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what it is
Guidewire sells the core software insurers use to write policies, send bills, and handle claims.
how it gets paid
Last year Guidewire Sftwre made $1.2B in revenue. subscription and support was the main engine at $0.73B, or 61% of sales.
why it's growing
Revenue grew 22.6% last year. Gross margin reached 63.8%, and management had already raised its FY2026 outlook after a strong start to the year.
what just happened
Guidewire's latest quarter showed revenue of $692M, up 93% vs. prior year, with EPS of $1.06.
At a glance
B balance sheet — gets the job done, barely
25/100 earnings predictability — expect surprises
196.3x trailing p/e — you're paying up for this one
12.5% return on capital — nothing to write home about
xvary composite: 45/100 — below average
What they do
Guidewire sells the core software insurers use to write policies, send bills, and handle claims.
Guidewire sits inside the boring plumbing insurers cannot afford to break. If your policy, billing, and claims systems run on Guidewire, replacing them means years of work, real operational risk, and a lot of angry customers. That shows up in ARR (annual recurring revenue → contracted software revenue that tends to repeat → better visibility) of $1.06 billion, up 22% vs. prior year.
How they make money
$1.2B
annual revenue · their business grew +22.6% last year
subscription and support
$0.73B
services
$0.28B
license
$0.14B
other
$0.05B
The products that matter
core insurance systems
Insurance Software Platforms
$1.2B revenue
it is the full $1.2B business today, and insurers use it for the policy and claims workflows they cannot afford to have fail.
core platform
cloud subscription base
Guidewire Cloud
$1.06B ARR · +22%
this recurring cloud revenue base hit $1.06B and grew 22% from a year earlier. That is the number underwriting the whole migration story.
recurring engine
Key numbers
196.3x
trailing p/e
P/E (price-to-earnings → how many years of current profit you are paying for → this stock already assumes a lot of future success) is the whole argument here.
$1.06B
ARR
ARR (annual recurring revenue → repeatable contracted sales → steadier revenue base) grew 22%, which is the cleanest proof demand is real.
3.4%
operating margin
Operating margin (profit after running the business → what the model earns before taxes and one-offs → still thin) says the story is ahead of the economics.
$675M
long-term debt
Debt is 5% of capital, so leverage is not the main problem. The real issue is paying a giant multiple for a still-low margin business.
Financial health
B
strength
- balance sheet grade B — adequate — nothing special
- risk rank 3 — safer than 50% of stocks
- price stability 45 / 100
- long-term debt $675M (5% of capital)
- net profit margin 16.4% — keeps 16 cents of every dollar in revenue
- return on equity 17% — $0.17 profit for every $1 investors have put in
B — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in GWRE 3 years ago → it's now worth $23,170.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Guidewire's latest quarter showed revenue of $692M, up 93% vs. prior year, with EPS of $1.06.
Gross margin reached 63.8%, and management had already raised its FY2026 outlook after a strong start to the year. The quiet part: demand looks strong, but the stock price was already acting like that.
$692M
revenue
$1.06
eps
63.8%
gross margin
the number that mattered
The key number was $1.06B of ARR because recurring revenue, not one quarter of EPS, is what justifies paying 196.3x earnings.
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guidewire software opened fiscal 2026 with a strong first quarter. (fiscal year ends july 31st.) revenue increased 27%, to $332.6 million, led by continued cloud migrations.
-
annual recurring revenue (arr) reached $1.06 billion, up 22% from a year earlier, reflecting both new customer wins and expansion activity among existing clients.beginning in fiscal 2026, our coverage will use non-gaap earnings, as this measure more closely reflects guidewire’s cash generation. stock-based compensation is excluded from the figure and remains a real cost that contributes to share dilution. on this basis, first-quarter earnings were about $0.66 per share, excluding $0.30 per share of expenses. note that this makes vs. prior year comparisons look especially strong, given that fiscal 2025 results were presented on a gaap basis.
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operating prospects are quite positive for the full year.
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following the quarter, management raised its 2026 outlook, calling for ending arr of roughly $1.225 billion, and total revenue of about $1.42 billion.growth should continue to be driven by cloud subscriptions as insurers replace legacy core systems and expand their use of guidewire’s software once implementations go live.
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operating cash flow is expected to strengthen over the remainder of the year, after a seasonally weak first quarter that reflected bonus and commission payments.while implementation timing can still cause some quarterly variability, the level of contracted backlog provides good visibility into results for the balance of 2026.
source: company earnings report, 2026
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What could go wrong
the top threat is a slower-than-expected cloud migration inside property-and-casualty insurers.
med
cloud migration pace
Guidewire's premium multiple rests on insurers moving from legacy deployments to its cloud platform on schedule. If that pace slows, the whole story slows with it.
This risk directly threatens the $1.06B ARR base and the roughly $1.225B fiscal 2026 ARR target.
med
implementation delays
These projects are large, customized, and slow. Revenue recognition can get pushed around when implementations slip, even if the customer relationship stays intact.
That matters in a business that just printed $332.6M of quarterly revenue and still has only 25 / 100 earnings predictability.
med
valuation compression
A 196.3x trailing p/e is what happens when investors price tomorrow's profits today. If growth merely stays good instead of exceptional, the stock can fall without the business breaking.
A miss on the roughly $1.42B revenue outlook would pressure both the multiple and the $14B market cap supporting it.
med
non-GAAP optics
Q1 non-GAAP earnings were about $0.66 per share after excluding $0.30 per share of expenses. The cash generation story may improve, but the excluded costs did not vanish.
If dilution or compensation expense keeps rising, headline earnings can look cleaner than shareholder economics.
The bull case needs cloud ARR to keep compounding and guidance to keep holding. If either slips, the valuation loses its cover fast.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next quarterly report
Watch whether the revenue run-rate after Q1's $332.6M start still supports roughly $1.42B for fiscal 2026.
metric
cloud ARR growth
$1.06B of ARR, up 22%, is the core health check. If that growth cools, the premium multiple starts to look lonely.
trend
margin quality
Operating margin sits at 21.5%. The next question is whether cloud scale lifts margins cleanly or implementation work keeps them lumpy.
risk
guidance credibility
Raised targets are good. Repeated raises are better. Watch whether management keeps the $1.225B ARR and roughly $1.42B revenue outlook intact.
Analyst rankings
short-term outlook
below average
momentum score 4 — in human-speak, analysts see enough valuation and execution risk to be cautious over the next stretch.
risk profile
average
stability score 3 — not especially safe, not a disaster either. Middle-of-the-pack risk.
chart momentum
top 5%
technical score 1 — the chart has been stronger than almost everything else, even while the valuation debate stays alive.
earnings predictability
25 / 100
earnings are hard to model here. Translation: expect a few ugly and a few beautiful quarters along the way.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 339 buyers vs. 303 sellers in 3q2025. total institutional holdings: 84.2M shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$124
$273
$159
current price
$199
target midpoint · +25% from current · 3-5yr high: $273
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