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Guidewire Set to Report Q3 Earnings: Here's What Investors Should Know
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Key Takeaways
GWRE expects Q3 revenue of $283-$289M, the Zacks Consensus Estimate is pinned at $285.7M.
Cloud-based growth, global deal wins, and strong subscription demand drive Guidewire's momentum
Non-GAAP operating income is projected at $36-$42M, with subscription gross margin seen at 68-69%.
Guidewire Software, Inc (GWRE - Free Report) is slated to report third-quarter fiscal 2025 results tomorrow.
Management expects revenues to be in the range of $283-$289 million. The Zacks Consensus Estimate is pegged at $285.7 million, indicating an 18.7% increase from the prior-year quarter's level.
The consensus estimate for the bottom line is pegged at 46 cents, which remained unchanged in the past 60 days. GWRE reported earnings of 26 cents per share in the year-ago period.
Image Source: Zacks Investment Research
It delivered a trailing four-quarter earnings surprise of 40.2%, on average. Shares of GWRE have gained 96.1% in the past year compared with the Internet-Software industry’s growth of 35%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Factors to Note Ahead of GWRE’s Q3 Release
Guidewire’s performance is likely to have benefited from continued momentum in its cloud-based solutions. GWRE is expected to have benefited from secular tailwinds in the property & casualty insurance industry, especially as climate-driven catastrophes highlight the critical role of robust risk infrastructure.
Solid deal volume across all tiers (especially Tier 1 insurers) and increasing international momentum, especially in Asia Pacific and Europe, are other tailwinds. In the last reported quarter, Guidewire Cloud reported 12 deal wins. Out of these deals, four were for InsuranceSuite Cloud, one InsuranceNow deal and the remainder for one or two core X Center applications.
The company’s focus on enhancing the Guidewire Cloud platform with new capabilities is expected to have boosted sales of subscription-based solutions. Management expects subscription and support revenues of $178 million, with services revenues of $52 million. GWRE noted that sequential growth in subscription revenues will be modest due to three fewer calendar days in the third quarter.
The company has been expanding its partner ecosystem, including more than 500 cloud apps on Guidewire Marketplace and more than 10,500 certified professionals, to drive sustained activity and greater value from the platform.
For the third quarter of fiscal 2025, ARR is anticipated to be between $942 million and $947 million. We expect ARR to be $944.6 million.
GWRE’s efforts to drive cloud operations efficiency to boost cloud margins remain an additional tailwind. The company’s expectation for non-GAAP operating income is pinned in the range of $36-$42 million. Subscription and support non-GAAP gross margin is expected to remain strong at 68-69%, while services gross margins are guided at 10%.
We expect non-GAAP gross margin Subscription and support to be 68.7% while our estimate for non-GAAP operating income is pegged at $39 million, up 87.8% year over year.
Increasing investments in product enhancements, along with weakness in global macroeconomic conditions and inflation, remain concerning. License revenues are likely to have been affected owing to the migration of on-premise customers to the cloud.
What Our Model Says About GWRE Stock
Our proven model does not predict an earnings beat for GWRE this time around. 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. This is not the case here.
GWRE 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 better-ranked stocks that you may consider, as our model shows that these have the right combination of elements to beat on earnings this season.
The Zacks Consensus Estimate for AVGO’s to-be-reported quarter’s earnings and revenues is pegged at $1.57 per share and $14.92 billion, respectively. Shares of AVGO have gained 83.1% in the past year.
Oxford Industries, Inc. (OXM - Free Report) presently has an Earnings ESP of +0.92% and a Zacks Rank #3. OXM is scheduled to report quarterly numbers on June 11. The Zacks Consensus Estimate for OXM’s to-be-reported quarter’s earnings and revenues is pegged at $1.82 per share and $385.2 million, respectively. Shares of OXM have lost 50.8% in the past year.
J.Jill, Inc. (JILL - Free Report) has an Earnings ESP of +1.71% and a Zacks Rank #3 at present. JILL is scheduled to report quarterly figures on June 11. The Zacks Consensus Estimate for JILL’s to-be-reported quarter’s earnings and revenues is pegged at 88 cents per share and $156.7 million, respectively. Shares of JILL have plunged 54.8% in the past year.
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Guidewire Set to Report Q3 Earnings: Here's What Investors Should Know
Key Takeaways
Guidewire Software, Inc (GWRE - Free Report) is slated to report third-quarter fiscal 2025 results tomorrow.
Management expects revenues to be in the range of $283-$289 million. The Zacks Consensus Estimate is pegged at $285.7 million, indicating an 18.7% increase from the prior-year quarter's level.
The consensus estimate for the bottom line is pegged at 46 cents, which remained unchanged in the past 60 days. GWRE reported earnings of 26 cents per share in the year-ago period.
Image Source: Zacks Investment Research
It delivered a trailing four-quarter earnings surprise of 40.2%, on average. Shares of GWRE have gained 96.1% in the past year compared with the Internet-Software industry’s growth of 35%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Factors to Note Ahead of GWRE’s Q3 Release
Guidewire’s performance is likely to have benefited from continued momentum in its cloud-based solutions. GWRE is expected to have benefited from secular tailwinds in the property & casualty insurance industry, especially as climate-driven catastrophes highlight the critical role of robust risk infrastructure.
Solid deal volume across all tiers (especially Tier 1 insurers) and increasing international momentum, especially in Asia Pacific and Europe, are other tailwinds. In the last reported quarter, Guidewire Cloud reported 12 deal wins. Out of these deals, four were for InsuranceSuite Cloud, one InsuranceNow deal and the remainder for one or two core X Center applications.
The company’s focus on enhancing the Guidewire Cloud platform with new capabilities is expected to have boosted sales of subscription-based solutions. Management expects subscription and support revenues of $178 million, with services revenues of $52 million. GWRE noted that sequential growth in subscription revenues will be modest due to three fewer calendar days in the third quarter.
The company has been expanding its partner ecosystem, including more than 500 cloud apps on Guidewire Marketplace and more than 10,500 certified professionals, to drive sustained activity and greater value from the platform.
Guidewire Software, Inc. Price and EPS Surprise
Guidewire Software, Inc. price-eps-surprise | Guidewire Software, Inc. Quote
For the third quarter of fiscal 2025, ARR is anticipated to be between $942 million and $947 million. We expect ARR to be $944.6 million.
GWRE’s efforts to drive cloud operations efficiency to boost cloud margins remain an additional tailwind. The company’s expectation for non-GAAP operating income is pinned in the range of $36-$42 million. Subscription and support non-GAAP gross margin is expected to remain strong at 68-69%, while services gross margins are guided at 10%.
We expect non-GAAP gross margin Subscription and support to be 68.7% while our estimate for non-GAAP operating income is pegged at $39 million, up 87.8% year over year.
Increasing investments in product enhancements, along with weakness in global macroeconomic conditions and inflation, remain concerning. License revenues are likely to have been affected owing to the migration of on-premise customers to the cloud.
What Our Model Says About GWRE Stock
Our proven model does not predict an earnings beat for GWRE this time around. 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. This is not the case here.
GWRE 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 better-ranked stocks that you may consider, as our model shows that these have the right combination of elements to beat on earnings this season.
Broadcom Inc. (AVGO - Free Report) is set to release quarterly numbers on June 5. It currently has an Earnings ESP of +1.27% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AVGO’s to-be-reported quarter’s earnings and revenues is pegged at $1.57 per share and $14.92 billion, respectively. Shares of AVGO have gained 83.1% in the past year.
Oxford Industries, Inc. (OXM - Free Report) presently has an Earnings ESP of +0.92% and a Zacks Rank #3. OXM is scheduled to report quarterly numbers on June 11. The Zacks Consensus Estimate for OXM’s to-be-reported quarter’s earnings and revenues is pegged at $1.82 per share and $385.2 million, respectively. Shares of OXM have lost 50.8% in the past year.
J.Jill, Inc. (JILL - Free Report) has an Earnings ESP of +1.71% and a Zacks Rank #3 at present. JILL is scheduled to report quarterly figures on June 11. The Zacks Consensus Estimate for JILL’s to-be-reported quarter’s earnings and revenues is pegged at 88 cents per share and $156.7 million, respectively. Shares of JILL have plunged 54.8% in the past year.