Guidewire Software Beats on Both Top and Bottom Lines

Guidewire Software (NYSE: GWRE  ) reported earnings on Feb. 26. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Jan. 31 (Q2), 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 grew significantly. GAAP earnings per share grew.

Gross margins dropped, operating margins shrank, net margins increased.

Revenue details
Guidewire Software chalked up revenue of $72.2 million. The five analysts polled by S&P Capital IQ wanted to see a top line of $64.3 million on the same basis. GAAP reported sales were 31% higher than the prior-year quarter's $55.1 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.21. The six earnings estimates compiled by S&P Capital IQ averaged $0.02 per share. Non-GAAP EPS of $0.21 for Q2 were 31% higher than the prior-year quarter's $0.16 per share. GAAP EPS of $0.09 for Q2 were 29% higher than the prior-year quarter's $0.07 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 56.5%, 590 basis points worse than the prior-year quarter. Operating margin was 7.0%, 270 basis points worse than the prior-year quarter. Net margin was 7.6%, 90 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $69.5 million. On the bottom line, the average EPS estimate is $0.03.

Next year's average estimate for revenue is $284.7 million. The average EPS estimate is $0.29.

Investor sentiment
The stock has a one-star rating (out of five) at Motley Fool CAPS, with 15 members out of 29 rating the stock outperform, and 14 members rating it underperform. Among 13 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), three give Guidewire Software a green thumbs-up, and 10 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 $35.50.

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