Guidewire Software’s robust Q4 results—including accelerating subscription growth, margin expansion, and a major cloud migration deal—have driven analysts to raise conviction in its growth trajectory, resulting in a consensus price target increase from $249.79 to $264.31.
Analyst Commentary
- Significant Q4 outperformance with broad-based beats, highlighted by accelerating bookings, strong subscription revenue growth (up 33% YoY), and expanding subscription gross margins (reaching 70%).
- Landmark 10-year cloud migration deal with Liberty Mutual validating Guidewire’s platform maturity and momentum in cloud adoption, as well as providing further validation to its growth trajectory.
- Record-low annual recurring revenue (ARR) attrition, record high ARR, and above-consensus ARR guidance for FY26 signal increasing long-term customer retention and visibility.
- Improving cloud margins and increasing scale, with 19 cloud deals and eight cloud migrations contributing to a more favorable risk/reward outlook.
- Bullish analysts cite Guidewire’s dominant position in a market with high barriers to entry, minimal customer churn, and enhanced growth prospects as drivers behind price target increases.
What's in the News
- Guidewire issued earnings guidance for fiscal 2026, projecting Ending ARR of $1,210–$1,220 million, total revenue of $1,385–$1,405 million, and operating income of $68–$88 million.
- Major insurance clients including Texas Windstorm Insurance Association, Ascot U.S., and Co-operators have implemented or migrated to Guidewire Cloud Platform for core operations and claims management.
- Launched the Niseko release, featuring advanced financial insights, risk modeling, streamlined development tools, and the latest HazardHubWildfire Risk Score 3.0 for enhanced risk assessment.
- Introduced a subscription service through Milliman Appleseed, enabling insurers to rapidly adopt regulator pre-approved HazardHub risk scores for rate filings and property underwriting.
- Announced integrated Docusign e-signature solutions for PolicyCenter and ClaimCenter, aiming to streamline digital agreement workflows and boost efficiency for property and casualty insurers.
Valuation Changes
Summary of Valuation Changes for Guidewire Software
- The Consensus Analyst Price Target has risen from $249.79 to $264.31.
- The Future P/E for Guidewire Software has risen slightly from 144.90x to 150.80x.
- The Net Profit Margin for Guidewire Software has fallen slightly from 11.05% to 10.73%.
Disclaimer
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