Guidewire Q2 Earnings & Revenues Beat Estimates, Up Y/Y, Stock Rises

Core Insights - Guidewire Software, Inc. (GWRE) reported non-GAAP earnings per share of $1.17 for Q2 fiscal 2026, a significant increase from 51 cents in the same period last year, surpassing the Zacks Consensus Estimate of 77 cents [1][9] - The company achieved revenues of $359.1 million, reflecting a 24% year-over-year growth, exceeding the Zacks Consensus Estimate by 4.8% and surpassing its own guidance of $339-$345 million [2][9] Financial Performance - Annual recurring revenue (ARR) reached $1.121 billion, up 22% year over year, with expectations for fiscal 2026 ARR to be between $1.229 billion and $1.237 billion, indicating an 18% to 19% increase [4][9] - Total revenues for fiscal 2026 are projected to be between $1.438 billion and $1.448 billion, an increase from the previous expectation of $1.403 billion to $1.419 billion, compared to total revenues of $1.202 billion in fiscal 2025 [5][9] - Subscription and support revenue is expected to be between $962 million and $966 million [5] Operational Highlights - The subscription and support segment's revenues accounted for 66.1% of total revenues, increasing by 33.4% year over year to $237.2 million [7] - License revenues, making up 16.6% of total revenues, decreased by 6.5% year over year to $59.5 million, while services revenues (17.3% of total) increased by 30.1% year over year to $62.4 million [10] - Non-GAAP gross margin improved to 67.6% from 65.2% year over year, with the subscription and support segment's gross margin rising to 75% from 69.2% [10] Future Outlook - For Q3 fiscal 2026, GWRE expects ending ARR to be between $1.144 billion and $1.150 billion, with subscription and support revenue projected in the range of $239 million to $243 million, and total revenue anticipated to be between $352 million and $358 million [13] - GAAP operating income is expected to range from $11 million to $17 million, while non-GAAP operating income is projected between $59 million and $65 million [13] Market Reaction - Shares of GWRE increased approximately 5% in after-market trading on March 5, 2026, despite a 11.8% decline over the past year compared to a 4.5% decline in the Internet Software industry [6]