Guidewire Software, Inc. (GWRE) | Investment Case

1. Company Snapshot

1.a. Company Description

Guidewire Software, Inc.provides software products for property and casualty insurers worldwide.The company offers Guidewire InsuranceSuite comprising Guidewire PolicyCenter, BillingCenter, and ClaimCenter applications.

It also provides Guidewire InsuranceNow, a cloud-based platform that offers policy, billing, and claims management functionality to insurers; and Guidewire InsuranceSuite for Self-Managed.In addition, the company offers Guidewire Rating Management to manage the pricing of insurance products; Guidewire Reinsurance Management to use rules-based logic to execute reinsurance strategy through underwriting and claims processes; Guidewire Client Data Management to capitalize on customer information; and Guidewire Product Content Management that offers software tools and standards-based line-of-business templates to introduce and modify products.Further, it provides Guidewire Underwriting Management, a cloud-based integrated business application; Guidewire AppReader, a submission intake management solution; Guidewire ClaimCenter Package for the London market supports the claims workflow used by London Market insurers and brokers; Guidewire Digital Engagement Applications, which enable insurers to provide digital experiences to customers, agents, vendors, and field personnel through their device of choice; and Guidewire for Salesforce to provide customer information regarding policies and claims.

Additionally, the company offers Guidewire Predictive Analytics, a set of cloud-native applications; Guidewire Risk Insights that allows insurers to assess new and evolving risks; Guidewire Business Intelligence that allows insurers to measure business performance; Guidewire DataHub, an operational data store; and Guidewire InfoCenter, a business intelligence warehouse, as well as implementation and integration, and professional services.The company was founded in 2001 and is headquartered in San Mateo, California.

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1.b. Last Insights on GWRE

Guidewire Software's recent performance was driven by strong Q4 earnings and revenue beats, fueled by cloud wins and a milestone Liberty Mutual deal. The company's record 19 cloud deals, including a 10-year commitment, signal a powerful industry inflection. Additionally, investments in AI and data analytics are expanding its moat and driving deeper customer integration. A definitive agreement to acquire ProNavigator and the unveiling of PricingCenter, a unified pricing and rating application, also contributed to positive momentum.

1.c. Company Highlights

Last Price	211.07
Change Percentage	-2.17%
Open	228.5
Previous Close	215.76
Market Cap ( Millions)	17842
Volume	2018764
Year High	272.6
Year Low	165.08
M A 50	229.58
M A 200	218.84

FCF Yield	1.60%
Dividend Yield	0.00%
ROE	6.54%
Debt / Equity	45.94%
Net Debt / EBIDTA	225.62%
Price To Book	11.67
Price Earnings Ratio	194.56
Price To FCF	62.39
Price To sales	14.02
EV / EBITDA	191.73

2. Guidewire Software's Q1 FY2026 Earnings Shine with Strong Cloud Adoption

Guidewire Software reported a robust first quarter fiscal 2026, with revenues reaching $333 million, up 27% year over year, and ARR growing 22% to $1.063 billion. Gross profit was $219 million, with a gross margin of 66%, and operating income finished at $63 million, up 83% year over year. Earnings per share (EPS) came in at $0.66, surpassing estimates of $0.614. The company's strong financial performance was driven by accelerating cloud adoption, with eight cloud deals in Q1, including five significant deals in North America and three international deals.

Publication Date: Dec -04

                                    📋 Highlights
                                    ARR Growth::
                                                Annual Recurring Revenue (ARR) reached $1.063 billion, reflecting 22% YoY growth and 21% on a constant currency basis.
Cloud Deals Momentum::
                                                Eight cloud deals in Q1, including five major North American and three international contracts, driving accelerated cloud adoption.
Revenue & Profit Expansion::
                                                Total revenue hit $333 million (+27% YoY), with gross profit rising 32% to $219 million and operating income surging 83% to $63 million.
New Product Launches::
                                                PricingCenter and UnderwritingCenter, infused with generative AI, are monetized, with ProNavigator acquisition adding $4 million to ARR.
Updated FY2026 Guidance::
                                                ARR projected between $1.22–1.23 billion, total revenue between $1.403–1.442 billion, and non-GAAP operating income of $266–282 million.

                                

Cloud and New Product Momentum

The company's cloud products and services continue to see accelerating adoption, driven by the introduction of new products like PricingCenter and UnderwritingCenter, which are designed to improve insurers' agility and performance. These applications are infused with generative AI capabilities, allowing insurers to dramatically improve on long-standing business constraints. The recent acquisition of ProNavigator, an AI-powered knowledge management platform, will also enhance Guidewire applications.

Growth Prospects and Valuation

Guidewire's growth algorithm targets a 17-18% ARR CAGR through FY '28, driven by various organic components, including cloud migrations, modernizations, new products, and marketplace growth. With a strong Q1 performance, the company raised its ARR guidance, and analysts estimate next year's revenue growth at 17.9%. The current valuation metrics indicate a P/S Ratio of 14.34 and an EV/EBITDA of 195.94, suggesting a premium valuation. However, the company's strong growth prospects and momentum in cloud adoption may justify this premium.

Investment Thesis and Risks

The company's philosophy on AI is to be an open platform, inviting InsurTechs to build against its core system of record. This approach is expected to drive growth, with a strong Q1 performance leading to a raised ARR guidance. The growth is broad-based across geographies, with North America, Europe, and Asia Pac seeing healthy demand. However, the company's reliance on cloud adoption and new product launches may pose risks to its growth prospects if not executed successfully.

3. NewsRoom

Compared to Estimates, Guidewire Software (GWRE) Q1 Earnings: A Look at Key Metrics

Dec -04

Source: zacks.com

Guidewire Q1 Earnings Match Estimates, Revenues Increase Y/Y

Dec -04

Source: zacks.com

The Cincinnati Insurance Company Deploys Guidewire ClaimCenter to Transform Claims Operations

Dec -04

Source: businesswire.com

Guidewire Software, Inc. (GWRE) Q1 2026 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

Guidewire Software (GWRE) Q1 Earnings Match Estimates

Dec -03

Source: zacks.com

Market Today: Fed hopes lift stocks; AWS AI rollout; Prada-Versace deal

Dec -03

Source: gurufocus.com

Guidewire Announces First Quarter Fiscal Year 2026 Financial Results

Dec -03

Source: businesswire.com

First Look: Airbus trims targets, AWS AI, AEO hikes outlook

Dec -03

Source: gurufocus.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.37%)

6. Segments

Subscription

Expected Growth: 12%

Guidewire Software's subscription growth is driven by increasing adoption of cloud-based insurance platforms, rising demand for digital transformation in the insurance industry, and the company's expanding partner ecosystem. Additionally, the growing need for insurers to modernize their legacy systems and improve operational efficiency is fueling demand for Guidewire's subscription-based services.

Term License

Expected Growth: 10%

Guidewire Software's Term License growth is driven by increasing demand for cloud-based insurance platforms, expansion into new markets, and growing adoption of digital transformation initiatives by insurance companies. Additionally, the company's strong brand reputation, innovative products, and strategic partnerships contribute to its growth momentum.

Services

Expected Growth: 9%

Guidewire Software's 9% growth is driven by increasing demand for cloud-based insurance platforms, expansion into new markets, and growing adoption of digital transformation in the insurance industry. Additionally, the company's strong brand reputation, innovative products, and strategic partnerships contribute to its growth momentum.

Support

Expected Growth: 8%

Guidewire Software, Inc.'s support fuels growth through increased adoption of its insurance platform, driven by rising demand for digital transformation, cloud-based solutions, and data analytics in the insurance industry. Additionally, strategic acquisitions, expanded partnerships, and innovative product offerings contribute to the company's accelerated growth.

Perpetual License

Expected Growth: 7%

Guidewire's Perpetual License growth is driven by increasing adoption of cloud-based insurance platforms, rising demand for digital transformation in the insurance industry, and the company's expanding global presence. Additionally, the growing need for core system replacements, increasing investments in InsurTech, and strategic partnerships are contributing to the 7% growth rate.

7. Detailed Products

Guidewire PolicyCenter

A policy administration system that enables insurers to manage and optimize their policy lifecycle, from product definition to policy issuance and maintenance.

Guidewire ClaimCenter

A claims management system that enables insurers to manage and optimize their claims lifecycle, from first notice of loss to settlement and closure.

Guidewire BillingCenter

A billing and receivables management system that enables insurers to manage and optimize their billing and payment processes.

Guidewire DataHub

A data management system that enables insurers to integrate, manage, and analyze their data from various sources.

Guidewire Digital Engagement Platform

A digital engagement platform that enables insurers to create omnichannel experiences for their customers, agents, and brokers.

Guidewire InsuranceSuite

A comprehensive insurance platform that integrates policy, claims, and billing management, enabling insurers to manage their entire insurance lifecycle.

8. Guidewire Software, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Guidewire Software, Inc. operates in the software industry, which is characterized by a moderate threat of substitutes. While there are alternative software solutions available, Guidewire's products are highly specialized and customized to meet the needs of the insurance industry, making it difficult for substitutes to replicate their functionality.

Bargaining Power Of Customers

Guidewire Software, Inc. has a diverse customer base, including large and small insurance companies. However, the company's products are highly customized and integrated into customers' systems, making it difficult for customers to switch to alternative solutions, thereby reducing their bargaining power.

Bargaining Power Of Suppliers

Guidewire Software, Inc. has a diverse supplier base, and the company is not heavily dependent on a single supplier. Additionally, the company's products are highly specialized, making it difficult for suppliers to exert significant bargaining power.

Threat Of New Entrants

The software industry, particularly the insurance industry, has high barriers to entry, including significant capital requirements, complex technology, and regulatory hurdles. These barriers make it difficult for new entrants to compete with established players like Guidewire Software, Inc.

Intensity Of Rivalry

The software industry is highly competitive, with many established players competing for market share. Guidewire Software, Inc. operates in a niche market, but still faces intense competition from other software providers, which drives innovation and pricing pressure.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	31.21%
Debt Cost	3.95%
Equity Weight	68.79%
Equity Cost	9.63%
WACC	7.86%
Leverage	45.36%

11. Quality Control: Guidewire Software, Inc. passed 4 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

AppFolio

A-Score: 5.1/10

Value: 0.6

Growth: 9.7

Quality: 8.8

Yield: 0.0

Momentum: 7.0

Volatility: 4.7

1-Year Total Return ->

Workiva

A-Score: 4.9/10

Value: 6.5

Growth: 6.7

Quality: 6.5

Yield: 0.0

Momentum: 6.0

Volatility: 3.7

1-Year Total Return ->

Lyft

A-Score: 4.7/10

Value: 2.9

Growth: 7.7

Quality: 6.1

Yield: 0.0

Momentum: 8.5

Volatility: 3.0

1-Year Total Return ->

RingCentral

A-Score: 4.6/10

Value: 8.1

Growth: 7.8

Quality: 5.3

Yield: 0.0

Momentum: 3.0

Volatility: 3.3

1-Year Total Return ->

Guidewire Software

A-Score: 4.5/10

Value: 0.0

Growth: 8.3

Quality: 6.2

Yield: 0.0

Momentum: 7.5

Volatility: 5.0

1-Year Total Return ->

Duolingo

A-Score: 4.4/10

Value: 0.3

Growth: 9.9

Quality: 8.0

Yield: 0.0

Momentum: 6.0

Volatility: 2.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

18.47%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.86%

Guidewire Software, Inc. - US40171V1008

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on GWRE

1.c. Company Highlights

Strong Momentum

Less Volatile

Lower Growth

Earnings Beats

Medium Volatility

Revenues Beats

Average Quality

Expensive

Earnings Miss

Stable Momentum

Higher Growth

2. Guidewire Software's Q1 FY2026 Earnings Shine with Strong Cloud Adoption

Cloud and New Product Momentum

Growth Prospects and Valuation

Investment Thesis and Risks

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.37%)

6. Segments

Subscription

Expected Growth: 12%

Term License

Expected Growth: 10%

Services

Expected Growth: 9%

Support

Expected Growth: 8%

Perpetual License

Expected Growth: 7%

7. Detailed Products

Guidewire PolicyCenter

Guidewire ClaimCenter

Guidewire BillingCenter

Guidewire DataHub

Guidewire Digital Engagement Platform

Guidewire InsuranceSuite

8. Guidewire Software, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Guidewire Software, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

211.07$

Current Price

211.07$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA