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

It's actually trading above your issue price.

And Sandeep, you've been involved in the business since 2016. At the time, it was $90 million of ARR. You've crossed over $325 million of ARR, 1,200-plus customers. The business has done just an incredible job scaling. It'd be great to just step back and spend a couple of minutes, just framing the business, how you guys have continued to do this? And I think for all of us, just a very quick overview of what's investment accounting and reconciliation?

Yes, that's a good lead-up. So firstly, thank you for the stock. It's nice to know it's doing well. But look, what we do is large clients have investment portfolios. That portfolios could be in the tens or hundreds of billions of dollars. And every day, they need to make a decision about what to trade, what to sell, what to buy and things of that ilk, right? And the question is how do you see a comprehensive view of what you own? That's the hard part. You think about yourself, you find it hard to figure out what you have today morning. You have savings accounts, checking accounts, you put all that together, what do you really have? And you probably have 20 websites you'll go to, put in your username and your password and you figure out. Our clients have hundreds of billions of dollars. They invested across the world, they invested in every asset class you can think of. And that's where Clearwater comes in. Clearwater goes out and understands what our client has, and then on a daily basis, every day in the morning, we give them a comprehensive view about what they own, what the risk is, what compliance they followed or not followed, what the yield is, who's doing what. So it's pretty incredible that we can do that. And that's why clients come to us. This company was, like you said, $90 million of ARR a few years back. And it's not like it's not a winded space. There are lots of accounting engines out there brought out by large companies. But what they don't do is they don't provide you a comprehensive view. Some companies will give you a view of your equity. Some will give you a view of your real estate. Some will give you a view of derivatives. And they will give you a view of different asset classes in different countries. Clearwater provides you with one comprehensive view you can act on. So that's our story. And it's really all about the technology and the platform. And it's not like we're geniuses. The platform was built like that, as one comprehensive thing clients can use.

That's great. That's great. And you just stole my thunder. I was going to jump in and ask about the platform. Spend a minute on that because you touched on this, if you think about that, right, different asset classes, different currencies, different accounting methodologies. There's a ton of complexity in what your platform does. Double click on the platform for a second. And I'll jump ahead a little bit, which would be, how is that so different than what some of your competitors do?

So you think about it, look, if you did just equities, we're not the right company for you. Who does just equities, right? So our value comes from people investing in every asset class, and our job is to bring it together. And then you have the issue about, I said it very casually, I'll give you the accounting position. But yes, based on what? Is it German GAAP accounting? Is it Japanese GAAP accounting? Is it IGAAP, U.S. GAAP, which one is it? And then I said you can do regulatory reporting and compliance. Yes, which country, right? So the point is not only do you have to ingest all that data on a daily basis, you have to come out on the other side and make sense of it in 25 different ways, depending on the user, depending upon which country you're talking about. The final piece is the personas. If you are a compliance person, your view of the same data is different. If you're the risk leader, your same data is different. And if you are the performance person yield, you look at it differently. What Clearwater does, just to talk about the platform a little bit, is we have a single-instance multi-tenant platform. And that is what is so incredibly different from every competitor we have out there. And so we say, what does that mean? We model every security once. So if 100 clients use the same security, we process it one time every day. If 200 people use it, process it one time. If you bought a competitor's product, you would have to ingest your own data for your security, reconcile it, correct it, and then go account for it. And if you bought it, guess what, he would have a different same software but he will do his own ingestion, his own reconciliation and his own accounting. Clearwater does single-instance, multi-tenant. Every security which comes in our system is accounted for and reconciled one time. And that is the [ strap ]. And we just sort of take that forward a little, let's assume you looked at your data in the morning and you say, huh, that data doesn't look right. What are you going to do? You're going to call me. And if I find it to be correct, I'll fix it. But when I fix it, it fixes it for every client of ours at that same instance. If you're using a competitor's product, you have to find every one of those errors yourself and then fix it, but you don't know what the other person found and the third person found, or the 1,200 people found. So obviously our data quality for us to be wrong, and we can be wrong, the data input has to be wrong, all of our machines have to miss it. We have 200 people who do data quality, they have to miss it. And all of our clients have to miss it. That's how Clearwater is wrong. While if it is their own system, you probably have a 2% reconciliation team, comes to your system, they have to be wrong, these 2 people miss it. And that's it, you're going to be wrong. So the point is I do think we have -- look, every other industry, you look at Salesforce, you look at Workday, you look at Microsoft Outlook, it's all single-instance multi-tenant. Everybody is going there. Our industry, which is the investment accounting analytics world, just hasn't got there yet. And Clearwater is at the forefront of that. And like I said, I think we are sort of unique because of those -- address those customer needs, which are hard to do. And just to finish up, German GAAP, you develop German GAAP one time, that's it. Everybody who's in the system can use German GAAP there from that point, or the Japanese GAAP, whatever that might be. So it is pretty unique, but it's not unique outside our industry. Outside the industry, this is how people talk, and this is how people sort of deliver value to clients. Ours is a pretty legacy-oriented infrastructure around the world. And that's because people have been doing it for a long time. When you look at the insurance companies several years back, they used to just do equities and fixed income products, and that was it. So you did not need somebody like us. And now insurance companies, they invest in real estate, CLOs, mortgages, derivatives and everything. And they also invest in Europe, they invest in Asia, they invest all over the world. But those are trends that have been going on for the last 15 years, which is why we were sort of not needed about 10, 12, 15 years back, and increasingly needed as the market has evolved.

No, that's great. And you just touched on another point I want to touch on, which is talk about this evolution in end markets. Because there was a journey here from corporates, the insurance market, asset managers, how that play out.

This company was based in Boise, and I'm not from Boise. When I went there 5 years back, I started and learned how things work. And it's interesting when you're in New York or you're in London or San Francisco, I think companies here think they know it. Nobody in Boise wakes up and says, I know how the world works. Nobody does that. And so -- not literally. But in New York, you feel like, I know this whole drill. People have to learn from me. And so the interesting thing is the company just started with just corporates, just corporate clients. So people like Apple, people like Cisco, people like that who have lots of cash, 200 managers, and they want to see one comprehensive view every day. How do you do that? And you've seen your own reports, which you get as a personal -- your personal. And they all look different. They have different columns, they all mean different things. We do that for these companies on day 1, every day at 9:00. So what happened was some of these investment managers were sort of not our clients and corporates went to them and said, hey, we want reports like that. We want that level of transparency. And so people from Boise went out of these asset managers and said, okay, how do we do this together? And we jointly developed it with clients. And we slowly moved into the asset management industry, slowly moved into the insurance industry like that and then got international. So we built out the European capabilities and now the Asian capabilities, but built along with clients on this journey. And that's why it's been a little bit consistent, our growth. It's just not like we think of these things and we go and try and sell it. Our growth has been client-led, joint innovation with clients, and therefore, the rate of success has been really, really high. I don't know, Jim, would you add anything to that?

Well, to that point, in the rate of success with customers, 60-plus Net Promoter Score, and I don't exactly think that the asset management community is an easy group of people to please. What is it that drives that level of satisfaction? Is it the fact that you're joint developing this stuff with the clients? What is it that drives that level of satisfaction?

Yes. Dan said it, not me, that asset managers are not easy to please. Except for Dan, of course. Fantastic. But no, I think more seriously, the whole culture is different. And the culture is very focused on clients. And I didn't bring that culture to the company. I mean I joined the company 6 years back, but the culture was very Boise. People care about clients. They really, really do care. And I think what Jim and I have done is continued that tradition of the focus on it. So my bonus is somewhat dependent upon the Net Promoter Score, which you just talked about. Jim's bonus is dependent on that. Most leaders in the company have a portion of the bonus dependent on the Net Promoter Score, and we really, really care. Now what is the expression to you? Two things. One is really high gross revenue retention. Our gross revenue retention is 98% and been that way for 16 of the last 17 quarters or something like that. So it's really high and that's a value to an investor. The other big value to an investor is our sales and marketing expense have always been pretty low. We're at about 13%, 14% in that region, and that is because a lot of our deals come from client resources. So it's not like a Net Promoter Score, yes, it's good. No, no, it actually provides benefits to our P&L because of gross revenue retention, because of the amount of money we have to get in sales and marketing to get our 20% growth. So as a result of that, Clearwater has always been really nicely profitable. It's not like, after we went public, we said, okay, how do we get profitable? We've been profitable way before that, right? And even now, we have 27% EBITDA, converts nicely to cash, and that is because of the Net Promoter Score. So we take it really seriously, not because something I like or Jim likes. It is a question of our business model is about delight clients, get them to sell for you, right? And the investment management community is reasonably small as many other vertical industries are and it really, really works.

Great. Well, let me pivot to competition for a second. It's never lost on me. You've got a slide that maps out the competitors. When I look at that page, I see names like SAP, like BlackRock. These are big companies, none of which have the growth profile that you have. So 2 parts to this. One, across your business, do you see greenfield opportunities? And two, what's driving your advantages versus some of that competitive landscape to drive the outsized growth?

Yes. If you look at our competitors, it's pretty interesting. Who is it? So I'm often told not to name my competitors, but okay, who are our competitors? Basically, you think in North America, you've got State Street, you've got SS&C, [indiscernible] BlackRock and people like that, right? And then in Europe, you've got SimCorp and Linedata and Murex. And without being too specific, the point is, our ability to have a single-instance platform, which gives you a comprehensive view at 9:00 in the morning, well, nobody has. Go to the website, they'll say they're on the cloud, which they are, but it is single -- it is single client, single-instance, which goes back to everything I talked about, which is if you bought it, you do your own data ingestion, you do your own reconciliation, your own accounting and your own reporting. Clearwater takes all of that away. The level of quality and the efficiency we can bring through doing this for all of our customers together on one platform, it's just -- it's night and day. And the issue isn't does Salesforce have more functionality for users, but Siebel is just a different technology. And that's the point here. I think those technologies are different, and getting all those technologies to [ sync ] is hard. And let's take a real client example. Let's say, you bought, tomorrow, your U.S.-based insurer and you bought a portfolio of German assets. What are you going to do now? Are you going to buy an accounting engine in Germany and then figure out where German regs are, and then figure out how to add that to your other reporting and see a comprehensive view? Yes, best of luck. With Clearwater, you literally flip a switch and say, I'm enabling mortgages and I'm enabling German GAAP, and you're in business. It is just so foundationally different. So, Dan's question, he was nice enough not to ask, if you're that great, why don't everybody switch today? Yes. There's got to be a compelling event. And a compelling event could be to buy assets in a different country or they invest in a new asset class, or they worry about compliance, or pulling the data together takes them 20 days after quarter close. We would do it in day 1 or 2 more often than not. So the question is there's got to be a compelling event to make the change. And nobody wakes up and says, oh, today, guess what, I'm going to change the accounting system. No, there's got to be a compelling event. And that's why it takes time, I think, to go out and talk to our clients who have that.

That makes sense. One other thing that you guys did last year was model transition. And in fact, it's gone incredibly smooth, and Jim, it's a good question for you. The fact the organic growth has ticked up in the last 2 quarters. Can you talk a little bit about that transition?

Sure. Thanks, Dan. So as we went public, we had a business model where we basically charge basis points. But when we would sell to a new client, we would sit down with them, we would look at the kind of composition of their asset classes, look at their scale, try and figure out and think about, okay, what do we think it's going to cost to serve them. We really focus on north of 80% gross margins on a steady-state basis and think about -- and we would think about kind of like, okay, this is an annual fee. Then we would take that annual fee that we thought of in our mind and divide it by their assets and come up with a basis points for them. Well, with the market volatility and the interest rate rises and the fixed income values dropping last year, right, that puts a headwind on that AUM-based pricing model. So we pivoted, and we did 2 things. For all the new clients, we stepped in with something called a base-plus model. So we, for new clients, we would do the exact same exercise that we were doing, but when we'd say, okay, we're going to charge you $1 million a year, instead of dividing by their assets and coming up with a basis point, we would say, we're going to charge $1 million a year, right? That's the base fee, okay? Where does the plus come from? Well, clients grow. And so as their AUM expands over time, we have a basis point model that helps them grow. So that's the second piece. That's the plus, which is kind of how most of our clients are coming to us because they're doing new things. They're entering new geographies, they're growing, and they have dynamic businesses. So again, it aligns with our clients, right? Here's your business today. Here's your business tomorrow. The next thing we said was we said, hey, let's put in kind of this base fee escalator so that we kind of have built-in price increases. But if your assets grow fast enough, it's kind of transparent, right? If your assets grow 10% and your fees grow 10% and your base fee goes up 5%, it's transparent to you as a customer. That makes sense? And then the last thing we did, which was the most strategic thing, up until a couple of years ago, we sold this thing called Clearwater. You can hear how we talked about it. And we talk about how expansive it is, how it's GAAP across every jurisdiction, any asset class, anything like that, risk, performance, compliance, all called Clearwater. Well, when you actually went to a client and you said, hey, before I flip on French GAAP for you for these new assets, do you mind paying us $1 more or $1 million more or something like that. The client would say, yes, I understand that. That's something incremental. It's new. It's something for us. And so we had not had that concept. So we -- the final piece of that kind of model change was to say, what we sold you is what we have today, and for the $100 million we're spending in R&D every year, $0.25 of every kind of revenue dollar that we're putting back into the product, to the extent we commercialize those discretely, we can charge for those separately. So that was kind of the model move to the base-plus model. 100% kind of adherence for all new clients. It's totally acceptable. And it does -- and it makes sense, right? It's just rational. It's kind of how they think about it. The other thing we did was we went back and we went back to our existing client base. And we said, hey, we want to modify that for folks going forward. And so that was kind of the transition that we went through in 2 quarters last year. And so we're starting to see that. So last year, the change in AUM was about a 500 basis point headwind to our growth last year. I think if we were going to have that same circumstance this year, it wouldn't be zero, but it would probably be 100 basis points instead of 500 basis points. So it's really mitigated kind of the AUM volatility around that. But we've also created a real launching pad for us even as a company internally to think about these things as a multiproduct company. We had very much been a single-product company. Now we have the contractual structure in place to talk about a multiproduct strategy. And so now as we build additional functionality in LPs and additional GAAPs throughout Europe and Asia and those sorts of things, and we avail those to clients, then that's an incremental kind of revenue opportunity for us. So Sandeep talked about our incredible gross revenue retention of 98%. Look, it's a great industry, it's sticky world and all of that, but 98% is really world-class. What our NRR, ones like -- last quarter, it was 109, it was as low as 103. That's pretty pedestrian when you think about starting at a 98% and at 60-plus NPS. And so as we think about this multiproduct strategy, it's a key opportunity for us to have some sort of a financial expression of the great NPS. Of course, that come from the great product and the great servicing that folks do. What would you add?

No. Just perfect.

Jim, great point. One follow-up to that. So you've got, I think it was a little over 70 customers that spend $1 million a year with you. To your point, this is a little bit more of a modular approach. How do you think about that opportunity? Or have you seen it historically play out, the ability to continue to scale with more products within existing customers' revenue growth?

Yes. I think we're early phases, but we talk about aspirationally thinking about NRR of 115. That's just great companies that have great gross retention. Think about that. And so I think there's a long room for expansion. In order to do that, we have to do at least 3 things, 3 things that we know so far. Number one is we've got to figure out the commercial structures for that. We feel like, okay, we've got that well understood. Number two, we've got to have our go-to-market teams aligned around a back to base. We have 2 people who sell back to base right now exclusively, of the kind of 100 quota carriers, right? It's very much a new logo focused machine, and so we've got to build that out. And then the last thing is we have all this innovation that we're creating and really accelerating on our platform, and how do we commercialize that? So we have a couple, kind of the first kind of nascent products. One is called Prism. It's more about -- kind of think about it's incremental functionality, right? So this is additional reporting that you can consume, has great data lineage, and you can understand this kind of across all your platforms. That's kind of a functional expansion. Then there's let's do more with the assets you already have on our platform. And the example of that is LPx. We already have 7,000 LPs on our platform because our clients own them, and we give them a comprehensive view. But the accounting for an LP is, okay, my GP just sent me my number at the end of the quarter, plug that in. It's probably a little more sophisticated than that, but that's that. What's really interesting about your LP investments is, when is my next capital call coming and what's that going to look like? And when is my cash distribution? And is that going to marry so that I actually don't have to think about allocating or putting cash aside for a potential capital call, so understanding that. And the next thing you want to know with your LP investment is, how do I look through, what underlies that? So LPx is a solution that we're selling back into our clients who have a number of LPs. It's difficult just to understand the truth with the LPs and now we're allowing people to really look through and do that. So those would be 2 examples we're going deeper in what we do and also going broader. I don't know if you want to talk about -- the other broad thing is we did a very small acquisition at the end of last year called JUMP Technology. It's about 100 people in France, it helps with our European exposure. But what they have is kind of a broad footprint where they have portfolio management, order management. Well, Clearwater connects, when we're providing that kind of clean, beginning of day value that you're using, most people are then taking that and pumping it into their intraday order management system or portfolio management system. And we connect and we're happy to do that. But for those clients who would like to continue to do more with us, that -- the hypothesis there is we can sell those types of functionalities back into those clients as well.

I think if you look at our company, we're trying to grow 20% on the top line organically. We're trying to take our EBITDA from the current 27 to 40. And the point is, if you can get to an NRR of 115, that changes the financial profile of the company, from the 106, 109 in the last 2 quarters. Because then to grow at 20%, which we grew last year, and I think we're guiding to 20%, 21% this year, I think the point is you've got to find that many new logos all the time, which we are capable of doing, but I think the profile of the company changes if you can consistently get NRR, which is somewhat like a GRR. GRR is world-class, like Jim said. NRR is pedestrian, so how do you improve it? It's a multiyear journey, I don't want to overstate the case here, that in 2021, we had nothing, none of this. In 2022 is when we started to work towards it, multiproduct. We started single [ instance ] single platform, price increase on a consistent basis of a certain number. So we started to work on this. And it takes time. This is not something you wake up and say, oh, guess what, we're now multiproduct, right? And we're going to continue to work on that, and this is -- we don't want to do it in one quarter though. It's a question of consistently being able to deliver the 115, and then that would be really fantastic.

A follow-up question to that, which is international. And Jim, you touched a bit on this with the JUMP acquisition. It's 8% of revenue today. It's a big piece of the TAM. How do you think about it? What investments have you made in infrastructure? And how does that play out for the business longer term?

Yes, I can just tell you about international is that we report on all the assets our clients have because that's how you can do accounting. You can't do accounting on 90% of the assets, you've got [ to put ] all. So we have always reported on assets around the world. At last count, we were looking at, it's like 242 countries. People have assets in 242 countries. And I hate to admit, I didn't even know there were 242 countries. I thought it was like 220. But the point is we report on assets in all of those countries, right? And if you look at the TAM, the way, Dan, you talked about it, literally insurance companies, actually the TAM is higher in Europe than here. And we have been very, very North American focused, which we are. We're a Boise-based company, we're regional. Now we are very much national. But to grow, it takes a little bit of effort. And we have spent the last 2, 2.5 years really building out our capabilities in Europe, building out the asset class coverage, building out the data sources. And all of those are new because we have connected to custodians here, what about custodians there? What about market data pricing? We connected to people here, what about there? So we have built out that capability. The only other last point I'd make on that is, at least in the U.S., we have U.S. GAAP. It's uncomplicated. And we have NAIC reporting. When you go to Europe, the problem is actually more acute. They're based on IFRS, most of them are, but German GAAP is different from French GAAP, which is different from Belgium GAAP, which is different from Italian GAAP. Every country has a slightly different GAAP and a slightly different regulatory reporting need. So think about if you're an investor investing in 10 different countries in Europe and you're doing this same thing, the problem is actually more acute. And then when you think about Asia, it's one more step more acute because there isn't a common framework. If you look at Indian GAAP and Japanese GAAP, there's no commonality in how they approach GAAP. So the point is, I do think we're big in the U.S., we've sold for it here. Europe, the problem is, I think, a little bit harder and more acute. The problem in Asia is a little bit more acute. I think we announced that we took Aviva live about was it a month or 2 -- actually 3 months back. And the point of that announcement was we have sophisticated, very large clients, and we have built out all of the infrastructure in Europe to be able to service a client like Aviva where every morning or 3 days -- 3 times in the day, they get a fully comprehensive view of their global assets. So we've built it out over the last 2.5, 3 years. It's almost complete. It never gets complete because they always have new asset classes, new data sources, but steady state, right? So there's one-time effort we have made over the last 2.5 years, is sort of coming to a close. Really exciting time to really go out and grow Europe, and I think it has to be an accelerant to our business.

That's great. Want to shift gears one more time. Clearwater-GPT announcement, I guess, what, 5 weeks ago. Can you talk a little bit about AI and how that's going to have a bigger role as you think about your business, investment accounting, et cetera?

Yes. Look, I'm sure you've heard many tech CEOs sit here and say this stuff is super disruptive. It is super disruptive. If you think about where we spend our money, we spend our money in data ingestion. And then we spend our money in reconciliation. And some of the reconciliation based on the person's knowledge. Well, GPT know how to do that. You can build it, point it to the millions of reconciliations that have been done over the last 10 years, and have Clearwater-GPT give you an answer. Perfect? No, not yet. And I don't even think we'll get to a point where we let the machine answer. But that the machine can then say, look, this is probably answer 1 or answer 2, and improve productivity massively. I think it's very real in our business model. So data ingestion can be very different, data aggregation could be different, reconciliation could be very different. And then you think about onboarding clients. We've onboarded 1,200 clients. Could be pointed to that and say, look, do exactly. Again, it's not going to do it, but can it change the efficiency or productivity just dramatically? We think so. Coding, which you guys just more generically understand, obviously, the speed of innovation should be dramatic. So should you need the same number of R&D people? Yes, that's right.And so we think that it will have a real impact on our business. We committed to this about 4 months back, 5 months back. And we have set up a dedicated team, which have been going after it. We have seen enough to know that this will -- as long as we stay with this human in the loop, we feel like it will improve productivity, instead of trying to think about it's just going to let the machine answer. There are too many problems with that. There are too many problems yet with letting the machine answer directly to clients because we are dealing with investment accounting. This is not some generic view. We have to be right, right? So I think that it's transformatively impactful. I don't think we're quite ready to give a sense of shape and size and how much impact. And -- but yes, super excited about it, as I'm sure most people are. It just sits very well with what we do. I feel that's the biggest thing. When you're reconciling, when you're ingesting, we can just point to local GPT, that's why Clearwater-GPT is important, not ChatGPT, right? You take Clearwater-GPT, point it to internal source of all millions of those times people have done it, and you can get a really good response. And that -- so I'm really super excited about it.

There's that on the efficiency side, and then there's how our customers will interact with us, right, and how they can interact with this data set. You have to understand, right, this is, right, when we talk about this kind of you reconcile it once, everyone has the same kind of security and you understand that, you start to understand. This is a data set that's pretty unique. So when Russia invaded Ukraine, we very quickly looked across our platform to know, okay, what's the exposure collectively of all of our clients to Russian securities or ruble stuff, right? And we were able to figure that out pretty quickly. Now that was a bespoke activity, just to be clear. But like another bespoke activity was when there were 2 hurricanes that went through Florida. We thought, huh, are our reinsurer clients kind of changing their portfolios because this doesn't align with their loss? Those are the types of questions that kind of, with a data set like that, you can start to ask those types of questions just broadly now. We -- that isn't what we're doing through ChatGPT yet, but the point is to think about that, and then to offer up for our clients to be able to interact with that data in a kind of anonymized way, to think about, well, how do I -- how, really, how am I doing? Like, that's really the question everybody has. How am I doing? And I think we have work to do, but we have the opportunity to answer that.

Can I just sort of take one more second with what Jim said? I think he said it quite easily, because we live in this iPhone world. So he said the thing happened in Ukraine, we had to figure out exposure to Ukraine. So you might think, what the hell, just go sort by Ukraine and look at all your assets. How hard is that? Just think about what that really entails? So if you're the Chief Investment Officer, you got -- just to talk about one, you got, suppose, 100 LPs or GPs, partner. They don't expose what's in it. You have to find out what those GPs have invested in and then figure out which country those are in, or some of them have exposure, you'll have to do that. Then you'll have to call up 25 people within your company and say, hey, can you tell me what your portfolio has? And can you tell me what the mortgage portfolio, by the way, at the next level, what real assets they own at the mortgage level? This could take you days and weeks to figure out what your real exposure to Ukraine is. Clearwater literally in a minute. And that's the power. I think it's -- in the iPhone world, we think everything is really easy, everything is connected. It's not. It is still different accounting engines for different countries, and the look-through capability Jim also spoke about, it is really hard to do, right? We spent $100 million doing this stuff. Yes, we're not doing very little, no.

Last question for me and then I want to open it up for the audience. M&A. You mentioned the JUMP acquisition. Just conceptually, I know you've talked about it on prior earnings calls, the ability to solve more pain points for your clients, geographies, et cetera. Can you just talk conceptually how you think about M&A?

Yes, you go back to this 60 NPS and -- 60-plus NPS. Clients are happy to do more with us. And so it sort of behooves us to say, what do we do right now? And we do, I think, a sliver of our clients' spend on investment management technology, just tech, they spend a lot more money than what they do with us. So the question is, what else can we do with them, which is the point of pain, or is it deeper risk reporting and deeper performance, deeper regulatory reporting? Is it the front office, like Jim talked about, OMS, order management systems, performance management systems. So our first thing we look for is, does it expand what we can do with our current clients? And if we can do that, that's wonderful. And that hopefully drives NPS -- pardon me, net revenue retention from the 109 to 111 and 112 and so on. So that's the first thing we look for. The second thing we look for is geographic expansion. We're trying to grow in Europe. Sounds easy. I'm sure you all have hired people in Europe. Yes, it takes quite a while. Then you have the next one, and the next one. So it just takes a long time to go out and build that out. So we bought something very small in Paris, really good tech though. So would we do more for geographic reach? Would we buy something in Asia? Yes. So it feels like you would buy for filling out that cycle of investment management, then you might buy for geographic reach and accelerating your growth there. So those 2 feel like the reasons we would do something. And obviously we have a strong financial bar, because we have a really nice story. This JUMP acquisition, 6 million ARR. So really small. And so we have this really nice organic growth story, EBITDA expanding, generating cash, network effect, the gross margin is sort of improving. So we want to be a little bit careful, but we also worry that, if that's the only way we're going to buy a company where everything checks, just not going to find that many companies. So we are thoughtful about, can we help them grow faster? If somebody is growing at 12%, can we get them to grow 20%, 25%, because you have the clientele. That kind of thing is interesting. Jim, would you add anything to that?

Let me open it up to the audience. Any questions out here? I know we're down to 2 minutes on the shot clock. Okay. Yes, please.

New to the story. A basic question. But I'm wondering, the 60 NPS you guys have. How known is the brand affinity or not with customers? And maybe there's variance by vertical. I know [ some report kind of give you ] the numbers. And really, the kind of the question is, is there a way for you to ambulance chase in your go-to market? You talked about customers needing a reason to switch. Whatever that reason comes, will they [ switch on to ] Clearwater or will you have [indiscernible].

I think, look, it's a really good question, but I do want to say that, look, 4, 5 years back, it was relatively not sophisticated. What had happened in the market was it was the whole sales team was all based in Boise, for example, right? So customer proximity and all that is an issue. Now if you look at our first market, which is the corporate market, yes, somebody files S1, the chance that we're going to get -- they will call us, off the charts. We're going to get that every time of the day, right? I think insurance in North America is starting to be pretty pervasive. It would be rare for someone to say, I want to switch and not consider Clearwater. That'd be like what do you mean? We do win 80% of the time without a proposal. So without a proposal, we're going to win 80% of the time, 20% we don't win. The vast majority is going to be because clients decided not to change. And they say you guys are better, I'm not just doing it right now. Asset management is the third one, the one we came into last, and so not at all. I think in the asset management industry, our name is much less known, if you will. If you go to the European market, much, much, much less known in all of those. Now we announced Aviva, you announced Athora and names like that and people are, what? And so it's a little bit more known, but less so. Asia, even less. Look, also 3 years back, we never had a marketing team. We just didn't believe in it. It was very Boise-centric, said, look, I'm going to build it, people will come kind of logic. And so we hired our first CMO 2.5, 3 years back. And so she is leading the charge and, hey, marketing matters. So I think these are journeys you take. I think when we came 5 years back, it was a little bit different. So I would say on the marketing and brand, it's sort of very much in its infancy, sort of trying to be better. But it's not running, if I sort of admit to that. She's doing a great job. Don't get me wrong. But just as a company, as a culture, it's just not a big strength yet.

Anything else in the audience? So tomorrow, you've got your first Investor Day.

Investor Day. Yes. Cool. We've got much brighter PowerPoints and lots of good colors, instead of me sitting here and sort of waxing eloquent. But yes, we're very excited. It's our first Investor Day tomorrow, and we're going to have the whole executive team there and it'll be fun.

Excellent. Thank you. Really appreciate it. Thank you.

Sure. Thank you.