Shares of Guidewire Software (GWRE) surged 21.84% in pre-market trading on Friday, following the company's impressive fourth-quarter fiscal 2025 results and optimistic guidance for the upcoming fiscal year.

The insurance software provider reported a 22% year-over-year increase in GAAP revenue, reaching $356.6 million for Q4 FY2025, surpassing both Wall Street expectations and the company's own guidance. Non-GAAP earnings per share also beat estimates, coming in at $0.84, marking a 35.5% increase from the same period last year. Notably, Guidewire achieved a significant milestone by exceeding $1 billion in annual recurring revenue (ARR) for the first time, with ARR reaching $1.03 billion, up 19% from the previous year.

Adding to investor optimism, Guidewire provided a strong outlook for fiscal year 2026. The company forecasts revenue between $1.39 billion and $1.41 billion, surpassing analysts' expectations of just under $1.36 billion. This positive guidance, coupled with the robust Q4 performance, has prompted several analysts to raise their price targets for Guidewire stock. The surge in Guidewire's stock price underscores the market's positive reception to the company's continued success in transitioning to a cloud-based, subscription-driven business model, positioning it well to capitalize on the ongoing digital transformation in the insurance industry.