Guidewire Grows Stronger Through Acquisitions

Insurance-focused platform Guidewire Software (NYSE: GWRE) recently announced its third-quarter results that outpaced market expectations. The company provides web-based tools to insurance companies to help them handle claims, manage receivables, and underwrite and administer policies.

Guidewire’s Financials

Revenues for the third quarter grew 14% over the year to $140.5 million, ahead of the market’s forecast of $137 million. Non-GAAP EPS of $0.05 was also significantly ahead of the $0.01 loss per share forecast by the market.

By segment, license and other revenues fell 15% to $50.4 million. Services revenues grew 50% to $71.4 million and maintenance revenues grew 11% to $18.7 million.

For the current quarter, Guidewire expects revenues of $234-$240 million, in line with the market’s forecast of $239.6 million. It expects to end the quarter with an adjusted EPS of $0.72-$0.77, compared with the market’s estimate of $0.74. The significant sequential increase in the revenues is attributed to seasonality.

The company improved the guidance for fiscal 2018 to revenues of $647-$653 million. Earlier, it had forecast revenues of $644-$650 million. The market was looking for revenues of $648.9 million. It also improved its earnings forecast, raising it to $1.05-$1.11 per share compared with the earlier guidance of $0.98-$1.04. The market was looking for an adjusted net income of $1.01 per share for the year.

Guidewire’s Acquisitions

Guidewire has been expanding its presence in the analytics space through several acquisitions. This year, it completed the acquisition of Cyence, a software company that uses advanced analytics to enable Property & Casualty (P&C) insurers to grow by underwriting the emerging risks that may have been overlooked otherwise. Cyence’s data listening and risk analytics solution integrates Internet-scale collection and curates external data with sophisticated machine learning and risk modeling to support insurers’ product management, actuarial, underwriting, and enterprise risk management functions. The deal is estimated to have cost Guidewire $265 million. Prior to the acquisition, Cyence had raised $40 million from investors including Dowling Capital Partners, New Enterprise Associates (NEA), and IVP.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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