Executive Summary
Guidewire delivered a strong Q4 2024 performance underpinned by robust cloud adoption and durable ARR growth. Total quarterly revenue of $291.5 million reflected a mix shift toward cloud-based offerings, with subscription and support revenue and cloud ARR driving the upside. The company reported a 14% year-over-year increase in ARR (constant currency) and a 19% growth in fully ramped ARR, as Guidewire continues to scale its cloud platform and move customers toward broader Suite and data-enabled solutions. Profitability improved meaningfully through higher cloud margins, with non-GAAP gross margin expanding to 63% and subscription gross margin surpassing 65%, supported by the ramp in Guidewire Cloud and efficiency gains across the operating model. Free cash flow remained robust, and the balance sheet remained solid with approximately $1.1 billion in cash, cash equivalents, and investments and a net cash position on a levered basis. The company guided to 2025 ARR of $0.995–$1.005 billion, total revenue of $1.135–$1.149 billion, and continued focus on cash generation, R&D investment, and margin expansion, signaling a durable path to GAAP profitability in fiscal 2025. The dynamics in Q4 also included a healthy pipeline, continued cloud migrations, and a broadening of deal sizes and scope, suggesting upside optionality from larger, multi-product deployments and an expanding ecosystem of partners and data offerings.
Key Performance Indicators
QoQ: 161.78% | YoY:69.22%
QoQ: 405.93% | YoY:37.14%
QoQ: 401.20% | YoY:33.33%
Key Insights
Revenue: Q4 2024 revenue of $291.5M (+7.99% YoY; +21.12% QoQ). Gross profit: $186.436M (+13.90% YoY; +31.08% QoQ); Gross margin: 63.0%. Operating income: $10.314M (+69.22% YoY; +161.78% QoQ). Net income: $16.759M (+37.14% YoY; +405.93% QoQ). EPS: $0.20 (+33.33% YoY; +401.20% QoQ). ARR (quarter end): $872M, pre-FX adjustment; FX-adjusted ARR: $864M; YoY ARR growth: 14% (constant currency); Fully ramped ARR growth: 19% YoY. Cloud ARR: $0.0? (Total cloud ARR grew 28% YoY and comprised 66% of total ...
Financial Highlights
Revenue: Q4 2024 revenue of $291.5M (+7.99% YoY; +21.12% QoQ). Gross profit: $186.436M (+13.90% YoY; +31.08% QoQ); Gross margin: 63.0%. Operating income: $10.314M (+69.22% YoY; +161.78% QoQ). Net income: $16.759M (+37.14% YoY; +405.93% QoQ). EPS: $0.20 (+33.33% YoY; +401.20% QoQ). ARR (quarter end): $872M, pre-FX adjustment; FX-adjusted ARR: $864M; YoY ARR growth: 14% (constant currency); Fully ramped ARR growth: 19% YoY. Cloud ARR: $0.0? (Total cloud ARR grew 28% YoY and comprised 66% of total ARR). Subscription revenue: $477M (+36% YoY). Subscription and support revenue: $549M (+28% YoY). License revenue: $250M (−6% YoY). Services revenue: $181M (−14% YoY). Cloud/SaaS margin progress: Subscription and support gross margin 65.5% (+10pp YoY). Operating cash flow: $196M for the year. Free cash flow: $189.3M. Cash/end-of-period: $549.2M; Cash, cash equivalents, and investments: ~$1.10B; Total debt: $442.9M; Net debt: −$105.1M (net cash). Guidance (FY25): ARR $0.995B–$1.005B (≈16% CC growth midpoint). Revenue $1.135B–$1.149B. Subscription revenue ~$642M (+34%). Support revenue ~$710M in subscription and support (net of cloud-structured models). Services revenue ~$190M. Total gross margin about 65%; subscription gross margin about 68%; professional services gross margin ~12%. Non-GAAP operating income $157M–$171M; GAAP operating income roughly $(4M) to $10M. CY2025 cash flow from operations: $220M–$250M; CapEx $20M–$25M. Q1 FY25 guidance implies a typical seasonality with subscription and support revenue of ~$167M and services ~$50M; total gross margins ~61%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
291.52M |
7.99% |
21.12% |
| Gross Profit |
186.44M |
13.90% |
31.08% |
| Operating Income |
10.31M |
69.22% |
161.78% |
| Net Income |
16.76M |
37.14% |
405.93% |
| EPS |
0.20 |
33.33% |
401.20% |
Key Financial Ratios
operatingProfitMargin
3.54%
operatingCashFlowPerShare
$2.35
freeCashFlowPerShare
$2.3
priceEarningsRatio
184.22
Management Commentary
Key management takeaways and quotes from the Q4 2024 earnings call:
- Strategy and market positioning: Mike Rosenbaum stated, I have a five-year view of Guidewire's cloud journey and we have now established a consistent track record of customer program success with our cloud applications. This underscores the durable demand for Guidewire Cloud and the trust of insurers in the platform’s ability to deliver measurable outcomes. Significance: reinforces the core thesis that Guidewire is transitioning from on-prem to cloud with durable ARR growth and expanding referenceability.
- Cloud economics and profitability: Jeff Cooper highlighted, Guidewire Cloud platform is demonstrating greater scale and efficiency with subscription and support gross margins increasing 10 points to over 65% for the year. Significance: underpins the higher-margin SaaS model, supports long-term margin targets, and validates cloud-first investments.
- Growth and guidance: Mike Rosenbaum reaffirmed, the company is on track to hit the $1 billion ARR target this fiscal year as cloud adoption accelerates and referenceability grows. Significance: supports confidence in the ARR trajectory and helps justify multiple expansion through year-end investor discussions.
- Customer outcomes and ecosystem: John Mullen noted, seven initial cloud go-lives in Q4 and 42 cloud deals in FY24; cloud migrations expanded beyond initial scope, with Tier-2 deals contributing meaningfully. Significance: demonstrates robust execution in cloud migrations and a widening footprint across tiers, reinforcing stickiness and upsell potential.
We have now established a consistent track record of customer program success with our cloud applications.
— Mike Rosenbaum
The Reference ability of our relationships and the power of full suite and data is resonating in the market.
— John Mullen
Forward Guidance
Management guidance for FY25 emphasizes continued cloud-led growth and margin expansion. Key points: ARR guidance of $0.995–$1.005B implies mid-teens growth on a constant-currency basis (centered around 16%). Total revenue guidance of $1.135–$1.149B; cloud-driven subscription revenue growth of ~34% to ~$642M; cloud/migration tailwinds expected to sustain gross margins around 65% with subscription margins near 68%, while services gross margins remain around 12%. Cash flow from operations is guided to $220–$250M, with CapEx of $20–$25M. Q1 2025 outlook anticipates typical seasonality with subscription revenue around $167M and services around $50M, gross margins around 61%. Achievability hinges on: (1) continued rapid cloud adoption and net-new pipeline; (2) maintaining favorable FX assumptions; (3) successful execution of higher R&D investment (~14% at R&D) and partner ecosystem expansion; and (4) the ability to convert large multi-product deals into recurring ARR. Investors should monitor: the progression of net revenue retention within cloud deployments, the pace of InsuranceNow to InsuranceSuite transitions, AWS contract benefits to gross margins, and the evolution of large Tier-1 versus Tier-2 deployments as a driver of fully ramped ARR.