What Management Said
Read the full Q3 2026 transcript ↗We have also posted this quarter's earnings deck on the IR section of the site. 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 our quarterly earnings deck on our IR website. The quarter was highlighted by 11 cloud wins, strong progression in key pipeline deals, and growing customer interest in PricingCenter and our AI platform tooling and ProNavigator offerings.
From a financial perspective, revenue, profitability, and cash flow all finished ahead of expectations, continuing to demonstrate the strength and durability of our model. ARR in Q3 came in within our guidance range, growing 19% year-over-year, and fully ramped ARR continues to grow faster than ARR. The bookings results in the quarter were solid, 19% ARR growth is a great achievement. This carrier is investing in Guidewire to support long-term growth while incorporating greater AI-driven capabilities into its operations.
Our platform manages the core systems of record for policy, billing, and claims, and we continue to expand that foundation into critical business functions like pricing and underwriting through a continuously improving cloud platform. Fully ramped ARR growth rates continue to outpace ARR growth, which is a strong indication into the growth environment we are experiencing. Total revenue was $373 million, up 27% year-over-year, above the high end of our outlook. Subscription and support revenue finished Q3 at $245 million, reflecting 35% year-over-year growth.
- Guidewire delivered a strong Q3 with revenue, profitability, and cash flow all finishing ahead of expectations.
- Total revenue grew 27% year-over-year to $373 million, with subscription and support revenue up 35% to $245 million and services revenue up 32% to $72 million.
- ARR reached $1.147 billion, up over 19% year-over-year, and fully ramped ARR continued to grow faster than ARR.
- The company closed 11 cloud deals, including two net-new core system wins and five ProNavigator deals, with notable transactions including a seven-year extension and expansion with Auto Club of Southern California, a net-new win with Bradesco Seguros in Brazil, and PricingCenter wins in Sweden, Poland, and the first U.S.
- win at Oklahoma Farm Bureau.
- Non-GAAP operating profit was $78 million with subscription and support gross margin of 74%, and operating cash flow was $61 million.
- Management cited a productivity tsunami from connecting AI tools (including Claude Code) and MCP servers to the platform, with about 35% improvement in on-prem-to-cloud migration timelines, and the company repurchased 1.7 million shares at an average price of $147.07.
- ARR of $1.147 billion came in within (rather than above) the guidance range as management had anticipated a couple more deals closing in the quarter that slipped due to timing not aligning with quarterly boundaries.
- Operating expenses benefited partly from slower-than-planned hiring, with some heads taking longer to bring in the door.
- Services gross margin of 14% was partially constrained by higher subcontractor expenses needed to ensure sufficient capacity for demand.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| ARR | FY2026 | $1.229B-$1.237B (18%-19% growth) (Maintained) |
| Total revenue | FY2026 | $1.46B-$1.47B (midpoint ~22% growth) (Raised) |
| Subscription and support revenue | FY2026 | $963M-$969M (Raised ~$20M) |
| Services revenue | FY2026 | Approximately $270 million (Raised) |
| Non-GAAP operating income | FY2026 | $314M-$324M (Raised) |
| GAAP operating income | FY2026 | $124M-$134M (Raised) |
| Cash flow from operations | FY2026 | $365M-$380M (Raised) |
| Overall gross margin | FY2026 | Approximately 67% (Maintained) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +27% (to $373 million) | Healthy cloud demand plus strong services demand and execution; above the high end of outlook |
| Subscription and support revenue | +35% (to $245 million) | Continued cloud platform scalability and adoption |
| Services revenue | +32% (to $72 million) | Strong demand for Guidewire-led services programs and field engineering activities |
| ARR | +19% (to $1.147 billion) | Solid bookings despite a few deals slipping on timing; fully ramped ARR growing faster than ARR |
| Subscription and support gross margin | 74% vs 71% a year ago | Scalability of the cloud platform |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Deal timing / slipped deals | — | A couple of deals slipped from Q3 on timing; not macro or AI-related; strong pipeline into Q4 | — |
| New products (ProNavigator, PricingCenter) | Objective this year to establish these product lines | Surpassed expectations; five ProNavigator and three PricingCenter wins, shorter sales cycles than core modernization | Accelerating |
| AI / agentic development tooling | — | Claude Code and MCP servers connected to the platform driving major productivity gains; ~35% faster migrations | Expanding |
| Fully ramped ARR vs ARR | Fully ramped ARR growth of 22% last year | Continues to outpace ARR growth; expected to hold or exceed prior levels for FY2026 | Strengthening |
| Core system modernization demand | — | Insurers aligning around Guidewire as long-term core platform partner; AI raising the bar to modernize | Strengthening |
| Leadership transition | — | CCO David Laker moving to strategic partners role; Shane Cassidy joining as CCO after Q4 | — |
Q&A Summary
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