Why Guidewire Software Inc (NYSE: GWRE) stock is killing it today

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Guidewire Software Inc (NYSE: GWRE) stock surged over 11% on March 7th, 2019 pre market session (Source: Google finance) after the company posted better-than-expected second-quarter earnings and strong guidance. It was an active Q2 for new subscription sales, which represented 53% in the second quarter and 47% in the first half of all new sales. As such, GWRE believe that they are on track to see 40% to 60% of this year’s bookings to be close to subscriptions.

In the second quarter, the company made progress against two of the strategic sales objectives, namely advancing momentum for InsuranceSuite cloud and Guidewire Digital for Salesforce. With respect to the former, the company sold InsuranceSuite cloud to TD Insurance, the first InsuranceSuite cloud deal of the fiscal year. TD Insurance is part of TD Bank Group, one of Canada’s largest banks and the top three personal, home and auto insurer. They license InsuranceSuite and Guidewire Digital via Guidewire Cloud and will be upgrading and migrating their existing implementation of InsuranceSuite to Guidewire Cloud as part of their journey to better protect more Canadians and be the most trusted insurer in the country.

GWRE in the second quarter of FY 19 has reported the adjusted earnings per share of 34 cents, beating the analysts’ estimates for the adjusted earnings per share of 19 cents, as per forecast by analysts surveyed by Refinitiv. The company had reported the adjusted revenue growth of 3 percent to $169 million in the second quarter of FY 19, beating the analysts’ estimates for revenue of $160 million. Subscription revenue was $14.8 million compared to $7.7 million a year ago, representing a year-over-year growth rate of over 93%. The sequential decline in subscription revenue of $0.5 million was largely driven by churn of Cyence customers at the beginning of the quarter, partially offset by new subscription deals completed toward the end of the quarter. Perpetual license revenue in the quarter was $0.4 million. Maintenance revenue was $21.3 million, an increase of 11% from a year ago and was also above the high end of the guidance range. Services revenue for the second quarter was $60.9 million, up 1% from a year ago. GWRE ended the quarter with $1.2 billion in cash, cash equivalents and investments, flat compared to the end of the first quarter

Guidewire for third-quarter of FY 19 expects revenue to be between $152.5 and $156.5 million, compared to the $148.6 million forecast by Wall Street. Earnings per share guidance is expected to be between 5 and 9 cents, while analysts estimated 5 cents.

 

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