Loading...
01/10 00:48
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary and Q&A session indicate strong financial metrics and optimistic guidance. Despite declining license revenue, the company shows growth in subscription revenue and has raised its ARR guidance. The positive sentiment is reinforced by strategic partnerships, efficiency gains, and innovation in AI, which are likely to boost stock prices. However, the lack of market cap data prevents a more precise prediction.
ARR (Annual Recurring Revenue) ARR ended at $1.063 billion, up 21% year-over-year on a constant currency basis and ahead of expectations. The growth was driven by strong subscription and support revenue growth as customers migrated to cloud and new insurers adopted cloud products.
Total Revenue Total revenue was $333 million, up 27% year-over-year, reflecting strong performance across all segments.
Subscription and Support Revenue Subscription and support revenue grew 31% to $222 million year-over-year. This growth was attributed to customers migrating to cloud and new insurers adopting cloud products.
License Revenue License revenue grew 12% to $42 million year-over-year. This increase was counterintuitive as license revenue is generally expected to decline due to migration to cloud. However, it benefited from a large annual term license renewal after the end of a multiyear commitment entered into in 2020.
Professional Services Revenue Professional services revenue was $68 million, well above expectations, reflecting high utilization and effective collaboration with SI partners.
Gross Profit Gross profit was $219 million, up 32% year-over-year, with a gross margin of 66%. Subscription and support gross margin reached 73%, continuing to track ahead of expectations. Professional services margin improved to 23%.
Operating Income Operating income finished at $63 million, up 83% year-over-year. This reflects strong revenue growth and operational efficiency.
Operating Cash Flow Operating cash flow ended the quarter at negative $67 million. This was consistent with expectations due to annual employee bonuses and commission expenses related to Q4 sales being paid out in Q1.
Cash, Cash Equivalents, and Investments The company ended the quarter with over $1.4 billion in cash, cash equivalents, and investments.
Guidewire Cloud Platform: Achieved significant adoption with 8 new cloud deals in Q1, including major insurers like The Hartford and Sompo. Expanded product portfolio with PricingCenter and UnderwritingCenter to address fragmented processes in pricing and underwriting.
ProNavigator Acquisition: Acquired ProNavigator, an AI-powered knowledge management platform, to enhance generative AI capabilities and provide context-aware guidance in insurance workflows.
Geographic Expansion: Secured 3 international deals, including a major win in the UK, a migration in Japan, and a deal with a large Australian insurer.
ARR Growth: Annual Recurring Revenue (ARR) grew 22% year-over-year to $1.063 billion, driven by cloud adoption and subscription growth.
Revenue Growth: Total revenue increased by 27% year-over-year to $333 million, with subscription and support revenue growing 31%.
Profitability: Operating income rose 83% year-over-year to $63 million, with subscription and support gross margin reaching 73%.
Generative AI Integration: Focused on integrating generative AI into insurance workflows to improve productivity and outcomes, leveraging ProNavigator and other AI capabilities.
Ecosystem Development: Continued investment in partnerships and innovation through programs like Insurtech Vanguard to foster start-ups and expand ecosystem capabilities.
Regulatory and Geopolitical Risks: The company acknowledges that its forward-looking statements are subject to risks, uncertainties, and assumptions, including the impact of local, national, and geopolitical events on its business.
Cloud Migration Challenges: The company continues to migrate customers to the cloud, which involves significant operational complexity and potential risks in ensuring successful transitions.
Dependence on Partners and Ecosystem: The company relies on an ecosystem of partners for its success, which could pose risks if partnerships do not perform as expected or if there are disruptions in collaboration.
Economic and Currency Risks: The company’s ARR growth and financial performance are subject to currency fluctuations and broader economic conditions, which could impact revenue and profitability.
Operational Costs and Investments: The company is investing in additional capacity, AI initiatives, and subcontractor utilization, which could increase operational costs and impact margins.
Integration of Acquisitions: The recent acquisition of ProNavigator involves integration risks, including the potential for higher costs and challenges in realizing expected synergies.
ARR (Annual Recurring Revenue): Raised annual outlook for ARR to be between $1.220 billion to $1.230 billion, reflecting strong pipeline and performance.
Total Revenue: Updated annual revenue expectations to range between $1.403 billion and $1.419 billion, with subscription revenue expected at approximately $891 million and subscription and support revenue at $948 million.
Services Revenue: Increased annual services revenue outlook to approximately $245 million due to better-than-expected Q1 performance and higher utilization rates.
ProNavigator Acquisition Impact: ProNavigator acquisition expected to add approximately $4 million of ARR and $2 million in revenue for fiscal year 2026.
Subscription and Support Gross Margin: Raised expectations for subscription and support gross margin to be between 72% and 73% for the year.
Services Gross Margin: Anticipated to be between 13% and 14% for the year, reflecting investments in capacity and AI initiatives.
Operating Income: Increased GAAP operating income outlook to between $72 million and $88 million, and non-GAAP operating income to between $266 million and $282 million for fiscal year 2026.
Cash Flow from Operations: Adjusted expectations to be between $355 million and $375 million for the year.
Capital Expenditures: Expected to range between $30 million and $35 million, including $18 million in capitalized software development costs.
Q2 ARR: Expected to finish between $1.107 billion and $1.113 billion.
Q2 Total Revenue: Projected to be between $339 million and $345 million.
Q2 Subscription and Support Revenue: Expected to be approximately $229 million.
Q2 Services Revenue: Anticipated to be approximately $58 million.
Q2 Subscription and Support Margins: Expected to be approximately 73%.
Q2 Services Margins: Projected to be around 9%.
Q2 Total Gross Margins: Expected to be around 66%.
The selected topic was not discussed during the call.
The earnings call summary and Q&A session indicate strong financial metrics and optimistic guidance. Despite declining license revenue, the company shows growth in subscription revenue and has raised its ARR guidance. The positive sentiment is reinforced by strategic partnerships, efficiency gains, and innovation in AI, which are likely to boost stock prices. However, the lack of market cap data prevents a more precise prediction.
The earnings call summary and Q&A indicate strong financial performance, with raised ARR and revenue guidance, and a focus on cloud and AI advancements. The strategic Liberty Mutual partnership and positive analyst sentiment further boost confidence. Despite some lack of detail, the overall outlook and shareholder return plan are positive, suggesting a stock price increase.
Guidewire's earnings call reveals strong financial performance with increased ARR and revenue, improved margins, and a robust cash flow outlook. The raised guidance and positive Q&A responses, particularly regarding cloud deals and AI integration, indicate confidence in future growth. Despite competitive and regulatory risks, the company's strategic initiatives and financial health suggest a positive market reaction. The absence of market cap information limits prediction specificity, but the overall sentiment leans towards a positive stock price movement in the 2% to 8% range.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
