Guidewire Software ( GWRE Quick Quote GWRE - Free Report) recently announced the acquisition of HazardHub, which provides comprehensive, national coverage for risks that destroy and damage property. This includes perils from air (wind, hail, tornado and lightning), water (flood, coastal storm surge), earth (earthquake and brownfield) and fire (wildfire and fire protection). HazardHub’s tools are currently used by more than 110 enterprises, including insurers, reinsurers, brokers, MGAs and other insurtechs. HazardHub’s API provides risk scores and the supporting underlying information for any property in the United States within a short span of time (in less than two seconds). The addition of HazardHub definitely strengthens Gudewire’s portfolio, which will expand the company’s footprint in the P&C market, thereby driving top-line growth. Strategic acquisitions have played an important part in driving Guidewire’s growth trajectory over the past few years. Buyouts like Cyence, ISCS (now called InsuranceNow), FirstBest (now called Guidewire Underwriting Management) and EagleEye Analytics (now known as Guidewire Predictive Analytics) have helped in cross-selling of the product suites, which has expanded customer base and revenue generation. Guidewire is optimistic regarding robust adoption of several cloud-based products and InsuranceSuite Cloud deal wins. In the last-reported quarter (third-quarter fiscal 2021), the company clinched eight cloud deals, including five deals for InsuranceSuite Cloud offering and three deals for its InsuranceNow solution. Guidewire also clinched six standalone deals for its data and analytics solutions.
Guidewire is also riding on higher subscription revenues. The company’s subscription-based offerings are gaining from robust adoption of its InsuranceSuite Cloud platform. The company's focus on enhancing its Guidewire Cloud platform with new capabilities, including digital frameworks, automation, tooling and other cloud services, is expected to boost sales of subscription-based solutions and expand its customer base.
However, Guidewire shares are down 14.2% year to date against the Zacks Business- Software Services’ gain of 18.7%. The decline in share price can be attributed to reduction in demand for the company’s software management services due to high cloud implementations, along with lengthening sales cycles and pandemic-related uncertainty. Lower licensing revenues due to cloud migration activity and less new term license sales have been affecting top-line growth. This is expected to continue in fiscal 2022. However, Guidewire expects subscription revenue growth of 42% to 48% over fiscal 2021 expectations (roughly $167 million in revenues), for fiscal 2022. Services revenues are expected to grow in the low single digits. Zacks Rank & Key Stocks to Consider
Guidewire currently has a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector include Apple ( AAPL Quick Quote AAPL - Free Report) , Avnet ( AVT Quick Quote AVT - Free Report) and Carrier Global ( CARR Quick Quote CARR - Free Report) . While both Apple and Avnet sport a Zacks Rank #1 (Strong Buy), Carrier Global carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Long term earnings growth rate for Apple, Avnet and Carrier Global is 12.7%, 25.4% and 14.5%, respectively.