Hot Tech Stock to Watch: Guidewire Software Inc (NYSE: GWRE)

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Guidewire Software Inc (NYSE: GWRE) stock rose over 0.9% in the after-hours session of June 2nd, 2021 (Source: Google finance) after the company posted higher than expected results for the third quarter of FY 21.

The company has closed eight cloud deals in Q3, five for InsuranceSuite Cloud and three for InsuranceNow. The company continues to see very healthy year-over-year growth in deal count. And year-to-date, the company had 11 InsuranceSuite Cloud deals, up nearly 2 times compared to the same period last year. In the quarter, the company also saw Insurance Australia Group, Australia’s largest insurer go live on PolicyCenter, BillingCenter and digital. This was a large transformational project four years in the making and included partners PwC, Tenzing and Cognizant. The company ended the quarter with more than 1,600 consultants from 31 partner companies, who have now earned the advanced certifications required for Guidewire InsuranceSuite Cloud implementations. Third quarter ARR ended at $538 million, up 11% year-over-year. The Company had $1.3 billion in cash, cash equivalents, and investments at April 30, 2021. The Company generated $3.2 million in cash from operations and had negative free cash flow of $16.8 million during the nine months ended April 30, 2021.

GWRE in the third quarter of FY 21 has reported the adjusted losses per share of 16 cents, beating the analysts’ estimates for the adjusted losses per share of 24 cents, according to Zacks Investment Research. The company had reported 2 percent decline in the adjusted revenue to $164 million in the third quarter of FY 21, beating the analysts’ estimates for revenue of $157.9 million. Subscription revenue was $46.6 million, which is up 48% year-over-year. Subscription revenue benefited from more than expected variable revenue from Cyence and InsuranceNow customers and strong third quarter revenue conversion from cloud deals sold in Q2 due to faster software provisioning. Term license revenue was $50.9 million, which is $12 million lower than Q3 last year due to $12.8 million of deal duration impacts last year that did not recur this year and, more generally, due to the fact that almost 90% of the bookings in Q3 came from the cloud products.

For the fourth quarter ending in July, Guidewire Software expects revenue to be in the range of $218 million to $224 million. The analysts surveyed by Zacks had expected revenue of $222.3 million.

The company expects full-year revenue in the range of $732 million to $738 million. FY 21 Non-GAAP operating income is expected to be between $14 million and $20 million.

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