Clearwater Analytics Holdings, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights: - Strong execution with Q1 revenue of $126.9M (+23.5% Y/Y), ARR of $493.9M (+22.7% Y/Y), adjusted EBITDA of $45.1M (+40% Y/Y), and gross margin at 78.9%. - Regulatory compliance: Most Clearwater clients already compliant with NAIC mandate, platform adjusted timely. - Gross margin improvement: Grew from 75.1% in FY2022 to 78.9% in Q1 2025, driven by multiple initiatives. - Strategic wins: Magnificent Seven tech leader selected PRISM solution, German insurance company win, global asset manager expanded partnership. - Acquisitions: Acquisitions of Enfusion, Beacon, Bistro position for integrated cloud native investment platform, aiming for single security master and data plane across asset classes.

Segment Performance: Revenue for the quarter was $126.9 million, a 23.5% year-on-year growth. ARR was $493.9 million, up 22.7% year-on-year. Adjusted EBITDA was $45.1 million, 35.5% of revenue and up 40% year-on-year. Gross margin was 78.9%, very close to a long-term target of 80%. Revenue contribution breakdown isn't explicitly detailed by product segment in the transcript, but overall financial performance highlights growth across key metrics.

Guidance: - Q2 2025: Before considering Bistro, expected revenue ~$129M (+21% Y/Y); with acquired businesses, total expected revenue $174M; adjusted EBITDA before acquisitions ~$45M, with acquired businesses contributing ~$8M, consolidated EBITDA margin ~30.5%. - Full-year 2025: Combined revenue expected $720-728M (+59-61% Y/Y); EBITDA expected $230-235M; expects 20% growth, 50 bps gross margin improvement, 200 bps EBITDA expansion per year.

Risks: - Market complexity and volatility affecting investment decision-making. - Regulatory changes and associated compliance challenges. - Integration risks from acquiring Enfusion, Beacon, and Bistro, including aligning operations and systems.

Q: Kevin McVeigh asks about 2026 and 2027 growth prospects.

A: Jim and Sandeep discuss 20% long-term growth target, with Enfusion expected to reaccelerate to 20% growth in 2026.

Q: Brian Schwartz inquires about macro impact on the business.

A: Sandeep and Jim note revenue is protected from headwinds, but NRR was slightly down in Q1 due to less AUM tailwind.

Q: Michael Infante asks about Enfusion pricing.

A: Sandeep discusses rethinking Enfusion's commercial model, with high receptivity to align with client business models.

Q: Rishi Jaluria asks about organic growth.

A: Jim and Sandeep explain inorganic contribution and emphasize Clearwater's 20% growth target with solid ground-up modeling.

Q: Andrew Schmidt asks about Enfusion hedge fund market.

A: Sandeep and Jim discuss hedge fund client health, churn consistency, and potential for incremental growth via cross-selling to Clearwater's client base.

Q: Ella asks about Enfusion pricing risk.

A: Sandeep and Jim discuss rethinking commercial model, client alignment, and confidence in the transition.

Q: Dylan Becker asks about integration playbook.

A: Sandeep expresses confidence in executing the same playbook used for Clearwater's growth.

Q: David asks about win rates.

A: Sandeep and Jim discuss high win rates, especially with cross-selling opportunities.

Q: Yun Kim asks about Enfusion renewal seasonality.

A: Jim discusses Q4 renewal seasonality in Enfusion's business.