Clearwater Analytics Holdings, Inc. Q2 FY2025 earnings
CWANQuarter ended Jun 2025.
Summary
Clearwater Analytics reported $181.9 million of GAAP revenue for FY2025 Q2, up 70.4% from the prior-year quarter. GAAP gross profit rose 54.1% to $118.5 million. The revenue mix showed the acquisition effect, with the recently acquired Enfusion and Beacon businesses adding a large block of revenue. Core Clearwater business growth was strong, but the combined company's GAAP gross margin was 65.1%, down 6.9 percentage points year over year. The drop reflects purchase accounting and integration costs now embedded in cost of revenue. Operating leverage went the other way. The quarter swung to a GAAP operating loss of $14.6 million from operating income a year earlier, and operating margin was -8.0%, down 11.6 percentage points from the prior-year quarter. That swing came alongside higher amortization and transaction expenses tied to the acquisitions.
The bottom line also weakened. Net loss attributable to Clearwater Analytics Holdings was $23.2 million, and diluted EPS was -$0.09. Both measures worsened versus the prior-year quarter. For the first half of FY2025, revenue was $308.8 million, up 47.4%. GAAP gross profit rose 39.6% to $211.5 million. The six-month period swung to a GAAP operating loss of $7.5 million and a net loss of $16.6 million. Diluted EPS for the year-to-date period swung to -$0.07. Acquired intangibles and integration work raised the cost base. Deferred revenue, current portion, stood at $20.81 million at June 30, 2025.
Non-GAAP metrics and KPIs gave a different view. Annualized recurring revenue reached $783.5 million as of June 30, 2025, up 83% from $427.2 million a year earlier. Gross revenue retention was 98%, compared with 99%. Net revenue retention was 110%, consistent with the prior-year figure, and the core Clearwater business net revenue retention remained at 114%. Adjusted EBITDA was $58.3 million for the quarter, up 74.3%, with an adjusted EBITDA margin of 32.1%, up 70 basis points. Non-GAAP gross margin was 77.4%. Management said the platform gross margin exceeded 80%, a long-term target management had hoped to achieve in a few years, and cited a $20 million synergy target achieved a full year ahead of schedule.
The company also reported progress on integration and commercial wins. Clearwater completed the acquisitions of Beacon and Enfusion on April 30 and April 21, 2025, respectively, and the Bistro asset purchase on March 31, 2025. Management pointed to Versicherungskammer Group, Germany's largest public insurer, as a new client using the combined Clearwater, Enfusion, and Beacon solutions. The APAC team also won a significant mandate from one of the largest banks in the world for client reporting. A strategic partnership with Bloomberg aims to integrate Bloomberg AIM with Clearwater and remove manual workflows. These are early signs that the cross-sell strategy can work, but they also raise execution demands.
Guidance points to continued acquisition-driven growth. For Q3 2025, management guided to year-over-year revenue growth of 75% to 76%, adjusted EBITDA of $65 million, and an adjusted EBITDA margin of 32%. For full year 2025, guidance calls for revenue growth of 61% to 62%, adjusted EBITDA of $232 million to $237 million, and an adjusted EBITDA margin of 32%. Cash generation remained positive. Operating cash flow was $47.1 million for Q2, up 7.2%, and $71.6 million for the first half, up 32.6%. Capital expenditures were $2.99 million in the quarter, up 97.9%, and $4.46 million year to date, up 51.2%. Free cash flow, a non-GAAP measure, was $44.1 million in Q2, up 4.0%. The main risks are integration and leverage. Clearwater must integrate Enfusion, Beacon, and Bistro, obtain third-party data rights, retain and incentivize acquired employees, and keep acquired clients. It also faces the need to repay debt and meet financial covenants. Management lists risks around synergies that may not be fully realized or may take longer than expected, rapid technological change including artificial intelligence, competition, market volatility or an economic downturn that could reduce asset values on the platform, growth management, hiring, system failures, data security, intellectual property claims, and its ownership structure.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $181.9M | $126.9M | +43.4% | $106.8M | +70.4% |
| Gross profit | $118.5M | $92.9M | +27.5% | $76.9M | +54.1% |
| Gross margin | 65.1% | 73.3% | -8.1 pp | 72.0% | -6.9 pp |
| Research & development | $49.8M | $37.4M | +33.0% | $35.4M | +40.7% |
| Sales & marketing | $39.2M | $19.6M | +99.8% | $15.2M | +158.6% |
| General & administrative | $44.1M | $28.8M | +53.0% | $22.5M | +95.8% |
| Total operating expenses | $133.1M | $85.9M | +55.0% | $73.1M | +82.2% |
| Operating income (loss) | -$14.6M | $7.1M | -305.9% | $3.8M | -479.3% |
| Operating margin | -8.0% | 5.6% | -13.6 pp | 3.6% | -11.6 pp |
| Net income (loss) | -$23.2M | $6.5M | -456.8% | -$430.0K | -5301.2% |
| Net margin | -12.8% | 5.1% | -17.9 pp | -0.4% | -12.4 pp |
| Diluted EPS | -$0.09 | $0.03 | -$0.12 | $0.00 | -$0.09 |
Risks
Clearwater completed the Enfusion and Beacon acquisitions in April 2025 and the Bistro asset purchase in March 2025, adding over 900 clients. Integrating front-office capabilities with its middle- and back-office platform may be more costly or disruptive than expected and may not achieve the intended unified front-to-back solution.
Gross margin declined to 65.1% in FY2025 Q2 from 72.0% in FY2024 Q2, and operating margin fell to -8.0% from 3.6%, as acquisition-related depreciation and amortization, payroll and data costs increased. Operating income swung to a $14.58 million loss in FY2025 Q2 from $3.84 million income in the prior-year quarter.
Interest expense increased to $13.5 million for the three months ended June 30, 2025 from $1.1 million in the prior-year period, mainly due to borrowings under the 2025 Credit Agreement with an average aggregate principal balance of $937.3 million and weighted average interest rate of 6.53%. Higher debt service could pressure future results.
Net revenue retention rate was 110% as of June 30, 2025, lower than Q1 2025 primarily because acquired businesses have lower retention than historical Clearwater; gross revenue retention declined to 98% as of June 30, 2025 from 99% as of June 30, 2024. If acquired customers churn, growth and revenue predictability could be harmed.
Clearwater expects Enfusion's Europe and Asia presence to accelerate global adoption, but its cost to acquire international clients is greater than in North America because of less brand awareness and lower historical sales and marketing investment. Execution risk may slow growth outside North America.
Although 77% of assets on the platform were high-grade fixed income securities and structured products as of December 31, 2024, Clearwater still bills basis-point fees linked to client assets, so revenue can fluctuate with market conditions, asset values, and interest rates.
The filing notes that any failure to accurately report and present non-GAAP financial measures could cause investors to lose confidence in reported financial information and negatively affect the trading price of Class A common stock.
SaaS KPIs
All quarters →Net Revenue Retention Rate
Adjusted EBITDA
Adjusted EBITDA Margin
Free Cash Flow
Non-GAAP Gross Margin
Total clients
Gross Revenue Retention Rate
Annualized Recurring Revenue (ARR)
Summary, forecast, risks and KPIs are extracted from Clearwater Analytics Holdings, Inc.'s SEC filings for Q2 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.