Clearwater Analytics (US:CWAN)2023-08-04 14:12Financial Data and Key Metrics Changes - In Q2 2023, Clearwater Analytics reported revenue of $89.9 million, representing a year-over-year growth of 22.4% driven by solid expansion at existing clients and strong onboarding activity [17][18] - Adjusted EBITDA for Q2 was $24.8 million, with an EBITDA margin of 27.6%, exceeding guidance by $2 million [20][49] - Free cash flow for Q2 was $19.6 million, reflecting an 18.5% year-over-year growth [23] - The company raised its full-year revenue guidance to a range of $364 million to $366 million, indicating a growth of approximately 20% to 21% year-over-year [24][49] Business Line Data and Key Metrics Changes - The average go-live time for clients decreased to approximately six months, showcasing improved operational efficiency [7][42] - Annualized recurring revenue (ARR) at the end of Q2 was $349.5 million, a 20.4% increase year-over-year [42] - Net revenue retention rate (NRR) improved to 109% as of June 30, 2023, indicating success in expanding services within existing clients [43][81] Market Data and Key Metrics Changes - The demand environment remains strong across key industries including insurance, asset management, corporates, and government, with a growing pipeline of deals [8][34] - The company has seen significant growth in Europe, particularly in Northern Europe and the French and Benelux markets [34][35] Company Strategy and Development Direction - Clearwater Analytics is focusing on operational excellence, addressing client pain points, and enhancing its commercial model, which has transitioned to a base plus pricing structure [11][40] - The company is investing in R&D to expand its platform capabilities, particularly in Europe and Asia, and is working on generative AI solutions to improve client service and operational efficiency [12][14][38] - A strategic partnership with JPMorgan Asset Management was announced, integrating Clearwater's platform with Morgan Money, which is expected to enhance client engagement and onboarding [33][98] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong client retention and satisfaction as key drivers [18][66] - The macro environment is viewed as stable, with confidence in the new commercial model to mitigate risks [130][131] - The company is excited about the potential of generative AI to transform operations and enhance client interactions [55][100] Other Important Information - Non-GAAP gross profit for Q2 was $68.1 million, with a gross margin of 75.8%, slightly improving from the previous year [60] - The company ended the quarter with $277.8 million in cash and cash equivalents, resulting in net cash holdings of approximately $229 million [47] Q&A Session Summary Question: Can you comment on the onboarding process and client sizes? - Management noted that onboarding includes both new clients and additional assets from existing clients, with a focus on improving the collaborative onboarding process [70][72] Question: How does generative AI impact onboarding and efficiency? - Management believes generative AI can significantly enhance onboarding efficiency and reduce time to value for clients [78][102] Question: What is the outlook for net revenue retention and product attach rates? - Management indicated that the improvement in NRR is sustainable and linked to the successful implementation of the new commercial model and product offerings [106][108] Question: How is the competitive landscape evolving? - Management sees a strong competitive position, particularly with the unique features of their platform, and noted opportunities arising from competitor acquisitions [120][118]