Guidewire Software (GWRE) Q1 2026 earnings summary

Executive summary

• Fiscal Q1 2026 results exceeded expectations across all key financial metrics, with strong momentum in cloud adoption and new AI-powered product launches at the annual customer conference.

• Accelerating adoption of cloud platform, highlighted by eight new cloud deals and significant wins in North America and internationally.

• Expanded product portfolio with new Pricing Center and Underwriting Center applications, leveraging generative AI and data analytics.

• Acquisition of ProNavigator/ProNav Technologies Ltd. for $34 million in November 2025 enhances AI-powered knowledge management capabilities.

• Net income rose to $31.3 million from $9.1 million in the prior year quarter, reflecting improved operating margins and higher gross profit.

Financial highlights

• Total revenue for Q1 FY26 was $333 million, up 27% year-over-year; subscription and support revenue grew 31% to $222 million, license revenue 12% to $42 million, and services revenue 23% to $68.5 million.

• ARR reached $1.063 billion as of October 31, 2025, up 21% year-over-year.

• Gross profit was $219 million (non-GAAP), up 32% year-over-year, with a gross margin of 66%; GAAP gross profit was $209.5 million (63% margin).

• Operating income was $63 million (non-GAAP), up 83% year-over-year; GAAP income from operations was $18.5 million, compared to a loss of $4.7 million in the prior year.

• Free cash flow for Q1 FY26 was negative $77.4 million, reflecting seasonal outflows and higher capital expenditures.

• Cash, cash equivalents, and investments totaled over $1.4 billion at quarter end.

Outlook and guidance

• Raised annual ARR outlook to $1.220–$1.230 billion and total revenue to $1.403–$1.419 billion; Q2 outlook: ARR $1.107–$1.113 billion, total revenue $339–$345 million.

• Subscription and support revenue expected at $948 million; services revenue outlook increased to $245 million.

• ProNavigator acquisition expected to add $4 million ARR and $2 million revenue.

• Subscription and support gross margin guidance raised to 72–73%; services gross margin expected at 13–14%.

• GAAP operating income expected between $72–$88 million; non-GAAP operating income between $266–$282 million; operating cash flow $355–$375 million.