Q4 2024 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$143.93Last close (Sep 5, 2024)
Post-Earnings Price$169.29Open (Sep 6, 2024)
Price Change
$25.36(+17.62%)
- Guidewire reported fully ramped ARR growth of 19%, significantly above the prior quarter's expectation of 16%, indicating that the net new value booked in Q4 was far above the original plan. This was driven by larger deals and customers making bigger commitments upfront, reflecting increased confidence in Guidewire's cloud platform.
- The company is experiencing strong momentum in cloud transitions, with the cloud installed base expanding healthily. Customers migrating to the Guidewire Cloud Platform are increasing their spend, including adoption of additional product sets in data and analytics. This suggests potential for further growth as the cloud becomes a larger part of the business.
- Guidewire is distancing itself from competitors, winning its fair share of deals due to a track record of success with its cloud products over the past 5 or 6 years. The company's ability to land and successfully execute programs has contributed to increased trust and confidence among customers, leading to stronger deal conversions and lifting quarterly performance.
- The strong Q4 performance may have been partly due to deals closing earlier than anticipated, potentially pulling forward future revenue and leading to weaker performance in upcoming quarters. Executives mentioned they had a "blowout Q4" and did their best to "run the table" , and despite efforts to smooth bookings, they experienced "typical linearity" with a very strong Q4.
- The company acknowledges it's too early to make judgments on customer expansion rates in their cloud installed base and is not closely tracking Net Revenue Retention (NRR). This suggests uncertainty in future growth from existing customers and potential challenges in driving additional revenue from cloud migrations.
- Recent cloud deals were mostly with Tier 2 through Tier 4 customers, indicating potential challenges in penetrating Tier 1 carriers. Tier 1 customers require "very specific proof points" and are approached differently, which could limit growth opportunities among the largest carriers.
Research analysts covering Guidewire Software.