Earnings call transcript: Guidewire beats Q4 2026 estimates, but shares sink

Guidewire Software surpassed Wall Street's fourth quarter estimates with adjusted earnings of $0.99 per share and revenue of $411.08 million, both exceeding forecasts. The stock, however, plummeted 15.11% to $172.20 after hours as investors focused on the company's outlook and future growth.

Guidewire reported annual recurring revenue of $1.242 billion, a 19% increase year-over-year, with cloud ARR driving the growth at 84% of total ARR. Subscription revenue grew 37%, fueling the overall expansion. The company's gross profit rose 25% to $990 million, and operating income increased by 63%.

Despite the disappointing after-hours reaction, Guidewire's fiscal year 2026 was highlighted as its strongest to date, driven by strong recurring revenue growth, profitability, and cash generation. The company's low churn rate and strong subscription business underscore its solid financial position and low short-term obligations.

Investors remain cautious, with Guidewire's stock trading at a premium valuation (P/E ratio of 109), though its PEG ratio of 0.3 suggests it may be reasonably priced given its growth prospects. Management emphasized the company's cloud model's success and its position in insurance software, positioning Guidewire as a key foundation for AI-driven workflows.