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Guidewire Announces Fourth Quarter and Fiscal Year 2023 Financial Results

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

“This was an exceptional fourth quarter with record demand for Guidewire Cloud Platform, completing an outstanding year for the Guidewire team and the broader community,” said Mike Rosenbaum, chief executive officer, Guidewire. “Sales activity in the quarter exceeded our expectations, adding to our confidence in achieving our mid-term and long-term financial targets.”

“We closed seventeen cloud deals in the fourth quarter, including eleven with Tier-1 insurers, resulting in better-than-expected ARR and Fully Ramped ARR, which grew 15% and 17%, respectively,” said Jeff Cooper, chief financial officer, Guidewire. “We executed on broad-based demand for our cloud offering while simultaneously delivering increased operational efficiency with non-GAAP subscription and support gross margins improving 8 percentage points for the year.”

Fiscal Year 2023 Financial Highlights

Revenue

  • Total revenue for fiscal year 2023 was $905.3 million, an increase of 11% from fiscal year 2022. Subscription and support revenue was $429.7 million, an increase of 25%; services revenue was $210.1 million, a decrease of less than 1%; and license revenue was $265.6 million, an increase of 3%.
  • As of July 31, 2023, annual recurring revenue, or ARR, was $763 million, or $761 million based on currency exchange rates as of July 31, 2022, compared to $664 million as of July 31, 2022. We measure ARR on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates. ARR grew in fiscal year 2023 by 15%, or 15% on a constant currency basis.

Profitability

  • GAAP loss from operations was $149.5 million for fiscal year 2023, compared with $199.4 million for fiscal year 2022.
  • Non-GAAP income from operations was $11.7 million for fiscal year 2023, compared with Non-GAAP loss from operations of $45.3 million for fiscal year 2022.
  • GAAP net loss was $111.9 million for fiscal year 2023, compared with $180.4 million for fiscal year 2022. GAAP net loss per share was $1.36, based on diluted weighted average shares outstanding of 82.2 million, compared with $2.16 for fiscal year 2022, based on diluted weighted average shares outstanding of 83.6 million.
  • Non-GAAP net income was $29.2 million for fiscal year 2023, compared with non-GAAP net loss of $42.5 million for fiscal year 2022. Non-GAAP net income per share was $0.35 for fiscal year 2023, based on diluted weighted average shares outstanding of 82.6 million, compared with non-GAAP net loss per share of $0.51 for fiscal year 2022, based on diluted weighted average shares outstanding of 83.6 million.

Liquidity and Capital Resources

  • The Company generated $38.4 million in cash from operations during fiscal year 2023.
  • The Company repurchased 4,041,284 shares of common stock during the fiscal year ended July 31, 2023, at an average price of $64.78 per share, for an aggregate purchase price of $261.8 million.

Fourth Quarter Fiscal Year 2023 Financial Highlights

Revenue

  • Total revenue for the fourth quarter of fiscal year 2023 was $270.0 million, an increase of 10% from the same quarter in fiscal year 2022. Subscription and support revenue was $117.3 million, an increase of 25%; services revenue was $51.7 million, a decrease of 8%; and license revenue was $100.9 million, a decrease of 6%.

Profitability

  • GAAP income from operations was $6.1 million for the fourth quarter of fiscal year 2023, compared with GAAP loss from operations of $32.2 million for the same quarter in fiscal year 2022.
  • Non-GAAP income from operations was $44.7 million for the fourth quarter of fiscal year 2023, compared with $5.3 million for the same quarter in fiscal year 2022.
  • GAAP net income was $12.2 million for the fourth quarter of fiscal year 2023, compared with GAAP net loss of $31.0 million for the same quarter in fiscal year 2022. GAAP net income per share was $0.15, based on diluted weighted average shares outstanding of 82.1 million, compared to a GAAP net loss per share of $0.37 for the same quarter in fiscal year 2022, based on diluted weighted average shares outstanding of 84.0 million.
  • Non-GAAP net income was $62.8 million for the fourth quarter of fiscal year 2023, compared with net income of $2.2 million for the same quarter in fiscal year 2022. Non-GAAP net income per share was $0.74, based on diluted weighted average shares outstanding of 85.7 million, compared to a Non-GAAP net income per share of $0.03 for the same quarter in fiscal year 2022, based on diluted weighted average shares outstanding of 84.1 million.

Liquidity and Capital Resources

  • The Company had $927.5 million in cash, cash equivalents, and investments at July 31, 2023, compared to $1.2 billion at July 31, 2022. The Company generated $173.2 million in cash from operations during the fourth quarter of fiscal year 2023.
  • The Company repurchased 604,614 shares at an average price of $75.77 per share during the fourth quarter of fiscal year 2023. As of July 31, 2023, $138.2 million remains under the September 2022 authorized and approved $400 million share repurchase program.

Business Outlook

Guidewire is issuing the following outlook for the first quarter of fiscal year 2024 based on current expectations:

  • ARR between $766 million and $769 million
  • Total revenue between $197 million and $202 million
  • Operating income (loss) between $(63) million and $(58) million
  • Non-GAAP operating income (loss) between $(25) million and $(20) million

Guidewire is issuing the following outlook for fiscal year 2024 based on current expectations:

  • ARR between $846 million and $858 million
  • Total revenue between $976 million and $986 million
  • Operating income (loss) between $(100) million and $(90) million
  • Non-GAAP operating income (loss) between $62 million and $72 million
  • Operating cash flow between $95 million and $125 million

Conference Call Information

What:

Guidewire Fourth Quarter and Fiscal Year 2023 Financial Results Conference Call

When:

Thursday, September 7, 2023

Time:

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

Live Call:

(877) 704-4453, Domestic

Live Call:

(201) 389-0920, International

Replay:

(844) 512-2921, Passcode 13740833, Domestic

Replay

(412) 317-6671, Passcode 13740833, 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, acquisition consideration holdback, and net impact of assignment of lease agreement. Non-GAAP net income (loss) and non-GAAP tax provision (benefit) 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. Non-GAAP net income (loss) per share also excludes the interest expense on convertible debt. 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, net impact of assignment of lease agreement, 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 fiscal year ended July 31, 2023, the recurring license and support or subscription contract value recognized as services revenue was $29.6 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 machine learning to deliver our platform as a cloud service. More than 540 insurers in 40 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 more than 1,600 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.

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 sales activity, operational scale, financial targets (including, without limitation, ARR and Fully Ramped ARR), gross and operating margins, operational efficiency, and our associated product 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; the timing, success, and number of professional services engagements and the billing rates and utilization of our professional services employees and contractors; recent global events (including, without limitation, global pandemics, the ongoing conflict between Russia and Ukraine, escalating tensions in the South China Sea, inflation higher than we have seen in decades, bank failures and associated financial instability and crises, 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; issues in the development and use of artificial intelligence combined with an uncertain regulatory environment; 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, without limitation, security, privacy, artificial intelligence and tax regulations and 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)

 

 

 

 

 

July 31,

2023

 

July 31,

2022

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

401,813

 

 

$

606,303

 

Short-term investments

 

396,872

 

 

 

369,865

 

Accounts receivable, net

 

151,034

 

 

 

143,797

 

Unbilled accounts receivable, net

 

87,752

 

 

 

71,515

 

Prepaid expenses and other current assets

 

62,132

 

 

 

61,223

 

Total current assets

 

1,099,603

 

 

 

1,252,703

 

Long-term investments

 

128,782

 

 

 

187,507

 

Unbilled accounts receivable, net

 

11,112

 

 

 

13,914

 

Property and equipment, net

 

54,499

 

 

 

80,740

 

Operating lease assets

 

52,373

 

 

 

90,287

 

Intangible assets, net

 

14,473

 

 

 

21,361

 

Goodwill

 

372,214

 

 

 

372,192

 

Deferred tax assets, net

 

226,875

 

 

 

191,461

 

Other assets

 

67,957

 

 

 

56,732

 

TOTAL ASSETS

$

2,027,888

 

 

$

2,266,897

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

34,627

 

 

$

40,440

 

Accrued employee compensation

 

103,980

 

 

 

90,962

 

Deferred revenue, net

 

206,923

 

 

 

170,776

 

Other current liabilities

 

27,731

 

 

 

35,340

 

Total current liabilities

 

373,261

 

 

 

337,518

 

Lease liabilities

 

42,972

 

 

 

105,123

 

Convertible senior notes, net

 

397,171

 

 

 

358,216

 

Deferred revenue, net

 

5,988

 

 

 

7,500

 

Other liabilities

 

9,030

 

 

 

6,883

 

Total liabilities

 

828,422

 

 

 

815,240

 

STOCKHOLDERS’ EQUITY:

 

 

 

Common stock

 

8

 

 

 

8

 

Additional paid-in capital

 

1,831,267

 

 

 

1,755,476

 

Accumulated other comprehensive income (loss)

 

(13,859

)

 

 

(19,845

)

Retained earnings (accumulated deficit)

 

(617,950

)

 

 

(283,982

)

Total stockholders’ equity

 

1,199,466

 

 

 

1,451,657

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,027,888

 

 

$

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 July 31,

 

Twelve Months Ended July 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

Subscription and support

$

117,346

 

 

$

93,570

 

 

$

429,667

 

 

$

343,708

 

License

 

100,924

 

 

 

94,786

 

 

 

265,593

 

 

 

258,631

 

Services

 

51,688

 

 

 

56,243

 

 

 

210,081

 

 

 

210,275

 

Total revenue

 

269,958

 

 

 

244,599

 

 

 

905,341

 

 

 

812,614

 

Cost of revenue(1):

 

 

 

 

 

 

 

Subscription and support

 

53,611

 

 

 

54,675

 

 

 

210,507

 

 

 

202,832

 

License

 

1,527

 

 

 

2,210

 

 

 

6,488

 

 

 

8,754

 

Services

 

51,142

 

 

 

65,047

 

 

 

230,135

 

 

 

223,852

 

Total cost of revenue

 

106,280

 

 

 

121,932

 

 

 

447,130

 

 

 

435,438

 

Gross profit:

 

 

 

 

 

 

 

Subscription and support

 

63,735

 

 

 

38,895

 

 

 

219,160

 

 

 

140,876

 

License

 

99,397

 

 

 

92,576

 

 

 

259,105

 

 

 

249,877

 

Services

 

546

 

 

 

(8,804

)

 

 

(20,054

)

 

 

(13,577

)

Total gross profit

 

163,678

 

 

 

122,667

 

 

 

458,211

 

 

 

377,176

 

Operating expenses(1):

 

 

 

 

 

 

 

Research and development

 

66,819

 

 

 

59,862

 

 

 

249,746

 

 

 

229,230

 

Sales and marketing

 

50,111

 

 

 

48,493

 

 

 

188,224

 

 

 

182,620

 

General and administrative

 

40,653

 

 

 

46,521

 

 

 

169,731

 

 

 

164,773

 

Total operating expenses

 

157,583

 

 

 

154,876

 

 

 

607,701

 

 

 

576,623

 

Income (loss) from operations

 

6,095

 

 

 

(32,209

)

 

 

(149,490

)

 

 

(199,447

)

Interest income

 

7,732

 

 

 

3,904

 

 

 

24,389

 

 

 

6,277

 

Interest expense

 

(1,682

)

 

 

(4,934

)

 

 

(6,716

)

 

 

(19,446

)

Other income (expense), net

 

3,612

 

 

 

(3,305

)

 

 

(2,277

)

 

 

(17,099

)

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

 

15,757

 

 

 

(36,544

)

 

 

(134,094

)

 

 

(229,715

)

Provision for (benefit from) income taxes

 

3,537

 

 

 

(5,514

)

 

 

(22,239

)

 

 

(49,284

)

Net income (loss)

$

12,220

 

 

$

(31,030

)

 

$

(111,855

)

 

$

(180,431

)

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

0.15

 

 

$

(0.37

)

 

$

(1.36

)

 

$

(2.16

)

Diluted

$

0.15

 

 

$

(0.37

)

 

$

(1.36

)

 

$

(2.16

)

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

 

 

 

 

 

 

 

Basic

 

81,490,213

 

 

 

83,953,164

 

 

 

82,176,629

 

 

 

83,569,517

 

Diluted

 

82,135,106

 

 

 

83,953,164

 

 

 

82,176,629

 

 

 

83,569,517

 

 

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

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2023

 

2022

 

2023

 

2022

 

(unaudited, in thousands)

Stock-based compensation expense:

 

 

 

 

 

 

 

Cost of subscription and support revenue

$

3,585

 

$

3,336

 

$

14,073

 

$

13,222

Cost of license revenue

 

104

 

 

151

 

 

463

 

 

692

Cost of services revenue

 

4,880

 

 

5,212

 

 

19,257

 

 

20,978

Research and development

 

10,189

 

 

8,606

 

 

39,865

 

 

33,446

Sales and marketing

 

7,582

 

 

7,002

 

 

29,925

 

 

31,281

General and administrative

 

10,208

 

 

9,671

 

 

39,259

 

 

37,392

Total stock-based compensation expense

$

36,548

 

$

33,978

 

$

142,842

 

$

137,011

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income (loss)

$

12,220

 

 

$

(31,030

)

 

$

(111,855

)

 

$

(180,431

)

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

 

 

 

 

 

 

 

Depreciation and amortization

 

4,927

 

 

 

7,795

 

 

 

24,838

 

 

 

33,540

 

Amortization of debt discount and issuance costs

 

429

 

 

 

3,672

 

 

 

1,703

 

 

 

14,391

 

Amortization of contract costs

 

4,966

 

 

 

4,736

 

 

 

17,966

 

 

 

14,456

 

Stock-based compensation

 

36,548

 

 

 

33,978

 

 

 

142,842

 

 

 

137,011

 

Changes to allowance for credit losses and revenue reserves

 

173

 

 

 

(110

)

 

 

(131

)

 

 

2,597

 

Deferred income tax

 

3,518

 

 

 

(6,658

)

 

 

(27,516

)

 

 

(54,115

)

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

 

(2,400

)

 

 

883

 

 

 

(4,858

)

 

 

5,498

 

Changes in fair value of strategic investments

 

802

 

 

 

(1,545

)

 

 

802

 

 

 

(1,545

)

Accelerated depreciation related to lease assignment

 

 

 

 

 

 

 

26,921

 

 

 

 

Gain from lease assignment

 

 

 

 

 

 

 

(18,419

)

 

 

 

Other non-cash items affecting net income (loss)

 

479

 

 

 

(158

)

 

 

164

 

 

 

63

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(22,057

)

 

 

(58,075

)

 

 

(7,301

)

 

 

(42,545

)

Unbilled accounts receivable

 

43,843

 

 

 

36,556

 

 

 

(13,435

)

 

 

18,106

 

Prepaid expenses and other assets

 

(9,895

)

 

 

(9,726

)

 

 

(22,613

)

 

 

(23,390

)

Operating lease assets

 

(7,652

)

 

 

(849

)

 

 

(19,000

)

 

 

7,160

 

Accounts payable

 

645

 

 

 

9,293

 

 

 

(6,080

)

 

 

13,580

 

Accrued employee compensation

 

30,832

 

 

 

23,313

 

 

 

12,440

 

 

 

(8,942

)

Deferred revenue

 

63,995

 

 

 

62,782

 

 

 

34,635

 

 

 

31,564

 

Lease liabilities

 

8,595

 

 

 

254

 

 

 

9,548

 

 

 

(9,637

)

Other liabilities

 

3,269

 

 

 

8,481

 

 

 

(2,256

)

 

 

4,699

 

Net cash provided by (used in) operating activities

 

173,237

 

 

 

83,592

 

 

 

38,395

 

 

 

(37,940

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

(147,292

)

 

 

(13,530

)

 

 

(506,115

)

 

 

(519,536

)

Maturities and sales of available-for-sale securities

 

164,875

 

 

 

216,641

 

 

 

547,094

 

 

 

908,914

 

Purchases of property and equipment

 

(3,207

)

 

 

(1,534

)

 

 

(5,821

)

 

 

(9,510

)

Capitalized software development costs

 

(2,729

)

 

 

(3,079

)

 

 

(11,606

)

 

 

(12,266

)

Acquisition of strategic investments

 

(2,789

)

 

 

(1,039

)

 

 

(10,840

)

 

 

(11,560

)

Acquisition of business, net of acquired cash

 

 

 

 

 

 

 

 

 

 

(43,830

)

Net cash provided by (used in) investing activities

 

8,858

 

 

 

197,459

 

 

 

12,712

 

 

 

312,212

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

1

 

 

 

 

 

 

228

 

 

 

116

 

Repurchase and retirement of common stock

 

(47,814

)

 

 

 

 

 

(261,807

)

 

 

(37,451

)

Net cash provided by (used in) financing activities

 

(47,813

)

 

 

 

 

 

(261,579

)

 

 

(37,335

)

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

 

917

 

 

 

(1,520

)

 

 

2,576

 

 

 

(7,161

)

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

 

135,199

 

 

 

279,531

 

 

 

(207,896

)

 

 

229,776

 

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

 

271,591

 

 

 

335,155

 

 

 

614,686

 

 

 

384,910

 

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

$

406,790

 

 

$

614,686

 

 

$

406,790

 

 

$

614,686

 

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 July 31,

 

Twelve Months Ended July 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Gross profit reconciliation:

 

 

 

 

 

 

 

GAAP gross profit

$

163,678

 

 

$

122,667

 

 

$

458,211

 

 

$

377,176

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

8,569

 

 

 

8,699

 

 

 

33,793

 

 

 

34,892

 

Amortization of intangibles

 

485

 

 

 

1,905

 

 

 

3,360

 

 

 

7,659

 

Non-GAAP gross profit

$

172,732

 

 

$

133,271

 

 

$

495,364

 

 

$

419,727

 

 

 

 

 

 

 

 

 

Income (loss) from operations reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

6,095

 

 

$

(32,209

)

 

$

(149,490

)

 

$

(199,447

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

36,548

 

 

 

33,978

 

 

 

142,842

 

 

 

137,011

 

Amortization of intangibles

 

1,367

 

 

 

2,787

 

 

 

6,888

 

 

 

14,081

 

Acquisition consideration holdback

 

730

 

 

 

749

 

 

 

2,939

 

 

 

3,067

 

Net impact of assignment of lease agreement (1)

 

 

 

 

 

 

 

8,502

 

 

 

 

Non-GAAP income (loss) from operations

$

44,740

 

 

$

5,305

 

 

$

11,681

 

 

$

(45,288

)

 

 

 

 

 

 

 

 

Net income (loss) reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss)

$

12,220

 

 

$

(31,030

)

 

$

(111,855

)

 

$

(180,431

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

36,548

 

 

 

33,978

 

 

 

142,842

 

 

 

137,011

 

Amortization of intangibles

 

1,367

 

 

 

2,787

 

 

 

6,888

 

 

 

14,081

 

Acquisition consideration holdback

 

730

 

 

 

749

 

 

 

2,939

 

 

 

3,067

 

Amortization of debt discount and issuance costs

 

429

 

 

 

3,672

 

 

 

1,703

 

 

 

14,391

 

Changes in fair value of strategic investments

 

802

 

 

 

(1,538

)

 

 

802

 

 

 

(1,538

)

Net impact of assignment of lease agreement (1)

 

 

 

 

 

 

 

8,502

 

 

 

 

Tax impact of non-GAAP adjustments

 

10,698

 

 

 

(6,464

)

 

 

(22,611

)

 

 

(29,105

)

Non-GAAP net income (loss)

$

62,794

 

 

$

2,154

 

 

$

29,210

 

 

$

(42,524

)

 

 

 

 

 

 

 

 

Tax provision (benefit) reconciliation:

 

 

 

 

 

 

 

GAAP tax provision (benefit)

$

3,537

 

 

$

(5,514

)

 

$

(22,239

)

 

$

(49,284

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

(4,705

)

 

 

10,397

 

 

 

92,849

 

 

 

37,826

 

Amortization of intangibles

 

(176

)

 

 

853

 

 

 

4,677

 

 

 

3,936

 

Acquisition consideration holdback

 

(94

)

 

 

229

 

 

 

1,924

 

 

 

847

 

Amortization of debt discount and issuance costs

 

(55

)

 

 

1,124

 

 

 

1,105

 

 

 

4,049

 

Changes in fair value of strategic investments

 

(103

)

 

 

(471

)

 

 

(103

)

 

 

(471

)

Net impact of assignment of lease agreement (1)

 

 

 

 

 

 

 

3,196

 

 

 

 

Tax impact of non-GAAP adjustments

 

(5,565

)

 

 

(5,668

)

 

 

(81,037

)

 

 

(17,082

)

Non-GAAP tax provision (benefit)

$

(7,161

)

 

$

950

 

 

$

372

 

 

$

(20,179

)

 

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 July 31,

 

Twelve Months Ended July 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

Net income (loss) per share reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss) per share – diluted

$

0.15

 

 

$

(0.37

)

 

$

(1.36

)

 

$

(2.16

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

0.44

 

 

 

0.40

 

 

 

1.74

 

 

 

1.63

 

Amortization of intangibles

 

0.02

 

 

 

0.03

 

 

 

0.08

 

 

 

0.16

 

Acquisition consideration holdback

 

0.01

 

 

 

0.01

 

 

 

0.04

 

 

 

0.03

 

Amortization of debt discount and issuance costs

 

 

 

 

0.04

 

 

 

0.02

 

 

 

0.17

 

Changes in fair value of strategic investments

 

0.01

 

 

 

0.02

 

 

 

0.01

 

 

 

0.01

 

Net impact of assignment of lease agreement (1)

 

 

 

 

 

 

 

0.10

 

 

 

 

Tax impact of non-GAAP adjustments

 

0.13

 

 

 

(0.08

)

 

 

(0.28

)

 

 

(0.35

)

Interest expense on convertible debt (2)

 

0.01

 

 

 

 

 

 

 

 

 

 

Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation

 

(0.03

)

 

 

(0.02

)

 

 

 

 

 

 

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

$

0.74

 

 

$

0.03

 

 

$

0.35

 

 

$

(0.51

)

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

GAAP weighted average shares – diluted

 

82,135,106

 

 

 

83,953,164

 

 

 

82,176,629

 

 

 

83,569,517

 

Non-GAAP dilutive shares excluded from GAAP income (loss) per share calculation

 

3,516,480

 

 

 

149,169

 

 

 

466,516

 

 

 

 

GAAP and pro forma weighted average shares — diluted

 

85,651,586

 

 

 

84,102,333

 

 

 

82,643,145

 

 

 

83,569,517

 

(1) During the third quarter of fiscal year 2023, the Company recorded in general and administrative expenses a net loss of $8.5 million related to the assignment of the lease agreement for the remaining lease term of the Company’s previous headquarters. The loss is comprised of an $18.4 million gain from the de-recognition of the operating lease asset of $56.9 million, the de-recognition of the lease liability of $75.5 million, and other expenses related to the lease assignment of $0.2 million, offset by accelerated depreciation expense related to property and equipment, primarily consisting of leasehold improvements, at the previous headquarters of $26.9 million. Prior to the third quarter of fiscal year 2023, there were no transactions similar to the lease assignment in any periods presented.

(2) During the fourth quarter of fiscal year 2023, the Company's Convertible Notes were dilutive due to non-GAAP net income. Accordingly, $1.0 million of interest expense related to the Convertible Notes was excluded from non-GAAP net income (loss) per share calculation under the “if-converted” method.

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

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Free cash flow:

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$

173,237

 

 

$

83,592

 

 

$

38,395

 

 

$

(37,940

)

Purchases of property and equipment

 

(3,207

)

 

 

(1,534

)

 

 

(5,821

)

 

 

(9,510

)

Capitalized software development costs

 

(2,729

)

 

 

(3,079

)

 

 

(11,606

)

 

 

(12,266

)

Free cash flow

$

167,301

 

 

$

78,979

 

 

$

20,968

 

 

$

(59,716

)

 

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):

 

First Quarter

Fiscal Year 2024

 

Fiscal Year 2024

Income (loss) from operations outlook reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

(63

)

$

(58

)

 

$

(100

)

$

(90

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

37

 

 

37

 

 

 

156

 

 

156

 

Amortization of intangibles

 

1

 

 

1

 

 

 

5

 

 

5

 

Acquisition consideration holdback

 

 

 

 

 

 

1

 

 

1

 

Non-GAAP income (loss) from operations

$

(25

)

$

(20

)

 

$

62

 

$

72

 

 

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