Guidewire Earnings: Good Results Show Momentum Building With Impressive Tier 1 Deals

Wide-moat Guidewire reported good fourth-quarter results featuring upside to revenue and profitability, while providing a solid outlook for fiscal 2024. Management expressed confidence in the firm’s progress and rightly so, as Guidewire continues to win replacement deals against competitors even for more modern installations. This is consistent with last quarter and is an emerging trend that could have a meaningful long-term impact if it persists. We are also impressed with significant deal activity at the largest insurers. Based on results and guidance, we slightly raised our estimates and are therefore raising our fair value estimate to $91 per share from $88 previously. We continue to see Guidewire as the primary winner as the property-casualty insurance industry continues to modernize and see consistent momentum in Tier 1 insurers selecting the platform.