Gabriela Borges: Okay. Cool.
Sandeep Sahai: One item I might add, Gabriela, is that if you look at ARR growth through the end of 2022, it was 16.4% and we delivered what we did in ’23. At the end of last year, the ARR growth was 17.2%. So really 80 basis points better than how we entered 2023. Now, you can just take that one data point and sort of extrapolate all the way, but we feel like we are starting in a good spot. These large programs make us a little bit more cautious because they tend to be more lumpy, if you will. But did the business grow nicely? We think it did.
Gabriela Borges: That’s helpful color. Thank you. And so, Jim, I want to follow up on your commentary on NRR and particularly the contributions that you can get from pricing. I believe in the prepared remarks you made a couple of comments about AUM and the AUM trends for the business being favorable, or at least more favorable than what they were in 2022. So help us understand, with the new pricing model that you implemented from 2022, are you now still seeing a benefit and a tailwind to your revenue growth from being able to do the AUM plus, the more nuanced pricing model because you have — now have AUM growing on the platform again after what may have been a more volatile 2022? In other words, can you underwrite pricing contributing more to the growth algorithm now than you could a year ago?
Jim Cox: So the AUM component of growth. So you’re right, Gabriela. In the base plus model, we do always have the upside from AUM growth, and obviously, we mitigated that on the downside through the base plus model, but have tried to maintain that on the upside going forward. And so we do have that optionality. When we think about what we’re underwriting for growth, we don’t think about market conditions changing in that way. But you are absolutely right. It was a significant headwind in 2022, and it was not in 2023. But we haven’t contemplated any — you could hypothesize that there could be rate changes that could change asset levels at some point in the future. We haven’t taken a viewpoint on that, Gabriela, at this point. But it would be an opportunity — should those occur.
Gabriela Borges: Okay. Thank you very much.
Sandeep Sahai: Thank you.
Operator: Thank you for your question. Next question is from the line of Brian Schwartz with Oppenheimer. Your line is now open.
Brian Schwartz: Yes, hi. Thanks for taking my question this afternoon. Congratulations on a great year in 2023. I have one question. I just wanted to take a high-level question just about the macro and the demand environment. Maybe, Sandeep, with — the customers that you’re talking to and their appetite to invest more in your technologies and how you’re thinking about budget growth from those customers, does it feel like that is loosening up that appetite to spend compared to last quarter, the Q3, second half of last year. And — or Jim, maybe it’s just a high-level question asking the assumption underlying the macro and kind of end-market budget growth with your 2024 guidance. Thank you very much.
Sandeep Sahai: Yes, Jim there. And so why don’t I just start by saying that we were a little surprised with how much movement we got in December. That’s just a fact. We did not — so it felt like something loosened up Towards the end of last year. Do we continue to see that? I think we have reasonable expectations, but we don’t see anything dramatically different, the macro and things like that. We simply just don’t take a point of view because we think if anything is likely to be positive to us, right? So when you think about even interest rates, we think if anything does happen there, we think it’ll be likely positive. So we don’t build that into our model. Jim, would you comment on anything on that? [Multiple Speakers]
Jim Cox: Yes, I would say that, Brian, we are pretty neutral vis-à-vis the overall macro environment because there’s reasons to buy Clearwater when times are good and companies are going public. We add lots of clients. When a lot of our asset management clients are thinking of us as a way to create efficiency and scale. And so there’s a lot of different reasons why clients — these are the — there are many, many different reasons why clients select Clearwater. As it relates to the kind of overall macro environment, our sales team is pretty agile at modifying to the specific needs of those clients which may be more impacted by the overall macro environment. And so I think we see an opportunity to continue to win share in any of those market conditions.
Brian Schwartz: Thank you.
Operator: Thank you for your question. Next question is from the line of Dylan Becker with William Blair. Your line is now open.
Dylan Becker: Hey, gentlemen. Appreciate it. Here maybe, Sandeep, for you. There’s been kind of a lot of evolution in the regulatory landscape and environment across kind of geographies here over the last several years. I wonder how that evolution maybe plays into incremental emphasis from the customer base on data integrity, transparency around that reporting capability and that kind of compounding complexity, maybe how Gen AI plays into that and what that can mean from a workflow perspective, not only for — from the reporting angle, but also how that flows into compliance as well?
Sandeep Sahai: Yes, we love it. We absolutely love the complexity. I’m actually out in [Edinburgh] (ph) right now, and we were speaking to the sales team, and every time regulations change or they become more complex, data quality becomes even more important. And if clients have a patchwork of legacy systems, it becomes really hard. And the Clearwater value proposition shines every time regulations become more complex or your new asset classes or alternative assets, or people who invest globally or people who invest in different regions. So, yes, I think the short answer is those are very high-quality impetus for us to go out and get clients to move to our platform. So we love it.
Dylan Becker: Okay, super helpful. That makes a ton of sense. And then maybe too, outside of reporting, obviously, risk management is key for some of your customer bases, maybe in particular, in insurance, they’ve seen some pressure to their models. But again, that risk management evolution, maybe the reinsurance landscape, again, the adaptability there, too. Anything you guys are seeing in that particular end segment or end market?
Sandeep Sahai: Yes, I think in my prepared remarks, we spoke about a reinsurer. So you’re exactly right. Frankly, these two questions are exactly on the money because it is an issue. When we think about risk, there is a whole mathematical side of risk, which is there, but there’s also the other side, which is your data in a consumable fashion by these risk models. So either of those two help us. And so I shouldn’t say — shouldn’t say we like it, but the fact is that higher regulations or more complicated reporting needs and more complicated risk management, all of those help make the case for a move into a Clearwater-like platform.
Dylan Becker: Great. Thanks, Sandeep. Appreciate it.
Sandeep Sahai: Thank you.
Operator: Thank you for your question. Next question is from the line of Yun Kim with Loop Capital Markets. Your line is now open.
Yun Kim: Okay, great. I’ll make it pretty quick. How should we think about sales capacity this year and the timing of the ramp? Any focus on ramping international sales capacity this year?
Sandeep Sahai: Yep, this is Sandeep here. A lot. So we continue to make very significant investments both in Europe and in Asia Pacific, behind the leadership of Keith, like we spoke about, and also Shane. So we expect to make significant investments and we are making already significant investments in Europe and Asia because we do think we can accelerate growth in these markets. And I do think, like Jim pointed out, they have grown nicely and we do continue to believe that there will be outsized growth in these markets in the years to come. So yes, we do continue to think that there’s strong GTM investments. And Yun Kim, that’s why you have more moderated EBITDA forecasting because we believe we have to continue to invest in R&D, and we believe we have to continue to increase our investments in GTM.
And we — because of the efficiency on our system, we feel we can do both of those things while delivering an improved EBITDA number and we are guiding to 250 basis points this year. So we think you can do all three. And really it comes from the capabilities of the platform. I don’t know, Jim, would you add something to that?
Jim Cox: No, well said. Well said.
Operator: Thank you for your question. There are no additional questions waiting at this time so I’ll pass the call back to Sandeep for any closing remarks.
Sandeep Sahai: I just wanted to thank everyone for your continued interest in our company. We have spent another year, another year has gone by and we remain really confident about what we can build here. And we really thank you for your indulgence and your questions here. Thank you.
Operator: That concludes the call. Thank you for joining me, now disconnect your lines.
