SAN MATEO, Calif. - Guidewire (NYSE:GWRE) Software, Inc. (NYSE: GWRE) announced its plan to offer $500 million in convertible senior notes due in 2029, targeting qualified institutional buyers. The software company also intends to provide an option to purchase up to an additional $75 million in notes within 13 days of issuance.
The notes, set to mature on November 1, 2029, are senior, unsecured obligations and will be subject to semi-annual interest payments. Holders will have the option to convert their notes under certain conditions, with Guidewire settling conversions in cash, shares, or a mix of both.
Guidewire reserves the right to redeem the notes, either wholly or partially, after November 5, 2027, and before the maturity date, provided specific conditions are met. In the event of a 'fundamental change' as described by the company, noteholders may require Guidewire to repurchase their notes at a price equal to the principal plus accrued interest.
The interest rate and initial conversion rate will be determined at the time of the offering's pricing. Guidewire aims to use the offering's proceeds to fund capped call transactions, retire part of its existing 1.25% Convertible Senior Notes due March 2025, and for general corporate purposes, including potentially redeeming the remaining 2025 Notes.
The company anticipates that holders of the 2025 Notes will engage in market activities that could affect the stock price of Guidewire. These activities may include purchasing Guidewire's common stock or unwinding derivatives, which could influence the trading price of the new notes.
Guidewire plans to enter into capped call transactions to offset potential dilution or cash payments upon conversion of the notes. However, in scenarios where the stock price exceeds the capped call transactions' cap price, dilution or cash payment offsets may not be fully prevented.
The offering and any shares issued upon conversion of the notes will not be registered under the Securities Act or other securities laws, and will be available only through exemptions or transactions not subject to registration requirements. This press release serves as neither an offer to sell nor a solicitation of an offer to buy any securities.
Guidewire is recognized for its cloud platform solutions for the property and casualty (P&C) insurance industry, serving over 570 insurance brands globally.
This news article is based on a press release statement and contains forward-looking statements subject to risks and uncertainties.
In other recent news, Guidewire Software Inc . has been the subject of several analyst firms' attention. BofA Securities adjusted its price target on Guidewire shares to $135, maintaining an Underperform rating. The firm's analysis reflects the company's potential despite a cautious outlook. Oppenheimer, on the other hand, increased its stock price target for Guidewire to $200, influenced by the company's financial targets for fiscal year 2028, which include $1.5 billion in Annual Recurring Revenue (ARR) and an EBIT margin expectation of 28-29%.
RBC Capital maintained its Outperform rating on Guidewire and raised its price target to $215, citing the company's ambitious long-term profitability targets and maturing cloud product offerings. Baird reiterated its Outperform rating on Guidewire shares, setting a steady price target of $204.00, while BTIG reaffirmed its Buy rating on Guidewire, keeping a $195.00 price target for the company's shares.
Guidewire's fiscal 2025 guidance projects an impressive $1 billion in ARR, with total revenue expected to be between $1.135 billion and $1.149 billion. This promising trajectory is largely attributed to Guidewire's successful transition to a cloud-based platform.
In other company news, Guidewire expanded its board of directors with the appointment of Mark Anquillare, former President and COO of Verisk Analytics (NASDAQ:VRSK). However, the company was implicated in a hacking incident involving a British individual, Robert Westbrook, who was arrested on charges of hacking into several companies, including Guidewire, for insider trading information.
InvestingPro Insights
Guidewire Software's decision to offer $500 million in convertible senior notes comes at a time when the company's financial metrics and market performance present an intriguing picture. According to InvestingPro data, Guidewire's market capitalization stands at $15.6 billion, reflecting its significant presence in the P&C insurance software market.
The company's revenue for the last twelve months as of Q4 2024 was $980.5 million, with a revenue growth of 8.3% over the same period. This growth trajectory aligns with an InvestingPro Tip suggesting that net income is expected to grow this year. Additionally, analysts predict the company will be profitable this year, which could be a positive sign for potential investors in the new convertible notes.
Guidewire's stock has shown remarkable performance, with a 110.48% price total return over the past year and a 71.95% return over the last six months. This strong momentum is further emphasized by the stock trading near its 52-week high, with the current price at 99.71% of the 52-week high. However, an InvestingPro Tip cautions that the RSI suggests the stock is in overbought territory, which potential investors might want to consider.
The company operates with a moderate level of debt, which is relevant to the current offering of convertible notes. This balanced approach to leverage could be reassuring for institutional buyers considering the new notes.
It's worth noting that Guidewire does not pay a dividend to shareholders, focusing instead on growth and reinvestment. This strategy appears to be paying off, given the company's strong market performance and expected profitability.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Guidewire Software, providing a deeper understanding of the company's financial health and market position.
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