Guidewire Software has gotten torched over the last six months - since August 2025, its stock price has dropped 42.5% to $123.70 per share. This might have investors contemplating their next move.

Following the drawdown, is now an opportune time to buy GWRE? Find out in our full research report, it’s free.

Why Does GWRE Stock Spark Debate?

With its systems powering the operations of hundreds of insurance brands across 42 countries, Guidewire Software (NYSE: GWRE) provides a technology platform that helps property and casualty insurance companies manage their core operations, digital engagement, and analytics.

Two Things to Like:

1. Billings Surge, Boosting Cash On Hand

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Guidewire Software’s billings punched in at $243.9 million in Q3, and over the last four quarters, its year-on-year growth averaged 20.7%. This performance was impressive, indicating robust customer demand. The high level of cash collected from customers also enhances liquidity and provides a solid foundation for future investments and growth.

2. Customer Acquisition Costs Are Recovered in Record Time

The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.

Guidewire Software is extremely efficient at acquiring new customers, and its CAC payback period checked in at 16.7 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a highly differentiated product offering and a strong brand reputation. These dynamics give Guidewire Software more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.

One Reason to be Careful:

Long-Term Revenue Growth Disappoints

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Guidewire Software grew its sales at a 11% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds. Luckily, there are other things to like about Guidewire Software.

Final Judgment

Guidewire Software’s positive characteristics outweigh the negatives. With the recent decline, the stock trades at 7.5× forward price-to-sales (or $123.70 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.

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