Clearwater Analytics (US:CWAN)2025-11-05 21:37Financial Performance - Revenue for Q3 2025 reached $205,110,000, a 77% increase from $115,828,000 in Q3 2024[24] - Gross profit for Q3 2025 was $134,472,000, compared to $84,471,000 in Q3 2024, reflecting a 59% increase[24] - Operating expenses for Q3 2025 totaled $127,918,000, up from $77,133,000 in Q3 2024, representing a 66% increase[24] - Net loss for Q3 2025 was $10,514,000, compared to a net income of $4,769,000 in Q3 2024[24] - The company reported a comprehensive loss of $11,365,000 for Q3 2025, compared to a comprehensive income of $9,039,000 in Q3 2024[26] - Net income for the nine months ended September 30, 2025, was a loss of $27.729 million, compared to a profit of $7.280 million in 2024[35] - Consolidated net loss for the three months ended September 30, 2025, was $(10,514) thousand, compared to net income of $4,769 thousand for the same period in 2024[107] - The company reported a net loss of $27,729,000 for the nine months ended September 30, 2025, compared to a net income of $7,280,000 for the same period in 2024[92] Assets and Liabilities - Total assets as of September 30, 2025, were $2,990,512,000, significantly up from $1,169,572,000 as of December 31, 2024[22] - Total liabilities increased to $988,961,000 as of September 30, 2025, compared to $139,341,000 at the end of 2024[22] - Cash and cash equivalents decreased to $60,750,000 from $177,350,000 as of December 31, 2024[22] - Accounts receivable, net, increased to $152,791,000 as of September 30, 2025, from $106,151,000 at the end of 2024[66] - Prepaid expenses and other current assets totaled $33,871,000 as of September 30, 2025, compared to $23,006,000 at the end of 2024[67] Equity and Stock - The total stockholders' equity attributable to Clearwater Analytics Holdings, Inc. increased to $1,981,550,000 from $1,008,255,000 as of December 31, 2024[22] - The company issued 3,833,333 shares of common stock, contributing $4,000,000 to additional paid-in capital[28] - The balance of shares withheld for net share settlement and other adjustments was $(264,336,000)[30] - The company has authorized a Share Repurchase Program to repurchase up to $100.0 million of Class A common stock, with no fixed expiration date[102] - As of September 30, 2025, a total of 7,092,009 shares of Class A common stock were available for issuance under the Employee Stock Purchase Plan (ESPP)[99] Cash Flow - Operating cash flow for the nine months ended September 30, 2025, was $120.565 million, an increase from $103.520 million in 2024[35] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $120.6 million, an increase from $103.5 million in the same period of 2024, reflecting a growth of approximately 16.5%[169][170] - Net cash used in investing activities was $988.5 million for the nine months ended September 30, 2025, primarily due to acquisitions totaling $1,074.8 million, compared to $54.8 million in the same period of 2024[171][172] - Net cash provided by financing activities was $750.2 million for the nine months ended September 30, 2025, significantly higher than the $42.5 million used in financing activities in the same period of 2024[173][174] Acquisitions - The total merger consideration for the acquisition of Enfusion, Inc. was $1.4 billion, net of cash acquired[51] - The company completed acquisitions of Beacon and Enfusion on April 30 and April 21, 2025, respectively, to enhance its investment management solutions[122] - The acquisition of Beacon Platform Inc. resulted in a total merger consideration of $487,738,000, with goodwill recorded at $337,928,000[56] - The Bistro Asset Acquisition was completed for $112.7 million, with identified intangible assets valued at $112,733,000[64] - Acquisition-related costs for the nine months ended September 30, 2025, were $4.1 million, with no costs incurred in the previous year[58] Research and Development - Research and development expenses for Q3 2025 were $52,065,000, up from $36,618,000 in Q3 2024, a 42% increase[24] - The company plans to invest in research and development to maintain its technological advantage, even if it results in higher expenses relative to revenue growth[129] - Research and development expenses accounted for 25% of revenue for the three months ended September 30, 2025, down from 32% in 2024[157] Client Growth and Retention - Clearwater Analytics manages over $8.8 trillion of global invested assets for over 1,400 clients as of December 31, 2024[117] - The company maintained a gross revenue retention rate of at least 98% in 26 of the last 27 quarters, with net revenue retention rates between 108% and 114% in 2025[125][144] - Annualized recurring revenue increased by 76.7% from September 30, 2024, to September 30, 2025, driven by client growth and asset onboarding[142] - The company expects revenue growth as clients transition from onboarding to steady state, with revenues and gross margins expected to increase over time[125] Debt and Financing - The company entered into a 2025 Credit Agreement providing $800 million in term loans and $200 million in revolving commitments, with initial cash proceeds of $800 million received[71][72] - The interest rates for the 2025 Term Loans are based on a SOFR rate plus an applicable margin of 2.25%, with a potential decrease of 0.25% if certain secured net leverage levels are achieved[74] - A hypothetical increase or decrease in SOFR of 100 basis points would result in an annual change of $8.6 million in interest expense under the 2025 Credit Agreement as of September 30, 2025[182] Employee Compensation - Employee compensation expense for the three months ended September 30, 2025, was $88,971 thousand, up from $49,932 thousand in the same period in 2024[107] - Total equity-based compensation expense for the three months ended September 30, 2025, was $33,470,000, up from $25,976,000 in 2024[152] - Equity-based compensation expenses totaled $33,648,000, indicating a significant investment in employee incentives[30] Other Financial Metrics - Adjusted EBITDA for the three months ended September 30, 2025, was $70,733,000, which is 34% of revenue, compared to $38,340,000 or 33% of revenue in 2024[151] - The effective tax rate for the three months ended September 30, 2025, was (5.1%), compared to (11.3%) for the same period in 2024[111] - The company recognized a debt extinguishment loss of $0.4 million related to the prior credit agreement in interest expense[79]