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Guidewire Announces Third Quarter Fiscal Year 2025 Financial Results

1. Guidewire reports Q3 revenue of $293.5 million, up 22% year-over-year. 2. Annual recurring revenue reaches $960 million, indicating robust growth. 3. Non-GAAP net income increases significantly to $75.2 million in Q3. 4. The company raises full-year fiscal 2025 targets due to strong performance. 5. Record cloud deals and industry events underline Guidewire's market leadership.

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FAQ

Why Very Bullish?

Strong revenue growth and profitability can elevate investor confidence, historically similar announcements have led to stock price increases.

How important is it?

Financial results exceeding expectations signal strong operational health, likely attracting more investors.

Why Long Term?

The increased ARR and revenue growth indicate sustainable performance, which positively impacts long-term valuations.

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SAN MATEO, Calif.--(BUSINESS WIRE)--Guidewire (NYSE: GWRE) today announced its financial results for the fiscal quarter ended April 30, 2025. “We delivered exceptional third-quarter results, highlighted by record Q3 sales activity and 17 cloud deals,” said Mike Rosenbaum, chief executive officer, Guidewire. “With Guidewire established as the clear worldwide leader in P&C core systems, we're increasing our market engagement activity, hosting our largest ever industry events in Paris, Tokyo, and Sydney, and our second annual Developer Summit in Bangalore, where we activated the industry's largest developer ecosystem.” “ARR, revenue, and operating income results all finished above the high end of our guidance ranges in the third fiscal quarter,” said Jeff Cooper, chief financial officer, Guidewire. “Based on this strong execution and our robust pipeline, we are raising our full-year fiscal 2025 targets, reinforcing our confidence in our growth trajectory and long-term value creation.” Third Quarter Fiscal Year 2025 Financial Highlights Revenue Total revenue for the third quarter of fiscal year 2025 was $293.5 million, an increase of 22% from the same quarter in fiscal year 2024. Subscription and support revenue was $181.8 million, an increase of 32%; license revenue was $57.2 million, an increase of 2%; and services revenue was $54.5 million, an increase of 17%, each as compared to the same quarter in fiscal year 2024. As of April 30, 2025, annual recurring revenue, or ARR, was $960 million, compared to $864 million as of July 31, 2024. ARR results for interim quarterly periods in fiscal year 2025 are based on actual currency rates at the end of fiscal year 2024, held constant throughout the year. Profitability GAAP income from operations was $4.5 million for the third quarter of fiscal year 2025, compared with GAAP loss from operations of $16.7 million for the same quarter in fiscal year 2024. Non-GAAP income from operations was $46.1 million for the third quarter of fiscal year 2025, compared with $20.8 million for the same quarter in fiscal year 2024. GAAP net income was $46.0 million for the third quarter of fiscal year 2025, compared with GAAP net loss of $5.5 million for the same quarter in fiscal year 2024. GAAP net income per share was $0.54, based on diluted weighted average shares outstanding of 85.9 million, compared to GAAP net loss per share of $0.07 for the same quarter in fiscal year 2024, based on diluted weighted average shares outstanding of 82.5 million. Non-GAAP net income was $75.2 million for the third quarter of fiscal year 2025, compared with $21.7 million for the same quarter in fiscal year 2024. Non-GAAP net income per share was $0.88, based on diluted weighted average shares outstanding of 85.9 million, compared with $0.26 for the same quarter in fiscal year 2024, based on diluted weighted average shares outstanding of 84.0 million. Liquidity and Capital Resources Guidewire had $1,243.7 million in cash, cash equivalents, and investments at April 30, 2025, compared to $1,129.5 million at July 31, 2024. The increase was primarily due to proceeds received from our October 2024 issuance of the convertible senior notes due 2029 (the “2029 Convertible Senior Notes”) and operating cash flow, partially offset by the settlement of the convertible senior notes due 2025 (the “2025 Convertible Senior Notes”) and the purchase of capped calls related to the 2029 Convertible Senior Notes. The 2025 Convertible Senior Notes matured on March 15, 2025. The Company fully settled the outstanding $179.1 million aggregate principal amount of the 2025 Convertible Senior Notes through aggregate cash payments totaling $180.2 million, which included related accrued interest of $1.1 million, and the gross issuance of 671,202 shares of common stock. The Company received 697,140 gross shares of common stock from the settlement of the capped calls related to the 2025 Convertible Senior Notes. These shares received offset the 671,202 shares issued to holders of the 2025 Convertible Senior Notes upon maturity. As a result, the Company received 25,938 net shares, which were retired, resulting in a small decrease in the Company’s shares outstanding. Business Outlook Guidewire is issuing the following outlook for the fourth quarter of fiscal year 2025 based on current expectations: Ending ARR between $1,012 million and $1,022 million Total revenue between $332 million and $340 million Operating income (loss) between $7 million and $15 million Non-GAAP operating income between $52 million and $60 million Guidewire is issuing the following updated outlook for fiscal year 2025 based on current expectations: Ending ARR between $1,012 million and $1,022 million Total revenue between $1,178 million and $1,186 million Operating income between $20 million and $28 million Non-GAAP operating income between $187 million and $195 million Operating cash flow between $255 million and $275 million Conference Call Information 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, and acquisition consideration holdback. 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 (loss) on sale of strategic investments, retirement of debt, and related tax effects of the non-GAAP adjustments. 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 nine months ended April 30, 2025, the recurring license and support or subscription contract value recognized as services revenue was $8.1 million. 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 insurers 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, and our future business momentum relating to our market leadership, sales activities, and financial performance expectations. 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, political uncertainties, tariffs, 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; errors or failures in our products or services, as well as service interruptions or failure of the third-party service providers we rely on; 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. (1)Amounts include stock-based compensation expense as follows: (1) During the nine months ended April 30, 2025, the Company recorded a $53.6 million loss on retirement of debt in other income (expense) comprised of $53.3 million loss on extinguishment and $0.3 million loss on the induced conversion of a portion of its convertible senior notes due March 2025. Prior to the first quarter of fiscal year 2025, there were no transactions similar to the retirement of debt in any periods presented on the condensed consolidated statements of operations. The following table summarizes our free cash flow for the periods indicated below:

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