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Here's How Guidewire (GWRE) Looks Just Ahead of Q3 Earnings

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Guidewire Software, Inc. GWRE is slated to report third-quarter fiscal 2021 results on Jun 2.

For fiscal third quarter, Guidewire expects revenues of $155-$159 million. The Zacks Consensus Estimate for revenues is pegged at $157.6 million, indicating a decline of 6.3% on a year-over-year basis.

The Zacks Consensus Estimate for fiscal third-quarter bottom line is pegged at a loss of 24 cent per share, unchanged in the past 30 days. The company had reported earnings of 9 cents per share in the year-ago quarter.

Notably, the company beat estimates in all the last four quarters. The company has a trailing four-quarter earnings surprise of 479.44%, on average.

Guidewire Software, Inc. Price and EPS Surprise

Guidewire Software, Inc. Price and EPS Surprise
Guidewire Software, Inc. Price and EPS Surprise

Guidewire Software, Inc. price-eps-surprise | Guidewire Software, Inc. Quote

Factors Likely to Have Influenced Q3 Performance

Guidewire's fiscal third-quarter results are likely to gain from the pandemic-induced demand for cloud-based insurance software solutions. Solid uptick in multiple components of Guidewire’s InsurancePlatform, which included InsuranceSuite, digital, data and analytics, may have acted as a tailwind.

Healthy adoption witnessed in subscription-based InsuranceSuite Cloud offerings, in particular, is expected to have contributed to subscription and supported revenues in the to-be-reported quarter.

Guidewire expects subscription revenues to be approximately $40 million, while support revenues are expected to be nearly $20 million for the fiscal third quarter. The Zacks Consensus Estimate for subscription and support revenues is at $60 million.

Moreover, initiatives to augment the Guidewire Cloud platform with new functionalities, including digital frameworks, automation, tooling as well as other cloud services are anticipated to have driven adoption of its InsurancePlatform suite of solutions in the fiscal third quarter.

Notably, the company expects Annual Recurring Revenues (or ARR) between $533 million and $536 million for the quarter to be reported. The company had reported ARR of $520 million as of Jan 31, 2021.

Growing clout of Guidewire’s offerings can be ascertained from expanding customer base, which includes the likes of Amerisafe AMSF and MetLife MET

Guidewire’s fiscal third-quarter results are anticipated to reflect benefit from an increasing partner base in the PartnerConnect program. With the PartnerConnect program, insurers can easily access Guidewire’s Marketplace, which helps them launch innovative solutions and cater to changing market demands.

The company has been increasing investments to enhance insurance software products through collaborations with prominent on-demand cloud infrastructure vendors, including Amazon’s AMZN Amazon Web Services.

The company anticipates Services revenues to be $48 million. The consensus mark for fiscal third quarter service revenues is pegged at $48.04, suggesting a decline of 11%. This is likely due to lower billable travel expenses.

Although increasing expenses on product enhancements and marketing initiatives bodes well over the long haul, it might have put pressure margin expansion in the fiscal third quarter.

Guidewire currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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