CWAN Q3 2025 Earnings Call Summary

1Key Financial Results and Metrics

Revenue: $205.1 million, up 77% year-over-year, exceeding guidance by over $1 million.

Annualized Recurring Revenue (ARR): Reached $807.5 million, also up 77% year-over-year.

Adjusted EBITDA: $70.7 million, representing a margin of 34.5%, up from 32.1% in Q2 2025.

Gross Revenue Retention (GRR): 98%, maintaining high retention over the last 27 quarters.

Net Revenue Retention (NRR): 108%, slightly down from 110% in Q2, attributed to lower contributions from AUM growth and asset-based upsells.

Gross Margin: 78.5%, consistent with 2027 targets, showcasing integration efficiency.

2Strategic Updates and Business Highlights

Acquisitions: First full quarter contributions from Enfusion, Beacon, and Bistro have been integrated successfully.

Growth Vectors: Emphasis on expanding into alternative assets, risk management, and enhancing cross-selling opportunities across platforms.

Technological Advancements: Significant progress in Generative AI integration, with clients experiencing substantial operational efficiencies (e.g., 90% reduction in manual reconciliation).

Market Position: Strong demand across various sectors, especially in alternatives and risk management, with a notable increase in bookings from hedge funds.

3Forward Guidance and Outlook

Q4 2025 Revenue Guidance: Expected between $216 million and $217 million, representing 71-72% year-over-year growth.

Full Year 2025 Revenue Guidance: Anticipated between $730 million and $731 million, reflecting approximately 62% growth.

Q4 EBITDA Guidance: Projected at $73 million, maintaining a 34% adjusted EBITDA margin.

Long-term Growth: Confidence in achieving a net revenue retention target of 115% supported by strategic pricing and cross-selling initiatives.

4Bad News, Challenges, or Points of Concern

Net Revenue Retention Decline: Slight decrease from 110% to 108%, indicating potential challenges in upselling and AUM growth.

Lumpiness in ARR Growth: Large deals can create variability in ARR recognition, leading to potential discrepancies between revenue and ARR growth rates.

Integration Risks: While integration has progressed well, there are ongoing challenges in aligning pricing models and client expectations across newly acquired platforms.

5Notable Q&A Insights

Market Strength: Strong bookings were reported across various sectors, particularly in alternatives and risk management, indicating broad-based demand.

Core Business Growth: Core Clearwater business growth is steady, but ARR growth was reported at 17%, which may not fully reflect the underlying momentum due to the timing of large deals.

Pricing Model Adjustments: New pricing models for Enfusion are set to roll out in 2026, aimed at aligning value with client pricing rather than increasing prices outright.

Generative AI Impact: The company is leveraging Generative AI to enhance client onboarding and internal processes, positioning itself as a leader in AI integration within the industry. Overall, CWAN demonstrated strong financial performance in Q3 2025, with significant growth driven by strategic acquisitions and technological advancements, despite facing some challenges in net revenue retention and the variability of ARR growth. The outlook remains positive as the company prepares for continued expansion and integration of its platforms.