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Guidewire's Solutions Witness Healthy Momentum: Will the Stock Gain?

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Guidewire Software (GWRE - Free Report) recently announced that Arch Capital Group’s subsidiary, Arch Insurance North America (Arch Insurance), has adopted Guidewire ClaimCenter as its new claims management system.  Guidewire ClaimCenter is a cloud-based claims management system tailored for property and casualty (P&C) insurers. The implementation project will be led by Deloitte Consulting LLP, a Guidewire PartnerConnect Consulting member, leveraging its insurance and technology expertise.

Arch Insurance North America operates across the United States and Canada under several entities. It offers a broad range of insurance products designed to meet the needs of diverse markets. Through this implementation, Arch Insurance aims to streamline and upgrade its claims operations and better meet the needs of its policyholders. 

In addition to ClaimCenter, Arch Insurance has selected several other Guidewire products, such as Guidewire Canvas, Guidewire Explore and Guidewire Predict. Guidewire Canvas is a powerful tool for geo-visualizing and analyzing complex claims processes and workflows during catastrophes. Guidewire Explore provides real-time ClaimCenter and PolicyCenter insights to enhance operational efficiency. Guidewire Predict uses advanced predictive analytics to help insurers anticipate risk factors, pricing, claims triage and litigation detection, improving decision-making and risk management.

With the rapid evolution of the insurance industry, the demand for transforming claims management increases to optimize the end-to-end claims process, enabling insurers to process claims more quickly and accurately while enhancing customer satisfaction. In July 2024, P&C insurer company — SAISON Auto & Fire Insurance — also adopted Guidewire ClaimCenter to facilitate its insurance claim operations.

Increasing adoption of its solutions is likely to drive the top-line expansion for Guidewire and boost the stock.

Strength in GWRE Cloud Buoys Revenues

Robust momentum across Guidewire Cloud, with 16 deal wins in the fiscal fourth quarter, cushioned its top-line growth. The company won 42 cloud deals for fiscal 2024. Out of these, 13 were for InsuranceSuite Cloud, bringing the total InsuranceSuite Cloud deals for the fiscal year to 37. Among the users are Capital Insurance Group, Czech Insurer, Encova Insurance and FMG.

In the last reported quarter, GWRE’s revenues rose 8% year over year to $291.5 million, beating the Zacks Consensus Estimate by 3%. The top line also exceeded the company’s guided range of $279-$287 million. Solid deal volume across all tiers and increasing sales activity, especially in Asia Pacific and EMEA, were the primary drivers. The subscription and support segment’s revenues jumped 29.4% from the year-ago quarter's level to $151.8 million. 

Per a report from Fortune Business Insights, the global Software-as-a-Service market is expected to witness a CAGR of 18.4% between 2024 and 2032. Seeing the strong demand trends, the company expects fiscal 2025 total revenues to be between $1.135 billion and $1.149 billion. Subscription revenues are forecasted to be $642 million, representing 34% year-over-year growth. 

San Mateo, CA-based Guidewire is a global provider of software solutions for P&C insurers. The platform offered by Guidewire integrates core operations, digital engagement, analytics, machine learning and artificial intelligence, which is then delivered to its customers via self-managed software or cloud services.

GWRE’s Zacks Rank & Stock Price Movement

Guidewire currently carries a Zacks Rank #3 (Hold). GWRE’s shares were up 1.02% in the last day’s trading on Sept. 9. In the past year, shares of the company have gained 80.9% compared with sub-industry’s growth of 23.8%.

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Stocks to Consider

Some better-ranked stocks from the broader technology space are Arista Networks, Inc. (ANET - Free Report) , Harmonic Inc. (HLIT - Free Report) and Ubiquiti Inc. (UI - Free Report) . ANET and HLIT presently sport a Zacks Rank #1 (Strong Buy), whereas UI carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks supplies products to a prestigious set of customers, including Fortune 500 global companies in markets like cloud titans, enterprises, financials and specialty cloud service providers. It delivered a trailing four-quarter average earnings surprise of 15.02%. In the last reported quarter, Arista delivered an earnings surprise of 8.25%.

Harmonic enables media companies and service providers to deliver ultra-high-quality broadcast and OTT video services to consumers globally. HLIT delivered a trailing four-quarter average earnings surprise of 32.5%.

Ubiquiti company offers a comprehensive portfolio of networking products and solutions for service providers and enterprises. The company’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques.

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