Guidewire Announces Fourth Quarter and Fiscal Year 2024 Financial Results

Guidewire (NYSE: GWRE) today announced its financial results for the fiscal quarter and year ended July 31, 2024.

“We finished the year with record fourth quarter sales activity and fully ramped ARR growth of 19%,” said Mike Rosenbaum, chief executive officer, Guidewire. “We enter the new fiscal year positioned well to continue accelerating modernization programs in the P&C industry and delivering increasing value to P&C insurers' drive for greater agility and innovation.”

“The fourth quarter capped off a tremendous year and strong financial results,” said Jeff Cooper, chief financial officer, Guidewire. “The combination of fully ramped ARR growth and 20% cash flow from operations as a percent of revenue demonstrates the power and durability of our model.”

Fiscal Year 2024 Financial Highlights

Revenue

  • Total revenue for fiscal year 2024 was $980.5 million, an increase of 8% from fiscal year 2023. Subscription and support revenue was $549.1 million, an increase of 28%; license revenue was $250.2 million, a decrease of 6%; and services revenue was $181.2 million, a decrease of 14%, each compared to fiscal year 2023.
  • As of July 31, 2024, annual recurring revenue, or ARR, was $872 million based on currency exchange rates as of July 31, 2023, compared to $763 million as of July 31, 2023. We measure ARR on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates and, based on this revaluation to currency rates as of July 31, 2024, ARR was $864 million. ARR grew in fiscal year 2024 by 14% on a constant currency basis.

Profitability

  • GAAP loss from operations was $52.6 million for fiscal year 2024, compared with $149.5 million for fiscal year 2023.
  • Non-GAAP income from operations was $99.5 million for fiscal year 2024, compared with $11.7 million for fiscal year 2023.
  • GAAP net loss was $6.1 million for fiscal year 2024, compared with $111.9 million for fiscal year 2023. GAAP net loss per share was $0.07 for fiscal year 2024, based on diluted weighted average shares outstanding of 82.3 million, compared with $1.36 for fiscal year 2023, based on diluted weighted average shares outstanding of 82.2 million.
  • Non-GAAP net income was $114.5 million for fiscal year 2024, compared with $29.2 million for fiscal year 2023. Non-GAAP net income per share was $1.35 for fiscal year 2024, based on diluted weighted average shares outstanding of 87.4 million, compared with $0.35 for fiscal year 2023, based on diluted weighted average shares outstanding of 82.6 million.

Liquidity and Capital Resources

  • Guidewire had $1,129.5 million in cash, cash equivalents, and investments at July 31, 2024, compared to $927.5 million at July 31, 2023.
  • Guidewire generated $195.7 million in cash from operations during the fiscal year ended July 31, 2024.
  • During the fiscal year ended July 31, 2024, the Company did not repurchase any shares of common stock.

Fourth Quarter Fiscal Year 2024 Financial Highlights

Revenue

  • Total revenue for the fourth quarter of fiscal year 2024 was $291.5 million, an increase of 8% from the same quarter in fiscal year 2023. Subscription and support revenue was $151.8 million, an increase of 29%; license revenue was $88.9 million, a decrease of 12%; and services revenue was $50.8 million, a decrease of 2%, each as compared to the same quarter in fiscal year 2023.

Profitability

  • GAAP income from operations was $10.3 million for the fourth quarter of fiscal year 2024, compared with $6.1 million for the same quarter in fiscal year 2023.
  • Non-GAAP income from operations was $49.0 million for the fourth quarter of fiscal year 2024, compared with $44.7 million for the same quarter in fiscal year 2023.
  • GAAP net income was $16.8 million for the fourth quarter of fiscal year 2024, compared with $12.2 million for the same quarter in fiscal year 2023. GAAP net income per share was $0.20, based on diluted weighted average shares outstanding of 85.0 million, compared to $0.15 for the same quarter in fiscal year 2023, based on diluted weighted average shares outstanding of 82.1 million.
  • Non-GAAP net income was $54.0 million for the fourth quarter of fiscal year 2024, compared with $62.8 million for the same quarter in fiscal year 2023. Non-GAAP net income per share was $0.62, based on diluted weighted average shares outstanding of 88.5 million, compared to $0.74 for the same quarter in fiscal year 2023, based on diluted weighted average shares outstanding of 85.7 million.

Business Outlook

Guidewire is issuing the following outlook for the first quarter of fiscal year 2025 based on current expectations:

  • ARR between $869 million and $874 million
  • Total revenue between $251 million and $257 million
  • Operating loss between $18 million and $12 million
  • Non-GAAP operating income between $18 million and $24 million

Guidewire is issuing the following outlook for fiscal year 2025 based on current expectations:

  • ARR between $995 million and $1,005 million
  • Total revenue between $1,135 million and $1,149 million
  • Operating income (loss) between $(4) million and $10 million
  • Non-GAAP operating income between $157 million and $171 million
  • Operating cash flow between $220 million and $250 million

Conference Call Information

What:

 

Guidewire Fourth Quarter and Fiscal Year 2024 Financial Results Conference Call

When:

 

Thursday, September 5, 2024

Time:

 

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

Live Call:

 

(877) 704-4453, Domestic

Live Call:

 

(201) 389-0920, International

Replay:

 

(844) 512-2921, Passcode 13748399, Domestic

Replay

 

(412) 317-6671, Passcode 13748399, International

Webcast:

 

http://ir.guidewire.com/ (live and replay)

The webcast will be archived on Guidewire’s website (www.guidewire.com) for a period of three months.

Non-GAAP Financial Measures and Other Metrics

This press release contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP tax provision (benefit), non-GAAP net income (loss) per share, and free cash flow. Non-GAAP gross profit and non-GAAP income (loss) from operations exclude stock-based compensation, amortization of intangibles, acquisition consideration holdback, and net impact of assignment of lease agreement. Non-GAAP net income (loss) and non-GAAP tax provision (benefit) also exclude the amortization of debt issuance costs from our convertible senior notes, changes in fair value of strategic investments, gain on sale of strategic investments, and related tax effects of the non-GAAP adjustments. Additionally, non-GAAP net income (loss) per share includes shares from the conversion premium and excludes the tax-effected interest expense on convertible debt using the if-converted method. Free cash flow consists of net cash flow provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized software development costs. These non-GAAP measures enable us to analyze our financial performance without the effects of certain non-cash items such as amortization and stock-based compensation.

Annual recurring revenue (“ARR”) is used to quantify the annualized recurring value outlined in active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, support contracts, and hosting agreements based on customer contractual terms and invoicing activities for the current reporting period, which may not be the same as the timing and amount of revenue recognized. ARR reflects all fee changes due to contract renewals, non-renewals, expansion, cancellations, attrition, or renegotiations at a higher or lower fee arrangement that are effective as of the ARR reporting date. All components of the licensing and other arrangements that are not expected to recur (primarily perpetual licenses and professional services) are excluded from our ARR calculations. In some arrangements with multiple performance obligations, a portion of recurring license and support or subscription contract value is allocated to services revenue for revenue recognition purposes, but does not get allocated for purposes of calculating ARR. This revenue allocation generally only impacts the initial term of the contract. This means that if we increase arrangements with multiple performance obligations that include services at discounted rates, more of the total contract value would be recognized as services revenue, but our reported ARR amount would not be impacted. During the twelve months ended July 31, 2024, the recurring license and support or subscription contract value recognized as services revenue was $10.7 million. Fully ramped annual recurring revenue (“fully ramped ARR”) is used to quantify the annualized recurring value outlined in active customer contracts including all non-variable price increases outlined in the pricing schedule of an executed customer contract within the first five years.

Guidewire believes that these non-GAAP financial measures and other metrics provide useful information to management and investors regarding certain financial and business trends relating to Guidewire’s financial condition and results of operations. Guidewire’s management uses these non-GAAP measures and other metrics to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation, and for budgeting and planning purposes. Guidewire believes that the use of these non-GAAP financial measures and other metrics provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing Guidewire’s financial measures with other software companies, many of which present similar non-GAAP financial measures and other metrics to investors.

Guidewire’s management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in Guidewire’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Guidewire urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including the financial tables at the end of this press release, and not to rely on any single financial measure to evaluate Guidewire’s business.

About Guidewire

Guidewire is the platform P&C insurers trust to engage, innovate, and grow efficiently. More than 570 insurance brands in 42 countries, from new ventures to the largest and most complex in the world, rely on Guidewire products. With core systems leveraging data and analytics, digital, and artificial intelligence, Guidewire defines cloud platform excellence for P&C insurers.

We are proud of our unparalleled implementation record, with 1,700+ successful projects supported by the industry’s largest R&D team and SI partner ecosystem. Our marketplace represents the largest solution partner community in P&C, where customers can access hundreds of applications to accelerate integration, localization, and innovation.

Guidewire uses its Investor Relations website (ir.guidewire.com), X (formerly known as Twitter) feed (@Guidewire_PandC), and LinkedIn page (www.linkedin.com/company/guidewire-software) as a means of disclosing information about the company and for complying with its disclosure obligations under Regulation FD. The information that is posted through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to Guidewire’s press releases, filings with the Securities and Exchange Commission, public conference calls, and webcasts.

NOTE: For information about Guidewire’s trademarks, visit www.guidewire.com/legal-notices.

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook and targets, our future business momentum relating to our product leadership, cloud deals, and profitability expectations, and our associated business plan, vision and strategy. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Guidewire’s control. Guidewire’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Guidewire’s most recent Forms 10-K and 10-Q filed with the Securities and Exchange Commission (the “SEC”) as well as other documents that may be filed by Guidewire from time to time with the SEC. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: quarterly and annual operating results may fluctuate more than expected; seasonal and other variations related to our customer agreements and related revenue recognition may cause significant fluctuations in our results of operations, ARR, and cash flows; our reliance on sales to and renewals from a relatively small number of large customers for a substantial portion of our revenue and ARR; our making long-term pricing commitments in our customer contracts based on available information and estimates about our future costs that may change; our ability to successfully manage our business model, including achieving market acceptance of our cloud-based services and products and the costs related to cloud operations, cybersecurity, product development, and services; the timing, success, and number of professional services engagements and the billing rates and utilization of our professional services employees and contractors; the impact of global events (including, without limitation, ongoing global conflicts, inflation, high interest rates, economic volatility, bank failures and associated financial instability, and supply chain issues) on our employees, our business, and the businesses of our customers, system integrator (“SI”) partners, and vendors; data security breaches of our cloud-based services and products or unauthorized access to our employees’ or our customers’ data; our competitive environment and changes thereto; issues in the development and use of AI and machine learning, combined with an uncertain regulatory environment; use of AI by our workforce may present risks to our business; our services revenue produces lower gross margins than our license, subscription and support revenue; our product development and sales cycles are lengthy and may be affected by factors outside of our control; the impact of new regulations and laws (including, without limitation, security, privacy, AI and machine learning, tax regulations and laws, and accounting standards); assertions by third parties that we violate their intellectual property rights; weakened global economic conditions may adversely affect the P&C insurance industry, including the rate of information technology spending; our ability to sell our services and products is highly dependent on the quality of our professional services and SI partners; the risk of losing key employees; the challenges of international operations, including changes in foreign exchange rates; and other risks and uncertainties. Past performance is not indicative of future results. The forward-looking statements included in this press release represent Guidewire’s views as of the date of this press release. Guidewire anticipates that subsequent events and developments will cause its views to change. Guidewire undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Guidewire’s views as of any date subsequent to the date of this press release.

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

 

 

 

 

 

July 31,

2024

 

July 31,

2023

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

547,992

 

 

$

401,813

 

Short-term investments

 

455,576

 

 

 

396,872

 

Accounts receivable, net

 

137,339

 

 

 

151,034

 

Unbilled accounts receivable, net

 

87,031

 

 

 

87,752

 

Prepaid expenses and other current assets

 

67,596

 

 

 

62,132

 

Total current assets

 

1,295,534

 

 

 

1,099,603

 

Long-term investments

 

125,885

 

 

 

128,782

 

Unbilled accounts receivable, net

 

4,157

 

 

 

11,112

 

Property and equipment, net

 

55,409

 

 

 

54,499

 

Operating lease assets

 

43,750

 

 

 

52,373

 

Intangible assets, net

 

9,005

 

 

 

14,473

 

Goodwill

 

372,214

 

 

 

372,214

 

Deferred tax assets, net

 

253,085

 

 

 

226,875

 

Other assets

 

67,255

 

 

 

67,957

 

TOTAL ASSETS

$

2,226,294

 

 

$

2,027,888

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

15,209

 

 

$

34,627

 

Accrued employee compensation

 

109,084

 

 

 

103,980

 

Deferred revenue, net

 

281,855

 

 

 

206,923

 

Convertible senior notes, net

 

398,903

 

 

 

 

Other current liabilities

 

32,584

 

 

 

27,731

 

Total current liabilities

 

837,635

 

 

 

373,261

 

Lease liabilities

 

34,721

 

 

 

42,972

 

Convertible senior notes, net

 

 

 

 

397,171

 

Deferred revenue, net

 

3,628

 

 

 

5,988

 

Other liabilities

 

7,578

 

 

 

9,030

 

Total liabilities

 

883,562

 

 

 

828,422

 

STOCKHOLDERS’ EQUITY:

 

 

 

Common stock

 

8

 

 

 

8

 

Additional paid-in capital

 

1,979,021

 

 

 

1,831,267

 

Accumulated other comprehensive income (loss)

 

(12,244

)

 

 

(13,859

)

Retained earnings (accumulated deficit)

 

(624,053

)

 

 

(617,950

)

Total stockholders’ equity

 

1,342,732

 

 

 

1,199,466

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,226,294

 

 

$

2,027,888

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands except share and per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

Revenue:

 

 

 

 

 

 

 

Subscription and support

$

151,848

 

 

$

117,346

 

 

$

549,087

 

 

$

429,667

 

License

 

88,858

 

 

 

100,924

 

 

 

250,176

 

 

 

265,593

 

Services

 

50,809

 

 

 

51,688

 

 

 

181,234

 

 

 

210,081

 

Total revenue

 

291,515

 

 

 

269,958

 

 

 

980,497

 

 

 

905,341

 

Cost of revenue(1):

 

 

 

 

 

 

 

Subscription and support

 

55,621

 

 

 

53,611

 

 

 

204,794

 

 

 

210,507

 

License

 

997

 

 

 

1,527

 

 

 

4,536

 

 

 

6,488

 

Services

 

48,461

 

 

 

51,142

 

 

 

187,806

 

 

 

230,135

 

Total cost of revenue

 

105,079

 

 

 

106,280

 

 

 

397,136

 

 

 

447,130

 

Gross profit:

 

 

 

 

 

 

 

Subscription and support

 

96,227

 

 

 

63,735

 

 

 

344,293

 

 

 

219,160

 

License

 

87,861

 

 

 

99,397

 

 

 

245,640

 

 

 

259,105

 

Services

 

2,348

 

 

 

546

 

 

 

(6,572

)

 

 

(20,054

)

Total gross profit

 

186,436

 

 

 

163,678

 

 

 

583,361

 

 

 

458,211

 

Operating expenses(1):

 

 

 

 

 

 

 

Research and development

 

75,320

 

 

 

66,819

 

 

 

269,381

 

 

 

249,746

 

Sales and marketing

 

54,784

 

 

 

50,111

 

 

 

199,033

 

 

 

188,224

 

General and administrative

 

46,018

 

 

 

40,653

 

 

 

167,520

 

 

 

169,731

 

Total operating expenses

 

176,122

 

 

 

157,583

 

 

 

635,934

 

 

 

607,701

 

Income (loss) from operations

 

10,314

 

 

 

6,095

 

 

 

(52,573

)

 

 

(149,490

)

Interest income

 

11,751

 

 

 

7,732

 

 

 

43,478

 

 

 

24,389

 

Interest expense

 

(1,677

)

 

 

(1,682

)

 

 

(6,738

)

 

 

(6,716

)

Other income (expense), net

 

(1,504

)

 

 

3,612

 

 

 

(11,005

)

 

 

(2,277

)

Income (loss) before provision for (benefit from) income taxes

 

18,884

 

 

 

15,757

 

 

 

(26,838

)

 

 

(134,094

)

Provision for (benefit from) income taxes

 

2,125

 

 

 

3,537

 

 

 

(20,735

)

 

 

(22,239

)

Net income (loss)

$

16,759

 

 

$

12,220

 

 

$

(6,103

)

 

$

(111,855

)

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

0.20

 

 

$

0.15

 

 

$

(0.07

)

 

$

(1.36

)

Diluted

$

0.20

 

 

$

0.15

 

 

$

(0.07

)

 

$

(1.36

)

Shares used in computing net income (loss) per share:

 

 

 

 

 

 

 

Basic

 

82,845,815

 

 

 

81,490,213

 

 

 

82,291,483

 

 

 

82,176,629

 

Diluted

 

84,956,655

 

 

 

82,135,106

 

 

 

82,291,483

 

 

 

82,176,629

 

(1)Amounts include stock-based compensation expense as follows:

 

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

Stock-based compensation expense:

 

 

 

 

 

 

 

Cost of subscription and support revenue

$

3,366

 

$

3,585

 

$

13,425

 

$

14,073

Cost of license revenue

 

38

 

 

104

 

 

186

 

 

463

Cost of services revenue

 

4,852

 

 

4,880

 

 

19,013

 

 

19,257

Research and development

 

10,086

 

 

10,189

 

 

40,213

 

 

39,865

Sales and marketing

 

9,322

 

 

7,582

 

 

34,590

 

 

29,925

General and administrative

 

9,622

 

 

10,208

 

 

39,033

 

 

39,259

Total stock-based compensation expense

$

37,286

 

$

36,548

 

$

146,460

 

$

142,842

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income (loss)

$

16,759

 

 

$

12,220

 

 

$

(6,103

)

 

$

(111,855

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

5,784

 

 

 

4,927

 

 

 

22,309

 

 

 

24,838

 

Amortization of debt discount and issuance costs

 

436

 

 

 

429

 

 

 

1,732

 

 

 

1,703

 

Amortization of contract costs

 

4,947

 

 

 

4,966

 

 

 

17,816

 

 

 

17,966

 

Stock-based compensation

 

37,286

 

 

 

36,548

 

 

 

146,460

 

 

 

142,842

 

Changes to allowance for credit losses and revenue reserves

 

668

 

 

 

173

 

 

 

526

 

 

 

(131

)

Deferred income tax

 

2,447

 

 

 

3,518

 

 

 

(26,847

)

 

 

(27,516

)

Amortization of premium (accretion of discount) on available-for-sale securities, net

 

(3,402

)

 

 

(2,400

)

 

 

(12,894

)

 

 

(4,858

)

Gain on sale of strategic investment

 

(45

)

 

 

 

 

 

(1,803

)

 

 

 

Changes in fair value of strategic investments

 

2,255

 

 

 

802

 

 

 

1,957

 

 

 

802

 

Accelerated depreciation related to lease assignment

 

 

 

 

 

 

 

 

 

 

26,921

 

Gain from lease assignment

 

 

 

 

 

 

 

 

 

 

(18,419

)

Other non-cash items affecting net income (loss)

 

 

 

 

479

 

 

 

(74

)

 

 

164

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(33,645

)

 

 

(22,057

)

 

 

12,631

 

 

 

(7,301

)

Unbilled accounts receivable

 

41,631

 

 

 

43,843

 

 

 

7,676

 

 

 

(13,435

)

Prepaid expenses and other assets

 

(11,452

)

 

 

(9,895

)

 

 

(33,534

)

 

 

(22,613

)

Operating lease assets

 

2,517

 

 

 

(7,652

)

 

 

8,623

 

 

 

(19,000

)

Accounts payable

 

(8,395

)

 

 

645

 

 

 

(18,933

)

 

 

(6,080

)

Accrued employee compensation

 

32,057

 

 

 

30,832

 

 

 

6,453

 

 

 

12,440

 

Deferred revenue

 

100,584

 

 

 

63,995

 

 

 

72,572

 

 

 

34,635

 

Lease liabilities

 

(2,253

)

 

 

8,595

 

 

 

(7,389

)

 

 

9,548

 

Other liabilities

 

5,598

 

 

 

3,269

 

 

 

4,570

 

 

 

(2,256

)

Net cash provided by (used in) operating activities

 

193,777

 

 

 

173,237

 

 

 

195,748

 

 

 

38,395

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

(162,494

)

 

 

(147,292

)

 

 

(615,935

)

 

 

(506,115

)

Maturities and sales of available-for-sale securities

 

160,587

 

 

 

164,875

 

 

 

576,886

 

 

 

547,094

 

Purchases of property and equipment

 

(1,694

)

 

 

(3,207

)

 

 

(6,362

)

 

 

(5,821

)

Capitalized software development costs

 

(2,736

)

 

 

(2,729

)

 

 

(12,165

)

 

 

(11,606

)

Acquisition of strategic investments

 

(1,000

)

 

 

(2,789

)

 

 

(1,336

)

 

 

(10,840

)

Sale of strategic investment

 

45

 

 

 

 

 

 

6,553

 

 

 

 

Net cash provided by (used in) investing activities

 

(7,292

)

 

 

8,858

 

 

 

(52,359

)

 

 

12,712

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

1,041

 

 

 

1

 

 

 

1,055

 

 

 

228

 

Repurchase and retirement of common stock

 

 

 

 

(47,814

)

 

 

 

 

 

(261,807

)

Net cash provided by (used in) financing activities

 

1,041

 

 

 

(47,813

)

 

 

1,055

 

 

 

(261,579

)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

 

865

 

 

 

917

 

 

 

(2,050

)

 

 

2,576

 

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

188,391

 

 

 

135,199

 

 

 

142,394

 

 

 

(207,896

)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period

 

360,793

 

 

 

271,591

 

 

 

406,790

 

 

 

614,686

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period

$

549,184

 

 

$

406,790

 

 

$

549,184

 

 

$

 

406,790

 

 

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Financial Measures

(unaudited, in thousands)

 

 

 

 

 

 

 

 

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:

 

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

Gross profit reconciliation:

 

 

 

 

 

 

 

GAAP gross profit

$

186,436

 

 

$

163,678

 

 

$

583,361

 

 

$

458,211

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

8,256

 

 

 

8,569

 

 

 

32,624

 

 

 

33,793

 

Amortization of intangibles

 

485

 

 

 

485

 

 

 

1,940

 

 

 

3,360

 

Non-GAAP gross profit

$

195,177

 

 

$

172,732

 

 

$

617,925

 

 

$

495,364

 

 

 

 

 

 

 

 

 

Income (loss) from operations reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

10,314

 

 

$

6,095

 

 

$

(52,573

)

 

$

(149,490

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

37,286

 

 

 

36,548

 

 

 

146,460

 

 

 

142,842

 

Amortization of intangibles

 

1,367

 

 

 

1,367

 

 

 

5,468

 

 

 

6,888

 

Acquisition consideration holdback

 

 

 

 

730

 

 

 

143

 

 

 

2,939

 

Net impact of assignment of lease agreement (1)

 

 

 

 

 

 

 

 

 

 

8,502

 

Non-GAAP income (loss) from operations

$

48,967

 

 

$

44,740

 

 

$

99,498

 

 

$

11,681

 

 

 

 

 

 

 

 

 

Net income (loss) reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss)

$

16,759

 

 

$

12,220

 

 

$

(6,103

)

 

$

(111,855

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

37,286

 

 

 

36,548

 

 

 

146,460

 

 

 

142,842

 

Amortization of intangibles

 

1,367

 

 

 

1,367

 

 

 

5,468

 

 

 

6,888

 

Acquisition consideration holdback

 

 

 

 

730

 

 

 

143

 

 

 

2,939

 

Net impact of assignment of lease agreement (1)

 

 

 

 

 

 

 

 

 

 

8,502

 

Amortization of debt issuance costs

 

436

 

 

 

429

 

 

 

1,732

 

 

 

1,703

 

Changes in fair value of strategic investment

 

2,255

 

 

 

802

 

 

 

1,957

 

 

 

802

 

Gain on sale of strategic investment (2)

 

(45

)

 

 

 

 

 

(1,803

)

 

 

 

Tax impact of non-GAAP adjustments

 

(4,044

)

 

 

10,698

 

 

 

(33,333

)

 

 

(22,611

)

Non-GAAP net income (loss)

$

54,014

 

 

$

62,794

 

 

$

114,521

 

 

$

29,210

 

 

 

 

 

 

 

 

 

Tax provision (benefit) reconciliation:

 

 

 

 

 

 

 

GAAP tax provision (benefit)

$

2,125

 

 

$

3,537

 

 

$

(20,735

)

 

$

(22,239

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

3,822

 

 

 

(4,705

)

 

 

13,930

 

 

 

92,849

 

Amortization of intangibles

 

140

 

 

 

(176

)

 

 

520

 

 

 

4,677

 

Acquisition consideration holdback

 

 

 

 

(94

)

 

 

25

 

 

 

1,924

 

Net impact of assignment of lease agreement (1)

 

 

 

 

 

 

 

 

 

 

3,196

 

Amortization of debt issuance costs

 

45

 

 

 

(55

)

 

 

165

 

 

 

1,105

 

Changes in fair value of strategic investment

 

231

 

 

 

(103

)

 

 

208

 

 

 

(103

)

Gain on sale of strategic investment (2)

 

(5

)

 

 

 

 

 

(196

)

 

 

 

Tax impact of non-GAAP adjustments

 

(189

)

 

 

(5,565

)

 

 

18,681

 

 

 

(81,037

)

Non-GAAP tax provision (benefit)

$

6,169

 

 

$

(7,161

)

 

$

12,598

 

 

$

372

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Financial Measures

(unaudited, in thousands except share and per share data)

 

 

 

 

 

 

 

 

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:

 

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

Net income (loss) per share reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss) per share – diluted

$

0.20

 

 

$

0.15

 

 

$

(0.07

)

 

$

(1.36

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

0.44

 

 

 

0.44

 

 

 

1.78

 

 

 

1.74

 

Amortization of intangibles

 

0.02

 

 

 

0.02

 

 

 

0.07

 

 

 

0.08

 

Acquisition consideration holdback

 

 

 

 

0.01

 

 

 

(0.01

)

 

 

0.04

 

Net impact of assignment of lease agreement (1)

 

 

 

 

 

 

 

 

 

 

0.10

 

Amortization of debt issuance costs

 

0.01

 

 

 

 

 

 

0.02

 

 

 

0.02

 

Changes in fair value of strategic investment

 

0.03

 

 

 

0.01

 

 

 

0.02

 

 

 

0.01

 

Gain on sale of strategic investment (2)

 

 

 

 

 

 

 

(0.02

)

 

 

 

Tax impact of non-GAAP adjustments

 

(0.06

)

 

 

0.13

 

 

 

(0.41

)

 

 

(0.28

)

Interest expense on convertible debt (3)

 

0.01

 

 

 

0.01

 

 

 

0.05

 

 

 

 

Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation

 

(0.03

)

 

 

(0.03

)

 

 

(0.08

)

 

 

 

Non-GAAP net income (loss) per share – diluted

$

0.62

 

 

$

0.74

 

 

$

1.35

 

 

$

0.35

 

 

 

 

 

 

 

 

 

Shares used in computing Non-GAAP net income (loss) per share amounts:

 

 

 

 

 

 

 

GAAP weighted average shares – diluted

 

84,956,656

 

 

 

82,135,106

 

 

 

82,291,483

 

 

 

82,176,629

 

Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation

 

3,516,480

 

 

 

3,516,480

 

 

 

5,072,080

 

 

 

466,516

 

Pro forma weighted average shares — diluted

 

88,473,136

 

 

 

85,651,586

 

 

 

87,363,563

 

 

 

82,643,145

 

(1) During the three months ended April 31, 2023, the Company recorded in general and administrative expenses a net loss of $8.5 million related to the assignment of the lease agreement for the remaining lease term of the Company’s previous headquarters. The loss is comprised of an $18.4 million gain from the de-recognition of the operating lease asset of $56.9 million, the de-recognition of the lease liability of $75.5 million, and other expenses related to the lease assignment of $0.2 million, offset by accelerated depreciation expense related to property and equipment, primarily consisting of leasehold improvements, at the previous headquarters of $26.9 million. Prior to the third quarter of fiscal year 2023, there were no transactions similar to the lease assignment in any periods presented.

 

(2) During the three months ended January 31, 2024, one of Guidewire’s strategic investments was acquired by a privately-held limited partnership. As a result, Guidewire received $12.1 million in consideration for its equity interest in the investee, composed of $6.5 million in cash and $5.6 million of an ownership interest in the privately-held limited partnership, and recognized a $1.8 million gain in excess of cost in other income (expense), net. Prior to the second quarter of fiscal year 2024, there were no transactions similar to the gain on sale of strategic investment in any periods presented.

 

(3) During the periods presented, the Company's Convertible Notes were dilutive due to non-GAAP net income. Accordingly, interest expense related to the Convertible Notes was excluded from non-GAAP net income (loss) per share calculation under the “if-converted” method.

The following table summarizes our free cash flow for the periods indicated below:

 

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2024

 

2023

 

2024

 

2023

Free cash flow:

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$

193,777

 

 

$

173,237

 

 

$

195,748

 

 

$

38,395

 

Purchases of property and equipment

 

(1,694

)

 

 

(3,207

)

 

 

(6,362

)

 

 

(5,821

)

Capitalized software development costs

 

(2,736

)

 

 

(2,729

)

 

 

(12,165

)

 

 

(11,606

)

Free cash flow

$

189,347

 

 

$

167,301

 

 

$

177,221

 

 

$

20,968

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Outlook

The following table reconciles the specific items excluded from GAAP outlook in the calculation of non-GAAP outlook for the periods indicated below (in millions):

 

First Quarter

Fiscal Year 2025

 

Fiscal Year 2025

Income (loss) from operations outlook reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$(18)

$(12)

 

$(4)

$10

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

35

35

 

156

156

Amortization of intangibles

1

1

 

5

5

Non-GAAP income (loss) from operations

$18

$24

 

$157

$171

 

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