Guidewire Earnings: Good Deal Flow and Excellent Profitability Highlight Good Results

Wide-moat Guidewire reported nice first-quarter results that exceeded our revenue and profitability expectations. The outlook was mixed, with key second-quarter measures being slightly light, while full-year revenue was unchanged, and full-year profitability was raised by a little less than the outstanding results from the first quarter. Based on rapid progress toward the firm’s gross margin target for next year, we are raising our fair value estimate to $94 per share from $91 previously, leaving shares fairly valued. We continue to see Guidewire as the primary winner as the property-casualty insurance industry continues to modernize and have durable momentum in seeing customers selecting the platform.