Guidewire Software (GWRE) investor relations material

Executive summary

• Achieved strong Q2 performance with total revenue of $359.1 million, up 24% year-over-year, driven by subscription and support growth and robust multi-year deal demand.

• Annual recurring revenue (ARR) reached $1,121 million as of January 31, 2026, reflecting 22% year-over-year growth.

• Net income was $60.1 million for the quarter, reversing prior year losses, and non-GAAP net income was $100.7 million.

• Large customers are committing to longer contracts and higher ARR, with average contract terms for new deals now over 6 years.

• AI-driven modernization and new product adoption, including ProNavigator, are accelerating demand and pipeline strength.

Financial highlights

• Subscription and support revenue grew 33% year-over-year to $237.2 million; services revenue rose 30% to $62.4 million; license revenue declined 7% to $59.5 million.

• Gross profit was $243 million (28% growth), with overall gross margin at 68%; GAAP gross margin improved to 64% for the quarter.

• Operating profit was $87 million (non-GAAP); GAAP income from operations was $38.4 million, up from $11.7 million.

• Free cash flow for the quarter was $105.7 million, up from $82.3 million in the prior year.

• Ended Q2 with $1.35 billion in cash, cash equivalents, and investments.

Outlook and guidance

• Raised full-year ARR outlook to $1.229–$1.237 billion (18–19% growth); full-year total revenue expected at $1.438–$1.448 billion.

• Subscription and support revenue guidance increased to $962–$966 million; services revenue to ~$255 million.

• Full-year subscription and support gross margin expected at 74%; services gross margin at 13%; overall gross margin at 67%.

• GAAP operating income forecasted at $100–$110 million; non-GAAP at $293–$303 million.

• Q3 ARR outlook: $1.144–$1.150 billion; total revenue: $352–$358 million.