EX-99.1 2 ex991q42021earningsrelease.htm EX-99.1 Document

Exhibit 99.1

Guidewire Software Announces Fourth Quarter and Fiscal Year 2021 Financial Results

SAN MATEO, Calif., September 2, 2021 - Guidewire Software, Inc. (NYSE: GWRE), the platform Property and Casualty (“P&C”) insurers trust to engage, innovate, and grow efficiently, today announced its financial results for the fiscal quarter and fiscal year ended July 31, 2021.

"We ended fiscal year 2021 with great momentum across Guidewire Cloud" said Mike Rosenbaum, chief executive officer, Guidewire Software. "We closed a record 17 core cloud deals in the fourth quarter, including 16 for InsuranceSuite, and strength across cloud migrations, new deals, and expansions all pushed ARR, total revenue, and profitability above our guidance ranges. We enter the new fiscal year with confidence in our cloud vision, strategy, and execution, and are well positioned to drive increasing ARR growth going forward."

Fiscal Year 2021 Financial Highlights

Revenue
•Total revenue for fiscal year 2021 was $743.3 million, an increase of less than 1% from fiscal year 2020. Subscription and support revenue was $252.4 million, an increase of 24%; license revenue was $303.8 million, a decrease of 8%; and services revenue was $187.1 million, a decrease of 10%.
•As of July 31, 2021, annual recurring revenue, or ARR, was $582 million, or $575 million based on currency exchange rates as of July 31, 2020. We measure ARR on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates. ARR grew in fiscal year 2021 by 13%, or 12% on a constant currency basis.

Profitability
•GAAP loss from operations was $105.6 million for fiscal year 2021, compared with $23.9 million for fiscal year 2020.
•Non-GAAP income from operations was $26.0 million for fiscal year 2021, compared with $104.8 million for fiscal year 2020.
•GAAP net loss was $66.5 million for fiscal year 2021, compared with $27.2 million for fiscal year 2020. GAAP net loss per share was $0.79, based on diluted weighted average shares outstanding of 83.6 million, compared with net loss per share of $0.33 for fiscal year 2020, based on diluted weighted average shares outstanding of 82.9 million.
•Non-GAAP net income was $41.3 million for fiscal year 2021, compared with $105.8 million for fiscal year 2020. Non-GAAP net income per share was $0.49, based on diluted weighted average shares outstanding of 84.4 million, compared with net income per share of $1.26 for fiscal year 2020, based on diluted weighted average shares outstanding of 83.7 million.

Liquidity
•The Company had $1.3 billion in cash, cash equivalents, and investments at July 31, 2021, compared to $1.4 billion.at July 31, 2020. The Company generated $111.6 million in cash from operations and had positive free cash flow of $82.7 million during fiscal year 2021.
•During fiscal year 2021, the Company used $162.5 million to repurchase 1.5 million shares of its common stock.

Fourth Quarter Fiscal Year 2021 Financial Highlights

Revenue
•Total revenue for the fourth quarter of fiscal year 2021 was $229.4 million, a decrease of 6% from the same quarter in fiscal year 2020. Subscription and support revenue was $70.0 million, an increase of 29%; license revenue was $109.7 million, a decrease of 20%; services revenue was $49.8 million, a decrease of 4%.



Profitability
•GAAP loss from operations was $0.1 million for the fourth quarter of fiscal year 2021, compared with GAAP income from operations of $44.3 million for the same quarter in fiscal year 2020.
•Non-GAAP income from operations was $32.0 million for the fourth quarter of fiscal year 2021, compared with $76.4 million for the same quarter in fiscal year 2020.
•GAAP net loss was $1.0 million for the fourth quarter of fiscal year 2021, compared with net income of $38.8 million for the same quarter in fiscal year 2020. GAAP net loss per share was $0.01, based on diluted weighted average shares outstanding of 83.2 million, compared with net income per share of $0.46 for the same quarter in fiscal year 2020, based on diluted weighted average shares outstanding of 83.9 million.
•Non-GAAP net income was $31.1 million for the fourth quarter of fiscal year 2021, compared with net income of $69.5 million for the same quarter in fiscal year 2020. Non-GAAP net income per share was $0.37, based on diluted weighted average shares outstanding of 83.7 million, compared with net income per share of $0.83 for the same quarter in fiscal year 2020, based on diluted weighted average shares outstanding of 83.9 million.

Liquidity
•During the fourth quarter of fiscal year 2021, the Company used $38.8 million to repurchase 0.4 million shares of its common stock.

Business Outlook
Guidewire is issuing the following outlook for the first quarter of fiscal year 2022 based on current expectations:
•ARR between $586 million and $590 million
•Total revenue between $162 million and $166 million
•Operating income (loss) between $(60) million and $(56) million
•Non-GAAP operating income (loss) between $(27) million and $(23) million
Guidewire is issuing the following updated outlook for fiscal year 2022 based on current expectations:
•ARR between $657 million and $667 million
•Total revenue between $780 million and $790 million
•Operating income (loss) between $(180) million and $(170) million
•Non-GAAP operating income (loss) between $(38) million and $(28) million
•Operating cash flow between $30 million and $40 million

Conference Call Information
What:        Guidewire Software Fourth Quarter and Fiscal Year 2021 Financial Results Conference Call
When:        Thursday, September 2, 2021
Time:        2:00 p.m. PT (5:00 p.m. ET)
Live Call:    (877) 705-6003, Domestic
(201) 493-6725, International
Replay:        (844) 512-2921, Passcode 13722593, Domestic
(412) 317-6671, Passcode 13722593, International
Webcast:    http://ir.guidewire.com/ (live and replay)

The webcast will be archived on Guidewire’s website (www.guidewire.com) for a period of three months.

Non-GAAP Financial Measures and Other Metrics
This press release contains the following non-GAAP financial measures: non-GAAP gross profit, non-GAAP income (loss) from operations, non-GAAP net income (loss), non-GAAP income tax provision (benefit), non-GAAP net income (loss) per share, and free cash flow. Non-GAAP gross profit and non-GAAP income (loss) from operations exclude stock-based


compensation, amortization of intangibles, and COVID-19 Canada Emergency Wage Subsidy benefits. Non-GAAP net income (loss), non-GAAP income tax provision (benefit), and non-GAAP net income (loss) per share also exclude the amortization of debt discount and issuance costs from our convertible notes, changes in fair value of our strategic investments, and the related tax effects of the non-GAAP adjustments. Free cash flow consists of net cash flow provided by (used in) operating activities less cash used for purchases of property and equipment and capitalized software development costs. These Non-GAAP measures enable us to analyze our financial performance without the effects of certain non-cash items such as depreciation, amortization, stock-based compensation, and changes in fair value of strategic investments.
Annual recurring revenue ("ARR") is used to quantify the annualized recurring value outlined in active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, support contracts, and hosting agreements based on customer contracts, which may not be the same as the timing and amount of revenue recognized. All components of the licensing and other arrangements that are not expected to recur (primarily perpetual licenses and professional services) are excluded. In some arrangements with multiple performance obligations, a portion of recurring license and support or subscription contract value is allocated to services revenue for revenue recognition purposes. This allocation only impacts the initial term of the contract and does not impact ARR. This means that as we increase arrangements with multiple performance obligations that include services at discounted rates, more of the total contract value will be recognized as services revenue. In fiscal year 2021, the recurring license and support or subscription contract value recognized as services revenue was $5.5 million.
Guidewire believes that these non-GAAP financial measures and other metrics provide useful information to management and investors regarding certain financial and business trends relating to Guidewire’s financial condition and results of operations. The Company’s management uses these non-GAAP measures and other metrics to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation, and for budgeting and planning purposes. The Company believes that the use of these non-GAAP financial measures and other metrics provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures and other metrics to investors.
Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Guidewire urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including the financial tables at the end of this press release, and not to rely on any single financial measure to evaluate the Company’s business.

About Guidewire Software
Guidewire is the platform P&C insurers trust to engage, innovate, and grow efficiently. We combine digital, core, analytics, and AI to deliver our platform as a cloud service. More than 400 insurers, from new ventures to the largest and most complex in the world, run on Guidewire.

As a partner to our customers, we continually evolve to enable their success. We are proud of our unparalleled implementation track record, with 1,000+ successful projects, supported by the largest R&D team and partner ecosystem in the industry. Our marketplace provides hundreds of applications that accelerate integration, localization, and innovation.

For more information, please visit www.guidewire.com and follow us on twitter: @Guidewire_PandC.

NOTE: For information about Guidewire’s trademarks, visit https://www.guidewire.com/legal-notices.



Cautionary Language Concerning Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook and our future business momentum related to our cloud vision and strategy. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Guidewire’s control. Guidewire’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Guidewire’s most recent Forms 10-K and 10-Q filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: quarterly and annual operating results may fluctuate more than expected; the impact of the COVID-19 pandemic on our employees and our business and the businesses of our customers, system integrator ("SI") partners, and vendors; seasonal and other variations related to our customer agreements and related revenue recognition may cause significant fluctuations in our results of operations and cash flows; our reliance on sales to and renewals from a relatively small number of large customers for a substantial portion of our revenue; our ability to successfully manage any changes to our business model, including the transition of our products to cloud offerings and the costs related to cloud operations; our products or cloud-based services may experience data security breaches; we face intense competition in our market; our services revenue produces lower gross margins than our license, subscription and support revenue; our product development and sales cycles are lengthy and may be affected by factors outside of our control; changes in accounting guidance, such as revenue recognition, which have and may cause us to experience greater volatility in our quarterly and annual results; assertions by third parties that we violate their intellectual property rights could substantially harm our business; weakened global economic conditions may adversely affect the P&C insurance industry including the rate of information technology spending; general political or destabilizing events, including war, conflict or acts of terrorism; our ability to sell our products is highly dependent on the quality of our professional services and SI partners; the risk of losing key employees; the challenges of international operations, including changes in foreign exchange rates; and other risks and uncertainties. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Guidewire’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Guidewire undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Guidewire’s views as of any date subsequent to the date of this press release.

Investor Contact:
Alex Hughes
Guidewire Software, Inc.
(650) 356-4921
ir@guidewire.com

Media Contact:
Diana Stott
Guidewire Software, Inc.
(650) 356-4941
dstott@guidewire.com


GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
July 31,
2021		July 31,
2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$384,910 $366,969 
Short-term investments734,517 766,527 
Accounts receivable, net104,068 114,242 
Unbilled accounts receivable, net79,061 49,491 
Prepaid expenses and other current assets52,729 45,989 
Total current assets1,355,285 1,343,218 
Long-term investments227,164 300,771 
Unbilled accounts receivable, net24,361 34,737 
Property and equipment, net80,061 65,235 
Operating lease assets97,447 103,797 
Intangible assets, net19,743 39,708 
Goodwill340,877 340,877 
Deferred tax assets, net138,428 101,565 
Other assets38,479 34,944 
TOTAL ASSETS$2,321,845 $2,364,852 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$27,830 $22,634 
Accrued employee compensation102,137 58,547 
Deferred revenue, net138,699 118,311 
Other current liabilities31,648 25,706 
Total current liabilities300,314 225,198 
Lease liabilities115,374 119,408 
Convertible senior notes, net343,825 330,208 
Deferred revenue, net7,237 14,685 
Other liabilities10,201 18,585 
Total liabilities776,951 708,084 
STOCKHOLDERS’ EQUITY:
Common stock8 8 
Additional paid-in capital 1,617,204 1,499,050 
Accumulated other comprehensive income (loss)(6,218)(5,246)
Retained earnings (accumulated deficit)(66,100)162,956 
Total stockholders’ equity1,544,894 1,656,768 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,321,845 $2,364,852 


GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except share and per share data)
Three Months Ended July 31,Twelve Months Ended July 31,
2021202020212020
Revenue:
Subscription and support$69,993 $54,120 $252,358 $203,473 
License109,660 137,567 303,792 331,554 
Services49,782 51,987 187,117 207,280 
Total revenue229,435 243,674 743,267 742,307 
Cost of revenue(1):
Subscription and support46,535 33,491 164,983 117,158 
License2,807 3,539 10,569 11,566 
Services50,778 50,781 199,502 209,291 
Total cost of revenue100,120 87,811 375,054 338,015 
Gross profit:
Subscription and support23,458 20,629 87,375 86,315 
License106,853 134,028 293,223 319,988 
Services(996)1,206 (12,385)(2,011)
Total gross profit129,315 155,863 368,213 404,292 
Operating expenses(1):
Research and development59,530 52,232 219,494 200,575 
Sales and marketing43,805 36,830 160,544 142,420 
General and administrative26,064 22,460 93,759 85,183 
Total operating expenses129,399 111,522 473,797 428,178 
Income (loss) from operations(84)44,341 (105,584)(23,886)
Interest income1,032 4,039 7,395 24,705 
Interest expense(4,742)(4,549)(18,711)(17,945)
Other income (expense), net(2,013)5,584 12,619 (7,205)
Income (loss) before provision for (benefit from) income taxes(5,807)49,415 (104,281)(24,331)
Provision for (benefit from) income taxes(4,775)10,640 (37,774)2,867 
Net income (loss)$(1,032)$38,775 $(66,507)$(27,198)
Net income (loss) per share:
Basic$(0.01)$0.46 $(0.79)$(0.33)
Diluted$(0.01)$0.46 $(0.79)$(0.33)
Shares used in computing net income (loss) per share:
Basic83,234,153 83,314,410 83,577,375 82,855,392 
Diluted83,234,153 83,947,187 83,577,375 82,855,392 



(1)Amounts include stock-based compensation expense as follows:
Three Months Ended July 31,Twelve Months Ended July 31,
2021202020212020
(unaudited, in thousands)
 Stock-based compensation expense:
 Cost of subscription and support revenue$2,895 $2,070 $11,231 $7,575 
 Cost of license revenue191 224 770 769 
 Cost of services revenue5,293 5,153 21,809 20,816 
 Research and development7,743 6,975 29,524 26,324 
 Sales and marketing6,450 5,117 25,820 21,260 
 General and administrative6,234 6,203 25,855 25,073 
 Total stock-based compensation expense$28,806 $25,742 $115,009 $101,817 




GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 Three Months Ended July 31,Twelve Months Ended July 31,
 2021202020212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$(1,032)$38,775 $(66,507)$(27,198)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization7,927 10,386 36,955 42,641 
Amortization of debt discount and issuance costs3,474 3,288 13,617 12,886 
Amortization of contract costs2,944 4,282 11,442 9,892 
Stock-based compensation28,806 25,742 115,009 101,817 
Changes to allowance for credit losses and revenue reserves216 177 226 367 
Deferred income tax(5,495)(813)(35,789)(11,859)
Amortization of premium (accretion of discount) on available-for-sale securities, net1,645 484 6,567 (1,882)
Changes in fair value of strategic investments— — — 10,672 
Other non-cash items affecting net income (loss)118 38 863 739 
Changes in operating assets and liabilities:
Accounts receivable(32,555)(34,302)10,820 23,878 
Unbilled accounts receivable28,693 6,615 (19,194)(38,125)
Prepaid expenses and other assets(12,177)(8,417)(16,764)(18,564)
Operating lease assets3,366 (17,895)6,350 (10,784)
Accounts payable3,745 4,471 3,627 (1,209)
Accrued employee compensation25,075 9,662 41,526 (15,624)
Deferred revenue51,021 26,900 12,940 1,165 
Lease liabilities(3,374)21,312 (3,346)18,678 
Other liabilities5,957 16,454 (6,755)15,576 
Net cash provided by (used in) operating activities108,354 107,159 111,587 113,066 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities(274,873)(431,443)(1,033,095)(1,280,755)
Sales of available-for-sale securities(4,097)40,632 123,234 134,050 
Maturities of available-for-sale securities319,731 357,179 1,005,290 1,168,720 
Purchases of property and equipment(6,596)(2,411)(19,008)(21,377)
Capitalized software development costs(2,227)(1,010)(9,846)(4,283)
Acquisition of strategic investments(384)(2,156)(2,384)(2,156)
Net cash provided by (used in) investing activities31,554 (39,209)64,191 (5,801)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon exercise of stock options10 1,878 1,932 4,955 
Repurchase and retirement of common stock(38,742)— (161,319)— 
Net cash provided by (used in) financing activities(38,732)1,878 (159,387)4,955 
Effect of foreign exchange rate changes on cash and cash equivalents(714)3,326 1,550 648 


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS100,462 73,154 17,941 112,868 
CASH AND CASH EQUIVALENTS—Beginning of period284,448 293,815 366,969 254,101 
CASH AND CASH EQUIVALENTS—End of period$384,910 $366,969 $384,910 $366,969 



GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited, in thousands)
The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:
Three Months Ended July 31,Twelve Months Ended July 31,
2021202020212020
Gross profit reconciliation:
GAAP gross profit$129,315 $155,863 $368,213 $404,292 
Non-GAAP adjustments:
Stock-based compensation
8,379 7,447 33,810 29,160 
Amortization of intangibles
1,820 4,526 13,175 19,221 
COVID-19 Canada Emergency Wage Subsidy benefit (1)
(56)— (1,975)— 
Non-GAAP gross profit$139,458 $167,836 $413,223 $452,673 
Income (loss) from operations reconciliation:
GAAP income (loss) from operations$(84)$44,341 $(105,584)$(23,886)
Non-GAAP adjustments:
Stock-based compensation
28,806 25,742 115,009 101,817 
Amortization of intangibles
3,398 6,323 19,965 26,834 
COVID-19 Canada Emergency Wage Subsidy benefit (1)
(87)— (3,396)— 
Non-GAAP income (loss) from operations$32,033 $76,406 $25,994 $104,765 
Net income (loss) reconciliation:
GAAP net income (loss)$(1,032)$38,775 $(66,507)$(27,198)
Non-GAAP adjustments:
Stock-based compensation
28,806 25,742 115,009 101,817 
Amortization of intangibles
3,398 6,323 19,965 26,834 
Amortization of debt discount and issuance costs
3,474 3,288 13,617 12,886 
Changes in fair value of strategic investment (2)
— — — 10,672 
COVID-19 Canada Emergency Wage Subsidy benefit (1)
(87)— (3,396)— 
Tax impact of non-GAAP adjustments (3)
(3,472)(4,598)(37,379)(19,243)
Non-GAAP net income (loss)$31,087 $69,530 $41,309 $105,768 
Tax provision (benefit) reconciliation:
GAAP tax provision (benefit)$(4,775)$10,640 $(37,774)$2,867 
Non-GAAP adjustments:
Stock-based compensation
(1,260)4,629 (20,979)16,453 
Amortization of intangibles
(149)1,137 (4,220)4,334 
Amortization of debt discount and issuance costs
(152)591 (2,555)2,080 
Changes in fair value of strategic investment (2)
— — — 1,418 
COVID-19 Canada Emergency Wage Subsidy benefit (1)
4 — (135)— 
Tax impact of non-GAAP adjustments (3)
5,029 (1,759)65,268 (5,042)
Non-GAAP tax provision (benefit)$(1,303)$15,238 $(395)$22,110 

(1) Effective the second fiscal quarter of 2021, the COVID-19 Canada Emergency Wage Subsidy benefit was included as a non-GAAP adjustment. Prior to the second fiscal quarter of 2021, this program was unavailable.
(2) Effective the third fiscal quarter of 2020, changes in fair value of strategic investments are excluded from non-GAAP measures. Prior to the third fiscal quarter of 2020, there were no changes in fair value of strategic investments in any periods presented.
(3) Adjustments reflect the tax benefit (provision) resulting from all non-GAAP adjustments.


GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited, in thousands except per share amounts)
The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:
Three Months Ended July 31,Twelve Months Ended July 31,
2021202020212020
Net income (loss) per share reconciliation:
GAAP net income (loss) per share — diluted$(0.01)$0.46 $(0.79)$(0.33)
Non-GAAP adjustments:
Stock-based compensation0.35 0.31 1.39 1.23 
Amortization of intangibles0.04 0.08 0.25 0.33 
Amortization of debt discount and issuance costs0.04 0.04 0.16 0.16 
Changes in fair value of strategic investment (1)
— — — 0.13 
COVID-19 Canada Emergency Wage Subsidy benefit (2)
— — (0.04)— 
Tax impact of non-GAAP adjustments (3)
(0.04)(0.05)(0.45)(0.23)
Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation (4)
(0.01)(0.01)(0.03)(0.03)
Non-GAAP net income (loss) per share — diluted$0.37 $0.83 $0.49 $1.26 
Shares used in computing Non-GAAP income (loss) per share amounts:
GAAP weighted average shares — diluted83,234,153 83,947,187 83,577,375 82,855,392 
Non-GAAP dilutive shares excluded from GAAP income (loss) per share calculation (4)
426,718 — 805,747 834,002 
Pro forma weighted average shares — diluted83,660,871 83,947,187 84,383,122 83,689,394 


(1) Effective the third fiscal quarter of 2020, changes in fair value of strategic investments are excluded from non-GAAP measures. Prior to the third fiscal quarter of 2020, there were no changes in fair value of strategic investments in any periods presented.
(2) Effective the second fiscal quarter of 2021, the COVID-19 Canada Emergency Wage Subsidy benefit was included as a non-GAAP adjustment. Prior to the second fiscal quarter of 2021, this program was unavailable.
(3) Adjustments reflect the impact on the tax benefit (provision) resulting from all non-GAAP adjustments.
(4) Due to the occurrence of a net loss on a GAAP basis, potentially dilutive securities were excluded from the calculation of GAAP net income (loss) per share, as they would have an anti-dilutive effect. However, these shares have a dilutive effect on non-GAAP net income (loss) per share and, therefore, are included in the non-GAAP net income (loss) per share calculation.
Twelve Months Ended July 31,
20212020
Free cash flow:
Net cash provided by (used in) operating activities$111,587 $113,066 
Purchases of property and equipment(19,008)(21,377)
Capitalized software development costs(9,846)(4,283)
Free cash flow$82,733 $87,406 


GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Outlook
The following tables reconcile the specific items excluded from GAAP outlook in the calculation of non-GAAP outlook for the periods indicated below:
(in $ millions)First Quarter Fiscal Year 2022Fiscal Year 2022
Income (loss) from operations outlook reconciliation:
GAAP income (loss) from operations$(60)—$(56)$(180)—$(170)
Non-GAAP adjustments:
Stock-based compensation 30—30131—131
Amortization of intangibles3—311—11
Non-GAAP income (loss) from operations$(27)—$(23)$(38)—$(28)