That was used for all clients. And if they made any changes, all the clients saw it right away. So that was unique in those days, and it's not unique anymore. Where did they get the idea from? From Salesforce. If you remember, those were the days Siebel was a very big deal. And you had to install Siebel everywhere, wherever you went. And they came up with the idea about, "We're going to have a single instance multi-tenant, which everybody can use." And that's what they did. And so investment accounting is the business we were in. We did that for many years when Jim and I got this, now seven years back, six years back. That's all the company did. It was a great platform.
What we did well, I thought, was we took that company and made it not just a regional player, but made it big in the United States. Then we took it to the larger customers and made it successful with the likes of J.P. Morgan and Morgan Stanley and all the large asset managers, large insurance companies, large corporates like Apple Computers and Cisco and everybody else like that. And so we haven't really changed the architecture, but we made it sort of ready for prime time. And we did that quite well. But once you got there, that is when this year we went out and bought two other companies. But they were still having to integrate with lots of front office systems, which were still very, very old. And trying to get all of it together. And why was that? Because of two big things that were happening.
One was, it was becoming more global, so people were buying assets in China, in Japan, and in India, in Europe, and all of those countries. They still wanted to get a view of all of their portfolio. They were also buying all kinds of alternative assets. They were buying private equity. They were buying private credit, private debt, derivatives, and mortgages too. But historically, it had been investment accounting, compliance, and reporting, and now we have solutions for the front office and for the risk to provide a more end-to-end.
That's helpful. Thank you, Sandeep. I guess the other thing I was going to just kind of quickly ask before we jump into it was, yesterday, you guys talked about the TAM. You've now doubled the TAM of the business.
Yeah.
As part of this question around your customers, right? Asset managers, insurance, etc. [audio distortion]
Yeah. So I think what we are really super proud of is two and a half years back, we did Investor Day. And at that time, we said, "You know what? We do investment accounting." And typically, clients [audio distortion] —we said, "We have spent so much money getting these clients super happy with us." And so our NPS is literally above 60% for the last five years running. And we said, "You know, genius. If they're doing so well and they're so happy with you, why can't you do more?" And so four years back, we laid out a whole vision about improving our NRR from 108%-109% to 115%. And we said, "In the space of three years, we're going to change it from 108% to 115%." Our GRR was always good. So our gross revenue retention has been [audio distortion]—was 97%. And for three quarters, it's been 99%.
So it's always been really good. But the [audio distortion] —and so as a merger, sort of consolidated companies, 110%. And I feel like we're back on the road again. We got to go change the commercial model. We got to go improve the cross-sell motion. We got to change how they sell and the focus they bring to the market. But again, this is a path we [audio distortion]—is a lot faster than we thought. I don't know, Jim, would you add anything to that, or?
Well said.
Let me ask you a question. Just given the nature of the relationship you have with these customers, and I think it's 110 customers spend over $1 million a year today. How has the dialogue with your customers changed, given the capabilities that you can bring to bear from one provider?
Yeah, I think, look, it'll change and continue to change quite a bit. When you think about what we sold, we sold middle-back office solutions, and the buyers for that are quite different from someone who's doing trading, portfolio management, and portfolio construction, right? So those people are different, and frankly, you get access to that using something like an Enfusion. They naturally go to that. They don't come to the middle office, and then you've got the whole situation with risk and alternative assets. It's a completely different world because those are the people who are trying to provide guidelines on what you could do and can't do. And risk, I would suspect today[ audio distortion] based on the risk, is really what matters. So I do think that the chief risk officer is something [audio distortion], traders and the portfolio managers on the periphery. And now you've got all three of them.
But what it has done, which I'm surprised with, is it got us into the C-suite. This was the Chief Executive wanting to meet with us and talk about what we're trying to build. And so it was interesting. Really good bottles of wine, by the way. And so, but that has changed. I think who we deal with is we talk about enterprise-class solutions while continuing to sell in the short, medium term to the middle office and separately to the front office. So really both. But the company is changing.
Yeah. I mean, maybe also to think about it, but also our clients who are asset owners, insurers, asset managers, hedge funds, their business is fundamentally changing, right? So everyone has to have, and alternatives are not an alternative. They are fundamental, right? Everyone is going global. So they're struggling with those problems, right? And so we've talked about it [audio distortion]. How we've come from the back office and kind of thinking about it across, that sounds like it's a push. It's actually a pull, right? The fact is, they've said, "Okay, we can rely on you. You do this. It's clean, reliable data. We can understand this. But we want to do more with it. And how do we think about that?" And so it's a confluence of us adding those capabilities across the whole lifecycle and up-leveling that.
But it's also them saying, "I have a fundamentally different view of how I need to operate my business. Who is a partner that I can trust? And who is a partner that has a vision for the future that aligns to the vision [audio distortion]?
Right on the hour. So it's not like we are going there, "Hey, you got to buy this." It's a lot about how can you make them more responsive and more competitive.
Yeah. Alternatives has come up a couple of times. It's not lost on anyone in this room when you think about transactions that have happened most recently, things like Preqin and others. This focus on alternatives has been immense, and you're seeing that in the case of Preqin with an asset manager. Your acquisition of Bistro gave you a footprint into alternatives. How do you see the convergence of alternatives and traditional asset management playing out?
Yeah, I think if we just sort of think about, we all are worried about something a fad or something going to stick and endure, and you think about insurance companies, and I'm going to say this wrong, but I'll say it. They weren't the best adopters of technology. They just weren't, and then you got all of these, the Apollos of the world and people like that who came into the market, and they took that money, and the returns they would produce were 200 basis points better than what these insurance companies were producing on their own, so once you start to produce 200 basis points more, you can use that to go buy more or reduce the price and get market share, and they were doing both, so the insurance companies have been forced to continue to modernize and start to invest in alternative assets.
If they don't invest in alternative assets, I think they start to lose and have continued to lose to all the private equity sponsored, if you will. Look at Global Atlantic. Look what they've built. Look at what Blackstone has built. Blackstone in the insurance market had, I think, close to. They started three years back. I think they have in excess of $400 billion of assets of insurance. What did they build? They built Bistro on the back of or using Clearwater's position data and accounting data and Beacon's risk calculations. That's what Bistro is really built on these two. We have had their CTO on conferences like this where he's spoken about that. That allows them to provide a very different level of visibility to their clients.
So I feel alternatives is here to stay because [audio distortion]. I think banks like it also because the fees you get on bank loans and private credit and private debt is a whole lot better than ETFs and passive investments. So I think the entire community is behind alternatives at this point, and I think continues and endures for a period of time. And I think all of our clients are moving in that direction of more and more alternatives. And us being able to build - I mean, who's the leader in alternative investments? It is Blackstone. And so they are the biggest ones in there. And so being able to bring that technology to bear for our clients, I think, is extraordinarily powerful. It's not easy. It takes time. But is that the right platform? I think without doubt.
We try to go to the market and say, "If it's good enough for Blackstone at their level of complexity, it should work for you." And I think most people will accept that.
Yeah. That's great. Let me pivot. We should spend a few minutes on Enfusion. You guys spent a lot of time talking about the path back to 20%, etc. It's probably good to give a little bit similar to the Clearwater overview, a little bit of an overview of Enfusion because this was the modern SaaS-native portfolio management, order management system out there, and outside of going public around the same time that you did, you guys did not overlap really in any way, shape, or form. It'd be helpful to hear just kind of a quick overview on Enfusion, then we'll come back to some of the things you talked about, Jim, around the growth, etc., yesterday.
Yeah, I can tell you a bit about Enfusion. So firstly, we almost take off where Enfusion ends. So Clearwater integrates with 26 different automatic [audio distortion] starts after the trade is done. So the trades are done. We get all the feeds, and that's when we start. And we will get 3,500 different sources of data every day. So that's where we start. So Enfusion was really in the front office. And if you look at what they did, first was just hedge funds. But if you go to a hedge fund today and you ask them, they really like the platform. It does a really good job. But they have only a limited market share there. I think if you see the new hedge funds which come out, they get a very large proportion of that, no problem with that.
But the conversions they've done have been a lot slower than we have been able to do, right, at Clearwater. So I think the platform's really good. I think their ability to go out in the market and convert clients has been somewhat slower than would have been expected in the last two years. But I didn't want to say that two years. If you go back three years and four years and five years and six years and seven years, they've always actually grown a lot faster than we have. So it isn't that the product has become weaker. It's not like the market has changed. I do think their execution over the last two years has been super spotty.
They brought in a new CEO, then they brought in an interim CEO who became a full-time CEO, and then they brought in another person who was going to become CEO in all in the space of two and a half, three years, and I've run companies in the past. Believe me, that's not the way to run a business. It will suffer, and I think they have suffered from lots and lots of changes and context switching, and I think we've gone back in, and we haven't done a lot except to say, "The team which is doing hedge funds is going to do just hedge funds. I want the growth back there," and this team which is doing asset management, we're going to bring in our team, put it together, and go focus on that. Also brought a strong culture of accountability. I mean, who owns it?
You have to own it, and so I think it's that there isn't this silver lining kind of thing, but I think they do become more powerful then because they can bring in middle office when clients need it. They are [audio distortion], but also half the hedge funds are risk-aware investing and multi-asset investing, and Beacon will play a massive role in making them much more competitive there, so I feel like they should be able to do what they used to do, get a little bit from the hedge fund focus, but also much stronger because of Beacon and what Clearwater brings to them, so I feel like they have all the right ingredients to make it work, and our job is to make sure they get back that growth rate they used to have.
I mean, I know it's still quite early, but you guys already have tangible proof points where you're already cross-selling with the customer base. I think there were a few called out. There was a bank. There was an asset manager, etc.
Yeah, yeah. Yeah. And you know, as we thought about these things, one of the pleasant surprises was to think about for those large hedge fund opportunities that are out there, which was a natural progression for Enfusion. It becomes with Beacon, that becomes all the more compelling in those two pieces. We always thought, "Oh, how can Clearwater help Enfusion?" But also to see how Beacon comes together and fits in that market. I think we're very excited about that opportunity.
If you want to fund this deal, the one we announced was VKB, which is our German insurer, right? So a large German insurer. And if you think about competition in Europe, they buy the whole stack. If you look at the providers of Europe, and you sort of think about the large two providers, they buy front office, middle office, everything together. That's how they bought it. And Clearwater would go in and try and displace the accounting piece of it, which is super exciting, but it didn't make economic sense because the competitor would not say, "I'm reducing my cost from 100 to 60," like they should. They would just say, "I'm reducing 90. What are you going to do about it?" Right?
And so our ability to go in and sell, have all the pieces together, is transforming how we go to the market in Europe and here. And so I do think this real proof point is we are surprised how quickly we got this first one very major deal [audio distortion]. It's made massive amount of sense because the number of people they would need to run this whole thing would fall to a third of what they were using. Forget about just the software and the tech. So I don't think it should change.
A pretty meaningful footprint in APAC. How do you think about this expanding the opportunity for you more globally?
Yeah, I think we spoke about that. Look, the largest deal we have got this year came out of Hong Kong, which was like shocking. Enfusion, Enfusion 80 people. So they went from this little no-name shop. That, yeah, you guys have presence, you have commitment to this market. And we were still winning some deals, but our largest deal for the entire year- to- date comes out of Hong Kong, which is such a surprise, but such a pleasant surprise. So I do think it brings us into the international markets with much greater strength than we had.
I think you mentioned, "Hey, we've doubled the TAM," right? And obviously, a big vector of that is doing the full life cycle. But another very large vector of that is the international aspects to it. In insurance specifically, right, where I think in North America, we're very comfortable saying that we're a leader. It's basically the same size in Europe and the same size in Asia, the opportunity there in each of those. And we're just scratching the surface there. And this is an example of an opportunity where people understand us. They understand what we can provide. But having actual presence there, they understand the commitment. It just increases everyone's confidence.
Yeah. Yeah. That makes sense. Hedge funds, some of the stuff around the go-to-market is in focus. What are some of the things that you're [audio distortion]?
You know, we had an entirely AUM-based pricing model, and we went to one of these conferences, and all anyone wanted to talk to us about was what was happening in the markets and what the AUM was doing, and so we were able to go back to our clients and change to what we call a base-plus model, pivot on that. When we look at both the Beacon and the Enfusion commercial models, they're slightly different from where they are, so we had a very rigorous process where we would go through, and we would really have a data-driven approach and understand. Really, it's all about aligning the value we're delivering to the client with what the client is paying. It's not about price increases. It's about packaging. It's about bundling and making sure that there's alignment to, as businesses benefit and grow, that we're aligned with those economic rents.
And so that's the process that we're going through to start with with Enfusion. And so when you think about things like that, you think about, well, what are the scalars of the business that help us drive revenue? How does that align with our clients? And so we start to think about those. So we're getting that work. And we think that when you look at that and you understand that level of detail, when you kind of disaggregate the NRR that Enfusion has, that we think there's about 4% in that rate. Now, that's not just 4% price increase. That's about all the upsells and downsells and mitigating all that and making sure that you're aligned and refining around that. But we think there's 4% opportunity. That's actually what we're going to target to achieve, 4% opportunity by evolving the commercial model.
Now, obviously, it first starts with kind of every new customer is on that new commercial model. And then we work back into the existing client base to kind of work them through that. One of the other precursors of that is that clients have to be happy, delighted. Seeing that clients were already happy, very happy with Enfusion. But there are segments where [audio distortion] you probably have a month-and-a-half process that you go through with your fund admin, which I'm sure is a ton of fun. Well, if we could solve that problem for you, would that be valuable for you? Almost universally, everyone says yes. Guess what? That's a problem that you have that we can solve, and we can come together and do that, as an example. So that's the commercial model.
Yeah, the other thing is around cross-sell. So one thing we are very good at is data. And nobody likes to get data from 50 sources and put it together, reconcile it, and bring it to where. Could we get to go take it to all the current clients of Enfusion? Absolutely. So there's an opportunity to cross-sell. But I do think we think about two things. One is the current team, please sell what you were selling yesterday. We don't want you to change that very much. And then do two, three things on top of it. One is when clients want client reporting and the middle office, go sell it along with that. When clients want risk, that's a big thing you can take back to that client base. Some clients want the entire modular structure, and you can go sell that.
And so our point is, can you cross-sell effectively? I think that's point number one. Point number two, there's hedge funds focused on just one sector, let's say commodities. Okay, that will be very hard to sell if you don't have something like a Beacon. Think about energy. Huge volatility. There's hedge funds which focus on just energy. And you can't really sell to them if you don't have really good capabilities around risk. And that's what Beacon brings. So it isn't Dan trying to change what they do because I think they win a lot of the deals already. But whether it's a $2 billion market or $2.5 billion, who cares? They have literally $200 million of ARR in the hedge fund. So we feel the runway is there. It's a question of execution. They've done it forever. I think they've not executed well in the last. I'll stop [audio distortion]
That is, there's a little bit of work enabling teams to win and letting them make decisions. And I think that we did really well in Q2 on the booking, not because we came up with any genius ideas. We enabled the sales team to go out and win and said, "You have the authority and the ability to go out and sell. You have the guardrails. Here's how much you can spend and not spend." And we laid out a plan [audio distortion]. We feel good about it. But it's a journey. I think we have said it'll take us two years to get them back to the growth rate through the year. [audio distortion] And then it should be much more stable, we hope.
Jim, I'm going to come back to just the broader financial profile for a second. The path to 40% margins as you guys continue to do it, and that's not at the expense of investment on the R&D side at all. So I guess as you think about that [audio distortion].
Right? And in fact, at the Investor Day, Analyst Day yesterday [audio distortion], it's been 80%. And we already have some clients who are at steady state, who are at 83%. A couple of years ago, as we talked about that, and we made more and said, "Hey, we'll do 50 basis points a year." But that actually, we've gone much faster than that. And Gen AI has really enabled a lot of efficiency in that. So you can see the gross margins kind of flowing through higher than option. [audio distortion] And the scale that we're at, you have a lot of optionality in how you want to invest. And so we are able to actually invest more dollars every year, meaningfully more dollars every year, in fact, more than the totality of what we spent as an entire business in 2020, the year before we went public.
So our growth just this year is more than that. So when you start thinking about those opportunities, there's lots of room there. And so we kind of pivoted and said, "Hey, we're going to continue on this path. We're committed to 200 basis points improvement every year. Could we do more than that? Of course we could. But we like the discipline of improving the EBITDA margins every year. But we also have lots of room to be able to make investments, to make the bets." And frankly, we fund every great idea we have, and we fund some good ideas as well. And that's kind of where we're at these days. We're still able to produce those margin improvements while making all of those investments.
I guess last one for me, capital allocation. You announced a share repurchase program, and you're well ahead on the deleveraging post-Enfusion. So as you think about that, I guess for the audience's benefit, target leverage levels for the company?
Yeah. So when we announced the deals, the target leverage level was to get below four times by the end of 2025 and below three times. And if you kind of took four times the fourth quarter EBITDA and our current debt, we'd be at three times. So we're already a year ahead. Because we're deleveraging so much more quickly, we were able to faster deleveraging. Because of all of that work while still being on that path to deleveraging, and we're fully committed to that path to deleveraging for everyone, it just gave us optionality. Because we operated so quickly, it gave us optionality cash next year. That's plenty to delever, and we have room to also be able to buy back shares. And that's kind of how we dropped to, "Okay, we'll do a $100 million share repurchase that we announced yesterday.
I think the financial profile at the time of acquisition was poorer because they were a 20% EBITDA company, right? And so we wanted to do $20 million of synergy because a $200 million revenue rate, if we take out $20 million, that would add 10 points at the bottom line. And they would go from 20% EBITDA to 30%. And we thought it would take us a year or something like that. When we got into it, it took us like two months to see there is a lot of things you should take out right away. And we execute on the $20 million right away. So when you do the math in your head, it's already a 30% business before the gross margin kicks in, improvement kicks in. And we made a lot of progress on the gross margin also.
I feel like we bought theoretically a financially weaker profile, but the profile will be solved really quickly. And if you take two months to solve something instead of one year, all that excess cash you can then go do things with, deliver faster, do stock repurchase, whatever that might be. So you defuse some of the dilution you did to buy this. So look, I think it's about execution. We are very focused on you execute well, and everything takes care of itself a little bit. Strategically, I feel like these were absolutely the right things to do. But it takes time. It takes time to show the full impact of it.
Yeah. Well, before we wrap up, are there any questions in the audience?
I guess you talked about kind of winning these large customers as the proof point, kind of like a land and expand strategy. How do you think about [audio distortion] ?
Yeah, I think that you will see, so firstly, I just got to back up. This was a little unexpected. We did not ever say that we would get a fully comprehensive deal day one. We always tried to lay out the expectation that this is going to take time because these are not easy decisions. For someone to say, "I'm going to change my entire tech stack," this doesn't happen. But I do think that what has been happening is we've been talking to all these clients all the time anyway. I don't think there is a medium or large insurer who doesn't talk to us today on an ongoing basis. So it's not like this is suddenly a new sales cycle. I think if we can find some proof points, you'll be able to flip them pretty faster, if you will.
But one last point I'll make about it. Nobody bloody wakes up and says, "I want to change my investment accounting platform." Nobody does that. Something has to trigger it. And usually the trigger is the front office, which says, "I want to invest in this country," or "I want to invest in this new asset class," or "I can't trade effectively enough. I can't price my things." Something's got to give. Sometimes there's regulatory needs or compliance needs. Something's got to change. But I think someone was saying, "If nothing changes, then it's hard for the [audio distortion] just saying, 'I'm an asset manager. I don't really care about these new alternative assets. I'm just going to keep investing in equities and bonds.'" Yeah, people just don't do that. So I feel like these proof points really matter because it proves to the market that you can make a change.
And by the way, you got to get them live. They have to be live. They have to be done really well [audio distortion].
Thank you, and congrats on the continued success of the business. You've continued to scale it. It's an incredible story.