Clearwater Analytics Holdings, Inc. Q3 FY2025 earnings
CWANQuarter ended Sep 2025.
Summary
Clearwater Analytics reported third quarter 2025 revenue of $205.1 million, up 77.1% from $115.8 million in the prior-year quarter. Gross profit rose 59.2% to $134.5 million from $84.5 million. GAAP gross margin fell to 65.6% from 72.9% as amortization of acquired intangibles and data and technology costs climbed. Operating income slipped 10.7% to $6.6 million from $7.3 million. The company swung to a net loss attributable to Clearwater Analytics Holdings, Inc. of $10.3 million, from net income of $3.6 million in the third quarter of 2024. Diluted loss per share was $0.04, from diluted earnings per share of $0.02 a year earlier. Operating cash flow was $49.0 million, down 1.2% from $49.6 million.
The non-GAAP picture was brighter. Adjusted EBITDA was $70.7 million, up 84.5% from $38.3 million, and adjusted EBITDA margin was 34.5%, an increase of 140 basis points. Non-GAAP gross profit was $161.0 million, a 78.5% non-GAAP gross margin, unchanged from the prior-year quarter. Non-GAAP net income increased 31.2% to $40.6 million. Free cash flow, which the company reports separately from operating cash flow, was $44.9 million.
Annualized recurring revenue reached $807.5 million as of September 30, 2025, up 77% from $456.9 million a year earlier. Organic ARR excluding acquisitions was $534.4 million, a sequential increase of $21.7 million from June 30, 2025. Gross revenue retention was 98%. Net revenue retention was 108%, down from 114% a year earlier. Management attributed the lower net retention rate to lower AUM growth and asset-based upsell than in the same period last year.
The quarter was the first as an integrated company after the Enfusion, Beacon and Bistro deals, and management said integration is ahead of schedule. Clearwater cited marquee wins across insurance, hedge funds, asset management and asset owners, including Texas Treasury Safekeeping Trust Company and the Latin American Reserve Fund. At its Investor Day, the company announced a $100 million share buyback and repurchased $8.9 million of stock in the quarter. Management also said clients are using more than 800 AI agents, with 90% reductions in manual reconciliation effort and 80% faster report generation.
Guidance for the fourth quarter of 2025 calls for revenue of $216 million to $217 million, year-over-year growth of 71% to 72%, adjusted EBITDA of $73 million and an adjusted EBITDA margin of 34%. For the full fiscal year 2025, Clearwater guided revenue to $730 million to $731 million, year-over-year growth of 62%, adjusted EBITDA of $247 million and an adjusted EBITDA margin of 34%. These are non-GAAP targets and come without a reconciliation to GAAP.
Nine-month figures show the same mix of rapid top-line growth and GAAP losses. Revenue rose 58.0% to $513.9 million from $325.3 million in the prior-year period. Net loss was $26.7 million, against net income of $5.1 million in the prior-year period. Operating cash flow was $120.6 million, up 16.5% from $103.5 million. Capital expenditures were $8.5 million, up 91.8% from $4.4 million.
The main risks sit around the acquisitions. Integration work is not finished, and the company must retain acquired clients and employees while carrying the debt taken on to fund the deals. Interest expense rose sharply year over year. Net revenue retention of 108% is lower than a year earlier. Revenue also depends on the value of client assets on the platform, which moves with markets and interest rates, and on competition from legacy providers.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $205.1M | $181.9M | +12.7% | $115.8M | +77.1% |
| Gross profit | $134.5M | $118.5M | +13.5% | $84.5M | +59.2% |
| Gross margin | 65.6% | 65.1% | +0.4 pp | 72.9% | -7.4 pp |
| Research & development | $52.1M | $49.8M | +4.6% | $36.6M | +42.2% |
| Sales & marketing | $44.5M | $39.2M | +13.4% | $17.9M | +148.6% |
| General & administrative | $31.4M | $44.1M | -28.9% | $22.6M | +38.7% |
| Total operating expenses | $127.9M | $133.1M | -3.9% | $77.1M | +65.8% |
| Operating income (loss) | $6.6M | -$14.6M | +145.0% | $7.3M | -10.7% |
| Operating margin | 3.2% | -8.0% | +11.2 pp | 6.3% | -3.1 pp |
| Net income (loss) | -$10.3M | -$23.2M | +55.5% | $3.6M | -384.8% |
| Net margin | -5.0% | -12.8% | +7.7 pp | 3.1% | -8.2 pp |
| Diluted EPS | -$0.04 | -$0.09 | +$0.05 | $0.02 | -$0.06 |
| Customers | 500 | — | — | 600 | -16.7% |
Risks
The company completed the Enfusion and Beacon acquisitions in April 2025 and the Bistro asset purchase in March 2025, adding over 900 clients across hedge funds, asset managers, insurance companies and banks. Integrating these front, middle and back-office capabilities into a unified platform may prove more costly or disruptive than expected and may not achieve the intended cross-sell and global expansion benefits.
Interest expense increased 1,398% to $16.1 million in Q3 2025 and 837% to $30.5 million year to date versus the prior-year periods due to borrowings under the 2025 Credit Agreement, with an average principal balance of $891.9 million and a 6.46% weighted average interest rate in Q3 2025. This elevated interest burden contributed to a Q3 2025 net loss attributable to the company of $10.3 million and may limit financial flexibility.
Gross margin fell to 65.6% in Q3 2025 from 72.9% in Q3 2024, down 7.4 percentage points, and operating margin fell to 3.2% from 6.3%, down 3.1 percentage points. The decline was driven by increased depreciation and amortization of acquired intangible assets, payroll and related costs, data costs and technology costs following the acquisitions.
Net revenue retention rate declined to 108% as of September 30, 2025 from 114% as of September 30, 2024, primarily due to lower assets under management growth and asset-based upsell than in the prior-year period. A continued decline could slow recurring revenue growth and reduce the predictability of the business.
A meaningful portion of revenue is billed monthly in arrears based on basis point rates applied to clients' assets on the platform, and pre-2022 contracts have not all been converted to the Base+ model. The MD&A notes that lower AUM growth and asset-based upsell contributed to the lower net revenue retention rate in Q3 2025, leaving revenue exposed to market value and interest rate fluctuations.
The company states that its cost to acquire clients in international markets is greater than in North America because of less awareness of the CWAN brand and lower historical investment in international sales and marketing. The Enfusion acquisition is expected to accelerate global adoption, but execution may be less efficient in new end-markets and could pressure sales and marketing returns.
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
Non-GAAP Gross Profit
Summary, forecast, risks and KPIs are extracted from Clearwater Analytics Holdings, Inc.'s SEC filings for Q3 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 1, 2026.