Guidewire Software Inc (GWRE)
Interest coverage
| Jul 31, 2025 | Apr 30, 2025 | Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Apr 30, 2024 | Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 62,606 | 38,884 | -25,859 | 21,641 | -20,100 | -23,222 | -65,360 | -80,549 | -127,378 | -176,427 | -190,218 | -230,488 | -210,269 | -179,724 | -151,396 | -122,843 | -85,570 | -30,541 | -22,417 | -15,421 |
| Interest expense (ttm) | US$ in thousands | 13,211 | 11,590 | 9,608 | 7,117 | 6,738 | 6,743 | 6,740 | 6,725 | 6,716 | 9,968 | 13,170 | 16,326 | 19,446 | 19,254 | 19,067 | 18,885 | 18,711 | 18,518 | 18,325 | 18,136 |
| Interest coverage | 4.74 | 3.35 | -2.69 | 3.04 | -2.98 | -3.44 | -9.70 | -11.98 | -18.97 | -17.70 | -14.44 | -14.12 | -10.81 | -9.33 | -7.94 | -6.50 | -4.57 | -1.65 | -1.22 | -0.85 |
July 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $62,606K ÷ $13,211K
= 4.74
The analysis of Guidewire Software Inc.’s interest coverage ratios over the specified period reveals a significant deterioration beginning in late 2020 through mid-2024, with the ratio consistently remaining negative and indicating substantial challenges in meeting interest obligations solely from earnings. From October 31, 2020, through October 31, 2023, the interest coverage ratio exhibits a persistent decline, with values plunging from -0.85 to -18.97. This trend suggests that the company's operating earnings were insufficient to cover interest expenses, pointing to ongoing financial stress or high leverage during this period.
Notably, the negative ratios indicate that Guidewire was generally unable to generate enough profit before interest and taxes to sustain its interest payments, reflecting reliance on non-operating income, debt refinancing, or other external financial strategies to service debt obligations. The extreme negative values around late 2022 and mid-2023 emphasize significant earnings shortfalls relative to interest costs.
However, starting in October 2024, a turnaround begins to appear, with the interest coverage ratio turning positive at 3.04 and remaining above zero into subsequent quarters. This improvement signifies that the company's earnings before interest and taxes exceeded its interest expenses, suggesting a notable enhancement in profitability or a reduction in interest costs. This shift could imply operational improvements, restructuring efforts, or successful strategic initiatives aimed at restoring financial stability.
In summary, the historical trend indicates a period of financial distress characterized by inadequate earnings to cover interest expenses, followed by a gradual recovery and improved capacity to meet interest obligations, as reflected in the positive ratios reported from late 2024 onward.