Clearwater Analytics Holdings, Inc. Q4 FY2024 earnings
CWANQuarter ended Dec 2024.
Summary
Clearwater Analytics reported fourth-quarter fiscal 2024 revenue of $126.5 million, up 27.7%. Full-year revenue was $451.8 million, up 22.7%. Gross profit rose 31.4% to $92.9 million in the quarter and 26.0% to $328.8 million for the year. Gross margin was 73.5% in the quarter, up 2.1 percentage points, and 72.8% for the full year, up 1.9 percentage points. Operating income was $1.2 million in the quarter, down 53.0%, and $12.2 million for the full year, up 173.1% and swung to a profit. Operating margin was 1.0% in the quarter, down 1.7 percentage points, and 2.7% for the full year, up 7.3 percentage points.
Net income attributable to Clearwater Analytics Holdings was $419.3 million in the fourth quarter, compared with a net loss a year earlier. Full-year net income attributable to Clearwater was $424.4 million, compared with a net loss in the prior year. The fourth quarter included a one-time income tax benefit from the release of a deferred tax asset valuation allowance. Diluted earnings per share for the full year was $1.68, compared with a loss per share in the prior year. Adjusted EBITDA was $41.7 million in the fourth quarter, up 39.0%, with a 33.0% margin. Full-year adjusted EBITDA was $145.7 million, with a 32.2% margin.
Annualized recurring revenue reached $474.9 million as of December 31, 2024, up 25.3% from $379.1 million as of December 31, 2023. Net revenue retention rate was 116%, compared with 114% as of September 30, 2024 and 107% as of December 31, 2023. Gross revenue retention rate was 98%, the same as a year earlier. The company had 1,462 clients at December 31, 2024, including 100 clients that contributed at least $1.0 million in annualized recurring revenue, up 16.3% from 86 such clients a year earlier. The platform processed $8.8 trillion in assets daily, compared with $7.3 trillion a year earlier. Management described the quarter as delivering record revenue and record net revenue retention. New clients included OpenAI, Nucor, the National Association of Realtors, the State of Louisiana, and the United Nations Federal Credit Union. Industrial Alliance Portfolio Management and The Alameda County Employees Retirement Association also selected the platform.
Operating cash flow was negative $29.2 million in the fourth quarter, down 221.2%, and $74.3 million for the full year, down 12.2%. The fourth quarter included $79 million in one-time settlement payments related to the termination of the Tax Receivable Agreement and associated fees. Capital expenditures were $0.8 million in the fourth quarter, down 47.4%, and $5.3 million for the full year, down 6.5%. Deferred revenue, current portion, was $7.3 million at December 31, 2024. Remaining performance obligations were $2.0 million, down 34.5%.
Guidance for the first quarter of 2025 calls for adjusted EBITDA of $41.5 million, a 33% margin. Guidance for the full year 2025 calls for adjusted EBITDA of $182 million to $185 million, a 34% margin. The guidance assumes no effect from the proposed Enfusion acquisition. Other full-year assumptions include $106 million in total equity-based compensation expense and related payroll taxes, $13 million in depreciation and amortization, a 25% non-GAAP effective tax rate, and 263 million diluted non-GAAP shares.
On January 13, 2025, Clearwater announced its intent to acquire Enfusion for $1.5 billion, a deal expected to close in the second quarter of 2025 subject to approvals. The main risks include the ability to close and integrate the acquisition, retain Enfusion employees and clients, repay debt and meet financial covenants, and realize cost savings and synergies. Other risks include rapid technological change including artificial intelligence, competition, market volatility or an economic downturn that reduces asset values on the platform, managing growth, attracting and retaining skilled employees, solution performance, disruptions in computer equipment and cloud services, protecting confidential information, infringement claims, and the company's ownership structure. Remaining Tax Receivable Agreement settlement payments are expected in the first quarter of 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2024 | Q3 FY2024 | QoQ | Q4 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $126.5M | $115.8M | +9.2% | $99.0M | +27.7% |
| Gross profit | $92.9M | $84.5M | +10.0% | $70.7M | +31.4% |
| Gross margin | 73.5% | 72.9% | +0.5 pp | 71.4% | +2.1 pp |
| Research & development | $40.9M | $36.6M | +11.7% | $33.7M | +21.3% |
| Sales & marketing | $17.9M | $17.9M | -0.0% | $16.3M | +9.6% |
| General & administrative | $32.9M | $22.6M | +45.4% | $18.1M | +82.2% |
| Total operating expenses | $91.7M | $77.1M | +18.9% | $68.1M | +34.6% |
| Operating income (loss) | $1.2M | $7.3M | -83.4% | $2.6M | -53.0% |
| Operating margin | 1.0% | 6.3% | -5.4 pp | 2.6% | -1.7 pp |
| Net income (loss) | $419.3M | $3.6M | +11453.7% | -$4.4M | +9558.2% |
| Net margin | 331.5% | 3.1% | +328.4 pp | -4.5% | +336.0 pp |
| Diluted EPS | $1.67 | $0.02 | +$1.65 | -$0.02 | +$1.69 |
Risks
The company entered a Merger Agreement on January 10, 2025 to acquire Enfusion for approximately $1.5 billion, expected to close in Q2 2025. Risks include failure to realize anticipated synergies, diversion of management attention, loss of key personnel or customers, and increased litigation.
To fund the Enfusion cash consideration, the company obtained an $800 million senior secured term loan B due 2033 and a $200 million revolving credit facility. As of December 31, 2024, $46.1 million of term loans were outstanding, and higher variable-rate debt could increase interest costs and impose restrictive covenants.
Substantially all revenue is derived from fees based primarily on assets on the platform, with insurance clients and asset manager clients representing 54% and 32% of total revenue for the year ended December 31, 2024. Market volatility, asset outflows, or economic downturns could reduce these portfolio-based fees.
A significant portion of assets consists of deferred tax assets. If the company determined realizability was not more likely than not, it would reduce deferred tax assets and increase income tax expense by approximately $629 million at December 31, 2024.
Client contracts are generally terminable upon thirty days' notice by clients or prior to such time for cause, including breach or bankruptcy. If a significant number of clients terminated and were not replaced, business and results could be materially adversely affected.
The company relies on data from thousands of sources, often without direct contracts. Third parties have blocked scraping or requested it cease, and future limits or fees could increase costs, make solutions less attractive, or harm gross margins.
Revenue for the year ended December 31, 2024 grew 23% versus 2023, and continued growth depends on attracting and retaining top talent. Competition for qualified employees is intense, and a prolonged labor shortage or increased turnover could raise labor costs and impair client service.
A portion of sales targets large financial institutions, corporations, and government entities, involving longer and less predictable sales cycles, complex requirements, and substantial upfront costs. Lengthening cycles or insufficient revenue from upfront investments could harm results.
Operational errors or systems issues, including the continued transition to a new automated billing system, could disrupt service, delay invoicing and collections, cause client dissatisfaction, and lead to financial loss or reputational harm.
A significant portion of assets consists of goodwill and other intangible assets, primarily from the JUMP and Wilshire Technology acquisitions. Future impairment or accelerated amortization could negatively impact results of operations and financial condition.
The Principal Equity Owners beneficially owned 62.0% of combined voting power as of December 31, 2024, limiting other stockholders' influence. They sold 53 million shares during 2024, and future sales could depress the Class A common stock price.
The financial services software market is highly competitive and includes SS&C, State Street, SAP, BNY Mellon, Simcorp, BlackRock, FIS, and Northern Trust. Competitors with greater resources may respond faster or offer lower prices, hurting market share and gross margins.
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)
Assets Under Management (AUM)
Summary, forecast, risks and KPIs are extracted from Clearwater Analytics Holdings, Inc.'s SEC filings for Q4 FY2024 (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.