Clearwater Analytics (CWAN) - 2024 Q1 - Quarterly Results

Q1 2024 Financial & Business Highlights Financial Performance Summary The company achieved strong Q1 2024 growth in revenue, Adjusted EBITDA, and net income Q1 2024 Financial Highlights | Financial Metric | Q1 2024 | Q1 2023 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $102.7M | $84.6M | +21.4% | | Gross Profit (GAAP) | $74.5M | $59.8M | +24.6% | | Net Income/(Loss) | $2.2M | ($5.4M) | N/A | | Adjusted EBITDA | $32.2M | $22.5M | +42.9% | | Adjusted EBITDA Margin | 31.3% | 26.6% | +470 bps | | Free Cash Flow | $8.6M | $6.2M | +38.3% | | Diluted EPS (GAAP) | $0.01 | ($0.02) | N/A | | Diluted EPS (Non-GAAP) | $0.10 | $0.07 | +42.9% | Key Operating Metrics Key growth indicators showed positive momentum with significant year-over-year growth in ARR and improved customer retention rates Key Operating Metrics | Key Metric | As of Mar 31, 2024 | As of Mar 31, 2023 | % Change | | :--- | :--- | :--- | :--- | | Annualized Recurring Revenue (ARR) | $402.3M | $337.4M | +19.3% | | Gross Revenue Retention Rate | 99% | 97% | +200 bps | | Net Revenue Retention Rate | 110% | N/A | N/A | Recent Business Developments The company enhanced its offerings through a key acquisition, advanced its multi-product strategy, and expanded internationally - Completed the acquisition of Wilshire Advisors' risk, performance, and analytics platforms to enhance front and middle office solutions[5] - Advanced its multi-product strategy with successful go-lives for Clearwater PRISM clients and a growing roster of clients using both JUMP and Clearwater's accounting solutions[5] - Launched Clearwater CWIC LPx, a new generative AI-based solution to help users extract investment insights on-demand[5] - Secured new international clients, including MSIG Singapore and France Active, for investment data management and accounting operations[5] Financial Outlook Q2 and Full Year 2024 Guidance The company projects continued growth for Q2 and the full year 2024, with revenue expected to increase by 19% to 20% Financial Guidance | Metric | Second Quarter 2024 Guidance | Full Year 2024 Guidance | | :--- | :--- | :--- | | Revenue | $105M - $106M | $438M - $442M | | Year-over-Year Growth | ~17% - 18% | ~19% - 20% | | Adjusted EBITDA | $31M | $137M - $139M | | Adjusted EBITDA Margin | ~29% - 30% | ~31% | Consolidated Financial Statements Consolidated Balance Sheets The company's balance sheet reflects total assets of $547.8 million and a strong equity position as of March 31, 2024 Consolidated Balance Sheets (in thousands) | Balance Sheet Item (in thousands) | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $189,644 | $221,765 | | Total current assets | $395,750 | $415,996 | | Total assets | $547,803 | $558,743 | | Total current liabilities | $70,817 | $80,792 | | Total liabilities | $141,588 | $149,086 | | Total stockholders' equity | $406,215 | $409,657 | Consolidated Statements of Operations The Q1 2024 income statement shows a 21.4% revenue increase and a return to profitability with a net income of $2.2 million Consolidated Statements of Operations (in thousands) | Income Statement Item (in thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $102,719 | $84,606 | | Gross Profit | $74,541 | $59,781 | | Total operating expenses | $74,707 | $66,104 | | Loss from operations | ($166) | ($6,323) | | Net income (loss) | $2,236 | ($5,417) | | Net income (loss) attributable to CWAN | $1,898 | ($4,384) | Consolidated Statements of Cash Flows Net cash from operations increased to $10.0 million, though overall cash decreased due to financing and investing activities Consolidated Statements of Cash Flows (in thousands) | Cash Flow Item (in thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,037 | $7,935 | | Net cash used in investing activities | ($11,800) | ($32,646) | | Net cash used in financing activities | ($30,145) | ($5,269) | | Change in cash and cash equivalents | ($32,121) | ($29,879) | | Cash and cash equivalents, end of period | $189,644 | $220,845 | Reconciliation of GAAP to Non-GAAP Measures Reconciliation of Net Income (Loss) to Adjusted EBITDA The reconciliation from GAAP net income to non-GAAP Adjusted EBITDA highlights adjustments for equity-based compensation and D&A Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Reconciliation Item (in thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net income (loss) | $2,236 | ($5,417) | | Interest income, net | ($2,060) | ($1,356) | | Depreciation and amortization | $2,550 | $2,449 | | Equity-based compensation expense | $28,481 | $24,507 | | Transaction expenses | $802 | $1,293 | | Other adjustments | $193 | $1,065 | | Adjusted EBITDA | $32,202 | $22,541 | Reconciliation of Free Cash Flow Free cash flow grew 38.3% year-over-year, calculated from net operating cash flow less capital expenditures Reconciliation of Free Cash Flow (in thousands) | Free Cash Flow Calculation (in thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $10,037 | $7,935 | | Less: Purchases of property and equipment | $1,438 | $1,717 | | Free Cash Flow | $8,599 | $6,218 | Detailed Non-GAAP Reconciliations This section details adjustments for non-GAAP gross profit and net income, showing improved margins and profitability Non-GAAP Reconciliations (in thousands) | Non-GAAP Reconciliation (in thousands) | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Gross Profit (GAAP) | $74,541 | $59,781 | | Equity-based comp. & related taxes | $3,522 | $2,475 | | Depreciation and amortization | $2,102 | $1,964 | | Gross Profit (Non-GAAP) | $80,165 | $64,220 | | Non-GAAP Gross Margin | 78% | 76% | | Net Income (Loss) (GAAP) | $2,236 | ($5,417) | | Total Adjustments (Equity-comp, D&A, etc.) | $32,654 | $29,069 | | Tax impacts of adjustments | ($8,698) | ($5,954) | | Net Income (Non-GAAP) | $26,192 | $17,598 | Legal Disclosures Use of Non-GAAP Information The company clarifies its use of non-GAAP measures to supplement GAAP reporting for performance evaluation - The company uses non-GAAP measures like adjusted EBITDA and free cash flow to supplement GAAP reporting[10] - These measures are adjusted to exclude items management believes are not indicative of ongoing operations, such as share-based compensation and transaction expenses[12] Forward-Looking Statements This section contains a safe harbor statement regarding forward-looking information and associated risks - The press release contains forward-looking statements concerning future results, business strategies, and growth opportunities[13] - These statements involve known and unknown risks that may cause actual results to differ materially from current expectations[14] - The company does not undertake any obligation to update forward-looking statements[16]