Guidewire Is Exceedingly Compelling
Despite guidance cut, we remain confident in the firm's ability to maintain its footprint and expand existing relationships across multiple touch points with their cloud platform.
Revenue came in at $179.7 million, representing year-over-year growth of 66%, driven by a 210% uptick in license and subscription revenue to $94.3 million. Adjusted operating margin was 17.6%, versus minus 7.7% in the year prior. We expect margins to widen as cloud and subscription adoption ramps, though there will be fits and starts along the way.
Guidewire now expects fiscal 2019 revenue to be in the range of $722-$732 million, versus a range of $740.5-$752.5 million previously. Management’s initial fiscal 2019 guidance assumed faster deal closure for a few of their InsuranceSuite cloud deals. The revenue guidance cut was driven by decreased expectations for services revenue, as the pushbacks in deployment also mean a delay in the recognition of revenue the firm accrues for assisting with implementation. While we would have expected Guidewire’s years of expertise to facilitate a level of foresight and prevent management from overshooting guidance, we are not shocked by the delays, given the labyrinthine nature of insurance regulations.
Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.
United States