Clearwater Analytics Holdings, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Clearwater Analytics 3rd Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. And now, I would like to welcome June Park, Head of Investor Relations, to begin the conference.

Thank you and welcome everyone to Clearwater Analytics Third Quarter 2024 Financial Results Conference Call. Joining me on the call today, as usual, are Sandeep Sahai, Chief Executive Officer, and Jim Cox, Chief Financial Officer. In addition, Subhi Sethi, our Chief Client Officer, will also join the call introducing herself to investors. 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 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 on this call are presented on a non-GAAP or adjusted basis 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. I'm pleased to report that Q3 2024 was a truly outstanding quarter for our company. We continue to make solid progress on the growth initiatives we've been working on, and it's very rewarding to deliver these financial results. Revenue for the quarter was $115.8 million, a 22.4% year-on-year increase. our annualized recurring revenue, ARR, grew by 26.1% year on year to $456.9 million. As I'm sure you'll agree, these are really strong growth numbers. Since the acquisition of the Wilshire assets is so new, we can measure its impact separately this quarter. So excluding the impact of the Wilshire ARR, ARR grew 24% year over year. The backbone of our growth story is our best-in-class gross revenue retention. For the last 22 out of the 23 quarters, our GRR has been 98% or higher. And for the last three quarters, we have recorded a 99% gross revenue retention. That is extraordinary. Next is the upside from AUM growth. After a long and sustained period where AUM expansion provided a gentle tailwind to ARR growth, it turned into a real headwind in 2022. You may recall the extensive work we did on the restructuring of our client contracts. we've worked very hard to limit our downside while ensuring that we shared in the upside with our clients. It is very rewarding to see that effort bear fruit in this quarter and provide a gentle tailwind to our growth. New logos have long been a driver of growth and we continue to see a significant runway in each of the markets we serve. the North American insurance, asset management and asset owner markets continue to be important levers for growth. Increasingly though, we see the international markets as an emerging engine for growth and I'm very encouraged to report that we see continued and sustained expansion in both booking and pipeline. To support our growth in Europe and Asia, We have been very fortunate to add exceptional talent to our leadership ranks with four strategic hires. They include Adrian de la Grange as head of sales in France, Belgium, and Luxembourg, Alessandro Pavoni as head of sales in the UK and Ireland, Amina Trozer as the new head of global delivery for EMEA and Jose Salas as head of partnerships and alliances for EMEA. We also opened a new office in Hong Kong, further reinforcing our commitment to that region. Selling within our current client base is the next big lever of growth. We have done several things to ensure sustained ARR expansion within those markets. Number one, maintained a very high level of client satisfaction where our success is evidenced by our NPS, which is meaningfully higher than 60%. Number two, we set up dedicated sales and relationship teams that focus exclusively on those key clients. And number three, a majority of our new product innovations are directed at these key relationships. As a result of this, we have seen our revenue from current clients continue to expand. Overall, we feel really good about the disruptive part of our platform, the competitive position we have in our industry, and therefore, our ability to grow. Talking about our platform, Let's also discuss our approach to leveraging GenAI for both efficiency and growth. We believe that Clearwater is at the forefront of using GenAI. As you all know, generative AI models are only as good as the data on which they are trained. Our single instance multi-tenant platform provides us with an outstanding and comprehensive investment management data set, and that can help power our GenAI work. Our technology teams are already integrating this critical technology to transform internal workflows, training them on the best in class reconciliation data we alone have access to. and providing our clients with the ability to interact conversationally with the data in real time. And finally, the next growth level I'd like to talk about is inorganic growth through strategic partnerships and M&A to complement our organic efforts. While our programs in these areas are still in their early days, we're already starting to see benefits. Our recent alliance with Snowflake exemplifies this effort. Insurance firms, asset managers, and asset owners can now seamlessly access all the investment data together. Think equities, fixed income, real estate, private equity, loans, and private debt, allowing them to capitalize on new opportunities to grow their business. We could not have achieved these exceptional results without continued operational rigor and a strong commitment to continuous improvement. Our ability to invest in these growth initiatives while simultaneously improving gross margins is driven in large part by the steady incremental margin expansion that our operations teams have delivered. And to discuss our operations, I would like to introduce you to our Chief Client Officer, Subhi Sethi. Subhi leads our operations teams globally and is responsible for onboarding and ongoing customer service. Not only does her team do a great job delivering on a daily basis, but they're also true partners for our client's growth. With over 25 years of experience leading operations teams for both large and mid-sized organizations around the world, Subi has been instrumental in scaling our business and processes across the company. With Subi at the helm, we have deepened client relationships, improved service delivery, and enhanced our platform's capabilities. With that, I'll hand the call to Subi to talk about operations and how her team contributes to this powerful engine that drives Clearwater forward.