Starting this quarter and moving forward, we have also posted a quarterly earnings deck on the IR section of our website. 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. Reconciliations and additional data are also posted at the end of the quarterly earnings deck on our IR website. We continue to see momentum and demand increasing, and the results across the board this quarter reflect what we believe makes Guidewire a uniquely durable business.

At the transactional level, we serve as the system of record for risk. Today, we don't simply provide that software, we operate it as a continuously improving, secure, reliable, and scalable cloud platform that strengthens over time. While we focus on serving this tier one and tier two segment of the market, we can also support smaller insurers. We sell recurring subscriptions to our cloud products and price them as a percentage of the direct written premium managed on Guidewire.

As insurers grow premium, expand lines of business, and modernize their operations and become more efficient, our growth aligns directly with that value creation. There has obviously been a significant discussion across the market about the pace of generative AI advancement and its implications for the overall software category. What we are seeing in practice at Guidewire is increased demand for InsuranceSuite and InsuranceNow. AI depends on clean data, trusted transactions, and reliable systems of record.

What went well
  • Guidewire delivered another strong quarter with ARR growing 22% year over year to $1.121 billion, and fully ramped ARR reaching $1.42 billion while continuing to outpace reported ARR growth.
  • Total revenue rose 24% to $359 million, with subscription and support revenue up 33% to $237 million and subscription gross margin expanding to 75% from 69% a year ago.
  • The company closed 15 InsuranceSuite cloud deals and two InsuranceNow deals, including three new customer wins such as one of Canada's largest private insurers (over $8 billion in direct written premium) and notable expansions at Aviva UK and Tokio Marine North America.
  • New products gained traction with the first PricingCenter deal and nine ProNavigator deals, plus 25 deals including data and analytics offerings.
  • RPO grew 63% to $3.5 billion, renewal rates hit all-time highs with InsuranceSuite ARR retention over 99%, and operating profit of $87 million beat the outlook; the company raised full-year targets across the board.

Guidance Changes

MetricPeriodCurrent guidance
Full-year ARRFY2026$1.229B-$1.237B (18%-19% growth) (Raised)
Full-year total revenueFY2026$1.438B-$1.448B (~20% growth at midpoint, up from 17%) (Raised)
Full-year subscription and support revenueFY2026$962M-$966M (+$16M at midpoint) (Raised)
Full-year services revenueFY2026~$255 million (Raised)
Full-year subscription and support gross marginFY2026~74% (Raised)
Full-year non-GAAP operating incomeFY2026$293M-$303M (Raised)
Full-year cash flow from operationsFY2026$360M-$375M (Adjusted)
Q3 ARRQ3 2026$1.144B-$1.150B (New)
Q3 total revenueQ3 2026$352M-$358M (New)
Q3 non-GAAP operating incomeQ3 2026$59M-$65M (New)

Performance Breakdown

MetricYoYNote
ARR +22% Broad-based larger deals, new wins, migrations, and expansions plus healthy true-up activity; 21% on constant currency
Total revenue +24% Continued InsuranceSuite cloud momentum and strong services demand
Subscription and support revenue +33% Continued cloud momentum
Services revenue +30% Strong demand for Guidewire-led services programs and increased field engineering activity
Gross profit +28% Higher revenue with subscription gross margin expanding to 75%
RPO +63% Customers leaning into longer-durated contracts and larger commitments

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Generative AI as demand driver, not threatAI is increasing urgency for insurers to modernize legacy systems and is seen as additive; partnerships with LLM vendors like OpenAI and Anthropic viewed as complementaryStrengthening
Longer contract durations and larger commitmentsStandard 5-year cloud terms; duration lower in early cloudAverage new InsuranceSuite contract term over six years; largest customers pushing beyond five years; trend up over last 18 monthsIncreasing
Large customer cohort growth35 customers above $5M fully ramped ARR in 202196 customers above $5M fully ramped ARR at end of Q2Accelerating
New product adoption (ProNavigator, PricingCenter)ProNavigator trending ahead of expectations with nine deals; first PricingCenter deal closed with strong engagementBuilding
Customer retention durabilityInsuranceSuite ARR retention over 99%; no $1M+ customer chose to replace Guidewire in five years except where mandated by an acquirerStable / all-time high

Q&A Summary

What is Guidewire's position in the broader AI stack and its strategy on owning versus enabling AI?
Rosenbaum said Guidewire will own core systems, not AI broadly, running an open model where larger companies mix Guidewire and partner solutions; ProNavigator is an example of doing more with AI, and the company will remain open and provide customer choice.
What is the pace that premium moves into cloud and where does penetration ultimately get?
Rosenbaum said it is improving with strong visibility into the back half, but he does not project specific percentage of global DWP; the company manages by net new ARR and fully ramped ARR, and demand is increasing because of generative AI potential, which requires a modernized core system.
Are competing LLM deals from OpenAI and Anthropic complementary?
Rosenbaum said they are absolutely additive and helpful; Guidewire runs an open ecosystem and those LLMs are most beneficial when connected to modern core systems, driving overall industry demand rather than competing.
How is true-up activity continuing to be a tailwind as DWP normalizes?
Cooper said true-up activity was healthier than expected in Q2; customers pass premium baselines and Guidewire effects true-up orders, with the back half aligned to expectations though tempering off prior highs.
What assumptions or cushion are baked in around ARR churn?
Cooper said it is a bottoms-up, account-by-account exercise with good visibility into downsell risk; the team casts a wide conservative net and usually performs better than that net.
What is driving longer contract durations and why the incremental disclosures now?
Cooper said the disclosures are due to the software market backdrop where durability elements were being missed; longer durations reflect platform maturity and largest customers committing beyond standard five-year terms over the last 18 months.

More on Guidewire Software, Inc.

Reported 2026-03-05 · figures from the Guidewire Software, Inc. Q2 2026 earnings call.

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