What Happened?

Shares of insurance software provider Guidewire Software (NYSE: GWRE) fell 1.5% in the afternoon session after the company announced third-quarter 2025 financial results that beat analyst expectations and included a raised full-year forecast. This decline occurred despite the positive report, which detailed revenue of $332.6 million, up 26.5% from the prior year. The results surpassed estimates, and the company also lifted its full-year revenue guidance. Growth was supported by a 21.6% year-over-year increase in Annual Recurring Revenue (ARR), a key metric for software firms. The negative stock reaction may be a case of investors taking profits, as the shares had jumped 4.9% immediately following the announcement.

The shares closed the day at $211.15, down 2.7% from previous close.

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What Is The Market Telling Us

Guidewire Software’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock gained 17.3% on the news that the company reported stronger-than-expected second-quarter 2025 financial results that surpassed analyst estimates. The company posted quarterly revenue of $356.6 million, up 22.3% year-on-year, and adjusted earnings of $0.84 per share, beating Wall Street's expectations by 5.8% and 33.3%, respectively. A key highlight was the company's annual recurring revenue (ARR), which grew to $1.03 billion. This growth was fueled by the company's successful transition to a subscription-based cloud model. Guidewire also issued strong revenue guidance for the upcoming third quarter, projecting sales about 5.3% higher than analysts had anticipated. The impressive results were further supported by a significant jump in operating margin, which rose to 8.3% from 3.5% in the same quarter last year, demonstrating increased efficiency.

Guidewire Software is up 23.2% since the beginning of the year, but at $208.88 per share, it is still trading 20.2% below its 52-week high of $261.88 from September 2025. Investors who bought $1,000 worth of Guidewire Software’s shares 5 years ago would now be looking at an investment worth $1,618.

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