Market Overview

Guidewire Software Announces Fourth Fiscal Quarter and Fiscal Year 2019 Financial Results

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Guidewire Software, Inc. (NYSE:GWRE), provider of the industry platform Property and Casualty ("P&C") insurers rely upon, today announced its financial results for the fourth fiscal quarter and fiscal year ended July 31, 2019.

"Our fourth quarter performance reflects growing P&C industry demand for core system modernization and an increasing preference for cloud-based deployments," said Marcus Ryu, co-founder and chairman of the board, Guidewire Software. "During the quarter, six insurers selected InsuranceSuite via Guidewire Cloud, representing a cross-section of the P&C industry, including insurers of multiple sizes and continents, and a mix of new and existing customers. Our strategic priority is to evolve and scale Guidewire Cloud to serve the operational and advanced analytic needs of the global P&C industry. With 65% of our new software sales in fiscal year 2019 from cloud products, we believe the industry is increasingly selecting Guidewire InsurancePlatform as its platform of choice."

"It's exciting to see the increasing demand and momentum for Guidewire Cloud offerings; earning the trust of industry leaders such as American Family Insurance, EMC Insurance Companies, and Gore Mutual Insurance marks a significant milestone for Guidewire and our industry," said Michael Rosenbaum, chief executive officer, Guidewire Software.

As of the first quarter of fiscal year 2019, Guidewire began reporting results under Accounting Standards Codification Topic 606, Revenue Recognition ("ASC 606"), using the modified retrospective method. Financial results for reporting periods prior to fiscal year 2019 are presented as previously disclosed in conformity with then existing guidance and as revised to reflect the restatement more fully described in Guidewire's Form 10-K/A for the year ended July 31, 2018, filed on June 3, 2019.

Fiscal Year 2019 Financial Highlights

Revenue

  • Total revenue for fiscal year 2019 was $719.5 million, an increase of 10% from fiscal year 2018. License and subscription revenue was $385.3 million, an increase of 25%; services revenue was $248.8 million, a decrease of 7%; and maintenance revenue was $85.4 million, an increase of 10%.

Profitability

  • GAAP income from operations was $1.5 million for fiscal year 2019, compared with a $15.6 million loss for fiscal year 2018.
  • Non-GAAP income from operations was $122.1 million for fiscal year 2019, compared with $101.5 million of non-GAAP income for fiscal year 2018.
  • GAAP net income was $20.7 million for fiscal year 2019, compared with a $26.7 million net loss for fiscal year 2018, which was adversely impacted by a net tax expense of $28.6 million in the second quarter of fiscal year 2018, as a result of the provisions of the Tax and Jobs Act (the "Tax Act") passed in December 2017. GAAP net income per share was $0.25, based on diluted weighted average shares outstanding of 82.7 million, compared with net loss per share of $0.34 for fiscal year 2018, based on diluted weighted average shares outstanding of 77.7 million.
  • Non-GAAP net income was $119.9 million for fiscal year 2019, compared with $85.1 million non-GAAP net income for fiscal year 2018. Non-GAAP net income per share was $1.45, based on diluted weighted average shares outstanding of 82.7 million, compared with net income per share of $1.07 for fiscal year 2018, based on diluted weighted average shares outstanding of 79.5 million.

Fourth Quarter Fiscal Year 2019 Financial Highlights

Revenue

  • Total revenue for the fourth quarter of fiscal year 2019 was $207.9 million, a decrease of 13% from the same quarter in fiscal year 2018. License and subscription revenue was $127.7 million, a decrease of 11%; services revenue was $58.3 million, a decrease of 23%; and maintenance revenue was $21.8 million, an increase of 6%.

Profitability

  • GAAP income from operations was $21.1 million for the fourth quarter of fiscal year 2019, compared with $48.1 million income for the comparable period in fiscal year 2018.
  • Non-GAAP income from operations was $51.1 million for the fourth quarter of fiscal year 2019, compared with $76.6 million of non-GAAP income for the comparable period in fiscal year 2018.
  • GAAP net income was $23.0 million for the fourth quarter of fiscal year 2019, compared with $58.8 million net income for the comparable period in fiscal year 2018. GAAP net income per share was $0.28, based on diluted weighted average shares outstanding of 82.9 million, compared with net income per share of $0.72 for the comparable period in fiscal year 2018, based on diluted weighted average shares outstanding of 82.2 million.
  • Non-GAAP net income was $46.3 million for the fourth quarter of fiscal year 2019, compared with $61.3 million non-GAAP net income for the comparable period in fiscal year 2018. Non-GAAP net income per share was $0.56, based on diluted weighted average shares outstanding of 82.9 million, compared with net income per share of $0.75 for the comparable period in fiscal year 2018, based on diluted weighted average shares outstanding of 82.2 million.

Liquidity

  • The Company had $1.3 billion in cash, cash equivalents, and investments at July 31, 2019 and 2018. The Company generated $116.1 million in cash from operations during the twelve months ended July 31, 2019.

Business Outlook

Guidewire is issuing the following outlook for the first fiscal quarter and fiscal year of 2020 based on current expectations:

 

(in $ millions, except per share outlook)

 

First Quarter Fiscal

Year 2020

 

Fiscal Year 2020

Revenue

 

149.0

-

153.0

 

759.0

-

771.0

License and subscription

 

78.0

-

80.0

 

443.0

-

455.0

Maintenance

 

19.0

-

20.0

 

85.0

-

87.0

Services

 

51.0

-

54.0

 

224.0

-

236.0

GAAP operating income (loss)

 

(33.8)

-

(29.8)

 

(41.4)

-

(29.4)

Non-GAAP operating income (loss)

 

(3.0)

-

1.0

 

96.0

-

108.0

GAAP net income (loss)

 

(26.5)

-

(23.4)

 

(30.7)

-

(21.7)

GAAP net income (loss) per share

 

(0.32)

-

(0.29)

 

(0.37)

-

(0.26)

Non-GAAP net income (loss)

 

0.6

-

4.0

 

92.4

-

102.3

Non-GAAP net income (loss) per share

 

0.01

-

0.05

 

1.10

-

1.22

 

Conference Call Information

What:

Guidewire Software Fourth Fiscal Quarter and Fiscal Year 2019 Financial Results Conference Call

When:

Thursday, September 5, 2019

Time:

2:00 p.m. PT (5:00 p.m. ET)

Live Call:

(877) 705-6003, Domestic

 

(201) 493-6725, International

Replay:

(844) 512-2921, Passcode 13693887, Domestic

 

(412) 317-6671, Passcode 13693887, International

Webcast:

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