Guidewire Software 2026 Q1 Earnings Surpasses Expectations with 242.6% Net Income Surge

Guidewire Software (GWRE) reported Q1 2026 results that exceeded expectations, with revenue growth of 26.5% and a significant net income increase. The company raised its full-year ARR and revenue guidance, reflecting confidence in its cloud migration and AI-driven product strategies. Despite a post-earnings stock decline, management emphasized long-term growth catalysts.

Revenue

Guidewire’s total revenue surged to $332.64 million in Q1 2026, up 26.5% year-over-year. Subscription and support revenue led the growth at $222.20 million, driven by strong recurring revenue streams. License revenue contributed $41.97 million, while services revenue reached $68.47 million. The performance underscores the company’s transition to a cloud-based model and expanding customer base.

Earnings/Net Income

Earnings per share (EPS) jumped 236.4% to $0.37 in Q1 2026, compared to $0.11 in the prior year. Net income reached $31.31 million, a 242.6% increase from $9.14 million. This marked the highest Q1 net income in 16 years, reflecting improved operational efficiency and higher-margin cloud adoption. The EPS performance significantly outpaced the company’s historical growth trajectory.

Price Action

Following the earnings report, GWRE shares fell 6.66% in a single trading day, with a 7.42% decline month-to-date. The stock’s volatility highlights investor caution despite strong financial results, potentially driven by profit-taking after prior gains.

Post-Earnings Price Action Review

The strategy of buying GWRE when revenues miss and holding for 30 days yielded a 53.61% return, underperforming the 85.89% benchmark. While the approach avoided losses (0.00% drawdown), its Sharpe ratio of 0.25 and 35.45% volatility suggest a conservative, low-risk profile with moderate gains.

CEO Commentary

CEO Mike Rosenbaum highlighted 8 cloud deals and 22% YoY ARR growth, emphasizing successful migrations at major insurers. He underscored the company’s focus on cloud adoption, generative AI integration, and expanding InsuranceSuite with PricingCenter and UnderwritingCenter. Rosenbaum expressed confidence in the platform’s extensible design and ecosystem of partners to drive innovation and long-term growth.

Guidance

Guidewire raised FY2026 ARR guidance to $1.22B–$1.23B and total revenue to $1.403B–$1.419B, reflecting 27% YoY growth. Subscription and support gross margins are projected at 72–73%, with services margins at 13–14%. Q2 ARR is expected to range from $1.107B–$1.113B, and capital expenditures are forecast at $30M–$35M, including $18M in capitalized software costs. The ProNavigator acquisition is anticipated to add $4M ARR and $2M in annual revenue.

Additional News

Recent developments include CEO Mike Rosenbaum’s insider sales of 72,642 shares totaling $17.27 million and CFO Jeffrey Cooper’s 26,049 shares for $6.40 million, raising questions about management’s confidence in the stock’s near-term trajectory. Meanwhile, the acquisition of ProNavigator is expected to contribute $4M in annual ARR, enhancing Guidewire’s cloud offerings. Analysts from Goldman Sachs and RBC Capital maintained “Buy” ratings, citing long-term growth potential from AI-driven products and cloud migration momentum.