Given the urgency driven by AI, what is Guidewire's updated view on the pace at which premium moves to the cloud and its ultimate market penetration?

Mike Rosenbaum confirmed that the pace of premium moving to the cloud is improving, with demand increasing due to the potential of generative AI. He noted that AI depends on modernized core systems, which drives momentum for Guidewire, though he focuses on net new ARR rather than DWP percentage. “I think demand is increasing because of the potential that everyone sees in generative AI... But you can only use it in your company if you're running on a modernized core system.”

What are the early customer feedback and traction for PricingCenter, and what is the update on the underwriting side?

Mike Rosenbaum highlighted strong customer engagement for PricingCenter, especially with PolicyCenter customers, noting it's a long sales cycle but exciting, with the first deal closed. For underwriting, they are working with a small subset of customers to develop agentic underwriting solutions, expecting production in the next couple of quarters. “We were excited to get that first deal done, but we're also excited about the amount of pipeline and the amount of engagement that we're creating for PricingCenter.”

How does Guidewire view partnering with large LLM vendors like OpenAI and Anthropic, and how does this drive greater customer success in the insurance industry?

Mike Rosenbaum and John Mullen emphasized an open approach, seeing LLM partnerships as additive and beneficial. They believe LLMs are most effective when connected to modern core systems like Guidewire, accelerating customer efficiency and innovation, and do not view these partnerships as competitive. “We absolutely see this as additive and helpful for Guidewire overall and the acceleration in the company. We have always run a very open approach to our products and to our ecosystem.”

GWRE

Guidewire (GWRE) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jan 2026 (Q2 FY26)· Information Technology· Mar 5, 2026

Source: earnings call transcript

Executive summary

Guidewire Q2 FY26 — Strong ARR Growth and AI-Driven Modernization Demand

Guidewire delivered a strong Q2 FY26, driven by robust ARR growth and increasing demand for core system modernization, fueled by the potential of generative AI. The company's focus on mission-critical P&C insurance systems, coupled with its cloud platform and premium-aligned pricing, underpins its durable business model. Management raised full-year targets, citing strong bookings, product attach, and a healthy pipeline, while emphasizing customer success and strategic commitments.

Highlights

Annual Recurring Revenue (ARR) grew 22% year-over-year to $1.121 billion.
Total revenue reached $359 million, up 24% year-over-year, surpassing the high end of outlook.
Subscription and support revenue increased 33% year-over-year to $237 million.
Non-GAAP operating income finished at $87 million, ahead of expectations.
Gross ARR retention rates for InsuranceSuite and InsuranceNow customers remained over 99%.

Guidance & targets

Category	Target	Timeline	Confidence
ARR	$1.229 billion to $1.237 billion high materiality	FY26	High
Total Revenue	$1.438 billion and $1.448 billion high materiality	FY26	High
Subscription and Support Revenue	$962 million and $966 million medium materiality	FY26	High
Services Revenue	approximately $255 million medium materiality	FY26	High
Subscription and Support Gross Margin	approximately 74% medium materiality	FY26	High
Services Gross Margin	approximately 13% medium materiality	FY26	High
Overall Gross Margin	67% medium materiality	FY26	High
GAAP Operating Income	$100 million and $110 million high materiality	FY26	High
Non-GAAP Operating Income	$293 million and $303 million high materiality	FY26	High
Stock-Based Compensation	approximately $185 million medium materiality	FY26	High
Cash Flow from Operations	$360 million and $375 million high materiality	FY26	High
Capital Expenditure	$30 million and $35 million medium materiality	FY26	High
ARR	$1.144 billion and $1.150 billion high materiality	Q3 · FY26	High
Total Revenue	$352 million and $358 million high materiality	Q3 · FY26	High
Subscription and Support Revenue	$239 million and $243 million medium materiality	Q3 · FY26	High
Services Revenue	approximately $60 million medium materiality	Q3 · FY26	High
Subscription and Support Gross Margin	approximately 74% medium materiality	Q3 · FY26	High
Services Gross Margin	around 12% medium materiality	Q3 · FY26	High
Total Gross Margin	around 67% medium materiality	Q3 · FY26	High
Non-GAAP Operating Income	$59 million and $65 million high materiality	Q3 · FY26	High

GWRE operating KPIs by quarter

GWRE operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Jan 2026 Q2 FY26	Apr 2026 Q3 FY26	Jul 2026 Q4 FY26	Change vs prior quarter
Annual recurring revenue (ARR)	$1.121B First, ARR ended at $1.121 billion and grew 22% year-over-year or 21% on a constant currency basis. Source: earnings call transcript	$1.147B ARR finished Q3 within the range at $1.147 billion, up over 19% year-over-year. Source: earnings call transcript	$1.242B ARR finished the year at $1.242 billion, up 19% year-over-year and above the high end of our guidance range. Source: earnings call transcript	+8.3%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total RPO $3.5B end of Q2 FY26

63% year-over-year growth

Product announcements

Product	Type	Timeline
PricingCenter	launch	Q2 FY26
ProNavigator	launch	Q2 FY26
UnderwritingCenter	roadmap	next couple of quarters

Deals & partnerships

Aviva U.K. Long-term agreement to move all Guidewire estate to Guidewire Cloud Platform long-term

Aviva U.K., the largest insurer in the United Kingdom, committed to move all of its Guidewire estate, including business acquired from DLG in 2025, to the Guidewire Cloud Platform.

Tokio Marine North America Expansion and migration to Guidewire Cloud

Tokio Marine North America is preparing to migrate major elements of three U.S. carrier businesses and has expanded significantly above its previous baseline as it commits to more growth on Guidewire.

Donegal Insurance Group Migration to Guidewire Cloud Platform and AI initiative alignment

Donegal Insurance Group selected Guidewire Cloud as the next step in its core system modernization strategy, migrating from on-premise InsuranceSuite. They also aligned strategic AI initiatives with Guidewire's AI roadmap, focusing on claims capabilities.

Top 20 commercial insurer Extension of ClaimCenter to more commercial and specialty lines

A top 20 commercial insurer extended ClaimCenter to more commercial and specialty lines for greater scale and efficiency, significantly increasing its DWP commitment as it works to consolidate legacy core systems.

Zurich Germany New win resulting from existing partnership

A win at Zurich Germany in Q2 was a direct result of the partnership and strategic framework agreement with Zurich.

Canada's largest private insurers Modernization of legacy claims administration system to ClaimCenter

One of Canada's largest private insurers signed a deal to modernize their legacy claims administration system to ClaimCenter, representing Guidewire's largest new customer win in the quarter.

Aviva Canada Adoption of ProNavigator

Aviva Canada adopted ProNavigator to leverage the agentic assistant for delivering answers, suggestions, and actions embedded in the core UI.

Gore Mutual Adoption of ProNavigator

Gore Mutual adopted ProNavigator to leverage the agentic assistant for delivering answers, suggestions, and actions embedded in the core UI.

What to watch in Q3 FY26

ProNavigator adoption and monetization

Next quarter and beyond

Current 9 deals in Q2 FY26, trending ahead of expectations

Target Continued growth in deals and evolution into other content areas to increase value

Why it matters

ProNavigator is a new AI-embedded solution, and its successful adoption and expansion will demonstrate Guidewire's ability to monetize AI features and drive efficiency for customers.

Trending positive to those expectations. I mean I was not expecting 9 deals in the first quarter. So we're thrilled with that progress. And we can think about how we will disclose that moving forward. But you should think about it as right now trending ahead of expectations.

Find out whether GWRE delivers this. Inve re-checks your case every morning.

Q&A highlights

How does Guidewire position itself in the broader AI stack, specifically regarding owning versus enabling AI, and what is the revenue opportunity?

Mike Rosenbaum stated Guidewire will own core systems and be the most trusted platform for AI integration. They will develop AI capabilities like ProNavigator and offer services, but also maintain an open architecture to allow customers to integrate other AI technologies, seeing this as additive to demand.

“We're going to be the most trusted, scalable, reliable core system that you can do anything you want with respect to AI and Guidewire.”

asked by Adam Hotchkiss · answered by Mike Rosenbaum

2 min read 6 chapters

Detailed narrative

AI as a Business Accelerator

Generative AI is increasing demand for core system modernization as legacy systems are not designed for real-time data access or AI workflows. Guidewire views AI as immensely beneficial, driving acceleration in its business by creating demand, accelerating development velocity, and improving implementation efficiency.

The company aims to be the most trusted, scalable, reliable core system for AI integration, supporting an open architecture for customers to use other AI technologies.

Customer Success and Retention

Guidewire maintains gross ARR retention rates of over 99% for its InsuranceSuite and InsuranceNow customers, reflecting its mission-critical role and culture of customer success. Over the past five years, no InsuranceSuite customer with over $1 million ARR has churned due to replacement by a competitor, with churn events limited to financial distress, M&A, or geopolitical reasons.

Pricing Model and Value Alignment

The company prices its cloud products as a percentage of the direct written premium (DWP) managed on Guidewire, rather than a seat-based model. This approach aligns Guidewire's growth directly with the economic value delivered to insurers as they grow premium, expand lines of business, and modernize their operations, ensuring mutual benefit.

New Product Momentum

Guidewire closed its first PricingCenter deal in Q2, indicating strong customer engagement for this new integrated offering. The data and analytics portfolio also saw strong adoption with 25 deals. ProNavigator, the new embedded AI solution, had an 'incredible start' with 9 deals in its first quarter, leveraging InsuranceSuite data to enhance employee efficiency and minimize claims leakage.

Longer-Duration Contracts and Larger Commitments

Customers are increasingly committing to longer-duration contracts, with the average contract term for new InsuranceSuite deals over the last 12 months exceeding six years (weighted by fully ramped ARR). This trend, up from the standard five years, signifies growing confidence in the platform's maturity and strategic importance, particularly among larger customers making significant bets on Guidewire.

Modernization Pace and AI Tooling

Guidewire is actively working to enhance the efficiency of migrations and modernization projects using generative AI, aiming to reduce timelines and costs. While AI can assist in code conversion, true modernization involves a comprehensive rethinking of business processes and products, which Guidewire and its System Integrator ecosystem are helping companies achieve, leading to a go-forward operating model.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.