Guidewire's Q2 Earnings Miss Estimates, Revenues Increase Y/Y

Core Insights - Guidewire Software, Inc (GWRE) reported non-GAAP earnings per share of 51 cents for Q2 fiscal 2025, reflecting an 11% year-over-year increase, but missed the Zacks Consensus Estimate by 1.9% [1] - The company achieved revenues of $289.5 million, a 20% year-over-year growth, surpassing the Zacks Consensus Estimate by 1.3% and exceeding its own guidance range [2] Financial Performance - Annual recurring revenues (ARR) reached $918.1 million, up 6.3% year-over-year, with expectations for fiscal 2025 ARR now projected between $1 billion and $1.01 billion [3] - Total revenues for fiscal 2025 are expected to be between $1.164 billion and $1.174 billion, an increase from earlier guidance [4] - Non-GAAP operating income is estimated to be between $175 million and $185 million, up from previous expectations [5] Revenue Breakdown - Subscription and support revenues, accounting for 61.4% of total revenues, increased by 35% year-over-year to $177.8 million [7] - License revenues decreased by 10% year-over-year to $63.7 million, representing 22% of total revenues [7] - Services revenues rose by 26% year-over-year to $47.9 million, making up 16.6% of total revenues [7] Margin Analysis - Non-GAAP gross margin expanded to 65.2% from 62.7% year-over-year, with subscription and support segment gross margin increasing to 69.2% [8] - Services' non-GAAP gross margin improved to 6.3% from negative 11.2% in the previous year [8] Cash Flow and Expenses - Total operating expenses rose by 8.1% year-over-year to $167.4 million, while non-GAAP operating income was reported at $53.9 million compared to $25.7 million in the prior year [9] - As of January 31, 2025, cash and cash equivalents were $1,412.4 million, down from $1,480.4 million as of October 31, 2024 [10] Future Outlook - For Q3 fiscal 2025, revenues are expected to be in the range of $283-$289 million, with ARR anticipated between $942 million and $947 million [11]