Guidewire Q4 2026 earnings: profit and revenue beat, but slower growth outlook spooks investors
Guidewire topped Wall Street's profit and revenue targets and posted record-low customer attrition, but shares fell as next year's growth guidance points to a slowdown.
| Q4 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $0.99 | $0.96 | +3.0% |
| Revenue | $411.1M | $410.3M | +0.2% |
Key takeaways
- Guidewire makes cloud software that insurance companies use to run their core operations, and it beat both profit and revenue expectations for the quarter, with revenue up about 15% from a year earlier.
- The company’s annual recurring revenue (ARR), a measure of the value of subscription contracts locked in for the year ahead, grew 19% to $1.242 billion for the full fiscal year, finishing above the high end of its own guidance range.
- Customer retention was unusually strong: less than 1.5% of ARR was lost to cancellations or downgrades company-wide, and under 1% among customers on Guidewire’s core insurance systems, which management pointed to as a sign of deepening customer relationships.
- Profitability has been improving steadily. The trailing-year operating margin of about 8% and net margin of about 11% reflect a business that has swung from losses a couple of years ago to consistent profits, as the shift to cloud subscriptions scales more efficiently than the older on-premises license model.
- Guidewire generated $390 million in operating cash flow for the fiscal year, a 26% cash-flow margin, and used some of that cash to repurchase $606 million of its own stock during the year.
- New products contributed to growth: the company closed 26 deals for its core insurance platform in the quarter (62 for the year), along with a growing number of wins for newer add-ons like ProNavigator and PricingCenter.
- For fiscal 2027, Guidewire guided to ARR of $1.45 billion to $1.46 billion, implying about 18% growth at the midpoint - a slight deceleration from the 19% growth just reported.
- Despite the quarterly beat, shares fell sharply after hours as investors focused on the guidance implying slower growth ahead for a stock that had been trading at a high valuation.
Q4 2026 in context
| Metric | Jul 2026 | Jul 2025 | Change |
|---|---|---|---|
| Revenue | $411M | $357M | +15.3% |
| Free cash flow | $282M | $241M | +16.7% |
| Gross margin | 65.6% | 65.0% | +0.6 pts |
| Operating margin | 15.2% | 8.3% | +6.9 pts |
Figures for the quarter ended Jul 2026 and the quarter ended Jul 2025, as reported to the SEC. Fourth-quarter flows are derived as the fiscal year minus its first three quarters.
How the stock took it
Guidewire Software Inc closed at $192.76 on Sep 2, 2026, the last session before the report, and at $162.42 on Sep 4, 2026, the first session after it — -15.7% across the report.
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 64.0% | Trailing 12 months |
| Operating margin | 8.2% | Trailing 12 months |
| Net profit margin | 11.3% | Trailing 12 months |
| Pretax margin | 11.3% | Trailing 12 months |
| EPS | $1.85 | Trailing 12 months |
| Revenue growth (YoY) | 24.9% | Trailing 12 months |
| EPS growth (YoY) | 364.6% | Trailing 12 months |
| Return on equity | 11.0% | Trailing 12 months |
Sources: company report · earnings call · Investing.com