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Guidewire Software Inc. Common (GWRE)
NYSE:GWRE
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Guidewire
(NYSE:GWRE)59Neutral
Positive Factors
Cloud Transition
Guidewire is becoming the preferred platform for Tier 1 and Tier 2 P&C insurers, which represent a substantial portion of the applicable annual market.
Revenue Growth
Guidewire reported another strong quarter with all key metrics ahead of expectations led by ARR and total revenue growth of 15% and 20%, respectively.
Negative Factors
Valuation Concerns
Despite a positive fundamental outlook, the stretched valuation of GWRE leads to a Hold rating.
Guidewire (GWRE) vs. S&P 500 (SPY)
Market Cap
$16.49B
Dividend YieldN/A
Average Volume (3M)1.51M
Price to Earnings (P/E)528.9
Beta (1Y)0.85
Revenue Growth12.92%
EPS GrowthN/A
CountryUS
Employees3,469
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)0.35
Shares Outstanding83,519,260
10 Day Avg. Volume981,234
30 Day Avg. Volume1,505,091
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)17.19
Price to Cash Flow (P/CF)-66.20
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$228.60Price Target Upside31.96% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering13
Guidewire Business Overview & Revenue Model
Company DescriptionGuidewire Software, Inc. (GWRE) is a leading provider of software products to the property and casualty insurance industry. The company offers a comprehensive suite of cloud-based and on-premises solutions designed to streamline and optimize insurance operations. Guidewire's core products include insurance platforms for underwriting, policy administration, billing, and claims management, which are bundled under its InsuranceSuite offering. These solutions enable insurers to enhance operational efficiency, improve customer engagement, and accelerate product launches.
How the Company Makes MoneyGuidewire makes money primarily through the sale of its software products and related services to insurance companies. The company's revenue model is based on software licensing fees, subscription fees for its cloud-based offerings, and professional services. Guidewire's licensing fees are generated from both term licenses and perpetual licenses, while its subscription fees are derived from its cloud-based platforms. Additionally, Guidewire provides implementation, training, and support services, which contribute to its service revenue. Key partnerships with major insurers and strategic alliances with technology providers also play a crucial role in expanding its market reach and driving sales.
Guidewire Financial Statement Overview
Summary
Guidewire has demonstrated solid revenue growth and effective cash flow management, though profitability remains a challenge. The company's balance sheet is stable with a healthy equity ratio and moderate leverage, yet return on equity highlights potential areas for operational improvement.Income Statement
Guidewire has shown consistent revenue growth with a 14.5% increase in TTM (Trailing-Twelve-Months) compared to the previous year. However, the company is still facing challenges in profitability, as indicated by negative EBIT and fluctuating net income margins. The gross profit margin is robust at 60.7% TTM, reflecting strong control over production costs.70
Positive
Balance Sheet
The balance sheet reveals a moderate debt-to-equity ratio of 0.77 TTM, indicating a balanced capital structure. The equity ratio stands at 48.8%, showing a solid equity base relative to total assets. However, the return on equity is low at 2.4% TTM, suggesting limited profitability from shareholder funds.65
Positive
Cash Flow
There is a strong growth in free cash flow with a 7.7% increase TTM, signaling a positive cash generation trend. The operating cash flow to net income ratio is high at 6.8 TTM, indicating efficient conversion of revenue into cash. The free cash flow to net income ratio is also strong at 6.3 TTM, further supporting robust cash operations.75
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.04B | 980.50M | 905.34M | 812.61M | 743.27M | 742.31M | Gross Profit |
| 629.46M | 583.36M | 458.21M | 352.22M | 368.21M | 404.29M | EBIT |
| -23.75M | -52.57M | -149.49M | -199.45M | -105.58M | -6.39M | EBITDA |
| 58.10M | 20.02M | -101.21M | -161.43M | -37.17M | 46.16M | Net Income Common Stockholders |
| 30.11M | -6.10M | -111.86M | -180.43M | -66.51M | -27.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.07B | 1.00B | 798.68M | 976.17M | 1.12B | 1.13B | Total Assets |
| 2.02B | 2.23B | 2.03B | 2.27B | 2.32B | 2.36B | Total Debt |
| 311.14M | 442.92M | 440.14M | 475.58M | 459.20M | 449.62M | Net Debt |
| -49.03M | -105.07M | 38.33M | -130.73M | 74.29M | 82.65M | Total Liabilities |
| 503.93M | 883.56M | 828.42M | 815.24M | 776.95M | 708.08M | Stockholders Equity |
| 1.51B | 1.34B | 1.20B | 1.45B | 1.54B | 1.66B |
| Cash Flow | Free Cash Flow | ||||
| 190.85M | 177.22M | 20.97M | -59.72M | 82.73M | 87.41M | Operating Cash Flow |
| 205.53M | 195.75M | 38.40M | -37.94M | 111.59M | 113.07M | Investing Cash Flow |
| -102.17M | -52.36M | 12.71M | 312.21M | 64.19M | -5.80M | Financing Cash Flow |
| 416.56M | 1.05M | -261.58M | -37.34M | -159.39M | 4.96M |
Guidewire Technical Analysis
Negative
173.24
Price Trends
193.93
Negative
191.60
Negative
169.62
Positive
Market Momentum
-3.70
Positive
25.79
Positive
18.45
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GWRE, the sentiment is Negative. The current price of 173.24 is below the 20-day moving average (MA) of 204.18, below the 50-day MA of 193.93, and above the 200-day MA of 169.62, indicating a neutral trend. The MACD of -3.70 indicates Positive momentum. The RSI at 25.79 is Positive, neither overbought nor oversold. The STOCH value of 18.45 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GWRE.
Guidewire Risk Analysis
Guidewire disclosed 53 risk factors in its most recent earnings report. Guidewire reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Guidewire Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $2.95T | 31.97 | 34.29% | 0.80% | 15.04% | 12.38% | |
78 Outperform | $193.43B | 36.22 | 36.31% | ― | 11.02% | 4.96% | |
68 Neutral | $422.17B | 36.94 | 132.00% | 1.06% | 6.40% | 12.83% | |
63 Neutral | $44.36B | 84.17 | -47.82% | ― | 14.49% | 21.85% | |
59 Neutral | $16.49B | 528.94 | 2.43% | ― | 12.92% | ― | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
56 Neutral | $4.72B | ― | -20.26% | ― | 10.38% | 6.88% |
* Technology Sector Average
Performance Comparison
GWRE
Guidewire
173.24
58.23
50.63%
ADBE
Adobe
449.40
-111.02
-19.81%
FICO
Fair Isaac
1,834.13
551.45
42.99%
MSFT
Microsoft
393.31
-8.15
-2.03%
ORCL
Oracle
155.16
42.25
37.42%
VRNS
Varonis Systems
40.74
-8.90
-17.93%
Guidewire Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: -7.35% | Next Earnings Date: Jun 10, 2025
Earnings Call Sentiment Positive
The earnings call presents a positive outlook with strong ARR and revenue growth, successful cloud deal closures, and a robust cloud ecosystem. The company also demonstrated a positive impact on customers affected by recent natural disasters. However, challenges include high costs associated with convertible notes retirement, service revenue constraints, and potential foreign exchange impacts. The company's hiring delays could also impact future product development. Overall, the highlights significantly outweigh the lowlights.Highlights
Strong ARR Growth
ARR finished at $918 million, reflecting strong sequential ARR additions and a net new ARR addition of $45 million, which is comparable to the largest seasonal quarter in Q4 last year.
Revenue and Subscription Growth
Total revenue was $289 million, up 20% year over year, with subscription and support revenue at $178 million, reflecting 35% year over year growth.
Successful Cloud Deal Closures
Closed twelve cloud deals, including four full insurance suite deals and welcomed five new customers, including one in Brazil and one in Belgium.
Strong Cloud Ecosystem
Guidewire Marketplace now has over 500 applications, including over 270 from technology partners, with over 6,000 app downloads in the first half of the year.
Improved Operating Profit
Operating profit finished at $54 million, ahead of expectations, with gross profit at $189 million, representing a 25% year over year growth.
High Cash Flow from Operations
Operating cash flow ended the quarter at $86 million, ahead of expectations due to strong collections, and the company ended with $1.4 billion in cash and equivalents.
Positive Customer Impact
During the LA fires, California Casualty, using Guidewire Software, proactively identified and aided at-risk policyholders, providing full coverage payments within two months to over 90% of total loss home orders.
Lowlights
High Convertible Notes Retirement Cost
Retired $100 million at face value of 2025 convertible notes at a real cost of $153 million, resulting in a $53 million charge to other income on a GAAP basis.
Service Revenue Constraints
Services revenue finished at $48 million, which was in line with expectations, but services margins were only 6% compared to negative 11% a year ago.
Cost Related to Hiring Delays
Hiring was slower than expected in the first half, which may impact product development teams, although an increase in hiring is expected in the second half.
Foreign Exchange Impact
If ARR was updated today based on current exchange rates, there would be an approximately $9 million negative adjustment.
Company Guidance
In the second quarter of fiscal 2025, Guidewire Software, Inc. reported strong financial performance and operational progress, surpassing expectations with an ARR of $918 million and total revenue of $289 million, which is up 20% year over year. The company closed 12 cloud deals, including four full insurance suite deals, and welcomed five new customers, showing significant momentum in cloud adoption. Subscription and support revenue grew by 35% year over year to $178 million, while services revenue aligned with expectations at $48 million. The company's operating profit reached $54 million, supported by a gross profit margin of 65% and a subscription and support gross margin of 69%. With a strategic focus on cloud migrations, Guidewire aims to transition 100% of its on-prem customer base to its cloud platform, leveraging its growing ecosystem of partners. The company is optimistic about the future, raising its ARR outlook to $1 billion to $1.01 billion, reflecting a growth of 16% to 17% year over year, driven by strong sales pipeline and ARR ramp-ups from prior deals.Guidewire Corporate Events
Executive/Board Changes
Guidewire Appoints Jeff Sloan to Board of Directors
Positive
Jan 27, 2025
Guidewire Software, Inc. appointed Jeff Sloan to its Board of Directors effective January 21, 2025. With his extensive leadership experience in the financial services and technology industries, particularly from his time as CEO of Global Payments Inc., Sloan is expected to provide valuable insight and perspective to Guidewire as it continues to grow and innovate its cloud platform for P&C insurers.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.