Brown Brothers Harriman's BBH Select Mid Cap ETF discussed Guidewire Software in its Q2 2026 investor letter, noting that early customer pilots using AI tooling have reduced cloud migration costs by approximately 35%, lowering the largest cost barrier to modernization. The fund stated that Guidewire declined 17.7% during the quarter, ending with a weight of 3.1%, despite reporting strong fiscal third quarter results with revenue growth of 27% and profitability ahead of guidance. Management raised full-year guidance for both revenue and profitability, but shares fell because annual recurring revenue growth of 19% finished at the midpoint of guidance, the first quarter since 2022 that ARR did not meet or exceed the high end of its guidance, as a couple of deals slipped past quarter end. The fund believes the slippage reflects timing rather than demand, noting the pipeline remains healthy and management expects the fiscal fourth quarter could be a record quarter. Guidewire currently wins more than 80% of competitive requests for proposals but only 25% of industry premiums are running on its systems, and its pricing is tied to direct written premiums rather than employee headcount, making it a beneficiary of rising insurance premiums and insulating it from potential AI-driven seat reductions.
Guidewire Software IncAI tooling reduces cloud migration costs by 35%, lowering modernization barrier and supporting growth.
