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Guidewire Software Inc GWRE

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Morningstar’s Analysis

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Guidewire’s Cloud Transition Is Rolling but the Outlook Remains Conservative; Maintain $116 FVE

Dan Romanoff, CPA Equity Analyst

Analyst Note

| Dan Romanoff, CPA |

For the eighth consecutive quarter, wide-moat Guidewire reported strong results offset by light guidance. We are pleased to see continued cloud traction and are surprised by large net new customers selecting on premise solutions. Overall, the firm saw 12 go-lives on 35 different products, with cloud momentum continuing. We see this as the beginning of a critical turning point in which customers have real proof points of Guidewire’s cloud-based solutions. On the negative side, we see continued margin pressure within subscriptions as the subscale cloud business ramps. Overall, we continue to see good outweighing the bad and we still believe that a transition to a true SaaS model is ultimately better for Guidewire. Further, we continue to expect the company should be the primary winner, as the P&C insurance industry continues to modernize. We are maintaining our fair value estimate of $116 per share and see shares as increasingly attractive as the software group has sold off recently.

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Company Profile

Business Description

Guidewire Software provides software solutions for property and casualty insurers. Flagship product InsuranceSuite is an on-premises system of record and comprises ClaimCenter, a claims management system; PolicyCenter, a policy management system including policy definitions, quotas, issuance, maintenance, and renewal; and BillingCenter, for billing management, payment plans, and agent commissions. The company also offers InsuranceNow, a cloud-based offering, as well as a variety of other add-on applications.

2850 S. Delaware Street, Suite 400
San Mateo, CA, 94403
T +1 650 357-9100
Sector Technology
Industry Software - Application
Most Recent Earnings Jan 31, 2021
Fiscal Year End Jul 31, 2021
Stock Type Distressed
Employees 2,690