Clearwater Analytics Holdings, Inc.
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Item 1. Business.
Recent Developments
On December 20, 2025, we entered into the Merger Agreement to be acquired in a transaction valued at approximately $8.4 billion by an investor group led by Permira and Warburg Pincus, and also including Temasek Holdings (Private) Limited (“Temasek”) and Francisco Partners Management, L.P. (“Francisco Partners” and, collectively with Permira, Warburg and Temasek, the “Investor Group”). Under the terms of the Merger Agreement, each share of our Class A common stock issued and outstanding immediately prior to the effective time of the Merger (other than shares of our Class A common stock (i) owned by Parent or Merger Sub, (ii) owned by us as treasury shares or (iii) held by any person who properly exercises appraisal rights under the Delaware General Corporation Law (the “DGCL”)) will convert into the right to receive an amount in cash equal to $24.55 per share, without interest, upon completion of the proposed transaction (the “Merger Consideration”).
In connection with the Merger, the Company will exercise its right to require each holder of LLC Interests in CWAN Holdings to exchange all of such holder’s LLC Interests and our Class B common stock for shares of our Class A common stock immediately prior to, and conditioned on the occurrence of, the effective time of the Merger (the “Effective Time”) and in accordance with the LLC Agreement and our certificate of incorporation (the “LLC Interests Exchange”). Each share of our Class B common stock will automatically be canceled immediately upon the consummation of the LLC Interests Exchange, such that no shares of our Class B common stock will remain outstanding as of immediately prior to the Effective Time. Each share of our Class A common stock issued in the LLC Interests Exchange will be entitled to receive the Merger Consideration.
The Merger is expected to close in the second quarter of 2026 and is subject to certain closing conditions, including the approval of the Company’s stockholders, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the receipt of certain other specified regulatory approvals or consents, the absence of legal restraints prohibiting consummation of the Merger, and other customary conditions specified in the Merger Agreement. Early termination of the waiting period under the HSR Act in connection with the Merger was granted effective February 13, 2026. For more information on the Merger, see Note 19 “Subsequent Events” to the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Overview
CWAN brings transparency to the opaque world of investment management with what we believe is the industry’s most comprehensive single instance, multi-tenant technology platform. Our cloud-native AI-powered software allows clients to radically simplify their investment management operations, enabling them to focus on higher-value business functions such as asset allocation strategy and investment selection. Our front-to-back platform provides a single source of truth for global investment assets, made available daily or on-demand, instead of weekly or monthly. We give our clients confidence that they are making the most informed decisions about investment performance, regulatory compliance and risk.
Our offerings integrate portfolio management, OEMS, investment accounting, reconciliation, regulatory reporting, performance, compliance, and risk analytics. Serving leading insurers, asset managers, hedge funds, banks, corporations and government entities, CWAN’s powerful platform aggregates and normalizes data on over $10 trillion of global invested assets for over 2,500 clients as of December 31, 2025. We bring modern software to an industry that has long been dominated by difficult-to-use, high cost legacy technologies and processes, which often lack data integrity and traceability, and often require significant manual intervention. The strength of our platform is demonstrated by our industry leading NPS scores and gross revenue retention rate of at least 98% in 27 of the past 28 quarters.
The markets we serve are highly complex and changing rapidly. All asset owners and asset managers need timely, accurate and comprehensive control over their investment portfolios in order to effectively make capital allocation decisions, manage risk, measure performance, comply with regulations and communicate to various stakeholders internally and externally. This requires organizations to have a comprehensive, global view of their investment portfolio. A partial view of one asset class or one reporting regime is ineffective: delivering analysis on 95% of the portfolio is inadequate because, more often than not, the opaque final 5% of the portfolio creates disproportionate risk. A single client can invest in different asset classes, hold assets in over 50 different currencies, be governed by more than 45 accounting bases and hold positions representing thousands of individual tax lots. These clients often have separate solutions for accounting, portfolio management, trading, reporting, performance, compliance and risk management with disparate products for each
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asset class and each country. Furthermore, clients frequently require large teams of people to manually review, compare and enter data, correct errors and build custom reports across multiple disparate systems and spreadsheets. For asset managers, their clients, the asset owners, have increasingly greater demands and are often requesting additional information and reporting. Our platform provides our clients with a single consolidated and transparent view of investment data and analytics, leaving the hard work to CWAN.
We believe that client demand for CWAN’s offering continues to grow not only in the United States, but also in financial centers around the world. In the past, institutions often invested in a narrower range of asset classes for which legacy solutions may have been able to provide adequate accounting, performance measurement, compliance monitoring and risk analytics. Over the past decade, however, clients’ needs have grown meaningfully as a result of industry-wide trends such as:
•higher investment allocations in alternative assets (such as private equity, hedge funds, and derivatives and structured services);
•greater demand for timely risk management and transparency given economic, interest rate and geopolitical volatility;
•pressure to increase speed and accuracy while reducing cost;
•globalization; and
•increased regulatory requirements and complexity.
Clients no longer find it sufficient to review investment portfolios on a quarterly, monthly or even weekly basis. Their aged patchworks of on-premises software applications with multiple data warehouses and significant manual intervention expose them to time delays, a lack of data integrity and traceability, and a significant increase in errors, cost and ultimately risk. For many clients, this has become increasingly untenable.
We provide our clients with modern cloud-native software to replace these legacy systems. Our platform helps clients reduce cost, time, errors and risk and allows them to reallocate resources to other value-creating activities. Our software aggregates, reconciles and validates data from more than 4,900 daily data feeds and more than four million securities that have been modeled across multiple currencies, asset classes and countries. This cleansed and validated data runs through our proprietary solutions to provide clients with powerful analytics and daily or on-demand configurable reporting. We offer multi-asset class, multi-basis, multi-currency accounting and analytics that provide clients with a comprehensive view of their holdings and related performance. This allows our clients to make better, more timely decisions about their investment portfolios.
CWAN benefits from powerful network effects. With our single instance, multi-tenant architecture, every client, whether new or existing, enriches our global data set by making it more complete and accurate. Our software continually sources, ingests, models, reconciles and validates the terms, conditions and features of every investment security held by all of our clients. Through this continuous process, we are able to identify and adjudicate data discrepancies that otherwise could introduce error and risk into our clients’ investment portfolios. We believe that a meaningful competitive advantage of this network effect is that we are increasingly seen as the best and most accurate source of investment data and analytics in the industry. We believe that this architecture and consolidated dataset offers clients a unique ability to accelerate time-to-insight and efficiency through generative artificial intelligence (“GenAI”), artificial intelligence agents (“AI Agents”) and other cutting-edge technologies embedded into the CWAN platform.
Our team members are passionate about client success. We strive to be an extension of our clients’ own teams by providing responsive, consistent and effective support. Our clients have direct access to a dedicated client service team, a specialized group of experts devoted to ensuring data is as accurate and current as possible and resolving any challenges our clients may encounter utilizing our platform. We take pride in our extremely high client satisfaction rating with an industry-leading NPS. Our gross revenue retention rate has remained at least 98% in 27 of the past 28 quarters, which we believe is a testament to the strength of our offering, our ability to deliver operational efficiency for our clients and our focus on providing exceptional client service. We are able to deliver this service to our clients by attracting, retaining and engaging an outstanding team.
Our clients are increasingly asking us to do more for them. In response, we endeavor to provide our clients with an ever-more comprehensive view, whether across new geographies or asset classes or by expanding to provide solutions front to back across the entire investment lifecycle. We track our progress in expanding client relationships through our net revenue retention rate, which has consistently exceeded 100% since 2019. We continue to expand our product offerings within our core Clearwater solution and we continue to introduce new, adjacent solutions to our clients, including CWAN Private Credit, CWAN Private Funds and Clearwater for Stable Value. In addition to our organic multi-product expansion, in 2025 we completed the business acquisitions of Beacon and Enfusion, and an asset purchase of Blackstone’s proprietary
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portfolio visualization software platform, Bistro. Enfusion’s front-office capabilities, including IBOR, portfolio and order management, risk analytics and comprehensive reporting, will be increasingly integrated with CWAN’s middle and back-office solutions and client reporting capabilities to enable a unified, cloud-native platform that seamlessly integrates with other technologies. Together with Beacon platform’s capabilities in risk management and Bistro’s private credit assets data visualization platform, these acquisitions aim to accelerate CWAN’s vision of creating a unified, real-time portfolio view across all asset types. We expect to continue to introduce new organically developed products and acquire additional solutions that we believe will further enhance our relationship with our clients.
We primarily have a recurring revenue model, excluding revenue from professional services and license-related revenue. We charge clients fees based on various factors that include the scale and complexity of a client’s assets managed on the CWAN platform, users, data connections, market data, and managed services, all of which vary by product. Our investment accounting solutions are typically priced through a contracting structure we describe as Base+, which includes a base fee for a prospective or existing client's book of business plus an incremental fee for increases in assets on the platform. The Base+ structure is designed to limit the downside volatility in our asset-based fees. A majority of the assets priced through this model are high-grade fixed income and structured assets, which have traditionally had lower levels of volatility enabling our highly predictable revenue streams. Our pricing model allows CWAN to include annual increases in the base fee and enables us to charge additional fees for additional services provided for certain alternative asset classes (e.g., CWAN Private Credit, CWAN Private Funds) or additional products (e.g. Reporting, PMS, OEMS, Risk) should the client choose to utilize those services.
Our Industry
We operate in the investment management market, serving a wide range of clients that own or manage assets across the entire investment lifecycle. We estimate that our total addressable market is $23 billion globally, including $10 billion, $6 billion and $3 billion of spend from the asset management, insurance, and hedge fund industries, respectively.
Before the global financial crisis in 2008, the investment community generally invested in a relatively small number of asset classes that could be tracked with legacy software tools and processes. Over the ensuing years, the industry has faced several challenges that have strained and broken this fragmented and often manual approach to investment operations. These new developments have included increasingly globalized holdings, growing regulatory complexities, the increasing prominence of complex alternative assets, and pressure to increase speed and accuracy while reducing cost. In light of these developments, asset owners and asset managers began to require a comprehensive, global view of their investment portfolios.
These organizations initially reacted by buying dedicated products for each asset class, country and reporting regime, building proprietary data warehouses for different use cases, and increasing employee headcount in accounting and compliance functions. These practices resulted in investment operations that were slow, expensive, inflexible and inconsistent, very often resulting in inaccurate data and reporting. We believe that our purpose-built single instance, multi-tenant technology platform provides clients with a vastly superior solution to their growing needs.
Growing Importance of Alternative Assets
Investors are increasingly allocating capital to alternative assets and complex financial instruments as part of a search for higher investment returns and returns that are uncorrelated to equity and fixed income markets. Preqin estimates that global alternative assets under management (“AUM”) will grow at a 9.4% CAGR from $19 trillion in 2024 to $32 trillion in 2030. In recent years, we have witnessed a dramatic increase in alternative assets on our platform. That is why we have built new products such as CWAN Private Funds and CWAN Private Credit, which provide an additional level of detail not offered by other solutions on the market. Alternative assets are typically traded less broadly and frequently than traditional investment assets (such as stocks, corporate bonds, treasury securities, currencies, mutual funds and exchange-traded funds) and often have less data readily available about them. This complicates reporting and risk management. Asset owners and asset managers need comprehensive, accurate and timely data regardless of the complexity of their investment holdings.
Rising Demand for Risk Management and Transparency
Investors are seeking the highest quality investment data and portfolio visibility in order to effectively make capital allocation decisions, manage risk and measure performance. Additionally, the environmental, social and governance (ESG) initiatives, particularly in Europe, in investing has increased the need for transparency in portfolio holdings as investors seek to measure compliance with ESG objectives. Asset owners and asset managers need a solution that provides on-
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demand transparency in order to optimize risk management, forecast income, conduct shock and scenario analyses and provide their stakeholders with the holdings-based visibility that they require.
Increasingly Global Investment Portfolios
Investors today increasingly hold positions in globally diversified assets as they search for yield and diversification. As a result, they require a global platform that delivers a multi-asset class, multi-basis, multi-currency solution across different accounting, reporting and regulatory regimes.
High Regulatory Complexity
Increased regulatory requirements within the financial services and investment industries continue to proliferate in jurisdictions around the world, forcing asset owners and asset managers to adapt and operate under a myriad of ever-changing rules. The spread of these new regulations (e.g., CECL, NAIC, Solvency II, IFRS 9 and 17, and others) has been accompanied by a nearly six-fold increase in global yearly regulatory alerts and SEC enforcement actions. In 2023, the NAIC mandated its largest change in more than 20 years which will require investors to add data and reconfigure their NAIC reports. Investors must be responsive to ensure they remain compliant across this vast range of regulations. Failure to do so could lead to investigations and sanctions. Asset owners and asset managers need a robust and dynamic solution to help them achieve and maintain compliance in this complex and ever-evolving environment.
Pressure to Increase Efficiency
The asset management industry is highly competitive and asset management firms must constantly improve operating efficiency to maintain profitability. Accounting teams at these firms are continually asked to meet growing regulatory and reporting challenges with fewer resources and increasing client demands and AUM, an ultimately unsolvable problem with legacy products and processes. Additionally, the growing prominence of passive investment strategies (e.g., through the use of Exchange Traded Funds and Index strategies) has compressed fees for active asset managers and led to a greater focus on managing overall organizational costs to maintain profitability and operational efficiency. In order to effectively compete, asset owners and asset managers need modern automated solutions that reduce the need for greater headcount, and ultimately lower costs.
Digital Transformation from Legacy Technologies
Many of the challenges that plague asset owners and asset managers result from their reliance upon legacy software products and outdated manual processes. These products typically require on-premises deployments, feature poor system flexibility and data management capabilities, and result in higher total costs of ownership. Asset owners and asset managers are seeking cloud-based solutions that address the costly, manual and error-prone deficiencies of these legacy technologies. Cloud-based solutions are able to more effectively leverage the automation and insights offered through various AI technologies, exponentially expanding the functionality gaps and benefits between legacy and modern software platforms.
Our Value Proposition
CWAN’s purpose-built single instance, multi-tenant technology platform helps clients around the world radically simplify their investment accounting and reporting, portfolio and order management, performance measurement, compliance monitoring and risk analytics. Our solutions provide our clients with a comprehensive view and single source of truth for their investment portfolios and we believe our solutions deliver unmatched levels of speed, flexibility, traceability, repeatability and auditability, all with no manual labor required of our clients. Some key aspects of our value proposition include:
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements included in the Annual Report on Form 10-K. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and in the section titled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and those discussed in the section titled “Risk Factors” in the Annual Report on Form 10-K.
Overview
CWAN brings transparency to the opaque world of investment management with what we believe is the industry’s most comprehensive single instance, multi-tenant technology platform. Our cloud-native AI-powered software allows clients to radically simplify their investment management operations, enabling them to focus on higher-value business functions such as asset allocation strategy and investment selection. Our front-to-back platform provides a single source of truth for global investments, made available daily or on-demand, instead of weekly or monthly. We give our clients confidence that they are making the most informed decisions about investment performance, regulatory compliance and risk.
Our offerings integrate portfolio management, OEMS, investment accounting, reconciliation, regulatory reporting, performance, compliance, and risk analytics. Serving leading insurers, asset managers, hedge funds, banks, corporations, and government entities, CWAN’s powerful platform aggregates and normalizes data on over $10 trillion of global invested assets for over 2,500 clients as of December 31, 2025. We bring modern software to an industry that has long been dominated by difficult-to-use, high cost legacy technologies and processes, which often lack data integrity and traceability, and often require significant manual intervention. The strength of our platform is demonstrated by our industry leading NPS scores and gross revenue retention rate of at least 98% in 27 of the last 29 quarters.
We provide our clients with modern cloud-native software to replace these legacy systems. Our platform helps clients reduce cost, time, errors and risk and allows them to reallocate resources to other value-creating activities. Our software aggregates, reconciles and validates data from more than 4,900 daily data feeds and more than four million securities that have been modeled across multiple currencies, asset classes and countries. This cleansed and validated data runs through our proprietary solutions to provide clients with powerful analytics and daily or on-demand configurable reporting. We offer multi-asset class, multi-basis, multi-currency accounting and analytics that provide clients with a comprehensive view of their holdings and related performance. This allows our clients to make better, more timely decisions about their investment portfolios.
CWAN benefits from powerful network effects. With our single instance, multi-tenant architecture, every client, whether new or existing, enriches our global data set by making it more complete and accurate. Our software continually sources, ingests, models, reconciles and validates the terms, conditions and features of every investment security held by all of our clients. Through this continuous process, we are able to identify and adjudicate data discrepancies that otherwise could introduce error and risk into our clients’ investment portfolios. We believe that a meaningful competitive advantage of this network effect is that we are increasingly seen as the best and most accurate source of investment management data and analytics in the industry. We believe that this architecture and consolidated dataset offers clients a unique ability to accelerate time-to-insight and efficiency through generative artificial intelligence (“GenAI”), artificial intelligence agents (“AI Agents”) and other cutting-edge technologies embedded into the CWAN platform.
We primarily have a recurring revenue model, excluding revenue from professional services and license-related revenue. We charge clients fees based on various factors that include the scale and complexity of a client’s assets managed on the CWAN platform, users, data connections, market data, and managed services, all of which vary by product. Our investment accounting solution is typically priced through a contracting structure we describe as Base+, which includes a base fee for a prospective or existing client's book of business plus an incremental fee for increases in assets on the platform. The Base+ structure is designed to limit the downside volatility in our asset-based fees. A majority of the assets priced through this model are high-grade fixed income and structured assets, which have traditionally had lower levels of volatility enabling our highly predictable revenue streams. Our pricing model allows CWAN to include annual increases in the base fee and enables us to charge additional fees for additional services provided for certain alternative asset classes (e.g., CWAN Private Funds, CWAN Private Credit) or additional products (e.g. Reporting, PMS, OEMS, Risk) should the client choose to utilize those services.
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Recent Developments
Proposed Merger
On December 20, 2025, we entered into a definitive Merger Agreement pursuant to and subject to the terms and conditions of which we will be acquired by the Investor Group. For further details on this proposed transaction, see Note 1 “Organization and Description of Business” to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on the Form 10-Q.
Key Factors Affecting Our Performance
The growth and future success of our business depends on many factors, including those described below.
•Adding New Clients in Established End Markets: Our future growth is dependent upon our ability to continue to add new clients, and in 2025 we added over 1,000 net new clients through organic growth and acquisitions. We are focused on continuing to increase our client base in our established client end-markets of corporations, insurance companies and asset managers, and doing so with increasingly large and sophisticated clients. As we add clients, it takes time to fully onboard their assets to the platform. Our revenue generally increases as assets are added to the platform, while the effort to serve the client is relatively consistent over time. Therefore, we expect revenues and gross margins to increase for a client as the client transitions from the onboarding process to a steady state once assets have been onboarded. In any period, our gross margins may fluctuate based on the relative size and number of clients that we are onboarding at that time.
•Expanding and Retaining Relationships with Existing Clients: Our future growth is dependent upon retaining our existing clients and expanding our relationships with these clients through increases in the amount of their assets on our platform. We have enjoyed consistent gross revenue retention rates of at least 98% in 27 of the past 29 quarters. The consistency in revenue retention creates predictability in our business and enables us to better plan our future investments. Our relationships with our clients expands as these clients add more assets to our platform, with our quarterly net revenue retention rates (as defined below under “—Key Operating Measures”) between 114% and 109% in 2025. Clients may add assets as a result of acquiring new clients themselves or by acquiring new businesses or simply through organic growth, which produces additional assets that they manage using our platform. We believe that our client service model and technology platform are strong contributing factors in our attractive retention rates. As such, we expect to continue to invest in both our operations and research and development functions to maintain and increase our high levels of client satisfaction, which we believe will lead to strong client retention and expansion.
•International Expansion: We believe that the value provided by our platform is equally applicable to asset owners and asset managers outside of North America, and there is a significant opportunity to expand our client base and usage of our platform internationally. Our future growth is dependent upon our ability to successfully enter new international markets and to expand our client base in our current international markets. Our cost to acquire clients in international markets is currently greater than in North America because there is less awareness of the CWAN brand and our product capabilities, and we have to date invested less in sales and marketing internationally. For these reasons, we expect to invest more in sales and marketing in international markets relative to North America in order to achieve growth in these international markets.
•Adding New Clients in Adjacent or Nascent End-Markets: Our strategy is to also add new clients in our more nascent end-markets, which include state and local governments, pension funds, sovereign wealth funds, as well as endowments and foundations. Traditionally, our existing clients have been among our best resources for referring new clients to us, and we will continue to invest in sales and marketing to build awareness of our brand, engage prospective clients and drive adoption of our platform, particularly as it relates to expanding into new end-markets. As we establish our presence in new end-markets, we expect sales and marketing expenditures will be less efficient than in our established verticals and we will become increasingly more efficient at acquiring clients in new end-markets over time.
•Expanding Solutions and Broadening Innovation: Our future growth is dependent upon our continued expansion of our solutions in order to better retain our current clients and to develop new use cases that appeal to new clients. While we believe we will be able to reduce our research and development expenses as a percentage of revenues as we achieve greater scale, our priority is to maintain and grow our technological advantage over our competitors. As we identify opportunities to increase our technological and competitive
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advantages, we may increase our investments in research and development at rates that are faster than our growth in revenues in order to enhance our long-term growth and profitability.
•Fluctuations in the Market Value of Assets on the Platform: Although we generally have a base fee and Base+ model, we also bill our clients monthly in arrears based on a basis point rate applied to our clients’ assets on our platform, which can be influenced by general economic conditions. While 74% of the assets on our platform were high-grade fixed income securities and structured products as of December 31, 2025 and traditionally subject to lower levels of volatility, the value of our clients’ assets on our platform varies on a daily basis due to changes in securities prices, cash flow needs, incremental buying and selling of assets and other strategic priorities of our clients. For these reasons, our revenue is subject to fluctuations based on economic conditions, including market conditions and the changing interest rate environment.
•Expansion of Usage with Existing Clients: With the acquisitions of Enfusion, Beacon and Bistro in 2025, we believe there are opportunities to further expand our relationships with existing clients through cross-selling related or complementary functionalities or services that continue to improve their investment management workflows and technology infrastructure. As we continue to execute and maximize each standalone businesses’ potential, we believe that there is a significant opportunity to expand usage from our existing clients as we provide value-adding capabilities and services to support their strategies to evolve and expand into new markets. We expect our revenues from existing clients to continue to increase as they broaden their use of our solutions and expand utilization into other investment groups within their organizations.
Key Components of Results of Operations
The following discussion describes certain line items in our condensed consolidated statements of operations.
Revenue
We generate revenue from fees derived from providing clients with access to the solutions and services on our SaaS platform. Sales of our offerings include a right to use our software in a hosted environment without taking possession of the software. A large number of our contracts are generally cancellable with 30 days’ notice without penalty. We generally invoice clients monthly in arrears based on a percentage of the average daily value of assets within a client’s accounts on our platform during that month, or based on a fixed monthly base fee. Payment terms may vary by contract but generally include a requirement of payment within 30 days following the month in which services are provided. Fees invoiced in advance of the delivery of the Company’s performance obligations are deemed set-up activities and are deferred as a material right and recognized over time, typically 12 months.
Cost of Revenue
Cost of revenue consists of expenses related to delivery of revenue-generating services, including expenses associated with client services, onboarding, reconciliation and agreements related to the purchase of data used in the provision of our services. Salary and benefits for certain personnel associated with supporting these functions, in addition to allocated overhead, amortization of developed technology intangible assets, and depreciation for facilities, are also included in cost of revenue.
Operating Expenses
Research and development expense consists primarily of salary and benefits for our development staff as well as contractors’ fees and other costs associated with the enhancement of our offering, ensuring operational stability and performance and development of new offerings.
Sales and marketing expense consists of the costs of personnel involved in the sales and marketing process, sales commissions, advertising and promotional materials, sales facilities expenses, the cost of trade shows and seminars, and amortization of client relationships intangible assets.
General and administrative expense consists primarily of personnel costs for IT, finance, administration, human resources and general management, amortization of trade name intangible assets, as well as expenses from legal, corporate technology and accounting service providers.
Interest Expense
Interest expense reflects interest accrued on our outstanding borrowings during the course of the applicable period. The accrual of interest varies depending on the timing and amount of borrowings and repayments during the period as well as fluctuations in interest rates.
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Other Income, Net
Other income, net consists of gains and losses of foreign currency and investments, and interest income. Interest income relates to interest received on our cash and cash equivalents based on interest rates in the course of the applicable period, and interest received from other investments.
Provision for (Benefit from) Income Taxes
Provision for (benefit from) income taxes consists of income taxes related to federal, state, and foreign jurisdictions where we conduct our business. Our effective tax rate may increase in the future as our ownership in CWAN Holdings increases via exchanges from historical partners. In addition, our discrete items may not be consistent from period to period and could cause volatility in our effective tax rate.
Key Operating Measures
We consider certain operating measures, such as annualized recurring revenue, gross retention rates and net retention rates, in measuring the performance of our business. The following table summarizes these operating measures as of the dates presented:
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||||||
| 2026 | ||||||||||||||||||||
| Annualized recurring revenue (in thousands) | $ | 871,814 | ||||||||||||||||||
| Gross revenue retention rate | 97 | % | ||||||||||||||||||
| Net revenue retention rate | 108 | % | ||||||||||||||||||
| 2025 | ||||||||||||||||||||
| Annualized recurring revenue (in thousands) | $ | 493,852 | $ | 783,450 | $ | 807,479 | $ | 840,962 | ||||||||||||
| Gross revenue retention rate | 98 | % | 98 | % | 98 | % | 98 | % | ||||||||||||
| Net revenue retention rate | 114 | % | 110 | % | 108 | % | 109 | % | ||||||||||||
Annualized Recurring Revenue
Annualized recurring revenue is calculated at the end of a period by dividing the recurring revenue in the last month of such period by the number of days in the month and multiplying by 365.
Because a substantial majority of the assets on our platform are fixed income securities that typically have low levels of volatility with respect to their market value, the growth in annualized recurring revenue is generally not attributable to the fluctuating market value of the assets on our platform. Rather, the growth in annualized recurring revenue is due to an increase in the number of clients using our offering as well as from onboarding more assets of our existing clients onto our platform.
Annualized recurring revenue increased 76.5% from March 31, 2025 to March 31, 2026 on account of growth in our client base, both organically through new clients brought onto our core CWAN platform, as well as inorganically through customers gained from acquired entities, as well as changes to our existing clients’ assets on our core CWAN platform and increasing revenue which is not related to assets on our platform.
Gross Revenue Retention Rate
Gross revenue retention rate represents annual contract value (“ACV”) at the beginning of the 12-month period ended on the reporting date less client attrition over the prior 12-month period, divided by ACV at the beginning of the 12-month period, expressed as a percentage. ACV is comprised of annualized recurring revenue plus contracted-not-billed revenue, which represents the estimated annual contracted revenue for new and existing client opportunities prior to revenue recognition. In order to arrive at total ACV, we include contracted-not-billed revenue, as it is contracted revenue that has not been recognized but that we expect to produce recognized revenue in the future. Client attrition occurs when a client provides a contract termination notice. The amount of client attrition is calculated as the reduction in annualized revenue of the client at the time of the notice and is recorded in the month the final billing occurs. In the case of client attrition where contracted-not-billed revenue is still present for a client, both annualized recurring revenue and contracted-not-billed revenue associated with such client are deducted from ACV.
Gross revenue retention rates have remained consistently at least 98% in 27 of the past 29 quarters. We believe the extremely consistent and high gross revenue retention rate is a testament to the value proposition that our leading solution offers. From the second quarter of 2025, the retention rates included the effects from the acquired entities.
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Net Revenue Retention Rate
Net revenue retention rate is the percentage of recurring revenue retained from clients on the platform for 12 months and includes changes from the addition, removal or value of assets on our platform, contractual changes that have an impact to annualized recurring revenues and lost revenue from client attrition. We calculate net revenue retention rate as of a period end by starting with the annualized recurring revenue from clients as of the 12 months prior to such period end. We then calculate the annualized recurring revenue from these clients as of the current period end. We then divide the total current period end annualized recurring revenue by the 12-month prior period end annualized recurring revenue to arrive at the net revenue retention rate.
As of March 31, 2026, the net revenue retention rate was 108% compared to 114% as of March 31, 2025. Our relationships with our clients expand as these clients add more assets to our platform, with our quarterly net revenue retention rates between 108% and 114% in 2025. From the second quarter of 2025, the retention rates included the effects from the acquired entities. Excluding the effects from the acquired entities, net revenue retention was 111% in the first quarter of 2026.
Non-GAAP Financial Measures
We also consider certain non-GAAP financial measures that are not prepared in accordance with U.S. GAAP, such as Adjusted EBITDA and Adjusted EBITDA Margin, in measuring the performance of our business. The non-GAAP measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. However, we believe that this non-GAAP information is useful as an additional means for investors to evaluate our operating performance, when reviewed in conjunction with our GAAP financial statements. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP, and because these amounts are not determined in accordance with GAAP, they should not be used exclusively in evaluating our business and operations. In addition, undue reliance should not be placed upon non-GAAP or operating information because this information is neither standardized across companies nor subjected to the same control activities and audit procedures that produce our GAAP financial results.
Adjusted EBITDA and Adjusted EBITDA Margin
Adjusted EBITDA and Adjusted EBITDA Margin are supplemental performance measures that our management uses to assess our operating performance. We define Adjusted EBITDA as net income (loss) plus (i) interest expense, (ii) depreciation and amortization, (iii) equity-based compensation expense and related payroll taxes, (iv) transaction expenses, (v) provision for (benefit from) income taxes, and (vi) other income, net. We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.
The following table reconciles net income (loss) to Adjusted EBITDA and includes amounts expressed as a percentage of revenue for the periods indicated.
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||
| Net income (loss) | $ | (2,796) | (1 | %) | $ | 6,936 | 5 | % | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Interest expense | 12,646 | 5 | % | 919 | 1 | % | |||||||||||||||||
| Depreciation and amortization | 29,557 | 13 | % | 3,146 | 2 | % | |||||||||||||||||
| Equity-based compensation expense and related payroll taxes | 32,827 | 15 | % | 27,562 | 22 | % | |||||||||||||||||
Transaction expenses(1) | 6,051 | 3 | % | 7,280 | 6 | % | |||||||||||||||||
| Provision for (benefit from) income taxes | (809) | 0 | % | 1,550 | 1 | % | |||||||||||||||||
| Other income, net | (51) | 0 | % | (2,323) | (2 | %) | |||||||||||||||||
| Adjusted EBITDA | $ | 77,425 | 35 | % | $ | 45,070 | 35 | % | |||||||||||||||
| Revenue | $ | 221,228 | 100 | % | $ | 126,864 | 100 | % | |||||||||||||||
(1) Transaction expenses primarily consist of professional & legal fees and administrative costs for the Proposed Transaction and closed acquisitions.
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Results of Operations
The following tables set forth our results of operations for the three months ended March 31, 2026 and 2025 (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (in thousands) | |||||||||||
| Revenue | $ | 221,228 | $ | 126,864 | |||||||
Cost of revenue(1) | 75,681 | 33,924 | |||||||||
| Gross profit | 145,547 | 92,940 | |||||||||
| Operating expenses: | |||||||||||
Research and development(1) | 57,050 | 37,400 | |||||||||
Sales and marketing(1) | 46,241 | 19,631 | |||||||||
General and administrative(1) | 33,266 | 28,827 | |||||||||
| Total operating expenses | 136,557 | 85,858 | |||||||||
| Income from operations | 8,990 | 7,082 | |||||||||
| Interest expense | 12,646 | 919 | |||||||||
| Other income, net | (51) | (2,323) | |||||||||
| Income (loss) before income taxes | (3,605) | 8,486 | |||||||||
| Provision for (benefit from) income taxes | (809) | 1,550 | |||||||||
| Net income (loss) | (2,796) | 6,936 | |||||||||
| Less: Net income (loss) attributable to non-controlling interests | (20) | 426 | |||||||||
| Net income (loss) attributable to Clearwater Analytics Holdings, Inc. | $ | (2,776) | $ | 6,510 | |||||||
(1)Amounts include equity-based compensation as follows:
| Cost of revenue | $ | 4,323 | $ | 3,464 | ||||
| Operating expenses: | ||||||||
| Research and development | 7,065 | 8,698 | ||||||
| Sales and marketing | 8,793 | 4,009 | ||||||
| General and administrative | 8,394 | 7,541 | ||||||
| Total equity-based compensation expense | $ | 28,575 | $ | 23,712 | ||||
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The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of revenue for the periods indicated.
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenue | 100 | % | 100 | % | |||||||
| Cost of revenue | 34 | % | 27 | % | |||||||
| Gross profit | 66 | % | 73 | % | |||||||
| Operating expenses: | |||||||||||
| Research and development | 26 | % | 29 | % | |||||||
| Sales and marketing | 21 | % | 15 | % | |||||||
| General and administrative | 15 | % | 23 | % | |||||||
| Total operating expenses | 62 | % | 68 | % | |||||||
| Income from operations | 4 | % | 6 | % | |||||||
| Interest expense | 6 | % | 1 | % | |||||||
| Other income, net | 0 | % | (2 | %) | |||||||
| Income (loss) before income taxes | (2 | %) | 7 | % | |||||||
| Provision for (benefit from) income taxes | 0 | % | 1 | % | |||||||
| Net income (loss) | (1 | %) | 5 | % | |||||||
Comparison of the three months ended March 31, 2026 and 2025 (unaudited)
Revenue
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In thousands, except percentages) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Revenue | $ | 221,228 | $ | 126,864 | $ | 94,364 | 74 | % | |||||||||||||||
Revenue increased $94.4 million for the three months ended March 31, 2026 as compared to the corresponding period in 2025. The increase was due a growth in our customer base, both organically through new clients brought onto our core CWAN platform, as well as inorganically through customers gained from acquired entities, as well as changes to our existing clients’ assets on our core CWAN platform and increasing revenue which is not related to assets on our platform. Average assets on our platform that were billed to new and existing clients increased 16% for the three months ended March 31, 2026, as compared to the corresponding period in 2025. Average basis point rate billed to clients increased by 0.6% for the three months ended March 31, 2026, compared to the corresponding period in 2025.
30
Cost of Revenue
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In thousands, except percentages) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Equity-based compensation | $ | 4,323 | $ | 3,464 | $ | 859 | 25 | % | |||||||||||||||
| All other cost of revenue | 71,358 | 30,460 | 40,898 | 134 | % | ||||||||||||||||||
| Total cost of revenue | $ | 75,681 | $ | 33,924 | $ | 41,757 | 123 | % | |||||||||||||||
| Percent of revenue | 34 | % | 27 | % | |||||||||||||||||||
Cost of revenue changed as follows:
| Change From 2025 to 2026 QTD | |||||
| (in thousands) | |||||
| Increased depreciation and amortization | $ | 19,231 | |||
| Increased payroll and related costs | 13,572 | ||||
| Increased data costs | 4,735 | ||||
| Increased technology costs | 1,442 | ||||
| Increased facility costs | 1,119 | ||||
| Increased equity-based compensation | 859 | ||||
| Other items | 799 | ||||
| Total change | $ | 41,757 | |||
The increase in cost of revenue for the three months ended March 31, 2026 was primarily due to increased depreciation and amortization of acquired intangible assets from acquisitions, increased payroll and related costs as a result of headcount growth from acquisitions, increases in merit-based compensation, and changes in our employee base leading to higher compensation. In addition, cost of revenue increased due to higher data costs for acquiring vendor data contracts, increased technology costs from higher utilization of third-party cloud computing services and other third-party IT services, increased allocation of facilities cost due to the acquisition of additional office spaces, and increased equity-based compensation due to grants of additional awards to employees.
Operating Expenses
Research and Development
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In thousands, except percentages) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Equity-based compensation | $ | 7,065 | $ | 8,698 | $ | (1,633) | (19 | %) | |||||||||||||||
| All other research and development | 49,985 | 28,702 | 21,283 | 74 | % | ||||||||||||||||||
| Total research and development | $ | 57,050 | $ | 37,400 | $ | 19,650 | 53 | % | |||||||||||||||
| Percent of revenue | 26 | % | 29 | % | |||||||||||||||||||
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Research and development expenses changed as follows:
| Change From 2025 to 2026 QTD | |||||
| (in thousands) | |||||
| Increased payroll and related costs | $ | 15,923 | |||
| Increased technology cost | 2,432 | ||||
| Increased outside services and contractors costs | 1,178 | ||||
| Increased facility costs | 1,080 | ||||
| Increased depreciation and amortization | 632 | ||||
| Decreased equity-based compensation | (1,633) | ||||
| Other items | 38 | ||||
| Total change | $ | 19,650 | |||
The increase in research and development expenses for the three months ended March 31, 2026 was primarily due to increased payroll and related costs as a result of headcount growth from acquisitions, increases in merit-based compensation, changes in our employee base leading to higher compensation, and increased equity-related payroll taxes for vested equity awards. In addition, research and development expenses increased due to increased technology costs from higher utilization of third-party cloud computing services and other third-party IT services, increased outside services and contractors costs related to acquisitions, and increased allocation of facilities cost due to the acquisition of additional office spaces. These increases were partially offset by decreased equity-based compensation due to the movement of certain key personnel from the research and development team to the sales and marketing team with a change in responsibilities.
Sales and Marketing
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In thousands, except percentages) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Equity-based compensation | $ | 8,793 | $ | 4,009 | $ | 4,784 | 119 | % | |||||||||||||||
| All other sales and marketing | 37,448 | 15,622 | 21,826 | 140 | % | ||||||||||||||||||
| Total sales and marketing | $ | 46,241 | $ | 19,631 | $ | 26,610 | 136 | % | |||||||||||||||
| Percent of revenue | 21 | % | 15 | % | |||||||||||||||||||
Sales and marketing expense changed as follows:
| Change From 2025 to 2026 QTD | |||||
| (in thousands) | |||||
| Increased payroll and related costs | $ | 12,313 | |||
| Increased depreciation and amortization | 6,143 | ||||
| Increased equity-based compensation | 4,784 | ||||
| Increased outside services and contractors | 1,357 | ||||
| Increased marketing expense | 1,080 | ||||
| Increased facility costs | 416 | ||||
| Other items | 517 | ||||
| Total change | $ | 26,610 | |||
The increase in sales and marketing expense for the three months ended March 31, 2026 was primarily due to increased payroll and related costs as a result of headcount growth from acquisitions and increases in merit-based compensation, increased depreciation and amortization of acquired intangible assets, and increased equity-based compensation due to grants of additional awards to employees, and movement of certain key personnel from the research and development team to the sales and marketing team with a change in responsibilities. In addition, sales and marketing
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expenses increased due to increased outside services and contractors costs related to acquisitions, increased marketing expense related to advertising and conferences, and increased allocation of facilities cost due to additional office spaces.
General and Administrative
| Three Months Ended March 31, | |||||||||||||||||||||||
| (In thousands, except percentages) | 2026 | 2025 | $ Change | % Change | |||||||||||||||||||
| Equity-based compensation | $ | 8,394 | $ | 7,541 | $ | 853 | 11 | % | |||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-06-15 | MACKESY D SCOTT indirect | Director | Sell | -633,879 | $24.30 | -$15,400,724 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-11-04 10-Q expected by 2026-11-09 (in 52 days)
- ~2027-02-13 10-K expected by 2027-02-13 (in 153 days)
- ~2027-05-06 10-Q expected by 2027-05-11 (in 235 days)
- ~2027-08-05 10-Q expected by 2027-08-10 (in 326 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-06-25 8-K Material Agreement Entered; Material Agreement Terminated; Completion of Acquisition/Disposition; Material Financial Obligation; Triggering Event/Obligation; Delisting Notice; Material Modification to Rights; Control Change; Officer/Director Change; Bylaws/Articles Amended; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-05-07 8-K Earnings Release; Financial Statements and Exhibits
- 2026-05-07 10-Q Quarterly Report
- 2026-04-01 10-K/A Annual Report (Amended)
- 2026-02-18 10-K Annual Report
- 2026-02-18 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-23 8-K Other Events
- 2025-12-22 8-K Material Agreement Entered; Other Events; Financial Statements and Exhibits
- 2025-11-05 10-Q Quarterly Report
- 2025-11-05 8-K Earnings Release; Financial Statements and Exhibits
- 2025-09-03 8-K Other Events; Financial Statements and Exhibits
- 2025-08-06 10-Q Quarterly Report
- 2025-08-06 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-05 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-06-16 8-K Material Modification to Rights; Bylaws/Articles Amended; Other Events; Financial Statements and Exhibits