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Duck Creek Technologies, Inc.NasdaqGS:DCT Stock Report

Market Cap US$2.6b
Share Price
n/a
My Fair Value
n/a
1Y-0.3%
7D0%
Portfolio Value
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Duck Creek Technologies, Inc.

NasdaqGS:DCT Stock Report

Market Cap: US$2.6b

This company has been acquired

The company may no longer be operating, as it has been acquired. Find out why through their latest events.

Duck Creek Technologies (DCT) Stock Overview

Duck Creek Technologies, Inc. provides software-as-a-service core systems to the property and casualty insurance industry in the United States and internationally. More details

DCT fundamental analysis
Snowflake Score
Valuation0/6
Future Growth1/6
Past Performance0/6
Financial Health6/6
Dividends0/6

Rewards

Revenue is forecast to grow 10.04% per year

Risk Analysis

Volatile share price over the past 3 months

Shareholders have been diluted in the past year

Currently unprofitable and not forecast to become profitable over the next 3 years


DCT Community Fair Values

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Duck Creek Technologies, Inc. Competitors

Price History & Performance

Summary of share price highs, lows and changes for Duck Creek Technologies
Historical stock prices
Current Share PriceUS$18.99
52 Week HighUS$20.38
52 Week LowUS$10.04
Beta0.59
1 Month Change0.37%
3 Month Change57.59%
1 Year Change-0.26%
3 Year Changen/a
5 Year Changen/a
Change since IPO-52.53%

Recent News & Updates

Recent updates

Seeking Alpha • Oct 11

Duck Creek Technologies Q4 2022 Earnings Preview

Duck Creek Technologies (NASDAQ:DCT) is scheduled to announce Q4 earnings results on Wednesday, October 12th, after market close. The consensus EPS Estimate is $0.02 (flat Y/Y) and the consensus Revenue Estimate is $73.08M (+3.2% Y/Y). Over the last 1 year, DCT has beaten EPS estimates 100% of the time and has beaten revenue estimates 100% of the time.
Seeking Alpha • Sep 15

Duck Creek and Smart Communications integrate to deliver personalized customer experiences

Smart Communications announced expanded integration with leading insurance platform, Duck Creek (NASDAQ:DCT). “Our integration work with Duck Creek is in response to the demand by insurers wanting to expand their tech ecosystems with complementary solutions that are easy to use. This collaboration was made possible with the support of NTT DATA and will be a tremendous advantage to insurers looking for innovative strategies, technology and implementation support.” said Chuck Fazio, Vice President of Global Alliances and Channels at Smart Communications.
Seeking Alpha • Aug 24

Duck Creek: To New Heights

Summary Duck Creek is the leader in cloud-based core business solutions for the short-term insurance industry. It serves an underpenetrated market (only 10% penetrated) and has low market share (only 8%). This means its runway for revenue growth is substantial. Its business is breakeven on an EBIT basis currently; I believe its achievable long-term operating margin is 31.5%, so profits can expand even further than revenues. Its valuation at 5x sales isn't high given its long-term growth prospects, the multiple the market is prepared to pay for other SaaS businesses, and its lead over Guidewire. Editor's note: Seeking Alpha is proud to welcome Kyle Wales as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to SA Premium. Click here to find out more » Duck Creek (DCT) is a controversial company. It was listed in the heady days of 2020 when money was flowing fast and valuations for anything tech-related were stratospheric. At its peak it traded at an EV-to-(forward)-sales ratio north of 20x. As of August 18, 2022, it trades at a price-to-sales ratio of only 4.5x, which I believe is not expensive given its growth profile. My call on this stock is that it's a strong buy. What does Duck Creek do? Duck Creek sells core business solutions to short-term insurers. It sells 3 basic modules: one for policies, one for billing, and one for claims. These modules can be bought on an a la carte basis or as a package. The history of Duck Creek is as follows: It was originally a tier 2/3 player in the market until it was acquired by Accenture (ACN) in 2011. A private equity player, Apax, then bought a stake in Duck Creek in 2015, and the company was finally IPOed in 2020. In some ways, Duck Creek is in a unique position because while it is a follower in its industry by revenue, it is the leader in the cloud-based solutions segment of its market - which is the segment exhibiting the most growth. Bloomberg I will begin by giving a brief introduction to Duck Creek and explaining why its addressable market is so attractive. I will then do a detailed competitor analysis between it and its larger peer, Guidewire (GWRE), to show that Duck Creek is still eating Guidewire's lunch. That's despite the fact that Duck Creek's results have disappointed in the last two quarters, while Guidewire's have impressed. This should bode well for Duck Creek's revenue and earnings growth going forward, and makes the discount it trades at relative to Guidewire unjustified in my view. Lastly, I will attempt to place a value on the company. What is so attractive about Duck Creek's target market? Short-term insurers collectively write an estimated $2.5 trillion in premiums annually and spend an estimated $88 billion on IT. Of this total IT spend ($88 billion), $20 billion relates to software, which is the market that Duck Creek is playing for. Historically, large short-term insurers built their own core business solutions, but many of these solutions are now outdated and they are gradually starting to upgrade them to better third-party-designed solutions, leaving them free to focus on what they do best - (hopefully) underwriting. Today it's estimated by some that only $2 billion (of the $20 billion total software pie) has been outsourced to third-party providers. This means that Duck Creek's target market is only 10% penetrated. Who are Duck Creek's competitors? Duck Creek's largest competitor is Guidewire. Guidewire earned almost $750 million in its largest financial year (until July 2021) vs. Duck Creek, which earned only $260 million in its last financial year (until August 2021). Guidewire is therefore 3x larger than Duck Creek in terms of revenues. Given that Guidewire's market share is 25%, Duck Creek would have an implied market share of 8%. However, while Duck Creek is small, it is the revenue leader in the cloud-based-solutions segment of its market. The reason for this is that Duck Creek went "all in" with its cloud solution in 2016/17, at the expense of its (perpetual/term) license business, while Guidewire continued to do business on the same terms it had always done business. Today, that decision is paying dividends to Duck Creek and giving Guidewire a headache. I believe Duck Creek's lead over Guidewire is among the widest between a disruptor and incumbent in any industry. This is evident from the number of Guidewire consultants who are cloud certified. As one would expect given its larger size, Guidewire has a larger overall number of system integrator consultants at its partner firms than Duck Creek (18,000 consultants as of Q3 2022) vs. Duck Creek's 5,400 (as of Q4 2021). However, only 4,400 of Guidewire's consultants are cloud certified vs. almost all of Duck Creek's. This is also evident in the numbers reported by the two companies. To make my case, let's start by looking at Duck Creek's and Guidewire's revenues and GP margins (over the last seven quarters) by type of revenue. For simplicity sake, I will assume that Duck Creek and Guidewire have the same financial year-end, even though their year-ends differ by a month. Also, for those who are not familiar with the term, "ARR" is annualized recurring revenue. ARR is a measure that tries to adjust for when large contracts are signed late in the current quarter (so negligible accounting revenue is recognized in the current quarter), but the company expects to earn greater revenue going forward as a result of signing the contract. For example, if Duck Creek or Guidewire signed a large contract on the last day of the current quarter (consequently negligible revenue recognized in current quarter) but they expect to earn $10 million in revenue per quarter going forward, they would include $10 million in ARR (and not 0). Let's begin with the numbers reported by Duck Creek: Duck Creek financials (Company disclosures) I will not discuss its "maintenance and support" and "license" revenues, which are immaterial and also in decline. Instead, I wish to draw your attention to Duck Creek's "subscription" and "professional services" revenues (i.e., its cloud revenues). There are a couple of things one will notice here. First, while Duck Creek's subscription revenues has seen a sharp deceleration in YoY growth over the last 7 quarters, ARR (which is a leading indicator) is still growing strongly (last print up 25%). The company attributes the deceleration in both measures due to the deals that have been delayed because of the uncertain economic outlook, even though they remain very optimistic about their future deal pipeline. Second, while one would expect any increase in its subscription revenues to be accompanied by an increase in its professional services revenues because its professional services mainly relate to Duck Creek implementations, this is not the case. Duck Creek's professional services revenues have been flat even though its subscription revenues have been growing strongly. The company attributes this to it outsourcing more of its implementation work to systems implementation partners like Accenture. Third, despite its small scale, Duck Creek's GP margins are very healthy for its material revenue streams. The GP margin on its subscription revenue is in the vicinity of 60%, while the GP margin on its professional services revenues is around 40%. GP margins trickle down to EBIT margins. Next, let me take you through Guidewire's numbers: Guidewire financials (Company disclosures) There are several items to make note of here. To begin, legacy revenue streams like "license" revenues are much more material in Guidewire's life than in Duck Creek's. The contribution of its "subscription and support" revenues (assume that's analogous to what Duck Creek calls "subscription" revenues) to its total revenues is relatively small. Guidewire's subscription and support revenues, though small, are also growing strongly, and for the last three quarters have even grown faster than Duck Creek's subscription revenues. However, all this growth has come at the expense of its license revenues. This means the bulk of Guidewire's growth has come from switching its license clients over to its subscription products, rather than winning new clients. It much easier to convert an existing client over to a new version of your product than to sell to a new client. While this flatters the growth it is reporting for subscription and support revenues in the short term, this does not augur well for the long term. In addition, Guidewire's gross margin profile is far weaker than Duck Creek's, even though one would expect a larger company to have higher margins because of better fixed cost absorption (operational gearing). Guidewire's GP margins for its subscription and support revenues is below 40% as it needs to invest heavily in its cloud product to bring it up to scratch. It also earns negative gross margins on its professional services, which means it effectively has to offer its clients discounts for them to upgrade to its cloud product. Lastly, even if one takes the recent deceleration in Duck Creek's growth into account, it is still growing faster than Guidewire. Its Q3 2022 ARR was 18% vs. 25% for Duck Creek. But what does this all mean for valuations? I value Duck Creek on an adjusted discount cashflow method taking a long-term view (5 years plus). I expect Duck Creek to grow its subscription revenues to grow at 35% over that period. By contrast, its overall revenue will grow in the mid-20s, as I forecast no growth for its maintenance and support revenues as well as its license revenues. This is in excess of what management has guided to and is without a doubt a chunky number, but the implied market penetration of Duck Creek's target market is only 20% at the end of my forecast period and its market share is only 20%. I believe this is conservative.
Analysis Article • Aug 18

We're Interested To See How Duck Creek Technologies (NASDAQ:DCT) Uses Its Cash Hoard To Grow

Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the...
Seeking Alpha • Jul 20

Duck Creek Technologies: Why I Am Ducking Out

Duck Creek Technologies is a vendor of core systems for the property and casualty insurance business that offers software as a service. Overall, I believe that they seem to offer an okay product to the market, but nothing extraordinary. As I am not 100% convinced that Duck Creek will sustain its growth rates, I don’t think the P/S ratio should be more than 4 times higher than the S&P500. As a result, I wouldn’t buy the Duck Creek stock with the current valuation. Investment thesis Since I'm not sure Duck Creek Technologies, Inc.'s (DCT) growth rates can be sustained, I don't think its P/S ratio should be more than four times greater than the median of the S&P 500. Therefore, given the current valuation, I wouldn't buy Duck Creek stock. Introducing Duck Creek Duck Creek Technologies Inc. is a vendor of core systems for the property and casualty (P&C) insurance business that offers Software as a Service (SaaS). The company's expertise in the property and casualty insurance sector has allowed it to create a single, unified suite of insurance software products that supports carriers' agility by enabling quick integration and expediting the capacity to record, retrieve, and utilize data. Duck Creek Policy, Duck Creek Billing, and Duck Creek Claims are among the tools in the Duck Creek Suite that serve the P&C insurance industry lifecycle. Property and casualty insurance (P&C) refers to a wide variety of insurance products. In general, it refers to insurance coverage that safeguards your assets, including your property. Market Outlook Consumers are using insurance in new ways, and they have different or additional expectations of their insurers than in the past. When dealing with clients, P&C companies must be prepared to respond with both technology and a comprehensive customer strategy. Customers want more personalized products and services that match their lives. Rather than focusing just on the insurance products offered, technology and data insight may provide a fantastic opportunity to personalize the user experience. Telematics, mobile applications, self-service, and other technology advancements are enhancing goods, pricing, claims, services, and other aspects of the industry. All of these variables create opportunities for property and casualty insurers to improve client engagement and business processes. There is a huge opportunity to reduce expenses and risk while increasing connections. As a result, I expect the P&C software industry will expand at a reasonable pace. Competition and product review Insurance companies' increased investment in software solutions, as well as the introduction of new platforms spanning from core system modernization to new digital engagement and data and analytics solutions, have produced the interest of entrepreneurs and investors. Increased capital allows market participants, or potential future market participants, such as "insurtech" companies, to pursue more aggressive strategies, improve existing services or products, try to introduce new services and products, develop disruptive solutions, and consolidate with other vendors. This business is also influenced by changing technical options, shifting customer needs, and the proliferation of cloud-based solutions. These features, in my opinion, lead to a more competitive climate. Firms that compete are P&C insurance software firms including Guidewire (NYSE:GWRE), EIS Group, Insurity, Majesco, Prima Solutions, RGI, and Sapiens. Users rate the product Duck Creek an average of 4.3 / 5 on Capterra and an average of 4.2 / 5 on Gartner. Dislikes mentioned are: Bit of a struggle to navigate Sometimes frustrating and slow Front end could be upgraded Upgrades difficult and time-consuming. Likes mentioned are: The capabilities to build, deploy and maintain insurance products (across all functional areas) The Duck Creek platform is capable of satisfying very broad requirement.
Seeking Alpha • Jun 29

Duck Creek Technologies Non-GAAP EPS of $0.01, revenue of $72.4M beats by $0.32M

Duck Creek Technologies press release (NASDAQ:DCT): Q3 Non-GAAP EPS of $0.01. Revenue of $72.4M (+6.6% Y/Y) beats by $0.32M. Shares -9.3%.
Analysis Article • May 04

We're Not Worried About Duck Creek Technologies' (NASDAQ:DCT) Cash Burn

Just because a business does not make any money, does not mean that the stock will go down. For example, biotech and...
Analysis Article • Feb 01

We're Not Worried About Duck Creek Technologies' (NASDAQ:DCT) Cash Burn

We can readily understand why investors are attracted to unprofitable companies. For example, biotech and mining...
Seeking Alpha • Dec 28

Duck Creek Technologies Focuses On Profitable Growth

Duck Creek Technologies went public in August 2020, raising $405 million in an IPO. The firm provides primarily a SaaS-based platform for P&C and general insurance companies. Management seeks to focus on the 'expand' part of its land and expand go-to-market strategy, hoping to more profitably grow some existing Tier 1 accounts. My short-term outlook is Neutral until we see evidence of growth or earnings as a result of this focus.
Seeking Alpha • Nov 01

Duck Creek Plunges After Earnings, Yet Remains Expensive

Insurance software provider Duck Creek was one of the most expensive SaaS names around earlier this year. Shares are down a quick 30% to new 52-week lows following a soft earnings report. Even so, shares are still not cheap on an absolute basis or compared to the firm's closest peer.
Analysis Article • Oct 19

Here's Why We're Not At All Concerned With Duck Creek Technologies' (NASDAQ:DCT) Cash Burn Situation

Even when a business is losing money, it's possible for shareholders to make money if they buy a good business at the...
Analysis Article • Jul 10

We're Not Worried About Duck Creek Technologies' (NASDAQ:DCT) Cash Burn

There's no doubt that money can be made by owning shares of unprofitable businesses. For example, although...
Seeking Alpha • Jun 21

Futran Solutions joins Duck Creek Technologies as consulting partner

New-Jersey-based digital technology organization Futran Solutions has been named a consulting partner of Duck Creek Technologies (DCT), subsequent to Anil Vazirani joining Futran Solutions as CEO.As a digital insourcing partner, Futran is able to extend the Duck Creek Platform's capabilities and technology to partner organizations and mutual customers."Futran's vision is to be the 'Best Insourcing Partner' for insurers and help them build in-house competency in the insurance domain and Duck Creek solutions by seeding in the best talent and bringing in proven accelerators,
Analysis Article • Mar 01

How Many Duck Creek Technologies, Inc. (NASDAQ:DCT) Shares Do Institutions Own?

If you want to know who really controls Duck Creek Technologies, Inc. ( NASDAQ:DCT ), then you'll have to look at the...
Analysis Article • Jan 07

Read This Before Selling Duck Creek Technologies, Inc. (NASDAQ:DCT) Shares

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also...

Shareholder Returns

DCTUS SoftwareUS Market
7D0%1.1%-0.3%
1Y-0.3%-9.1%24.0%

Return vs Industry: DCT exceeded the US Software industry which returned -14.6% over the past year.

Return vs Market: DCT exceeded the US Market which returned -13.4% over the past year.

Price Volatility

Is DCT's price volatile compared to industry and market?
DCT volatility
DCT Average Weekly Movement14.3%
Software Industry Average Movement9.7%
Market Average Movement7.2%
10% most volatile stocks in US Market16.2%
10% least volatile stocks in US Market3.1%

Stable Share Price: DCT's share price has been volatile over the past 3 months.

Volatility Over Time: DCT's weekly volatility (14%) has been stable over the past year, but is still higher than 75% of US stocks.

About the Company

FoundedEmployeesCEOWebsite
20161,883Mike Jackowskiwww.duckcreek.com

Duck Creek Technologies, Inc. provides software-as-a-service core systems to the property and casualty insurance industry in the United States and internationally. The company provides Duck Creek Policy, a solution that enables insurers to develop and launch new insurance products and manage various aspects of policy administration ranging from product definition to quoting, binding, and servicing; Duck Creek Billing that provides payment and invoicing capabilities, such as billing and collections, commission processing, disbursement management, and general ledger capabilities for insurance lines and bill types; and Duck Creek Claims that supports entire claims lifecycle from first notice of loss through investigation, payments, negotiations, reporting, and closure. It also offers Duck Creek Rating that allows carriers to develop new rates and models and deliver quotes in real-time based on the complex rating algorithms; Duck Creek Insights, an insurance analytics solution that allows carriers to gather and analyze data from internal and external sources and facilitate analysis and reporting on a single system; Duck Creek Digital Engagement that offer digital interactions between property and casualty insurers and their agents, brokers, and policyholders; and Duck Creek Distribution Management that automates sales channel activities for agents and brokers, including producer onboarding, compliance, and compensation management.

Duck Creek Technologies, Inc. Fundamentals Summary

How do Duck Creek Technologies's earnings and revenue compare to its market cap?
DCT fundamental statistics
Market capUS$2.60b
Earnings (TTM)-US$14.18m
Revenue (TTM)US$310.08m
8.4x
P/S Ratio
-183.3x
P/E Ratio

Is DCT overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report (TTM)
DCT income statement (TTM)
RevenueUS$310.08m
Cost of RevenueUS$134.49m
Gross ProfitUS$175.60m
Other ExpensesUS$189.78m
Earnings-US$14.18m

Last Reported Earnings

Nov 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.10
Gross Margin56.63%
Net Profit Margin-4.57%
Debt/Equity Ratio0%

How did DCT perform over the long term?

See historical performance and comparison

Company Analysis and Financial Data Status

DataLast Updated (UTC time)
Company Analysis2023/03/31 22:39
End of Day Share Price 2023/03/29 00:00
Earnings2022/11/30
Annual Earnings2022/08/31

Data Sources

The data used in our company analysis is from S&P Global Market Intelligence LLC. The following data is used in our analysis model to generate this report. Data is normalised which can introduce a delay from the source being available.

PackageDataTimeframeExample US Source *
Company Financials10 years
  • Income statement
  • Cash flow statement
  • Balance sheet
Analyst Consensus Estimates+3 years
  • Forecast financials
  • Analyst price targets
Market Prices30 years
  • Stock prices
  • Dividends, Splits and Actions
Ownership10 years
  • Top shareholders
  • Insider trading
Management10 years
  • Leadership team
  • Board of directors
Key Developments10 years
  • Company announcements

* Example for US securities, for non-US equivalent regulatory forms and sources are used.

Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more.

Analysis Model and Snowflake

Details of the analysis model used to generate this report is available on our Github page, we also have guides on how to use our reports and tutorials on Youtube.

Learn about the world class team who designed and built the Simply Wall St analysis model.

Industry and Sector Metrics

Our industry and section metrics are calculated every 6 hours by Simply Wall St, details of our process are available on Github.

Analyst Sources

Duck Creek Technologies, Inc. is covered by 11 analysts. 4 of those analysts submitted the estimates of revenue or earnings used as inputs to our report. Analysts submissions are updated throughout the day.

AnalystInstitution
Michael FunkBofA Global Research
Patrick WalravensCitizens JMP Securities, LLC
Peter HeckmannD.A. Davidson & Co.