Posted on Tuesday, Jun 26th 2018

Insurance coverage-focused platform Guidewire Software program (NYSE: GWRE) just lately introduced its third quarter outcomes that outpaced market expectations. The corporate supplies web-based instruments to insurance coverage corporations to assist them deal with claims, handle receivables, and underwrite and administer insurance policies.

Guidewire’s Financials

Revenues for the third quarter grew 14% over the yr to $140.5 million, forward of the market’s forecast of $137 million. Non-GAAP EPS of $zero.05 was additionally considerably forward of the $zero.01 loss per share forecast by the market.

By phase, license and different revenues fell 15% to $50.four million. Providers revenues grew 50% to $71.four million and upkeep revenues grew 11% to $18.7 million.

For the present quarter, Guidewire expects revenues of $234-$240 million, in keeping with the market’s forecast of $239.6 million. It expects to finish the quarter with an adjusted EPS of $zero.72-$zero.77, in contrast with the market’s estimate of $zero.74. The numerous sequential improve within the revenues is attributed to seasonality.

The corporate improved the steerage for fiscal 2018 to revenues of $647-$653 million. Earlier, it had forecast revenues of $644-$650 million. The market was on the lookout for revenues of $648.9 million. It additionally improved its earnings forecast, elevating it to $1.05-$1.11 per share in contrast with the sooner steerage of $zero.98-$1.04. The market was on the lookout for an adjusted internet revenue of $1.01 per share for the yr.

Guidewire’s Acquisitions

Guidewire has been increasing its presence within the analytics area by means of a number of acquisitions. This yr, it accomplished the acquisition of Cyence, a software program firm that makes use of superior analytics to allow Property & Casualty (P&C) insurers to develop by underwriting the rising dangers which will have been ignored in any other case. Cyence’s knowledge listening and danger analytics answer integrates Web-scale assortment and curates exterior knowledge with refined machine studying and danger modeling to help insurers’ product administration, actuarial, underwriting, and enterprise danger administration features. The deal is estimated to have value Guidewire $265 million. Previous to the acquisition, Cyence had raised $40 million from buyers together with Dowling Capital Companions, New Enterprise Associates (NEA), and IVP.

Earlier final yr, Guidewire had additionally accomplished the acquisition of ISCS, a cloud computing know-how company that focuses on policy administration, underwriting, claims, billing, business intelligence, reinsurance and mobile products. Previous to the acquisition, it was trending at annual income run charges of greater than $40 million and was rising 20% yearly, The deal was estimated to be valued at $160 million.

In the meantime, Guidewire continues to enhance its product providing. Earlier this yr, it introduced the newest launch of its flagship platform. The newest launch consists of a number of enhancements to its core knowledge and digital and all-in-one product households. It can additionally function greater than 80 ready-for-Guidewire validated accelerators. It additionally introduced the supply of its first P&C insurance coverage CRM purposes for Salesforce Monetary Providers Cloud. The mixing will permit P&C insurers to unify their core digital and CRM methods in an easier and quicker approach.

Guidewire shouldn’t be the one participant in its area. There are a number of different personal gamers within the business as properly together with Carpe Knowledge, Black Swan Knowledge, and Knowledge Science. However the firm is doing nicely, given the awards it retains profitable. Final quarter, it gained two awards for coverage administration by business analyst Celent.

The market is happy with Guidewire’s efficiency. Its inventory is buying and selling at $91.34 with a market capitalization of $7.three billion. It had climbed a 52-week excessive of $96.19 earlier final month. It has been steadily climbing from its 52-week low of $67.82 in June final yr. The stock has grown significantly since its 2012 listing price of $13 when it raised $115 million. Previous to itemizing, Guidewire had raised an undisclosed quantity from buyers together with US Ventures, Bay Companions, and Battery Companions.

Questions for the Board

Guidewire has clearly recognized the chance for progress by way of acquisitions. I want to know what different segments is it specializing in by means of these acquisitions. By including analytics to its capabilities, it’s widening its attain inside its present clientele. What different such alternatives does Guidewire need to leverage?