SAN MATEO, Calif. - Guidewire Software (NYSE:GWRE) shares soared Tuesday, climbing 8.2% after the company reported third-quarter earnings and revenue that surpassed Wall Street estimates and raised its fourth-quarter revenue outlook.
For the third quarter ended April 30, 2024, the company posted adjusted earnings per share (EPS) of $0.26, beating the analyst consensus of $0.13. Revenue also exceeded expectations, coming in at $240.7 million against the consensus estimate of $231.29 million.
The company's performance represents a significant improvement compared to the same period last year, with subscription and support revenue growing by 28%, license revenue by 11%, and total revenue seeing a 16% increase year-over-year (YoY).
Guidewire's chief executive officer, Mike Rosenbaum, attributed the robust quarter to strong Tier-1 deal volume and an acceleration in migration activity, particularly in the Asia Pacific region. The company's continuous innovation and frequent product releases have been key factors in maturing the Guidewire Cloud Platform and driving global engagement.
Looking ahead, Guidewire provided an optimistic outlook for the fourth quarter of fiscal year 2024, projecting total revenue to be between $279 million and $287 million, compared to the consensus estimate of $285.6 million. The company anticipates operating income to range from $5 million to $13 million and adjusted operating income to be between $43 million and $51 million.
For the full fiscal year 2024, Guidewire updated its guidance, expecting annual recurring revenue (ARR) to range from $856 million to $864 million, with total revenue estimated between $968 million and $976 million. The company forecasts an operating loss between $58 million and $50 million and an adjusted operating income between $94 million and $102 million. Operating cash flow is projected to be between $130 million and $150 million.
The upbeat results and guidance reflect the company's confidence in delivering on its pipeline and strategic objectives. Jeff Cooper, chief financial officer of Guidewire, emphasized the company's success in exceeding expectations for ARR, revenue, and operating income, fueled by eight cloud deals that contributed to a 33% increase in InsuranceSuite cloud wins year-to-date.
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