Guidewire Software GWRE reported non-GAAP earnings per share (EPS) of 62 cents in fourth-quarter fiscal 2024 (ended July 31, 2024). The figure surpassed the Zacks Consensus Estimate by 19.2%. However, EPS declined 16% from the year-ago reported actuals.
The company reported revenues of $291.5 million, up 8% year over year. Revenues surpassed the Zacks Consensus Estimate by 3%. The figure also came ahead of the company’s guided range of $279-$287 million. The uptick was driven by solid deal volume across all tiers and increasing sales activity, especially in Asia Pacific and EMEA.
Guidewire Cloud continued to gain momentum in the reported quarter with 16 deal wins, taking the total cloud wins to 42 for the year. Out of these deals, 13 were for InsuranceSuite Cloud, bringing the total InsuranceSuite Cloud deals for the fiscal year to 37.
Guidewire Software, Inc. Price, Consensus and EPS Surprise
Guidewire Software, Inc. price-consensus-eps-surprise-chart | Guidewire Software, Inc. Quote
As of July 31, annual recurring revenues (ARR) were $872 million, up 14.3% year over year. GWRE added that the strong performance of the metric in fiscal 2024 positions the company to achieve its $1 billion ARR target by fiscal 2025.
For fiscal 2025, GWRE expects total revenues to be between $1.135 billion and $1.149 billion. Subscription revenues are forecasted to be $642 million, representing 34% year-over-year growth. ARR is expected to be in the range of $995-$1,005 million. Non-GAAP operating income is estimated to be between $157 million and $171 million. Cash flow from operations is now anticipated to be in the range of $220-$250 million.
Following the results, shares were up 6.6% in the pre-market trading on Sept. 6. In the past year, shares of the company have gained 69.7% compared with sub-industry’s growth of 23.7%.
Image Source: Zacks Investment Research
GWRE’s Fiscal Fourth Quarter in Details
Subscription and support segment’s revenues (52.1% of total revenues) soared 29.4% from the year-ago quarter's level to $151.8 million.
License’s revenues (30.5%) were down 12% year over year to $88.9 million.
Services’ revenues (17.4%) fell 2% year over year to $50.8 million.
Non-GAAP gross margin expanded to 67% from 64% on a year-over-year basis. The subscription and support segment’s gross margin increased to 66% from 57.8% on a year-over-year basis, attributed to increased cloud infrastructure efficiency. Services’ non-GAAP gross margin was 14.2% compared with 10.5% in the year-ago quarter.
Total operating expenses increased 11.8% year over year to $176.1 million. Non-GAAP operating income was $49 million compared with $44.7 million in the year-ago quarter.
Financial Details
As of July 31, 2024, cash and cash equivalents and short-term investments were $1,129.5 million compared with $934.2 million as of April 30.
GWRE generated $193.8 million in cash from operations in the quarter under review, with a free cash flow of nearly $189.4 million.
Outlook
Management expects typical seasonality to impact first-quarter ARR sequential performance.
For the first quarter of fiscal 2025, revenues are expected in the range of $251-$257 million. ARR is anticipated between $869 million and $874 million. Non-GAAP operating income is estimated in the range of $18-$24 million.
GWRE’s Zacks Rank & Stocks to Consider
Guidewire currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter BMI, Adobe ADBE and ANSYS ANSS, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Adobe’s fiscal 2024 EPS is pegged at $18.16, which remained unchanged in the past 30 days. ADBE’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 2.7%. The long-term earnings growth rate is 13%. Its shares have risen 1.3% in the past year. Adobe reported better-than-expected second-quarter 2024 results, with non-GAAP earnings and revenues (reported basis) registering year-over-year growth of 14.6% and 10%, respectively.
The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.96, which remained unchanged in the past 30 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed the mark once, the average surprise being 4.8%. Its shares have lost 2.7% in the past year. ANSS also reported better-than-expected second-quarter 2024 results, with non-GAAP earnings and revenues (reported basis) registering year-over-year growth of 56.3% and 20%, respectively.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $4.06, up 4.4% in the past 30 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%. Its shares have risen 18.3% in the past year.
In the last reported quarter, BMI’s quarterly net sales were $216.7 million, up 23% year over year. EPS of $1.12 topped the Zacks Consensus Estimate by 14.3% and compared favorably with the year-ago quarter’s figure of 76 cents.
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