What Management Said
Read the full Q2 2026 transcript ↗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.
- 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
| Metric | Period | Current guidance |
|---|---|---|
| Full-year ARR | FY2026 | $1.229B-$1.237B (18%-19% growth) (Raised) |
| Full-year total revenue | FY2026 | $1.438B-$1.448B (~20% growth at midpoint, up from 17%) (Raised) |
| Full-year subscription and support revenue | FY2026 | $962M-$966M (+$16M at midpoint) (Raised) |
| Full-year services revenue | FY2026 | ~$255 million (Raised) |
| Full-year subscription and support gross margin | FY2026 | ~74% (Raised) |
| Full-year non-GAAP operating income | FY2026 | $293M-$303M (Raised) |
| Full-year cash flow from operations | FY2026 | $360M-$375M (Adjusted) |
| Q3 ARR | Q3 2026 | $1.144B-$1.150B (New) |
| Q3 total revenue | Q3 2026 | $352M-$358M (New) |
| Q3 non-GAAP operating income | Q3 2026 | $59M-$65M (New) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| 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
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Generative AI as demand driver, not threat | — | AI is increasing urgency for insurers to modernize legacy systems and is seen as additive; partnerships with LLM vendors like OpenAI and Anthropic viewed as complementary | Strengthening |
| Longer contract durations and larger commitments | Standard 5-year cloud terms; duration lower in early cloud | Average new InsuranceSuite contract term over six years; largest customers pushing beyond five years; trend up over last 18 months | Increasing |
| Large customer cohort growth | 35 customers above $5M fully ramped ARR in 2021 | 96 customers above $5M fully ramped ARR at end of Q2 | Accelerating |
| New product adoption (ProNavigator, PricingCenter) | — | ProNavigator trending ahead of expectations with nine deals; first PricingCenter deal closed with strong engagement | Building |
| Customer retention durability | — | InsuranceSuite ARR retention over 99%; no $1M+ customer chose to replace Guidewire in five years except where mandated by an acquirer | Stable / all-time high |
Q&A Summary
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