Education
About Us
Working with TipRanks
Follow Us
Clearwater Analytics Holdings (CWAN)
NYSE:CWAN
RESEARCH TOOLSreports
Top Page
Clearwater Analytics Holdings
(NYSE:CWAN)
Rating:76Outperform
Price Target:―
Positive Factors
Acquisitions
Clearwater's recent acquisitions of Enfusion, Beacon, and Bistro are enhancing its end-to-end value proposition and contributing to market expansion.
Financial Performance
Clearwater Analytics Holdings, Inc. Class A reported strong first-quarter results with 24% revenue growth and 23% ARR growth.
Investment Opportunity
The recent pullback in shares is seen as a compelling opportunity for investors, supporting an Outperform rating.
Negative Factors
Customer Management
Clearwater faces challenges in navigating across multiple senior sponsors at each customer and optimizing pricing and packaging.
Scaling Challenges
There are risks associated with the next phase of scaling into a multi-product company for Clearwater.
Stock Performance
Clearwater has meaningfully underperformed vertical software peers due to event-driven arbitrage trades unwinding and a flurry of M&A deals.
Clearwater Analytics Holdings (CWAN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.28B
Dividend YieldN/A
Average Volume (3M)3.31M
Price to Earnings (P/E)13.3
Beta (1Y)0.74
Revenue Growth23.21%
EPS GrowthN/A
CountryUS
Employees1,915
SectorTechnology
Sector Strength77
IndustrySoftware - Application
Share Statistics
EPS (TTM)0.13
Shares Outstanding254,586,550
10 Day Avg. Volume3,000,896
30 Day Avg. Volume3,307,673
Financial Highlights & Ratios
PEG Ratio0.03
Price to Book (P/B)4.92
Price to Sales (P/S)0.00
P/FCF Ratio80.16
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$32.30Price Target Upside45.63% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering11
Clearwater Analytics Holdings Business Overview & Revenue Model
Company DescriptionClearwater Analytics Holdings, Inc. (CWAN) is a leading provider of SaaS-based investment accounting, reporting, and analytics solutions. The company serves a diverse range of clients including insurers, asset managers, corporations, and government entities. Clearwater Analytics' platform helps organizations streamline their investment accounting processes, offering real-time data aggregation, reconciliation, and comprehensive reporting capabilities.
How the Company Makes MoneyClearwater Analytics generates revenue primarily through subscription fees for its cloud-based software solutions. Clients pay recurring fees to access the platform's investment accounting and reporting services, which are tailored to meet the specific needs of different industries. The company's revenue model is bolstered by long-term contracts that provide a stable and predictable income stream. Additionally, Clearwater Analytics may engage in partnerships with financial institutions to expand its market reach and enhance its service offerings, although specific partnership details are not disclosed.
Clearwater Analytics Holdings Financial Statement Overview
Summary
Clearwater Analytics Holdings demonstrates strong revenue growth and profitability with high net margins and low leverage. However, some caution is needed due to income components influenced by non-operational factors.Income Statement
Clearwater Analytics Holdings has demonstrated strong revenue growth with a significant increase from $451.8M to $475.9M in the TTM, translating to a 5.3% growth rate. The company achieved impressive gross and net profit margins at 72.9% and 90.1%, respectively, indicating robust profitability. The EBIT and EBITDA margins also show improvement, reflecting effective cost management and operational efficiency. However, the substantial net income can be attributed to other income or tax benefits, which warrants cautious optimism.85
Very Positive
Balance Sheet
The balance sheet displays a solid equity base, with a debt-to-equity ratio of 0.06, indicating low financial leverage and reduced financial risk. The equity ratio of 86.8% also suggests a strong capital structure. However, the return on equity (ROE) calculation is skewed due to the high net income figure, potentially inflating the perceived returns. Overall, the balance sheet showcases financial stability with ample liquidity and low debt levels.78
Positive
Cash Flow
Clearwater Analytics Holdings has demonstrated strong cash flow management, with a free cash flow of $83.5M in the TTM, representing a substantial increase from the previous period. The company maintains a healthy operating cash flow to net income ratio, indicating efficient cash conversion. The free cash flow to net income ratio is positive, supporting sustainable growth and financial flexibility. Nevertheless, fluctuations in investing and financing cash flows suggest potential volatility in future cash positions.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 475.95M | 451.80M | 368.17M | 303.43M | 252.02M | 203.22M | Gross Profit |
| 347.21M | 328.82M | 261.04M | 215.64M | 184.16M | 149.96M | EBIT |
| 20.36M | 12.23M | -16.75M | 5.12M | 38.76M | -20.42M | EBITDA |
| 25.87M | 24.41M | -6.82M | 5.12M | 31.95M | -18.15M | Net Income Common Stockholders |
| 428.99M | 424.38M | -21.63M | -6.70M | -8.09M | -44.23M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 240.07M | 255.49M | 296.22M | 255.61M | 254.60M | 61.09M | Total Assets |
| 491.39M | 1.17B | 558.74M | 483.84M | 344.36M | 115.56M | Total Debt |
| 78.13M | 71.92M | 72.08M | 76.60M | 53.91M | 424.90M | Net Debt |
| -142.71M | -105.43M | -149.69M | -174.13M | -200.69M | 363.82M | Total Liabilities |
| 137.93M | 139.34M | 149.09M | 145.45M | 82.27M | 460.17M | Stockholders Equity |
| 289.02M | 1.01B | 354.33M | 269.52M | 197.03M | -344.61M |
| Cash Flow | Free Cash Flow | ||||
| 83.50M | 69.06M | 78.98M | 50.25M | -1.67M | -10.29M | Operating Cash Flow |
| 88.78M | 74.32M | 84.60M | 58.01M | 3.36M | -6.49M | Investing Cash Flow |
| 55.68M | -55.65M | -95.06M | -76.55M | -5.03M | -3.81M | Financing Cash Flow |
| -58.77M | -61.67M | -19.29M | 16.23M | 195.29M | 51.04M |
Clearwater Analytics Holdings Technical Analysis
Negative
22.18
Price Trends
24.12
Negative
26.23
Negative
26.52
Negative
Market Momentum
-0.33
Positive
35.09
Neutral
4.07
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CWAN, the sentiment is Negative. The current price of 22.18 is below the 20-day moving average (MA) of 23.19, below the 50-day MA of 24.12, and below the 200-day MA of 26.52, indicating a bearish trend. The MACD of -0.33 indicates Positive momentum. The RSI at 35.09 is Neutral, neither overbought nor oversold. The STOCH value of 4.07 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CWAN.
Clearwater Analytics Holdings Risk Analysis
Clearwater Analytics Holdings disclosed 56 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 3 New Risks
1.
If the acquisition of Enfusion is completed, we may not achieve the anticipated benefits of the proposed acquisition, including anticipated synergies. Q4, 2024
2.
The combined company may be exposed to increased litigation, which could have an adverse effect on the combined company's business, financial position, results of operations and cash flows. Q4, 2024
3.
Deferred tax assets represent a significant portion of our assets, and non-realizability of these assets could negatively impact our results of operations and financial condition. Q4, 2024
Clearwater Analytics Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $6.28B | 13.32 | 58.14% | ― | 23.21% | ― | |
76 Outperform | $8.84B | 50.22 | 39.29% | 0.12% | 14.29% | 151.38% | |
76 Outperform | $7.70B | 103.39 | 25.23% | ― | 18.63% | -55.09% | |
69 Neutral | $6.19B | 235.54 | -19.65% | ― | 15.20% | -666.94% | |
66 Neutral | $7.89B | ― | -0.20% | ― | 30.93% | 99.45% | |
61 Neutral | $11.29B | 10.07 | -7.05% | 2.96% | 7.47% | -10.75% | |
54 Neutral | $3.75B | ― | -32.59% | ― | 8.56% | 13.34% |
* Technology Sector Average
Performance Comparison
CWAN
Clearwater Analytics Holdings
22.04
2.94
15.39%
CVLT
CommVault Systems
174.43
63.83
57.71%
PEGA
Pegasystems
96.04
36.21
60.52%
KC
Kingsoft Cloud Holdings
13.06
10.20
356.64%
VERX
Vertex
37.94
4.24
12.58%
GTLB
Gitlab
47.50
-7.67
-13.90%
Clearwater Analytics Holdings Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: -2.46%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, strategic acquisitions, and technological advancements. While there were some challenges, such as a slight decline in NRR and Enfusion's slower growth, the outlook remains positive with plans for continued integration and expansion.Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Revenue for Q1 2025 was $126.9 million, marking a 23.5% year-over-year increase.
Significant ARR Increase
Annualized Recurring Revenue (ARR) reached $493.9 million, up 22.7% from the prior year.
EBITDA Expansion
Adjusted EBITDA for Q1 2025 was $45.1 million, a 40% year-over-year increase, with a margin of 35.5%.
Gross Margin Improvement
Gross margin improved to 78.9%, close to the long-term target of 80%.
Successful Strategic Acquisitions
Acquisitions of Enfusion, Beacon, and Bistro are expected to add over 50% in revenue, despite a 15% share dilution.
Global Market Expansion
Secured a pivotal win with a leading German insurance company, opening up significant market opportunities in Europe.
Innovation in Technology
Development of a proprietary reconciliation tool, Helios, and leadership in generative AI applications.
Successful Integration Plans
Finance and legal teams have been integrated under common leadership, aiming for cross-sell strategies and operational synergies.
Negative Updates
NRR Slight Decline
Net Revenue Retention (NRR) rate decreased slightly from 116% to 114% due to less AUM growth.
High Equity-Based Compensation Costs
Equity-based compensation and related payroll taxes were $27.6 million, representing 21.7% of Q1 revenue.
Challenges with Enfusion's Growth Rate
Enfusion's Q1 2025 revenue growth was 13%, lower than Clearwater's 20% target, with plans to accelerate growth in two years.
Company Guidance
In the first quarter of 2025, Clearwater Analytics demonstrated robust financial performance with a revenue of $126.9 million, marking a 23.5% increase year-on-year. The company's annualized recurring revenue (ARR) reached $493.9 million, growing by 22.7% from the previous year. The adjusted EBITDA stood at $45.1 million, accounting for 35.5% of the revenue and showing a 40% increase year-on-year. Gross margin was reported at 78.9%, indicating a significant improvement towards the long-term target of 80%. Additionally, the company achieved a gross revenue retention rate of 98% and a net revenue retention rate of 114%. Clearwater also outlined its strategic acquisitions, including Enfusion, Beacon, and Bistro, which are expected to contribute to a consolidated revenue growth of 59% to 61% for the full year 2025. The acquisition of these companies is projected to enhance Clearwater's offerings, integrating front, middle, and back-office operations, and is expected to drive a 20% growth rate and a 50 basis point improvement in gross margin annually. The company remains confident in its ability to execute its strategic roadmap, emphasizing continued investment in R&D and operational excellence.Clearwater Analytics Holdings Corporate Events
M&A TransactionsBusiness Operations and Strategy
Clearwater Analytics Completes Acquisition of Enfusion
Positive
Apr 21, 2025
On April 21, 2025, Clearwater Analytics completed its acquisition of Enfusion, valued at approximately $1.5 billion. This strategic move positions Clearwater as the first unified, cloud-native front-to-back platform for institutional investors, enhancing its market position by integrating Enfusion’s front-office capabilities with its existing middle and back-office solutions. The acquisition is expected to expand Clearwater’s total addressable market and international presence, offering seamless integration and operational efficiency across asset classes and geographies.
M&A TransactionsBusiness Operations and Strategy
Clearwater Analytics Expands with Strategic Acquisitions
Positive
Mar 12, 2025
On March 11, 2025, Clearwater Analytics Holdings announced two strategic acquisitions, Beacon and Blackstone’s Bistro, to enhance its investment management technology platform. The acquisition of Beacon, a leader in cross-asset class modeling and risk analytics, and Bistro, a portfolio visualization software, aims to provide a unified, real-time view of portfolios, thereby improving risk management and operational efficiency for institutional investors. This move positions Clearwater as a comprehensive solution provider in the investment management industry, promising enhanced transparency and decision-making capabilities for stakeholders.
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.
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.