Guidewire Software (GWRE) Tops Q2 EPS by 12c, Revenues Beat; Offers 3Q & FY21 Revenues Guidance Below Consensus

Guidewire Software (NYSE: GWRE) reported Q2 EPS of $0.11, $0.12 better than the analyst estimate of ($0.01). Revenue for the quarter came in at $180.1 million versus the consensus estimate of $170.29 million.

Second Quarter Fiscal Year 2021 Financial Highlights

Revenue

• Total revenue for the second quarter of fiscal year 2021 was $180.1 million, an increase of 4% from the same quarter in fiscal year 2020. Subscription and support revenue was $59.6 million, an increase of 20%; license revenue was $77.9 million, an increase of 2%; and services revenue was $42.6 million, a decrease of 10%.
• Annual recurring revenue, or ARR, was $520 million as of January 31, 2021, compared to $514 million as of July 31, 2020. ARR results for interim quarterly periods in fiscal year 2021 are based on currency exchange rates at the end of fiscal year 2020, held constant throughout the year.

Profitability

• GAAP loss from operations was $27.1 million for the second quarter of fiscal year 2021, compared with $18.0 million for the comparable period in fiscal year 2020.
• Non-GAAP income from operations was $7.5 million for the second quarter of fiscal year 2021, compared with $15.4 million for the comparable period in fiscal year 2020.
• GAAP net loss was $8.7 million for the second quarter of fiscal year 2021, compared with $19.9 million for the comparable period in fiscal year 2020. GAAP net loss per share was $0.10, based on diluted weighted average shares outstanding of 83.8 million, compared with $0.24 for the comparable period in fiscal year 2020, based on diluted weighted average shares outstanding of 82.7 million.
• Non-GAAP net income was $9.0 million for the second quarter of fiscal year 2021, compared with $17.6 million for the comparable period in fiscal year 2020. Non-GAAP net income per share was $0.11, based on diluted weighted average shares outstanding of 84.8 million, compared with $0.21 for the comparable period in fiscal year 2020, based on diluted weighted average shares outstanding of 83.6 million.

Liquidity

• The Company had $1.4 billion in cash, cash equivalents, and investments at both January 31, 2021 and July 31, 2020. The Company used $2.4 million in cash from operations and had negative free cash flow of $12.8 million during the six months ended January 31, 2021.
• The Company has used $42.7 million to repurchase shares of its common stock since July 31, 2020.

“We experienced strong sales activity in the quarter across our core, cloud and analytics offerings, highlighted by a new Tier 1 customer in Europe," said Mike Rosenbaum, chief executive officer, Guidewire Software. "We also closed six cloud deals, five for InsuranceSuite and one for InsuranceNow, along with five standalone wins for our data and analytics solutions."

GUIDANCE:

Guidewire Software sees Q3 2021 revenue of $155-159 million, versus the consensus of $166.68 million.

Guidewire Software sees FY2021 revenue of $725-733 million, versus the consensus of $733.73 million.

Guidewire is issuing the following outlook for the third quarter of fiscal year 2021 based on current expectations:

• ARR between $533 million and $536 million
• Total revenue between $155 million and $159 million
• Operating income (loss) between $(62) million and $(58) million
• Non-GAAP operating income (loss) between $(29) million and $(25) million

Guidewire is issuing the following updated outlook for fiscal year 2021 based on current expectations:

• ARR between $560 million and $571 million
• Total revenue between $725 million and $733 million
• Operating income (loss) between $(138) million and $(130) million
• Non-GAAP operating income (loss) between $2 million and $10 million
• Operating cash flow between $60 million and $70 million

For earnings history and earnings-related data on Guidewire Software (GWRE) click here.

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