Guidewire Software Inc (GWRE)
Profitability ratios
Return on sales
| Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | |
|---|---|---|---|---|---|
| Gross profit margin | 62.54% | 59.50% | 50.61% | 46.42% | 52.41% |
| Operating profit margin | 3.42% | -5.36% | -16.51% | -24.54% | -14.21% |
| Pretax margin | 4.11% | -2.74% | -14.81% | -28.27% | -14.03% |
| Net profit margin | 5.81% | -0.62% | -12.36% | -22.20% | -8.95% |
The analysis of Guidewire Software Inc's profitability ratios over the period from July 2021 to July 2025 indicates a gradual improvement in the company's financial performance.
Starting with gross profit margin, the figures reflect a decline from 52.41% in July 2021 to a low of 46.42% in July 2022, followed by a recovery that culminated in a substantial increase to 59.50% in July 2024 and further to 62.54% in July 2025. This trend suggests the company's increasing efficiency in managing cost of goods sold relative to revenue, signaling enhanced profitability at the gross level.
In terms of operating profit margin, the ratios remained negative throughout the period, with a notable improvement occurring in 2024 and 2025. The margin worsened from -14.21% in July 2021 to -24.54% in July 2022, indicating escalating operational losses. However, there was a significant turnaround by July 2024, with the margin improving to -5.36%, and by July 2025 transitioning into positive territory at 3.42%. This progression reflects a resilient effort to control operating expenses and improve operational efficiency, leading to profitability at the operating level.
The pretax margin exhibited a consistent pattern of recovery. The negative pretax margin widened from -14.03% in July 2021 to -28.27% in July 2022, before narrowing again in subsequent periods. The margin approached break-even at -2.74% in July 2024 and turned positive at 4.11% by July 2025, indicating an overall reduction in pre-tax losses and an improvement in earnings before taxes.
The net profit margin followed a similar trajectory, improving from a loss of -8.95% in July 2021 to a deeper loss of -22.20% in July 2022. Subsequently, the net margin steadily improved, reaching -12.36% in July 2023, and approaching breakeven at -0.62% in July 2024. By July 2025, the net profit margin transitioned into positive territory at 5.81%, reflecting profitable operations and effective management of all expenses.
Overall, the ratios depict a company that has experienced operational and profitability challenges but has demonstrated substantial progress towards profitability, especially in the two most recent years. The consistent improvement across gross profit, operating profit, pretax, and net profit margins signifies a positive trend in Guidewire Software Inc's financial health and operational efficiency.
Return on investment
| Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 1.51% | -2.36% | -7.37% | -8.80% | -4.55% |
| Return on assets (ROA) | 2.57% | -0.27% | -5.52% | -7.96% | -2.86% |
| Return on total capital | 4.30% | -1.50% | -10.62% | -14.48% | -5.54% |
| Return on equity (ROE) | 4.79% | -0.45% | -9.33% | -12.43% | -4.30% |
The profitability ratios for Guidewire Software Inc from July 31, 2021, to July 31, 2025, demonstrate a notable trend of incremental improvement over this period.
Starting with the operating return on assets (Operating ROA), the company exhibited negative values throughout all reported periods, with the ratio declining from -4.55% in 2021 to a low point of -8.80% in 2022. However, subsequent data indicate a steady recovery, with the ratio improving to -7.37% in 2023, -2.36% in 2024, and crossing into positive territory at 1.51% in 2025. This pattern suggests that operational efficiency and core business performance are gradually enhancing, moving toward profitability.
Similarly, the return on assets (ROA) reflects a consistent negative trend initially, with values worsening from -2.86% in 2021 to -7.96% in 2022. Nevertheless, this metric has also shown significant improvement, progressing to -5.52% in 2023, nearly break-even at -0.27% in 2024, and culminating in a positive 2.57% in 2025. The transition into positive territory indicates a meaningful turnaround in asset utilization efficiency and overall profitability.
The return on total capital follows a comparable trajectory. It was deeply negative in 2021 (-5.54%) and sharply declined in 2022 (-14.48%), before showing signs of recovery with figures of -10.62% in 2023, improved to -1.50% in 2024, and finally reaching 4.30% in 2025. These shifts suggest that the company has been increasingly effective in generating returns from its invested capital, reflecting enhanced operational execution and strategic initiatives.
Finally, the return on equity (ROE), which measures profitability from shareholders' perspective, was negative for each period, starting at -4.30% in 2021 and deteriorating to -12.43% in 2022. Since then, there has been a progressive improvement with the ratio rising to -9.33% in 2023, nearing breakeven at -0.45% in 2024, and turning positive at 4.79% in 2025. The positive ROE in 2025 indicates that shareholders are beginning to realize real gains from their investments, highlighting a substantial shift toward overall profitability.
Overall, Guidewire Software Inc exhibits a clear trend of recovering profitability over the observed period. The transition from negative to positive ratios across all measures signals enhanced operational efficiency, better asset and capital utilization, and increasing shareholder returns, reflecting a positive outlook on the firm's financial health and future prospects.