Guidewire Software, Inc. (GWRE) Earnings & Analysis

Latest quarter

Guidewire reported Q4 FY2026 revenue of $411.1 million, above the consensus of $402.2 million, and adjusted earnings per share of $0.99, above the $0.94 consensus. Revenue rose 15.3% from $356.6 million a year earlier, while diluted earnings per share fell to $0.38 from $0.60.

For the full fiscal year, Guidewire attributed subscription revenue growth primarily to cloud transitions, new agreements and renewals at fully ramped fees. Its filing said term license and support revenue fell as customers migrated to subscriptions, while services revenue grew with higher employee utilization and new implementation and migration projects.

Guidewire reported a quarterly gross margin of 65.6%, compared with 65.0% a year earlier, and an operating margin of 15.2%, up from 8.30%. Free cash flow was $276.7 million, compared with $237.7 million a year earlier. The company’s filing says cash receipts and operating cash flow are typically concentrated in its fiscal fourth quarter because of annual customer billings.

Quarterly revenue exceeded Guidewire’s previous $396.0 million to $406.0 million range, and the company also reported GAAP operating income above its quarterly guidance.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Mike Rosenbaum said ProNavigator and Pricing Center performed better than Guidewire had anticipated at the beginning of the year. He said the products broaden the portfolio and give the company ways to sell more to its existing cloud customers. President John Mullen said Guidewire closed 26 core cloud deals in the quarter and 62 for the fiscal year.

Rosenbaum said Nationwide selected Pricing Center for personalized pricing and rating. Asked about the opportunity, he said integrating pricing with Policy Center and Guidewire’s data platform would help insurers adjust prices and respond to risks. Mullen said it was too early to assess sales cycles or attachment rates, while pointing to the integration with Policy Center as part of the product’s appeal.

On ProNavigator, Rosenbaum said the year’s sales momentum came primarily from selling to existing customers. He said the AI assistant could also support new core-system wins by adding capabilities to claims and underwriting workflows. Mullen said the product recorded 14 wins in the quarter and 28 for the year.

CFO Jeff Cooper said investments in the services organization and AI capabilities were affecting near-term services margins. He said Guidewire was working to reduce implementation costs and expected those investments to support future efficiency. For the first quarter, Cooper said the timing of revenue from larger fixed-fee engagements would leave services margin around break-even.

Asked about contract ramps, Cooper said more contracted ARR would move from backlog into the following year, although that amount would represent a lower share of the total backlog. He said the outlook assumed attrition would normalize and that more than half of its contemplated net new ARR was already under contract.

Guidance

After the earnings call, CFO Jeff Cooper said Guidewire expected a three-year ARR compound annual growth rate through FY2028 closer to 18.0% to 19.0%, up from its previous framework. Guidewire also expects its planned hyperexponential acquisition to add to FY2027 ARR growth. The company said the deal would not affect its first-quarter guidance and that it plans to update its FY2027 outlook with first-quarter results.