Press Release

Guidewire Software Announces Fourth Quarter and Fiscal Year 2020 Financial Results

SAN MATEO, Calif., September 2, 2020

Guidewire Software, Inc. (NYSE: GWRE), provider of the platform Property and Casualty (“P&C”) insurers trust to engage, innovate, and grow efficiently, today announced its financial results for the fourth fiscal quarter and fiscal year ended July 31, 2020.

“We had a strong fourth quarter, adding 10 InsuranceSuite Cloud customers and growing subscription revenue for the year by 84%,” said
Mike Rosenbaum, chief executive officer, Guidewire Software. “Additionally, we launched Aspen, our first cloud-optimized release of InsuranceSuite, taking a major leap forward in our mission to provide the cloud platform that enables P&C insurers around the world to engage, innovate and grow efficiently.”

Fiscal Year 2020 Financial Highlights

Revenue

  • Total revenue for fiscal year 2020 was $742.3 million, an increase of 3% from fiscal year 2019. Subscription and support revenue was $203.5 million, an increase of 35%; license revenue was $331.5 million, an increase of 4%; services revenue was $207.3 million, a decrease of 17%.
  • Annual recurring revenue, or ARR, was $514 million as of July 31, 2020, up from $460 million as of July 31, 2019, an increase of 12%, or 11% on a constant currency basis. We measure ARR on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates. Currency rate changes between the end of fiscal year 2019 and the end of fiscal year 2020 have resulted in a $5 million dollar benefit to ARR.

Profitability

  • GAAP loss from operations was $23.9 million for fiscal year 2020, compared to income of $1.5 million for fiscal year 2019.
  • Non-GAAP income from operations was $104.8 million for fiscal year 2020, compared to $122.1 million for fiscal year 2019.
  • GAAP net loss was $27.2 million for fiscal year 2020, compared to income of $20.7 million for fiscal year 2019. GAAP net loss per share was $0.33, based on diluted weighted average shares outstanding of 82.9 million, compared to net income per share of $0.25 for fiscal year 2019, based on diluted weighted average shares outstanding of 82.7 million.
  • Non-GAAP net income was $105.8 million for fiscal year 2020, compared to $119.9 million for fiscal year 2019. Non-GAAP net income per share was $1.26, based on diluted weighted average shares outstanding of 83.7 million, compared to $1.45 for fiscal year 2019, based on diluted weighted average shares outstanding of 82.7 million.

Liquidity

  • The Company had $1.4 billion in cash, cash equivalents, and investments at July 31, 2020, compared to $1.3 billion at July 31, 2019. The Company generated $113.1 million in cash from operations and had positive free cash flow of $87.4 million during fiscal year 2020.

Fourth Quarter Fiscal Year 2020 Financial Highlights

Revenue

  • Total revenue for the fourth quarter of fiscal year 2020 was $243.7 million, an increase of 17% from the same quarter in fiscal year 2019. Subscription and support revenue was $54.1 million, an increase of 29%; license revenue was $137.5 million, an increase of 28%; services revenue was $52.0 million, a decrease of 11%.

Profitability

  • GAAP income from operations was $44.3 million for the fourth quarter of fiscal year 2020, compared to $21.1 million for the same quarter in fiscal year 2019.
  • Non-GAAP income from operations was $76.4 million for the fourth quarter of fiscal year 2020, compared to $51.1 million for the same quarter in fiscal year 2019.
  • GAAP net income was $38.8 million for the fourth quarter of fiscal year 2020, compared to $23.0 million for the same quarter in fiscal year 2019. GAAP net income per share was $0.46, based on diluted weighted average shares outstanding of 83.9 million, compared to $0.28 for the same quarter in fiscal year 2019, based on diluted weighted average shares outstanding of 82.9 million.
  • Non-GAAP net income was $69.5 million for the fourth quarter of fiscal year 2020, compared to $46.3 million for the same quarter in fiscal year 2019. Non-GAAP net income per share was $0.83, based on diluted weighted average shares outstanding of 83.9 million, compared to $0.56 for the same quarter in fiscal year 2019, based on diluted weighted average shares outstanding of 82.9 million.

Business Outlook

Guidewire is issuing the following outlook for the first quarter of fiscal year 2021 based on current expectations:

  • ARR between $509 million and $512 million
  • Total revenue between $162 million and $166 million
  • Operating loss between $44 million and $40 million
  • Non-GAAP operating loss between $10 million and $6 million

Guidewire is issuing the following outlook for the fiscal year 2021 based on current expectations:

  • ARR between $560 million and $571 million
  • Total revenue between $723 million and $733 million
  • Operating loss between $155 million and $145 million
  • Non-GAAP operating (loss) income between $(5) million and $5 million
  • Operating cash flow between $60 million and $70 million

Conference Call Information

What:

 

Guidewire Software Fourth Quarter and Fiscal Year 2020 Financial Results Conference Call

When:

 

Wednesday, September 2, 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 13708659, Domestic

 

 

(412) 317-6671, Passcode 13708659, 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, changes in fair value of our strategic investments, 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 depreciation, amortization, stock-based compensation, and changes in fair value of strategic investments.

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, 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 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 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. As of the end of our fiscal year 2019, more than 380 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.

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 progress in developing cloud-based core systems. 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 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 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)

 

 

 

 

 

July 31,

2020

 

July 31,

2019

ASSETS

 

 

 

CURRENT ASSETS:

 

 

 

Cash and cash equivalents

$

366,969

 

 

$

254,101

 

Short-term investments

766,527

 

 

870,136

 

Accounts receivable, net

114,242

 

 

138,443

 

Unbilled accounts receivable, net

49,491

 

 

36,728

 

Prepaid expenses and other current assets

45,989

 

 

35,566

 

Total current assets

1,343,218

 

 

1,334,974

 

Long-term investments

300,771

 

 

213,524

 

Unbilled accounts receivable, net

34,737

 

 

9,375

 

Property and equipment, net

65,235

 

 

65,809

 

Operating lease assets

103,797

 

 

 

Intangible assets, net

39,708

 

 

66,542

 

Goodwill

340,877

 

 

340,877

 

Deferred tax assets, net

101,565

 

 

90,308

 

Other assets

34,944

 

 

45,554

 

TOTAL ASSETS

$

2,364,852

 

 

$

2,166,963

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

CURRENT LIABILITIES:

 

 

 

Accounts payable

$

22,634

 

 

$

34,255

 

Accrued employee compensation

58,547

 

 

73,365

 

Deferred revenue, net

118,311

 

 

108,304

 

Other current liabilities

25,706

 

 

16,348

 

Total current liabilities

225,198

 

 

232,272

 

Lease liabilities

119,408

 

 

 

Convertible senior notes, net

330,208

 

 

317,322

 

Deferred revenue, net

14,685

 

 

23,527

 

Other liabilities

18,585

 

 

19,641

 

Total liabilities

708,084

 

 

592,762

 

STOCKHOLDERS’ EQUITY:

 

 

 

Common stock

8

 

 

8

 

Additional paid-in capital

1,499,050

 

 

1,391,904

 

Accumulated other comprehensive income (loss)

(5,245

)

 

(7,758

)

Retained earnings

162,955

 

 

190,047

 

Total stockholders’ equity

1,656,768

 

 

1,574,201

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

2,364,852

 

 

$

2,166,963

 

 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

 

 

 

 

 

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

Subscription and support

$

54,120

 

 

$

42,069

 

 

$

203,473

 

 

$

150,475

 

License

137,527

 

 

107,464

 

 

331,514

 

 

320,271

 

Services

52,027

 

 

58,325

 

 

207,320

 

 

248,768

 

Total revenue

243,674

 

 

207,858

 

 

742,307

 

 

719,514

 

Cost of revenue(1):

 

 

 

 

 

 

 

Subscription and support

33,511

 

 

23,083

 

 

117,178

 

 

73,597

 

License

3,519

 

 

2,618

 

 

11,546

 

 

7,700

 

Services

50,781

 

 

57,083

 

 

209,291

 

 

243,053

 

Total cost of revenue

87,811

 

 

82,784

 

 

338,015

 

 

324,350

 

Gross profit:

 

 

 

 

 

 

 

Subscription and support

20,609

 

 

18,986

 

 

86,295

 

 

76,878

 

License

134,008

 

 

104,846

 

 

319,968

 

 

312,571

 

Services

1,246

 

 

1,242

 

 

(1,971

)

 

5,715

 

Total gross profit

155,863

 

 

125,074

 

 

404,292

 

 

395,164

 

Operating expenses(1):

 

 

 

 

 

 

 

Research and development

52,232

 

 

49,472

 

 

200,575

 

 

188,541

 

Sales and marketing

36,830

 

 

33,958

 

 

142,420

 

 

130,751

 

General and administrative

22,460

 

 

20,562

 

 

85,183

 

 

74,401

 

Total operating expenses

111,522

 

 

103,992

 

 

428,178

 

 

393,693

 

Income (loss) from operations

44,341

 

 

21,082

 

 

(23,886

)

 

1,471

 

Interest income

4,039

 

 

8,030

 

 

24,705

 

 

30,182

 

Interest expense

(4,549

)

 

(4,476

)

 

(17,945

)

 

(17,334

)

Other income (expense), net

5,584

 

 

(909

)

 

(7,205

)

 

(1,867

)

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

49,415

 

 

23,727

 

 

(24,331

)

 

12,452

 

Provision for (benefit from) income taxes

10,640

 

 

722

 

 

2,867

 

 

(8,280

)

Net income (loss)

$

38,775

 

 

$

23,005

 

 

$

(27,198

)

 

$

20,732

 

Net income (loss) per share:

 

 

 

 

 

 

 

Basic

$

0.46

 

 

$

0.28

 

 

$

(0.33

)

 

$

0.25

 

Diluted

$

0.46

 

 

$

0.28

 

 

$

(0.33

)

 

$

0.25

 

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

 

 

 

 

 

 

 

Basic

83,314,410

 

 

81,977,722

 

 

82,855,392

 

 

81,447,998

 

Diluted

83,947,187

 

 

82,928,818

 

 

82,855,392

 

 

82,681,214

 

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

       

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2020

 

2019

 

2020

 

2019

 

(unaudited, in thousands)

Stock-based compensation expense:

 

 

 

 

 

 

 

Cost of subscription and support revenue

$

2,070

 

 

$

1,933

 

 

$

7,575

 

 

$

4,659

 

Cost of license revenue

224

 

 

75

 

 

769

 

 

173

 

Cost of services revenue

5,153

 

 

4,883

 

 

20,816

 

 

22,781

 

Research and development

6,975

 

 

5,655

 

 

26,324

 

 

23,420

 

Sales and marketing

5,117

 

 

4,819

 

 

21,260

 

 

19,245

 

General and administrative

6,203

 

 

5,394

 

 

25,073

 

 

21,237

 

Total stock-based compensation expense

$

25,742

 

 

$

22,759

 

 

$

101,817

 

 

$

91,515

 

                               
 

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended July 31,

 

Twelve Months Ended July 31,

 

2020

 

2019

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income (loss)

$

38,775

 

 

$

23,005

 

 

$

(27,198

)

 

$

20,732

 

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

 

 

 

 

 

 

 

Depreciation and amortization

10,386

 

 

10,813

 

 

42,641

 

 

39,953

 

Amortization of debt discount and issuance costs

3,288

 

 

3,112

 

 

12,886

 

 

12,194

 

Stock-based compensation

25,742

 

 

22,759

 

 

101,817

 

 

91,516

 

Charges to bad debt and revenue reserves

177

 

 

191

 

 

367

 

 

670

 

Deferred income tax

(813

)

 

(2,162

)

 

(11,859

)

 

(13,998

)

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

484

 

 

(2,061

)

 

(1,882

)

 

(7,757

)

Changes in fair value of strategic investment

 

 

 

 

10,672

 

 

 

Other non-cash items affecting net income (loss)

38

 

 

(386

)

 

739

 

 

189

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

(34,302

)

 

(29,826

)

 

23,878

 

 

(15,057

)

Unbilled accounts receivable

6,615

 

 

26,517

 

 

(38,125

)

 

(17,341

)

Prepaid expenses and other assets

(4,135

)

 

(10,419

)

 

(8,672

)

 

(16,251

)

Operating lease assets

(17,895

)

 

 

 

(10,784

)

 

 

Accounts payable

4,471

 

 

5,615

 

 

(1,209

)

 

(5,521

)

Accrued employee compensation

9,662

 

 

18,890

 

 

(15,624

)

 

13,825

 

Deferred revenue

26,900

 

 

20,011

 

 

1,165

 

 

(9,628

)

Lease liabilities

21,312

 

 

 

 

18,678

 

 

 

Other liabilities

16,454

 

 

16,815

 

 

15,576

 

 

22,600

 

Net cash provided by (used in) operating activities

107,159

 

 

102,874

 

 

113,066

 

 

116,126

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of available-for-sale securities

(431,443

)

 

(431,301

)

 

(1,280,755

)

 

(1,209,312

)

Sales of available-for-sale securities

40,632

 

 

13,706

 

 

134,050

 

 

77,204

 

Maturities of available-for-sale securities

357,179

 

 

215,928

 

 

1,168,720

 

 

879,532

 

Purchases of strategic investments

(2,156

)

 

 

 

(2,156

)

 

 

Purchases of property and equipment

(2,411

)

 

(16,175

)

 

(21,377

)

 

(44,921

)

Capitalized software development costs

(1,010

)

 

(1,634

)

 

(4,283

)

 

(3,936

)

Net cash provided by (used in) investing activities

(39,209

)

 

(219,476

)

 

(5,801

)

 

(301,433

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

1,878

 

 

2,103

 

 

4,955

 

 

3,954

 

Net cash provided by (used in) financing activities

1,878

 

 

2,103

 

 

4,955

 

 

3,954

 

Effect of foreign exchange rate changes on cash and cash equivalents

3,326

 

 

(269

)

 

648

 

 

(1,686

)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

73,154

 

 

(114,768

)

 

112,868

 

 

(183,039

)

CASH AND CASH EQUIVALENTS—Beginning of period

293,815

 

 

368,869

 

 

254,101

 

 

437,140

 

CASH AND CASH EQUIVALENTS—End of period

$

366,969

 

 

$

254,101

 

 

$

366,969

 

 

$

254,101

 

 

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 July 31,

 

Twelve Months Ended July 31,

 

2020

 

2019

 

2020

 

2019

Gross profit reconciliation:

 

 

 

 

 

 

 

GAAP gross profit

$

155,863

 

 

$

125,074

 

 

$

404,292

 

 

$

395,164

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

7,447

 

 

6,891

 

 

29,160

 

 

27,614

 

Amortization of intangibles

4,526

 

 

4,945

 

 

19,221

 

 

19,780

 

Non-GAAP gross profit

$

167,836

 

 

$

136,910

 

 

$

452,673

 

 

$

442,558

 

 

 

 

 

 

 

 

 

Income (loss) from operations reconciliation:

 

 

 

 

 

 

 

GAAP income (loss) from operations

$

44,341

 

 

$

21,082

 

 

$

(23,886

)

 

$

1,471

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

25,742

 

 

22,759

 

 

101,817

 

 

91,516

 

Amortization of intangibles

6,323

 

 

7,217

 

 

26,834

 

 

29,113

 

Non-GAAP income (loss) from operations

$

76,406

 

 

$

51,058

 

 

$

104,765

 

 

$

122,100

 

 

 

 

 

 

 

 

 

Net income (loss) reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss)

$

38,775

 

 

$

23,005

 

 

$

(27,198

)

 

$

20,732

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

25,742

 

 

22,759

 

 

101,817

 

 

91,516

 

Amortization of intangibles

6,323

 

 

7,217

 

 

26,834

 

 

29,113

 

Amortization of debt discount and issuance costs

3,288

 

 

3,111

 

 

12,886

 

 

12,194

 

Changes in fair value of strategic investment (1)

 

 

 

 

10,672

 

 

 

Tax impact of non-GAAP adjustments (2)

(4,598

)

 

(9,818

)

 

(19,243

)

 

(33,678

)

Non-GAAP net income (loss)

$

69,530

 

 

$

46,274

 

 

$

105,768

 

 

$

119,877

 

 

 

 

 

 

 

 

 

Tax provision (benefit) reconciliation:

 

 

 

 

 

 

 

GAAP tax provision (benefit)

$

10,640

 

 

$

722

 

 

$

2,867

 

 

$

(8,280

)

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

4,629

 

 

4,222

 

 

16,453

 

 

15,800

 

Amortization of intangibles

1,137

 

 

1,339

 

 

4,334

 

 

5,033

 

Amortization of debt discount and issuance costs

591

 

 

577

 

 

2,080

 

 

2,117

 

Changes in fair value of strategic investment (1)

 

 

 

 

1,418

 

 

 

Tax impact of non-GAAP adjustments (2)

(1,759

)

 

3,680

 

 

(5,042

)

 

10,728

 

Non-GAAP tax provision (benefit)

$

15,238

 

 

$

10,540

 

 

$

22,110

 

 

$

25,398

 

(1) Effective the third fiscal quarter of 2020, changes in fair value of strategic investments are excluded from non-GAAP measures. Prior to the third fiscal quarter of 2020, there were no changes in fair value of strategic investments in any periods presented.

(2) 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, 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 July 31,

 

Twelve Months Ended July 31,

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

Net income (loss) per share reconciliation:

 

 

 

 

 

 

 

GAAP net income (loss) per share — diluted

$

0.46

 

 

$

0.28

 

 

$

(0.33

)

 

$

0.25

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

Stock-based compensation

0.31

 

 

0.27

 

 

1.23

 

 

1.11

 

Amortization of intangibles

0.08

 

 

0.09

 

 

0.33

 

 

0.36

 

Amortization of debt discount and issuance costs

0.04

 

 

0.04

 

 

0.16

 

 

0.16

 

Changes in fair value of strategic investment (1)

 

 

 

 

0.13

 

 

 

Tax impact of non-GAAP adjustments (2)

(0.05

)

 

(0.12

)

 

(0.23

)

 

(0.42

)

Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation (3)

(0.01

)

 

 

 

(0.03

)

 

(0.01

)

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

$

0.83

 

 

$

0.56

 

 

$

1.26

 

 

$

1.45

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

GAAP weighted average shares — diluted

83,947,187

 

 

82,928,818

 

 

82,855,392

 

 

82,681,214

 

Non-GAAP dilutive shares excluded from GAAP income (loss) per share calculation (3)

 

 

 

 

834,002

 

 

Pro forma weighted average shares — diluted

83,947,187

 

 

82,928,818

 

 

83,689,394

 

 

82,681,214

 

(1) Effective the third fiscal quarter of 2020, changes in fair value of strategic investments are excluded from non-GAAP measures. Prior to the third fiscal quarter of 2020, there were no changes in fair value of strategic investments in any periods presented.

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

(3) 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.

 
   

 

Twelve Months Ended July 31,

 

2020

 

2019

Free cash flow:

 

 

 

Net cash provided by (used in) operating activities

$

113,066

 

 

$

116,126

 

Purchases of property and equipment

(21,377

)

 

(44,921

)

Capitalized software development costs

(4,283

)

 

(3,936

)

Free cash flow

$

87,406

 

 

$

67,269

 

 

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)

 

First Quarter Fiscal

Year 2021

 

Fiscal Year 2021

Income (loss) from operations outlook reconciliation:

 

 

 

 

 

 

 

 

GAAP income (loss) from operations

 

(44)

-

(40)

 

(155)

-

(145)

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

Stock-based compensation

 

27

-

27

 

129

-

129

Amortization of intangibles

 

7

-

7

 

21

-

21

Non-GAAP income (loss) from operations

 

(10)

(6)

 

(5)

-

5

Media Contact:
Diana Stott
Guidewire Software, Inc.
(650) 356-4941
dstott [at] guidewire.com

Investor Contact:
Garo Toomajanian
ICR, LLC
(650) 357-5282
ir [at] guidewire.com

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