trading Platform. This allows permissioned users to easily navigate between both systems. The joint solution will make it easier for financial professionals to have a global connected view of the investment portfolios and empower them to make real-time investment decisions on the Clearwater and Morgan Money platforms. We continue to see strong sales of our add-on products like Clearwater LPX and PRISM. As an example, one of our large existing insurers signed on to use PRISM for reporting, which led this client to more than double the AUM with Clearwater. Europe had a very strong first half with several new wins in Northern Europe and the French and Benelux markets. This included both mid-sized clients and large institutions in the insurance and asset management industries. We've had several successes here in the US with jumps full front-to-back platform. We were also successful with an offering that paired Jump's front office suite with Clearwater for accounting and reconciliation. As you may recall, Clearwater acquired Jump with a vision to revolutionize the entire investment lifecycle and be executing on that plan. These deals underscore the value our clients receive from both our platforms working together. They also validate our premise of an expanded DAM with a combined product offering. Overall, our product continues to resonate across the globe, and we don't see any change in the competitive environment. Our sustained investment in our platform continues to set us apart in the market. Thirdly, on a commercial model, we continue to be pleased with the changes we drove last year and the impact it is having and can have on our growth trajectory. As you might recall, last year we made the leap from a pure AUM-based model to a base plus model. We couldn't be happier with the results and this commercial model has now become the default way we contract with clients across industries and sites. With Prism, LPX, and Jumps modules, we are increasingly acknowledged by our customers as a multi-product company capable of providing solutions across the value chain. Our strong NPS clearly helps customers feel confident in purchasing more software from us. Clearly, our approach here continues to create a win-win for both our clients and for Clearwater. Fourth, our aggressive and sustained investment in R&D allowed us to expand the platform to address the needs of clients in both Europe and Asia. We have invested in building products to solve the need of existing customers here in North America. Many of these efforts involve using clients as design partners, and that gives us confidence that our investments will continue to pay off. I already mentioned Clearwater LPX and Clearwater Prism, but also in Q2, we began a beta program with Clearwater MLX, which is a solution designed to improve the visibility and detailed accounting for commercial, and retail mortgage loans. We expect to launch Clearwater MLX in Q3. Another frontier of investment would be to bring front office and front to back functionality to the US using the Clearwater Jump platform. We are delighted that we already have North American customers who want to work with us. Next, we are working on additional capabilities including self-service, allowing our customers to configure and manage the growth of their accounts. We are also enhancing intraday data and recon, which are sometimes referred to as T plus zero processing. This will help us improve how we deliver same-day investment book of records for clients that need near real-time visibility. We have to talk about the work we are doing with generative AI and the potential to transform and disrupt the market. You may have seen our recent press release on this topic, where we announced that we stood up our own instance of a large language model, which we are calling Clearwater GPT. We are working on rolling out new gen AI driven solutions and dramatically improving the way we service clients. Clearwater GPT is the first solution of its kind that seeks to address the full investment lifecycle. We see this effort as both adding to the revenue growth of the company with new Gen-EI based product offering and impacting the bottom line with efficiencies across our operations. I'm sure you're immediately wondering if we can predict what this might mean to our financials. Let me just say that the product is very promising and the early results are very good. But the technology is new and it is hard to assess the full impact it can have. We expect to have more details for you in the coming months. Given that our robust multi-product offering caters to diverse geographies around the world, We're excited to welcome Sunil Dixit as our new chief product officer who brings proven expertise in innovating and building multi-product platforms at leading SaaS companies. When I stop and think about these four areas, operational excellence, demand based on addressing client pain with a large dam, an effective commercial model, and a disruptive platform, I'm not only proud of our team, but I also recognize that this is what allows us to deliver stable growth with the potential to increase margins consistently. That is what we set out to deliver, and our actions and results in the last two years since we went public bear out the strength of our approach. We are setting aggressive goals and executing on a plan. It's frankly a great time to be at Clearwater Analytics. Now let me turn it over to Jim to discuss the financial results of the company and the outlook for the year.