Guidewire(GWRE) - 2025 Q3 - Quarterly Report

Financial Performance - Total revenue for the three months ended April 30, 2025, was $293.5 million, a 22$240.7 million in the same period of 2024[18]. - Subscription and support revenue reached $181.8 million, up 32$138.0 million year-over-year[18]. - Net income for the three months ended April 30, 2025, was $46.0 million, compared to a net loss of$5.5 million in the same period of 2024[20]. - Gross profit for the nine months ended April 30, 2025, was $520.2 million, compared to$396.9 million for the same period in 2024, reflecting a 31% increase[18]. - Comprehensive income for the three months ended April 30, 2025, was $52.8 million, compared to a loss of$7.6 million in the same period of 2024[20]. - Net income for the nine months ended April 30, 2025, was $17.853 million, a significant improvement from a net loss of$22.862 million in the same period of 2024[26]. - Cash flows from operating activities provided $56.036 million, compared to only$1.971 million in the prior year[26]. - Total revenue for the nine months ended April 30, 2025, reached $845.9 million, a 23$689.0 million for the same period in 2024[46]. - For the three months ended April 30, 2025, the company reported a net income of $45.991 million, compared to a net loss of$5.478 million for the same period in 2024[77]. - Basic earnings per share for the three months ended April 30, 2025, was $0.55, while for the same period in 2024, it was a loss of$0.07 per share[77]. Revenue Breakdown - Subscription revenue increased to $166.5 million for the three months ended April 30, 2025, up 38$120.4 million in the prior year[45]. - Total revenue from the United States for the three months ended April 30, 2025, was $191.7 million, up from$163.4 million in the same period of 2024[45]. - Total revenue from the Americas for the three months ended April 30, 2025, was $225.8 million, compared to$190.5 million in the prior year, reflecting a growth of 18%[45]. - Services revenue increased by $8.0 million (17$54.5 million for the three months ended April 30, 2025, compared to $46.5 million in the same period of 2024[161]. - Subscription revenue for the nine months ended April 30, 2025, increased by$137.8 million (40%) to $480.9 million compared to$343.2 million in the same period of 2024[156]. - Support revenue decreased by $2.2 million (12$15.4 million for the three months ended April 30, 2025, compared to $17.5 million in the same period of 2024[157]. - Term license revenue increased by$2.1 million (4%) during the three months ended April 30, 2025, compared to the same period a year ago[159]. Expenses and Costs - Operating expenses for the three months ended April 30, 2025, were $178.2 million, an increase from$158.9 million in the same period of 2024[18]. - Total cost of revenue increased by $12.4 million (13$110.8 million for the three months ended April 30, 2025, compared to the same period in 2024[165]. - Subscription and support cost increased by $6.2 million (12$57.4 million for the three months ended April 30, 2025, primarily due to cloud infrastructure expenses[165]. - Research and development expenses increased by $18.0 million (9$15.3 million[184]. - Sales and marketing expenses rose by $20.4 million (14$15.4 million[188]. - General and administrative expenses increased by $10.5 million (9$3.9 million[192]. Assets and Liabilities - Total current assets increased to $1.3 billion as of April 30, 2025, from$1.3 billion as of July 31, 2024[16]. - Long-term investments rose significantly to $323.3 million from$125.9 million year-over-year[16]. - Total liabilities decreased to $1.1 billion as of April 30, 2025, from$883.6 million as of July 31, 2024[16]. - Cash and cash equivalents at the end of the period totaled $511.512 million, down from$549.184 million at the beginning of the period[27]. - Cash, cash equivalents, and investments totaled $1.24 billion as of April 30, 2025, an increase from$1.13 billion on July 31, 2024[213]. - Working capital improved to $907.1 million as of April 30, 2025, compared to$457.9 million on July 31, 2024[213]. Strategic Investments and Acquisitions - The company made strategic investments, acquiring businesses for a net cash outflow of $26.724 million[26]. - The Company completed the acquisition of Quantee for approximately$27.9 million, with $21.4 million attributed to goodwill[69][72]. - The carrying amount of goodwill increased from$372.2 million as of July 31, 2024, to $393.6 million as of April 30, 2025[73]. Stock and Financing - The company issued$690 million in 1.25% Convertible Senior Notes due 2029 in October 2024, with a fair value of $760.0 million as of April 30, 2025[61][62]. - The company had a total principal amount of$690 million in 2029 Convertible Senior Notes as of April 30, 2025, with an effective interest rate of 1.8%[79]. - The company recognized total interest expense of $3.494 million for the three months ended April 30, 2025, compared to$1.684 million for the same period in 2024[79]. - The Company retired $220.9 million aggregate principal amount of the 2025 Convertible Senior Notes in cash for$354.0 million during the nine months ended April 30, 2025[102]. Future Outlook - The company anticipates that subscription arrangements will constitute a significant majority of annual new sales going forward, indicating a strategic shift towards cloud-based offerings[124]. - The company continues to invest in product development and cloud operations to enhance existing products and introduce new solutions, which is critical for maintaining competitive advantage[125]. - The company anticipates that subscriptions will continue to represent a significant majority of new arrangements, impacting future revenue growth due to the ratable recognition of subscription revenue[155]. - The company expects research and development expenses to increase in absolute dollars but decrease as a percentage of revenue as hiring slows[185]. - The company anticipates sales and marketing expenses to continue increasing in absolute dollars but decrease as a percentage of revenue due to slowed hiring[189]. - General and administrative expenses are expected to rise in absolute dollars due to inflation and strategic investments but decrease as a percentage of revenue as hiring slows[194].