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Clearwater Analytics Holdings, Inc. (CWAN)·Q2 2025 Earnings Summary

Executive Summary

  • Clearwater delivered strong Q2 2025 results: revenue $181.9M (+70% YoY) with core Clearwater revenue $130.6M (+22% YoY), non-GAAP gross margin 77.4%, and adjusted EBITDA $58.3M (32.1% margin), beating revenue guidance and consensus; non-GAAP diluted EPS of $0.12 was in line/slightly above consensus .
  • Consolidated ARR reached $783.5M (+83% YoY); core NRR remained 114%, consolidated NRR 110%; GAAP net loss (-$24.2M) stemmed from acquisition-related amortization and higher interest expense .
  • Guidance raised: FY 2025 revenue to $726–$732M and adjusted EBITDA to $232–$237M; Q3 2025 guidance set at revenue $203–$204M and EBITDA ~$65M; below-EBITDA guidance provided for interest, D&A, and SBC .
  • Strategic catalysts: early synergy capture ($20M achieved in Q2), non-GAAP GM performance in core business >80%, integrated platform story (Clearwater + Enfusion + Beacon), Bloomberg partnership for large AMs, marquee wins (e.g., VKB, Pool Re) .

What Went Well and What Went Wrong

  • What Went Well
    • Beat revenue guidance/consensus with $181.9M; adjusted EBITDA $58.3M exceeded guidance by ~$5M; consolidated ARR rose 83% YoY to $783.5M .
    • Non-GAAP gross margin 77.4% despite integrating lower-margin Enfusion; core accounting/analytics GM exceeded 80% in the quarter (“a big shout out to both the operations and technology teams”) .
    • Strategic validation: VKB (Germany’s largest public insurer) selected integrated Clearwater–Enfusion–Beacon solution; announced Bloomberg AIM partnership unlocking front-to-back for large asset managers .
  • What Went Wrong
    • GAAP loss (-$24.2M) driven by intangible amortization, transaction costs, and higher interest expense; total debt rose to ~$872M post acquisitions .
    • Consolidated NRR at 110% below long-term 115% target; management reiterated plans to improve Infusion retention and cross-sell to reach 115% over time .
    • GAAP gross margin fell to 65.1% vs 72.0% a year ago due to acquisition mix; OpEx increased materially (Sales & Marketing $39.2M; G&A $44.1M) reflecting integration and growth investments .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Millions)$106.8 $126.9 $181.9
GAAP Gross Margin %72.0% 73.3% 65.1%
Non-GAAP Gross Margin %77.5% 78.9% 77.4%
Adjusted EBITDA ($USD Millions)$33.4 $45.1 $58.3
Adjusted EBITDA Margin %~31.3% (calc: $33.4/$106.8) 35.5% 32.1%
GAAP Net Income/(Loss) ($USD Millions)$0.3 $6.9 $(24.2)
Non-GAAP Net Income ($USD Millions)$26.8 $34.9 $34.8
Non-GAAP Diluted EPS ($)$0.10 $0.13 $0.12
Operating Cash Flow ($USD Millions)$43.9 $24.5 $47.1
Free Cash Flow ($USD Millions)$42.4 $23.0 $44.1

Actual vs Consensus (Q2 2025):

MetricQ2 2025 ActualQ2 2025 Consensus*Surprise
Revenue ($USD Millions)$181.9 $174.13*+$7.77M / +4.5%*
Primary EPS (Non-GAAP Diluted, $)$0.12 $0.1199*+$0.0001*

Note: Values with asterisks retrieved from S&P Global.

Segment/KPIs:

KPIQ2 2024Q1 2025Q2 2025
Core Clearwater Revenue ($USD Millions)——$130.6
ARR ($USD Millions)$427.2 $493.9 $783.5
GRR %99% 98% 98%
NRR % (Consolidated)110% 114% (core) 110% consolidated; 114% core
Cash & Investments ($USD Millions)—$282.9 $71.9
Total Debt ($USD Millions)$45.9 $45.2 $878.1 (net of issuance costs)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q3 2025—$203–$204 Initiated
Adjusted EBITDA ($USD Millions)Q3 2025—~$65 Initiated
Adjusted EBITDA Margin %Q3 2025—~32% Initiated
Interest Expense ($USD Millions)Q3 2025—~$16 per quarter (Q3 & Q4) Initiated
D&A ($USD Millions)Q3 2025—~$29 per quarter (Q3 & Q4) Initiated
Equity-based Comp ($USD Millions)Q3 2025—~$34–$35 per quarter (Q3 & Q4) Initiated
Revenue ($USD Millions)FY 2025$720–$728 $726–$732 Raised
Adjusted EBITDA ($USD Millions)FY 2025$230–$235 $232–$237 Raised
Adjusted EBITDA Margin %FY 2025~32% ~32% Maintained
Equity-based Comp ($USD Millions)FY 2025~$139 ~$135 Lowered
Depreciation & Amortization ($USD Millions)FY 2025~$100–$120 ~$86 Lowered
Interest Expense ($USD Millions)FY 2025—~$48 Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Margin expansionNon-GAAP GM +170 bps in 2024; Q1 2025 non-GAAP GM 78.9%; EBITDA margin 35.5% Non-GAAP GM 77.4%; core GM >80%; EBITDA margin 32.1%; synergy $20M Strong, ahead of expectations; near-term mix compresses GAAP GM
Integrated platform (Clearwater + Enfusion + Beacon)Acquisitions announced/closed; vision for unified platform GTM teams integrated; 4 verticals; architecture pillars; cross-asset, single security master; VKB win Accelerating execution; client validation
AI/Helios and efficiencyGenerative AI investments highlighted Scaling generative AI Helios; agentic AI plans; near-term impact on efficiency, revenue monetization to follow Building; monetization likely 2025–2026
Bloomberg partnership—Bi-directional AIM integration; >dozen active deals in pipeline; targeting large global AMs New catalyst; expands TAM
NRR trajectoryNRR 116% in Q4 2024; Q1 core NRR 114% Consolidated NRR 110%; plan to reach 115% over time via commercial alignment and cross-sell Improvement needed; management confident
Alternatives & Blackstone Bistro—Largest investment area; Bistro + Beacon to modernize alt workflows and risk Strategic focus and growth driver

Management Commentary

  • “Our total revenue grew 70% year on year to $181,900,000... ARR was $783,500,000 up 83.4%... adjusted EBITDA of $58,300,000 was 32.1% of revenue... we delivered a gross margin of 77.4% in Q2 itself… core accounting and analytics business exceeded 80% [gross margin] for the quarter.” — CEO Sandeep Sahai .
  • “We achieved record revenue… which comfortably beat our guidance of 174,000,000… EBITDA… beat our guidance of $53,000,000 by $5,000,000… this beat resulted primarily from the achievement of the $20,000,000 in expense synergies within this quarter.” — CFO Jim Cox .
  • “The collaboration [with Bloomberg] creates a bidirectional integration between Bloomberg AIM and Clearwater… we’re already working on over a dozen active deals where the joint solution is the key differentiator.” — CEO Sandeep Sahai .
  • “VKB… Germany’s largest public insurer… replacing a leading legacy provider and delivering a disruptive solution… brings together components of Clearwater, Beacon and Infusion to deliver an integrated front to back platform.” — CEO Sandeep Sahai .

Q&A Highlights

  • Organic ARR trajectory: Management expects sequential revenue growth acceleration in 2H to support ~20% organic growth; ARR timing can be variable due to onboarding; strong Q2 bookings noted .
  • Bloomberg partnership optionality: For large global AMs, Clearwater will partner with Bloomberg AIM to offer front-to-back solutions; near-term pipeline includes several active deals; Infusion remains core for small/mid AMs and hedge funds .
  • NRR outlook: Consolidated NRR at 110%, with levers in commercial structure and cross-sell to reach 115% over time; Infusion bookings strong but retention improvement is an ongoing focus .
  • Commercial model change: Approach will be deliberate; align packaging/pricing to delivered value; expect impact beginning 2026 after execution on servicing and platform performance improvements .
  • AI monetization: Near-term benefits in operational efficiency; revenue monetization expected to ramp through 2025–2026 as clients adopt generative AI-enabled workflows .

Estimates Context

  • Q2 2025 result vs Street: Revenue $181.9M vs $174.13M consensus*; non-GAAP diluted EPS $0.12 vs $0.1199 consensus* — revenue beat and EPS in line/slight beat .
  • Q3 2025 outlook: Company guided revenue $203–$204M and EBITDA ~$65M; consensus Q3 revenue ~$203.6M* and EPS ~$0.137* are broadly aligned; EBITDA consensus may differ due to definition vs adjusted EBITDA .
  • FY 2025: Management raised revenue and EBITDA ranges; Street models likely to move up to reflect stronger Q2 and guidance.

Note: Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

  • Revenue momentum and early synergy capture de-risk integration; the revenue and EBITDA beats plus raised FY guidance are positive catalysts for estimate revisions and sentiment .
  • Margin narrative is stronger than feared: non-GAAP GM 77.4% despite lower-margin acquisitions; core GM >80% signals structural efficiency from single-instance architecture and network effects .
  • Platform strategy is resonating: Bloomberg partnership and VKB lighthouse win validate front-to-back positioning and expand enterprise TAM, particularly among large asset managers and European insurers .
  • Watch NRR trajectory: Consolidated NRR at 110% should trend back toward 115% as commercial model evolves and cross-sell ramps, but it is a key execution metric to monitor in 2H/2026 .
  • Balance sheet leverage is elevated post-deals; management is repaying revolver and expects leverage comfortably below 4x by year-end — monitor cash flow and pace of deleveraging .
  • AI efficiency gains are tangible now; revenue monetization from generative AI likely becomes an incremental growth driver into 2025–2026 — a medium-term upside lever .
  • Near-term trading: Positive reaction likely on raised guidance and beat; medium term thesis rests on integrated platform cross-sell, AI-driven efficiency, improved retention, and international expansion .

Appendix: Other Relevant Q2 Press Releases

  • VKB win (Germany’s largest public insurer) adopting integrated Clearwater–Enfusion–Beacon solution; lighthouse in DACH insurance market .
  • Pool Re (UK terrorism reinsurer) modernizes investment operations and risk analytics on Clearwater .

Disclosures

  • Financial figures and management commentary sourced from CWAN’s Q2 2025 press release and 8-K, and Q2 2025 earnings call transcript etc.
  • Street consensus values marked with asterisks were retrieved from S&P Global.