GWRE · Guidewire Software
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $205.85
Note written ·
Price against the kill line
23.1% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $205.85, on record since 11 November 2026. The shares are down 8.0% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $205.85, the highest close of the last 63 sessions (28 August 2026), which would show the shares leading the S&P 500. A fiscal 2027 outlook that raises organic ending ARR above the $1,450–1,460 million range would point the same way.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 31 July 2026, filed 11 September 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 411
- Revenue, change on a year (%)
- +15.3
- Gross margin (%)
- 65.6
- Operating margin (%)
- 15.2
- Free cash flow, four quarters ($M)
- 378
- Net cash, cash less debt ($M)
- 75.0
- Price to earnings (×)
- 93.1
- Enterprise value to sales (×)
- 8.7
All filed numbers
What Guidewire Software reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 411 | +15.3 | 65.6 | 15.2 |
| first filed | 373 | +26.9 | 63.5 | 8.2 |
| first filed | 359 | +24.0 | 64.5 | 10.7 |
| first filed | 333 | +26.5 | 63.0 | 5.6 |
| first filed | 357 | +22.3 | 65.0 | 8.3 |
| first filed | 294 | +22.0 | 62.2 | 1.5 |
| Pre-tax income ($M) | 45.3 |
| Net income ($M) four quarters: 139 | 31.4 |
| Diluted shares, change on a year (%) quarter to 30 April 2026, filed 5 June 2026; against the quarter to 30 April 2025 | −0.9 |
| Operating cash flow ($M) | 390 |
| Capital spending ($M) | 12.1 |
| Free cash flow ($M) | 378 |
| Cash and short-term investments ($M) | 753 |
| Debt ($M) notes | 678 |
| Net cash, cash less debt ($M) | 75.0 |
| Deferred revenue ($M) +27.3% on a year | 439 |
| Backlog, orders not yet delivered ($M) +38.7% on a year | 4,300 |
| Receivables ($M) | 194 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 1,194 |
| Market value ($M) | 12,973 |
| Enterprise value, market value plus net debt ($M) | 12,898 |
| Enterprise value to sales (×) | 8.7 |
| Enterprise value to operating income (×) | 86.1 |
| Price to earnings (×) | 93.1 |
| Price to book value (×) | 10.9 |
| Free-cash-flow yield (%) | 2.9 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 4.7% of shares outstanding sold short, 3.1 days of average trading to cover, +32.9% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $31.6M |
| 12 monthsfrom | $0 | $49.3M |
The thesis
Guidewire Software's $1.7 billion purchase of hyperexponential gives its artificial intelligence (AI) story a growth figure, but the shares are more likely to lag the S&P 500 than lead it over the next three months. The first-quarter fiscal 2027 report, expected in early December, carries the first full-year outlook that includes the deal. It settles whether organic annual recurring revenue (ARR) still tracks the $1,450–1,460 million fiscal 2027 range the company set in September.
The company's 8-K of 27 October 2026 says the deal should add at least 650 basis points to fiscal 2027 ARR growth and at least 150 basis points to organic ARR growth from fiscal 2028. The filing does not give hyperexponential's own ARR, so the price paid cannot be checked against what the business brings in.
The market has not paid up for the announcement. Chief Executive Michael Rosenbaum's Form 4 shows a sale at $187.19 on 26 October 2026, the day before the deal was announced, and another at $160.16 on 2 November 2026. The shares closed at $160.01 on 12 November 2026, 30.4% below the 52-week intraday high of $229.85 set on 4 December 2025, and are down 8.9% over three months.
Bullish and bearish views on Guidewire Software, Inc.
The bull case on Guidewire Software, Inc. (GWRE), in brief: the acquisition lifts reported growth. The bear case: the deal adds debt and an earnout.
Bull case
- The acquisition lifts reported growth. The 27 October 2026 8-K guides to at least 650 basis points of added fiscal 2027 ARR growth from the deal. The September guide of $1,450–1,460 million for fiscal 2027 ending ARR came before the deal.
- The target brings large commercial-lines customers. hyperexponential counts Aviva, Allianz, Sompo, Beazley, Markel, HDI and Cincinnati Financial as customers, per the company's 27 October 2026 release. Its software prices more than $75 billion in annual commercial property and casualty premium.
- Core guidance points to growth. Guidewire guided fiscal 2027 revenue to $1,707–1,727 million in its fiscal 2026 results release of 3 September 2026. For the quarter ended 31 July 2026 it reported non-GAAP earnings of $0.99 a share, per the same release.
- Sell-side support persists. Investing.com counted 13 Buy ratings on 21 October 2026, with an average 12-month target of $213.29, a high of $258 and a low of $170. Oppenheimer's report of 20 October 2026 named backlog as a driver of durable growth.
- Customer wins keep arriving. GuideOne Insurance completed its migration to Guidewire Cloud on 11 November 2026, and Gore Mutual deployed Guidewire ProNavigator on 2 November 2026, per company news.
Bear case
- The deal adds debt and an earnout. The purchase is funded with a new $1.0 billion term loan committed by Bank of America and Citibank, plus cash, per the 27 October 2026 8-K. Up to $400 million more is payable if recurring-revenue targets are met.
- The price paid is opaque. The company gave the deal's contribution only in growth points. It disclosed no dollar ARR or revenue for hyperexponential and no earnings effect.
- A cautious new rating arrived. Jefferies initiated coverage on 11 November 2026 with a Hold rating and a $175 price target, per company news. The shares closed at $158.16 that day.
- Insiders keep selling. Rosenbaum sold 1,200 shares at $159.60 on 9 November 2026. President John Mullen sold 1,800 shares at $187.19 on 26 October 2026 and 5,400 at $185.00 on 20 October 2026. Chief Administrative Officer James King sold 9,187 shares at $168.00 on 9 October 2026. All ran under Rule 10b5-1 plans, per SEC Form 4 filings.
- The shares are below their medium-term averages' recent range. The close of $160.01 on 12 November 2026 sits just under the 50-day average of $160.85, and the stock fell from $167.35 on 5 November 2026 to $155.48 on 10 November 2026 before recovering.
Price setup
The last close of $160.01 on 12 November 2026 is 30.4% below the 52-week intraday high of $229.85 (4 December 2025). It sits just under the 50-day average of $160.85 and above the 200-day average of $149.06, both from adjusted daily closes.
The 52-week closing low is $102.69, set on 22 June 2026. Closes since 5 November 2026 ran $167.35, $161.41, $160.84, $155.48, $158.16 and $160.01. The $155.48 close on 10 November 2026 is the low of that run.
Analyst targets sit above the price. Investing.com's average target was $213.29 on 21 October 2026, and its lowest target was $170. Jefferies' new target is $175.
Catalysts ahead
- ~3 December 2026 (est.): First-quarter fiscal 2027 results with second-quarter guidance and an updated full-year outlook. First outlook that separates organic ARR from the hyperexponential contribution; shows whether the core business holds the $1,450–1,460 million range.
- ~31 January 2027 (est.): Expected close of the hyperexponential acquisition in the fiscal second quarter of 2027. Closing starts the inorganic ARR contribution and the interest cost of the $1.0 billion term loan.
What would change the view
A daily close above $205.85, the highest close of the last 63 sessions (28 August 2026), which would show the shares leading the S&P 500. A fiscal 2027 outlook that raises organic ending ARR above the $1,450–1,460 million range would point the same way.
What it trades with
Guidewire sells core systems to property and casualty insurers, so its results follow insurer technology budgets more than AI chip demand. The shares have traded with enterprise software peers on AI-disruption worries. The hyperexponential deal ties the stock more closely to AI in commercial insurance. No peer correlation figure has been measured for this note.
The evidence, claim by claim (8)
- Guidewire agreed to acquire hyperexponential for $1.7 billion in cash plus up to $400 million in contingent consideration tied to recurring-revenue targets. Guidewire 8-K, Exhibit 99.1, 27 October 2026 · as of
- The deal is expected to add at least 650 basis points to fiscal 2027 ARR growth inorganically and at least 150 basis points to organic ARR growth from fiscal 2028. Guidewire 8-K, Exhibit 99.1, 27 October 2026 · as of
- Financing is a new $1.0 billion term loan committed by Bank of America and Citibank plus cash on hand; closing is expected in the fiscal second quarter of 2027. Guidewire 8-K, Exhibit 99.1, 27 October 2026 · as of
- Guidewire guided fiscal 2027 revenue to $1,707–1,727 million and ending ARR to $1,450–1,460 million. Guidewire fiscal 2026 results release · as of
- Jefferies initiated coverage of Guidewire with a Hold rating and a $175 price target. Company news, Jefferies initiation · as of
- CEO Michael Rosenbaum sold 1,200 shares at $159.60 under a Rule 10b5-1 plan. SEC Form 4 filed 9 November 2026 · as of
- President John Mullen sold 1,800 shares at $187.19 on 26 October 2026 under a Rule 10b5-1 plan. SEC Form 4 filed 27 October 2026 · as of
- Investing.com counted 13 Buy ratings with an average 12-month target of $213.29, a high of $258 and a low of $170. Investing.com analyst summary · as of
Sources
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