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Investing.com -- Guidewire Software Inc (NYSE:GWRE) saw its shares soar 11% in premarket trading Wednesday after the property and casualty insurance software provider reported third-quarter earnings that significantly exceeded analyst expectations and raised its full-year outlook.
For the quarter ended April 30, 2025, Guidewire posted adjusted earnings per share of $0.88, handily beating the analyst consensus of $0.41. Revenue came in at $293.5 million, up 22% YoY and above the $286.33 million estimate.
Annual recurring revenue (ARR) was reported at $960 million, also beating Street estimates of $945 million thanks to sustained cloud demand.
The company’s strong performance was driven by robust cloud adoption, with 17 cloud deals closed in the quarter. Annual recurring revenue (ARR) grew to $960 million, up from $864 million at the end of fiscal 2024.
"We delivered exceptional third-quarter results, highlighted by record Q3 sales activity and 17 cloud deals," said Mike Rosenbaum, CEO of Guidewire.
According to Stifel analysts, this was Guidewire’s "third best quarter in company history with nine cloud migrations, five net new wins, and three expansions."
"Overall, Guidewire continues to display positive cloud momentum, with the company delivering a combination of high subscription growth and steady margin expansion," they added, raising their price target to $270 from $230.
Oppenheimer also hiked its target price to $275 from $230, noting that Guidewire remains its "top SMID pick, with strong P&C trends and a resilient operating profile forming a unique blend of offense and defense."
Looking ahead, Guidewire raised its full-year fiscal 2025 revenue guidance to $1.178-1.186 billion, up from the previous analyst consensus of $1.171 billion. For the fourth quarter, the company expects revenue between $332-340 million, in line with estimates of $332.2 million.
Full-year ARR outlook was also lifted to $1.012 billion - $1.022 billion, ahead of the $1 billion expected by analysts.
Chief Financial Officer Jeff Cooper expressed confidence in the company’s growth trajectory, stating, "Based on this strong execution and our robust pipeline, we are raising our full-year fiscal 2025 targets, reinforcing our confidence in our growth trajectory and long-term value creation."
The company’s cash position remained strong, with $1.24 billion in cash, cash equivalents, and investments as of April 30, 2025, up from $1.13 billion at the end of fiscal 2024.
(Luke Juricic contributed to this report.)