Statements today include forward-looking ones regarding our financial results, products, customer demand, operations, the impact of local, national, and geopolitical events on our business, and other matters. Following a record Q4, we saw continued momentum with another eight cloud deals in Q1. All this momentum was driven by the factors we've shared before: our cloud maturity, track record of customer success, and a resilient global P&C insurance market that continues to modernize. Both new applications represent significant market opportunities that address the industry's need to overcome very fragmented and manual processes that negatively impact their speed-to-market loss ratios and growth.
By integrating ProNavigator into Guidewire applications, we can now deliver instant, context-aware guidance and answers to the people using our applications. This sort of in-context guidance is a first step in generative AI deployment to insurance workflows and can upskill every user of Guidewire application. Q1 saw record sales activity for a first quarter and a clean beat across ARR revenue and profitability expectations. Total revenue is $333 million, up 27% year-over-year, reflecting strong performance across all segments.
We continue to see strong subscription and support revenue growth as customers migrate to cloud and new insurers adopt our cloud products. In the first quarter, subscription and support revenue grew 31% to $222 million. In general, we expect license revenue to decline as we continue to migrate customers to cloud and drive subscription revenue growth. As a reminder, revenue related to multi-year term license contracts are generally recognized upfront, and as a result, no additional license revenue is recognized until the committed term expires.
| Metric | Period | Current guidance |
|---|---|---|
| ARR | FY2026 | $1.220-$1.230 billion (raised) |
| Total revenue | FY2026 | $1.403-$1.419 billion (raised) |
| Subscription and support gross margin | FY2026 | 72%-73% (raised) |
| Services gross margin | FY2026 | 13%-14% (new) |
| Non-GAAP operating income | FY2026 | $266-$282 million (raised) |
| GAAP operating income | FY2026 | $72-$88 million (raised) |
| Operating cash flow | FY2026 | $355-$375 million (adjusted) |
| ARR | Q2 2026 | $1.107-$1.113 billion (new) |
| Total revenue | Q2 2026 | $339-$345 million (new) |
| Non-GAAP operating income | Q2 2026 | $68-$74 million (new) |
| Metric | YoY | Note |
|---|---|---|
| ARR | +22% (21% constant currency) | continued cloud migrations and new insurer adoption |
| Total revenue | +27% to $333M | strong performance across all segments |
| Subscription and support revenue | +31% to $222M | customers migrating to cloud and new cloud product adoption |
| License revenue | +12% to $42M | a large annual term license renewal after a multi-year commitment from 2020 |
| Gross profit | +32% to $219M (66% margin) | efficiency gains in subscription and support |
| Operating income | +83% to $63M | revenue strength and operating leverage |
| Professional services revenue | +to $68M (above expectations) | high utilization and effective SI partner collaboration |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Cloud migration momentum | record Q4 | Eight more cloud deals in Q1; tier-one insurers committing at scale | Accelerating |
| New products (Pricing Center, Underwriting Center) | — | Launched targeting customer base; very positive early reception, expected adoption slightly faster than core systems | Emerging |
| Generative/agentic AI | — | Infused into new applications; ProNavigator acquired; viewed as a long-term migration driver and first-party plus open ecosystem | Expanding |
| Data and analytics attach | — | Six of eight Q1 wins expanded to include data and analytics offerings | Strengthening |
| Services investment | — | Investing in capacity, AI to lower implementation cost, and new-product enablement; margins stepping down near-term | Increasing |
| Pricing model | — | DWP-based pricing expected to extend to new and GenAI products, with margin protections built in | Stable |