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 product launches, including AI-powered products highlighted at the annual customer conference.

• Accelerating adoption of cloud platform, with eight new cloud deals in Q1 and significant wins in North America and internationally.

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

• Expansion into new product areas, notably Pricing Center and Underwriting Center, leveraging generative AI and data analytics.

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

Financial highlights

• ARR reached $1.063 billion as of October 31, 2025, up 21% year-over-year on a constant currency basis.

• Total revenue was $332.6 million, up 27% year-over-year; subscription and support revenue grew 31% to $222 million, license revenue increased 12% to $42 million, and services revenue grew 23% to $68.5 million.

• 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, up from 60%).

• 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.

• Cash, cash equivalents, and investments exceeded $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 guidance: ARR $1.107–$1.113 billion, total revenue $339–$345 million, non-GAAP operating income $68–$74 million.

• Subscription and support gross margin expected at 72–73% for the year; services gross margin at 13–14%.

• GAAP operating income guidance raised to $72–$88 million; non-GAAP operating income to $266–$282 million.

• Cash flow from operations expected between $355–$375 million; CapEx between $30–$35 million.