Financial News

Guidewire Announces Second Quarter Fiscal Year 2024 Financial Results

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

“Our strong performance in the second quarter was marked by eleven cloud deals, including a healthy mix of migrations, expansions, and net-new customers,” said Mike Rosenbaum, chief executive officer, Guidewire. “The enthusiasm and interest we’ve seen around Guidewire Cloud Platform is testament to our team’s hard work and our commitment to innovation and excellence.”

“We are pleased with the continued cloud momentum, enabling us to beat and raise our ARR outlook and deliver 65% non-GAAP subscription and support gross margins in the quarter,” said Jeff Cooper, chief financial officer, Guidewire. “Our fiscal year 2024 revenue outlook change is due to lower expected services revenue, as we are seeing success with our SI partners leading more cloud engagements at a pace that is faster than we originally expected. We are maintaining our profitability outlook as strong subscription and support gross margin and operating expense discipline offset the impact of lower services revenue.”

Second Quarter Fiscal Year 2024 Financial Highlights

Revenue

  • Total revenue for the second quarter of fiscal year 2024 was $240.9 million, an increase of 4% from the same quarter in fiscal year 2023. Subscription and support revenue was $131.6 million, an increase of 24%; services revenue was $38.2 million, a decrease of 29%; and license revenue was $71.1 million, a decrease of 3%, each as compared to the same quarter in fiscal year 2023.
  • As of January 31, 2024, annual recurring revenue, or ARR, was $800 million, compared to $763 million as of July 31, 2023. ARR results for interim quarterly periods in fiscal year 2024 are based on actual currency rates at the end of fiscal year 2023, held constant throughout the year.

Profitability

  • GAAP loss from operations was $12.4 million for the second quarter of fiscal year 2024, compared with GAAP loss from operations of $23.2 million for the same quarter in fiscal year 2023.
  • Non-GAAP income from operations was $25.7 million for the second quarter of fiscal year 2024, compared with non-GAAP income from operations of $15.1 million for the same quarter in fiscal year 2023.
  • GAAP net income was $9.7 million for the second quarter of fiscal year 2024, compared with GAAP net loss of $9.2 million for the same quarter in fiscal year 2023. GAAP net income per share was $0.12, based on diluted weighted average shares outstanding of 83.3 million, compared to a GAAP net loss per share of $0.11 for the same quarter in fiscal year 2023, based on diluted weighted average shares outstanding of 82.1 million.
  • Non-GAAP net income was $39.1 million for the second quarter of fiscal year 2024, compared with non-GAAP net loss of $17.4 million for the same quarter in fiscal year 2023. Non-GAAP net income per share was $0.46, based on diluted weighted average shares outstanding of 86.8 million, compared to a non-GAAP net loss per share of $0.21 for the same quarter in fiscal year 2023, based on diluted weighted average shares outstanding of 82.1 million.

Liquidity and Capital Resources

  • Guidewire had $932.7 million in cash, cash equivalents, and investments at January 31, 2024, compared to $927.5 million at July 31, 2023. Guidewire used $2.8 million in cash from operations during the six months ended January 31, 2024.

Business Outlook

Guidewire is issuing the following outlook for the third quarter of fiscal year 2024 based on current expectations:

  • ARR between $815 million and $820 million
  • Total revenue between $228 million and $234 million
  • Operating loss between $(34) million and $(28) million
  • Non-GAAP operating income between $4 million and $10 million

Guidewire is updating the outlook for fiscal year 2024 based on current expectations as follows:

  • ARR between $852 million and $862 million
  • Total revenue between $957 million and $967 million
  • Operating loss between $(71) million and $(61) million
  • Non-GAAP operating income between $82 million and $92 million
  • Operating cash flow between $120 million and $140 million

Conference Call Information

What:

Guidewire Second Quarter Fiscal Year 2024 Financial Results Conference Call

When:

Thursday, March 7, 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 13744052, Domestic

Replay

(412) 317-6671, Passcode 13744052, 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, 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, gain on sale of strategic investment, and the related tax effects of the non-GAAP adjustments. Additionally, Non-GAAP net income (loss) per share excludes the interest expense on convertible debt. 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 only impacts the initial term of the contract. This means that as we increase arrangements with multiple performance obligations that include services at discounted rates, more of the total contract value will be recognized as services revenue, but our reported ARR amount will not be impacted. During the six months ended January 31, 2024, the recurring license and support or subscription contract value recognized as services revenue was $5.2 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. We combine digital, core, analytics, and machine learning to deliver our platform as a cloud service. More than 540 insurers in 40 countries, from new ventures to the largest and most complex in the world, run on Guidewire.

As a partner to our customers, we continually evolve to enable their success. We are proud of our unparalleled implementation track record, with more than 1,600 successful projects, supported by the largest R&D team and partner ecosystem in the industry. Our marketplace provides hundreds of applications that accelerate integration, localization, and innovation.

For more information, please visit www.guidewire.com and follow us on X (formerly known as Twitter) @Guidewire_PandC and LinkedIn.

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 and cloud deals, 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 as well as other documents that may be filed by Guidewire from time to time with the Securities and Exchange Commission. 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 ability to successfully manage any changes to our business model, including the transition of our products to cloud offerings and the costs related to cloud operations and security; the timing, success, and number of professional services engagements and the billing rates and utilization of our professional services employees and contractors; recent global events (including, without limitation, the ongoing wars between Israel and Hamas and between Russia and Ukraine, escalating tensions in the South China Sea, high inflation, global pandemics, bank failures and associated financial instability and crises, and supply chain issues) and their impact on our employees and our business and the businesses of our customers, system integrator (“SI”) partners, and vendors; data security breaches of our cloud-based services or products or unauthorized access to our or our customers’ data; our competitive environment and changes thereto; issues in the development and use of artificial intelligence and machine learning combined with an uncertain regulatory environment; 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, artificial intelligence 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; general political or destabilizing events, including war, conflict or acts of terrorism; our ability to sell our 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 in countries such as Argentina; 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)

 

 

 

 

 

January 31,

2024

 

July 31,

2023

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

349,989

 

 

$

401,813

 

Short-term investments

 

427,634

 

 

 

396,872

 

Accounts receivable, net

 

128,242

 

 

 

151,034

 

Unbilled accounts receivable, net

 

90,966

 

 

 

87,752

 

Prepaid expenses and other current assets

 

63,799

 

 

 

62,132

 

Total current assets

 

1,060,630

 

 

 

1,099,603

 

Long-term investments

 

155,061

 

 

 

128,782

 

Unbilled accounts receivable, net

 

6,796

 

 

 

11,112

 

Property and equipment, net

 

55,109

 

 

 

54,499

 

Operating lease assets

 

48,327

 

 

 

52,373

 

Intangible assets, net

 

11,739

 

 

 

14,473

 

Goodwill

 

372,214

 

 

 

372,214

 

Deferred tax assets, net

 

243,424

 

 

 

226,875

 

Other assets

 

60,220

 

 

 

67,957

 

TOTAL ASSETS

$

2,013,520

 

 

$

2,027,888

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

21,999

 

 

$

34,627

 

Accrued employee compensation

 

62,669

 

 

 

103,980

 

Deferred revenue, net

 

195,083

 

 

 

206,923

 

Other current liabilities

 

27,325

 

 

 

27,731

 

Total current liabilities

 

307,076

 

 

 

373,261

 

Lease liabilities

 

39,074

 

 

 

42,972

 

Convertible senior notes, net

 

398,033

 

 

 

397,171

 

Deferred revenue, net

 

4,072

 

 

 

5,988

 

Other liabilities

 

9,152

 

 

 

9,030

 

Total liabilities

 

757,407

 

 

 

828,422

 

STOCKHOLDERS’ EQUITY:

 

 

 

Common stock

 

8

 

 

 

8

 

Additional paid-in capital

 

1,903,873

 

 

 

1,831,267

 

Accumulated other comprehensive income (loss)

 

(12,434

)

 

 

(13,859

)

Retained earnings (accumulated deficit)

 

(635,334

)

 

 

(617,950

)

Total stockholders’ equity

 

1,256,113

 

 

 

1,199,466

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,013,520

 

 

$

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 January 31,

 

Six Months Ended January 31,

 

2024

 

2023

 

2024

 

2023

Revenue:

 

 

 

 

 

 

 

Subscription and support

$

131,642

 

 

$

105,754

 

 

$

259,269

 

 

$

204,822

 

License

 

71,083

 

 

 

73,115

 

 

 

105,108

 

 

 

114,067

 

Services

 

38,172

 

 

 

53,742

 

 

 

83,927

 

 

 

109,004

 

Total revenue

 

240,897

 

 

 

232,611

 

 

 

448,304

 

 

 

427,893

 

Cost of revenue(1):

 

 

 

 

 

 

 

Subscription and support

 

49,934

 

 

 

48,924

 

 

 

97,988

 

 

 

104,615

 

License

 

1,483

 

 

 

1,845

 

 

 

2,702

 

 

 

3,718

 

Services

 

47,074

 

 

 

58,379

 

 

 

92,916

 

 

 

123,945

 

Total cost of revenue

 

98,491

 

 

 

109,148

 

 

 

193,606

 

 

 

232,278

 

Gross profit:

 

 

 

 

 

 

 

Subscription and support

 

81,708

 

 

 

56,830

 

 

 

161,281

 

 

 

100,207

 

License

 

69,600

 

 

 

71,270

 

 

 

102,406

 

 

 

110,349

 

Services

 

(8,902

)

 

 

(4,637

)

 

 

(8,989

)

 

 

(14,941

)

Total gross profit

 

142,406

 

 

 

123,463

 

 

 

254,698

 

 

 

195,615

 

Operating expenses(1):

 

 

 

 

 

 

 

Research and development

 

65,458

 

 

 

61,702

 

 

 

127,927

 

 

 

119,872

 

Sales and marketing

 

49,181

 

 

 

44,781

 

 

 

93,762

 

 

 

91,249

 

General and administrative

 

40,177

 

 

 

40,196

 

 

 

79,200

 

 

 

82,263

 

Total operating expenses

 

154,816

 

 

 

146,679

 

 

 

300,889

 

 

 

293,384

 

Income (loss) from operations

 

(12,410

)

 

 

(23,216

)

 

 

(46,191

)

 

 

(97,769

)

Interest income

 

10,290

 

 

 

5,392

 

 

 

20,903

 

 

 

10,030

 

Interest expense

 

(1,692

)

 

 

(1,677

)

 

 

(3,375

)

 

 

(3,351

)

Other income (expense), net

 

10,776

 

 

 

11,291

 

 

 

(2,966

)

 

 

(2,533

)

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

 

6,964

 

 

 

(8,210

)

 

 

(31,629

)

 

 

(93,623

)

Provision for (benefit from) income taxes

 

(2,723

)

 

 

979

 

 

 

(14,245

)

 

 

(15,116

)

Net income (loss)

$

9,687

 

 

$

(9,189

)

 

$

(17,384

)

 

$

(78,507

)

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

0.12

 

 

$

(0.11

)

 

$

(0.21

)

 

$

(0.95

)

Diluted

$

0.12

 

 

$

(0.11

)

 

$

(0.21

)

 

$

(0.95

)

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

 

 

 

 

 

 

 

Basic

 

82,133,632

 

 

 

82,051,867

 

 

 

81,912,272

 

 

 

82,686,420

 

Diluted

 

83,305,080

 

 

 

82,051,867

 

 

 

81,912,272

 

 

 

82,686,420

 

 

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

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

2024

 

2023

 

2024

 

2023

Stock-based compensation expense:

 

 

 

 

 

 

 

Cost of subscription and support revenue

$

3,414

 

$

3,440

 

$

6,876

 

$

6,908

Cost of license revenue

 

53

 

 

119

 

 

148

 

 

266

Cost of services revenue

 

4,643

 

 

4,397

 

 

9,432

 

 

9,746

Research and development

 

10,138

 

 

10,301

 

 

20,124

 

 

19,592

Sales and marketing

 

8,190

 

 

8,024

 

 

15,919

 

 

14,911

General and administrative

 

9,989

 

 

9,898

 

 

20,025

 

 

19,852

Total stock-based compensation expense

$

36,427

 

$

36,179

 

$

72,524

 

$

71,275

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

2024

 

2023

 

2024

 

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income (loss)

$

9,687

 

 

$

(9,189

)

 

$

(17,384

)

 

$

(78,507

)

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

 

 

 

 

 

 

 

Depreciation and amortization

 

5,492

 

 

 

6,606

 

 

 

10,934

 

 

 

14,229

 

Amortization of debt issuance costs

 

432

 

 

 

425

 

 

 

862

 

 

 

848

 

Amortization of contract costs

 

4,681

 

 

 

4,107

 

 

 

8,745

 

 

 

8,597

 

Stock-based compensation

 

36,427

 

 

 

36,179

 

 

 

72,524

 

 

 

71,275

 

Changes to allowance for credit losses and revenue reserves

 

(322

)

 

 

(243

)

 

 

(194

)

 

 

(315

)

Deferred income tax

 

(4,170

)

 

 

(323

)

 

 

(17,390

)

 

 

(18,358

)

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

 

(3,296

)

 

 

(820

)

 

 

(6,223

)

 

 

(722

)

Gain on sale of strategic investment

 

(1,758

)

 

 

 

 

 

(1,758

)

 

 

 

Other non-cash items affecting net income (loss)

 

(17

)

 

 

42

 

 

 

(46

)

 

 

76

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(34,646

)

 

 

(38,721

)

 

 

22,547

 

 

 

16,524

 

Unbilled accounts receivable

 

18,352

 

 

 

(8,801

)

 

 

1,102

 

 

 

(29,460

)

Prepaid expenses and other assets

 

(5,971

)

 

 

(3,981

)

 

 

(12,531

)

 

 

(4,820

)

Operating lease assets

 

2,075

 

 

 

1,040

 

 

 

4,046

 

 

 

4,808

 

Accounts payable

 

4,770

 

 

 

(3,136

)

 

 

(12,212

)

 

 

(2,289

)

Accrued employee compensation

 

14,919

 

 

 

13,009

 

 

 

(39,657

)

 

 

(32,539

)

Deferred revenue

 

24,137

 

 

 

7,284

 

 

 

(13,756

)

 

 

(26,291

)

Lease liabilities

 

(1,644

)

 

 

(1,276

)

 

 

(3,245

)

 

 

(5,717

)

Other liabilities

 

103

 

 

 

(982

)

 

 

804

 

 

 

(3,554

)

Net cash provided by (used in) operating activities

 

69,251

 

 

 

1,220

 

 

 

(2,832

)

 

 

(86,215

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

(154,607

)

 

 

(101,097

)

 

 

(314,846

)

 

 

(270,329

)

Maturities and sales of available-for-sale securities

 

130,030

 

 

 

116,092

 

 

 

267,416

 

 

 

235,383

 

Purchases of property and equipment

 

(2,992

)

 

 

(1,333

)

 

 

(3,990

)

 

 

(1,937

)

Capitalized software development costs

 

(2,366

)

 

 

(2,421

)

 

 

(6,058

)

 

 

(6,118

)

Acquisition of strategic investments

 

 

 

 

(5,660

)

 

 

(250

)

 

 

(5,841

)

Sale of strategic investment

 

6,508

 

 

 

 

 

 

6,508

 

 

 

 

Net cash provided by (used in) investing activities

 

(23,427

)

 

 

5,581

 

 

 

(51,220

)

 

 

(48,842

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

4

 

 

 

2

 

 

 

4

 

 

 

2

 

Repurchase and retirement of common stock

 

 

 

 

 

 

 

 

 

 

(200,000

)

Net cash provided by (used in) financing activities

 

4

 

 

 

2

 

 

 

4

 

 

 

(199,998

)

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

 

2,742

 

 

 

4,933

 

 

 

(1,561

)

 

 

1,941

 

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

 

48,570

 

 

 

11,736

 

 

 

(55,609

)

 

 

(333,114

)

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

 

302,611

 

 

 

269,836

 

 

 

406,790

 

 

 

614,686

 

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

$

351,181

 

$

281,572

 

 

$

351,181

 

 

$

281,572

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 January 31,

 

Six Months Ended January 31,

 

2024

 

2023

 

2024

 

2023

Gross profit reconciliation:

 

 

 

 

 

 

 

GAAP gross profit

$

142,406

 

 

$

123,463

 

 

$

254,698

 

 

$

195,615

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

8,110

 

 

 

7,956

 

 

 

16,456

 

 

 

16,920

 

Amortization of intangibles

 

485

 

 

 

485

 

 

 

970

 

 

 

2,390

 

Non-GAAP gross profit

$

151,001

 

 

$

131,904

 

 

$

272,124

 

 

$

214,925

 

 

 

 

 

 

 

 

 

Income (loss) from operations reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

(12,410

)

 

$

(23,216

)

 

$

(46,191

)

 

$

(97,769

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

36,427

 

 

 

36,179

 

 

 

72,524

 

 

 

71,275

 

Amortization of intangibles

 

1,367

 

 

 

1,367

 

 

 

2,734

 

 

 

4,154

 

Acquisition consideration holdback

 

299

 

 

 

730

 

 

 

685

 

 

 

1,503

 

Non-GAAP income (loss) from operations

$

25,683

 

 

$

15,060

 

 

$

29,752

 

 

$

(20,837

)

 

 

 

 

 

 

 

 

Net income (loss) reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss)

$

9,687

 

 

$

(9,189

)

 

$

(17,384

)

 

$

(78,507

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

36,427

 

 

 

36,179

 

 

 

72,524

 

 

 

71,275

 

Amortization of intangibles

 

1,367

 

 

 

1,367

 

 

 

2,734

 

 

 

4,154

 

Acquisition consideration holdback

 

299

 

 

 

730

 

 

 

685

 

 

 

1,503

 

Amortization of debt issuance costs

 

432

 

 

 

425

 

 

 

862

 

 

 

848

 

Gain on sale of strategic investment (1)

 

(1,809

)

 

 

 

 

 

(1,809

)

 

 

 

Tax impact of non-GAAP adjustments

 

(7,327

)

 

 

(46,863

)

 

 

(18,820

)

 

 

(26,485

)

Non-GAAP net income (loss)

$

39,076

 

 

$

(17,351

)

 

$

38,792

 

 

$

(27,212

)

 

 

 

 

 

 

 

 

Tax provision (benefit) reconciliation:

 

 

 

 

 

 

 

GAAP tax provision (benefit)

$

(2,723

)

 

$

979

 

 

$

(14,245

)

 

$

(15,116

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

3,839

 

 

 

56,765

 

 

 

7,218

 

 

 

84,391

 

Amortization of intangibles

 

144

 

 

 

2,145

 

 

 

272

 

 

 

4,339

 

Acquisition consideration holdback

 

32

 

 

 

1,145

 

 

 

68

 

 

 

1,753

 

Amortization of debt issuance costs

 

46

 

 

 

667

 

 

 

86

 

 

 

1,000

 

Gain on sale of strategic investment (1)

 

(191

)

 

 

 

 

 

(191

)

 

 

 

Tax impact of non-GAAP adjustments

 

3,457

 

 

 

(13,859

)

 

 

11,367

 

 

 

(64,998

)

Non-GAAP tax provision (benefit)

$

4,604

 

 

$

47,842

 

 

$

4,575

 

 

$

11,369

 

(1) 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.

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 January 31,

 

Six Months Ended January 31,

 

2024

 

2023

 

2024

 

2023

 

 

 

 

 

 

 

 

Net income (loss) per share reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss) per share – diluted

$

0.12

 

 

$

(0.11

)

 

$

(0.21

)

 

$

(0.95

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

0.44

 

 

 

0.44

 

 

 

0.88

 

 

 

0.86

 

Amortization of intangibles

 

0.02

 

 

 

0.02

 

 

 

0.04

 

 

 

0.05

 

Acquisition consideration holdback

 

 

 

 

0.01

 

 

 

 

 

 

0.02

 

Amortization of debt issuance costs

 

0.01

 

 

 

0.01

 

 

 

0.02

 

 

 

0.02

 

Gain on sale of strategic investment (1)

 

(0.02

)

 

 

 

 

 

(0.02

)

 

 

 

Tax impact of non-GAAP adjustments

 

(0.09

)

 

 

(0.58

)

 

 

(0.23

)

 

 

(0.34

)

Interest expense on convertible debt (2)

 

0.01

 

 

 

 

 

 

 

 

 

 

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

 

(0.03

)

 

 

 

 

 

(0.01

)

 

 

 

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

$

0.46

 

 

$

(0.21

)

 

$

0.47

 

 

$

(0.34

)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

GAAP weighted average shares – diluted

 

83,305,080

 

 

 

82,051,867

 

 

 

81,912,272

 

 

 

82,686,420

 

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

 

3,516,480

 

 

 

 

 

 

1,031,222

 

 

 

 

Pro forma weighted average shares — diluted

 

86,821,560

 

 

 

82,051,867

 

 

 

82,943,494

 

 

 

82,686,420

 

(1) 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.

 
(2) During the three months ended January 31, 2024, Guidewire's convertible senior notes were dilutive due to non-GAAP net income. Accordingly, $1.0 million of interest expense related to the convertible senior 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 January 31,

 

Six Months Ended January 31,

 

2024

 

2023

 

2024

 

2023

Free cash flow:

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$

69,251

 

 

$

1,220

 

 

$

(2,832

)

 

$

(86,215

)

Purchases of property and equipment

 

(2,992

)

 

 

(1,333

)

 

 

(3,990

)

 

 

(1,937

)

Capitalized software development costs

 

(2,366

)

 

 

(2,421

)

 

 

(6,058

)

 

 

(6,118

)

Free cash flow

$

63,893

 

 

$

(2,534

)

 

$

(12,880

)

 

$

(94,270

)

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):

 

Third Quarter

Fiscal Year 2024

 

Fiscal Year 2024

Income (loss) from operations outlook reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

(34

)

$

(28

)

 

$

(71

)

$

(61

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

37

 

 

37

 

 

 

147

 

 

147

 

Amortization of intangibles

 

1

 

 

1

 

 

 

5

 

 

5

 

Acquisition consideration holdback

 

 

 

 

 

 

1

 

 

1

 

Non-GAAP income (loss) from operations

$

4

 

$

10

 

 

$

82

 

$

92

 

 

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