Guidewire Software Announces Fourth Quarter and Fiscal 2012 Financial Results

FOSTER CITY, Calif.--(BUSINESS WIRE)--Sep. 4, 2012-- Guidewire Software, Inc. (NYSE: GWRE), a provider of core system software to property and casualty insurers, today announced its financial results for the quarter and fiscal year ended July 31, 2012.

“Our fourth quarter exceeded our expectations for both revenue and profitability, capping a year with total revenue growth of 35%, recurring revenue growth of 28%, and increasing market traction,” said Marcus Ryu, Chief Executive Officer of Guidewire Software. “Our strategy to focus on winning PolicyCenter and complete InsuranceSuite sales in fiscal 2012 — including at very large insurers — has been successful, and is validated by our results. These results included a 29% increase in the number of customers licensing at least one of our core system solutions, for a total of 130 insurers.”

Ryu added, “We believe the $1.2 trillion insurance industry is still in the early days of the inevitable replacement of its legacy core systems with flexible, upgradeable next-generation software. We also believe that Guidewire is well positioned to capture a disproportionate share of this major opportunity over time, and our investments across technology, sales, and services during 2013 are focused on extending our market leadership position and driving further market share gains.”

Fourth Quarter Fiscal 2012 Financial Highlights

Revenue

• Total revenue for the fourth quarter of fiscal 2012 was $67.6 million, an increase of 33% from the comparable period in fiscal 2011.
• License revenue for the fourth quarter of fiscal 2012 was $28.9 million, up 11% from the year ago period, maintenance revenue was $7.9 million, up 33% from the year ago period, and services revenue was $30.8 million, up 61% from the year ago period.
• Rolling four-quarter recurring term license and maintenance revenue was $104.4 million, an increase of 28% from the same period a year ago.

Profitability

• GAAP operating income was $5.3 million for the fourth quarter of fiscal 2012, compared to a loss of ($5.0) million in the comparable period in fiscal 2011.
• Non-GAAP operating income was $9.6 million for the fourth quarter of fiscal 2012, an increase of 31% from the comparable period in fiscal 2011.
• Adjusted EBITDA was $10.4 million for the fourth quarter of fiscal 2012, an increase of 22% from the comparable period in fiscal 2011.
• GAAP net income was $3.5 million for the fourth quarter of fiscal 2012, compared to a loss of ($1.2) million for the comparable period in fiscal 2011. GAAP net income per share was $0.06, based on diluted weighted average shares outstanding of 61.2 million, compared to a GAAP net loss per share ($0.06) for the comparable period in fiscal 2011, based on diluted weighted average shares outstanding of 20.4 million.
• Non-GAAP net income was $6.4 million for the fourth quarter of fiscal 2012, a decrease of 43% from the comparable period in fiscal 2011. Non-GAAP net income per diluted share was $0.10, based on diluted weighted average shares outstanding of 61.2 million, compared to $0.24 for the fourth quarter of fiscal 2011, based on pro forma diluted weighted average shares outstanding of 45.8 million.

Fiscal 2012 Financial Highlights

Revenue

• Total revenue for the fiscal year ended July 31, 2012 was $232.1 million, an increase of 35% from fiscal 2011.
• License revenue for fiscal 2012 was $97.1 million, up 31% from fiscal 2011, maintenance revenue was $29.6 million, up 39% from the year ago period, and services revenue was $105.4 million, up 36% from the year ago period.
• In fiscal 2012, 55% of total revenue was in the United States, and 45% was generated outside the United States.

Profitability

• GAAP operating income was $24.0 million for fiscal 2012, compared to $6.9 million in fiscal 2011.
• Non-GAAP operating income was $41.9 million for fiscal 2012, an increase of 78% from fiscal 2011.
• Adjusted EBITDA was $44.8 million in fiscal 2012, an increase of 74% from fiscal 2011.
• GAAP net income was $15.2 million for fiscal 2012, compared to $35.6 million for fiscal 2011, with the decrease primarily attributable to an income tax benefit in 2011 due to the release of a significant portion of the Company’s tax valuation allowance. GAAP net income per diluted share was $0.25, based on diluted weighted average shares outstanding of 41.5 million, compared to $0.76 in fiscal 2011, based on diluted weighted average shares outstanding of 17.8 million.
• Non-GAAP net income was $27.1 million in fiscal 2012, a decrease of 4% from fiscal 2011 resulting from a tax benefit in 2011 compared to a tax expense in 2012. Non-GAAP net income per diluted share was $0.50, based on pro forma diluted weighted average shares outstanding of 53.8 million, compared to $0.65 in fiscal 2011, based on pro forma diluted weighted average shares outstanding of 43.1 million.

Balance Sheet

• The Company had $205.7 million in cash and cash equivalents at July 31, 2012, an increase from $201.9 million at April 30, 2012. The Company generated $19.1 million in cash flow from operations in the fourth quarter and $17.1 million in cash flow from operations in fiscal 2012.

Conference Call Information

The webcast will be archived on Guidewire’s website for a period of three months.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Non-GAAP operating income, Adjusted EBITDA, Non-GAAP net income and Non-GAAP net income per share.

Guidewire believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Guidewire’s financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the company’s performance to that of prior periods for trend analyses, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. These measures are used in monthly financial reports prepared for management and in monthly and quarterly financial reports presented to the Company’s board of directors. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. Guidewire urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

About Guidewire Software

Guidewire Software is a provider of core system software to the global Property/Casualty (general) insurance industry. Designed to be flexible and scalable, Guidewire solutions give insurers the capability to deliver excellent service, increase market share and lower operating costs. Guidewire InsuranceSuite™, consisting of Guidewire PolicyCenter®, Guidewire ClaimCenter® and Guidewire BillingCenter® spans the key functional areas in insurance – underwriting and policy administration, claims management, and billing. Guidewire is headquartered in Foster City, California, with offices in Beijing, Dublin, Hong Kong, London, Munich, Paris, Sydney, Tokyo, and Toronto. For more information, please visit www.guidewire.com.

NOTE: Guidewire, Guidewire Software, Guidewire ClaimCenter, Guidewire PolicyCenter, Guidewire BillingCenter, Guidewire InsuranceSuite, Deliver Insurance Your Way, and the Guidewire logo are trademarks or registered trademarks of Guidewire Software, Inc.

Cautionary Language Concerning Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our market positioning, future adoption of our products and future investments. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as "expect," "anticipate," "should," "believe," "hope," "target," "project," "goals," "estimate," "potential," "predict," "may," "will," "might," "could," "intend," variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Guidewire’s control. Guidewire’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Guidewire’s most recent Form 10-Q filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the market for our software may develop more slowly than expected or than it has in the past; quarterly and annual operating results may fluctuate more than expected; seasonal and other variations related to our revenue recognition may cause significant fluctuations in our results of operations and cash flows; our reliance on sales to and renewals from a relatively small number of large customers for a substantial portion of our revenues; our services revenues produce lower gross margins than our license and maintenance revenues; assertions by third parties that we violate their intellectual property rights could substantially harm our business; we face intense competition in our market; weakened global economic conditions may adversely affect the P&C insurance industry including the rate of information technology spending; our product development and sales cycles are lengthy; the risk of losing key employees; increased demands on employees and costs associated with operating as a public company; changes in foreign exchange rates; general political or destabilizing events, including war, conflict or acts of terrorism; and other risks and uncertainties. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Guidewire’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Guidewire undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Guidewire’s views as of any date subsequent to the date of this press release.

Source: Guidewire Software, Inc.

Media Contact:
Guidewire Software, Inc.
Diana Stott, 650-356-4941
dstott@guidewire.com
or
Investor Contact:
ICR
Garo Toomajanian, 650-357-5282
ir@guidewire.com