Group 1 - Guidewire provides core systems to the Property and Casualty (P&C) insurance industry, functioning as the ERP system for insurance companies [2] - The core systems manage policy administration, claims, and billing, indicating their complexity and long-term operational design [2] - Guidewire has been established for about 25 years and has a significant market share in the P&C industry [3]

Group 1 - Guidewire provides core systems to the Property and Casualty (P&C) insurance industry, functioning as the ERP system for insurance companies [2] - The core systems manage policy administration, claims, and billing, representing complex implementations designed for long-term operation [2] - Guidewire has been established for about 25 years and has secured a significant market share within the P&C industry [3]

Summary of Guidewire Software Conference Call Company Overview - **Company**: Guidewire Software (NYSE: GWRE) - **Industry**: Property and Casualty (P&C) Insurance - **Role**: Provides core systems (ERP-like) for the P&C insurance industry, managing policy administration, claims, and billing [5][12][19] Key Points and Arguments Transition to Cloud - Guidewire transitioned from an on-premises software model to a cloud service model starting around 2018, driven by customer feedback and competitive pressure [7][19] - The company has successfully validated its ability to run applications as a service, improving gross margins significantly [8][20] - Currently, over 20% of direct written premium (DWP) is processed on Guidewire's platform, with aspirations to increase market penetration beyond 50% [9][12][13] Market Penetration Strategy - Focus on large, mature P&C insurance markets (e.g., Japan, Germany, USA) to increase market share [13] - Emphasis on minimizing implementation risks and establishing a track record of success to gain trust from tier-one insurers [15][16] Recent Performance - The company reported an annual recurring revenue (ARR) growth rate approaching 20%, with fully ramped ARR exceeding 20% [20][21] - Referenceability from existing customers is a key driver of new business, with 100% of customers expressing satisfaction with their decision to partner with Guidewire [21][22] AI and Automation - The insurance industry is complex and has historically resisted traditional automation; however, large language models (LLMs) present new opportunities for efficiency [24][25] - Guidewire aims to create a "LLM-friendly" environment to enhance decision-making processes in underwriting and claims management [28][29] Customer Lifecycle and Expansion - Guidewire's customer lifecycle typically involves migrating existing on-premises customers to the cloud while expanding their use of multiple Guidewire products [30][32] - Increased willingness from customers to adopt the full InsuranceSuite reflects improved confidence in Guidewire's capabilities [34] Growth Constraints and Opportunities - Growth is limited by the concentrated nature of the insurance industry and the bandwidth of insurance companies to execute projects [37] - Guidewire is exploring new product opportunities, such as pricing platforms and underwriting efficiencies, to drive growth beyond core implementations [38][45] Strategic Partnerships - The recent deal with Liberty Mutual is highlighted as a significant long-term partnership that will define best-in-class operations for the next decade [49][50] - Referenceability and a balance between configuration and customization are critical factors in winning competitive bids [52][53] Financial Performance and Margins - Guidewire has seen significant improvements in gross margins due to operational efficiencies and a strong engineering organization [60][61] - The company is committed to maintaining focus on core system opportunities while exploring new product innovations [42][43] Future Outlook - In the next 6 to 12 months, the focus will be on executing effectively on new product innovations and maintaining operational excellence [63] - The long-term vision includes positioning Guidewire as both a core systems leader and an innovation partner in data and analytics [64] Additional Important Insights - The transition to cloud is progressing well, with a clear communication strategy for on-premises customers regarding migration timelines [56] - The company is committed to ensuring no customer is left behind during the transition to cloud services [57]

Core Insights - LähiTapiola has chosen to migrate its Guidewire InsuranceSuite from an on-premises environment to the Guidewire Cloud Platform to enhance continuous insurance innovation and increase business agility [1] Company Overview - LähiTapiola is a Finnish finance group providing insurance services, serving approximately 1.8 million owner-customers and employing around 3,800 staff [1]

Core Insights - Guidewire Software (GWRE) experienced a significant stock increase of 20.15% following a quarterly earnings report that exceeded market expectations by 32% [1][3] - The stock's Relative Strength (RS) Rating improved dramatically from 62 to 88, placing it in the top 12% of all stocks for price performance over the past year [2][3] - Guidewire reported a 35% increase in fiscal fourth quarter earnings, reaching 84 cents per share, alongside a 22% revenue growth to $356.6 million [3][4] Financial Performance - The company's earnings per share (EPS) growth of 35% was a decline from a previous quarter's 238% increase, indicating a strong but fluctuating performance [3] - Revenue for the quarter rose by 22%, consistent with the previous quarter's growth rate [3] - Analyst consensus predicts continued earnings growth for the next two quarters, suggesting a positive outlook for the company [5] Stock Performance - Guidewire's stock has increased approximately 140% over the past year and a half, closing just below 262 on Monday [6] - The stock appears to be forming a cup pattern, indicating potential for further growth [6] - Guidewire holds the No. 2 rank in the Computer Software-Financial industry group, with Pagaya Technologies being the top-ranked stock [7] Ratings and Investor Sentiment - The company has a Composite Rating of 93 and an A SMR Rating, indicating strong sales, profit margins, and return on equity [4] - Institutional investors show strong interest in Guidewire, as reflected in its A- Accumulation/Distribution Rating [4] - The EPS Rating is currently at 76, with expectations for improvement based on strong profit growth anticipated this year [5]

Core Insights - Guidewire Software, Inc. reported fourth-quarter earnings of $0.84 per share, exceeding analyst estimates of $0.64 per share, and quarterly sales of $356.570 million, surpassing the consensus estimate of $337.858 million [1] - The company projects FY2026 sales between $1.385 billion and $1.405 billion, significantly higher than the previous estimate of $1.184 billion [1] - Guidewire executed 19 cloud deals in the fourth quarter and achieved over $1 billion in Annual Recurring Revenue (ARR), highlighted by a notable 10-year agreement with a major Tier-1 insurer [2] Analyst Ratings and Price Targets - RBC Capital analyst Rishi Jaluria maintained an Outperform rating and raised the price target from $290 to $300 [9] - Oppenheimer analyst Ken Wong also maintained an Outperform rating, increasing the price target from $275 to $300 [9] - Stifel analyst Parker Lane maintained a Buy rating and raised the price target from $270 to $300 [9] - Wells Fargo analyst Michael Turrin maintained an Overweight rating, increasing the price target from $265 to $275 [9] - Goldman Sachs analyst Adam Hotchkiss maintained a Buy rating and raised the price target from $270 to $305 [9] - Raymond James analyst Alexander Sklar reiterated an Outperform rating and boosted the price target from $255 to $275 [9]

Core Insights - Guidewire Software, Inc (GWRE) reported non-GAAP earnings per share of 84 cents for Q4 fiscal 2025, reflecting a 35.5% year-over-year increase and surpassing the Zacks Consensus Estimate of 62 cents [1][10] - The company achieved revenues of $356.6 million, a 22% year-over-year growth, exceeding the Zacks Consensus Estimate by 5.8% and surpassing its own guidance of $332-$340 million [2][10] Revenue Performance - Subscription and support revenues, which accounted for 56.6% of total revenues, increased by 33% year-over-year to $201.9 million [9][11] - License revenues (26.3% of total) rose 5% year-over-year to $93.6 million, while services revenues (17.1%) jumped 20% year-over-year to $61 million [11] Cloud Momentum - Guidewire Cloud gained traction with 19 deal wins in the reported quarter, totaling 57 for the fiscal year, including nine deals with Tier 1 insurers [2][10] - The 10-year deal with Liberty Mutual was highlighted as a significant milestone, validating the platform's maturity and scalability [3][10] Annual Recurring Revenue (ARR) - As of July 31, ARR reached $1.032 billion, up 19% year-over-year, with expectations for fiscal 2026 ARR to be between $1.21 billion and $1.22 billion [4][10] Future Guidance - GWRE anticipates total revenues for fiscal 2026 to be between $1.385 billion and $1.405 billion, compared to $1.202 billion in fiscal 2025 [5] - Subscription revenues are projected at $888 million, with total subscription and support revenues expected to reach $945 million [5] Operating Income and Cash Flow - Non-GAAP operating income is forecasted to be between $259 million and $279 million, with cash flow from operations anticipated in the range of $350-$370 million [6] - Non-GAAP gross margin improved to 67.7% from 67% year-over-year, with the subscription and support segment's gross margin increasing to 70.2% from 66% [11] Stock Performance - Following the earnings results, GWRE shares rose by 15.2% in pre-market trading, with a 34.2% increase over the past year compared to the Internet Software industry's growth of 46.1% [8]

Group 1 - Guidewire Software reported revenue of $356.57 million for the quarter ended July 2025, a year-over-year increase of 22.3% and a surprise of +5.76% over the Zacks Consensus Estimate of $337.15 million [1] - The company achieved an EPS of $0.84, compared to $0.62 a year ago, resulting in an EPS surprise of +35.48% [1] - Annual recurring revenue reached $1.03 billion, slightly above the four-analyst average estimate of $1.02 billion [4] Group 2 - Subscription and support revenue was $201.89 million, exceeding the estimated $194.68 million, representing a year-over-year increase of +33% [4] - License revenue was reported at $93.64 million, surpassing the average estimate of $86.17 million, with a year-over-year change of +5.4% [4] - Services revenue was $61.04 million, above the estimated $56.81 million, reflecting a year-over-year increase of +20.1% [4] Group 3 - Gross profit from subscription and support was $137.32 million, compared to the average estimate of $131.32 million [4] - Gross profit from services was $1.76 million, below the estimated $4.72 million [4] - Gross profit from license was $92.73 million, exceeding the average estimate of $84.37 million [4] Group 4 - Over the past month, Guidewire Software's shares returned -2.8%, while the Zacks S&P 500 composite increased by +3.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Annual Recurring Revenue (ARR) grew 19% year-over-year, reaching $1.032 billion, with fully ramped ARR increasing 22% on a constant currency basis [7][19] - Total revenue for the year was $1.2 billion, exceeding expectations, with subscription revenue at $667 million, up 40% year-over-year [20][22] - Operating income was $208 million, up 109% year-over-year, with cash flow from operations at $301 million [23][26] Business Line Data and Key Metrics Changes - The company signed 19 core cloud deals in Q4, totaling 57 for the year, indicating healthy annual growth in deal count [12] - Subscription and support gross margins finished the year at 70%, reflecting improved cloud margins [8][22] - Services revenue grew 21% year-over-year, reaching $219 million, supported by strong partnerships with the SI community [22][16] Market Data and Key Metrics Changes - North America showed exceptional win rates, while Europe closed 11 deals for the year, indicating strong geographic performance [14][15] - Latin America experienced a sharp increase in market momentum, closing three deals in Q4 [14] - The Asia-Pacific region saw success in Australia and New Zealand, positioning the company well for long-term growth [15] Company Strategy and Development Direction - The company is focused on expanding its cloud platform and enhancing data-driven analytics and AI applications to modernize the P&C insurance industry [9][10] - The acquisition of Quanti aims to modernize pricing operations and product management across the industry [9] - The company is optimistic about leveraging generative AI to improve operational efficiencies and customer outcomes [10][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for the Guidewire Cloud Platform, with a healthy pipeline entering fiscal 2026 [8][24] - The company anticipates ARR growth of 17% for fiscal 2026, with total revenue expected between $1.385 and $1.405 billion [24][26] - Management highlighted the importance of customer success and project implementation quality in driving low ARR attrition rates [30][32] Other Important Information - The company ended the year with $1.5 billion in cash, cash equivalents, and investments, indicating strong financial health [23] - The Guidewire Marketplace has expanded to over 300 third-party applications, enhancing the platform's value proposition [60][62] Q&A Session Summary Question: What are the drivers behind the record low ARR attrition? - Management attributed the low attrition to a durable customer base, focus on project success, and proactive customer engagement [30][32] Question: How should investors think about platform expansion post-cloud transition? - Management indicated that the next phase involves focusing on data and analytics, with significant opportunities in pricing and underwriting [34][37] Question: How does premium growth impact the business model? - Management clarified that while premium growth benefits the company, the complexity of contract structures means it does not directly translate to revenue [41][43] Question: What is the competitive landscape like? - Management noted that demand for modernization remains strong, and minimizing project failure risks is key to driving growth [49][50] Question: Can you discuss the Liberty Mutual deal's significance? - Management emphasized the strategic nature of the partnership and its potential to set a precedent for future long-term commitments [56][66] Question: How is the company leveraging AI in its services? - Management confirmed that AI is a primary focus for enhancing service delivery and minimizing modernization risks [64][70]

Financial Data and Key Metrics Changes - Annual Recurring Revenue (ARR) grew 19% year-over-year, reaching $1.032 billion, with fully ramped ARR increasing by 22% on a constant currency basis [5][17] - Total revenue for the year was $1.2 billion, exceeding expectations, with subscription revenue at $667 million, up 40% year-over-year [18] - Operating income was $208 million, up 109% year-over-year, with cash flow from operations at $301 million [20][24] Business Line Data and Key Metrics Changes - The company signed 19 core cloud deals in Q4, totaling 57 for the year, indicating healthy annual growth in deal count [10] - Subscription and support revenue increased by 33% year-over-year, while services revenue grew by 21% [19] - Total cloud ARR grew 36% year-over-year, comprising 74% of total ARR [18] Market Data and Key Metrics Changes - North America showed strong performance with a stable win rate, while Europe closed 11 deals for the year, and Latin America saw a sharp increase with three deals in Q4 [11][12] - The Asia-Pacific region benefited from successes in Australia, New Zealand, and Japan, positioning the company well for long-term growth [12] Company Strategy and Development Direction - The company is focused on enhancing its cloud platform and expanding its data-driven analytics and AI applications to modernize the insurance industry [7][8] - The acquisition of Quanti aims to modernize pricing operations and product management across the industry [7] - The company is optimistic about leveraging generative AI to improve operational efficiencies and customer outcomes [8][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for the Guidewire Cloud Platform and the healthy pipeline entering fiscal 2026 [6][21] - The company anticipates ARR growth of 17% for fiscal 2026, with total revenue expected between $1.385 and $1.405 billion [21][22] - Management highlighted the importance of customer success and project implementation quality in driving low ARR attrition rates [28][29] Other Important Information - The company ended the year with $1.5 billion in cash, cash equivalents, and investments [20] - The professional services team is focused on improving the pace and predictability of cloud program implementations [62] Q&A Session Summary Question: What are the drivers behind the record low ARR attrition? - Management attributed the low attrition to a durable customer base, focus on project success, and proactive customer engagement [28][29] Question: How should investors think about platform expansion post-cloud transition? - Management indicated that the next phase involves focusing on data and analytics, with significant potential in pricing, underwriting, and claims [33][34] Question: How does premium growth impact the business model? - Management clarified that while premium growth generally benefits the company, the complexity of contract structures means it does not directly translate to revenue [39][41] Question: What is the competitive landscape like? - Management noted that the demand for modernization remains strong, and minimizing the risk of project failure is key to driving growth [47][48] Question: Can you discuss the Liberty Mutual deal and its implications? - Management described the deal as significant but noted it is not yet a pattern for all Tier 1 conversations [54] Question: How is the Guidewire Marketplace performing? - Management highlighted the importance of third-party development and the potential for innovation through the marketplace [58][59] Question: How is AI being integrated into service operations? - Management confirmed that AI is a primary focus for improving deployment efficiency and minimizing modernization risks [61][62]