Guidewire reports Q1 2025 results
Guidewire reported solid financial results for the first quarter of fiscal 2025, reflecting strong cloud demand and significant traction with Tier-1 insurers. The company recorded nine cloud deals in the quarter, including five with Tier-1 insurers. Notable wins include two deals with Zurich Insurance Group and one with Arch Insurance’s middle-market commercial and entertainment business.
Guidewire also signed a global framework agreement with Zurich Insurance Group, facilitating easier adoption of its cloud platform across Zurich’s global entities. This agreement led to Zurich adopting Guidewire Cloud at two entities: a full-suite implementation for large corporate and commercial lines and ClaimCenter for Zurich Australia.
Additionally, Baloise Group transitioned to the Guidewire Cloud Platform, expanding its use of the full suite for its European operations.
Guidewire, which has 122 customers using its platform for workers’ compensation insurance, sees opportunities to grow in this segment. CEO Michael Rosenbaum explained that the company is focused on two areas: expanding within its existing customer base by improving products and adding data and analytics solutions, and attracting new workers’ comp carriers looking for a modern platform. He also noted interest in shared solutions to address common needs among workers’ comp carriers, which could lead to additional sales and better service. Laura Drabik is leading the company’s efforts in this area.
Rosenbaum also acknowledged the early stage of generative AI adoption and the complexities of determining its pricing model. He emphasized that there are numerous options for packaging and pricing generative AI use cases, making it premature to outline specifics. He explained that generative AI would be integrated into various solutions and products, with pricing tied more to those offerings than the underlying AI technology itself. The costs of building, running, and delivering AI-powered capabilities will factor into pricing but will require a nuanced approach rather than a standard model.
“I think it’s premature for us to talk about it [the pricing model for GenAI]. It’s just because we have a lot of options that we’ll look at, different ways we could look at packaging it. And so it’s just — there’s just like so many ways that this might go that it’s probably premature for me to describe it. And I also think I would connect you back to the previous conversation. I think it’s almost like if you say like how does the Internet or web browsers interact with your technology, and it’s like, well, it’s everywhere, right?
And so like there’s going to be components. There’s going to be solutions and products that are packaged and priced that are powered by generative AI. And those prices and packages will relate to the solutions and products more so than they will relate to the enabling technology, the enabling capability, which will certainly be like a factor in how much it costs to run and how much it costs to build and deliver. But it’s going to be far more nuanced than just like this is how we price generative AI at Guidewire.”
Financial Highlights Q1 FY25
- Revenue: $262.9M (+27% YoY), with subscription and support revenue up 33%.
- ARR: $874M as of October 31, 2024.
- Profitability: GAAP loss from operations improved to $4.7M from $33.8M YoY. Non-GAAP income from operations rose to $34.7M from $4.1M YoY.
- Cash Position: $1.48B in cash and investments, driven by proceeds from convertible note issuance.
Customer Insights from Connections Conference
At Guidewire’s annual conference, executives from leading insurers highlighted their successes with the Guidewire Cloud Platform:
- Travelers CTO: Emphasized faster implementation timelines for PolicyCenter migrations, driving growth and innovation.
- IAG COO: Shared how consolidating claims platforms reduced claim reporting time from 22 minutes to 90 seconds while enabling greater efficiency and innovation.
Outlook for FY25
Guidewire projects ARR of $995M–$1,005M and total revenue of $1,155M–$1,167M for the fiscal year. Non-GAAP operating income is expected to range between $164M and $176M, supported by ongoing cloud adoption and operational execution.
Bottom Line: Guidewire stock is down $34.81 (-17%) over the past month.
