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. It has also yielded tremendous financial results this year with both ARR and fully ramped ARR growth rates accelerating. ARR in fiscal 2025 grew 19%, and fully ramped ARR grew 22% on a constant currency basis. First, demand for the Guidewire Cloud Platform is strong and continues to grow.

Q4 was a record quarter driven by deal volume, deal size, and a milestone win for our company. This durable demand environment is being driven by the success and referenceability of our cloud customers, which continues to generate great engagement and conversations with insurers of all sizes across all worldwide regions. Our acquisition of Quanti is a great example of this, where we believe we can modernize pricing operations and product management across the industry and, as a result, help insurers grow. By combining mission-critical core systems of record with cloud-native services and modern APIs, we're in a position to focus directly and incrementally on these new applications that I think will genuinely improve the industry.

As Mike said, it was another record quarter and fiscal year for Guidewire Software. We continued to see growing demand, signing 19 core cloud deals in Q4, totaling 57 for the year, representing healthy annual growth in deal count. Our European team closed two meaningful deals in the quarter, bringing their total for the year to 11, which shows a great return on the investments we've made in Europe. In Latin America, we saw a sharp increase in market momentum, closing three deals in the fourth quarter.

What went well
  • Guidewire capped fiscal 2025 with a record Q4 driven by deal volume, deal size, and a landmark Liberty Mutual win in which the Tier 1 insurer migrated ClaimCenter to the cloud and made a 10-year commitment to adopt PolicyCenter—described as the most strategic deal in company history.
  • ARR grew 19% and fully ramped ARR grew 22% on a constant currency basis, surpassing the $1 billion ARR milestone (ending at $1.032 billion, or $1.041 billion after FX), with the lowest ARR attrition rate on record.
  • The company signed 19 core cloud deals in Q4 (57 for the year) with broad-based strength across geographies, lines of business, migrations, expansions, and net-new, including nine Tier 1 deals.
  • Cloud margins improved ahead of schedule, with subscription and support gross margin reaching 70%, total gross margin rising to 66%, operating income up 109% to $208 million, and operating cash flow of $301 million.
  • Data and analytics momentum was strong, with 16 of the quarter's core deals attaching analytics offerings and the Quanti pricing acquisition expanding the platform.
What went wrong
  • License revenue grew only 1% for the year and is expected to decline by over $30 million in fiscal 2026 as cloud migrations accelerate, with support revenue also expected to decline about $7 million.
  • Services revenue growth is guided to moderate to roughly $232 million off a healthy fiscal 2025 base.
  • Q4 operating income upside was partially offset by higher-than-expected employee bonus accruals tied to outperformance, and Q1 cash flow is expected to be pressured by annual bonus and Q4 sales commission payouts.

Guidance Changes

MetricPeriodCurrent guidance
ARRFY2026$1.21B-$1.22B (~17% CC growth at midpoint) (+~17% growth guided)
Total revenueFY2026$1.385B-$1.405B (Growth guided)
Subscription revenueFY2026~$888M (~34% growth) (+~34%)
Subscription & support revenueFY2026~$945M (Growth; support to decline ~$7M)
License revenueFY2026Decline of over $30M (-$30M+)
Services revenueFY2026~$232M (More modest growth)
Subscription & support gross marginFY202671%-72% (+1-2 pts)
Non-GAAP operating incomeFY2026$259M-$279M (Growth guided)
Cash flow from operationsFY2026$350M-$370M (Growth guided)

Performance Breakdown

MetricYoYNote
ARR +19% (constant currency) Strong sales activity and record-low ARR attrition; surpassed $1B milestone
Fully ramped ARR +22% (constant currency) Increased willingness of insurers to make large, ramped commitments
Total cloud ARR +36% Cloud products plus customers contracted to move to cloud; now 74% of total ARR
Subscription revenue +40% Continued cloud migration and bookings
License revenue +1% Healthy direct written premium and CPI adjustments, offset by migrations to cloud
Services revenue +21% Strong utilization balanced with SI community partnership
Operating income +109% (to $208M) Higher revenue and improving cloud/services margins, partly offset by higher bonus accruals
Subscription & support gross margin +4 pts (to 70%) Cloud platform scaling well
Services gross margin +6 pts (to 13%) Improved billable utilization and successful cloud program outcomes

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Tier 1 cloud adoption—Nine Tier 1 deals in Q4 plus landmark Liberty Mutual 10-year ClaimCenter+PolicyCenter commitment; full-suite conversations increasingAccelerating
Durable ARR growth profileHistorical mid-teens growth19% in FY2025, guiding 17% FY2026; elevated growth seen as potentially durableMoving up
AI and analytics (act three)—Data/analytics growing faster than core; Quanti pricing acquisition, Industry Intelligence claims models; agentic AI seen as lift to core demandEmerging investment focus
ARR attrition—Lowest on record; no large M&A churn events, strong customer-success focusImproving
Cloud margin trajectory—Subscription/support gross margin at 70%, ahead of schedule; FY2026 guided 71-72% with confidence in long-term targetsImproving
Partner ecosystem / marketplaceMarketplace launched 2021Over 300 third-party apps, 200+ technology partners, SI community up 11% to 27,000+ professionalsGrowing

Q&A Summary

What drove the record-low ARR attrition this year? (RBC)
A durable customer base and use case, plus intense focus on project success, quality implementations, and customer success; there were also no large M&A churn events this year.
How does premium growth affect the model, and does slowing premium hurt Guidewire? (William Blair)
Direct written premium growth generally benefits Guidewire but flows in indirectly given complex contract structures with price-certainty periods; slowing premium has limited impact and even increases the incentive for insurers to modernize. Fiscal 2026 assumes slightly lower license/term growth, which is minimal relative to other drivers.
Is the Liberty Mutual 10-year term unique or an emerging pattern for Tier 1 migrations? (Citizens Bank)
It reflects the size and scale of that specific partnership, not yet a pattern for all Tier 1s; term length depends on rollout cadence across claims, policy, and lines of business, and Guidewire aims to align with customers' strategic plans and realized value.
Can AI be infused into the services organization to reduce modernization risk? (Oppenheimer)
Yes; it is a primary services agenda with the SI community to improve pace and predictability, with early data-migration and technical-migration results promising via a more templatized configuration approach.
Will Guidewire sell its own AI agents, and what differentiates the platform in an agentic world? (RW Baird)
Modern core customers benefit most from agentic automation; agents may come from Guidewire or marketplace third parties, with embedded automation (workflow/autopilot) becoming more agentic over time. Vertical context and a platform-up architecture that interoperates with customer ecosystems are the key differentiators.
Why is Q1 implied net-new ARR stronger than typical seasonality? (Tyler Radke)
A robust demand environment means a strong Q4 did not exhaust the pipeline, and Q1 benefits from a healthy step-up of ARR coming off the backlog—a modeling dynamic not always visible to analysts.

More on Guidewire Software, Inc.

Reported 2025-09-04 · figures from the Guidewire Software, Inc. Q4 2025 earnings call.

See how Top Bucket AI works for your firm

Request Demo
Top Bucket AI Research

Stay ahead of private markets

Research and market intelligence for private-markets professionals.

✓

You're subscribed.

Thanks for signing up.