Guidewire Software (GWRE) Q2 2025 earnings summary

Executive summary

• Achieved strong Q2 FY2025 results with total revenue of $289.5 million, up 20% year-over-year, driven by robust cloud sales, 12 new cloud deals, and customer migrations, especially among large insurers in North America and Europe.

• ARR reached $918.1 million as of January 31, 2025, up from $864 million at July 31, 2024, exceeding guidance and supporting an upward revision of the full-year outlook.

• Net loss for the quarter was $37.3 million, primarily due to a $53.3 million debt retirement expense and higher operating expenses, despite strong non-GAAP profitability.

• The partner ecosystem expanded to over 26,000 practitioners and 10,500 cloud-certified professionals.

• The platform supported insurers during catastrophic events, such as the LA wildfires, highlighting its resilience.

Financial highlights

• Q2 ARR was $918 million, with $45 million net new ARR added, matching the previous Q4 seasonal high.

• Total revenue for Q2 FY2025 was $289.5 million, up 20% year-over-year, with subscription and support revenue at $177.8 million (+35% YoY), license revenue at $63.7 million (-10% YoY), and services revenue at $47.9 million (+26% YoY).

• Gross margin improved to 65% (non-GAAP: 65%), with subscription and support gross margin at 69% and services gross margin at 6%.

• Q2 GAAP net loss was $37.3 million, while non-GAAP net income was $43.9 million; Q2 GAAP EPS was $(0.45), non-GAAP EPS $0.51.

• Ended Q2 with $1.41 billion in cash, cash equivalents, and investments; free cash flow for the six months was $14.9 million, and Q2 operating cash flow was $86 million.

Outlook and guidance

• FY2025 ARR outlook raised to $1.00–$1.01 billion, with total revenue expected between $1.164–$1.174 billion.

• FY2025 non-GAAP operating income guidance increased to $175–$185 million; GAAP operating income of $10–$20 million.

• FY2025 operating cash flow expected at $230–$260 million.

• Q3 FY2025 guidance: ARR $942–$947 million; total revenue $283–$289 million; GAAP operating income $(4)M–$2M; non-GAAP operating income $36M–$42M.

• Subscription and support gross margin expected to remain at 69% for FY2025.