This company (GWRE) is changing into a subscription model and some of the figures are down, or poor, as a result. The SP certainly has not performed recently as well as the main subjects of the board but it looks to have solid enough fundamentals. I do not recall it being commented on here. I like the sector (insurance) and the potential for growth and cash flow. I wonder if anyone is taking any interest.
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Hi strelna.
I have no position in Guidewire, but I do have a position in a “competitor”, Ebix. I put “competitor” in quotes because both companies sell software to insurers, as I understand it, but I’m not sure that both companies compete for the same projects. I covered Ebix for TMF for a while, but dropped that coverage a few years ago, so my commentary may not be totally current. It is my understanding that Ebix focuses on setting up exchanges, but I’m not sure about Guidewire’s fit in the insurance world.
Ebix’ CEO was born in India, I’m pretty sure, and a lot of his workforce is based there, although the company is based in the USA (near Atlanta, if I recall correctly). The CEO, Robin Raina, is a good businessman, although at times he can appear to be a bit eccentric. Recently, he’s been working on expanding the business in ways that support government growth initiatives in India, so the company is becoming less of an “insurance software” pure play.
I’ve held my EBIX position for almost a decade and it is currently worth roughly 6.5 times what I paid for it, although I’ll readily admit it hasn’t been a smooth ride. The company is still relatively small, with a market cap below $2.5 billion.
Guidewire went public while I was covering Ebix, and I spent some time with its S-1 SEC document (initial securities registration). I don’t specifically remember why I decided against GWRE at the time, but it was probably a combination of (1) lack of TMF imprimatur, (2) lack of a track record, since it was an IPO, and (3) I felt as if it didn’t diversify me well because EBIX was already a large holding. So, basically, my rejection of GWRE was more for personal reasons than based on what I learned way back then (and have mostly since forgotten).
While I’m actually caught up on this board (not always the case) and posting, I wanted to add my name to the list of people who appreciate all the great discussion that occurs. I was just telling someone the other night that Saul’s approach has influenced my investing style for the better. I’m sure that Saul would feel as uncomfortable with my portfolio as I would with his, but I’ve copied a page or two from his game plan, to my benefit, and in ways that fit comfortably with my investing style. But it isn’t purely Saul that keeps me reading. There are many great investors here. Kudos to Saul for creating the forum and being so welcoming of talented investors (and those seeking to become more talented). And thanks to all of you for your active participation.
Thanks again, and best wishes,
TMFDatabaseBob (long: EBIX; no position in GWRE)
See my holdings here: http://my.fool.com/profile/TMFDatabasebob/info.aspx
Peace on Earth
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Just had to ask, given your TMF name: ever looked at MDB?
Hi DreamerDad.
I put MDB on my Watch List and I’ve done a little bit of reading about it. My forte was transactional systems needing a strong COMMIT mechanism. My running joke (not a joke, really) was that if the DBMS doesn’t have a transaction log, it’s a toy.
So, this is not the kind of DBMS that I would have used at work. I’m retired for almost five years now, which is roughly a quarter of an eternity in the technical field, so I don’t consider myself qualified to speak about MDB as if I have an opinion worth listening to.
Thanks for asking, though, and best wishes,
TMFDatabaseBob (no position in companies mentioned)
See my holdings here: http://my.fool.com/profile/TMFDatabasebob/info.aspx
Peace on Earth
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I’ve managed the implementation of two Guidewire systems. Guidewire was an evolutionary step in the insurance world starting about 2005. They developed three canned packaged software applications, one for Claims processing, one for Billing & Financials, and one for Policy quoting & administration. They operate independently but are architected to coexist as one platform. ClaimCenter was the major move forward, and their flagship product - to standardize P&C claims processing, it was the first insurance platform built native Java EE from the ground up, it included continuous integration / continuous deployment, and it separated customer-configurable components from base Guidewire components to allow customizations without corrupting the base code & database.
They grew really fast, became dominant by the late aughts / early 10’s. As with a typical high growth model, their growth is slowing down because the majority of big fish have already been hooked. They rely on upgrades (which are complicated & expensive), professional services and partners (who are usually very good).
I’m not sure what effect a subscription model has on their revenue. They settled on a percentage-of-customer-revenue pricing model, with tiered discounts increasing as customer business grows.
FC
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