Guidewire Software (GWRE) Q2 2026 earnings summary

Executive summary

• Achieved total revenue of $359.1 million in Q2 FY26, up 24% year-over-year, driven by strong subscription and support growth, robust multi-year deal demand, and major wins with Aviva UK, Tokio Marine North America, and Zurich Germany.

• 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; non-GAAP net income was $100.7 million, more than doubling year-over-year.

• Cloud transition and generative AI adoption are driving longer contract durations, higher ARR, and accelerating modernization cycles.

• Customers are committing to larger, longer-term contracts, with average new InsuranceSuite deal duration over 6 years.

Financial highlights

• Subscription and support revenue grew 33% year-over-year to $237.2 million, now 66% of total revenue; 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% (non-GAAP) and 64% (GAAP), both up year-over-year.

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

• Free cash flow for Q2 FY26 was $27.8 million (GAAP) and $105.7 million (non-GAAP); operating cash flow was $112 million.

• 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); total revenue guidance increased to $1.438–$1.448 billion.

• Subscription and support revenue expected at $962–$966 million; services revenue at ~$255 million.

• Full-year gross margin expected at 67% (non-GAAP); subscription/support margin at 74–75%; services margin at 13%.

• Non-GAAP operating income guidance raised to $293–$303 million; GAAP operating income outlook $100–$110 million.

• Operating cash flow expected at $360–$375 million; CapEx at $30–$35 million.