Guidewire Software Announces Third Quarter Fiscal 2013 Financial Results

Guidewire Software Announces Third Quarter Fiscal 2013 Financial Results

FOSTER CITY, Calif.--(BUSINESS WIRE)-- Guidewire Software, Inc. (NYS: GWRE) , a provider of software products for Property/Casualty (P/C) insurers, today announced its financial results for the fiscal quarter ended April 30, 2013.

"Revenue and profitability were ahead of our expectations in the third quarter, and rolling four quarter recurring term license and maintenance revenue grew by 34% from a year ago. In addition to strong financial results, our momentum continued with PolicyCenter and full InsuranceSuite sales, international expansion and customer go lives," said Marcus Ryu, Chief Executive Officer of Guidewire Software. "We believe that we are in the early stage of our market opportunity, and we continue to invest in expanding our product capabilities and global reach to advance our leadership position."


Third Quarter Fiscal 2013 Financial Highlights

Revenue

  • Total revenue for the third quarter of fiscal 2013 was $68.3 million, an increase of 20% from the comparable period in fiscal 2012.
  • Total license revenue, including term and perpetual licenses, for the third quarter of fiscal 2013 was $22.9 million, an increase of 6% from the comparable period in fiscal 2012. Recurring term license revenue was $17.9 million, a 16% increase from a year ago and revenue from perpetual licenses was $5.0 million compared with $6.3 million a year ago. Maintenance revenue was $9.1 million, up 17% from the comparable period in fiscal 2012, and services revenue was $36.2 million, up 31% from the comparable period in fiscal 2012.
  • Rolling four-quarter recurring term license and maintenance revenue was $130.9 million, an increase of 34% from the comparable period in fiscal 2012.

Profitability

  • GAAP operating loss was ($4.4) million for the third quarter of fiscal 2013, compared to operating income of $4.8 million in the comparable period in fiscal 2012.
  • Non-GAAP operating income was $3.9 million for the third quarter of fiscal 2013, compared to $9.1 million in the comparable period in fiscal 2012.
  • Adjusted EBITDA was $5.0 million for the third quarter of fiscal 2013, compared to $9.8 million in the comparable period in fiscal 2012.
  • GAAP net loss was ($2.7) million for the third quarter of fiscal 2013, compared to GAAP net income of $3.1 million for the comparable period in fiscal 2012. GAAP net loss per share was ($0.05), based on diluted weighted average shares outstanding of 57.0 million, compared to a GAAP net income per share of $0.05 for the comparable period in fiscal 2012, based on diluted weighted average shares outstanding of 60.1 million.
  • Non-GAAP net income was $2.6 million for the third quarter of fiscal 2013, compared to $5.9 million in the comparable period in fiscal 2012. Non-GAAP net income per diluted share was $0.04, based on diluted weighted average shares outstanding of 62.2 million, compared to $0.10 for the third quarter of fiscal 2012, based on diluted weighted average shares outstanding of 60.1 million.
  • Each profitability metric was better than the company's guidance, and decreases in year-over-year profitability comparisons were as expected and primarily due to anticipated investments in long-term growth.

Balance Sheet

  • The Company had $203.6 million in cash, cash equivalents and investments at April 30, 2013, compared to $203.2 million at January 31, 2013. Cash flow from operations was $5.0 million in the third quarter, compared to $10.3 million in the comparable period in fiscal 2012.

Conference Call Information

What:

    

Guidewire Software third quarter fiscal 2013 financial results conference call

When:

Tuesday, May 28, 2013

Time:

2:00 p.m. PT (5:00 p.m. ET)

Live Call:

(877) 545-1407, domestic

 

(719) 325-4772, international

Replay:

(877) 870-5176, passcode 3893116, domestic

 

(858) 384-5517, passcode 3893116, 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, Adjusted EBITDA, Non-GAAP net income and Non-GAAP earnings 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 analyses, 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. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. 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.

About Guidewire Software

Guidewire Software is a provider of software products for Property/Casualty insurers. Designed to be flexible and scalable, Guidewire products enable insurers to deliver excellent service, increase market share, and lower operating costs. Guidewire products include Guidewire InsuranceSuite™, consisting of Guidewire PolicyCenter®, Guidewire ClaimCenter® and Guidewire BillingCenter® which span the core functional areas in insurance and Guidewire LiveSM, a cloud-based network connecting peer insurers, core system data and expert tools through instant on apps. Guidewire is headquartered in Foster City, California, with offices in Beijing, Dublin, Hong Kong, London, Munich, Paris, Sydney, Tokyo, Toronto and Warsaw. For more information, please visit www.guidewire.com.

NOTE: Guidewire, Guidewire Software, Guidewire ClaimCenter, Guidewire PolicyCenter, Guidewire BillingCenter, Guidewire InsuranceSuite, Guidewire Live, Before & After, Guidewire PartnerConnect, Deliver Insurance Your Way, and the Guidewire logo are trademarks, service marks, or registered trademarks of Guidewire Software, Inc. in the United States and/or other countries.

Cautionary Language Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our market positioning, future adoption of our products and future investments. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Guidewire's control. Guidewire's actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Guidewire's most recent Form 10-K filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the market for our software may develop more slowly than expected or than it has in the past; quarterly and annual operating results may fluctuate more than expected; seasonal and other variations related to our revenue recognition may cause significant fluctuations in our results of operations and cash flows; our reliance on sales to and renewals from a relatively small number of large customers for a substantial portion of our revenues; our services revenues produce lower gross margins than our license and maintenance revenues; assertions by third parties that we violate their intellectual property rights could substantially harm our business; we face intense competition in our market; weakened global economic conditions may adversely affect the P&C insurance industry including the rate of information technology spending; our product development and sales cycles are lengthy; the risk of losing key employees; changes in foreign exchange rates; general political or destabilizing events, including war, conflict or acts of terrorism; and other risks and uncertainties. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Guidewire's views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Guidewire undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Guidewire's views as of any date subsequent to the date of this press release.

 
 
GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
       
April 30,July 31,
20132012
Assets
Current assets:
Cash and cash equivalents$90,530$205,718
Short-term investments63,591-
Restricted cash, current2033,726
Accounts receivable48,13732,313
Deferred tax asset, current18,19913,442
Prepaid expenses and other current assets 6,906  7,266 
Total current assets227,566262,465
Long-term investments49,471-
Property and equipment, net12,34811,924
Deferred tax assets, noncurrent9,3139,313
Other assets 467  545 
Total assets$299,165 $284,247 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$7,034$9,781
Accrued employee compensation21,10126,502
Deferred revenues, current48,43952,947
Other current liabilities 4,707  3,957 
Total current liabilities81,28193,187
Deferred revenues, noncurrent3,0222,569
Other liabilities 5,388  4,529 
Total liabilities89,691100,285
Stockholders' Equity
Common stock65
Additional paid-in capital230,013207,624
Accumulated other comprehensive loss(652)(496)
Accumulated deficit (19,893) (23,171)
Total stockholders' equity 209,474  183,962 
Total liabilities and stockholders' equity$299,165 $284,247 
 
 
GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in thousands except share and per share amounts)
           
Three Months Ended April 30,Nine Months Ended April 30,
2013 20122013 2012
Revenues :
License$22,918$21,662$74,482$68,206
Maintenance9,1107,76927,69021,680
Services 36,222  27,564 101,567  74,586 
Total revenues 68,250  56,995 203,739  164,472 
 
Cost of revenues: (1)
License139150436683
Maintenance2,0791,3105,4303,773
Services 33,774  22,513 89,071  59,748 
Total cost of revenues 35,992  23,973 94,937  64,204 
 
Gross profit :
License22,77921,51274,04667,523
Maintenance7,0316,45922,26017,907
Services 2,448  5,051 12,496  14,838 
Total gross profit 32,258  33,022 108,802  100,268 
 
Operating expenses: (1)
Research and development16,85412,98647,50336,107
Sales and marketing11,9158,40936,68024,968
General and administrative 7,851  6,785 23,962  20,862 
Total operating expenses 36,620  28,180 108,145  81,937 
Income (loss) from operations(4,362)4,84265718,331
Interest income, net137107359220
Other income (expense), net (268) 164 (104) (471)
Income (loss) before provision for (benefit from) income taxes(4,493)5,11391218,080
Provision for (benefit from) Income taxes (1,823) 1,964 (2,366) 6,428 
Net income (loss)$(2,670)$3,149$3,278 $11,652 
Earnings per share:
Basic$(0.05)$0.06$0.06 $0.23 
Diluted$(0.05)$0.05$0.05 $0.19 
Shares used in computing earnings per share:
Basic 57,017,856  52,519,909 55,887,786  28,351,997 
Diluted 57,017,856  60,127,430 61,732,623  34,928,429 
 
(1) Amounts include stock-based compensation expense, as follows:      
Three Months Ended April 30,Nine Months Ended April 30,
2013201220132012
Stock-based compensation expenses:
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