Based in San Mateo, Calif., Guidewire provides software to the property and casualty insurance sector. Big companies like Nationwide and Zurich Financial use the software for underwriting and policy administration, as well as claims management and billing. The software can be used on-premise or over the cloud.
The company states in its S-1 filing that Gartner claims its product "is the insurance industry's most widely used web-based claims system." However, later on in the same filing, Guidewire says that its customers typically choose on-premise over the cloud.
Guidewire goes on to tout its cloud ability, but it's clear that even though clients have the cloud option, they aren't choosing it. It makes sense, because the clients have very sensitive material that they want to make sure is protected. Gaskins believes Guidewire was pushing the cloud rhetoric as way to pump up its offering price, and it looks like it may have worked.
The company has said it received a batch of new orders at the end of 2011, which will be delivered in 2012 and boost revenue by $7.2 million this year. The company does experience seasonal fluctuations with increased orders in the second and fourth fiscal quarters and Jan. 31 marks the end of its fiscal second quarter.
This is a fragmented market and highly competitive with Accenture jumping in with its acquisition of Duck Creek Software. Guidewire also has to compete with Computer Sciences, MajescoMastek, and . Oracle offers software that can be customized for the insurance company needs.
Meantime, IntelePeer is another cloud company hitting the public markets this week. It's looking to raise $100 million through the sale of 7.5 million shares with the expected pricing range at $9 to $11 each.
IntelePeer is a true cloud company, but it may need to turn a profit before enjoying those high cloud multiples.
IntelePeer helps companies migrate from telephone networks to IP-based technologies. It also integrates all levels of communication including voice, email, video, IM, and SMS. IntelePeer charges its customers by the minutes of use for traffic delivered through the platform. Those minutes increased to 23 billion in 2011 from 3.8 billion in 2008, and the number of customers jumped to 365 from 78 in that same time frame.
Sales have risen to $145 million in 2011 from $43 million in 2008, but the company continues to lose money. Plus, revenue is expected to drop in the December quarter, not exactly the way to launch a new public company. However, it has attached itself to the cloud stratosphere hoping for the new shareholders to ignore the negatives as they jump into the cloud.
IntelePeer said in its filing that there are low barriers to enter the business. So, while IntelePeer gets revenue from Sprint Nextel and Qwest, it could face competition from the legacy telecommunications companies. The number of voice peering service provider companies is climbing, as well.
Gaskins's take: "PEER is offering a non-differentiated service deep in the bowels of the telecom industry, with no end-user branding."
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