Clearwater Analytics Reports Strong Q2 Growth Amid Challenges

Clearwater Analytics Holdings, Inc. Class A ((CWAN)) has held its Q2 earnings call. Read on for the main highlights of the call.

Clearwater Analytics Holdings, Inc. Class A recently held an earnings call that painted a picture of robust growth and strategic advancement. The sentiment was largely positive, driven by impressive revenue growth and successful integration of acquisitions. However, there were some concerns regarding the GAAP loss and Enfusion’s profitability challenges.

Record Revenue Growth

Clearwater Analytics reported a remarkable 70% year-on-year increase in total revenue, reaching $181.9 million. The core business was a significant contributor, with $130.6 million in revenue and a 22% year-over-year organic growth. This showcases the company’s strong market position and effective business strategies.

ARR and Net Revenue Retention

The company’s Annualized Recurring Revenue (ARR) soared to $783.5 million, marking an 83.4% increase from the previous year. Core Net Revenue Retention (NRR) was at an impressive 114%, with consolidated NRR at 110%, indicating strong customer retention and recurring revenue streams.

Gross Margin Improvement

Despite challenges, Clearwater achieved a gross margin of 77.4% in Q2, surpassing expectations. This was particularly notable given the integration of Enfusion, which historically had a lower profitability profile.

Successful Integration and Synergies

The integration of Enfusion and Beacon was successfully completed, realizing $20 million in synergies. The company achieved its full year 1 target within the first few days as an integrated entity, highlighting operational efficiency.

Notable Client Win

Clearwater secured a significant client win by signing VKB, Germany’s largest public insurer. This deal involves replacing a leading legacy provider with a disruptive solution that integrates Clearwater, Beacon, and Enfusion.

Exciting Partnership with Bloomberg

The company announced a partnership with Bloomberg to deliver a seamless front-to-back solution. They are already working on over a dozen active deals, which could further enhance their market presence.

GAAP Loss Reported

Despite the positive growth, Clearwater reported a GAAP loss for the quarter. This was attributed to increased intangible amortization expenses, costs related to acquisitions, and higher interest expenses.

Challenges with Enfusion’s Profitability

Enfusion’s historically lower gross margin profile posed challenges, though improvements are underway. Clearwater is focused on enhancing Enfusion’s profitability to align with its overall financial goals.

Forward-Looking Guidance

Looking ahead, Clearwater Analytics anticipates continued growth, supported by operational efficiencies and generative AI initiatives. The company provided guidance for Q3 2025, expecting revenues between $203 million and $204 million, and full-year revenues ranging from $726 million to $732 million.

In summary, Clearwater Analytics Holdings, Inc. Class A’s earnings call reflected a positive sentiment with strong revenue growth and strategic advancements. Despite some challenges, particularly with Enfusion’s profitability, the company is well-positioned for future growth, supported by successful integrations and strategic partnerships.