Stock Story -
What Happened: Shares of insurance industry-focused software maker Guidewire (NYSE:GWRE) jumped 13.6% in the morning session after the company reported second-quarter earnings results. Guidewire blew past analyst expectations for most of the key topline metrics we track, including revenue, billings, and ARR (annual recurring revenue). The bottom line was also strong as free cash flow and EPS both came in ahead of consensus estimates. Looking ahead, its full-year revenue guidance topped Wall Street's estimates. Zooming out, we think this was a solid quarter.
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What is the market telling us: Guidewire’s shares are somewhat volatile and over the last year have had 4 moves greater than 5%. But moves this big are very rare even for Guidewire and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 16.3% on the news that the company announced a "beat and raise" quarter. Guidewire beat analysts' revenue, billings, and ARR (annual recurring revenue) expectations. Its full-year ARR guidance also beat Wall Street's estimates.
One negative was that its gross margin decreased, but it didn't matter much in the face of a "beat-and-raise" quarter. Zooming out, we think this was a solid quarter, showing the company is staying on track.
Guidewire is up 50.7% since the beginning of the year, and at $160.94 per share, has set a new 52-week high. Investors who bought $1,000 worth of Guidewire’s shares 5 years ago would now be looking at an investment worth $1,471.
