Boston, MA 03/04/2014 (wallstreetpr) – Guidewire Software Inc (NYSE:GWRE) reported its fiscal 2014 second quarter Monday. The company announced mixed results in that revenue increased, but earnings sank to the point of hitting a loss. Could things have been different for the stock if some metrics didn’t exceed expectation? We answer that important question.
In the most recent quarter, Guidewire Software Inc (NYSE:GWRE) reported earning loss of $892,000, reflecting 1 cent loss per share. In the corresponding quarter a year ago, the company earned profit of $5.5 million, suggesting 9 cents per share. On the adjusted earnings basis, the most recent quarter earnings were 16 cents, down from 20 cents in the period last year.
As concerns revenue, Guidewire Software Inc (NYSE:GWRE) was all good news. Revenue rose to $83.5 million, suggesting 16 percent gain compared to the same quarter of last year. On their part, the management expected revenue to come in between $76 and $78 million. That should have resulted in breakeven or profit of 2 cents per share. But while revenue surpassed expectations, earnings were at best a disappointment.
What was the trouble?
Guidewire Software Inc (NYSE:GWRE) could not register profit in the most recent quarter for the simple reason that expenses were higher than anticipated. Operating expenses in the quarter were up 32 percent. Note that included 52 percent increase in sales and marketing expenses and 20 percent increase in spending in research and development. With the expenses up, there was no way the 16 percent increase in revenue could keep things from walling into the red zone.
Shares of Guidewire Software Inc (NYSE:GWRE) fell 0.84 percent to $53.16 in the regular session and more than 3 percent in the post-market trading. The shares are up about 18 percent over the past three months.
Bottom Line
Guidewire Software Inc (NYSE:GWRE) ended its second quarter in loss, but there are still attractive prospects for the company. With insurance companies modernizing their systems, it is poised to benefit from increased spending in software acquisitions. The company is a provider of system software for casualty and property insurers.
