Guidewire Earnings: Possibly the Strongest Outlook in Our Software Coverage Over the Last Two Years

We raise our fair value estimate to $125 per share from $102 for wide-moat Guidewire, after a strong fiscal fourth quarter that topped our revenue estimate while falling short of our aggressive profitability estimate. The full-year revenue outlook was among the strongest we have seen in our coverage over the last couple of years. Management is bullish about the demand environment, which is showing up in results and guidance. We raise our revenue growth estimates over the next several years based on a strong guide and surging annually recurring revenue, or ARR, but we still see shares as overvalued. We still see Guidewire as the primary winner as the property and casualty insurance industry continues to modernize and display durable momentum, with customers selecting the platform.