Guidewire Software (GWRE) reported non-GAAP loss of 8 cents per share in third-quarter fiscal 2023 (ended Apr 30), which was narrower than the Zacks Consensus Estimate of a loss of 13 cents and year-ago quarter’s non-GAAP loss of 26 cents.
The company reported revenues of $207.5 million, rising 5% year over year. However, the top line missed the Zacks Consensus Estimate by 3.1%.
Guidewire Cloud continued to gain momentum in the reported quarter with eight deal wins.
Guidewire Software, Inc. Price, Consensus and EPS Surprise
Guidewire Software, Inc. price-consensus-eps-surprise-chart | Guidewire Software, Inc. Quote
Quarter in Detail
Subscription and support segment’s revenues (51.8% of total revenues) soared 24% from the year-ago quarter’s levels to $107.5 million, owing to higher subscription revenues. Subscription revenues gained 34.1% year over year to $89.1 million. Support revenues declined 9.9% year over year to $18.4 million.
License’s revenues (24.4%) were down 6% year over year to $50.6 million.
Services’ revenues (23.8%) fell 13% year over year to $49.4 million.
Annual recurring revenues (ARR) were $722 million as of Apr 30, up 13.3% (rose 17% on constant currency basis) year over year.
Non-GAAP gross margin expanded 410 basis points (bps) on a year-over-year basis to 51.9%.
Subscription and support segments’ gross margin expanded 870 bps on a year-over-year basis to 55.2%, due to increased cloud infrastructure efficiency. Services’ non-GAAP gross margin was (2.1%) against a gross margin of 3.5% in the year-ago reported quarter.
Total operating expenses increased 7.1% year over year to $156.7 million. Non-GAAP operating loss was $12.2 million compared with a loss of $24.9 million reported in the year-ago quarter.
As of Apr 30, cash and cash equivalents and short-term investments were $806.9 million compared with $714.7 million as of Jan 31.
Guidewire used $48.6 million in cash from operations during the quarter under review, with a free cash outflow of nearly $52.1 million.
For fourth-quarter fiscal 2023, revenues are expected in the range of $255-$265 million. ARR is projected to be between $745 million and $755 million. GAAP operating income (loss) is anticipated to be between $(7) million and $3 million. Non-GAAP operating income is estimated to be between $29 million and $39 million.
For fiscal 2023, the company expects total revenues to be between $890 million and $900 million. ARR is projected in the range of $745-$755 million.
Non-GAAP operating income (loss) is estimated to be between $(4) million and $6 million. Cash flow from operations is anticipated in the range of $10-$40 million.
Zacks Rank & Stocks to Consider
At present, Guidewire carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Dropbox DBX, Badger Meter BMI and Blackbaud BLKB. Dropbox and Badger Meter sport a Zacks Rank #1 (Strong Buy) whereas Blackbaud carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Dropbox’s 2023 earnings has increased 10.1% in the past 60 days to $1.85 per share. The long-term earnings growth rate is anticipated to be 12.3%.
Dropbox’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.4%. Shares of DBX have gained 1.6% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has improved 4.7% in the past 60 days to $2.69 per share.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 5.3%. Shares of BMI have surged 75.2% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2023 earnings has risen 9.3% in the past 60 days to $3.75 per share.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average surprise being 10.4%. Shares of BLKB have increased 12.1% in the past year.
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