Clearwater Analytics (US:CWAN)2023-05-06 18:12Financial Data and Key Metrics Changes - The company reported first-quarter revenue of $84.6 million, exceeding expectations by $1.6 million, driven by successful onboarding of new client assets [34][21] - Annualized recurring revenue (ARR) reached $337.4 million, reflecting a year-over-year increase of 17.5% [17] - Adjusted EBITDA for the first quarter was $22.5 million, with an EBITDA margin of 26.6%, better than guidance due to revenue beat and prudent expense management [36][21] - Gross margin improved to 75.9%, up from 74.2% in the same quarter last year [36] Business Line Data and Key Metrics Changes - The company successfully onboarded 29 new clients in Q1, contributing to revenue growth [26] - The base plus contract model was adopted by nearly all new clients, allowing for incremental fees based on asset increases [18] - Research and development expenses were $22.7 million, representing 26.8% of revenue, which included costs associated with the JUMP Technology acquisition [19] Market Data and Key Metrics Changes - The company noted a 20% year-over-year revenue growth despite challenges in the macro market environment, particularly from regional banks [58] - Gross revenue retention rate was reported at 97.4%, marking a slight decline due to churn related to acquisitions among corporate clients [59] Company Strategy and Development Direction - The company is focused on expanding its global footprint, particularly in Europe and Asia, while continuing to enhance its multiproduct strategy [31][69] - Investment in R&D and capabilities like insight and self-service is expected to yield benefits in 2024 and beyond [13] - The integration of JUMP Technology is progressing well, with joint teams established to merge development efforts [37] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the business's resilience despite macroeconomic challenges, emphasizing a strong demand for their solutions [64][112] - The company is focused on maintaining client relationships and addressing their needs, particularly in light of recent banking sector volatility [128] - Future revenue guidance remains largely unchanged, indicating confidence in ongoing demand and execution [87] Other Important Information - The company ended the quarter with $256.8 million in cash and cash equivalents, resulting in net cash holdings of approximately $207 million [62] - Free cash flow for the first quarter was $6.2 million, representing a year-over-year growth of 33% [62] Q&A Session Summary Question: Impact of regional banks on guidance - Management indicated that exposure to regional banks is minimal, with only about 3% of ARR affected, and the impact on business is not significant [67] Question: Understanding gross margins - Management clarified that gross margins improved due to successful onboarding efforts and a favorable client mix rather than the JUMP acquisition [42] Question: Demand for solutions amid banking crisis - Management noted increased awareness among clients for better investment visibility and risk management solutions due to the banking crisis [48][50] Question: Trends in pricing model and client characteristics - Management confirmed that most new clients are adopting the new pricing model, which is designed to enhance revenue stability [53] Question: International demand comparison - International revenue grew by 17% year-over-year, indicating strong demand in global markets [139]