GUIDEWIRE SOFTWARE, INC. 2026 Q4 Earnings Call

Thank you, Grace. Hello, everyone. With me today is Mike Rosenbaum, Chief Executive Officer, John Mullen, President, Jeff Cooper, Chief Financial Officer. Complete disclosure of our results can be found in our press release issued today, as well as in our related Form 8-K furnished to the SEC, both of which are available on the investor relations section of our website. We have also posted our fourth quarter earnings deck on our IR section of the website. Today's call is being recorded. A replay will be available following its conclusion. Statements today include forward-looking ones regarding our financial outlook, our cloud and AI product strategies, customer demand, business operations, the impact of macroeconomic factors, and other matters. These statements are subject to risks, uncertainties, and assumptions and are based on management's current expectations as of today and should not be relied upon as representing our views as of any subsequent date.

Please refer to the press release and risk factors and documents we file with the SEC, including our most recent annual report on Form 10-K and our prior and forthcoming quarterly reports on Form 10-Q filed and to be filed with the SEC for information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements. We also will refer to certain non-GAAP financial measures to provide additional information to investors. All commentary on margins, profitability, and expenses are on a non-GAAP basis unless stated otherwise. A reconciliation of non-GAAP to GAAP measures is provided in our press release. Reconciliations and additional data are also posted at the end of our quarterly earnings deck on our IR website. With that, I will now turn the call over to Mike.

Good afternoon, everyone, and thank you for joining us today. We finished our fiscal year with an outstanding fourth quarter, capping off another exceptional year for Guidewire. ARR finished the year at $1.242 billion, up 19% year-over-year, and above the high end of our guidance range. Fully ramped ARR grew 22%, marking the fourth consecutive year that fully ramped growth outpaced ARR growth. Subscription and support revenue grew 33%, and we exceeded expectations across revenue, operating income, and cash flow. Our execution in Q4 underscores the durability and resilience of our business model, as well as the position and potential we have to lead the AI-driven transformation in the P&C insurance industry. Q4 included a number of achievements and milestones. My personal highlight was signing a long-term cloud migration agreement with Nationwide.

Guidewire has partnered with Nationwide for over a decade across our core application suite, and in many ways, they were the critical partner who validated the scalability of our platform to the tier 1 insurance segment. Earning their trust for their cloud transition and solidifying our position and supporting them for decades to come is a defining milestone in our company's cloud journey. Nationwide also selected PricingCenter for personal lines pricing and rating. This is obviously a great win for our PricingCenter team. As we work to deliver on the specific business and technical requirements, we will further validate that PricingCenter is ready to provide the capability and scale required for any tier 1 insurer globally. While the Nationwide win was monumental, our broader momentum with PricingCenter has been remarkable.

John will share more details shortly, but the integrated value proposition and the market demand for real-time price adjustment are resonating with customers. I couldn't be happier with the performance so far of this acquisition, and this deal serves as a fantastic capstone to an incredible year for Dawid, the founder of Quantee, and our PricingCenter team in Warsaw. Another standout in the quarter was ProNavigator. John will provide additional color, but sales velocity for this new product dramatically outperformed our plans. Embedding AI-driven assistance directly into the core workflows of ClaimCenter and PolicyCenter is precisely what our customer base needs right now. Rapidly integrating ProNavigator into the fabric of Guidewire and seeing immediate commercial traction was a major highlight of the quarter. ProNavigator serves as a straightforward AI and on-ramp for customers and now forms a core pillar of our broader strategy.

Given customer enthusiasm, it is entirely realistic to expect this capability to eventually be incorporated into every Guidewire implementation worldwide. The final element of our AI strategy tangibly taking shape relates to Guidewire Cloud Platform itself. Developer assistants are now available to all customers and partners, making agentic development on Guidewire exponentially faster. Things like writing integration code and building front-end applications for digital experiences are now dramatically faster. In our Qusar release, we delivered our agentic platform, enabling customers to build standalone AI agents tuned to their specific implementations and existing workflows. These agents operate seamlessly within their core systems, maximizing their preexisting modernization investments and taking full advantage of the structured context that resides natively in Guidewire. Taken together, these platform and product milestones make the Guidewire strategic thesis clear. The path to intelligent, hyper-efficient, agent-driven P&C insurance operations begins with a modern, cloud-based, continuously upgraded core platform.

I think it's fair to say that only Guidewire has the ability to provide this to the market right now. With respect to the financial performance of the company Jeff will cover the numbers in detail later in the call, but I want to highlight two significant financial milestones. First, we nearly completed our share repurchase program, buying back over $600 million in shares. Our ability to do this is an outcome of our expanding profitability, cash generation, and confidence in the long-term durability of our business. Second, this year, we achieved an annual gross ARR attrition rate of less than 1.5% for all ARR and less than 1% for core systems customers who represent the vast majority of our ARR base. Attrition is a key metric we manage closely and acts as a primary indicator of our business durability and customer satisfaction.

These attrition rates at over $1 billion in ARR are world-class. Even more than the top-line metrics, this number signals that our product design, implementation, and ongoing support are driving exceptional long-term customer loyalty. I am immensely proud of our team for achieving this measure of performance and commend everybody at Guidewire, past and present, for helping to create this system and for operating it at this level of excellence. We play a critical role in our customers' business operations, and of course, that reality necessitates an approach that logically leads to a uniquely durable business. This year, and especially in Q4, we have begun to see clearly how our role as a core system of record can be expanded to support the application of advanced analytics to pricing agility and application of AI to core workflow efficiency.

How earning the trust of our customers allows us to establish a cloud platform that is delivering the AI-powered speed and agility the industry needs to not just continue their monetization agendas, but to propel them into a new, more intelligent and efficient insurance operating model. We are happy about the results in Q4 and our fiscal year, but we are more motivated about the impact we are helping to create in the insurance industry. Finally, before handing the call over to John and Jeff, I want to convey my excitement for our upcoming Connections conference this October in Las Vegas, where we will also host our Analyst Day on October 27th. You are all, of course, invited to join us. We look forward to showcasing our latest product innovations and the new agentic capabilities of our platform.

Our strategy is straightforward: deliver the world's most trusted core platform for P&C insurance, supercharge it with AI to accelerate every technology initiative within an insurance company, and embed agentic intelligence directly into claims and underwriting to drive an industry-wide and global transformation. There is no better place to understand the power of Guidewire in the insurance industry, and we hope to see you at Connections in October. With that, I will hand it over to John.

Thank you, Mike. This was a great year that underscores the increasing alignment between Guidewire's roadmap and our customers' strategic ambitions. We work to continually increase the value our customers experience from their partnership with Guidewire and improve speed to value. Our proximity to our customers is a tremendous asset. We are at a point where our growing portfolio of products and solutions affords us the opportunity to work closely with those customers addressing enterprise-grade operations and agile business capabilities, connecting their specific context to their agentic future. This alignment resulted in 26 core deals for the fourth quarter, bringing the total for the year to 62 core cloud deals covering PolicyCenter, ClaimCenter, BillingCenter, or InsuranceNow. A few of the core deals to highlight. As Mike mentioned, Nationwide, a Fortune 100 company, is the clearest example.

They signed a multi-year agreement to move their entire InsuranceSuite estate to Guidewire Cloud Platform, capping a long-standing partnership built on proving out the platform's maturity to support their growth ambitions. Another is AF Group, consolidating a number of core processing components onto Guidewire InsuranceSuite. MAPFRE US expanded with Guidewire InsuranceSuite and added ProNavigator to support their commercial lines growth strategy. Additionally, one of the largest insurers in Canada signed a meaningful migration deal. We are also seeing our customers choose to expand their AI footprint with Guidewire. Definity, a leading tier 1 Canadian P&C insurer, expanded their Guidewire Cloud commitment and adopted ProNavigator for embedded insurance domain-specific AI expertise. They are accelerating their innovation by leveraging our platform alongside their broader suite of enterprise cloud and AI tools. We are seeing that same choice play out elsewhere in the portfolio.

Alfa Insurance selected ProNavigator to accelerate previously considered internal build options. Hollard, a tremendous partner in Australia, selected ProNavigator to strengthen claimant and adjuster experience in support of a truly differentiated brand. Regulatory and compliance precision and increasing demands for efficiency contributed to this win. A long-standing customer in the U.S. Northeast selected ProNavigator as a critical element of their strategy, following on from work done together with one of our field engineering pods. Fundamental in our strategy is the ability for our platform and product portfolio to coexist with our customer's environment, maximizing impact, pace, and flexibility. The strength of ProNavigator is important to this thesis and translated into 14 wins in Q4 and 28 for the full year. A tremendous year for this team as they joined Guidewire. I could not be happier to see this team's impact and their passion for driving results for our customers.