Guidewire Software Inc (GWRE)
Return on equity (ROE)
| Jul 31, 2025 | Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net income | US$ in thousands | 69,804 | -6,103 | -111,855 | -180,431 | -66,507 |
| Total stockholders’ equity | US$ in thousands | 1,457,230 | 1,342,730 | 1,199,470 | 1,451,660 | 1,544,890 |
| ROE | 4.79% | -0.45% | -9.33% | -12.43% | -4.30% |
July 31, 2025 calculation
ROE = Net income ÷ Total stockholders’ equity
= $69,804K ÷ $1,457,230K
= 4.79%
The analysis of Guidewire Software Inc.'s return on equity (ROE) over the period from July 31, 2021, to July 31, 2025, reveals a significant transformation in the company's profitability and shareholder return metrics. Initially, in July 2021, the company exhibited a negative ROE of -4.30%, indicating that it was not generating sufficient net income relative to shareholders' equity, which is a common characteristic for companies in early growth stages, restructuring phases, or facing operational challenges.
By July 31, 2022, the situation deteriorated further, with the ROE declining to -12.43%. This decline signified an increased deficit in net income relative to equity, suggesting either increased losses, reduced profitability, or equity adjustments that adversely impacted overall returns to shareholders. The negative trend continued into July 2023 with a ROE of -9.33%, signifying persistent difficulties in generating positive returns from shareholders' capital, albeit with some improvement compared to the prior year.
The subsequent period shows notable progress. As of July 31, 2024, the ROE improved markedly to -0.45%, approaching break-even territory. This near-zero ROE indicates that the company was nearing the point of generating roughly equivalent net income to the shareholders' equity, reflecting operational or strategic adjustments that mitigated prior losses.
Most significantly, by July 31, 2025, the ROE transitioned into positive territory at 4.79%. This positive ROE suggests that Guidewire Software Inc. began generating net income that surpassed shareholders’ equity investments, marking a recovery in profitability and effective utilization of equity capital. Such a shift may be associated with operational efficiencies, successful strategic initiatives, product development, or favorable market conditions contributing to improved earnings.
In summary, the company's ROE trend over the four-year span illustrates a trajectory from initial negative performance, worsening to deeper losses, and subsequently a substantial rebound towards profitability. The shift from negative to positive ROE reflects a potentially transformative phase in the company's financial health, signaling improved operational performance and the potential for sustained shareholder value creation in the future.