Company: CWAN
Filing Date: 2025-05-02
Form Type: 10-Q
Source: 0001628280-25-021833
Chunk: 71

Company: Clearwater Analytics Holdings, Inc.
Filing Date: 2025-05-02
Form: 10-Q
Item: Part I, Item 8
Chunk 71
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 estimated annual effective tax rate, adjusted for discrete items arising in the applicable quarter. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The estimated annual effective tax rate may be subject to significant volatility due to several factors, including our ability to accurately predict the proportion of our pretax income in multiple jurisdictions, certain book-tax differences, and exchanges from non-controlling interests.The following table provides details of the provision for (benefit from) income taxes:Three Months EndedMarch 31,20252024Income before income taxes$8,486 $2,138 Provision for (benefit from) income taxes1,550 (98)Effective tax rate18.3 %(4.6 %)For the three months ended March 31, 2025, the Company’s effective tax rate was different than the statutory rate primarily because of foreign taxes and non-deductible equity-based compensation, offset by tax credits, windfalls from equity-based compensation deductions, as well as the portion of pretax earnings that are attributable to the non-controlling interest and not taxable to the Company. For the three months ended March 31, 2024, the Company’s effective tax rate was different than the statutory rate primarily because of foreign taxes, non-deductible equity-based compensation, the generation of tax credits and incentives, and the valuation allowance on U.S. deferred tax assets.

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Note 14. Tax Receivable Agreement Liability

In connection with the IPO and related transactions, we entered into a TRA that provided 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, as a result of (i) increases in our share of the tax basis in the net assets of CWAN Holdings resulting from any redemptions or exchanges of CWAN Holdings units, (ii) tax basis increases attributable to payments made under the TRA, and (iii) deductions attributable to imputed interest and bonus payments pursuant to the TRA Bonus Agreements (the “TRA Payments”).On November 4, 2024, the Company entered into the TRA Amendment which amended the TRA to provide for one-time settlement payments in a gross amount of approximately $72.5 million. The settlement payments were made in Q4 of 2024 and Q1 of 2025. The Company has no further payment obligations (past, current, or future) to the TRA Parties