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d1f3d83ef4959fe24be21262e41eb329a29e385499417416842b9c4b4a3880d4

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2dcaf48905cf83e2a017594b3069ce32604aef3461e79e35d0b76d5f6e01c21c

Clearwater Analytics Holdings, Inc. (**CWAN**) is a **SaaS (Software-as-a-Service) provider** specializing in solutions for **automated investment data aggregation, reconciliation, accounting, and reporting services**. The company serves a diverse client base, including insurers, investment managers, corporations, institutional investors, and government entities. CWAN generates revenue primarily through fees for access to its SaaS platform, offering clients automated and accurate investment data management and streamlined reporting processes.  **[0001628280-24-007825_cwan-20231231.htm:138]** **[0001628280-24-045742_cwan-20240930.htm:11]** **[0001628280-24-034169_cwan-20240630.htm:11]** **[0001628280-24-020003_cwan-20240331.htm:10]** **[0001628280-24-007825_cwan-20231231.htm:113]** **[0001628280-23-036707_cwan-20230930.htm:11]** 

1. **Investment Data Solutions** - Provides a comprehensive platform for investment data aggregation, accounting, analytics, and reporting services, catering to the needs of institutional investors and other financial entities.  **[0001628280-24-007825_cwan-20231231.htm:138]** **[0001628280-24-045742_cwan-20240930.htm:11]** **[0001628280-24-034169_cwan-20240630.htm:11]** **[0001628280-24-020003_cwan-20240331.htm:10]** **[0001628280-24-007825_cwan-20231231.htm:113]** **[0001628280-23-036707_cwan-20230930.htm:11]**

67e07a7c9e058732d0e8f0c9799fd436ab022af1efc96346d7f7aba991ee2248

| Name         | Position                                      | Start Date         | Short Bio                                                                                                                                                                                                                     |
|--------------|----------------------------------------------|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Sandeep Sahai | Chief Executive Officer (Principal Executive Officer) | **July 2018**      | Sandeep Sahai has been the CEO of Clearwater Analytics since **July 2018**. He previously served as CEO of Solmark (2014–2018) and held leadership roles at Headstrong and Genpact. He holds degrees from IIT Varanasi and IIM Kolkata.  **[0001628280-24-018800_cwan-20240426.htm:27]** **[0001193125-23-124125_d395342ddef14a.htm:21]**  |
| Jim Cox      | Chief Financial Officer (Principal Financial and Accounting Officer) | **November 3, 2023** | Jim Cox serves as the CFO at Clearwater Analytics. He has been certifying financial reports for the company at least since **November 3, 2023**, based on the earliest available certification in the documents.  **[0001628280-23-036707_cwan-20230930xexx3221.htm:0]**           |
| Subi Sethi   | Chief Client Officer                         | **January 2020**   | Subi Sethi has been the Chief Client Officer at Clearwater Analytics since **January 2020**. She previously led operations at UnitedHealth Group's Optum Global Solutions and held leadership roles at Genpact.  **[0001628280-24-018800_cwan-20240426.htm:28]** **[0001193125-23-124125_d395342ddef14a.htm:22]** **[0000950170-23-005990_cwan-20221231.htm:165]**        |

e57352ee16899ce356ef27d525c87fbdd53f94df906cc9606ae46a6b933fdffd

1. Your Net Revenue Retention Rate (NRR) increased to **114%** this quarter, partly due to onboarding additional assets and cross-selling new products; can you elaborate on how sustainable this elevated NRR is, especially considering that some of the new products are not yet fully mature?  **[CWAN_3406420_9]** **[CWAN_3406420_15]** **[CWAN_3406420_13]** **[CWAN_3406420_10]** **[CWAN_3406420_11]** 

2. You've mentioned that the recent interest rate environment provided a tailwind to your ARR growth; with potential future interest rate cuts, how do you anticipate this will impact your ARR, given your new contract structures and the sensitivity of your revenue to asset valuations?  **[CWAN_3406420_6]** **[CWAN_3406420_15]** **[CWAN_3406420_1]** **[CWAN_3406420_11]** 

3. With the significant **$290 million** in net cash holdings, and the proposal to terminate the Tax Receivable Agreement (TRA), can you provide more details on your capital allocation priorities, particularly regarding M&A opportunities and returning value to shareholders?  **[CWAN_3406420_6]** **[CWAN_3406420_19]** **[CWAN_3406420_8]** 

4. Your gross margin improvement of **110 basis points** is ahead of your target of **50 basis points** for the year; what are the key drivers of this outperformance, and how do you plan to sustain or accelerate margin expansion going forward?  **[CWAN_3406420_6]** **[CWAN_3406420_1]** **[CWAN_3406420_22]** **[CWAN_3406420_8]** 

5. Given your investments in new products, international expansion, and leveraging technologies like GenAI, how are you balancing these growth initiatives with the need for operational efficiency and improving EBITDA margins?  **[CWAN_3406420_6]** **[CWAN_3406420_1]** **[CWAN_3406420_22]** **[CWAN_3406420_2]** 

491df542eab33d272b88ec411e7c1b037f9a99860edf389005f54bcd586b1e68

### Clearwater Analytics (CWAN) Guidance from the Last Four Earnings Calls

#### **1. Q3 2024 Earnings Call**
- **Issued Period**: Q3 2024  
- **Guided Period**: Q4 2024 and FY 2024  
- **Guidance**:  
  - **Q4 2024 Revenue**: At least **$120.2 million**, representing a year-over-year growth rate of approximately **21%**.  **[CWAN_3406420_6]**   
  - **FY 2024 Revenue**: Raised to **$445.5 million**, representing a year-over-year growth rate of approximately **21%**.  **[CWAN_3406420_6]**   
  - **Q4 2024 Adjusted EBITDA**: Expected to be **$38.5 million**, representing an EBITDA margin of approximately **32%**.  **[CWAN_3406420_6]**   
  - **FY 2024 Adjusted EBITDA**: Raised to **$142.5 million**, an increase of **$2.5 million** from prior guidance, providing an adjusted EBITDA margin of approximately **32%** and a **35%** increase in EBITDA year-over-year.  **[CWAN_3406420_6]**   
  - **Commitment for 2025**: At least **200 basis points** of EBITDA margin expansion next year on wherever they end in 2024.  **[CWAN_3406420_20]** 

---

#### **2. Q2 2024 Earnings Call**
- **Issued Period**: Q2 2024  
- **Guided Period**: Q3 2024 and FY 2024  
- **Guidance**:  
  - **Q3 2024 Revenue**: Expected to be in the range of **$113 million to $114 million**, representing a year-over-year growth rate of approximately **19% to 20%**.  **[CWAN_3395629_7]**   
  - **FY 2024 Revenue**: Expected to be in the range of **$442 million to $444 million**, representing a year-over-year growth rate of approximately **20% to 21%**.  **[CWAN_3395629_7]**   
  - **Q3 2024 Adjusted EBITDA**: Expected to be **$36 million**, representing an adjusted EBITDA margin of **31.7%**.  **[CWAN_3395629_7]**   
  - **FY 2024 Adjusted EBITDA**: Raised to **$140 million**, with an adjusted EBITDA margin of approximately **31.6%**.  **[CWAN_3395629_7]**   
  - **FY 2024 Depreciation and Amortization Expense**: Increased guidance to **$12 million**.  **[CWAN_3395629_7]**   
  - **FY 2024 Tax Receivable Agreement Expense**: Expected to be approximately **$17 million**.  **[CWAN_3395629_6]** 

---

#### **3. Q1 2024 Earnings Call**
- **Issued Period**: Q1 2024  
- **Guided Period**: Q2 2024 and FY 2024  
- **Guidance**:  
  - **Q2 2024 Revenue**: Expected to be in the range of **$105 million to $106 million**, representing a year-over-year growth rate of approximately **17% to 18%**.  **[CWAN_3382073_5]**   
  - **FY 2024 Revenue**: Expected to be in the range of **$438 million to $442 million**, representing a year-over-year growth rate of approximately **19% to 20%**.  **[CWAN_3382073_5]**   
  - **Q2 2024 Adjusted EBITDA**: Expected to be **$31 million**, with an adjusted EBITDA margin of **29% to 30%**.  **[CWAN_3382073_6]**   
  - **FY 2024 Adjusted EBITDA**: Expected to be in the range of **$137 million to $139 million**, with an adjusted EBITDA margin of **31%**.  **[CWAN_3382073_5]**   
  - **FY 2024 Gross Margin**: Progress towards their long-term goal of **80% gross margin**  **[CWAN_3406420_6]** **[CWAN_3375786_6]** .  
  - **FY 2024 Net Revenue Retention (NRR)**: Targeting **115%** in the long term, with progress expected to be directional but not linear.  **[CWAN_3382073_4]** 

---

#### **4. Q4 2023 Earnings Call**
- **Issued Period**: Q4 2023  
- **Guided Period**: Q1 2024 and FY 2024  
- **Guidance**:  
  - **Q1 2024 Revenue**: Expected to be **$10.5 million**, representing first-quarter revenue growth of **19%**.  **[CWAN_3375786_5]**   
  - **FY 2024 Revenue**: Expected to be in the range of **$431 million to $437 million**, representing approximately **17% to 19% year-over-year growth**.  **[CWAN_3375786_5]**   
  - **Q1 2024 Adjusted EBITDA**: Expected to be **$28.8 million**, with an adjusted EBITDA margin of **28.7%**, approximately **200 basis points better** than Q1 2023.  **[CWAN_3375786_5]**   
  - **FY 2024 Adjusted EBITDA**: Expected to be in the range of **$135 million to $137 million**, reflecting an approximately **250 basis point improvement** from 2023.  **[CWAN_3375786_5]**   
  - **FY 2024 Total Equity-Based Compensation**: Expected to be approximately **$106 million**, a slight decrease from **$108 million** in 2023, representing a **5% reduction** as a percentage of revenue.  **[CWAN_3375786_5]**   
  - **FY 2024 Depreciation and Amortization Expense**: Expected to be approximately **$11 million**.  **[CWAN_3375786_6]**   
  - **FY 2024 Non-GAAP Effective Tax Rate**: Expected to be **25%**.  **[CWAN_3375786_6]** 

f6efd24ed872dd3ada88cd0e638c8d504c425ad08033103758db0e8cda47381a

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

United States

Rest of World

Total Revenue

7135a05e2912818d58949cb7a0c5ea713cbf54887158a9e3103629cd949f9c0d

Percentage of High-Grade Fixed Income Securities (%)

Net Revenue Retention Rate (%)

Global Invested Assets (Trillions USD)

Gross Revenue Retention Rate (%)

108abce307ee154b10e5f320c11b7e48696afed6391b7aac1caff86098200d88

- The company anticipates **lower revenue growth in Q2 2024, projecting 17% to 18% growth compared to 21% in Q1 2024**. This suggests a potential deceleration in momentum. The reduced guidance is partly due to a significant client going live earlier than expected, pulling revenue into Q1, and the company expresses concern about projecting too high for Q2.  **[CWAN_3382073_9]**
- New product initiatives are **not yet contributing significantly to revenue**, and there is uncertainty about the timing of their impact. The company acknowledges that **"new products are a little bit difficult to predict exactly when it'll happen and how it'll happen"**, indicating potential challenges in achieving their target net revenue retention rate of 115%.  **[CWAN_3382073_9]**
- The plan to engage in more systematic mergers and acquisitions introduces integration risks and potential distractions for management. The company notes, **"We did announce 2 really senior executives we've brought in the company to do this on a more systematic way... So I think you should expect us to do... 2 tuck-ins in a year or whatever that number is"**, which could pose challenges in maintaining operational focus.  **[CWAN_3382073_16]**

c12b0e3fb8948aea84b521425ed29d43cb1ad075455033df287b9fa6da16b02f

- **Clearwater Analytics is guiding for a slower revenue growth rate in Q4, despite strong Q3 results, which may indicate potential concerns about future demand or growth prospects.**  **[CWAN_3406420_18]** ,  **[CWAN_3406420_20]**
- **The company expects lower EBITDA margins in Q4 due to increased investments in go-to-market efforts and hiring, which may pressure near-term profitability.**  **[CWAN_3406420_20]**
- **The significant increase in net revenue retention (NRR) to 114% this quarter was partly due to temporary factors like AUM tailwinds from interest rate changes, and management suggests that such levels may not be sustainable in the near term.**  **[CWAN_3406420_11]** ,  **[CWAN_3406420_13]**

3906bf0fd13b8acdb182736d7eadae07e7f6965566559356551ae254d84f1cce

- **Heavy investment in R&D may pressure margins longer than anticipated.** Clearwater is spending **60% of R&D capacity on building new products**  **[CWAN_3395629_2]** , with plans to reduce R&D expenses from **25%-26% to 20%** in the mid to long term.  **[CWAN_3395629_13]**  If these new products do not generate expected returns, margins could be negatively impacted.
- **Macro headwinds may affect future growth.** Management acknowledges that "a number of enterprise software companies saw weakness in pipeline and eventually in booking and eventually in revenue" and they "continue to be watchful".  **[CWAN_3395629_9]**  Despite current optimism, macroeconomic challenges could impact Clearwater's pipeline and sales cycles.
- **Net Revenue Retention (NRR) remains flat at 110%, potentially delaying growth targets.** NRR was "unchanged sequentially" at **110%**  **[CWAN_3395629_12]** , and while the company aims to reach **115% NRR by first quarter of 2026**  **[CWAN_3395629_12]** , achieving this target may take longer than expected, potentially limiting revenue growth from existing customers.

66e8d393922fdfede6431dd5752c4ef2853b3d06e342b9140e1b2cbdf7393393

- The company's **Net Revenue Retention Rate (NRR) increased to 110%** in Q1 2024, driven by a **best-ever gross revenue retention rate of 99%** and a **25% contribution from cross-selling new solutions**, indicating strong customer retention and expansion opportunities.  **[CWAN_3382073_15]** ,  **[CWAN_3382073_18]** ,  **[CWAN_3382073_10]**
- Successful integration of acquisitions, such as **JUMP and Wilshire**, is expanding the company's total addressable market and contributing to growth, with **six new clients** won for the Clearwater JUMP platform in the quarter.  **[CWAN_3382073_3]** ,  **[CWAN_3382073_2]**
- International expansion is showing positive momentum, with **new contracts signed in APAC, Germany, France, and the UK**, supported by **new leadership adding value and building up the pipeline**, suggesting significant growth potential outside North America.  **[CWAN_3382073_2]** ,  **[CWAN_3382073_17]**

ce8b982e3c75579862113b676805c71d92c0e81c3b23cee0cb076585217950a6

1. **Net Revenue Retention (NRR)**  
   **Q:** NRR is close to your 2026 goal of 115%. Is this ceiling hard or could it be exceeded?  
   **A:** Management believes achieving an NRR of **115% by 2026** is very achievable.  **[CWAN_3406420_10]**  They've been buoyed by recent results, noting that **9%** of NRR was from new products and increased wallet share, which was **3% higher** than last quarter.  **[CWAN_3406420_10]**  However, since the new products are still maturing, they prefer to see more consistency before raising targets.  **[CWAN_3406420_10]** 

2. **Sustainability of NRR Growth**  
   **Q:** What drove the wallet share gains, and can this momentum continue?  
   **A:** Wallet share growth comes from large asset management clients growing and from M&A activities.  **[CWAN_3406420_11]**  Cross-selling new products like **LPX** and **MLX** also contributed.  **[CWAN_3406420_11]**  In September, they saw a **2% increase** from AUM tailwinds compared to June.  **[CWAN_3406420_11]**  While new products are not yet mature, they expect these growth levers to become reliable over time.  **[CWAN_3406420_11]** 

3. **Interest Rate Impact on ARR**  
   **Q:** How will future interest rate cuts affect ARR under the new pricing model?  
   **A:** Interest rate cuts are expected to be a **tailwind**, but the impact is less pronounced under the new base-plus model.  **[CWAN_3406420_15]**  In 2022, a **500 bps** rate increase resulted in a **500 bps** headwind.  **[CWAN_3406420_15]**  Under current contracts, they would capture most of the asset price increases due to rate cuts, though the exact impact depends on asset class pricing.  **[CWAN_3406420_15]** 

4. **Q4 Revenue Outlook**  
   **Q:** Why is the Q4 revenue growth guidance slightly slower despite strong demand?  
   **A:** The company aims to deliver on its guidance and feels confident about Q4.  **[CWAN_3406420_18]**  They see no weakness or softness but consider the guidance appropriate at this point.  **[CWAN_3406420_18]** 

5. **Snowflake Partnership and AI Monetization**  
   **Q:** How will the Snowflake partnership and AI capabilities add value and be monetized?  
   **A:** The Snowflake partnership allows clients to access Clearwater data through Snowflake, creating a single pane of glass for reporting.  **[CWAN_3406420_16]**  This enhances client satisfaction and may lead to operational efficiencies over time.  **[CWAN_3406420_21]**  While AI tools improve platform efficiency and contribute to gross margin, significant revenue impact is still early.  **[CWAN_3406420_12]** 

6. **Bookings Strength and Deal Distribution**  
   **Q:** Was the strong bookings result due to mega deals or broad-based strength?  
   **A:** Bookings strength was **broad-based** across industries and geographies.  **[CWAN_3406420_9]**  There were no outsized mega deals; growth came from new products, new logos, and back-to-base sales.  **[CWAN_3406420_9]** 

7. **Product Mix Between Asset Managers and Insurance Companies**  
   **Q:** Is there a shift in the mix between asset managers and insurance companies?  
   **A:** The mix remains within **1%** of previous distribution; there's no significant change.  **[CWAN_3406420_13]**  Movement between insurance and asset managers is minimal, so go-to-market strategies remain consistent.  **[CWAN_3406420_13]** 

8. **2025 Planning and Strategic Priorities**  
   **Q:** Have any priorities for 2025 surfaced given recent progress?  
   **A:** The company feels more confident and plans to be **more aggressive** in pursuing partnerships, M&A, and leveraging technologies like GenAI.  **[CWAN_3406420_22]**  They focus on growth with increased ambition about future opportunities.  **[CWAN_3406420_22]** 

9. **Commitment to Margin Expansion**  
   **Q:** Are you still committed to delivering 200 bps of EBITDA margin expansion next year?  
   **A:** They are **100% committed** to at least **200 bps** of margin expansion in 2025.  **[CWAN_3406420_20]**  Investments in Q4 aim to fortify future growth while exceeding current margin improvement targets.  **[CWAN_3406420_20]** 

10. **Momentum with Upmarket Insurers**  
    **Q:** Can you discuss the progress with upmarket insurers?  
    **A:** They continue to win large insurer clients, bringing them live quickly.  **[CWAN_3406420_23]**  There's ongoing opportunity in this market segment, particularly as insurers invest more in alternative assets.  **[CWAN_3406420_23]** 

26b953c15057c9f2d3a702e42a9f49477681b3d5d3e1c1dccd1720eb52bd952c

- **Record high bookings in 2023**, with the **highest bookings in the company's history** occurring in December, indicating strong demand and a robust pipeline, especially in asset management and insurance sectors. Large prospects, including ones that would not have engaged **three years ago**, are now in the pipeline.  **[CWAN_3375786_17]** **[CWAN_3375786_14]**
- The **completion of the public cloud migration** has freed up **60% of R&D capacity** for innovation and growth, allowing the company to invest in new products expected to impact revenue growth in the **second half of 2024** and more substantially in **2025**, driving towards a sustained **Net Revenue Retention (NRR) of 115%**.  **[CWAN_3375786_7]** **[CWAN_3375786_18]**
- The company is making significant investments in expanding into **Europe and Asia-Pacific**, with senior leadership hires in these regions, aiming to accelerate growth in markets where **international revenue grew to 18% of total revenue** in 2023, with **Asia growing the fastest** albeit from a small base.  **[CWAN_3375786_22]** **[CWAN_3375786_13]**

41f007f80db4e58ecc4c6e2d476ee062beb4d60bf8c4ad9e2b6b6f6a8c2dc7e3

- **Revenue guidance for 2024 is below the company's target growth rate of 20%+, indicating potential growth deceleration.** The company guides for **17% to 19% year-over-year growth** for 2024  **[CWAN_3375786_18]** , which is lower than the 20%+ growth they aspire to.
- **The Jump acquisition did not meet its ambitious growth targets, failing to achieve the performance thresholds for RSU vesting.**  **[CWAN_3375786_9]**  This may suggest potential challenges with integration or overestimation of growth prospects.
- **Net Revenue Retention Rate (NRR) has decreased over the past few quarters, from 109% to 107%,**  **[CWAN_3375786_12]**  which may signal challenges in upselling or expanding with existing customers.

ffae3d783cddb3631a1bceb38c2a86b1bbd8cf47b14e7bf6bc0ff46f280cffdb

- **Strong Organic ARR Growth exceeding 20%**, even after excluding the impact of the Wilshire acquisition, indicating robust demand for Clearwater Analytics' solutions.  **[CWAN_3395629_11]**
- **High Net Revenue Retention Rate of 110%**, with expectations to increase to **115%** as they cross-sell more solutions to existing clients, demonstrating effective upselling and client satisfaction.  **[CWAN_3395629_11]** **[CWAN_3395629_12]**
- **Improving Margins and Strong Cash Flow Generation**, with adjusted EBITDA margin of **31.3%** in Q2, exceeding guidance, and record high free cash flow of **$42.4 million**, representing a **117%** year-over-year improvement, supporting strategic investments and growth.  **[CWAN_3395629_21]** **[CWAN_3395629_14]**

d04118e587f876f3cf86922c6c684b3603123e6240bbba15f48fb483d96dd20d

- **Broad-based booking strength across industries and geographies**: The company's booking strength in Q3 was very **broad-based**, with contributions from **new products**, **new logos**, and **back-to-base sales**, without reliance on any single deal or market segment.  **[CWAN_3406420_9]**
- **Strong Net Revenue Retention (NRR) approaching 2026 goal ahead of schedule**: The company achieved an **NRR of 114%** in Q3, driven by **increased wallet share from existing clients**, cross-selling of **new products**, and a **2% AUM increase in September**.  **[CWAN_3406420_11]** **[CWAN_3406420_13]** **[CWAN_3406420_10]**  This is close to their **2026 goal of 115%**, indicating strong customer relationships and potential for continued revenue growth.  **[CWAN_3406420_10]**
- **Strategic investments to fortify future growth while expanding margins**: The company is committed to delivering at least **200 basis points of EBITDA margin expansion next year** and is making strategic investments in **go-to-market teams** and **new product innovations**.  **[CWAN_3406420_20]**  This demonstrates effective management and strong future growth prospects.

bbf0f96e165b6549a33db1c1632c2d7c1e5688008ee4e392cb2292cb5b2629ff

Clearwater Analytics Holdings Inc (CWAN)

Financials