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Guidewire Software, Inc. (GWRE - Free Report) reported fourth-quarter fiscal 2020 non-GAAP earnings of 83 cents per share, outpacing the Zacks Consensus Estimate by 84.4%. Moreover, the bottom line improved 48.2% from the year-ago quarter’s figure.
The company reported revenues of $243.7 million, which beat the Zacks Consensus Estimate by 16.9%. The figure also came above the higher end of management’s guidance of $204.9-$212.9 million. Moreover, the top line increased 17% from the year-ago quarter.
The growth can primarily be attributed to higher license and subscription revenues.
Guidewire Software, Inc. Price, Consensus and EPS Surprise
Further, management is optimistic regarding growing clout of its several cloud-based products and InsuranceSuite Cloud deal wins.
Quarter in Detail
The company has now realigned reporting segments, into Subscription and support, License and Services, beginning fourth-quarter fiscal 2020.
Subscription and support revenues (22.2% of total revenues) improved 29% from the year-ago quarter’s level to $54.1 million, driven by solid adoption of InsuranceSuite cloud.
License revenues (56.4%) grew 28% year over year to $137.5 million on increase in higher term license bookings.
Services revenues (21.4%) fell 10.8% from the year-ago quarter’s figure to $52 million.
Annual recurring revenues (or ARR) were $514 million as of Jul 31, 2020, compared with $483 million as of Apr 30, 2020.
Operating Details
Non-GAAP gross margin expanded 300 basis points (bps) on a year-over-year basis to 68.9%, on higher revenue base and ongoing shift to subscription-based solutions.
Non-GAAP gross margin for Subscription and support contracted from 60.5% reported in the prior-year quarter to 49.5%. Non-GAAP gross margin for License contracted 10 bps to 97.9%. Meanwhile, non-GAAP gross margin for Services expanded 180 bps to 12.3%.
Total operating expenses climbed 7.2% year over year to $111.5 million.
Non-GAAP operating income came in at $76.4 million during the reported quarter, up 49.6% year over year.
Balance Sheet
As of Jul 31, 2020, cash and cash equivalents and short-term investments came in at $1.133 billion, compared with $1.034 billion as of Apr 30, 2020.
Fiscal 2020 at a Glance
In fiscal 2020, revenues were $742.3 million, up 3% year over year. Subscription and support revenues of $203.5 million, improved 35%; while license revenues of $331.5 million, grew 4%. However, services revenues declined 17% year over year to $207.3 million.
Non-GAAP gross margin contracted 50 basis points (bps) on a year-over-year basis to 61%, on increasing investments to enhance cloud capabilities.
Non-GAAP gross margin for License contracted 90 bps to 97.2%. Meanwhile, non-GAAP gross margin for Services contracted 240 bps to 9.1%. Non-GAAP gross margin for Subscription and support contracted from 54.8% reported in the prior-year quarter to 66.3%.
For 12 months ended Jul 31, 2020, the company generated cash from operating activities of $113.1 million compared with $116.1 million for 12 months ended Jul 31, 2019.
For 12 months ended Jul 31, 2020, free cash flow came in at $87.4 million compared with $67.3 million for 12 months ended Jul 31, 2019.
Guidance
For first-quarter fiscal 2021, revenues are expected in the range of $162-$166 million. The Zacks Consensus Estimate for revenues is currently pegged at $168.1 million.
Subscription revenues are expected to be approximately $35 million. ARR is projected between $509 million and $512 million.
For fiscal 2021, the company expects total revenues between $723 million and $733 million. The Zacks Consensus Estimate for revenues is currently pegged at $783.51 million. Services revenues are anticipated to be approximately $190 million. Subscription revenues are expected to be approximately $165 million. ARR is projected between $560 million and $571 million.
Guidewire is well poised to benefit from increasing cloud implementations and higher allegiance of customers to adopt subscription-based services. The company is focused on enhancing InsuranceSuite Cloud platform with new capabilities including digital frameworks, automation, tooling and other cloud services.
Zacks Rank & Stocks to Consider
Guidewire currently carries a Zacks Rank #3 (Hold).
Long-term earnings growth rate for Blackbaud, Qorvo and Analog Devices is currently pegged at 7.6%, 11.4%, and 13.3%, respectively.
Biggest Tech Breakthrough in a Generation
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Guidewire (GWRE) Q4 Earnings & Revenues Surpass Estimates
Guidewire Software, Inc. (GWRE - Free Report) reported fourth-quarter fiscal 2020 non-GAAP earnings of 83 cents per share, outpacing the Zacks Consensus Estimate by 84.4%. Moreover, the bottom line improved 48.2% from the year-ago quarter’s figure.
The company reported revenues of $243.7 million, which beat the Zacks Consensus Estimate by 16.9%. The figure also came above the higher end of management’s guidance of $204.9-$212.9 million. Moreover, the top line increased 17% from the year-ago quarter.
The growth can primarily be attributed to higher license and subscription revenues.
Guidewire Software, Inc. Price, Consensus and EPS Surprise
Guidewire Software, Inc. price-consensus-eps-surprise-chart | Guidewire Software, Inc. Quote
Further, management is optimistic regarding growing clout of its several cloud-based products and InsuranceSuite Cloud deal wins.
Quarter in Detail
The company has now realigned reporting segments, into Subscription and support, License and Services, beginning fourth-quarter fiscal 2020.
Subscription and support revenues (22.2% of total revenues) improved 29% from the year-ago quarter’s level to $54.1 million, driven by solid adoption of InsuranceSuite cloud.
License revenues (56.4%) grew 28% year over year to $137.5 million on increase in higher term license bookings.
Services revenues (21.4%) fell 10.8% from the year-ago quarter’s figure to $52 million.
Annual recurring revenues (or ARR) were $514 million as of Jul 31, 2020, compared with $483 million as of Apr 30, 2020.
Operating Details
Non-GAAP gross margin expanded 300 basis points (bps) on a year-over-year basis to 68.9%, on higher revenue base and ongoing shift to subscription-based solutions.
Non-GAAP gross margin for Subscription and support contracted from 60.5% reported in the prior-year quarter to 49.5%. Non-GAAP gross margin for License contracted 10 bps to 97.9%. Meanwhile, non-GAAP gross margin for Services expanded 180 bps to 12.3%.
Total operating expenses climbed 7.2% year over year to $111.5 million.
Non-GAAP operating income came in at $76.4 million during the reported quarter, up 49.6% year over year.
Balance Sheet
As of Jul 31, 2020, cash and cash equivalents and short-term investments came in at $1.133 billion, compared with $1.034 billion as of Apr 30, 2020.
Fiscal 2020 at a Glance
In fiscal 2020, revenues were $742.3 million, up 3% year over year. Subscription and support revenues of $203.5 million, improved 35%; while license revenues of $331.5 million, grew 4%. However, services revenues declined 17% year over year to $207.3 million.
Non-GAAP gross margin contracted 50 basis points (bps) on a year-over-year basis to 61%, on increasing investments to enhance cloud capabilities.
Non-GAAP gross margin for License contracted 90 bps to 97.2%. Meanwhile, non-GAAP gross margin for Services contracted 240 bps to 9.1%. Non-GAAP gross margin for Subscription and support contracted from 54.8% reported in the prior-year quarter to 66.3%.
For 12 months ended Jul 31, 2020, the company generated cash from operating activities of $113.1 million compared with $116.1 million for 12 months ended Jul 31, 2019.
For 12 months ended Jul 31, 2020, free cash flow came in at $87.4 million compared with $67.3 million for 12 months ended Jul 31, 2019.
Guidance
For first-quarter fiscal 2021, revenues are expected in the range of $162-$166 million. The Zacks Consensus Estimate for revenues is currently pegged at $168.1 million.
Subscription revenues are expected to be approximately $35 million. ARR is projected between $509 million and $512 million.
For fiscal 2021, the company expects total revenues between $723 million and $733 million. The Zacks Consensus Estimate for revenues is currently pegged at $783.51 million. Services revenues are anticipated to be approximately $190 million. Subscription revenues are expected to be approximately $165 million. ARR is projected between $560 million and $571 million.
Guidewire is well poised to benefit from increasing cloud implementations and higher allegiance of customers to adopt subscription-based services. The company is focused on enhancing InsuranceSuite Cloud platform with new capabilities including digital frameworks, automation, tooling and other cloud services.
Zacks Rank & Stocks to Consider
Guidewire currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader sector are Qorvo (QRVO - Free Report) , Blackbaud (BLKB - Free Report) and Analog Devices (ADI - Free Report) . While Qorvo and Blackbaud flaunt a Zacks Rank #1 (Strong Buy), Analog Devices carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Blackbaud, Qorvo and Analog Devices is currently pegged at 7.6%, 11.4%, and 13.3%, respectively.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>