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Guidewire (GWRE) Q1 Loss Narrower Than Expected, Revenues Up Y/Y
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Guidewire Software (GWRE - Free Report) reported non-GAAP loss of 12 cents per share in first-quarter fiscal 2023 (ended Oct 31), narrower than the Zacks Consensus Estimate of a loss of 39 cents per share. This compared favorably with the year-ago quarter’s non-GAAP loss of 21 cents per share.
The company reported revenues of $195.3 million, rising 18% year over year and beating the Zacks Consensus Estimate by 2.5%.
Guidewire Cloud continued to gain momentum in the reported quarter among new and existing clients.
Guidewire Software, Inc. Price, Consensus and EPS Surprise
Subscription and support segments’ revenues (50.7% of total revenues) soared 25% from the year-ago quarter’s levels to $99.1 million, owing to higher subscription revenues. Subscription’s revenues surged 38.2% year over year to $79 million. Support’s revenues declined 8% year over year to $21 million.
License’s revenues (21% of total revenues) were down 2% year over year to $41 million.
Services’ revenues (28.3% of total revenues) climbed 18.1% year over year to $55.3 million, driven by increased cloud implementation programs.
Annual recurring revenues (ARR) were $673 million as of Oct 31, up 13.3% year over year.
Non-GAAP gross margin contracted 500 basis points (bps) on a year-over-year basis to 42.5%.
Subscription and support segments’ gross margin expanded 390 bps on a year-over-year basis to 49.2%. This year-over-year improvement was due to increased cloud infrastructure efficiency and slower hiring. Services’ non-GAAP gross margin was negative 9% compared with a gross margin of 10.3% in the year-ago reported quarter.
Total operating expenses increased 9.7% year over year to $146.7 million. Non-GAAP operating income was $35.9 million compared with the operating income of $28.7 million reported in the year-ago quarter.
Financial Details
As of Oct 31, cash and cash equivalents and short-term investments came in at $0.9 billion compared with $1.2 billion as of Jul 31.
Guidewire used $87.4 million in cash from operations during the fiscal first quarter, with a free cash outflow of nearly $91.7 million.
Guidance
For second-quarter fiscal 2023, revenues are expected in the range of $221-$226 million. ARR is expected to be between $695 million and $700 million. Non-GAAP operating income (loss) is expected between $(4) million and $0 million. GAAP operating income (loss) is expected to be between $(41) million and $(37) million.
For fiscal 2023, the company expects total revenues between $886 million and $896 million. ARR is expected to be between $745 million and $760 million.
Non-GAAP operating loss for fiscal 2023 is projected in the range of $18-$28 million. Cash flow from operations is projected in the range of $50-$80 million.
Zacks Rank & Other Stocks to Consider
At present, Guidewire carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.37 per share, up 8.2% in the past 60 days. The long-term earnings growth rate is anticipated at 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have increased 2.9% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2022 earnings is pegged at $2.59 per share, up 1.6% in the past 60 days. The long-term earnings growth rate is anticipated at 4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 4.9%. Shares of BLKB have declined 26.6% in the past year.
The Zacks Consensus Estimate for Plexus’ fiscal 2023 earnings is pegged at $5.98 per share, up 8.9% in the past 60 days.
Plexus’ earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 17.5%. Shares of PLXS have increased 15% in the past year.
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Guidewire (GWRE) Q1 Loss Narrower Than Expected, Revenues Up Y/Y
Guidewire Software (GWRE - Free Report) reported non-GAAP loss of 12 cents per share in first-quarter fiscal 2023 (ended Oct 31), narrower than the Zacks Consensus Estimate of a loss of 39 cents per share. This compared favorably with the year-ago quarter’s non-GAAP loss of 21 cents per share.
The company reported revenues of $195.3 million, rising 18% year over year and beating the Zacks Consensus Estimate by 2.5%.
Guidewire Cloud continued to gain momentum in the reported quarter among new and existing clients.
Guidewire Software, Inc. Price, Consensus and EPS Surprise
Guidewire Software, Inc. price-consensus-eps-surprise-chart | Guidewire Software, Inc. Quote
Quarter in Detail
Subscription and support segments’ revenues (50.7% of total revenues) soared 25% from the year-ago quarter’s levels to $99.1 million, owing to higher subscription revenues. Subscription’s revenues surged 38.2% year over year to $79 million. Support’s revenues declined 8% year over year to $21 million.
License’s revenues (21% of total revenues) were down 2% year over year to $41 million.
Services’ revenues (28.3% of total revenues) climbed 18.1% year over year to $55.3 million, driven by increased cloud implementation programs.
Annual recurring revenues (ARR) were $673 million as of Oct 31, up 13.3% year over year.
Non-GAAP gross margin contracted 500 basis points (bps) on a year-over-year basis to 42.5%.
Subscription and support segments’ gross margin expanded 390 bps on a year-over-year basis to 49.2%. This year-over-year improvement was due to increased cloud infrastructure efficiency and slower hiring. Services’ non-GAAP gross margin was negative 9% compared with a gross margin of 10.3% in the year-ago reported quarter.
Total operating expenses increased 9.7% year over year to $146.7 million. Non-GAAP operating income was $35.9 million compared with the operating income of $28.7 million reported in the year-ago quarter.
Financial Details
As of Oct 31, cash and cash equivalents and short-term investments came in at $0.9 billion compared with $1.2 billion as of Jul 31.
Guidewire used $87.4 million in cash from operations during the fiscal first quarter, with a free cash outflow of nearly $91.7 million.
Guidance
For second-quarter fiscal 2023, revenues are expected in the range of $221-$226 million. ARR is expected to be between $695 million and $700 million. Non-GAAP operating income (loss) is expected between $(4) million and $0 million. GAAP operating income (loss) is expected to be between $(41) million and $(37) million.
For fiscal 2023, the company expects total revenues between $886 million and $896 million. ARR is expected to be between $745 million and $760 million.
Non-GAAP operating loss for fiscal 2023 is projected in the range of $18-$28 million. Cash flow from operations is projected in the range of $50-$80 million.
Zacks Rank & Other Stocks to Consider
At present, Guidewire carries a Zacks Rank #2 (Buy).
Other stocks worth consideration from the broader technology space are Arista Networks (ANET - Free Report) , Blackbaud (BLKB - Free Report) and Plexus (PLXS - Free Report) . Arista Networks and Plexus currently sport a Zacks Rank #1 (Strong Buy), while Blackbaud carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.37 per share, up 8.2% in the past 60 days. The long-term earnings growth rate is anticipated at 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have increased 2.9% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2022 earnings is pegged at $2.59 per share, up 1.6% in the past 60 days. The long-term earnings growth rate is anticipated at 4%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 4.9%. Shares of BLKB have declined 26.6% in the past year.
The Zacks Consensus Estimate for Plexus’ fiscal 2023 earnings is pegged at $5.98 per share, up 8.9% in the past 60 days.
Plexus’ earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 17.5%. Shares of PLXS have increased 15% in the past year.