EX-99.1 2 gwreex991earningsrelease73.htm EX-99.1 Document

Exhibit 99.1

Guidewire Announces Fourth Quarter and Fiscal Year 2022 Financial Results

SAN MATEO, Calif., September 6, 2022 - Guidewire (NYSE: GWRE) today announced its financial results for the fiscal quarter and fiscal year ended July 31, 2022.

“We closed fiscal year 2022 exceeding our outlook for ARR, revenue, and profitability driven by strong cloud adoption,” said Mike Rosenbaum, Chief Executive Officer, Guidewire. “We won sixteen cloud deals in the fourth quarter across new and existing customers. As we look forward to fiscal year 2023, we are positioned to build on our record of consistent product innovation and to transition the P&C insurance industry to cloud-based core systems.”

Fourth Quarter Fiscal Year 2022 Financial Highlights

Revenue
•Total revenue for the fourth quarter of fiscal year 2022 was $244.6 million, an increase of 7% from the same quarter in fiscal year 2021. Subscription and support revenue was $93.6 million, an increase of 34%; services revenue was $56.2 million, an increase of 13%; and license revenue was $94.8 million, a decrease of 14%.
Profitability
•GAAP loss from operations was $32.2 million for the fourth quarter of fiscal year 2022, compared with $0.1 million for the same quarter in fiscal year 2021.
•Non-GAAP income from operations was $5.3 million for the fourth quarter of fiscal year 2022, compared with $32.0 million for the same quarter in fiscal year 2021.
•GAAP net loss was $31.0 million for the fourth quarter of fiscal year 2022, compared with $1.0 million for the same quarter in fiscal year 2021. GAAP net loss per share was $0.37, based on diluted weighted average shares outstanding of 84.0 million, compared with $0.01 for the same quarter in fiscal year 2021, based on diluted weighted average shares outstanding of 83.2 million.
•Non-GAAP net income was $2.2 million for the fourth quarter of fiscal year 2022, compared with $31.1 million for the same quarter in fiscal year 2021. Non-GAAP net income per share was $0.03, based on diluted weighted average shares outstanding of 84.1 million, compared with Non-GAAP net income per share of $0.37 for the same quarter in fiscal year 2021, based on diluted weighted average shares outstanding of 83.7 million.

Liquidity
•The Company generated $83.6 million in cash from operations and had positive free cash flow of $79.0 million during the fourth quarter of fiscal year 2022.

Fiscal Year 2022 Financial Highlights

Revenue
•Total revenue for fiscal year 2022 was $812.6 million, an increase of 9% from fiscal year 2021. Subscription and support revenue was $343.7 million, an increase of 36%; services revenue was $210.3 million, an increase of 12%; and license revenue was $258.6 million, a decrease of 15%.
•As of July 31, 2022, annual recurring revenue, or ARR, was $664 million, or $683 million based on currency exchange rates as of July 31, 2021, compared to $582 million as of July 31, 2021. 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 2022 by 14%, or 17% on a constant currency basis.
Profitability
•GAAP loss from operations was $199.4 million for fiscal year 2022, compared with $105.6 million for fiscal year 2021.
•Non-GAAP loss from operations was $45.3 million for fiscal year 2022, compared with Non-GAAP income from operations of $26.0 million for fiscal year 2021.


•GAAP net loss was $180.4 million for fiscal year 2022, compared with $66.5 million for fiscal year 2021. GAAP net loss per share was $2.16, based on diluted weighted average shares outstanding of 83.6 million, compared with $0.79 for fiscal year 2021, based on diluted weighted average shares outstanding of 83.6 million.
•Non-GAAP net loss was $42.5 million for fiscal year 2022, compared with non-GAAP net income of $41.3 million for fiscal year 2021. Non-GAAP net loss per share was $0.51 for fiscal year 2022, based on diluted weighted average shares outstanding of 83.6 million, compared with non-GAAP net income per share of $0.49 for fiscal year 2021, based on diluted weighted average shares outstanding of 84.4 million.

Liquidity and Capital Resources
•The Company had $1.2 billion in cash, cash equivalents, and investments at July 31, 2022, compared to $1.3 billion at July 31, 2021.
•The Company used $37.9 million in cash from operations during fiscal year 2022 and $43.8 million for the acquisition of HazardHub during the first quarter of fiscal year 2022.

Business Outlook
Guidewire is issuing the following outlook for the first quarter of fiscal year 2023 based on current expectations:
•ARR between $667 million and $670 million
•Total revenue between $190 million and $195 million
•Operating income (loss) between $(82) million and $(77) million
•Non-GAAP operating income (loss) between $(45) million and $(40) million

Guidewire is issuing the following outlook for fiscal year 2023 based on current expectations:
•ARR between $745 million and $760 million
•Total revenue between $885 million and $895 million
•Operating income (loss) between $(177) million and $(167) million
•Non-GAAP operating income (loss) between $(30) million and $(20) million
•Operating cash flow between $50 million and $80 million

Conference Call Information
What:
Guidewire Fourth Quarter and Fiscal Year 2022 Financial Results Conference Call
When:
Tuesday, September 6, 2022
Time:2:00 p.m. PT (5:00 p.m. ET)
Live Call:(877) 704-4453, Domestic
Live Call:(201) 389-0920, International
Replay:(844) 512-2921, Passcode 13732349, Domestic
Replay(412) 317-6671, Passcode 13732349, 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, the COVID-19 Canada Emergency Wage Subsidy benefit, and acquisition consideration holdback. 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 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, but does not get allocated for purposes of calculating ARR. This allocation only impacts the initial term of the contract. 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, but our reported ARR amount will not be impacted. In fiscal year 2022, the recurring license and support or subscription contract value recognized as services revenue was $28.9 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
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. Approximately 520 insurers in 38 countries, 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 and LinkedIn.

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 regarding our cloud sales, product innovation and cloud migration, and our associated cloud leadership, 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, inflation, and other global events, such as the conflict between Russia and Ukraine, 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 and ARR; our reliance on sales to and renewals from a relatively small number of large customers for a substantial portion of our revenue and ARR; 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; assertions by third parties that we violate their intellectual property rights; weakened global economic conditions may adversely affect the P&C insurance industry including the rate of information technology spending and the amount of direct written premiums; 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 and hiring sufficient 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
(650) 356-4921
ir@guidewire.com

Media Contact:
Diana Stott
Guidewire
(650) 781-9955
dstott@guidewire.com


GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)
July 31,
2022		July 31,
2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$606,303 $384,910 
Short-term investments369,865 734,517 
Accounts receivable, net143,797 104,068 
Unbilled accounts receivable, net71,515 79,061 
Prepaid expenses and other current assets61,223 52,729 
Total current assets1,252,703 1,355,285 
Long-term investments187,507 227,164 
Unbilled accounts receivable, net13,914 24,361 
Property and equipment, net80,740 80,061 
Operating lease assets90,287 97,447 
Intangible assets, net21,361 19,743 
Goodwill372,192 340,877 
Deferred tax assets, net191,461 138,428 
Other assets56,732 38,479 
TOTAL ASSETS$2,266,897 $2,321,845 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$40,440 $27,830 
Accrued employee compensation90,962 102,137 
Deferred revenue, net170,776 138,699 
Other current liabilities35,340 31,648 
Total current liabilities337,518 300,314 
Lease liabilities105,123 115,374 
Convertible senior notes, net358,216 343,825 
Deferred revenue, net7,500 7,237 
Other liabilities6,883 10,201 
Total liabilities815,240 776,951 
STOCKHOLDERS’ EQUITY:
Common stock8 8 
Additional paid-in capital 1,755,476 1,617,204 
Accumulated other comprehensive income (loss)(19,845)(6,218)
Retained earnings (accumulated deficit)(283,982)(66,100)
Total stockholders’ equity1,451,657 1,544,894 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$2,266,897 $2,321,845 


GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except share and per share data)
Three Months Ended July 31,Twelve Months Ended July 31,
2022202120222021
Revenue:
Subscription and support$93,570 $69,993 $343,708 $252,358 
License94,786 109,660 258,631 303,792 
Services56,243 49,782 210,275 187,117 
Total revenue244,599 229,435 812,614 743,267 
Cost of revenue(1):
Subscription and support57,621 46,535 213,275 164,983 
License2,210 2,807 8,754 10,569 
Services68,912 50,778 238,365 199,502 
Total cost of revenue128,743 100,120 460,394 375,054 
Gross profit:
Subscription and support35,949 23,458 130,433 87,375 
License92,576 106,853 249,877 293,223 
Services(12,669)(996)(28,090)(12,385)
Total gross profit115,856 129,315 352,220 368,213 
Operating expenses(1):
Research and development65,287 59,530 249,665 219,494 
Sales and marketing51,671 43,805 194,611 160,544 
General and administrative31,107 26,064 107,391 93,759 
Total operating expenses148,065 129,399 551,667 473,797 
Income (loss) from operations(32,209)(84)(199,447)(105,584)
Interest income3,904 1,032 6,277 7,395 
Interest expense(4,934)(4,742)(19,446)(18,711)
Other income (expense), net(3,305)(2,013)(17,099)12,619 
Income (loss) before provision for (benefit from) income taxes(36,544)(5,807)(229,715)(104,281)
Provision for (benefit from) income taxes(5,514)(4,775)(49,284)(37,774)
Net income (loss)$(31,030)$(1,032)$(180,431)$(66,507)
Net income (loss) per share:
Basic and diluted$(0.37)$(0.01)$(2.16)$(0.79)
Shares used in computing net income (loss) per share:
Basic and diluted83,953,164 83,234,153 83,569,517 83,577,375 



(1)Amounts include stock-based compensation expense as follows:
Three Months Ended July 31,Twelve Months Ended July 31,
2022202120222021
(unaudited, in thousands)
 Stock-based compensation expense:
 Cost of subscription and support revenue$3,442 $2,895 $14,614 $11,231 
 Cost of license revenue151 191 692 770 
 Cost of services revenue5,354 5,293 22,951 21,809 
 Research and development8,794 7,743 36,134 29,524 
 Sales and marketing7,117 6,450 32,960 25,820 
 General and administrative9,120 6,234 29,660 25,855 
 Total stock-based compensation expense$33,978 $28,806 $137,011 $115,009 




GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 Three Months Ended July 31,Twelve Months Ended July 31,
 2022202120222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)$(31,030)$(1,032)$(180,431)$(66,507)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization7,795 7,927 33,540 36,955 
Amortization of debt discount and issuance costs3,672 3,474 14,391 13,617 
Amortization of contract costs4,736 2,944 14,456 11,442 
Stock-based compensation33,978 28,806 137,011 115,009 
Changes to allowance for credit losses and revenue reserves(110)216 2,597 226 
Deferred income tax(6,658)(5,495)(54,115)(35,789)
Amortization of premium (accretion of discount) on available-for-sale securities, net883 1,645 5,498 6,567 
Changes in fair value of strategic investments(1,545)— (1,545)— 
Other non-cash items affecting net income (loss)(158)118 63 863 
Changes in operating assets and liabilities:
Accounts receivable(58,075)(32,555)(42,545)10,820 
Unbilled accounts receivable36,556 28,693 18,106 (19,194)
Prepaid expenses and other assets(9,726)(12,177)(23,390)(16,764)
Operating lease assets(849)3,366 7,160 6,350 
Accounts payable9,293 3,745 13,580 3,627 
Accrued employee compensation23,313 25,075 (8,942)41,526 
Deferred revenue62,782 51,021 31,564 12,940 
Lease liabilities254 (3,374)(9,637)(3,346)
Other liabilities8,481 5,957 4,699 (6,755)
Net cash provided by (used in) operating activities83,592 108,354 (37,940)111,587 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities(13,530)(274,873)(519,536)(1,033,095)
Sales of available-for-sale securities9,806 (4,097)74,552 123,234 
Maturities of available-for-sale securities206,835 319,731 834,362 1,005,290 
Purchases of property and equipment(1,534)(6,596)(9,510)(19,008)
Capitalized software development costs(3,079)(2,227)(12,266)(9,846)
Acquisition of strategic investments(1,039)(384)(11,560)(2,384)
Acquisition of business, net of acquired cash— — (43,830)— 
Net cash provided by (used in) investing activities197,459 31,554 312,212 64,191 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon exercise of stock options— 10 116 1,932 
Repurchase and retirement of common stock— (38,742)(37,451)(161,319)
Net cash provided by (used in) financing activities— (38,732)(37,335)(159,387)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash(1,520)(714)(7,161)1,550 
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH279,531 100,462 229,776 17,941 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period335,155 284,448 384,910 366,969 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period$614,686 $384,910 $614,686 $384,910 


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,
2022202120222021
Gross profit reconciliation:
GAAP gross profit$115,856 $129,315 $352,220 $368,213 
Non-GAAP adjustments:
Stock-based compensation8,947 8,379 38,257 33,810 
Amortization of intangibles1,905 1,820 7,659 13,175 
COVID-19 Canada Emergency Wage Subsidy benefit(1)
— (56)— (1,975)
Non-GAAP gross profit$126,708 $139,458 $398,136 $413,223 
Income (loss) from operations reconciliation:
GAAP income (loss) from operations$(32,209)$(84)$(199,447)$(105,584)
Non-GAAP adjustments:
Stock-based compensation33,978 28,806 137,011 115,009 
Amortization of intangibles2,787 3,398 14,081 19,965 
   COVID-19 Canada Emergency Wage Subsidy benefit(1)
— (87)— (3,396)
Acquisition consideration holdback (2)
749 — 3,067 — 
Non-GAAP income (loss) from operations$5,305 $32,033 $(45,288)$25,994 
Net income (loss) reconciliation:
GAAP net income (loss)$(31,030)$(1,032)$(180,431)$(66,507)
Non-GAAP adjustments:
Stock-based compensation33,978 28,806 137,011 115,009 
Amortization of intangibles2,787 3,398 14,081 19,965 
COVID-19 Canada Emergency Wage Subsidy benefit(1)
— (87)— (3,396)
Acquisition consideration holdback(2)
749 — 3,067 — 
Amortization of debt discount and issuance costs3,672 3,474 14,391 13,617 
Changes in fair value of strategic investments(1,538)— (1,538)— 
Tax impact of non-GAAP adjustments(6,464)(3,472)(29,105)(37,379)
Non-GAAP net income (loss)$2,154 $31,087 $(42,524)$41,309 
Tax provision (benefit) reconciliation:
GAAP tax provision (benefit)$(5,514)$(4,775)$(49,284)$(37,774)
Non-GAAP adjustments:
Stock-based compensation10,397 (1,260)37,826 (20,979)
Amortization of intangibles853 (149)3,936 (4,220)
COVID-19 Canada Emergency Wage Subsidy benefit(1)
— 4 — (135)
Acquisition consideration holdback (2)
229 — 847 — 
Amortization of debt discount and issuance costs1,124 (152)4,049 (2,555)
Changes in fair value of strategic investments(471)— (471)— 
Tax impact of non-GAAP adjustments(5,668)5,029 (17,082)65,268 
Non-GAAP tax provision (benefit)$950 $(1,303)$(20,179)$(395)



GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited, in thousands except share and per share data)
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,
2022202120222021
Net income (loss) per share reconciliation:
GAAP net income (loss) per share – diluted$(0.37)$(0.01)$(2.16)$(0.79)
Non-GAAP adjustments:
Stock-based compensation0.40 0.35 1.63 1.38 
Amortization of intangibles0.03 0.04 0.16 0.24 
COVID-19 Canada Emergency Wage Subsidy benefit(1)
— — — (0.04)
Acquisition consideration holdback (2)
0.01 — 0.03 — 
Amortization of debt discount and issuance costs0.04 0.04 0.17 0.16 
Changes in fair value of strategic investments0.02 — 0.01 — 
Tax impact of non-GAAP adjustments(0.08)(0.04)(0.35)(0.45)
Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation(0.02)(0.01)— (0.01)
Non-GAAP net income (loss) per share – diluted $0.03 $0.37 $(0.51)$0.49 
Shares used in computing Non-GAAP income (loss) per share amounts:
GAAP weighted average shares – diluted83,953,164 83,234,153 83,569,517 83,577,375 
Non-GAAP dilutive shares excluded from GAAP income (loss) per share calculation149,169 426,718 — 805,747 
Pro forma weighted average shares – diluted84,102,333 83,660,871 83,569,517 84,383,122 

(1) Effective the second quarter of fiscal year 2021, the COVID-19 Canada Emergency Wage Subsidy benefit has been included as a non-GAAP adjustment. Prior to the second quarter of fiscal year 2021, this program was unavailable. Beginning with the first quarter of fiscal year 2022, we have not and do not expect to receive a subsidy under the COVID-19 Canada Emergency Wage Subsidy.
(2) Effective the first quarter of fiscal year 2022, acquisition consideration holdback that is earned and recognized as expense over a post-acquisition service period has been included as a non-GAAP adjustment. Prior to the first quarter of fiscal year 2022, there was no acquisition consideration holdback in any periods presented.


The following table summarizes our free cash flow for the periods indicated below (in thousands):

Three Months Ended July 31,Twelve Months Ended July 31,
2022202120222021
Free cash flow:
Net cash provided by (used in) operating activities$83,592 $108,354 $(37,940)$111,587 
Purchases of property and equipment(1,534)(6,596)(9,510)(19,008)
Capitalized software development costs(3,079)(2,227)(12,266)(9,846)
Free cash flow$78,979 $99,531 $(59,716)$82,733 


GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Outlook
The following table reconciles 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 2023
Fiscal Year 2023
Income (loss) from operations outlook reconciliation:
GAAP income (loss) from operations$(82)—$(77)$(177)—$(167)
Non-GAAP adjustments:
Stock-based compensation 33—33137—137
Amortization of intangibles3—37—7
Acquisition consideration holdback1—13—3
Non-GAAP income (loss) from operations$(45)—$(40)$(30)—$(20)