Net Income (Loss) Per Share

3 Months Ended

Oct. 31, 2025

The Company calculates basic earnings per share by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. For calculating diluted earnings per share, the Company uses the treasury stock method for options to purchase common stock, time-based RSUs, performance-based restricted stock units (“PSUs”), and Employee Stock Purchase Plan (“ESPP”) purchase rights, and the if-converted method for the Convertible Senior Notes. RSUs and PSUs are collectively referred to as “Stock Awards.”

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share for the periods presented (in thousands, except share and per share amounts):


	Three Months Ended
	October 31,
	2025		2024
Numerator:
Net income (loss)	$	31,308	$	9,139
Net income (loss) per share:
Basic	$	0.37	$	0.11
Diluted	$	0.36	$	0.11
Denominator:
Weighted average shares used in computing net income (loss) per share:
Basic	84,780,201		83,276,236
Weighted average effect of dilutive stock options	77,299		93,718
Weighted average effect of dilutive stock awards	1,593,579		1,805,910
Weighted average effect of dilutive convertible senior notes	—		785,004
Weighted average effect of the ESPP purchase rights	658		—
Diluted	86,451,737		85,960,868

The following weighted average shares of potential common stock were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been anti-dilutive:


	Three Months Ended
	October 31,
	2025	2024

Stock awards	191,634	151,662

ESPP purchase rights	1,744	—

During the three months ended October 31, 2025 and 2024, the average market price of the Company’s common stock did not exceed the initial conversion price of the 2029 Convertible Senior Notes.

During the three months ended October 31, 2025, there was no dilutive effect on net income (loss) per share due to maturity and settlement of the outstanding principal balance of the 2025 Convertible Senior Notes in fiscal year 2025. During the three months ended October 31, 2024, the average market price of the Company’s common stock exceeded the initial conversion price of the 2025 Convertible Senior Notes, and the conversion premium was included in weighted average shares outstanding for calculating diluted net income per share.

Guidewire Software, Inc. 10-Q