Guidewire Software shares rise over 20% pre-market after company forecasts FY26 revenue above estimates, Q4 results beat

Guidewire Software shares rise over 20% pre-market after company forecasts FY26 revenue above estimates, Q4 results beat

Guidewire Software (GWRE) saw its shares rise over 20% in pre-market trading on September 2, 2025, following the company's announcement of a strong fiscal year 2026 (FY26) revenue forecast and a beat in its Q4 2025 earnings. The stock is trading at $247.81, up 16.36% from its previous close, and is set to open at more than a two-month high.

The company reported Q4 2025 revenue of $356.6 million, a 22% year-over-year increase, and beat analysts' estimates by $18.8 million. Non-GAAP earnings per share (EPS) reached $0.84, up 33.33% from the previous year's $0.63, and also exceeded expectations [1]. This performance was driven by a 19% year-over-year rise in Annual Recurring Revenue (ARR), which hit $1.03 billion for the first time.

Guidewire's Q1 2026 revenue guidance of $315-$321 million represents a 3.2% beat over analyst estimates, with ARR projected to range between $1.048 billion and $1.054 billion. The company expects FY2026 ARR to be $1.21-$1.22 billion, with cloud ARR growth accelerating to 36% year-over-year. This strategic shift to cloud subscriptions has boosted margins and retention, reinforcing Guidewire's resilience in the insurance tech sector [2].

Analysts have responded positively to the news, with J.P.Morgan and Oppenheimer raising their price targets to $300, citing greater market share gains and strong cloud execution. Needham, however, kept its rating at "hold" due to stretched valuation. The stock's 12-month forward valuation is trading at 12.5x times sales, higher than the industry median of 2.58x [3].

Guidewire's success is attributed to its cloud-first strategy and aggressive investment in AI-driven solutions. The company's cloud ARR now accounts for 74% of total ARR, up from 68% in FY2024, enhancing customer lifetime value and reducing churn. This transition has delivered higher margins and customer retention, further insulating Guidewire from cyclical downturns [4].

Looking ahead, Guidewire's trajectory offers a compelling blend of near-term earnings upside and long-term growth potential. While the growth rate may moderate as it scales, the underlying fundamentals—strong recurring revenue, high-margin cloud services, and a clear innovation roadmap—remain intact.

References:
[1] Reuters. (2025). Guidewire jumps on annual forecast raise upbeat results. Retrieved from https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3US0T7:0-guidewire-jumps-on-annual-forecast-raise-upbeat-results/
[2] AInvest. (2025). Guidewire Software Q1 2026 Revenue Outlook: Growth Momentum, Assessing Earnings Upside, Accelerating Cloud Adoption. Retrieved from https://www.ainvest.com/news/guidewire-software-q1-2026-revenue-outlook-growth-momentum-assessing-earnings-upside-accelerating-cloud-adoption-2509/
[3] Yahoo Finance. (2025). Guidewire Software (GWRE) Q4 Earnings. Retrieved from https://finance.yahoo.com/news/guidewire-software-gwre-q4-earnings-214503233.html