Guidewire Posts 22% Revenue Jump in Q4

Key Points

• Non-GAAP earnings per share reached $0.84 in Q4 FY2025, up 35.5% from the same period in fiscal year 2024.

• GAAP revenue climbed 22% year over year to $356.6 million in Q4 FY2025, beating expectations and surpassing guidance.

• Annual recurring revenue exceeded $1 billion for the first time, reaching $1.03 billion in FY2025, up 19.0%.

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Guidewire Software (NYSE:GWRE), a leading provider of software for the property and casualty insurance industry, reported its fiscal fourth-quarter 2025 earnings on Sept. 4, 2025. The standout news was Guidewire surpassing $1 billion in annual recurring revenue (ARR) as of Q4 FY2025 and posting both GAAP revenue and non-GAAP earnings above its guidance and Wall Street expectations. Guidewire delivered GAAP revenue of $356.6 million, up 22% from the year-ago period, and non-GAAP earnings per share (EPS) of $0.84. The business achieved record profitability, strong growth in its cloud and subscription business, and remains on track with its strategic focuses. Overall, the quarter marked a strong finish to fiscal 2025 with meaningful progress on key business metrics.

Business Overview and Strategic Focus

Guidewire creates core software platforms that help insurance companies manage policies, process claims, handle billing, and engage digitally with customers and partners. Its offerings span from InsuranceSuite, the flagship cloud-based core system, to digital engagement tools and advanced data and analytics products. Guidewire serves more than 570 insurers in 43 countries, making it a central technology provider in the global property and casualty insurance market.

Over the past few years, Guidewire has concentrated on shifting its business from traditional software licenses to recurring, cloud-based subscriptions. This pivot aims to provide insurers with flexible, scalable, and constantly updated technology. Success depends on broad adoption of its cloud platform, deep integration of digital and analytics tools, and continued customer wins -- especially among large Tier-1 insurers. The company also invests heavily in product development to stay ahead in a competitive field where innovation, particularly in the use of artificial intelligence and data analytics, is crucial.

Quarterly Highlights: Strong Growth and Cloud Momentum

In Q4 FY2025, Guidewire surpassed $1 billion in ARR, a key measure of ongoing subscription and support revenue, growing 19% year over year. This milestone followed 19 new cloud deals closed in Q4 FY2025, indicating that insurers are increasingly opting for Guidewire’s cloud-based offerings. Subscription and support, including cloud services, accounted for approximately 60.8% of total revenue in fiscal year 2025. Management highlighted a 10-year agreement with a major Tier-1 insurer in Q4 FY2025 as further evidence of growing trust in its cloud platform.

GAAP revenue increased by 23% in FY2025, driven mainly by cloud and subscription sales. Non-GAAP operating income increased 109.3% from fiscal year 2024 to fiscal year 2025. These improvements reflect both growing sales and improved efficiencies as cloud business scale increases. The period also saw notable progress in managed services, digital engagement, and the deployment of tools like the Jutro Digital Platform (for customer-facing digital experiences) and Guidewire Predict (an analytics product that uses machine learning for insurance risk evaluation).

Cloud adoption continued to accelerate as legacy software license revenue growth largely plateaued. License revenue, representing customers running software primarily in their own data centers, rose just 5% on a GAAP basis in Q4 FY2025. This trend matches management’s expectation for a mature transition phase, where recurring revenue from cloud and subscriptions is now shouldering growth. The services line, which supports insurers during implementations and upgrades, also rose 20% in Q4 FY2025.

Guidewire reported strong profitability, with GAAP net income rising to $52.0 million in Q4 FY2025, up sharply from $16.8 million in Q4 FY2024, and non-GAAP net income climbing 99.1% in FY2025. Guidewire maintained high investment in research and development, up nearly 10% from fiscal year 2024 to fiscal year 2025, to maintain rapid product improvements and respond to competitive pressure from peers like Duck Creek and Sapiens, which are also focused on cloud and AI advancements. One-time highlights included the major multiyear Tier-1 client win and continued integration of acquired analytics capability from Quanti, now part of the company’s expanding portfolio.

Looking Ahead: Guidance and Investor Focus

Management provided a forward outlook for FY2026, guiding to ARR of $1.21 billion to $1.22 billion, which would represent another year of double-digit growth, albeit at a slightly slower rate than FY2025. GAAP revenue for FY2026 is expected to range from $1.385 to $1.405 billion. Non-GAAP operating income is projected at $259 million to $279 million for FY2026, with operating cash flow expected to be $350 million to $370 million for FY2026. These targets suggest both continued cloud adoption and some moderation in top-line expansion as the company scales. For the upcoming first quarter, revenue guidance is $315 million to $321 million and ARR of $1.048 billion to $1.054 billion for Q1 FY2026.

Investors watching Guidewire should pay close attention to several key factors in upcoming quarters. These include the pace of cloud migration among existing clients, the outcome of large multiyear deal pursuits, and the speed of innovation in AI, digital tools, and analytics. The company remains under pressure to maintain growth in recurring subscription revenue as legacy license income flattens.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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