Company: CWAN
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0001866368-25-000018
Chunk: 115

Company: Clearwater Analytics Holdings, Inc.
Filing Date: 2025-08-06
Form: 10-Q
Item: Part I, Item 8
Chunk 115
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 outcomes being different from those on which we based our assumptions.

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There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the Annual Report under the caption “Critical Accounting Estimates” in Management’s Discussion and Analysis of Financial Condition and Results of Operations, set forth in Part II, Item 7, except for the following accounting policy and specific estimates resulting from the business combinations completed during the three and six months ended June 30, 2025 that involve a greater degree of judgment and complexity. 

Business Combinations

We allocate the fair value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired, based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Our valuation of acquired assets and assumed liabilities requires significant estimates, especially with respect to intangible assets. The valuation of intangible assets, in particular, requires that we use valuation techniques such as the income approach. The income approach includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires the following significant estimates: future expected revenue, expenses, capital expenditures and other costs, and discount rates. We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred.

Recent Accounting Pronouncements

There are no recent accounting pronouncements during the six months ended June 30, 2025 that are applicable to the Company.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

AUM Market Price Risk

The majority of our revenue is derived from fees that are primarily based on the amount of assets on our Clearwater platform. These fees are stated in basis points, or 1/100th of 1%. Though in substantially all cases we charge a minimum fee regardless of the assets that are loaded onto our platform, our revenues fluctuate based on the value of the assets that our clients maintain on our platform. A total of $8.8 trillion of assets was loaded on our platform as of December 31, 2024. Movements in funds invested between different securities or fluctuations in securities prices or investment performance could cause