Guidewire Software Inc (NYSE:GWRE) saw its shares jump 11% in premarket trading Wednesday, following a third-quarter earnings report that far exceeded analyst expectations and a raised full-year outlook from the property and casualty insurance software provider.
For the quarter ending April 30, 2025, Guidewire delivered adjusted earnings per share of $0.88, more than doubling the consensus estimate of $0.41. Revenue came in at $293.5 million, marking a 22% year-over-year increase and beating the forecasted $286.33 million.
Annual recurring revenue (ARR) hit $960 million, surpassing the Street’s estimate of $945 million, fueled by sustained demand for cloud solutions.
The company’s solid results were largely driven by strong cloud adoption, with 17 cloud deals closed during the quarter. This helped ARR climb from $864 million at fiscal 2024’s end to the current $960 million.
“We delivered exceptional third-quarter results, highlighted by record Q3 sales activity and 17 cloud deals,” stated Mike Rosenbaum, Guidewire’s CEO.
Stifel analysts noted that this quarter ranks as Guidewire’s “third best in company history,” highlighting nine cloud migrations, five new wins, and three expansions.
“Overall, Guidewire continues to display positive cloud momentum, with the company delivering a combination of high subscription growth and steady margin expansion,” they added, raising their price target from $230 to $270.
Oppenheimer also increased its price target to $275 from $230, describing Guidewire as its “top SMID pick,” citing strong property and casualty trends and a resilient operating model as key strengths.
Looking forward, Guidewire boosted its fiscal 2025 revenue guidance to a range of $1.178 billion to $1.186 billion, above the previous consensus of $1.171 billion. For the fourth quarter, revenue is projected between $332 million and $340 million, aligning with estimates of $332.2 million.
The full-year ARR forecast was lifted to between $1.012 billion and $1.022 billion, beating analyst expectations of $1 billion.
Chief Financial Officer Jeff Cooper expressed optimism about the company’s prospects: “Based on this strong execution and our robust pipeline, we are raising our full-year fiscal 2025 targets, reinforcing our confidence in our growth trajectory and long-term value creation.”
Guidewire ended the quarter with a healthy cash balance of $1.24 billion in cash, cash equivalents, and investments as of April 30, 2025, up from $1.13 billion at the end of the previous fiscal year.