GUIDEWIRE SOFTWARE, INC.

Customer and revenue · Customer retention and subscription renewal

Our customers have no obligation to renew their term licenses or subscriptions after their contract period expires, and these licenses and subscriptions, if renewed, may be done so on less favorable terms. If our customers do not renew their term licenses or subscriptions for our solutions or renew on less favorable terms, our revenue may decline or grow more slowly than expected and our profitability may be harmed.

Customer and revenue · Customer concentration and key customer dependence

Our ten largest customers accounted for 21% and 20% of our revenue in fiscal years 2026 and 2025, respectively. Additionally, our ten largest customers based on ARR accounted for 20% of total ARR at July 31, 2026. While we expect this reliance to decrease over time as our revenue, customer base, and subscription services as a percentage of revenue grow, we expect that we will continue to depend upon a relatively small number of customers for a significant portion of our revenue and ARR for the foreseeable future.

Market position and competition · Competitive pressure and market share loss

The market for our products is intensely competitive and rapidly evolving. If our competitors' products, services, or technologies become more accepted than our solutions, if they are successful in bringing their products or services to market earlier than we are, if their products or services are more technologically capable than ours (including, without limitation, as a result of new or better use of evolving AI technologies), or if our customers or potential customers replace our solutions with custom-built software, then our revenue could be adversely affected.

Market position and competition · Disruptive competitors and new market entrants

We may also face competition from new market entrants, specialized AI companies, enterprise AI platform providers, and cloud-based vendors that utilize innovative technologies, including AI technologies, to compete with or disrupt portions of our business. As AI technologies continue to evolve, our existing and potential customers may leverage these capabilities to develop their own solutions that could reduce or eliminate the need for our solutions.

Market position and competition · Pricing pressure and margin compression

These customers have significant bargaining power when negotiating new licenses or subscriptions or renewals of existing agreements, and have the ability to buy similar products from other vendors or develop such systems internally. We have been required to, and may again be required to, reduce the average selling price and ARR of our products, along with agreeing to ramps that delay reaching fully ramped ARR, in response to these pressures.

Market position and competition · Market cyclicality and demand volatility

Seasonal sales patterns may cause significant fluctuations in our results of operations and cash flows and may prevent us from achieving our quarterly or annual forecasts. We generally see increased new orders in our fourth fiscal quarter, which is the quarter ending July 31, due to efforts by our sales team to achieve annual incentives.

Innovation and product development · Product development and randd investment risks

If we fail to develop new products, enhance our existing products, or manage our products in the cloud, our business could be adversely affected, especially if our competitors are able to introduce products with enhanced functionality in the cloud. It is critical to our success for us to anticipate changes in technology, industry standards and regulations, and customer requirements and to successfully introduce new, enhanced, and competitive products to meet our customers' and prospective customers' needs on a timely basis.

Human capital and workforce · Skills shortage and training requirements

We believe that our future growth will depend on the continued recruiting, retention, and training of our global direct sales force and their ability to obtain new customers. New hires require significant training and may, in some cases, take more than a year before becoming productive, if at all.

Project and contract management · Project execution and delivery risks

The implementation and testing of our products by our customers typically lasts six to 24 months or longer and unexpected implementation delays and difficulties can occur. Failing to meet the expectations of our customers during the implementation of our products could result in a loss of customers and negative publicity about us and our products.

Human capital and workforce · Talent acquisition and retention

Retaining existing and hiring new personnel, maintaining our company culture, and managing a hybrid and geographically distributed workforce. Our inability to attract and retain qualified employees and key personnel, or delays in hiring required personnel, including attrition, retention and delay issues due to macroeconomic and other factors beyond our control, may seriously harm our business, results of operations, and financial condition.

Core operations · Quality control and product defects

Because we offer complex products, undetected errors or failures may exist or occur, especially when products are first introduced or when new versions or updates are released. Despite extensive testing by us, we may not identify all errors, failures, or bugs in new products or releases until after commencement of commercial sales or installation.

Project and contract management · Service level and performance guarantees

Our subscription contracts also contain penalty clauses, for matters such as failing to meet stipulated service levels or other contractual provisions. Should these penalties be triggered, our results of operations may be adversely affected. These penalties and costs have taken, and could in the future take, the form of monetary credits for current or future service engagements, reduced fees for additional services or products or upon renewal of existing agreements.

Geopolitical and trade · Regulatory and policy uncertainty

Moreover, the regulatory framework for AI technologies is rapidly evolving as many federal, state and foreign government bodies and agencies have enacted or are currently considering laws and regulations governing AI. Additionally, existing laws and regulations may be interpreted or enforced in ways that would affect our use of AI technologies.

Geopolitical and trade · Political instability and government changes

Political, social, and economic instability abroad, terrorist attacks, and security concerns in general. Government sanctions that may interfere with our ability to sell into particular countries, such as Russia.

Economic and market conditions · Economic recession and downturns

The impact of economic downturns, recessions, or market volatility caused by inflation, deflation, financial instability, public health crises, geopolitical conflicts, and trade uncertainties, which may negatively affect our partners and vendors, or cause a delay, failure to execute, collection issues, or cancellation of significant customer agreements and professional service arrangements.

Capital structure and performance · Financial performance volatility

Our quarterly and annual results of operations have fluctuated in the past and may fluctuate significantly in the future due to a variety of factors, many of which are outside of our control. This variability has led, and may continue to lead to volatility in our stock price as investors and research analysts respond to quarterly fluctuations.

Market and investment · Market volatility and economic cycles

Exposure to market risks, including geographical and global events, supply chain disruptions, inflation, political and regional conflicts, interest rates, foreign currency exchange rates, tariffs, and financial markets' volatility, all of which have impacted or may impact our stock price and its volatility and our customers, partners, vendors, or our business operations.

Digital transformation and innovation · Artificial intelligence and automation

We use internally developed and third-party AI technologies across our products and internal business operations, and are continuing to make investments in expanding such AI capabilities. The complexity of our products that incorporate AI technologies could result in unforeseen delays or expenses, undetected defects, bugs, system misconfigurations, or new cybersecurity or data privacy vulnerabilities.

Cybersecurity and data protection · Data breaches and cyber attacks

Exposure to risks in relation to data security incidents or breaches of our cloud-based products, including increasingly sophisticated, AI-accelerated cyberattacks that may outpace our defensive measures, unauthorized access to our customers' or employees' data, and the related impact on our ability to effectively operate our cloud environment for our customers.

Cybersecurity and data protection · Data privacy and protection regulations

Required compliance with current and evolving local data privacy and cybersecurity laws and regulations in all jurisdictions where we have customers, and our ability to maintain the security of our customers' data and our cloud-based products, appropriately limit the use of information, and manage related costs and liabilities incurred.