Clearwater Analytics Holdings, Inc. Q4 FY2024 earnings call

• Q4 2024 was an outstanding quarter with strong revenue, ARR, and adjusted EBITDA growth. - NRR of 116% was achieved, driven by focus on client satisfaction, innovation, and commercial model. - Widespread expansion across market segments and geographies. - Gross margin improved, with plans to expand unit economics further. - Initiatives in new products, platform modules, and client acquisitions, including marquee clients like Imperial Fund Capital Partners, etc. - Acquisition of Enfusion, with strategic alignment to build a front-to-back platform for the investment management industry, focusing on accelerating revenue growth, cross-selling, improving margin, etc.

In Q4 2024, revenue was $126.5 million, a 28% year-on-year growth. ARR grew to $474.9 million, a 25% year-on-year growth. Adjusted EBITDA was $41.7 million, 33% of revenue, and up 39% year-on-year. NRR grew to 116%. Gross margin for Q4 was 78.8% and full year 2024 was 78.2%. Full year 2024 revenue was $451.8 million, with a year-over-year growth of 22.7%, beating the midpoint of the original guidance by $17.8 million. ARR at the end of 2024 was $474.9 million, a 25.3% increase from the prior year. Adjusted EBITDA for the full year was $145.7 million, up 37.6% year-on-year.

• For full year 2025, revenue is expected to be between $535.5 million to $542 million, a ~19-20% year-on-year growth. - Full year 2025 EBITDA is expected to be $182 million to $185 million, with an adjusted EBITDA margin of 34%. - Q1 2025 revenue is expected to be $125 million, a ~22% year-on-year growth. - Q1 2025 adjusted EBITDA is expected to be $41.5 million, with an adjusted EBITDA margin of 33.2%.

• Forward-looking statements involve risks and uncertainties, including those in the SEC filings. - Impact of foreign exchange rates on earnings and revenue. - Integration challenges associated with the acquisition of Enfusion.

Q: Nice to see a continued solid execution. I've got two. First, I wanted to start with just kind of the upcoming Enfusion deal. I understand, obviously, you're limited in what you can do, but, Sandeep and Jim, as you've been talking to your existing customers and including these, impressive new logos that you've been landing, what has been early feedback from those customers around the potential to have the two of you together, the potential to bring some of the front office solutions and retool them and integrate them? Any color you could share that would be helpful. And then I've got a quick follow-up.

A: Yes, thank you, Rishi. So the first thing is that people are generally very excited about what we have done. So what are they excited about? We have talked about 1-to-4 bps for a long time. And our ability to bring a market leader such as Enfusion into the play is, I think, very exciting for clients. So we feel that it does accelerate a 1-to-4 bps bid journey. It's not super easy, though. We obviously have integration work to do. But the point here is that from a customer point of view, to get both pre-trade and post-trade from the same vendor is just very, very interesting and exciting.

Q: Congratulations on a real strong finish to the year. Sandeep, I wanted to ask you about the NAIC regs, kind of the effectiveness in that core insurance market. I'm just wondering if that mandate is still going to be a tailwind for replacement activity or other aspects of the business in 2025, or did that demand boost mostly play out in 2024?

A: Yes, thank you, Brian. Regulatory reporting has always been a bit of a tailwind for us, as has compliance, as has additional assets being brought in because of acquisitions. So we do think of regulatory reporting as a big tailwind, and we continue to make investments in that space. I think what Jim was referring to was usually this is pretty broad based. Every country is doing something. Every region is doing something. NAIC made a massive change this year. And so that was, that felt a little bit one-time-ish. And that's why I think Jim called out that there was $3 million of revenue, which we thought would come in Q1. It actually came in Q4. And so we felt it was different enough that we wanted to call it out. But do we expect to continue to see regulatory changes all through 2025 and 2026? Heck yes, absolutely. It doesn't mean there'll be more regulations in every country, but changes are literally done all the time. I don't know, Jim, whether you'd --