Guidewire Software Falls 15% as Weak Q1 Revenue Guidance Overshadows Record Q4 ARR Growth

Guidewire Software reported strong fiscal fourth-quarter results on September 3, 2026, but shares tumbled roughly 15% in premarket trading to $172.99 on September 4 after the company issued a first-quarter fiscal 2027 revenue outlook of $372 million to $378 million that fell well short of investor expectations. After-hours losses on Thursday had been as steep as 19.2% before shares partially recovered.

The Q4 results themselves beat on every major metric. Adjusted earnings per share came in at $0.99 for the quarter ended July 31, 2026, topping the consensus estimate of $0.93 and up from $0.84 a year earlier. Revenue reached $411.1 million, a 15% year-over-year gain and above the $402.7 million analyst estimate. Annual recurring revenue grew 19% on a constant-currency basis to $1.242 billion, finishing above the high end of management's prior guidance range. Gross ARR attrition fell below 1.5% across all customers and below 1% for core systems clients, both records since the company began tracking the metric.

New product momentum was a particular highlight. Guidewire closed 26 core cloud deals in Q4, bringing the fiscal year total to 62. Its AI-focused ProNavigator product recorded 14 wins in the quarter and 28 for the full year, while PricingCenter closed 8 deals in Q4 and 12 for the year. CEO Mike Rosenbaum cited AI as a driver of deepening customer commitments. The company also repurchased $606 million worth of shares during fiscal 2026, covering 4.1 million shares at an average price of $148.41.

Analysts reacted with mixed price target adjustments after the print. Oppenheimer raised its target to $210 from $200, Wells Fargo lifted its target to $195 from $190, and Citi moved its target sharply higher to $181 from $137, all while maintaining buy-equivalent ratings. BTIG trimmed its target to $220 from $230. RBC Capital noted that the fiscal 2027 outlook disappointed despite keeping its buy rating, and several analysts suggested the Q1 guidance may prove conservative given the company's track record.