The 10-second takeaway
For the quarter ended April 30 (Q3), Guidewire Software beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly. Non-GAAP earnings per share contracted significantly. GAAP earnings per share dropped to a loss.
Margins contracted across the board.
Guidewire Software booked revenue of $68.3 million. The five analysts polled by S&P Capital IQ wanted to see net sales of $63.6 million on the same basis. GAAP reported sales were 20% higher than the prior-year quarter's $57.0 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.04. The six earnings estimates compiled by S&P Capital IQ anticipated $0.02 per share. Non-GAAP EPS of $0.04 for Q3 were 60% lower than the prior-year quarter's $0.10 per share. GAAP EPS were -$0.05 for Q3 compared to $0.05 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 47.3%, much worse than the prior-year quarter. Operating margin was -6.4%, much worse than the prior-year quarter. Net margin was -3.9%, 940 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $93.1 million. On the bottom line, the average EPS estimate is $0.14.
Next year's average estimate for revenue is $296.8 million. The average EPS estimate is $0.50.
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 24 members out of 40 rating the stock outperform, and 16 members rating it underperform. Among 13 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), five give Guidewire Software a green thumbs-up, and eight give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Guidewire Software is outperform, with an average price target of $38.60.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.