S&P 500   5,106.36 (-0.48%)
DOW   38,845.35 (-0.37%)
QQQ   440.84 (-0.72%)
AAPL   171.05 (-2.31%)
MSFT   412.46 (-0.59%)
META   493.67 (-0.91%)
GOOGL   131.90 (-1.09%)
AMZN   176.30 (-0.72%)
TSLA   182.51 (-2.99%)
NVDA   858.32 (+0.70%)
NIO   5.20 (-2.44%)
AMD   200.79 (-2.23%)
BABA   71.30 (-0.97%)
T   16.97 (+1.01%)
F   12.70 (-0.31%)
MU   94.08 (-1.76%)
CGC   2.98 (-1.32%)
GE   160.56 (-0.28%)
DIS   113.29 (-0.35%)
AMC   4.24 (-1.85%)
PFE   25.95 (+0.23%)
PYPL   59.32 (-1.10%)
XOM   103.99 (-0.35%)
S&P 500   5,106.36 (-0.48%)
DOW   38,845.35 (-0.37%)
QQQ   440.84 (-0.72%)
AAPL   171.05 (-2.31%)
MSFT   412.46 (-0.59%)
META   493.67 (-0.91%)
GOOGL   131.90 (-1.09%)
AMZN   176.30 (-0.72%)
TSLA   182.51 (-2.99%)
NVDA   858.32 (+0.70%)
NIO   5.20 (-2.44%)
AMD   200.79 (-2.23%)
BABA   71.30 (-0.97%)
T   16.97 (+1.01%)
F   12.70 (-0.31%)
MU   94.08 (-1.76%)
CGC   2.98 (-1.32%)
GE   160.56 (-0.28%)
DIS   113.29 (-0.35%)
AMC   4.24 (-1.85%)
PFE   25.95 (+0.23%)
PYPL   59.32 (-1.10%)
XOM   103.99 (-0.35%)
S&P 500   5,106.36 (-0.48%)
DOW   38,845.35 (-0.37%)
QQQ   440.84 (-0.72%)
AAPL   171.05 (-2.31%)
MSFT   412.46 (-0.59%)
META   493.67 (-0.91%)
GOOGL   131.90 (-1.09%)
AMZN   176.30 (-0.72%)
TSLA   182.51 (-2.99%)
NVDA   858.32 (+0.70%)
NIO   5.20 (-2.44%)
AMD   200.79 (-2.23%)
BABA   71.30 (-0.97%)
T   16.97 (+1.01%)
F   12.70 (-0.31%)
MU   94.08 (-1.76%)
CGC   2.98 (-1.32%)
GE   160.56 (-0.28%)
DIS   113.29 (-0.35%)
AMC   4.24 (-1.85%)
PFE   25.95 (+0.23%)
PYPL   59.32 (-1.10%)
XOM   103.99 (-0.35%)
S&P 500   5,106.36 (-0.48%)
DOW   38,845.35 (-0.37%)
QQQ   440.84 (-0.72%)
AAPL   171.05 (-2.31%)
MSFT   412.46 (-0.59%)
META   493.67 (-0.91%)
GOOGL   131.90 (-1.09%)
AMZN   176.30 (-0.72%)
TSLA   182.51 (-2.99%)
NVDA   858.32 (+0.70%)
NIO   5.20 (-2.44%)
AMD   200.79 (-2.23%)
BABA   71.30 (-0.97%)
T   16.97 (+1.01%)
F   12.70 (-0.31%)
MU   94.08 (-1.76%)
CGC   2.98 (-1.32%)
GE   160.56 (-0.28%)
DIS   113.29 (-0.35%)
AMC   4.24 (-1.85%)
PFE   25.95 (+0.23%)
PYPL   59.32 (-1.10%)
XOM   103.99 (-0.35%)

Clearwater Analytics: An affordable, best-of-breed SaaS play

Image of Clearwater Analytics logo

Key Points

  • Clearwater Analytics provides automated investment accounting services to asset managers, insurers, government entities and corporations.
  • Clearwater Analytics handles over $6.4 trillion of investment accounting and reporting daily.
  • DA Davison named Clearwater Analytics to its "Best of Breed Bison" stock list on January 4, 2024.
  • 5 stocks we like better than Clearwater Analytics

Clearwater Analytics Holdings Inc. NASDAQ: CWAN is a leading investment accounting, reporting and management platform in the business services sector. Asset managers use it, as do insurers, enterprises and government agencies, including Thornburg, DC.gov, Meta Platforms Inc. (NASDAQ: META), Facebook, Fifth Third Bank Inc. NASDAQ: FITBZillow Group Inc. NASDAQ: Z and NC State University. 

The company handles over $6.4 trillion of client reconciliation and reporting across thousands of accounts, asset classes, currencies and regulatory bodies daily.

Clearwater claims to be the first and only software-as-a-service (SaaS) investment accounting and analytics platform that can transform the investment accounting team into a growth machine. It's rare to find best-of-breed stocks trading under $20 with the markets near all-time highs. While valuations may be high, the cost of Clearwater Analytics stock is affordable at under $20.  


Investment accounting and reporting 

Clearwater is considered best-of-breed. Investment accounting is not your typical form of bookkeeping and accounting. Asset classes can require different accounting and tax treatments, regulatory requirements and filings. This gets more complicated as more data feeds and different systems are aggregated, especially regarding foreign assets and regulations.

Clearwater automates the entire investment lifecycle on a single platform, combining and reconciling all the data once, enabling all clients to use it and perform analytics, derive data-driven insights, manage risk, and optimize performance. Its open architecture enables its engines to integrate seamlessly with other financial systems and data sources. It employs artificial intelligence (AI) for predictive analytics, anomaly detection and generating proactive information on investments. 

Check out the sector heatmap on MarketBeat.

Solid growth and margins 

On November 1, 2023, Clearwater released its third-quarter fiscal 2023 results for September 2023. The company reported earnings-per-share (EPS) of nine cents, beating consensus analyst estimates for eight cents by a penny. Non-GAAP gross profit rose to $73.2 million for a 77.4% non-GAAP gross margin, up 250 bps YoY. 

Net loss for the quarter was $2.3 million, which included $31.2 million in equity-based compensation and payroll taxes.

Non-GAAP income rose to $23.7 million, up from $13.8 million in the year-ago period. Revenues rose 23.7% YoY to $94.66 million versus $91.95 million analyst estimates. Clearwater ended the quarter with $302.8 million in cash and cash equivalents. Total debt was $48.7 million as of September 30, 2023. 

Its annualized recurring revenue (ARR) rose 19.4% to $362.4 million. The gross revenue retention rate was 98%, which it has been for 18 of the 19 prior quarters. The net revenue retention rate was 108%, up from 103% in the year-ago period.

In line guidance 

Clearwater reaffirmed Q4 2023 revenues of $98.5 million versus $98.54 million consensus analyst estimates.

Winning clients from competitors

Clearwater Analytics CEO Sandeep Sahai stated that 90% of client onboarding happens within five months instead of several years to implement. Clearwater wins 80% of its proposals for new clients, in large part due to the power of the single instance platform. 

He gave an example of a seven-figure insurance company client win in the quarter. The client had outsourced all its investment accounting functions to a competitor. The client was convinced upon seeing an onsite demo of its platform.

Sahai commented, “They realized that it was possible to get a comprehensive daily view of the global portfolio, including public and private assets, which in turn would enable their decision-makers to make better and more informed decisions. That demo led to an accelerated review of the accounting book of record solution, and this insurer selected Clearwater in record time.” 

This has been the typical template of client wins and onboarding. On January 3, 2024, DA Davidson appointed Clearwater Analytics to its "Best of Breed Bison List."

Clearwater Analytics analyst ratings and price targets are at MarketBeat. Clearwater Analytics peers and competitor stocks can use the MarketBeat stock screener.

Daily descending triangle pattern 

The daily candlestick chart for CWAN illustrates a descending triangle pattern, a falling or descending trendline that commenced at $21.89 on November 29, 2023. Subsequent bounce attempts were met with lower highs. The flat-bottom horizontal trendline formed around $19.01 after testing multiple times. 

The daily market structure low (MSL) buy trigger formed at $19.44. The 50-period moving average has been a resistance at $19.68 as it flattens.

The daily relative strength index (RSI) attempts to bounce off the 50-band as shares get closer to the apex point where the descending upper trendline meets the horizontal flat-bottom lower trendline. Pullback support levels are $19.01, $18.55, $18 and $17.65.

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Should you invest $1,000 in Clearwater Analytics right now?

Before you consider Clearwater Analytics, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Clearwater Analytics wasn't on the list.

While Clearwater Analytics currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Clearwater Analytics (CWAN)
1.6407 of 5 stars
$17.54+2.8%N/A-159.45Moderate Buy$21.77
Meta Platforms (META)
3.8375 of 5 stars
$493.67-0.9%0.41%33.13Moderate Buy$494.53
Fifth Third Bancorp (FITB)
4.7257 of 5 stars
$35.44-0.1%3.95%10.97Moderate Buy$34.63
Zillow Group (Z)
0.8132 of 5 stars
$56.74-1.0%N/A-83.44Hold$58.75
Compare These Stocks  Add These Stocks to My Watchlist 

Jea Yu

About Jea Yu

  • JeaYu21@gmail.com

Contributing Author

Trading Strategies

Experience

Jea Yu has been a contributing writer for MarketBeat since 2018.

Areas of Expertise

Equities, options, ETFs and futures; fundamental, qualitative, quantitative and technical analysis and pattern identification; active and swing trading; trading systems and methodology development

Education

Bachelor of Arts, University of Maryland, College Park

Past Experience

U.S. equity markets trader, writer and analyst for over 25 years. Published four books by publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. Speaker at various expos and seminars and has been quoted and featured in USA Today, The Wall Street Journal, Traders Magazine, The Financial Times and various trade publications, including Stocks & Commodities, Active Trader and Online Investor.


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