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Factors to Note Ahead of Guidewire's (GWRE) Q3 Earnings

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Guidewire Software, Inc (GWRE - Free Report) is slated to report third-quarter fiscal 2022 results on Jun 7.

For the fiscal third quarter, Guidewire expects revenues of $186-$190 million. The Zacks Consensus Estimate for revenues is pegged at $186.8 million, indicating an increase of 13.9% on a year-over-year basis.

The Zacks Consensus Estimate for the bottom line is pegged at a loss of 30 cents per share, unchanged in the past 30 days. The company had reported a loss of 16 cents per share in the year-ago quarter.

Notably, the company beat estimates in all the last four quarters. The company has a trailing four-quarter earnings surprise of 30.9%, on average.

Guidewire Software, Inc. Price and EPS Surprise

 

Guidewire Software, Inc. Price and EPS Surprise

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

 

Factors Likely to Have Influenced Q3 Performance

Guidewire’s fiscal third-quarter performance is likely to gain from the pandemic-induced demand for cloud-based insurance software solutions. In the last reported quarter, Guidewire’s cloud and cloud products constituted over 90% of the company’s new sales.

Annual recurring revenues (ARR) were $620 million as of Jan 31, 2022, compared with $582 million as of Jul 31, 2021. The company expects ARR between $632 million and $635 million for the quarter to be reported.

A solid uptick in multiple components of Guidewire’s InsurancePlatform, which included InsuranceSuite, digital, data and analytics, might have acted as a tailwind.

Healthy adoption witnessed in subscription-based InsuranceSuite Cloud offerings is expected to have contributed to subscription and supported revenues in the to-be-reported quarter. Also, migration activity for InsuranceSuite Cloud is likely to have favored the company’s top-line numbers.

Continued momentum in data and analytics offerings is likely to have acted as a key growth factor. Synergies from the buyout of HazardHub (August 2021) are likely to have contributed to this segment’s performance. HazardHub provides extensive, national coverage for risks that destroy and damage property. The addition of HazardHub bolsters Gudewire’s portfolio, which will help expand the company’s presence in the P&C market.

The Zacks Consensus Estimate for subscription and support revenues is pegged at $85 million. The consensus mark for service revenues is pegged at $51 million and the same for license revenues is at $54 million.

Although increasing expenses on product enhancements, especially cloud infrastructure and marketing initiatives, bode well over the long haul, it might have put pressure on margin expansion in the fiscal third quarter.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Guidewire has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings this season.

Smartsheet (SMAR - Free Report) has an Earnings ESP of +1.89% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Smartsheet is set to release first-quarter fiscal 2023 results on Jun 7. The Zacks Consensus Estimate for earnings is pegged at a loss of 19 cents per share compared with a loss of 19 cents reported in the year-ago quarter. Shares of SMAR have decreased 36.6% in the past year.

Casey General Stores (CASY - Free Report) has an Earnings ESP of +0.38% and a Zacks Rank of 3.

Casey General Stores is scheduled to release fourth-quarter fiscal 2022 results on Jun 7. The Zacks Consensus Estimate for earnings is pegged at $1.54 per share, up 37.5% from the year-ago quarter’s levels. Shares of CASY have declined 2.2% in the past year.

Kroger (KR - Free Report) has an Earnings ESP of +2.95% and a Zacks Rank of 2 at present.

Kroger is scheduled to release first-quarter fiscal 2022 results on Jun 16. The Zacks Consensus Estimate for earnings is pegged at $1.27 per share, suggesting an increase of 6.7% from the prior-year quarter’s levels. Shares of KR have increased 37.3% in the past year.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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