Record Quarterly Revenue of $89.9 Million, Up 22% Year-Over-Year
Adjusted EBITDA of $24.8 Million, Up 30% Year-Over-Year
Annualized Recurring Revenue of $349.5 Million, Up 20% Year-Over-Year
Gross Revenue Retention Rate of 98%; Net Revenue Retention Rate of 109%
BOISE, Idaho — August 2, 2023 — Clearwater Analytics Holdings, Inc. (NYSE: CWAN) (“Clearwater Analytics” or the “Company”), a leading provider of SaaS-based investment management, accounting, reporting, and analytics solutions, today announced its financial results for the quarter ended June 30, 2023.
“I’m very pleased with our re-acceleration of growth while simultaneously improving the bottom line. As we expected, we continue to have success onboarding our large insurance clients and asset managers, enabling them to go live while supporting their growth initiatives. Our strong execution delivered outstanding growth across our key markets,” said Sandeep Sahai, Chief Executive Officer. “Last year we started a journey towards an enhanced commercial model and movement to a multi-product platform. These actions are starting to bear fruit and contributed to a strong net revenue retention rate for the quarter.”
Second Quarter 2023 Financial Results Summary
- Revenue: Total revenue for the second quarter of 2023 reached $89.9 million, an increase of 22.4%, from $73.4 million in the second quarter of 2022.
- Gross Profit: Gross profit for the second quarter of 2023 was $62.9 million, compared with $52.5 million in the second quarter of 2022. Non-GAAP gross profit for the second quarter of 2023 was $68.1 million, which equates to a 75.8% non-GAAP gross margin.
- Net Income/(Loss): Net loss for the second quarter of 2023 was $11.9 million compared with net loss of $2.2 million in the second quarter of 2022. Net loss for the second quarter included total equity-based compensation expense and related payroll taxes of $28.7 million, including $5.5 million related to the JUMP Technology acquisition, which closed in the fourth quarter of 2022. Non-GAAP net income for the second quarter of 2023 increased by 50.9% to $20.0 million from $13.3 million in the second quarter of 2022.
- Adjusted EBITDA: Adjusted EBITDA for the second quarter of 2023 was $24.8 million, an increase of 30.2%, from $19.1 million in the second quarter of 2022. Adjusted EBITDA margin for the second quarter of 2023 was 27.6%.
- Cash Flows: Operating cash flows for the second quarter were $21.1 million. Free cash flows for the second quarter of 2023 increased by 18.5% to $19.6 million from $16.5 million in the second quarter of 2022.
- 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 $0.06 in the second quarter of 2023. Non-GAAP net income per basic share was $0.10, and non-GAAP net income per diluted share was $0.08 in the second quarter of 2023.
- Cash, cash equivalents, and investments were $277.8 million as of June 30, 2023. Total debt, net of debt issuance cost, was $49.3 million as of June 30, 2023.
Second Quarter 2023 Key Metrics Summary
- Annualized Recurring Revenue: As of June 30, 2023, annualized recurring revenue (“ARR”) reached $349.5 million, an increase of 20.4% from $290.4 million as of June 30, 2022.
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 June 30, 2023, the gross revenue retention rate was 98%, an increase from 97% as of March 31, 2023.
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 June 30, 2023, the net revenue retention rate was 109%, an increase from 106% as of March 31, 2023.
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.
Recent Business Highlights
- Clearwater Analytics and J.P. Morgan Asset Management announced a strategic partnership to integrate Clearwater with the MORGAN MONEY® global trading platform, allowing permissioned users to easily navigate between both systems. The joint solution will make it easier for financial professionals to have a global, connected view of their investment portfolios and empower them to make real-time investment decisions on the Clearwater and Morgan Money platforms.
- Clearwater Analytics announced that Aviva, one of the UK’s leading insurance, wealth and retirement businesses with operations in the UK, Ireland and Canada, went live April 1, 2023, on the Clearwater platform as the comprehensive solution for its investment accounting operations and regulatory reporting. Additional go lives in Q2 included: Amica Mutual Insurance, Greenwich Investment Management, and Highmark Health, to name a few.
- In the second quarter, the Company expanded its footprint within existing clients and added marquee clients such as Apollo Syndicate, Covenant Capital, Delta Dental of Wyoming, Finance Incorporated Limited, Intellia Therapeutics, Medical Protection Society Limited, Omnicap Group LLC, Viridian Therapeutics, Inc., and Western Asset Mortgage Capital Corporation.
- The Company executed on several Clearwater JUMP sales, including the use of JUMP for front-office and Clearwater accounting and reporting for back-office, demonstrating the value of our end-to-end platform. In addition, the Company closed a significant deal with a French insurer to support their unit-linked funds.
- Clearwater Analytics was named in the 2023 FinTech Global WealthTech100, a list that helps investment firms, private banks, and financial advisors identify the most innovative technology.
- Clearwater established Clearwater-GPT, making a strong commitment to the emerging technology of generative AI with dedicated engineering teams driving innovation to accelerate growth and improve operational efficiency.
- On the heels of our largest Clearwater Connect users’ conference in London in the second quarter, the Company plans to host another Clearwater Connect in Boise on September 20-21, 2023, where current and prospective users will have the opportunity to significantly enhance their knowledge of the world’s most comprehensive investment accounting solution.
Third Quarter and Full Year 2023 Guidance
|Third Quarter 2023||Full Year 2023|
|Revenue||$92 million||$364 million to $366 million|
|Year-over-Year Growth %||~20%||~20% to 21%|
|Adjusted EBITDA||$25.5 million||$100 million|
|Equity-based compensation expense and related payroll taxes||~$80 million|
|Equity-based compensation expense related to JUMP Technology 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 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.
Conference Call Details
Clearwater Analytics will hold a conference call and webcast on August 2, 2023, at 5:00 p.m. Eastern time to discuss second quarter 2023 financial results, provide a general business update, and respond to analyst questions.
A live webcast of the call will also be available on the Company’s investor relations website. Please visit investors.clearwateranalytics.com at least fifteen minutes prior to the start of the event to register, download and install any necessary audio software.
If you are unable to participate live, a replay of the webcast will be available following the conference call on the Company’s investor relations website, along with the earnings press release, and related financial tables.