Clearwater Analytics Holdings, Inc. Q3 FY2024 earnings call

• Sandeep Sahai reported Q3 2024 was an outstanding quarter with strong revenue and ARR growth, highlighting GRR, AUM growth, new logos, international expansion with strategic hires and a Hong Kong office, focus on selling within current client base via high client satisfaction, dedicated teams, and product innovations.
• Subhi Sethi discussed Clearwater's operational excellence, onboarding new clients like the American Endowment Foundation, ACLU, ACERA, and LuxNordic Wealth Management, and operational principles including global capacity, leadership, domain expertise, tiered delivery model, and continuous improvement with Gen AI integration.
• Jim Cox highlighted Q3 financial results exceeding guidance, record free cash flow, strong cash position, increased net revenue retention rate to 114%, and discussed the proposal to terminate the tax receivable agreement (TRA) by paying $72.5 million to TRA counterparties.

Revenue for the quarter was $115.8 million, a 22.4% year-on-year increase. Annualized recurring revenue (ARR) grew by 26.1% year-on-year to $456.9 million. Excluding the impact of the Wilshire ARR, ARR grew 24% year over year. Gross revenue retention (GRR) has been 98% or higher for 22 out of the last 23 quarters, with 99% for the last three quarters.

• Q4 2024 revenue guidance is at least $120.2 million, representing a ~21% year-over-year growth.
• Full-year 2024 revenue guidance raised to $445.5 million, adjusted EBITDA guidance raised by $2.5 million to reflect strong performance.
• Discussed terminating the TRA if a majority of unaffiliated stockholders vote to approve, with the decision hinging on shareholder approval.

Q: Brian Schwartz asked about booking strength being broad-based.

A: Sandeep Sahai said booking strength was very broad-based across industries and geographies, with new products contributing a quarter of booking.

Q: Andrew Schmidt asked about NRR and wallet share wins.

A: Jim Cox said wallet share comes from growing with large asset management clients, M&A, and cross-selling new products; Sandeep added 40% of new product innovations go to current clients.

Q: Rishi Jaluria asked about interest rate impact and Snowflake partnership.

A: Jim Cox discussed interest rate impact on AUM and ARR, Subhi Sethi explained Snowflake integration enables clients to access data for reporting solutions.

Q: Alexei Gogolev asked about Q4 guide and Snowflake financial impact.

A: Jim Cox said Q4 is for building growth, Subhi Sethi discussed potential OPEX leverage and onboarding cycle time impact from Snowflake integration.

Q: Gabriela Borges asked about 2025 priorities.

A: Sandeep Sahai said focus on growth with more aggression on partnerships, M&A, and Gen AI for faster performance improvement.

Q: Dylan Becker asked about momentum with upmarket insurers.

A: Sandeep Sahai said there's opportunity with large insurers, and they're winning and aiming to continue winning there.

Q: Michael Turan asked about base plus business model.

A: Jim Cox explained the base plus model stabilizes business, captures AUM upside, and enables cross-selling new products, with examples like NAIC regulatory change solving for clients.