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Clearwater Analytics Holdings (CWAN)
NYSE:CWAN
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Clearwater Analytics Holdings
(NYSE:CWAN)79Outperform
Positive Factors
Acquisition Synergies
The Enfusion acquisition is likely to deliver significant synergistic value through additional cross-selling capabilities and remains on track to close in the second quarter of the year.
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.
Negative Factors
Market Volatility
The acquisition of Enfusion introduces higher levels of P&L volatility due to the natural fluctuations in the hedge fund market.
Clearwater Analytics Holdings (CWAN) vs. S&P 500 (SPY)
Market Cap
$7.35B
Dividend YieldN/A
Average Volume (3M)2.58M
Price to Earnings (P/E)17.5
Beta (1Y)1.06
Revenue Growth22.72%
EPS GrowthN/A
CountryUS
Employees1,756
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)1.65
Shares Outstanding216,231,920
10 Day Avg. Volume2,918,719
30 Day Avg. Volume2,581,548
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)16.27
Price to Cash Flow (P/CF)-62.90
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$36.86Price Target Upside28.25% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Clearwater Analytics Holdings Business Overview & Revenue Model
Company DescriptionClearwater Analytics Holdings, Inc. (CWAN) is a leading provider of cloud-based investment accounting, reporting, and analytics solutions for insurance companies, asset managers, corporations, and government entities. The company operates within the financial technology sector and offers an innovative platform that provides clients with a comprehensive view of their investment portfolios. Clearwater Analytics' core services include data aggregation, reconciliation, compliance, performance measurement, and risk analytics, empowering clients to make informed decisions and optimize their investment strategies.
How the Company Makes MoneyClearwater 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 demonstrates robust financial health with strong revenue growth of 22.7%, healthy gross margins, and low leverage. However, operational profitability is modest, indicating room 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.85
Very Positive
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.75
Positive
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.80
Positive
| 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
Neutral
28.74
Price Trends
28.43
Positive
28.67
Positive
25.22
Positive
Market Momentum
0.41
Positive
47.13
Neutral
25.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CWAN, the sentiment is Neutral. The current price of 28.74 is below the 20-day moving average (MA) of 29.20, above the 50-day MA of 28.43, and above the 200-day MA of 25.22, indicating a neutral trend. The MACD of 0.41 indicates Positive momentum. The RSI at 47.13 is Neutral, neither overbought nor oversold. The STOCH value of 25.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CWAN.
Clearwater Analytics Holdings Risk Analysis
Clearwater Analytics Holdings disclosed 58 risk factors in its most recent earnings report. Clearwater Analytics Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Clearwater Analytics Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $7.35B | 17.46 | 62.32% | ― | 22.72% | ― | |
78 Outperform | $27.83B | 37.21 | 35.34% | 1.41% | 5.73% | 11.41% | |
78 Outperform | $21.44B | 29.02 | 11.81% | 1.16% | 6.89% | 26.17% | |
73 Outperform | $16.80B | 31.65 | 29.17% | 0.94% | 5.02% | 12.58% | |
67 Neutral | $3.07B | 21.96 | 45.56% | ― | 10.74% | 200.08% | |
64 Neutral | $4.87B | ― | 99.24% | ― | 16.18% | 64.10% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
CWAN
Clearwater Analytics Holdings
28.74
11.92
70.87%
BR
Broadridge Financial Solutions
240.92
41.76
20.97%
FDS
Factset Research
440.73
-31.62
-6.69%
SSNC
SS&C Technologies Holdings
85.86
23.99
38.77%
WK
Workiva
85.87
0.85
1.00%
BL
BlackLine
48.88
-18.26
-27.20%
Clearwater Analytics Holdings Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: 6.29% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with significant revenue and EBITDA growth, enhanced by operational efficiencies and strategic client expansions. The company has successfully leveraged generative AI and anticipates continued growth in 2025. However, challenges include managing negative free cash flow due to a one-time payment and the complexities of integrating the Enfusion acquisition.Highlights
Exceptional Revenue Growth
Q4 2024 revenue was $126.5 million, representing a 28% year-on-year growth. Annual Recurring Revenue (ARR) grew to $474.9 million, a 25% year-on-year increase.
Strong EBITDA and Profitability
Adjusted EBITDA was $41.7 million, 33% of revenue, and up 39% year-on-year. EBITDA grew by 350 bps for the year, exceeding the 200 bps goal.
High Net Revenue Retention
Net Revenue Retention (NRR) reached 116%, achieved a full year earlier than expected.
Successful Client Expansion
Notable client wins include Imperial Fund Capital Partners, Invictus Capital Management, and OpenAI, among others.
Effective Use of Generative AI
Generative AI has driven operational efficiency and improved customer service, contributing to a 190 bps gross margin growth year-on-year.
Strong Guidance for 2025
For 2025, expected revenue growth is 19% to 20%, with EBITDA expected to be $182 million to $185 million, representing an adjusted EBITDA margin of 34%.
Lowlights
Negative Free Cash Flow
Free cash flow in Q4 was negative $29.8 million due to a one-time payment of $72.5 million to terminate the tax receivable agreement.
Challenges in Integrating Enfusion
While the Enfusion acquisition is expected to bring strategic benefits, integration is acknowledged as a complex and resource-intensive process.
Company Guidance
During the Clearwater Analytics Fourth Quarter and Full Year 2024 Financial Results Conference Call, several key metrics were highlighted demonstrating the company's strong performance and strategic outlook. Revenue for Q4 2024 reached $126.5 million, representing a 28% year-over-year growth. The company's Annualized Recurring Revenue (ARR) increased by 25% year-over-year to $474.9 million, alongside a Net Revenue Retention (NRR) rate of 116% for the quarter. The adjusted EBITDA was $41.7 million, translating to a 33% margin, and reflecting a 39% increase from the previous year. The company's gross margin also saw significant improvement, growing 190 basis points (bps) year-over-year for the quarter and 170 bps for the full year, surpassing the 50 bps target set previously. Looking ahead to 2025, Clearwater expects to continue its growth trajectory with projected full-year revenue of $535.5 million to $542 million and an adjusted EBITDA of $182 million to $185 million. The acquisition of Enfusion is anticipated to close in Q2 2025, with expectations of enhancing the company's platform capabilities and driving further growth.Clearwater Analytics Holdings Corporate Events
M&A TransactionsBusiness Operations and Strategy
Clearwater Analytics Awaits Enfusion Acquisition Completion
Positive
Feb 27, 2025
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.
Private Placements and FinancingM&A Transactions
Clearwater Analytics Merger with Enfusion Announced
Neutral
Jan 13, 2025
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.