Guidewire Software Inc (GWRE) Q3 2025 Earnings Call Highlights: Record ARR and Strong Cloud ...
Total Revenue: $294 million, up 22% year-over-year.
Subscription and Support Revenue: $182 million, reflecting 32% year-over-year growth.
Services Revenue: $54 million, benefiting from strong services bookings.
Gross Profit: $192 million on a non-GAAP basis.
Subscription and Support Gross Margin: 71%, compared to 66% a year ago.
Services Gross Margin: 13%, compared to 10% a year ago.
Operating Profit: $46 million on a non-GAAP basis.
Operating Cash Flow: $32 million, ahead of expectations.
Cash Equivalents and Investments: Over $1.2 billion.
Fiscal Year 2025 Revenue Outlook: Between $1.178 billion and $1.186 billion.
Fiscal Year 2025 Subscription Revenue Outlook: Approximately $660 million.
Fiscal Year 2025 Subscription and Support Revenue Outlook: $724 million.
Fiscal Year 2025 Services Revenue Outlook: Approximately $215 million.
Fiscal Year 2025 Non-GAAP Operating Income Outlook: Between $187 million and $195 million.
Fiscal Year 2025 Cash Flow from Operations Outlook: Between $255 million and $275 million.
Warning! GuruFocus has detected 6 Warning Sign with CRWD.
Release Date: June 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Guidewire Software Inc (NYSE:GWRE) achieved a record ARR of $960 million, indicating strong market demand and allowing the company to raise its full-year outlook.
The company closed 17 cloud deals, including significant wins with tier 1 and tier 2 insurers, showcasing the robustness and maturity of its platform.
International momentum is building with significant cloud expansions in Canada, APAC, and EMEA, highlighting global growth potential.
Guidewire Software Inc (NYSE:GWRE) reported a 22% year-over-year increase in total revenue, with subscription and support revenue growing by 32%, reflecting strong cloud momentum.
The acquisition of Quanti enhances Guidewire Software Inc (NYSE:GWRE)'s pricing and rating technology, potentially broadening its product offerings and market reach.
Despite strong performance, the company acknowledges the risks and uncertainties associated with geopolitical events and market conditions that could impact future results.
The company's gross margin improvements are partly attributed to temporary credits from cloud service providers, which may not be sustainable long-term.
Guidewire Software Inc (NYSE:GWRE) faces challenges in maintaining its momentum, particularly as Q4 is critical for achieving fully ramped ARR results.
The integration of Quanti and the associated increase in stock-based compensation could impact profitability in the short term.
The company is still working towards its long-term subscription gross margin target of 80%, indicating room for improvement in operational efficiency.
Q: Jeff, could you share your thoughts on the fully ramped ARR outlook for this year? A: Jeffrey Cooper, CFO: We feel confident about maintaining fully ramped ARR growth at levels consistent with recent years, around the upper 10s. However, Q4 is critical as it involves larger, multi-year commitments, which can be binary in nature. Achieving this growth for three consecutive years would be a tremendous outcome.
Q: Mike, what is driving your success in the Japanese market, and how are customers there viewing your software? A: Michael Rosenbaum, CEO: Our success in Japan is due to our commitment to the market. We are investing significantly to ensure our platform meets the needs of Japanese insurers for the long term. Our dedication to delivering a fit-for-purpose platform and ensuring successful cloud deployments is key to our strategy in Japan.
Q: Was there any pull forward from Q4 in your Q3 results, or was it just stronger demand? A: Michael Rosenbaum, CEO: Q3 was strong across all tiers and components of the business. We executed well, and while some deals were expected to slide into Q4, our sales team ensured they closed in Q3. There was no significant pull forward; it was more about strong execution.
Q: How are your conversations evolving around being a singular end-to-end vendor for insurers? A: John Mullen, President and CRO: With successful cloud deployments, we are earning the right to broaden conversations with insurers. We are seeing momentum in becoming part of the strategic fabric of carriers' planning, allowing us to engage in discussions about expanding our reach across lines of business and geographies.
Q: How do you view the opportunity for Guidewire to help narrow the coverage gap in the insurance industry? A: Michael Rosenbaum, CEO: Agility is key. By providing insurers with the ability to quickly adapt their products and pricing, we enable them to better address coverage gaps. Our platform reduces IT risk, allowing insurers to focus on executing their business strategies effectively.
Q: What is driving the record low attrition and high ramping activity in your core market? A: Michael Rosenbaum, CEO: The ramp activity is due to the success of prior years and the follow-through of agreements. Customer success is paramount, and our maturing cloud operations and customer success teams are working closely with clients to ensure successful outcomes, which drives financial performance.
Q: Can you discuss the potential of generative AI in your product suite? A: Michael Rosenbaum, CEO: We are taking a broad approach to integrating generative AI across our products. Key areas include improving claims process efficiency, underwriting processes, and developer productivity. We are receiving positive feedback from customers and developers on these initiatives.
Q: How do you see Guidewire Industry Intelligence impacting your pricing strategy and customer engagement? A: Michael Rosenbaum, CEO: Guidewire Industry Intelligence offers predictive models that can benefit smaller insurers lacking extensive data. It also helps larger insurers entering new lines or territories. This product line opens new conversations with C-suite executives, focusing on insurance results rather than just operational outcomes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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