Guidewire Announces Second Quarter Fiscal Year 2023 Financial Results

Guidewire (NYSE: GWRE) today announced its financial results for the fiscal quarter ended January 31, 2023.

“We are thrilled with our second quarter results. We closed eight cloud transactions and improved operating efficiency, resulting in strong top-line growth and improved subscription and support gross margins,” said Mike Rosenbaum, Chief Executive Officer, Guidewire. “Continued progress on our cloud platform enabled us to exceed the top end of our guidance range for revenue, ARR, and profitability.”

Second Quarter Fiscal Year 2023 Financial Highlights

Revenue

  • Total revenue for the second quarter of fiscal year 2023 was $232.6 million, an increase of 14% from the same quarter in fiscal year 2022. Subscription and support revenue was $105.8 million, an increase of 25%; services revenue was $53.7 million, an increase of 6%; and license revenue was $73.1 million, an increase of 5%.
  • As of January 31, 2023, annual recurring revenue, or ARR, was $707 million, compared to $664 million as of July 31, 2022. ARR results for interim quarterly periods in fiscal year 2023 are based on actual currency rates at the end of fiscal year 2022, held constant throughout the year.

Profitability

  • GAAP loss from operations was $23.2 million for the second quarter of fiscal year 2023, compared with $39.5 million for the same quarter in fiscal year 2022.
  • Non-GAAP income from operations was $15.1 million for the second quarter of fiscal year 2023, compared with $3.0 million for the same quarter in fiscal year 2022.
  • GAAP net loss was $9.2 million for the second quarter of fiscal year 2023, compared with $40.7 million for the same quarter in fiscal year 2022. GAAP net loss per share was $0.11, based on diluted weighted average shares outstanding of 82.1 million, compared to $0.49 for the same quarter in fiscal year 2022, based on diluted weighted average shares outstanding of 83.4 million.
  • Non-GAAP net loss was $17.4 million for the second quarter of fiscal year 2023, compared with $4.8 million for the same quarter in fiscal year 2022. Non-GAAP net loss per share was $0.21, based on diluted weighted average shares outstanding of 82.1 million, compared to $0.06 for the same quarter in fiscal year 2022, based on diluted weighted average shares outstanding of 83.4 million.

Liquidity and Capital Resources

  • The Company had $870.0 million in cash, cash equivalents, and investments at January 31, 2023, compared to $1.2 billion at July 31, 2022. The Company used $86.2 million in cash from operations during the six months ended January 31, 2023.
  • In September 2022, the Company authorized a $400 million share repurchase program. As part of this program, the Company entered into an accelerated share repurchase agreement (“ASR”) to repurchase an aggregate of $200 million of Guidewire’s outstanding shares of common stock. Under the terms of the ASR, which was finalized in February 2023, the Company received a share delivery of 2,581,478 shares of common stock in September 2022 and of 648,001 shares of common stock in February 2023, representing total shares repurchased of 3,229,479 at an average price of $61.93 per share. As of January 31, 2023, $200 million remains under the September 2022 authorized and approved share repurchase program.

Business Outlook

Guidewire is issuing the following outlook for the third quarter of fiscal year 2023 based on current expectations:

  • ARR between $715 million and $720 million
  • Total revenue between $211 million and $216 million
  • Operating income (loss) between $(64) million and $(59) million
  • Non-GAAP operating income (loss) between $(20) million and $(16) million

Guidewire is issuing the following updated outlook for fiscal year 2023 based on current expectations:

  • ARR between $745 million and $760 million
  • Total revenue between $894 million and $904 million
  • Operating income (loss) between $(175) million and $(164) million
  • Non-GAAP operating income (loss) between $(17) million and $(7) million
  • Operating cash flow between $50 million and $80 million

Conference Call Information

What:

Guidewire Second Quarter Fiscal Year 2023 Financial Results Conference Call

When:

Monday, March 6, 2023

Time:

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

Live Call:

(877) 704-4390, Domestic

Live Call:

(201) 389-0932, International

Replay:

(844) 512-2921, Passcode 13736033, Domestic

Replay

(412) 317-6671, Passcode 13736033, International

Webcast:

http://ir.guidewire.com/ (live and replay)

The webcast will be archived on Guidewire’s website (www.guidewire.com) for a period of three months.

Non-GAAP Financial Measures and Other Metrics

This press release contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP tax provision (benefit), non-GAAP net income (loss) per share, and free cash flow. Non-GAAP gross profit and non-GAAP income (loss) from operations exclude stock-based compensation, amortization of intangibles, and acquisition consideration holdback. Non-GAAP net income (loss), non-GAAP tax provision (benefit), and non-GAAP net income (loss) per share also exclude the amortization of debt discount and issuance costs from our convertible notes, changes in fair value of our strategic investments, and the related tax effects of the non-GAAP adjustments. Free cash flow consists of net cash flow provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized software development costs. These non-GAAP measures enable us to analyze our financial performance without the effects of certain non-cash items such as amortization, stock-based compensation, and changes in fair value of strategic investments.

Annual recurring revenue ("ARR") is used to quantify the annualized recurring value outlined in active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, support contracts, and hosting agreements based on customer contracts, which may not be the same as the timing and amount of revenue recognized. All components of the licensing and other arrangements that are not expected to recur (primarily perpetual licenses and professional services) are excluded. In some arrangements with multiple performance obligations, a portion of recurring license and support or subscription contract value is allocated to services revenue for revenue recognition purposes, but does not get allocated for purposes of calculating ARR. This revenue allocation only impacts the initial term of the contract. This means that as we increase arrangements with multiple performance obligations that include services at discounted rates, more of the total contract value will be recognized as services revenue, but our reported ARR amount will not be impacted. During the six months ended January 31, 2023, the recurring license and support or subscription contract value recognized as services revenue was $19.7 million.

Guidewire believes that these non-GAAP financial measures and other metrics 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 and other metrics to compare the Company’s performance to that of prior periods for trend analysis, 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 and other metrics 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 and other metrics 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. 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 the financial tables at the end of this press release, and not to rely on any single financial measure to evaluate the Company’s business.

About Guidewire

Guidewire is the platform P&C insurers trust to engage, innovate, and grow efficiently. We combine digital, core, analytics, and AI to deliver our platform as a cloud service. More than 500 insurers in 38 countries, from new ventures to the largest and most complex in the world, run on Guidewire.

As a partner to our customers, we continually evolve to enable their success. We are proud of our unparalleled implementation track record, with 1,000+ successful projects, supported by the largest R&D team and partner ecosystem in the industry. Our marketplace provides hundreds of applications that accelerate integration, localization, and innovation.

For more information, please visit www.guidewire.com and follow us on twitter: @Guidewire_PandC and LinkedIn.

NOTE: For information about Guidewire’s trademarks, visit https://www.guidewire.com/legal-notices.

GWRE-F

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 financial outlook and our future business momentum regarding our cloud sales, platform efficiency, product innovation and cloud migration, and our associated cloud leadership, vision and strategy. 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 Forms 10-K and 10-Q 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: quarterly and annual operating results may fluctuate more than expected; seasonal and other variations related to our customer agreements and related revenue recognition may cause significant fluctuations in our results of operations, ARR, and cash flows; our reliance on sales to and renewals from a relatively small number of large customers for a substantial portion of our revenue; our ability to successfully manage any changes to our business model, including the transition of our products to cloud offerings and the costs related to cloud operations and security; recent global events (including, without limitation, the continuing COVID-19 pandemic, the ongoing conflict between Russia and Ukraine, inflation higher than we have seen in decades, and supply chain issues) and their impact on our employees and our business and the businesses of our customers, system integrator (“SI”) partners, and vendors; data security breaches of our cloud-based services or products or unauthorized access to our customers’ data, particularly in connection with our transition to a hybrid in-person and remote workforce; our competitive environment and changes thereto; our services revenue produces lower gross margins than our license, subscription and support revenue; our product development and sales cycles are lengthy and may be affected by factors outside of our control; the impact of new regulations and laws, including tax laws and accounting standards; assertions by third parties that we violate their intellectual property rights; weakened global economic conditions may adversely affect the P&C insurance industry, including the rate of information technology spending; general political or destabilizing events, including war, conflict or acts of terrorism; our ability to sell our products is highly dependent on the quality of our professional services and SI partners; the risk of losing key employees; the challenges of international operations, including changes in foreign exchange rates; 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. Guidewire 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

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

 

 

 

 

 

January 31,

2023

 

July 31,

2022

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

274,899

 

 

$

606,303

 

Short-term investments

 

439,833

 

 

 

369,865

 

Accounts receivable, net

 

127,627

 

 

 

143,797

 

Unbilled accounts receivable, net

 

100,313

 

 

 

71,515

 

Prepaid expenses and other current assets

 

63,591

 

 

 

61,223

 

Total current assets

 

1,006,263

 

 

 

1,252,703

 

Long-term investments

 

155,306

 

 

 

187,507

 

Unbilled accounts receivable, net

 

14,576

 

 

 

13,914

 

Property and equipment, net

 

78,544

 

 

 

80,740

 

Operating lease assets

 

85,479

 

 

 

90,287

 

Intangible assets, net

 

17,207

 

 

 

21,361

 

Goodwill

 

372,214

 

 

 

372,192

 

Deferred tax assets, net

 

218,308

 

 

 

191,461

 

Other assets

 

56,050

 

 

 

56,732

 

TOTAL ASSETS

$

2,003,947

 

 

$

2,266,897

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

38,025

 

 

$

40,440

 

Accrued employee compensation

 

58,064

 

 

 

90,962

 

Deferred revenue, net

 

145,963

 

 

 

170,776

 

Other current liabilities

 

33,157

 

 

 

35,340

 

Total current liabilities

 

275,209

 

 

 

337,518

 

Lease liabilities

 

99,045

 

 

 

105,123

 

Convertible senior notes, net

 

396,316

 

 

 

358,216

 

Deferred revenue, net

 

6,022

 

 

 

7,500

 

Other liabilities

 

7,183

 

 

 

6,883

 

Total liabilities

 

783,775

 

 

 

815,240

 

STOCKHOLDERS’ EQUITY:

 

 

 

Common stock

 

8

 

 

 

8

 

Additional paid-in capital

 

1,719,020

 

 

 

1,755,476

 

Accumulated other comprehensive income (loss)

 

(16,061

)

 

 

(19,845

)

Retained earnings (accumulated deficit)

 

(482,795

)

 

 

(283,982

)

Total stockholders’ equity

 

1,220,172

 

 

 

1,451,657

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,003,947

 

 

$

2,266,897

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands except share and per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended January

31,

 

Six Months Ended January

31,

 

2023

 

2022

 

2023

 

2022

Revenue:

 

 

 

 

 

 

 

Subscription and support

$

105,754

 

 

$

84,297

 

 

$

204,822

 

 

$

163,287

 

License

 

73,115

 

 

 

69,798

 

 

 

114,067

 

 

 

109,951

 

Services

 

53,742

 

 

 

50,538

 

 

 

109,004

 

 

 

97,329

 

Total revenue

 

232,611

 

 

 

204,633

 

 

 

427,893

 

 

 

370,567

 

Cost of revenue(1):

 

 

 

 

 

 

 

Subscription and support

 

48,924

 

 

 

48,276

 

 

 

104,615

 

 

 

96,326

 

License

 

1,845

 

 

 

2,254

 

 

 

3,718

 

 

 

4,593

 

Services

 

58,379

 

 

 

51,912

 

 

 

123,945

 

 

 

99,063

 

Total cost of revenue

 

109,148

 

 

 

102,442

 

 

 

232,278

 

 

 

199,982

 

Gross profit:

 

 

 

 

 

 

 

Subscription and support

 

56,830

 

 

 

36,021

 

 

 

100,207

 

 

 

66,961

 

License

 

71,270

 

 

 

67,544

 

 

 

110,349

 

 

 

105,358

 

Services

 

(4,637

)

 

 

(1,374

)

 

 

(14,941

)

 

 

(1,734

)

Total gross profit

 

123,463

 

 

 

102,191

 

 

 

195,615

 

 

 

170,585

 

Operating expenses(1):

 

 

 

 

 

 

 

Research and development

 

61,702

 

 

 

55,804

 

 

 

119,872

 

 

 

110,928

 

Sales and marketing

 

44,781

 

 

 

48,507

 

 

 

91,249

 

 

 

89,512

 

General and administrative

 

40,196

 

 

 

37,337

 

 

 

82,263

 

 

 

74,979

 

Total operating expenses

 

146,679

 

 

 

141,648

 

 

 

293,384

 

 

 

275,419

 

Income (loss) from operations

 

(23,216

)

 

 

(39,457

)

 

 

(97,769

)

 

 

(104,834

)

Interest income

 

5,392

 

 

 

699

 

 

 

10,030

 

 

 

1,373

 

Interest expense

 

(1,677

)

 

 

(4,833

)

 

 

(3,351

)

 

 

(9,627

)

Other income (expense), net

 

11,291

 

 

 

(8,045

)

 

 

(2,533

)

 

 

(6,862

)

Income (loss) before provision for (benefit from) income taxes

 

(8,210

)

 

 

(51,636

)

 

 

(93,623

)

 

 

(119,950

)

Provision for (benefit from) income taxes

 

979

 

 

 

(10,955

)

 

 

(15,116

)

 

 

(27,993

)

Net income (loss)

$

(9,189

)

 

$

(40,681

)

 

$

(78,507

)

 

$

(91,957

)

Net income (loss) per share:

 

 

 

 

 

 

 

Basic and diluted

$

(0.11

)

 

$

(0.49

)

 

$

(0.95

)

 

$

(1.10

)

Shares used in computing net income (loss) per share:

 

 

 

 

 

 

 

Basic and diluted

 

82,051,867

 

 

 

83,413,643

 

 

 

82,686,420

 

 

 

83,430,693

(1)Amounts include stock-based compensation expense as follows:

 

Three Months Ended January

31,

 

Six Months Ended January

31,

 

2023

 

2022

 

2023

 

2022

 

(unaudited, in thousands)

Stock-based compensation expense:

 

 

 

 

 

 

 

Cost of subscription and support revenue

$

3,440

 

$

3,406

 

$

6,908

 

$

6,436

Cost of license revenue

 

119

 

 

189

 

 

266

 

 

371

Cost of services revenue

 

4,397

 

 

5,552

 

 

9,746

 

 

10,741

Research and development

 

10,301

 

 

8,719

 

 

19,592

 

 

16,716

Sales and marketing

 

8,024

 

 

10,379

 

 

14,911

 

 

17,492

General and administrative

 

9,898

 

 

9,620

 

 

19,852

 

 

18,349

Total stock-based compensation expense

$

36,179

 

$

37,865

 

$

71,275

 

$

70,105

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

Three Months Ended January

31,

 

Six Months Ended January

31,

 

2023

 

2022

 

2023

 

2022

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income (loss)

$

(9,189

)

 

$

(40,681

)

 

$

(78,507

)

 

$

(91,957

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

6,606

 

 

 

8,545

 

 

 

14,229

 

 

 

16,979

 

Amortization of debt discount and issuance costs

 

425

 

 

 

3,572

 

 

 

848

 

 

 

7,096

 

Amortization of contract costs

 

4,107

 

 

 

3,309

 

 

 

8,597

 

 

 

6,310

 

Stock-based compensation

 

36,179

 

 

 

37,865

 

 

 

71,275

 

 

 

70,105

 

Changes to allowance for credit losses and revenue reserves

 

(243

)

 

 

122

 

 

 

(315

)

 

 

157

 

Deferred income tax

 

(323

)

 

 

(12,698

)

 

 

(18,358

)

 

 

(30,249

)

Amortization of premium (accretion of discount) on available-for-sale securities, net

 

(820

)

 

 

1,714

 

 

 

(722

)

 

 

3,315

 

Other non-cash items affecting net income (loss)

 

42

 

 

 

97

 

 

 

76

 

 

 

228

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(38,721

)

 

 

(32,028

)

 

 

16,524

 

 

 

(7,940

)

Unbilled accounts receivable

 

(8,801

)

 

 

5,689

 

 

 

(29,460

)

 

 

(448

)

Prepaid expenses and other assets

 

(3,981

)

 

 

(6,289

)

 

 

(4,820

)

 

 

(13,335

)

Operating lease assets

 

1,040

 

 

 

2,788

 

 

 

4,808

 

 

 

5,667

 

Accounts payable

 

(3,136

)

 

 

(378

)

 

 

(2,289

)

 

 

(1,711

)

Accrued employee compensation

 

13,009

 

 

 

15,314

 

 

 

(32,539

)

 

 

(47,323

)

Deferred revenue

 

7,284

 

 

 

12,630

 

 

 

(26,291

)

 

 

(17,826

)

Lease liabilities

 

(1,276

)

 

 

(3,431

)

 

 

(5,717

)

 

 

(6,817

)

Other liabilities

 

(982

)

 

 

850

 

 

 

(3,554

)

 

 

(2,303

)

Net cash provided by (used in) operating activities

 

1,220

 

 

 

(3,010

)

 

 

(86,215

)

 

 

(110,052

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

(101,097

)

 

 

(125,867

)

 

 

(270,329

)

 

 

(367,114

)

Sales of available-for-sale securities

 

105,092

 

 

 

23,030

 

 

 

202,115

 

 

 

50,361

 

Maturities of available-for-sale securities

 

11,000

 

 

 

142,322

 

 

 

33,268

 

 

 

415,265

 

Purchases of property and equipment

 

(1,333

)

 

 

(3,657

)

 

 

(1,937

)

 

 

(6,990

)

Capitalized software development costs

 

(2,421

)

 

 

(2,414

)

 

 

(6,118

)

 

 

(6,197

)

Acquisition of strategic investments

 

(5,660

)

 

 

(10,521

)

 

 

(5,841

)

 

 

(10,521

)

Acquisition of business, net of acquired cash

 

 

 

 

 

 

 

 

 

 

(43,830

)

Net cash provided by (used in) investing activities

 

5,581

 

 

 

22,893

 

 

 

(48,842

)

 

 

30,974

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

2

 

 

 

81

 

 

 

2

 

 

 

98

 

Repurchase and retirement of common stock

 

 

 

 

(11,189

)

 

 

(200,000

)

 

 

(37,451

)

Net cash provided by (used in) financing activities

 

2

 

 

 

(11,108

)

 

 

(199,998

)

 

 

(37,353

)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

 

4,933

 

 

 

(1,823

)

 

 

1,941

 

 

 

(2,807

)

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

11,736

 

 

 

6,952

 

 

 

(333,114

)

 

 

(119,238

)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period

 

269,836

 

 

 

258,720

 

 

 

614,686

 

 

 

384,910

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period

$

281,572

$

265,672

$

281,572

$

265,672

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Financial Measures

(unaudited, in thousands)

 

 

 

 

 

 

 

 

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:

 

Three Months Ended January

31,

 

Six Months Ended January

31,

 

2023

 

2022

 

2023

 

2022

Gross profit reconciliation:

 

 

 

 

 

 

 

GAAP gross profit

$

123,463

 

 

$

102,191

 

 

$

195,615

 

 

$

170,585

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

7,956

 

 

 

9,147

 

 

 

16,920

 

 

 

17,548

 

Amortization of intangibles

 

485

 

 

 

1,905

 

 

 

2,390

 

 

 

3,849

 

Non-GAAP gross profit

$

131,904

 

 

$

113,243

 

 

$

214,925

 

 

$

191,982

 

 

 

 

 

 

 

 

 

Income (loss) from operations reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

(23,216

)

 

$

(39,457

)

 

$

(97,769

)

 

$

(104,834

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

36,179

 

 

 

37,865

 

 

 

71,275

 

 

 

70,105

 

Amortization of intangibles

 

1,367

 

 

 

3,770

 

 

 

4,154

 

 

 

7,524

 

Acquisition consideration holdback

 

730

 

 

 

836

 

 

 

1,503

 

 

 

1,509

 

Non-GAAP income (loss) from operations

$

15,060

 

 

$

3,014

 

 

$

(20,837

)

 

$

(25,696

)

 

 

 

 

 

 

 

 

Net income (loss) reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss)

$

(9,189

)

 

$

(40,681

)

 

$

(78,507

)

 

$

(91,957

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

36,179

 

 

 

37,865

 

 

 

71,275

 

 

 

70,105

 

Amortization of intangibles

 

1,367

 

 

 

3,770

 

 

 

4,154

 

 

 

7,524

 

Acquisition consideration holdback

 

730

 

 

 

836

 

 

 

1,503

 

 

 

1,509

 

Amortization of debt discount and issuance costs

 

425

 

 

 

3,572

 

 

 

848

 

 

 

7,096

 

Tax impact of non-GAAP adjustments

 

(46,863

)

 

 

(10,165

)

 

 

(26,485

)

 

 

(17,131

)

Non-GAAP net income (loss)

$

(17,351

)

 

$

(4,803

)

 

$

(27,212

)

 

$

(22,854

)

 

 

 

 

 

 

 

 

Tax provision (benefit) reconciliation:

 

 

 

 

 

 

 

GAAP tax provision (benefit)

$

979

 

 

$

(10,955

)

 

$

(15,116

)

 

$

(27,993

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

56,765

 

 

 

5,347

 

 

 

84,391

 

 

 

16,895

 

Amortization of intangibles

 

2,145

 

 

 

532

 

 

 

4,339

 

 

 

1,877

 

Acquisition consideration holdback

 

1,145

 

 

 

118

 

 

 

1,753

 

 

 

359

 

Amortization of debt discount and issuance costs

 

667

 

 

 

504

 

 

 

1,000

 

 

 

1,766

 

Tax impact of non-GAAP adjustments

 

(13,859

)

 

 

3,664

 

 

 

(64,998

)

 

 

(3,766

)

Non-GAAP tax provision (benefit)

$

47,842

 

 

$

(790

)

 

$

11,369

 

 

$

(10,862

)

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Financial Measures

(unaudited, in thousands except share and per share data)

 

 

 

 

 

 

 

 

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:

 

Three Months Ended January

31,

 

Six Months Ended January

31,

 

2023

 

2022

 

2023

 

2022

 

 

 

 

 

 

 

 

Net income (loss) per share reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss) per share – diluted

$

(0.11

)

 

$

(0.49

)

 

$

(0.95

)

 

$

(1.10

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

0.44

 

 

 

0.45

 

 

 

0.86

 

 

 

0.84

 

Amortization of intangibles

 

0.02

 

 

 

0.05

 

 

 

0.05

 

 

 

0.10

 

Acquisition consideration holdback

 

0.01

 

 

 

0.01

 

 

 

0.02

 

 

 

0.02

 

Amortization of debt discount and issuance costs

 

0.01

 

 

 

0.04

 

 

 

0.02

 

 

 

0.08

 

Tax impact of non-GAAP adjustments

 

(0.58

)

 

 

(0.12

)

 

 

(0.34

)

 

 

(0.20

)

Non-GAAP net income (loss) per share – diluted

$

(0.21

)

 

$

(0.06

)

 

$

(0.34

)

 

$

(0.26

)

 

 

 

 

 

 

 

 

Shares used in computing Non-GAAP income (loss) per share amounts:

 

 

 

 

 

 

 

GAAP and pro forma weighted average shares — diluted

 

82,051,867

 

 

 

83,413,643

 

 

 

82,686,420

 

 

 

83,430,693

The following table summarizes our free cash flow for the periods indicated below (in thousands):

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

2023

 

2022

 

2023

 

2022

Free cash flow:

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$ 1,220

 

$ (3,010)

 

$ (86,215)

 

$ (110,052)

Purchases of property and equipment

(1,333)

 

(3,657)

 

(1,937)

 

(6,990)

Capitalized software development costs

(2,421)

 

(2,414)

 

(6,118)

 

(6,197)

Free cash flow

$ (2,534)

 

$ (9,081)

 

$ (94,270)

 

$ (123,239)

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Outlook

The following table reconciles the specific items excluded from GAAP outlook in the calculation of non-GAAP outlook for the periods indicated below (in millions):

 

Third Quarter

Fiscal Year 2023

 

Fiscal Year 2023

Income (loss) from operations outlook reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

(64

)

$

(59

)

 

$

(175

)

$

(164

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

33

 

 

33

 

 

 

139

 

 

139

 

Amortization of intangibles

 

1

 

 

1

 

 

 

7

 

 

7

 

Acquisition consideration holdback

 

1

 

 

1

 

 

 

3

 

 

3

 

Assignment of lease agreement and sublease (1)

 

9

 

 

8

 

 

 

9

 

 

8

 

Non-GAAP income (loss) from operations

$

(20

)

$

(16

)

 

$

(17

)

$

(7

)

 

 

 

 

 

 

 

 

(1) In February 2023, the Company assigned the remaining lease term of its existing headquarters consisting of 179,496 square feet in San Mateo, California, with remaining lease payments of approximately $90 million due through December 2029, and concurrently entered into a sublease for 78,911 square feet of office space also in San Mateo, California with the same third party for its new worldwide headquarters. The term of the sublease is approximately 4 years with total lease payments of approximately $22 million.

 

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