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

Clearwater Analytics fourth quarter and full year 2024 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, expectations for the timing of the Enfusion acquisition and its expected benefits, and similar items, including without limitation, expressions using terminology may, will, can't, 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 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 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, Joon. I'm pleased to report that Q4 2024 was an outstanding quarter for our company. Revenue for the quarter was $126.5 million, a 28% year-on-year growth, which I'm sure you'll agree is spectacular. ARR grew to $474.9 million, a 25% year-on-year growth, one of the highest increases since our IPO. Coupled with our strong gross revenue retention, this allows us to look ahead to 2025 and beyond with very high confidence. And finally, adjusted EBITDA was $41.7 million, 33% of revenue, and up 39% year-on-year. We continue to deliver very strong organic growth with increasingly high unit economics and high levels of profitability, all while investing heavily in strategic initiatives and innovation. It was indeed an outstanding quarter. This growth was made possible by success across various dimensions of our business. Number one, NRR grew to 116%. As we have laid out on several occasions in the past, one of the foundations of our growth strategy has been NRR growth. It involves a strong focus on client satisfaction and delight, investment in innovation and product development, a robust commercial model, and dedicated teams focused on driving NRR growth. We are excited to deliver an NRR growth of 116% for the quarter and believe that it provides a very strong foundation for sustained growth. Number two, widespread expansion across our increasingly diverse market segments and geographies. We have a single-instance multi-tenant platform and the ease with which it adapts to adjacent market segments and geographies allows us to chart a multi-year growth strategy with excellent visibility. Growth without a focus on unit economics is never sustainable in the longer term, and that's why you continue to see us incredibly focused on it. I'm pleased to report that our gross margin has grown exceptionally well. For the quarter, our gross margin grew 190 bps year-on-year and 170 bps for the full year. These are significantly higher than the 50 bps per year improvement target we had set on Investor Day two years back, but at that time, we did not foresee the impact generative AI would have on our business. We believe that we can expand unit economics this year by an additional 50 bps, and we now believe that the long-term target for gross margin is north of 80%. The combination of strong execution, our development of gen AI use cases, and the benefits of our network effect provide us with ample opportunities to drive this expansion in margin. Generative AI has the dual benefit of driving operational efficiency and providing customers with faster responses to the queries via self-serve agents. We have continued to invest heavily in this technology and believe that we are at the very leading edge of innovation in our industry, enabled by the fact that our platform uses a single security master across all our clients. It is gratifying to see the fruits of our labor come to life on overall profitability. Again, we see very strong performance driven by expanding unit economics and scalability benefits across various functions within our company. EBITDA grew by 350 bps for the year, exceeding the already ambitious 200 bps goal we outlined during Investor Day in 2023. The overperformance in unit economics flew through to the bottom line almost entirely. Finally, we expect to deliver another 200 bps in EBITDA growth in 2025. We are delivering a disruptive platform to the investment management industry, one that is constantly getting better because of our sustained investment in innovation. Our approach and plan for organic growth remains largely unchanged. We believe that having many irons in the fire for driving growth is the appropriate approach for delivering durable growth in our business. We are comfortable with the pace of improvements that we had previously outlined in both unit economics and profitability expansion, while we continue to make sustained investments to drive durable growth. The levels of growth are, number one, driving new logos in North America, where we have the largest camp and the highest right to win, leveraging a high NPS and CSAT rating. All of these results in sustained strong win rates. Number two, continued international expansion to become the platform of choice for the investment management industry in Europe and Asia. Number three, focusing on back-to-base investments to drive one to four-bps expansion in our core markets. We actively manage our investments in new products and are rigorous about unfunding investments that show limited traction. Conversely, we increase support for investments that resonate with our clients. Number four, expanding our reach to asset owners beyond traditional insurance companies and corporates to now include state and local governments, foundations, REITs, pensions, sovereign funds, and endowments. Number five, building an effective channel of growth through partnership with other software providers, system integrators, and advisors. This has been an under-invested area for us and many companies generate substantial revenue from this channel. We hope to see results later this year and in the years to come. Number six, continued selective M&A initiatives, ensuring that any potential acquisition aligns with our long-term strategic goals. And number seven, we believe our core TAM stands at approximately $5.9 billion, a figure derived from the segments where we have achieved a long-term 80% win rate. With $474.9 million in ARR at the end of 2024, we have a long runway of growth ahead of us. Let's discuss some of our initiatives in greater detail. Our new product initiatives, which focuses on expanding into adjacent markets, are developed in partnership with our clients. These initiatives have played a significant role in driving engagement and growth in 2024. Our initiatives focused on platform modules that enhance customer efficiency, LPs, mortgages, regulatory reporting, funds, risk and performance have all helped grow our business. Clearwater expanded its footprint with existing clients but also added marquee clients such as Imperial Fund Capital Partners, Invictus Capital Management, National Association of Realtors, New Cold Corporation, OpenAI, School Employees Retirement System of Ohio, State of Louisiana, United Nations Federal Credit Union, WCF Insurance, and several others. In the insurance sector, our expansion among mega and large insurers continues. I would like to highlight a global commercial property insurance provider where our ability to deliver automated, scalable investment accounting processes set us apart, exposing the limitations of their legacy system. We also welcomed a national property and casualty workers' compensation insurer serving businesses across the U.S. According to our client, a modern platform was the only solution that meets their needs for asset class diversification, streamlined operations, and long-term scalable growth. In the asset management industry, a leading OCIO has chosen to replace the legacy system, selecting us as the cornerstone of their long-term expansion with the goal of growing their assets to $50 billion in AUM. Clearwater will replace six other platforms, dramatically simplifying their technology infrastructure. Asset owners beyond the traditional insurance and corporate segments continue to expand in scope and scale. Leading organizations like Alameda County Employees Retirement Association will rely on Clearwater for data validation, shadow book of record accounting, and total plan reporting across their entire investment portfolio, including alternative assets. In the public sector, we welcome the state of Nevada and the state of Louisiana to Clearwater. When faced with significant key person risk and an internally built, outdated local government investment pool system, the state of Nevada selected Clearwater to manage their entire LGIP and general fund portfolio. This state treasury team and the pool participants will be able to seamlessly navigate LGIPs, complete with participant portal logins and statement preparation, all for one central secure platform. Additionally, the state employees retirement system of Ohio selected Clearwater for a powerful investment accounting solution that can do anything and everything with accounting across all asset classes. These wins build on a reputation as a trusted partner for investment and pension management solutions supported by teams dedicated to this market. Our expansion in Europe, Asia, and Africa has brought new clients. One notable success in Asia Pacific involves a leading asset management company that adopted Clearwater to unify the insurance assets under a single comprehensive platform. We couldn't be more excited to support this asset manager's ambitious expansion plans across multiple Asian countries. Our platform is designed to scale effortlessly and we are proud of the growth that it enables. To highlight one of our cross-sell successes, I'm pleased to welcome a U.S. investment management firm specializing in real estate and alternative investments that has selected Clearwater to empower its mortgage loan team. Our solution provides deep visibility into the expanded agency and non-agency mortgage-backed securities, repurchase agreements, and derivatives instruments. With Clearwater, the investment professionals gain a comprehensive platform to drive growth and make well-informed decisions throughout the entire loan lifecycle, from origination and deal management to analytics, accounting, and reporting. This win exemplifies the single pane of glass experience our platform is designed to deliver. These examples are just a glimpse of our expanding portfolio of new client wins showcasing Clearwater's unmatched ability to meet diverse client needs. We are in the business of transformation, simplifying complex legacy systems, and empowering clients to achieve bold, ambitious growth targets. Our platform is precision-engineered to deliver purpose-built solutions that replace outdated, inflexible legacy systems, keeping our clients ahead in a fast-moving investment management landscape. We continue to build and support these initiatives and our investment in R&D will continue to grow in dollar terms, even if they fall as a percent of revenue, fully consistent with the plans we have discussed on earlier calls. Now let me turn to the acquisition of Enfusion. Before I go any further, I believe that our first order of business is to ensure that the core Clearwater platform continues to perform and deliver the durable and efficient growth it has delivered over the past few years. That is a key message I've emphasized to our teams. We have had the opportunity to engage with the Enfusion leadership and subsequently with the entire team in a town hall setting. We've also had the opportunity to meet with several teams in person. I'm excited to report that all of us share the enthusiasm and commitment to jointly build a market-leading front-to-back platform that can transform our industry. Both Clearwater and Enfusion share a strong multi-year growth track record powered by next-generation, single-instance, multi-tenant platforms designed for an increasingly complex investment landscape. Both companies offer an end-to-end platform tailored to the needs of the market segments each of us focuses on and have been very successful in doing that. However, when viewed across market segments, sizes, and industries, including all kinds of asset managers and asset owners, our core strengths are entirely complementary. Enfusion provides a best-in-class front-office solution while Clearwater's platform excels in middle and back-office capabilities. The strategic alignment will enable us to deliver integrated solutions that meet the diverse needs of the investment management industry. We held a multi-day meeting of leaders from both organizations to align on the details of our shared strategy. Working together, we defined our priorities and they include, number one, accelerate our goal of building a front-to-back platform for the entire investment lifecycle and thereby obviate the need for having multiple systems that need to be constantly upgraded. That by itself is a game-changer. This should also dramatically reduce the need for reconciling data between the front, middle, and back office, which has been a long-standing problem for our industry. Another game-changer, using that same data for risk, compliance, and regulatory reporting will alter the efficiency of these enabling functions very meaningfully. Number two, meaningfully improve a joint right to win in the asset management industry across strategies, sizes, and geographies. By combining the IP, engineering, and product teams of Clearwater, Enfusion, and JUMP Technology, all under a unified leadership, we expect to build a transformative and comprehensive platform for the largest TAM we have. Number three, effectively offer Enfusion's investment book of record or an IBOR, portfolio management system, and order and execution management system to Clearwater clients, furthering our one-to-four bps journey. Number four, refocus and dedicate product, engineering, operations, and GTM resources on the hedge fund market to enhance and grow Enfusion's leadership position is another key priority. Dedicated focus and teams make a big difference, and we believe that this realignment will result in faster growth. Number five, use Enfusion's greater presence in Europe and Asia to drive faster adoption of our platform. The international market represents approximately 50% of our TAM, and having additional resources across these geographies will help position us better. Number six, improving our gross margin and achieving cost synergies that will create a financially compelling business model. Ultimately, though, this acquisition is about growth and industry leadership. We also expect to realize strong synergies and sustained improvement in unit economics. We are enthusiastic about the opportunity to collaboratively build a best-in-class platform for the entire investment life cycle, one that we believe simply does not exist in our industry. Coming out of the leadership meeting, we have initial plans for each of these priorities and expect to hit the ground running when we close in quarter two. So what lies ahead? A comprehensive front-to-back platform that serves industries of all sizes. That is our promise. We are scaling with a clear vision, excited about the journey we are on, and remain committed to delivering exceptional value to our clients, employees, and shareholders. With that, I'll hand the call to Jim to dive deeper into our financial results.

Thanks, Sandeep. I am proud to report an outstanding Q4 and full year 2024 results, which continued the impressive momentum from the prior three quarters of 2024. Among our many stellar results, it was most satisfying to report NRR of 116 this quarter, a full year earlier than the goal we stated in our Investor Day back in September 2023. Overall, our key metrics were exceptional across the board in Q4 with multiple record highs. I'd also like to take a quick moment to thank our clients and employees who made this consistent track record of excellence possible. While investors have come to expect this performance as a routine occurrence, in reality, it's quite an accomplishment and it takes the hard work and relentless dedication of individuals and the alignment of teams to our goals throughout the organization to achieve these stellar results. Again, we achieved full year revenue of $451.8 million with year-over-year growth of 22.7%. For additional perspective, revenue also comfortably beat the midpoint of the original guidance we announced back on February 28, 2024 for full year 2024 by $17.8 million. In addition, the year-over-year growth of 22.7% marked yet another year in which Clearwater grew revenue by more than 20%. In Q4, 2024, we delivered $126.5 million in revenue. This translates to an impressive 27.7% year-over-year revenue growth and beat guidance by $6.3 million. The NAIC made the most significant set of accounting and designation changes in over a decade and those are effective in early 2025. Several of our insurance clients were somewhat unprepared and sought our help in ensuring compliance with these new rules. We planned to do the work in both Q4, 2024 and in Q1 of 2025, but we were able to utilize some third-party resources to assist us to deliver those services more quickly than we had planned. Customers were delighted to get the work completed before the end of the year. There was about $3 million in incremental revenue in the quarter relative to our expectations when we provided our Q4 guidance. The third-party expenses associated with that additional work was also booked in Q4. Because these services are not expected to reoccur, they were not included in the amounts reported for ARR or NRR. Annualized recurring revenue or ARR at the end of December 2024 was a record $474.9 million, representing a robust year-over-year increase of 25.3% from the $379.1 million in the prior year. In addition, as of December 31, 2024, the Clearwater platform processes and reports on $8.8 trillion in assets daily, which represents an increase of $1.5 trillion over the prior year. Additionally, we grew the number of clients with over 1 million in ARR to 100 from the prior year's 86, achieving an impressive triple digits in Clearwater clients with over 1 million in ARR. We expect to further increase these record-breaking numbers in the future as we continue to both win new logo clients and also win cross-sell initiatives and layer on additional assets with existing clients, as well as cross-sell additional products to obtain more of our clients' wallet share, the program we call 1 to 4 bps. Now let's turn to profitability. We've continued our strong margin expansion path by delivering $145.7 million in EBITDA in the full year 2024, with an impressive year-over-year growth rate of 37.6% and an EBITDA margin for the full year of 32.2%, comfortably beating our guidance for the full year 2024. In Q4 2024, we achieved an EBITDA of $41.7 million, with a record high EBITDA margin of 33%. That beat our guidance for the quarter by $3.2 million. Our strong margin expansion path was also reflected in our gross margin, with a record high 78.2% gross margin for the full year 2024, and Q4 2024, a gross margin of 78.8%. This consistent achievement in margin expansion underscores the continued profitable unit economics, efficacy of our growth initiatives, and the strong value-add that we provide to our client. While free cash flow in the quarter was a negative $29.8 million, in December 2024, our unaffiliated shareholders approved the one-time payment to terminate the company's tax receivable agreement, which was $72.5 million plus approximately $6.5 million in third-party expenses. Absent that change, our working capital continues to noticeably improve, with our AR day sales outstanding, decreasing to 77 days in Q4 from 86 in Q4 of last year. As a result, we ended Q4 with $285.8 million in cash, cash equivalents, and investments. Current total debt is $45.9 million, and that results in net cash holdings of approximately $240 million. As I previously mentioned, we increased our net revenue retention rate to 116% from the prior year's 107%. This really represents a significant achievement, especially gratifying given it occurred 12 months ahead of our original scheduled target date. At the end of 2025, achievement of these results starts with our world-class and consistent gross revenue retention, which was 98% again in Q4. Upsell of the core platform across clients was very strong at nearly 7%. While new product cross-sell was 3% of the growth, this year we yielded nearly 5% price increases across the portfolio, while AUM expansion provided a remainder of the growth from 98% at gross retention to 116% of net revenue retention. At Clearwater, it is incredibly important to set out and achieve ambitious goals, and so we are very proud to have achieved this goal for the first time. However, the goal was not to achieve NRR 115 once, but to achieve it reliably and consistently with the durability our investors expect in all aspects of our business, and we know there is more work to do to deliver these results consistently. In addition to the terrific revenue and non-GAAP results, we achieved GAAP net income, and a pretty impressive one at that. We reported $420.3 million for GAAP net income in Q4. That compares to a GAAP net loss of $3.4 million in Q4 of 2023. As much as we appreciate the very large GAAP net income, it was created by the release of the deferred tax valuation allowance in Q4. We now have an approximately $600 million deferred tax asset on our balance sheet, and as a result, our cash tax payments will be very limited over the next few years. Now let's turn to guidance. For the full year 2025, we expect revenue to be between $535.5 million to $542 million on a standalone basis, representing an initial year-over-year growth rate of approximately 19% to 20%. We currently expect the Enfusion acquisition to close in the second quarter of 2025, and we'll update all our full-year guidance to reflect the combined company at that time. For the full year 2025, we expect EBITDA to be $182 million to $185 million, representing an adjusted EBITDA margin of 34% for the year. For the first quarter of 2025, we expect revenue to be $125 million, representing a year-over-year growth rate of approximately 22%, which is a strong start to the year for year-over-year growth. Please note that approximately $3 million of revenues and associated expense related to the NAIC project expected to be recognized in Q1 of 2025 was recognized in Q4 of 2024. In terms of adjusted EBITDA guidance, for the first quarter of 2025, we expect EBITDA to be $41.5 million, representing an adjusted EBITDA margin of 33.2%, or approximately 200 basis points higher than the prior year Q1. For the year, we currently expect equity-based compensation and related payroll taxes to be $106 million, basically flat for the third year in a row. With our continued revenue growth, we expect equity-based compensation will now represent less than 20% of revenues for 2025. Depreciation and amortization before considering the impact of the Enfusion acquisition will be $13 million in 2025. Although we will pay only a limited amount in cash taxes, we will continue to utilize a non-GAAP tax rate of 25% for 2025. Lastly, we expect our share count for the year, again, absent the impact of acquisitions, to be 263 million shares on a fully diluted basis. With that, I'll turn it over to Sandeep to provide some closing thoughts before questions.

Thank you, Jim. This quarter's stellar performance and record revenue growth, bolstered by a 116% NRR, reflects a remarkable execution of our strategic initiatives and the trust that our clients place in us. We are not only responding to market needs, but also actively shaping the future of investing with a powerful, scalable platform. I'm proud of our team's dedication and a shared commitment to operational excellence, which positions us for sustained revenue growth and value creation for our clients, employees, and shareholders alike. With the acquisition of Enfusion, we are bringing together two very strong companies, and we plan to build a truly transformative platform for the investment management industry. We look forward to building on this momentum and delivering on our plans in the quarters and years to come. Thank you.

We will now begin the Q&A session. [Operator Instructions]. The first question is from the line of Rishi Jaluria with RBC. Your line is now open.

Nice to see a continued solid execution. I've got two. First, I wanted to start with just kind of the upcoming Enfusion deal. I understand, obviously, you're limited in what you can do, but, Sandeep and Jim, as you've been talking to your existing customers and including these, impressive new logos that you've been landing, what has been early feedback from those customers around the potential to have the two of you together, the potential to bring some of the front office solutions and retool them and integrate them? Any color you could share that would be helpful. And then I've got a quick follow-up.

Yes, thank you, Rishi. So the first thing is that people are generally very excited about what we have done. So what are they excited about? We have talked about 1-to-4 bps for a long time. And our ability to bring a market leader such as Enfusion into the play is, I think, very exciting for clients. So we feel that it does accelerate a 1-to-4 bps bid journey. It's not super easy, though. We obviously have integration work to do. But the point here is that from a customer point of view, to get both pre-trade and post-trade from the same vendor is just very, very interesting and exciting.

Got it. Thanks. That's really helpful. And then maybe I just wanted to think about, margins here. You're showing continued nice margin expansion. I know you've talked in the past about leveraging AI to drive greater efficiency and margin expansion. Maybe two pieces to this. Number one, as we think about the glide path towards a long-term margins, and we can leave Enfusion out of the discussion for right now. But if you should think about that, how do you think about maybe the potential headwinds that you may get from Gen AI over time as you incorporate more of the technology and productize it in the set of solutions, especially just given how resource intensive the technology is? And maybe related to that, Sandeep, you made a comment on your prepared remarks about how sometimes you find projects that you de-emphasize because they're not demonstrating ROI. Can you give an example of maybe what has been one of those projects historically, and how you come to make that decision? Thank you.

Yes, thank you. Look, our Q4 margin was 78.8%, right? So that is, obviously very close to 79. A long-term target was 80%. And so we feel, we don't find it very challenging to tell you that it's going to be north of 80%. Now, is it going to be much higher? I think that is something time will tell, but I do think that the comment about Gen AI, we feel it pays back very, very quickly, often within the year. When it comes to margin expansion, we don't think there's any headwind at all in terms of Gen AI sort of lowering the margin profile of the company. So that's how we think about it. Now, where did we get improvement because of these initiatives and these R&D investments? Everything that was adjacent, Rishi, worked well. And everything which was sort of two steps removed did not do well. And so at a broad level, that's how we sort of allocated resources in 2025. I want to make one final point is the R&D investments we make in dollar terms continues to grow. But last year, we had approximately 60% of those investments focused on roadmap and new product for current clients or clients with just one. So I do feel we have lots of room to invest in innovation. As long as that is driving growth, we are happy, more than happy to continue to make them. So I do feel our investments are well-timed. But this comment about unfunding things that don't work, we're also very, very stringent about that. If some program runs for six to nine months and doesn't get customer traction, that's it. We're going to cut it. And so we feel that we have a good path right now and a good balance, if you will, between investments and returns, from a shareholder point of view, but also from a client point of view.

Thank you. The next question is from Brian Schwartz with Oppenheimer. Your line is now open.

Congratulations on a real strong finish to the year. Sandeep, I wanted to ask you about the NAIC regs, kind of the effectiveness in that core insurance market. I'm just wondering if that mandate is still going to be a tailwind for replacement activity or other aspects of the business in 2025, or did that demand boost mostly play out in 2024?

Yes, thank you, Brian. Regulatory reporting has always been a bit of a tailwind for us, as has compliance, as has additional assets being brought in because of acquisitions. So we do think of regulatory reporting as a big tailwind, and we continue to make investments in that space. I think what Jim was referring to was usually this is pretty broad based. Every country is doing something. Every region is doing something. NAIC made a massive change this year. And so that was, that felt a little bit one-time-ish. And that's why I think Jim called out that there was $3 million of revenue, which we thought would come in Q1. It actually came in Q4. And so we felt it was different enough that we wanted to call it out. But do we expect to continue to see regulatory changes all through 2025 and 2026? Heck yes, absolutely. It doesn't mean there'll be more regulations in every country, but changes are literally done all the time. I don't know, Jim, whether you'd --

The only thing I'd add, Brian, is that this tailwind, I think it persists, right? And here's why it persists. If you were a Clearwater client and you were faced with this significant NAIC change, we solved it for you. If you weren't a Clearwater client, you probably had to do a bunch of -- I'm not exactly sure what you had to do, but I'm reasonably certain it was gymnastics and they may still be doing it. And so I think when you think about being on a modern platform, a single instance multi-tenant solution where you can make these changes across the entire ecosystem of your clients, the benefits of that are meaningful. Of course, people may switch in order to solve that problem. But I think as Sandeep mentioned, there's always the next problem. And so understanding the pain of that and then realizing that you don't have to feel that pain as a Clearwater client, we think will continue to be a tailwind into the foreseeable future.

Yes. And Brian, I would just add that if you talked with Clearwater clients and you also talk with other midsize insurers, I think the Clearwater client would tell you, NAIC change was a non-event. It just got done. While the other were not Clearwater clients would definitely tell you that, oh my Lord, there's so much work to be done. And I would tell you today, many, many of them have still not completed the NAIC work at all. So I do feel that ways over time to say, if you were a Clearwater client and you continue to see regulatory changes around the world, it just is a better platform for handling those things.

Switching gears to my follow-up question, just one on Enfusion, Sandeep. How fast do you think you can get going on working to achieve the synergies of the deal rationale? The reason I ask is, is there something about the similarities of your two businesses or maybe the familiarity as competitors that could speed up the synergies achievement when the deal closes? Thanks for taking my questions.

Yes, Brian, I don't know whether I should say this, but starting off acquisitions always look really good on Excel spreadsheets. It's nice and easy, but I do want to say that we have had really detailed meetings with the Enfusion leadership. And I'll tell you, the knowledge, the quality of the platform is very, very impressive. I do think that the integration is hopefully easier because we are both cloud native, single instance, multi-tenant platforms. The technologies we use is very, very similar. So we feel very confident that we can get things done relatively quickly. I do think we have provided guidance around our growth expectations and around margin expansion. And everything we have seen till now just allows us to say that we absolutely believe that those are completely doable. I don't know, Jim, whether you would add anything to that.

Thank you. The next question is from Kevin McVeigh with UBS. Your line is now open.

Congratulations. Well, Jim, I think you talked about the NAIC was about $3 million. I think you exceeded at least the street by $7 million. Is there an incremental for anything to call out there that drove the incremental $4 million revenue?

Yes, I think we had a nice bookings quarter in the fourth quarter. And I think we've been very pleased with how our bookings are converting into revenue. And we've focused on that for a long period of time to try and get that faster and faster. We started to see that grow. We also, obviously, the NRR 116 is obviously helpful and better than, if you recall, just last quarter, it's a couple of points better than that. And so going into the quarter, we wouldn't necessarily expect that to improve, but we were hopeful and pleasantly surprised by that as well. And I think it was a very solid beat under any circumstance.

Yes. Kevin, I would add that, obviously, Jim and I went to the board and reported results for Q4. And if you think about it, we obviously, but thinking about 114, we got 116, that gives you 2%. And that's way real money. And the conversion from booking was very strong. I think the onboarding was very strong. So literally every element of the business outperformed what our expectation was. So, quite thrilled with what we were able to deliver in Q4.

That's a good outcome. And then, Sandeep, I know you talked about the 116 a year early. If you think about what drove that relative to your expectations in terms of the upside, any thoughts?

Yes. I think that the main driver that was, obviously, we have teams that are prosecuting against this, but was a very pleasant piece, was, and I mentioned it in the results, is the upsell of the Clearwater platform across to other divisions and helping our clients grow was 7%. That would be, helpful and frankly, higher than what we would probably put in our base algorithm for that. We see, and some of that, like, obviously, that's really hard work, but you're also a little reliant upon your clients to win that business, to grow, to do those acquisitions and those activities that they do. The other piece that I'm proud of, right, is the 3% of cross-sell, right? So that's kind of, we talked about the Go initiatives and all of these different initiatives, and we're seeing that back into our base. I think, but the thing to remember about these new products is we're also selling them within our new logos as well. And so don't underestimate the power of these additional products flowing through. I don't have the number in front of me, but I think it was, 28% or something like that of bookings for the year was in these additional products, which is meaningful when you think about growing 20%, that's a meaningful growth driver for that. So those were the pieces that worked well. I'd also say that, I'm very proud of the team that executes price increases. We have normalized price increases across the entire portfolio. We haven't asked for more from clients, but we're asking for it from all of our clients consistently, and we're doing it in an automated and regular way. And so that is, it feels very sustainable to me.

Thank you. The next question is from Michael Infante with Morgan Stanley. Your line is now open.

Nice results. I just wanted to ask on, Jim, you obviously gave some color on cross-selling price, but at a high level, how early are you just in terms of tapping cross-sell and levering price across the base? It seems like the third quarter was really the first quarter where it started to have a noticeable impact on the P&L, and we clearly had some nice flow through in the fourth quarter. So just any high-level thoughts there would be helpful. And then I have a quick follow-up.

Yes. I think that, when I think of the sustainability of NRR 115, I think we'd like to see that cross-sell be higher than 3%. We'd love for upsell to be 7% and cross-sell to be 7%. Then everything's easy at that point. But I do think the teams have become energized around it. They understand the value of it and obviously seeing the benefits of it. So I think pretty optimistic about our ability to execute against those plans going forward.

As Jim laid out, look, NRR is, what does it depend on? It depends on good retention, start from there. And then Jim laid out additional assets, new products, price, and some AUM growth, right? And our job, I think, is to make sure all of them can operate at full potential. Now we don't expect all of them to work every quarter. And if all of them work, that'd be great. We'd get to a really high number. But the point here is we want to try and deliver 115 on a consistent and durable way. And we're most happy to see additional assets at 7%, 8%, and new products at a similar number. And that's what we hope to get. I did want to just sort of add one more point. We really thought new products would mostly go towards NRR. And what we have found is a lot of it was used to drive new logos. And that's just not what we had expected. We had thought new products would first go to current clients, and then new clients would sort of incorporate them in what they were buying. But we have really seen a pretty strong uptick from their business on from new clients.

Very helpful, Sandeep. Just another quick follow-up on Enfusion. It would be good to get your preliminary thoughts on how you're thinking about the pricing model there and how it may evolve post-close. If I think about the hedge fund industry broadly, they have, in general, priced on seats. And we've seen little incremental expansion in hedge fund in the industry over the last couple of years. But I'm curious if you sort of think about some of the early work that you've done and the ACV differential of Enfusion versus some of the incumbents in the space, whether or not that affords you the opportunity to begin to explore pricing on assets versus seats without any meaningful uptick in terms. Thanks, guys.

Yes, thank you. That's a really good question. I think I'll just start by saying that Enfusion delivers an absolutely industry-leading platform for the hedge fund industry. It absolutely does that. Number two is the client servicing and the operations team have really improved, I think, over the next, over the last seven, eight quarters, and is very close to being world-class. So I think those two things just happen to be true. I do think the commercial model could use a lot of help. I do think that if we look at Clearwater, we executed on that very swiftly and very, I think, in a very responsible way in 2022. And so in all of our discussions with the Enfusion leadership, we have discussed how we might think about the commercial model, but I do think it needs to evolve. Obviously, we want to evolve it in a responsible way, in a thoughtful way, such that clients see the value of it. But I do think that the current model just has room to drive NRR. And driving NRR within the Enfusion client base is sort of a really important objective we have. And so today I couldn't tell you what exactly we might do at the commercial model, but it will be done, obviously, in partnership with the Enfusion leadership. But we do have lots of ideas we have worked on. And frankly, our NRR of 116 is testimony that it works, and it works in a sustainable way. So we expect to discuss it and execute on it in the coming quarters.

Thank you. The next question is from Alexei Gogolev with JPMorgan. Your line is now open.

My congratulations with great results. And Jim, I was wondering if you have any thoughts for us in terms of FX headwinds that you are incorporating into your 2025 guidance. What would your growth outlook be in quantum currency basis, both on revenue and EBITDA?

Thanks, Alexei. So although 18%, 19% of our revenues are international, the vast majority of those revenues are in U.S. dollar currency. There are some in euros and some in pounds. How we think about it, Alexei, is looking at the currencies as well as the costs that we align to those. And so we create kind of a natural hedge between the revenues of clients in that currency and the expenses within those currencies. So it's de minimis as it relates to EBITDA. Then in addition, I think we are not impacted so much by FX on the revenue basis as we think about it because we build monthly. And so therefore, I think our views on that will change. But obviously, it is a slight headwind as we sit here today. But we would hope that rates would revert more to a mean throughout the year. So that would mean right over the year.

And I just wanted to add that we now have a significant number of employees in India. And as you might know, even Enfusion has a significant workforce presence in India. And if the currency does strengthen as it has, I think that will obviously help the cost base because we don't have revenue in India in the matching format and what Jim just spoke about. And that matching format works for Europe and other locations. But given the significant presence in India, I do expect it to be a mild tailwind.

Okay. Thank you, Sandeep. Thank you, Jim. And Sandeep, a follow-up for you. You listed the number of new clients in the quarter. Maybe you can give us a few more use cases on what you do for those clients. I was specifically interested in OpenAI that you included. Can you elaborate what exactly you do for them?

Yes. So the thing about Alexei is we don't do anything different for any of these clients. We do the same data ingestion for them. We do the same data reconciliation. We do the accounting. We do the reporting. So I wish I could give you some nuggets about what is different for OpenAI or any of these corporate clients. We do exactly the same thing for them. Now, how they use it and what they use it for differs. So for example, when you look at asset managers, they use it very heavily for third-party client reporting. People in the insurance industry may use it very much for reporting and regulatory reporting and compliance. Corporates may do it for, corporates like OpenAI may use it for just consolidating reporting from multiple managers. But the work Clearwater does and the platform, what it does for them is really not different at all. And so again, there are nuggets here. Now over time, Alexei, we do build visualization for other clients. So for example, if you go to the government sector, they see things a little bit differently. So we may build visualization for them about how they like to do reports, how they like to think about returns and how they want reports on that. So you may change that, but even there, nothing has changed in how we ingest data, reconcile it, account for it. We go to other industries in Europe and they may want to see some things that are different. In the U.S., they might want to see NAIC differently, but the platform is already doing all of those calculations. The question is what do clients normally like to see? So yes, nothing different from the other listed corporate clients we're doing for OpenAI.

Thank you. The next question is from Michael Turrin with Wells Fargo. Your line is now open.

Hey, great. Thanks very much. Appreciate you taking the questions. Sandeep, I want to ask the Enfusion question from a higher level and maybe just listen to you articulate how you ensure you can continue to execute and keep momentum on the core business that we're seeing moving in a direction while also working to integrate a larger acquisition than you've historically done at the same time. What are the things that you're kind of making sure are in place so you can continue to walk and chew gum throughout this?

Yes, this is, look, I just wanted to say that this is obviously meaningfully bigger than anything we have ever done. And so what do we expect and what do we think? Number one is we only did this because we think our core business is working well. And without that, I think it would be far too risky a proposition. So what makes a difference is, is our operations working well? Is the sales engine working well? Is the enabling functions working well? Is the technology in the platform working well? And I think the answer to those is very quickly, yes, yes, yes, and yes. So that is the foundation for me. And then you have to sort of think about, is this strategically a really compelling proposition? And I've got to tell you that the more I learned about Enfusion, what they have built, it was absolutely the right decision. My clients do want a front-to-back solution, and they just simply does not exist when you think about public and private assets. Now, some exist for the private side or the public side, pardon me, on the front office, and there are lots of solutions for the back office, again, for either the privates or the publics. But ability to bring those together, I think is strategically such a big deal for our industry. So I feel really good about the strategic intent here. Now, the third thing is, what are we going to do differently? One is, we've had really good meetings about joint teams going after workstreams. We have a really strong PMO function. We have a function for each of these items we have talked to you all about, accelerating revenue growth, cross-selling, improving margin and G&A, operating margin. Each of them have workstream leaders, with leaders from both sides, creating V1 of the plans, and we expect V2 over the next several weeks, and V3 over the weeks after that. So I do think we are approaching this as a very important and giving it the right attention. Finally, really important for us to continue on our own business well. So what we have done is taken out people from the current business, so that the rest of them are focused entirely on the Clearwater platform for the next several months and quarters, while we take out several leaders and have them focus on working jointly with Enfusion. And I would just sort of add that the Enfusion leadership in operations, in the sales teams, in the technology teams are all very impressive. And so we feel really good about their ability to drive growth. So it's a question of working together. What can we do? What can we build? And that's where, frankly, the excitement comes from.

Great, color. Jim, just a quick one, if I may. Could you just help frame what you're assuming in terms of the initial guide? You're executing well. Growth stepped up in 4Q. You're guiding for 19 to 20 to start the year. Maybe just frame what you're assuming in terms of expansion or some of the drivers that you're executing on relative to the base case and guidance. Thank you.

Yes, I think we've targeted NRR 115 as of the end of the year. And so we think about that as something that is a North Star element for us. I would say, if you understand Clearwater historically, we like to make sure that we're highly confident in our guide and build throughout the year. And so I think we have anticipated the growth metrics and the evolution of the new products that we're driving as well as the markets where we exist there while giving ourselves room vis-à-vis AUM. We have assumed no AUM tailwind built into this guidance for 2025.

Thank you. The next question is from Andrew Schmidt with Citigroup. Your line is now open.

Congrats on the results here. Apologies, I hopped on a little bit late. Sorry if this has been asked. But going back to Clearwater Connect, obviously big focus on CWIC. I'm curious to hear how the demand for that product has been trending since launch and how that plays into the sort of the cross-sell opportunity in 2025. Maybe it's a little bit early, but I'm just curious about the potential for that product. Thanks so much.

Yes, thank you, Andrew, for the question. Look, the biggest result which you can sort of see is in the improvement of gross margin throughout this whole year. And frankly, the last year, the second half of last year, I think Q4 gross margin was 78.8%. So we feel like, wow, we were able to get a lot of mileage from that investment. The revenue side, which is what I think you're talking about is how much customers are paying for that. So I would just say to you that we have more than 10 clients who are all using it, but it's still early. I don't want to give the impression that it is a major contributor of revenue growth. It is not. Do we expect that to be a major contributor of revenue growth in 2025? We don't. Do we expect it to be a major contributor in 2026 and 2027? Absolutely, we do. But not from selling QUIC, CWIC. It is from the marketplaces and the insights business we want to build and drive. So I think QUIC is more of an enabler of businesses and of operational efficiency and of onboarding, but QUIC by itself is the infrastructural piece. And I think what you will see is other parts of our business drive revenue growth using it.

Got it. Thank you so much for that, Sandeep. And maybe I could, I know there's been a lot of questions on Enfusion, but maybe I could ask one more. And apologies if this is being nitty gritty. If we could talk about sort of end state data architecture, I know obviously the one source of truth for data is important. The Enfusion engine has sort of the real time risk decisioning. How does the -- what's the data strategy when all this comes together? When we think about just, one source of truth or will there have to be sort of multiple systems running? Thanks so much.

Yes, look, I think that's a really, really good question. Thank you. Thank you for asking it. Look, the way to think about this is phase one, phase two, phase three. Eventually though, having a single data plane, having a single data ingestion mechanism and a data reconciliation mechanism obviously makes the most sense. Should you try and think about a single security master? Of course it makes the most sense, right? If we can achieve that in some reasonable timeframe, you would create a complete game changer in our industry because then the data and the pre-trade systems would flow directly and without touch into the middle back office systems. So that's where you want to go. What we don't want to do though is just get locked into that goal. What we want to do is think about what do our current clients need? And so those are asset owners who want front office applications. Let's go cross sell to them and what does that need? And so that feels like phase one to me. And then phase two might be integration on the data side and the security master side. So I really like the question because that is the promise. The promise is, we can have a single data layer with absolutely free flowing data back and forth. This concept of wipe or rinse and wipe and then repopulate makes no sense. We should have one set of golden truth, but that is a longer project. And so we think we'll do it in phases, but that's absolutely where we want to go.

Thank you. The next question is from Gabriela Borges with Goldman Sachs. Your line is now open.

Sandeep, I want to revisit the conversation from the time of the ICO around legacy replacement cycles and to what extent Clearwater is limited by the time you have those renewal cycles and how you position yourself to be in the best competitive position when those contracts come up for renewal. So we'd love to hear how things are going now versus two and a half, three years ago. What are some of the things that are in your control that let you control some of those cycles and what are the things that are out of control? Thanks so much.

Yes, Gabriela, thank you for the question. I think it's really interesting to discuss the evolution of this. And when you think about our business, we've always thought that what drives it is operational efficiency. And then we said, no, no, what drives it is regulatory reporting and the needs around it. And then we said, no, you should add compliance and the need for compliance. And then we said, no, you need to add risk for that. So what we have tried to build over time is continuing reasons for clients to move to Clearwater. That's what we have tried to build. As we went into this 1-to-4 bps world, we sort of said what clients really want is pre-trade platforms, which can integrate seamlessly with mid-office and back-office applications and platforms like we have. So our ambition about a year and a half back changed. And we said, we want to address the entire investment lifecycle. And that was a big change. Now, some companies and some clients will say, if you can't do all of it, I don't want to switch, it's too hard. And so they have now one more reason to move to the Clearwater Enfusion platform. And the same thing is true for Enfusion, is that they had many, many clients who use them for the front office. And they would say, look, if you don't do the accounting, you don't do the regulatory reporting, it's not worth the squeeze. And our position would be, well, now you have five more reasons to buy the Enfusion Clearwater platform. And so what we are trying to do is continue to show the market that we can build the only end-to-end platform built on a single instance, multi-tenant architecture, which has a single security master. Now, do we have that for every other private asset class? We don't. And so we will continue to try and look at alternative assets, private debt, private credit, and all of those areas to provide a very modular, but very deep insight into each of these asset classes. Yes, that's what we are building with alternative assets. So I do think our ambition is to be one unified platform for private and public assets, which does risk for public and private assets and does front-end pre-trade work for those asset classes and those personas. And we think that we are on the way to being able to achieve that. And the first big step we have taken, I think, is really Enfusion, which I think changes the game for us. So we're very excited about it because when you just think about what the market needs and you don't think about Clearwater, what the market needs is that end-to-end platform, which addresses the needs across public and private assets, understands the risk, can do shock and exposure and all of those things, which any asset manager or CIO of an asset owner should want to see. And we think we are on our way to achieve that.

Thank you. The next question is from Faith Brunner with William Blair. Your line is now open.

Congrats again on the quarter and thanks for taking the questions. Maybe first off, high level, can you talk about the different factors that are driving durability of demand? I know you talked about the ongoing regulation changes serving as a tailwind with some one-time pull forward in the corner. But I guess what else is fueling demand and it's supporting the growth and expansion at these levels?

So look, I wish I had a really good answer for you, but I'll tell you what the real answer is. The real answer is we build many irons in the fire to drive growth. We don't know what will work in a given quarter or a given year. So what we do have is multiple irons in the fire. And what are those? It starts number one with retention. When you have a 99% or a 98% retention, that is a driver of growth. And then you get to the area as Jim talked about, which is additional assets. Do we have dedicated teams which are going from desk to desk and driving additional assets? Do we have new products we are investing in to drive additional assets, but also to get new logos? And then do you have a commercial model and a pricing model which is really good? And do you have an AUM growth which can be captured by the new commercial model? And I just have to say that every year and every quarter, it's a little bit different, but if some of them show up in a given quarter, we can meet the needs of the quarter. And that's what our agenda is, is really many irons in the fire is what leads to durability. You may have a spike in a quarter or two, that's hard to predict. But if you want durable growth, you've got to have those multiple irons in the fire. Sorry, Jim, go ahead, please.

I was going to say the same thing. The only thing I would add to that is also geographically, international, across the world, we're also executing against each of those geographic locations as well.

Okay, helpful. And then a quick one just to follow up. So talk about some of the newer products and how they've been driving some of that expansion we saw in the quarter. Prior commentary kind of highlighted insights as somewhat of a sleeping giant. So any color there on the contribution this product has had in the last couple quarters and how you kind of see this contribution going forward, or any way that's driving different conversations with customers as you expand the capabilities?

Yes, look, I think that I've said before, I think insights and marketplaces is a really, really significant initiative for the company. But I think I've also said very clearly that this is not something which is going to deliver revenue growth in 25 and 26. Now, what you'll find is our clients are very interested in what we are building and are they paying for it? Yes. But is it going to be a major contributor to revenue? I don't think in the 25 timeframe, I think we'll start to see more in 26. But I do think if we look out longer term, if we think about three, five years, it could be a very significant part of our business is what I would say. But I do think the other part is our core business also just continues to grow very nicely and very quickly. So to be a significant driver, that number needs to be really high. And so the value that creates is pretty high.

Thank you. The next question is from Arvind Ramnani with Piper Sandler. Your line is now open.

Looks like there are not enough questions on the acquisition. So I just want to ask one more. I mean, clearly, there's a idiosyncratic value proposition you're providing your client now with the combined entity. But what you all have talked about in the past is the end markets move at a particular speed in terms of how they decide and how they work with their partners. Do you think this combined entity will be able to meaningfully move growth rates or decision-making rates further? Or do you think you'll still be subject to the way the industry makes the decision-making?

Yes. I think the way to think about this is, we are providing prospects and clients with one more reason and a very significant reason to move to the Clearwater platform. And the reverse, for people who would have considering Enfusion at this time, we're providing them with one very big reason to move to the Enfusion platform. And that is just at the very basic level. Like I said, if a client was going to move to Clearwater because of compliance or regulatory reporting or AUM expansion, but didn't want to do it because, you know, what about the front office? And it'll still have a different platform. Well, now they have a really good reason to do it. So we do think it enhances the growth rates of both organizations. And that is really the promise of the transaction. Then there may be some clients who only want a front to back solution. And we expect to provide that in the quarters and years to come, a joint platform with a shared data infrastructure, shared security master, and things of that ilk. So I do think all of these three, though, are additive to what the company is able to do themselves.

Yes, that's helpful. I've known you for a couple of decades and we've seen sometimes, you know, there's a change in the industry where once a competitor basically moves to a particular solution, it forces others, whether, I mean, the big ones are -- want to move to the cloud, for instance, right? Like once one company starts, it kind of forces others in the industry to move as well. Is the solution going to provide that much value where it becomes like a cascading effect where folks will be forced to move to Yelp?

Yes, Arvind, the industry really well. How much money is spent reconciling data across all the platforms? Enormous. People have thousands of people doing this kind of work. And what the promise of this transaction is, we could have a system which has a pre-trade and a post-trade, all of the same data plane, all of the same security mass. So that's the promise of it. And you really would take away a very vast amount of reconciliation work, which is what, legions of people, that's all they do. They make sure it all reconciles between the various applications and we can obviate the need for doing that. Once you have it, you can use exactly that same data for risk. So you don't have to build lots and lots of systems outside for data being provided to risk systems and for compliance systems and for regulatory reporting systems. So I do think it can be a complete game changer. You don't see us pitching that very aggressively today because it takes time. It takes time to realize that vision. But if someone has a chance, you've got to believe it's us. Because both these platforms are cloud native, single instance architecture, single security master infrastructure, which is very hard to transform from a legacy infrastructure. So I feel we have the right and the license to build it. We feel we are enormously well positioned to build it. And if we can get some more scale over time in alternative assets and deeper risk in private assets, I think that completes the picture of what the industry will need.

Thank you. The next question is from Yun Kim with Loop Capital. Your line is now open.

Okay, great. I'll make this pretty quick. Sandeep, on the drivers behind the growth margin improvement that you're seeing right now and also continue to expect, are you also seeing a shorter onboarding ramp time? And also, is that providing better visibility into your revenue flow?

Yes, so very short answer. Yes, it is. So we are very, very pleasantly surprised with how mature the onboarding process has become. I think our commercial model has also evolved. So do we see a shorter period of time between booking and ARR? Absolutely. Do we see a shorter period of time to go live? Absolutely. And all of that, obviously, as you can imagine, improves not just revenue growth, but also improves the margin profile. So we do think, I think Jim and I both spoke about excellent execution, and we feel that team continues to execute very, very well.

Okay, great. And then just one quick follow-up. With the new year, how should we think about your self-capacity this year and the timing of the ramp if you're planning to add self-rep, especially with the Enfusion acquisition set to close in Q2?

Yes, to be quite transparent, when a business grows 20 plus percent organically, there's a lot of room to make investments. So I would just say our ability to add more money to sales and marketing efforts, and frankly, even R&D efforts, is very high. Also, because unit economics are better. So once you have 20% growth and improving unit economics, and you think about that, and then you say, yes, you should have a lot of money to invest. And so GTM teams are fully funded, not just in North America, but in continental Europe, in the U.K., and in Asia to the extent appropriate. So we do feel we continue to add muscle into the GTM function.

Thank you. There are no further questions. I'd like to hand the call back over to Sandeep before concluding remarks.

I just want to take a moment to say thank you to all of the analysts who cover us and the investors who have shown tremendous faith in us over the last several quarters and years. We're very proud of what we've done, but we're also very proud of the confidence you show in us. So thank you. Thank you very much.