Company Overview - Clearwater Analytics Holdings provides cloud-native platforms for institutional investors, integrating various investment lifecycle functions into a single system [1] - The company serves a diverse clientele, including insurers, asset managers, hedge funds, banks, corporations, and governments [1] - Clearwater has been recognized for its capabilities in complex portfolio management across public and private markets, including structured products and derivatives [1] Activist Involvement - Starboard Value holds approximately 4.9% ownership in Clearwater and is known for its successful activist campaigns, achieving an average return of 36.92% in prior IT company engagements [2][3] - Starboard has urged Clearwater to conduct a thorough sales process if there is inbound interest from potential buyers [3][9] Recent Developments - Clearwater has shifted its strategy by making several acquisitions, including Enfusion and two private businesses, which has raised concerns about its ability to integrate these acquisitions while maintaining organic growth [6][7] - Following these acquisitions, Clearwater's stock price fell to a low of $15.73 per share after its third-quarter earnings report [7] Strategic Options - Clearwater has engaged advisers to evaluate strategic options after receiving unsolicited offers from firms like Thoma Bravo and Warburg Pincus [8] - Starboard's involvement suggests a focus on maximizing shareholder value, whether through a sale or a standalone growth strategy [10][11] Potential Outcomes - There are three potential outcomes for Clearwater: (i) a standalone plan focusing on integration and core growth, (ii) a sale of the company at a satisfactory premium, or (iii) a sale process led by Warburg and Permira [13] - Starboard is likely to support either the standalone plan or a competitive sale process, while opposing a sale orchestrated by existing private equity investors [13]

Core Insights - The logistics industry, often perceived as a labor-intensive sector, is emerging as a prime application area for AI technology, exemplified by the rapid growth of logistics AI company Augment, which recently secured $85 million in Series A funding, bringing its total funding to $110 million within just five months of operation [2][3][4] Group 1: Augment's AI Solution - Augment's AI assistant, Augie, streamlines the entire logistics process from order receipt to payment collection, significantly enhancing operational efficiency [2][10] - Augie has been adopted by numerous top-tier third-party logistics (3PL) companies, managing goods worth over $35 billion, and has reportedly saved clients millions of dollars [3][4] - The AI's ability to operate across multiple systems and communication channels reduces the need for manual data entry and communication, addressing the inefficiencies prevalent in the fragmented logistics processes in North America and Europe [10][12][19] Group 2: Industry Challenges and Augment's Approach - The logistics sector in the U.S. is characterized by a fragmented system where various companies handle different segments of the supply chain, leading to inefficiencies and communication challenges [6][7][8] - Augment's approach involves adapting to existing standard operating procedures (SOPs) of logistics companies rather than forcing them to change their processes, thereby minimizing resistance to AI adoption [18][19] - The implementation of Augie has resulted in significant improvements in productivity, with one logistics company doubling the number of invoices processed per employee daily and reducing reconciliation time by eight days [21] Group 3: Broader AI Applications in Logistics - Other companies like Dexory and Loop are also leveraging AI to address specific pain points in logistics, such as inventory management and financial reconciliation, respectively [20][25] - Dexory uses robots and AI to enhance inventory accuracy, achieving a 99.9% accuracy rate and transforming warehouses from "black boxes" to "transparent boxes" [22][24] - Loop automates the invoicing and reconciliation process, reducing the time taken from two weeks to one day, thus improving cash flow for logistics companies [26][27] Group 4: Future Trends in Logistics AI - The logistics AI landscape is evolving, with companies like Beacon and Vooma innovating in multi-modal transport tracking and instant pricing, respectively, indicating a shift towards a more integrated and efficient logistics ecosystem [28][29] - The overall trend suggests that AI is not merely an enhancement but is fundamentally restructuring the logistics industry by automating traditionally manual processes, leading to faster, more reliable, and cost-effective operations [30]

Group 1: Housing Market Overview - The housing market is currently experiencing a downturn, described as an "ice age," with existing home sales and realtor activity depressed [6][10] - There is optimism about a potential recovery as interest rates may decrease, leading to increased refinancing opportunities and housing transactions [6][7] Group 2: Company Insights - Rocket Companies is highlighted as a key player that has made strategic acquisitions during the market downturn, including a significant mortgage servicing portfolio and Redfin, which drives leads to realtors and mortgage brokers [8][9] - The company has seen an 82% increase year-to-date, indicating strong market positioning despite previous poor demand and delivery reports [9][10] Group 3: Valuation and Investment Potential - Companies like D.R. Horton and Toll Brothers are trading at low price-to-earnings ratios, with D.R. Horton at 12 times earnings and Toll Brothers at 10 times earnings, suggesting they are undervalued [11] - The potential for lower interest rates is expected to fuel growth in these stocks, which are considered attractive buys given their current valuations [10][11]

Clearwater Analytics (CWAN) 2025 Investor Day Summary Company Overview - Clearwater Analytics is focused on integrating its platform with acquisitions such as Infusion, Beacon, and Bistro to enhance its service offerings and market position [8][72]. Core Financial Performance - Clearwater achieved a 21% revenue growth in 2023, exceeding the forecast of 20% [14]. - The company expects continued growth with projected revenues of $437 million in 2024 [14]. - Gross revenue retention rate stands at 98%, maintaining this level for 25 out of 26 quarters [18]. Acquisitions and Integration Strategy - The integration of Infusion and Beacon is seen as a strategic move to enhance Clearwater's capabilities in hedge funds and risk calculations [10][72]. - The company emphasizes the importance of not merely rolling acquisitions into the existing brand but rather creating a new identity that reflects the strengths of all platforms [9]. Market Trends and Challenges - The investment management industry is experiencing significant changes, particularly with the growth of alternative assets, which now constitute 25-40% of portfolios [28]. - The complexity of managing global portfolios and the need for rapid adjustments in investment strategies are highlighted as key challenges [27][30]. Technology and Innovation - Clearwater's platform is designed to handle the complexities of modern investment management, including regulatory compliance and risk assessment [34][39]. - The company is leveraging generative AI to enhance its data processing capabilities, which is expected to improve operational efficiency [67][69]. Growth Strategy - Clearwater's growth model includes deepening client relationships, vertical specialization, geographical expansion, and targeting asset managers and owners [93][98]. - The company aims to maintain its high net promoter score (NPS) and net retention rate (NRR) as indicators of client satisfaction and loyalty [102][103]. Client Engagement and Satisfaction - Clearwater has over 130 clients paying more than $1 million annually, with a gross retention rate of 98% [104]. - The company focuses on delivering seamless workflows and operational insights to enhance client satisfaction and stickiness [105][106]. Future Outlook - Clearwater is optimistic about its ability to grow and improve margins, particularly through dedicated teams for hedge funds and asset managers [78][80]. - The company plans to continue its trajectory of incremental improvements while also aiming for disruptive advancements in the industry [87][89]. Conclusion - Clearwater Analytics is positioned to leverage its recent acquisitions and technological advancements to enhance its market presence and operational efficiency, while maintaining a strong focus on client satisfaction and retention [51][56].

Financial Performance & Guidance - Clearwater core business revenue in 2024 was $451.8 million, with a forecasted 20% growth[183] - The company significantly exceeded gross margin expectations, delivering 78.2% in H1 2023 against a 76% forecast[29, 27] - Non-GAAP EBITDA expectations were also exceeded, with 35.5% in H1 2023 compared to a 31% forecast[33, 31] - FY 2025E revenue guidance is between $726 million and $732 million[183, 185] - The company aims to reduce leverage to below 3 times by December 31, 2026[210] Strategic Initiatives & Growth Drivers - The company's Total Addressable Market (TAM) has more than doubled after integration[83] - Enfusion is expected to re-accelerate growth, targeting a ~20% ending growth rate[96, 97] - The company is enabling a "1 to 4 bps journey," referring to increased technology spending by clients, with current spend addressing 1bp and a target to reach 4bp[106, 112] - Insurance market represents a $6.3 billion ARR global opportunity[117, 119] Technology & Platform - Clearwater has a single data ingestion platform that processes over $10 trillion for over 1,450 clients daily[63] - The company is creating a CWAN compliant standard for the industry, aiming to become the standard for reporting for Alternative Assets with $10T on the platform[160]

Financial Data and Key Metrics Changes - Total revenue grew 70% year on year to $181.9 million, with core business contributing $130.6 million, representing 22% year over year organic growth [6][21] - Annualized recurring revenue (ARR) was $783.5 million, up 83.4% year on year, with organic ARR at $513 million, an increase of 20% year on year [6][22] - Adjusted EBITDA was $58.3 million, representing 32.1% of revenue and up 74.3% year on year [6][24] - Non-GAAP gross margins were 77.4%, exceeding expectations despite the integration of lower-margin businesses [24] Business Line Data and Key Metrics Changes - The core Clearwater revenue continued to grow at 22%, driven by strong net revenue retention rates [21] - Infusion delivered the highest bookings in its history during the quarter, welcoming 49 new clients [23] - Beacon's risk capabilities showed strong performance across all client segments, indicating robust customer interest [23] Market Data and Key Metrics Changes - The company has seen growth in international insurance and global asset management, contributing to overall revenue growth [21] - The integration of acquired businesses has led to a solid performance, with revenue outpacing conservative forecasts [22] Company Strategy and Development Direction - The company aims to build a true front-to-back platform that integrates various capabilities to enhance client service and operational efficiency [14][15] - A focus on cross-selling and launching new products is planned to fuel growth, with dedicated teams for hedge funds and asset managers established [30][48] - The partnership with Bloomberg is expected to enhance offerings for large asset managers, providing a comprehensive front-to-back solution [19][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth and margin expansion, driven by operational efficiencies and generative AI initiatives [10][11] - The company anticipates a clear path to achieving its target of 115% net revenue retention over time [25] - Management highlighted the importance of client feedback and alignment in shaping future strategies and offerings [81] Other Important Information - The company achieved $20 million in synergies within the first few days of integration, surpassing initial targets [13] - GAAP results showed a loss due to increased intangible amortization and acquisition-related costs, but operating cash flow remained strong at $47.1 million [26] Q&A Session Summary Question: Organic ARR growth expectations for the full year - Management expects acceleration in organic ARR growth in the second half of the year, driven by improved revenue growth [34][36] Question: Insights on the Bloomberg partnership and its impact - The partnership with Bloomberg is expected to enhance capabilities for large asset managers, providing a comprehensive solution that was previously unavailable [38][41] Question: Disaggregation of ARR figures - Management confirmed the ARR figures for Clearwater, Infusion, and Beacon, indicating a clear understanding of revenue contributions from each segment [45][46] Question: NRR trends post-acquisition - The net revenue retention rate for the consolidated business is currently at 110%, with expectations for improvement as the integration progresses [57][58] Question: Guidance on organic versus non-organic growth - Management provided insights on expected growth rates for Clearwater and the acquired businesses, emphasizing a focus on maintaining a 20% growth rate for the core business [61][62] Question: Impact of generative AI on revenue growth - While generative AI has improved operational efficiency, the transition to revenue-generating products is expected to take time, with potential developments anticipated in 2025 [106][110]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $126.9 million, representing a year-on-year growth of 23.5% [4][29] - Annualized recurring revenue (ARR) reached $493.9 million, up 22.7% year-on-year [5][30] - Adjusted EBITDA was $45.1 million, accounting for 35.5% of revenue, with a year-on-year growth of 40% [5][31] - Gross margin improved to 78.9%, up from 75.1% in FY 2022, exceeding expectations [13][30] Business Line Data and Key Metrics Changes - The company has maintained over 20% revenue growth for the past six years, with a win rate of 80% and a gross revenue retention rate (GRR) of over 98% [9][10] - The launch of a commercial contract restructuring program in 2022 has helped dampen revenue downside during AUM declines while retaining revenue upside during AUM growth [10] Market Data and Key Metrics Changes - The company has secured significant wins in Europe, including a leading German insurance company, which validates its expansion strategy [18] - A global asset manager expanded its partnership to include additional solutions, demonstrating strong cross-sell momentum [18] Company Strategy and Development Direction - The strategic acquisitions of Infusion, Beacon, and Bistro aim to create a fully cloud-native investment platform that integrates front, middle, and back office operations [19][20] - The company plans to implement a three-phase roadmap focusing on maximizing standalone business potential, cross-selling, and developing a unified platform [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute and drive growth despite market complexities [5][16] - The company is focused on client satisfaction and operational efficiency, which are seen as key to improving profitability [12][31] Other Important Information - The company expects to achieve a 20% growth rate, with a 50 basis point gross margin improvement and a 200 basis point EBITDA expansion per year [27] - The integration of operations and client servicing teams under common leadership is expected to enhance efficiency [14] Q&A Session Summary Question: Thoughts on future growth rates and margin pacing - Management reiterated a commitment to 20% growth for Clearwater and Beacon, with expectations for Infusion to improve from 13% growth [46][47] Question: Demand outlook and macroeconomic impact - Management noted that Q1 revenue was solid and that they have not seen significant negative impacts from recent market turmoil [58][60] Question: Synergies from acquisitions - Management confirmed expectations for $20 million in cost synergies and improvements in gross margin over the next two years [66] Question: Organic growth expectations - Management provided guidance indicating that organic growth for Clearwater would remain above 20%, with contributions from acquisitions factored in [84][87] Question: Insights on Infusion's pricing and customer conversations - Management indicated a strong receptivity to developing a stable commercial model for Infusion, aiming for consistent growth [79][80]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $126.9 million, representing a year-on-year growth of 23.5% [6][31] - Annualized recurring revenue (ARR) reached $493.9 million, up 22.7% year-on-year from $402.3 million [6][32] - Adjusted EBITDA was $45.1 million, accounting for 35.5% of revenue, with a year-on-year growth of 40% [6][31] - Gross margin improved to 78.9%, up from 75.1% in FY 2022, exceeding expectations [15][32] Business Line Data and Key Metrics Changes - The company has maintained over 20% revenue growth for the past six years, with a win rate of 80% and a gross revenue retention rate (GRR) of over 98% [11][12] - The restructuring program launched in 2022 has helped dampen revenue downside during market volatility while retaining revenue upside during favorable conditions [12] Market Data and Key Metrics Changes - The company secured significant wins in Q1, including partnerships with a leading German insurance company and a global asset manager, indicating strong market demand [19][20] - The company’s platform is positioned to address complex operational challenges across diverse clients, enhancing cross-sell momentum [20] Company Strategy and Development Direction - The strategic acquisitions of Infusion, Beacon, and Bistro aim to create a fully cloud-native investment platform that integrates front, middle, and back office operations [20][21] - The company plans to implement a three-phase roadmap focusing on maximizing standalone business potential, cross-selling strategies, and developing a unified platform [25][27] - The company anticipates achieving 20% growth, 50 basis points gross margin improvement, and 200 basis points EBITDA expansion per year post-acquisitions [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company’s ability to navigate market complexities and maintain revenue growth despite potential headwinds [7][65] - The company is focused on client satisfaction and operational efficiency as key drivers for future growth [14][17] - Management highlighted the importance of integrating new acquisitions to enhance overall business performance and client offerings [29][72] Other Important Information - The company spent $37.4 million on R&D in Q1, representing 21.6% of revenue, which is more than double the amount spent when going public in 2021 [35] - Free cash flow for Q1 was $23 million, a year-on-year increase of 168% [36] Q&A Session Summary Question: Insights on future growth rates and margin pacing - Management confirmed a commitment to 20% growth for Clearwater and Beacon, with expectations for Infusion to improve from 13% growth to 20% over the next two years [50][54] Question: Role of Bistro in the overall strategy - Bistro is seen as a horizontal capability applicable across various markets, enhancing the company’s offerings in alternative asset visualization [56][58] Question: Demand outlook and macroeconomic impact - Management noted that Q1 performance was solid, with no significant negative impact from macroeconomic factors observed in April [64][68] Question: Synergies from acquisitions - Management expects to achieve $20 million in cost synergies and improve gross margins by 400 basis points in the first year post-acquisition [71][72] Question: Organic growth expectations - Management indicated that organic growth for Clearwater is expected to remain above 20%, with contributions from the acquired companies factored into the overall guidance [87][92]