Guidewire Software, Inc. GWRE exited fiscal 2026 with solid annual recurring revenue (ARR) momentum, supported by strong cloud adoption, healthy bookings and exceptionally low customer attrition. ARR reached $1.24 billion on a constant-currency basis, increasing 19% year over year and exceeding the high end of management’s guidance. Fully ramped ARR grew an even stronger 22%, marking the fourth consecutive year in which its growth outpaced reported ARR growth.
The company’s cloud transition remains a key growth catalyst. Total cloud ARR advanced 35% year over year and accounted for 84% of overall ARR. Guidewire also ended fiscal 2026 with 105 customers generating more than $5 million each in fully ramped ARR, up from 86 a year earlier. Subscription revenues rose 37% to $916 million, highlighting the continued shift toward Guidewire’s cloud-based recurring-revenue model.
Strong customer retention further strengthens the ARR foundation. Guidewire reported annual gross ARR attrition of less than 1.5%, while attrition among core systems customers was below 1%. New-product momentum is also contributing to growth. ProNavigator recorded 14 wins in the fourth quarter and 28 for the year, while PricingCenter secured eight fourth-quarter deals and 12 during fiscal 2026. On the last earnings call, management stated that both products performed materially better than initially expected and are helping the company further monetize its cloud installed base.
Guidewire expects fiscal 2027 ARR of $1.45-$1.46 billion, representing about 18% constant-currency growth at the midpoint. Importantly, more than half of the projected net new ARR is already under contract, providing meaningful visibility. However, management expects attrition to normalize after fiscal 2026’s unusually low level, which had added roughly one percentage point to ARR growth.
Moreover, a smaller proportion of Guidewire’s growing backlog is expected to convert into ARR during fiscal 2027, with more ramping events scheduled for later years. Thus, while the timing of ARR recognition could temper near-term acceleration, sustained cloud migrations, strong fully ramped ARR growth, new-product adoption and a sizable contracted backlog provide a solid base for continued high-teens ARR growth.
Taking a Look at GWRE’s Competitors
ServiceNow, Inc. NOW benefits from enterprise workflow digitization and broader adoption of governed, agentic AI across IT, employee, CRM, security and data use cases. AI-native bundles and rising usage are expanding monetization, while higher adoption and consumption support a broader revenue flywheel. AI Control Tower, Armis and Veza deepen governance and security cross-selling, while planned mid-market products widen the addressable base. Subscription growth, rising customer commitments and internal AI efficiencies support the long-term model. For the third quarter of 2026, NOW expects subscription revenues between $3.98 billion and $3.98 billion, implying 20.5% year-over-year growth and 20% growth at cc.
SAP SE SAP is strengthening its competitive position through its AI strategy despite broader macroeconomic uncertainty. More than 90% of its 50 largest deals include AI and SAP BDC, supporting a strong outlook for the second half of the year. The indirect channel is outperforming the direct cloud business, highlighting progress from the company’s go-to-market transformation. New RISE with SAP and GROW with SAP offerings are also gaining traction, driven by increased adoption of its AI-led ERP migration toolchain. SAP announced a €10 billion share buyback program through 2027. Following the Sapphire event, Suite and Joule Work saw oversubscribed beta demand, supporting expectations for their third-quarter launch.
GWRE Price Performance, Valuation and Estimates
Shares of Guidewire have gained 36.3% over the past three months compared with the Internet Software industry’s growth of 29.5%.
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GWRE’s shares are trading at a forward 12-month price-to-sales multiple of 7.11X, higher than the Internet Software industry’s 4.4X.
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The Zacks Consensus Estimate for GWRE’s earnings for 2026 has been revised upward over the past 60 days.
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GWRE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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