Guidewire Software, Inc. (NYSE: GWRE), a provider of software products to Property and Casualty insurers, today announced its financial results for the fiscal quarter ended October 31, 2017.
“We exceeded our guidance for revenue and operating income for the first quarter of fiscal 2018,” said Marcus Ryu, chief executive officer, Guidewire Software. “We were also gratified that our recent user conference attracted 25% greater attendance than last year. At Connections we showcased enhancements to our core, digital, and data products, our industry platform ambition, and our progress toward delivering all Guidewire products in the cloud. We also introduced our newly-acquired Cyence business, unveiled several next-generation digital and data analytics products, and expanded the scope of Guidewire Marketplace.”
Ryu continued, “Connections is also a key opportunity to refresh our understanding of how our customers and prospects are approaching their transformation journeys. This year our new cloud-based solutions received strong positive feedback, and we noted an increased willingness to consider cloud-based core systems as well. As a result, today we expect our mix of sales to feature more subscriptions and fewer perpetual and term sales than our initial expectations for fiscal 2018.”
First Quarter Fiscal 2018 Financial Highlights
Revenue
Total revenue for the first quarter of fiscal 2018 was $108.2 million, an increase of 15% from the same quarter in fiscal 2017. Services revenue was $59.1 million, an increase of 52%, and maintenance revenue was $18.9 million, an increase of 15%. License and other revenue was $30.1 million, a decrease of 22% from the first quarter of fiscal 2017.
Rolling four-quarter recurring term license and maintenance revenue was $324.8 million for the period ended October 31, 2017, an increase of 19% compared to the same metric for the period ended October 31, 2016.
Profitability
GAAP loss from operations was $32.7 million for the first quarter of fiscal 2018, compared with a loss of $18.3 million in the comparable period in fiscal 2017.
Non-GAAP loss from operations was $8.3 million for the first quarter of fiscal 2018, compared with $1.0 million in the comparable period in fiscal 2017.
GAAP net loss was $8.9 million for the first quarter of fiscal 2018, compared with a net loss of $7.9 million for the comparable period in fiscal 2017. GAAP net loss per share was $0.12, based on diluted weighted average shares outstanding of 75.2 million, compared with $0.11 net loss per share for the comparable period in fiscal 2017, based on diluted weighted average shares outstanding of 73.3 million.
Non-GAAP net loss was $4.8 million for the first quarter of fiscal 2018, compared with a net income of $1.1 million in the comparable period in fiscal 2017. Non-GAAP net loss per diluted share was $0.06, based on diluted weighted average shares outstanding of 75.2 million, compared with net income per diluted share of $0.02 in the comparable period in fiscal 2017, based on diluted weighted average shares outstanding of 74.6 million.
Liquidity
The Company had $653.5 million in cash, cash equivalents and investments at October 31, 2017, compared with $687.8 million at July 31, 2017. The Company used $31.2 million cash from operations in the first quarter of fiscal 2018, reflecting normal seasonal patterns.
Business Outlook
Guidewire is issuing the following outlook for the second quarter and fiscal 2018, including the impact of the previously announced acquisition of Cyence, based on current expectations:
Fiscal Year 2018
Fiscal 2018 Revenue 152.0 - 156.0 631.0 - 641.0 License and other revenue 76.0 - 78.0 302.0 - 312.0 Maintenance revenue 18.0 - 19.0 73.0 - 75.0 Services revenue 57.5 - 59.5 250.0 - 260.0 GAAP operating income/(loss) (16.1 ) - (12.1 ) (35.0 ) - (25.0 ) Non-GAAP operating income/(loss) 18.0 - 22.0 90.0 - 100.0 GAAP net income/(loss) (25.9 ) - (22.5 ) (20.7 ) - (12.2 ) GAAP net income/(loss) per share (0.34 ) - (0.30 ) (0.27 ) - (0.16 ) Non-GAAP net income/(loss) 13.2 - 15.8 63.3 - 69.9 Non-GAAP net income/(loss) per share 0.17 - 0.21 0.82 - 0.90 Non-GAAP income from operations and non-GAAP net income exclude stock-based compensation expense and amortization of intangible assets. The GAAP and non-GAAP estimated annual tax rates used to compute net income and EPS exclude discrete items such as forecasted tax benefits related to share-based compensation.
Conference Call Information
What: Guidewire Software First Quarter Fiscal 2018 Financial Results Conference Call When: Wednesday, November 29, 2017 Time: 2:00 p.m. PT (5:00 p.m. ET) Live Call: (800) 289-0438, Domestic (323) 794-2423, International Replay: (844) 512-2921, Passcode 9517261, Domestic (412) 317-6671, Passcode 9517261, International Webcast: http://ir.guidewire.com (live and replay)
The webcast will be archived on Guidewire’s website for a period of three months.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: Non-GAAP operating income, Non-GAAP net income (loss), Non-GAAP net income (loss) per share and Non-GAAP tax provision (benefit). These Non-GAAP financial measures exclude stock-based compensation and amortization of intangibles, and the tax effect of these adjustments for Non-GAAP net income (loss) and Non-GAAP net income (loss) per share.
Guidewire believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Guidewire’s financial condition and results of operations. The Company’s management uses these non-GAAP measures 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. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.
Management of the Company 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 the Company’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 this press release, and not to rely on any single financial measure to evaluate the Company’s business.
Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.