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Guidewire (GWRE) to Report Q1 Earnings: What's in the Cards?

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Guidewire Software, Inc. (GWRE - Free Report) is scheduled to release first-quarter fiscal 2021 results on Dec 8.

For the fiscal first quarter, Guidewire expects revenues of $162-$166 million. The Zacks Consensus Estimate for revenues is pegged at $164.5 million, indicating an improvement of 4.8% on a year-over-year basis.

The Zacks Consensus Estimate for the fiscal first-quarter bottom line has been unchanged over the past 30 days at a loss of 6 cents per share. The company had reported earnings of 13 cents per share in the year-ago quarter.

Factors to Note

Guidewire's fiscal first-quarter results are likely to reflect the impact of coronavirus-led macroeconomic weakness, which might have affected renewals from small- and medium-sized insurers.

Guidewire Software, Inc. Price and EPS Surprise

Guidewire Software, Inc. Price and EPS Surprise

Guidewire Software, Inc. price-eps-surprise | Guidewire Software, Inc. Quote

Notably, the company expects Annual Recurring Revenues (or ARR) between $509 million and $512 million for the quarter to be reported. The company had reported ARR of $514 million as of Jul 31, 2020.

Nevertheless, gains from solid momentum in the cloud-based InsurancePlatform suite of solutions are expected to have cushioned the top-line performance in the quarter under review. Robust uptake of subscription-based InsuranceSuite Cloud offerings, in particular, is expected to have contributed to subscription and support revenues in the to-be-reported quarter.

Further, the coronavirus-triggered demand for cloud-based insurance software solutions is likely to get reflected in the to-be-reported quarter’s revenues.

The company has been focused on enhancing the Guidewire Cloud platform with new capabilities, including digital frameworks, automation, tooling, and other cloud services, and leveraging the Guidewire data platform. The latest functionalities are anticipated to have driven the adoption of its InsurancePlatform suite of solutions in the fiscal first quarter.

In fact, growing clout of Guidewire’s offerings can be ascertained from the expanding customer base, which includes the likes of Amerisafe (AMSF - Free Report) . During the quarter under review, a notable property and casualty insurance company, The Philadelphia Contributionship, announced that it will be moving the InsuranceNow platform to Guidewire Cloud to boost operational efficiency.

Also, incremental adoption of the latest InsuranceSuite 10 and InsuranceSuite Cloud offerings is expected to have driven the implementation of InsuranceNow. Solid uptick in multiple components of Guidewire’s InsurancePlatform, which included InsuranceSuite, digital, data and analytics, is expected to have been a tailwind.

Besides, the new deal wins from Ontario-based agri-business mutual insurer, Trillium Mutual Insurance Company, and South Africa-based short-term special risk insurer, Sasria, might get reflected in the fiscal first-quarter revenues.

Likewise, strong uptake of Cyence for Cyber Risk Management, ClaimCenter and PolicyCenter solutions is expected to have contributed to revenues.

Moreover, the company’s fiscal first-quarter results are expected to reflect gains from an expanding partner base in the PartnerConnect program. Notably, with the PartnerConnect program, insurers can easily access Guidewire’s Marketplace, which helps them introduce innovative solutions and adapt to changing market demands.

During the quarter to be reported, ClearPay, a well-known name in the payment automation solutions space, joined the PartnerConnect program as a solution partner to help joint customers via automation of the payment process between agencies and insurers.

Furthermore, the company has been increasing investments to enhance insurance software products via collaborations with leading on-demand cloud infrastructure vendors, including Amazon’s (AMZN - Free Report) Amazon Web Services and Microsoft’s (MSFT - Free Report) Azure cloud platform.

Additionally, rising expenditure to boost the implementation of Aspen, the company’s first cloud-optimized product release for InsuranceSuite, remains noteworthy.

Although increasing spend on product enhancements and marketing initiatives bodes well over the long haul, it might have impeded margin expansion in the fiscal first quarter.

Guidewire currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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