Clearwater Analytics Holdings, Inc. Class A ((CWAN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Clearwater Analytics Holdings, Inc. (CWAN) recently held its earnings call, revealing a strong positive sentiment driven by significant revenue and ARR growth. The company’s successful acquisitions and strategic integration of businesses have been pivotal in achieving these results. Despite some challenges in maintaining consistent ARR growth and net revenue retention, CWAN’s advancements in Generative AI and its global expansion efforts underscore its solid competitive position in the market.
Record Revenue and ARR Growth
CWAN reported impressive financial results with revenues reaching $205.1 million, marking a 77% year-over-year increase. The Annualized Recurring Revenue (ARR) also saw a 77% growth, amounting to $807.5 million. This robust performance highlights the company’s ability to scale its operations effectively.
Improved EBITDA and Gross Margin
The company achieved an adjusted quarterly EBITDA of $70.7 million, up from $58.3 million in the previous quarter. The EBITDA margin rose to 34.5%, reflecting a 240 basis point improvement. Gross margin performance was strong at 78.5%, surpassing targets set for 2027.
High Gross Revenue Retention
Maintaining a gross revenue retention rate of 98%, CWAN has demonstrated consistent high retention over nearly seven years, underscoring the company’s ability to retain its client base effectively.
Successful Acquisitions and Integration
The acquisitions of Enfusion, Beacon, and Bistro have significantly contributed to CWAN’s revenue growth. The company has successfully improved the margin and profitability profiles of these businesses, aligning them closely with CWAN’s standards.
Generative AI Advancements
CWAN’s integration of Generative AI has led to significant improvements in gross margins. This technology supports over $10 trillion in institutional assets, enhancing operational efficiency and client offerings.
Global Expansion and New Client Wins
CWAN has expanded its international presence with significant client wins in North America, Europe, and Asia. Notably, the company secured a contract with the Texas Treasury Safekeeping Trust for $30 billion in state assets.
Lower Net Revenue Retention
The net revenue retention rate slightly decreased to 108% from 110% in the previous quarter. This was primarily due to lower contributions from AUM growth and asset-based upsells.
Challenges with Enfusion Growth
Enfusion’s growth was slower in Q1 but showed improvements in Q2 and Q3. CWAN is revising the commercial model for Enfusion, with expected impacts in 2026.
Lumpiness in ARR Growth
The core business ARR growth was 17%, slightly below expectations, attributed to the irregular timing of large deals coming online.
Forward-Looking Guidance
Looking ahead, CWAN projects Q4 2025 revenue to be between $216-$217 million, representing a 71-72% year-on-year growth. For the full year 2025, the company expects revenue of $730-$731 million, with a full-year adjusted EBITDA margin of 34%. The company is also expanding its Total Addressable Market (TAM) to $23 billion, with significant growth in asset management.
In conclusion, Clearwater Analytics Holdings, Inc. has demonstrated a strong performance in its recent earnings call, with significant revenue and ARR growth driven by strategic acquisitions and technological advancements. Despite some challenges in ARR growth consistency, the company’s forward-looking guidance remains optimistic, highlighting its potential for continued success in the financial markets.