What Happened?

Shares of insurance industry-focused software maker Guidewire (NYSE: GWRE) jumped 16.2% in the afternoon session after the company reported impressive first-quarter 2025 (Fiscal Q3 '25) results, which blew past most of the key metrics we track including billings, annual recurring revenue, EPS, and adjusted operating income. In addition, quarterly revenue guidance outperformed Wall Street's estimates. 

What really stood out was subscription revenue, which rose 32%, showing that more customers are signing up and sticking around. That helped push sales up by 22%, a strong pace for a company this size. 

Margins also got a lift. With expenses held in check, operating income more than doubled on a non-GAAP basis. That efficiency boost powered a big jump in earnings per share, which more than tripled year-over-year. 

Management also raised revenue and operating income targets for the year, and guided to stronger-than-expected results in the fourth quarter. Overall, we think this was a solid quarter with some key areas of upside.

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What The Market Is Telling Us

Guidewire’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Guidewire and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 12 months ago when the stock gained 16.3% on the news that the company announced a "beat and raise" quarter. Guidewire beat analysts' revenue, billings, and ARR (annual recurring revenue) expectations. Its full-year ARR guidance also beat Wall Street's estimates. 

One negative was that its gross margin decreased, but it didn't matter much in the face of a "beat-and-raise" quarter. Zooming out, we think this was a solid quarter, showing the company is staying on track.

Guidewire is up 49.9% since the beginning of the year, and at $254.11 per share, has set a new 52-week high. Investors who bought $1,000 worth of Guidewire’s shares 5 years ago would now be looking at an investment worth $2,408.

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