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Guidewire Software (GWRE) is trading sharply higher after delivering an impressive beat-and-raise 2Q26 performance, highlighted by robust ARR growth, accelerating cloud momentum, and a meaningful lift to FY26 revenue and profitability targets. The upside is being driven by strong demand for InsuranceSuite Cloud, rising attach of newer analytics and AI offerings such as ProNavigator, and clear evidence that generative AI is becoming a tailwind for core modernization rather than a headwind.

• Q2 ARR grew 22% yr/yr to $1.121 bln, with fully ramped ARR reaching $1.42 bln and continuing to outpace reported ARR growth, reflecting larger deal sizes and longer ramps on multi-year contracts,
• Total revenue increased 24% yr/yr to $359 mln, above the high end of the outlook, with Subscription and Support revenue up 33% yr/yr to $237 mln and Services revenue up 30% yr/yr to $62 mln on strong Guidewire-led programs.
• RPO ended the quarter at $3.5 bln, up 63% yr/yr, while the cohort of customers with more than $5 mln in fully ramped ARR expanded to 96, underscoring deepening penetration at larger insurers.
• Profitability was also better than expected.Non-GAAP operating income reached $87 mln, with total gross margin at 68% and Subscription and Support gross margin at 75%, well ahead of last year’s 69%.
• Management raised FY26 ARR guidance to $1.229-1.237 bln (18-19% yr/yr growth) and total revenue guidance to $1.438-1.448 bln (20% growth at the midpoint, up from 17%), while lifting FY26 non-GAAP operating income to $293-303 mln and operating cash flow expectations to $360-375 mln.

Briefing.com Analyst Insight:

GWRE’s 2Q26 report checks the boxes investors care most about in a subscription transition story: accelerating ARR, expanding cloud gross margins, and a confident raise to full-year guidance supported by durable backlog and long-dated customer commitments. The print reinforces the view that generative AI is an accelerant, not a disruptor, as insurers recognize that unlocking AI value requires modern, API-rich core systems -- an area where GWRE remains the de facto standard in P&C. With fully ramped ARR growing faster than reported ARR, RPO up more than 60%, and average InsuranceSuite contract duration now above six years, visibility into multi-year growth is improving just as new AI-driven products like ProNavigator and PricingCenter broaden the addressable opportunity.