Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Guidewire Software, Inc. | gwre-20200302.htm |
Exhibit 99.1
Guidewire Software Announces Second Quarter Fiscal Year 2020 Financial Results
SAN MATEO, Calif., March 4, 2020 - Guidewire Software, Inc. (NYSE: GWRE), provider of the industry platform Property and Casualty (“P&C”) insurers rely upon, today announced its financial results for the fiscal quarter ended January 31, 2020.
“Our second quarter was highlighted by two Tier 1 insurers selecting InsuranceSuite Cloud and one new customer selecting InsuranceNow," said Mike Rosenbaum, chief executive officer, Guidewire Software. "Total revenue and profitability exceeded our outlook in the quarter, and we continue to see a clear shift to cloud-based core systems. However, the growing interest in cloud-based systems is dampening self-managed demand, impacting our full year outlook. Ultimately, this trend is a positive validation of our cloud strategy and reinforces our confidence in serving the more than $2 trillion P&C industry."
Second Quarter Fiscal Year 2020 Financial Highlights
Revenue
•Total revenue for the second quarter of fiscal year 2020 was $173.5 million, an increase of 3% from the same quarter in fiscal year 2019. License and subscription revenue was $105.0 million, an increase of 21%; services revenue was $47.4 million, a decrease of 22%; and maintenance revenue was $21.1 million, which remained relatively flat.
•Annual recurring revenue, or ARR, was $474 million as of January 31, 2020, up from $460 million as of July 31, 2019. Quarterly ARR results for fiscal year 2020 are based on actual currency rates at the end of fiscal year 2019, held constant throughout the year.
Profitability
•GAAP loss from operations was $18.0 million for the second quarter of fiscal year 2020, compared with $6.3 million for the comparable period in fiscal year 2019.
•Non-GAAP income from operations was $15.4 million for the second quarter of fiscal year 2020, compared with $25.4 million for the comparable period in fiscal year 2019.
•GAAP net loss was $19.9 million for the second quarter of fiscal year 2020, compared with less than $0.1 million for the comparable period in fiscal year 2019. GAAP net loss per share was $0.24, based on diluted weighted average shares outstanding of 82.7 million, compared with less than $0.01 for the comparable period in fiscal year 2019, based on diluted weighted average shares outstanding of 81.2 million.
•Non-GAAP net income was $17.6 million for the second quarter of fiscal year 2020, compared with $27.3 million for the comparable period in fiscal year 2019. Non-GAAP net income per share was $0.21, based on diluted weighted average shares outstanding of 83.6 million, compared with $0.33 for the comparable period in fiscal year 2019, based on diluted weighted average shares outstanding of 82.7 million.
Liquidity
•The Company had $1.3 billion in cash, cash equivalents, and investments at January 31, 2020, the same as at July 31, 2019. The Company generated $1.3 million in cash from operations and had negative free cash flow of $12.1 million during the six months ended January 31, 2020.
Business Outlook
Guidewire is issuing the following outlook for the third fiscal quarter and revised outlook for fiscal year 2020 based on current expectations:
| (in $ millions) | Third Quarter Fiscal Year 2020 | Fiscal Year 2020 | ||||||||||||||||||||||||
| Revenue | 153.0 | - | 157.0 | 702.0 | - | 714.0 | ||||||||||||||||||||
| License and subscription | 78.0 | - | 82.0 | 413.0 | - | 425.0 | ||||||||||||||||||||
| Maintenance | 20.0 | - | 20.5 | 83.0 | - | 84.0 | ||||||||||||||||||||
| Services | 53.0 | - | 57.0 | 202.0 | - | 208.0 | ||||||||||||||||||||
| GAAP income (loss) from operations | (45.6) | - | (41.6) | (75.0) | - | (63.0) | ||||||||||||||||||||
| Non-GAAP income (loss) from operations | (11.0) | - | (7.0) | 61.0 | - | 73.0 | ||||||||||||||||||||
| GAAP net income (loss) | (34.0) | - | (30.9) | (67.0) | - | (55.4) | ||||||||||||||||||||
| GAAP net income (loss) per share | (0.41) | - | (0.37) | (0.81) | - | (0.67) | ||||||||||||||||||||
| Non-GAAP net income (loss) | (5.1) | - | (1.7) | 68.6 | - | 78.6 | ||||||||||||||||||||
| Non-GAAP net income (loss) per share | (0.06) | - | (0.02) | 0.82 | - | 0.94 | ||||||||||||||||||||
ARR growth on a constant currency basis is now expected to be between 11% and 12% in fiscal year 2020 compared to our previous range of 14% to 16%.
Conference Call Information
What: Guidewire Software Second Quarter Fiscal Year 2020 Financial Results Conference Call
When: Wednesday, March 4, 2020
Time: 2:00 p.m. PT (5:00 p.m. ET)
Live Call: (877) 705-6003, Domestic
(201) 493-6725, International
Replay: (844) 512-2921, Passcode 13697014, Domestic
(412) 317-6671, Passcode 13697014, International
Webcast: http://ir.guidewire.com/ (live and replay)
The webcast will be archived on Guidewire’s website (www.guidewire.com) for a period of three months.
Non-GAAP Financial Measures and Other Metrics
This press release contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP income tax provision (benefit), non-GAAP net income (loss) per share, and free cash flow. Non-GAAP gross profit and non-GAAP income (loss) from operations exclude stock-based compensation and amortization of intangibles. Non-GAAP net income (loss), non-GAAP income tax provision (benefit), and non-GAAP net income (loss) per share also exclude the amortization of debt discount and issuance costs from our convertible notes and the related tax effects of the non-GAAP adjustments. Free cash flow, which consists of net cash flow provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized software development costs, enables us to analyze our financial performance without the effects of certain non-cash items such as depreciation, amortization, and stock-based compensation expenses. Annual recurring revenue ("ARR") is used to identify the annualized recurring value of active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, maintenance contracts, and hosting contracts. All components of the licensing and usage arrangements that are not expected to recur (primarily perpetual licenses and services) are excluded.
Guidewire believes that these non-GAAP financial measures and other metrics provide useful information to management and investors regarding certain financial and business trends relating to Guidewire’s financial condition and results of operations. The Company’s management uses these non-GAAP measures and other metrics to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation, and for budgeting and planning purposes. The Company believes that the use of these non-GAAP financial measures and other metrics provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures and other metrics to investors.
Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Guidewire urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including the financial tables at the end of this press release, and not to rely on any single financial measure to evaluate the Company’s business.
About Guidewire Software
Guidewire delivers the industry platform that P&C insurers rely upon to adapt and succeed in a time of accelerating change. We provide the software, services, and partner ecosystem to enable our customers to run, differentiate, and grow their business. As of the end of our fiscal year 2019, we were privileged to serve more than 380 companies in 34 countries. For more information, please visit www.guidewire.com and follow us on twitter: @Guidewire_PandC.
NOTE: For information about Guidewire’s trademarks, visit https://www.guidewire.com/legal-notices.
Cautionary Language Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook, market positioning, growing customer interest in cloud-based core systems, and validation of our long-term product strategy. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Guidewire’s control. Guidewire’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Guidewire’s most recent Forms 10-K and 10-Q filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: quarterly and annual operating results may fluctuate more than expected; seasonal and other variations related to our revenue recognition may cause significant fluctuations in our results of operations and cash flows; our reliance on sales to and renewals from a relatively small number of large customers for a substantial portion of our revenue; our ability to successfully manage any changes to our business model, including the transition of our products to cloud offerings and the costs related to cloud operations; our services revenue produces lower gross margins than our license and maintenance revenue; our products or cloud-based services may experience data security breaches; we face intense competition in our market; assertions by third parties that we violate their intellectual property rights could substantially harm our business; changes in accounting guidance on revenue recognition, such as contained in ASC 606, have and may cause us to experience greater volatility in our quarterly and annual results; our product development and sales cycles are lengthy and may be affected by factors outside of our control; weakened global economic conditions may adversely affect the P&C insurance industry including the rate of information technology spending; general political or destabilizing events, including war, conflict or acts of terrorism; our ability to sell our products is highly dependent on the quality of our professional services and system integrator partners; the risk of losing key employees; changes in foreign exchange rates; and other risks and uncertainties. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Guidewire’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Guidewire undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Guidewire’s views as of any date subsequent to the date of this press release.
Media Contact:
Melissa Cobb
Guidewire Software, Inc.
(650) 357-5324
mcobb@guidewire.com
Investor Contact:
Garo Toomajanian
ICR, LLC
(650) 357-5282
ir@guidewire.com
| GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES | |||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
| (unaudited, in thousands) | |||||||||||
| January 31, 2020 | July 31, 2019 | ||||||||||
| ASSETS | |||||||||||
| CURRENT ASSETS: | |||||||||||
| Cash and cash equivalents | $ | 218,463 | $ | 254,101 | |||||||
| Short-term investments | 836,939 | 870,136 | |||||||||
| Accounts receivable, net | 101,171 | 138,443 | |||||||||
| Unbilled accounts receivable, net | 50,297 | 36,728 | |||||||||
| Prepaid expenses and other current assets | 41,114 | 35,566 | |||||||||
| Total current assets | 1,247,984 | 1,334,974 | |||||||||
| Long-term investments | 274,563 | 213,524 | |||||||||
| Unbilled accounts receivable, net | 12,824 | 9,375 | |||||||||
| Property and equipment, net | 66,673 | 65,809 | |||||||||
| Operating lease assets | 88,520 | — | |||||||||
| Intangible assets, net | 52,633 | 66,542 | |||||||||
| Goodwill | 340,877 | 340,877 | |||||||||
| Deferred tax assets, net | 94,424 | 90,308 | |||||||||
| Other assets | 43,092 | 45,554 | |||||||||
| TOTAL ASSETS | $ | 2,221,590 | $ | 2,166,963 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| CURRENT LIABILITIES: | |||||||||||
| Accounts payable | $ | 25,988 | $ | 34,255 | |||||||
| Accrued employee compensation | 44,425 | 73,365 | |||||||||
| Deferred revenue, net | 89,043 | 108,304 | |||||||||
| Other current liabilities | 23,130 | 16,348 | |||||||||
| Total current liabilities | 182,586 | 232,272 | |||||||||
| Lease liabilities | 102,083 | — | |||||||||
| Convertible senior notes, net | 323,676 | 317,322 | |||||||||
| Deferred revenue, net | 19,205 | 23,527 | |||||||||
| Other liabilities | 1,475 | 19,641 | |||||||||
| Total liabilities | 629,025 | 592,762 | |||||||||
| STOCKHOLDERS’ EQUITY: | |||||||||||
| Common stock | 8 | 8 | |||||||||
| Additional paid-in capital | 1,444,597 | 1,391,904 | |||||||||
| Accumulated other comprehensive income (loss) | (7,259) | (7,758) | |||||||||
| Retained earnings | 155,219 | 190,047 | |||||||||
| Total stockholders’ equity | 1,592,565 | 1,574,201 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 2,221,590 | $ | 2,166,963 | |||||||
| GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| (unaudited, in thousands except share and per share data) | |||||||||||||||||||||||
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| License and subscription | $ | 104,954 | $ | 86,713 | $ | 187,377 | $ | 181,393 | |||||||||||||||
| Maintenance | 21,116 | 21,264 | 42,087 | 42,267 | |||||||||||||||||||
| Services | 47,388 | 60,557 | 101,004 | 125,129 | |||||||||||||||||||
| Total revenue | 173,458 | 168,534 | 330,468 | 348,789 | |||||||||||||||||||
Cost of revenue(1): | |||||||||||||||||||||||
| License and subscription | 27,032 | 14,739 | 50,828 | 28,069 | |||||||||||||||||||
| Maintenance | 4,084 | 3,954 | 7,778 | 7,822 | |||||||||||||||||||
| Services | 52,480 | 60,987 | 105,846 | 125,397 | |||||||||||||||||||
| Total cost of revenue | 83,596 | 79,680 | 164,452 | 161,288 | |||||||||||||||||||
| Gross profit: | |||||||||||||||||||||||
| License and subscription | 77,922 | 71,974 | 136,549 | 153,324 | |||||||||||||||||||
| Maintenance | 17,032 | 17,310 | 34,309 | 34,445 | |||||||||||||||||||
| Services | (5,092) | (430) | (4,842) | (268) | |||||||||||||||||||
| Total gross profit | 89,862 | 88,854 | 166,016 | 187,501 | |||||||||||||||||||
Operating expenses(1): | |||||||||||||||||||||||
| Research and development | 49,954 | 46,471 | 96,450 | 91,967 | |||||||||||||||||||
| Sales and marketing | 37,339 | 31,173 | 70,355 | 63,492 | |||||||||||||||||||
| General and administrative | 20,599 | 17,541 | 41,838 | 35,886 | |||||||||||||||||||
| Total operating expenses | 107,892 | 95,185 | 208,643 | 191,345 | |||||||||||||||||||
| Income (loss) from operations | (18,030) | (6,331) | (42,627) | (3,844) | |||||||||||||||||||
| Interest income | 6,958 | 7,553 | 14,594 | 14,404 | |||||||||||||||||||
| Interest expense | (4,462) | (4,287) | (8,891) | (8,531) | |||||||||||||||||||
| Other income (expense), net | (182) | 1,148 | (433) | (341) | |||||||||||||||||||
| Income (loss) before provision for income taxes | (15,716) | (1,917) | (37,357) | 1,688 | |||||||||||||||||||
| Provision for (benefit from) income taxes | 4,228 | (1,916) | (2,422) | (4,620) | |||||||||||||||||||
| Net income (loss) | $ | (19,944) | $ | (1) | $ | (34,935) | $ | 6,308 | |||||||||||||||
| Net income (loss) per share: | |||||||||||||||||||||||
| Basic | $ | (0.24) | $ | — | $ | (0.42) | $ | 0.08 | |||||||||||||||
| Diluted | $ | (0.24) | $ | — | $ | (0.42) | $ | 0.08 | |||||||||||||||
| Shares used in computing net income (loss) per share: | |||||||||||||||||||||||
| Basic | 82,725,641 | 81,217,511 | 82,543,267 | 81,058,562 | |||||||||||||||||||
| Diluted | 82,725,641 | 81,217,511 | 82,543,267 | 82,289,773 | |||||||||||||||||||
(1)Amounts include stock-based compensation expense as follows:
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| (unaudited, in thousands) | |||||||||||||||||||||||
| Stock-based compensation expense: | |||||||||||||||||||||||
| Cost of license and subscription revenue | $ | 1,617 | $ | 535 | $ | 2,980 | $ | 869 | |||||||||||||||
| Cost of maintenance revenue | 457 | 558 | 907 | 1,092 | |||||||||||||||||||
| Cost of services revenue | 5,469 | 6,210 | 10,801 | 12,178 | |||||||||||||||||||
| Research and development | 6,668 | 6,440 | 12,849 | 12,846 | |||||||||||||||||||
| Sales and marketing | 5,996 | 5,074 | 11,153 | 9,695 | |||||||||||||||||||
| General and administrative | 6,529 | 5,555 | 12,604 | 11,027 | |||||||||||||||||||
| Total stock-based compensation expense | $ | 26,736 | $ | 24,372 | $ | 51,294 | $ | 47,707 | |||||||||||||||
| GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||
| (unaudited, in thousands) | |||||||||||||||||||||||
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||
| Net income (loss) | $ | (19,944) | $ | (1) | $ | (34,935) | $ | 6,308 | |||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||||||||
| Depreciation and amortization | 10,758 | 9,789 | 21,644 | 19,441 | |||||||||||||||||||
| Amortization of debt discount and issuance costs | 3,198 | 3,027 | 6,354 | 6,013 | |||||||||||||||||||
| Stock-based compensation | 26,736 | 24,372 | 51,294 | 47,707 | |||||||||||||||||||
| Charges to bad debt and revenue reserves | 521 | 114 | 878 | 352 | |||||||||||||||||||
| Deferred income tax | 3,014 | (3,380) | (4,361) | (6,762) | |||||||||||||||||||
| Accretion of discount on available-for-sale securities, net | (652) | (2,026) | (2,012) | (3,816) | |||||||||||||||||||
| Other non-cash items affecting net income (loss) | 572 | 201 | 572 | 575 | |||||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||||
| Accounts receivable | (22,308) | (23,786) | 36,259 | 4,414 | |||||||||||||||||||
| Unbilled accounts receivable | 6,085 | (4,529) | (17,018) | (30,190) | |||||||||||||||||||
| Prepaid expenses and other assets | (2,081) | (4,783) | (3,527) | (885) | |||||||||||||||||||
| Operating lease assets | 2,153 | — | 4,493 | — | |||||||||||||||||||
| Accounts payable | (1,023) | (6,544) | (4,032) | (14,475) | |||||||||||||||||||
| Accrued employee compensation | 10,986 | 13,786 | (28,794) | (15,262) | |||||||||||||||||||
| Deferred revenue | 1,126 | 5,246 | (23,583) | (27,490) | |||||||||||||||||||
| Lease liabilities | (44) | — | 241 | — | |||||||||||||||||||
| Other liabilities | 377 | 2,802 | (2,137) | 1,111 | |||||||||||||||||||
| Net cash provided by (used in) operating activities | 19,474 | 14,288 | 1,336 | (12,959) | |||||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||
| Purchases of available-for-sale securities | (194,641) | (209,433) | (601,403) | (462,902) | |||||||||||||||||||
| Sales and maturities of available-for-sale securities | 216,512 | 172,194 | 576,749 | 410,583 | |||||||||||||||||||
| Purchases of property and equipment | (1,629) | (8,061) | (11,254) | (11,006) | |||||||||||||||||||
| Capitalized software development costs | (864) | (704) | (2,210) | (1,163) | |||||||||||||||||||
| Net cash provided by (used in) investing activities | 19,378 | (46,004) | (38,118) | (64,488) | |||||||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||
| Proceeds from issuance of common stock upon exercise of stock options | 871 | 414 | 1,239 | 1,103 | |||||||||||||||||||
| Net cash provided by (used in) financing activities | 871 | 414 | 1,239 | 1,103 | |||||||||||||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | (349) | 149 | (95) | (627) | |||||||||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 39,374 | (31,153) | (35,638) | (76,971) | |||||||||||||||||||
| CASH AND CASH EQUIVALENTS—Beginning of period | 179,089 | 391,322 | 254,101 | 437,140 | |||||||||||||||||||
| CASH AND CASH EQUIVALENTS—End of period | $ | 218,463 | $ | 360,169 | $ | 218,463 | $ | 360,169 | |||||||||||||||
| GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| Reconciliation of GAAP to Non-GAAP Financial Measures | |||||||||||||||||||||||
| (unaudited, in thousands) | |||||||||||||||||||||||
| The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below: | |||||||||||||||||||||||
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Gross profit reconciliation: | |||||||||||||||||||||||
| GAAP gross profit | $ | 89,862 | $ | 88,854 | $ | 166,016 | $ | 187,501 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
Stock-based compensation (1) | 7,543 | 7,303 | 14,688 | 14,139 | |||||||||||||||||||
Amortization of intangibles (1) | 4,945 | 4,945 | 9,890 | 9,890 | |||||||||||||||||||
| Non-GAAP gross profit | $ | 102,350 | $ | 101,102 | $ | 190,594 | $ | 211,530 | |||||||||||||||
| Income (loss) from operations reconciliation: | |||||||||||||||||||||||
| GAAP income (loss) from operations | $ | (18,030) | $ | (6,331) | $ | (42,627) | $ | (3,844) | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
Stock-based compensation (1) | 26,736 | 24,372 | 51,294 | 47,707 | |||||||||||||||||||
Amortization of intangibles (1) | 6,742 | 7,309 | 13,909 | 14,618 | |||||||||||||||||||
| Non-GAAP income (loss) from operations | $ | 15,448 | $ | 25,350 | $ | 22,576 | $ | 58,481 | |||||||||||||||
| Net income (loss) reconciliation: | |||||||||||||||||||||||
| GAAP net income (loss) | $ | (19,944) | $ | (1) | $ | (34,935) | $ | 6,308 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
Stock-based compensation (1) | 26,736 | 24,372 | 51,294 | 47,707 | |||||||||||||||||||
Amortization of intangibles (1) | 6,742 | 7,309 | 13,909 | 14,618 | |||||||||||||||||||
Amortization of debt discount and issuance costs (2) | 3,198 | 3,027 | 6,354 | 6,013 | |||||||||||||||||||
Tax impact of non-GAAP adjustments (3) | 826 | (7,411) | (8,086) | (16,274) | |||||||||||||||||||
| Non-GAAP net income (loss) | $ | 17,558 | $ | 27,296 | $ | 28,536 | $ | 58,372 | |||||||||||||||
| Tax provision (benefit) reconciliation: | |||||||||||||||||||||||
| GAAP tax provision (benefit) | $ | 4,228 | $ | (1,916) | $ | (2,422) | $ | (4,620) | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
Stock-based compensation (1) | 4,329 | 4,037 | 8,529 | 7,902 | |||||||||||||||||||
Amortization of intangibles (1) | 1,092 | 1,212 | 2,319 | 2,423 | |||||||||||||||||||
Amortization of debt discount and issuance costs (2) | 518 | 509 | 1,058 | 1,004 | |||||||||||||||||||
Tax impact of non-GAAP adjustments (3) | (6,765) | 1,653 | (3,820) | 4,945 | |||||||||||||||||||
| Non-GAAP tax provision (benefit) | $ | 3,402 | $ | 5,495 | $ | 5,664 | $ | 11,654 | |||||||||||||||
(1) Adjustments relate to amortization of acquired intangibles and stock-based compensation recognized during the periods for GAAP purposes.
(2) Adjustments reflect the amortization of debt discount and issuance costs related to the issuance of our Senior Convertible Notes recognized during the periods for GAAP purposes.
(3) Adjustments reflect the tax benefit (provision) resulting from all non-GAAP adjustments.
| GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| Reconciliation of GAAP to Non-GAAP Financial Measures | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below: | |||||||||||||||||||||||
| Three Months Ended January 31, | Six Months Ended January 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net income (loss) per share reconciliation: | |||||||||||||||||||||||
| GAAP net income (loss) per share — diluted | $ | (0.24) | $ | — | $ | (0.42) | $ | 0.08 | |||||||||||||||
| Non-GAAP adjustments: | |||||||||||||||||||||||
Stock-based compensation (1) | 0.32 | 0.30 | 0.62 | 0.58 | |||||||||||||||||||
Amortization of intangibles (1) | 0.08 | 0.09 | 0.17 | 0.18 | |||||||||||||||||||
Amortization of debt discount and issuance costs (2) | 0.04 | 0.04 | 0.08 | 0.08 | |||||||||||||||||||
Tax impact of non-GAAP adjustments (3) | 0.01 | (0.10) | (0.10) | (0.21) | |||||||||||||||||||
Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation (4) | — | — | (0.01) | — | |||||||||||||||||||
| Non-GAAP net income (loss) per share — diluted | $ | 0.21 | $ | 0.33 | $ | 0.34 | $ | 0.71 | |||||||||||||||
| Shares used in computing Non-GAAP income (loss) per share amounts: | |||||||||||||||||||||||
| GAAP weighted average shares — diluted | 82,725,641 | 81,217,511 | 82,543,267 | 82,289,773 | |||||||||||||||||||
Non-GAAP dilutive shares excluded from GAAP income (loss) per share calculation (4) | 842,001 | 1,488,107 | 854,608 | — | |||||||||||||||||||
| Pro forma weighted average shares — diluted | 83,567,642 | 82,705,618 | 83,397,875 | 82,289,773 | |||||||||||||||||||
(1) Adjustments relate to amortization of acquired intangibles and stock-based compensation recognized during the periods for GAAP purposes.
(2) Adjustments reflect the amortization of debt discount and issuance costs related to the issuance of our Senior Convertible Notes recognized during the periods for GAAP purposes.
(3) Adjustments reflect the impact on the tax benefit (provision) resulting from all non-GAAP adjustments.
(4) Due to the occurrence of a net loss on a GAAP basis, potentially dilutive securities were excluded from the calculation of GAAP net income (loss) per share, as they would have an anti-dilutive effect. However, these shares have a dilutive effect on non-GAAP net income (loss) per share and, therefore, are included in the non-GAAP net income (loss) per share calculation.
| (unaudited, in thousands) | |||||||||||
| Six Months Ended January 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Free cash flow: | |||||||||||
| Net cash provided by (used in) operating activities | $ | 1,336 | $ | (12,959) | |||||||
| Purchases of property and equipment | (11,254) | (11,006) | |||||||||
| Capitalized software development costs | (2,210) | (1,163) | |||||||||
| Free cash flow | $ | (12,128) | $ | (25,128) | |||||||
| GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| Reconciliation of GAAP to Non-GAAP Outlook | ||||||||||||||||||||||||||
| The following tables reconcile the specific items excluded from GAAP outlook in the calculation of non-GAAP outlook for the periods indicated below: | ||||||||||||||||||||||||||
| (in $ millions) | Third Quarter Fiscal Year 2020 | Fiscal Year 2020 | ||||||||||||||||||||||||
| Income (loss) from operations outlook reconciliation: | ||||||||||||||||||||||||||
| GAAP income (loss) from operations | (45.6) | - | (41.6) | (75.0) | - | (63.0) | ||||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||
| Stock-based compensation | 25.8 | - | 27.8 | 103.9 | - | 109.9 | ||||||||||||||||||||
| Amortization of intangibles | 7.8 | - | 7.8 | 29.1 | - | 29.1 | ||||||||||||||||||||
| Non-GAAP income (loss) from operations | (11.0) | - | (7.0) | 61.0 | - | 73.0 | ||||||||||||||||||||
| Net income (loss) outlook reconciliation: | ||||||||||||||||||||||||||
| GAAP net income (loss) | (34.0) | - | (30.9) | (67.0) | - | (55.4) | ||||||||||||||||||||
| Non-GAAP adjustments: | ||||||||||||||||||||||||||
| Stock-based compensation | 25.8 | - | 27.8 | 103.9 | - | 109.9 | ||||||||||||||||||||
| Amortization of intangibles | 7.8 | - | 7.8 | 29.1 | - | 29.1 | ||||||||||||||||||||
| Amortization of debt discount and issuance costs | 3.1 | - | 3.1 | 12.5 | - | 12.5 | ||||||||||||||||||||
| Tax impact of non-GAAP adjustments | (8.8) | - | (8.4) | (13.0) | - | (14.6) | ||||||||||||||||||||
| Non-GAAP net income (loss) | (5.1) | - | (1.7) | 68.6 | - | 78.6 | ||||||||||||||||||||