Shares of Guidewire Software (GWRE) surged 13.36% 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. JP Morgan, Oppenheimer, and RBC Capital Markets all increased their target prices, reflecting growing confidence in the company's growth trajectory and market position in the insurance software sector.

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. With 19 new cloud deals closed in Q4 FY2025 and a notable 10-year agreement with a major Tier-1 insurer, Guidewire appears well-positioned to capitalize on the ongoing digital transformation in the insurance industry.