Guidewire to Report Q1 Earnings: Here's What Investors Should Know

Guidewire Software, Inc. (GWRE) is slated to report first-quarter fiscal 2026 results on Dec 3.

Management expects revenues to be between $315 million and $321 million. The Zacks Consensus Estimate is pinned at $317.2 million, up 20.7% from the same quarter last year.

The consensus estimate for the bottom line is pinned at 66 cents, unchanged over the past 60 days. GWRE delivered earnings of 43 cents per share in the year-ago quarter.

The company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, while missing in the remaining one, with an average surprise of 42.1%.

Shares of GWRE have gained 4% in the past year compared with the Internet-Software industry’s growth of 1%.

Factors at Play for GWRE’s Q1 Results

Accelerating momentum in its cloud business as insurers transition from legacy systems bodes well for GWRE. On the last earnings call, management characterized the demand environment as “durable” and added that the pipeline was healthy going into fiscal 2026.

It is witnessing solid deal volume across all tiers (especially Tier 1 insurers) and increasing international momentum across Europe, Latin America and APAC. In the last reported quarter, Guidewire Cloud reported nine deal wins with Tier 1 insurers. Guidewire reported 19 total deal wins in the fiscal fourth quarter, bringing the full-year count to 57. On the last earnings call, management noted that the maturity and referenceability of its cloud platform were driving larger deal sizes.

Moreover, the 10-year Liberty Mutual deal was highlighted by management as a milestone moment. Guidewire added that endorsement of the platform by Liberty Mutual, a key Tier 1 insurer, validates the platform’s maturity, scalability and referenceability.

Subscription growth is likely to have been strong as cloud migrations accelerate and deal sizes expand. The company’s focus on enhancing the Guidewire Cloud platform with new capabilities is expected to have boosted sales of subscription-based solutions. For the fiscal first quarter, management expects subscription and support revenues of $218 million, while ARR is expected to land between $1.048 billion and $1.054 billion. Customer wins across migrations, expansions and net-new implementations are expected to have buoyed ARR performance.

Guidewire Software, Inc. Price and EPS Surprise

Guidewire Software, Inc. price-eps-surprise | Guidewire Software, Inc. Quote

Early traction from the Guidewire Industry Intelligence solution is likely to have acted as a growth driver. Industry Intelligence is a pre-built predictive model embedded into the ClaimCenter workflow. This solution is trained and validated using anonymized data available on Guidewire’s cloud deployments. This is a value addition for insurers looking to make data-driven claims decisions.

GWRE’s efforts to drive cloud operations efficiency to boost cloud margins remain an additional tailwind. The company’s expectation for non-GAAP operating income for the fiscal first quarter is pinned in the range of $47-$53 million. Subscription and support non-GAAP gross margin is expected to remain strong at 71-72%.

We expect non-GAAP gross margin subscription and support to be 70.9% while our estimate for non-GAAP operating income is pegged at $51.1 million, up 16.1% year over year.

Increasing investments in product enhancements, along with weakness in global macroeconomic conditions and inflation, remain concerning. License revenues are likely to have been affected owing to the migration of on-premise customers to the cloud.

Meanwhile, services revenues are expected to moderate from the elevated growth levels of fiscal 2025. For the fiscal first quarter, service revenues are expected to be $60 million.

What Our Model Says About GWRE Stock

Our proven model does not predict an earnings beat for GWRE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

GWRE has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:

Micron Technology (MU) presently has an Earnings ESP of +2.46% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

MU is scheduled to report quarterly numbers on Dec. 17. The Zacks Consensus Estimate for Micron’s to-be-reported quarter’s earnings and revenues is pegged at $3.77 per share and $12.54 billion, respectively. Shares of MU have gained 140.8% in the past year.

Broadcom Inc. (AVGO) is set to release quarterly numbers on Dec. 11. It currently has an Earnings ESP of +0.71% and a Zacks Rank #3.

The Zacks Consensus Estimate for AVGO’s to-be-reported quarter’s earnings and revenues is pegged at $1.87 per share and $17.5 billion, respectively. Shares of AVGO have gained 129.6% in the past year.

FedEx Corporation (FDX) has an Earnings ESP of +1.19% and a Zacks Rank #2 at present. FDX is scheduled to report quarterly figures on Dec. 18. The Zacks Consensus Estimate for FDX’s to-be-reported quarter’s earnings and revenues is pegged at $4.03 per share and $22.86 billion, respectively. Shares of FDX have lost 3.4% in the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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