In This Article:
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Revenue: $126.9 million, up 23.5% year-over-year.
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Annualized Recurring Revenue (ARR): $493.9 million, up 22.7% year-over-year.
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Adjusted EBITDA: $45.1 million, representing 35.5% of revenue, up 40% year-over-year.
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Gross Margin: 78.9%, a 370 basis point improvement from fiscal year 2022.
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GAAP Net Income: $6.9 million.
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Free Cash Flow: $23 million, up 168% year-over-year.
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Total Cash and Cash Equivalents: $282.9 million.
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Net Revenue Retention Rate: 114%.
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Equity-Based Compensation: $27.6 million, 21.7% of Q1 revenue.
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R&D Expense: $37.4 million, 21.6% of revenue on a non-GAAP basis.
Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Clearwater Analytics Holdings Inc (NYSE:CWAN) reported strong revenue growth of 23.5% year-over-year, reaching $126.9 million for Q1 2025.
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The company achieved a record high gross margin of 78.9%, showing significant improvement from previous years.
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Adjusted EBITDA for Q1 2025 was $45.1 million, representing a 35.5% margin and a 40% increase year-over-year.
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The company has a high client retention rate with a gross revenue retention rate of 98% and a net revenue retention rate of 114%.
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Strategic acquisitions of Enfusion, Beacon, and Bistro are expected to enhance Clearwater's platform, offering a comprehensive cloud-native investment management solution.
Negative Points
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The net revenue retention rate decreased slightly from 116% in the previous quarter to 114% in Q1 2025, indicating a slight reduction in client expansion.
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Equity-based compensation expenses remain high, representing 21.7% of Q1 revenue.
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The integration of recent acquisitions may pose challenges and could take time to realize expected synergies and growth acceleration.
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The company faces potential macroeconomic risks that could impact future growth, as indicated by the cautious guidance provided.
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There is a 15% dilution in shares due to recent acquisitions, which may affect shareholder value in the short term.
Q & A Highlights
Q: Can you provide guidance on how we should think about revenue growth for 2026 and 2027? A: Jim Cox, CFO, explained that Clearwater aims for a 20% growth rate, and they expect Enfusion's growth to accelerate from 13% to 20% over the next two years. The company is committed to expanding EBITDA margins by 200 basis points annually.
Q: How does Bistro fit into the integration with Beacon and Enfusion? A: Sandeep Sahai, CEO, stated that Bistro provides visualization capabilities for alternative assets, applicable across asset management, hedge funds, and insurance companies. It is seen as a horizontal capability that will be integrated with Clearwater's and Enfusion's client bases.