GWRE Stock Is Cruising Ahead in the InsurTech Space

Guidewire Stock Cruising Ahead in the InsurTech Space
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Guidewire Stock Keeps Gaining on Rising Demand

Technology has changed the way business is carried out in almost every industry, and insurance is no exception. The rising trend of advanced technology in the insurance sector, called “InsurTech,” is disrupting traditional practices.

Insurance industry players are using new technologies to create strategic advantages for themselves in a highly competitive field, and one company is gaining immensely from this trend.

Guidewire Software Inc (NYSE:GWRE) operates in the property and casualty (P&C) segment of the global insurance sector. It’s one of the top insurance software providers in the world.

With InsurTech transforming the industry in order to improve customer experience and simplify policy management, Guidewire stock investors stand to gain in the coming years.

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The company provides a P&C insurance technology platform that’s comprised of software, services, and a partner ecosystem.

Its customers range from some of the largest global insurance carriers (or their subsidiaries), such as Aviva plc, AXA, and Zurich—as well as national carriers, such as Direct Line Insurance Group plc and Insurance Australia Group Limited (IAG).

Its “Guidewire InsurancePlatform” applications support core operations, data management, and digital engagement. They can be deployed in the cloud or on-premise.

The company delivers software-as-a-service (SaaS) subscriptions via “Guidewire Cloud.” These applications strengthen clients’ ability to adapt and succeed in a rapidly changing market.

With the adoption of advanced technologies in the P&C insurance sector, insurers have increased their ability to grow revenue, reduce costs, and engage more deeply with their customer base. With the rise in customer expectations for personalized products and services, the InsurTech trend will likely continue to grow.

P&C insurance companies continue to actively modernize the transactional systems that support the key functional areas of P&C insurance, such as product definition, underwriting and policy administration, claims management, and billing.

For Guidewire Software Inc., this represents a market opportunity of more than $8.0 billion. This bodes well for GWRE stock. (Source: Guidewire Analyst Day, Guidewire Software Inc, September 20, 2018)

Guidewire is leaving no stone unturned in its efforts to grow and excel in its business. Earlier this year, the company closed its acquisition of Cyence, a data listening and machine learning company. This acquisition will help Guidewire provide P&C insurers with cloud-based risk analytics solutions.

The growth in opportunities has been reflected in the company’s improving financial results.

The company recently posted strong fourth-quarter results, with revenue growing by an impressive 37% year-over-year to $248.6 million. For fiscal-year 2018, the total revenue was $661.1 million, which was an increase of 29% from the previous year. (Source: “Guidewire Software Announces Fourth Fiscal Quarter and Fiscal Year 2018 Financial Results,” Guidewire Software Inc, September 5, 2018.)

Generally accepted accounting principles (GAAP) income from operations in the quarter was $55.2 million, up from $41.0 million in the same prior-year period. Both revenue and net income were above the guidance ranges.

The company posted its best performance in Europe. During the fiscal year, 64 products were licensed to 22 customers in Europe, 10 of whom were new clients. This reflected a strong demand environment for data and digital, as well as for cloud deployment.

During the quarter, Guidewire Digital was chosen by 29 new and existing customers, and the company ended the year with 127 customers that licensed at least one of its digital products.

The fourth quarter and fiscal-year results showed that Guidewire has been advancing its mission of enabling insurers to adapt and succeed in a time of accelerated change.

Guidewire stock has been gaining consistently over the past years as demand rises for its products and services, and the company’s product portfolio expands.

The company has completed more than 620 projects in over 30 countries, for more than 240 customers. And that list continues to grow. (Source: “Guidewire Analyst Day,” Guidewire Software Inc, op cit.)

GWRE stock has gained almost 22% over the last year, as the following stock chart shows.

guidewire-stock-chart

Chart courtesy of StockCharts.com

Since I wrote about Guidewire in July 2017, the stock price has gone up by more than 30%.

Analyst Take

Guidewire Software Inc provides P&C insurers with a technology platform that’s focused on three key elements: core transaction processing, data management and analytics, and digital engagement.

As technology continues to disrupt the insurance sector, insurers have been trying hard to keep up. Guidewire’s software helps them achieve this goal.

The company’s applications enable P&C insurers to grow their business and improve customer engagement. These clients can not only lower their operating costs by adopting Guidewire’s technology platform, but they also can improve their decision-making processes.

The continued growth in InsurTech presents a significant global revenue opportunity for Guidewire, and this bodes well for GWRE stock. Investors might want to consider Guidewire stock for the long term.