Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Guidewire Software, Inc. (GWRE 1.40%) jumped by more than 10% during intraday trading Wednesday after the insurance software specialist turned in solid fiscal first quarter 2014 results and raised forward guidance.
So what: Quarterly revenue rose 5% year over year to $66.5 million -- or 14% if you don't include a $5 million nonrecurring revenue item Guidewire recognized in the same year-ago period -- which translated to an adjusted net loss of $0.4 million, or $0.01 per diluted share. By contrast, analysts were looking for an adjusted net loss of $0.16 per share on sales of $62.78 million.
In addition, Guidewire increased its full-year revenue guidance to a range of $330.5 million to $342.5 million, compared to its previous range of $328.5 million to $340.5 million. This, in turn, should translate to adjusted fiscal 2014 net income of about $0.20 to $0.25 per share.
Curiously enough, analysts were already modeling adjusted full-year fiscal 2014 earnings of $0.25 per share on sales of $336.85 million.
Now what: I suppose it should come as no surprise, then, that shares of Guidewire gave up some of their gains as the day wore on, and sit up around 5% as of this writing. As it stands, it's also worth noting the midpoint of the company's increased guidance only represents top-line growth of 12% over last year. With the stock currently trading around nine times sales and 100 times next year's estimated earnings, I'd prefer to wait for a more attractive entry point.
