Clearwater Analytics Holdings, Inc. (CWAN) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for joining us. My name is Maya Kilcullen. I work here on the software team at JPMorgan. And today, I am joined by Clearwater CEO Sandeep Sahai. Sandeep, could you take a few minutes to introduce yourself?

I thought usually a good idea giving me that much time to introduce myself but okay. Now quickly, I'm Sandeep Sahai. I'm based in Washington D.C. I've been CEO of the company for about 4 years. And in the audience, we've got Mr. Cox, Jim Cox here. He's the CFO based in San Francisco. So just looking at the audience, quickly about our company. Just in terms of size, it's about ARR of about $287 million at the end of Q1. The company has grown at about 25% organically compounded for the last 5 years. And in that time frame, we've also generated between 25% and 30% adjusted EBITDA each year. So it's been a nice growth story. The foundation of that is a 98% gross revenue retention rate, so really high gross revenue retention rate. And then 80% of the time we write a proposal we win, so really high win rate. So question, what does the company do? So we do investment accounting and analytics. So we do that for insurance companies. We do it for corporates and also for asset managers. So when you think about the book, what's going on is much more global, many, many assets they're investing in and huge risk in regulation and compliance. So larger companies have 10, 20 different systems and they're trying to make sense of it every day, right? And how do you do that? That's where Clearwater comes in. It's a disruptive, on the cloud, single instance, multi-tenant solution. And that's why we win 80%. It's not like we're the best salespeople or something. It's just that the technology is disruptive enough and your competition really is legacy systems. And so that's why we win. And the company continues to do well. We started to go international. And I could go on. So I'll stop and let Maya ask some questions.

So another thing about the platform that I think is a differentiator from your competitors is that daily reconciliation is really the standard. Can you talk about why that is important and why that has been difficult for other platforms to achieve?

Yes. Super good question today, right? So the question is, if you are the Chief Investment Officer of a large institution, when do you want to react to the events of yesterday and today? Well, I guess you want to know now, right? And if you have legacy technology, you probably have 10 accounting systems at least, something different in Japan, something different in Hong Kong, something different in Germany and France. And you have all of those systems and you're going to call all of them say, send me your reports quickly because I want to try and reconcile it. And whenever you get such a report, you're like, where did this data come from, where did that? So I guess the point is, it takes very long to get a comprehensive view of your global assets across assets. With Clearwater, you get that 9:00 every day in the morning. When you wake up at 9 in the morning, some of our clients have, just to tell you why it is hard is, 60 different asset classes they invest in, CMLs, auto MLs, bank loans, mortgages, whatever, right, 40 different currencies. Well, Clearwater will reconcile all of that every day using this platform. And in the morning at 9:00, you'll have a comprehensive view on which you can decide on trades, you can decide on risk, you can decide on regulatory reporting you need to make. And that is the power. But when you have that many asset classes, Maya, what happens is, you buy something and then you go build a system for it. Then you invest in Germany and you buy a new system for German GAAP, then you go buy something in Hong Kong and you. So really organically, companies build up this huge pool of systems and Clearwater sort of takes all that away. It's a single instance, multi-tenant solution. And that's sort of the power of it.

And can you talk about how, the fact that it's a single-instance solution, how that improves the accuracy and kind of the error solving across all of the customers?

Sure. I like her already. She's asking all the right questions. No. But seriously, when you think about a software on-prem, you did whatever you did. You did all of it. So if you were running a system for an insurance company, you made sure the feeds came in, in the morning. You made sure you did the right accounting. You made sure the reporting well. You did all of that. You did all the reconciliation and the quality, right? And with Clearwater, it's just completely different. What we do is we don't process people's books. We process the securities they own. So every security you own is processed separately. And the point being, if 2 clients have a 60% overlap, we process that security onetime. If 10 clients had the same security, we still process that security onetime. And so as you can think about 1,000 clients all on the same security master, obviously, we get much, much more efficient. But the bigger value, at least a large value of that also is, let's say you found an error. Let's say you found something which wasn't right. What would you do? You'd call us. And we would go investigate that. But if we fix it, we don't fix it for that client. We fix it for all clients who use that security. And that's why the quality of what we have is always going to be so much better because it's a single security master. If you had another software which was just simply on the cloud, that's okay, but you will be doing your own ingestion, your own reconciliation, your own quality tests and your own data. With Clearwater, like I said, the securities are processed onetime. So it's just foundationally different technology. I wish I could say we invented it. We didn't. It just that when we started running our businesses, newer technology like this was available and was built cloud-native Day 1.

And so as you have these high win rates, can you talk a little bit about who you're going up against and what the typical RFP process might look like?

Yes. So I would say that almost always is the incumbent who's the real competitor. And it's not quite that easy because accounting is very mission-critical, right? But I don't think we ordinarily lose to competition other than the incumbent. So you will go into the deal and the incumbent doesn't get moved out. That does happen. And when I say we win 80% of the time we write a proposal, that's the other 20%. But I think it's pretty rare for us to lose to one of our other competitors who does investment accounting. And that has been historically true for a while. But I want to stress, it's not because our sales and marketing is good. It is because it's a fundamentally different technology. And I don't think anyone sitting here will challenge that a single-instance, multi-tenant, single-security master is the right approach. I don't think anyone calls us today and says, you know what, that's not a good idea. Why don't you do on-prem or why don't we do cloud software. So I don't think we lose on the merits of the case, right? I think we lose because of incumbency, and that happens often enough.

Okay. I just want to quickly pause too and remind the audience that you can submit questions online through the conference website, but also feel free to just raise your hand at any point, and we have mics that can come around. I just want to put that out there. So taking a step back, this is your first conference, first year as a public company. What are some of the highlights that have changed both about the business as well as the industry in your first several months as a public company?

Yes. Firstly, everybody told me the stock market is a very gentle thing, don't worry about it. Good bloody lord, I don't know why I listened to it. But seriously, don't worry about it. It's all great. So that was the first thing. Second thing is, these things called earnings calls and investor relations meeting and analyst meetings, that's interesting. It takes some more of time. But look, more seriously, we went public for 3 reasons, right? We went mostly because of clients and prospects. And the issue was that clients, we are doing something which is mission-critical and clients were like, let me see, you're owned by private equity, who knows where you're going to be tomorrow? Why am I going to trust you with something that crucial? And so being a public company gives you a lot more standing. And the second thing about clients was, we're headquartered in Boise, Idaho. And usually, people would start with where is Boise now? I think it's not Boise. It's Boise. So just the market standing we had was just, wasn't that great. So clients and prospects were really reason number one. Reason number two were employees. The market is challenging for talent, especially good talent. And having the ability to provide RSUs and options, we thought was crucial. And thirdly, maybe somewhat lucky is we wanted to get rid of our debt and have an ability to do M&A to accelerate growth. And so we thought we'd get a currency and we'd get cash. And so it feels like a good time to have cash on your balance sheet. And so we're really lucky at this point. And we want to use it judiciously as opportunities present themselves. But just finally, on the business model, nothing has changed. I think some of you know us from 3, 4 years back, continue to execute on, we have said we will continue to grow at 20%-plus. We'll generate EBITDA between 25% and 30%. We'll still spend 25% on R&D. So we invest a lot in R&D. Our gross margin is going to be 75% plus/minus a little. Steady-state client gross margin is going to be 80%. So really nothing has changed in that. It's a question of building out the company, building out infrastructure in different cities, in different locations and executing. And execution is all we are really doing, I think. It's not easy, though. I think you're talking about global companies with everything is different. German GAAP is different from Dutch GAAP, which is different from French GAAP, which is different from Taiwanese GAAP. And so you're building all of that out because for us to be valuable, you have to be fully comprehensive. I mean, you can't talk about risk and say, I understand risk on 95% of my portfolio. That doesn't mean anything. You have to have a full comprehensive view and Clearwater sort of provides that, if that makes sense.

Yes. Can you elaborate a little bit more on the M&A strategy you mentioned? How do you think about potential targets? What areas look attractive right now?

Yes. The biggest thing is an acceleration of growth. That's why you would do it, right? But the bar is a little bit high because we don't want something to come in and impede our growth. I mean, we have a pretty good story. We can keep growing at this rate and generate profit. So we feel the bar is high. But if something gave us faster growth in Europe, for example, I think that would be interesting because Europe just takes time to build, same thing with Asia. If you got a footprint in Asia and helped accelerate growth there, I think that would be interesting. Also a number of adjacent spaces you could look at, just deeper risk, deeper analytics, things like that may be interesting. And so again, it's in the service of being more comprehensive than today or being more geographically comprehensive than today. And that's what would be good for us from an M&A perspective. But the bar is high, and I know we get asked this all the time saying, what are you doing with the money on your balance sheet? And the answer is, we're not going to do anything until we feel it's going to be helpful to both companies' growth.

Can we talk a little bit about the international opportunity that you just mentioned? So this past quarter, signed your first French insurance carrier. You're expanding into new verticals with the foundations. Can you talk about what the demand environment looks like in Europe right now?

Yes. So just the starting point is 2 things. One is revenue last year out of international markets was 5%, so nonexistent, right? But we invested in sales and marketing in Europe about 2, 2.5 years back because 40% of all TAM is in Europe. So it should be literally close to, as big as the U.S. market is. So it's strategic. The way we approached it was we said, let's go get some really big clients. And the solution on the platform should be transferable because obviously when you have large clients here, they have many assets in Europe already, of course, and you're processing them already. And so that's how we approached it. So we won, I think we've announced Aegon. We announced Athora out in Europe. And those are at times multi-country deals. And the idea was, let's go out, let's go implement them, let's go get them to be really successful and then drive down from there. So just as a matter of result then, 20% of all new deals last year, new business last year was out of Europe. So Europe, I think we said Q1 was 10% of our revenue now. So we feel like there's a real room there. And what we have done is built, we're not just, there's no fly-by deal here. We set up a London office. We set up an office in Paris with 8, 9 people, another 8, 9 people in Frankfurt. We set up 100-person or 150-person team in Edinburgh to sort of go out and operate, do the operations. So again, it's a full-fledged effort because we don't think it's a short thing. We feel it's got massive TAM and we should go out and capture it in a systematic way. Yes, please.

Can we ask, sorry, I just want to grab microphone. Maybe while at the front here, maybe while we're getting the mic. In the U.S., you started off with insurance carriers and then moved into corporations and asset managers. Is that the same strategy that you are implementing in new regions or are you kind of attacking all fronts?

Yes. I do want to say this that when the company started, it was founder-led. And as most founders, I've started companies before, you'd go incrementally, right? You don't want to spend money. So we start with just corporations actually. So we did just corporations for a long time, went to insurance and really started with small insurance and into bigger, bigger, large insurance and same thing with asset managers, right? But the platform now is fully proven across jurisdictions and geographies and industries. So in Europe now, the attitude is very different. We're going to go after all insurers of a certain size, right, from the bigger ones coming down and really all asset managers. So those 2 are markets we're going after all of Europe very systematically. We also set up Singapore. And there, we got a really large insurer, which we announced and didn't expect it, so I shouldn't say, but we just didn't expect it that quickly. But yes, it is both those markets quickly.

I think we had a question in the front.

I was wondering if you could speak to the way you drive pricing for the business? Is it as a percentage of assets under management or how exactly, how does that work? And for the M&A strategy, like how much leverage would you be willing to take on the balance sheet just to understand like how sizable an acquisition could be?

Yes. So when you think of pricing, our pricing was, I wish it was a better answer, but it wasn't super sophisticated. What we did was we looked at, if you were a client, we would look at your asset mix and what it would cost us to sort of service it and we'll price at about 80%, 82% gross margin. And that's how we used to price. I think you can imagine every book is different and what they require is different. And so therefore, we would do an estimation of what it will take us to service it. 80% steady state, that's what we will price at, right? And I do think we are in a very, very vast majority of the time successful getting to that build rate and getting to those kind of margins. The margins are lower when you're onboarding, right? So we don't charge separately for onboarding. So the margins are lower while you're onboarding. Finally, as you go to new geographies, the margins are lower. Why is that? Because if you're an insurer here in North America, for example, we're already connected to every custodian you could want. We're almost definitely doing most of the securities you already have. So we're already doing it, right? When we go to new geographies and new industries, sometimes you have new custodians and all that. And that's why our margin is more like 75% and 74% in that region and not 80% because those sort of weigh you down some, right? And so that's how we have price and not super sophisticated like I said. But what we are trying to work on is, look, our gross retention is world-class, 98% gross retention for, whatever, 13, 14, 15 quarters. I think that's excellent. Our net revenue retention, frankly, can be a lot better. And our thought is, it's got to do with pricing. We should have more systematic price increases. That's number one. Much, much more importantly, we should have a multi-product, multi-pricing strategy for product. Right now, it's one price for everything, as many users, whatever functionality we develop comes to you for free. And so right now, it's not super sophisticated. But it's not quite that easy, right? It's a multiyear journey going from here to where we want to be. But it is superbly strategic to us is how do we go out and build NRR out into the future and take it to be world class, which it is not right now, right? I think it's okay. I mean, sorry, I don't want you to sort of freak out. Like 107%, 110% NRR is okay, but it's not like the 98% gross revenue. Gross revenue retention is world-class. And if we can get the net revenue up a little bit higher as we definitely think we can, then that would be just a big lever for growth. I forgot the second part of the question. I forget. Yes, the leverage. We think, again, the company has never done an M&A. So we just want to be thoughtful about this. Have the executive leaders done M&A before, yes, they have. But as a company, we have never done acquisitions. It's been all organic. This 25% growth, compounded growth I spoke about, it's all organic. So I don't think we are looking to go do something big. I think we would do something reasonable. But would you take 2, 2.5x or something like that? Yes, but a whole lot more than that, that would sort of worry us a little bit, I think. I mean, obviously, M&A is hard to predict. But that's our approach going into it. Notice I was looking at Jim to make sure he was comfortable with that. He was like smiling. He was okay.

Sticking on pricing for a little bit. So in the traditional customers with insurance carriers and corporations, most of the assets that were coming to the platform were fixed income assets, correct?

Yes.

How does shifting into asset managers where you might have more of a concentration in equities, how does that change the volatility of revenue? And is that something you talked about potentially different pricing structures, is that something that you're considering?

Yes. So when you look at the insurance companies or corporates, we pretty much always get the full book. For the vast majority of our clients, we'll get the full book only because that's when it's Clearwater in its full glory, if you will. You get to see NYSE reporting. Regulatory reporting is right off, actually, one click away. And so that's what happens when those 2 markets are sort of together. The asset management space is different, right? So asset management space is very much land and expand. So you could get into a client and you could get some institutional clients, not all. And then as you do well, you get more institutional clients and you sort of go from literally, I won't say desk to desk but definitely from business to business. So volatility, though, I think the way we price with asset managers is a little bit different, right? We would do some on an AUM basis. There's floors for each of these items. There's some fixed prices for each of these items. So it does, it's not exactly. It doesn't mirror that because the asset mix is different.

Got it. That makes sense. I want to talk about Prism, one of your newer product offerings. But maybe before, can you just set the stage for what a traditional onboarding process would look like?

Yes. Somebody was asking me today and said, isn't it scary. I don't know. So typically, if you're a client, when you get on board, we don't get data from you. We basically go to your custodians directly. So all we'll ask you, who's your custodian and we'll go to the custodians directly and get feeds every day from them. We'll get feeds from your trading systems directly. We'll also get feeds from sources like S&P, Refinitiv and people like that who have pricing information, right? And what we also do is we model every security ourselves. So if everybody in the room, if any one of you had one security which only you had, we would still model that. So every security on our platform is modeled on our platform, right? So the point is, you get custodians, you get trading systems, you get this thing from market makers and you get our model. There's 2,600 feeds a day, all of them come in, right? And we will process all those 2,600 feeds and get accounting on each of these securities. And so what else was the...

I think that's great. Maybe you can just talk then, yes, so give an overview of Prism and how that differs.

So the way it sort of works is everything had to flow through Clearwater for us to provide the super comprehensive view on the right side, if you will. And sometimes a client found that hard to do. Sometimes there will be a German office, which would say, I'm not moving real estate off Yardi right now. You can do what you want kind of thing, right? And clearly, what I would sort of walk away from those opportunities, come back in 6 months or a year. And what Prism does is sort of just builds a bi-lane, if you will, right? So everything else goes through Clearwater. And then the feed from Yardi in this case, in this example I'm talking about would come directly to the reporting layer. And then the client would still see a comprehensive view for risk, for compliance, for regulatory reporting and things like that, but not everything is calculated by Clearwater. We may be doing 90% of it, not just the real estate. Let's say someone has a pool of mortgages which they have an accounting system for it. They don't want to migrate quite yet. That's how that would work. So Prism basically expands our TAM about what we can address today. So if we couldn't do 100% of your book, it would not be an opportunity for Clearwater. Today, if we can do 90% of your book, it is an opportunity for Clearwater. So that's the difference, right? Does that makes sense?

Yes. That makes sense. And can you quantify what is that TAM expansion?

Yes. So in our core markets, we think the core market is about $4.7 billion. And so the way we think about core markets is very rigorous. We have every name of every prospect, what their AUM is and therefore what the price might be. So we do this pretty rigorously, and it's about, like I said, about $4.7 billion. Prism allows us to expand that by about $1.4 billion, right? And so that's the size of TAM expansion we think we can find. And right now, we believe our TAM, our currently addressable TAM is about $10 billion. So $4.7 billion, from there I think it's about $2.7 billion of adjacent markets, $1.4 billion from Prism and about $1.3 billion from APAC. So that's sort of the market we can see where we can literally list every client and say, this is their AUM, this is what the likely pricing is, and therefore, what the TAM is. So Prism does expand our market from the current $4.7 billion and adds about $1.4 billion to it.

Great. And can you just talk about what you're seeing in terms of interest level so far? And what are you doing on the sales side to drive adoption of Prism?

Yes. Look, Prism is interesting. I think it was a very religious thing to move over to Clearwater. You had to give up all of it, if that's okay. And now we can do 90%. So we find a lot of interest in it. Clearwater is, especially when asset managers, institutional client reporting, you can now do it without us having to do all of it. So take an example of a large asset manager, and they had their own performance they wanted to put out there, right? And typically, you would have to take what Clearwater did. Well, now we can do what Clearwater does but we can also pipe in what you have from your systems and present them side by side, right? So the clients had that ability. So I think the interest in Prism has been, we thought it would be only asset managers. We're a little bit surprised by the interest in insurance companies because we just didn't think it was that big. But people seem wedded to some systems, especially real estate. People are wedded to some systems there. Derivatives, people are wedded to some systems there. And we don't have to convert people. We can serve. They can keep their religion a little bit.

And what are some of the main barriers or hurdles that you're seeing on the customer side with being a little bit more hesitant to moving over their systems?

Yes. I think if people don't have, I think people are just comfortable then it's harder to sort of get them to move, right? But if people have any change going on, then it becomes a very easy thing to do. So for example, if people are buying new pools of assets or if people are now having to do IFRS reporting or now having to work with Japanese GAAP or people have new asset class that they're reporting in or investing in. So someone says, I want to invest in bank loans. What are you going to do? Well, they can go buy another system which does just bank loans well and then you build another system and to integrate all that for risk and regulation. We can do that. Or move to Clearwater and take that leap, right? So I find that every time there is any change that's a reason people come to us. Volatility actually helps us a lot because if it's not volatile, the changes you need to make are lesser. But when it's very volatile, you want to see everything every day. And the reason we know that is, we obviously see how many people access what reports on the other side. And right, the number of people who access our risk modules is just through the roof. Because it's literally every minute, people are banging at it saying, what's my risk exposure on the world. So that change, I feel, is the one which drives it. Sometimes there's cost to asset managers, sometimes there is cost. Asset managers also, we talked to a client in the morning today. For them, it's client expansion. So when they go sell their services to a potential client, the fact that they can do comprehensive reporting is a big strength. And if we have gone, I know we work with JPMorgan Asset Management, we will go with them to clients and sort of bid jointly, if you will. And if you don't have high-quality reporting, well, that's a negative. So sometimes we are brought in to help grow the business and the mandates they have. So those are good fun.

Great. Going back to some of the international expansion. I think at the time of the IPO, the opportunity in Asia seemed a little bit farther down the line. What has changed because now you've landed a larger customer in Singapore. What are you seeing in the demand environment? And is that different from what you expected when you were going public?

Yes. We were definitely caught on that. I think that's a weird term. But yes, we sort of set up an office and we went after the market. And we thought they would just take longer because, frankly, it's 10% of the TAM. So we thought we'd get a lot more, it will take a while to get that. But I don't know whether it strikes everybody, but yes, they don't, every country is so different in Asia, which is not true in Europe. Obviously, not true in the U.S. right? You've got U.S. GAAP, you've got U.S. GAAP, fine. You go to Europe and it's very much IFRS and just a slight movement from IFRS into every GAAP. But if you are an insurer in the Asia Pacific region, yes, good luck. You've got Malaysian GAAP and Taiwanese GAAP and reporting in each regulation, each regime. So yes, so we got these deals without, we didn't think enough, I guess. And when we got them, we had nobody to onboard them in that time zone. And so then we moved people from Boise to Singapore, which is fun. And so yes, we are quickly trying to build that a little bit ahead. But I actually see the logic of, if I'm the head of operations for an insurance company or a Chief Investment Officer in Asia, my life must be quite terrible and quite difficult. Terrible is the wrong term but quite difficult. And Clearwater can absolutely help you there, right?

And so please, the one on the front.

Newer to the strategy and story so forgive the question here. But price positioning, if you could help us understand that. So if you're the upstart and you are displacing an incumbent that's an on-prem maintenance stream, let's say, and you've got the public cloud SaaS. Are you coming in at a 2x their maintenance stream? And pitching that as apples-to-apples from a price positioning, effectively trying to back into, are you pricing at a premium or a discount to the incumbents? And then I've got a quick follow-up.

Yes. Look, so don't just think of the software, right? So if you're running, let's say, you're a company, a large insurance company, you have 5 pieces of software all over the world, right? But you have people who are sort of manning each of these 5 people, doing the data ingestion, doing the aggregation, reconciliation, accounting, but you also have to have an overlay software you run. So you probably built a data warehouse, okay, Snowflake, whatever. I don't really care. And you built that and you're running that infrastructure also. So you're going to get rid of all of this software and all of the people who are sort of working this, right? And fundamentally, we should be a whole lot more efficient than that and the total cost. So don't think about just the software, think about the total cost of ownership besides the point that I can deliver a result to you every day, and those systems are going to give you once a week, once a month, whatever that is, right? So we don't do that very much. We look at what we think is going to cost to service it. We do this 80% gross margin and we live our life, right? And it is what it is, right? And we will not sell much below that.

Is there an average cost reduction that you can pitch with case studies when you walk into a new account?

Yes. So people should see, but again, we try not to answer the question you're asking by saying, if you don't have a business problem, you don't have a business problem. But I can produce, if your the Chief Risk Officer, every day of the week, I can produce a global view of your portfolio. Now should you be reducing cost by 40% or 30%, yes. By the way, should you be getting a better return on your assets because you can react faster? Yes. So we think it isn't just about cost. It's about the total return on your AUM should be higher, and that's been proven out with many, many clients. The overall cost should go down meaningfully. But thirdly, it should make you so much more efficient and reactive to the market. So we think those 3 together, it's not about just the cost, right? And I know you're not implying that, but I do think all 3 matter equally.

Yes. I mean, I think that's accurate. I mean, working for an asset manager for a large bank, I can tell you we have heads within our building that we don't know yet or inefficient problems until we have someone come in and say, hey, you don't need that expense there to do that. So that's heartwarming.

And the data, when you get it, you question the heck out of every piece of data. If you're on Clearwater, you click it, double click it, triple click it. It will take you to the base data and show you where it came from. Because otherwise in a meeting, half the time is spent in trying to figure out, where did this data come from? Whose data is right? Is the risk guy right or this guy, all that goes away. It's one data, one security master.

And then a quick follow-up. In terms of boosting the NRR over time, you mentioned 107%, 110%, wherever you guys are today and bridging that to something higher. I guess I was a little disappointed to hear a strategy that I would describe as more private equity-like and driven by pricing instead of leveraging the 25-some-odd percent of revenues you're spending on R&D with new feature functionality, increased adoption. So is there a walk from your customer portfolio of increased product adoption over time outside of pricing that can bridge you to that NRR goal that you're setting without gouging on pricing?

Yes. So I obviously didn't do a good job at that. So let me just sort of walk you through the math of it, right, so you get all of it. You start with 100%. You go down 2%. You get to 98%. You get about 2.5%, 3% from there on price. So price is really small there. And then typically, you've got a 3%, 2%, 3% tailwind from assets growth generally speaking, right? So that gets you to the 104% something like that. And the rest of it was more adoption within the current client base. So this is like you go to one desk and you go to the next desk and next desk. And so that's what got you to the 110%. So that's what the, not price based at all actually, right, at all is not the right thing. We obviously have 2% to 3%. And what we are talking about, as you think further ahead, modularizing and selling modules is what can drive growth to NRR. So let me give you an example. Over the last few years, we have built Japanese GAAP, Austrian GAAP, German GAAP, French GAAP. If you bought our software 1.5 years back, you just get all that for free. That makes no sense. I mean, this is new functionality you would have bought software for, and so we should be able to charge you for that, right? Same thing with cash flow forecasting or composite pricing. So we have not done a good enough job of modularizing the software and selling it separately. And that's what will drive sustainable growth in the future. So I think price is a part of it, but that is literally 2%, 3% in a 15% walk.

So we're a little bit over on time. So I think we need to end it there. But Sandeep, thank you so much, and thank you, everyone, for joining.

Thank you so much. Thank you, appreciate it.