Guidewire Software, Inc. Q1 FY2026 earnings call

Key Points

• The company had a strong start to the fiscal year with results ahead of expectations across key financial metrics.
• Accelerating adoption of Guidewire Cloud Platform, with eight cloud deals in Q1. ARR grew 22% year over year.
• Launched Aspen five years ago, and now on NoSECCO, the 14th release, with success across the industry.
• New products: InsuranceSuite includes PricingCenter and UnderwritingCenter, leveraging generative AI. Acquisition of ProNavigator, an AI-powered knowledge management platform for the insurance industry.
• Ecosystem of partners and InsurTech Vanguard program played a significant role in success.

In the first quarter, subscription and support revenue grew 31% to $222 million. License revenue increased 12% to $42 million. Professional services revenue was $68 million. Gross profit was $219 million, with a gross margin of 66%. Subscription and support gross margin reached 73%, and professional services margin improved to 23%. ARR ended at $1.063 billion, up 21% year over year on a constant currency basis.

Fiscal Year 2026 Outlook

• Raised ARR guidance to between $1.22 billion and $1.23 billion. Total revenue expected between $1.403 billion and $1.442 billion.
• Subscription and support gross margin expected 72-73% for the year. Services gross margins expected 13-14%. Overall gross margins still expected 66%.
• Operating income outlook adjusted: GAAP operating income between $72 million and $88 million, non-GAAP between $266 million and $282 million.

Q2 Outlook

• ARR expected to finish between $1.107 billion and $1.113 billion. Total revenue between $339 million and $345 million. Subscription and support revenue ~$229 million, services revenue ~$58 million.

Q: Dylan Becker asks about operational agility and new products like PricingCenter and UnderwritingCenter.

A: Mike Rosenbaum responds on the strategy of targeting customer base, integration with platform, and how these products help insurance companies with pricing and underwriting efficiency.

Q: Alexei Gogolev inquires about cloud consumption patterns and ARR guidance.

A: Mike Rosenbaum talks about earning trust for cloud at scale, and Jeff Cooper discusses Q1 deal activity, pipeline strength, and ProNavigator acquisition impact on guidance.

Q: Ken Wong asks about timeline for adoption of UnderwritingCenter and PricingCenter.

A: Mike Rosenbaum says it's slightly different from core products, with incremental or greenfield approach, and positive initial response.

Q: Adam Hotchkiss asks about AI philosophy and competing vs partnering.

A: Mike Rosenbaum states Guidewire is an open platform, invites InsurTechs to build on core system, focuses on winning core and fostering ecosystem.

Q: Max asks about monetization of generative AI features in new products and impact on margins.

A: Mike Rosenbaum explains DWP-based pricing model, and considerations for gross margin impact with generative AI features.