Group 1 - Clearwater Analytics Holdings (NYSE: CWAN) is expected to see growth accelerate back to mid-20% which will support its valuation to stay above 13x forward [1] - The investment approach focuses on companies with long-term durability, steady growth, no cyclicality, and a strong balance sheet [1] - There is a belief that while valuation is important, in certain situations, the potential for growth can outweigh immediate price concerns [1]

Group 1: Earnings Performance - Clearwater Analytics reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and up from $0.10 per share a year ago [1] - The earnings surprise for this quarter was 18.18%, following a previous surprise of 9.09% when earnings were $0.12 per share against an expectation of $0.11 [2] - Over the last four quarters, the company has surpassed consensus EPS estimates three times [2] Group 2: Revenue Performance - The company posted revenues of $126.47 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 5.01%, compared to $99.02 million in the same quarter last year [3] - Clearwater Analytics has topped consensus revenue estimates four times over the last four quarters [3] Group 3: Stock Performance and Outlook - Clearwater Analytics shares have increased by approximately 0.4% since the beginning of the year, while the S&P 500 has gained 4.2% [4] - The current consensus EPS estimate for the upcoming quarter is $0.12 on revenues of $123.11 million, and for the current fiscal year, it is $0.52 on revenues of $535.27 million [8] - The Zacks Industry Rank for Internet - Software is currently in the top 33% of over 250 Zacks industries, indicating a favorable outlook for the sector [9]

Financial Data and Key Metrics Changes - Revenue for Q4 2024 was $126.5 million, representing a 28% year-on-year growth, while full-year revenue reached $451.8 million, with a year-over-year growth of 22.7% [6][31] - Annual Recurring Revenue (ARR) grew to $474.9 million, a 25% year-on-year increase [6][33] - Adjusted EBITDA for Q4 was $41.7 million, accounting for 30.3% of revenue, and up 39% year-on-year [7][34] - Net Revenue Retention (NRR) increased to 116%, a significant achievement occurring twelve months ahead of the original target [7][35] Business Line Data and Key Metrics Changes - The company reported strong performance across various dimensions, with a gross margin of 78.8% for Q4 and 78.2% for the full year [34] - The gross margin improved by 190 basis points year-on-year for Q4 and 170 basis points for the full year, exceeding the previous target of 50 basis points per year [9][34] - The company achieved a 7% upsell rate and a 3% growth from new product cross-sell initiatives [36][70] Market Data and Key Metrics Changes - The platform processes and reports on $8.8 trillion in assets daily, an increase of $1.5 trillion from the previous year [33] - The number of clients with over $1 million in ARR grew to 100, up from 86 the previous year [33] Company Strategy and Development Direction - The company aims to drive organic growth through various initiatives, including expanding into new markets, focusing on back-to-base investments, and building partnerships with other software providers [12][14] - The acquisition of Infusion is expected to enhance the company's capabilities by integrating front office solutions with existing middle and back office functionalities [24][28] - The long-term target for gross margin is now set to exceed 80%, driven by operational efficiencies and the development of generative AI use cases [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong client satisfaction and a robust commercial model as key drivers [8][41] - The regulatory environment, particularly changes from NAIC, is viewed as a tailwind for the company, facilitating compliance and driving demand for its services [55][56] - The company anticipates continued growth in 2025, with revenue guidance set between $535.5 million and $542 million, reflecting a year-over-year growth rate of approximately 19% to 20% [38] Other Important Information - The company ended Q4 with $285.8 million in cash and cash equivalents, with total debt at $45.9 million, resulting in net cash holdings of approximately $240 million [35] - The company plans to continue investing in R&D, with a focus on initiatives that demonstrate customer traction and ROI [52] Q&A Session Summary Question: Feedback on the Infusion deal from existing customers - Management noted that customers are excited about the potential integration of front and back office solutions, which is seen as a significant advantage [46] Question: Thoughts on margin expansion and GenAI - Management indicated that they expect continued margin expansion, with GenAI investments paying off quickly and not posing a headwind to margins [51] Question: Impact of NAIC regulations on the core insurance market - Management confirmed that regulatory changes are a tailwind for the company, facilitating compliance for clients and driving demand for services [55][56] Question: Synergies from the Infusion acquisition - Management expressed confidence in achieving synergies quickly due to the similarities in technology and platform structure between the two companies [63] Question: Incremental revenue drivers in Q4 - Management highlighted strong bookings and upsell performance as key contributors to exceeding revenue expectations [68][70] Question: Cross-selling and pricing strategies - Management acknowledged the potential for higher cross-sell rates and emphasized the importance of executing price increases across the portfolio [75][71] Question: FX headwinds in 2025 guidance - Management stated that while there are slight FX headwinds, the majority of revenues are in US dollars, mitigating significant impacts [85] Question: Use cases for new clients, specifically OpenAI - Management clarified that the services provided to clients like OpenAI are consistent with those offered to other clients, focusing on data ingestion, reconciliation, and reporting [90]

Financial Performance - Fourth quarter 2024 revenue reached $126.5 million, a 27.7% increase from $99.0 million in Q4 2023[4] - Annualized Recurring Revenue (ARR) as of December 31, 2024, was $474.9 million, up 25.3% from $379.1 million a year earlier[6] - Net income for Q4 2024 was $420.3 million, compared to a net loss of $3.4 million in Q4 2023[8] - Adjusted EBITDA for Q4 2024 was $41.7 million, a 39% increase from $30.0 million in Q4 2023[8] - Revenue for Q4 2024 was $126,465,000, representing a 27.7% increase from $99,019,000 in Q4 2023[27] - Gross profit for the year ended December 31, 2024, was $328,816,000, up from $261,041,000 in 2023, indicating a growth of 25.9%[27] - Net income attributable to Clearwater Analytics Holdings, Inc. for Q4 2024 was $419,486,000, compared to a net loss of $4,186,000 in Q4 2023[27] - Net income for Q4 2024 was $420,305, a significant increase from a net loss of $3,447 in Q4 2023, representing a 332% improvement[32] - Revenue for Q4 2024 reached $126,465, up from $99,019 in Q4 2023, marking a 28% year-over-year growth[32] - Adjusted EBITDA for Q4 2024 was $41,683, reflecting a 39% increase compared to $29,982 in Q4 2023[32] - Gross profit for Q4 2024 was $92.904 million, up from $70.684 million in Q4 2023, representing a 31.3% growth[36] - Non-GAAP gross profit margin improved to 79% in Q4 2024 compared to 77% in Q4 2023[36] - Income from operations, non-GAAP, was $41.683 million in Q4 2024, up from $29.982 million in Q4 2023, reflecting a 39.0% increase[37] - Non-GAAP net income per share, diluted, increased to $0.13 in Q4 2024 from $0.10 in Q4 2023[37] Client and Market Growth - The net revenue retention rate improved to 116% as of December 31, 2024, up from 107% a year earlier[6] - As of December 31, 2024, Clearwater Analytics had 1,462 clients, including 100 clients contributing at least $1.0 million in ARR, a 16.3% increase from the previous year[9] - The company processes and reports on $8.8 trillion in assets daily, an increase from $7.3 trillion a year earlier[9] Expenses and Cash Flow - Operating cash flows for Q4 2024 were negative $28.9 million, impacted by one-time settlement payments of $79 million[8] - Free Cash Flow for Q4 2024 was $(29,762), a decrease from $22,531 in Q4 2023, indicating a shift in cash generation[34] - Operating cash flow for Q4 2024 was $(28,940), compared to $24,093 in Q4 2023, showing a decline in cash provided by operating activities[34] - Total cash and cash equivalents at the end of Q4 2024 were $177,350, down from $221,765 at the end of Q4 2023[34] - The company incurred $30,421 in equity-based compensation expense in Q4 2024, up from $23,660 in Q4 2023, indicating increased investment in employee incentives[32] - The tax receivable agreement expense for Q4 2024 was $41,637, significantly higher than $8,284 in Q4 2023, reflecting changes in tax strategy[32] - The company reported a net cash used in financing activities of $(19,168) in Q4 2024, compared to $(9,364) in Q4 2023, indicating increased financing outflows[34] Asset and Equity Changes - Total assets increased significantly to $1,169,572,000 as of December 31, 2024, from $558,743,000 in 2023, marking an increase of 109%[25] - Cash and cash equivalents decreased to $177,350,000 in 2024 from $221,765,000 in 2023, a decline of 20%[25] - Goodwill increased to $70,971,000 in 2024 from $45,338,000 in 2023, a rise of 56.6%[25] - Total stockholders' equity attributable to Clearwater Analytics Holdings, Inc. rose to $1,008,255,000 in 2024 from $354,329,000 in 2023, an increase of 184%[25] Guidance and Future Projections - Guidance for Q1 2025 revenue is projected at $125 million, with full year 2025 revenue expected between $535.5 million and $542 million[11] Research and Development - Research and development expenses for the year were $150,558,000, up from $123,925,000 in 2023, reflecting a 21.5% increase[27] - Research and development expenses increased to $40.904 million in Q4 2024, a 21.5% rise from $33.728 million in Q4 2023[36] Operating Expenses - Operating expenses totaled $316,582,000 for the year, compared to $277,786,000 in 2023, an increase of 14%[27] - General and administrative expenses rose to $32.896 million in Q4 2024, up from $18.050 million in Q4 2023, indicating an increase of 82.5%[36]

Core Viewpoint - Clearwater Analytics (CWAN) has received an upgrade to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Clearwater Analytics is expected to earn $0.44 per share for the fiscal year ending December 2024, reflecting a 33.3% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for Clearwater Analytics has risen by 13.4% [8]. Zacks Rating System - The Zacks Rank stock-rating system categorizes stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions [9][10].

Group 1 - Surmodics, Inc. (SRDX) provides performance coating technologies for the medical sector and has a Zacks Rank 1 [1] - The Zacks Consensus Estimate for Surmodics' current year earnings increased by 18.8% over the last 60 days [1] - Surmodics' shares gained 3.3% over the last three months, outperforming the S&P 500's advance of 2.3% [1] - Clearwater Analytics Holdings, Inc. (CWAN) offers a Software-as-a-Service (SaaS) platform and also has a Zacks Rank 1 [2] - The Zacks Consensus Estimate for Clearwater Analytics' next year earnings increased by 3.9% over the last 60 days [2] - Clearwater Analytics' shares gained 7.2% over the last three months, significantly outperforming the S&P 500's advance of 2.3% [2] - Surmodics has a Momentum Score of A, while Clearwater Analytics has a Momentum Score of B [1][2]

Group 1 - Clearwater Analytics Holdings (CWAN) has a favorable growth outlook, leading to a buy recommendation in August [1] - The investment approach focuses on long-term durability and affordability rather than just low multiples [1] - Companies with steady long-term growth, no cyclicality, and strong balance sheets are preferred for investment [1] Group 2 - There is a recognition that investing in successful companies carries risks, particularly regarding valuation [1] - The potential for significant development in certain companies may lessen the immediate importance of price [1]

Group 1 - Clearwater Analytics (CWAN) has returned 55% year-to-date, outperforming the Computer and Technology sector's average return of 29.1% [4] - The Zacks Consensus Estimate for CWAN's full-year earnings has increased by 1.5% over the past 90 days, indicating improved analyst sentiment [4] - Clearwater Analytics is ranked 2 (Buy) in the Zacks Rank, which is a stock-picking model focusing on earnings estimates and revisions [3] Group 2 - Clearwater Analytics belongs to the Internet - Software industry, which has 145 companies and is currently ranked 39 in the Zacks Industry Rank [6] - The average return for the Internet - Software industry this year is 33.3%, showing that CWAN is performing better than its industry peers [6] - In contrast, AST SpaceMobile, Inc. (ASTS), another stock in the Computer and Technology sector, has a year-to-date return of 294.9% and is ranked 2 (Buy) [5]

Investors interested in Computer and Technology stocks should always be looking to find the best-performing companies in the group. Has Clearwater Analytics (CWAN) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out.Clearwater Analytics is one of 619 companies in the Computer and Technology group. The Computer and Technology group currently sits at #2 within the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the ...

Clearwater Analytics Holdings, Inc. (NYSE:CWAN) Q3 2024 Earnings Conference Call November 6, 2024 5:00 PM ET Company Participants Joon Park - Head of IR Sandeep Sahai - CEO and Board Member Subi Sethi - Chief Client Officer Jim Cox - CFO Conference Call Participants Brian Schwartz - Oppenheimer Andrew Schmidt - Citi Yun Kim - Loop Capital Markets Rishi Jaluria - RBC Capital Markets Michael Infante - Morgan Stanley Peter Heckmann - D.A. Davidson Alexei Gogolev - JPMorgan Gabriela Borges - Goldman Sachs Dylan ...