Guidewire Software 2026 Q1 Earnings Strong Performance with Net Income Surges 242.6%

Guidewire Software (GWRE) reported Q1 2026 earnings on Dec 3, 2025, with total revenue rising 26.5% to $332.64 million, surpassing expectations. The company raised its fiscal 2026 guidance, projecting ARR between $1.22–$1.23 billion and total revenue of $1.403–$1.419 billion.

Revenue

Guidewire’s revenue was driven by a 31% year-over-year increase in subscription and support revenue to $222.20 million, while license revenue stood at $41.97 million and services revenue reached $68.47 million. Total revenue of $332.64 million reflected robust demand for cloud solutions and strategic customer deals.

Earnings/Net Income

The company’s EPS surged 236.4% to $0.37, and net income jumped 242.6% to $31.31 million, marking a 16-year high for Q1 net income. This growth underscored improved operational efficiency and strong customer retention.

Price Action

The stock price edged up 0.62% during the latest trading day but dropped 7.65% month-to-date.

Post-Earnings Price Action Review

The strategy of buying Guidewire shares after a quarterly revenue drop on the financial report release date and holding for 30 days delivered exceptional returns over the past three years. The strategy achieved a 248.69% return, vastly outperforming the benchmark return of 70.56%. The excess return was 178.13%, indicating the strategy’s significant advantage over a simple buy-and-hold approach. With a CAGR of 52.15% and a maximum drawdown of 0.00%, the strategy also showcased robust risk-adjusted performance, highlighted by a Sharpe ratio of 1.45 and a volatility of 36.04%.

CEO Commentary

CEO Mike Rosenbaum highlighted 22% YoY ARR growth and eight cloud deals, driven by cloud maturity and customer success. Strategic priorities include expanding the Guidewire Cloud Platform with new AI-driven applications and leveraging vertical data to enhance insurer outcomes.

Guidance

CFO Jeffrey Cooper raised FY2026 ARR guidance to $1.22–$1.23 billion and total revenue to $1.403–$1.419 billion. Q2 guidance includes ARR of $1.107–$1.113 billion, revenue of $339–$345 million, and non-GAAP operating income of $68–$74 million.

Additional News

1. Insider Sales: CEO Mike Rosenbaum sold 1,400 shares ($298.8K), and President John Mullen sold 3,000 shares ($640.3K) via prearranged trading plans.

2. Hedge Fund Activity: Linonia Partnership LP added 915,841 shares (+27.0%), while Wellington Management Group LLP reduced holdings by 31.7%.

3. Analyst Ratings: Four firms, including Wells Fargo and RBC Capital, issued “Overweight”/“Outperform” ratings, with a median price target of $288.