Summary
Guidewire closed fiscal 2025 with a strong fourth quarter. Total revenue for the quarter ended July 31, 2025 was $356.6 million, up 22.3% from the prior-year quarter. Gross profit rose 24.3% to $231.8 million, and gross margin improved to 65.0%, up 1.1 percentage points. Operating income climbed 187.0% to $29.6 million, and operating margin reached 8.3%, up 4.8 percentage points. Net income of $51.95 million swung to a profit from a loss in the prior-year quarter.
The full fiscal year told a similar story. Revenue reached $1,202.5 million, up 22.6%. Gross profit of $752.05 million rose 28.9%, and gross margin was 62.5%, up 3.0 percentage points. Operating income of $41.07 million swung to a profit from a loss, and operating margin was 3.4%, up 8.8 percentage points. Net income was $69.8 million, also swinging to a profit, and diluted EPS was $0.81, up from a loss per share a year earlier.
Annual recurring revenue reached $1,032 million as of July 31, 2025, measured at currency rates as of July 31, 2024, compared with $864 million a year earlier. On a constant currency basis, ARR grew 19% for the year. Revalued at July 31, 2025 rates, ARR was $1,041 million. Fully ramped ARR grew 22%. Remaining performance obligations were $3.10 billion, up 55.0% from the prior-year quarter, and deferred revenue was $344.8 million, up 20.8%. Operating cash flow was $244.8 million in the quarter, up 26.3%, and $300.9 million for the full year, up 53.7%. Capital expenditures were $3.4 million in the quarter, up 101.0%, and $5.7 million for the year, down 9.8%. Free cash flow was $237.7 million in the quarter and $280.4 million for the year. Cash, cash equivalents, and investments totaled $1,483.2 million at July 31, 2025, compared with $1,129.5 million a year earlier.
The quarter included 19 cloud deals, and management pointed to a 10-year agreement with a major Tier-1 insurer. Guidewire now serves more than 570 insurers in 43 countries. Subscription and support revenue was $201.9 million in the quarter, up 33%, while license revenue of $93.6 million rose 5% and services revenue of $61.0 million rose 20%. On a non-GAAP basis, income from operations was $73.5 million for the quarter, compared with $49.0 million a year earlier, and non-GAAP net income was $72.1 million, or $0.84 per diluted share, compared with $54.0 million and $0.62. For the full year, non-GAAP income from operations was $208.2 million, non-GAAP net income was $227.9 million, and non-GAAP diluted EPS was $2.65.
Guidance for the first quarter of fiscal 2026 calls for ending ARR of $1,048 million to $1,054 million and non-GAAP operating income of $47 million to $53 million. For the full fiscal year 2026, the company guided ending ARR to $1,210 million to $1,220 million and non-GAAP operating income to $259 million to $279 million.
Several risks frame the outlook. Guidewire depends on a relatively small number of large customers that hold substantial negotiating leverage, and sales cycles are lengthy and variable. The company makes long-term pricing commitments based on cost estimates that can change. Revenue mix keeps shifting as customers migrate from term licenses to subscription services, which defers revenue recognition and tempers near-term reported growth. Seasonality matters too, since the fourth fiscal quarter is the largest for new orders and carries fewer billable services days. Management also flagged global events such as ongoing conflicts, inflation, tariffs, and currency swings, along with competition and the evolving regulatory environment for AI. GAAP profitability for the year was also reduced by a loss on the retirement of convertible notes.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $356.6M | $293.5M | +21.5% | $291.5M | +22.3% |
| Gross profit | $231.8M | $182.7M | +26.9% | $186.4M | +24.3% |
| Gross margin | 65.0% | 62.3% | +2.8 pp | 64.0% | +1.1 pp |
| Research & development | $84.1M | $72.9M | +15.3% | $75.3M | +11.7% |
| Sales & marketing | $65.6M | $57.8M | +13.6% | $54.8M | +19.8% |
| General & administrative | $52.5M | $47.5M | +10.4% | $46.0M | +14.0% |
| Total operating expenses | $202.2M | $178.2M | +13.5% | $176.1M | +14.8% |
| Operating income (loss) | $29.6M | $4.5M | +562.4% | $10.3M | +187.0% |
| Operating margin | 8.3% | 1.5% | +6.8 pp | 3.5% | +4.8 pp |
| Net income (loss) | $52.0M | $46.0M | +13.0% | $16.8M | +210.0% |
| Net margin | 14.6% | 15.7% | -1.1 pp | 5.8% | +8.8 pp |
| Diluted EPS | $0.60 | $0.54 | +$0.06 | $0.20 | +$0.40 |
Risks
A relatively small number of P&C insurance customers drive significant revenue and ARR; the ten largest customers accounted for 20% of revenue in fiscal 2025 and 22% in fiscal 2024, and 20% of total ARR at July 31, 2025. These large insurers have substantial negotiating leverage and may seek price reductions or delayed ARR ramps, and P&C insurer consolidation could further concentrate the customer base.
Sales and implementation cycles are lengthy and variable, with implementations typically lasting six to 24 months or longer. Customers have significant negotiating power, and failure to meet implementation timeframes or product commitments can lead to penalties, monetary credits, revenue reversals, or refusal to pay fees.
AI technologies are evolving rapidly, and existing and potential customers may use them to develop their own solutions that reduce demand for Guidewire products. Guidewire's own AI development and workforce use pose risks including regulatory scrutiny, IP infringement claims from AI-generated code, data exposure, and factually flawed outputs.
Customers have no obligation to renew term licenses or subscriptions, and renewals may occur on less favorable terms; some customers can cancel early or exercise a perpetual buyout. A decline in renewals or expansions would harm future revenue and profitability.
Global events including inflation, tariffs, high interest rates, geopolitical conflicts, bank failures, and supply chain issues have adversely affected and may continue to affect customer spending, sales cycles, and payment behavior. A substantial downturn in the P&C insurance industry could cause customers to reduce IT spending or renegotiate vendor contracts.
Subscription and support revenue was 61% of total revenue in fiscal 2025 versus 56% in fiscal 2024, and it carries lower gross margin than license revenue. Ratable recognition of cloud subscriptions lowers initial-period revenue, and migration from term licenses can pressure reported revenue growth and margins.
Future success depends on attracting, training, integrating, and retaining highly skilled employees, especially executive officers, sales, professional services, cloud operations, and software engineers. Competition is intense in the San Francisco Bay Area and other development centers, and hybrid work may affect recruitment, retention, collaboration, and culture.
As of July 31, 2025, $690.0 million aggregate principal amount of 2029 Convertible Senior Notes was outstanding, and holders may require repurchase upon a fundamental change or convert under certain conditions, requiring cash settlement. The 2025 Credit Facility contains restrictive covenants, and failure to comply could accelerate maturities.
Guidewire may fail to set optimal pricing and packaging, especially as contracts are often multi-year and pricing is based on DWP or usage. Competitors may offer lower prices or incentives, and changes in product mix or international markets may require price reductions or model changes.
International sales and operations subject Guidewire to additional risks; revenue from customers outside the United States was $431.6 million in fiscal 2025 and $347.9 million in fiscal 2024. Risks include compliance, local competition, currency fluctuations, and geopolitical instability.
Guidewire generally sees increased new orders in its fourth fiscal quarter ending July 31, and a significantly higher percentage of annual license revenue and cash receipts has historically been recognized in that quarter. Subscription ratable recognition may dampen seasonality over time but near-term comparisons and cash flow remain concentrated.
Growth depends on the quality and effectiveness of professional services, technical support, and SI partners, and on expanding the global direct sales force. Failure of Guidewire or its SI partners to provide high-quality implementation, migration, and support could damage reputation and reduce renewals.
SaaS KPIs
All quarters →Summary, forecast, risks and KPIs are extracted from Guidewire Software, Inc.'s SEC filings for Q4 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.