Guidewire Delivers Upbeat Q4 Results; Shares Gain 7% After-Hours

Guidewire Software, Inc. (GWRE) shares jumped almost 7% in Thursday’s extended trading session after the software company that caters to the property and casualty insurance industry worldwide delivered robust fiscal fourth-quarter results driven by strong momentum across Guidewire Cloud.

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Markedly, Guidewire also issued its Fiscal 2022 revenue guidance above analysts’ expectations.

The company reported adjusted earnings of $0.37 per share, significantly beating analysts’ expectations of $0.25 per share. The company reported earnings of $0.83 per share in the prior-year period. (See Guidewire stock charts on TipRanks)

Revenues declined 6% year-over-year to $229.4 million but exceeded consensus estimates of $222.35 million. The decline in revenues reflected a 20% decrease in license revenue to $109.7 million and a 4% decrease in services revenue to $49.8 million, offsetting a 29% growth in subscription and support revenue to $70.0 million.

Guidewire CEO Mike Rosenbaum commented, “We closed a record 17 core cloud deals in the fourth quarter, including 16 for InsuranceSuite, and strength across cloud migrations, new deals, and expansions all pushed ARR, total revenue, and profitability above our guidance ranges.”

Looking optimistically to the future, he added, “We enter the new fiscal year with confidence in our cloud vision, strategy, and execution, and are well positioned to drive increasing ARR growth going forward.”

Based on strong Q4 results, management issued its financial guidance for the first quarter and full year of Fiscal 2022. For the full year, the company forecasts revenues to be in the range of $780 – $790 million, versus the consensus estimate of $769.23 million.

For the fiscal first quarter, the company expects revenues to be in the range of $162 – $166 million, versus analysts’ expectations of $174.6 million.

Following the robust Q4 results, Citigroup analyst Tyler Radke increased the price target from $115 to $138 (16.5% upside potential) while reiterating a Hold rating on the stock.

Radke continues to have certain questions regarding the economics of Guidewire’s cloud transition, though he was impressed by the enhanced cloud deal momentum that drove annual recurring revenue growth during the fourth quarter.

Consensus among analysts is a Moderate Buy based on 4 Buys and 3 Holds. The average Guidewire price target of $134 implies 13% upside potential to current levels.

TipRanks data shows that financial blogger opinions are 100% Bullish on GWRE, compared to a sector average of 71%.