Summary
Guidewire closed fiscal 2026 with fourth-quarter revenue of $411.09 million, up 15.3% from the prior-year quarter. Gross profit rose 16.3% to $269.68 million, and operating income more than doubled to $62.32 million, up 110.6%. That lifted the quarterly operating margin to 15.2%, up 6.9 percentage points from a year earlier. Gross margin reached 65.6%, up 0.6 points. Net income moved the other way, landing at $31.40 million for the quarter, down 39.6%. Quarterly profit does not track the operating line here. Items below operations matter, and the full-year picture shows why: the company recorded an income tax provision in fiscal 2026 after a benefit a year earlier, and foreign exchange moved against it.
Full-year results were stronger on nearly every line. Revenue for fiscal 2026 was $1.48 billion, up 22.7%, and gross profit grew 26.0% to $947.37 million. Operating income reached $149.87 million, up 264.9%, and the full-year operating margin was 10.2%, up 6.7 percentage points. Gross margin for the year was 64.2%, up 1.7 points. Net income was $139.28 million, up 99.5%, and diluted earnings per share were $1.63, up 101.2%. Deferred revenue at July 31, 2026 stood at $438.81 million, up 27.3%, and remaining performance obligations were $4.30 billion, up 38.7%.
The mix keeps shifting toward subscriptions. Subscription and support is now the large majority of revenue, and subscription growth is outpacing declines in term license and support revenue as customers migrate to the cloud. Annual recurring revenue ended the year at $1,237 million, up 19% on both a reported and constant currency basis; measured at currency rates as of July 31, 2025, that ARR would be $1,242 million. Cash generation was solid. Operating cash flow was $283.89 million in the fourth quarter, up 16.0%, and $389.72 million for the year, up 29.5%. Capital expenditures were $2.12 million in the quarter, down 37.7%, and $12.06 million for the year, up 110.0%. Non-GAAP free cash flow, which nets capital expenditures and capitalized software development costs against operating cash flow, was $358.7 million for fiscal 2026 against $280.4 million a year earlier. Non-GAAP net income was $293.0 million and non-GAAP diluted earnings per share were $3.43.
Capital returns and hiring both stayed active. The company repurchased 4,085,350 shares at an average price of $148.41 during fiscal 2026 and had $31.9 million remaining on the $500.0 million authorization approved in January 2026. Research and development headcount reached 1,412, up from 1,273, professional services 1,015 from 873, and cloud operations and technical support 670 from 606.
Forward commentary is directional, not numerical. The filing offers no specific guidance figure for the next quarter or the full fiscal year. Management expects subscription and support gross margin to keep improving, though more slowly than in recent years, services gross margin to improve while fluctuating with subcontractor use, research and development and general and administrative costs to grow in absolute dollars while shrinking as a percentage of revenue, and sales and marketing to grow more slowly than revenue.
The risk list is long. Guidewire leans on a relatively small number of large customers that carry substantial negotiating leverage, sales and implementation cycles run long and vary widely, and competition in the global market is fierce. The company also cites AI development, deployment, and workforce use under an evolving regulatory environment, long-term pricing commitments based on cost estimates that can move, and the cost and security of running cloud infrastructure for customers. Seasonality compounds the picture: the fourth fiscal quarter brings the heaviest order activity because sales teams chase annual incentives, and annual billing concentrates cash flow in that same period. Global events, from the war between Russia and Ukraine to conflicts in the Middle East and new tariffs, add volatility, as does the migration from term licenses to subscription services, which holds back reported revenue growth because subscription revenue is recognized ratably.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2026 | Q3 FY2026 | QoQ | Q4 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $411.1M | $372.5M | +10.3% | $356.6M | +15.3% |
| Gross profit | $269.7M | $236.6M | +14.0% | $231.8M | +16.3% |
| Gross margin | 65.6% | 63.5% | +2.1 pp | 65.0% | +0.6 pp |
| Research & development | $90.6M | $87.9M | +3.1% | $84.1M | +7.7% |
| Sales & marketing | $65.0M | $68.2M | -4.7% | $65.6M | -1.0% |
| General & administrative | $51.8M | $49.9M | +3.7% | $52.5M | -1.3% |
| Total operating expenses | $207.4M | $206.0M | +0.7% | $202.2M | +2.5% |
| Operating income (loss) | $62.3M | $30.6M | +103.4% | $29.6M | +110.6% |
| Operating margin | 15.2% | 8.2% | +6.9 pp | 8.3% | +6.9 pp |
| Net income (loss) | $31.4M | $16.5M | +90.6% | $52.0M | -39.6% |
| Net margin | 7.6% | 4.4% | +3.2 pp | 14.6% | -6.9 pp |
| Diluted EPS | $0.37 | $0.19 | +$0.18 | $0.60 | -$0.23 |
Risks
The filing expands competitive risk to include new market entrants, specialized AI companies, enterprise AI platform providers, and cloud vendors using AI to disrupt portions of Guidewire's business, and notes that existing and potential customers may leverage AI to develop their own solutions that reduce or eliminate the need for Guidewire's products. It also warns that capital invested in potential new entrants utilizing AI technologies may increase.
Guidewire's ten largest customers accounted for 21% and 20% of revenue in fiscal years 2026 and 2025, respectively, and its ten largest customers based on ARR accounted for 20% of total ARR at July 31, 2026. These large P&C insurers have substantial bargaining power, and the company states it has been required, and may again be required, to reduce average selling price and ARR and agree to ramps that delay reaching fully ramped ARR.
The filing adds a detailed AI risk section covering model drift, undetected defects, third-party model availability and pricing changes, potential IP infringement from AI-generated code, employee use of unapproved AI tools exposing source code or customer data, and evolving rules such as the EU Artificial Intelligence Act that may require changes to data handling and model governance or restrict deployment of AI features in certain markets.
Sales cycles are lengthy and unpredictable, and implementation and testing typically lasts six to 24 months or longer. The company states that consequences of implementation failures have included monetary credits, reduced fees, potential reversals of previously recognized revenue, renegotiated contract terms, and customer refusal to pay contractually obligated fees.
Subscription and support revenue was 66% of total revenue in fiscal year 2026 versus 61% in fiscal year 2025, and carries a 73% gross margin in fiscal year 2026 versus 99% for license revenue. Services revenue was 18% of total revenue in both fiscal years 2026 and 2025 and produces significantly lower gross margin, which has at times been negative.
A significantly higher percentage of annual license revenue and cash receipts has historically been recognized in the fourth fiscal quarter ending July 31, and the company expects cash flows to remain concentrated in that quarter due to annual billing arrangements. Ratable subscription recognition also means new fourth quarter orders are not fully reflected in revenue until the following fiscal year.
The company cites intense competition for personnel, particularly for roles with backgrounds in AI technologies and cloud-based offerings, and notes that new sales hires may take more than a year to become productive. It also flags that hybrid and remote arrangements make preserving company culture more difficult and may reduce collaboration, training, and retention.
The filing emphasizes increasingly sophisticated, AI-accelerated cyberattacks that may outpace defensive measures, unauthorized access to customer or employee data, and failures or security vulnerabilities of third-party technologies and service providers used to host subscription services.
As of July 31, 2026, Guidewire had $690.0 million aggregate principal of 2029 Convertible Senior Notes outstanding, which must be settled in cash upon conversion, and holders may require repurchase at 100% of principal upon a fundamental change. The company also notes counterparty risk on its capped call transactions with financial institutions.
Other income (expense), net was an expense of $21.0 million for fiscal year 2026, driven primarily by a foreign currency loss of $22.5 million, compared to a foreign currency gain of $16.7 million for fiscal year 2025. ARR is also revalued at year end to current exchange rates, with ARR of $1,237 million at July 31, 2026 versus $1,242 million based on July 31, 2025 rates.
The filing cites inflation, tariffs, high interest rates, supply chain issues, and geopolitical conflicts including the war between Russia and Ukraine and conflicts in the Middle East as pressures on customer technology spending and sales cycles. It also notes that P&C insurer customers face catastrophe losses and that consolidation among P&C insurers may further concentrate the customer base and heighten pricing and margin pressure.
SaaS KPIs
All quarters →Annual Recurring Revenue (ARR)
Summary, forecast, risks and KPIs are extracted from Guidewire Software, Inc.'s SEC filings for Q4 FY2026 (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.