Guidewire Software’s third quarter was marked by strong momentum in its core cloud business, with management crediting accelerating adoption from both new and existing property and casualty insurance customers as a key driver. CEO Mike Rosenbaum noted that the company’s cloud platform maturity allowed for broader and deeper customer engagement, particularly as insurers sought greater operational agility. The integration of newly launched applications and the continued buildout of the partner ecosystem were highlighted as helping to meet evolving customer needs. Rosenbaum emphasized, “We continue to see accelerating adoption for Guidewire Cloud Platform and have plenty of runway to continue growing our core business.”
Is now the time to buy GWRE? Find out in our full research report (it’s free for active Edge members).
Guidewire Software (GWRE) Q3 CY2025 Highlights:
- Revenue: $332.6 million vs analyst estimates of $318 million (26.5% year-on-year growth, 4.6% beat)
- Adjusted EPS: $0.66 vs analyst estimates of $0.61 (7.5% beat)
- Adjusted Operating Income: $63.43 million vs analyst estimates of $51.06 million (19.1% margin, 24.2% beat)
- The company lifted its revenue guidance for the full year to $1.41 billion at the midpoint from $1.40 billion, a 1.1% increase
- Operating Margin: 5.6%, up from -1.8% in the same quarter last year
- Annual Recurring Revenue: $1.06 billion vs analyst estimates of $1.05 billion (21.6% year-on-year growth, 1.1% beat)
- Billings: $243.9 million at quarter end, up 19.1% year on year
- Market Capitalization: $16.77 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Guidewire Software’s Q3 Earnings Call
- Dylan Becker (William Blair) asked about the opportunity for new products like PricingCenter and UnderwritingCenter to drive further momentum. CEO Mike Rosenbaum pointed to their integration with the platform and value in accelerating insurers’ ability to adjust pricing and underwriting in real time.
- Ken Wong (Oppenheimer and Co.) inquired about the adoption timeline for PricingCenter and UnderwritingCenter. Rosenbaum explained that while adoption could be faster than past core products, it remains a significant decision for insurers and may not follow a uniform pattern.
- Adam Hotchkiss (Goldman Sachs) questioned Guidewire’s approach to AI competition and third-party integrations. Rosenbaum emphasized an open platform philosophy, aiming to foster both internal and external AI innovation rather than viewing other InsurTechs solely as competitors.
- Max (RBC, for Rishi Jaluria) asked how generative AI features are priced and their potential margin impact. Rosenbaum shared that pricing is typically tied to customers’ direct written premium, with safeguards to manage AI-related costs as usage scales.
- Aaron Kimson (Citizens Bank) requested clarity on the relative contributions of migrations, expansions, and new products to growth. CFO Jeff Cooper described growth as broad-based, with migrations often accompanied by expansions and new product adoption expected to grow over time.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will be closely watching (1) the pace at which existing customers migrate to Guidewire Cloud and expand usage of new modules, (2) adoption rates and customer feedback for PricingCenter and UnderwritingCenter, and (3) the impact of generative AI integration on both operational efficiency and platform differentiation. Additional focus will be on how well the ProNavigator acquisition accelerates AI-driven knowledge management within Guidewire’s ecosystem.
Guidewire Software currently trades at $197.05, down from $217 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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