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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________

FORM 10-Q

______________________________________________________________

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-35394

______________________________________________________________

Guidewire Software, Inc.

(Exact name of registrant as specified in its charter)

______________________________________________________________


Delaware			36-4468504
(State or other jurisdiction of Incorporation or organization)			(I.R.S. Employer Identification No.)

970 Park Pl, Suite 200 San Mateo, California			94403
(Address of principal executive offices)			(Zip Code)

(650) 357-9100

(Registrant’s telephone number, including area code)

______________________________________________________________

N/A

(Former name, former address and former fiscal year, if changed since last report)

______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	GWRE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Table of Contents

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On May 29, 2026, the registrant had 83,256,364 shares of common stock issued and outstanding.

Table of Contents

Guidewire Software, Inc.

Index


Part I – Financial Information

Item 1.	Financial Statements (unaudited):	1

	Condensed Consolidated Balance Sheets as of April 30, 2026 and July 31, 2025	3

	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended April 30, 2026 and 2025	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended April 30, 2026 and 2025	5

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended April 30, 2026 and 2025	6

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2026 and 2025	8

	Notes to Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	46

Item 4.	Controls and Procedures	47

Part II – Other Information		48

Item 1.	Legal Proceedings	48

Item 1A.	Risk Factors	48

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	76

Item 5.	Other Information	76

Item 6.	Exhibits	77

Signatures		78

Table of Contents

FORWARD-LOOKING STATEMENTS

The section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as other parts of this Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to risks and uncertainties. The forward-looking statements may include statements concerning, among other things, our business strategy (including anticipated trends and developments in, and management plans for, our business, and the markets in which we operate), financial results, results of operations, revenue, gross margins, operating expenses, services, products, projected costs and capital expenditures, research and development programs, cloud operations, cybersecurity effectiveness, sales and marketing initiatives, and competition. In some cases, you can identify these statements by forward-looking words, such as “will,” “may,” “might,” “should,” “could,” “estimate,” “expect,” “suggest,” “believe,” “anticipate,” “intend,” “plan,” and “continue,” the negative or plural of these words and other comparable terminology. Actual events or results may differ materially from those expressed or implied by these statements due to various factors, including but not limited to, the matters discussed in the section titled “Part II – Other Information – Item 1A. Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q. Many of the forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on information available to us as of the filing date of this Quarterly Report on Form 10-Q and our current expectations about future events, which are inherently subject to change and involve risks and uncertainties. You should not place undue reliance on these forward-looking statements.

We do not undertake any obligation to update any forward-looking statements in this Quarterly Report on Form 10-Q or in any of our other communications, except as required by law. All such forward-looking statements should be read as of the time the statements were made and with the recognition that these forward-looking statements may not be complete or accurate at a later date.

_____________

Unless the context requires otherwise, we are referring to Guidewire Software, Inc., together with its subsidiaries, when we use the terms “Guidewire,” the “Company,” “we,” “our,” or “us.” When using the term “products,” we are generally referring to both our subscription services and term license software.

PART I – Financial Information

ITEM 1.Financial Statements (unaudited)

Table of Contents

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)


	April 30, 2026		July 31, 2025

ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	294,634	$	697,902
Short-term investments	454,900		451,541
Accounts receivable, net of allowances of $1,917 and $1,166, respectively	138,853		140,639
Unbilled accounts receivable, net	224,769		130,959
Prepaid expenses and other current assets	102,255		86,374
Total current assets	1,215,410		1,507,415
Long-term investments	397,267		333,754
Unbilled accounts receivable, net	83		670
Property and equipment, net	66,647		60,436
Operating lease assets	36,443		39,309
Intangible assets, net	17,727		12,042
Goodwill	421,111		393,978
Deferred tax assets, net	293,911		297,234
Other assets	86,533		76,261
TOTAL ASSETS	$	2,535,132	$	2,721,099
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	34,972	$	28,797
Accrued employee compensation	117,531		140,613
Deferred revenue, net	300,641		340,253
Other current liabilities	44,032		35,139
Total current liabilities	497,175		544,802
Lease liabilities	27,031		30,687
Convertible senior notes, net	677,206		674,568
Deferred revenue, net	3,718		4,533
Other liabilities	12,858		9,279
Total liabilities	1,217,987		1,263,869
STOCKHOLDERS’ EQUITY:
Common stock	8		8
Additional paid-in capital	2,169,769		2,020,393
Accumulated other comprehensive income (loss)	(7,105)		(8,922)
Retained earnings (accumulated deficit)	(845,527)		(554,249)
Total stockholders’ equity	1,317,145		1,457,230
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,535,132	$	2,721,099

See accompanying Notes to Condensed Consolidated Financial Statements.

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands except shares and per share amounts)


	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2026		2025		2026		2025
Revenue:
Subscription and support	$	244,738	$	181,823	$	704,150	$	529,403
License	55,996		57,233		157,491		158,297
Services	71,807		54,452		202,634		158,189
Total revenue	372,541		293,508		1,064,276		845,889
Cost of revenue:
Subscription and support	67,882		57,411		195,737		170,531
License	374		892		1,460		2,715
Services	67,639		52,507		189,390		152,401
Total cost of revenue	135,896		110,810		386,587		325,647
Gross profit:
Subscription and support	176,856		124,412		508,413		358,872
License	55,622		56,341		156,031		155,582
Services	4,167		1,945		13,244		5,788
Total gross profit	236,645		182,698		677,689		520,242
Operating expenses:
Research and development	87,868		72,915		249,510		212,063
Sales and marketing	68,201		57,768		193,934		164,698
General and administrative	49,939		47,547		146,689		132,010
Total operating expenses	206,008		178,230		590,133		508,771
Income (loss) from operations	30,637		4,468		87,556		11,471
Interest income	11,295		13,794		38,432		43,122
Interest expense	(3,318)		(3,668)		(9,965)		(9,913)
Other income (expense), net	(18,854)		34,074		2,791		(36,270)
Income (loss) before provision for (benefit from) income taxes	19,760		48,668		118,814		8,410
Provision for (benefit from) income taxes	3,289		2,677		10,926		(9,443)
Net income (loss)	$	16,471	$	45,991	$	107,888	$	17,853
Net income (loss) per share:
Basic	$	0.20	$	0.55	$	1.27	$	0.21
Diluted	$	0.19	$	0.54	$	1.26	$	0.21

Shares used in computing net income (loss) per share:
Basic	84,241,069		84,044,661		84,630,718		83,671,443
Diluted	85,065,999		85,880,643		85,945,646		85,654,903

See accompanying Notes to Condensed Consolidated Financial Statements.

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)


	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2026		2025		2026		2025
Net income (loss)	$	16,471	$	45,991	$	107,888	$	17,853
Other comprehensive income (loss):
Foreign currency translation adjustments	(2,367)		6,322		2,459		2,962
Unrealized gains (losses) on available-for-sale securities	(2,476)		462		(993)		819
Tax benefit (expense) on unrealized gains (losses) on available-for-sale securities	553		(141)		200		(212)
Reclassification adjustment for realized gains (losses) on available-for-sale securities, included in net income (loss)	144		134		152		78
Total other comprehensive income (loss)	(4,146)		6,777		1,818		3,647
Comprehensive income (loss)	$	12,325	$	52,768	$	109,706	$	21,500

See accompanying Notes to Condensed Consolidated Financial Statements.

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited, in thousands except share amounts)


	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings (accumulated deficit)		Total stockholders’ equity
	Shares	Amount
Balance as of July 31, 2025	84,530,418	$	8	$	2,020,393	$	(8,922)	$	(554,249)	$	1,457,230
Net income (loss)	—	—		—		—		31,308		31,308

Issuance of common stock upon exercise of stock options	6,171	—		413		—		—		413
Issuance of common stock upon vesting of restricted stock units ("RSUs")	482,304	1		—		—		—		1
Stock-based compensation	—	—		43,449		—		—		43,449




Foreign currency translation adjustment	—	—		—		118		—		118
Unrealized gains (losses) on available-for-sale securities, net of tax	—	—		—		945		—		945
Reclassification adjustment for realized gains (losses) on available-for-sale securities, included in net income (loss)	—	—		—		(46)		—		(46)
Balance as of October 31, 2025	85,018,893	$	9	$	2,064,255	$	(7,905)	$	(522,941)	$	1,533,418
Net income (loss)	—	—		—		—		60,110		60,110
Issuance of common stock under employee stock purchase plan ("ESPP") and upon exercise of stock options	87,386	—		13,482		—		—		13,482
Issuance of common stock upon vesting of RSUs	292,046	—		—		—		—		—
Stock-based compensation	—	—		46,851		—		—		46,851
Repurchase and retirement of common stock	(740,995)	(1)		—		—		(148,192)		(148,193)
Foreign currency translation adjustment	—	—		—		4,708		—		4,708
Unrealized gains (losses) on available-for-sale securities, net of tax	—	—		—		185		—		185
Reclassification adjustment for realized gains (losses) on available-for-sale securities, included in net income (loss)	—	—		—		54		—		54
Balance as of January 31, 2026	84,657,330	$	8	$	2,124,589	$	(2,959)	$	(611,021)	$	1,510,618
Net income (loss)	—	—		—		—		16,471		16,471
Issuance of common stock under ESPP and upon exercise of stock options	679	—		1		—		—		1
Issuance of common stock upon vesting of RSUs	294,374	—		—		—		—		—
Stock-based compensation	—	—		45,179		—		—		45,179
Repurchase and retirement of common stock, including excise tax	(1,696,180)	—		—		—		(250,975)		(250,975)
Foreign currency translation adjustment	—	—		—		(2,367)		—		(2,367)
Unrealized gains (losses) on available-for-sale securities, net of tax	—	—		—		(1,923)		—		(1,923)
Reclassification adjustment for realized gains (losses) on available-for-sale securities, included in net income (loss)	—	—		—		144		—		144


Balance as of April 30, 2026	83,256,203	$	8	$	2,169,769	$	(7,105)	$	(845,527)	$	1,317,145

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	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings (accumulated deficit)		Total stockholders’ equity
	Shares	Amount
Balance as of July 31, 2024	83,025,637	$	8	$	1,979,021	$	(12,244)	$	(624,053)	$	1,342,732
Net income (loss)	—	—		—		—		9,139		9,139
Issuance of common stock upon exercise of stock options	27,003	—		1,939		—		—		1,939
Issuance of common stock upon vesting of RSUs	466,489	—		—		—		—		—
Stock-based compensation	—	—		38,167		—		—		38,167
Purchase of capped calls	—	—		(58,788)		—		—		(58,788)
Retirement of convertible senior notes	—	—		(79,366)		—		—		(79,366)
Deferred tax asset related to debt issuance of convertible senior notes	—	—		13,931		—		—		13,931
Foreign currency translation adjustment	—	—		—		(62)		—		(62)
Unrealized gains (losses) on available-for-sale securities, net of tax	—	—		—		453		—		453
Reclassification adjustment for realized gains (losses) on available-for-sale securities, included in net income (loss)	—	—		—		(116)		—		(116)
Balance as of October 31, 2024	83,519,129	$	8	$	1,894,904	$	(11,969)	$	(614,914)	$	1,268,029
Net income (loss)	—	—		—		—		(37,277)		(37,277)
Issuance of common stock upon exercise of stock options	8,556	—		525		—		—		525
Issuance of common stock upon vesting of RSUs	352,891	—		—		—		—		—
Stock-based compensation	—	—		40,864		—		—		40,864

Foreign currency translation adjustment	—	—		—		(3,298)		—		(3,298)
Unrealized gains (losses) on available-for-sale securities, net of tax	—	—		—		(167)		—		(167)
Reclassification adjustment for realized gains (losses) on available-for-sale securities, included in net income (loss)	—	—		—		60		—		60
Balance as of January 31, 2025	83,880,576	$	8	$	1,936,293	$	(15,374)	$	(652,191)	$	1,268,736
Net income (loss)	—	—		—		—		45,991		45,991
Issuance of common stock upon exercise of stock options	10,196	—		710		—		—		710
Issuance of common stock upon vesting of RSUs	330,255	—		—		—		—		—
Stock-based compensation	—	—		40,367		—		—		40,367
Settlement of convertible senior notes	671,202	—		(6)		—		—		(6)
Settlement of capped calls	(697,140)	—		—		—		—		—

Foreign currency translation adjustment	—	—		—		6,322		—		6,322
Unrealized gains (losses) on available-for-sale securities, net of tax	—	—		—		321		—		321
Reclassification adjustment for realized gains (losses) on available-for-sale securities, included in net income (loss)	—	—		—		134		—		134
Balance as of April 30, 2025	84,195,089	$	8	$	1,977,364	$	(8,597)	$	(606,200)	$	1,362,575

See accompanying Notes to Condensed Consolidated Financial Statements.

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
	Nine Months Ended April 30,
	2026		2025
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	107,888	$	17,853
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	20,632		17,538
Amortization of debt issuance costs	2,947		2,782
Amortization of contract costs	25,812		22,518
Stock-based compensation	135,015		119,365
Changes to allowance for credit losses and revenue reserves	2,542		1,107
Deferred income tax	922		(15,851)
Amortization of premium (accretion of discount) on available-for-sale securities, net	(5,377)		(8,613)
(Gains) losses on sale of strategic investments	(632)		(3,671)
Changes in fair value of strategic investments	(554)		341
Loss on retirement of debt	—		53,565
Other non-cash items affecting net income (loss)	18		56
Changes in operating assets and liabilities:
Accounts receivable	276		(10,609)
Unbilled accounts receivable	(93,214)		(74,471)
Prepaid expenses and other assets	(33,815)		(29,305)
Operating lease assets	2,866		1,983
Accounts payable	7,910		13,589
Accrued employee compensation	(23,578)		(20,600)
Deferred revenue	(40,781)		(24,876)
Lease liabilities	(3,572)		(1,121)
Other liabilities	525		(5,544)
Net cash provided by (used in) operating activities	105,830		56,036
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities	(644,915)		(672,330)
Maturities and sales of available-for-sale securities	582,638		529,887
Purchases of property and equipment	(9,934)		(2,336)
Capitalized software development costs	(13,939)		(10,972)
Acquisition of strategic investments	(14,590)		(1,772)
Sale of strategic investment	781		5,671
Acquisition of business, net of acquired cash	(33,453)		(26,724)
Net cash provided by (used in) investing activities	(133,412)		(178,576)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible senior notes, net of issuance costs	—		671,840
Payment for the retirement of convertible senior notes	—		(353,535)
Payment for the maturity of convertible senior notes	—		(179,061)
Purchase of capped calls	—		(58,788)
Payment of revolving credit facility costs	—		(2,065)
Proceeds from issuance of common stock under employee stock purchase plan	13,364		—
Proceeds from issuance of common stock upon exercise of stock options	539		3,174
Repurchase and retirement of common stock	(392,447)		—
Net cash provided by (used in) financing activities	(378,544)		81,565

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Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	1,666		3,303
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(404,460)		(37,672)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period	699,094		549,184
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period	$	294,634	$	511,512






SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	4,824	$	7,000
Cash paid for income taxes, net of tax refunds	$	6,965	$	6,323
Accruals for purchase of property and equipment	$	929	$	802
Accruals for capitalized software development costs	$	1,096	$	807
Accruals for shares repurchased	$	5,201	$	—

Accrual for business acquisition purchase consideration holdback	$	878	$	1,011

See accompanying Notes to Condensed Consolidated Financial Statements.

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. The Company and Summary of Significant Accounting Policies and Estimates

Company

Guidewire Software, Inc., a Delaware corporation, was incorporated on September 20, 2001. Guidewire Software, Inc., together with its subsidiaries (the “Company”), provides a technology platform which combines core systems of record with digital, analytics, and artificial intelligence (“AI”) applications. The Company’s technology platform supports core insurance operations, including underwriting, policy administration, claim management, and billing; insights into data that can improve business decision making; and digital sales, service, and claims experiences for policyholders, agents, and other key stakeholders. The Company’s customers are primarily property and casualty insurance carriers.

Basis of Presentation and Consolidation

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The condensed consolidated financial statements and notes include the Company and its wholly owned subsidiaries and reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. All intercompany balances and transactions have been eliminated in consolidation. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the SEC. Certain figures included in this document have been subjected to rounding adjustments. Accordingly, figures shown in the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and related notes, together with management’s discussion and analysis of financial condition and results of operations, presented in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

Use of Estimates

In preparing the condensed consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the SEC, the Company must make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ materially from these estimates.

Significant Accounting Policies

There have been no changes in the Company’s significant accounting policies from those that were disclosed in the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended July 31, 2025, except for those disclosed herein.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, investments, accounts receivable, and unbilled accounts receivable. The Company maintains its cash, cash equivalents, and investments with high-quality financial institutions. The Company is exposed to credit risk for cash held in financial institutions in the event of a default to the extent that such amounts recorded in the condensed consolidated balance sheets are in excess of amounts that are insured by the Federal Deposit Insurance Corporation.

No customer individually accounted for 10% or more of the Company’s revenue for the three and nine months ended April 30, 2026 and 2025. As of April 30, 2026, no customer individually accounted for 10% or more of the Company’s accounts receivable. As of July 31, 2025, one customer accounted for 10% or more of the Company’s accounts receivable.

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Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The new standard will be adopted in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2026. The adoption will impact the Company’s disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose qualitative and quantitative information about certain costs and expenses in the notes to the financial statements on an interim and annual basis. The new standard will be effective and the Company will adopt it for the annual period beginning August 1, 2027, and for the interim periods beginning after August 1, 2028. Upon adoption, the guidance can be applied prospectively or retrospectively. The adoption of this ASU will impact the Company’s disclosures.

In July 2025, the FASB issued ASU No. 2025-05, Income Statement—Reporting Financial Instruments-Credit Losses (Subtopic 326-20): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for all entities related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The new standard will be effective and the Company will adopt it beginning August 1, 2026 on a prospective basis. The Company is currently assessing the impact of adopting this standard on the consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software which removes all references to prescriptive and sequential software development stages to increase the operability of applying the guidance to software costs incurred in an iterative development environment. The new standard will be effective and the Company will adopt it beginning August 1, 2028. Upon adoption, the guidance can be applied using a prospective, retrospective, or modified transition approach. The Company is currently assessing the impact of adopting this standard on the consolidated financial statements.

Other recent accounting pronouncements that will be applicable to the Company are not expected to have a material impact on its present or future financial statements.

2. Revenue

Disaggregation of Revenue

Revenue by product type is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2026		2025		2026		2025
Subscription and support
Subscription	$	232,129	$	166,464	$	662,312	$	480,981
Support	12,609		15,359		41,838		48,422

License (1)	55,996		57,233		157,491		158,297

Services	71,807		54,452		202,634		158,189
Total revenue	$	372,541	$	293,508	$	1,064,276	$	845,889

(1) License revenue for the three and nine months ended April 30, 2025 includes perpetual license revenue of $0.1 million and $0.1 million, respectively.

Revenue by product type and by geography is as follows (in thousands):

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	Three Months Ended April 30, 2026
	Subscription and support		License		Services		Total
United States	$	161,641	$	32,105	$	48,533	$	242,279
Canada	31,797		2,302		6,093		40,193
Other Americas	3,497		565		753		4,815
Total Americas	196,935		34,972		55,380		287,287


Total EMEA	31,962		11,050		9,778		52,790
Total APAC	15,842		9,974		6,648		32,464
Total revenue	$	244,738	$	55,996	$	71,807	$	372,541


	Three Months Ended April 30, 2025
	Subscription and support		License		Services		Total

United States	$	119,966	$	33,402	$	38,319	$	191,687
Canada	25,068		2,249		3,917		31,234
Other Americas	1,958		626		267		2,851
Total Americas	146,992		36,277		42,503		225,772


Total EMEA	22,461		11,024		8,868		42,353
Total APAC	12,370		9,932		3,081		25,383
Total revenue	$	181,823	$	57,233	$	54,452	$	293,508


	Nine Months Ended April 30, 2026
	Subscription and support		License		Services		Total
United States	$	466,239	$	86,093	$	131,153	$	683,484
Canada	90,554		10,776		26,078		127,408
Other Americas	10,482		756		2,521		13,758
Total Americas	567,274		97,624		159,752		824,650


Total EMEA	90,471		38,917		29,087		158,476
Total APAC	46,405		20,950		13,795		81,150
Total revenue	$	704,150	$	157,491	$	202,634	$	1,064,276


	Nine Months Ended April 30, 2025
	Subscription and support		License		Services		Total
United States	$	351,424	$	79,358	$	109,313	$	540,095
Canada	75,912		12,116		14,579		102,607
Other Americas	4,851		1,153		1,178		7,182
Total Americas	432,187		92,627		125,070		649,884


Total EMEA	59,568		38,822		24,455		122,845
Total APAC	37,648		26,848		8,664		73,160
Total revenue	$	529,403	$	158,297	$	158,189	$	845,889

No country or region other than those listed above accounted for more than 10% of revenue during the three and nine months ended April 30, 2026 and 2025.

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Customer Contract – Related Balance Sheet Amounts

Amounts related to customer contract-related arrangements are included in the condensed consolidated balance sheets as follows (in thousands):


	April 30, 2026		July 31, 2025
Unbilled accounts receivable, net	$	224,852	$	131,629
Contract acquisition costs, net	$	65,028	$	67,922
Costs to fulfill a contract, net	$	12,353	$	9,415
Deferred revenue, net	$	304,358	$	344,786

Contract acquisition costs

The current portion of contract acquisition costs of $21.1 million and $21.1 million is included in prepaid and other current assets in the Company’s condensed consolidated balance sheets as of April 30, 2026 and July 31, 2025, respectively. The non-current portion of contract acquisition costs of $43.9 million and $46.8 million is included in other assets in the Company’s condensed consolidated balance sheets as of April 30, 2026 and July 31, 2025, respectively. The Company amortized $5.6 million and $4.7 million of contract acquisition costs during the three months ended April 30, 2026 and 2025, respectively, and amortized $17.0 million and $14.6 million of contract acquisition costs during the nine months ended April 30, 2026 and 2025, respectively.

Costs to fulfill a contract

The current portion of costs to fulfill a contract of $8.5 million and $5.9 million is included in prepaid and other current assets in the Company’s condensed consolidated balance sheets as of April 30, 2026 and July 31, 2025, respectively. The non-current portion of costs to fulfill a contract of $3.8 million and $3.5 million is included in other assets in the Company’s condensed consolidated balance sheets as of April 30, 2026 and July 31, 2025, respectively. The Company amortized $2.9 million and $2.6 million of costs to fulfill a contract during the three months ended April 30, 2026 and 2025, respectively, and amortized $8.8 million and $7.9 million of costs to fulfill a contract during the nine months ended April 30, 2026 and 2025, respectively.

Deferred revenue

During the three and nine months ended April 30, 2026, the Company recognized revenue of approximately $51.8 million and $309.8 million related to the Company’s gross deferred revenue balance as of July 31, 2025.

Remaining Performance Obligations

The aggregate amount of consideration allocated to remaining performance obligations either not satisfied or partially satisfied was approximately $3.6 billion as of April 30, 2026. Subscription services are typically satisfied over five years and support services and professional services are generally satisfied within one year. Professional services under time and material contracts are not included in the remaining performance obligations calculation as these arrangements can be cancelled at any time.

3. Fair Value of Financial Instruments

Available-for-sale investments within cash equivalents and investments consist of the following (in thousands):


	April 30, 2026
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Asset-backed securities	$	85,115	$	59	$	(99)	$	85,075
Certificates of deposit	56,450		—		—		56,450
Commercial paper	57,607		—		—		57,607
Corporate bonds	468,898		631		(651)		468,878
Foreign government bonds	1,820		—		—		1,820
Money market funds	162,494		—		—		162,494
U.S. Government agency securities	86,182		20		(155)		86,047
U.S. Government bonds	97,273		37		(272)		97,038
Total	$	1,015,839	$	747	$	(1,177)	$	1,015,410

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	July 31, 2025
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Asset-backed securities	$	69,405	$	69	$	(17)	$	69,457
Certificates of deposit	80,970		—		—		80,970
Commercial paper	130,628		—		—		130,628
Corporate bonds	424,791		545		(138)		425,198
Foreign government bonds	1,820		11		—		1,831
Money market funds	488,854		—		—		488,854
U.S. Government agency securities	66,184		15		(70)		66,129
U.S. Government bonds	64,187		36		(39)		64,184
Total	$	1,326,839	$	676	$	(264)	$	1,327,251

The Company does not consider any portion of the unrealized losses at April 30, 2026 to be credit losses. The Company has recorded the securities at fair value in its condensed consolidated balance sheets, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss). The amount of unrealized gains and losses reclassified into earnings are based on the specific identification of the securities sold. The realized gains and losses from sales of securities are presented in the condensed consolidated statements of comprehensive income (loss).

The following table summarizes the contractual maturities of the Company’s available-for-sale investments measured at fair value (in thousands):


	April 30, 2026
	Less Than 12 Months		12 Months or Greater		Total
Asset-backed securities	$	14,715	$	70,360	$	85,075
Certificates of deposit	56,450		—		56,450
Commercial paper	57,607		—		57,607
Corporate bonds	279,650		189,228		468,878
Foreign government bonds	1,820		—		1,820
Money market funds	162,494		—		162,494
U.S. Government agency securities	7,969		78,078		86,047
U.S. Government bonds	37,437		59,601		97,038


Total	$	618,142	$	397,267	$	1,015,410

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company applies the three-level valuation hierarchy when measuring the fair value of certain assets and liabilities:

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2—Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and

Level 3—Unobservable inputs that are supported by little or no market activity, which require the Company to develop its own assumptions.

Available-for-sale investments

The following tables summarize the Company’s available-for-sale investments measured at fair value, by level within the fair value hierarchy (in thousands):

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	April 30, 2026
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Commercial paper	$	—	$	749	$	—	$	749

Money market funds	162,494		—		—		162,494
Total cash equivalents	162,494		749		—		163,243
Short-term investments:
Asset-backed securities	—		14,715		—		14,715
Certificates of deposit	—		56,450		—		56,450
Commercial paper	—		56,858		—		56,858
Corporate bonds	—		279,650		—		279,650
Foreign government bonds	—		1,820		—		1,820
U.S. Government agency securities	—		7,969		—		7,969
U.S. Government bonds	—		37,437		—		37,437

Total short-term investments	—		454,900		—		454,900
Long-term investments:
Asset-backed securities	—		70,360		—		70,360
Corporate bonds	—		189,228		—		189,228

U.S. Government agency securities	—		78,078		—		78,078
U.S. Government bonds	—		59,601		—		59,601
Total long-term investments	—		397,267		—		397,267
Total	$	162,494	$	852,916	$	—	$	1,015,410


	July 31, 2025
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Commercial paper	$	—	$	53,102	$	—	$	53,102
Money market funds	488,854		—		—		488,854
Total cash equivalents	488,854		53,102		—		541,956
Short-term investments:
Asset-backed securities	—		11,393		—		11,393
Certificates of deposit	—		80,970		—		80,970
Commercial paper	—		77,526		—		77,526
Corporate bonds	—		220,890		—		220,890
Foreign government bonds	—		1,831		—		1,831
U.S. Government agency securities	—		13,188		—		13,188
U.S. Government bonds	—		45,743		—		45,743
Total short-term investments	—		451,541		—		451,541
Long-term investments:
Asset-backed securities	—		58,064		—		58,064
Corporate bonds	—		204,308		—		204,308
U.S. Government agency securities	—		52,941		—		52,941
U.S. Government bonds	—		18,441		—		18,441
Total long-term investments	—		333,754		—		333,754
Total	$	488,854	$	838,397	$	—	$	1,327,251

Convertible Senior Notes

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In March 2018, the Company issued $400.0 million aggregate principal amount of 1.25% Convertible Senior Notes due 2025 (the “2025 Convertible Senior Notes”) and, in October 2024, the Company issued $690.0 million aggregate principal amount of 1.25% Convertible Senior Notes due 2029 (the “2029 Convertible Senior Notes,” together with the 2025 Convertible Senior Notes, the “Convertible Senior Notes”). The 2025 Convertible Senior Notes were fully settled prior to July 31, 2025.

The fair value of the 2029 Convertible Senior Notes was $682.4 million and $795.0 million at April 30, 2026 and July 31, 2025, respectively. The Company estimates the fair value of the 2029 Convertible Senior Notes using commonly accepted valuation methodologies and market-based risk measurements that are directly observable, such as unadjusted quoted prices in markets that are not active (Level 2).

Strategic Investments

The Company’s other assets include strategic investments in privately held companies in which the Company does not have a controlling interest or the ability to exert significant influence. The strategic investments consist of non-marketable equity securities that do not have readily determinable market values (Level 3), which are recorded using the measurement alternative of cost less impairment and adjusts cost for subsequent observable changes in fair value, and an investment in a limited partnership, which is recorded using the net asset value practical expedient (Level 3) in accordance with ASC 820. Changes in fair value are recorded in other income (expense) on the condensed consolidated statements of operations.

The following table summarizes the unrealized and realized gains (losses) on strategic investments (in thousands):


	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2026		2025		2026		2025
Unrealized gains (losses), net, recognized on privately held equity securities measured using net asset value	$	(13)	$	(103)	$	(58)	$	(341)
Unrealized gains (losses) recognized on strategic investments using the measurement alternative	611		—		611		—


Unrealized gains (losses), net	599		(103)		554		(341)
Realized gains (losses), net on sales of strategic investments	632		—		632		3,671
Gains (losses) on strategic investments, net	$	1,231	$	(103)	$	1,186	$	3,330

The following table summarizes the carrying amount of the Company’s strategic investments (in thousands):


	April 30, 2026		July 31, 2025
Equity investments using the measurement alternative	$	33,315	$	18,263
Equity investment using net asset value	$	1,724	$	1,781

4. Acquisitions

On April 16, 2025, the Company completed its acquisition of a Poland-based insurtech company specializing in dynamic pricing software, for net cash consideration of approximately $27.9 million, subject to customary transaction adjustments. The measurement period for the Company’s acquisition ended on April 15, 2026, and the final allocation of the purchase consideration included goodwill of $21.4 million.

On November 7, 2025, the Company completed its acquisition of a Canada-based knowledge management platform purpose-built for the P&C insurance industry, for net cash consideration of approximately $33.4 million, subject to customary transaction adjustments. The preliminary allocation of the purchase price included goodwill of $26.1 million primarily related to the expected synergies from the acquired workforce, and the opportunity to sell into and expand the Company’s customer base. The goodwill recorded is not expected to be deductible for income tax purposes. The preliminary allocation of purchase price is pending the resolution of certain post-closing matters, and is therefore subject to potential future measurement period adjustments. The measurement period will end no later than November 6, 2026.

In conjunction with the purchase price allocations for the acquired companies, the Company determined that the separately identifiable intangible assets were acquired technology and customer relationships. The valuation models were based on estimates of future operating projections of the acquired companies and rights to sell new products containing the acquired technology, as well as judgments on the discount rates used and other variables. The Company developed financial forecasts based on a number of factors, including future revenue and operating cost projections, a discount rate that is representative of the weighted average cost of capital, and royalty and long-term sustainable growth rates based on a market analysis. These fair value measurements were based on

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significant inputs that were not observable in the market and thus represent a Level 3 measurement. The Company amortizes the acquired intangibles over their estimated useful lives.

Pro forma and historical financial information have not been provided as the acquisitions are not material to the condensed consolidated financial statements.

5. Net Income (Loss) Per Share

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 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				Nine Months Ended
	April 30,				April 30,
	2026		2025		2026		2025
Numerator:
Net income (loss)	$	16,471	$	45,991	$	107,888	$	17,853
Net income (loss) per share:
Basic	$	0.20	$	0.55	$	1.27	$	0.21
Diluted	$	0.19	$	0.54	$	1.26	$	0.21
Denominator:
Weighted average shares used in computing net income (loss) per share:
Basic	84,241,069		84,044,661		84,630,718		83,671,443
Weighted average effect of dilutive stock options	54,629		86,029		68,607		89,946
Weighted average effect of dilutive stock awards	767,005		1,749,953		1,227,386		1,893,514

Weighted average effect of the ESPP purchase rights	3,296		—		18,935		—
Diluted	85,065,999		85,880,643		85,945,646		85,654,903

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		Nine Months Ended
	April 30,		April 30,
	2026	2025	2026	2025

Stock awards	1,360,753	—	650,557	—

During the three and nine months ended April 30, 2026 and 2025, 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 and nine months ended April 30, 2026 and 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.

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6. Debt

Convertible Senior Notes

In March 2018, the Company issued $400.0 million aggregate principal amount of the 2025 Convertible Senior Notes. The 2025 Convertible Senior Notes matured on March 15, 2025 and were fully settled in fiscal year 2025 as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

In October 2024, the Company offered and sold $690.0 million aggregate principal amount of its 2029 Convertible Senior Notes. The 2029 Convertible Senior Notes were issued in accordance with the Indenture, dated as of October 18, 2024, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “2029 Indenture”). The net proceeds from the issuance of the 2029 Convertible Senior Notes were $671.8 million after deducting issuance costs.

The 2029 Convertible Senior Notes are unsecured obligations of the Company with interest payable semi-annually in arrears, at a rate of 1.25% per year, on May 1st and November 1st of each year. The 2029 Convertible Senior Notes will mature on November 1, 2029 unless repurchased, redeemed, or converted prior to such date. Before August 1, 2029, holders of the 2029 Convertible Senior Notes will have the right to convert their 2029 Convertible Senior Notes only upon the occurrence of certain events. On or after August 1, 2029, the 2029 Convertible Senior Notes are convertible at any time at the election of holders until the close of business on the second scheduled trading day immediately preceding the maturity date. The 2029 Convertible Senior Notes will have an initial conversion rate of 4.0875 shares of common stock per $1,000 principal (equivalent to an initial conversion price of approximately $244.65 per share of the Company’s common stock). The conversion rate is subject to customary adjustments upon the occurrence of certain events but will not be adjusted for any accrued and unpaid interest. The consideration due upon conversion will consist of cash, up to at least the proportional amount of the principal amount being converted, and any excess of the proportional conversion value for that trading day that will not be settled in cash will be settled in shares of the Company’s common stock.

The Company may redeem the 2029 Convertible Senior Notes, at its option, on or after November 5, 2027 and on or before the 20th scheduled trading day immediately before the maturity date, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest if (i) the 2029 Convertible Senior Notes are “Freely Tradable” (as defined in the 2029 Indenture) as of the date the Company sends the related redemption notice, and all accrued and unpaid additional interest, if any, has been paid in full, as of the most recent interest payment date occurring on or before the date the Company sends the related redemption notice; and (ii) the last reported sale price of the Company’s common stock has been at least 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption; and (2) the trading day immediately preceding the date on which the Company provides notice of redemption. No sinking fund is required to be provided for the 2029 Convertible Senior Notes. Upon the occurrence of a fundamental change (as defined in the 2029 Indenture) prior to the maturity date, holders may require the Company to repurchase all or a portion of the 2029 Convertible Senior Notes for cash at a price equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2029 Convertible Senior Notes rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2029 Convertible Senior Notes, and equal in right of payment to any of its indebtedness that is not so subordinated. The 2029 Convertible Senior Notes are effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) and any preferred equity of its current or future subsidiaries.

The net carrying value of debt instruments and unamortized debt issuance costs was as follows (in thousands):


Debt Instrument	April 30, 2026		July 31, 2025
2029 convertible senior notes - principal amount	$	690,000	$	690,000


Less: unamortized debt issuance costs	(12,794)		(15,432)
Net carrying amount of debt	677,206		674,568
Less: current portion of convertible senior notes, net	—		—
Non-current portion of convertible senior notes, net	$	677,206	$	674,568

The effective interest rate of the 2029 Convertible Senior Notes is 1.8%. The if-converted value of the 2029 Convertible Senior Notes did not exceed the outstanding principal as of April 30, 2026.

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The following table sets forth the interest expense recognized related to debt instruments (in thousands):


	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2026		2025		2026		2025
Contractual interest expense	$	2,156	$	2,436	$	6,469	$	6,827
Amortization of debt issuance costs	984		1,058		2,947		2,782
Commitment fees	168		167		512		279
Total	$	3,309	$	3,661	$	9,928	$	9,888

Capped Calls

The capped call transactions related to the 2025 Convertible Senior Notes were fully settled in March 2025 in connection with the maturity and settlement of the 2025 Convertible Senior Notes as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

In connection with the offering of the 2029 Convertible Senior Notes, the Company purchased capped calls with certain financial institutions pursuant to capped call confirmations (collectively, the “Capped Calls”).

The initial strike price of the Capped Calls corresponds to the initial conversion price of the 2029 Convertible Senior Notes. By entering into the Capped Calls, the Company expects to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price under the 2029 Convertible Senior Notes. The Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. Additionally, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including changes in law, insolvency filings, and hedging disruptions. The Capped Calls were recorded in the period purchased as a reduction of the Company’s additional paid-in capital in the accompanying consolidated balance sheets and are not accounted for as derivatives.

The following table sets forth key terms and costs incurred for the Capped Calls related to the 2029 Convertible Senior Notes:


	2029 Convertible Senior Notes
Initial strike price per share, subject to certain adjustments	$	244.65
Initial cap price per share, subject to certain adjustments	$	329.33
Net cost incurred (in millions)	$	58.8
Common stock shares covered, subject to anti-dilution adjustments (in millions)	2.8

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Revolving Credit Facility

In December 2024, the Company entered into a revolving credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent and certain other financial institutions from time to time party thereto (with the administrative agent, the “Lenders”), which provides for a senior secured revolving credit facility in an aggregate principal amount of $300.0 million (the “2025 Credit Facility”). At the Company’s discretion, it allows flexibility for an uncommitted upsize of the aggregate principal amount of the 2025 Credit Facility or the establishment of incremental term loan facilities, in each case, as further set forth in the Credit Agreement.

The loans under the 2025 Credit Facility bear interest (i) for U.S. Dollar-denominated loans, at the Company’s option, at either (a) the bank’s base rate, plus an applicable margin ranging from 0.25% to 1.25% per annum, or (b) a term SOFR (as defined in the Credit Agreement), plus an applicable margin ranging from 1.25% to 2.25% per annum, and (ii) for alternative currency-denominated loans, at the applicable alternative currency rate (whether a daily rate or a term rate), plus an applicable margin ranging from 1.25% to 2.25% per annum, in each case, such applicable margins to be determined based on the Company’s total net leverage ratio.

In addition to paying interest on the outstanding principal under the 2025 Credit Facility, the Company is required to pay (i) a commitment fee ranging from 0.175% to 0.30% per annum, to be determined based on the Company’s total net leverage ratio, on the actual daily unused amount of each Lender’s commitment under the 2025 Credit Facility, (ii) a letter of credit fronting fee of 0.125% per annum of the daily amount available to be drawn under outstanding letters of credit, and (iii) certain other customary fees and expenses of the Lenders and agents.

The Credit Agreement contains customary covenants, including, but not limited to, restrictions on the Company’s ability to merge and consolidate with other companies, dispose of assets, incur indebtedness, or grant liens or other security interests on assets, in each case, subject to certain customary exceptions. The financial covenants require as of the end of each fiscal quarter that (a) the Company has a minimum consolidated net cash interest coverage ratio of 3.00:1.00 and (b) the Company does not exceed a maximum total net leverage ratio of 3.75:1.00. The maximum total net leverage ratio is subject to a step-up by 0.50:1.00 at the election of the Company for four fiscal quarters following certain material acquisitions, subject to certain customary exceptions.

The Company was in compliance with all covenants as of April 30, 2026.

The 2025 Credit Facility has a scheduled maturity of December 2, 2029; provided that the Credit Agreement provides for a maturity date of 91 days prior to the earlier maturity date of any individual or related series of other indebtedness with an aggregate outstanding principal amount that exceeds the greater of (x) $107.5 million and (y) 50% of Consolidated EBITDA (as defined in the Credit Agreement) as of the most recent four fiscal quarter period preceding such 91st day for which financial statements were required to be delivered pursuant to the Credit Agreement, unless the Company maintains either (a) a total net leverage ratio lower than 2.00:1.00 or (b) liquidity greater than 125% of the aggregate outstanding principal amount of such indebtedness.

The Credit Agreement includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA (as defined in the Credit Agreement) events, in each case, subject to certain customary exceptions and grace periods. During the continuance of an event of default, the Lenders may take a number of actions, including, among others, declaring the entire aggregate amount then outstanding under the 2025 Credit Facility to be due and payable.

The Company’s obligations under the Credit Agreement are required to be guaranteed by the Company’s material domestic subsidiaries. The Company’s obligations under the Credit Agreement are secured by a security interest in substantially all of the assets of the Company and each guarantor. Revolving loans may be prepaid, and revolving loan commitments may be permanently reduced by the Company in whole or in part, without penalty or premium.

As of April 30, 2026, there were no outstanding borrowings of revolving loans under the 2025 Credit Facility. As of April 30, 2026, there was an outstanding standby letter of credit issued under the 2025 Credit Facility in an immaterial amount.

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7. Commitments and Contingencies

There has been no material change in the Company’s contractual obligations and commitments other than in the ordinary course of business since the Company’s fiscal year ended July 31, 2025.

See the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025 for additional information regarding the Company’s contractual obligations.

Legal Proceedings

From time to time, the Company is involved in various legal proceedings and receives claims arising from the normal course of business activities. The Company had no material accrual for claims as of April 30, 2026 or July 31, 2025. The Company has not accrued for estimated losses in the accompanying condensed consolidated financial statements as the Company has determined that no provision for liability nor disclosure is required related to any claim against the Company because: (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial. The Company expenses legal fees in the period in which they are incurred.

Indemnification

The Company sells software licenses and services to its customers under Software Subscription Agreements (“SSAs”) and Software License Agreements (“SLAs”). SSAs and SLAs contain the terms of the contractual arrangement with the customer and generally include certain provisions for defending the customer against any claims that the Company’s software infringes upon a patent, copyright, trademark, or other proprietary right of a third party. SSAs and SLAs also generally indemnify the customer against judgments, settlements, fines, penalties, costs, and expenses resulting from a claim (“Losses”) against the customer in the event the Company’s software is found to infringe upon such third-party rights.

The Company has not had to reimburse any of its customers for Losses related to indemnification provisions and no material claims against the Company were outstanding as of April 30, 2026 or July 31, 2025. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases under various SSAs and SLAs, the Company cannot estimate the amount of potential future payments, if any, related to indemnification provisions.

The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of these persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that may enable the Company to recover a portion of any future amounts paid.

8. Stock-Based Compensation Expense and Stockholders’ Equity

Stock-Based Compensation Expense

Stock-based compensation expense related to stock options, Stock Awards, and ESPP purchase rights is included in the Company’s condensed consolidated statements of operations as follows (in thousands):

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	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2026		2025		2026		2025
Stock-based compensation expense	$	45,179	$	40,367	$	135,479	$	119,398
Net impact of deferred stock-based compensation	(237)		(10)		(463)		(33)
Total stock-based compensation expense, net	$	44,941	$	40,357	$	135,015	$	119,365
Stock-based compensation expense is included in the following categories:
Cost of subscription and support revenue	$	3,391	$	3,598	$	10,437	$	10,511
Cost of license revenue	—		32		—		104
Cost of services revenue	6,108		5,055		18,203		15,218
Research and development	12,061		10,267		36,277		30,560
Sales and marketing	11,598		10,832		35,014		31,400
General and administrative	11,784		10,573		35,085		31,572
Total stock-based compensation expense	$	44,941	$	40,357	$	135,015	$	119,365

Total unrecognized stock-based compensation expense related to the Company’s Stock Awards and ESPP purchase rights as of April 30, 2026 is as follows:


	Unrecognized Expense (in thousands)		Weighted Average Expected Recognition Period (in years)

Stock Awards	$	336,815	2.1
ESPP purchase rights	1,578		0.2
Total unrecognized stock-based compensation expense	$	338,393

Stock Awards

A summary of the Company’s Stock Awards activity under the Company’s equity incentive plans is as follows:


	Stock Awards Outstanding
	Number of Stock Awards	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)(1)
Balance as of July 31, 2025	2,672,857	$	117.25	$	604,654
Granted	903,084	$	229.42
Released	(1,068,724)	$	107.90	$	228,679
Canceled	(160,949)	$	135.22
Balance as of April 30, 2026	2,346,268	$	163.45	$	324,700
Expected to vest as of April 30, 2026	2,346,268	$	163.45	$	324,700

(1) Aggregate intrinsic value at each period end represents the total market value of Stock Awards at the Company’s closing stock price of $138.39 and $226.22 on April 30, 2026 and July 31, 2025, respectively. Aggregate intrinsic value for released Stock Awards represents the total market value of released Stock Awards at date of release.

Certain executive officers have been granted Stock Awards that cliff vest after three years, subject to continued service until such time, with the opportunity to increase the number of vested awards based on Company financial performance and, for a select number of awards, the market performance of the Company’s common stock. The fair value of the awards will be recognized over the three-year performance period and may increase or decrease depending on the estimated attainment of the Company’s financial performance criteria. The Company determined the fair value of the awards subject to market performance of the Company’s common stock using a Monte Carlo simulation model, which included the following assumptions:

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Nine Months Ended

April 30,

2026

2025

Performance period

September 11, 2024 to September 11, 2027

3-year historical volatility

36.0%

3-year risk free rate

3.4%

*No Stock Awards subject to a market performance condition were granted during the nine months ended April 30, 2026.

For the portion of the award subject to the market performance of the Company’s common stock, stock-based compensation expense is recognized over the requisite service period regardless of whether or not the market condition is ultimately satisfied, subject to continued service over the period.

The Company recognized stock-based compensation related to PSUs of $9.2 million and $7.1 million during the three months ended April 30, 2026 and 2025, respectively, and $25.7 million and $19.2 million during the nine months ended April 30, 2026 and 2025, respectively.

Stock Options

A summary of stock option activity under the Company’s equity incentive plans is as follows:



	Number of Stock Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value(1)
				(in years)	(in thousands)
Balance as of July 31, 2025	109,958	$	64.09	6.8	$	17,828
Granted	—	$	—
Exercised	(9,721)	$	55.47		$	1,661
Canceled	—	$	—
Balance as of April 30, 2026	100,237	$	64.92	6.1	$	7,364
Vested and expected to vest as of April 30, 2026	100,237	$	64.92	6.1	$	7,364
Exercisable as of April 30, 2026	100,237	$	64.92	6.1	$	7,364

(1) Aggregate intrinsic value at each period end represents the difference between the Company’s closing stock price of $138.39 and $226.22 on April 30, 2026 and July 31, 2025, respectively, and the exercise price of outstanding options. Aggregate intrinsic value for exercised options represents the difference between the Company’s stock price at date of exercise and the exercise price.

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Share Repurchase Program

In September 2022, the Company’s board of directors authorized and approved a share repurchase program of up to $400.0 million of the Company’s outstanding common stock. The Company began repurchasing shares under this program during the first quarter of fiscal year 2023 and completed the program in December 2025.

In January 2026, the Company’s board of directors authorized and approved a new share repurchase program of up to $500.0 million of the Company’s outstanding common stock. Share repurchases under this program may be made from time to time, in the open market, in privately negotiated transactions and otherwise, at the discretion of management of the Company and in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act, and other applicable legal requirements. Such repurchases may also be made in compliance with Rule 10b5-1 trading plans entered into by the Company.

During the three and nine months ended April 30, 2026, the Company repurchased 1,696,180 and 2,437,175 shares of common stock, respectively, at an average price of $147.07 and $163.16, respectively.

The Inflation Reduction Act of 2022 imposed an excise tax of 1% on share repurchases in excess of new issuances in the fiscal year. During the three and nine months ended April 30, 2026, the Company recorded total excise tax of $1.5 million, which has been included within retained earnings (accumulated deficit), as part of the cost basis of the common stock repurchased, and other current liabilities in the condensed consolidated balance sheets as of April 30, 2026.

During the three and nine months ended April 30, 2025, the Company did not repurchase any shares of common stock.

As of April 30, 2026, $240.5 million remained available for future share repurchases, subject to the Company’s compliance with the terms of the Credit Agreement.

9. Segment Information

The Company has one reportable segment that conducts business globally and is managed, operated, and organized on a consolidated basis. The Company’s chief executive officer is the chief operating decision maker. Since the Company operates in one segment, financial information, revenue by type, and revenue by geographic area presented in the condensed consolidated financial statements represents the operations of the Company’s single segment.

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The following table presents selected financial information for the Company’s single operating segment (in thousands):


	Three Months Ended April 30,						Nine Months Ended April 30,
	2026			2025			2026			2025
Total revenue	$	372,541		$	293,508		$	1,064,276		$	845,889
Adjusted cost of revenue(1)	125,217			101,640			354,902			298,359
Stock-based compensation expense	9,498			8,685			28,639			25,833
Amortization of intangible assets	1,180			485			3,045			1,455
Total cost of revenue	135,896			110,810			386,587			325,647
Gross profit	236,645			182,698			677,689			520,242
Gross profit margin	64		%	62		%	64		%	62		%
Adjusted operating expenses(2)	169,540			145,809			480,769			412,815
Stock-based compensation expense	35,443			31,672			106,376			93,532
Amortization of intangible assets	584			749			1,923			2,424
Acquisition holdback expense	440			—			1,065			—
Total operating expenses	206,008			178,230			590,133			508,771
Income (loss) from operations	30,637			4,468			87,556			11,471
Income (loss) from operations margin	8		%	1		%	8		%	2		%
Adjusted interest income (expense) and other income (expense)(3)	9,017			11,185			31,506			35,990
Changes in fair value of strategic investments	599			(103)			554			(341)
Gains (losses) on sale of strategic investments	632			—			632			3,671
Amortization of debt issuance costs	(984)			(1,058)			(2,947)			(2,782)
Retirement of debt	—			—			—			(53,565)
Unrealized foreign exchange rate gains (losses)	(20,141)			34,176			1,513			13,967
Income (loss) before provision for (benefit from) income taxes	19,760			48,668			118,814			8,410
Provision for (benefit from) income taxes	3,289			2,677			10,926			(9,443)
Net income (loss)	$	16,471		$	45,991		$	107,888		$	17,853

(1) Adjusted cost of revenue excludes stock-based compensation expense and amortization of intangible assets.

(2) Adjusted operating expenses excludes stock-based compensation expense, amortization of intangible assets, and acquisition holdback expense.

(3) Adjusted interest income (expense) and other income (expense) excludes changes in fair value of strategic investments, gains (losses) on sale of strategic investments, amortization of debt issuance costs, retirement of debt, and unrealized foreign exchange rate gains (losses).

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the Risk Factors included in Item 1A of Part II of this Quarterly Report on Form 10-Q. All information presented herein is based on our fiscal calendar. Unless otherwise stated, references in this report to particular years or quarters refer to our fiscal years ended in July and the associated quarters of those fiscal years. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Overview

Guidewire is the platform that property and casualty (“P&C”) insurers rely on to engage with customers, innovate, and operate more efficiently. Our platform combines core systems of record with digital, analytics, and artificial intelligence (“AI”) capabilities. We serve insurers of all sizes, ranging from global carriers to regional and local providers, helping them navigate a rapidly changing insurance landscape.

Our foundational core products, InsuranceSuite and InsuranceNow, are delivered primarily as cloud-based subscription services. Historically, InsuranceSuite has also been available for self-managed installations. These products serve as transactional systems of record, fully supporting insurance operations, including product definition, policy administration, claims management and billing.

In addition, we provide digital engagement products that enable seamless sales, omnichannel service, and enhanced claims experiences for policyholders, agents, vendors, and field personnel. Our analytics products allow insurers to manage and use data more effectively, gain business insights, improve operational efficiency, and underwrite emerging risks. To support insurers worldwide, we localize our products to address diverse regulatory, language, and currency requirements.

InsuranceSuite is a highly configurable and scalable product, delivered as a service, and primarily comprised of five core applications (PolicyCenter, ClaimCenter, BillingCenter, and the recently announced PricingCenter and UnderwritingCenter) that can be subscribed to separately or together. These applications are built on and optimized for our Guidewire Cloud Platform (“GWCP”) architecture and leverage our in-house cloud operations team. InsuranceSuite is designed to support multiple releases each year to accelerate delivery of new capabilities and ensure that cloud customers remain on the latest version and gain fast access to our innovation efforts. Additionally, InsuranceSuite embeds digital and analytics capabilities natively into our platform. Most new sales and implementations are for InsuranceSuite.

InsuranceNow is a complete, cloud-based application that offers policy administration, claims management, and billing functionality, plus pre-integrated document production, analytics, and other capabilities, that increases agility without adding complexity. Like InsuranceSuite, InsuranceNow is hosted on GWCP and managed by our internal cloud operations team. InsuranceNow is currently only available in the United States and Canada, and is generally suited to mid-market carriers and managing general agents whose needs are often not as complex as a typical InsuranceSuite customer.

We reach customers directly through our global sales team and in partnership with third-party global system integrators (“SI’s”). Because our platform is central to insurers’ operations, customer evaluation cycles are often extensive, particularly when multiple products are involved or when insurers are moving to GWCP for the first time. Sales processes typically include detailed due diligence and customer reference checks. Our growth depends on continuously enhancing existing products, introducing new capabilities, ensuring efficient cloud operations, expanding local content, and providing access to innovation through the Guidewire Marketplace.

We sell our products primarily through subscription services for our platform and cloud-delivered products. We generally price our subscription services for the core products based on the amount of Direct Written Premium (“DWP”) managed on our platform, with certain cloud-delivered products priced based on usage or other metrics. Initial subscription agreements are generally five years in duration, with annual renewals thereafter. In some instances, we have customers that sign contracts with an initial term of seven years or longer. Subscription revenue is recognized ratably over the contract term. We also offer term licenses, primarily for existing on-premise customers, as well as support and professional services. Support is typically priced as a percentage of license fees and recognized ratably, while most professional services are billed monthly on a time-and-materials basis. However, certain services engagements are based on a fixed fee and revenue is recognized on a percentage of completion basis.

Over the past few years, we have primarily been entering into cloud-based subscription arrangements with our new and existing customers, and we anticipate that subscription arrangements will continue to be a significant majority of annual new sales going forward. We may decide to change certain contract terms in new arrangements to remain competitive or otherwise meet market demands which may impact the way we recognize revenue and/or Annual Recurring Revenue (“ARR”).

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To extend our technology leadership in the global market and to drive operating efficiency, we continue to invest in product development and cloud operations to enhance and improve our current products, introduce new products, and advance our ability to securely and cost-effectively deliver our services in the cloud. Continued investment is critical as we seek to assist our customers in achieving their technology goals, maintain our competitive advantage, grow our revenue, expand internationally, and meet evolving customer demands. In certain cases, we may also acquire skills and technologies to manage our cloud infrastructure and accelerate our time to market for new products, solutions, and upgrades.

Our track record of success with customers and their implementations is central to maintaining our strong competitive position. We rely on our global services team and SI partners to ensure that teams with the right combination of product, business, and language skills are used in the most efficient way to meet our customers’ implementation and migration needs. We have extensive relationships with SI, consulting, technology, and other industry partners. Our network of partners has expanded as interest in and adoption of our platform has grown. We encourage our partners to co-market, pursue joint sales initiatives, and drive broader adoption of our technology, helping us grow our business more efficiently and enabling us to focus our resources on continued innovation and further enhancement of our solutions.

We work closely with our network of SI partners to facilitate new sales and implementations of our products. Our partnership with leading SI partners allows us to increase efficiency and scale while reducing customer implementation and migration costs. We continue to invest time and resources to increase the number of qualified consultants employed by our SI partners, develop relationships with new partners in existing and new markets, and ensure that all SI partners are qualified to assist with implementing our products. We believe this model will continue to serve us well, and we intend to continue to expand our network of partners and the number of certified consultants with whom we work so we can leverage our SI partners more effectively, especially for future subscription migrations and implementations.

We face a number of risks in the execution of our strategy, including, but not limited to, risks related to fluctuations in our results due to factors largely outside of our control, reliance on sales to a relatively small number of large customers and the related substantial negotiating leverage of these customers, lengthy and variable sales and implementation cycles, competing effectively in the global market, growing our business and managing our expanding operations, development and use of AI in an evolving regulatory environment, making long-term pricing commitments based on cost estimates that may change, expanding market adoption of our cloud-based offerings, maintaining customer satisfaction and renewals, cost-effectively and securely managing the infrastructure of our cloud-based customers, and the impact of these and other factors, including the impact of AI on the insurance and software industries, on our stock price and its volatility. In response to these and other risks we might face, we continue to invest in many areas of our business, including product development, cloud operations, cybersecurity, introduction of new products and/or new features, implementation and migration services, and sales and marketing.

Seasonality

We have experienced seasonal variations in our license revenue and, to a lesser extent, in our subscription revenue as a result of increased customer orders in our fourth fiscal quarter, which is the quarter ending July 31. We generally see significantly increased orders in our fourth fiscal quarter due to efforts by our sales team to achieve annual incentives. Because we recognize revenue upfront for term licenses compared to over time for subscription services, an increase in term licenses due to renewals or expansion orders, or non-renewals may impact our quarterly results. Subscription sales now represent the significant majority of total sales and, as a result when compared to term license sales, the revenue we recognize in the initial fiscal year of an order is lower, deferred revenue is higher, and our total reported revenue growth may be adversely affected in the near term due to the ratable nature of these arrangements. Over time, this ratable revenue dynamic will dampen the impact of seasonality on our revenue.

Our services revenue is also subject to seasonal fluctuations, though to a lesser degree than our license revenue. Our services revenue is impacted by the number of billable days in a given fiscal quarter. Our second fiscal quarter, which is the quarter ending January 31, usually has fewer billable days due to the impact of calendar year end holidays in Europe and the United States. Our fourth fiscal quarter usually has fewer billable days due to the impact of vacations taken by our services professionals. Because we pay our services professionals the same amount throughout the year, our gross margins on our services revenue are usually lower in these quarters. This seasonal pattern, however, may be absent in any given year.

Global Events

Global events have adversely affected and may continue to adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, inflationary pressures, and increased market volatility. For instance, the ongoing war between Russia and Ukraine, conflicts in the Middle East, escalating tensions in the South China Sea, currency exchange fluctuations, changes in interest rates, changes in trade policies and practices (including the imposition of tariffs), previous bank failures in the United States and Switzerland, and supply chain issues have contributed to global economic and market volatility in recent years. We are unable to accurately predict the full impact that these global events will have on our results of operations, financial condition, liquidity, and cash flows due to numerous uncertainties.

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Our business and financial results have been and may in the future be impacted due to these disruptions, which may affect our ARR and revenue growth rates, sales cycles, services revenue and margins, operating cash flow and expenses, employee attrition, hiring and onboarding necessary personnel, allowance for collectibility of accounts receivable and unbilled receivables, and the change in fair value of strategic investments. Additionally, inflation levels and political uncertainty are impacting the global economy and have magnified the impact of these disruptions.

Our customers may be unable to pay or may request amended payment terms for their outstanding invoices due to the economic impacts from these disruptions, and we may need to increase our accounts receivable allowances. A decrease in orders in a given period could negatively affect our revenue and ARR in future periods, particularly if experienced on a sustained basis, because a substantial proportion of our new software subscription services orders is recognized as revenue over time. Also, the global economic impact of these disruptions could affect our customers’ DWP, which could ultimately impact our revenue as we generally price our products based on the amount of DWP that will be managed by our products. As a result of these developments and the related economic impact to our business, we may be required to record impairment related to our operating lease assets, investments, long-lived assets, intangible assets, or goodwill.

We will continue to monitor and evaluate the nature and extent of these global events on our business.

Key Business Metrics

We use certain key metrics and financial measures not prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) to evaluate and manage our business, including ARR and Free Cash Flow. For a further discussion of how we use key metrics and certain non-GAAP financial measures, see “Non-GAAP Financial Measures” in this Quarterly Report on Form 10-Q.

Annual Recurring Revenue (“ARR”)

We use ARR to quantify the annualized recurring value outlined in active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, support contracts, and hosting agreements based on customer contractual terms and invoicing activities for the current reporting period, which may not be the same as the timing and amount of revenue recognized. ARR reflects all fee changes due to contract renewals, non-renewals, expansion, cancellations, attrition, or renegotiations at a higher or lower fee arrangement that are effective as of the ARR reporting date. All components of the licensing and other arrangements that are not expected to recur (primarily perpetual licenses and professional services) are excluded from our ARR calculations. In some arrangements with multiple performance obligations, a portion of recurring license and support or subscription contract value is allocated to services revenue for revenue recognition purposes, but does not get allocated for purposes of calculating ARR. This revenue allocation generally only impacts the initial term of the contract. This means that if we increase arrangements with multiple performance obligations that include services at discounted rates, more of the total contract value would be recognized as services revenue, but our reported ARR amount would not be impacted. During the nine months ended April 30, 2026, the recurring license and support or subscription contract value recognized as services revenue was $5.9 million.

If a customer contract contains invoicing amounts that increase over the contract term, then ARR reflects the annualized invoicing amount outlined in the contract for the current reporting period. For example, given a contract with annual invoicing of $1.0 million at the beginning of year one, $2.0 million at the beginning of year two, and $3.0 million at the beginning of year three, and the reporting period is subsequent to year two invoicing and prior to year three invoicing, the reported ARR for that contract would be $2.0 million.

As of April 30, 2026, ARR was $1,147 million, compared to $1,041 million as of July 31, 2025. We measure ARR results on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates.

Free Cash Flow

We monitor our free cash flow, as a key measure of our overall business performance, which enables us to analyze our financial performance without the effects of certain non-cash items such as depreciation, amortization, and stock-based compensation expenses. Additionally, free cash flow takes into account the impact of changes in deferred revenue, which reflects the receipt of cash payments for products before they are recognized as revenue, and unbilled accounts receivable, which reflects revenue that has been recognized that has yet to be invoiced to our customers. Our net cash provided by (used in) operating activities is significantly impacted by the timing of invoicing and collections of accounts receivable, the timing and amount of annual bonus payments, as well as payroll, commissions, payroll taxes, and other tax payments. Our capital expenditures consist of purchases of property and equipment, primarily computer hardware, software, and leasehold improvements, and capitalized software development costs. For a further discussion of our operating cash flows, see “Liquidity and Capital Resources – Cash Flows.”

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	Nine Months Ended April 30,
	2026		2025
	(in thousands)
Net cash provided by (used in) operating activities	$	105,830	$	56,036
Purchases of property and equipment	(9,934)		(2,336)
Capitalized software development costs	(13,939)		(10,972)
Free cash flow	$	81,957	$	42,728

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. Accounting policies, methods, and estimates are an integral part of the preparation of condensed consolidated financial statements in accordance with GAAP and, in part, are based upon management’s current judgments. Those judgments are normally based on knowledge and experience with regard to past and current events and assumptions about future events. Certain accounting policies, methods, and estimates are particularly sensitive because of their significance to the condensed consolidated financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. While there are a number of significant accounting policies, methods, and estimates affecting our condensed consolidated financial statements, which are described in Note 1 “The Company and Summary of Significant Accounting Policies and Estimates” to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025, our revenue recognition policies are critical to the periods presented.

There have been no material changes to our critical accounting policies as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

Recent Accounting Pronouncements

See Note 1 “The Company and Summary of Significant Accounting Policies and Estimates” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a full description of recent accounting pronouncements adopted, including the dates of adoption, and recent accounting pronouncements not yet adopted.

Results of Operations

The following table sets forth our results of operations for the periods presented. The data has been derived from the condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q which, in the opinion of our management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to fairly present the financial position and results of operations for the interim periods presented. The results of operations for any period should not be considered indicative of results for any future period. Certain figures included in this document have been subjected to rounding adjustments. Accordingly, figures shown in the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. This information should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

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	Three Months Ended April 30,
	2026		As a % of total revenue		2025		As a % of total revenue
	(in thousands, except percentages)
Revenue:
Subscription and support	$	244,738	66	%	$	181,823	62	%
License	55,996		15		57,233		19
Services	71,807		19		54,452		19
Total revenue	372,541		100		293,508		100
Cost of revenue:
Subscription and support	67,882		18		57,411		20
License	374		—		892		—
Services	67,639		18		52,507		18
Total cost of revenue	135,896		36		110,810		38
Gross profit:
Subscription and support	176,856		47		124,412		42
License	55,622		15		56,341		19
Services	4,167		1		1,945		1
Total gross profit	236,645		64		182,698		62
Operating expenses:
Research and development	87,868		24		72,915		25
Sales and marketing	68,201		18		57,768		20
General and administrative	49,939		13		47,547		16
Total operating expenses	206,008		55		178,230		61
Income (loss) from operations	30,637		8		4,468		1
Interest income	11,295		3		13,794		5
Interest expense	(3,318)		(1)		(3,668)		(1)
Other income (expense), net	(18,854)		(5)		34,074		12
Income (loss) before provision for (benefit from) income taxes	19,760		5		48,668		17
Provision for (benefit from) income taxes	3,289		1		2,677		1
Net income (loss)	$	16,471	4	%	$	45,991	16	%

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	Nine Months Ended April 30,
	2026		As a % of total revenue		2025		As a % of total revenue
	(in thousands, except percentages)
Revenue:
Subscription and support	$	704,150	66	%	$	529,403	63	%
License	157,491		15		158,297		18
Services	202,634		19		158,189		19
Total revenue	1,064,276		100		845,889		100
Cost of revenue:
Subscription and support	195,737		18		170,531		20
License	1,460		—		2,715		—
Services	189,390		18		152,401		18
Total cost of revenue	386,587		36		325,647		38
Gross profit:
Subscription and support	508,413		48		358,872		43
License	156,031		15		155,582		18
Services	13,244		1		5,788		1
Total gross profit	677,689		64		520,242		62
Operating expenses:
Research and development	249,510		23		212,063		25
Sales and marketing	193,934		18		164,698		19
General and administrative	146,689		14		132,010		16
Total operating expenses	590,133		55		508,771		60
Income (loss) from operations	87,556		8		11,471		2
Interest income	38,432		4		43,122		5
Interest expense	(9,965)		(1)		(9,913)		(1)
Other income (expense), net	2,791		—		(36,270)		(4)
Income (loss) before provision for (benefit from) income taxes	118,814		11		8,410		2
Provision for (benefit from) income taxes	10,926		1		(9,443)		(1)
Net income (loss)	$	107,888	10	%	$	17,853	3	%

Revenue

We derive our revenue primarily from delivering cloud-based services, licensing our software applications, providing support, and delivering professional services.

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Subscription and Support

The majority of our revenue consists of fees for our subscription services, which are generally priced based on the amount of DWP that is managed by our subscription services. Subscription revenue is recognized ratably over the term of the arrangement, beginning at the point in time our provisioning process has been completed and access has been made available to the customer. The initial term of such arrangements is generally five years, though in some instances customers have entered into contracts with an initial term of seven years or longer. Subscription agreements contain optional annual renewals commencing upon the expiration of the initial contract term. A majority of our subscription customers are billed annually in advance. In some arrangements with multiple performance obligations, a portion of recurring subscription contract value may be allocated to license revenue or services revenue for revenue recognition purposes. For example, in arrangements with multiple performance obligations that include services at discounted rates, a portion of the total contract value related to subscription services will be allocated and recognized as services revenue. Additionally, agreements to migrate an existing term license customer to subscription services contain multiple performance obligations, including a provision to continue using the term license during the subscription service implementation period. Under these migration agreements, a portion of the total contract value related to subscription services could be allocated and recognized as term license and support revenue in the period renewed or delivered.

Our support revenue is generally recognized ratably over the committed support term of the licensed software. Our support fees are typically priced as a fixed percentage of the associated term license fees. We generally invoice support annually in advance. Support related to subscription arrangements is included in subscription revenue, as support is not quoted or priced separately from the subscription services.

License

The majority of our license revenue consists of term license fees. Our term license revenue is primarily generated through license fees that are billed annually in advance during the term of the contract, including any renewals. Our term license fees are generally priced based on the amount of DWP that will be managed by our licensed software. Our term licenses are sold under an initial term with optional annual renewals after the initial term. Term license revenue for the committed term of the customer agreement is generally fully recognized upon delivery of the software or at the beginning of the renewal term. We do enter into license arrangements that have an initial term of two or more years and renewal terms of more than one year which results in significantly higher revenue in the initial year of the committed term than arrangements for our subscription services.

Services

Our services revenue is primarily derived from implementation and migration services performed for our customers, reimbursable travel expenses, and training fees. A majority of our services engagements are billed and revenue is recognized on a time and materials basis upon providing our services, while certain services engagements are based on a fixed fee and revenue is recognized on a percentage of completion basis.

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	Three Months Ended April 30,
	2026				2025				Change
	Amount		As a % of total revenue		Amount		As a % of total revenue		($)		(%)
	(in thousands, except percentages)
Revenue:
Subscription and support:
Subscription	$	232,129	62	%	$	166,464	57	%	$	65,665	39	%
Support	12,609		3		15,359		5		(2,750)		(18)	%

License	55,996		15		57,233		19		(1,237)		(2)	%
Services	71,807		19		54,452		19		17,354		32	%
Total revenue	$	372,541	100	%	$	293,508	100	%	$	79,032	27	%


	Nine Months Ended April 30,
	2026				2025				Change
	Amount		As a % of total revenue		Amount		As a % of total revenue		($)		(%)
	(in thousands, except percentages)
Revenue:
Subscription and support:
Subscription	$	662,312	62	%	$	480,981	57	%	$	181,331	38	%
Support	41,838		4		48,422		6		(6,584)		(14)	%

License	157,491		15		158,297		18		(806)		(1)	%
Services	202,634		19		158,189		19		44,445		28	%
Total revenue	$	1,064,276	100	%	$	845,889	100	%	$	218,386	26	%

Subscription and Support

We anticipate subscriptions will continue to represent a significant majority of new arrangements, including customers migrating from existing term license arrangements to subscription services, in future periods. Due to the ratable recognition of subscription revenue, growth in subscription revenue will lag behind the growth of subscription orders and will impact the comparative growth of our reported revenue on a year-over-year basis. If we complete a higher percentage of subscription arrangements towards the end of a given period, our short-term growth rates will be negatively impacted. Due to the seasonal nature of our business, the impact of new subscription orders in our fourth fiscal quarter, our historically largest quarter for new orders, is not fully reflected in revenue until the following fiscal year.

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Subscription revenue increased by $65.7 million and $181.3 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, primarily due to the impact of cloud transition agreements entered into and provisioned since April 30, 2025, new subscription agreements, and the renewal or extension of subscription services at the fully ramped annual fees after the initial committed term.

Support revenue decreased by $2.8 million and $6.6 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, primarily due to customers migrating from on-premise term licenses to subscription services. Support related to subscription arrangements is included in subscription revenue, as support is not quoted or priced separately from the subscription services. As customers enter into a subscription agreement to migrate from an existing term license agreement, the timing and amount of revenue recognized will be impacted by allocations of the total contract value between the license, subscription, and support performance obligations. As a result, we expect that the small percentage of term licenses as a percentage of total new sales and customers migrating from term licenses to subscription services will result in lower support revenue in the future.

License

Revenue related to new term licenses and multi-year term license renewals is generally recognized upfront and, as a result, no additional license revenue is recognized until after the committed term expires. As a customer enters into a subscription agreement to migrate from an existing term license agreement, the timing and amount of revenue recognition will be impacted by allocations of total contract value between license, subscription, and support performance obligations. License revenue growth has and will be negatively impacted as subscription sales are a significant majority of total new sales and as customers migrate from term licenses to subscription services instead of renewing their term licenses.

Term license revenue decreased by $1.2 million and $0.8 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, primarily due to agreements that migrated from a term license to a subscription service.

Ongoing revenue related to migration agreements is recorded as subscription revenue.

Services

Services revenue increased by $17.4 million and $44.4 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, due to higher utilization of services employees and new subscription implementation and migration projects.

As we successfully leverage our SI partners to lead more implementations and migrations, we expect our services revenue could fluctuate between periods. Additionally, services revenue overall may continue to be impacted by contracts with lower average services billing rates and investments in customer implementations, including fixed fee or capped arrangements, to accelerate customer transition to the cloud. In these arrangements when a project extends longer than originally anticipated, the average billing rate we recognize may decrease, which can result in revenue adjustments and lower gross profit. As we continue to expand into new markets and develop new products, we have, and may continue to, enter into contracts with lower average billing rates, make investments in customer implementation and migration engagements, and enter into fixed price contracts.

Cost of Revenue and Gross Profit

Our cost of subscription and support revenue primarily consists of personnel costs for our cloud operations and technical support teams, cloud infrastructure costs, development of online training curriculum, amortization of intangible assets, and royalty fees paid to third parties. Our cost of license revenue primarily consists of royalty fees paid to third parties and amortization of intangible assets. Our cost of services revenue primarily consists of personnel costs for our professional service employees, third-party subcontractors or consultants, and travel costs. In instances where we have primary responsibility for the delivery of services, subcontractor fees are expensed as cost of services revenue. In each case, personnel costs include salaries, bonuses, benefits, and stock-based compensation.

We allocate overhead such as information technology infrastructure and software expenses, information security infrastructure and software expenses, and facilities expenses to all functional departments based on headcount. As such, these general overhead expenses are reflected in cost of revenue and each functional operating expense.

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Cost of Revenue:
	Three Months Ended April 30,
	2026		2025		Change
	Amount		Amount		($)		(%)
	(in thousands, except percentages)
Cost of revenue:
Subscription and support	$	67,882	$	57,411	$	10,472	18	%
License	374		892		(518)		(58)	%
Services	67,639		52,507		15,132		29	%
Total cost of revenue	$	135,896	$	110,810	$	25,086	23	%

Includes stock-based compensation of:
Cost of subscription and support revenue	$	3,391	$	3,598	$	(207)
Cost of license revenue	—		32		(32)
Cost of services revenue	6,108		5,055		1,053
Total	$	9,498	$	8,685	$	813


	Nine Months Ended April 30,
	2026		2025		Change
	Amount		Amount		($)		(%)
	(in thousands, except percentages)
Cost of revenue:
Subscription and support	$	195,737	$	170,531	$	25,206	15	%
License	1,460		2,715		(1,255)		(46)	%
Services	189,390		152,401		36,989		24	%
Total cost of revenue	$	386,587	$	325,647	$	60,940	19	%

Includes stock-based compensation of:
Cost of subscription and support revenue	$	10,437	$	10,511	$	(74)
Cost of license revenue	—		104		(104)
Cost of services revenue	18,203		15,218		2,985
Total	$	28,640	$	25,833	$	2,807

Cost of subscription and support revenue during the three months ended April 30, 2026 increased by $10.5 million compared to the same period a year ago, primarily due to increases in cloud infrastructure expenses of $6.1 million driven by increased transaction volume on our cloud services, personnel costs of $2.5 million due to higher headcount, amortization of intangible assets of $0.7 million, and royalties of $0.5 million.

Cost of subscription and support revenue during the nine months ended April 30, 2026 increased by $25.2 million compared to the same period a year ago, primarily due to increases in cloud infrastructure expense of $12.1 million from increased transaction volume on our cloud services, personnel costs of $8.3 million due to higher headcount, amortization of intangible assets of $1.6 million, and royalties of $1.2 million.

We expect the cost of subscription and support revenue to increase in absolute dollars due to a greater number of customers utilizing our cloud services, continued adoption of cloud-based and AI-related product features, growth in cloud customer transaction volume, and the impact of inflation and other macroeconomic events.

Cost of license revenue decreased by $0.5 million and $1.3 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, primarily due to decreases in personnel costs of $0.3 million and $1.0 million, respectively, and to a lesser extent, decreases in royalties. Personnel costs associated with the development of online training curriculum are primarily focused on our cloud services, thus contributing to the decrease in cost of license revenue.

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We continue to anticipate lower cost of license revenue over time as our term license customers transition to cloud subscription agreements.

The $15.1 million increase in cost of services revenue during the three months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $8.2 million due to higher headcount, subcontractor expenses of $3.8 million due to implementations involving our SI partners, and travel expenses of $2.2 million.

The $37.0 million increase in cost of services revenue during the nine months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $23.5 million due to higher headcount, subcontractor expenses of $7.8 million due to implementations involving our SI partners, and travel expenses of $3.2 million.

We had 663 cloud operations and technical support employees and 972 professional services employees at April 30, 2026, compared to 591 cloud operations and technical support employees and 836 professional services employees at April 30, 2025.

Gross Profit:


	Three Months Ended April 30,
	2026				2025				Change
	Amount		Margin %		Amount		Margin %		($)		(%)
	(in thousands, except percentages)
Gross profit:
Subscription and support	$	176,856	72	%	$	124,412	68	%	$	52,444	42	%
License	55,622		99		56,341		98		(719)		(1)	%
Services	4,167		6		1,945		4		2,222		114	%
Total gross profit	$	236,645	64	%	$	182,698	62	%	$	53,947	30	%

Our gross profit increased $53.9 million during the three months ended April 30, 2026, compared to the same period a year ago. Gross profit was primarily impacted by the increase in subscription and support gross profit due to the increase in subscription revenue from cloud migration and new and renewed subscription orders at a rate higher than subscription and support costs. Services contributed to the increased gross profit due to higher utilization of services employees and higher revenues from new subscription implementation and migration projects. These increases were partially offset by a decrease in license gross profit due to lower license revenue as customers migrate to subscription services.

Our gross margin increased to 64% during the three months ended April 30, 2026 from 62% during the same period a year ago. Gross margin increased primarily due to the growth in subscription and support revenue which continues to outpace increases in cloud infrastructure and personnel costs.


	Nine Months Ended April 30,
	2026				2025				Change
	Amount		Margin %		Amount		Margin %		($)		(%)
	(in thousands, except percentages)
Gross profit:
Subscription and support	$	508,413	72	%	$	358,872	68	%	$	149,541	42	%
License	156,031		99		155,582		98		449		—	%
Services	13,244		7		5,788		4		7,456		129	%
Total gross profit	$	677,689	64	%	$	520,242	62	%	$	157,447	30	%

Our gross profit increased $157.4 million during the nine months ended April 30, 2026, compared to the same period a year ago. Gross profit was primarily impacted by the increase in subscription and support gross profit due to the increase in subscription revenue at a rate higher than subscription and support costs. Services contributed to the increased gross profit due to higher utilization of services employees and higher revenues from new subscription implementation and migration projects.

Our gross margin increased to 64% during the nine months ended April 30, 2026 from 62% during the same period a year ago. Gross margin increased primarily due to the growth in subscription and support revenue which continues to outpace increases in cloud infrastructure and personnel costs.

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We expect subscription and support gross margin to continue to improve, though at a slower rate than in recent years, as we increase the number of cloud customers and scale our cloud platform. We expect services gross margin will continue to improve as we gain additional efficiencies, but could fluctuate between periods based on the use of subcontractors to supplement our internal services team and the impact of any arrangements entered into to encourage customers to migrate from licenses to subscription services. We expect license gross profit to decline over time due to customers migrating from licenses to subscription services but can fluctuate quarter to quarter depending on the timing of renewals and license revenue allocation from migration orders. Overall, we expect gross margins to continue to improve over time as improvements in subscription and support gross margin and services gross margin will more than offset the negative impact of revenue shifts away from high margin license revenue.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. The largest components of our operating expenses are personnel costs for our employees and, to a lesser extent, professional services. In each case, personnel costs include salaries, bonuses, commissions, benefits, and stock-based compensation.


	Three Months Ended April 30,
	2026			2025			Change
	Amount		As a % of total revenue	Amount		As a % of total revenue	($)		(%)
	(in thousands, except percentages)
Operating expenses:
Research and development	$	87,868	24%	$	72,915	25%	$	14,953	21	%
Sales and marketing	68,201		18	57,768		20	10,433		18	%
General and administrative	49,939		13	47,547		16	2,392		5	%
Total operating expenses	$	206,008	55%	$	178,230	61%	$	27,778	16	%

Includes stock-based compensation of:
Research and development	$	12,061		$	10,267		$	1,794
Sales and marketing	11,598			10,832			766
General and administrative	11,784			10,573			1,211
Total	$	35,443		$	31,672		$	3,771

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	Nine Months Ended April 30,
	2026				2025				Change
	Amount		As a % of total revenue		Amount		As a % of total revenue		($)		(%)
	(in thousands, except percentages)
Operating expenses:
Research and development	$	249,510	23	%	$	212,063	25	%	$	37,447	18	%
Sales and marketing	193,934		18		164,698		19		29,236		18	%
General and administrative	146,689		14		132,010		16		14,680		11	%
Total operating expenses	$	590,133	55	%	$	508,771	60	%	$	81,362	16	%

Includes stock-based compensation of:
Research and development	$	36,277			$	30,560			$	5,717
Sales and marketing	35,014				31,400				3,614
General and administrative	35,085				31,572				3,513
Total	$	106,376			$	93,532			$	12,844

Research and Development

Our research and development expenses primarily consist of personnel costs for our technical staff, web hosting costs, and software subscription costs.

The $15.0 million increase in research and development expenses during the three months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $11.0 million associated with higher headcount, and web hosting and software subscription costs of $2.8 million driven by increased product development efforts.

The $37.4 million increase in research and development expenses during the nine months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $28.4 million associated with higher headcount, and web hosting and software subscription costs of $5.7 million.

Our research and development headcount was 1,369 at April 30, 2026, compared with 1,204 at April 30, 2025.

We expect our research and development expenses to increase in absolute dollars due to inflation and investments to enhance and develop our products and services, but decrease as a percentage of revenue as we focus on hiring in lower cost regions. We continue to dedicate internal resources to develop, improve, and expand the functionality, efficiency, and security of our solutions in the cloud. Our research and development expenses may also increase as we dedicate more resources to our software development efforts, utilize AI tools to accelerate development efforts, and invest in AI-driven solutions for our customers, as well as if we pursue additional acquisitions.

Sales and Marketing

Our sales and marketing expenses primarily consist of personnel costs for our sales and marketing employees. Included in our personnel costs are commissions, which are considered contract acquisition costs and are capitalized when earned and expensed over the anticipated period of time that goods and services are expected to be provided to a customer, which we estimate to be approximately five years. Sales and marketing expenses also include travel expenses, professional services for marketing activities, and amortization of certain acquired intangibles.

The $10.4 million increase in sales and marketing expenses during the three months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $7.8 million associated with higher headcount, which includes the impact of contract acquisition costs, and marketing and advertising expenses of $1.9 million due to customer events and increased lead generation activity.

The $29.2 million increase in sales and marketing expenses during the nine months ended April 30, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $20.4 million associated with higher headcount, which includes the impact of contract acquisition costs, marketing and advertising expenses of $4.3 million, and travel expenses of $4.3 million, partially offset by a decrease in web hosting costs of $1.1 million.

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Our sales and marketing headcount was 554 at April 30, 2026, compared with 497 at April 30, 2025.

We expect our sales and marketing expenses to increase in absolute dollars as we support new product initiatives and ongoing subscription and cloud growth, but to grow more slowly than revenue over time. As a result, we expect sales and marketing expense as a percentage of revenue to decline as we realize efficiencies and leverage prior investments in customer success.

General and Administrative

Our general and administrative expenses include executive, finance, human resources, information technology, information security, legal, and corporate development and strategy functions, and primarily consist of personnel costs and, to a lesser extent, professional services, software costs, and cloud hosting costs.

The $2.4 million increase in general and administrative expenses during the three months ended April 30, 2026, compared to the same period a year ago, was due to increases in personnel costs of $2.6 million, driven by the impact of annual salary increases and an increase in the annual bonus accrual and stock-based compensation, which was partially offset by the net impact of fluctuations in bad debt expenses, web hosting, software subscription and professional services costs.

The $14.7 million increase in general and administrative expenses during the nine months ended April 30, 2026, compared to the same period a year ago, was due to increases in personnel costs of $9.9 million driven by the impact of annual salary increases and an increase in the annual bonus accrual and stock-based compensation, professional services of $1.8 million, bad debt expenses of $1.5 million, and facilities costs of $1.2 million.

Our general and administrative headcount was 491 at April 30, 2026, compared with 468 at April 30, 2025. General and administrative headcount includes facilities personnel whose expenses are allocated across all functional departments.

We expect that our general and administrative expenses will increase in absolute dollars due to inflation and investments required to support our strategic initiatives, grow our business, and meet our product and information security, compliance and reporting obligations, but decrease as a percentage of revenue as overall hiring and investments slow.

Other Income (Expense)


	Three Months Ended April 30,
	2026		2025		Change
	Amount		Amount		($)		(%)
	(in thousands, except percentages)
Interest income	$	11,295	$	13,794	$	(2,499)	(18)	%
Interest expense	$	(3,318)	$	(3,668)	$	350	(10)	%
Other income (expense), net	$	(18,854)	$	34,074	$	(52,928)	(155)	%


	Nine Months Ended April 30,
	2026		2025		Change
	Amount		Amount		($)		(%)
	(in thousands, except percentages)
Interest income	$	38,432	$	43,122	$	(4,690)	(11)	%
Interest expense	$	(9,965)	$	(9,913)	$	(52)	1	%
Other income (expense), net	$	2,791	$	(36,270)	$	39,061	(108)	%

Interest Income

Interest income represents interest earned on our cash, cash equivalents, and investments.

Interest income decreased $2.5 million and $4.7 million during the three and nine months ended April 30, 2026, respectively, compared to the same periods a year ago, primarily due to lower interest rates and lower available funds to invest due to purchases under our stock repurchase program.

Interest Expense

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Interest expense includes both stated interest and the amortization of debt issuance costs associated with the outstanding amount due on the aggregate principal amount of our 1.25% Convertible Senior Notes due 2025 (“2025 Convertible Senior Notes”) and the aggregate principal amount of our 1.25% Convertible Senior Notes due 2029 (the “2029 Convertible Senior Notes”, together with the 2025 Convertible Senior Notes, the “Convertible Senior Notes”). The amortization of debt issuance costs is recognized on an effective interest basis. Our 2025 Convertible Senior Notes were partially retired in October and December 2024, and were fully settled on their maturity date of March 15, 2025. Interest expense also includes commitment fees on our undrawn 2025 Credit Facility and amortization of issuance costs associated with our revolving credit agreement recognized on a straight-line basis.

Interest expense for the three months ended April 30, 2026 consists of stated interest of $2.2 million, non-cash interest expense of $1.0 million related to amortization of debt issuance costs, and $0.2 million of commitment fees on our undrawn 2025 Credit Facility. Interest expense for the three months ended April 30, 2025 consists of stated interest of $2.4 million, non-cash interest expense of $1.1 million related to the amortization of debt issuance costs, and $0.2 million of commitment fees on our undrawn 2025 Credit Facility.

Interest expense for the nine months ended April 30, 2026 consists of stated interest of $6.5 million, non-cash interest expense of $2.9 million related to amortization of debt issuance costs, and $0.5 million of commitment fees on our undrawn 2025 Credit Facility. Interest expense for the nine months ended April 30, 2025 consists of stated interest of $6.8 million, non-cash interest expense of $2.8 million related to the amortization of debt issuance costs, and $0.3 million of commitment fees on our undrawn 2025 Credit Facility.

Other Income (Expense), Net

Other income (expense), net includes foreign exchange gains and losses resulting from fluctuations in foreign exchange rates on monetary asset and monetary liability balances that are denominated in currencies other than the functional currency of the entity in which they are recorded. Our monetary assets and liabilities denominated in currencies other than the functional currency of the entity in which they are recorded consist primarily of trade accounts receivable, unbilled accounts receivable, trade accounts payable, and intercompany receivables and payables. We have significant transactions in the following currencies: Australian Dollar, British Pound, Canadian Dollar, Euro, Indian Rupee, and Polish Zloty. Other income (expense) also includes changes in the fair value of our strategic investments and expenses related to the retirement of a portion of our 2025 Convertible Senior Notes.

Other income (expense), net during the three months ended April 30, 2026 was expense of $18.9 million, compared to income of $34.1 million during the same period a year ago. This change was primarily driven by a foreign currency loss of $20.1 million during the three months ended April 30, 2026, compared to a gain of $34.2 million during the same period a year ago due to fluctuations in foreign currency exchange rates.

Other income (expense), net during the nine months ended April 30, 2026 was income of $2.8 million, compared to expense of $36.3 million during the same period a year ago due to $53.6 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes during the nine months ended April 30, 2025. Additionally, during the nine months ended April 30, 2026, we recorded a foreign currency gain of $1.5 million, compared to $14.0 million during the same period a year ago due to fluctuations in foreign currency exchange rates.

Income Taxes

We are subject to taxes in the United States as well as other tax jurisdictions and countries in which we conduct business. Earnings from our non-U.S. activities are subject to local country income tax and may also be subject to U.S. income tax.


	Three Months Ended April 30,
	2026			2025			Change
	Amount			Amount			($)		(%)
	(in thousands, except percentages)
Provision for (benefit from) income taxes	$	3,289		$	2,677		$	612	23	%
Effective tax rate	17		%	6		%


	Nine Months Ended April 30,
	2026			2025			Change
	Amount			Amount			($)		(%)
	(in thousands, except percentages)
Provision for (benefit from) income taxes	$	10,926		$	(9,443)		$	20,369	(216)	%
Effective tax rate	9		%	(112)		%

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We recognized an income tax expense of $3.3 million and $2.7 million for the three months ended April 30, 2026 and 2025, respectively, and an income tax expense of $10.9 million and an income tax benefit of $9.4 million for the nine months ended April 30, 2026 and 2025, respectively.

The change in income taxes recorded for the three months ended April 30, 2026, compared to the same period a year ago, was primarily due to an increase in non-deductible executive compensation, a decrease in the Foreign-Derived Intangible Income (“FDII”) deduction, a decrease in research and development credits due to U.S. tax law changes under H.R. 1 enacted on July 4, 2025, and a decrease in the deductions for stock-based compensation, offset by a decrease in income before taxes.

The change in income taxes recorded for the nine months ended April 30, 2026, compared to the same period a year ago, was primarily due to an increase in income before taxes, an increase in non-deductible executive compensation, a decrease in the FDII deduction, and a decrease in research and development credits due to U.S. tax law changes under H.R. 1 enacted on July 4, 2025, offset by an increase in the deductions for stock-based compensation.

In the United States, on July 4, 2025, H.R. 1 was signed into law. Among other provisions, the legislation reinstated immediate expensing for domestic research and experimental expenditures, extended 100% bonus depreciation for qualified property placed in service beginning January 20, 2025, and made certain other provisions of the Tax Cuts and Jobs Act permanent. The legislation has multiple effective dates, with certain provisions effective in fiscal year 2026 and others effective from fiscal year 2027. We recognized the fiscal year 2026 tax effects of the legislation in our income tax provision for the three and nine months ended April 30, 2026.

The effective tax rate of 17% and 9% for the three and nine months ended April 30, 2026, respectively, differs from the statutory U.S. Federal income tax rate of 21% primarily due to tax deductions for stock-based compensation, the FDII deduction, and research and development credits, partially offset by state taxes and certain non-deductible expenses, including the limitation on executive compensation.

Non-GAAP Financial Measures

In addition to the key business metrics presented above, we believe that the following non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Management uses these non-GAAP measures to compare our performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation, and for budgeting and planning purposes. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other software companies because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, many of which present similar non-GAAP financial measures to investors. However, our management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP.

The non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. We urge investors to review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included herein and not to rely on any single financial measure to evaluate our business.

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The following table reconciles the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below (in thousands, except share and per share data):


	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2026		2025		2026		2025
Gross profit reconciliation:
GAAP gross profit	$	236,645	$	182,698	$	677,689	$	520,242
Non-GAAP adjustments:
Stock-based compensation	9,498		8,685		28,639		25,833
Amortization of intangibles	1,180		485		3,045		1,455
Non-GAAP gross profit	$	247,324	$	191,868	$	709,373	$	547,530

Income (loss) from operations reconciliation:
GAAP income (loss) from operations	$	30,637	$	4,468	$	87,556	$	11,471
Non-GAAP adjustments:
Stock-based compensation	44,941		40,357		135,015		119,365
Amortization of intangibles	1,765		1,234		4,968		3,879
Acquisition consideration holdback	440		—		1,064		—
Non-GAAP income (loss) from operations	$	77,784	$	46,059	$	228,604	$	134,715

Net income (loss) reconciliation:
GAAP net income (loss)	$	16,471	$	45,991	$	107,888	$	17,853
Non-GAAP adjustments:
Stock-based compensation	44,941		40,357		135,015		119,365
Amortization of intangibles	1,765		1,234		4,968		3,879
Acquisition consideration holdback	440		—		1,064		—
Amortization of debt issuance costs	984		1,058		2,947		2,782
Changes in fair value of strategic investments	(599)		103		(554)		341
(Gains) losses on sale of strategic investments	(632)		—		(632)		(3,671)


Retirement of debt	—		—		—		53,565
Unrealized foreign exchange rate (gains) losses(1)	20,141		(34,176)		(1,513)		(13,967)
Tax impact of non-GAAP adjustments	(13,864)		(7,157)		(39,295)		(35,330)
Non-GAAP net income (loss)	$	69,648	$	47,409	$	209,888	$	144,817

Tax provision (benefit) reconciliation:
GAAP tax provision (benefit)	$	3,289	$	2,677	$	10,926	$	(9,443)
Non-GAAP adjustments:
Stock-based compensation	8,881		6,933		26,154		18,110
Amortization of intangibles	349		212		963		586
Acquisition consideration holdback	87		—		206		—
Amortization of debt issuance costs	194		182		571		426
Changes in fair value of strategic investments	(118)		18		(110)		51
(Gains) losses on sale of strategic investments	—		—		—		(520)


Retirement of debt	—		—		—		7,585
Unrealized foreign exchange rate (gains) losses(1)	3,980		(5,871)		(152)		(3,011)
Tax impact of non-GAAP adjustments	490		5,684		11,664		12,103
Non-GAAP tax provision (benefit)	$	17,153	$	9,834	$	50,222	$	25,887

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Guidewire Software, Inc. 10-Q