Shares of P&C insurance software vendor Guidewire (GWRE, Financial) fell due to multiple compression in high-growth cloud technology stocks. The company has crossed the mid-point of its cloud transition, which should correspond with dramatically improving financial results. We believe Guidewire has tripled its addressable market through new products and cloud delivery. We also believe Guidewire will be the critical software vendor for the global P&C insurance industry, capturing 30% to 50% of its $15 billion to $30 billion total addressable market and generating margins above 40%. This should lead to strong free cash flow which the company can use to continue to invest in its business and create new products and services for its customers.
Shares of P&C insurance software vendor Guidewire Software, Inc. fell due to multiple compression in high-growth technology stocks. We retain conviction. The company has crossed the midpoint of its cloud transition, which should correspond with improving financial results. We believe Guidewire has tripled its addressable market through new products and cloud delivery and will be the critical software vendor for the global P&C insurance industry, capturing 30% to 50% of its $15 billion to $30 billion total addressable market and generating margins above 40%.
From Ron Baron (Trades, Portfolio)'s Baron Focused Growth Fund first-quarter 2022 letter.
