Q4 2022 Revenue of $82.7 million, up 19% year-over-year
Full Year 2022 Revenue of $303.4 million, up 20% year-over-year
Q4 2022 EBITDA margin of 29.4%; Q4 2022 Free Cash Flows of $16.6 million
Q4 2022 Gross Revenue Retention Rate of 98%; Net Revenue Retention Rate of 106%
BOISE, Idaho — February 21, 2023 — Clearwater Analytics Holdings, Inc. (NYSE: CWAN) (“Clearwater Analytics” or the “Company”), a leading provider of SaaS-based investment accounting, reporting, and analytics solutions, today announced its financial results for the quarter and year ended December 31, 2022.
| Fourth Quarter 2022 | Full Year 2022 | |||
| Revenue | $82.7 million | $303.4 million | ||
| Year-over-Year Revenue Growth % | 18.5% | 20.4% | ||
| Annualized Recurring Revenue (ARR)1 | $323.5 million | |||
| Year-over-Year ARR Growth % | 16.4% | |||
| Net Loss | $(2.0) million | $(6.7) million | ||
| Net Loss Margin % | (2.4)% | (2.2)% | ||
| Adjusted EBITDA | $24.3 million | $81.1 million | ||
| Adjusted EBITDA Margin % | 29.4% | 26.7% |
1ARR is a point in time metric, therefore fourth quarter 2022 and full year 2022 results are the same.
“I am proud to report that 2022 was our strongest year on record. We welcomed marquee clients across the globe, displaced legacy vendors, drove R&D and technology innovation, and empowered our clients to gain tremendous efficiency. While the world continues to face a challenging macroeconomic environment with both high interest rates and high inflation, we balanced growth and profitability while generating strong cash flow,” said Sandeep Sahai, Chief Executive Officer. “The leadership team, and frankly the entire company, demonstrated resiliency with agile and deliberate adjustments to our business model. This promises to help us maintain our momentum, grow our leadership position, and further underscores what differentiates Clearwater.”
Fourth Quarter 2022 Financial Results Summary
- Revenue: Total revenue for the fourth quarter of 2022 reached $82.7 million, an increase of 18.5%, from $69.8 million in the fourth quarter of 2021. Results for the fourth quarter of and fiscal year 2022 include the results of the JUMP Technology acquisition from December 1, 2022.
- Gross Profit: Gross profit for the fourth quarter of 2022 was $59.7 million, compared with $49.6 million in the fourth quarter of 2021. Non-GAAP gross profit for the fourth quarter of 2022 was $62.6 million, which equates to a 75.7% non-GAAP gross margin.
- Net Income/(Loss): Net loss for the fourth quarter of 2022 was $2.0 million compared with net income of $0.1 million in the fourth quarter of 2021. In the fourth quarter of 2022, the Company recorded a $5.9 million expense related to its Tax Receivable Agreement and $0.4 million in transaction expenses related to the JUMP Technology Non-GAAP net income for the fourth quarter of 2022 increased by 23.3% to $17.2 million from $14.0 million in the fourth quarter of 2021.
- Adjusted EBITDA: Adjusted EBITDA for the fourth quarter of 2022 was $24.3 million, compared with $20.1 million in the fourth quarter of 2021. Adjusted EBITDA margin for the fourth quarter of 2022 was 29.4%.
- Cash Flows: Operating cash flows for the fourth quarter were $18.5 million. Free cash flows for the fourth quarter were $16.6 million, compared with $10.9 million in the fourth quarter of 2021. Free cash flows reflected a 68% conversion of Adjusted EBITDA to free cash flow.
- Net Loss Per Share and Non-GAAP Net Income Per Share attributable to Clearwater Analytics Holdings, Inc.: Net loss per basic and diluted share was $0.02 in the fourth quarter of 2022. Non-GAAP net income per basic share was $0.09, and non-GAAP net income per diluted share was $0.07 in the fourth quarter of 2022.
- Cash, cash equivalents and short-term investments were $255.6 million as of December 31, 2022, compared to $254.6 million as of December 31, 2021.
Fourth Quarter and Full Year 2022 Key Metrics Summary
- Annualized Recurring Revenue: As of December 31, 2022, annualized recurring revenue (“ARR”) reached $323.5 million and includes $6.4 million of JUMP Technology’s ARR, an increase of 16.4% from $277.8 million as of December 31, 2021.
ARR is calculated at the end of a period by dividing the recurring revenue in the last month of such period by the number of days in the month and multiplying by 365.
- Gross Revenue Retention Rate: As of December 31, 2022, the gross revenue retention rate was 98%. The Company has reported a gross revenue retention rate of approximately 98% for sixteen consecutive quarters.
Gross revenue retention rate represents annual contract value (“ACV”) at the beginning of the 12-month period ended on the reporting date less client attrition over the prior 12-month period, divided by ACV at the beginning of the 12-month period, expressed as a percentage. ACV is comprised of annualized recurring revenue plus contracted-not-billed revenue, which represents the estimated annual contracted revenue for new and existing client opportunities prior to revenue recognition.
- Net Revenue Retention Rate: As of December 31, 2022, the net revenue retention rate was 106%, an increase from 103% as of September 30, 2022. The new pricing construct continues to bear fruit and reduces volatility in ARR.
Net revenue retention rate is the percentage of recurring revenue from clients on the platform for 12 months and includes changes from the addition, removal, or value of assets on our platform, contractual changes that have an impact to annualized recurring revenues and lost revenue from client attrition.
- Clients: As of December 31, 2022, the Company, including JUMP Technology, had 1,262 clients, and 67 clients that contributed at least $1.0 million in ARR.
- Assets Under Management (AUM): As of December 31, 2022, the platform processes and reports on $6.4 trillion assets daily, compared to $5.9 trillion assets daily as of December 31, 2021.
Recent Business Highlights
- In the last one hundred days of 2022, two more of the top twenty insurers by AUM in the U.S. chose to move off legacy platforms and migrate to the Clearwater platform.
- Clearwater Analytics announced that it completed the acquisition of Paris, France-based JUMP Technology. In the fourth quarter of 2022, JUMP Technology contributed $2.7 million in revenue. The transaction expands Clearwater Analytics’ total addressable market in investment management with a complete end-to-end lifecycle solution. With the addition of JUMP Technology, Clearwater Analytics further positions itself to become an industry-leading provider of innovative, modularized solutions to investment management companies globally. Luxembourg-based insurance provider Cardif Lux Vie selected the Clearwater JUMP solution to meet its asset management, investment accounting, and reporting needs. Cardif Lux Vie cited JUMP Technology now integrated into the Clearwater group for its best-of-breed solutions and dedicated client services team that will enable the insurer to reduce operational risk, comply with regulatory requirements, and achieve greater operational efficiencies.
- In 2022, Clearwater Analytics focused on building out its multi-product offering by introducing Clearwater Prism and Clearwater LPx. Clearwater Prism and Clearwater LPx have gained traction in the market, solving some of our clients’ most complex investment reporting needs.
- Clearwater LPx is an investment data platform dedicated to streamlining the accounting process for limited partnerships. Clearwater clients leverage the automated solution to enable significant efficiency gains and solve the operational challenges associated with data aggregation, reconciliation, commitment tracking, document storage, accounting, and reporting. Clients are using Clearwater LPx to gain a full picture of all of their limited partnerships and to automate their NAIC reporting.
- Clearwater Prism is a reporting engine that combines information from multiple data sources, including those outside of the core Clearwater platform. In 2022, existing client J.P. Morgan Asset Management expanded its relationship with Clearwater Analytics to implement a regulatory reporting solution. The Clearwater platform with Clearwater Prism aggregates data and performs a series of calculations and data validations that generate templated reports for J.P. Morgan Asset Management to comply with a daily regulatory reporting obligation. At Clearwater Connect 2022, J.P. Morgan Asset Management was the recipient of the Partnered for Success award for driving breakthrough efficiencies in investment accounting with Clearwater Analytics.
- To further expand Clearwater’s footprint within existing clients, Clearwater Analytics continued strong growth momentum across new markets and geographies. In the fourth quarter, we added marquee clients such as Adventist Health System, Avallis Investments, Bimini Advisors, Homestead Advisers Corp., Meeder Investment Management, MSIG Insurance (Thailand) Public Company Limited, Payden & Rygel, PT Asuransi MSIG Indonesia, Robinson Capital Management, and WestCap Management. Singapore-based fund manager Avallis Investments selected Clearwater Analytics to power its investment data management, portfolio analytics, and investment reporting operations in order to drive higher growth across its business. By eliminating the need to manually aggregate, reconcile, and validate data from different sources and systems, Avallis Investments will benefit from having “a single pane of glass” to holistically view their entire investment portfolio and easily respond to unique reporting challenges.
- In the fourth quarter of 2022, Clearwater Analytics won numerous industry awards, including:
- RiskTech Buyside 50 award in the Investment Lifecycle in the Insurance/Pensions Fund category
- WatersTechnology 2022 Buy-Side Technology award for the best buy-side client reporting platform for 2022
- Award for Excellence 2022 from InsuranceAsia News as the Technology Provider of the Year
- European Insurance Technology award from InsurancePost as the Best Reg Tech Solution
- Technology Firm of the Year from Insurance Asset Management
First Quarter and Full Year 2023 Guidance
| First Quarter 2023 | Full Year 2023 | |||
| Revenue | $83 million | $361 million to $364 million | ||
| Year-over-Year Growth % | ~17% | ~19% to 20% | ||
| Adjusted EBITDA | $20 million | $97 million to $98 million | ||
| Equity-based compensation | ~$80 million | |||
| Equity-based compensation for JUMP Technology post-acquisition | ~$25 million | |||
| Depreciation and Amortization | ~$9 million | |||
| Non-GAAP effective tax rate | 25% | |||
| Diluted non-GAAP share count | ~255 million |
Certain components of the guidance given above are provided on a non-GAAP basis only without providing a reconciliation to guidance provided on a GAAP basis. Information is presented in this manner, consistent with Securities and Exchange Commission (the “SEC”) rules, because the preparation of such a reconciliation could not be accomplished without “unreasonable efforts.” The Company does not have access to certain information that would be necessary to provide such a reconciliation, including non-recurring items that are not indicative of the Company’s ongoing operations. The Company does not believe that this information is likely to be significant to an assessment of the Company’s ongoing operations.
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