All right, good afternoon, and welcome to the Clearwater Analytics session at the Goldman Sachs Communacopia and Technology Conference. I'm Gabriela Borges. I cover Clearwater here at Goldman, and my colleague Callie Valenti, stage left. Delighted to have with us on stage Jim Cox, CFO of Clearwater. Thank you for your time. Thank you. Can I recommend the next time we do this, can we do it poolside? I think that'd be great. Yeah. Yeah, there's not a lot of sunlight in this room. No, no, but this is good. Don't. You brighten my day. We'll take it. There you go. There you go. So, Jim, this time last year was the first Investor Day, and it's a really nice milestone post the IPO back in twenty twenty-one as well. How would you describe, in terms of your long-term strategy, where you've made the most progress and where you think there's still the most growth to come? Sure. That's a good question. Thank you. So yeah, it's. Let's see, it has been about a year since that. So, so if you recall, and if I reflect back on what we spoke about at the Investor Day a year ago, I think a couple things that really I think we focused on was the pivot to a multi-product company during that process, and talked about that in the context of kind of aspirationally talking about NRR one fifteen. And so that was one piece that we talked about. Another piece that we spoke about was very much the path to the long-term operating margins and the consistent kind of 20+% growth in the long-term operating margins of 40% and long-term gross margins of 80%. And we've kind of said, "Hey, we're gonna be on this path of fifty basis points at the gross margin line and two hundred basis points at the operating margin line." I think that if you just look where we are today versus where we were then, we've done way better than the two hundred basis points and fifty basis points. So I think we're definitely. I I think we've proven to the market that we are capable of kind of operating with nice incremental margins. And I think that that has been that overperformance, but not entirely unexpected, is, you know, I think we feel like we're ahead on that. I think that when we talked about the fifty bips, we said, "Hey, we're not including anything from AI in that." And I think that that has been. We were hopeful that we would see more, but just didn't know, so didn't commit to it. So I think that that's a place where I think that there's probably not a lot of debate. Folks that see Clearwater, that like our ability to expand margins, is there. I think we've also made a lot of progress towards NRR 115 and the pivot to the multi-product company. We're not ready to say, you know, mission accomplished. Was that the famous or infamous thing that was said, a long time ago? And so, but I do see a lot of great growth and progress there. I think just the crispness about how we think about how we're getting to that NRR 115, the ethos within the company of being truly a multi-product company and thinking about what we have the right to build versus what we wanna think of inorganically and expanding along those fronts. Obviously, I feel like we've made a lot of progress there, but it's not complete. On the topic of incremental growth opportunities, you recently announced a new CMO. Yeah, Fleur. So talk a little bit about Fleur and what her priorities will be and where you think there's room for Clearwater to grow from a branding and market awareness perspective. Yeah. Yeah. So I think, if you harken back to, even when we went public, we talked about one of the reasons why we would go public was to really expand the brand, particularly globally, right? And although we've made progress kind of considering things internationally, I think we have a ton of runway there, particularly on the brand awareness and marketing front. And so I think when we think about how do we roll this out globally, I think Fleur's gonna be incredibly helpful on that front. The second thing that and this ties into kind of the multi-product kind of strategy is also then just account-based marketing and thinking about for, you know, the largest and most successful companies around the world, how are they thinking about engaging with their clients? How do we think about account management, particularly when we're thinking about it across a multi-product, multi, potential buyer area? And so I think as we think about how we roll that out, now Fleur has a part to play in that, right, on the marketing side, but we also have, just more broadly, the account management side to think about how we wanna do that. And then even, even more so then, how do we, how do we wanna prosecute against each of those? So it's not just her job, but I think she's gonna be a big helper along as we think about just maturing our overall go-to-market, particularly in a multi-product world. Maybe just ground us a little bit. What are you currently doing with respect to account-based marketing, and what do you want it to be? Yeah. So I think if you, if you think about it, and it, so interestingly, Fleur was a colleague of Shane Akeroyd, our Chief Strategy Officer, that we hired in, I forget whether it was January or December or February, or something like that, as well as a colleague of Keith Viverito, who is our MD International, and so they know each other. And one of the things, and they all worked at Markit together, which had a lot of products and was able to kind of execute on that. And one of the areas that Shane ran at Markit was really this account management spectrum. And so as you think about this, it's how do you have those true executive-level, strategic relationships with your client? And thinking, so what do we do now that's terrific? I think we're as great as anyone at explaining the value of Clearwater and how it works, and how it makes an accountant's life better, and how you can be more efficient and faster, and do the things that you want to do that perhaps you, as an accountant, your boss is asking you to do something that is strategic to your boss. Where I think we can all improve, is then having that conversation that's more of a conversation where Jim Cox is your buyer, as opposed to someone who works for Jim Cox, or Sandeep Sahai, more importantly, is your buyer. What's most important to Sandeep? How does that then correlate to what we're trying to do and connect with that? I think we have a knowledge of that at the executive level and what our clients are trying to do because we are in a very, you know, let's not underestimate how important our relationship is. We're delivering clean, reliable data every day to these clients, and that is a cherished relationship to have. And so then it's like, but how do we do more? You know, they're asking us to help them do more, and so how do we do more? And how do we do more for the CEOs of those organizations so that they think of us in that context, and that will help us really broaden that kind of strategy. So that. Sorry, I went down to a bunch of detail there, but I think that helps with understanding kind of, you know, and that's what great companies do. Great companies become truly cherished by their most important clients. Callie, over to you on the product side. Yeah. Yeah. So you already brought up kind of how important multi-product has been to Clearwater. Can you walk us through a little bit, kind of where you were on the multi-product journey, let's say, two years ago versus one year ago versus today? And then building off of that, kind of where you feel like you need to put more work in, so you can be in a better place even one or two years from now? Yeah, yeah. So, if you think about it, when we went public, we were very much a single product company, and we had talked about the promise of this. And then, a watershed event for us really was the first acquisition we did at the end of 2022. JUMP Technologies, it's a small business based in Paris, and there were really three rationales behind it. One was, you know, increasing the footprint in Europe, in continental Europe. Success. I think that's worked very well. Two was kind of expanding in an asset management footprint. And then three, selling some of that functionality back into our existing clients. And the truth is, up until that point, you could debate whether we were a multi-product company or not. And forget about, like, externally debating, like internally, people could think, "Oh, well, you know, is this? Do I charge separately for this?" And all of that, but companies go through. After that, it was very clear we were a multi-product company. And so that was kind of an important step. And then, I guess the next evolution that I think we've seen at the end of last year, which was a privilege, right? The thing we were working on organically was really growing globally, right? And so we had to build out really the platform, you know, with all the gaps globally and the infrastructure to be able to scale globally. When that finished in October of last year, we were able to move to the next. So kind of single product company, then JUMP, then a global company, and then in October of last year, we were able to really pivot and say: Okay, we are gonna focus on reallocating a lot of those resources that were focused on new logo expansion globally, and saying we can focus on specific multi-product growth objectives. And that kind of, in earnest, really started at the beginning of this year. So I think that was a real watershed event for us. And then to see the success that we've seen in the first half of this year, about a quarter of our bookings, right, are from these new products. And that is, you know, until you know, you don't know. And so it was great to have the demand points that we've seen in the first half of the year, which lead us to, you know, a real belief that we are. And when you hear, you know, there's nothing more powerful than hearing salespeople walk down the hallway talking about how they're focused on this product or that product, and really debating what they should be leading with a client. That's, you know, that's an enviable position relative to where we were, you know, twelve months ago or something like that. Where do we, where do we have to go from here? I mean, like, again, the work is never done, right? And so, so I think there's just, there's a number of products that are, that remain in the, in the pipe, where we see early demand. We have. We're tracking to all this stuff with client development partners, and so I think you'll continue to see a nice set of cadence around releases, around kind of the products that we have, as well as more that we're introducing over the next six to 18 months. Yeah, that's great. And then you speak about kind of the international being a big focus of your organic development last year. I think another big focus last year was just the transition from private to public cloud. So as we think about those R&D resources now being freed up in kind of two different ways, how should we think about the time for that to really translate into even kind of bridging that NRR from the 110 to the 115? Yeah. So they've been working on, you know, they're hard at work- Yeah And already working on that, and I think we've continued to feel increasingly confident about our path. Yeah Towards that NRR 115, and so I think we'll continue to see it grow. And I think I've said this before, but if I'm still talking about, aspirationally talking about NRR 115 in 2026, I will have failed. So I think we're really pushing. We wanna see that growth. And that really is, those incremental products are really the biggest portion as we look at the algorithm for how we get from 110 to 115, those incremental products are where that's at. And so we'll continue to see that kind of build. Yeah, and you continue to be pretty focused on your kind of three core customer cohorts. Yeah. But you've increasingly also been adding kind of- Yeah Adjacent to that. So can you speak a little bit about the organic development you've had to do in order to add adjacencies, and kind of how you view building out more horizontal versus more vertical functionality? Yeah. So I'll use a couple new product examples, one that kind of we've been able to sell back into the base and another into these new products. But one product is kind of broadly under funds. There's a bunch of different funds, kind of technology that you need. And what we found with a lot of this is we're 80% of the way there, 90% of the way there, 95% of the way there, and so our clients are actually leaning on us. So there's this concept called pooled funds, which enables states to enable local or municipalities to pool their excess cash and invest in that. So think of it as kind of just subscriptions and redemptions. And so, you know, there's fifty states, and, you know, thirty-seven of them needed this functionality. And all fifty states can use the core Clearwater, but without this kind of incremental functionality, those thirty-seven states said, "You know, we'd love to do this, but we need to wait on that." Guess what? It's done. We did it, and kind of that's rolling out now. That's a new area that we focused in. Another successful area over the last year or so has been real estate investment trusts that we've been able to kind of, particularly those that are focused on mortgages. You know, we handle mortgages very well on our platform, and so that's a natural kind of evolution there. And then another place that has been successful for us is kind of these kind of endowments and foundations. Again, think of asset owner pools that are similar to our other asset owner clients. And of course, there's incremental development to do for all those folks, but that fits. And so that's kind of that new kind of, you know, those nascent classes. Now, and so that. You know, we look to do that for those folks and then kind of, you know, continue to pensions and et cetera. Sovereigns, you know, someday we'll be talking about those. Yeah, makes sense. One more, and then I'll turn it back over to Gabriela. Yeah. So, where do you feel like you're at in a sales training and enablement perspective in getting all these new products ramped with the sales team? Yeah. And then, along with that, like, what are some key priorities for you going into 2025 of course? Yeah, that's, I mean, that's really important. And so kind of fundamentally, you know, we were talking about the account-based marketing and the account management. So the sales organization very firmly owns the relationship with the client. And then it's the product team and the sales engineers, so that the sales engineers align to the product leaders in not only are they building the development, but they're also building the training and the infrastructure around that. And so we lean on folks that are sales engineers in the, sales organization, but really being directed by that product, leader, or we'll call them general managers in some cases, to really drive kind of the knowledge and the understanding. And it creates a really interesting tension, because it's nice, because there's a tension of all the product leaders want the salesperson to present their product to the client. And so it's like, how do we make that, you know, interesting enough for the salesperson? And then all of the product people also own a bookings number, right? And so they're very focused on trying to drive to that. So, I'm sure there's things we can continue to evolve on, but happy with how that structure has come together at this point. I'll bring it back to some of the near-term dynamics in the model. Sure. One of the more impressive feats of the last three years was your execution on the change in pricing model. Sure Where you set things up so that you're now protected on the downside. So to the extent rates go down and AUM, to the extent rates go up and AUM goes down, you're protected. We're now, for the first time, looking at a scenario where actually rates are going to go down and AUM goes up. So with the new pricing model, how do you think about the impact of rates, let's say, hundred basis points over the next year? What impact does that have on NRR? Yeah, I think that we certainly felt that impact on the downside in twenty twenty-two. And so hence the business model shift. I think, look, AUM going up, assets going up at our clients for any reason, because they're profitable, because rates do a loop-de-loop, because, you know, they acquire other businesses, anything like that, that's good for us, right? And that will help us. It's very difficult to quantify, other than to say it's a tailwind. I don't think we would think of anything beyond that, because when rates change by 500 basis points, the whole curve changes. When rates change by 50 basis points, maybe the curve doesn't change so much. Maybe the curve has already changed. You know, the two-year is under 4%, right? And that's, I believe, below the Fed funds rate, right? So, you know, perhaps this evolution is already occurring. And so you really have to think about the whole. In these dramatic events, you can see these meaningful things. But I think you would. You know, here's something that's really interesting is, you know, we're able to see across kind of portfolios. So I looked because I'm a corporate CFO, and I wanted to know what other people were doing, right? And their duration. So everybody's duration for, you know, since rates really went up, everybody's duration was zero to six months, yeah, on the corporate side. And I would say that that has moved out, you know, pretty significantly. It doesn't sound like a lot if you say, "Hey, your duration's gone from zero to six to 12-18 months," but that's a really big move in kind of average duration for corporate. And so really what they've said is, "Oh, we'll move out in duration." And so you've kind of seen that switch. So okay, so sure, like for like, interest rates have changed, but as duration is also moving, you know, people, you can isolate for one piece but not the other. So I'll summarize it by saying, it's a tailwind. We appreciate it. Assets going up for any reason is good. But I think that it's very, I think there's so many great reasons to invest in Clearwater, in addition to kind of any AUM kind of viewpoint on it. You know, I think we're delivering consistent, durable growth under any scenario. We're expanding margins, we're throwing off cash flow, and we're winning share. And so if we also have a tailwind of AUM, I think that helps. But, I think there's a ton of reasons without that. Maybe just to clarify the nuance, does duration coming in or out have a negative or positive impact, or? No, but it just your It's multidimensional. Your impact. Yes, yes. A rate change impact, depending on your duration, could be greater or less. It's not linear. Got it. Okay. Yeah. Similar question on the health of the end markets that you're exposed to, insurance, asset managers, corporate. Any color that you can share on those customers' willingness to invest in accounting software and back office, more broadly? I was hoping that you would have a bunch of private companies here so that we have an IPO market, 'cause that's a nice, you know, little tailwind for us as well. Oh, it's because they're all lined up for our private company conference, so. Oh, great! Perfect. Great. Good to hear. Apple charged. When they start, you should pitch them. That's great, so you know, that obviously just for everybody in the audience, if you don't know, like, as companies go public, you generally have excess cash. When you have excess cash, you start investing in it. When you invest in things, you should be able to account for them, so you buy Clearwater. That's the simplest kind of IPO story for corporate, and I guess if you were gonna ask me at the beginning of this year, I kind of thought there might be something by the end, but looks like that'll give us good things in 2025 instead. Asset managers, you know, I've said this all year, so I think this is the same story. 2024 is a better year than 2023 for asset manager buying. I would say also, insurance companies have done pretty well. And so that's, you know, I would say that that's they've been very fine. But remember, these are multi-quarter selling cycles, and these are really fundamental. You know, this is an ERP system for these companies, and so they don't, like, choose to do it or not choose to do it because of the nuances in the market. And so I would say that the overall, the market remains kind of, resilient. You're alluding a little bit to the visibility that you have into bookings, pipeline revenue, and you've commented a few times where by the time we see an impact in revenue, well, you could have predicted that one, two, three quarters ahead of time. So it leads into a little bit of a pipeline question, which is: I think about this time last year, bookings trended worse into year-end and was an overhang on 1H 2024 revenue. How do you think about the seasonality in the business from a booking standpoint? Is there a risk that bookings fall off towards the end of the year, and we have the same dynamic into 1H 2025? Maybe a little bit about what was idiosyncratic last year versus what's seasonal from a booking standpoint. Yeah. So, okay, so let me, Can I just correct one. Please. Characterization? So I would say that bookings were not worse last year. They were worse than I expected. Is that fair? Yeah. They were still Gotcha, yeah. You know, growing bookings. We're a growing business. We've been growing, and so I just wanted to- Yes, please Be clear that they were. You know what I mean? It was good, and so I think we feel the same way. There is a normal seasonal cycle in across all software, but particularly in the software where you know, I think most of these businesses, it's like Q4 is your biggest quarter, Q2 is your next biggest, Q3 is a little lighter with Europe being lighter, and Q1 is a little lighter. It's kind of that, and that would be a dynamic that we would see here in Clearwater. Not too dramatic, but generally there's more, so I think, you know, as we look obviously, we had a good first half of the year, and so I think we feel great about that, and the pipeline continues to look good. And so I think we feel good about that. And, yeah, this time last year feels a really long time ago, and so I can't remember how I felt then, but I'm confident about how we feel this year. Let me pause for a moment. Questions from the audience? Callie, I'll turn it to you on AI and some of the model dynamics. Yeah. So we wanted to ask about Clearwater Intelligent Console. That's kind of new for you guys. CWIC! Yeah. CWIC. Sorry. Sorry. Yeah. Yeah. I didn't know this, you called it. Yeah. Thank you. No, I'm glad you called it Clearwater Intelligent Console. Yes. The launch in beta earlier this year, any updates you can give us on that or early feedback you're getting from customers? Yeah. So, let me just describe what it is. It's kind of the easiest way to think of it is it's a top ten list. You know, your David Letterman of, like, what are the questions? If you're in your seat and you're looking at our data, what are the most likely questions that you're gonna ask? And it allows our clients to click on those and have those questions answered for them. And so what does that do? For them, it gives them an answer that they may like or not like, right? If they like the answer, then what it does for us is it absolutely deflects the question. And because half of all of our questions are, because we do accounting for people, the number is X, why is it not Y, right? That is, that is literally what most of our questions are every day. Why is this number this? How could it be this? Tell me how you did this. That sort of stuff. And so that's what those top ten will allow people to do. Let's say that that doesn't work, so that's full deflection, and then if it doesn't work, then there's toolsets that we have for our clients, which isn't CWIC. So that's just what CWIC is. And I think that those questions will become more sophisticated and more aware of who ultimately is the user in that case. That's kind of some of the help. Those are unique and nuanced to the role that that person is at the company and what they're looking at. So I think that's helpful. The second piece that isn't CWIC, but we're using to be CWICer, is we have the opportunity where when a question does come into us, we're providing our own people with those answers. So think of it as a human in the loop opportunity. And in that case, you can, you know, take that and respond more quickly to your clients, and so that lowers the response time. We've seen meaningful improvements in in kind of the deflection rate and in the response times to clients, which ultimately should result in us having less people that need to be there to answer that question, "Why is that number X or Y?" That's generally what's been going on. There's also various other pieces that are underway that we will. I'll plug our Clearwater Connect conference next week, so we will be announcing a variety of different stuff, including things associated with GenAI. Nice. I wanted to ask on some of the components of NRR, and we touched on this a little before, but can you talk us through kind of where those components are at today versus where you think they can go? And I think a big part of that is the multi-product. It is. I think you've walked through some of the math on that. It is. It is. Yeah. Let me just kind. Yeah, I'll just do it. So you start at a hundred. Yeah. Gross revenue retention, it's been 99% the last couple quarters, but it's 98%, so down 2%. We realized kind of across the portfolio, about 3% on price. You would, on average, get about 3% from AUM expansion. And so price, there's somebody who's responsible for that. There's no one responsible for AUM. That's kind of. Then there's about 4%, which is what we'll call wallet share expansion. So it's the core product. But finding new places at Goldman Sachs to sell Right? Or helping Goldman Sachs win more business for those together those assets. That's about 4%. I think that if I'm doing my math right, that gets you to 108. And then in last quarter, 2% was new products. Now, remember, we had about 25% of our bookings were new products, but half of those were for new logos, so that didn't show up in that 2%. But it actually makes the NRR 115 harder to achieve. but we'll just keep working on that. And so that's the 2%. So, you know, could you get a little bit more in price increase? Could you get a little more in wallet share, as we kind of build out that account-based marketing and that management? Yeah, but on the margin, right? You're not really. The way I think about it is, the name of the game to move from one ten to one fifteen is take that 2% of additional product and turn it into 7%. That's sustainable, durable. We can always kind of do that. Now, it's not about having one product that creates 5% growth, though that would be wonderful. It's about having, you know, just a bounty of solutions that we can do based on client type, based on what they want, and that sort of stuff. That's. And by the way, that 5% is gonna be a combination of what we're building today and inorganic options that we look to in the future. So I think that's. Now, obviously, we've quoted everybody on that 115, so that it's far greater than that, but I think that's a great. That's the algorithm that I think I'm comfortable talking about. Yeah, and then I'll squeeze in one quick one before I turn it back to Gabriela. Yeah. So pricing, I think that's something that's kind of new with the new pricing model you're in, is you do have a, like, just set pricing increase in those contracts. Yeah. How should we think about how much of that is in the model today versus how much of that's gonna show up in, let's say, three to five years? Yeah. So, so it continues, and so for every new. So if you think about it, we had no one on a price increase. Yeah. Then in 2022, we moved a significant portion of that to price increase. But for every new customer we have, all of them are on the new model. Yeah. So that continues to build in. Look, we're gonna get a price increase from all of our clients, whether it's automatic in the contract- Yeah Or we have to engage with them on that. Okay. So I think you see a lot of it in the model already. Okay. It just becomes more and more efficient as the contract structures change. Yeah, makes sense. Jim, you mentioned Clearwater Connect. Yeah. If we, as investors, were going to mix and mingle with customers at the conference, what are the one or two things you think that we should be pushing our customers on? Yeah. Pushing is a strong word. Good question. Yeah, yeah, yeah. Gently interviewing. No, I think, well, you know, it's. You get a room with 700 accountants in it. It could be wild and crazy. Yes. Karaoke. You should push them to do karaoke, but I think as you think about the product strategy and you think about. It's really what are the questions that I would love an investor to ask our clients, in addition to, you know, why do you love Clearwater and, you know, why, you know, Jim's such a great guy, and all that stuff? More seriously, it's more, "Hey, what did your boss tell you to go learn here?" Not what did you want to learn when you came here, but what did your boss ask you to learn by coming to Clearwater Connect? What are those strategic things, or the other question was, to make it more personal to them, how is your career going to become better as part of, you know, coming on to Clearwater? Or how has it become better or different, and that sort of thing. So to try and personalize it with them about, like, what is their growth, because ultimately, you know, what we're trying to do is equip the leaders of tomorrow, so that we can kind of grow with them. What do you think the answer is to the, why did your boss send you to Clearwater Connect question? Yeah. I think it's an eval. What it is today, or what do I want it to be? Well, both. Yeah. Yeah. I think that, you know, it's to understand where the journey ends, right? So whenever you're doing, you know, kind of when you're doing these ERP-type systems for folks, this portfolio accounting, you're on a journey with them. And so if I were gonna ask someone to come to Clearwater Connect, I'd want to understand why we were the right partner, and why, and, you know, how my life is gonna get better as a result of the journey we're gonna collectively go on. And so I may not say, "Hey, I wanna buy this," or, "I wanna buy this other thing today," but what we're all about is enabling growth for our clients. And so if I'm their boss and I say, "Hey, I'm interested in this new asset class," or, "I'm working on an acquisition that my accountant doesn't know about, and I wanna be able to utilize that," those are the types of things that we wanna know. You know, you'd wanna know as you look at your vendor, can they operate with us, and can they kind of, step to that next level? Very good. We'll leave it there. Please join me in thanking Jim for his time. Jim, thank you.