Clearwater Analytics Holdings, Inc.

for questions.

I would now like to turn the call over to Jun Park, Head of Investor Relations at Clearwater Analytics. Jun, please go ahead. Thank you and welcome everyone to Clearwater Analytics fourth quarter and full year 2023 Financial Results Conference call. Joining me on the call today are 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 outlook, 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 factor section of our filings with the SEC. Our show 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. Before the market opens on Smart Morning, we plan to file with the SEC a Form 10-K for the fiscal year ended December 31, 2023. Lastly, all metrics discussed on this call are presented on a non-GAAP or adjusted basis and include the results of Jump Technologies 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, Jun, and thank you all for joining us. Let me start by saying that I'm incredibly proud of what we have achieved as a company over the last five years. We are on a mission to be the world's most trusted and comprehensive technology platform that simplifies the entire investment management lifecycle and eventually revolutionizes the world of investing. While we are very ambitious, we want to build a durable business that grows consistently while improving unit economics, margin, EBITDA, and cash flow. That's why 2023 was a great year. Revenue grew 21.3%. Gross margin was 139 basis points better than the previous year. Adjusted EBITDA was 203 basis points higher than the previous year. And finally, our cash flow for the year increased by 57.2%. We have often talked about the power of a single instance multi-tenant platform and the network effect it produces. But the growth in Europe and then in Asia, and finally, new asset classes have masked the true impact. We're delighted to note that in 2023, we grew our revenue 21% without adding a single net new employee to our operations team, reflecting the true power of the network effect aided by GenAI. We have always insisted that it was not just about cost efficiency. Clients would be happier because the network effect made our data better and they would get the data faster. No surprise then that even though we did not add any operational headcount, we grew NPS and improved employee satisfaction score. Finally, we are taking the GenAI power technology we have been using internally to our customers. And we launched Clearwater's Intelligent Console this month. Clearwater's success starts with disruptive technology. At our core, We believe that the level of complexity across the investing world is incredibly high and is a moving target. The emergence of new asset classes, new geographies, new rules and regulations surrounding investments, and finally regulatory reporting, all continue to add to complexity. You simply cannot solve this effectively with patchwork legacy technology. That is why we believe that our prospects need to move to a modern technology like Clearwater. And our platform, which is truly disruptive, has never been more ready to scale. we completed the transition to the public cloud in less than a year with little to no disruption to the operating teams or clients, thereby meaningfully altering our ability to scale the business. And because it is a single instance multi-tenant platform, there is no migration. All, not most, but all of our clients are automatically on the public cloud. Let me pause here. For much of our industry, such a migration would have been a multi-year endeavor. Not for us, because we are a single instance, multi-tenant platform. Make no mistake, this endeavor took much of last year and involved more than half of our R&D team. With that completed, we are really excited that we can now devote more than 60% of all R&D capacity to growth-related product development. And while new products take some time to build and take to market, We have the track record with Prism and LPX to show that we know how to innovate effectively. We view the journey towards NRR 115 as an incredibly strategic endeavor and investing in new products that we deliver to our current customers is absolutely integral to our plans. More specifically, we are working jointly with our customers to innovate in five different areas. Number one, investment data consolidation, which includes our Clearwater Prism product that offers a centralized hub of investment data, which can then be used for client analytics and reporting, thereby helping our clients grow faster. An example is a win with a large private investment firm. They were struggling with custodial feeds, reconciliation, and accurate tax slot data, and wanted a holistic view of their custody, brokerage, and alternative assets. By pulling data from their accounting system, their CRM, and their general ledger, We proved that Clearwater's combined offering of an accounting platform and a next-gen investment data hub has the capacity to make the business much more efficient and competitive. Number two, asset class and fund expansion. like a Clearwater LPX and MLX products and other solutions that allow clients to dive deeper into those assets and analyze the underlying assets in much greater detail. Let me give you some real-life examples for Q4. We have continued to win LPX and LPX clarity deals. As you know, late last year, we launched Clearwater MLX, a comprehensive all-in-one solution for mortgage loan investors. In 2023, we partnered with one of our REIT clients who is now transitioning the business purpose loans to MLX. Before choosing Clearwater, this client struggled with a competing product that couldn't handle draws on construction loans. After reviewing the available solutions in the market, they opted for Clearwater MLX and we are delighted to count them as another satisfied REIT client. Number three, front and middle office solutions that allow customers to get a full front to back solution from Clearwater in a modular architecture by including Clearwater Core, Jump, Performance Plus, and Rest Plus. This opens new TAM within and outside our current customer base. An example of this is our recent win with CCR. CCR is a leading reinsurer in Europe, that selected Clearwater's platform for the entire investment lifecycle. Number four, platform innovations that provide our existing clients specialized add-on modules for their accounting and reporting needs. These include region-specific, country-specific gap accounting, customized data feeds, and toolkits that support our clients' unique period-end closed requirements. Number five, new frontiers that allow us to apply advanced technology like generative AI and machine learning to the investment world, both for internal benefit and for client use. These solutions take the manual work out of things like book yield calculations, perform income validations, verify lockdown procedures are correct, and more. You can think of this as the intersection of process and technology that empowers people to move faster while still ensuring quality. And while it is early days for the innovative products we are bringing to market, there are some very good initial signs. Let me begin with a leading insurer in the North American insurance market. This client is an excellent example of successfully integrating the Clearwater platform with our Jump OMS solution to provide a comprehensive platform. During the search for an OMS to comply with new regulations mandating a T plus one trading system, this insurer evaluated other solutions in the industry. The Clearwater Jump OMS proved how it can optimize each step of the trade workflow, specifically with our accounting system as an ideal connection point. we met all the requirements for this insurer, instilling the confidence and trust necessary for them to partner with us. Another example is the progress we have made in the stable value of funds domain. In Q4, a global investment management firm operating with fully homegrown systems face significant strain on the IT resources and the manual work from the operations team. With the rapid expansion into new contract types, asset classes and clients, the teams operated on different platforms and relied heavily on email for data exchange. The front office group lacked insight into the underlying investments of their contracts, hindering the ability to evaluate new potential strategies and differentiate themselves in the market. The back office team struggled to meet the demands of the front office group in a timely manner. resulting in a flood of emails reaching issuers, sub-advisors, internal trade desks, fund accountants, and other stakeholders. Clearwater provided the best-in-class solution they needed. Both teams now operate on the same system, enabling easy access to data for end users and significantly reducing the strain and risk across the organization. Our client sought a vendor whose platform would become an industry gold standard, and they identified Coolwater as precisely that. Our ability to showcase a stable value product capable of supporting front, middle and back office functions outperformed other competing products they evaluated. In Q4, a leading retirement and life insurance company chose Clearwater to power an automated solution for the European taxonomy reporting, thus fulfilling its ESG reporting requirements. This client is working with Clearwater to integrate the new data sets, including non-native Clearwater ABAR portfolios, and further streamline the client's ESG reporting process. Clearwater PRISM ingests portfolio data, including separate account investments not on Clearwater, enriches it with ESG data, runs calculation, and generates the required ESG reports. The client is very pleased with our world-class client services team, and we consistently demonstrate the agility and commitment to address our client's custom requirements, thereby achieving the goals. Looking ahead, we want to do the following. Number one, Focus on innovation leading to increased back-to-base sales and thereby continue to make progress on a path towards NRR 115. We are investing heavily and expect to see some results in 2024 and a more robust return on investment in 2025. Second, grow our presence in Europe and Asia more aggressively. Towards that end, we are excited to welcome Keith Viverito to our executive team. Keith has a deep understanding of the industry, has over 20 years of experience in high-growth companies serving financial markets, and is a perfect fit to lead Clearwater's expansion internationally in EMEA and APEC. Number three, investment accounting technology accounts for roughly one BIP client spend. And we want to add capabilities and products that allow us to address the other three BIPs, which constitutes the full investment management space. To help that transition, we are very happy to welcome Shane Aykroyd to our team. Shane is our chief strategy officer and has helped grow market and then IHS market and finally S&P through organic growth and M&A. Fourth, focus on continued operational excellence via increased use of Gen AI. As a summary, we continue to delight our customers and are grateful for the trust they have in us. We have an exciting multi-product roadmap along the five vectors I just described. We have a team of industry experts who ensure our client success, and we are capitalizing on the latest technologies to improve both our internal operations and deliver unparalleled scale and growth opportunities for so many critical companies around the world. With that, I'd like to turn it back to Jim to cover our detailed metrics and guidance.