Guidewire Software Inc Reports First Quarter Fiscal Year 2024 Results
Guidewire Software Inc (NYSE:GWRE) reports a 6% increase in total revenue for Q1 FY2024, reaching $207.4 million.
Subscription and support revenue grew by 29% year-over-year, while GAAP net loss per share improved from $0.83 to $0.33.
Annual recurring revenue (ARR) rose to $770 million, with the company raising profitability targets for the fiscal year.
On December 7, 2023, Guidewire Software Inc (NYSE:GWRE) released its 8-K filing, announcing financial results for the first quarter of fiscal year 2024. The company reported a total revenue of $207.4 million, marking a 6% increase from the same quarter in the previous fiscal year. The growth was primarily driven by a significant 29% increase in subscription and support revenue, which totaled $127.6 million.
Financial Performance Overview
Guidewire's ARR as of October 31, 2023, was $770 million, showing a slight increase from $763 million at the end of the previous quarter. Despite a decrease in services and license revenue by 17% each, the company's shift towards a subscription-based model is evident in the strong growth of subscription and support revenue.
The GAAP loss from operations significantly improved, with a reported loss of $33.8 million compared to a loss of $74.6 million in the same quarter of the previous fiscal year. Non-GAAP income from operations turned positive at $4.1 million, a substantial improvement from a Non-GAAP loss of $35.9 million in the prior year's quarter. GAAP net loss also narrowed to $27.1 million, or $0.33 per share, from a loss of $69.3 million, or $0.83 per share, year-over-year.
Liquidity and Capital Resources
Guidewire's cash, cash equivalents, and investments stood at $853.6 million as of October 31, 2023, a decrease from $927.5 million at the end of July 2023. The company used $72.1 million in cash from operations during the quarter.
Forward-Looking Business Outlook
Guidewire provided an optimistic outlook for the second quarter of fiscal year 2024, with an expected ARR between $793 million and $798 million, and total revenue projected to be between $237 million and $243 million. The company also updated its full-year outlook, anticipating an ARR between $846 million and $858 million, total revenue between $976 million and $986 million, and operating cash flow between $115 million and $135 million.
Balance Sheet and Cash Flow Highlights
The condensed consolidated balance sheets revealed a solid financial position, with total current assets at $976.8 million. The company's total liabilities amounted to $713.9 million, resulting in a healthy stockholders' equity of $1.2 billion.
Guidewire's cash flow statements indicated a use of $72.1 million in operating activities, primarily due to changes in operating assets and liabilities, including a significant reduction in accrued employee compensation and deferred revenue.
Non-GAAP Financial Measures and Commentary
Guidewire's non-GAAP financial measures, which exclude stock-based compensation, amortization of intangibles, and acquisition consideration holdback, among other items, provide a different perspective on the company's performance. Non-GAAP gross profit stood at $121.1 million, and non-GAAP net loss was minimal at $0.3 million.
"We are thrilled with our first quarter financial results and the continued momentum in Guidewire Cloud Platform with another seven cloud deals closed," said Mike Rosenbaum, chief executive officer, Guidewire.
"We are off to a strong start to the fiscal year with ARR finishing above the high end of our outlook, and margins significantly beating our expectations," said Jeff Cooper, chief financial officer, Guidewire. "We are at an exciting inflection point with respect to profitability and are raising our profitability targets for the year."
Guidewire's focus on the cloud platform and the positive reception of its latest cloud release, Innsbruck, at the annual customer conference, Connections, underscores the company's strategic direction and potential for future growth.
For more detailed information on Guidewire's financial results, including reconciliations of non-GAAP financial measures, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Guidewire Software Inc for further details.
This article first appeared on GuruFocus.
