$GWRE is undergoing a real fundamental transformation. The stock market is finally valuing this company based on the quality of its real profits, rather than just "cloud software" hype. A major opportunity opened up during the market panic when the stock plummeted roughly 15% in a single trading session. That massive drop happened simply because Wall Street didn't like management's future financial guidance, not because anything actually broke in the underlying business. Since that panic, the stock has recovered beautifully, climbing back up by roughly 23%. Wall Street analysts still think it has plenty of room to run from these levels: • Piper Sandler target: $210 • Citizens target: $220 • DA Davidson target: $222 The business is fundamentally thriving. Its Annual Recurring Revenue (ARR) Predictable, recurring software subscription revenue it pulls in every year cracked $1.242 billion (up 19% year-over-year). Meanwhile, its core subscription and support revenue jumped 33%. The most impressive part? While full-year revenue grew a solid 23% to $1.475B, its actual operating profits grew by a staggering 63%. When profits grow nearly triple the rate of sales, it proves the company's business model is becoming vastly more efficient and profitable as it scales. This is a compounding machine, not a story running on fumes. Furthermore, Guidewire's customer cancellation rate (gross ARR attrition) sits at a record low below 1.5%. Management's future growth targets conservatively assume that more customers will cancel next year. But so far, they aren't. If customers stay loyal, management's goals will turn out to be way too cautious, and the stock price will have even more room to rise. Citizens Analyst Group publicly agreed, calling Guidewire's initial guidance "more conservative than usual". Bought the fear, holding for the long term. Analyst Day on October 27 is the next real test to see if my thesis keeps tracking beautifully. 😊
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