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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
______________________________________
FORM 10-Q
______________________________________
(Mark One)
| | | | | |
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2024
OR
| | | | | |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-40838
______________________________________
Clearwater Analytics Holdings, Inc.
(Exact Name of Registrant as Specified in its Charter)
______________________________________
| | | | | |
| Delaware | 87-1043711 |
(State or other jurisdiction of
incorporation or organization) | (I.R.S. Employer
Identification No.) |
777 W. Main Street Suite 900 Boise, ID | 83702 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (208) 433-1200
______________________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| Title of each class | | Trading
Symbol(s) | | Name of each exchange on which registered |
| Class A common stock, par value $0.001 per share | | CWAN | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
| Large accelerated filer | x | | Accelerated filer | o |
| | | | |
| Non-accelerated filer | o | | Smaller reporting company | o |
| | | | |
| Emerging growth company | o | | | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of October 31, 2024, the number of outstanding shares of the registrant’s common stock was:
172,050,286 shares of Class A common stock.
27,424,288 shares of Class C common stock.
47,549,757 shares of Class D common stock.
Table of Contents
GLOSSARY
As used in this Quarterly Report on Form 10-Q, the terms identified below have the meanings specified below unless otherwise noted or the context indicates otherwise:
•“Company,” “we,” “us,” “our,” “Clearwater” and similar references refer, (1) following the consummation of the Transactions, to Clearwater Analytics Holdings, Inc., and, unless otherwise stated, all of its direct and indirect subsidiaries, including CWAN Holdings, and (2) prior to the completion of the Transactions, to CWAN Holdings and, unless otherwise stated, all of its direct and indirect subsidiaries.
•“AAA” refers to Wilshire AxiomSM, Wilshire AtlasSM, Wilshire Abacus, and Wilshire iQComposite.
•“Acquisition” refers to the acquisition of Wilshire AxiomSM, Wilshire AtlasSM, Wilshire Abacus, and Wilshire iQComposite and the associated workforce and customer contracts by Clearwater Analytics, LLC.
•“Acquisition Date” refers to April 22, 2024.
•“Annual Report” refers to our Annual Report on Form 10-K, dated December 31, 2023 (File No. 001-40838), as filed with the SEC on February 29, 2024.
•“Borrower” refers to Clearwater Analytics, LLC as borrower under the Credit Agreement.
•“Continuing Equity Owners” refers collectively to direct or indirect holders of LLC Interests and/or our Class B common stock, Class C common stock and/or Class D common stock immediately following consummation of the Transactions, including the Principal Equity Owners and certain of our directors and officers and their respective Permitted Transferees who may exchange at each of the irrespective options, in whole or in part from time to time, their LLC Interests (along with an equal number of shares of Class B common stock or Class C common stock, as the case may be (and such shares shall be immediately cancelled)) for newly issued shares of our Class A common stock or our Class D common stock, as the case may be, and additionally holders of shares of our Class D common stock may convert such shares at any time for newly issued shares of our Class A common stock, on a one-for-one basis (in which case their shares of our Class D common stock will be cancelled on a one-for-one basis upon any such issuance).
•“CWAN Holdings” refers to CWAN Holdings, LLC.
•“Exchange Act” refers to the Securities Exchange Act of 1934, as amended.
•“IPO” refers to our initial public offering, which closed in September 2021.
•“JUMP” refers to JUMP Technology SAS and its consolidated subsidiary JUMP Consulting Luxembourg S.a.r.l.
•“LLC Agreement” refers to CWAN Holdings, LLC’s Third Amended and Restated Limited Liability Company Agreement.
•“LLC Interests” refers to the common units of CWAN Holdings, LLC, including those that we purchased with a portion of the net proceeds from the IPO.
•“New Credit Agreement” refers to a new credit agreement which Clearwater Analytics, LLC entered into with JPMorgan Chase Bank, N.A. in connection with the closing of the IPO.
•“NPS” refers to our net promoter score, which can range from a low of negative 100 to a high of positive 100, that we use to gauge customer satisfaction. NPS benchmarks can vary significantly by industry, but a score greater than zero represents a company having more promoters than detractors. Our methodology of calculating NPS reflects responses from customers who purchase investment accounting and reporting, performance measurement, compliance monitoring and risk analytic solutions from us and choose to respond to the survey question. In particular, it reflects responses given in the fourth quarter of 2023 and reflects a sample size of 148 responses over that period. NPS gives no weight to customers who decline to answer the survey question.
•“NYSE” refers to the New York Stock Exchange.
•“Other Continuing Equity Owners” refers to Continuing Equity Owners who are not also Principal Equity Owners.
•“Permira” refers to Permira Advisers LLC, one of our largest owners through holdings by its affiliates.
•“Permitted Transferee” refers to, subject to the provisions of the LLC Agreement, (a) with respect to any Principal Equity Owner, any of such Principal Equity Owner’s affiliates and (b) with respect to any Other Continuing Equity Owner, any such Other Continuing Equity Owner’s affiliates or, in the case of individuals, members of their immediate family.
•“Principal Equity Owners” refers to Welsh Carson, Warburg Pincus, Permira and their respective affiliates and Permitted Transferees.
•“QTD” for any given year means the three months ended June 30 of that year.
•“SaaS” refers to Software-as-a-Service.
•“SEC” refers to the Securities and Exchange Commission.
•“Securities Act” refers to the Securities Act of 1933, as amended.
•“Secondary Offerings” refers to the sale by certain affiliates of Welsh Carson, Warburg Pincus and Permira, as applicable, of an aggregate of 14,950,000, 10,000,000, 20,000,000, 17,000,000, 16,250,000 and 12,000,000 shares of Class A common stock in underwritten secondary public offerings entered into on March 8, 2023, June 15, 2023, November 6, 2023, November 30, 2023, March 6, 2024 and June 10, 2024, respectively.
•“Tax Receivable Agreement” or “TRA” refers to the Tax Receivable Agreement, dated as of September 28, 2021, by and among Clearwater Analytics Holdings, Inc., CWAN Holdings and the other parties thereto.
•“TRA Bonus Agreement” refers to the Tax Receivable Agreement Bonus Letters, each dated as of September 28, 2021, by and among Clearwater Analytics Holdings, Inc. and certain of our executive officers.
•“Transactions” refers to the organizational transactions described under “Transactions” in Note 1 - Organization and Description of Business in our Annual Report.
•“Up-C” refers to the Company’s umbrella partnership-C-corporation organizational structure. See Note 1 “Organization and Description of Business” to our unaudited condensed consolidated financial statements of this Quarterly Report on Form 10-Q.
•“Warburg Pincus” refers to Warburg Pincus LLC, one of our largest owners through holdings by its affiliates.
•“Welsh Carson” refers to Welsh, Carson, Anderson & Stowe, one of our largest owners through holdings by its affiliates.
•“Wilshire” refers to Wilshire Advisors LLC.
•“Wilshire Technology” refers collectively, to Wilshire AxiomSM, Wilshire AtlasSM, Wilshire Abacus and Wilshire iQComposite.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. The forward-looking statements are contained principally in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, financing and investment plans, dividend policy, competitive position, industry and regulatory environment, potential growth opportunities and the effects of competition. Forward looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Important factors that could cause actual results, performance or achievements to differ materially from our expectations include, but are not limited to, the following:
•we operate in a highly competitive industry, with many companies competing for business from insurance companies, asset managers, corporations and government entities on the basis of a number of factors, including the quality and breadth of solutions and services provided, ability to innovate, reputation and the prices of services, and this competition could hurt our financial performance and cash flows;
•we are dependent on fees based on the value of the assets on our platform for the vast majority of our revenues, and to the extent market volatility, a downturn in economic conditions or other factors cause negative trends or fluctuations in the value of the assets on our platform, our fee-based revenue and earnings may decline;
•because some of our sales efforts are targeted at large financial institutions, corporations and government entities, we face prolonged sales cycles, substantial upfront sales costs and less predictability in completing some of our sales. If our sales cycle lengthens, or if our upfront sales investments do not result in sufficient revenue, our results of operations may be harmed;
•we have experienced considerable revenue growth over the past several years, which may be difficult to sustain, and we depend on attracting and retaining top talent to continue growing and operating our business, and if we are unable to hire, integrate, develop, motivate and retain our personnel, we may not be able to maintain or manage our growth, which could have a material adverse effect on our business, financial condition, results of operations and cash flows;
•if our investment accounting and reporting solutions, regulatory reporting solutions or risk management or performance analytics solutions fail to perform properly due to undetected errors or similar problems, our business, financial condition, reputation or results of operations could be materially adversely affected;
•our business relies heavily on computer equipment, cloud-based services, electronic delivery systems, networks and telecommunications systems and infrastructure, the Internet and the information technology systems of third parties. Any failures or disruptions in any of the foregoing could result in reduced revenues, increased costs and the loss of clients and could harm our business, financial condition, reputation and results of operations;
•our failure to successfully integrate acquisitions, including the Wilshire Technology acquisition, could strain our resources. In addition, there are significant risks associated with growth through acquisitions, which may materially adversely affect our business, financial condition or results of operations;
•if we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed;
•if our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest, and our competitive position may be harmed;
•we may need to defend ourselves against third-party claims that we are infringing, misappropriating or otherwise violating others’ intellectual property rights, which could divert management’s attention, cause us to incur significant costs, and prevent us from selling or using the technology to which such rights relate;
•the Principal Equity Owners continue to have significant influence over us, including control over decisions that require the approval of stockholders, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote;
•we are classified as a “controlled company,” and as a result, we qualify for, and rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements. In addition, the Principal Equity Owners’ interests may conflict with our interests and the interests of other stockholders;
•provisions in our certificate of incorporation and bylaws may have the effect of delaying or preventing a change of control or changes in our management;
•if we fail to remediate an identified material weakness or implement and maintain effective internal controls over financial reporting, we may be unable to accurately or timely report our financial condition or results of operations, which may adversely affect our business;
•the consummation of the TRA Buyout (as defined below) is subject to certain conditions, including the approval of our unaffiliated stockholders, and there is no assurance that we will be able to satisfy such conditions or realize all the expected benefits thereof; and
•other risks described in the section titled “Risk Factors” in our Annual Report and in periodic reports that we file with the SEC, and our reports to shareholders. These filings are available at www.sec.gov and on our website.
Given these risks and uncertainties, you should not place undue reliance on forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Quarterly Report on Form 10-Q and should not be relied upon as representing Clearwater's expectations or beliefs as of any date subsequent to the time they are made. Clearwater does not undertake to and specifically declines any obligation to update any forward-looking statements that may be made from time to time by or on behalf of Clearwater.
You should read this Quarterly Report on Form 10-Q in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2023 included in our Annual Report.
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited).
Clearwater Analytics Holdings, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share amounts and per share amounts, unaudited)
| | | | | | | | | | | |
| September 30 | | December 31 |
| 2024 | | 2023 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 228,694 | | | $ | 221,765 | |
| Short-term investments | 77,134 | | | 74,457 | |
| Accounts receivable, net | 100,377 | | | 92,091 | |
| Prepaid expenses and other current assets | 24,635 | | | 27,683 | |
| Total current assets | 430,840 | | | 415,996 | |
| Property and equipment, net | 15,279 | | | 15,349 | |
| Operating lease right-of-use assets, net | 25,752 | | | 22,554 | |
| Deferred contract costs, non-current | 6,172 | | | 6,439 | |
| Intangible assets, net | 34,014 | | | 26,132 | |
| Goodwill | 74,160 | | | 45,338 | |
| Long-term investments | 30,889 | | | 21,495 | |
| Other non-current assets | 6,347 | | | 5,440 | |
| Total assets | $ | 623,453 | | | $ | 558,743 | |
| Liabilities and Stockholders' Equity | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 4,238 | | | $ | 3,062 | |
| Accrued expenses and other current liabilities | 60,680 | | | 49,535 | |
| Notes payable, current portion | 2,750 | | | 2,750 | |
| Operating lease liability, current portion | 7,806 | | | 6,551 | |
| Tax receivable agreement liability | 16,928 | | | 18,894 | |
| Total current liabilities | 92,402 | | | 80,792 | |
| Notes payable, less current maturities and unamortized debt issuance costs | 43,830 | | | 45,828 | |
| Operating lease liability, less current portion | 19,121 | | | 16,948 | |
| Tax receivable agreement, less current portion | 11,900 | | | — | |
| Other long-term liabilities | 2,581 | | | 5,518 | |
| Total liabilities | 169,834 | | | 149,086 | |
| Stockholders' Equity | | | |
Class A common stock, par value $0.001 per share; 1,500,000,000 shares authorized, 172,013,431 shares issued and outstanding as of September 30, 2024, 127,604,185 shares issued and outstanding as of December 31, 2023 | 172 | | | 128 | |
Class B common stock, par value $0.001 per share; 500,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2024, 111,191 shares issued and outstanding as of December 31, 2023 | — | | | — | |
Class C common stock, par value $0.001 per share; 500,000,000 shares authorized, 27,424,288 shares issued and outstanding as of September 30, 2024, 32,684,156 shares issued and outstanding as of December 31, 2023 | 27 | | | 33 | |
Class D common stock, par value $0.001 per share; 500,000,000 shares authorized, 47,549,757 shares issued and outstanding as of September 30, 2024, 82,955,977 shares issued and outstanding as of December 31, 2023 | 48 | | | 83 | |
| Additional paid-in-capital | 564,331 | | | 532,507 | |
| Accumulated other comprehensive income | 4,626 | | | 2,909 | |
| Accumulated deficit | (165,957) | | | (181,331) | |
| Total stockholders' equity attributable to Clearwater Analytics Holdings, Inc. | 403,247 | | | 354,329 | |
| Non-controlling interests | 50,372 | | | 55,328 | |
| Total stockholders' equity | 453,619 | | | 409,657 | |
| Total liabilities and stockholders' equity | $ | 623,453 | | | $ | 558,743 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Clearwater Analytics Holdings, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except share amounts and per share amounts, unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| Revenue | $ | 115,828 | | | $ | 94,664 | | | $ | 325,338 | | | $ | 269,149 | |
Cost of revenue(1) | 31,357 | | | 27,013 | | | 89,426 | | | 78,792 | |
| Gross profit | 84,471 | | | 67,651 | | | 235,912 | | | 190,357 | |
| Operating expenses: | | | | | | | |
Research and development(1) | 36,618 | | | 32,250 | | | 109,654 | | | 90,198 | |
Sales and marketing(1) | 17,889 | | | 15,020 | | | 49,369 | | | 44,049 | |
General and administrative(1) | 22,626 | | | 26,268 | | | 65,873 | | | 75,445 | |
| Total operating expenses | 77,133 | | | 73,538 | | | 224,896 | | | 209,692 | |
| Income (loss) from operations | 7,338 | | | (5,887) | | | 11,016 | | | (19,335) | |
| Interest income, net | (2,290) | | | (1,733) | | | (6,191) | | | (4,422) | |
| Tax receivable agreement (benefit) expense | 5,344 | | | (566) | | | 11,545 | | | 6,112 | |
| Other (income) expense, net | 1 | | | (971) | | | (1,113) | | | (1,205) | |
| Income (loss) before income taxes | 4,283 | | | (2,617) | | | 6,775 | | | (19,820) | |
| Benefit from income taxes | (486) | | | (274) | | | (505) | | | (184) | |
| Net income (loss) | 4,769 | | | (2,343) | | | 7,280 | | | (19,636) | |
| Less: Net income (loss) attributable to non-controlling interests | 1,140 | | | (454) | | | 2,184 | | | (2,442) | |
| Net income (loss) attributable to Clearwater Analytics Holdings, Inc. | $ | 3,629 | | | $ | (1,889) | | | $ | 5,096 | | | $ | (17,194) | |
| | | | | | | |
| Net income (loss) per share attributable to Class A and Class D common stockholders stock: | | | | | | | |
| Basic | $ | 0.02 | | | $ | (0.01) | | | $ | 0.02 | | | $ | (0.09) | |
| Diluted | $ | 0.02 | | | $ | (0.01) | | | $ | 0.02 | | | $ | (0.09) | |
| | | | | | | |
| Weighted average shares of Class A and Class D common stock outstanding: | | | | | | | |
| Basic | 219,009,124 | | 201,582,951 | | 216,880,515 | | 197,903,361 |
| Diluted | 231,467,214 | | 201,582,951 | | 227,768,434 | | 197,903,361 |
(1)Amounts include equity-based compensation as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Cost of revenue | $ | 3,460 | | | $ | 3,346 | | | $ | 9,879 | | | $ | 8,837 | |
| Operating expenses: | | | | | | | |
| Research and development | 8,674 | | | 6,768 | | | 26,767 | | | 17,393 | |
| Sales and marketing | 3,905 | | | 4,010 | | | 10,418 | | | 11,221 | |
| General and administrative | 9,937 | | | 16,233 | | | 27,995 | | | 44,675 | |
| Total equity-based compensation expense | $ | 25,976 | | | $ | 30,357 | | | $ | 75,059 | | | $ | 82,126 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands, unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended
September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| Net income (loss) | $ | 4,769 | | | $ | (2,343) | | | $ | 7,280 | | | $ | (19,636) | |
| Other comprehensive income (loss), net of taxes: | | | | | | | |
| Foreign currency translation adjustment | 3,892 | | | (2,358) | | | 1,645 | | | (997) | |
| Unrealized gain (loss) on available-for-sale investments | 378 | | | (10) | | | 252 | | | (289) | |
| Comprehensive income (loss) | $ | 9,039 | | | $ | (4,711) | | | $ | 9,177 | | | $ | (20,922) | |
| Less: Comprehensive income (loss) attributable to non-controlling interests | 1,616 | | | (853) | | | 2,364 | | | (2,620) | |
| Comprehensive income (loss) attributable to Clearwater Analytics Holdings, Inc. | $ | 7,423 | | | $ | (3,858) | | | $ | 6,813 | | | $ | (18,302) | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed Consolidated Statements of Changes in Equity
(In thousands, except share amounts, unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A
Shares | | Class A
Amount | | Class B
Shares | | Class B
Amount | | Class C
Shares | | Class C
Amount | | Class D
Shares | | Class D
Amount | | Additional
Paid in
Capital | | Accumulated
Other
Comprehensive Income | | Accumulated
Deficit | | Non-
controlling
Interest | | Total
stockholders'
equity |
| Balance at December 31, 2023 | 127,604,185 | | $ | 128 | | | 111,191 | | $ | — | | | 32,684,156 | | $ | 33 | | | 82,955,977 | | $ | 83 | | | $ | 532,507 | | | $ | 2,909 | | | $ | (181,331) | | | $ | 55,328 | | | $ | 409,657 | |
| Exercise of options to purchase common stock | 626,608 | | — | | | — | | — | | | — | | — | | | — | | — | | | 91 | | | — | | | — | | | 13 | | | 104 | |
| Restricted stock units released | 3,344,058 | | 3 | | | — | | | — | | | — | | | — | | | — | | | — | | | | | — | | | — | | | | | 3 | |
| Shares withheld for net share settlement and other | (1,635,604) | | (1) | | | — | | | — | | | — | | | — | | | — | | | — | | | (25,083) | | | — | | | — | | | (3,691) | | | (28,775) | |
| Equity-based compensation | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 21,197 | | | — | | | — | | | 3,119 | | | 24,316 | |
| Foreign currency translation adjustment | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | (1,537) | | | — | | | (227) | | | (1,764) | |
| Unrealized loss on available-for-sale investments | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (58) | | | — | | | (8) | | | (66) | |
| Net income | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | 1,898 | | | 338 | | | 2,236 | |
| Accrued tax distributions payable to Continuing Equity Owners | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | 505 | | | 505 | |
| Effect of ownership changes | 16,250,000 | | 16 | | | — | | | — | | | (5,259,868) | | (5) | | | (10,990,132) | | (11) | | | — | | | — | | | 9,830 | | | (9,830) | | | — | |
| Balance at March 31, 2024 | 146,189,247 | | $ | 146 | | | 111,191 | | $ | — | | | 27,424,288 | | $ | 27 | | | 71,965,845 | | $ | 72 | | | $ | 528,712 | | | $ | 1,314 | | | $ | (169,603) | | | $ | 45,547 | | | $ | 406,215 | |
| Exercise of options to purchase common stock | 836,970 | | 1 | | | — | | — | | | — | | — | | | — | | — | | | 5 | | | — | | | — | | | — | | | 6 | |
| Restricted stock units released | 199,874 | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
Shares withheld for net share settlement and other
| (638,679) | | | (1) | | | — | | — | | | — | | — | | | — | | — | | | (3,824) | | | — | | | — | | | (482) | | | (4,307) | |
| ESPP shares issued | 173,268 | | — | | | — | | — | | | — | | — | | | — | | — | | | 2,482 | | | — | | | — | | | 313 | | | 2,795 | |
| Equity-based compensation | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 22,205 | | | — | | | — | | | 2,800 | | | 25,005 | |
| Foreign currency translation adjustment | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | (429) | | | — | | | (54) | | | (483) | |
| Unrealized loss on available-for-sale investments | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | (53) | | | — | | | (7) | | | (60) | |
| Net income (loss) | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | (430) | | | 706 | | | 276 | |
| Accrued tax distributions payable to Continuing Equity Owners | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | (776) | | | (776) | |
| Effect of ownership changes | 13,661,119 | | 14 | | | — | | | — | | | — | | | — | | | (13,661,119) | | (14) | | | — | | | — | | | (17) | | | 17 | | | — | |
| Balance at June 30, 2024 | 160,421,799 | | $ | 160 | | | 111,191 | | $ | — | | | 27,424,288 | | $ | 27 | | | 58,304,726 | | $ | 58 | | | $ | 549,580 | | | $ | 832 | | | $ | (170,050) | | | $ | 48,064 | | | $ | 428,671 | |
| Exercise of options to purchase common stock | 867,954 | | | 1 | | | — | | | — | | | — | | | — | | | — | | | — | | | 89 | | | — | | | — | | | 11 | | | 100 | |
| Restricted stock units released | 537,259 | | | 1 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 1 | |
| Shares withheld for net share settlement and other | (679,741) | | | (1) | | | — | | | — | | | — | | | — | | | — | | | — | | | (8,513) | | | — | | | — | | | (1,068) | | | (9,581) | |
| Equity-based compensation | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 23,175 | | | — | | | — | | | 2,910 | | | 26,085 | |
| Foreign currency translation adjustment | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3,458 | | | — | | | 434 | | | 3,892 | |
| Unrealized gain on available-for-sale investments | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 336 | | | | | 42 | | | 378 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net income | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 3,629 | | | 1,140 | | | 4,769 | |
| Accrued tax distributions payable to Continuing Equity Owners | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (697) | | | (697) | |
| Effect of ownership changes | 10,866,160 | | | 11 | | | (111,191) | | | — | | | — | | | — | | | (10,754,969) | | | (11) | | | — | | | — | | | 464 | | | (464) | | | — | |
| Balance at September 30, 2024 | 172,013,431 | | $ | 172 | | | 0 | | $ | — | | | 27,424,288 | | $ | 27 | | | 47,549,757 | | $ | 48 | | | $ | 564,331 | | | $ | 4,626 | | | $ | (165,957) | | | $ | 50,372 | | | 453,619 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Class A
Shares | | Class A
Amount | | Class B
Shares | | Class B
Amount | | Class C
Shares | | Class C
Amount | | Class D
Shares | | Class D
Amount | | Additional
Paid in
Capital | | Accumulated
Other
Comprehensive Income | | Accumulated
Deficit | | Non-
controlling
Interest | | Total
stockholders'
equity |
| Balance at December 31, 2022 | 61,148,890 | | $ | 61 | | | 1,439,251 | | $ | 1 | | | 47,377,587 | | $ | 47 | | | 130,083,755 | | $ | 130 | | | $ | 455,320 | | | $ | 609 | | | $ | (186,647) | | | $ | 68,865 | | | $ | 338,386 | |
| Exercise of options to purchase common stock | 790,873 | | 1 | | | — | | — | | | — | | — | | | — | | — | | | 2,158 | | | — | | | — | | | 534 | | | 2,693 | |
| Restricted stock units released | 1,150,785 | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
| Shares withheld for net share settlement and other | (661,451) | | | — | | | — | | — | | | — | | — | | | — | | — | | | (5,832) | | | — | | | — | | | (1,443) | | | (7,275) | |
| Equity-based compensation | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 18,680 | | | — | | | — | | | 4,621 | | | 23,301 | |
| Foreign currency translation adjustment | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | 1,101 | | | — | | | 273 | | | 1,374 | |
| Unrealized gain on available-for-sale investments | — | | — | | — | | — | | | — | | — | | | — | | — | | | — | | | 33 | | | — | | | 8 | | | 41 | |
| Net loss | — | | — | | — | | — | | | — | | — | | — | | — | | — | | — | | (4,384) | | | (1,033) | | | (5,417) | |
| Accrued tax distributions payable to Continuing Equity Owners | — | | — | | — | | — | | | — | | — | | — | | — | | — | | — | | — | | | 362 | | | 362 | |
| Effect of LLC unit exchanges | 14,975,000 | | 15 | | | (25,000) | | | — | | (4,823,901) | | | (5) | | | (10,126,099) | | | (10) | | | — | | | — | | | 7,743 | | | (7,743) | | | — | |
| Balance at March 31, 2023 | 77,404,097 | | $ | 77 | | | 1,414,251 | | $ | 1 | | | 42,553,686 | | $ | 43 | | | 119,957,656 | | $ | 120 | | | $ | 470,326 | | | $ | 1,742 | | | $ | (183,288) | | | $ | 64,444 | | | $ | 353,465 | |
| Exercise of options to purchase common stock | 334,226 | | — | | | — | | — | | | — | | — | | | — | | — | | | 398 | | | — | | | — | | | 88 | | | 486 | |
| Restricted stock units released | 114,392 | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
| Shares withheld for net share settlement and other | (175,295) | | | — | | | — | | — | | | — | | — | | | — | | — | | | (961) | | | — | | | — | | | (211) | | | (1,172) | |
| ESPP shares issued | 189,390 | | — | | | — | | — | | | — | | — | | | — | | — | | | 2,128 | | | — | | | — | | | 467 | | | 2,595 | |
| Equity-based compensation | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 23,552 | | | — | | | — | | | 5,170 | | | 28,722 | |
| Foreign currency translation adjustment | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | (11) | | | — | | | (2) | | | (13) | |
| Unrealized loss on available-for-sale investments | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | (262) | | | — | | | (58) | | | (320) | |
| Net loss | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | (10,921) | | | (955) | | | (11,876) | |
| Accrued tax distributions payable to Continuing Equity Owners | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | (1,161) | | | (1,161) | |
| Effect of LLC unit exchanges | 10,012,066 | | 10 | | | (12,066) | | — | | | (3,215,940) | | | (3) | | | (6,784,060) | | (7) | | | — | | | — | | | 5,085 | | | (5,085) | | | — | |
| Balance at June 30, 2023 | 87,878,876 | | $ | 88 | | | 1,402,185 | | $ | 1 | | | 39,337,746 | | $ | 39 | | | 113,173,596 | | $ | 113 | | | $ | 495,444 | | | $ | 1,469 | | | $ | (189,124) | | | $ | 62,696 | | | $ | 370,726 | |
| Exercise of options to purchase common stock | 1,211,583 | | 1 | | | — | | — | | | — | | — | | | — | | — | | | 1,069 | | | — | | | — | | | 216 | | | 1,286 | |
| Restricted stock units released | 468,830 | | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | — | | | — | |
| Shares withheld for net share settlement and other | (710,651) | | | — | | | — | | — | | | — | | — | | | — | | — | | | (5,357) | | | — | | | — | | | (1,083) | | | (6,440) | |
| Equity-based compensation | — | | — | | | — | | — | | | — | | — | | | — | | — | | | 25,329 | | | — | | | — | | | 5,125 | | | 30,454 | |
| Foreign currency translation adjustment | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | (1,961) | | | — | | | (397) | | | (2,358) | |
| Unrealized loss on available-for-sale investments | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | (8) | | | | | (2) | | | (10) | |
| Net loss | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | (1,889) | | | (454) | | | (2,343) | |
| Accrued tax distributions payable to Continuing Equity Owners | — | | — | | | — | | — | | | — | | — | | | — | | — | | | — | | | — | | | — | | | 120 | | | 120 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Effect of LLC ownership changes | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 414 | | | (414) | | | — | |
| Balance at September 30, 2023 | 88,848,638 | | $ | 89 | | | 1,402,185 | | $ | 1 | | | 39,337,746 | | $ | 39 | | | 113,173,596 | | $ | 113 | | | $ | 516,485 | | | $ | (500) | | | $ | (190,599) | | | $ | 65,807 | | | 391,435 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Clearwater Analytics Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)
| | | | | | | | | | | |
| Nine Months Ended September 30, |
| 2024 | | 2023 |
| OPERATING ACTIVITIES | | | |
| Net income (loss) | $ | 7,280 | | | $ | (19,636) | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
| Depreciation and amortization | 8,730 | | | 7,336 | |
| Noncash operating lease cost | 6,900 | | | 5,667 | |
| Equity-based compensation | 75,059 | | | 82,126 | |
| | | |
| Amortization of deferred contract acquisition costs | 3,573 | | | 3,563 | |
| Amortization of debt issuance costs, included in interest expense | 209 | | | 210 | |
| Deferred tax benefit | (3,076) | | | (524) | |
| Accretion of discount on investments | (1,732) | | | (901) | |
| Realized (gain) loss on investments | 24 | | | (89) | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable, net | (7,875) | | | (18,864) | |
| Prepaid expenses and other assets | 2,561 | | | 4,219 | |
| Deferred contract acquisition costs | (3,416) | | | (2,662) | |
| Accounts payable | 1,586 | | | 109 | |
| Accrued expenses and other liabilities | 3,763 | | | (6,171) | |
| Tax receivable agreement liability | 9,934 | | | 6,122 | |
| Net cash provided by operating activities | 103,520 | | | 60,505 | |
| INVESTING ACTIVITIES | | | |
| Purchases of property and equipment | (4,437) | | | (4,062) | |
| Purchase of held to maturity investments | (3,009) | | | — | |
| Purchases of available-for-sale investments | (93,968) | | | (111,018) | |
| Proceeds from sale of available-for-sale investments | — | | | 5,950 | |
| Proceeds from maturities of investments | 86,867 | | | 13,517 | |
| Acquisition of business, net of cash acquired | (40,121) | | | — | |
| Payment of initial direct costs for operating leases | (104) | | | — | |
| Net cash used in investing activities | (54,772) | | | (95,613) | |
| FINANCING ACTIVITIES | | | |
| Proceeds from exercise of options | 210 | | | 4,465 | |
| Taxes paid related to net share settlement of equity awards | (42,663) | | | (14,887) | |
| Repayments of borrowings | (2,062) | | | (2,062) | |
| Payment of business acquisition holdback liability | (780) | | | — | |
| Proceeds from employee stock purchase plan | 2,795 | | | 2,595 | |
| Payment of tax distributions | (25) | | | (35) | |
| Net cash used in financing activities | (42,525) | | | (9,924) | |
| Effect of exchange rate changes on cash and cash equivalents | 706 | | | (27) | |
| Change in cash and cash equivalents during the period | 6,929 | | | (45,059) | |
| Cash and cash equivalents, beginning of period | 221,765 | | | 250,724 | |
| Cash and cash equivalents, end of period | $ | 228,694 | | | $ | 205,665 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | | | |
| Cash paid for interest | $ | 2,627 | | | $ | 2,530 | |
| Cash paid for income taxes | $ | 1,179 | | | $ | 1,484 | |
| NON-CASH INVESTING AND FINANCING ACTIVITIES | | | |
| Purchase of property and equipment included in accounts payable and accrued expense | $ | 25 | | | $ | 2 | |
| Tax distributions payable to Continuing Equity Owners included in accrued expenses | $ | 3,889 | | | $ | 3,838 | |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Clearwater Analytics Holdings, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1. Organization and Description of Business
Clearwater Analytics Holdings, Inc. (the “Company” or “Clearwater”) was incorporated as a Delaware corporation on May 18, 2021, as a holding company for the purpose of facilitating the IPO and other related transactions in order to carry on the business of the Company. Prior to the IPO, all business operations were conducted through Carbon Analytics Holdings, LLC, which changed its name to CWAN Holdings, LLC (“CWAN Holdings”) in connection with the IPO. Clearwater provides a SaaS solution for automated investment data aggregation, reconciliation, accounting and reporting services to insurers, investment managers, corporations, institutional investors and government entities. Following the IPO, Clearwater’s principal asset consists of ownership of common units in CWAN Holdings. As the sole managing member of CWAN Holdings, Clearwater operates and controls all the business operations of the Company. Our corporate structure following the IPO, as described above, is commonly referred to as an “Up-C” structure and is described in Note 1 - Organization and Description of Business in our Annual Report.
The Company headquarters is located in Boise, ID, and we operate in five offices throughout the U.S. and seven offices internationally.
Secondary Offerings
As required by the Registration Rights Agreement dated September 28, 2021, the Company participated in multiple underwritten offerings of shares held by our Principal Equity Owners during the year ended December 31, 2023 and in the nine months ended September 30, 2024. No underwritten offerings were completed in the three months ended September 30, 2024.
Pursuant to underwriting agreements executed on March 8 and June 15, 2023, certain affiliates of Welsh Carson (the “WCAS Selling Stockholders”) sold 14,950,000 and 10,000,000 shares, respectively, of Class A common stock in underwritten secondary public offerings. As part of these secondary offerings, the WCAS Selling Stockholders exchanged a total of 8,039,841 shares of Class C common stock, together with corresponding LLC Interests of CWAN Holdings, and 16,910,159 shares of Class D common stock for an equivalent number of shares of Class A common stock that were purchased by the underwriters. The Company did not sell any securities in these secondary offerings and did not receive any proceeds from the sale of the shares sold by the WCAS Selling Stockholders. For the year ended December 31, 2023, the Company incurred $1.6 million in expenses associated with these secondary offerings which were recorded as general and administrative expenses.
Pursuant to underwriting agreements executed on November 6 and November 30, 2023, certain affiliates of Welsh Carson, Warburg Pincus and Permira (the “Selling Stockholders”) sold 20,000,000 and 17,000,000 shares, respectively, of Class A common stock in underwritten secondary public offerings. As part of these secondary offerings, the Selling Stockholders exchanged a total of 6,653,590 shares of Class C common stock, together with corresponding LLC Interests of CWAN Holdings, and 30,212,119 shares of Class D common stock for an equivalent number of shares of Class A common stock that were purchased by the underwriter. The Company did not sell any securities in these secondary offerings and did not receive any proceeds from the sale of the shares sold by the Selling Stockholders. The Company incurred $0.5 million in expenses associated with these secondary offerings in the year ended December 31, 2023 which were recorded as general and administrative expenses.
Pursuant to an underwriting agreement executed on March 6, 2024, WCAS Selling Stockholders sold 16,250,000 shares of Class A common stock in an underwritten secondary public offering. As part of the secondary public offering the WCAS Selling Stockholders exchanged a total of 5,259,868 shares of Class C common stock and 10,990,132 shares of Class D common stock, and corresponding units in CWAN Holdings, for an equivalent number of shares of Class A common stock that were purchased by the underwriter. The Company did not sell any securities in the secondary offering and did not receive any proceeds from the sale of the shares sold by the WCAS Selling Stockholders. The Company incurred $0.2 million in expenses associated with the secondary offering in the three months ended March 31, 2024, which were recorded as general and administrative expenses.
Pursuant to an underwriting agreement executed on June 10, 2024, certain affiliates of Warburg Pincus and Permira (the “Warburg Pincus and Permira Selling Stockholders”) sold 12,000,000 shares of Class A common stock in an underwritten secondary offering. As part of this secondary offering, the Warburg Pincus and Permira Selling Stockholders exchanged a total of 11,917,765 shares of Class D common stock for an equivalent number of shares of Class A common stock that were purchased by the underwriter. The Company did not sell any securities in this secondary offering and did not receive any proceeds from the sale of the shares sold by the Warburg Pincus and Permira Selling Stockholders. The
Company incurred $0.2 million in expenses associated with this secondary offering in the three months ended June 30, 2024, which were recorded as general and administrative expenses.
As of September 30, 2024, the Company owns 88.9% of the interests in CWAN Holdings. Continuing Equity Owners which hold Class B and Class C common stock own the remaining 11.1% of the interests in CWAN Holdings. The attributes of the Company's classes of common stock are summarized in the following table:
| | | | | | | | | | | | | | |
| Class of Common Stock | | Votes per Share | | Economic Rights |
| Class A common stock | | 1 | | Yes |
| Class B common stock | | 1 | | No |
| Class C common stock | | 10 | | No |
| Class D common stock | | 10 | | Yes |
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the SEC and, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of results for the unaudited interim periods presented. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The results of operations for the interim period are not necessarily indicative of the results to be obtained for the full fiscal year.
Principles of consolidation
The condensed consolidated financial statements include the accounts of the Company and its directly and indirectly wholly-owned or controlled subsidiaries. All intercompany balances and transactions have been eliminated through consolidation. Clearwater Analytics Holdings, Inc. consolidated the financial results of CWAN Holdings as a Variable Interest Entity (“VIE”). Clearwater Analytics Holdings, Inc. owns the majority economic interest and has the power to control all the business and affairs of CWAN Holdings.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the related disclosures at the date of the condensed consolidated financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Actual results could differ materially from those estimates.
Items subject to estimates and assumptions include the useful lives and recoverability of long-lived assets, the average period of benefit associated with deferred contract costs, sales reserves, the incremental borrowing rate applied in lease accounting, accruals for sales tax liabilities, the fair value and probability of achieving performance conditions of equity awards, business combinations, tax valuation allowance and probability of making payments under the TRA, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the result of which forms the basis for making judgments about the carrying values of assets and liabilities, and measurement of revenues and expenses. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, the Company’s condensed consolidated financial statements will be affected.
Significant Accounting Policies
The Company's significant accounting policies are discussed in Note 2 – Basis of Presentation and Summary of Significant Accounting Policies in the Annual Report. There have been no significant changes to these policies that have had a material impact on the Company's unaudited condensed consolidated financial statements and related notes during the three and nine months ended September 30, 2024.
Note 3. Revenue Recognition
For SaaS offerings, the Company is applying the optional exemption to not disclose transaction price allocated to the remaining performance obligations given the Company’s monthly recurring revenue contracts.
For Licenses, the Company's remaining performance obligations represent the transaction price allocated to maintenance and support performance obligations that have yet to be satisfied. The following table includes estimated revenue expected to be recognized in the future related to maintenance and support performance obligations that are partially satisfied (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Remainder of 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | Thereafter |
| Revenue expected to be recognized in the future as of September 30, 2024 | $ | 451 | | | $ | 986 | | | $ | 560 | | | $ | 289 | | | $ | 167 | | | $ | — | |
Of the total revenue recognized for the three and nine months ended September 30, 2024, $0.4 million and $2.3 million, respectively, was included in the deferred revenue balance as of December 31, 2023. Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were not material. Contract asset balances classified as current are $2.1 million and $2.8 million as of September 30, 2024 and December 31, 2023, respectively. Contract asset balances classified as non-current are $0.7 million and $1.9 million as of September 30, 2024 and December 31, 2023, respectively.
The following table presents the Company’s revenue disaggregated by geography, based on billing address of the customer (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| United States | $ | 94,517 | | | $ | 76,704 | | | $ | 265,912 | | | $ | 220,967 | |
| Rest of World | 21,311 | | | 17,960 | | | 59,426 | | | 48,182 | |
| Total revenue | $ | 115,828 | | | $ | 94,664 | | | $ | 325,338 | | | $ | 269,149 | |
Note 4. Cash, Cash Equivalents and Investments
The following tables show the Company’s cash, cash equivalents and investments by significant investment category as of September 30, 2024 and December 31, 2023 in accordance with the fair value hierarchy (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 30, 2024 |
| Adjusted Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | | Cash and Cash Equivalents | | Short-Term Investments | | Long-Term Investments |
| Cash | $ | 16,365 | | | $ | — | | | $ | — | | | $ | 16,365 | | | $ | 16,365 | | | $ | — | | | $ | — | |
Level 1 (1): | | | | | | | | | | | | | |
| Money market funds | $ | 211,334 | | | $ | — | | | $ | — | | | $ | 211,334 | | | $ | 211,334 | | | $ | — | | | $ | — | |
Level 2 (2): | | | | | | | | | | | | | |
| Treasury bills | $ | 1,446 | | | $ | 4 | | | $ | — | | | $ | 1,450 | | | $ | — | | | $ | 1,450 | | | $ | — | |
| U.S. government bonds | $ | 34,453 | | | $ | 111 | | | $ | (6) | | | $ | 34,558 | | | $ | — | | | $ | 24,670 | | | $ | 9,888 | |
| U.S. agency securities | $ | 3,905 | | | $ | — | | | $ | (1) | | | $ | 3,904 | | | $ | — | | | $ | 1,500 | | | $ | 2,404 | |
| Commercial paper | $ | 13,346 | | | $ | 5 | | | $ | — | | | $ | 13,351 | | | $ | 995 | | | $ | 12,356 | | | $ | — | |
| Corporate debt securities | $ | 52,566 | | | $ | 190 | | | $ | (10) | | | $ | 52,746 | | | $ | — | | | $ | 34,149 | | | $ | 18,597 | |
| Certificates of deposit | $ | 3,009 | | | $ | — | | | $ | — | | | $ | 3,009 | | | $ | — | | | $ | 3,009 | | | $ | — | |
| Subtotal | $ | 108,725 | | | $ | 310 | | | $ | (17) | | | $ | 109,018 | | | $ | 995 | | | $ | 77,134 | | | $ | 30,889 | |
| Total | $ | 336,424 | | | $ | 310 | | | $ | (17) | | | $ | 336,717 | | | $ | 228,694 | | | $ | 77,134 | | | $ | 30,889 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| Adjusted Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value | | Cash and Cash Equivalents | | Short-Term Investments | | Long-Term Investments |
| Cash | $ | 24,247 | | | $ | — | | | $ | — | | | $ | 24,247 | | | $ | 24,247 | | | $ | — | | | $ | — | |
Level 1 (1): | | | | | | | | | | | | | |
| Money market funds | $ | 190,610 | | | $ | — | | | $ | — | | | $ | 190,610 | | | $ | 190,610 | | | $ | — | | | $ | — | |
Level 2 (2): | | | | | | | | | | | | | |
| Treasury bills | $ | 1,485 | | | $ | — | | | $ | (2) | | | $ | 1,483 | | | $ | — | | | $ | 1,483 | | | $ | — | |
| U.S. government bonds | $ | 9,553 | | | $ | 20 | | | $ | (11) | | | $ | 9,562 | | | $ | — | | | $ | 4,387 | | | $ | 5,175 | |
| U.S. agency securities | $ | 23,843 | | | $ | 2 | | | $ | (22) | | | $ | 23,823 | | | $ | — | | | $ | 23,823 | | | $ | — | |
| Commercial paper | $ | 16,983 | | | $ | 9 | | | $ | (1) | | | $ | 16,991 | | | $ | 6,908 | | | $ | 10,083 | | | $ | |
