Guidewire Software, Inc. (GWRE): history, ownership, mission, how it works & makes money

A Brief History of Guidewire Software, Inc.

Guidewire Software, Inc. (NYSE: GWRE), established in 2001, specializes in providing software solutions for property and casualty insurance carriers. The company has evolved significantly over the years, expanding its product offerings and increasing its market presence.

Financial Performance Overview

As of July 31, 2024, Guidewire reported total revenue of $343.7 million, a notable increase from $258.6 million in the previous fiscal year. The growth in revenue can be attributed to an increase in subscription and support services, which are crucial for the company’s recurring revenue model.

Stock Performance

The closing stock price for Guidewire on July 31, 2024, was $150.07, reflecting a significant increase compared to $84.82 in 2023 and $77.72 in 2022. The company has also engaged in share repurchase programs, with $138.2 million remaining as of July 31, 2024, from a previously authorized $400 million program.

Strategic Investments

In fiscal year 2024, Guidewire invested $1.3 million in new strategic investments, down from $10.8 million in 2023. The strategic investments have been essential in enhancing the company’s technology stack and expanding its market reach.

Operating Expenses and Liabilities

Operating lease costs for the fiscal year ending July 31, 2024, were $12.5 million, with total lease liabilities amounting to $44 million. The company’s accrued employee compensation reached $109.1 million, indicating a strong investment in talent acquisition and retention.

Convertible Senior Notes

In March 2018, Guidewire issued $400 million of 1.25% Convertible Senior Notes due March 2025. The net proceeds from this issuance were approximately $387.2 million after deducting issuance costs. As of July 31, 2024, the company continues to manage these obligations effectively, with anticipated conversion rates influencing its capital structure.

Tax Position

For the fiscal year 2024, Guidewire recognized an income tax benefit of $20.7 million, a decrease from $22.2 million in 2023. The effective tax rate varies due to state taxes and other factors, with net deferred tax assets reported at $250.9 million as of July 31, 2024.

Research and Development

Guidewire has emphasized innovation, with R&D expenses totaling $16.2 million in 2024, reflecting the company's commitment to enhancing its software solutions and maintaining competitive advantages in the insurance technology space.

Guidewire continues to solidify its position as a leader in the insurance technology sector, leveraging its financial resources, strategic investments, and commitment to innovation to drive future growth. As of 2024, the company remains focused on expanding its customer base and enhancing its product offerings in an increasingly competitive market.

A Who Owns Guidewire Software, Inc. (GWRE)

Major Shareholders

As of July 31, 2024, Guidewire Software, Inc. (GWRE) had 83,025,637 shares of common stock outstanding. The largest shareholders include:

• BlackRock, Inc. - 12.5% ownership (approximately 10.4 million shares)
• The Vanguard Group, Inc. - 10.2% ownership (approximately 8.5 million shares)
• FMR LLC (Fidelity) - 8.4% ownership (approximately 6.9 million shares)
• SSgA Funds Management, Inc. - 5.1% ownership (approximately 4.2 million shares)
• Other institutional investors - 30% cumulative ownership

Insider Ownership

As of July 31, 2024, insider ownership was approximately 3.5%, which includes shares held by executive officers and directors.

• CEO and Co-founder: 1.0% (approximately 800,000 shares)
• Other executives: 2.5% (approximately 2,000,000 shares)

Market Performance

The last reported sale price of Guidewire Software, Inc. common stock on July 31, 2024, was $150.07 per share. The average daily trading volume for the last month was approximately 450,000 shares.

Stockholder Composition

The composition of stockholders as of July 31, 2024, is as follows:

• Institutional Investors: 65%
• Retail Investors: 20%
• Insiders: 3.5%
• Other Entities (e.g., mutual funds): 11.5%

Convertible Notes and Debt

As of July 31, 2024, the fair value of the Convertible Senior Notes was $528.0 million. The company also reported total liabilities of $883.6 million.

Financial Overview

For the fiscal year ended July 31, 2024, Guidewire Software reported:

• Total Revenue: $980.5 million
• Net Income (Loss): $(6.1) million
• Earnings per Share (EPS): $(0.07)

Recent Developments

During fiscal year 2024, Guidewire did not repurchase any shares under its authorized repurchase program, which remains at $138.2 million available for future repurchases.

Guidewire Software, Inc. (GWRE) Mission Statement

Overview of Mission Statement

Guidewire Software, Inc. focuses on providing a technology platform that enables property and casualty (P&C) insurers to engage, innovate, and grow efficiently. The mission emphasizes leveraging data and analytics, digital solutions, and artificial intelligence (AI) to support core insurance operations.

Core Values

• Integrity: Commitment to ethical practices in all operations.
• Customer Success: Prioritizing the needs and success of clients.
• Innovation: Continuously evolving to meet market demands and technological advancements.
• Diversity and Inclusion: Promoting a diverse workforce to enhance creativity and problem-solving.

Recent Financial Performance

Customer Base and Market Positioning

Guidewire serves a diverse clientele primarily within the P&C insurance sector. As of July 31, 2024, the top ten customers accounted for 22% of the total annual recurring revenue (ARR). The company aims to reduce reliance on a small number of customers by expanding its customer base.

Employee Engagement and Culture

As of July 31, 2024, Guidewire employed 3,469 individuals globally, focusing on creating an inclusive culture that promotes employee engagement and development. The company has established several employee resource groups to foster diversity and support various demographics.

Investment in Research and Development

In fiscal year 2024, Guidewire invested $269.4 million in research and development to enhance its product offerings and maintain a competitive edge in the market. This investment is critical to the company’s strategy of driving innovation and improving operational efficiency.

Recent Strategic Initiatives

Guidewire continues to evolve its service offerings, focusing on cloud-based solutions and subscription services. The company aims to transition more customers from traditional software licensing to cloud services, which are expected to dominate future sales.

Financial Metrics

Stock Performance

As of July 31, 2024, Guidewire's stock price was $150.07 per share. The company’s market capitalization was approximately $6.6 billion, reflecting investor confidence in its strategic direction and market positioning.

Future Outlook

Guidewire aims to strengthen its market presence by enhancing its technology platform and expanding its customer base. The company is focused on adapting to industry changes and meeting the evolving demands of the insurance sector.

How Guidewire Software, Inc. (GWRE) Works

Company Overview

Guidewire Software, Inc. (GWRE) is a leading provider of software solutions for the global property and casualty (P&C) insurance industry. The company specializes in offering cloud-based services, licensing software applications, and providing professional services to its clients. As of July 31, 2024, Guidewire operates under a subscription model, transitioning many clients from traditional licensing to cloud subscriptions.

Financial Performance

For the fiscal year ended July 31, 2024, Guidewire reported total revenue of $980.5 million, reflecting an increase from $905.3 million in the previous year. The breakdown of revenue streams is as follows:

Cost Structure

The total cost of revenue for the fiscal year 2024 was $397.1 million, compared to $447.1 million in 2023. The cost components are detailed in the table below:

Gross Profit and Margin

Guidewire achieved a gross profit of $583.4 million in 2024, which translates to a gross margin of 59%, up from 51% in 2023. The gross profit by segment is as follows:

Operating Expenses

Total operating expenses for the fiscal year 2024 were $635.9 million, with the following breakdown:

Net Income and Loss

In FY 2024, Guidewire recorded a net loss of $6.1 million, compared to a loss of $111.9 million in FY 2023. The net income (loss) per share for FY 2024 was ($0.07).

Cash Flow and Liquidity

Cash and cash equivalents amounted to $548.0 million as of July 31, 2024. The working capital was $457.9 million, a decrease from $726.3 million in the previous year. The company reported cash flows from operating activities of $195.7 million in FY 2024.

Employee and Operational Metrics

As of July 31, 2024, Guidewire employed 1,169 personnel in research and development, 477 in sales and marketing, and 613 in cloud operations and technical support. The professional services team consisted of 750 employees.

Stockholder Equity

The total stockholders' equity as of July 31, 2024, was $1.34 billion. The company had 83,025,637 shares outstanding, with additional paid-in capital of $1.98 billion.

Market Performance

As of July 31, 2024, Guidewire's stock closed at $150.07, with a market capitalization reflecting the ongoing transition towards cloud-based solutions.

How Guidewire Software, Inc. (GWRE) Makes Money

Revenue Streams

Guidewire Software, Inc. primarily generates revenue through three main categories:

• Subscription and support
• License
• Services

Subscription and Support Revenue

In fiscal year 2024, subscription and support revenue totaled $549.1 million, representing a significant increase from $429.7 million in fiscal year 2023. This category accounted for 56% of total revenue in 2024, up from 48% in 2023. The breakdown is as follows:

Subscription revenue is recognized ratably over the term of the arrangement, typically between three to five years, with most customers billed annually in advance.

License Revenue

License revenue for fiscal year 2024 was $250.2 million, a decline from $265.6 million in fiscal year 2023. This category represented 26% of total revenue in 2024, down from 29% in 2023. The license revenue includes:

• Term license revenue: $248.8 million
• Perpetual license revenue: $1.3 million

This decline is attributed to the transition of customers from term licenses to cloud subscription agreements.

Services Revenue

Services revenue decreased to $181.2 million in fiscal year 2024 from $210.1 million in 2023, representing 18% of total revenue, down from 23%. This revenue primarily comes from:

• Implementation and migration services
• Reimbursable travel expenses
• Training fees

Services revenue is recognized based on the time and materials used, with a majority billed upon service delivery.

Cost of Revenue

The total cost of revenue for Guidewire in fiscal year 2024 was $397.1 million, reduced from $447.1 million in 2023. The breakdown is as follows:

The gross profit for fiscal year 2024 reached $583.4 million, a margin of 60%, compared to 51% in the previous year.

Operating Expenses

Guidewire's total operating expenses in fiscal year 2024 were $635.9 million, an increase from $607.7 million in 2023. The breakdown of operating expenses is as follows:

Research and development expenses increased due to personnel costs and investments in cloud capabilities.

Net Income

Guidewire reported a net loss of $6.1 million in fiscal year 2024, a significant improvement from a net loss of $111.9 million in 2023. The net income (loss) per share was $(0.07) for 2024 compared to $(1.36) in 2023.

Future Outlook

The company anticipates subscription revenue to continue growing as more clients transition from term licenses to subscription models. As of July 31, 2024, the aggregate amount of remaining performance obligations was approximately $2 billion.