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What changed in Clearwater Analytics Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Clearwater Analytics Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+314 added−327 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-29)

Top changes in Clearwater Analytics Holdings, Inc.'s 2024 10-K

314 paragraphs added · 327 removed · 233 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

65 edited+8 added−7 removed106 unchanged
Biggest changeDigital Transformation from Legacy Technologies Many of the challenges that plague asset owners and asset managers result from their reliance upon legacy software products and outdated manual processes. These products typically require on-premises deployments, feature poor system flexibility and data management capabilities, and result in higher total costs of ownership.
Biggest changeThese products typically require on-premises deployments, feature poor system flexibility and data management capabilities, and result in higher total costs of ownership. Asset owners and asset managers are seeking cloud-based solutions that address the costly, manual and error-prone deficiencies of these legacy technologies.
Clearwater has also launched individual committees for Environmental, Social and Governance with members across functions and geographies Clearwater has a number of on-going initiatives and has demonstrated progress in several of these areas, including offering employee benefits that promote responsible transportation, volunteerism and charitable contributions, and transitioning to a cloud-based server provider.
Clearwater has also launched individual committees for Environmental, Social and Governance with members across functions and geographies. Clearwater has a number of on-going ESG initiatives and has demonstrated progress in several of these areas, including offering employee benefits that promote responsible transportation, volunteerism and charitable contributions, and transitioning to a cloud-based server provider.
We will continue to consider similar partnerships and acquisitions focused on improving our technology for alternative assets data and our performance and risk management offerings, as well as expansion in Europe, the Middle East and Asia. Competition The market for solutions serving the full investment lifecycle, including investment accounting, and analytics is competitive and highly fragmented.
We will continue to consider partnerships and acquisitions focused on improving our technology for alternative assets data and our performance and risk management offerings, as well as expansion in Europe, the Middle East and Asia. Competition The market for solutions serving the full investment lifecycle, including investment accounting, and analytics is competitive and highly fragmented.
Our solution is comprehensive in its capabilities: • Multi-asset class: We have differentiated global asset class coverage including fixed income, equities, bank loans, commercial and residential mortgages, private capital markets (e.g., general and limited partnerships), derivatives and various other alternative assets; • Multi-basis: A single client can access 30 accounting bases, such as GAAP, Statutory, Tax and IFRS.
Our solution is comprehensive in its capabilities: • Multi-asset class: We have differentiated global asset class coverage including fixed income, equities, bank loans, commercial and residential mortgages, private capital markets (e.g., general and limited partnerships), derivatives and various other alternative assets; • Multi-basis: A single client can access 39 accounting bases, such as GAAP, Statutory, Tax and IFRS.
A single client can invest in over 60 different asset classes, hold assets in over 40 different currencies, be governed by more than 10 accounting regimes and hold positions representing thousands of individual tax lots. These clients often have separate solutions for accounting, reporting, performance, compliance and risk management with disparate products for each asset class and each country.
A single client can invest in over 60 different asset classes, hold assets in over 50 different currencies, be governed by more than 10 accounting regimes and hold positions representing thousands of individual tax lots. These clients often have separate solutions for accounting, reporting, performance, compliance and risk management with disparate products for each asset class and each country.
JUMP provides us with significant expansion in European markets and increases our capabilities through unit-linked funds functionality to serve European insurers which have assets in unit-linked funds.
JUMP provides us with expansion in European markets and increases our capabilities through unit-linked funds functionality to serve European insurers which have assets in unit-linked funds.
We have a 100% recurring revenue model, excluding revenue from professional services and license-related revenue from the JUMP acquisition. We charge our clients a fee that is based on the amount and complexity of the assets they manage on our platform as well as the breadth and type of the solution utilized by the client.
We have a recurring revenue model, excluding revenue from professional services and license-related revenue from JUMP. We charge our clients a fee that is based on the amount and complexity of the assets they manage on our platform as well as the breadth and type of the solution utilized by the client.
We believe the principal factors that drive competition in our market include: • Comprehensive accounting and reporting of global assets on a daily basis; • Ability to provide a “Golden Copy” / single source of data truth in order to ensure data consistency across all business applications; • Breadth and quality of solutions; • Technology differentiation, including single instance, multi-tenant architecture; • Automated data aggregation and reconciliation capabilities; • Flexible and integrated reporting; 9 Table of Contents • Daily and on-demand visibility into investment performance; • Quality of client service; • Reputation with other leading financial institutions and clients; • Frequent and complete regulatory updates; • Simplified IT infrastructure and operating costs; • Scalability, including handling large changes in assets (e.g., M&A); • Ease of use and quality of user interface; and • The price of such offerings and return on investment.
We believe the principal factors that drive competition in our market include: • New SaaS technology; • Comprehensive accounting and reporting of global assets on a daily basis; • Ability to provide a “Golden Copy” / single source of data truth in order to ensure data consistency across all business applications; • Breadth and quality of solutions; • Technology differentiation, including single instance, multi-tenant architecture; • Automated data aggregation and reconciliation capabilities; • Flexible and integrated reporting; • Daily and on-demand visibility into investment performance; • Quality of client service; • Reputation with other leading financial institutions and clients; • Frequent and complete regulatory updates; • Simplified IT infrastructure and operating costs; • Scalability, including handling large changes in assets (e.g., M&A); • Ease of use and quality of user interface; and • The price of such offerings and return on investment.
No client accounted for more than 10% of our revenue for the years ended December 31, 2023, 2022 and 2021, and our top 10 clients represented less than 30% of total revenue for each of the years ended December 31, 2023, 2022 and 2021. Our Go-to-Market Strategy We seek to deliver exceptional innovation and service to our clients every day.
No client accounted for more than 10% of our revenue for the years ended December 31, 2024, 2023 and 2022, and our top 10 clients represented less than 30% of total revenue for each of the years ended December 31, 2024, 2023 and 2022. Our Go-to-Market Strategy We seek to deliver exceptional innovation and service to our clients every day.
The strength of our platform is demonstrated by our approximately 80% win rate for new clients over the prior six years in deals that reached the proposal stage. The markets we serve are highly complex and changing rapidly.
The strength of our platform is demonstrated by our approximately 80% win rate for new clients over the prior four years in deals that reached the proposal stage. The markets we serve are highly complex and changing rapidly.
We have substantial room to grow our international business as revenues outside the United States represented only 18% of our total revenues for the year ended December 31, 2023, despite these markets representing approximately 46% of our total addressable market.
We have substantial room to grow our international business as revenues outside the United States represented only 18% of our total revenues for the year ended December 31, 2024, despite these markets representing approximately 46% of our total addressable market.
Employees have also worked with a local non-governmental agency to donate winter essentials to the underprivileged. We offer our employees 16 hours of paid time off to perform volunteer services and have matched employee donations to company identified charities. 12 Table of Contents Organization Clearwater Analytics Holdings, Inc. was incorporated as a Delaware corporation on May 18, 2021.
Employees have also worked with a local non-governmental agency to donate winter essentials to the underprivileged. We offer our employees 16 hours of paid time off to perform volunteer services and have matched employee donations to company identified charities. Organization Clearwater Analytics Holdings, Inc. was incorporated as a Delaware corporation on May 18, 2021.
Over the ensuing years, the industry has faced several challenges that have strained and broken this fragmented and often manual approach to investment accounting operations. These new developments have included increasingly 2 Table of Contents globalized holdings, growing regulatory complexities, the increasing prominence of complex alternative assets, and pressure to increase speed and accuracy while reducing cost.
Over the ensuing years, the industry has faced several challenges that have strained and broken this fragmented 2 Table of Content s and often manual approach to investment accounting operations. These new developments have included increasingly globalized holdings, growing regulatory complexities, the increasing prominence of complex alternative assets, and pressure to increase speed and accuracy while reducing cost.
We encourage our employees to operate by a common set of values, which includes being: • Infectiously passionate about Clearwater; • Intensely committed to our clients; • Devoted to building an outstanding, engaged team; • Focused on execution and dedicated to getting things done; • Continuously innovative and improving; 11 Table of Contents • Dedicated to building truly differentiated offerings; and • Committed to having values beyond reproach.
We encourage our employees to operate by a common set of values, which includes being: • Infectiously passionate about Clearwater; • Intensely committed to our clients; • Devoted to building an outstanding, engaged team; • Focused on execution and dedicated to getting things done; • Continuously innovative and improving; • Dedicated to building truly differentiated offerings; and • Committed to having values beyond reproach.
Our single-instance, multi-tenant platform allows us to take full advantage of these innovations as new Clearwater features and functions targeting any client’s needs become immediately available to the entire 4 Table of Contents Clearwater client base. In effect, each client benefits from the breadth of holdings, and the demands and needs of, all other Clearwater clients.
Our single-instance, multi-tenant platform allows us to take full advantage of these innovations as new Clearwater features and functions targeting any client’s needs become immediately available to the entire Clearwater client base. In effect, each client benefits from the breadth of holdings, and the demands and needs of, all other Clearwater clients.
All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law. 13 Table of Contents
All statements made in any of our securities filings, including all forward-looking statements or information, are made as of the date of the document in which the statement is included, and we do not assume or undertake any obligation to update any of those statements or documents unless we are required to do so by law. 13 Table of Content s
Additionally, the rise of environmental, social and governance (ESG) initiatives in investing has increased the need for transparency in portfolio holdings as investors seek to measure compliance with ESG objectives.
Additionally, the rise of environmental, social and governance (ESG) initiatives, particularly in Europe, in investing has increased the need for transparency in portfolio holdings as investors seek to measure compliance with ESG objectives.
For many clients, this has become increasingly untenable. 1 Table of Contents We allow our clients to replace these legacy systems with modern cloud-native software. Our platform helps clients reduce cost, time, errors and risk and allows them to reallocate resources to other value-creating activities.
For many clients, this has become increasingly untenable. 1 Table of Content s We allow our clients to replace these legacy systems with modern cloud-native software. Our platform helps clients reduce cost, time, errors and risk and allows them to reallocate resources to other value-creating activities.
For example, our clients can switch from a GAAP view to a Tax view to a STAT view, all in a matter of seconds. • Powerful Network Effects: Every incremental data source from an additional client improves our global data set by making it more complete and accurate for other clients on our platform that are similarly entitled to access such data.
For example, our clients can switch from a GAAP view to a Tax view to a STAT view, all in a matter of seconds. 4 Table of Content s • Powerful Network Effects: Every incremental data source from an additional client improves our global data set by making it more complete and accurate for other clients on our platform that are similarly entitled to access such data.
Clearwater’s Board of Directors has delegated oversight of development and implementation of the Company’s goals regarding environmental, social, and governance and sustainability matters to the Nominating and Corporate Governance Committee and has also delegated oversight of human capital management, including corporate culture and diversity and inclusion, to the Compensation Committee.
Clearwater’s Board of Directors has delegated oversight of development and implementation of the Company’s focus and objectives regarding environmental, social, and governance and sustainability matters to the Nominating and Corporate Governance Committee and has also delegated oversight of human capital management, including corporate culture and diversity and inclusion, to the Compensation Committee.
Approximately 36% of our global employee base is dedicated to product development and engineering. Our personnel are organized into solution-specific teams and are based principally in Boise, Idaho, Seattle, Washington and Noida, India. We expect to continue our significant investment in product engineering and innovation as we extend our competitive strengths moving forward.
Approximately 34% of our global employee base is dedicated to product development and engineering. Our personnel are organized into solution-specific teams and are based principally in Boise, Idaho, Seattle, Washington, Paris, France and Noida, India. We expect to continue our significant investment in product engineering and innovation as we extend our competitive strengths moving forward.
LPx scans and interprets data buried in PDF files, cleans and surfaces them for comparison and reporting, and provides a complete view over LP investments not available anywhere else on the market. Clearwater MLx: 6 Table of Contents Clearwater MLx is a comprehensive mortgage loan investment solution.
LPx scans and interprets data buried in PDF files, cleans and surfaces them for comparison and reporting, and provides a complete view over LP investments not available anywhere else on the market. Clearwater MLx: Clearwater MLx is a comprehensive mortgage loan investment solution.
Each upgrade and update is made available worldwide. • Comprehensive View of Global Assets: For asset owners and asset managers, we provide comprehensive views and powerful analytics regarding their investment data. We offer investment accounting for $7.3 trillion of assets in our clients’ portfolios globally as of December 31, 2023, including complex derivatives and alternative investments.
Each upgrade and update is made available worldwide. • Comprehensive View of Global Assets: For asset owners and asset managers, we provide comprehensive views and powerful analytics regarding their investment data. We offer investment accounting for $8.8 trillion of assets in our clients’ portfolios globally as of December 31, 2024, including complex derivatives and alternative investments.
In addition, SLED (state, local and education) entities, and bank/ community foundations have $0.3 trillion and $0.3 trillion in assets on our platform, respectively as of December 31, 2023.
In addition, SLED (state, local and education) entities, and bank/community foundations have $0.3 trillion and $0.2 trillion in assets on our platform, respectively as of December 31, 2024.
Clearwater LPx: Clearwater LPx is a full-service solution for private funds that delivers complete, timely, accurate, and consumable data for limited partnerships. The solution empowers institutional investors to understand underlying risk and exposure data in limited partnership investments and empowers them to make informed decisions.
Clearwater LPx: Clearwater LPx is a full-service solution for private funds that delivers complete, timely, accurate, and consumable data for limited partnerships. 6 Table of Content s The solution empowers institutional investors to understand underlying risk and exposure data in limited partnership investments and empowers them to make informed decisions.
Our platform has the flexibility to add new accounting bases as our clients’ needs require; and • Multi-currency: We support clients with more than 50 local currencies (currency of the country they are domiciled in), 30 functional currencies (currency of the country where their principal business is), and numerous reporting currencies.
Our platform has the flexibility to add new accounting bases as our clients’ needs require; and 5 Table of Content s • Multi-currency: We support clients with more than 54 local currencies (currency of the country they are domiciled in), 30 functional currencies (currency of the country where their principal business is), and numerous reporting currencies.
Client success is core to our go-to-market approach and contributes to both our ability to win new clients and retain existing clients. We have earned an NPS of 60+ in an industry that typically scores much lower. Our high client satisfaction also translates into gross revenue retention rates of approximately 98% in 19 of the past 20 quarters.
Client success is core to our go-to-market approach and contributes to both our ability to win new clients and retain existing clients. We have earned an NPS of 60+ in an industry that typically scores much lower. Our high client satisfaction also translates into gross revenue retention rates of at least 98% in 23 of the past 24 quarters.
There is a large opportunity to tailor the regulatory reporting and performance management capabilities of our existing solutions to better serve the needs of a range of additional asset owners, such as state and local governments, pension funds, sovereign wealth funds and a variety of alternative asset managers.
There is a large opportunity to tailor the regulatory reporting and performance management capabilities of our existing solutions to better serve the needs of a range of additional asset owners, such as state and local governments, pension funds, sovereign wealth funds as well as endowments and foundations.
In addition, as of December 31, 2023, we had 86 clients who contributed at least $1,000,000 in annualized recurring revenue. Our diversified, blue-chip client base of insurance companies, asset managers and large corporations have $3.4 trillion, $2.2 trillion and $1.0 trillion in assets on our platform, respectively, as of December 31, 2023.
In addition, as of December 31, 2024, we had 100 clients who contributed at least $1,000,000 in annualized recurring revenue. Our diversified, blue-chip client base of insurance companies, asset managers and large corporations have $4.4 trillion, $2.7 trillion and $1.1 trillion in assets on our platform, respectively, as of December 31, 2024.
In the normal course of business, we provide access to our SaaS Solution that is built upon our intellectual property to third parties through licensing or restricted use agreements. We have proprietary know-how in our algorithms, business on-boarding functions and software applications. We have in the past and may in the future pursue patents covering our proprietary technology.
In the normal course of business, we provide access to our SaaS Solution that is built upon our intellectual property to third parties through licensing or restricted use agreements. We have proprietary know-how in our algorithms, business on-boarding functions and software applications.
We believe that operating with purpose, passion and creativity benefits our clients, stockholders, employees and suppliers, as well as the communities where we operate, and the environment. ESG Clearwater is focused on ESG objectives to create long-term value and manage risks.
We believe that operating with purpose, passion and creativity benefits our clients, stockholders, employees and suppliers, as well as the communities where we operate, and the environment. ESG Clearwater has adopted ESG objectives designed to create long-term value and manage risks.
We believe our existing solutions are suitable to serve the needs of the clients in these end-markets and the acquisition of JUMP strengthens these capabilities. While we have onboarded 8 Table of Contents our first clients in these end-markets and have built internal teams to service them, we do not currently derive a material amount of revenue from these end-markets.
We believe our existing solutions are suitable to serve the needs of the clients in these end-markets. While we have onboarded our first clients in these end-markets and have built internal teams to service them, we do not currently derive a material amount of revenue from these end-markets.
Our gross revenue retention rate has remained approximately 98% in 19 of the past 20 quarters, which we believe is a testament to the strength of our offering, our ability to deliver operational efficiency for our clients and our focus on providing exceptional client service.
Our gross revenue retention rate has remained at least 98% in 23 of the past 24 quarters, which we believe is a testament to the strength of our offering, our ability to deliver operational efficiency for our clients and our focus on providing exceptional client service.
Chief Financial Officers, treasurers, controllers and Chief Operating Officers select our platform to deliver a holistic solution consisting of data aggregation, accounting book of record (ABOR), multi-basis reporting, powerful analytical tools and other key features. As of December 31, 2023, we had over 1,300 clients across 39 countries with over $7.3 trillion of global invested assets on our platform.
Chief Financial Officers, treasurers, controllers and Chief Operating Officers select our platform to deliver a holistic solution consisting of data aggregation, accounting book of record (ABOR), multi-basis reporting, powerful analytical tools and other key features. 7 Table of Content s As of December 31, 2024, we had over 1,400 clients across 49 countries with over $8.8 trillion of global invested assets on our platform.
We also pursue the registration of certain of our trademarks and service marks in the United States. We have registered the marks “Clearwater” and “Clearwater Prism,” and two versions of Clearwater’s stylized logo with the U.S Patent and Trademark Office and various international trademark offices. In addition, we have registered numerous Internet domain names related to our business.
We have registered the marks “Clearwater” and “Clearwater Prism,” and two versions of Clearwater’s stylized logo with the U.S Patent and Trademark Office and various international trademark offices. In addition, we have registered numerous Internet domain names related to our business.
Clearwater has a diverse Board of Directors that is 60% comprised of women, racial and ethnic minority and LGBTQ+ directors. Clearwater has also instituted leading information security practices to meet the high security expectations of its client base.
Clearwater has a diverse Board of Directors that is 60% comprised of directors who identify as female, a racial and ethnic minority, or a member of the LGBTQ+ community. Clearwater has also instituted leading information security practices to meet the high security expectations of its client base.
We believe we are very effective in solving our clients’ challenges in managing investment accounting and reporting, performance measurement, compliance monitoring and risk analytics. Our gross revenue retention rate has remained approximately 98% for 19 of the last 20 quarters, and our net revenue retention rate reached 107% in the quarter ended December 31, 2023.
We believe we are very effective in solving our clients’ challenges in managing investment accounting and reporting, performance measurement, compliance monitoring and risk analytics. Our gross revenue retention rate has remained at least 98% for 23 of the last 24 quarters, and our net revenue retention rate reached 116% in the quarter ended December 31, 2024.
We aim to hire individuals who share our passion, commitment and entrepreneurial spirit. We are also committed to diversity and inclusion because we believe that diversity leads to better outcomes for our business and enables us to better meet the needs of our clients. We recognize the importance of diversity in leadership roles within our company.
We are also committed to diversity and inclusion because we believe that diversity leads to better outcomes for our business and enables us to better meet the needs of our clients. We recognize the importance of diversity in leadership roles within our company.
In addition to our organic multiproduct expansion, we acquired JUMP Technology in 2022. The JUMP solution provides Order Management and Portfolio Management solutions as well as specific functionality tailored to the French market. We expect to continue to introduce new organically developed products and acquire additional solutions that we believe will further enhance our relationship with our clients.
The JUMP solution provides Order Management and Portfolio Management solutions as well as specific functionality tailored to the French market. In 2024, we acquired the Wilshire Technology to provide clients with additional post-trade risk capabilities. We expect to continue to introduce new organically developed products and acquire additional solutions that we believe will further enhance our relationship with our clients.
Our daily reconciliation, flexible reporting and general ledger capabilities ensure that period-end close processes are efficient and accurate. • Performance Measurement: Our solution enables investors to compare separate accounts, set custom benchmarks and track the overall performance of their portfolios.
Our daily reconciliation, flexible reporting and general ledger capabilities ensure that period-end close processes are efficient and accurate. • Performance Measurement: Our solution enables investors to compare separate accounts, set custom benchmarks and track the overall performance of their portfolios. Custom performance reports and return calculations are available and designed to meet applicable GIPS calculation standards for investment managers.
Our principal competitors include large providers of investment operations, accounting and analytics systems such as SS&C (with its Advent, CAMRA, Maximus, and Singularity products), State Street (with its PAM and outsourced service offerings), SAP, BNY Mellon’s Eagle product, Simcorp’s Dimension, BlackRock’s Aladdin, FIS’s iWorks and Northern Trust. We occasionally see smaller providers of specialized applications and services.
Our principal competitors include large providers of investment 9 Table of Content s operations, accounting and analytics systems such as SS&C (with its Advent, CAMRA, Maximus, and Singularity products), State Street (with its PAM and outsourced service offerings), SAP, BNY Mellon’s Eagle product, Deutsche Börse’s Simcorp Dimension, BlackRock’s Aladdin, FIS’s iWorks and Northern Trust.
We also compete with outsourcers, as well as the internal processing and IT departments of our prospective clients.
We occasionally see smaller providers of specialized applications and services. We also compete with outsourcers, as well as the internal processing and IT departments of our prospective clients.
Accordingly, we may be subject to those countries’ privacy laws and the jurisdiction of such regulators by collecting or storing the personal data of those countries’ residents, even if we have no physical or legal presence there.
As a result, we may collect and store the personal information of individuals who live in many different countries. Accordingly, we may be subject to those countries’ privacy laws and the jurisdiction of such regulators by collecting or storing the personal data of those countries’ residents, even if we have no physical or legal presence there.
Our Human Capital Management and Culture As of December 31, 2023, we had 1,756 employees, including approximately 638 in product development and engineering, 179 in sales and marketing, 821 in operations and 118 in executive, general administrative and corporate functions.
Our Human Capital Management and Culture As of December 31, 2024, we had 1,915 employees, including approximately 648 in product development and engineering, 202 in sales and marketing, 919 in operations and 146 in executive, general administrative and corporate functions.
Accounting teams at these firms are continually asked to meet growing regulatory and reporting challenges with fewer resources and increasing client demands and AUM, an ultimately unsolvable problem with legacy products and processes.
Pressure to Increase Efficiency The asset management industry is highly competitive and asset management firms must constantly improve operating efficiency to maintain profitability. Accounting teams at these firms are continually asked to meet growing regulatory and reporting challenges with fewer resources and increasing client demands and AUM, an ultimately unsolvable problem with legacy products and processes.
Asset owners and asset managers need a solution that provides on-demand transparency in order to optimize risk management, forecast income, conduct shock and scenario analyses and provide their stakeholders with the holdings-based visibility that they require. Pressure to Increase Efficiency The asset management industry is highly competitive and asset management firms must constantly improve operating efficiency to maintain profitability.
Asset owners and asset managers need a solution that provides 3 Table of Content s on-demand transparency in order to optimize risk management, forecast income, conduct shock and scenario analyses and provide their stakeholders with the holdings-based visibility that they require.
High Regulatory Complexity Increased regulatory requirements within the financial services and investment industries continue to proliferate in jurisdictions around the world, forcing asset owners and asset managers to adapt and operate under a myriad of ever-changing rules.
As a result, they require a global platform that delivers a multi-asset class, multi-basis, multi-currency solution across different accounting, reporting and regulatory regimes. High Regulatory Complexity Increased regulatory requirements within the financial services and investment industries continue to proliferate in jurisdictions around the world, forcing asset owners and asset managers to adapt and operate under a myriad of ever-changing rules.
None of our U.S. employees are subject to a collective bargaining agreement. Employees in France are represented by local workers’ councils and/ or collective bargaining agreements, as required by local laws or customs. We have never experienced a work stoppage and believe our relationship with our employees to be good.
Employees in France are represented by local workers’ councils and/ or collective bargaining agreements, as required by local laws or customs. We have never experienced a work stoppage and believe our relationship with our employees to be good. We have a team-oriented culture and encourage candor from our employees, which we believe helps us to succeed and drive operational excellence.
Asset owners and asset managers are seeking cloud-based solutions that address the costly, manual and error-prone deficiencies of these legacy technologies. Our Value Proposition Clearwater’s purpose-built single instance, multi-tenant technology platform helps clients around the world radically simplify their investment accounting and reporting, performance measurement, compliance monitoring and risk analytics.
Our Value Proposition Clearwater’s purpose-built single instance, multi-tenant technology platform helps clients around the world radically simplify their investment accounting and reporting, performance measurement, compliance monitoring and risk analytics.
We divide this sales force by geography, client end- 7 Table of Contents market and target client size. Our North American sales team includes representatives focused on insurance companies, asset managers, corporations and growth markets. Our international sales team includes representatives focused on insurers and asset managers based in various regions of Europe and APAC.
Our North American sales team includes representatives focused on insurance companies, asset managers, corporations and growth markets. Our international sales team includes representatives focused on insurers and asset managers based in various regions of Europe and APAC. We plan to continue expanding our sales force and adding new target end-markets in the periods ahead.
We plan to continue expanding our sales force and adding new target end-markets in the periods ahead. Our sales force is supported by a global marketing team with 25 team members as of December 31, 2023. We actively grow our sales pipeline through account-based marketing, investment in our digital presence, increased brand awareness and product marketing.
Our sales force is supported by a global marketing team with 23 team members as of December 31, 2024. We actively grow our sales pipeline through account-based marketing, investment in our digital presence, increased brand awareness and product marketing. We will continue to invest in and build out our global marketing function to drive future pipeline and growth.
Changes to such laws and regulations could cause us to incur additional costs and change our practices in order to comply. Data Protection and Privacy Users of our solutions and services are located in the United States and around the world. As a result, we may collect and store the personal information of individuals who live in many different countries.
This ambiguity includes laws and regulations possibly affecting our business, such as those related to data protection. Changes to such laws and regulations could cause us to incur additional costs and change our practices in order to comply. Data Protection and Privacy Users of our solutions and services are located in the United States and around the world.
We are a holding company and our principal asset is our interest in CWAN Holdings. We completed an underwritten IPO of shares of our Class A common stock on September 23, 2021. Prior to the IPO, all business operations were conducted through Carbon Analytics Holdings, LLC, which changed its name to CWAN Holdings, LLC in connection with the IPO.
We are a holding company and our principal asset is our interest in CWAN Holdings. We completed an underwritten IPO of shares of our Class A common stock on September 23, 2021.
These laws are often complex, sometimes contradict other laws, and are frequently evolving. Laws may be interpreted and enforced in different ways in various locations around the world, posing a significant challenge to our global business. This ambiguity includes laws and regulations possibly affecting our business, such as those related to data protection.
Regulations As with any company operating in our field, we are subject to a growing number of local, national and international laws and regulations. These laws are often complex, sometimes contradict other laws, and are frequently evolving. Laws may be interpreted and enforced in different ways in various locations around the world, posing a significant challenge to our global business.
The invention also allows users to search for specific functionality, or the use of certain data or information, to find specific web services, and eliminate the need to manually search through each function in the API to find the “best” function for the situation. 10 Table of Contents Regulations As with any company operating in our field, we are subject to a growing number of local, national and international laws and regulations.
The invention also allows users to search for specific functionality, or the use of certain data or information, to find specific web services, and eliminate the need to manually search through each function in the API to find the “best” function for the situation.
We bring modern software to an industry that has long been dominated by difficult-to-use, high cost legacy technologies and processes, which often lack data integrity and traceability, and often require significant manual intervention.
Every day, Clearwater’s powerful platform aggregates and normalizes data on over $8.8 trillion of global invested assets for over 1,400 clients as of December 31, 2024. We bring modern software to an industry that has long been dominated by difficult-to-use, high cost legacy technologies and processes, which often lack data integrity and traceability, and often require significant manual intervention.
We are able to deliver this service to our clients by attracting, retaining and engaging an outstanding team. Our clients are increasingly asking us to do more for them. In response, we endeavor to provide our clients with an ever-more comprehensive view, whether across new geographies or asset classes or by expanding to provide solutions across the entire investment lifecycle.
We are able to deliver this service to our clients by attracting, retaining and engaging an outstanding team. Our clients are increasingly asking us to do more for them.
We track our progress in expanding client relationships through our net revenue retention rate, which has consistently exceeded 100% since 2019. We continue to expand our product offerings within our Core Clearwater solution and we continue to introduce new, adjacent solutions to our clients, including Prism, LPx, and since 2023, MLx.
We continue to expand our product offerings within our Core Clearwater solution and we continue to introduce new, adjacent solutions to our clients, including Prism, LPx, and since 2023, MLx. In addition to our organic multiproduct expansion, we acquired JUMP Technology in 2022.
From January 1, 2017 to December 31, 2023, client partners and client referrals, taken together, generated approximately one quarter of our closed deals on a total revenue basis. We continue to see significant demand for our offerings around the world, and our sales efforts are supported by a sales force of 135 team members globally as of December 31, 2023.
We continue to see significant demand for our offerings around the world, and our sales efforts are supported by a sales force of 179 team members globally as of December 31, 2024. We divide this sales force by geography, client end-market and target client size.
We provide full investment lifecycle solutions spanning: accounting and reporting, performance measurement, compliance monitoring, planning and order management and risk analytics solutions for asset managers, insurance companies and large corporations. Every day, Clearwater’s powerful platform aggregates and normalizes data on over $7.3 trillion of global invested assets for over 1,300 clients.
We provide full investment lifecycle solutions spanning: accounting and reporting, performance measurement, compliance monitoring, planning and order management and risk analytics solutions for asset managers, insurance companies, large corporations and other asset owning institutions including governments, endowments and foundations.
The acquisition expands our offerings globally for our existing clients and we believe it opens a new addressable market for our business. Our Clients Clearwater serves a broad universe of institutional clients across multiple end-markets. Today, our largest client end-markets are asset management, insurance and corporate treasury.
As a result, investment teams are able to significantly improve client satisfaction and drive faster growth of assets under management compared to the market. Our Clients Clearwater serves a broad universe of institutional clients across multiple end-markets. Today, our largest client end-markets are asset management, insurance and corporate treasury.
Accelerate International Expansion With new offices, leadership and sales teams now established in Edinburgh, London, Paris, Frankfurt, and Singapore, we are poised to reach more new clients globally moving forward.
Our competitive win rate for new clients remains approximately 80% over the prior four years in deals that reached the proposal stage, which gives us confidence that our approach works well. 8 Table of Content s Accelerate International Expansion With new offices, leadership and sales teams now established in Edinburgh, London, Paris, Frankfurt, Singapore, and Hong Kong, we are poised to reach more new clients globally moving forward.
We completed the acquisition of JUMP in November 2022, which has expanded our capabilities in investment management and operations with a complete front-to-back end solution that provides significant expansion into European markets.
We completed the acquisition of JUMP in November 2022, which has expanded our capabilities in investment management and provides expansion into European markets. In April 2024, we acquired Wilshire Technology to provide enhanced analytical capabilities for investment managers and institutional asset owners and to strengthen our position in the institutional asset owner market.
We have a team-oriented culture and encourage candor from our employees, which we believe helps us to succeed and drive operational excellence. We also seek to, and have a history of, promoting from within our organization as well as hiring top talent from outside of our company to expand our capabilities.
We also seek to, and have a history of, promoting from within our organization as well as hiring top talent from outside of our company to expand our capabilities. 11 Table of Content s We aim to hire individuals who share our passion, commitment and entrepreneurial spirit.
In order to effectively compete, asset owners and asset managers need modern automated solutions that reduce 3 Table of Contents the need for greater headcount, and ultimately lower costs. Clearwater PRISM is a solution that provides an improved client experience with on demand data and reporting for clients.
In order to effectively compete, asset owners and asset managers need modern automated solutions that reduce the need for greater headcount, and ultimately lower costs. Digital Transformation from Legacy Technologies Many of the challenges that plague asset owners and asset managers result from their reliance upon legacy software products and outdated manual processes.
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Increasingly Global Investment Portfolios Investors today increasingly hold positions in globally diversified assets as they search for yield and diversification. As a result, they require a global platform that delivers a multi-asset class, multi-basis, multi-currency solution across different accounting, reporting and regulatory regimes.
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In response, we endeavor to provide our clients with an ever-more comprehensive view, whether across new geographies or asset classes or by expanding to provide solutions front to back across the entire investment lifecycle. We track our progress in expanding client relationships through our net revenue retention rate, which has consistently exceeded 100% since 2019.
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Custom performance reports and return 5 Table of Contents calculations are available and designed to meet applicable GIPS calculation standards for investment managers.
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As announced on January 13, 2025, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) on January 10, 2025 to acquire Enfusion, Inc. (NYSE: ENFN) (“Enfusion”). The acquisition is expected to accelerate the Company’s vision of building the first cloud-native front-to-back platform for the entire investment management industry.
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We will continue to invest in and build out our global marketing function to drive future pipeline and growth.
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The merger is expected to be completed in the second quarter of 2025, subject to approval by Enfusion’s shareholders, the receipt of required regulatory approvals and other customary closing conditions set forth in the Merger Agreement.
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Our competitive win rate for new clients remains approximately 80% over the prior six years in deals that reached the proposal stage, which gives us confidence that our approach works well.
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For more information, see Note 19 “Subsequent Events” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Increasingly Global Investment Portfolios Investors today increasingly hold positions in globally diversified assets as they search for yield and diversification.
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Of these employees, 668 were located in Boise, Idaho, 41 were located in Seattle, Washington, 37 were located in New York, New York, 17 were located in San Jose, California, 15 were located in McLean, Washington D.C. metropolitan area, 148 were located remotely within the United States, 158 were located in Edinburgh, United Kingdom, 38 were located in London, United Kingdom, 11 were located remotely within the United Kingdom, 133 were located within the European Union, 7 were located in Singapore, 466 were located in Noida, India, and 17 were located remotely within India.
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Clearwater Wilshire Analytics We acquired Wilshire Technology in April 2024 to provide enhanced analytical capabilities for investment managers and institutional asset owners. The Clearwater Wilshire Analytics platform helps clients calculate performance and risk attribution, assist with security-level portfolio construction, uncover new strategies, access high-quality portfolio models, and identify investment opportunities that maximize returns and mitigate risk.
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We completed an ESG materiality assessment in 2023, with the aid of a well-known consulting firm and identified the following ESG priorities: • Environmental: renewable energy, greenhouse gas emissions, climate risk and action, responsible sourcing and procurement; • Social: diversity, equity and inclusion, community engagement and responsible products and offerings; and • Governance: data privacy, corporate governance, ethics and anti-corruption and risk management In 2023, Clearwater began tracking internal metrics to gauge its progress in these areas, and the Company developed the below mission and vision statements: • Mission: Be a positive influence on our employees’ lives, the markets we serve, and the communities we live in through our values, our offerings, and how we operate; • Environmental: Seek out opportunities to positively impact our environment as a company and provide employees opportunities to do the same; • Social: Set the example for inclusivity, employee well-being, and productive work environments that allow our employees to thrive and make positive contributions to the team, our clients, and our communities; and • Governance: Be a trusted company through the values that we demonstrate, the policies we implement and the controls we maintain.
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We have in the past and may in the future pursue patents 10 Table of Content s covering our proprietary technology. We also pursue the registration of certain of our trademarks and service marks in the United States.
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Available Information Our website is located at https://www.clearwateranalytics.com.
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Of these employees, 977 were located in the United States, 541 were located in India, 235 were located in the United Kingdom, 151 were located within the European Union, 4 were located in Singapore, and 7 were located in Hong Kong. None of our U.S. employees are subject to a collective bargaining agreement.
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Prior to the IPO, all business operations were conducted through Carbon Analytics Holdings, LLC, which changed its name to CWAN Holdings, LLC in connection with the IPO. 12 Table of Content s Available Information Our website is located at https://www.clearwateranalytics.com.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur potential exposure to foreign countries’ privacy and data security laws may impact our ability to collect and use personal information now and in the future, increase our legal compliance costs and may expose us to significant liability for non-compliance. 18 Table of Contents We are also subject to various laws and regulations both in the United States, including the California Consumer Privacy Act, and in other countries where we currently operate, including the Data Protection Act 2018 and UK General Data Protection Regulation in the United Kingdom.
Biggest changeConsequently, we may be obligated to comply with the privacy and data security laws of certain foreign countries. Our potential exposure to foreign countries’ privacy and data security laws may impact our ability to collect and use personal information now and in the future, increase our legal compliance costs and may expose us to significant liability for non-compliance.
In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make voting decisions, or take other actions, to hold these corporations and their boards of directors accountable.
In addition, investors, particularly some institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make voting decisions, or take other actions, to hold these corporations and their boards of directors accountable.
Any damage to, failure of or interference with our cloud service that is hosted by AWS or Google, or by third-party providers we currently utilize or may utilize in the future, whether as a result of our actions, actions by the third-party data centers, actions by other third parties, or acts of God, could result in interruptions in our cloud service and/or the loss of our or our clients’ data.
Any damage to, failure of or interference with our cloud service that is hosted by AWS, or by third-party providers we currently utilize or may utilize in the future, whether as a result of our actions, actions by the third-party data centers, actions by other third parties, or acts of God, could result in interruptions in our cloud service and/or the loss of our or our clients’ data.
A failure by us or our subsidiaries to comply with the covenants or to maintain the required financial ratios contained in the New Credit Agreement could result in an event of default under such indebtedness, which could adversely affect our ability to respond to changes in our business and manage our operations.
A failure by us or our subsidiaries to comply with the covenants or to maintain the required financial ratios contained in the Credit Agreement could result in an event of default under such indebtedness, which could adversely affect our ability to respond to changes in our business and manage our operations.
These risks include: • the burdens of complying with a wide variety of foreign regulations, laws and legal standards, including privacy, data security, tax and employment, some of which may be materially different or more stringent than those of the United States; • regional data privacy laws that apply to the transmission of personal data across international borders; • lack of familiarity with, and unexpected changes in, foreign regulatory requirements; 27 Table of Contents • clients’ unfamiliarity with and concerns regarding laws and regulations of the United States that may impact our business operations in their jurisdictions; • negative, local perception of industries and clients that we may pursue; • laws and business practices favoring local competitors; • localization of our solutions and services, including unanticipated costs related to translation into foreign languages and adaptation for local practices and regulatory requirements; • different pricing environments; • difficulties in managing and staffing international operations; • reduced or varied protection for intellectual property rights in some countries; • compliance with laws and regulations for foreign operations, including the U.S.
These risks include: • the burdens of complying with a wide variety of foreign regulations, laws and legal standards, including privacy, data security, tax and employment, some of which may be materially different or more stringent than those of the United States; • regional data privacy laws that apply to the transmission of personal data across international borders; • lack of familiarity with, and unexpected changes in, foreign regulatory requirements; • clients’ unfamiliarity with and concerns regarding laws and regulations of the United States that may impact our business operations in their jurisdictions; • negative, local perception of industries and clients that we may pursue; • laws and business practices favoring local competitors; • localization of our solutions and services, including unanticipated costs related to translation into foreign languages and adaptation for local practices and regulatory requirements; • different pricing environments; • difficulties in managing and staffing international operations; • reduced or varied protection for intellectual property rights in some countries; • compliance with laws and regulations for foreign operations, including the U.S.
These include provisions that: • provide for a multi-class common stock structure in which each share of our Class C common stock and each share of our Class D common stock entitles its holder to ten votes per share on all matters presented to our stockholders generally; • authorize “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt; • provide for a classified board of directors with staggered three-year terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors; • preclude cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • limit the ability of stockholders to call a special stockholder meeting; • prohibit stockholders from acting by written consent from and after the date on which Welsh Carson, Warburg Pincus and Permira and their affiliates, collectively or singly, cease to beneficially own shares of our common stock representing at least 50% of the voting power of our common stock (the “Trigger Event”); • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; • require that, from and after the Trigger Event, the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of common stock of the Company entitled to vote thereon; • providing that our board of directors is expressly authorized to amend, alter, rescind or repeal our bylaws; and • provide that, from and after the Trigger Event, requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of our common stock to amend provisions of our 33 Table of Contents certificate of incorporation relating to the management of our business, our board of directors, stockholder action by written consent, calling special meetings of stockholders, competition and corporate opportunities, Section 203 of the Delaware General Corporation Law (the “DGCL”), forum selection and the liability of our directors, or to amend, alter, rescind or repeal our bylaws.
These include provisions that: • provide for a multi-class common stock structure in which each share of our Class C common stock and each share of our Class D common stock entitles its holder to ten votes per share on all matters presented to our stockholders generally; • authorize “blank check” preferred stock that our board of directors could issue to increase the number of outstanding shares to discourage a takeover attempt; • provide for a classified board of directors with staggered three-year terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors; 32 Table of Content s • preclude cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • limit the ability of stockholders to call a special stockholder meeting; • prohibit stockholders from acting by written consent from and after the date on which Welsh Carson, Warburg Pincus and Permira and their affiliates, collectively or singly, cease to beneficially own shares of our common stock representing at least 50% of the voting power of our common stock (the “Trigger Event”); • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; • require that, from and after the Trigger Event, the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% in voting power of all the then-outstanding shares of common stock of the Company entitled to vote thereon; • providing that our board of directors is expressly authorized to amend, alter, rescind or repeal our bylaws; and • provide that, from and after the Trigger Event, requiring the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then-outstanding shares of our common stock to amend provisions of our certificate of incorporation relating to the management of our business, our board of directors, stockholder action by written consent, calling special meetings of stockholders, competition and corporate opportunities, Section 203 of the Delaware General Corporation Law (the “DGCL”), forum selection and the liability of our directors, or to amend, alter, rescind or repeal our bylaws.
Because we provide a majority of our solutions to the financial services industry, we are vulnerable to U.S. and foreign economic conditions and general trends in business and finance, which are affected by many factors beyond our control, including interest rate changes, inflation, exchange rate changes, fiscal and monetary policy and general economic conditions, including those caused by national and international macroeconomic events, including instability caused by geopolitical issues, war and uncertainty with respect to elections and terrorism.
Because we provide a majority of our solutions to the financial services industry, we are vulnerable to U.S. and foreign economic conditions and general trends in business and finance, which are affected by many factors beyond our control, including interest rate changes, tariffs, inflation, exchange rate changes, fiscal and monetary policy and general economic conditions, including those caused by national and international macroeconomic events, including instability caused by geopolitical issues, war and uncertainty with respect to terrorism.
Among other factors that could affect our stock price are: • changes in laws or regulations applicable to our industry or offerings; • speculation about our business in the press or the investment community; • price and volume fluctuations in the overall stock market; • volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable; • stock price and volume fluctuations attributable to inconsistent trading levels of our shares; • our ability to protect our intellectual property and other proprietary rights and to operate our business without infringing, misappropriating or otherwise violating the intellectual property and other proprietary rights of others; • sales of our Class A common stock by us or our significant stockholders, officers and directors, and the expiration of contractual lock-up agreements in connection therewith; • redemptions and exchanges by certain of the Continuing Equity Owners of their LLC Interests into shares of Class A common stock; • the development and sustainability of an active trading market for our Class A common stock; • success of competitive products or services; • the public’s response to press releases or other public announcements by us or others, including our filings with the SEC, announcements relating to litigation or significant changes to our key personnel; 35 Table of Contents • the effectiveness of our internal controls over financial reporting; • changes in our capital structure, such as future issuances of debt or equity securities; • our entry into new markets; • tax developments in the United States, Europe or other markets; • strategic actions by us or our competitors, such as acquisitions or restructurings; and • changes in accounting principles.
Among other factors that could affect our stock price are: • changes in laws or regulations applicable to our industry or offerings; • speculation about our business in the press or the investment community; • price and volume fluctuations in the overall stock market; • volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable; • stock price and volume fluctuations attributable to inconsistent trading levels of our shares; • our ability to protect our intellectual property and other proprietary rights and to operate our business without infringing, misappropriating or otherwise violating the intellectual property and other proprietary rights of others; 34 Table of Content s • sales of our Class A common stock by us or our significant stockholders, officers and directors, and the expiration of contractual lock-up agreements in connection therewith; • redemptions and exchanges by certain of the Continuing Equity Owners of their LLC Interests into shares of Class A common stock; • the development and sustainability of an active trading market for our Class A common stock; • success of competitive products or services; • the public’s response to press releases or other public announcements by us or others, including our filings with the SEC, announcements relating to litigation or significant changes to our key personnel; • the effectiveness of our internal controls over financial reporting; • changes in our capital structure, such as future issuances of debt or equity securities; • our entry into new markets; • tax developments in the United States, Europe or other markets; • strategic actions by us or our competitors, such as acquisitions or restructurings; and • changes in accounting principles.
We cannot guarantee that: • our intellectual property rights will provide competitive advantages to us; • our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; • our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; • any of the trademarks, copyrights, trade secrets or other intellectual property rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned; 25 Table of Contents • our trademark applications will lead to registered trademarks; • our patent applications will lead to issued patents; or • competitors will not design around our intellectual property rights or develop similar technologies or offerings; or that we will be able to successfully assert our intellectual property rights against others.
We cannot guarantee that: • our intellectual property rights will provide competitive advantages to us; • our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes will not be limited by our agreements with third parties; • our intellectual property rights will be enforced in jurisdictions where competition may be intense or where legal protection may be weak; • any of the trademarks, copyrights, trade secrets or other intellectual property rights that we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned; • our trademark applications will lead to registered trademarks; • our patent applications will lead to issued patents; or • competitors will not design around our intellectual property rights or develop similar technologies or offerings; or that we will be able to successfully assert our intellectual property rights against others.
Additionally, a default by us under the New Credit Agreement or an agreement governing any other future indebtedness may trigger cross-defaults under any other future agreements governing our indebtedness.
Additionally, a default by us under the Credit Agreement or an agreement governing any other future indebtedness may trigger cross-defaults under any other future agreements governing our indebtedness.
Disruptions, capacity limitations or interference with our use of the data centers that host our solutions and services could result in delays or outages and harm our business. We currently host substantially all of our cloud service from third-party data center facilities from several global locations operated by Amazon Web Services (“AWS”) or Google Cloud Computing Services.
Disruptions, capacity limitations or interference with our use of the data centers that host our solutions and services could result in delays or outages and harm our business. We currently host substantially all of our cloud service from third-party data center facilities from several global locations operated by Amazon Web Services (“AWS”).
Operational risk generally refers to the risk of loss resulting from our operations, including, but not limited to, improper or unauthorized execution and processing of transactions and financial and market data, deficiencies in our operating systems, delays or errors in transitioning to new operating systems, faulty aggregation or incorrect reconciliation of data by our solutions and services, miscalculations of cash balances available for investment purposes, business 16 Table of Contents disruptions and inadequacies or breaches in our internal control processes.
Operational risk generally refers to the risk of loss resulting from our operations, including, but not limited to, improper or unauthorized execution and processing of transactions and financial and market data, deficiencies in our operating systems, delays or errors in transitioning to new operating systems, faulty aggregation or incorrect reconciliation of data by our solutions and services, miscalculations of cash balances available for investment purposes, business disruptions and inadequacies or breaches in our internal control processes.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of equity-based compensation; • costs related to intercompany restructurings; • changes in tax laws, regulations or interpretations thereof; • lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates; or • changes in the geographic location and amount of expenses we have for certain of our activities that qualify for tax credits and incentives.
Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including: • changes in the valuation of our deferred tax assets and liabilities; • expected timing and amount of the release of any tax valuation allowances; • tax effects of equity-based compensation; • costs related to intercompany restructurings; 23 Table of Content s • changes in tax laws, regulations or interpretations thereof; • lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates; or • changes in the geographic location and amount of expenses we have for certain of our activities that qualify for tax credits and incentives.
There is intense competition in India for skilled technical professionals, and we expect such competition to increase. As a result, we may be unable to cost-effectively retain our current employee base in India or hire additional new talent. In addition, India has experienced significant inflation, low growth in gross domestic product and shortages of 28 Table of Contents foreign exchange.
There is intense competition in India for skilled technical professionals, and we expect such competition to increase. As a result, we may be unable to cost-effectively retain our current employee base in India or hire additional new talent. In addition, India has experienced significant inflation, low growth in gross domestic product and shortages of foreign exchange.
In addition to our U.S. operations, we currently maintain international operations in the United Kingdom and India, and have smaller sales-focused research and development-focused presences in France, Germany, Luxembourg and Singapore, and have clients located around the globe.
In addition to our U.S. operations, we currently maintain international operations in the United Kingdom and India and have smaller sales-focused research and development-focused presences in France, Germany, Luxembourg, Singapore, and Hong Kong, and have clients located around the globe.
Such laws and regulations may cover sales practices, taxes, user privacy, data protection, the use of generative AI, pricing, content, copyrights, distribution, electronic contracts, consumer protection, broadband residential Internet access and the characteristics and quality of services. Moreover, it is not always clear how certain existing laws governing these matters apply to the Internet.
Such laws and regulations may cover sales 26 Table of Content s practices, taxes, user privacy, data protection, the use of generative AI, pricing, content, copyrights, distribution, electronic contracts, consumer protection, broadband residential Internet access and the characteristics and quality of services. Moreover, it is not always clear how certain existing laws governing these matters apply to the Internet.
In addition, we are required to maintain compliance with various financial ratios in the New Credit Agreement.
In addition, we are required to maintain compliance with various financial ratios in the Credit Agreement.
If we are not able to effectively increase and retain our talent, our ability to achieve our strategic objectives will be adversely impacted, and our business, financial condition and results of operations will be harmed. 15 Table of Contents Sustaining growth will also require us to commit additional sales, management, operational and financial resources and to maintain appropriate operational and financial systems.
If we are not able to effectively increase and retain our talent, our ability to achieve our strategic objectives will be adversely impacted, and our business, financial condition and results of operations will be harmed. 15 Table of Content s Sustaining growth will also require us to commit additional sales, management, operational and financial resources and to maintain appropriate operational and financial systems.
Any future determination relating to dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including restrictions in our and our subsidiaries’ current and future debt instruments, our future earnings, capital requirements, financial condition and prospects, and applicable Delaware law, which provides that dividends are only payable out of surplus or current net profits.
Any future determination relating to dividend policy will be made at the discretion of our board of directors and will depend on a number of factors, including restrictions in our and our subsidiaries’ current and future debt instruments, our future earnings, capital requirements, financial condition and prospects, and applicable Delaware law, which provides that 33 Table of Content s dividends are only payable out of surplus or current net profits.
Even when our 24 Table of Contents solutions and services do not cause these problems, the existence of these errors might cause us to incur significant costs and divert the attention of our management and technical personnel, any of which could materially adversely affect our business, financial condition or results of operations.
Even when our solutions and services do not cause these problems, the existence of these errors might cause us to incur significant costs and divert the attention of our management and technical personnel, any of which could materially adversely affect our business, financial condition or results of operations.
Thus, CWAN Holdings will be required to make tax distributions that, in the aggregate, will likely exceed the amount of taxes that it would have paid if it were taxed on its net income at the tax rate applicable to a similarly situated corporate taxpayer.
Thus, CWAN Holdings will be required to make tax distributions that, in the aggregate, may be substantial and will likely exceed the amount of taxes that it would have paid if it were taxed on its net income at the tax rate applicable to a similarly situated corporate taxpayer.
Upon the occurrence of an event of default or cross-default under any of the present or future agreements governing our indebtedness, the lenders could elect to declare all amounts outstanding to be 23 Table of Contents due and payable and exercise other remedies as set forth in the agreements.
Upon the occurrence of an event of default or cross-default under any of the present or future agreements governing our indebtedness, the lenders could elect to declare all amounts outstanding to be due and payable and exercise other remedies as set forth in the agreements.
We use machine learning (ML) and artificial intelligence (AI) technologies in our solutions and business, and we are making investments in expanding the use of AI solutions, including ongoing deployment and improvement of features using AI technologies.
We use machine learning (ML) and AI technologies in our solutions and business, and we are making investments in expanding the use of AI solutions, including ongoing deployment and improvement of features using AI technologies.
Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a factor in making an investment decision.
Certain investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a factor in making an investment decision.
The New Credit Agreement contains, and the agreements evidencing or governing any other future indebtedness may contain, financial restrictions on us and our restricted subsidiaries, including restrictions on our or our restricted subsidiaries’ ability to, among other things: • place liens on our or our restricted subsidiaries’ assets; • make investments other than permitted investments; • incur additional indebtedness; • prepay or redeem certain indebtedness; • merge, consolidate or dissolve; • sell assets; • engage in transactions with affiliates; • change the nature of our business; • change our or our subsidiaries’ fiscal year or organizational documents; and • make restricted payments.
The Credit Agreement contains, and the agreements evidencing or governing any other future indebtedness may contain, financial restrictions on us and our restricted subsidiaries, including restrictions on our or our restricted subsidiaries’ ability to, among other things: • place liens on our or our restricted subsidiaries’ assets; 24 Table of Content s • make investments other than permitted investments; • incur additional indebtedness; • prepay or redeem certain indebtedness; • merge, consolidate or dissolve; • sell assets; • engage in transactions with affiliates; • change the nature of our business; • change our or our subsidiaries’ fiscal year or organizational documents; and • make restricted payments.
Issuing additional shares of our Class B common stock and Class C common stock, as applicable, when issued with corresponding LLC Interests, may also dilute the economic and voting rights of our existing stockholders or reduce 34 Table of Contents the market price of our Class A common stock or both.
Issuing additional shares of our Class B common stock and Class C common stock, as applicable, when issued with corresponding LLC Interests, may also dilute the economic and voting rights of our existing stockholders or reduce the market price of our Class A common stock or both.
Our revenues for the year ended December 31, 2023 grew 21% compared to the same period in 2022. Continued future growth could place additional demands on our resources and increase our expenses. Our success depends in large part on our ability to attract high-quality management and employees in sales, development, software engineering, operations and support functions.
Our revenues for the year ended December 31, 2024 grew 23% compared to the same period in 2023. Continued future growth could place additional demands on our resources and increase our expenses. Our success depends in large part on our ability to attract high-quality management and employees in sales, development, software engineering, operations and support functions.
However, CWAN Holdings’ ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would violate either any contract or agreement to which CWAN Holdings or its subsidiaries is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering CWAN Holdings or its subsidiaries insolvent.
However, CWAN Holdings’ ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would violate either any contract or agreement to which CWAN Holdings or its subsidiaries is then a party, including debt agreements, or any applicable law, or that would have the effect 30 Table of Content s of rendering CWAN Holdings or its subsidiaries insolvent.
We believe that our significant presence in India provides certain important advantages for our business, such as direct access to a large pool of skilled professionals and assistance in growing our business internationally. However, it also creates certain risks that we must effectively manage. As of December 31, 2023, 483 of our total employees were based in India.
We believe that our significant presence in India provides certain important advantages for our business, such as direct access to a large pool of skilled professionals and assistance in growing our business internationally. However, it also creates certain risks that we must effectively manage. As of December 31, 2024, 541 of our total employees were based in India.
For example, customers of our asset 14 Table of Contents manager clients are generally free to change asset managers, and can even withdraw the funds they have invested with asset managers to avoid all securities markets-related risks.
For example, customers of our asset manager 14 Table of Content s clients are generally free to change asset managers and can even withdraw the funds they have invested with asset managers to avoid all securities markets-related risks.
Our business relies heavily on our computer equipment (including our servers), cloud-based services, electronic delivery systems, networks and telecommunications systems and infrastructure, the Internet and the IT systems of third party providers, and the foregoing may be vulnerable to disruptions, failures or slowdowns caused by fire, earthquake, extreme weather events, power loss, telecommunications failure, terrorist attacks, wars, Internet failures, computer viruses, system errors and miscalculations and other events beyond our control.
Our business relies heavily on cloud-based services and to some extent, our own computer equipment, electronic delivery systems, networks and telecommunications systems and infrastructure, the Internet and the IT systems of third party providers, and the foregoing may be vulnerable to disruptions, failures or slowdowns caused by fire, earthquake, extreme weather events, power loss, telecommunications failure, terrorist attacks, wars, Internet failures, computer viruses, system errors and miscalculations and other events beyond our control.
Privacy regulators in some of those countries have publicly stated that foreign entities (including entities based in the United States) may render themselves subject to those countries’ privacy laws and the jurisdiction of such regulators by collecting or storing the personal data of those countries’ residents, even if such entities have no physical or legal presence there.
Privacy regulators in some of those countries have publicly stated that foreign entities (including entities based in the United States) may render themselves subject to those countries’ privacy laws and the jurisdiction of such regulators by collecting or storing the personal data of those 18 Table of Content s countries’ residents, even if such entities have no physical or legal presence there.
The investments we make and additional resources we use to expand our operations, target new international clients, expand our presence globally within our existing clients and manage operational and sales growth in other countries may not produce desired levels of revenue or profitability, which could adversely affect our business and results of operations.
The investments we make and additional resources we 29 Table of Content s use to expand our operations, target new international clients, expand our presence globally within our existing clients and manage operational and sales growth in other countries may not produce desired levels of revenue or profitability, which could adversely affect our business and results of operations.
These agreements may not effectively prevent unauthorized disclosure of confidential information 26 Table of Contents or unauthorized parties from copying aspects of our technologies, investment accounting offerings or obtaining and using information that we regard as proprietary.
These agreements may not effectively prevent unauthorized disclosure of confidential information or unauthorized parties from copying aspects of our technologies, investment accounting offerings or obtaining and using information that we regard as proprietary.
In any of the forgoing circumstances, our business, financial condition, reputation or results of operations could be materially adversely affected. Our business relies heavily on computer equipment, cloud-based services, electronic delivery systems, networks and telecommunications systems and infrastructure, the Internet and the IT systems of third parties.
In any of the forgoing circumstances, our business, financial condition, reputation or results of operations could be materially adversely affected. Our business relies heavily on cloud-based services and to some extent, our own computer equipment, electronic delivery systems, networks and telecommunications systems and infrastructure, the Internet and the IT systems of third parties.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our business, financial condition and results of operations.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or 19 Table of Content s the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could adversely affect our business, financial condition and results of operations.
As a result, because of these inherent limitations in our control system, misstatements or omissions due to error or fraud may occur and may not be detected, which could result in failures to file required reports in a timely manner and filing reports containing incorrect information.
As a result, because of these 35 Table of Content s inherent limitations in our control system, misstatements or omissions due to error or fraud may occur and may not be detected, which could result in failures to file required reports in a timely manner and filing reports containing incorrect information.
We are dependent on fees based on the value of the assets on our platform for the vast majority of our revenues, and to the extent market volatility, a downturn in economic conditions or other factors cause negative trends or fluctuations in the value of the assets on our platform, our fee-based revenue and earnings may decline.
We are dependent on fees based on the value of the assets on our platform for the main portion of our revenues, and to the extent market volatility, a downturn in economic conditions or other factors cause negative trends or fluctuations in the value of the assets on our platform, our fee-based revenue and earnings may decline.
A key element of our strategy is to invest significantly in our growth and research and development efforts to develop new solutions and services and enhance our existing solutions and services to address additional applications and markets. For the year ended December 31, 2023, our research and development expense was approximately 34% of our revenue.
A key element of our strategy is to invest significantly in our growth and research and development efforts to develop new solutions and services and enhance our existing solutions and services to address additional applications and markets. For the year ended December 31, 2024, our research and development expense was approximately 33% of our revenue.
In addition, third parties may in the future assert intellectual property infringement claims against our clients, which, in certain circumstances, we have agreed to indemnify. Any intellectual property related infringement or misappropriation claims, whether or not meritorious, could result in costly litigation and could divert management resources and attention.
In addition, third parties may in the future assert intellectual property infringement claims against our clients, which, in certain circumstances, we have agreed to indemnify. Any intellectual property related infringement or misappropriation claims, whether or not meritorious, could 27 Table of Content s result in costly litigation and could divert management resources and attention.
A significant portion of our assets consists of goodwill and other intangible assets, primarily recorded as the result of the JUMP acquisition. We may subsequently experience unforeseen events that could adversely affect the value of our goodwill or intangible assets.
A significant portion of our assets consists of goodwill and other intangible assets, primarily recorded as the result of the JUMP and Wilshire Technology acquisitions. We may subsequently experience unforeseen events that could adversely affect the value of our goodwill or intangible assets.
We intend to cause CWAN Holdings to make cash distributions to the owners of LLC Interests in amounts sufficient to (1) fund all or part of their tax obligations in respect of taxable income allocated to them and (2) cover our operating expenses, including payments under the Tax Receivable Agreement.
We intend to cause CWAN Holdings to make cash distributions to the owners of LLC Interests in amounts sufficient to (1) fund all or part of their tax obligations in respect of taxable income allocated to them and (2) cover our operating expenses.
If we are unable to re-institute the web-based data feed, or otherwise obtain the data from our clients through 17 Table of Contents another reliable means, then we may be unable to continue to serve the affected clients.
If we are unable to re-institute the web-based data feed, or otherwise obtain the data from our clients through another reliable means, then we may be unable to continue to serve the affected clients.
Under the terms of the LLC Agreement, CWAN Holdings is required to make tax distributions to the holders of LLC Interests, including us, on a pro rata basis, unless certain exceptions apply. In addition to tax payments, we will incur expenses related to our operations, including obligations to make payments under the Tax Receivable Agreement and the TRA Bonus Agreements.
Under the terms of the LLC Agreement, CWAN Holdings is required to make tax distributions to the holders of LLC Interests, including us, on a pro rata basis, unless certain exceptions apply. In addition to tax payments, we will incur expenses related to our operations.
Our failure to successfully integrate acquisitions could strain our resources. In addition, there are significant risks associated with growth through acquisitions, which may materially adversely affect our business, financial condition or results of operations. We expect to grow our business by, among other things, making acquisitions. Acquisitions involve a number of risks.
In addition, there are significant risks associated with growth through acquisitions, which may materially adversely affect our business, financial condition or results of operations. We expect to grow our business by, among other things, making acquisitions. Acquisitions involve a number of risks.
Furthermore, while we aim to develop and use AI responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be unsuccessful in identifying or resolving issues before they arise.
Furthermore, while we aim to develop and use AI responsibly and attempt to mitigate ethical and legal issues presented by its use, we may ultimately be 28 Table of Content s unsuccessful in identifying or resolving issues before they arise.
Our ability to keep up with technology and business and legal and regulatory changes is subject to a number of risks, including that: • we may find it difficult or costly to update our solutions and services and to develop new solutions and services quickly enough to meet our clients’ needs; • we may find it difficult or costly to make some features of our software work effectively and securely over the Internet or with new or changed external applications; • we may find it difficult or costly to update our solutions and services to keep pace with business, evolving industry standards, regulatory and other developments in the industries where our clients operate; • we may find it difficult or costly to advertise and market our solutions and services; • we may find it difficult or costly to protect our proprietary technology and intellectual property rights; • our clients may delay purchases in anticipation of new solutions, services or enhancements; and • we may be exposed to liability for security breaches that allow unauthorized persons to gain access to confidential information stored on our computers or transmitted over our network. 20 Table of Contents Our failure to enhance our platform and to develop and introduce new solutions and services to promptly address the needs of the insurance industry and financial markets could adversely affect our business, financial condition or results of operations.
Our ability to keep up with technology and business and legal and regulatory changes is subject to a number of risks, including that: • we may find it difficult or costly to update our solutions and services and to develop new solutions and services quickly enough to meet our clients’ needs; • we may find it difficult or costly to make some features of our software work effectively and securely over the Internet or with new or changed external applications; 20 Table of Content s • we may find it difficult or costly to update our solutions and services to keep pace with business, evolving industry standards, regulatory and other developments in the industries where our clients operate; • we may find it difficult or costly to advertise and market our solutions and services; • we may find it difficult or costly to protect our proprietary technology and intellectual property rights; • our clients may delay purchases in anticipation of new solutions, services or enhancements; and • we may be exposed to liability for security breaches that allow unauthorized persons to gain access to confidential information stored on our computers or transmitted over our network.
From time to time, we or our stockholders may sell shares of our Class A common stock. During the year ended December 31, 2023, our Principal Equity Owners sold 62 million shares of our Class A common stock pursuant to four underwritten secondary offerings.
From time to time, we or our stockholders may sell shares of our Class A common stock. During the year ended December 31, 2024, our Principal Equity Owners sold 53 million shares of our Class A common stock pursuant to three underwritten secondary offerings.
As a holding company, we have no independent means of generating revenue or cash flow, and our ability to pay our taxes and operating expenses, including our obligations under the Tax Receivable Agreement and the TRA Bonus Agreements, or declare and pay dividends, if any, in the future, will depend upon the results of operations and cash flows of CWAN Holdings and its consolidated subsidiaries and distributions we receive from CWAN Holdings.
As a holding company, we have no independent means of generating revenue or cash flow, and our ability to pay our taxes and operating expenses, or declare and pay dividends, if any, in the future, will depend upon the results of operations and cash flows of CWAN Holdings and its consolidated subsidiaries and distributions we receive from CWAN Holdings.
In particular, we are dependent on the fee-based revenue from our insurance industry clients and asset manager clients, from whom we derived 52% and 30%, respectively, of our total revenue for the year ended December 31, 2023.
In particular, we are dependent on the fee-based revenue from our insurance industry clients and asset manager clients, from whom we derived 54% and 32%, respectively, of our total revenue for the year ended December 31, 2024.
The holders of an aggregate of 115,640,133 shares of our Class A common stock (on an as-converted basis) or their transferees are entitled to rights with respect to the registration of their shares under the Securities Act.
The holders of an aggregate of 34,785,778 shares of our Class A common stock (on an as-converted basis) or their transferees are entitled to rights with respect to the registration of their shares under the Securities Act.
Even if such a breach is unrelated to our own security programs or practices, or if the client failed to adequately protect their IT system, that breach could result in our incurring significant economic and operational costs in investigating, remediating, eliminating and putting in place additional tools and devices to further protect our clients from their own vulnerabilities, and could also result in reputational harm to us. 19 Table of Contents The reliability and security of our IT systems are critical to our operations and the implementation of our growth initiatives.
Even if such a breach is unrelated to our own security programs or practices, or if the client failed to adequately protect their IT system, that breach could result in our incurring significant economic and operational costs in investigating, remediating, eliminating and putting in place additional tools and devices to further protect our clients from their own vulnerabilities, and could also result in reputational harm to us.
We may not be able to raise additional capital to execute our current or future business strategies on favorable terms, if at all, or without dilution to our stockholders. We expect that we may need to raise additional capital to execute our current or future business strategies.
We may not be able to raise additional capital to execute our current or future business strategies on favorable terms, if at all, or without dilution to our stockholders. We expect that we may need to raise additional capital to execute our current or future business strategies, including to finance any acquisitions of other businesses.
We intend to cause CWAN Holdings to make tax distributions quarterly to the holders of LLC Interests (including us), in each case on a pro rata basis based on CWAN Holdings’ net taxable income, which tax distributions will be based on an assumed tax rate.
Instead, taxable income is allocated to its members, including us and the Continuing Equity Owners. We intend to cause CWAN Holdings to make tax distributions quarterly to the holders of LLC Interests (including us), in each case on a pro rata basis based on CWAN Holdings’ net taxable income, which tax distributions will be based on an assumed tax rate.
There can be no assurance that the United States Federal Reserve will not raise rates in the future, and any such increase in interest costs could have a material adverse impact on our financial condition and cash flows.
As a result, we may incur higher interest costs if interest rates continue to increase. There can be no assurance that the United States Federal Reserve will not raise rates in the future, and any such increase in interest costs could have a material adverse impact on our financial condition and cash flows.
As we control CWAN Holdings, we have certain obligations to the Continuing Equity Owners as holders of LLC Interests that may conflict with fiduciary duties our officers and directors owe to our shareholders.
As we control CWAN Holdings, we have certain obligations to the Continuing Equity Owners as holders of LLC Interests that may conflict with fiduciary duties our officers and directors owe to our shareholders. These conflicts may result in decisions that are not in the best interests of our shareholders.
Outcomes from these audits could have an adverse effect on our results of operations and financial condition. 22 Table of Contents Our indebtedness could adversely affect our financial flexibility and our competitive position. As of December 31, 2023, there was $48.8 million of term loans outstanding under the New Credit Agreement.
Outcomes from these audits could have an adverse effect on our results of operations and financial condition. Our indebtedness could adversely affect our financial flexibility and our competitive position. As of December 31, 2024, there was $46.1 million of term loans outstanding under the Credit Agreement.
Organizational Structure Risks We are a holding company and our principal asset is our interest in CWAN Holdings and, accordingly, we depend on distributions from CWAN Holdings to pay our taxes and expenses, including payments under the Tax Receivable Agreement and the TRA Bonus Agreements. CWAN Holdings’ ability to make such distributions may be subject to various limitations and restrictions.
Organizational Structure Risks We are a holding company and our principal asset is our interest in CWAN Holdings and, accordingly, we depend on distributions from CWAN Holdings to pay our taxes and expenses. CWAN Holdings’ ability to make such distributions may be subject to various limitations and restrictions.
If the sources from which we obtain information that is important to our solutions and services limit or restrict our ability to access or use such information, we may be unable to obtain similar data from other sources on commercially reasonable terms or at all, or we may be required to attempt to obtain such information by other means, such as end-user permissioned data scraping, that could be more costly and time-consuming, and less effective or efficient.
If the sources from which we obtain information that is important to our solutions and services limit or restrict our ability to access or use such information, we may be unable to obtain similar data from other sources on commercially reasonable terms or at all, or we may be required to attempt to obtain such information by other means, such as end-user permissioned data scraping, that could be more costly and time-consuming, and less effective or efficient. 17 Table of Content s In order to serve our clients, we must have a reliable method from which to obtain client data.
In order to serve our clients, we must have a reliable method from which to obtain client data. In the past, certain of our clients have requested we obtain this data through a web-based retrieval process, which we refer to as a web-based data feed.
In the past, certain of our clients have requested we obtain this data through a web-based retrieval process, which we refer to as a web-based data feed.
Any cybersecurity event or other material disruption in our IT systems, or delays or difficulties in implementing or integrating new IT systems or enhancing current IT systems, could have an adverse effect on our business and results of operations.
The reliability and security of our IT systems are critical to our operations and the implementation of our growth initiatives. Any cybersecurity event or other material disruption in our IT systems, or delays or difficulties in implementing or integrating new IT systems or enhancing current IT systems, could have an adverse effect on our business and results of operations.
Our clients may, for a number of reasons, seek to negotiate a lower basis points fee percentage.
Our clients may, for a number of reasons and despite the Base+ framework, seek to negotiate a lower basis points fee percentage.
As long as the Principal Equity Owners collectively own or control at least a majority of our outstanding voting power, they will have the ability to exercise substantial control and significant influence over our management and affairs and all corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including the election and removal of directors and the size of our board of directors, any amendment of our certificate of incorporation or bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of our assets.
As such, the Principal Equity Owners have the ability to exercise significant influence over our management and affairs, as well as over corporate actions requiring stockholder approval, irrespective of how our other stockholders may vote, including the election and removal of directors and the size of our board of directors, any amendment of our certificate of incorporation or bylaws, or the approval of any merger or other significant corporate transaction, including a sale of substantially all of our assets.
In addition, the Principal Equity Owners own 47.5% of the economic interest in the Company (on a fully converted basis) and 13.4% of the direct interest in CWAN Holdings as of December 31, 2023.
In addition, the Principal Equity Owners own 14.1% of the economic interest in the Company (on a fully converted basis) and 5.1% of the direct interest in CWAN Holdings, LLC as of December 31, 2024.
Our revenue may fluctuate from period-to-period in the future due to a variety of factors, many of which are beyond our control.
Financial Risks Our revenue can fluctuate from period to period, which could cause our stock price to fluctuate. Our revenue may fluctuate from period-to-period in the future due to a variety of factors, many of which are beyond our control.
No such person will be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person, acting in good faith, pursues or acquires any such business opportunity, directs any such business opportunity to another person or fails to present any such business opportunity, or information regarding any such business opportunity, to us unless, in the case of any such person who is our director or officer, any such business opportunity is expressly offered to such director or officer solely in his or her capacity as our director or officer. 32 Table of Contents We are classified as a “controlled company,” and as a result, we qualify for, and rely on, exemptions from certain corporate governance requirements.
No such person will be liable to us for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person, acting in good faith, pursues or acquires any such business opportunity, directs any such business opportunity to another person or fails to present any such business opportunity, or information regarding any such business opportunity, to us unless, in the case of any such person who is our director or officer, any such business opportunity is expressly offered to such director or officer solely in his or her capacity as our director or officer.
Bribery Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our solutions and services in certain foreign markets, and the risks and costs of compliance; • fluctuations in currency exchange rates; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, difficulty in interpreting international tax laws and restrictions on the repatriation of earnings; • increased financial accounting and reporting burdens and complexities; and • political, social and economic instability abroad, terrorist attacks and security concerns in general, including instability caused by the Russian invasion of Ukraine, the Israel-Hamas war and related sanctions.
Bribery Act, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory or contractual limitations on our ability to sell our solutions and services in certain foreign markets, and the risks and costs of compliance; • fluctuations in currency exchange rates; • potentially adverse tax consequences, including the complexities of foreign value added tax systems, difficulty in interpreting international tax laws and restrictions on the repatriation of earnings; • increased financial accounting and reporting burdens and complexities; and • ongoing uncertainties as a result of instability or changes in geopolitical conditions, including military or political conflicts, such as those caused by the ongoing conflicts between Russian and Ukraine or in the Middle East.
However, if we were deemed to be an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.
If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, financial condition and results of operations.
In the ordinary course of their business activities, the Principal Equity Owners and their respective affiliates may engage in activities where their interests conflict with our interests or those of our stockholders.
Certain of our stockholders will have the right to engage or invest in the same or similar businesses as us. In the ordinary course of their business activities, the Principal Equity Owners and their respective affiliates may engage in activities where their interests conflict with our interests or those of our stockholders.
If government regulation of the Internet or other areas of our business changes, or if attitudes toward use of the Internet change, we may need to change the manner in which we conduct our business or incur greater operating expenses.
Changes to laws or regulations could increase our potential liability in connection with the solutions and services that we provide. If government regulation of the Internet or other areas of our business changes, or if attitudes toward use of the Internet change, we may need to change the manner in which we conduct our business or incur greater operating expenses.
Our clients may seek to negotiate a lower fee percentage or may cease using our services, which could limit the growth of, or decrease, our revenues.
Our clients may seek to negotiate a lower fee percentage or may cease using our services, which could limit the growth of, or decrease, our revenues. In 2022, we transitioned our contracting structure to a framework we describe as Base+ for all new clients.
If we expend a significant amount of resources on research and development and our efforts do not lead to the successful introduction or improvement of solutions and services that are competitive in our current or future markets, it would harm our business and results of operations. 21 Table of Contents Financial Risks Our revenue can fluctuate from period to period, which could cause our stock price to fluctuate.
If we expend a significant amount of resources on research and development and our efforts do not lead to the successful introduction or improvement of solutions and services that are competitive in our current or future markets, it would harm our business and results of operations. 21 Table of Content s Risks Related to the Proposed Acquisition of Enfusion If the acquisition of Enfusion is completed, we may not achieve the anticipated benefits of the proposed acquisition, including anticipated synergies.
Any transfers or sales of such pledged shares may cause the price of our Class A common stock to decline. General Risks We cannot assure you that the price of our Class A common stock will not decline or not be subject to significant volatility. The market price of our Class A common stock could be subject to significant fluctuations.
These sales also could cause our stock price to fall and make it more difficult for stockholders to sell shares of our Class A common stock. General Risks We cannot assure you that the price of our Class A common stock will not decline or not be subject to significant volatility.
CWAN Holdings is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to U.S. federal income tax. Instead, taxable income is allocated to its members, including us and the Continuing Equity Owners.
In certain circumstances, CWAN Holdings will be required to make distributions to us and the Continuing Equity Owners and the distributions may be substantial. CWAN Holdings is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to U.S. federal income tax.
We are currently controlled by the Principal Equity Owners who beneficially own 90.1% of the combined voting power of all of our outstanding common stock as of December 31, 2023.
The Principal Equity Owners beneficially own 62.0% of the combined voting power of all of our outstanding common stock as of December 31, 2024.
For example, they may have different tax positions from us which could influence their decisions regarding whether and when to dispose of assets, and whether and when to incur new or refinance existing indebtedness, especially in light of the existence of the Tax Receivable Agreement.
For example, they may have different tax positions from us which could influence their decisions regarding whether and when to dispose of assets, and whether and when to incur new or refinance existing indebtedness. In addition, the structuring of future transactions may take into consideration these existing unitholders’ tax considerations even where no similar benefit would accrue to us.
While our board may choose to distribute such cash balances as dividends on our Class A common stock, it will not be required to do so, and may in its sole discretion choose to use such excess cash for any purpose depending upon the facts and circumstances at the time of determination. 30 Table of Contents The amounts that we may be required to pay to the Continuing Equity Owners and the Blocker Shareholders under the Tax Receivable Agreement and to the relevant executive officers under the TRA Bonus Agreements may be accelerated in certain circumstances and may also significantly exceed the actual tax benefits that we ultimately realize.
While our board may choose to distribute such cash balances as dividends on our Class A common stock, it will not be required to do so, and may in its sole discretion choose to use such excess cash for any purpose depending upon the facts and circumstances at the time of determination.
However, we do not know what forms of financing, if any, will be available to us. Some financing activities in which we may engage could cause your equity interest in the Company to be diluted, which could cause the value of our Class A common stock to decrease.
Some financing activities in which we may engage, as well as equity interests we may issue as consideration for or in connection with the financing of any acquisitions, could cause your equity interest in the Company to be diluted, which could cause the value of our Class A common stock to decrease.
In addition, negative public perception and reputational damage caused by such claims would adversely affect our client relationships and our ability to enter into new contracts. Any of these problems could have a material adverse effect on our business, financial condition, reputation or results of operations.
In addition, negative public perception and reputational damage caused by such claims would adversely affect our client relationships and our ability to enter into new contracts.
Prior to 2022, interest rates in the U.S. had generally been at historic lows for several years. In 2022 and 2023, the United States Federal Reserve raised interest rates several times in an attempt to combat historically high inflation. As a result, we may incur higher interest costs if interest rates continue to increase.
Our debt consists of variable-rate debt and fluctuations in interest rates could have a material effect on our business. Prior to 2022, interest rates in the U.S. had generally been at historic lows for several years. In 2022 through 2024, the United States Federal Reserve raised interest rates several times in an attempt to combat historically high inflation.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe use these cybersecurity frameworks and information security standards as a guide to help us identify, assess and manage cybersecurity risks relevant to our business.
Biggest changeWe design and assess our program based on various cybersecurity frameworks, such as the NIST and the CIS, and align our security program closely to the NIST Cyber Security Framework. We use these cybersecurity frameworks and information security standards as a guide to help us identify, assess and manage cybersecurity risks relevant to our business.
Our management team oversees efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other 39 Table of Contents information obtained from governmental, public, or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the IT environment.
Our management team oversees efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel, threat intelligence and other 37 Table of Content s information obtained from governmental, public, or private sources, including external consultants engaged by us, and alerts and reports produced by security tools deployed in the IT environment.
Removed
We design and assess our program based on various cybersecurity frameworks, such as the National Institute of Standards and Technology (“NIST”) and the Center for Internet Security (“CIS”), and align our security program closely to the NIST Cyber Security Framework.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeWe also lease office space in New York, New York; McLean, Washington D.C. metropolitan area; Seattle, Washington; San Jose, California; London, United Kingdom; Edinburgh, United Kingdom; Paris, France; Luxembourg; Frankfurt, Germany; Noida, India and Singapore. We lease all our facilities and do not own any real property.
Biggest changeWe also lease office space in New York, New York; McLean, Virginia; Seattle, Washington; San Jose, California; London, United Kingdom; Edinburgh, United Kingdom; Paris, France; Luxembourg; Frankfurt, Germany; Noida, India, Singapore and Hong Kong. We lease all our facilities and do not own any real property.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeIn the opinion of our management, we are not involved in any litigation or proceedings with third parties that we believe could have a material adverse effect on our results of operations, financial condition, cash flows or business. Item 4. Mine Safety Disclosures. Not applicable. 40 Table of Contents PART II
Biggest changeIn the opinion of our management, we are not involved in any litigation or proceedings with third parties that we believe could have a material adverse effect on our results of operations, financial condition, cash flows or business. Item 4. Mine Safety Disclosures. Not applicable. 38 Table of Content s PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−2 removed6 unchanged
Biggest changeThe graph uses the closing market price on September 24, 2021 of $25.37 per share as the initial value of our Class A common stock. All values assume reinvestment of dividends. 41 Table of Contents The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our Class A common stock.
Biggest changeThe graph uses the closing market price on September 24, 2021 of $25.37 per share as the initial value of our Class A common stock.
An investment of $100 is assumed to have been made in our Class A common stock and in each index on September 24, 2021, the date our Class A common stock began trading on the NYSE, and its relative performance is tracked through December 31, 2023.
An investment of $100 is assumed to have been made in our Class A common stock and in each index on September 24, 2021, the date our Class A common stock began trading on the NYSE, and its relative performance is tracked through December 31, 2024.
The graph set forth below compares the cumulative total return to stockholders on our Class A common stock relative to the cumulative total returns of the Standard & Poor’s 500 Index (the S&P 500) and Standard & Poor’s Information Technology Sector Index.
The graph set forth below compares the cumulative total return to stockholders on our Class A common stock relative to the cumulative total returns of the Standard & Poor’s 500 Index (the S&P 500), Standard & Poor’s Information Technology Sector Index, NASDAQ Composite Index and NASDAQ 100 Technology Sector Index.
Holders of Record As of February 23, 2024, there were 7 holders of record of our Class A common stock. The actual number of stockholders of Class A common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Holders of Record As of February 21, 2025, there were 17 holders of record of our Class A common stock. The actual number of stockholders of Class A common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. As of February 23, 2024, we also had 1 holder of record of our Class B common stock, 5 holders of record of our Class C stock and 10 holders of record of our Class D common stock.
This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. As of February 21, 2025, we also had 32 holders of record of our Class C stock and 3 holders of record of our Class D common stock.
Removed
Securities Authorized for Issuance Under Equity Compensation Plans Equity compensation plans’ information is incorporated by reference from Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this document, and should be considered an integral part of Item 5.
Added
All values assume reinvestment of dividends. 39 Table of Content s The comparisons are based on historical data and are not indicative of, nor intended to forecast, the future performance of our Class A common stock. Unregistered Sales of Equity Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None.
Removed
Unregistered Sales of Equity Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved] 42 Table of Contents
Added
Item 6. [Reserved] 40 Table of Content s

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, 2023 2022 2021 (in thousands) Up-C structure expenses $ — $ 158 $ 1,660 Amortization of prepaid management fees and reimbursable expenses 2,592 2,486 2,367 Provision for income taxes 217 1,360 487 Other (income) expense, net (1,874) (50) 83 Total other expenses $ 934 $ 3,954 $ 4,597 49 Table of Contents Results of Operations The following tables set forth our results of operations for the years ended December 31, 2023, 2022 and 2021: Year Ended December 31, 2023 2022 2021 (in thousands) Revenue $ 368,168 $ 303,426 $ 252,022 Cost of revenue (1) 107,127 87,784 67,864 Gross profit 261,041 215,642 184,158 Operating expenses: Research and development (1) 123,925 94,120 72,690 Sales and marketing (1) 60,365 52,638 39,065 General and administrative (1) 93,496 63,767 43,942 Total operating expenses 277,786 210,525 155,697 Income (loss) from operations (16,745) 5,117 28,461 Interest (income) expense, net (6,401) (1,137) 25,682 Tax receivable agreement expense 14,396 11,639 — Loss on debt extinguishment — — 10,303 Other (income) expense, net (1,874) (50) 83 Loss before income taxes (22,866) (5,335) (7,607) Provision for income taxes 217 1,360 487 Net loss (23,083) (6,695) (8,094) Less: Net income (loss) attributable to non-controlling interests (1,456) 1,272 119 Net loss attributable to Clearwater Analytics Holdings, Inc. $ (21,627) $ (7,967) $ (8,213) (1) Amounts include equity-based compensation as follows: Year Ended December 31, 2023 2022 2021 (in thousands) Cost of revenue $ 12,215 $ 9,043 $ 4,786 Operating expenses: Research and development 24,739 17,950 10,409 Sales and marketing 15,843 12,711 7,059 General and administrative 51,650 25,987 14,441 Total equity-based compensation expense $ 104,447 $ 65,691 $ 36,695 50 Table of Contents The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the periods indicated: Year Ended December 31, 2023 2022 2021 Revenue 100 % 100 % 100 % Cost of revenue 29 % 29 % 27 % Gross profit 71 % 71 % 73 % Operating expenses: Research and development 34 % 31 % 29 % Sales and marketing 16 % 17 % 16 % General and administrative 25 % 21 % 17 % Total operating expenses 75 % 69 % 62 % Income (loss) from operations (5 %) 2 % 11 % Interest (income) expense, net (2 %) 0 % 10 % Tax receivable agreement expense 4 % 4 % 0 % Loss on debt extinguishment 0 % 0 % 4 % Other (income) expense, net (1 %) 0 % 0 % Loss before income taxes (6 %) (2 %) (3 %) Provision for income taxes 0 % 0 % 0 % Net loss (6) % (2) % (3) % Comparison of the Years Ended December 31, 2023, 2022 and 2021 Revenue Year Ended December 31, 2023 2022 2021 (In thousands, except percentages) Revenue $ 368,168 $ 303,426 $ 252,022 Change over prior year 64,742 51,404 Percent change over prior year 21 % 20 % Revenue increased $64.7 million, or 21%, in 2023 compared to 2022.
Biggest changeYear Ended December 31, 2024 2023 2022 (in thousands, except percentages) Net income (loss) $ 427,585 95 % $ (23,083) (6 %) $ (6,695) (2 %) Adjustments: Interest income, net (8,621) (2 %) (6,401) (2 %) (1,137) 0 % Depreciation and amortization 12,181 3 % 9,929 3 % 5,139 2 % Equity-based compensation expense and related payroll taxes 110,961 25 % 108,078 29 % 66,525 22 % Tax receivable agreement expense 53,181 12 % 14,396 4 % 11,639 4 % Transaction expenses 8,308 2 % 2,052 1 % 1,711 1 % Amortization of prepaid management fees and reimbursable expenses 1,990 0 % 2,592 1 % 2,486 1 % Provision for (benefit from) income taxes (457,648) (101 %) 217 0 % 1,360 0 % Other income, net (2,263) (1 %) (1,874) (1 %) (50) 0 % Up-C structure expenses — — % — — % 158 0 % Adjusted EBITDA 145,674 32 % 105,906 29 % 81,136 27 % Revenue $ 451,803 100 % $ 368,168 100 % $ 303,426 100 % 47 Table of Content s Results of Operations The following tables set forth our results of operations for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 2023 2022 (in thousands) Revenue $ 451,803 $ 368,168 $ 303,426 Cost of revenue (1) 122,987 107,127 87,784 Gross profit 328,816 261,041 215,642 Operating expenses: Research and development (1) 150,558 123,925 94,120 Sales and marketing (1) 67,254 60,365 52,638 General and administrative (1) 98,770 93,496 63,767 Total operating expenses 316,582 277,786 210,525 Income (loss) from operations 12,234 (16,745) 5,117 Interest income, net (8,621) (6,401) (1,137) Tax receivable agreement expense 53,181 14,396 11,639 Other income, net (2,263) (1,874) (50) Loss before income taxes (30,063) (22,866) (5,335) Provision for (benefit from) income taxes (457,648) 217 1,360 Net income (loss) 427,585 (23,083) (6,695) Less: Net income (loss) attributable to non-controlling interests 3,207 (1,456) 1,272 Net income (loss) attributable to Clearwater Analytics Holdings, Inc. $ 424,378 $ (21,627) $ (7,967) (1) Amounts include equity-based compensation as follows: Year Ended December 31, 2024 2023 2022 (in thousands) Cost of revenue $ 13,634 $ 12,215 $ 9,043 Operating expenses: Research and development 36,093 24,739 17,950 Sales and marketing 15,304 15,843 12,711 General and administrative 38,170 51,650 25,987 Total equity-based compensation expense $ 103,201 $ 104,447 $ 65,691 48 Table of Content s The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the periods indicated: Year Ended December 31, 2024 2023 2022 Revenue 100 % 100 % 100 % Cost of revenue 27 % 29 % 29 % Gross profit 73 % 71 % 71 % Operating expenses: Research and development 33 % 34 % 31 % Sales and marketing 15 % 16 % 17 % General and administrative 22 % 25 % 21 % Total operating expenses 70 % 75 % 69 % Income (loss) from operations 3 % (5 %) 2 % Interest (income) expense, net (2 %) (2 %) 0 % Tax receivable agreement expense 12 % 4 % 4 % Other (income) expense, net (1 %) (1 %) 0 % Loss before income taxes (7 %) (6 %) (2 %) Provision for (benefit from) income taxes (101 %) 0 % 0 % Net income (loss) 95 % (6) % (2) % Comparison of the Years Ended December 31, 2024, 2023 and 2022 Revenue Year Ended December 31, 2024 2023 2022 (In thousands, except percentages) Revenue $ 451,803 $ 368,168 $ 303,426 Change over prior year 83,635 64,742 51,404 Percent change over prior year 23 % 21 % 20 % Revenue increased $83.6 million, or 23%, in 2024 compared to 2023.
Cash Flows from Financing Activities Net cash used in financing activities during 2023 was $19.3 million, of which $20.8 million was used to pay minimum tax withholding on behalf of employees related to net share settlement, $2.9 million was used for the payment of business acquisition holdback liability, $2.8 million was used in the repayment of borrowings and $2.2 million was used for the payment of tax distributions to Continuing Equity Owners, which was partially offset by $4.8 million of proceeds from the exercise of options and $4.6 million of proceeds from the employee stock purchase plan.
Net cash used in financing activities during 2023 was $19.3 million, of which $20.8 million was used to pay minimum tax withholding on behalf of employees related to net share settlement, $2.9 million was used for the payment of business acquisition holdback liability, $2.8 million was used in the repayment of borrowings and $2.2 million was used for the payment of tax distributions to Continuing Equity Owners, which was partially offset by $4.8 million of proceeds from the exercise of options and $4.6 million of proceeds from the employee stock purchase plan.
We have a 100% recurring revenue model, excluding revenue from professional services and license-related revenue from the JUMP Technology acquisition. We charge our clients a fee that is based on the amount and complexity of the assets they manage on our platform as well as the breadth of the solution utilized by the customer.
We have a recurring revenue model, excluding revenue from professional services and license-related revenue from the JUMP Technology acquisition. We charge our clients a fee that is based on the amount and complexity of the assets they manage on our platform as well as the breadth of the solution utilized by the customer.
While 77% of the assets on our platform were high-grade fixed income securities and structured products as of December 31, 2023 and traditionally subject to lower levels of volatility, the value of our clients’ assets on our platform varies on a daily basis due to changes in securities prices, cash flow needs, incremental buying and selling of assets and other strategic priorities of our clients.
While 77% of the assets on our platform were high-grade fixed income securities and structured products as of December 31, 2024 and traditionally subject to lower levels of volatility, the value of our clients’ assets on our platform varies on a daily basis due to changes in securities prices, cash flow needs, incremental buying and selling of assets and other strategic priorities of our clients.
Provision for Income Taxes Provision for income taxes consists of income taxes related to federal, state, and foreign jurisdictions where we conduct our business, net of our valuation allowance. Our effective tax rate may increase in the future as our ownership in CWAN Holdings increases via exchanges from historical partners.
Provision for (Benefit from) Income Taxes Provision for (benefit from) income taxes consists of income taxes related to federal, state, and foreign jurisdictions where we conduct our business, net of any valuation allowance. Our effective tax rate may increase in the future as our ownership in CWAN Holdings increases via exchanges from historical partners.
The Company did not sell any securities in these secondary offerings and did not receive any proceeds from the sale of the shares sold by the Selling Stockholders. The Company incurred $1.6 million in expenses associated with these secondary offerings which were recorded as general and administrative expenses.
The Company did not sell any securities in these secondary offerings and did not receive any proceeds from the sale of the shares sold by the Selling Stockholders. The Company incurred $2.1 million in expenses associated with these secondary offerings which were recorded as general and administrative expenses.
We believe the following accounting policies contain the more significant judgments and estimates used in the preparation of our consolidated financial statements: • Revenue recognition • Equity-based compensation • Income taxes • Tax receivable agreement 58 Table of Contents Revenue Recognition We earn revenues primarily from providing access to our SaaS platform solution to our customers, services that support the implementation on the SaaS platform, selling perpetual and term-based software licenses and providing maintenance and support and professional services under contracts with customers.
We believe the following accounting policies contain the more significant judgments and estimates used in the preparation of our consolidated financial statements: • Revenue recognition • Equity-based compensation • Income taxes • Tax receivable agreement expense Revenue Recognition We earn revenues primarily from providing access to our SaaS platform solution to our customers, services that support the implementation on the SaaS platform, selling perpetual and term-based software licenses and providing maintenance and support and professional services under contracts with customers.
If there are any modifications of equity-based awards, we may be required to accelerate, increase, decrease or reverse any equity-based compensation expense on the unvested awards. The Company records forfeitures when they occur for all equity-based awards. 59 Table of Contents Income Taxes We use the asset and liability method of accounting for income taxes.
If there are any modifications of equity-based awards, we may be required to accelerate, increase, decrease or reverse any equity-based compensation expense on the unvested awards. The Company records forfeitures when they occur for all equity-based awards. Income Taxes We use the asset and liability method of accounting for income taxes.
We recognize interest and penalties related to uncertain tax positions as a component of our provision for income taxes. Accrued interest and penalties are included with the related tax liability.
We recognize interest and penalties related to uncertain tax positions as a component of our provision for (benefit from) income taxes. Accrued interest and penalties are included with the related tax liability.
The Company did not sell any securities in these secondary offerings and did not receive any proceeds from the sale of the shares sold by the Selling Stockholders. The Company incurred $0.5 million in expenses associated with these secondary offerings which were recorded as general and administrative expenses.
The Company did not sell any securities in the secondary offerings and did not receive any proceeds from the sale of the shares sold by the Selling Stockholders. The Company incurred $0.6 million in expenses associated with the secondary offerings which were recorded as general and administrative expenses.
SaaS We typically bill our SaaS customers monthly in arrears based on a percentage of the average of the daily value of the assets within a customer’s accounts on the platform. Payment terms may vary by contract but generally include a requirement of payment within 30 days following the month in which services were provided.
SaaS 56 Table of Content s We typically bill our SaaS customers monthly in arrears based on a percentage of the average of the daily value of the assets within a customer’s accounts on the platform. Payment terms may vary by contract but generally include a requirement of payment within 30 days following the month in which services were provided.
Fees invoiced in advance of the delivery of the Company’s performance obligations are deemed set-up activities and are deferred as a material right and recognized over time, typically 12 months. Through JUMP, which we acquired on November 30, 2022, we also earn license revenue.
Fees invoiced in advance of the delivery of 43 Table of Content s the Company’s performance obligations are deemed set-up activities and are deferred as a material right and recognized over time, typically 12 months. Through JUMP, which we acquired on November 30, 2022, we also earn license revenue.
Key Factors Affecting Our Performance The growth and future success of our business depends on many factors, including those described below. • Adding New Clients in Established End Markets: Our future growth is dependent upon our ability to continue to add new clients, and in 2023 we added over 80 net new clients.
Key Factors Affecting Our Performance The growth and future success of our business depends on many factors, including those described below. • Adding New Clients in Established End Markets: Our future growth is dependent upon our ability to continue to add new clients, and in 2024 we added over 100 net new clients.
Cash, cash equivalents and short-term investments primarily consist of highly-liquid investments in money market funds, commercial paper, U.S. agency securities, corporate debt securities and certificates of deposit. Long-term investments primarily consist of U.S. agency securities and corporate debt securities.
Cash, cash equivalents and short-term investments primarily consist of highly-liquid investments in money market funds, corporate debt securities, US government bond, commercial paper and certificates of deposit. Long-term investments primarily consist of US government bond, U.S. agency securities and corporate debt securities.
Annualized recurring revenue increased 17% from December 31, 2022 to December 31, 2023 due to growth in our client base as we brought new clients onto our platform and added additional assets from existing clients.
Annualized recurring revenue increased 25% from December 31, 2023 to December 31, 2024 due to growth in our client base as we brought new clients onto our platform and added additional assets from existing clients.
The strength of our platform is demonstrated by our approximately 80% win rate for new clients over the prior six years in deals that reached the proposal stage, as well as NPS of 60+ and 98% gross retention in 19 of the last 20 quarters. We allow our clients to replace legacy systems with modern cloud-native software.
The strength of our platform is demonstrated by our approximately 80% win rate for new clients over the prior four years in deals that reached the proposal stage, as well as NPS of 60+ and at least 98% gross retention in 23 of the last 24 quarters. We allow our clients to replace legacy systems with modern cloud-native software.
We define Adjusted EBITDA Margin as Adjusted EBITDA (as defined above) divided by revenue. 48 Table of Contents The following table reconciles net loss to Adjusted EBITDA and includes amounts expressed as a percentage of revenue for the periods indicated.
We define Adjusted EBITDA Margin as Adjusted EBITDA (as defined above) divided by revenue. 46 Table of Content s The following table reconciles net loss to Adjusted EBITDA and includes amounts expressed as a percentage of revenue for the periods indicated.
Tax Receivable Agreement In connection with the IPO and related transactions, we entered into a TRA that provides for the payment by us of 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, from any redemptions or exchanges of CWAN Holdings units.
Tax Receivable Agreement In connection with the IPO and related transactions, we entered into a TRA that, prior to the TRA Amendment, provided for the payment by us of 85% of the amount of any tax benefits that we actually realized, or in some cases were deemed to realize, from any redemptions or exchanges of CWAN Holdings units.
Pursuant to underwriting agreements executed on November 6 and November 30, 2023, certain affiliates of Welsh Carson, Warburg Pincus and Permira (the “Selling Stockholders”) sold 20,000,000 and 17,000,000 shares, respectively, of Class A common stock in underwritten secondary public offerings.
Pursuant to underwriting agreements executed on March 8, June 15, November 6, and November 30, 2023, certain affiliates of Welsh Carson, Warburg Pincus and Permira (the “Selling Stockholders”) sold 14,950,000, 10,000,000, 20,000,000 and 17,000,000 shares, respectively, of Class A common stock in underwritten secondary public offerings.
Recently Issued Accounting Pronouncements Refer to Note 2 “Basis of Presentation and Summary of Significant Accounting Policies” to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K regarding recently issued accounting pronouncements. 60 Table of Contents
Recently Issued Accounting Pronouncements Refer to Note 2 “Basis of Presentation and Summary of Significant Accounting Policies” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Indebtedness For a discussion of our indebtedness, refer to Note 8 - “Credit Agreement” in the notes to our audited consolidated financial statements included in this Annual Report on Form 10-K.
Indebtedness For a discussion of our indebtedness, refer to Note 8 “Credit Agreement” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Our relationships with our clients expands as these clients add more assets to our platform, with our quarterly net revenue retention rates (as defined below under “—Key Operating Measures”) between 106% and 109% in 2023.
Our relationships with our clients expands as these clients add more assets to our platform, with our quarterly net revenue retention rates (as defined below under “—Key Operating Measures”) between 110% and 116% in 2024.
Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe it is more likely than not that they will not be realized.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets are evaluated for future realization and reduced by a valuation allowance to the extent we believe it is more likely than not that they will not be realized.
For these reasons, we expect to 44 Table of Contents invest more in sales and marketing in international markets relative to North America in order to achieve growth in these international markets. • Adding New Clients in Adjacent or Nascent End-Markets: Our strategy is to also add new clients in our more nascent end-markets, which include state and local governments, pension funds and sovereign wealth funds, as well as a variety of alternative asset managers.
For these reasons, we expect to invest more in sales and marketing in international markets relative to North America in order to achieve growth in these international markets. • Adding New Clients in Adjacent or Nascent End-Markets: Our strategy is to also add new clients in our more nascent end-markets, which include state and local governments, pension funds, sovereign wealth funds, as well as endowments and foundations.
Average assets on our platform that were billed to new and existing clients increased 15% from 2021 to 2022 while average basis point rate billed to clients increased by 2.6% from 2021 to 2022.
Average assets on our platform that were billed to new and existing clients increased 19% from 2022 to 2023 while average basis point rate billed to clients decreased by 2.2% from 2022 to 2023.
We provide investment accounting and reporting, performance measurement, compliance monitoring and risk analytics solutions for asset managers, insurance companies and large corporations. Every day, Clearwater’s powerful platform aggregates and normalizes data on over $7.3 trillion of global invested assets for over 1,300 clients.
We provide investment accounting and reporting, performance measurement, compliance monitoring and risk analytics solutions for asset managers, insurance companies and large corporations. Every day, Clearwater’s powerful platform aggregates and normalizes data on over $8.8 trillion of global invested assets for over 1400 clients as of December 31, 2024.
As part of these secondary offerings, the Selling Stockholders exchanged a total of 6,653,590 shares of Class C common stock, together with corresponding LLC Interests of CWAN Holdings, and 30,212,119 shares of Class D common stock for an equivalent number of shares of Class A common stock that were purchased by the underwriters.
As part of these secondary offerings, the Selling Stockholders exchanged a total of 14,693,431 shares of Class C common stock, together with corresponding LLC Interests of CWAN Holdings, and 47,122,278 shares of Class D common stock for an equivalent number of shares of Class A common stock that were purchased by the underwriters.
In addition, cost of revenue increased due to increased depreciation and amortization related to the amortization of capitalized IT projects and JUMP-related intangible assets, increased equity-based compensation due to additional headcount, increased allocation of technology costs from hosting services as we completed the migration of IT applications to a cloud environment, increased allocation of facilities cost due to additional office space, increased travel and entertainment expense as employees travelled more between our office locations to support client onboarding, increased data costs to support a larger client base and higher utilization of third-party contractors in connection with operational activities.
In addition, cost of revenue increased due to higher data costs for acquiring vendor data contracts related to the Wilshire Technology acquisition, increased depreciation and amortization related to the amortization of capitalized IT projects and acquired Wilshire Technology intangible assets, increased equity-based compensation due to additional headcount, increased allocation of facilities cost due to additional office space in international locations, increased travel and entertainment expense as employees travelled more between our office locations to support client onboarding, and higher utilization of third-party contractors in connection with operational activities, partially offset by decreased technology costs from hosting services.
The remaining $3.8 million TRA liability related to 2022 is expected to be paid in the first quarter of 2024. TRA payments are presented net of $14.4 million TRA expense recognized in the year ended December 31, 2023.
The remaining $2.2 million TRA payments related to 2022 was made in the first quarter of 2024. TRA payments are presented net of $14.4 million TRA expense recognized in the year ended December 31, 2023.
We have enjoyed consistent gross revenue retention rates of approximately 98% in 19 of the past 20 quarters. The consistency in revenue retention creates predictability in our business and enables us to better plan our future investments.
We have enjoyed consistent gross revenue retention rates of at least 98% in 23 of the past 24 quarters. The consistency in revenue retention creates predictability in our 42 Table of Content s business and enables us to better plan our future investments.
The increase in sales and marketing expense in 2022 was primarily due to increased equity-based compensation due to increased grant-date fair value of equity awards and higher headcount, as well as increased payroll and related costs as a result of additional employees to expand sales coverage.
The increase in sales and marketing expense in 2023 was primarily due to increased equity-based compensation due to grants of additional awards to employees, and increased payroll and related costs as a result of the hiring of additional employees to expand sales coverage.
The increase in cost of revenue in 2022 was primarily due to increased payroll and related costs as a result of headcount growth of additional employees across our client services, onboarding and reconciliation teams to support a larger client base as well as increased equity-based compensation due to increased grant-date fair value of equity awards and higher headcount.
The increase in cost of revenue in 2023 was primarily due to increased payroll and related costs as a result of headcount growth of additional employees across our client services, onboarding and reconciliation teams to support a larger client base and headcount growth related to the JUMP acquisition.
The Base+ model includes annual increases in the base fee and enables us to charge additional fees for supplemental services provided for certain alternative asset classes (e.g., LPx, MLx) or additional products (e.g.
The Base+ model includes annual increases in the base fee and enables us to charge additional fees for 41 Table of Content s supplemental services provided for certain alternative asset classes (e.g., LPx, MLx) or additional products (e.g. Prism, OMS/PMS) should the client choose to utilize those services.
Deferred income taxes are recognized for the expected future tax consequences attributable to temporary differences between the carrying amount of the existing tax assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied in the years in which temporary differences are expected to be recovered or settled.
Deferred income taxes are recognized for the expected future tax consequences attributable to temporary differences between the carrying amount of the existing tax assets and liabilities and their respective tax basis.
Prism, OMS/PMS) should the client choose to utilize those services. 43 Table of Contents Recent Developments Secondary Offerings As required by the Registration Rights Agreement dated September 28, 2021, the Company participated in multiple underwritten offerings of shares held by our Principal Equity Owners during the year ended December 31, 2023.
Recent Developments Secondary Offerings As required by the Registration Rights Agreement dated September 28, 2021, the Company participated in multiple underwritten offerings of shares held by our Principal Equity Owners during the year ended December 31, 2024.
Tax Receivable Agreement Expense In connection with the IPO and related transactions, we entered into a TRA that provides for the payment by us of 85% of certain tax benefits that we realize as a result of Tax Attributes, as defined in the Tax Receivable Agreement. Tax receivable agreement expense relates to payments we anticipate making under the TRA.
Tax Receivable Agreement Expense In connection with the IPO and related transactions, we entered into a TRA that, prior to the TRA Amendment, provided for the payment by us of 85% of certain tax benefits that we realized, or in some cases were deemed to realize, as a result of Tax Attributes, as defined in the Tax Receivable Agreement.
Annualized Recurring Revenue Annualized recurring revenue is calculated at the end of a period by dividing the recurring revenue in the last month of such period by the number of days in the month and multiplying by 365. 46 Table of Contents The following table summarizes the Company’s annualized recurring revenue as of the dates presented: First Quarter Second Quarter Third Quarter Fourth Quarter (in thousands) 2023 Annualized recurring revenue $ 337,366 $ 349,536 $ 362,442 $ 379,096 2022 Annualized recurring revenue $ 287,137 $ 290,354 $ 303,560 $ 323,461 2021 Annualized recurring revenue $ 232,467 $ 245,033 $ 257,022 $ 277,780 Because a substantial majority of the assets on our platform are fixed income securities that typically have low levels of volatility with respect to their market value, the growth in annualized recurring revenue is generally not attributable to the fluctuating market value of the assets on our platform.
The following table summarizes the Company’s annualized recurring revenue as of the dates presented: First Quarter Second Quarter Third Quarter Fourth Quarter (in thousands) 2024 Annualized recurring revenue $ 402,326 $ 427,189 $ 456,941 $ 474,924 2023 Annualized recurring revenue $ 337,366 $ 349,536 $ 362,442 $ 379,096 2022 Annualized recurring revenue $ 287,137 $ 290,354 $ 303,560 $ 323,461 Because a substantial majority of the assets on our platform are fixed income securities that typically have low levels of volatility with respect to their market value, the growth in annualized recurring revenue is generally not attributable to the fluctuating market value of the assets on our platform.
The following table shows our cash flows from operating activities, investing activities and financing activities for the stated periods: Year Ended December 31, 2023 2022 2021 (in thousands) Net cash provided by operating activities $ 84,602 $ 58,005 $ 3,358 Net cash used in investing activities (95,055) (76,551) (5,025) Net cash provided by (used in) financing activities (19,291) 16,229 195,288 Effect of exchange rate changes on cash and cash equivalents 785 (1,556) (112) Change in cash and cash equivalents during the period $ (28,959) $ (3,873) $ 193,509 Cash Flows from Operating Activities Net cash provided by operating activities of $84.6 million during 2023 was primarily the result of our net loss plus non-cash charges, including equity-based compensation, operating lease expense and depreciation and amortization offset by changes in operating assets and liabilities that decreased operating cash flow by $30.5 million.
See “Risk Factors” elsewhere in this Annual Report on Form 10-K. 54 Table of Content s The following table shows our cash flows from operating activities, investing activities and financing activities for the stated periods: Year Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 74,321 $ 84,602 $ 58,005 Net cash used in investing activities (55,648) (95,055) (76,551) Net cash (used in) provided by financing activities (61,668) (19,291) 16,229 Effect of exchange rate changes on cash and cash equivalents (1,420) 785 (1,556) Change in cash and cash equivalents during the period $ (44,415) $ (28,959) $ (3,873) Cash Flows from Operating Activities Net cash provided by operating activities of $74.3 million during 2024 was primarily the result of our net income plus non-cash charges, including equity-based compensation, operating lease expense and depreciation and amortization, offset by deferred tax benefits of $460 million and changes in operating assets and liabilities that decreased operating cash flow by $21.2 million.
The second is to record the TRA liability related to all future years that is probable and reasonably estimable. We determine the amount that is probable and reasonably estimable by mirroring the net deferred tax asset balance such that the TRA liability is 85% of the net deferred tax asset balance.
We determined the amount that was probable and reasonably estimable by mirroring the net deferred tax asset balance such that the TRA liability was 85% of the net deferred tax asset balance.
We define Adjusted EBITDA as net loss plus (i) interest (income) expense, net, (ii) loss on debt extinguishment, (iii) depreciation and amortization expense, (iv) equity-based compensation expense and related payroll taxes, (v) equity-based compensation expense related to JUMP acquisition, (vi) tax receivable agreement expense, (vii) transaction expenses, and (viii) other expenses.
We define Adjusted EBITDA as net loss plus (i) interest income, net, (ii) depreciation and amortization expense, (iii) equity-based compensation expense and related payroll taxes, (iv) tax receivable agreement expense, (v) transaction expenses, (vi) amortization of prepaid management fees and reimbursable expenses, (vii) provision for (benefit from) income taxes, (viii) other income, net, and (ix) Up-C structure expenses.
Net cash provided by operating activities of $3.4 million during 2021 was primarily the result of our net loss plus non-cash charges including equity-based compensation, depreciation and amortization, and debt extinguishment costs offset by changes in operating assets and liabilities that decreased operating cash flow by $43.4 million. Accounts receivable increased $17.3 million during the year.
Net cash provided by operating activities of $84.6 million during 2023 was primarily the result of our net loss plus non-cash charges, including equity-based compensation, operating lease expense and depreciation and amortization offset by changes in operating assets and liabilities that decreased operating cash flow by $30.5 million.
Accrued sales tax liability decreased $8.5 million as we remitted sales tax payable for prior periods to different jurisdictions, and accrued interest on debt decreased $2.3 million due to lower interest payments due under the New Credit Agreement. 57 Table of Contents Cash Flows from Investing Activities Net cash used in investing activities of $95.1 million during 2023 was primarily due to the purchase of $124.2 million available-for-sale investments, purchase of $3.0 million held-to-maturity investments and $5.6 million attributable to the purchase of property and equipment, including internally developed software, which was offset by $37.8 million in proceeds from the sale and maturity of investments.
Net cash used in investing activities of $95.1 million during 2023 was primarily due to the purchase of $124.2 million available-for-sale investments, purchase of $3.0 million held-to-maturity investments and $5.6 million attributable to the purchase of property and equipment, including internally developed software, which was offset by $37.8 million in proceeds from the sale and maturity of investments.
Operating Expenses Research and development expense consists primarily of salary and benefits for our development staff as well as contractors’ fees and other costs associated with the enhancement of our offering, ensuring operational stability and performance and development of new offerings. 45 Table of Contents Sales and marketing expense consists of the costs of personnel involved in the sales and marketing process, sales commissions, advertising and promotional materials, sales facilities expenses, and the cost of trade shows and seminars.
Operating Expenses Research and development expense consists primarily of salary and benefits for our development staff as well as contractors’ fees and other costs associated with the enhancement of our offering, ensuring operational stability and performance and development of new offerings.
Additional funds may not be available on terms favorable to us or at all, including as a result of disruptions in the credit markets. See “Risk Factors” elsewhere in this Annual Report on Form 10-K.
For more information, see Note 19 “Subsequent Events” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Additional funds may not be available on terms favorable to us or at all, including as a result of disruptions in the credit markets.
Average assets on our platform that were billed to new and existing clients increased 19% from 2022 to 2023 while average basis point rate billed to clients decreased by 2.2% from 2022 to 2023. Additionally, license revenues related to JUMP were $6.6 million in 2023. Revenue increased $51.4 million, or 20%, in 2022 compared to 2021.
Average assets on our platform that were billed to new and existing clients increased 15% from 2023 to 2024 and average basis point rate billed to clients increased by 6.2% from 2023 to 2024. Revenue increased $64.7 million, or 21%, in 2023 compared to 2022.
Interest income relates to interest received on our cash and cash equivalents based on interest rates in the course of the applicable period, and interest received from our other investments.
Interest Income, Net Interest income, net reflects interest received on our cash and cash equivalents based on interest rates in the course of the applicable period, and interest received from our other investments. Interest expense reflects expense on our outstanding term loans under the Credit Agreement during the course of the applicable period.
In addition, our discrete items (e.g. changes in tax rates or laws, equity-based compensation deductions, or mix of income between tax jurisdictions) may not be consistent from year to year and could cause volatility in our effective tax rate.
In addition, our discrete items (e.g. changes in tax rates or laws, equity-based compensation deductions, or mix of income between tax jurisdictions) may not be consistent from year to year and could cause volatility in our effective tax rate. 44 Table of Content s Key Operating Measures We consider certain operating measures, such as annualized recurring revenue, gross retention rates and net retention rates, in measuring the performance of our business.
The increase in research and development expense in 2022 was primarily due to increased payroll and related costs as a result of headcount growth of additional employees to focus on new offerings, as well as increased equity-based compensation due to increased grant-date fair value of equity awards and higher headcount.
The increase in general and administrative expense in 2023 was primarily due to increased equity-based compensation expense due to JUMP acquisition-related equity awards and grant of additional awards to employees, increased payroll and related costs as a result of headcount growth.
In addition, research and development expense increased due to increased technology costs from higher utilization of third-party cloud computing and other third-party services, increased travel and entertainment costs due to the relaxation of travel restrictions from the COVID-19 pandemic in 2022 compared to 2021, and increased allocation of facilities costs.
In addition, research and development expense increased due to increased technology costs from higher utilization of third-party cloud computing and other third-party IT services, and increased allocation of facilities cost due to additional office space.
Additionally, license revenues related to JUMP were $0.9 million in 2022. 51 Table of Contents Cost of Revenue Year Ended December 31, 2023 $ Change % Change 2022 $ Change % Change 2021 (In thousands, except percentages) Equity-based compensation $ 12,215 $ 3,172 35 % $ 9,043 $ 4,257 89 % $ 4,786 All other cost of revenue 94,912 16,171 21 % 78,741 15,663 25 % 63,078 Total cost of revenue $ 107,127 $ 19,343 22 % $ 87,784 $ 19,920 29 % $ 67,864 Percent of revenue 29 % 29 % 27 % Cost of revenue changed as follows: Change from December 31, 2022 to December 31, 2023 Change from December 31, 2021 to December 31, 2022 (in thousands) Increased payroll and related $ 7,954 $ 10,060 Increased depreciation and amortization 4,709 1,588 Increased equity-based compensation 3,172 4,257 Increased technology costs 1,113 711 Increased facilities and infrastructure expenses 1,068 582 Increased travel and entertainment 567 1,095 Increased data costs 341 1,169 Increased outside services and contractors 310 486 Other items 109 (28) Total change $ 19,343 $ 19,920 The increase in cost of revenue in 2023 was primarily due to increased payroll and related costs as a result of headcount growth of additional employees across our client services, onboarding and reconciliation teams to support a larger client base and headcount growth related to the JUMP acquisition.
Additionally, license revenues related to JUMP were $6.6 million in 2023. 49 Table of Content s Cost of Revenue Year Ended December 31, 2024 $ Change % Change 2023 $ Change % Change 2022 (In thousands, except percentages) Equity-based compensation $ 13,634 $ 1,419 12 % $ 12,215 $ 3,172 35 % $ 9,043 All other cost of revenue 109,353 14,441 15 % 94,912 16,171 21 % 78,741 Total cost of revenue $ 122,987 $ 15,860 15 % $ 107,127 $ 19,343 22 % $ 87,784 Percent of revenue 27 % 29 % 29 % Cost of revenue changed as follows: Change from December 31, 2023 to December 31, 2024 Change from December 31, 2022 to December 31, 2023 (in thousands) Increased payroll and related costs $ 8,005 $ 7,954 Increased data costs 2,964 341 Increased depreciation and amortization 2,139 4,709 Increased equity-based compensation 1,419 3,172 Increased facilities and infrastructure expenses 1,409 1,068 Increased travel and entertainment 239 567 Increased outside services and contractors 223 310 (Decreased) increased technology costs (492) 1,113 Other items (46) 109 Total change $ 15,860 $ 19,343 The increase in cost of revenue in 2024 was primarily due to increased payroll and related costs as a result of headcount growth, increases in merit-based compensation, and changes in our employee base leading to higher compensation and increased equity-related payroll taxes for vested equity awards.
As part of these secondary offerings, the WCAS Selling Stockholders exchanged a total of 8,039,841 shares of Class C common stock, together with corresponding LLC Interests of CWAN Holdings, and 16,910,159 shares of Class D common stock for an equivalent number of shares of Class A common stock that were purchased by the underwriters.
As part of these secondary public offerings, the Selling Stockholders exchanged a total of 14,093,593 shares of Class C common stock and 29,613,617 shares of Class D common stock, and corresponding units in CWAN Holdings, for an equivalent number of shares of Class A common stock that were purchased by the underwriter.
Interest (Income) Expense, Net Interest (income) expense, net reflects interest expense on our outstanding term loans under the New Credit Agreement and Previous Credit Agreement during the course of the applicable period. The interest expense varies depending on the timing and amount of borrowings and repayments during the period as well as fluctuations in interest rates.
The interest expense varies depending on the timing and amount of borrowings and repayments during the period as well as fluctuations in interest rates.
Pursuant to underwriting agreements executed on March 8 and June 15, 2023, certain affiliates of Welsh Carson (the “WCAS Selling Stockholders”) sold 14,950,000 and 10,000,000 shares, respectively, of Class A common stock in underwritten secondary public offerings.
Pursuant to underwriting agreements executed on March 6, June 10, and November 11, 2024, the Selling Stockholders sold 16,250,000, 12,000,000 and 25,000,000 shares, respectively, of Class A common stock in underwritten secondary public offerings.
The following table summarizes our retention rates as of the dates presented: First Quarter Second Quarter Third Quarter Fourth Quarter 2023 Gross revenue retention rate 97 % 98 % 98 % 98 % Net revenue retention rate 106 % 109 % 108 % 107 % 2022 Gross revenue retention rate 98 % 98 % 98 % 98 % Net revenue retention rate 107 % 104 % 103 % 106 % 2021 Gross retention rate 98 % 98 % 98 % 98 % Net retention rate 110 % 109 % 111 % 111 % 47 Table of Contents Gross revenue retention rates have remained consistently at approximately 98% in 19 of the past 20 quarters.
We then divide the total current period end annualized recurring revenue by the 12-month prior period end annualized recurring revenue to arrive at the net revenue retention rate. 45 Table of Content s The following table summarizes our retention rates as of the dates presented: First Quarter Second Quarter Third Quarter Fourth Quarter 2024 Gross revenue retention rate 99 % 99 % 99 % 98 % Net revenue retention rate 110 % 110 % 114 % 116 % 2023 Gross revenue retention rate 97 % 98 % 98 % 98 % Net revenue retention rate 106 % 109 % 108 % 107 % 2022 Gross retention rate 98 % 98 % 98 % 98 % Net retention rate 107 % 104 % 103 % 106 % Gross revenue retention rates have remained consistently at least 98% in 23 of the past 24 quarters.
The principal items giving rise to temporary differences are basis differences due to exchange transactions, loss and tax credit carryforwards, equity-based compensation, and intangible asset amortization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied in the years in which temporary differences are 57 Table of Content s expected to be recovered or settled. The principal items giving rise to temporary differences are basis differences due to exchange transactions, loss and tax credit carryforwards, equity-based compensation, and intangible asset amortization.
These increases were partially offset by decreased costs associated with setting up our the Up-C structure and the Tax Receivable Agreement, and decreased third-party agency recruitment costs. 55 Table of Contents Non-Operating Expenses Interest Expense, Net Year Ended December 31, 2023 $ Change % Change 2022 $ Change % Change 2021 (In thousands, except percentages) Interest (income) expense, net $ (6,401) $ (5,264) 463 % $ (1,137) $ (26,819) (104 %) $ 25,682 Tax receivable agreement expense 14,396 $ 2,757 24 % 11,639 11,639 NMF — Loss on extinguishment — $ — NMF — (10,303) (100 %) 10,303 Other (income) expense, net $ (1,874) $ (1,824) 3648 % (50) (133) (160 %) 83 NMF - not meaningful Interest (income) expense, net increased for the year ended December 31, 2023 due to increased interest income on our cash, cash equivalents and investments from higher interest rates, and higher average investment balances.
Non-Operating Expenses Interest Income, Net Year Ended December 31, 2024 $ Change % Change 2023 $ Change % Change 2022 (In thousands, except percentages) Interest income, net $ (8,621) $ (2,220) 35 % $ (6,401) $ (5,264) 463 % $ (1,137) Tax receivable agreement expense 53,181 $ 38,785 269 % 14,396 2,757 24 % 11,639 Other income, net $ (2,263) $ (389) 21 % (1,874) (1,824) 3648 % (50) Interest income, net increased for the year ended December 31, 2024 and 2023 due to increased interest income on our cash, cash equivalents and investments from higher interest rates, and higher average investment balances.
These increases were partially offset by lower utilization of third-party consultants on development activities due to a focus on internal hiring of developers, and decreased depreciation expense due to lower impairment losses on abandoned capitalized software projects. 53 Table of Contents Sales and Marketing Year Ended December 31, 2023 $ Change % Change 2022 $ Change % Change 2021 (In thousands, except percentages) Equity-based compensation $ 15,843 $ 3,132 25 % $ 12,711 $ 5,652 80 % $ 7,059 All other sales and marketing 44,522 4,595 12 % 39,927 7,921 25 % 32,006 Total sales and marketing $ 60,365 $ 7,727 15 % $ 52,638 $ 13,573 35 % $ 39,065 Percent of revenue 16 % 17 % 16 % Sales and marketing expense changed as follows (in thousands): Change from December 31, 2022 to December 31, 2023 Change from December 31, 2021 to December 31, 2022 (in thousands) Increased equity-based compensation $ 3,132 $ 5,652 Increased payroll and related 2,330 5,677 Increased travel and entertainment 941 1,225 Increased (decreased) outside services and contractors 679 (1,036) Increased technology costs 254 234 Increased facilities and infrastructure expenses 124 215 Increased depreciation and amortization 303 37 (Decreased) increased marketing (56) 1,617 Other items 20 (48) Total change $ 7,727 $ 13,573 The increase in sales and marketing expense in 2023 was primarily due to increased equity-based compensation due to grants of additional awards to employees, and increased payroll and related costs as a result of the hiring of additional employees to expand sales coverage.
In addition, research and development expense increased due to increased technology costs from higher utilization of third-party cloud computing and other third-party services as well as increased equity-based compensation due to additional headcount, increased allocation of facilities cost due to additional office space, and increased travel and entertainment costs as employees travelled more between our office locations to support new offering initiatives. 51 Table of Content s Sales and Marketing Year Ended December 31, 2024 $ Change % Change 2023 $ Change % Change 2022 (In thousands, except percentages) Equity-based compensation $ 15,304 $ (539) (3) % $ 15,843 $ 3,132 25 % $ 12,711 All other sales and marketing 51,950 7,428 17 % 44,522 4,595 12 % 39,927 Total sales and marketing $ 67,254 $ 6,889 11 % $ 60,365 $ 7,727 15 % $ 52,638 Percent of revenue 15 % 16 % 17 % Sales and marketing expense changed as follows: Change from December 31, 2023 to December 31, 2024 Change from December 31, 2022 to December 31, 2023 (in thousands) Increased payroll and related costs $ 5,219 $ 2,330 Increased outside services and contractors 906 679 Increased (decreased) marketing 793 (56) Increased travel and entertainment 465 941 Increased depreciation and amortization 49 303 (Decreased) increased equity-based compensation (539) 3,132 Other items (4) 398 Total change $ 6,889 $ 7,727 The increase in sales and marketing expense in 2024 was primarily due to increased payroll and related costs as a result of headcount growth to expand sales coverage and increases in merit-based compensation.
In addition, cost of revenue increased from a rise in depreciation and amortization due to the completion of internal IT projects, increased data costs to support a larger client base, increased travel and entertainment costs due to the relaxation of travel restrictions from the COVID-19 pandemic in 2022 compared to 2021, higher utilization of third-party contractors, technology and IT services on operational activities, and increased allocation of facility costs. 52 Table of Contents Operating Expenses Research and Development Year Ended December 31, 2023 $ Change % Change 2022 $ Change % Change 2021 (In thousands, except percentages) Equity-based compensation $ 24,739 $ 6,789 38 % $ 17,950 $ 7,541 72 % $ 10,409 All other research and development 99,186 23,016 30 % 76,170 13,889 22 % 62,281 Total research and development $ 123,925 $ 29,805 32 % $ 94,120 $ 21,430 29 % $ 72,690 Percent of revenue 34 % 31 % 29 % Research and development expense changed as follows: Change from December 31, 2022 to December 31, 2023 Change from December 31, 2021 to December 31, 2022 (in thousands) Increased payroll and related $ 13,655 $ 9,301 Increased technology costs 8,847 4,495 Increased equity-based compensation 6,789 7,541 Increased facilities and infrastructure expenses 1,283 591 Increased travel and entertainment costs 339 694 Decreased outside services and contractors (893) (985) Decreased depreciation and amortization (249) (44) Other items 34 (163) Total change $ 29,805 $ 21,430 The increase in research and development expense in 2023 was primarily due to increased payroll and related costs as a result of headcount growth of additional employees to focus on new offerings, headcount growth related to the JUMP acquisition and lower capitalization of payroll costs related to IT projects, offset by a tax credit related to JUMP based on research and development expenses incurred in France.
In addition, cost of revenue increased due to increased depreciation and amortization related to the amortization of capitalized IT projects and JUMP-related intangible assets, increased equity-based compensation due to additional headcount, increased allocation of technology costs from hosting services as we completed the migration of IT applications to a cloud environment, increased allocation of facilities cost due to additional office space, increased travel and entertainment expense as employees travelled more between our office locations to support client onboarding, increased data costs to support a larger client base and higher utilization of third-party contractors in connection with operational activities. 50 Table of Content s Operating Expenses Research and Development Year Ended December 31, 2024 $ Change % Change 2023 $ Change % Change 2022 (In thousands, except percentages) Equity-based compensation $ 36,093 $ 11,354 46 % $ 24,739 $ 6,789 38 % $ 17,950 All other research and development 114,465 15,279 15 % 99,186 23,016 30 % 76,170 Total research and development $ 150,558 $ 26,633 21 % $ 123,925 $ 29,805 32 % $ 94,120 Percent of revenue 33 % 34 % 31 % Research and development expense changed as follows: Change from December 31, 2023 to December 31, 2024 Change from December 31, 2022 to December 31, 2023 (in thousands) Increased equity-based compensation $ 11,354 $ 6,789 Increased payroll and related costs 11,276 13,655 Increased technology costs 4,207 8,847 Increased facilities and infrastructure expenses 349 1,283 Decreased outside services and contractors (369) (893) Other items (184) 124 Total change $ 26,633 $ 29,805 The increase in research and development expense in 2024 was primarily due to increased equity-based compensation due to grants of additional awards to employees, and movement of a key employee to research and development with a change in responsibilities, as well as increased payroll and related costs as a result of headcount growth, increases in merit-based compensation, and changes in our employee base leading to higher compensation and increased equity-related payroll taxes for vested equity awards.
Provision for Income Taxes Year Ended December 31, 2023 2022 2021 (In thousands, except percentages) Provision for income taxes $ 217 $ 1,360 $ 487 Percent of revenue 0 % 0 % 0 % Change over prior year $ (1,143) $ 873 Percent change over prior year (84) % 179 % The decrease in provision for income taxes in 2023 relates to change in the mix of foreign jurisdiction income in the period, and decreased pretax income in foreign jurisdictions.
Provision for (benefit from) Income Taxes Year Ended December 31, 2024 2023 2022 (In thousands, except percentages) Provision for (benefit from) income taxes $ (457,648) $ 217 $ 1,360 Percent of revenue (101) % 0 % 0 % Change over prior year $ (457,865) $ (1,143) $ 873 Percent change over prior year (210,998) % (84) % 179 % The benefit from income taxes in 2024 primarily relates to the valuation allowance release on our U.S. federal and state deferred tax assets.
Net cash used in investing activities of $76.5 million during 2022 was primarily due to $65.8 million related to the acquisition of JUMP, net of cash acquired, $3.0 million attributable to the purchase of short-term investments, and $7.8 million attributable to the purchase of property, plant and equipment, including internally developed software.
Net cash used in investing activities of $76.5 million during 2022 was primarily due to $65.8 million related to the acquisition of JUMP, net of cash acquired, $3.0 million attributable to the purchase of short-term investments, and $7.8 million attributable to the purchase of property, plant and equipment, including internally developed software. 55 Table of Content s Cash Flows from Financing Activities Net cash used in financing activities during 2024 was $61.7 million, of which $55.3 million was used to pay minimum tax withholding on behalf of employees related to net share settlement, $4.7 million was used for the payment of business acquisition holdback liability, $2.8 million was used in the repayment of borrowings and $3.9 million was used for the payment of tax distributions to Continuing Equity Owners, which was partially offset by $4.7 million of proceeds from the employee stock purchase plan.
The increase was on account of growth in our client base as we brought new clients onto our platform, as well as changes to our existing clients’ assets on our platform.
The increase was due to new clients brought onto our platform which resulted in an increase in revenue of $21.3 million, acquired customer base related to the Wilshire Technology acquisition of $4.2 million, as well as changes to our existing clients’ assets on our platform and an increase in revenue not related to assets on our platform.
General and Administrative 54 Table of Contents Year Ended December 31, 2023 $ Change % Change 2022 $ Change % Change 2021 (In thousands, except percentages) Equity-based compensation $ 51,650 $ 25,663 99 % $ 25,987 $ 11,546 80 % $ 14,441 All other general and administrative 41,846 4,066 11 % 37,780 8,279 28 % 29,501 Total general and administrative $ 93,496 $ 29,729 47 % $ 63,767 $ 19,825 45 % $ 43,942 Percent of revenue 25 % 21 % 17 % General and administrative expense changed as follows: Change from December 31, 2022 to December 31, 2023 Change from December 31, 2021 to December 31, 2022 (in thousands) Increased equity-based compensation $ 25,663 $ 11,546 Increased payroll and related 2,408 1,311 Increased technology costs 837 1,637 Increased (decreased) recruiting expense 789 (1,024) Increased transaction expenses 341 1,711 Increased outside services and contractors 123 1,052 Increased travel and entertainment 56 705 (Decreased) increased insurance (961) 1,858 (Decreased) increased accrued sales tax exposure (69) 1,755 (Decreased) increased facilities and infrastructure expenses (48) 104 Decreased Up-C structure expenses — (1,502) Other items 590 672 Total change $ 29,729 $ 19,825 The increase in general and administrative expense in 2023 was primarily due to increased equity-based compensation expense due to JUMP acquisition related equity awards and grant of additional awards to employees, increased payroll and related costs as a result of headcount growth.
General and Administrative Year Ended December 31, 2024 $ Change % Change 2023 $ Change % Change 2022 (In thousands, except percentages) Equity-based compensation $ 38,170 $ (13,480) (26) % $ 51,650 $ 25,663 99 % $ 25,987 All other general and administrative 60,600 18,754 45 % 41,846 4,066 11 % 37,780 Total general and administrative $ 98,770 $ 5,274 6 % $ 93,496 $ 29,729 47 % $ 63,767 Percent of revenue 22 % 25 % 21 % 52 Table of Content s General and administrative expense changed as follows: Change from December 31, 2023 to December 31, 2024 Change from December 31, 2022 to December 31, 2023 (in thousands) Increased outside services and contractors $ 9,701 $ 464 Increased payroll and related costs 5,126 2,408 Increased (decreased) facilities and infrastructure expenses 1,258 (48) Increased recruiting expense 1,018 789 Increased travel and entertainment 569 56 Increased technology costs 484 837 Increased depreciation and amortization 373 27 (Decreased) increased equity-based compensation (13,480) 25,663 Decreased insurance expense (260) (961) Other items 485 494 Total change $ 5,274 $ 29,729 The increase in general and administrative expense in 2024 was primarily due to increased outside services and contractors due to higher utilization of professional services supporting accounting, legal and human resources related to secondary transactions, acquisition-related activities and Tax Receivable Agreement settlement, increased payroll and related costs as a result headcount growth and increases in merit-based compensation, increased allocation of facilities cost due to additional office space, and increased recruiting expense to support key hires.
We expect to benefit from the remaining 15% of any tax benefits that we may actually realize. We account for amounts payable under the TRA in two parts. The first is to accrue the TRA liability that has been incurred as of the balance sheet date.
We have historically accounted for amounts payable under the TRA in two parts. The first was to accrue the TRA liability that has been incurred as of the balance sheet date. The second was to record the TRA liability related to all future years that was probable and reasonably estimable.
Net cash used in investing activities of $5.0 million during 2021 was attributable to the purchase of property and equipment, including internally developed software.
Cash Flows from Investing Activities Net cash used in investing activities of $55.6 million during 2024 was primarily due to the purchase of $114.6 million available-for-sale investments, acquisition of Wilshire Technology, net of cash acquired of $40.1 million, purchase of $3.0 million held-to-maturity investments and $5.3 million attributable to the purchase of property and equipment, including internally developed software, which was offset by $107.4 million in proceeds from the sale and maturity of investments.
These increases were partially offset by lower utilization of third-party consultants supporting marketing initiatives.
These increases were partially offset by decreased use of outside services and contractors due to lower utilization of third-party consultants on development activities due to a focus on internal hiring of developers.
The increase in provision for income taxes in 2022 relates to change in the mix of foreign jurisdiction income in the period and decreased equity-based compensation windfalls.
The decrease in provision for income taxes in 2023 primarily relates to change in the mix of foreign jurisdiction income in the period and decreased pre-tax income in foreign jurisdictions. Liquidity and Capital Resources To date, we have primarily financed our operations through cash flows from operations and financing activities.
The loss on extinguishment relates to a prepayment premium and unamortized debt issue costs following the repayment of borrowings under the Previous Credit Agreement in September 2021. Other (income) expense, net relates to foreign exchange gains and losses driven by fluctuations in exchange rates, and gains and losses related to our investments.
Refer to Note 17 “Tax Receivable Agreement Liability” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Other income, net relates to foreign exchange gains and losses driven by fluctuations in exchange rates, and gains and losses related to our investments.
Removed
Loss on Debt Extinguishment Loss on debt extinguishment related to the early repayment of borrowings under the Previous Credit Agreement. The debt was extinguished on September 28, 2021 in connection with the closing of the IPO. Other (Income) Expense, Net Other (income) expense, net, consists of gains and losses of foreign currency and investments.
Added
Strategic Acquisitions On April 22, 2024, the Company completed our acquisition of Wilshire Technology that comprises the risk and performance analytics solutions businesses of Wilshire, a leading global financial services firm. This strategic acquisition allows us to provide enhanced analytical capabilities for investment managers and institutional asset owners and to strengthen our position in the institutional asset owner market.
Removed
Key Operating Measures We consider certain operating measures, such as annualized recurring revenue, gross retention rates and net retention rates, in measuring the performance of our business.
Added
On January 10, 2025, the Company and Enfusion entered into the Merger Agreement for the Company to acquire Enfusion, a leader in SaaS solutions for the investment management and hedge fund industry, for a purchase consideration of approximately $1.5 billion.
Removed
We then divide the total current period end annualized recurring revenue by the 12-month prior period end annualized recurring revenue to arrive at the net revenue retention rate.
Added
The acquisition is expected to accelerate the Company’s vision of building the first cloud-native front-to-back platform for the entire investment management industry. The merger is expected to be completed in the second quarter of 2025, subject to approval by Enfusion’s shareholders, the receipt of required regulatory approvals and other customary closing conditions set forth in the Merger Agreement.
Removed
Year Ended December 31, 2023 2022 2021 (in thousands, except percentages) Net loss $ (23,083) (6 %) $ (6,695) (2 %) $ (8,094) (3 %) Adjustments: Interest (income) expense, net (6,401) (2 %) (1,137) — % 25,682 10 % Loss on debt extinguishment — — — — 10,303 4 % Depreciation and amortization 9,929 3 % 5,139 2 % 3,493 1 % Equity-based compensation expense and related payroll taxes 94,906 26 % 64,704 21 % 36,695 15 % Equity-based compensation expense related to JUMP acquisition 13,172 4 % 1,821 1 % — — Tax receivable agreement expense 14,396 4 % 11,639 4 % — — Transaction expenses 2,052 1 % 1,711 1 % — — Other expenses (1) 934 — % 3,954 1 % 4,597 2 % Adjusted EBITDA 105,905 29 % 81,136 27 % 72,676 29 % Revenue $ 368,168 100 % $ 303,426 100 % $ 252,022 100 % (1) Other expenses include management fees to our investors, provision for income taxes, foreign exchange gains and losses and other expenses that are not reflective of our core operating performance, including the costs to set up our Up-C structure and Tax Receivable Agreement.
Added
For more information, see Note 19 “Subsequent Events” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Removed
Cost of revenue headcount grew at a faster rate than overall revenue growth as we continue to expand and increase our scale to support our expected continued international expansion. International revenue grew to 14% of revenues in 2022, compared to 9% in 2021.
Added
Sales and marketing expense consists of the costs of personnel involved in the sales and marketing process, sales commissions, advertising and promotional materials, sales facilities expenses, and the cost of trade shows and seminars.
Removed
In addition, research and development expense increased due to increased technology costs from higher utilization of third-party cloud computing and other third-party services as well as increased equity-based compensation due to additional headcount, increased allocation of facilities cost due to additional office space, and increased travel and entertainment costs as employees travelled more between our office locations to support new offering initiatives.
Added
Tax receivable agreement expense relates to payments we made, or to be made, under the TRA prior to or in connection with the TRA Amendment.
Removed
In addition, sales and marketing expense increased from higher marketing costs due to increased focus on public relations, events and branding across the globe including the in-person Clearwater Connect conference in September 2022, increased travel and entertainment costs due to the relaxation of travel restrictions from the COVID-19 pandemic in 2022 compared to 2021, increased utilization of IT services and increased allocation of facilities cost.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+1 added−1 removed2 unchanged
Biggest changeA total of $7.3 trillion and $6.4 trillion of assets was loaded on our platform as of December 31, 2023 and 2022, respectively. Movements in funds invested between different securities or fluctuations in securities prices or investment performance could cause the value of AUM to decline, which would result in lower fees we receive from our clients.
Biggest changeMovements in funds invested between different securities or fluctuations in securities prices or investment performance could cause the value of AUM to decline, which would result in lower fees we receive from our clients. 58 Table of Content s Interest Rate Risk We have interest rate risk relating to debt and associated interest expense under the Credit Agreement, which has been amended to be indexed to the Secured Overnight Financing Rate (“SOFR”).
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. AUM Market Price Risk The vast majority of our revenue is derived from fees that are primarily based on the amount of assets on our platform. These fees are stated in basis points, or 1/100th of 1%.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. AUM Market Price Risk A portion of our revenue is derived from fees that are primarily based on the amount of assets on our platform. These fees are stated in basis points, or 1/100th of 1%.
However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset higher costs through price increases and our inability or failure to do so could potentially harm our business, financial condition, and results of operations. 61 Table of Contents
However, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset higher costs through price increases and our inability or failure to do so could potentially harm our business, financial condition, and results of operations. 59 Table of Content s
We estimate that a hypothetical increase or decrease in SOFR of 100 basis points would increase or decrease, respectively, our interest expense or income by approximately $0.2 million on an annual basis, based on our $48.8 million debt balance under the New Credit Agreement at December 31, 2023.
We estimate that a hypothetical increase or decrease in SOFR of 100 basis points would increase or decrease, respectively, our interest expense or income by approximately $0.2 million on an annual basis, based on our $46.1 million debt balance under the Credit Agreement at December 31, 2024.
Conversely, a decrease in interest rates could result in a material increase in earnings and cash flows.
At any time, a rise in interest rates could have a material adverse impact on our earnings and cash flows. Conversely, a decrease in interest rates could result in a material increase in earnings and cash flows.
Removed
Interest Rate Risk We have interest rate risk relating to debt and associated interest expense under the New Credit Agreement, which has been amended to be indexed to the Secured Overnight Financing Rate (“SOFR”). At any time, a rise in interest rates could have a material adverse impact on our earnings and cash flows.
Added
A total of $8.8 trillion and $7.3 trillion of assets was loaded on our platform as of December 31, 2024 and 2023, respectively.

Other CWAN 10-K year-over-year comparisons