Guidewire Software, Inc. (GWRE) delivered better-than-expected financial results for the fourth quarter, signaling continued growth and a positive outlook for the company. Total revenue climbed 8% year-over-year to $291.5 million, surpassing the consensus estimate of $283.9 million. This strong performance was driven by a significant 29% surge in subscription and support revenue, reaching $151.8 million. While license revenue decreased by 12% to $88.9 million, services revenue also saw a slight dip of 2% to $50.8 million.
Despite the mixed performance in certain segments, Guidewire demonstrated robust profitability. Adjusted income from operations rose to $49.0 million from $44.7 million in the previous year’s quarter. Adjusted earnings per share (EPS) came in at 62 cents, exceeding the analyst consensus of 54 cents.
Mike Rosenbaum, the company’s CEO, expressed confidence in Guidewire’s position to drive further modernization within the property and casualty (P&C) insurance industry. He emphasized the company’s commitment to delivering value to insurers by enhancing agility and innovation.
Looking ahead, Guidewire projects strong growth. For the first quarter, the company anticipates total revenue of $251 million to $257 million, exceeding the current estimate of $236.1 million. For the full fiscal year 2025, Guidewire forecasts revenue between $1.135 billion and $1.149 billion, significantly higher than the street view of $1.093 billion.
The company’s confidence in its future is further reflected in its anticipated annual recurring revenue (ARR). Guidewire expects an ARR of $869 million to $874 million in the first quarter and $995 million to $1.005 billion for fiscal year 2025.
Encouraged by Guidewire’s strong performance and optimistic guidance, several analysts have adjusted their price targets on the stock. Baird analyst Joe Vruwink maintained an Outperform rating and raised the price target from $165 to $175. Oppenheimer analyst Ken Wong also maintained an Outperform rating while increasing the price target from $170 to $185. RBC Capital analyst Rishi Jaluria echoed this sentiment, maintaining an Outperform rating and boosting the price target from $170 to $180.
These upward revisions in price targets reflect the analysts’ confidence in Guidewire’s ability to continue delivering strong results and maintain its growth trajectory.
