Company: CWAN
Filing Date: 2025-05-02
Form Type: 10-Q
Source: 0001628280-25-021833
Chunk: 111

Company: Clearwater Analytics Holdings, Inc.
Filing Date: 2025-05-02
Form: 10-Q
Item: Part I, Item 2
Chunk 111
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 GAAP. We review the accounting policies used in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities.

On an ongoing basis, we evaluate the process we use to develop estimates. We base our estimates on historical experience and on other information that we believe is reasonable for making judgments at the time the estimates are made. Actual results may differ from our estimates due to actual outcomes being different from those on which we based our assumptions.

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.

Recent Accounting Pronouncements

There are no recent accounting pronouncements during the three months ended March 31, 2025.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

AUM Market Price Risk

The vast majority of our revenue is derived from fees that are primarily based on the amount of assets on our 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 and $7.3 trillion of assets was loaded on our platform as of 

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December 31, 2024 and 2023, respectively. Movements in funds invested between different securities or fluctuations in securities prices or investment performance could cause the value of AUM to decline, which would result in lower fees we receive from our clients.

Interest Rate Risk

We had interest rate risk relating to debt and associated interest expense under the Prior Credit Agreement. At any time, a rise in interest rates could have a material adverse impact on our earnings and cash flows. Conversely, a decrease in interest rates could result in a material increase in earnings and cash flows. We estimate that a hypothetical increase or decrease in SOFR of 100 basis points would increase or decrease, respectively, our interest expense or income by approximately $0.1 million on an annual basis, based on our $45.4 million debt balance under the Prior Credit Agreement at March 31, 2025. 

On April