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Mar 08, 2022 at 4:15 PM EST

Guidewire Announces Second Quarter Fiscal Year 2022 Financial Results

SAN MATEO, Calif.--(BUSINESS WIRE)--Mar. 8, 2022-- Guidewire (NYSE: GWRE) today announced its financial results for the fiscal quarter ended January 31, 2022.

“Our second quarter results exceeded our guidance for ARR, revenue, and profitability with subscription revenue increasing 64% year-over-year,” said Mike Rosenbaum, chief executive officer, Guidewire. “We saw continued demand for Guidewire Cloud, including 11 cloud deals in the quarter from a mix of existing customer migrations and new customers embarking on core modernizations.”

Second Quarter Fiscal Year 2022 Financial Highlights

Revenue

  • Total revenue for the second quarter of fiscal year 2022 was $204.6 million, an increase of 14% from the same quarter in fiscal year 2021. Subscription and support revenue was $84.3 million, an increase of 42%; services revenue was $50.5 million, an increase of 19%; and license revenue was $69.8 million, a decrease of 10%.
  • Annual recurring revenue, or ARR, was $620 million as of January 31, 2022, compared to $582 million as of July 31, 2021. ARR results for interim quarterly periods in fiscal year 2022 are based on actual currency rates at the end of fiscal year 2021, held constant throughout the year.

Profitability

  • GAAP loss from operations was $39.5 million for the second quarter of fiscal year 2022, compared with $27.1 million for the same quarter in fiscal year 2021.
  • Non-GAAP income from operations was $3.0 million for the second quarter of fiscal year 2022, compared with $7.5 million for the same quarter in fiscal year 2021.
  • GAAP net loss was $40.7 million for the second quarter of fiscal year 2022, compared with $8.7 million for the same quarter in fiscal year 2021. GAAP net loss per share was $0.49, based on diluted weighted average shares outstanding of 83.4 million, compared with $0.10 for the same quarter in fiscal year 2021, based on diluted weighted average shares outstanding of 83.8 million.
  • Non-GAAP net loss was $4.8 million for the second quarter of fiscal year 2022, compared with net income of $9.0 million for the same quarter in fiscal year 2021. Non-GAAP net loss per share was $0.06, based on diluted weighted average shares outstanding of 83.4 million, compared with net income per share of $0.11 for the same quarter in fiscal year 2021, based on diluted weighted average shares outstanding of 84.8 million.

Liquidity

  • The Company had $1.1 billion in cash, cash equivalents, and investments at January 31, 2022, compared to $1.3 billion at July 31, 2021. The Company used $110.1 million in cash from operations during the first half of fiscal year 2022 and $43.8 million for the acquisition of Hazard Hub during the first quarter of fiscal year 2022.
  • During the second quarter of fiscal year 2022, the Company used $11.2 million to repurchase 0.1 million shares of its common stock, which completes its authorized share repurchase program of $200 million.

Business Outlook

Guidewire is issuing the following outlook for the third quarter of fiscal year 2022 based on current expectations:

  • ARR between $632 million and $635 million
  • Total revenue between $186 million and $190 million
  • Operating income (loss) between $(65) million and $(62) million
  • Non-GAAP operating income (loss) between $(29) million and $(25) million

Guidewire is issuing the following updated outlook for fiscal year 2022 based on current expectations:

  • ARR between $664 million and $670 million
  • Total revenue between $784 million and $792 million
  • Operating income (loss) between $(202) million and $(194) million
  • Non-GAAP operating income (loss) between $(50) million and $(42) million
  • Operating cash flow between $10 million and $20 million

Conference Call Information

 

What:

Guidewire Second Quarter Fiscal Year 2022 Financial Results Conference Call

When:

Tuesday, March 8, 2022

Time:

2:00 p.m. PT (5:00 p.m. ET)

Live Call:

(877) 705-6003, Domestic

 

(201) 493-6725, International

Replay:

(844) 512-2921, Passcode 13727147, Domestic

 

(412) 317-6671, Passcode 13727147, International

Webcast:

https://ir.guidewire.com/ (live and replay)

 

The webcast will be archived on Guidewire’s website (www.guidewire.com) for a period of three months.

Non-GAAP Financial Measures and Other Metrics

This press release contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP income tax provision (benefit), non-GAAP net income (loss) per share, and free cash flow. Non-GAAP gross profit and non-GAAP income (loss) from operations exclude stock-based compensation, amortization of intangibles, the COVID-19 Canada Emergency Wage Subsidy benefit, and acquisition consideration holdback. Non-GAAP net income (loss), non-GAAP income tax provision (benefit), and non-GAAP net income (loss) per share also exclude the amortization of debt discount and issuance costs from our convertible notes and the related tax effects of the non-GAAP adjustments. Free cash flow consists of net cash flow provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized software development costs. These Non-GAAP measures enable us to analyze our financial performance without the effects of certain non-cash items such as amortization, stock-based compensation, and changes in fair value of strategic investments.

Annual recurring revenue ("ARR") is used to quantify the annualized recurring value outlined in active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, support contracts, and hosting agreements based on customer contracts, which may not be the same as the timing and amount of revenue recognized. All components of the licensing and other arrangements that are not expected to recur (primarily perpetual licenses and professional services) are excluded. In some arrangements with multiple performance obligations, a portion of recurring license and support or subscription contract value is allocated to services revenue for revenue recognition purposes, but does not get allocated for purposes of calculating ARR. This allocation only impacts the initial term of the contract. This means that as we increase arrangements with multiple performance obligations that include services at discounted rates, more of the total contract value will be recognized as services revenue, but our reported ARR amount will not be impacted. During the six months ended January 31, 2022, the recurring license and support or subscription contract value recognized as services revenue was $6.0 million.

Guidewire believes that these non-GAAP financial measures and other metrics 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 and other metrics to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation, and for budgeting and planning purposes. The Company believes that the use of these non-GAAP financial measures and other metrics 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 and other metrics 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. 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 the financial tables at the end of this press release, and not to rely on any single financial measure to evaluate the Company’s business.

About Guidewire

Guidewire is the platform P&C insurers trust to engage, innovate, and grow efficiently. We combine digital, core, analytics, and AI to deliver our platform as a cloud service. More than 450 insurers, from new ventures to the largest and most complex in the world, run on Guidewire.

As a partner to our customers, we continually evolve to enable their success. We are proud of our unparalleled implementation track record, with 1,000+ successful projects, supported by the largest R&D team and partner ecosystem in the industry. Our marketplace provides hundreds of applications that accelerate integration, localization, and innovation.

For more information, please visit www.guidewire.com and follow us on twitter: @Guidewire_PandC.

NOTE: For information about Guidewire’s trademarks, visit https://www.guidewire.com/legal-notices.

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 financial outlook and our future business momentum regarding our cloud sales, product enhancements and cloud migration, and our associated cloud leadership, vision and strategy. 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 Forms 10-K and 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: quarterly and annual operating results may fluctuate more than expected; the impact of the COVID-19 pandemic and inflation on our employees and our business and the businesses of our customers, system integrator ("SI") partners, and vendors; seasonal and other variations related to our customer agreements and related 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 revenue; our ability to successfully manage any changes to our business model, including the transition of our products to cloud offerings and the costs related to cloud operations; our products or cloud-based services may experience data security breaches; we face intense competition in our market; our services revenue produces lower gross margins than our license, subscription and support revenue; our product development and sales cycles are lengthy and may be affected by factors outside of our control; changes in accounting guidance, such as revenue recognition, which have and may cause us to experience greater volatility in our quarterly and annual results; assertions by third parties that we violate their intellectual property rights could substantially harm our business; weakened global economic conditions may adversely affect the P&C insurance industry including the rate of information technology spending; general political or destabilizing events, including war, conflict or acts of terrorism; our ability to sell our products is highly dependent on the quality of our professional services and SI partners; the risk of losing and hiring sufficient key employees; the challenges of international operations, including changes in foreign exchange rates; 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.

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

 

 

 

 

 

January 31,
2022

 

July 31,
2021

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

257,378

 

 

$

384,910

 

Short-term investments

 

562,753

 

 

 

734,517

 

Accounts receivable, net

 

111,705

 

 

 

104,068

 

Unbilled accounts receivable, net

 

84,318

 

 

 

79,061

 

Prepaid expenses and other current assets

 

61,423

 

 

 

52,729

 

Total current assets

 

1,077,577

 

 

 

1,355,285

 

Long-term investments

 

293,537

 

 

 

227,164

 

Unbilled accounts receivable, net

 

19,665

 

 

 

24,361

 

Property and equipment, net

 

81,692

 

 

 

80,061

 

Operating lease assets

 

91,780

 

 

 

97,447

 

Intangible assets, net

 

27,918

 

 

 

19,743

 

Goodwill

 

372,062

 

 

 

340,877

 

Deferred tax assets, net

 

166,587

 

 

 

138,428

 

Other assets

 

52,807

 

 

 

38,479

 

TOTAL ASSETS

$

2,183,625

 

 

$

2,321,845

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

24,661

 

 

$

27,830

 

Accrued employee compensation

 

53,516

 

 

 

102,137

 

Deferred revenue, net

 

123,234

 

 

 

138,699

 

Other current liabilities

 

29,740

 

 

 

31,648

 

Total current liabilities

 

231,151

 

 

 

300,314

 

Lease liabilities

 

108,941

 

 

 

115,374

 

Convertible senior notes, net

 

350,921

 

 

 

343,825

 

Deferred revenue, net

 

5,652

 

 

 

7,237

 

Other liabilities

 

6,492

 

 

 

10,201

 

Total liabilities

 

703,157

 

 

 

776,951

 

STOCKHOLDERS’ EQUITY:

 

 

 

Common stock

 

8

 

 

 

8

 

Additional paid-in capital

 

1,687,982

 

 

 

1,617,204

 

Accumulated other comprehensive income (loss)

 

(12,014

)

 

 

(6,218

)

Retained earnings (accumulated deficit)

 

(195,508

)

 

 

(66,100

)

Total stockholders’ equity

 

1,480,468

 

 

 

1,544,894

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,183,625

 

 

$

2,321,845

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands except share and per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

2022

 

2021

 

2022

 

2021

Revenue:

 

 

 

 

 

 

 

Subscription and support

$

84,297

 

 

$

59,563

 

 

$

163,287

 

 

$

117,529

 

License

 

69,798

 

 

 

77,912

 

 

 

109,951

 

 

 

143,195

 

Services

 

50,538

 

 

 

42,587

 

 

 

97,329

 

 

 

89,140

 

Total revenue

 

204,633

 

 

 

180,062

 

 

 

370,567

 

 

 

349,864

 

Cost of revenue(1):

 

 

 

 

 

 

 

Subscription and support

 

50,565

 

 

 

40,158

 

 

 

100,896

 

 

 

77,164

 

License

 

2,254

 

 

 

2,834

 

 

 

4,593

 

 

 

5,771

 

Services

 

55,165

 

 

 

48,910

 

 

 

105,674

 

 

 

99,934

 

Total cost of revenue

 

107,984

 

 

 

91,902

 

 

 

211,163

 

 

 

182,869

 

Gross profit:

 

 

 

 

 

 

 

Subscription and support

 

33,732

 

 

 

19,405

 

 

 

62,391

 

 

 

40,365

 

License

 

67,544

 

 

 

75,078

 

 

 

105,358

 

 

 

137,424

 

Services

 

(4,627

)

 

 

(6,323

)

 

 

(8,345

)

 

 

(10,794

)

Total gross profit

 

96,649

 

 

 

88,160

 

 

 

159,404

 

 

 

166,995

 

Operating expenses(1):

 

 

 

 

 

 

 

Research and development

 

60,403

 

 

 

53,194

 

 

 

120,329

 

 

 

105,809

 

Sales and marketing

 

51,167

 

 

 

39,216

 

 

 

94,798

 

 

 

75,860

 

General and administrative

 

24,536

 

 

 

22,820

 

 

 

49,111

 

 

 

44,000

 

Total operating expenses

 

136,106

 

 

 

115,230

 

 

 

264,238

 

 

 

225,669

 

Income (loss) from operations

 

(39,457

)

 

 

(27,070

)

 

 

(104,834

)

 

 

(58,674

)

Interest income

 

699

 

 

 

2,015

 

 

 

1,373

 

 

 

4,804

 

Interest expense

 

(4,833

)

 

 

(4,651

)

 

 

(9,627

)

 

 

(9,271

)

Other income (expense), net

 

(8,045

)

 

 

6,805

 

 

 

(6,862

)

 

 

9,373

 

Income (loss) before provision for (benefit from) income taxes

 

(51,636

)

 

 

(22,901

)

 

 

(119,950

)

 

 

(53,768

)

Provision for (benefit from) income taxes

 

(10,955

)

 

 

(14,249

)

 

 

(27,993

)

 

 

(24,926

)

Net income (loss)

$

(40,681

)

 

$

(8,652

)

 

$

(91,957

)

 

$

(28,842

)

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

(0.49

)

 

$

(0.10

)

 

$

(1.10

)

 

$

(0.34

)

Diluted

$

(0.49

)

 

$

(0.10

)

 

$

(1.10

)

 

$

(0.34

)

Shares used in computing net income (loss) per share:

 

 

 

 

 

 

 

Basic

 

83,413,643

 

 

 

83,830,624

 

 

 

83,430,693

 

 

 

83,737,889

 

Diluted

 

83,413,643

 

 

 

83,830,624

 

 

 

83,430,693

 

 

 

83,737,889

 

(1)   

Amounts include stock-based compensation expense as follows:

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

2022

 

2021

 

2022

 

2021

 

(unaudited, in thousands)

Stock-based compensation expense:

 

 

 

 

 

 

 

Cost of subscription and support revenue

$

3,773

 

$

2,954

 

$

7,121

 

$

5,556

Cost of license revenue

 

189

 

 

145

 

 

371

 

 

396

Cost of services revenue

 

6,081

 

 

5,578

 

 

11,718

 

 

11,121

Research and development

 

9,433

 

 

7,604

 

 

18,047

 

 

14,851

Sales and marketing

 

10,825

 

 

6,806

 

 

18,314

 

 

12,783

General and administrative

 

7,564

 

 

6,809

 

 

14,534

 

 

13,273

Total stock-based compensation expense

$

37,865

 

$

29,896

 

$

70,105

 

$

57,980

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

2022

 

2021

 

2022

 

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income (loss)

$

(40,681

)

 

$

(8,652

)

 

$

(91,957

)

 

$

(28,842

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

8,545

 

 

 

10,434

 

 

 

16,979

 

 

 

20,971

 

Amortization of debt discount and issuance costs

 

3,572

 

 

 

3,380

 

 

 

7,096

 

 

 

6,715

 

Amortization of contract costs

 

3,309

 

 

 

3,201

 

 

 

6,310

 

 

 

5,355

 

Stock-based compensation

 

37,865

 

 

 

29,896

 

 

 

70,105

 

 

 

57,980

 

Changes to allowance for credit losses and revenue reserves

 

122

 

 

 

161

 

 

 

157

 

 

 

118

 

Deferred income tax

 

(12,698

)

 

 

(8,467

)

 

 

(30,249

)

 

 

(20,294

)

Amortization of premium (accretion of discount) on available-for-sale securities, net

 

1,714

 

 

 

1,738

 

 

 

3,315

 

 

 

3,128

 

Other non-cash items affecting net income (loss)

 

97

 

 

 

810

 

 

 

228

 

 

 

800

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

(32,028

)

 

 

(13,556

)

 

 

(7,940

)

 

 

22,368

 

Unbilled accounts receivable

 

5,689

 

 

 

(6,844

)

 

 

(448

)

 

 

(32,058

)

Prepaid expenses and other assets

 

(6,289

)

 

 

(1,600

)

 

 

(13,335

)

 

 

(3,441

)

Operating lease assets

 

2,788

 

 

 

4,672

 

 

 

5,667

 

 

 

91

 

Accounts payable

 

(378

)

 

 

(2,114

)

 

 

(1,711

)

 

 

(4,312

)

Accrued employee compensation

 

15,314

 

 

 

17,357

 

 

 

(47,323

)

 

 

3,844

 

Deferred revenue

 

12,630

 

 

 

(765

)

 

 

(17,826

)

 

 

(24,411

)

Lease liabilities

 

(3,431

)

 

 

(4,103

)

 

 

(6,817

)

 

 

2,669

 

Other liabilities

 

850

 

 

 

(12,219

)

 

 

(2,303

)

 

 

(13,059

)

Net cash provided by (used in) operating activities

 

(3,010

)

 

 

13,329

 

 

 

(110,052

)

 

 

(2,378

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

(125,867

)

 

 

(177,196

)

 

 

(367,114

)

 

 

(523,601

)

Sales of available-for-sale securities

 

23,030

 

 

 

27,650

 

 

 

50,361

 

 

 

85,553

 

Maturities of available-for-sale securities

 

142,322

 

 

 

214,607

 

 

 

415,265

 

 

 

456,198

 

Purchases of property and equipment

 

(3,657

)

 

 

(3,610

)

 

 

(6,990

)

 

 

(5,517

)

Capitalized software development costs

 

(2,414

)

 

 

(2,303

)

 

 

(6,197

)

 

 

(4,884

)

Acquisition of strategic investments

 

(10,521

)

 

 

 

 

 

(10,521

)

 

 

(2,000

)

Acquisition of business, net of acquired cash

 

 

 

 

 

 

 

(43,830

)

 

 

 

Net cash provided by (used in) investing activities

 

22,893

 

 

 

59,148

 

 

 

30,974

 

 

 

5,749

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

81

 

 

 

104

 

 

 

98

 

 

 

1,820

 

Repurchase and retirement of common stock

 

(11,189

)

 

 

(37,679

)

 

 

(37,451

)

 

 

(42,679

)

Net cash provided by (used in) financing activities

 

(11,108

)

 

 

(37,575

)

 

 

(37,353

)

 

 

(40,859

)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

 

(1,823

)

 

 

2,649

 

 

 

(2,807

)

 

 

1,906

 

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

 

6,952

 

 

 

37,551

 

 

 

(119,238

)

 

 

(35,582

)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period

 

258,720

 

 

 

293,836

 

 

 

384,910

 

 

 

366,969

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period

$

265,672

 

 

$

331,387

 

 

$

265,672

 

 

$

331,387

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Financial Measures

(unaudited, in thousands)

 

 

 

 

 

 

 

 

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:

 

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

2022

 

2021

 

2022

 

2021

Gross profit reconciliation:

 

 

 

 

 

 

 

GAAP gross profit

$

96,649

 

 

$

88,160

 

 

$

159,404

 

 

$

166,995

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

10,043

 

 

 

8,677

 

 

 

19,210

 

 

 

17,073

 

Amortization of intangibles

 

1,905

 

 

 

4,526

 

 

 

3,849

 

 

 

9,052

 

COVID-19 Canada Emergency Wage Subsidy benefit (1)

 

 

 

 

(968

)

 

 

 

 

 

(968

)

Non-GAAP gross profit

$

108,597

 

 

$

100,395

 

 

$

182,463

 

 

$

192,152

 

 

 

 

 

 

 

 

 

Income (loss) from operations reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

(39,457

)

 

$

(27,070

)

 

$

(104,834

)

 

$

(58,674

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

37,865

 

 

 

29,896

 

 

 

70,105

 

 

 

57,980

 

Amortization of intangibles

 

3,770

 

 

 

6,323

 

 

 

7,524

 

 

 

12,646

 

COVID-19 Canada Emergency Wage Subsidy benefit (1)

 

 

 

 

(1,686

)

 

 

 

 

 

(1,686

)

Acquisition consideration holdback (2)

 

836

 

 

 

 

 

 

1,509

 

 

 

 

Non-GAAP income (loss) from operations

$

3,014

 

 

$

7,463

 

 

$

(25,696

)

 

$

10,266

 

 

 

 

 

 

 

 

 

Net income (loss) reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss)

$

(40,681

)

 

$

(8,652

)

 

$

(91,957

)

 

$

(28,842

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

37,865

 

 

 

29,896

 

 

 

70,105

 

 

 

57,980

 

Amortization of intangibles

 

3,770

 

 

 

6,323

 

 

 

7,524

 

 

 

12,646

 

Amortization of debt discount and issuance costs

 

3,572

 

 

 

3,379

 

 

 

7,096

 

 

 

6,714

 

COVID-19 Canada Emergency Wage Subsidy benefit (1)

 

 

 

 

(1,686

)

 

 

 

 

 

(1,686

)

Acquisition consideration holdback (2)

 

836

 

 

 

 

 

 

1,509

 

 

 

 

Tax impact of non-GAAP adjustments (3)

 

(10,165

)

 

 

(20,232

)

 

 

(17,131

)

 

 

(23,375

)

Non-GAAP net income (loss)

$

(4,803

)

 

$

9,028

 

 

$

(22,854

)

 

$

23,437

 

 

 

 

 

 

 

 

 

Tax provision (benefit) reconciliation:

 

 

 

 

 

 

 

GAAP tax provision (benefit)

$

(10,955

)

 

$

(14,249

)

 

$

(27,993

)

 

$

(24,926

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

5,347

 

 

 

8,138

 

 

 

16,895

 

 

 

(14,153

)

Amortization of intangibles

 

532

 

 

 

1,721

 

 

 

1,877

 

 

 

(3,298

)

Amortization of debt discount and issuance costs

 

504

 

 

 

920

 

 

 

1,766

 

 

 

(1,727

)

COVID-19 Canada Emergency Wage Subsidy benefit (1)

 

 

 

 

(459

)

 

 

 

 

 

(459

)

Acquisition consideration holdback (2)

 

118

 

 

 

 

 

 

359

 

 

 

 

Tax impact of non-GAAP adjustments (3)

 

3,664

 

 

 

9,912

 

 

 

(3,766

)

 

 

43,012

 

Non-GAAP tax provision (benefit)

$

(790

)

 

$

5,983

 

 

$

(10,862

)

 

$

(1,551

)

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Financial Measures

(unaudited, in thousands except per share amounts)

 

 

 

 

 

 

 

 

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:

 

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Net income (loss) per share reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss) per share — diluted

$

(0.49

)

 

$

(0.10

)

 

$

(1.10

)

 

$

(0.34

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

 

0.45

 

 

 

0.36

 

 

 

0.84

 

 

 

0.70

 

Amortization of intangibles

 

0.05

 

 

 

0.08

 

 

 

0.10

 

 

 

0.16

 

Amortization of debt discount and issuance costs

 

0.04

 

 

 

0.04

 

 

 

0.08

 

 

 

0.08

 

COVID-19 Canada Emergency Wage Subsidy benefit (1)

 

 

 

 

(0.02

)

 

 

 

 

 

(0.02

)

Acquisition consideration holdback (2)

 

0.01

 

 

 

 

 

 

0.02

 

 

 

 

Tax impact of non-GAAP adjustments (3)

 

(0.12

)

 

 

(0.24

)

 

 

(0.20

)

 

 

(0.28

)

Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation (4)

 

 

 

 

(0.01

)

 

 

(0.01

)

 

 

(0.02

)

Non-GAAP net income (loss) per share — diluted

$

(0.06

)

 

$

0.11

 

 

$

(0.27

)

 

$

0.28

 

 

 

 

 

 

 

 

 

Shares used in computing Non-GAAP income (loss) per share amounts:

 

 

 

 

 

 

 

GAAP weighted average shares — diluted

 

83,413,643

 

 

 

83,830,624

 

 

 

83,430,693

 

 

 

83,737,889

 

Non-GAAP dilutive shares excluded from GAAP income (loss) per share calculation (4)

 

 

 

 

1,007,573

 

 

 

 

 

 

859,492

 

Pro forma weighted average shares — diluted

 

83,413,643

 

 

 

84,838,197

 

 

 

83,430,693

 

 

 

84,597,381

 

(1) Effective the second quarter of fiscal year 2021, the COVID-19 Canada Emergency Wage Subsidy benefit has been included as a non-GAAP adjustment. Prior to the second quarter of fiscal year 2021, this program was unavailable. Beginning with the first quarter of fiscal year 2022, we have not and do not expect to receive a subsidy under the COVID-19 Canada Emergency Wage Subsidy.

(2) Effective the first quarter of fiscal year 2022, the acquisition consideration holdback that is earned and recognized as expense over a post-acquisition service period has been included as a non-GAAP adjustment. Prior to the first quarter of fiscal year 2022, there was no acquisition consideration holdback in any periods presented.

(3) Adjustments reflect the impact on the tax benefit (provision) from all non-GAAP adjustments.

(4) Due to the occurrence of a net loss on a GAAP basis, potentially dilutive securities were excluded from the calculation of GAAP net income (loss) per share, as they would have an anti-dilutive effect. However, these shares have a dilutive effect on non-GAAP net income (loss) per share and, therefore, are included in the non-GAAP net income (loss) per share calculation.

 

Six Months Ended January 31,

 

2022

 

2021

Free cash flow:

 

 

 

Net cash provided by (used in) operating activities

$

(110,052

)

 

$

(2,378

)

Purchases of property and equipment

 

(6,990

)

 

 

(5,517

)

Capitalized software development costs

 

(6,197

)

 

 

(4,884

)

Free cash flow

$

(123,239

)

 

$

(12,779

)

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

Reconciliation of GAAP to Non-GAAP Outlook

The following tables reconcile the specific items excluded from GAAP outlook in the calculation of non-GAAP outlook for the periods indicated below:

 

(in $ millions)

 

Third Quarter
Fiscal Year 2022

 

Fiscal Year 2022

Income (loss) from operations outlook reconciliation:

 

 

 

 

 

 

 

 

GAAP income (loss) from operations

 

$

(65

)

$

(62

)

 

$

(202

)

$

(194

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

32

 

 

32

 

 

 

135

 

 

135

 

Amortization of intangibles

 

 

4

 

 

4

 

 

 

14

 

 

14

 

Acquisition consideration holdback

 

 

1

 

 

1

 

 

 

3

 

 

3

 

Non-GAAP income (loss) from operations

 

$

(29

)

$

(25

)

 

$

(50

)

$

(42

)

 

 

 

 

 

 

 

 

 

 

Investor Contact:
Alex Hughes
Guidewire Software, Inc.
(650) 356-4921
ir@guidewire.com

Media Contact:
Diana Stott
Guidewire Software, Inc.
(650) 781-9955
dstott@guidewire.com

Source: Guidewire