Guidewire Software, Inc.

GWRE

Services-Prepackaged Software

Mkt Cap

$8.005B

PE

-71.57

Debt

$397.2M

Cash

$406.8M

EV

$7.995B

FCF

$32.57M

Market Cap

$8.005B

P/E Ratio

-71.57

Debt

$397.2M

Cash

$406.8M

EV

$7.995B

FCF

$32.57M

Guidewire Software, Inc. provides software products for property and casualty (P&C) insurers worldwide. The company offers Guidewire InsuranceSuite Cloud comprising PolicyCenter Cloud, BillingCenter Cloud, and ClaimCenter Cloud applications. It also provides Guidewire InsuranceNow, a cloud-based platform that offers policy, billing, and claims management functionality to insurers; and Guidewire InsuranceSuite for Self-Managed. In addition, the company offers Guidewire Rating Management to manage the pricing of insurance products; Guidewire Reinsurance Management to use rules-based logic to execute reinsurance strategy through underwriting and claims processes; and Further, it provides Guidewire Underwriting Management, a cloud-based integrated business application; Guidewire AppReader, a submission intake management solution; Guidewire ClaimCenter Package for the London market supports the claims workflow used by London Market insurers and brokers; Guidewire Digital Engagement Applications, which enable insurers to provide digital experiences to customers, agents, vendors, and field personnel through their device of choice; and Guidewire for Salesforce to provide customer information regarding policies and claims. Additionally, the company offers Guidewire Predict, a P&C-specific machine-learning platform; Guidewire HazardHub, that allows insurers to understand, assess, price, and manage property risk; Guidewire Canvas, Guidewire Compare, and Guidewire Explore cloud-native applications; Guidewire Cyence, a cyber-risk economic modeling product; The company was incorporated in 2001 and is headquartered in San Mateo, California.

Sector

10-K
7/31/23
10-Q
4/30/23
10-Q
1/31/23
10-Q
10/31/22
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7/31/22
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4/30/22
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1/31/22
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10/31/21
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7/31/21
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4/30/21
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1/31/21
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10/31/20
10-K
7/31/20
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4/30/20
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1/31/20
10-Q
10/31/19
10-K
7/31/19
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4/30/19
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1/31/19
10-Q
10/31/18
10-K
7/31/18
10-Q
4/30/18
10-Q
1/31/18

DCF

Discounted Cash Flow Valuation of Guidewire Software, Inc.

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$32.57M	$32.29M	$32.02M	$31.74M	$31.47M	$31.2M	$30.93M	$30.67M	$30.41M	$30.14M	$29.89M	$298.9M
DCF		$28.08M	$24.21M	$20.87M	$17.99M	$15.51M	$13.37M	$11.53M	$9.94M	$8.569M	$7.387M	$73.87M
Value	$231.3M

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth -11%

Earnings Stability -70%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been decreasing indicating a lower marginal ROA with respect to the calculated one, this could impede growth.

Years	07-2015	07-2016	07-2017	07-2018	07-2019	07-2020	07-2021	07-2022	07-2023	TTM
Net Margin	2.6%	3.5%	4.1%	-3%	2.9%	-3.7%	-8.9%	-22%	-12%	-12%
ROA	2.1%	2.3%	3.1%	0.00091%	0.57%	-1%	-4.5%	-8.8%	-6.6%	-6.6%
ROE	1.4%	1.9%	2.4%	-1.4%	1.3%	-1.6%	-4.3%	-12%	-9.3%	-9.3%

What is the average Net Margin?

The average Net Margin over the past 5 years is -7.88%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is -3.64%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is -3.39%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is -1.85%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is -4.63%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is -2.39%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

The company has high debt with respect to the cashflow it generates.

The Graham’s stability indicate a relevant drawdown, consider checking when it has occured and why.

Years	07-2015	07-2016	07-2017	07-2018	07-2019	07-2020	07-2021	07-2022	07-2023	TTM
Debt FCF	-	-	-	2.33	4.46	3.60	3.71	-7.55	12.19	12.19
Debt Equity	-	-	-	0.21	0.20	0.20	0.22	0.25	0.33	0.33
MIN
Graham Stability	-	-	100%	-130%	100%	-370%	-	-	-	-370%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 12.19.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 0.38.

What is the Graham’s Stability?

Graham’s Stability measure stands at -3.66.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has been increasing in past years.

Years	07-2016	07-2018	07-2020	07-2022	Trend
Revenue	11%	6.5%	6.8%	11%	-1.1%
Net Income	-	-	-	-	37%
Stockholders Equity	6.3%	-3.4%	-10%	-17%	-4.1%
FCF	-14%	-24%	-29%	-	-3.4%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +6.49%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is -1.05%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +41.58%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is +37.29%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is -3.37%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is -4.13%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is -24.3%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -3.37%.