Executive Summary
Guidewire Software delivered solid top-line growth in QQ3 2025, with revenue of USD 293.5 million, up 21.95% year-over-year and 1.39% quarter-over-quarter. The period featured a strong gross margin of 62.2% and an EBITDA of USD 58.3 million, contributing to a positive pre-tax result. Net income reached USD 45.99 million and earnings per share USD 0.55 (diluted USD 0.54), aided by a notable non-operating item: total other income and expenses net of USD 44.2 million, which largely drove the bottom-line improvement versus a relatively modest operating profit of USD 4.47 million. Free cash flow was USD 31.65 million, underscoring healthy cash generation even as investing and financing activities affected cash positioning.
Key takeaways for investors include: (1) the Cloud and Services mix is increasing value through the Guidewire InsuranceSuite and InsuranceNow platforms, supporting durable revenue growth; (2) operating leverage remains modest in the near term, with operating income at USD 4.5 million and a positive EBITDA suggesting a business transitioning toward higher-margin, recurring cloud revenue; and (3) a strong liquidity position (cash and cash equivalents around USD 510M, net debt USD 196.4M) provides flexibility to fund R&D and strategic investments while maintaining balance sheet strength. Going forward, investors should monitor the trajectory of cloud ARR, customer retention and mix shifts, and any recurring vs. non-recurring items in non-operating income that can influence reported profitability.
Key Performance Indicators
QoQ: -61.89% | YoY:126.76%
QoQ: 223.38% | YoY:939.56%
QoQ: 222.22% | YoY:928.31%
Key Insights
Revenue: USD 293.508 million; YoY growth 21.95%, QoQ growth 1.39%
Gross Profit: USD 182.698 million; YoY margin 28.46% growth; QoQ margin 1.98% growth
Operating Income: USD 4.468 million; YoY growth 126.76%; QoQ change -61.89%
EBITDA: USD 58.301 million; EBITDA margin 19.86%
Net Income: USD 45.991 million; Net income margin 15.67%
EPS: USD 0.55 (GAAP) / USD 0.54 (diluted); YoY EPS growth 928.31%; QoQ growth 222.22%
Income Before Tax: USD 48.668 million; Tax Expense USD 2.677 million; Effective t...
Financial Highlights
Revenue: USD 293.508 million; YoY growth 21.95%, QoQ growth 1.39%
Gross Profit: USD 182.698 million; YoY margin 28.46% growth; QoQ margin 1.98% growth
Operating Income: USD 4.468 million; YoY growth 126.76%; QoQ change -61.89%
EBITDA: USD 58.301 million; EBITDA margin 19.86%
Net Income: USD 45.991 million; Net income margin 15.67%
EPS: USD 0.55 (GAAP) / USD 0.54 (diluted); YoY EPS growth 928.31%; QoQ growth 222.22%
Income Before Tax: USD 48.668 million; Tax Expense USD 2.677 million; Effective tax rate ~5.5%
Free Cash Flow: USD 31.647 million; Operating Cash Flow USD 32.350 million; Capital expenditures USD 0.703 million
Cash and Equivalents: USD 510.321 million; Total debt: USD 706.709 million; Net debt: USD 196.388 million
Balance Sheet: Total assets USD 2,488.071 million; Total liabilities USD 1,125.496 million; Total stockholders’ equity USD 1,362.575 million
Liquidity/(Leverage) Ratios: Current ratio ~3.24x (Total current assets USD 1,312.969 million vs. current liabilities USD 405.914 million); Interest coverage ( EBITDA/Interest expense ) ~15.9x; Cash-to-debt dynamics support ongoing investment in product development and potential M&A opportunities if aligned with strategy
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
293.51M |
21.95% |
1.39% |
| Gross Profit |
182.70M |
28.46% |
1.98% |
| Operating Income |
4.47M |
126.76% |
-61.89% |
| Net Income |
45.99M |
939.56% |
223.38% |
| EPS |
0.55 |
928.31% |
222.22% |
Management Commentary
Note: Transcript content is not provided in the data set. No management quotes or themes from the QQ3 2025 earnings call are available in the supplied material. If you can share the transcript or key quotes, I can integrate them here with thematic grouping (strategy, operations, market conditions) and context.
Forward Guidance
No formal forward guidance was included in the provided QQ3 2025 data. Given Guidewire's ongoing cloud transition and multi-product strategy for P&C insurers, the positive revenue trajectory and expanding EBITDA are encouraging, but investors should look for explicit guidance on: (1) annual and quarterly recurring revenue/ARR growth, (2) cloud mix by segment, (3) bookings and backlog evolution, and (4) core operating margin trajectory as the company accelerates cloud adoption and reduces on-premises revenue reliance. Key factors to monitor include customer retention rates, net dollar expansion, competitive dynamics with peers (e.g., Duck Creek, Insurity), and the pace of monetizing analytics/data platform offerings. If management provides targets, compare them against current trajectory to assess achievability and required investments.