Guidewire (GWRE) Q3 2026: Revenue Growth Accelerates, Profitability Mixed — Positive Outlook

Guidewire (NYSE: GWRE) reported its financial results for the third quarter of fiscal year 2026, showcasing a robust performance compared to the same quarter last year. Total revenue reached $372.5 million, reflecting an increase of $79.0 million or 27% year-over-year (YoY). This growth was driven by a 35% increase in subscription and support revenue, which totaled $244.7 million.

Despite the impressive revenue growth, the quarter presented a mixed picture for profitability. GAAP net income was $16.5 million, down from $46.0 million in Q3 2025, primarily due to a significant foreign currency loss of $20.1 million. This resulted in a GAAP diluted net income per share of $0.19, compared to $0.54 in the prior year.

Key Financial Metrics:

• Total Revenue: $372.5 million (+27% YoY)
• Subscription and Support Revenue: $244.7 million (+35% YoY)
• License Revenue: $56.0 million (-2% YoY)
• Services Revenue: $71.8 million (+32% YoY)
• GAAP Income from Operations: $30.6 million (vs. $4.5 million YoY)
• GAAP Net Income: $16.5 million (vs. $46.0 million YoY)
• GAAP Diluted Net Income per Share: $0.19 (vs. $0.54 YoY)
• Non-GAAP Net Income: $69.6 million (vs. $47.4 million YoY)
• Non-GAAP Diluted Net Income per Share: $0.82 (vs. $0.55 YoY)
• Annual Recurring Revenue (ARR): $1,147 million (up from $1,041 million as of July 31, 2025)

Analyst View

This quarter can be viewed as a positive outcome for shareholders, primarily due to the significant revenue growth and the increase in ARR, which is a key indicator of future performance. The 27% revenue growth and 19% ARR increase demonstrate strong demand for Guidewire's cloud solutions and AI applications among insurers. However, the decline in GAAP net income raises concerns about the impact of foreign currency fluctuations on profitability.

The company has also announced a new $500 million share repurchase program, having already repurchased 1,696,180 shares at an average price of $147.07 during the quarter. This move is likely to enhance shareholder value and reflects management's confidence in the company's future prospects.

Guidance Update

Looking ahead, Guidewire has raised its fiscal year 2026 outlook, projecting:

• Ending ARR: Between $1,229 million and $1,237 million
• Total Revenue: Between $1,460 million and $1,470 million
• GAAP Operating Income: Between $124 million and $134 million
• Non-GAAP Operating Income: Between $314 million and $324 million

Forward Catalyst

Investors should closely monitor the upcoming fourth quarter, as Guidewire anticipates a record performance. The company expects total revenue between $396 million and $406 million, with subscription and support revenue projected between $259 million and $265 million. The continued focus on cloud migration and AI adoption in the insurance sector could further bolster growth, making the next quarter a critical period for assessing Guidewire's trajectory.

In summary, while the decline in GAAP net income is a concern, the overall growth in revenue and ARR, coupled with proactive capital management strategies, positions Guidewire favorably for the future.

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

Note: All amounts are in thousands.

ASSETS	April 30, 2026	July 31, 2025
CURRENT ASSETS:
Cash and cash equivalents	$294,634	$697,902
Short-term investments	454,900	451,541
Accounts receivable, net	138,853	140,639
Unbilled accounts receivable, net	224,769	130,959
Prepaid expenses and other current assets	102,255	86,374
Total current assets	1,215,410	1,507,415
Long-term investments	397,267	333,754
Unbilled accounts receivable, net	83	670
Property and equipment, net	66,647	60,436
Operating lease assets	36,443	39,309
Intangible assets, net	17,727	12,042
Goodwill	421,111	393,978
Deferred tax assets, net	293,911	297,234
Other assets	86,533	76,261
TOTAL ASSETS	$2,535,132	$2,721,099
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$34,972	$28,797
Accrued employee compensation	117,531	140,613
Deferred revenue, net	300,641	340,253
Other current liabilities	44,032	35,139
Total current liabilities	497,175	544,802
Lease liabilities	27,031	30,687
Convertible senior notes, net	677,206	674,568
Deferred revenue, net	3,718	4,533
Other liabilities	12,858	9,279
Total liabilities	1,217,987	1,263,869
STOCKHOLDERS’ EQUITY:
Common stock	8	8
Additional paid-in capital	2,169,769	2,020,393
Accumulated other comprehensive income (loss)	-7,105	-8,922
Retained earnings (accumulated deficit)	-845,527	-554,249
Total stockholders’ equity	1,317,145	1,457,230
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$2,535,132	$2,721,099

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands except share and per share data)

Note: All amounts are in thousands, except share and per share data.

Revenue:	Three Months Ended	Nine Months Ended
	April 30, 2026	April 30, 2025
Subscription and support	$244,738	$704,150
License	55,996	157,491
Services	71,807	202,634
Total revenue	372,541	1,064,276
Cost of revenue:
Subscription and support	67,882	195,737
License	374	1,460
Services	67,639	189,390
Total cost of revenue	135,896	386,587
Gross profit:
Subscription and support	176,856	508,413
License	55,622	156,031
Services	4,167	13,244
Total gross profit	236,645	677,689
Operating expenses:
Research and development	87,868	249,510
Sales and marketing	68,201	193,934
General and administrative	49,939	146,689
Total operating expenses	206,008	590,133
Income (loss) from operations	30,637	87,556
Interest income	11,295	38,432
Interest expense	-3,318	-9,965
Other income (expense), net	-18,854	2,791
Income (loss) before provision for income taxes	19,760	118,814
Provision for (benefit from) income taxes	3,289	10,926
Net income (loss)	$16,471	$107,888
Net income (loss) per share:
Basic	$0.20	$1.27
Diluted	$0.19	$1.26
Shares used in computing net income (loss) per share:
Basic	84,241,069	84,630,718
Diluted	85,065,999	85,945,646

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