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GWRE's Q3 EPS surged 238.5% to $0.88, beating estimates by 91.3% and revenues were up 22% Y/Y.
Guidewire Cloud saw 17 new wins, including deals with Tier 1 and Tier 2 insurers.
FY25 revenue outlook raised to $1.178-$1.186B; ARR now expected to be in the band of $1.012-$1.022B.
Guidewire Software, Inc (GWRE - Free Report) reported non-GAAP earnings per share of 88 cents in third-quarter fiscal 2025 (ended April 30, 2025), up 238.5% year over year and beat the Zacks Consensus Estimate by 91.3%.
The company reported revenues of $293.5 million, up 22% year over year. Revenues beat the Zacks Consensus Estimate by 2.7%. The figure also surpassed the company’s guided range of $283-$289 million. This uptick was driven by solid sales activity.
Guidewire Cloud continued to gain momentum in the reported quarter with 17 deal wins. Out of these deals, 14 were for various InsuranceSuite Cloud applications and three InsuranceNow deals. It closed seven core system deals with Tier 1 insurers and three with Tier 2 insurers.
Guidewire Software, Inc. Price, Consensus and EPS Surprise
As of April 30, annual recurring revenues (“ARR”) were $960 million, up 15.9% year over year. GWRE now expects ARR for fiscal 2025 to be in the range of $1.012 billion to $1.022 billion (previous projection: $1-$1.01 billion).
Driven by strong revenue performance in the fiscal third quarter, GWRE expects total revenues for fiscal 2025 to be between $1.178 billion and $1.186 billion compared with earlier guidance of $1.164 billion to $1.174 billion. Subscription revenues are now forecasted to be $660 million, while subscription and support revenues are expected to be $724 million. Services revenues are expected to be approximately $215 million.
Non-GAAP operating income is estimated between $187 million and $195 million compared with $175-$185 million expected previously. Cash flow from operations is now anticipated to be in the range of $255-$275 million (earlier range: $230-$260 million).
Following the results, shares are up 11.4% in the pre-market trading session today. In the past year, shares of the company have gained 71.1% compared with the Internet Software industry’s growth of 35.6%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Image Source: Zacks Investment Research
GWRE’s Fiscal Q3 in Details
The subscription and support segment’s revenues (62% of total revenues) soared 32% from the year-ago quarter's level to $181.8 million.
License’s revenues (19.5%) were up 2% year over year to $57.2 million.
Services’ revenues (18.5%) jumped 17% year over year to $54.5 million.
Non-GAAP gross margin expanded to 65.5% from 62.6% on a year-over-year basis. The subscription and support segment’s gross margin increased to 70.6% from 65.6% on a year-over-year basis, attributed to higher-than-expected revenues and increases in cloud infrastructure platform efficiency, along with $4 million in credits received from its cloud service provider. Services’ non-GAAP gross margin was 12.9% against negative 10.3% in the year-ago quarter.
Total operating expenses increased 12.1% year over year to $178.2 million. Non-GAAP operating income was $46.1 million compared with $20.8 million in the year-ago quarter.
Financial Details of GWRE
As of April 30, 2025, cash and cash equivalents and short-term investments were $1,243.7 million compared with $1,412.4 million as of Jan. 31, 2025.
Driven by strong collections, GWRE generated $32.4 million in cash from operations in the quarter under discussion while free cash flow was nearly $27.8 million.
GWRE’s Fiscal Q4 Outlook
For the fourth quarter of fiscal 2025, revenues are expected in the range of $332-$340 million. Non-GAAP operating income is estimated in the range of $52-$60 million.
Recent Performance of Other Companies in the Same Space
CoreWeave (CRWV - Free Report) reported first-quarter 2025 loss per share of $1.49, which was much wider than a loss of 62 cents in the year-ago quarter. Adjusted net loss for the quarter was $149.6 million compared with a loss of $23.6 million a year ago. Revenues in the quarter were a record $981.6 million, which beat the Zacks Consensus Estimate by 15.2%. Total revenues jumped 420% year over year. The top-line performance was driven by increasing demand for AI-cloud infrastructure. CRWV highlighted that AI is forecasted to have a global economic impact of $20 trillion by 2030, while the total addressable market is anticipated to increase to $400 billion by 2028. Shares of CoreWeave have skyrocketed 195% in the past month.
Atlassian Corporation (TEAM - Free Report) reported third-quarter fiscal 2025 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Its non-GAAP earnings per share of 97 cents beat the Zacks Consensus Estimate by 7.8%. The figure jumped 9% from the year-ago quarter’s non-GAAP earnings of 89 cents per share. TEAM’s fiscal third-quarter revenues climbed 21.4% year over year to $1.36 billion and beat the Zacks Consensus Estimate by 0.72%. The top line was primarily driven by robust paid growth in Atlassian Government Cloud and Isolated Cloud, and momentum in AI-adoption. Shares of TEAM have inched up 1.4% in the past month.
Zoom Communications Inc’s. (ZM - Free Report) first-quarter fiscal 2026 adjusted earnings of $1.43 per share beat the Zacks Consensus Estimate by 10% and increased 5.93% year over year. Zoom’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.33%. Revenues of $1.175 billion beat the consensus mark by 0.89% and increased 2.93% year over year. Adjusting for foreign currency impact, revenues in constant currency were $1.18 billion, up 3.4% year over year. Shares of ZM are up 3.5% in the past month.
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Guidewire's Q3 Earnings & Revenues Beat Estimates, Stock Surges
Key Takeaways
Guidewire Software, Inc (GWRE - Free Report) reported non-GAAP earnings per share of 88 cents in third-quarter fiscal 2025 (ended April 30, 2025), up 238.5% year over year and beat the Zacks Consensus Estimate by 91.3%.
The company reported revenues of $293.5 million, up 22% year over year. Revenues beat the Zacks Consensus Estimate by 2.7%. The figure also surpassed the company’s guided range of $283-$289 million. This uptick was driven by solid sales activity.
Guidewire Cloud continued to gain momentum in the reported quarter with 17 deal wins. Out of these deals, 14 were for various InsuranceSuite Cloud applications and three InsuranceNow deals. It closed seven core system deals with Tier 1 insurers and three with Tier 2 insurers.
Guidewire Software, Inc. Price, Consensus and EPS Surprise
Guidewire Software, Inc. price-consensus-eps-surprise-chart | Guidewire Software, Inc. Quote
As of April 30, annual recurring revenues (“ARR”) were $960 million, up 15.9% year over year. GWRE now expects ARR for fiscal 2025 to be in the range of $1.012 billion to $1.022 billion (previous projection: $1-$1.01 billion).
Driven by strong revenue performance in the fiscal third quarter, GWRE expects total revenues for fiscal 2025 to be between $1.178 billion and $1.186 billion compared with earlier guidance of $1.164 billion to $1.174 billion. Subscription revenues are now forecasted to be $660 million, while subscription and support revenues are expected to be $724 million. Services revenues are expected to be approximately $215 million.
Non-GAAP operating income is estimated between $187 million and $195 million compared with $175-$185 million expected previously. Cash flow from operations is now anticipated to be in the range of $255-$275 million (earlier range: $230-$260 million).
Following the results, shares are up 11.4% in the pre-market trading session today. In the past year, shares of the company have gained 71.1% compared with the Internet Software industry’s growth of 35.6%. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
Image Source: Zacks Investment Research
GWRE’s Fiscal Q3 in Details
The subscription and support segment’s revenues (62% of total revenues) soared 32% from the year-ago quarter's level to $181.8 million.
License’s revenues (19.5%) were up 2% year over year to $57.2 million.
Services’ revenues (18.5%) jumped 17% year over year to $54.5 million.
Non-GAAP gross margin expanded to 65.5% from 62.6% on a year-over-year basis. The subscription and support segment’s gross margin increased to 70.6% from 65.6% on a year-over-year basis, attributed to higher-than-expected revenues and increases in cloud infrastructure platform efficiency, along with $4 million in credits received from its cloud service provider. Services’ non-GAAP gross margin was 12.9% against negative 10.3% in the year-ago quarter.
Total operating expenses increased 12.1% year over year to $178.2 million. Non-GAAP operating income was $46.1 million compared with $20.8 million in the year-ago quarter.
Financial Details of GWRE
As of April 30, 2025, cash and cash equivalents and short-term investments were $1,243.7 million compared with $1,412.4 million as of Jan. 31, 2025.
Driven by strong collections, GWRE generated $32.4 million in cash from operations in the quarter under discussion while free cash flow was nearly $27.8 million.
GWRE’s Fiscal Q4 Outlook
For the fourth quarter of fiscal 2025, revenues are expected in the range of $332-$340 million. Non-GAAP operating income is estimated in the range of $52-$60 million.
GWRE’s Zacks Rank
Guidewire currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Recent Performance of Other Companies in the Same Space
CoreWeave (CRWV - Free Report) reported first-quarter 2025 loss per share of $1.49, which was much wider than a loss of 62 cents in the year-ago quarter. Adjusted net loss for the quarter was $149.6 million compared with a loss of $23.6 million a year ago. Revenues in the quarter were a record $981.6 million, which beat the Zacks Consensus Estimate by 15.2%. Total revenues jumped 420% year over year. The top-line performance was driven by increasing demand for AI-cloud infrastructure. CRWV highlighted that AI is forecasted to have a global economic impact of $20 trillion by 2030, while the total addressable market is anticipated to increase to $400 billion by 2028. Shares of CoreWeave have skyrocketed 195% in the past month.
Atlassian Corporation (TEAM - Free Report) reported third-quarter fiscal 2025 results, wherein earnings and revenues beat the Zacks Consensus Estimate. Its non-GAAP earnings per share of 97 cents beat the Zacks Consensus Estimate by 7.8%. The figure jumped 9% from the year-ago quarter’s non-GAAP earnings of 89 cents per share. TEAM’s fiscal third-quarter revenues climbed 21.4% year over year to $1.36 billion and beat the Zacks Consensus Estimate by 0.72%. The top line was primarily driven by robust paid growth in Atlassian Government Cloud and Isolated Cloud, and momentum in AI-adoption. Shares of TEAM have inched up 1.4% in the past month.
Zoom Communications Inc’s. (ZM - Free Report) first-quarter fiscal 2026 adjusted earnings of $1.43 per share beat the Zacks Consensus Estimate by 10% and increased 5.93% year over year. Zoom’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.33%. Revenues of $1.175 billion beat the consensus mark by 0.89% and increased 2.93% year over year. Adjusting for foreign currency impact, revenues in constant currency were $1.18 billion, up 3.4% year over year. Shares of ZM are up 3.5% in the past month.