InsuranceAsia News Recognizes Clearwater Analytics' Excellence in Investment Management TechnologyBOISE, Idaho and SINGAPORE, Jan. 29, 2024 /PRNewswire/ -- Clearwater Analytics (NYSE: CWAN), a leading provider of SaaS-based investment management, accounting, reporting, and analytics solutions, today announced that InsuranceAsia News has named Clearwater Analytics the winner of the Technology Provider of the Year Excellence Award for the second year in a row. Clearwater Analytics Wins the InsuranceAsia ne ...

Note 7. Supplemental Consolidated Balance Sheet Information Accounts Receivable, net | --- | --- | --- | --- | --- | |------------------------------------|-------|------------------------------------|-------|-------------------------------| | Deferred tax liabilities | $ | September 30, \n2023 \n4,756 | $ | December 31, \n2022 \n5,932 | | Acquisition holdback liability | | 3,650 | | 3,496 | | Asset retirement obligation | | 155 | | 119 | | Other long-term liabilities | $ | 8,561 | $ | 9,547 | Note 8. Leases ...

Clearwater Analytics Holdings, Inc. (NYSE:CWAN) Q3 2023 Earnings Conference Call November 1, 2023 5:00 PM ET Company Participants Joon Park - Head, Investor Relations Sandeep Sahai - Chief Executive Officer Jim Cox - Chief Financial Officer Conference Call Participants Rishi Jaluria - RBC Ella Smith - JPMorgan Michael Infante - Morgan Stanley David Unger - Wells Fargo Peter Heckmann - D.A. Davidson Gabriela Borges - Goldman Sachs Dylan Becker - William Blair Brian Schwartz - Oppenheimer Operator Thank you f ...

Company Overview - Clearwater Analytics aims to be the world's most trusted and comprehensive technology platform for investment accounting and analytics[9,31] - The company has a durable and reliable growth model with a recurring revenue model, providing a mission-critical platform to clients[16] - Clearwater Analytics has a high-quality business and financial profile with meaningful operating leverage, consistently profitable for the last 4 years, with a path to 40% adjusted EBITDA margin[16] - The company's disruptive technology platform has deep competitive moats, with a sustained competitive win rate of approximately 80%[16,55] - Clearwater Analytics has multiple drivers for continued growth, with continued investment expanding the core total addressable market (TAM) from $47 billion to $59 billion, moving the total addressable market from $10 billion to $11 billion[16,108] - The company focuses on clients, helping them grow their business or enhance their ability to invest across asset classes and geographies[16] Financial Performance - The company's Annual Recurring Revenue (ARR) has grown significantly from 2016 to 2022[11] - Clearwater Analytics has a 100% SaaS revenue model[12] - The company's Q2 2023 EBITDA margin is approximately 28%, making it a ~Rule of 50 company with a score of 47%[12,130] - Clearwater Analytics has a strong Net Revenue Retention (NRR) rate of 109% as of June 30, 2023[16] - In FY 2022, international revenue accounted for 14% of the total, up from 9% in FY 2021[105] Client Satisfaction - Clearwater Analytics has a high Net Promoter Score (NPS) of 60+[16,34] - The company has a gross revenue retention rate of 98% for 17 out of the past 18 quarters[34,124]

Financial Data and Key Metrics Changes - In Q2 2023, Clearwater Analytics reported revenue of $89.9 million, representing a year-over-year growth of 22.4% driven by solid expansion at existing clients and strong onboarding activity [17][18] - Adjusted EBITDA for Q2 was $24.8 million, with an EBITDA margin of 27.6%, exceeding guidance by $2 million [20][49] - Free cash flow for Q2 was $19.6 million, reflecting an 18.5% year-over-year growth [23] - The company raised its full-year revenue guidance to a range of $364 million to $366 million, indicating a growth of approximately 20% to 21% year-over-year [24][49] Business Line Data and Key Metrics Changes - The average go-live time for clients decreased to approximately six months, showcasing improved operational efficiency [7][42] - Annualized recurring revenue (ARR) at the end of Q2 was $349.5 million, a 20.4% increase year-over-year [42] - Net revenue retention rate (NRR) improved to 109% as of June 30, 2023, indicating success in expanding services within existing clients [43][81] Market Data and Key Metrics Changes - The demand environment remains strong across key industries including insurance, asset management, corporates, and government, with a growing pipeline of deals [8][34] - The company has seen significant growth in Europe, particularly in Northern Europe and the French and Benelux markets [34][35] Company Strategy and Development Direction - Clearwater Analytics is focusing on operational excellence, addressing client pain points, and enhancing its commercial model, which has transitioned to a base plus pricing structure [11][40] - The company is investing in R&D to expand its platform capabilities, particularly in Europe and Asia, and is working on generative AI solutions to improve client service and operational efficiency [12][14][38] - A strategic partnership with JPMorgan Asset Management was announced, integrating Clearwater's platform with Morgan Money, which is expected to enhance client engagement and onboarding [33][98] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong client retention and satisfaction as key drivers [18][66] - The macro environment is viewed as stable, with confidence in the new commercial model to mitigate risks [130][131] - The company is excited about the potential of generative AI to transform operations and enhance client interactions [55][100] Other Important Information - Non-GAAP gross profit for Q2 was $68.1 million, with a gross margin of 75.8%, slightly improving from the previous year [60] - The company ended the quarter with $277.8 million in cash and cash equivalents, resulting in net cash holdings of approximately $229 million [47] Q&A Session Summary Question: Can you comment on the onboarding process and client sizes? - Management noted that onboarding includes both new clients and additional assets from existing clients, with a focus on improving the collaborative onboarding process [70][72] Question: How does generative AI impact onboarding and efficiency? - Management believes generative AI can significantly enhance onboarding efficiency and reduce time to value for clients [78][102] Question: What is the outlook for net revenue retention and product attach rates? - Management indicated that the improvement in NRR is sustainable and linked to the successful implementation of the new commercial model and product offerings [106][108] Question: How is the competitive landscape evolving? - Management sees a strong competitive position, particularly with the unique features of their platform, and noted opportunities arising from competitor acquisitions [120][118]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ______________________________________ FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-40838 Clearwater Analytics Holdings, Inc. (Exact Name of Registrant as Sp ...

Financial Data and Key Metrics Changes - The company reported first-quarter revenue of $84.6 million, exceeding expectations by $1.6 million, driven by successful onboarding of new client assets [34][21] - Annualized recurring revenue (ARR) reached $337.4 million, reflecting a year-over-year increase of 17.5% [17] - Adjusted EBITDA for the first quarter was $22.5 million, with an EBITDA margin of 26.6%, better than guidance due to revenue beat and prudent expense management [36][21] - Gross margin improved to 75.9%, up from 74.2% in the same quarter last year [36] Business Line Data and Key Metrics Changes - The company successfully onboarded 29 new clients in Q1, contributing to revenue growth [26] - The base plus contract model was adopted by nearly all new clients, allowing for incremental fees based on asset increases [18] - Research and development expenses were $22.7 million, representing 26.8% of revenue, which included costs associated with the JUMP Technology acquisition [19] Market Data and Key Metrics Changes - The company noted a 20% year-over-year revenue growth despite challenges in the macro market environment, particularly from regional banks [58] - Gross revenue retention rate was reported at 97.4%, marking a slight decline due to churn related to acquisitions among corporate clients [59] Company Strategy and Development Direction - The company is focused on expanding its global footprint, particularly in Europe and Asia, while continuing to enhance its multiproduct strategy [31][69] - Investment in R&D and capabilities like insight and self-service is expected to yield benefits in 2024 and beyond [13] - The integration of JUMP Technology is progressing well, with joint teams established to merge development efforts [37] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the business's resilience despite macroeconomic challenges, emphasizing a strong demand for their solutions [64][112] - The company is focused on maintaining client relationships and addressing their needs, particularly in light of recent banking sector volatility [128] - Future revenue guidance remains largely unchanged, indicating confidence in ongoing demand and execution [87] Other Important Information - The company ended the quarter with $256.8 million in cash and cash equivalents, resulting in net cash holdings of approximately $207 million [62] - Free cash flow for the first quarter was $6.2 million, representing a year-over-year growth of 33% [62] Q&A Session Summary Question: Impact of regional banks on guidance - Management indicated that exposure to regional banks is minimal, with only about 3% of ARR affected, and the impact on business is not significant [67] Question: Understanding gross margins - Management clarified that gross margins improved due to successful onboarding efforts and a favorable client mix rather than the JUMP acquisition [42] Question: Demand for solutions amid banking crisis - Management noted increased awareness among clients for better investment visibility and risk management solutions due to the banking crisis [48][50] Question: Trends in pricing model and client characteristics - Management confirmed that most new clients are adopting the new pricing model, which is designed to enhance revenue stability [53] Question: International demand comparison - International revenue grew by 17% year-over-year, indicating strong demand in global markets [139]

Table of Contents FORM 10-Q Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted ...

PART I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Clearwater Analytics offers a cloud-native SaaS platform for investment accounting and analytics, serving over 1,200 clients with $6.4 trillion in assets - Clearwater Analytics provides a cloud-native, single-instance, multi-tenant SaaS platform for investment accounting and analytics, aggregating and normalizing data for over **$6.4 trillion** in global invested assets for over **1,200 clients**[272](index=272&type=chunk)[287](index=287&type=chunk)[303](index=303&type=chunk)[311](index=311&type=chunk) - The company acquired JUMP Technology in November 2022 for **€75 million** cash, aiming to strengthen its position in investment management software globally and expand in European markets[273](index=273&type=chunk)[241](index=241&type=chunk)[310](index=310&type=chunk) - Clearwater operates on a **100% recurring revenue model** (excluding JUMP license revenue), with fees primarily based on the value of assets on its platform[272](index=272&type=chunk) - In 2022, **80% of clients** transitioned to a 'Base+' contract framework or accepted price increases to limit downside volatility[288](index=288&type=chunk) - The company maintains a high client satisfaction rating with an NPS of **60+** and a gross revenue retention rate of approximately **98%** over the past sixteen quarters[288](index=288&type=chunk)[312](index=312&type=chunk) [Item 1A. Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from market competition, asset-based fee volatility, operational failures, financial liabilities, and complex organizational structure - The company operates in a highly competitive industry, facing competition from large-scale players and internal client IT departments, which could lead to price reductions and reduced gross margins[284](index=284&type=chunk)[345](index=345&type=chunk) - Revenue is highly dependent on fees based on the value of assets on its platform, making it vulnerable to market volatility, economic downturns, and changes in client investing patterns[284](index=284&type=chunk)[346](index=346&type=chunk)[348](index=348&type=chunk) - The company faces risks from potential undetected errors or defects in its investment accounting and reporting solutions, which could harm its reputation, lead to lost sales, and incur significant costs[284](index=284&type=chunk)[355](index=355&type=chunk) - A significant portion of assets consists of goodwill and other intangible assets, primarily from the JUMP acquisition, which are subject to impairment tests and could negatively impact financial results[20](index=20&type=chunk) - The company is a holding company dependent on distributions from CWAN Holdings to pay taxes and expenses, including substantial payments under the Tax Receivable Agreement (TRA), estimated at **$625 million** under certain assumptions[38](index=38&type=chunk)[41](index=41&type=chunk) - Principal Equity Owners maintain significant influence over the company (**96.6%** of combined voting power as of Dec 31, 2022) and the company is classified as a 'controlled company,' allowing exemptions from certain corporate governance requirements[55](index=55&type=chunk)[57](index=57&type=chunk)[284](index=284&type=chunk) [Item 1B. Unresolved Staff Comments](index=43&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - No unresolved staff comments were reported[89](index=89&type=chunk) [Item 2. Properties](index=43&type=section&id=Item%202.%20Properties) The company leases its corporate headquarters in Boise, Idaho, and additional offices globally, deeming current facilities adequate - Corporate headquarters in Boise, Idaho (**106,780 sq ft**, lease expires Oct 31, 2026, with two 5-year renewal options)[90](index=90&type=chunk) - Leases additional office space in Paris, Edinburgh, Seattle, New York, Noida, London, McLean, San Jose, Luxembourg, Frankfurt, and Singapore[82](index=82&type=chunk)[90](index=90&type=chunk) - All facilities are leased; no real property is owned. Existing facilities are deemed adequate, with additional space available for growth[90](index=90&type=chunk) [Item 3. Legal Proceedings](index=43&type=section&id=Item%203.%20Legal%20Proceedings) Management believes no material legal proceedings or claims could adversely affect the company's financial condition or operations - Management believes there are no material legal proceedings or claims that could adversely affect the company's financial condition or operations[82](index=82&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[91](index=91&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=44&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Class A common stock trades on NYSE, while other classes do not, with no current plans for dividends and significant equity compensation plans - Class A common stock is listed on the NYSE under 'CWAN'; Class B, C, and D common stocks have no established public trading market[94](index=94&type=chunk) - As of March 1, 2023, there were **7 holders of record** for Class A common stock, **5** for Class B, **3** for Class C, and **8** for Class D[95](index=95&type=chunk) - The company does not anticipate paying cash dividends on Class A or Class D common stock in the foreseeable future, prioritizing debt repayment, working capital, and business growth[66](index=66&type=chunk)[96](index=96&type=chunk) - A stock performance graph compares the cumulative total return of Class A common stock against the S&P 500 and S&P Information Technology Sector Index from September 24, 2021, through December 31, 2022[98](index=98&type=chunk)[100](index=100&type=chunk) [Item 6. [Reserved]](index=45&type=section&id=Item%206.%20%5BReserved%5D) Item 6 is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=46&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Revenue grew **20%** to **$303.4 million** in 2022, with a net loss of **$(6.7) million** and Adjusted EBITDA of **$81.1 million**, supported by strong liquidity - Clearwater Analytics' revenue increased by **$51.4 million**, or **20%**, in 2022 compared to 2021, reaching **$303.4 million**[112](index=112&type=chunk) - This growth was primarily due to an increase in client base and assets on the platform, with JUMP acquisition contributing **$2.7 million**[112](index=112&type=chunk) - The company reported a net loss of **$(6.7) million** in 2022, an improvement from **$(8.1) million** in 2021 and **$(44.2) million** in 2020[110](index=110&type=chunk) - Adjusted EBITDA for 2022 was **$81.1 million**, with an Adjusted EBITDA Margin of **27%**[85](index=85&type=chunk) - Cash and cash equivalents stood at **$250.7 million** as of December 31, 2022, with operations primarily financed through cash flows from operations and IPO proceeds[139](index=139&type=chunk) - Annualized recurring revenue increased **14%** from December 31, 2021, to December 31, 2022, driven by client base growth and additional assets on the platform, despite a **5%** reduction from decreases in fixed income and equity security prices[267](index=267&type=chunk) - Net revenue retention rate was **106%** as of December 31, 2022, indicating **6%** year-over-year growth from existing clients, though this was a decrease compared to 2021 primarily due to market value declines[269](index=269&type=chunk) [Item 8. Financial Statements and Supplementary Data.](index=66&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) Audited consolidated financial statements for 2020-2022 are presented, including balance sheets, income statements, cash flows, and detailed notes on accounting policies and key transactions - KPMG LLP issued an unqualified opinion on the consolidated financial statements for the three-year period ended December 31, 2022, confirming conformity with U.S. GAAP[164](index=164&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2022 | Dec 31, 2021 | | :----- | :----------- | :----------- | | Total Assets | $481,942 | $344,355 | | Total Liabilities | $143,556 | $82,487 | | Total Stockholders' Equity | $338,386 | $261,868 | Consolidated Statements of Operations Highlights (in thousands) | Metric | 2022 | 2021 | 2020 | | :----- | :--- | :--- | :--- | | Revenue | $303,426 | $252,022 | $203,222 | | Gross Profit | $215,642 | $184,158 | $149,959 | | Income (loss) from operations | $5,117 | $28,461 | $(20,418) | | Net loss | $(6,695) | $(8,094) | $(44,230) | Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 2022 | 2021 | 2020 | | :----- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $58,005 | $3,358 | $(6,486) | | Net cash used in investing activities | $(76,551) | $(5,025) | $(3,806) | | Net cash provided by financing activities | $16,229 | $195,288 | $51,041 | - The company adopted ASU No. 2016-02, Leases (Topic 842) on January 1, 2022, recognizing a **$23.1 million** ROU asset and **$24.6 million** lease liability, with no material impact on results of operations or cash flows[165](index=165&type=chunk)[236](index=236&type=chunk) - Goodwill increased to **$43.8 million** in 2022, primarily due to the JUMP acquisition (**$42.5 million**), which is not expected to be deductible for income tax purposes[245](index=245&type=chunk)[243](index=243&type=chunk) - Clearwater Analytics Holdings, Inc. operates as an 'Up-C' holding company, with its principal asset being a controlling interest (**79.7%** as of Dec 31, 2022) in CWAN Holdings, LLC, which conducts all business operations[195](index=195&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk) - The company completed its IPO on September 28, 2021, raising **$582.2 million** in net proceeds, used to purchase LLC interests, repay debt, and cover IPO expenses[188](index=188&type=chunk)[196](index=196&type=chunk)[274](index=274&type=chunk) - The JUMP Technology acquisition on November 30, 2022, involved a total purchase consideration of **€75 million** (**$77.1 million**), with **€67.5 million** paid upfront and the remainder subject to an indemnification holdback[241](index=241&type=chunk)[273](index=273&type=chunk) - The Tax Receivable Agreement (TRA) requires the company to pay **85%** of certain tax benefits realized from tax basis increases and other attributes to Continuing Equity Owners and Blocker Shareholders, with an estimated aggregate payment of **$625 million** under certain assumptions[41](index=41&type=chunk)[580](index=580&type=chunk)[615](index=615&type=chunk) - The company recognized **$65.7 million** in equity-based compensation expense in 2022, reflecting increased grant-date fair value of awards and higher headcount[174](index=174&type=chunk) - As of December 31, 2022, the company had **$51.6 million** in term loans outstanding under the New Credit Agreement, amortizing at **5.00%** per annum, paid quarterly[15](index=15&type=chunk)[416](index=416&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.](index=101&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) No changes in or disagreements with accountants on accounting and financial disclosure were reported - No changes in or disagreements with accountants on accounting and financial disclosure were reported[475](index=475&type=chunk) [Item 9A. Controls and Procedures.](index=101&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded disclosure controls and internal control over financial reporting were effective as of December 31, 2022, excluding the JUMP acquisition - Disclosure controls and procedures were evaluated as effective as of December 31, 2022, providing reasonable assurance for information recording, processing, summarizing, and reporting[476](index=476&type=chunk) - Internal control over financial reporting was effective as of December 31, 2022, excluding the JUMP acquisition, which will be included in the 2023 assessment[477](index=477&type=chunk) - No material changes in internal control over financial reporting occurred during the period, except for those related to the JUMP acquisition[478](index=478&type=chunk) [Item 9B. Other Information.](index=102&type=section&id=Item%209B.%20Other%20Information.) No other information was reported for this item - No other information was reported for this item[480](index=480&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.](index=102&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections.) Disclosure regarding foreign jurisdictions that prevent inspections is not applicable - Disclosure regarding foreign jurisdictions that prevent inspections is not applicable[481](index=481&type=chunk) PART III [Item 10. Directors, Executive Officers and Corporate Governance.](index=103&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) The company's corporate governance details its Board of Directors, executive officers, and policies, operating as a 'controlled company' with Principal Equity Owners' significant influence - The Board of Directors consists of ten individuals, divided into three classes with staggered three-year terms[482](index=482&type=chunk) - The Board values diversity, with **60%** of its members identifying as women, racial/ethnic minority, or LGBTQ+[338](index=338&type=chunk)[485](index=485&type=chunk)[491](index=491&type=chunk) - The company is classified as a 'controlled company' under NYSE standards due to Principal Equity Owners controlling a majority of voting power, allowing exemptions from certain corporate governance requirements (e.g., majority independent directors, independent committees)[57](index=57&type=chunk)[488](index=488&type=chunk) - The roles of Board Chair (Eric Lee) and Chief Executive Officer (Sandeep Sahai) are separated to ensure strong oversight and operational focus[498](index=498&type=chunk) - The Audit Committee, composed of independent directors, is responsible for overseeing financial reporting, internal controls, and risk management, including cybersecurity[521](index=521&type=chunk)[529](index=529&type=chunk) - The company has a Code of Ethics applicable to all directors, officers, and employees, and policies prohibiting hedging and promoting anti-corruption[500](index=500&type=chunk)[527](index=527&type=chunk)[528](index=528&type=chunk) [Item 11. Executive Compensation.](index=113&type=section&id=Item%2011.%20Executive%20Compensation.) This section details the 2022 compensation for named executive officers, including base salary, incentive plans, equity awards, and other benefits, along with director compensation - Named executive officers for Fiscal 2022 include Sandeep Sahai (CEO), Jim Cox (CFO), Scott Erickson (President, Americas and Asia), and Souvik Das (CTO)[565](index=565&type=chunk) 2022 Summary Compensation Table (in $) | Name | Salary | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | :--- | :----- | :----------- | :------------ | :------------------------------------- | :--------------------- | :---- | | Sandeep Sahai | 653,400 | — | — | 787,420 | 277,802 | 1,718,622 | | Jim Cox | 425,000 | — | — | 384,852 | 115,391 | 925,243 | | Scott Erickson | 362,500 | — | — | 309,074 | 134,349 | 805,923 | | Souvik Das | 375,000 | 1,612,500 | — | 148,501 | 25,845 | 2,161,846 | - Named executive officers earned between **96.2%** and **106.6%** of their target annual cash incentive awards for Fiscal 2022, based on company-wide and individual performance[570](index=570&type=chunk) - Equity compensation includes stock options and Restricted Stock Units (RSUs), with vesting conditions often tied to time-based schedules (e.g., **25%** on first anniversary, then monthly) and performance-based metrics (e.g., annual revenue growth rate)[571](index=571&type=chunk)[572](index=572&type=chunk) - Directors not affiliated with a Principal Equity Owner are eligible for an annualized cash retainer of **$40,000** and an annual RSU grant of **$200,000**[581](index=581&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.](index=120&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Beneficial ownership details for Class A and D common stock are provided, highlighting significant voting power held by Principal Equity Owners and equity compensation plan information - As of February 17, 2023, Principal Equity Owners (Welsh Carson, Permira, Warburg Pincus) collectively hold significant voting power, with Welsh Carson affiliated entities owning **60.4%** of combined voting power[586](index=586&type=chunk) - The company has a multi-class common stock structure: Class A and B common stock have one vote per share, while Class C and D common stock have ten votes per share[199](index=199&type=chunk)[551](index=551&type=chunk) Equity Compensation Plans Information (as of Dec 31, 2022) | Metric | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :----- | :---------------------------------------------------------------------------------------------- | :------------------------------------------------------------------------------ | :---------------------------------------------------------------------------------------------------------------------------------------- | | 2021 Omnibus Incentive Plan | 27,282,118 | 8.47 | 25,961,402 | | 2021 Employee Stock Purchase Plan | — | N/A | 3,123,260 | | Total | 27,282,118 | | 29,084,662 | [Item 13. Certain Relationships and Related Transactions, and Director Independence.](index=123&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) This section details related party transactions, including the LLC Agreement, Tax Receivable Agreement, and Stockholders' Agreement, which grant Principal Equity Owners significant control - The Audit Committee is responsible for reviewing and approving related party transactions, with a policy requiring consent for transactions exceeding **$120,000**[591](index=591&type=chunk) - Prior to the IPO, the company paid management fees to affiliates of Welsh Carson, Warburg Pincus, and Permira, totaling **$2.5 million** in 2022 and **$2.4 million** in 2021, which terminated upon the IPO[612](index=612&type=chunk) - The LLC Agreement governs tax distributions to LLC Interest holders, which are pro rata based on CWAN Holdings' net taxable income and may exceed the amount of taxes if CWAN Holdings were a corporate taxpayer[593](index=593&type=chunk) - The Tax Receivable Agreement (TRA) requires the company to pay **85%** of realized tax benefits to Continuing Equity Owners and Blocker Shareholders, with estimated aggregate payments of **$625 million** under certain assumptions[562](index=562&type=chunk)[615](index=615&type=chunk) - The Stockholders' Agreement grants Principal Equity Owners the right to designate Board nominees and committee members, maintaining their significant influence over the company's governance[599](index=599&type=chunk) - The company indemnifies its directors and officers to the fullest extent permitted by Delaware General Corporation Law (DGCL) and has entered into customary indemnification agreements[621](index=621&type=chunk) [Item 14. Principal Accounting Fees and Services.](index=130&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) This section details fees paid to KPMG LLP for audit, audit-related, and tax services in 2022 and 2021, overseen by the Audit Committee - The Audit Committee is responsible for engaging, compensating, and reviewing the performance of KPMG LLP, ensuring auditor independence[600](index=600&type=chunk) Aggregate Fees for Professional Audit and Other Services (in $) | Category | 2022 | 2021 | | :------- | :--- | :--- | | Audit fees | 1,150,000 | 2,341,000 | | Audit-related fees | 422,500 | — | | Tax fees | 815,273 | 530,979 | | All other fees | — | — | | Total | 2,387,773 | 2,871,979 | - Audit fees in 2022 included annual audit and quarterly review procedures, as well as fees related to the JUMP acquisition. In 2021, audit fees included IPO-related services[601](index=601&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules.](index=131&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) This section lists all financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, including various agreements and certifications - All financial statements are listed in the 'Index to Consolidated Financial Statements' under Part II, Item 8[624](index=624&type=chunk) - Other financial statement schedules are omitted as not applicable or included in the consolidated financial statements and notes[624](index=624&type=chunk) - Exhibits include organizational documents, various agreements (e.g., Registration Rights, Stockholders', Tax Receivable, Credit, Employment), equity compensation plans, and certifications (e.g., SOX 302, 906)[604](index=604&type=chunk)[605](index=605&type=chunk)[627](index=627&type=chunk) [Item 16. Form 10-K Summary](index=132&type=section&id=Item%2016.%20Form%2010-K%20Summary) No summary for Form 10-K was provided in this section - No summary for Form 10-K was provided in this section[629](index=629&type=chunk) [SIGNATURES](index=133&type=section&id=SIGNATURES) The report is duly signed by the principal executive and financial officers, along with other directors, on March 3, 2023 - The report is signed by Sandeep Sahai (CEO and Director) and Jim Cox (CFO) on March 3, 2023[609](index=609&type=chunk)[634](index=634&type=chunk) - Additional directors also signed the report on March 3, 2023[609](index=609&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q4 2022 was $82.7 million, and full-year revenue was $303.4 million, representing a year-over-year growth of 20.4% [78][99] - Gross revenue retention remained at 98% for the 16th consecutive quarter, while net revenue retention increased to 106% [88][8] - Gross profit for Q4 was $62.6 million, with a gross margin of 75.7% [38][88] - EBITDA for the full year 2022 was $81.1 million, with a Q4 EBITDA margin of 29.4% [104][88] - Annualized recurring revenue (ARR) at the end of December 2022 was $323.5 million, including $6.4 million from the JUMP acquisition [92] Business Line Data and Key Metrics Changes - The insurance vertical accounted for 52% of ARR, asset management for 33%, and corporates/government for 15% as of December 31, 2022 [92] - The JUMP acquisition is expected to enhance the total addressable market (TAM) by $1 billion, allowing for the delivery of front office systems [89] Market Data and Key Metrics Changes - Clearwater's platform processes and reports on $6.4 trillion in assets daily, an increase from $5.9 trillion at the end of 2021 [92] - The company is onboarding clients in various international markets, including Singapore, Thailand, Hong Kong, Australia, Japan, France, the UK, and the Netherlands [38] Company Strategy and Development Direction - The company focuses on a client-centric approach, aiming for consistent, reliable, and durable growth [4] - Clearwater plans to continue investing in R&D, allocating 25% of revenue in 2022 and maintaining this level in 2023 [34] - The transition to a base plus pricing model is a key strategy, with 100% of new clients with contracts over $500,000 adopting this model [37][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in 2023 guidance, expecting revenue growth of 19% to 20% [95][99] - The company remains vigilant regarding economic conditions and plans to align headcount growth with new business growth [95] - Management noted that the demand for Clearwater's solutions remains strong, particularly in the face of regulatory challenges [100] Other Important Information - The JUMP acquisition closed in November 2022, and the integration is expected to enhance Clearwater's offerings [6][89] - The company incurred $5.9 million in Tax Receivable Agreement expenses in Q4 2022 [39] Q&A Session Summary Question: What is driving the confidence in ARR growth? - Management highlighted strong bookings in Q4 and a focus on bookings as a leading indicator for future revenue [13][42] Question: Are there expectations for growth in specific verticals for 2023? - Management indicated that they are gaining share across all verticals, with a particular focus on asset management due to its larger TAM [20][50] Question: Can you elaborate on the due diligence process for potential acquisitions? - Management stated they are open to acquisitions that enhance geographic expansion or add value to current clients, emphasizing a high bar for any future deals [56][66] Question: What trends are being observed in the top of the funnel and conversion pace? - Management noted a strong funnel and continued interest from large clients, with a positive outlook for conversions [30][61] Question: How is the transition to the base plus model impacting NRR? - Management clarified that while the base plus model stabilizes revenue, the focus remains on increasing product adoption to drive NRR higher [12][112]