Shares of Guidewire Software, the first tech IPO of the year, jumped 32% in Wednesday’s debut.
Guidewire (GWRE) provides back-end software for property and casualty insurance companies in the U.S. and overseas.
The San Mateo, Calif.-based company priced 8.85 million shares at $13 each, raising a total of $115 million. The company had planned to sell 7.5 million shares at $10 to $12. The shares closed at 17.12.
“Guidewire has toiled in obscurity among the better-known consumer names for a long time, and to be so well-received by the investor community is a huge boost,” Marcus Ryu, Guidewire’s chief executive, told IBD.
Property and casualty insurance is a $1.2 trillion industry worldwide, says Neal Dempsey, a general partner with Cupertino, Calif.-based Bay Partners, one of three VC firms backing Guidewire.
“The market is just enormous,” Dempsey said. “We’ve barely touched the tip of the iceberg. (Guidewire’s) product totally automates the property and casualty business.”
Guidewire competes against tech consulting and outsourcing firms such as Accenture (ACN) and large enterprise software makers such as Oracle (ORCL). Rivals also include Ebix (EBIX), a software provider to insurance agents and brokers that’s had a top-performing stock of late.
According to Guidewire’s amended S-1 filed with the SEC on Jan. 9, revenue rose 51% to $52.4 million in the quarter ended Oct. 31. Per-share profit rose 200% to 9 cents.
The company says its flexible Web-based apps support critical computer processes for property and casualty insurers, many of which are saddled with old legacy systems.
The company sells three major products: PolicyCenter, for underwriting and policy management; ClaimCenter, for claims management processing; and BillingCenter, for insurance billing.
Ryu says Guidewire’s software can be deployed in customers’ cloud-based systems, in which companies keep their data and apps in remote server networks and access data via the Internet. “Cloud is not a huge decision point for most insurance carriers,” Ryu said. “It’s more of a deployment choice. We have some consumers who like it and others who prefer a more conventional approach.”
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