02adbb93ad5dff905c194d250b1a9f589c12d1eea8387d6c7100da430e38095b

d9aac9e26d4061e020c2913fd1e5ab03fd728160599c5f32dbc4d3473b768aed

Total Revenue (USD, thousands)

Total Cost of Revenue (USD, thousands)

Total Gross Profit (USD, thousands)

Total Operating Expenses (USD, thousands)

Income (Loss) from Operations (USD, thousands)

Interest Income (USD, thousands)

Interest Expense (USD, thousands)

Other Income (Expense), Net (USD, thousands)

Income (Loss) Before Provision for (Benefit from) Income Taxes (USD, thousands)

Provision for (Benefit from) Income Taxes (USD, thousands)

Net Income (Loss) (USD, thousands)

eaa0cef80724709bb086ab7a657b4abba242d9bb8de006031b7a1adf7c92b4ba

United States Revenue

Canada Revenue

Other Americas Revenue

Total Americas Revenue

Total EMEA Revenue

Total APAC Revenue

Total Revenue

1ad02cadd70d0c137833fb8f3e3b1ee03d2e62cb0d02bfd793ff3607a8b73fe9

The surge in **cash and cash equivalents** for Q1 2025 was primarily driven by the **issuance of convertible senior notes**, which brought in net proceeds of **$672.75 million**. Although a portion of these proceeds was used to retire about 30% of the existing convertible notes (costing **$200.394 million**) and to purchase capped calls (for **$58.788 million**), these transactions, along with the net impact of operating and investing activities, resulted in an overall net increase of **$275.57 million** in cash and cash equivalents.  **[0001528396-24-000162_gwre-20241031.htm:5]** **[GWRE_3410971_4]** 

Why did cash and cash equivalents surge so high in Q1 2025?

The significant increase in total assets in Q1 2025 was driven by several factors. **Cash and cash equivalents** increased notably from **$547,992 thousand** to **$823,562 thousand** due to the issuance of convertible senior notes, which provided net proceeds of **$672,750 thousand**, even as some convertible notes were retired. Additionally, there were increases in **short-term investments** (from **$455,576 thousand** to **$514,767 thousand**), **deferred tax assets** (from **$253,085 thousand** to **$274,875 thousand**), and **unbilled accounts receivable** (from **$87,031 thousand** to **$129,429 thousand**). These factors combined to propel the overall growth in total assets during the period.  **[0001528396-24-000162_gwre-20241031.htm:3]** **[0001528396-24-000162_gwre-20241031.htm:5]** **[0001528396-24-000162_gwre-20241031.htm:9]** 

What drove the significant increase in total assets in Q1 2025?

The abrupt jump in current liabilities in Q3 2024 was primarily driven by the **reclassification of convertible senior notes** from long-term to current liabilities, which added approximately **$398,467 thousand**. This significant increase was partially offset by declines in deferred revenue and accrued employee compensation, but the key factor was the conversion of the convertible senior notes as they approached maturity.  **[0001528396-24-000057_gwre-20240430.htm:3]** **[0001528396-24-000055_gwreex991earningsrelease43.htm:9]** 

What caused the abrupt jump in current liabilities in Q3 2024?

The sharp increase in **convertible senior notes** in Q1 2025 arose mainly because the company partially retired its 2025 Convertible Senior Notes during the quarter and then issued new 2029 Convertible Senior Notes. In essence, while the retirements (including significant transactions in October and December 2024) reduced the outstanding principal of the 2025 Notes, the replacement with the 2029 Notes increased the overall reported net balance to **671,820** (in thousands) in Q1 2025.  **[0001528396-24-000162_gwre-20241031.htm:3]** **[0001528396-24-000162_gwre-20241031.htm:12]** **[0001528396-24-000201_gwre-20241217.htm:1]** **[0001528396-24-000162_gwre-20241031.htm:16]** **[0001193125-24-239688_d869983dex992.htm:2]** 

Why did convertible senior notes increase sharply in Q1 2025?

4e243b5cb0f5fd0f02a3d4d08aaa2ab55aa81f5091f1443995716deda7dfdd59

In Q3 2024, the significant change in operating cash flow was primarily driven by **an $85,100 thousand decrease in net loss** (after excluding non-cash charges such as deferred taxes and stock-based compensation) and **a $51,700 thousand reduction in cash used by working capital activities**. These factors combined to substantially improve the operating cash flow compared to the negative performance in Q3 2023.  **[0001528396-24-000057_gwre-20240430.htm:50]** 

What drove the sharp drop in Operating Cash Flow in Q3 2024?

The operating cash flow in Q1 2025 turned negative primarily because the benefits from a **$46.1 million decrease in net loss** (after adjustment for non-cash items such as deferred taxes, stock-based compensation, depreciation, and amortization) were largely offset by a **$36.3 million increase in cash used by working capital activities**. This increase in working capital usage was the key factor that pushed overall operating cash flow into negative territory, resulting in a net cash outflow of **$62.3 million** for the quarter.  **[0001528396-24-000162_gwre-20241031.htm:47]** 

Why did Operating Cash Flow swing to a negative figure in Q1 2025?

The significant improvement in **Net Income** in **Q4 2024** was driven by a combination of factors. First, **improved revenue performance** played a major role, with total revenue increasing to **$291.5 million** and marked improvements in **subscription and support revenue** despite a decline in license revenue and a slight decrease in services revenue.  **[0001528396-24-000088_gwreex991earningsrelease73.htm:0]** **[GWRE_3400893_5]**  Additionally, **higher profitability** was achieved as seen by the increase in **GAAP income from operations** (up to **$10.3 million**) and improved **non-GAAP income from operations**.  **[0001528396-24-000088_gwreex991earningsrelease73.htm:1]**  **Cost efficiency and margin improvements** also contributed, notably through enhanced subscription and support gross margins and services gross margin growth to **14%**.  **[GWRE_3400893_5]**  Furthermore, effective management of **stock‐based compensation and other adjustments** supported the positive outcome.  **[0001528396-24-000088_gwreex991earningsrelease73.htm:11]** **[GWRE_3400893_5]**  Lastly, solid **ARR growth** of **14% year-over-year**, reaching **$872 million**, underlined the strong momentum in customer adoption of cloud solutions.  **[0001528396-24-000088_gwreex991earningsrelease73.htm:0]** **[GWRE_3400893_5]** 

What factors contributed to the significant improvement in Net Income in Q4 2024?

9cbcdcf09f4ea2c671ab454cae57340369d94e0b9b4c1705ee9767fd13ccd448

Guidewire Software’s operating income turnaround in Q4 2024 was driven by several factors. **Revenue growth** played a key role, with total revenue rising **8% year-over-year** to **$291.5 million**, supported by a **29% increase in subscription and support revenue** that more than offset declines in license and services revenue.  **[0001528396-24-000088_gwreex991earningsrelease73.htm:0]**  **Improved operating efficiency** also contributed, as evidenced by a boost in GAAP income from operations from **$6.1 million** in Q4 2023 to **$10.3 million** in Q4 2024, reflecting better cost management.  **[0001528396-24-000088_gwreex991earningsrelease73.htm:1]**  Additionally, **non-GAAP adjustments**—including adjustments for stock-based compensation and amortization of intangibles—helped enhance the reported operating performance.  **[0001528396-24-000088_gwreex991earningsrelease73.htm:1]** **[0001528396-24-000088_gwreex991earningsrelease73.htm:12]**  The company’s progress in its **cloud transition**, marked by **7 initial cloud go-lives** on its Guidewire Cloud platform, and **improved services margins** further bolstered the operational turnaround.  **[GWRE_3400893_4]** 

What factors contributed to the operating income turnaround in Q4 2024?

The significant improvement in **net income** in **Q4 2024** was driven by a combination of factors including **improved revenue performance**—with total revenue reaching **$291.5 million** (an **8% increase**) and subscription and support revenue surging by **29%** to **$151.8 million**—and **enhanced operational efficiency** that led to higher **GAAP profitability** (rising to **$16.8 million** from **$12.2 million** the previous year). In addition, effective **cost management** and strong **cash flow**—evidenced by operating cash flow of **$195.7 million**—played key roles in offsetting increases in expenses such as stock-based compensation.  **[0001528396-24-000088_gwreex991earningsrelease73.htm:0]** **[0001528396-24-000088_gwreex991earningsrelease73.htm:1]** 

What drove the significant improvement in net income in Q4 2024?

The spike in total revenue in Q4 2024 was driven primarily by a **29% increase** in subscription and support revenue—from **$117,346 thousand** in Q4 2023 to **$151,848 thousand**—which was fueled by new subscription agreements, cloud transition agreements, and renewals/extensions at fully ramped annual fees. Although there were declines of **12% in license revenue** and a slight **2% drop in services revenue**, the strong performance in the subscription and support segment more than offset these decreases, resulting in an overall **8% increase** in total revenue to **$291,515 thousand**.  **[0001528396-24-000088_gwreex991earningsrelease73.htm:0]** **[0001528396-24-000088_gwreex991earningsrelease73.htm:10]** **[0001528396-24-000105_gwre-20240731.htm:87]** 

Why did total revenue spike in Q4 2024?

The swing to positive other income in Q2 2024 was driven primarily by **foreign currency exchange rate fluctuations** affecting the valuation of monetary assets and liabilities, along with a **strategic investment transaction**. In the strategic investment, Guidewire received **$12.1 million** in consideration (comprising **$6.5 million in cash** and **$5.6 million in ownership interest**) which generated a **$1.8 million gain** in excess of cost, contributing to the positive swing in other income.  **[0001528396-24-000017_gwre-20240131.htm:42]** **[0001528396-24-000017_gwre-20240131.htm:43]** 

What drove the swing to positive other income in Q2 2024?

The documents do not provide a direct explanation comparing Q4 2024 with Q1 2025. While Q4 2024 reported a **net income of $16,759 thousand**  **[0001528396-24-000105_gwre-20240731.htm:106]**  and Q1 2025 reported a **net income of $9,139 thousand**  **[0001528396-24-000162_gwre-20241031.htm:34]** , the detailed narrative in the documents describes the Q1 2025 performance relative to Q1 2024 rather than addressing a drop from Q4 2024. In Q1 2025, improvements were driven by revenue growth, enhanced gross margins, reduced operating losses, and non-GAAP adjustments.  **[0001528396-24-000162_gwre-20241031.htm:5]** **[0001528396-24-000162_gwre-20241031.htm:4]** **[0001528396-24-000160_gwreex991earningsrelease10.htm:0]**  However, none of the provided information explains why the Q1 2025 net income is lower than that of Q4 2024.

Why did net income fall in Q1 2025 after a strong Q4 2024 performance?

25ef0f67b7ff3fdd93c44c8b24262342a4561c7a27b97af7de1e89e73e8b3518

Adjustments for Non-Cash Items (USD, thousands)

Stock-Based Compensation (USD, thousands)

Changes in Working Capital (USD, thousands)

Capital Expenditures (CapEx) (USD, thousands)

Proceeds from / Repayments of Debt (USD, thousands)

Share Repurchases (USD, thousands)

Dividend Payments (USD, thousands)

Net Change in Cash (USD, thousands)

c633cb707c36b6770cc74e6a5fe44027a8f0ccfad3a8529aca5eb2a1ce760df4

Net income (loss) [USD, thousands]

Depreciation and amortization [USD, thousands]

Amortization of debt issuance costs [USD, thousands]

Amortization of contract acquisition costs [USD, thousands]

Stock-based compensation [USD, thousands]

Changes to allowance for credit losses and revenue reserves [USD, thousands]

Amortization of premium (accretion of discount) on available-for-sale securities, net [USD, thousands]

Changes in fair value of strategic investments [USD, thousands]

Other non-cash items affecting net income (loss) [USD, thousands]

Net cash provided by (used in) operating activities [USD, thousands]

Purchases of available-for-sale securities [USD, thousands]

Maturities and sales of available-for-sale securities [USD, thousands]

Purchases of property and equipment [USD, thousands]

Capitalized software development costs [USD, thousands]

Acquisition of strategic investments [USD, thousands]

Sale of strategic investment [USD, thousands]

Net cash provided by (used in) investing activities [USD, thousands]

Proceeds from issuance of convertible senior notes, net of issuance costs [USD, thousands]

Payment for the retirement of convertible senior notes [USD, thousands]

Purchase of capped calls [USD, thousands]

Proceeds from issuance of common stock upon exercise of stock options [USD, thousands]

Net cash provided by (used in) financing activities [USD, thousands]

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash [USD, thousands]

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH [USD, thousands]

Deferred income tax [USD, thousands]

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period [USD, thousands]

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period [USD, thousands]

8e490f0040657ad200a16b99f439482c209fbfdb43f85fb895d27cd6ebaef13f

Cash and cash equivalents (USD, thousands)

Short-term investments (USD, thousands)

Accounts receivable, net (USD, thousands)

Unbilled accounts receivable, net (USD, thousands)

Prepaid expenses and other current assets (USD, thousands)

Total current assets (USD, thousands)

Long-term investments (USD, thousands)

Property and equipment, net (USD, thousands)

Operating lease assets (USD, thousands)

Intangible assets, net (USD, thousands)

Goodwill (USD, thousands)

Deferred tax assets, net (USD, thousands)

Other assets (USD, thousands)

TOTAL ASSETS (USD, thousands)

Accounts payable (USD, thousands)

Accrued employee compensation (USD, thousands)

Deferred revenue, net (USD, thousands)

Convertible senior notes, net (USD, thousands)

Other current liabilities (USD, thousands)

Total current liabilities (USD, thousands)

Lease liabilities (USD, thousands)

Other liabilities (USD, thousands)

Total liabilities (USD, thousands)

Common stock (USD, thousands)

Additional paid-in capital (USD, thousands)

Accumulated other comprehensive income (loss) (USD, thousands)

Retained earnings (accumulated deficit) (USD, thousands)

Total stockholders’ equity (USD, thousands)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (USD, thousands)

8bdbd60e33cb17334bf7858d94b4a418fc848149130fb3d27c948c2e117282af

Subscription and Support Revenue

- Subscription

- Support

License Revenue

- Term License

- Perpetual License

Services Revenue

6b544ef3ba04baecd920ca4be88b5e453f7ae1a3202f529443869a3207dad43e

Guidewire Software Inc (GWRE)

Financials