Press Release

Guidewire Software Announces Second Quarter Fiscal Year 2020 Financial Results

SAN MATEO, Calif., March 4, 2020

Guidewire Software, Inc. (NYSE: GWRE), provider of the industry platform Property and Casualty (“P&C”) insurers rely upon, today announced its financial results for the fiscal quarter ended January 31, 2020.

“Our second quarter was highlighted by two Tier 1 insurers selecting InsuranceSuite Cloud and one new customer selecting InsuranceNow," said
Mike Rosenbaum, chief executive officer, Guidewire Software. "Total revenue and profitability exceeded our outlook in the quarter, and we continue to see a clear shift to cloud-based core systems. However, the growing interest in cloud-based systems is dampening self-managed demand, impacting our full year outlook. Ultimately, this trend is a positive validation of our cloud strategy and reinforces our confidence in serving the more than $2 trillion P&C industry."

Second Quarter Fiscal Year 2020 Financial Highlights

Revenue

  • Total revenue for the second quarter of fiscal year 2020 was $173.5 million, an increase of 3% from the same quarter in fiscal year 2019. License and subscription revenue was $105.0 million, an increase of 21%; services revenue was $47.4 million, a decrease of 22%; and maintenance revenue was $21.1 million, which remained relatively flat.
  • Annual recurring revenue, or ARR, was $474 million as of January 31, 2020, up from $460 million as of July 31, 2019. Quarterly ARR results for fiscal year 2020 are based on actual currency rates at the end of fiscal year 2019, held constant throughout the year.

Profitability

  • GAAP loss from operations was $18.0 million for the second quarter of fiscal year 2020, compared with $6.3 million for the comparable period in fiscal year 2019.
  • Non-GAAP income from operations was $15.4 million for the second quarter of fiscal year 2020, compared with $25.4 million for the comparable period in fiscal year 2019.
  • GAAP net loss was $19.9 million for the second quarter of fiscal year 2020, compared with less than $0.1 million for the comparable period in fiscal year 2019. GAAP net loss per share was $0.24, based on diluted weighted average shares outstanding of 82.7 million, compared with less than $0.01 for the comparable period in fiscal year 2019, based on diluted weighted average shares outstanding of 81.2 million.
  • Non-GAAP net income was $17.6 million for the second quarter of fiscal year 2020, compared with $27.3 million for the comparable period in fiscal year 2019. Non-GAAP net income per share was $0.21, based on diluted weighted average shares outstanding of 83.6 million, compared with $0.33 for the comparable period in fiscal year 2019, based on diluted weighted average shares outstanding of 82.7 million.

Liquidity

  • The Company had $1.3 billion in cash, cash equivalents, and investments at January 31, 2020, the same as at July 31, 2019. The Company generated $1.3 million in cash from operations and had negative free cash flow of $12.1 million during the six months ended January 31, 2020.

Business Outlook

Guidewire is issuing the following outlook for the third fiscal quarter and revised outlook for fiscal year 2020 based on current expectations:

(in $ millions)

 

Third Quarter Fiscal Year 2020

 

Fiscal Year 2020

Revenue

 

153.0

-

157.0

 

702.0

-

714.0

License and subscription

 

78.0

-

82.0

 

413.0

-

425.0

Maintenance

 

20.0

-

20.5

 

83.0

-

84.0

Services

 

53.0

-

57.0

 

202.0

-

208.0

GAAP income (loss) from operations

 

(45.6)

-

(41.6)

 

(75.0)

-

(63.0)

Non-GAAP income (loss) from operations

 

(11.0)

-

(7.0)

 

61.0

-

73.0

GAAP net income (loss)

 

(34.0)

-

(30.9)

 

(67.0)

-

(55.4)

GAAP net income (loss) per share

 

(0.41)

-

(0.37)

 

(0.81)

-

(0.67)

Non-GAAP net income (loss)

 

(5.1)

-

(1.7)

 

68.6

-

78.6

Non-GAAP net income (loss) per share

 

(0.06)

-

(0.02)

 

0.82

-

0.94

ARR growth on a constant currency basis is now expected to be between 11% and 12% in fiscal year 2020 compared to our previous range of 14% to 16%.

Conference Call Information

What:

   

Guidewire Software Second Quarter Fiscal Year 2020 Financial Results Conference Call

When:

   

Wednesday, March 4, 2020

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 13697014, Domestic

 

   

(412) 317-6671, Passcode 13697014, International

Webcast:

   

http://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 and amortization of intangibles. 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, which 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, enables us to analyze our financial performance without the effects of certain non-cash items such as depreciation, amortization, and stock-based compensation expenses. Annual recurring revenue ("ARR") is used to identify the annualized recurring value of active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, maintenance contracts, and hosting contracts. All components of the licensing and usage arrangements that are not expected to recur (primarily perpetual licenses and services) are excluded.

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 Software

Guidewire delivers the industry platform that Property and Casualty (P&C) insurers rely upon to adapt and succeed in a time of accelerating change. We provide the software, services, and partner ecosystem to enable our customers to run, differentiate, and grow their business. As of the end of our fiscal year 2019, we were privileged to serve more than 380 companies in 34 countries. For more information, please visit www.guidewire.com. Follow us on Twitter: @Guidewire_PandC.

Cautionary Language Concerning Forward-Looking Statement

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, market positioning, growing customer interest in cloud-based core systems, and validation of our long-term product 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; 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 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 services revenue produces lower gross margins than our license and maintenance revenue; our products or cloud-based services may experience data security breaches; we face intense competition in our market; assertions by third parties that we violate their intellectual property rights could substantially harm our business; changes in accounting guidance on revenue recognition, such as contained in ASC 606, have and may cause us to experience greater volatility in our quarterly and annual results; our product development and sales cycles are lengthy and may be affected by factors outside of our control; 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 system integrator partners; the risk of losing key employees; 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,
2020

 

July 31,
2019

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

 

$

218,463

 

 

$

254,101

 

Short-term investments

 

 

836,939

 

 

 

870,136

 

Accounts receivable, net

 

 

101,171

 

 

 

138,443

 

Unbilled accounts receivable, net

 

 

50,297

 

 

 

36,728

 

Prepaid expenses and other current assets

 

 

41,114

 

 

 

35,566

 

Total current assets

 

 

1,247,984

 

 

 

1,334,974

 

Long-term investments

 

 

274,563

 

 

 

213,524

 

Unbilled accounts receivable, net

 

 

12,824

 

 

 

9,375

 

Property and equipment, net

 

 

66,673

 

 

 

65,809

 

Operating lease assets

 

 

88,520

 

 

Intangible assets, net

 

 

52,633

 

 

 

66,542

 

Goodwill

 

 

340,877

 

 

 

340,877

 

Deferred tax assets, net

 

 

94,424

 

 

 

90,308

 

Other assets

 

 

43,092

 

 

 

45,554

 

TOTAL ASSETS

 

$

2,221,590

 

 

$

2,166,963

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Accounts payable

 

$

25,988

 

 

$

34,255

 

Accrued employee compensation

 

 

44,425

 

 

 

73,365

 

Deferred revenue, net

 

 

89,043

 

 

 

108,304

 

Other current liabilities

 

 

23,130

 

 

 

16,348

 

Total current liabilities

 

 

182,586

 

 

 

232,272

 

Lease liabilities

 

 

102,083

 

 

Convertible senior notes, net

 

 

323,676

 

 

 

317,322

 

Deferred revenue, net

 

 

19,205

 

 

 

23,527

 

Other liabilities

 

 

1,475

 

 

 

19,641

 

Total liabilities

 

 

629,025

 

 

 

592,762

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

Common stock

 

 

8

 

 

 

8

 

Additional paid-in capital

 

 

1,444,597

 

 

 

1,391,904

 

Accumulated other comprehensive income (loss)

 

 

(7,259

)

 

 

(7,758

)

Retained earnings

 

 

155,219

 

 

 

190,047

 

Total stockholders’ equity

 

 

1,592,565

 

 

 

1,574,201

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$

2,221,590

 

 

$

2,166,963

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

 

License and subscription

 

$

104,954

 

 

$

86,713

 

 

$

187,377

 

 

$

181,393

 

Maintenance

 

 

21,116

 

 

 

21,264

 

 

 

42,087

 

 

 

42,267

 

Services

 

 

47,388

 

 

 

60,557

 

 

 

101,004

 

 

 

125,129

 

Total revenue

 

 

173,458

 

 

 

168,534

 

 

 

330,468

 

 

 

348,789

 

Cost of revenue(1):

 

 

 

 

 

 

 

 

License and subscription

 

 

27,032

 

 

 

14,739

 

 

 

50,828

 

 

 

28,069

 

Maintenance

 

 

4,084

 

 

 

3,954

 

 

 

7,778

 

 

 

7,822

 

Services

 

 

52,480

 

 

 

60,987

 

 

 

105,846

 

 

 

125,397

 

Total cost of revenue

 

 

83,596

 

 

 

79,680

 

 

 

164,452

 

 

 

161,288

 

Gross profit:

 

 

 

 

 

 

 

 

License and subscription

 

 

77,922

 

 

 

71,974

 

 

 

136,549

 

 

 

153,324

 

Maintenance

 

 

17,032

 

 

 

17,310

 

 

 

34,309

 

 

 

34,445

 

Services

 

 

(5,092

)

 

 

(430

)

 

 

(4,842

)

 

 

(268

)

Total gross profit

 

 

89,862

 

 

 

88,854

 

 

 

166,016

 

 

 

187,501

 

Operating expenses(1):

 

 

 

 

 

 

 

 

Research and development

 

 

49,954

 

 

 

46,471

 

 

 

96,450

 

 

 

91,967

 

Sales and marketing

 

 

37,339

 

 

 

31,173

 

 

 

70,355

 

 

 

63,492

 

General and administrative

 

 

20,599

 

 

 

17,541

 

 

 

41,838

 

 

 

35,886

 

Total operating expenses

 

 

107,892

 

 

 

95,185

 

 

 

208,643

 

 

 

191,345

 

Income (loss) from operations

 

 

(18,030

)

 

 

(6,331

)

 

 

(42,627

)

 

 

(3,844

)

Interest income

 

 

6,958

 

 

 

7,553

 

 

 

14,594

 

 

 

14,404

 

Interest expense

 

 

(4,462

)

 

 

(4,287

)

 

 

(8,891

)

 

 

(8,531

)

Other income (expense), net

 

 

(182

)

 

 

1,148

 

 

 

(433

)

 

 

(341

)

Income (loss) before provision for income taxes

 

 

(15,716

)

 

 

(1,917

)

 

 

(37,357

)

 

 

1,688

 

Provision for (benefit from) income taxes

 

 

4,228

 

 

 

(1,916

)

 

 

(2,422

)

 

 

(4,620

)

Net income (loss)

 

$

(19,944

)

 

$

(1

)

 

$

(34,935

)

 

$

6,308

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.24

)

 

$—

 

$

(0.42

)

 

$

0.08

 

Diluted

 

$

(0.24

)

 

$—

 

$

(0.42

)

 

$

0.08

 

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

 

 

 

 

 

 

 

 

Basic

 

 

82,725,641

 

 

 

81,217,511

 

 

 

82,543,267

 

 

 

81,058,562

 

Diluted

 

 

82,725,641

 

 

 

81,217,511

 

 

 

82,543,267

 

 

 

82,289,773

 

(1)Amounts include stock-based compensation expense as follows:

 

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

 

2020

 

2019

 

2020

 

2019

 

 

(unaudited, in thousands)

Stock-based compensation expense:

 

 

 

 

 

 

 

 

Cost of license and subscription revenue

 

$

1,617

 

$

535

 

$

2,980

 

$

869

Cost of maintenance revenue

 

 

457

 

 

558

 

 

907

 

 

1,092

Cost of services revenue

 

 

5,469

 

 

6,210

 

 

10,801

 

 

12,178

Research and development

 

 

6,668

 

 

6,440

 

 

12,849

 

 

12,846

Sales and marketing

 

 

5,996

 

 

5,074

 

 

11,153

 

 

9,695

General and administrative

 

 

6,529

 

 

5,555

 

 

12,604

 

 

11,027

Total stock-based compensation expense

 

$

26,736

 

$

24,372

 

$

51,294

 

$

47,707

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended January 31,

 

Six Months Ended January 31,

 

 

2020

 

2019

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(19,944

)

 

$

(1

)

 

$

(34,935

)

 

$

6,308

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

10,758

 

 

 

9,789

 

 

 

21,644

 

 

 

19,441

 

Amortization of debt discount and issuance costs

 

 

3,198

 

 

 

3,027

 

 

 

6,354

 

 

 

6,013

 

Stock-based compensation

 

 

26,736

 

 

 

24,372

 

 

 

51,294

 

 

 

47,707

 

Charges to bad debt and revenue reserves

 

 

521

 

 

 

114

 

 

 

878

 

 

 

352

 

Deferred income tax

 

 

3,014

 

 

 

(3,380

)

 

 

(4,361

)

 

 

(6,762

)

Accretion of discount on available-for-sale securities, net

 

 

(652

)

 

 

(2,026

)

 

 

(2,012

)

 

 

(3,816

)

Other non-cash items affecting net income (loss)

 

 

572

 

 

 

201

 

 

 

572

 

 

 

575

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(22,308

)

 

 

(23,786

)

 

 

36,259

 

 

 

4,414

 

Unbilled accounts receivable

 

 

6,085

 

 

 

(4,529

)

 

 

(17,018

)

 

 

(30,190

)

Prepaid expenses and other assets

 

 

(2,081

)

 

 

(4,783

)

 

 

(3,527

)

 

 

(885

)

Operating lease assets

 

 

2,153

 

 

 

 

4,493

 

 

Accounts payable

 

 

(1,023

)

 

 

(6,544

)

 

 

(4,032

)

 

 

(14,475

)

Accrued employee compensation

 

 

10,986

 

 

 

13,786

 

 

 

(28,794

)

 

 

(15,262

)

Deferred revenue

 

 

1,126

 

 

 

5,246

 

 

 

(23,583

)

 

 

(27,490

)

Lease liabilities

 

 

(44

)

 

 

 

241

 

 

Other liabilities

 

 

377

 

 

 

2,802

 

 

 

(2,137

)

 

 

1,111

 

Net cash provided by (used in) operating activities

 

 

19,474

 

 

 

14,288

 

 

 

1,336

 

 

 

(12,959

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of available-for-sale securities

 

 

(194,641

)

 

 

(209,433

)

 

 

(601,403

)

 

 

(462,902

)

Sales and maturities of available-for-sale securities

 

 

216,512

 

 

 

172,194

 

 

 

576,749

 

 

 

410,583

 

Purchases of property and equipment

 

 

(1,629

)

 

 

(8,061

)

 

 

(11,254

)

 

 

(11,006

)

Capitalized software development costs

 

 

(864

)

 

 

(704

)

 

 

(2,210

)

 

 

(1,163

)

Net cash provided by (used in) investing activities

 

 

19,378

 

 

 

(46,004

)

 

 

(38,118

)

 

 

(64,488

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

871

 

 

 

414

 

 

 

1,239

 

 

 

1,103

 

Net cash provided by (used in) financing activities

 

 

871

 

 

 

414

 

 

 

1,239

 

 

 

1,103

 

Effect of foreign exchange rate changes on cash and cash equivalents

 

 

(349

)

 

 

149

 

 

 

(95

)

 

 

(627

)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

 

39,374

 

 

 

(31,153

)

 

 

(35,638

)

 

 

(76,971

)

CASH AND CASH EQUIVALENTS—Beginning of period

 

 

179,089

 

 

 

391,322

 

 

 

254,101

 

 

 

437,140

 

CASH AND CASH EQUIVALENTS—End of period

 

$

218,463

 

 

$

360,169

 

 

$

218,463

 

 

$

360,169

 

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,

 

 

2020

 

2019

 

2020

 

2019

Gross profit reconciliation:

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

89,862

 

 

$

88,854

 

 

$

166,016

 

 

$

187,501

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation (1)

 

 

7,543

 

 

 

7,303

 

 

 

14,688

 

 

 

14,139

 

Amortization of intangibles (1)

 

 

4,945

 

 

 

4,945

 

 

 

9,890

 

 

 

9,890

 

Non-GAAP gross profit

 

$

102,350

 

 

$

101,102

 

 

$

190,594

 

 

$

211,530

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations reconciliation:

 

 

 

 

 

 

 

 

GAAP income (loss) from operations

 

$

(18,030

)

 

$

(6,331

)

 

$

(42,627

)

 

$

(3,844

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation (1)

 

 

26,736

 

 

 

24,372

 

 

 

51,294

 

 

 

47,707

 

Amortization of intangibles (1)

 

 

6,742

 

 

 

7,309

 

 

 

13,909

 

 

 

14,618

 

Non-GAAP income (loss) from operations

 

$

15,448

 

 

$

25,350

 

 

$

22,576

 

 

$

58,481

 

 

 

 

 

 

 

 

 

 

Net income (loss) reconciliation:

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

$

(19,944

)

 

$

(1

)

 

$

(34,935

)

 

$

6,308

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation (1)

 

 

26,736

 

 

 

24,372

 

 

 

51,294

 

 

 

47,707

 

Amortization of intangibles (1)

 

 

6,742

 

 

 

7,309

 

 

 

13,909

 

 

 

14,618

 

Amortization of debt discount and issuance costs (2)

 

 

3,198

 

 

 

3,027

 

 

 

6,354

 

 

 

6,013

 

Tax impact of non-GAAP adjustments (3)

 

 

826

 

 

 

(7,411

)

 

 

(8,086

)

 

 

(16,274

)

Non-GAAP net income (loss)

 

$

17,558

 

 

$

27,296

 

 

$

28,536

 

 

$

58,372

 

 

 

 

 

 

 

 

 

 

Tax provision (benefit) reconciliation:

 

 

 

 

 

 

 

 

GAAP tax provision (benefit)

 

$

4,228

 

 

$

(1,916

)

 

$

(2,422

)

 

$

(4,620

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation (1)

 

 

4,329

 

 

 

4,037

 

 

 

8,529

 

 

 

7,902

 

Amortization of intangibles (1)

 

 

1,092

 

 

 

1,212

 

 

 

2,319

 

 

 

2,423

 

Amortization of debt discount and issuance costs (2)

 

 

518

 

 

 

509

 

 

 

1,058

 

 

 

1,004

 

Tax impact of non-GAAP adjustments (3)

 

 

(6,765

)

 

 

1,653

 

 

 

(3,820

)

 

 

4,945

 

Non-GAAP tax provision (benefit)

 

$

3,402

 

 

$

5,495

 

 

$

5,664

 

 

$

11,654

 

(1) Adjustments relate to amortization of acquired intangibles and stock-based compensation recognized during the periods for GAAP purposes.
(2) Adjustments reflect the amortization of debt discount and issuance costs related to the issuance of our Senior Convertible Notes recognized during the periods for GAAP purposes.
(3) Adjustments reflect the tax benefit (provision) resulting from all non-GAAP adjustments.

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)

 

 

 

 

 

 

 

 

 

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,

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Net income (loss) per share reconciliation:

 

 

 

 

 

 

 

 

GAAP net income (loss) per share — diluted

 

$

(0.24

)

 

$

 

 

$

(0.42

)

 

$

0.08

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation (1)

 

 

0.32

 

 

 

0.30

 

 

 

0.62

 

 

 

0.58

 

Amortization of intangibles (1)

 

 

0.08

 

 

 

0.09

 

 

 

0.17

 

 

 

0.18

 

Amortization of debt discount and issuance costs (2)

 

 

0.04

 

 

 

0.04

 

 

 

0.08

 

 

 

0.08

 

Tax impact of non-GAAP adjustments (3)

 

 

0.01

 

 

 

(0.10

)

 

 

(0.10

)

 

 

(0.21

)

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

 

 

 

 

 

 

 

 

(0.01

)

 

 

 

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

 

$

0.21

 

 

$

0.33

 

 

$

0.34

 

 

$

0.71

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

GAAP weighted average shares — diluted

 

 

82,725,641

 

 

 

81,217,511

 

 

 

82,543,267

 

 

 

82,289,773

 

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

 

 

842,001

 

 

 

1,488,107

 

 

 

854,608

 

 

 

 

Pro forma weighted average shares — diluted

 

 

83,567,642

 

 

 

82,705,618

 

 

 

83,397,875

 

 

 

82,289,773

 

(1) Adjustments relate to amortization of acquired intangibles and stock-based compensation recognized during the periods for GAAP purposes.
(2) Adjustments reflect the amortization of debt discount and issuance costs related to the issuance of our Senior Convertible Notes recognized during the periods for GAAP purposes.
(3) Adjustments reflect the impact on the tax benefit (provision) resulting 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.

(unaudited, in thousands)

 

 

Six Months Ended January 31,

 

 

2020

 

2019

Free cash flow:

 

 

 

 

Net cash provided by (used in) operating activities

 

$

1,336

 

 

$

(12,959

)

Purchases of property and equipment

 

 

(11,254

)

 

 

(11,006

)

Capitalized software development costs

 

 

(2,210

)

 

 

(1,163

)

Free cash flow

 

$

(12,128

)

 

$

(25,128

)

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 2020

 

Fiscal Year 2020

Income (loss) from operations outlook reconciliation:

 

 

 

 

 

 

 

 

GAAP income (loss) from operations

 

(45.6)

-

(41.6)

 

(75.0)

-

(63.0)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

25.8

-

27.8

 

103.9

-

109.9

Amortization of intangibles

 

7.8

-

7.8

 

29.1

-

29.1

Non-GAAP income (loss) from operations

 

(11.0)

-

(7.0)

 

61.0

-

73.0

 

 

 

 

 

 

 

 

 

Net income (loss) outlook reconciliation:

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

(34.0)

-

(30.9)

 

(67.0)

-

(55.4)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

25.8

-

27.8

 

103.9

-

109.9

Amortization of intangibles

 

7.8

-

7.8

 

29.1

-

29.1

Amortization of debt discount and issuance costs

 

3.1

-

3.1

 

12.5

-

12.5

Tax impact of non-GAAP adjustments

 

(8.8)

-

(8.4)

 

(13.0)

-

(14.6)

Non-GAAP net income (loss)

 

(5.1)

-

(1.7)

 

68.6

-

78.6

 

Media Contact:

Melissa CobbGuidewire Software, Inc.
(650) 357-5324
mcobb [at] guidewire.com

Investor Contact:

Garo ToomajanianICR, LLC
(650) 357-5282
ir [at] guidewire.com