Clearwater Analytics Holdings (CWAN) AI Stock Analysis

• Market Cap: $6.16B
• Dividend Yield: N/A
• Average Volume (3M): 2.68M
• Price to Earnings (P/E): 14.6
• Beta (1Y): 0.94
• Revenue Growth: 22.72%
• EPS Growth: N/A
• Country: US
• Employees: 1,915
• Sector: Technology
• Sector Strength: 40
• Industry: Software - Application
• EPS (TTM): 1.65
• Shares Outstanding: 222,513,440
• 10 Day Avg. Volume: 2,262,623
• 30 Day Avg. Volume: 2,684,223
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 14.72
• Price to Cash Flow (P/CF): -56.90
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $36.50
• Price Target Upside: 52.34% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

Clearwater Analytics Holdings presents a strong investment case with robust financials and promising growth prospects. The company's strategic acquisitions and effective use of AI technologies bolster its competitive position. While technical indicators suggest mixed short-term trends, the overall outlook remains positive, supported by solid earnings performance and strategic initiatives.

Positive Factors

Acquisitions

Clearwater's acquisition of Enfusion was transformational for the company, presenting a cross-sell opportunity and unlocking additional market potential by accessing Enfusion's hedge fund clients.

Financial Performance

Clearwater reported a strong end to 2024, with net dollar retention of 116% and ARR growth of 25% sending shares more than 15% higher after hours.

Revenue Growth

Clearwater maintains a strong long-term outlook with targets of 20% revenue growth, 80% gross margins, and 40% adjusted EBITDA margins.

Negative Factors

Integration Challenges

Clearwater announced acquisitions of Beacon and Bistro for a combined $685 million, which may pose integration challenges despite strengthening end-to-end platform capabilities.

Near-term Revenue Impact

The acquisitions of Beacon and Bistro, while strategically beneficial, could lead to near-term revenue growth dilution as the company integrates these new assets.

Revenue Growth Dilution

The company re-iterated its long-term outlook with expectations of 20% revenue growth, 80% gross margins, and 40% adjusted EBITDA margins, even with slight near-term revenue growth dilution from the Enfusion acquisition.

Clearwater Analytics Holdings Business Overview & Revenue Model

Company Description

Clearwater Analytics Holdings, Inc. develops and provides a Software-as-a-Service solution for automated investment data aggregation, reconciliation, accounting, and reporting services to insurers, investment managers, corporations, institutional investors, and government entities. The company offers investment accounting and reporting, performance measurement, compliance monitoring, and risk analytics solutions. Its Clearwater Prism solution enables self-service access to data feeds from accounting, compliance, performance, and risk systems, including those offered by the company and other third-party software vendors, as well as provides flexible reporting to various users. The company was incorporated in 2021 and is headquartered in Boise, Idaho.

How the Company Makes Money

Clearwater Analytics generates revenue primarily through a subscription-based model, where clients pay recurring fees to access its cloud-based platform. The company's key revenue streams include subscription fees for its software-as-a-service (SaaS) offering, which provides clients with continuous access to its investment accounting and analytics tools. Clearwater Analytics also benefits from long-term client relationships and high retention rates, as its platform is deeply integrated into clients' operations. Additionally, Clearwater leverages strong industry partnerships and collaborations to enhance its service offerings and expand its client base, contributing to its overall revenue growth.

Clearwater Analytics Holdings Financial Statement Overview

Summary

Clearwater Analytics Holdings exhibits robust financial health with strong revenue growth and healthy profit margins. The balance sheet shows low leverage and high equity, with significant net income driving return on equity. However, operational profitability is modest, indicating an area for improvement.

Income Statement

Clearwater Analytics Holdings shows strong revenue growth, with a significant increase from $368.2 million to $451.8 million in the TTM, reflecting a growth rate of 22.7%. The gross profit margin remains healthy at 72.8% in the TTM, indicating efficient cost management. The net profit margin improved drastically to 94.0% due to a notable net income increase, largely influenced by exceptional non-operating gains. However, EBIT and EBITDA margins are modest at 3.1% and 3.9%, respectively, suggesting core operational profitability is an area for improvement.

Balance Sheet

The company maintains a solid equity position with a high equity ratio of 86.2%, indicating low leverage and financial stability. The debt-to-equity ratio is low at 0.07, showcasing prudent debt management. Return on equity stands impressively at 42.1%, driven by the substantial net income. However, past equity deficits present potential long-term financial risks.

Cash Flow

Cash flow from operations is strong, supporting a high operating cash flow to net income ratio of 0.18, which demonstrates efficient cash conversion from operations. Free cash flow also remains healthy with a slight decline to $69.3 million. Free cash flow growth rate is negative compared to the previous year, but the company shows a consistent ability to generate cash, bolstering financial flexibility.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
451.80M	368.17M	303.43M	252.02M	203.22M
	Gross Profit
328.82M	261.04M	215.64M	184.16M	149.96M
	EBIT
12.23M	-16.75M	5.12M	38.76M	-20.42M
	EBITDA
24.41M	-6.82M	5.12M	31.95M	-18.15M
	Net Income Common Stockholders
424.38M	-21.63M	-6.70M	-8.09M	-44.23M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
255.49M	296.22M	255.61M	254.60M	61.09M
	Total Assets
1.17B	558.74M	483.84M	344.36M	115.56M
	Total Debt
71.92M	72.08M	76.60M	53.91M	424.90M
	Net Debt
-105.43M	-149.69M	-174.13M	-200.69M	363.82M
	Total Liabilities
139.34M	149.09M	145.45M	82.27M	460.17M
	Stockholders Equity
1.01B	354.33M	269.52M	197.03M	-344.61M
Cash Flow		Free Cash Flow
69.06M	78.98M	50.25M	-1.67M	-10.29M
	Operating Cash Flow
74.32M	84.60M	58.01M	3.36M	-6.49M
	Investing Cash Flow
-55.65M	-95.06M	-76.55M	-5.03M	-3.81M
	Financing Cash Flow
-61.67M	-19.29M	16.23M	195.29M	51.04M

Clearwater Analytics Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 23.96
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CWAN, the sentiment is Negative. The current price of 23.96 is below the 20-day moving average (MA) of 25.78, below the 50-day MA of 27.60, and below the 200-day MA of 26.03, indicating a bearish trend. The MACD of -0.54 indicates Positive momentum. The RSI at 39.18 is Neutral, neither overbought nor oversold. The STOCH value of 34.76 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CWAN.

Clearwater Analytics Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CWAN	80 Outperform	$6.16B	14.55	62.32%	―	22.72%	―
CVLT	77 Outperform	$6.94B	41.41	74.05%	―	15.19%	―
PEGA	68 Neutral	$6.07B	63.88	21.12%	0.19%	4.51%	43.29%
VERX	67 Neutral	$6.09B	235.54	-24.39%	―	16.49%	-279.46%
GTLB	60 Neutral	$7.59B	―	-0.20%	―	30.93%	99.45%
Sector *	57 Neutral	$20.24B	9.51	-13.28%	2.72%	5.43%	-24.54%
KC	56 Neutral	$3.22B	―	-32.59%	―	8.56%	13.34%

Clearwater Analytics Holdings Corporate Events

Clearwater Analytics Expands with Strategic Acquisitions

On March 11, 2025, Clearwater Analytics Holdings announced two strategic acquisitions, Beacon and Blackstone’s Bistro, to enhance its investment management technology platform. The acquisition of Beacon, a leader in cross-asset class modeling and risk analytics, and Bistro, a portfolio visualization software, aims to provide a unified, real-time view of portfolios, thereby improving risk management and operational efficiency for institutional investors. This move positions Clearwater as a comprehensive solution provider in the investment management industry, promising enhanced transparency and decision-making capabilities for stakeholders.

Clearwater Analytics Awaits Enfusion Acquisition Completion

On February 26, 2025, Clearwater Analytics Holdings announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act for its proposed acquisition of Enfusion. This expiration satisfies a key condition for the transaction, which is expected to close in the second quarter of 2025, pending customary closing conditions and Enfusion shareholder approval. The acquisition aims to integrate Enfusion’s operations and technology with Clearwater’s, potentially enhancing their competitive position and growth opportunities in the investment management industry.

Clearwater Analytics Merger with Enfusion Announced

Clearwater Analytics Holdings has announced a merger agreement with Enfusion, Inc., involving several subsidiaries and restructuring steps to form a unified corporate entity under Clearwater. This strategic merger, financed by a $1 billion debt commitment, aims to enhance Clearwater’s market position and operational synergies, subject to customary closing conditions and regulatory approvals.