Guidewire Software : Supplementary 3Q21 Earnings Data

Guidewire Software, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations - GAAP

	(unaudited, in thousands except share and per share amounts)
Description			Q1 2020		Q2 2020		Q3 2020		Q4 2020		FY 2020		Q1 2021		Q2 2021		Q3 2021
Revenue:
Subscription and support		$	49,031	$	49,550	$	50,772	$	54,120	$	203,473	$	57,966	$	59,563	$	64,836
License			54,363		76,520		63,104	$	137,567	$	331,554		65,283		77,912		50,937
Services			53,616		47,388		54,289	$	51,987	$	207,280		46,553		42,587		48,195
Total revenue			157,010		173,458		168,165		243,674		742,307		169,802		180,062		163,968
Cost of revenue:
Subscription and support			24,933		28,212		30,522		33,491		117,158		37,006		40,158		41,284
License			2,557		2,904		2,566		3,539		11,566		2,937		2,834		1,991
Services			53,366		52,480		52,664		50,781		209,291		51,024		48,910		48,790
Total cost of revenue			80,856		83,596		85,752		87,811		338,015		90,967		91,902		92,065
Gross profit:
Subscription and support			24,098		21,338		20,250		20,629		86,315		20,960		19,405		23,552
License			51,806		73,616		60,538		134,028		319,988		62,346		75,078		48,946
Services			250		(5,092)		1,625		1,206		(2,011)		(4,471)		(6,323)		(595)
Total gross profit			76,154		89,862		82,413		155,863		404,292		78,835		88,160		71,903
Operating expenses:
Research and development			46,496		49,954		51,893		52,232		200,575		52,615		53,194		54,155
Sales and marketing			33,016		37,339		35,235		36,830		142,420		36,644		39,216		40,879
General and administrative			21,239		20,599		20,885		22,460		85,183		21,180		22,820		23,695
Total operating expenses			100,751		107,892		108,013		111,522		428,178		110,439		115,230		118,729
Income (loss) from operations			(24,597)		(18,030)		(25,600)		44,341		(23,886)		(31,604)		(27,070)		(46,826)
Interest income			7,636		6,958		6,072		4,039		24,705		2,789		2,015		1,559
Interest expense			(4,429)		(4,462)		(4,505)		(4,549)		(17,945)		(4,620)		(4,651)		(4,698)
Other income (expense), net			(251)		(182)		(12,356)		5,584		(7,205)		2,568		6,805		5,259
Income (loss) before provision for (benefit from) income taxes			(21,641)		(15,716)		(36,389)		49,415		(24,331)		(30,867)		(22,901)		(44,706)
Provision for (benefit from) income taxes			(6,650)		4,228		(5,351)		10,640		2,867		(10,677)		(14,249)		(8,073)
Net income (loss)		$	(14,991)	$	(19,944)	$	(31,038)	$	38,775	$	(27,198)	$	(20,190)	$	(8,652)	$	(36,633)
Earnings per share:
Basic		$	(0.18)	$	(0.24)	$	(0.37)	$	0.46	$	(0.33)	$	(0.24)	$	(0.10)	$	(0.44)
Diluted		$	(0.18)	$	(0.24)	$	(0.37)	$	0.46	$	(0.33)	$	(0.24)	$	(0.10)	$	(0.44)
Shares used in computing net earnings per share:
Basic			82,360,891		82,725,641		83,024,291		83,314,410		82,855,392		83,613,287		83,830,624		83,600,327
Diluted			82,360,891		82,725,641		83,024,291		83,947,187		82,855,392		83,613,287		83,830,624		83,600,327
Impairment of equity in strategic investment		$	-	$	-	$	10,672	$	-	$	10,672	$	-	$	-	$	0
Stock-based compensation		$	24,558	$	26,736	$	24,781	$	25,742	$	101,817	$	28,084	$	29,896	$	28,223

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These schedules have been derived from, and should be read in conjunction with, our financial statements in our reports on Forms 10-Q and 10-K which are filed with the SEC. Our Forms 10-Q and 10-K may be found on our website at http://ir.guidewire.com/phoenix.zhtml?c=248177&p=irol-sec.

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Guidewire Software, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations - Non-GAAP Adjustments

(unaudited, in thousands)

Description		Q1 2020		Q2 2020		Q3 2020		Q4 2020		FY 2020		Q1 2021		Q2 2021		Q3 2021
Amortization of intangibles	$	4,545	$	4,545	$	4,405	$	4,126	$	17,621	$	4,126	$	4,126	$	1,903
Stock-based compensation		1,633		1,886		1,986		2,070		7,575		2,602		2,954		2,780
COVID-19 Canada Emergency Wage Subsidy benefit (1)		-		-		-		-		-		-		(770)		(768)
Total adjustment to cost of revenue - subscription and support		6,178		6,431		6,391		6,196		25,196		6,728		6,310		3,915
Amortization of intangibles		400		400		400		400		1,600		400		400		400
Stock-based compensation		180		188		177		224		769		251		145		183
Total adjustment to cost of revenue - license		580		588		577		624		2,369		651		545		583
Stock-based compensation		5,332		5,469		4,862		5,153		20,816		5,543		5,578		5,395
COVID-19 Canada Emergency Wage Subsidy benefit (1)		-		-		-		-		-		-		(198)		(183)
Total adjustment to cost of revenue - services		5,332		5,469		4,862		5,153		20,816		5,543		5,380		5,212
Stock-based compensation		6,181		6,668		6,500		6,975		26,324		7,247		7,604		6,930
COVID-19 Canada Emergency Wage Subsidy benefit (1)		-		-		-		-		-		-		(593)		(556)
Total adjustment to research and development		6,181		6,668		6,500		6,975		26,324		7,247		7,011		6,374
Stock-based compensation		5,157		5,996		4,990		5,117		21,260		5,977		6,806		6,587
Amortization of intangibles		2,222		1,797		1,797		1,797		7,613		1,797		1,797		1,618
COVID-19 Canada Emergency Wage Subsidy benefit (1)		-		-		-		-		-		-		(104)		(97)
Total adjustment to sales and marketing		7,379		7,793		6,787		6,914		28,873		7,774		8,499		8,108
Stock-based compensation		6,075		6,529		6,266		6,203		25,073		6,464		6,809		6,348
COVID-19 Canada Emergency Wage Subsidy benefit (1)		-		-		-		-		-		-		(21)		(19)
Total adjustment to general and administrative		6,075		6,529		6,266		6,203		25,073		6,464		6,788		6,329
Amortization of debt discount and issuance costs		3,156		3,198		3,244		3,288		12,886		3,335		3,379		3,429
Total adjustment to interest expense		3,156		3,198		3,244		3,288		12,886		3,335		3,379		3,429
Changes in fair value of strategic investment		-		-		10,672		-		10,672		-		-		-
Total adjustment to other income (expense), net		-		-		10,672		-		10,672		-		-		-
Non-GAAP tax impact		(8,912)		826		(6,559)		(4,598)		(19,243)		(3,143)		(20,232)		(10,532)
Total adjustment to provision for (benefit from) income taxes		(8,912)		826		(6,559)		(4,598)		(19,243)		(3,143)		(20,232)		(10,532)

(1) Effective the second fiscal quarter of 2021, the COVID-19 Canada Emergency Wage Subsidy benefit was included as a non-GAAP adjustment.

These schedules have been derived from, and should be read in conjunction with, our financial statements in our reports on Forms 10-Q and 10-K which are filed with the SEC. Our Forms 10-Q and 10-K may be found on our website at http://ir.guidewire.com/phoenix.zhtml?c=248177&p=irol-sec.

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Guidewire Software, Inc. and Subsidiaries

Condensed Consolidated Statement of Operations - Other Reconciliations

Description		Q1 2020		Q2 2020		Q3 2020		Q4 2020		FY 2020		Q1 2021		Q2 2021		Q3 2021
Reconciliation of GAAP to Non-GAAP earnings per share:
GAAP diluted earnings per share	$	(0.18)	$	(0.24)	$	(0.37)	$	0.46	$	(0.33)	$	(0.24)	$	(0.10)	$	(0.44)
Amortization of intangibles		0.09		0.08		0.08		0.08		0.33		0.08		0.08		0.05
Stock-based compensation		0.30		0.32		0.30		0.31		1.23		0.34		0.36		0.34
Amortization of debt discount and issuance costs		0.04		0.04		0.04		0.04		0.16		0.04		0.04		0.04
Changes in fair value of strategic investment		-		-		0.13		-		0.13		-		-		-
COVID-19 Canada Emergency Wage Subsidy benefit (1)		-		-		-		-		-		-		(0.02)		(0.02)
Non-GAAP tax impact		(0.11)		0.01		(0.08)		(0.05)		(0.23)		(0.04)		(0.24)		(0.13)
Non-GAAP dilutive shares excluded from GAAP EPS calculation (2)		(0.01)		-		(0.01)		(0.01)		(0.03)		(0.01)		(0.01)		-
Non-GAAP diluted earnings per share	$	0.13	$	0.21	$	0.09	$	0.83	$	1.26	$	0.17	$	0.11	$	(0.16)
Diluted weighted average shares outstanding	82,360,891	82,725,641	83,024,291	83,947,187	82,855,392	83,613,287	83,830,624		83,600,327
Non-GAAP dilutive shares excluded from GAAP EPS calculation (2)		788,902		842,001		486,398		-		834,002		586,287		1,007,573		-
Diluted weighted average shares outstanding	83,149,793	83,567,642	83,510,689	83,947,187	83,689,394	84,199,574	84,838,197		83,600,327
Gross margin:
Subscription and support:
GAAP gross margin		49.1 %		43.0 %		39.9 %		38.2 %		42.4 %		36.2 %		32.6 %		36.3 %
Stock-based compensation		3.3 %		3.8 %		3.9 %		3.8 %		3.7 %		4.5 %		5.0 %		4.3 %
Amortization of intangibles		9.3 %		9.2 %		8.7 %		7.6 %		8.7 %		7.1 %		6.9 %		2.9 %
COVID-19 Canada Emergency Wage Subsidy benefit (1)		- %		- %		- %		- %		- %		- %		(1.3)%		(1.2)%
Non-GAAP gross margin		61.7 %		56.0 %		52.5 %		49.6 %		54.8 %		47.8 %		43.2 %		42.3 %
License:
GAAP gross margin		95.3 %		96.3 %		95.9 %		97.4 %		96.5 %		95.5 %		96.4 %		96.1 %
Stock-based compensation		0.3 %		0.2 %		0.3 %		0.2 %		0.2 %		0.4 %		0.2 %		0.4 %
Amortization of intangibles		0.8 %		0.5 %		0.6 %		0.3 %		0.5 %		0.6 %		0.5 %		0.8 %
Non-GAAP gross margin		96.4 %		97.0 %		96.8 %		97.9 %		97.2 %		96.5 %		97.1 %		97.3 %
Services:
GAAP gross margin		0.4 %		(10.7)%		2.9 %		2.3 %		(0.9)%		(9.6)%		(14.8)%		(1.2)%

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Stock-based compensation	10.0 %	11.5 %	9.0 %	9.9 %	10.0 %	11.9 %	13.1 %	11.2 %
COVID-19 Canada Emergency Wage Subsidy benefit (1)	- %	- %	- %	- %	- %	- %	(0.5)%	(0.4)%
Non-GAAP gross margin	10.4 %	0.8 %	11.9 %	12.2 %	9.1 %	2.3 %	(2.2)%	9.6 %
Overall:
GAAP gross margin	48.5 %	51.8 %	49.0 %	63.9 %	54.5 %	46.4 %	49.0 %	43.9 %
Amortization of intangibles	3.1 %	2.9 %	2.9 %	1.9 %	2.6 %	2.7 %	2.5 %	1.4 %
Stock-based compensation	4.6 %	4.3 %	4.1 %	3.1 %	3.9 %	4.9 %	4.8 %	5.1 %
COVID-19 Canada Emergency Wage Subsidy benefit (1)	- %	- %	- %	- %	- %	- %	(0.5)%	(0.4)%
Non-GAAP gross margin	56.2 %	59.0 %	56.0 %	68.9 %	61.0 %	54.0 %	55.8 %	50.0 %

1. Effective the second fiscal quarter of 2021, the COVID-19 Canada Emergency Wage Subsidy benefit was included as a non-GAAP adjustment.
2. Due to the occurrence of a net loss on a GAAP basis, potentially dilutive securities were excluded from the calculation of GAAP net income (loss) per share, as they would have an anti-dilutive effect. However, these shares have a dilutive effect on non-GAAP net income (loss) per share and, therefore, are included in the non-GAAP net income (loss) per share calculation

These schedules have been derived from, and should be read in conjunction with, our financial statements in our reports on Forms 10-Q and 10-K which are filed with the SEC. Our Forms 10-Q and 10-K may be found on our website at http://ir.guidewire.com/phoenix.zhtml?c=248177&p=irol-sec.

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