Piper Sandler has kept its Neutral stance on Clearwater Analytics Holdings (NYSE: CWAN), maintaining a $23.00 price target.
Following investor meetings in New York City with Clearwater's CFO Jim Cox and Head of IR Joon Park, the firm expressed a clearer perspective on the company's growth strategies and the influence of AI on its operations.
Clearwater's commitment to achieving a Net Revenue Retention (NRR) goal of 115% by the end of the fiscal year 2025 was highlighted, alongside its focus on investment areas and partnership strategies.
The meetings underscored Clearwater's two-pronged growth approach, which includes increasing sales to existing clients and acquiring new customers.
Piper Sandler noted Clearwater's consistent performance in recent quarters and its pattern of surpassing expectations and raising future outlooks, which the firm anticipates could extend into the second half of the year.
Clearwater's current stock valuation was discussed, with it trading at 10.1 times the next twelve months (NTM) enterprise value to sales (EV/S), compared to a post-initial public offering (IPO) historical multiple of 9.1 times.
Clearwater Analytics reported a substantial 19% increase in revenue year-over-year for the second quarter of 2024, reaching $106.8 million.
The robust growth is primarily attributed to the introduction of new products and expansion across North American and international markets.
Consequently, the company has revised its revenue guidance for the year upwards, following a significant increase in adjusted EBITDA margin to 31.3% and a 116.9% increase in free cash flow from operations, totaling $42.4 million.
In addition to these financial highlights, Clearwater Analytics has appointed Fleur Sohtz as its new Chief Marketing Officer. Sohtz brings a wealth of experience from the financial services and technology sectors, expected to significantly contribute to Clearwater's growth and brand development.
Furthermore, Clearwater Analytics is investing in generative AI and expanding across Europe and APAC, specifically targeting the UK, French, and German markets. The company also plans to improve gross margins by 50 basis points year-over-year, targeting an 80% gross margin.
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