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GWRE
Earnings call · Jul 2026 (Q4 FY26)

Guidewire Software Q4 FY26 earnings call GWRE

Sep 3, 2026 Source

Executive summary

Guidewire Q4 FY26 — Strong ARR Growth, AI Product Momentum, and Record Low Attrition

Guidewire concluded FY26 with robust financial performance, driven by strong ARR growth and record-low attrition rates, underscoring the durability of its business model. The company demonstrated significant momentum in its AI product strategy with strong adoption of ProNavigator and PricingCenter, including a landmark cloud migration and PricingCenter deal with Nationwide. This quarter highlights Guidewire's strategic positioning to lead the AI-driven transformation in the P&C insurance industry through its modern cloud-based platform and expanding product portfolio.

Highlights

5

  • ARR finished the year at $1.242 billion, up 19% year-over-year on a constant currency basis, exceeding guidance.

  • Fully ramped ARR grew 22% year-over-year on a constant currency basis, outpacing total ARR growth for the fourth consecutive year.

  • Gross ARR attrition rate was less than 1.5% for all ARR and less than 1% for core systems customers, signaling exceptional customer loyalty.

  • Non-GAAP operating income increased 63% year-over-year to $340 million, surpassing the high end of the outlook.

  • The share repurchase program nearly completed, with over $600 million in shares bought back in fiscal year 2026.

Concerns

4

  • Services margin impact from investments

  • Support revenue decline due to cloud migration

  • License revenue decline due to cloud transition

  • Normalization of ARR attrition rate

Guidance & targets

CategoryTargetConfidence
ARR
$1.45B-$1.46B
high materiality
High
Total Revenue
$1.707B-$1.727B
high materiality
High
Subscription Revenue Growth
approximately 31%
medium materiality
High
Subscription and Support Revenue
$1.240B-$1.246B
medium materiality
High
License Revenue
approximately $189M
medium materiality
High
Services Revenue
approximately $285M
medium materiality
High
Subscription and Support Gross Margin
75%-76%
medium materiality
High
Professional Services Gross Margin
approximately 12%
low materiality
High
Total Gross Margins
67%-68%
medium materiality
High
Non-GAAP Operating Income
$403M-$423M
high materiality
High
GAAP Operating Income
$197M-$217M
medium materiality
High
Stock-based Compensation Expense
approximately $202M
low materiality
High
Operating Cash Flow
$445M-$465M
high materiality
High
CapEx
$23M-$28M
low materiality
High
ARR
$1.253B-$1.259B
high materiality
High
Subscription and Support Revenue
$279M-$283M
medium materiality
High
Subscription and Support Margin
around 77%
medium materiality
High
Services Revenue
approximately $65M
medium materiality
High
Services Margin
around breakeven
low materiality
High
Total Gross Margins
approximately 65%
medium materiality
High

GWRE operating KPIs by quarter

GWRE operating KPIs stated on its earnings calls, by fiscal quarter
KPI Jan 2026 Q2 FY26 Apr 2026 Q3 FY26This call Jul 2026 Q4 FY26Change 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 transcript
$1.147B ARR finished Q3 within the range at $1.147 billion, up over 19% year-over-year. Source 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 transcript
+8.3%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Net new ARR already under contract >50% Q4 FY26

More than half of the net new ARR contemplated in the FY27 outlook is already under contract with ramp dates defined and signed customer agreements.

Product announcements

ProductTypeDetails
PricingCenterupdate
ProNavigatorlaunch
Developer assistantslaunch
Agentic platform (Qusar release)launch
Underwriting Centerroadmap

Deals & partnerships

Nationwide Long-term cloud migration agreement and PricingCenter selection multiyear

Signed a multiyear agreement to move their entire InsuranceSuite estate to Guidewire Cloud Platform. Also selected PricingCenter for personal lines pricing and rating.

AF Group Consolidating core processing components

Consolidating a number of core processing components onto Guidewire InsuranceSuite.

MAPFRE U.S. Expansion with InsuranceSuite and ProNavigator adoption

Expanded with Guidewire InsuranceSuite and added ProNavigator to support their commercial lines growth strategy.

Definity Expanded cloud commitment and ProNavigator adoption

A leading Tier 1 Canadian P&C insurer expanded their Guidewire cloud commitment and adopted ProNavigator for embedded insurance domain-specific AI expertise.

Alfa Insurance ProNavigator selection

Selected ProNavigator to accelerate previously considered internal build options.

Hollard ProNavigator selection

A partner in Australia, selected ProNavigator to strengthen claimant and adjuster experience in support of a truly differentiated brand, driven by regulatory and compliance precision and increasing demands for efficiency.

Capital Insurance Group PricingCenter selection

Selected PricingCenter in a highly competitive process.

Shelter Insurance PricingCenter selection

Chose PricingCenter as part of its larger expansion with Guidewire.

Achmea Farm Insurance PricingCenter selection

In Australia, chose PricingCenter to drive greater pricing agility and precision throughout their operation.

Risks & headwinds

Services margin impact from investments near-term

Services gross margin was 12.5% in FY26, compared with 12.9% a year ago.

Mitigation:Investing in AI capabilities to support future program delivery, expecting future efficiency lift in services motion to help future cloud sales by bringing down implementation costs.

Support revenue decline due to cloud migration FY27

Support revenue will decline about $8 million in FY27.

Mitigation:This is an expected outcome of the continued migration of the installed base to the cloud, where support activities are included in the subscription fee for cloud customers.

License revenue decline due to cloud transition FY27

License revenue of approximately $189 million in FY27, a decline of $46 million year-over-year.

Mitigation:This decline is a result of the cloud transition model playing out as expected, with term license revenue from recent cloud migration customers declining by almost $50 million, partially offset by true-ups and pricing adjustments at existing on-prem customers.

Normalization of ARR attrition rate FY27

Record low attrition rate contributed roughly 1 percentage point to ARR growth in FY26.

Mitigation:The FY27 ARR outlook assumes attrition normalizes relative to FY26, though it's possible similar rates could be seen again, it's not built into the base plan.

What to watch in Q1 FY27

ProNavigator and PricingCenter monetization

next quarter
Current 14 ProNavigator wins in Q4, 8 PricingCenter deals in Q4
Target Continued strong deal counts and ARR contribution

Why it matters

These new AI-driven products are key to broadening Guidewire's portfolio and monetizing its cloud installed base, impacting future ARR growth and competitive differentiation.

But the performance of these 2 products, ProNavigator and PricingCenter was markedly better than what we anticipated at the beginning of the year, and that's a great sign for us.

Q&A highlights

Asked about the key drivers of Q4 ARR performance, specifically new deals versus backlog conversions and true-ups, and if any sizable deals closed in August were surprising.

Management stated that Q4 ARR largely came in line with expectations, benefiting from strong new sales activity, positive ramp outcomes, and a tremendous impact from low churn. The performance of ProNavigator and PricingCenter was markedly better than anticipated at the beginning of the year, contributing significantly to ARR.

“But the performance of these 2 products, ProNavigator and PricingCenter was markedly better than what we anticipated at the beginning of the year, and that's a great sign for us.”

asked by Alexei Gogolev · answered by Mike Rosenbaum

2 min read 5 chapters

Detailed narrative

Cloud Migration Momentum and Strategic Wins

Guidewire achieved significant cloud migration milestones in Q4 FY26, highlighted by a long-term agreement with Nationwide to move its entire InsuranceSuite estate to Guidewire Cloud Platform. This deal solidifies Guidewire's position with a Tier 1 insurer and validates the platform's scalability. The company closed 26 core deals in Q4, contributing to a total of 62 core cloud deals for the year, covering PolicyCenter, ClaimCenter, BillingCenter, or InsuranceNow. Other notable wins include AF Group consolidating core processing and MAPFRE U.S. expanding with InsuranceSuite and ProNavigator.

AI Product Traction and Monetization

Guidewire saw remarkable commercial traction with its AI-driven products. ProNavigator sales velocity dramatically outperformed plans, securing 14 wins in Q4 and 28 for the full year, embedding AI assistance into core workflows. PricingCenter also had a strong quarter with 8 deals in Q4 and 12 for the year, including Nationwide as its first U.S. Tier 1 customer for personal lines. These products are seen as key to broadening the portfolio and monetizing the cloud installed base, offering customers agility in pricing and operational efficiency.

Platform Strategy and Agentic Capabilities

The Guidewire Cloud Platform (GCP) is central to the company's AI strategy. Developer assistants are now available to all customers and partners, accelerating agentic development. The Qusar release delivered an agentic platform, enabling customers to build stand-alone AI agents tuned to their specific implementations and existing workflows. This strategy aims to provide an intelligent, hyper-efficient, agent-driven P&C insurance operation, leveraging the structured context within Guidewire's core systems.

Financial Durability and Capital Returns

Guidewire demonstrated strong financial durability, with ARR ending at $1.242 billion (up 19% YoY cc) and fully ramped ARR growing 22% YoY cc. The company achieved a gross ARR attrition rate of less than 1.5% overall and less than 1% for core systems customers, reflecting high customer satisfaction. Expanding profitability and cash generation enabled the near completion of a share repurchase program, buying back over $600 million in shares at an average price of $148.41 per share in FY26.

Services Efficiency and Ecosystem Partnerships

The services organization is investing in AI capabilities to support future program delivery, aiming for efficiency lifts and reduced implementation costs. While these investments impacted near-term services margins (12.5% in FY26 vs 12.9% prior year), the goal is to accelerate cloud sales by lowering the budgetary and complexity hurdles for customers. Guidewire is strengthening its partnerships with System Integrators (SIs), focusing on business transformation and ensuring the ecosystem is equipped with tooling to drive faster and more predictable programs.

AI-generated summary of the company's earnings call. Not investment advice.