UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________________

FORM 10-Q

______________________________________________________________

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~April~~October 3031, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-35394

______________________________________________________________

Guidewire Software, Inc.

(Exact name of registrant as specified in its charter)

______________________________________________________________


Delaware			36-4468504
(State or other jurisdiction of Incorporation or organization)			(I.R.S. Employer Identification No.)

970 Park Pl, Suite 200 San Mateo, California			94403
(Address of principal executive offices)			(Zip Code)

(650) 357-9100

(Registrant’s telephone number, including area code)

______________________________________________________________

N/A

(Former name, former address and former fiscal year, if changed since last report)

______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	GWRE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On ~~May~~November 3028, 2025, the registrant had 8485,~~195~~019,~~223~~176 shares of common stock issued and outstanding.

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Guidewire Software, Inc.

Index

Part I – Financial Information
Item 1.	Financial Statements (unaudited):	1
	Condensed Consolidated Balance Sheets as of April 30, 2025 and July 31, 2024	3
	Condensed Consolidated Balance Sheets as of October 31, 2025 and July 31, 2025	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended April 30, 2025 and 2024	4
	Condensed Consolidated Statements of Operations for the Three Months Ended October 31, 2025 and 2024	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended April 30, 2025 and 2024	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended October 31, 2025 and 2024	5
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended April 30, 2025 and 2024	6
	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended October 31, 2025 and 2024	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended April 30, 2025 and 2024	8
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended October 31, 2025 and 2024	7
	Notes to Condensed Consolidated Financial Statements	109
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4840
Item 4.	Controls and Procedures	4941
Part II – Other Information		5042
Item 1.	Legal Proceedings	5042
Item 1A.	Risk Factors	5042
Item 5.	Other Information	7869
Item 6.	Exhibits	7970
Signatures		8071

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FORWARD-LOOKING STATEMENTS

The section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as other parts of this Quarterly Report on Form 10-Q and certain information incorporated herein by reference contain forward-looking statements within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), ~~that~~which are subject to risks and uncertainties. The forward-looking statements may include statements concerning, among other things, our business strategy (including anticipated trends and developments in, and management plans for, our business, ~~growth,~~ and the markets in which we operate), financial results, results of operations, revenue, gross margins, operating expenses, services, products, projected costs and capital expenditures, research and development programs, ~~sales~~cloud ~~and~~operations, ~~marketing~~cybersecurity ~~initiatives~~effectiveness, ~~competition,~~sales and ~~the~~marketing ~~impact of general economic~~initiatives, ~~business,~~ and ~~market conditions~~competition. In some cases, you can identify these statements by forward-looking words, such as “will,” “may,” “might,” “should,” “could,” “estimate,” “expect,” “suggest,” “believe,” “anticipate,” “intend,” “plan,” and “continue,” the negative or plural of these words and other comparable terminology. Actual events or results may differ materially from those expressed or implied by these statements due to various factors, including but not limited to, the matters discussed in the section titled “Part II – Other Information – Item 1A. Risk Factors,” and elsewhere in this Quarterly Report on Form 10-Q. Many of the forward-looking statements are located in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties. The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on information available to us as of the filing date of this Quarterly Report on Form 10-Q and our current expectations about future events, which are inherently subject to change and involve risks and uncertainties. You should not place undue reliance on these forward-looking statements.

We do not undertake any obligation to update any forward-looking statements in this Quarterly Report on Form 10-Q or in any of our other communications, except as required by law. All such forward-looking statements should be read as of the time the statements were made and with the recognition that these forward-looking statements may not be complete or accurate at a later date.

_____________

Unless the context requires otherwise, we are referring to Guidewire Software, Inc., together with its subsidiaries, when we use the terms “Guidewire,” the “Company,” “we,” “our,” or “us.” When using the term “products,” we are generally referring to both our subscription services and term license software.

PART I – Financial Information

ITEM 1.Financial Statements (unaudited)

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands)

	April 30,2025		July 31,2024
	October 31,2025		July 31,2025
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	~~510~~492,~~321~~038	$	~~547~~697,~~992~~902
Short-term investments	~~410~~519,~~116~~861		~~455~~451,~~576~~541
Accounts receivable, net of allowances of $1,848 and $646, respectively	147,296		137,339
Accounts receivable, net of allowances of $2,783 and $1,166, respectively	94,600		140,639
Unbilled accounts receivable, net	~~166~~163,~~925~~016		87130,~~031~~959
Prepaid expenses and other current assets	7887,~~311~~509		6786,~~596~~374
Total current assets	1,~~312~~357,~~969~~024		1,~~295~~507,~~534~~415
Long-term investments	~~323~~397,~~305~~365		~~125~~333,~~885~~754
Unbilled accounts receivable, net	~~791~~83		~~4,157~~670
Property and equipment, net	5565,~~561~~199		5560,~~409~~436
Operating lease assets	4137,~~767~~636		4339,~~750~~309
Intangible assets, net	1310,~~482~~704		912,~~005~~042
Goodwill	~~393~~394,~~592~~300		~~372~~393,~~214~~978
Deferred tax assets, net	~~281~~305,~~344~~494		~~253~~297,~~085~~234
Other assets	6571,~~260~~526		6776,~~255~~261
TOTAL ASSETS	$	2,~~488~~639,~~071~~331	$	2,~~226~~721,~~294~~099
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	2833,~~952~~557	$	1528,~~209~~797
Accrued employee compensation	8970,~~230~~300		~~109~~140,~~084~~613
Deferred revenue, net	~~258~~253,~~786~~537		~~281~~340,~~855~~253
Convertible senior notes, net	—		398,903
Other current liabilities	32,464		35,139
Other current liabilities	28,946		32,584
Total current liabilities	389,858		544,802
Total current liabilities	405,914		837,635
Lease liabilities	29,057		30,687
Lease liabilities	33,013		34,721
Convertible senior notes, net	675,443		674,568
Convertible senior notes, net	673,696		—
Deferred revenue, net	2,464		4,533
Deferred revenue, net	4,937		3,628
Other liabilities	9,091		9,279
Other liabilities	7,936		7,578
Total liabilities	1,105,913		1,263,869
Total liabilities	1,125,496		883,562
STOCKHOLDERS’ EQUITY:
Common stock	89		8
Additional paid-in capital	12,~~977~~064,~~364~~255		12,~~979~~020,~~021~~393
Accumulated other comprehensive income (loss)	(87,~~597~~905)		(128,~~244~~922)
Retained earnings (accumulated deficit)	(~~606~~522,~~200~~941)		(~~624~~554,~~053~~249)
Total stockholders’ equity	1,~~362~~533,~~575~~418		1,~~342~~457,~~732~~230
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,~~488~~639,~~071~~331	$	2,~~226~~721,~~294~~099

See accompanying Notes to Condensed Consolidated Financial Statements.

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands except shares and per share amounts)

Three Months Ended

~~Nine Months Ended~~

April 30,

October 31,

2025

2024

~~2025~~

~~2024~~

Revenue:

Subscription and support

~~181~~222,~~823~~203

~~137~~169,~~970~~742

~~529,403~~

~~397,239~~

License

5741,~~233~~967

5637,~~210~~370

~~158,297~~

~~161,318~~

Services

5468,~~452~~469

4655,~~498~~789

~~158,189~~

~~130,425~~

Total revenue

~~293~~332,~~508~~639

~~240~~262,~~678~~901

~~845,889~~

~~688,982~~

Cost of revenue:

Subscription and support

5763,~~411~~927

5154,~~185~~024

~~170,531~~

~~149,173~~

License

~~892~~644

~~837~~881

~~2,715~~

~~3,539~~

Services

5258,~~507~~546

4649,~~429~~604

~~152,401~~

~~139,345~~

Total cost of revenue

~~110~~123,~~810~~117

98104,~~451~~509

~~325,647~~

~~292,057~~

Gross profit:

Subscription and support

~~124~~158,~~412~~276

86115,~~785~~718

~~358,872~~

~~248,066~~

License

5641,~~341~~323

5536,~~373~~489

~~155,582~~

~~157,779~~

Services

19,~~945~~923

696,185

~~5,788~~

~~(8,920)~~

Total gross profit

~~182~~209,~~698~~522

~~142~~158,~~227~~392

~~520,242~~

~~396,925~~

Operating expenses:

Research and development

7278,~~915~~317

6668,~~134~~880

~~212,063~~

~~194,061~~

Sales and marketing

5764,~~768~~258

5051,~~487~~478

~~164,698~~

~~144,249~~

General and administrative

4748,~~547~~469

42,~~302~~754

~~132,010~~

~~121,502~~

Total operating expenses

~~178~~191,~~230~~044

~~158~~163,~~923~~112

~~508,771~~

~~459,812~~

Income (loss) from operations

418,~~468~~478

(164,~~696~~720)

~~11,471~~

~~(62,887)~~

Interest income

1314,~~794~~650

1013,~~824~~606

~~43,122~~

~~31,727~~

Interest expense

(3,~~668~~312)

(12,~~686~~062)

~~(9,913)~~

~~(5,061)~~

Other income (expense), net

34(5,~~074~~314)

(64,~~535~~055)

~~(36,270)~~

~~(9,501)~~

Income (loss) before provision for (benefit from) income taxes

4824,~~668~~502

~~(14~~2,~~093)~~769

~~8,410~~

~~(45,722)~~

Provision for (benefit from) income taxes

2(6,~~677~~806)

(86,~~615~~370)

~~(9,443)~~

~~(22,860)~~

Net income (loss)

4531,~~991~~308

(59,~~478)~~139

~~17,853~~

~~(22,862)~~

Net income (loss) per share:

Basic

0.5537

(0.~~07)~~11

~~0.21~~

~~(0.28)~~

Diluted

0.5436

(0.~~07)~~11

~~0.21~~

~~(0.28)~~

Shares used in computing net income (loss) per share:

Basic

84,~~044~~780,~~661~~201

8283,~~500~~276,~~109~~236

~~83,671,443~~

~~82,105,357~~

Diluted

8586,~~880~~451,~~643~~737

8285,~~500~~960,~~109~~868

~~85,654,903~~

~~82,105,357~~

See accompanying Notes to Condensed Consolidated Financial Statements.

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)

Three Months Ended

~~Nine Months Ended~~

April 30,

October 31,

2025

2024

~~2025~~

~~2024~~

Net income (loss)

4531,~~991~~308

(59,~~478)~~139

~~17,853~~

~~(22,862)~~

Other comprehensive income (loss):

Foreign currency translation adjustments

~~6,322~~118

(~~1,238~~62)

~~2,962~~

~~(2,383)~~

Unrealized gain (loss) on available-for-sale securities

~~462~~1,224

~~(1,016)~~557

~~819~~

~~2,830~~

Tax benefit (expense) on unrealized gain (loss) on available-for-sale securities

(~~141~~279)

~~262~~(104)

~~(212)~~

~~(533)~~

Reclassification adjustment for realized gain (loss) on available-for-sale securities, included in net income (loss)

~~134~~(46)

(95116)

~~(576)~~

Total other comprehensive income (loss)

61,~~777~~017

~~(2,087)~~275

~~3,647~~

~~(662)~~

Comprehensive income (loss)

5232,~~768~~325

(79,~~565)~~414

~~21,500~~

~~(23,524)~~

See accompanying Notes to Condensed Consolidated Financial Statements.

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited, in thousands except share amounts)

	Common stock			Additionalpaid-incapital		Accumulatedothercomprehensive income (loss)		Retained earnings (accumulated deficit)		Totalstockholders’equity
	Shares	Amount
Balance as of July 31, 2024	83,025,637	$	8	$	1,979,021	$	(12,244)	$	(624,053)	$	1,342,732
Balance as of July 31, 2025	84,530,418	$	8	$	2,020,393	$	(8,922)	$	(554,249)	$	1,457,230
Net income (loss)	—	—		—		—		931,~~139~~308		931,~~139~~308
Issuance of common stock upon exercise of stock options	276,~~003~~171	—		~~1,939~~413		—		—		~~1,939~~413
Issuance of common stock upon vesting of restricted stock units (“RSUs”)	466,489	—		—		—		—		—
Issuance of common stock upon vesting of restricted stock units ("RSUs")	482,304	1		—		—		—		1
Stock-based compensation	—	—		3843,~~167~~449		—		—		3843,~~167~~449
Purchase of capped calls	—	—		(58,788)		—		—		(58,788)
Foreign currency translation adjustment	—	—		—		118		—		118
Retirement of convertible senior notes	—	—		(79,366)		—		—		(79,366)
Unrealized gain (loss) on available-for-sale securities, net of tax	—	—		—		945		—		945
Deferred tax asset related to debt issuance of convertible senior notes	—	—		13,931		—		—		13,931
Reclassification adjustment for realized gain (loss) on available-for-sale securities, included in net income (loss)	—	—		—		(46)		—		(46)
Foreign currency translation adjustment	—	—		—		(62)		—		(62)
Balance as of October 31, 2025	85,018,893	$	9	$	2,064,255	$	(7,905)	$	(522,941)	$	1,533,418
Unrealized gain (loss) on available-for-sale securities, net of tax	—	—		—		453		—		453
Reclassification adjustment for realized gain (loss) on available-for-sale securities, included in net income (loss)	—	—		—		(116)		—		(116)
Balance as of October 31, 2024	83,519,129	$	8	$	1,894,904	$	(11,969)	$	(614,914)	$	1,268,029
Net income (loss)	—	—		—		—		(37,277)		(37,277)
Issuance of common stock upon exercise of stock options	8,556	—		525		—		—		525
Issuance of common stock upon vesting of RSUs	352,891	—		—		—		—		—
Stock-based compensation	—	—		40,864		—		—		40,864
Foreign currency translation adjustment	—	—		—		(3,298)		—		(3,298)
Unrealized gain (loss) on available-for-sale securities, net of tax	—	—		—		(167)		—		(167)
Reclassification adjustment for realized gain (loss) on available-for-sale securities, included in net income (loss)	—	—		—		60		—		60
Balance as of January 31, 2025	83,880,576	$	8	$	1,936,293	$	(15,374)	$	(652,191)	$	1,268,736
Net income (loss)	—	—		—		—		45,991		45,991
Issuance of common stock upon exercise of stock options	10,196	—		710		—		—		710
Issuance of common stock upon vesting of RSUs	330,255	—		—		—		—		—
Stock-based compensation	—	—		40,367		—		—		40,367
Settlement of convertible senior notes	671,202	—		(6)		—		—		(6)
Settlement of capped calls	(697,140)	—		—		—		—		—
Foreign currency translation adjustment	—	—		—		6,322		—		6,322
Unrealized gain (loss) on available-for-sale securities, net of tax	—	—		—		321		—		321
Reclassification adjustment for realized gain (loss) on available-for-sale securities, included in net income (loss)	—	—		—		134		—		134
Balance as of April 30, 2025	84,195,089	$	8	$	1,977,364	$	(8,597)	$	(606,200)	$	1,362,575


	Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Retained earnings (accumulated deficit)		Total stockholders’ equity
	Shares	Amount
Balance as of July 31, 2024	83,025,637	$	8	$	1,979,021	$	(12,244)	$	(624,053)	$	1,342,732
Net income (loss)	—	—		—		—		9,139		9,139
Issuance of common stock upon exercise of stock options	27,003	—		1,939		—		—		1,939
Issuance of common stock upon vesting of RSUs	466,489	—		—		—		—		—
Stock-based compensation	—	—		38,167		—		—		38,167
Purchase of capped calls	—	—		(58,788)		—		—		(58,788)
Retirement of convertible senior notes	—	—		(79,366)				—		(79,366)
Deferred tax asset related to debt issuance of convertible senior notes	—	—		13,931				—		13,931
Foreign currency translation adjustment	—	—		—		(62)		—		(62)
Unrealized gain (loss) on available-for-sale securities, net of tax						453				453
Reclassification adjustment for realized gain (loss) on available-for-sale securities, included in net income (loss)	—	—		—		(116)		—		(116)
Balance as of October 31, 2024	83,519,129	$	8	$	1,894,904	$	(11,969)	$	(614,914)	$	1,268,029

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

			Common stock					Additionalpaid-incapital		Accumulatedothercomprehensive income (loss)		Retained earnings (accumulated deficit)		Totalstockholders’equity
GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
			Shares			Amount
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Balance as of July 31, 2023			81,440,669			$	8	$	1,831,267	$	(13,859)	$	(617,950)	$	1,199,466
(unaudited, in thousands)
Net income (loss)			—			—		—		—		(27,071)		(27,071)
	Three Months Ended October 31,
Issuance of common stock upon exercise of stock options			42			—		1		—		—		1
	2025			2024
Issuance of common stock upon vesting of RSUs			489,783			—		—		—		—		—
CASH FLOWS FROM OPERATING ACTIVITIES:
Stock-based compensation			—			—		36,199		—		—		36,199
Net income (loss)	$	31,308		$	9,139
Foreign currency translation adjustment			—			—		—		(3,507)		—		(3,507)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Unrealized gain (loss) on available-for-sale securities, net of tax			—			—		—		851		—		851
Depreciation and amortization	6,362			5,845
Reclassification adjustment for realized gain (loss) on available-for-sale securities, included in net income (loss)			—			—		—		(290)		—		(290)
Amortization of debt issuance costs	980			545
Balance as of October 31, 2023			81,930,494			$	8	$	1,867,467	$	(16,805)	$	(645,021)	$	1,205,649
Amortization of contract costs	8,802			7,780
Net income (loss)			—			—		—		—		9,687		9,687
Stock-based compensation	43,316			38,060
Issuance of common stock upon exercise of stock options			327			—		3		—		—		3
Changes to allowance for credit losses and revenue reserves	2,358			1,257
Issuance of common stock upon vesting of RSUs			391,289			—		—		—		—		—
Deferred income tax	(8,527)			(7,955)
Stock-based compensation			—			—		36,403		—		—		36,403
Amortization of premium (accretion of discount) on available-for-sale securities, net	(1,948)			(3,228)
Foreign currency translation adjustment			—			—		—		2,362		—		2,362
Changes in fair value of strategic investments	60			(53)
Unrealized gain (loss) on available-for-sale securities, net of tax			—			—		—		2,200		—		2,200
Other non-cash items affecting net income (loss)	17			286
Reclassification adjustment for realized gain (loss) on available-for-sale securities, included in net income (loss)			—			—		—		(191)		—		(191)
Changes in operating assets and liabilities:
Balance as of January 31, 2024			82,322,110			$	8	$	1,903,873	$	(12,434)	$	(635,334)	$	1,256,113
Accounts receivable	43,676			38,609
Net income (loss)			—			—		—		—		(5,478)		(5,478)
Unbilled accounts receivable	(31,470)			(38,889)
Issuance of common stock upon exercise of stock options			746			—		9		—		—		9
Prepaid expenses and other assets	(4,710)			(8,932)
Issuance of common stock upon vesting of RSUs			340,215			—		—		—		—		—
Operating lease assets	1,673			1,757
Stock-based compensation			—			—		36,809		—		—		36,809
Accounts payable	4,264			16,206
Foreign currency translation adjustment			—			—		—		(1,238)		—		(1,238)
Accrued employee compensation	(69,630)			(56,545)
Unrealized gain (loss) on available-for-sale securities, net of tax			—			—		—		(754)		—		(754)
Deferred revenue	(88,785)			(58,107)
Reclassification adjustment for realized gain (loss) on available-for-sale securities, included in net income (loss)			—			—		—		(95)		—		(95)
Lease liabilities	(1,537)			(1,685)
Balance as of April 30, 2024			82,663,071			$	8	$	1,940,691	$	(14,521)	$	(640,812)	$	1,285,366
Other liabilities	(3,607)			(6,395)
Net cash provided by (used in) operating activities	(67,398)			(62,305)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities	(318,525)			(211,649)
Maturities and sales of available-for-sale securities	189,726			139,896
Purchases of property and equipment	(4,878)			(843)
Capitalized software development costs	(5,088)			(4,233)
Acquisition of strategic investments	—			(772)
Net cash provided by (used in) investing activities	(138,765)			(77,601)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible senior notes, net of issuance costs	—			672,750
Payment for the retirement of convertible senior notes	—			(200,394)
Purchase of capped calls	—			(58,788)
Proceeds from issuance of common stock upon exercise of stock options	413			1,939
Net cash provided by (used in) financing activities	413			415,507
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(114)			(31)
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(205,864)			275,570
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period	699,094			549,184
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period	$	493,230		$	824,754

See accompanying Notes to Condensed Consolidated Financial Statements.

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GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash paid for interest	$	173	$	2,639
(unaudited, in thousands)
Cash paid for income taxes, net of tax refunds	$	1,952	$	2,604
	Nine Months Ended April 30,
Accruals for purchase of property and equipment	$	3,335	$	461
	2025		2024
Accruals for capitalized software development costs	$	327	$	251
CASH FLOWS FROM OPERATING ACTIVITIES:
Accruals for unpaid debt issuance cost	$	—	$	1,055
Net income (loss)	$	17,853	$	(22,862)
Accrual for business acquisition purchase consideration holdback	$	993	$	—
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	17,538		16,525
Amortization of debt issuance costs	2,782		1,296
Amortization of contract acquisition costs	14,597		12,869
Stock-based compensation	119,365		109,174
Changes to allowance for credit losses and revenue reserves	1,107		(142)
Deferred income tax	(15,851)		(29,294)
Amortization of premium (accretion of discount) on available-for-sale securities, net	(8,613)		(9,492)
Gain on sale of strategic investments	(3,671)		(1,758)
Changes in fair value of strategic investments	341		(298)
Loss on retirement of debt	53,565		—
Other non-cash items affecting net income (loss)	56		(74)
Changes in operating assets and liabilities:
Accounts receivable	(10,609)		46,276
Unbilled accounts receivable	(74,471)		(33,955)
Prepaid expenses and other assets	(21,384)		(22,082)
Operating lease assets	1,983		6,106
Accounts payable	13,589		(10,538)
Accrued employee compensation	(20,600)		(25,604)
Deferred revenue	(24,876)		(28,012)
Lease liabilities	(1,121)		(5,136)
Other liabilities	(5,544)		(1,028)
Net cash provided by (used in) operating activities	56,036		1,971
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities	(672,330)		(453,441)
Maturities and sales of available-for-sale securities	529,887		416,299
Purchases of property and equipment	(2,336)		(4,668)
Capitalized software development costs	(10,972)		(9,429)
Acquisition of strategic investments	(1,772)		(336)
Sale of strategic investments	5,671		6,508
Acquisition of business, net of acquired cash	(26,724)		—
Net cash provided by (used in) investing activities	(178,576)		(45,067)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible senior notes, net of issuance costs	671,840		—
Payment for the retirement of convertible senior notes	(353,535)		—
Payment for the maturity of convertible senior notes	(179,061)		—
Purchase of capped calls	(58,788)		—
Payment of revolving credit facility costs	(2,065)		—
Proceeds from issuance of common stock upon exercise of stock options	3,174		14
Net cash provided by (used in) financing activities	81,565		14
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	3,303		(2,915)

See accompanying Notes to Condensed Consolidated Financial Statements.

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NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(37,672)		(45,997)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—Beginning of period	549,184		406,790
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH—End of period	$	511,512	$	360,793

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest	$	7,000	$	5,000
Cash paid for income taxes, net of tax refunds	$	6,323	$	6,173
Accruals for purchase of property and equipment	$	802	$	638
Accruals for capitalized software development costs	$	807	$	712
Accruals for acquisition purchase consideration holdback	$	1,011	$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. The Company and Summary of Significant Accounting Policies and Estimates

Company

Guidewire Software, Inc., a Delaware corporation, was incorporated on September 20, 2001. Guidewire Software, Inc., together with its subsidiaries (the “Company”), provides a technology platform which combines core ~~operations,~~systems ~~digital~~of ~~engagement~~record with digital, analytics, ~~machine learning,~~ and artificial intelligence (“AI”) applications. The Company’s technology platform supports core insurance operations, including underwriting, policy administration, claim management, and billing; insights into data that can improve business decision making; and digital sales, service, and claims experiences for policyholders, agents, and other key stakeholders. The Company’s customers are primarily property and casualty insurance carriers.

Basis of Presentation and Consolidation

The ~~Company’s~~ condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The condensed consolidated financial statements and notes include the Company and its wholly owned subsidiaries and reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for a fair presentation of the interim periods presented. All intercompany balances and transactions have been eliminated in consolidation. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted under the rules and regulations of the SEC.

These condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and related notes, together with management’s discussion and analysis of financial condition and results of operations, presented in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2024~~2025.

Use of Estimates

In preparing the condensed consolidated financial statements and related disclosures in conformity with GAAP and pursuant to the rules and regulations of the SEC, the Company must make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ materially from these estimates.

Segment Information

The Company has determined that the chief executive officer is the chief operating decision maker. The Company’s chief executive officer reviews financial information presented on a consolidated basis for purposes of assessing performance and making decisions on how to allocate resources and assess performance. Accordingly, the Company has determined that it operates in a single reportable segment. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements and accompanying notes.

Significant Accounting Policies

There have been no changes in the Company’s significant accounting policies from those that were disclosed in the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended July 31, ~~2024~~2025, except for those disclosed herein.

Restricted Cash

Unearned acquisition consideration holdback subject to service conditions is held in escrow and considered restricted cash. As of ~~April~~October 3031, 2025 and July 31, ~~2024~~2025, unearned acquisition consideration holdback of $1.2 million was included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, investments, accounts receivable, and unbilled accounts receivable. The Company maintains its cash, cash equivalents, and investments with high-quality financial institutions. The Company is exposed to credit risk for cash held in financial institutions in the event of a default to the extent that such amounts recorded in the condensed consolidated balance sheets are in excess of amounts that are insured by the Federal Deposit Insurance Corporation.

No customer individually accounted for 10% or more of the Company’s revenue for the three ~~and nine~~ months ended ~~April~~October 3031, 2025 and 2024. As of ~~April~~October 3031, 2025, noand ~~customer~~July 31, ~~individually~~2025, ~~accounted~~the ~~for~~Company ~~10%~~had orone ~~more~~customer, ofwhich ~~the~~were ~~Company’s~~different ~~accounts~~customers ~~receivables.~~in Aseach ~~of July 31~~period, ~~2024,~~which ~~one customer~~ accounted for 10% or more of the Company’s accounts receivable.

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Business Combinations

The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. Goodwill is calculated as the difference between the acquisition-date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and subject to refinement, and, as a result, actual results may differ from estimates. During the measurement period, which may be up to one year from the acquisition date, if new information is obtained about facts and circumstances that existed as of the acquisition date, the Company may record adjustments to the fair value of these assets and liabilities, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired and liabilities assumed, whichever comes first, subsequent adjustments, if any, are recorded to the Company’s condensed consolidated statements of operations.

Recently Adopted Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The new standard was early adopted by the Company beginning August 1, 2024 and applied retrospectively for all periods presented. See Note 6 “Debt.” The new standard did not have an impact on prior periods presented in the condensed consolidated financial statements.

Recent Accounting Pronouncements

In ~~November~~December 2023, the FASB issued ASU No. 2023-0709, ~~Segment~~Income ~~Reporting~~Taxes (Topic ~~280~~740): Improvements to ~~Reportable~~Income ~~Segment~~Tax Disclosures, which ~~requires~~improves ~~public~~the ~~entities~~transparency toof ~~disclose~~income ~~information~~tax ~~about~~disclosures ~~their~~by ~~reportable~~requiring ~~segments’~~consistent ~~significant~~categories ~~expenses~~ and ~~other~~greater ~~segment~~disaggregation ~~items~~of oninformation anin ~~interim~~the ~~and~~effective ~~annual~~tax ~~basis.~~rate ~~Public~~reconciliation ~~entities~~and ~~with~~income ataxes ~~single~~paid ~~reportable~~disaggregated ~~segment~~by ~~are required to apply the disclosure requirements in ASU No~~jurisdiction. ~~2023-07,~~It asalso ~~well~~includes ascertain ~~all~~other ~~existing~~amendments ~~segment~~to ~~disclosures~~improve ~~and~~the ~~reconciliation~~effectiveness ~~requirements~~of inincome ~~Accounting~~tax ~~Standards Codification (“ASC”) 280 on an interim and annual basis~~disclosures. The new standard will be effective and the Company will adopt it for the annual period beginning August 1, ~~2024, and for the interim periods beginning after August 1,~~ 2025. The adoption ~~of this ASU~~ will impact the Company’s disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. The new standard will be effective and the Company will adopt it beginning August 1, 2025. Upon adoption, the guidance can be applied prospectively or retrospectively. The adoption of this ASU will impact the Company’s disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities to disclose qualitative and quantitative information about certain costs and expenses in the notes to the financial statements on an interim and annual basis. The new standard will be effective and the Company will adopt it for the annual period beginning August 1, 2027, and for the interim periods beginning after August 1, 2028. Upon adoption, the guidance can be applied prospectively or retrospectively. The adoption of this ASU will impact the Company’s disclosures.

In July 2025, the FASB issued ASU No. 2025-05, Income Statement—Reporting Financial Instruments-Credit Losses (Subtopic 326-20): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient for all entities related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. The new standard will be effective and the Company will adopt it beginning August 1, 2026 on a prospective basis. The Company is currently assessing the impact of adopting this standard on the consolidated financial statements.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software which removes all references to prescriptive and sequential software development stages to increase the operability of applying the guidance to software costs incurred in an iterative development environment. The new standard will be effective and the Company will adopt it beginning August 1, 2028. Upon adoption, the guidance can be applied using a prospective, retrospective, or modified transition approach. The Company is currently assessing the impact of adopting this standard on the consolidated financial statements.

Other recent accounting pronouncements that will be applicable to the Company are not expected to have a material impact on its present or future financial statements.

2. Revenue

Disaggregation of Revenue

Revenue by product type is as follows (in thousands):


	Three Months Ended
	October 31,
	2025		2024
Subscription and support
Subscription	$	207,459	$	152,858
Support	14,744		16,884
License
Term license	41,967		37,370

Services	68,469		55,789
Total revenue	$	332,639	$	262,901

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	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2025		2024		2025		2024
Subscription and support
Subscription	$	166,464	$	120,430	$	480,981	$	343,152
Support	15,359		17,540		48,422		54,087
License
Term license	57,115		55,005		158,179		160,017
Perpetual license	118		1,205		118		1,301
Services	54,452		46,498		158,189		130,425
Total revenue	$	293,508	$	240,678	$	845,889	$	688,982

Revenue by product type and by geography is as follows (in thousands):

	Three Months Ended April 30, 2025
	Subscription and support		License		Services		Total
United States	$	119,966	$	33,402	$	38,319	$	191,687
Canada	25,068		2,249		3,917		31,234
Other Americas	1,958		626		267		2,851
Total Americas	146,992		36,277		42,503		225,772
Total EMEA	22,461		11,024		8,868		$	42,353
Total APAC	12,370		9,932		3,081		25,383
Total revenue	$	181,823	$	57,233	$	54,452	$	293,508

	Three Months Ended April 30, 2024
	Subscription and support		License		Services		Total
United States	$	94,089	$	36,016	$	33,286	$	163,391
Canada	19,583		2,859		1,837		24,279
Other Americas	1,484		855		452		2,791
Total Americas	115,156		39,730		35,575		190,461
Total EMEA	15,139		10,556		8,850		34,545
Total APAC	7,675		5,924		2,073		15,672
Total revenue	$	137,970	$	56,210	$	46,498	$	240,678

	Nine Months Ended April 30, 2025
	Subscription and support		License		Services		Total
United States	$	351,424	$	79,358	$	109,313	$	540,095
Canada	75,912		12,116		14,579		102,607
Other Americas	4,851		1,153		1,178		7,182
Total Americas	432,187		92,627		125,070		649,884
Total EMEA	59,568		38,822		24,455		122,845
Total APAC	37,648		26,848		8,664		73,160
Total revenue	$	529,403	$	158,297	$	158,189	$	845,889

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					Nine Months Ended April 30, 2024
	Three Months Ended October 31, 2025
	Subscription and support		License		~~Subscription and support~~		Services		~~License~~		Total		~~Services~~		~~Total~~
United States	$	147,627	$	20,472	$	~~271,015~~	$	45,906	$	~~85,522~~	$	214,005	$	~~90,853~~	$	~~447,390~~
Canada	28,321		5,597		~~56,362~~		9,245		~~10,662~~		43,163		~~5,970~~		$	~~72,994~~
Other Americas	3,379		—		~~4,469~~		754		~~1,357~~		4,133		~~1,373~~		~~7,199~~
Total Americas	179,327		26,069		~~331,846~~		55,905		~~97,541~~		261,301		~~98,196~~		~~527,583~~
Total EMEA	28,288		8,746		~~43,104~~		9,582		~~37,511~~		$	46,616	~~25,551~~		~~106,166~~
Total APAC	14,588		7,152		~~22,289~~		2,982		~~26,266~~		24,722		~~6,678~~		~~55,233~~
Total revenue	$	222,203	$	41,967	$	~~397,239~~	$	68,469	$	~~161,318~~	$	332,639	$	~~130,425~~	$	~~688,982~~

No country or region other than those listed above, accounted for more than 10% of revenue during the three and nine months ended April 30, 2025 and 2024.


	Three Months Ended October 31, 2024
	Subscription and support		License		Services		Total

United States	$	112,814	$	12,858	$	37,574	$	163,246
Canada	24,986		5,234		6,581		36,801
Other Americas	1,510		336		485		2,331
Total Americas	139,310		18,428		44,640		202,378


Total EMEA	17,999		9,018		8,179		35,196
Total APAC	12,433		9,924		2,970		25,327
Total revenue	$	169,742	$	37,370	$	55,789	$	262,901

No country or region other than those listed above accounted for more than 10% of revenue during the three months ended October 31, 2025 and 2024.

Customer Contract – Related Balance Sheet Amounts

Amounts related to customer contract-related arrangements are included in the condensed consolidated balance sheets as follows (in thousands):

	April 30, 2025		July 31, 2024
	October 31, 2025		July 31, 2025
Unbilled accounts receivable, net	$	~~167~~163,~~716~~099	$	91131,~~188~~629
Contract acquisition costs, net	$	5264,~~499~~178	$	5467,~~689~~922
Costs to fulfill a contract, net	$	79,~~354~~115	$	109,~~710~~415
Deferred revenue, net	$	~~263~~256,~~723~~001	$	~~285~~344,~~483~~786

As of April 30, 2025 and July 31, 2024, there was no allowance for credit losses associated with unbilled accounts receivable.

Contract acquisition costs

The current portion of contract acquisition costs of $1720.75 million and $1721.71 million is included in prepaid and other current assets in the Company’s condensed consolidated balance sheets as of ~~April~~October 3031, 2025 and July 31, ~~2024~~2025, respectively. The non-current portion of contract acquisition costs of $3443.87 million and $3746.08 million is included in other assets in the Company’s condensed consolidated balance sheets as of ~~April~~October 3031, 2025 and July 31, ~~2024~~2025, respectively. The Company amortized $45.7 million and $45.1 million of contract acquisition costs during the three months ended ~~April~~October 3031, 2025 and 2024, respectively~~, and amortized $14~~.~~6 million and $12.9 million of contract acquisition costs during the nine months ended April 30, 2025 and 2024, respectively.~~

Costs to fulfill a contract

The current portion of costs to fulfill a contract of $76.30 million and $65.09 million is included in prepaid and other current assets in the Company’s condensed consolidated balance sheets as of ~~April~~October 3031, 2025 and July 31, ~~2024~~2025, respectively. The non-current portion of costs to fulfill a contract of $23.51 million and $43.75 million is included in other assets in the Company’s condensed consolidated balance sheets as of ~~April~~October 3031, 2025 and July 31, ~~2024~~2025, respectively. The Company amortized $23.61 million and $2.56 million of costs to fulfill a contract during the three months ended ~~April~~October 3031, 2025 and 2024, respectively~~, and amortized $7~~.~~9 million and $7.5 million of costs to fulfill a contract during the nine months ended April 30, 2025 and 2024, respectively.~~

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Deferred revenue

During the three ~~and nine~~ months ended ~~April~~October 3031, 2025, the Company recognized revenue of approximately $46163.37 million ~~and $250.5 million, respectively,~~ related to the Company’s gross deferred revenue balance as of July 31, ~~2024~~2025.

Remaining Performance Obligations

The aggregate amount of consideration allocated to remaining performance obligations either not satisfied or partially satisfied was approximately $23.52 billion as of ~~April~~October 3031, 2025. Subscription services are typically satisfied over ~~three to~~ five years, and support services ~~are generally satisfied within one year,~~ and professional services are ~~typically~~generally satisfied within one year. Professional services under time and material contracts are not included in the remaining performance obligations calculation as these arrangements can be cancelled at any time.

3. Fair Value of Financial Instruments

Table of Contents

Available-for-sale investments within cash equivalents and investments consist of the following (in thousands):

April 30, 2025

October 31, 2025

Amortized Cost

Unrealized Gains

Unrealized Losses

Estimated Fair Value

Asset-backed securities

6382,~~466~~257

~~112~~136

(1728)

6382,~~561~~365

Certificates of deposit

6472,~~660~~450

—

6472,~~660~~450

Commercial paper

~~139~~171,~~574~~511

—

~~139~~171,~~574~~511

Corporate bonds

~~405~~507,~~102~~420

1,~~121~~336

(9762)

~~406~~508,~~126~~694

Foreign government bonds

1,~~819~~820

2211

—

1,~~841~~831

Money market funds

~~334~~294,~~743~~010

—

~~334~~294,~~743~~010

U.S. Government agency securities

4479,~~329~~034

5367

(1416)

4479,~~368~~085

U.S. Government bonds

8456,~~478~~135

~~195~~148

(42)

8456,~~669~~281

Total

1,~~138~~264,~~171~~637

1,~~503~~698

(~~132~~108)

1,~~139~~266,~~542~~227

July 31, 2024

July 31, 2025

Amortized Cost

Unrealized Gains

Unrealized Losses

Estimated Fair Value

Asset-backed securities

5869,~~812~~405

~~116~~69

(6117)

5869,~~867~~457

Certificates of deposit

4680,~~900~~970

—

4680,~~900~~970

Commercial paper

~~138~~130,~~598~~628

—

~~138~~130,~~598~~628

Corporate bonds

~~245~~424,~~817~~791

~~564~~545

(~~107~~138)

~~246~~425,~~274~~198

Foreign government bonds

51,~~590~~820

2111

~~(15)~~—

51,~~596~~831

Money market funds

~~360~~488,~~881~~854

—

~~360~~488,~~881~~854

U.S. Government agency securities

3366,~~499~~184

1215

(1270)

3366,~~499~~129

U.S. Government bonds

8964,~~928~~187

7236

(~~117~~39)

8964,~~883~~184

Total

~~980~~1,~~025~~326,839

~~785~~676

(~~312~~264)

~~980~~1,~~498~~327,251

The Company does not consider any portion of the unrealized losses at ~~April~~October 3031, 2025 to be credit losses. The Company has recorded the securities at fair value in its condensed consolidated balance sheets, with unrealized gains and losses reported as a component of accumulated other comprehensive income (loss). The amount of unrealized gains and losses reclassified into earnings are based on the specific identification of the securities sold. The realized gains and losses from sales of securities are presented in the condensed consolidated statements of comprehensive income (loss).

The following table summarizes the contractual maturities of the Company’s available-for-sale investments measured at fair value (in thousands):

	April 30, 2025
	Less Than 12 Months		12 Months or Greater		Total
Asset-backed securities	$	12,320	$	51,241	$	63,561
Certificates of deposit	64,660		—		64,660
Commercial paper	139,574		—		139,574
Corporate bonds	205,384		200,742		406,126
Foreign government bonds	—		1,841		1,841
Money market funds	334,743		—		334,743
U.S. Government agency securities	5,332		39,036		44,368
U.S. Government bonds	54,224		30,445		84,669
Total	$	816,237	$	323,305	$	1,139,542

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	October 31, 2025
	Less Than 12 Months		12 Months or Greater		Total
Asset-backed securities	$	3,176	$	79,189	$	82,365
Certificates of deposit	72,450		—		72,450
Commercial paper	171,511		—		171,511
Corporate bonds	272,823		235,871		508,694
Foreign government bonds	1,831		—		1,831
Money market funds	294,010		—		294,010
U.S. Government agency securities	9,826		69,259		79,085
U.S. Government bonds	43,235		13,046		56,281


Total	$	868,862	$	397,365	$	1,266,227

Fair Value Measurement

Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company applies the three-level valuation hierarchy when measuring the fair value of certain assets and liabilities:

Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2—Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and

Level 3—Unobservable inputs that are supported by little or no market activity, which require the Company to develop its own assumptions.

Available-for-sale investments

The following tables summarize the Company’s available-for-sale investments measured at fair value, by level within the fair value hierarchy (in thousands):

	April 30, 2025
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Commercial paper	$	—	$	70,157	$	—	$	70,157
Corporate bonds	—		1,221		—		1,221
Money market funds	334,743		—		—		334,743
Total cash equivalents	334,743		71,378		—		406,121
Short-term investments:
Asset-backed securities	—		12,320		—		12,320
Certificates of deposit	—		64,660		—		64,660
Commercial paper	—		69,417		—		69,417
Corporate bonds	—		204,163		—		204,163
U.S. Government agency securities	—		5,332		—		5,332
U.S. Government bonds	—		54,224		—		54,224
Total short-term investments	—		410,116		—		410,116
Long-term investments:
Asset-backed securities	—		51,241		—		51,241
Corporate bonds	—		200,742		—		200,742
Foreign government bonds	—		1,841		—		1,841
U.S. Government agency securities	—		39,036		—		39,036
U.S. Government bonds	—		30,445		—		30,445
Total long-term investments	—		323,305		—		323,305
Total	$	334,743	$	804,799	$	—	$	1,139,542

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	July 31, 2024
	October 31, 2025
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Commercial paper	$	—	$	3854,~~156~~991	$	—	$	3854,~~156~~991
Money market funds	~~360~~294,~~881~~010		—		—		~~360~~294,~~881~~010
Total cash equivalents	~~360~~294,~~881~~010		3854,~~156~~991		—		~~399~~349,~~037~~001
Short-term investments:
Asset-backed securities	—		183,~~826~~176		—		183,~~826~~176
Certificates of deposit	—		4672,~~900~~450		—		4672,~~900~~450
Commercial paper	—		~~100~~116,~~442~~520		—		~~100~~116,~~442~~520
Corporate bonds	—		~~177~~272,~~081~~823		—		~~177~~272,~~081~~823
Foreign government bonds	—		31,~~756~~831		—		31,~~756~~831
U.S. Government agency securities	—		329,~~605~~826		—		329,~~605~~826
U.S. Government bonds	—		7543,~~966~~235		—		7543,~~966~~235
Total short-term investments	—		~~455~~519,~~576~~861		—		~~455~~519,~~576~~861
Long-term investments:
Asset-backed securities	—		4079,~~041~~189		—		4079,~~041~~189
Corporate bonds	—		69235,~~193~~871		—		69235,~~193~~871
Foreign government bonds	—		1,840		—		1,840
U.S. Government agency securities	—		69,259		—		69,259
U.S. Government agency securities	—		894		—		894
U.S. Government bonds	—		13,046		—		13,046
U.S. Government bonds	—		13,917		—		13,917
Total long-term investments	—		397,365		—		397,365
Total long-term investments	—		125,885		—		125,885
Total	$	294,010	$	972,217	$	—	$	1,266,227
Total	$	360,881	$	619,617	$	—	$	980,498


	July 31, 2025
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Commercial paper	$	—	$	53,102	$	—	$	53,102
Money market funds	488,854		—		—		488,854
Total cash equivalents	488,854		53,102		—		541,956
Short-term investments:
Asset-backed securities	—		11,393		—		11,393
Certificates of deposit	—		80,970		—		80,970
Commercial paper	—		77,526		—		77,526
Corporate bonds	—		220,890		—		220,890
Foreign government bonds	—		1,831		—		1,831
U.S. Government agency securities	—		13,188		—		13,188
U.S. Government bonds	—		45,743		—		45,743
Total short-term investments	—		451,541		—		451,541
Long-term investments:
Asset-backed securities	—		58,064		—		58,064
Corporate bonds	—		204,308		—		204,308
U.S. Government agency securities	—		52,941		—		52,941
U.S. Government bonds	—		18,441		—		18,441
Total long-term investments	—		333,754		—		333,754
Total	$	488,854	$	838,397	$	—	$	1,327,251

Convertible Senior Notes

In March 2018, the Company issued $400.0 million aggregate principal amount of 1.25% Convertible Senior Notes due 2025 (the “2025 Convertible Senior Notes”) and, in October 2024, the Company issued $690.0 million aggregate principal amount of 1.25% Convertible Senior Notes due 2029 (the “2029 Convertible Senior Notes,” together with the 2025 Convertible Senior Notes, the “Convertible Senior Notes”). 14

The fair value of the 2029 Convertible Senior Notes was $760.0 million at April 30, 2025. The Company estimates the fair value of the 2029 Convertible Senior Notes using commonly accepted valuation methodologies and market-based risk measurements that are directly observable, such as unadjusted quoted prices in markets that are not active (Level 2).

In March 2025, the Company fully settled the outstanding $179.1 million principal balance of the 2025 Convertible Senior Notes, which matured on March 15, 2025. In October 2024 and December 2024, the Company retired $120.9 million and $100.0 million aggregate principal amount of the 2025 Convertible Senior Notes, respectively, in cash for $200.5 million and $153.5 million, respectively, which included related accrued interest of $0.1 million and $0.3 million, respectively. See Note 6 “Debt.”

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The fair value of the 2029 Convertible Senior Notes was $815.8 million and $795.0 million at October 31, 2025 and July 31, 2025, respectively. The Company estimates the fair value of the 2029 Convertible Senior Notes using commonly accepted valuation methodologies and market-based risk measurements that are directly observable, such as unadjusted quoted prices in markets that are not active (Level 2).

Strategic Investments

The Company’s other assets include strategic investments in privately held companies in which the Company does not have a controlling interest or the ability to exert significant influence. The strategic investments consist of non-marketable equity securities that do not have readily determinable market values (Level 3), which are recorded using the measurement alternative at cost less impairment and adjusts cost for subsequent observable changes in fair value, and an investment in a limited partnership, which is recorded using the net asset value practical expedient (Level 3) in accordance with ASC 820. Changes in fair value are recorded in other income (expense) on the condensed consolidated statements of operations.

During the second quarter of fiscal year 2025, one of the Company’s investees was acquired by a publicly traded company. As a result, the Company received $5.7 million in consideration for its equity interest in the investee, composed of $3.4 million cash and $2.4 million of the acquirer’s shares, which were subsequently sold prior to April 30, 2025 for $2.3 million, and recognized a $3.7 million gain in excess of cost in other income (expense), net on the condensed consolidated statements of operations.

During the second quarter of fiscal year 2024, one of the Company’s investees was acquired by a privately held limited partnership. As a result, the Company received $12.1 million in consideration for its equity interest in the investee, composed of $6.5 million cash and $5.6 million of an ownership interest in the privately held limited partnership, and recognized a $1.8 million gain in excess of cost in other income (expense), net on the condensed consolidated statements of operations.

The following table summarizes the unrealized and realized gains (losses) on strategic investments (in thousands):

	Three Months Ended				~~Nine Months Ended~~
	April 30,				April 30,
	October 31,
	2025		2024		~~2025~~		~~2024~~
Unrealized gains (losses), net, recognized on privately held equity securities measured using net asset value	$	(~~103~~60)	$	—53	$	~~(341)~~	$	—
Unrealized gains (losses), net	(103)		—		(341)		—
Gains (losses) on strategic investments, net	$	(60)	$	53
Realized gains (losses), net on sales of strategic investments	—		—		3,671		1,758
Gains (losses) on strategic investments, net	$	(103)	$	—	$	3,330	$	1,758

The following table summarizes the carrying amount of the Company’s strategic investments (in thousands):

	April 30, 2025		July 31, 2024
	October 31, 2025		July 31, 2025
Equity investments using the measurement alternative	$	18,~~513~~263	$	18,~~740~~263
Equity investment using net asset value	$	31,~~320~~721	$	31,~~661~~781

~~4. Acquisitions~~15

On April 16, 2025, the Company completed its acquisition of Quantee sp. z o.o. (“Quantee”), a Poland-based insurtech company specializing in dynamic pricing software, for net cash consideration of approximately $27.9 million, subject to transaction adjustments, of which $1.0 million of the net consideration was withheld at closing and is accrued to cover certain seller-related transaction expenses and potential claims and indemnities for 18 months after closing. Additionally, the Company awarded $6.4 million in holdback consideration to certain founders, comprised of $4.5 million of the Company’s common stock and $1.9 million of cash, each subject to service conditions over three years subsequent to closing.

In conjunction with the purchase price allocation, the Company determined that Quantee’s separately identifiable intangible assets were acquired technology and customer relationships. The valuation models were based on estimates of future operating projections of Quantee and rights to sell new products containing the acquired technology, as well as judgments on the discount rates used and other variables. The Company developed financial forecasts based on a number of factors, including future revenue and operating cost projections, a discount rate that is representative of the weighted average cost of capital, and royalty and long-term sustainable growth rates based on a market analysis. These fair value measurements were based on significant inputs that were not observable in the market and thus represent a Level 3 measurement. The Company amortizes the acquired intangibles over their estimated useful lives as set forth in the table below.

The preliminary allocation of purchase price is pending the final working capital adjustment and the resolution of certain post-closing matters, and is therefore subject to potential future measurement period adjustments. The measurement period will end no later than April 15, 2026. The preliminary allocation of the purchase consideration is as follows:

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	Preliminary Purchase Price Allocation		Estimated Useful Lives
	(in thousands)		(in years)
Acquired assets, net of assumed liabilities	$	(514)
Acquired technology	6,305		5.0
Customer relationships	2,050		5.0
Goodwill	21,378
Deferred tax liability	(1,368)
Total preliminary purchase consideration	$	27,851

4. Net Income (Loss) Per Share

~~Goodwill~~The Company calculates basic earnings per share by dividing the net income (loss) by the weighted average number of ~~$21~~shares of common stock outstanding for the period.4 ~~million~~For ~~arising~~calculating ~~from~~diluted earnings per share, the ~~acquisition~~Company isuses ~~primarily~~the ~~related~~treasury stock method for options to ~~the~~purchase ~~acquired~~common ~~workforce~~stock, ~~expected~~time-based ~~synergies~~RSUs, performance-based restricted stock units (“PSUs”), and ~~the~~Employee ~~opportunity~~Stock toPurchase ~~sell~~Plan ~~into~~(“ESPP”) ~~and~~purchase ~~expand~~rights, and the ~~Company’s~~if-converted ~~customer~~method ~~base.~~for ~~The~~the ~~goodwill~~Convertible ~~recorded~~Senior isNotes. ~~not~~RSUs ~~expected~~and toPSUs beare ~~deductible~~collectively ~~for~~referred ~~income~~to ~~tax~~as ~~purposes~~“Stock Awards.”

Pro forma and historical financial information has not been provided as the acquisition was not material to the condensed consolidated financial statements.

Except for additions related to the Quantee acquisition, there were no other changes in the carrying amount of goodwill for the nine months ended April 30, 2025. The carrying amount of goodwill was $393.6 million and $372.2 million as of April 30, 2025 and July 31, 2024, respectively.

The Company amortized $1.2 million and $1.4 million of expense for intangible assets during the three months ended April 30, 2025 and 2024, respectively, and amortized $3.9 million and $4.1 million of expense for intangible assets during the nine months ended April 30, 2025 and 2024, respectively. The carrying amount of intangible assets was $13.5 million and $9.0 million as of April 30, 2025 and July 31, 2024, respectively.

The future amortization expense for existing intangible assets as of April 30, 2025, based on their current useful lives, is as follows (in thousands):.

Fiscal year ending July 31,
2025 (remainder of fiscal year)	$	1,565
2026	5,243
2027	1,943
2028	1,800
2029	1,677
Thereafter	1,254
Total	$	13,482

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5. Net Income (Loss) Per Share

The Company calculates basic earnings per share by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. For calculating diluted earnings per share, the Company uses the treasury stock method for options to purchase common stock, time-based restricted stock units (“RSUs”), and performance-based restricted stock units (“PSUs”) and the if-converted method for the Convertible Senior Notes. RSUs and PSUs are collectively referred to as “Stock Awards.”

The following table sets forth the computation of the Company’s basic and diluted net income (loss) per share for the periods presented (in thousands, except share and per share amounts):

	Three Months Ended				~~Nine Months Ended~~
	April 30,				April 30,
	October 31,
	2025		2024		~~2025~~		~~2024~~
Numerator:
Net income (loss)	$	4531,~~991~~308	$	(59,~~478)~~139	$	~~17,853~~	$	~~(22,862)~~
Net income (loss) per share:
Basic	$	0.5537	$	(0.~~07)~~11	$	~~0.21~~	$	~~(0.28)~~
Diluted	$	0.5436	$	(0.~~07)~~11	$	~~0.21~~	$	~~(0.28)~~
Denominator:
Weighted average shares used in computing net income (loss) per share:
Basic	84,~~044~~780,~~661~~201		8283,~~500~~276,~~109~~236		~~83,671,443~~		~~82,105,357~~
Weighted average effect of dilutive stock options	8677,~~029~~299		—93,718		~~89,946~~		—
Weighted average effect of dilutive stock awards	1,~~749~~593,~~953~~579		—1,805,910		~~1,893,514~~		—
Diluted	85,880,643		82,500,109		85,654,903		82,105,357
Weighted average effect of dilutive convertible senior notes	—		785,004
Weighted average effect of the ESPP purchase rights	658		—
Diluted	86,451,737		85,960,868

The following weighted average shares of potential common stock were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been anti-dilutive:

	Three Months Ended		~~Nine Months Ended~~
	April 30,		April 30,
	October 31,
	2025	2024	~~2025~~	~~2024~~
Stock options	—	181,646	—	184,000
Stock awards	191,634	151,662
Stock awards	—	3,764,735	—	3,846,177
ESPP purchase rights	1,744	—
Convertible senior notes	—	3,550,532	—	3,516,480

During the three ~~and nine~~ months ended ~~April~~October 3031, 2025, ~~there was no dilutive effect on net income (loss) per share due to maturity~~ and ~~settlement of the outstanding principal balance of the 2025 Convertible Senior Notes. During the three months ended April 30,~~ 2024, the average market price of the Company’s common stock exceeded the initial conversion price of the 2025 Convertible Senior Notes; however, the conversion premium was excluded from the computation of diluted net income (loss) per share as it would be anti-dilutive due to the net loss incurred in this period. During the nine months ended April 30, 2024, the average market price of the Company’s common stock did not exceed the initial conversion price of the ~~2025~~2029 Convertible Senior Notes.

During the three months ended October 31, 2025, there was no dilutive effect on net income (loss) per share due to maturity and ~~nine~~settlement of the outstanding principal balance of the 2025 Convertible Senior Notes in fiscal year 2025. During the three months ended ~~April~~October 3031, ~~2025~~2024, the average market price of the Company’s common stock ~~did~~exceeded ~~not exceed~~ the initial conversion price of the ~~2029~~2025 Convertible Senior Notes, and the conversion premium was included in weighted average shares outstanding for calculating diluted net income per share.

1916

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65. Debt

~~The~~Convertible ~~net~~Senior ~~carrying value of debt instruments and unamortized debt issuance costs was as follows (in thousands):~~Notes

Debt Instrument	Maturity Date	Effective Interest Rate	April 30, 2025		July 31, 2024
2025 convertible senior notes	March 15, 2025	1.7%	$	—	$	400,000
2029 convertible senior notes	November 1, 2029	1.8%	690,000		—
2025 credit facility			—		—
Total principal amount			690,000		400,000
Less: unamortized debt issuance costs			(16,304)		(1,097)
Net carrying amount of debt			673,696		398,903
Less: current portion of convertible senior notes, net			—		398,903
Non-current portion of convertible senior notes, net			$	673,696	$	—

In March 2018, the Company issued $400.0 million aggregate principal amount of the 2025 Convertible Senior Notes. The 2025 Convertible Senior Notes matured on March 15, 2025 and were fully settled in fiscal year 2025 as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

	Three Months Ended				Nine Months Ended
	April 30,				April 30,
	2025		2024		2025		2024
Contractual interest expense	$	2,436	$	1,250	$	6,827	$	3,750
Amortization of debt issuance costs	1,058		434		2,782		1,296
Total	$	3,494	$	1,684	$	9,609	$	5,046

In October 2024, the Company offered and sold $690.0 million aggregate principal amount of its 2029 Convertible Senior Notes. The 2029 Convertible Senior Notes were issued in accordance with the Indenture, dated as of October 18, 2024, between the Company and U.S. Bank Trust Company, National Association, as trustee (the “2029 Indenture”). The net proceeds from the issuance of the 2029 Convertible Senior Notes were $671.8 million after deducting issuance costs.

As of April 30, 2025, the if-converted value of the 2029 Convertible Senior Notes did not exceed their outstanding principal amount.

2025 Convertible Senior Notes

In March 2018, the Company issued $400.0 million aggregate principal amount of the 2025 Convertible Senior Notes. The 2025 Convertible Senior Notes were unsecured, bore interest at 1.25% per year payable semi-annually on March 15 and September 15, and matured on March 15, 2025, unless repurchased, redeemed, or converted. The 2025 Convertible Senior Notes were convertible at the option of holders at an initial conversion rate of 8.7912 shares of common stock per $1,000 principal (equivalent to an initial conversion price of approximately $113.75 per share of the Company’s common stock). No sinking fund was provided.

In October 2024, the Company retired $120.9 million aggregate principal amount and $0.2 million of related debt issuance costs of the 2025 Convertible Senior Notes for $200.5 million in cash, which included related accrued interest of $0.1 million. The retirement was accounted for as an induced conversion resulting in an inducement expense of $0.3 million recorded in other income (expense), net on the condensed consolidated statements of operations and a decrease to additional paid-in capital of $79.4 million on the condensed consolidated balance sheets.

In December 2024, the Company retired $100.0 million aggregate principal amount and $0.1 million of related debt issuance costs of the 2025 Convertible Senior Notes for $153.5 million in cash, which included related accrued interest of $0.3 million. The retirement was accounted for as a debt extinguishment resulting in an extinguishment expense of $53.3 million recorded in other income (expense), net on the condensed consolidated statements of operations.

The 2025 Convertible Senior Notes matured on March 15, 2025. During the period from January 15, 2025 through the close of business on March 13, 2025, holders of the 2025 Convertible Senior Notes had the option to convert their outstanding 2025 Convertible Senior Notes, and they elected to convert substantially all of the outstanding notes. In accordance with the holders’ elections, the Company fully settled the outstanding $179.1 million aggregate principal amount of the 2025 Convertible Senior Notes through aggregate cash payments totaling $180.2 million, which included related accrued interest of $1.1 million, and the gross issuance of 671,202 shares of common stock. The share amount does not reflect the impact of the capped calls related to the 2025 Convertible Senior Notes. See “Note 6—Debt—Capped Calls” for further information.

2029 Convertible Senior Notes

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and U.S. Bank Trust Company, National Association, as trustee (the “2029 Indenture”). The net proceeds from the issuance of the 2029 Convertible Senior Notes were $671.8 million after deducting issuance costs.

The 2029 Convertible Senior Notes are unsecured obligations of the Company with interest payable semi-annually in arrears, at a rate of 1.25% per year, on May 1st and November 1st of each year. The 2029 Convertible Senior Notes will mature on November 1, 2029 unless repurchased, redeemed, or converted prior to such date. Before August 1, 2029, holders of the 2029 Convertible Senior Notes will have the right to convert their 2029 Convertible Senior Notes only upon the occurrence of certain events. On or after August 1, 2029, the 2029 Convertible Senior Notes are convertible at any time at the election of holders until the close of business on the second scheduled trading day immediately preceding the maturity date. The 2029 Convertible Senior Notes will have an initial conversion rate of 4.0875 shares of common stock per $1,000 principal (equivalent to an initial conversion price of approximately $244.65 per share of the Company’s common stock). The conversion rate is subject to customary adjustments upon the occurrence of certain events but will not be adjusted for any accrued and unpaid interest. The consideration due upon conversion will consist of cash, up to at least the proportional amount of the principal amount being converted, and any excess of the proportional conversion value for that trading day that will not be settled in cash will be settled in shares of the Company’s common stock.

The Company may redeem the 2029 Convertible Senior Notes, at its option, on or after November 5, 2027 and on or before the 20th scheduled trading day immediately before the maturity date, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest if (i) the 2029 Convertible Senior Notes are “Freely Tradable” (as defined in the 2029 Indenture) as of the date the Company sends the related redemption notice, and all accrued and unpaid additional interest, if any, has been paid in full, as of the most recent interest payment date occurring on or before the date the Company sends the related redemption notice; and (ii) the last reported sale price of the Company’s common stock has been at least 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption; and (2) the trading day immediately preceding the date on which the Company provides notice of redemption. No sinking fund is required to be provided for the 2029 Convertible Senior Notes. Upon the occurrence of a fundamental change (as defined in the 2029 Indenture) prior to the maturity date, holders may require the Company to repurchase all or a portion of the 2029 Convertible Senior Notes for cash at a price equal to 100% of the principal amount of the notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2029 Convertible Senior Notes rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2029 Convertible Senior Notes, and equal in right of payment to any of its indebtedness that is not so subordinated. The 2029 Convertible Senior Notes are effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) and any preferred equity of its current or future subsidiaries.

~~Capped~~The ~~Calls~~net carrying value of debt instruments and unamortized debt issuance costs was as follows (in thousands):

In connection with each offering of the Convertible Senior Notes, the Company purchased capped calls with certain financial institutions pursuant to capped call confirmations (collectively the “Capped Calls”). The initial strike price of the Capped Calls corresponds to the initial conversion price of each of the Convertible Senior Notes. By entering into the Capped Calls, the Company expects to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price under the Convertible Senior Notes. The Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. Additionally, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including changes in law, insolvency filings, and hedging disruptions. The Capped Calls were recorded in the period purchased as a reduction of the Company’s additional paid-in capital in the accompanying consolidated balance sheets and are not accounted for as derivatives.


Debt Instrument	October 31, 2025		July 31, 2025
2029 convertible senior notes	$	690,000	$	690,000
2025 credit facility	—		—
Total principal amount	690,000		690,000
Less: unamortized debt issuance costs	(14,557)		(15,432)
Net carrying amount of debt	675,443		674,568
Less: current portion of convertible senior notes, net	—		—
Non-current portion of convertible senior notes, net	$	675,443	$	674,568

The ~~following~~effective ~~table~~interest ~~below~~rate ~~sets~~of ~~forth~~the ~~key~~2029 ~~terms~~Convertible ~~and~~Senior ~~costs~~Notes ~~incurred~~is ~~for~~1.8%. ~~the~~The ~~Capped~~if-converted ~~Calls~~value ~~related to each~~ of the 2029 Convertible Senior Notes ~~(in~~did ~~millions,~~not ~~except~~exceed ~~per~~the ~~share~~outstanding ~~amounts):~~principal as of October 31, 2025.

	2025 Convertible Senior Notes		2029 Convertible Senior Notes
Initial strike price per share, subject to certain adjustments	$	113.75	$	244.65
Initial cap price per share, subject to certain adjustments	$	153.13	$	329.33
Net cost incurred	$	37.2	$	58.8
Common stock shares covered, subject to anti-dilution adjustments	3.5		2.8

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The following table sets forth the interest expense recognized related to debt instruments (in thousands):

In connection with the March 2025 settlement of the 2025 Convertible Senior Notes, the Company received 697,140 gross shares of common stock from the settlement of the Capped Calls related to the 2025 Convertible Senior Notes. These shares received from the settlement of such Capped Calls offset the 671,202 shares issued to holders of the 2025 Convertible Senior Notes upon maturity. As a result, the Company received 25,938 net shares, which were retired, resulting in a small decrease in the Company’s shares outstanding.


	Three Months Ended
	October 31,
	2025		2024
Contractual interest expense	$	2,156	$	1,511
Amortization of debt issuance costs	980		545
Commitment fees	173		—
Total	$	3,309	$	2,056

Capped Calls

The capped call transactions related to the 2025 Convertible Senior Notes were fully settled in March 2025 in connection with the maturity and settlement of the 2025 Convertible Senior Notes as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2025.

In connection with the offering of the 2029 Convertible Senior Notes, the Company purchased capped calls with certain financial institutions pursuant to capped call confirmations (collectively, the “Capped Calls”).

The initial strike price of the Capped Calls corresponds to the initial conversion price of the 2029 Convertible Senior Notes. By entering into the Capped Calls, the Company expects to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price under the 2029 Convertible Senior Notes. The Capped Calls are subject to either adjustment or termination upon the occurrence of specified extraordinary events affecting the Company, including a merger event, a tender offer, and a nationalization, insolvency or delisting involving the Company. Additionally, the Capped Calls are subject to certain specified additional disruption events that may give rise to a termination of the Capped Calls, including changes in law, insolvency filings, and hedging disruptions. The Capped Calls were recorded in the period purchased as a reduction of the Company’s additional paid-in capital in the accompanying consolidated balance sheets and are not accounted for as derivatives.

The following table below sets forth key terms and costs incurred for the Capped Calls related to the 2029 Convertible Senior Notes (in millions, except per share amounts):


	2029 Convertible Senior Notes
Initial strike price per share, subject to certain adjustments	$	244.65
Initial cap price per share, subject to certain adjustments	$	329.33
Net cost incurred	$	58.8
Common stock shares covered, subject to anti-dilution adjustments	2.8

Revolving Credit Facility

In December 2024, the Company entered into a revolving credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent and certain other financial institutions from time to time thereto (with the administrative agent, the “Lenders”), which provides for a senior secured revolving credit facility in an aggregate principal amount of $300.0 million (the “2025 Credit Facility”). At the Company’s discretion, it allows flexibility for an uncommitted upsize of the aggregate principal amount of the 2025 Credit Facility or the establishment of incremental term loan facilities, in each case, as further set forth in the Credit Agreement.

The loans under the 2025 Credit Facility bear interest (i) for U.S. Dollar-denominated loans, at the Company’s option, at either (a) the bank’s base rate, plus an applicable margin ranging from 0.25% to 1.25% per annum, or (b) a term SOFR (as defined in the Credit Agreement), plus an applicable margin ranging from 1.25% to 2.25% per annum, and (ii) for alternative currency-denominated loans, at the applicable alternative currency rate (whether a daily rate or a term rate), plus an applicable margin ranging from 1.25% to 2.25% per annum, in each case, such applicable margins to be determined based on the Company’s total net leverage ratio.

In addition to paying interest on the outstanding principal under the 2025 Credit Facility, the Company is required to pay (i) a commitment fee ranging from 0.175% to 0.30% per annum, to be determined based on the Company’s total net leverage ratio, on the actual daily unused amount of each Lender’s commitment under the 2025 Credit Facility, (ii) a letter of credit fronting fee of 0.125% per annum of the daily amount available to be drawn under outstanding letters of credit, and (iii) certain other customary fees and expenses of the Lenders and agents.

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The Credit Agreement contains customary covenants, including, but not limited to, restrictions on the Company’s ability to merge and consolidate with other companies, dispose of assets, incur indebtedness, or grant liens or other security interests on assets, in each case, subject to certain customary exceptions. The financial covenants require as of the end of each fiscal quarter that (a) the Company has a minimum consolidated net cash interest coverage ratio of 3.00:1.00 and (b) the Company does not exceed a maximum total net leverage ratio of 3.75:1.00. The maximum total net leverage ratio is subject to a step-up by 0.50:1.00 at the election of the Company for four fiscal quarters following certain material acquisitions, subject to certain customary exceptions.

The Company was in compliance with all covenants as of ~~April~~October 3031, 2025.

The 2025 Credit Facility has a scheduled maturity of December 2, 2029; provided that the Credit Agreement provides for a maturity date of 91 days prior to the earlier maturity date of any individual or related series of other indebtedness with an aggregate outstanding principal amount that exceeds the greater of (x) $107.5 million and (y) 50% of Consolidated EBITDA (as defined in the Credit Agreement) as of the most recent four fiscal quarter period preceding such 91st day for which financial statements were required to be delivered pursuant to the Credit Agreement, unless the Company maintains either (a) a total net leverage ratio lower than 2.00:1.00 or (b) liquidity greater than 125% of the aggregate outstanding principal amount of such indebtedness.

The Credit Agreement includes customary events of default that include, among other things, non-payment of principal, interest or fees, inaccuracy of representations and warranties, violation of certain covenants, cross default to certain other indebtedness, bankruptcy and insolvency events, material judgments, change of control and certain material ERISA (as defined in the Credit Agreement) events, in each case, subject to certain customary exceptions and grace periods. During the continuance of an event of default, the Lenders may take a number of actions, including, among others, declaring the entire aggregate amount then outstanding under the 2025 Credit Facility to be due and payable.

The Company’s obligations under the Credit Agreement are required to be guaranteed by the Company’s material domestic subsidiaries. The Company’s obligations under the Credit Agreement are secured by a security interest in substantially all of the assets of the Company and each guarantor. Revolving loans may be prepaid, and revolving loan commitments may be permanently reduced by the Company in whole or in part, without penalty or premium.

As of ~~April~~October 3031, 2025, there were no outstanding borrowings under the 2025 Credit Facility.

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76. Commitments and Contingencies

~~Except~~There ~~as discussed below, there~~ has been no material change in the Company’s contractual obligations and commitments other than in the ordinary course of business since the Company’s fiscal year ended July 31, ~~2024~~2025.

~~During~~See the ~~nine months ended April 30, 2025, the~~ Company’s ~~retired~~Annual ~~$220.9~~Report ~~million~~on ~~aggregate~~Form ~~principal~~10-K ~~amount~~for of the ~~2025~~fiscal ~~Convertible~~year ~~Senior~~ended ~~Notes~~July 31, in2025 ~~cash~~ for ~~$354.0~~additional ~~million,~~information ~~which~~regarding ~~included related accrued interest of $0.5 million, and issued $690 million aggregate principal amount of~~ the ~~2029 Convertible Senior Notes. In March 2025, the~~ Company’s ~~fully~~contractual ~~settled the outstanding $179~~obligations.1 million aggregate principal amount of the 2025 Convertible Senior Notes through aggregate cash payments totaling $180.2 million, which included related accrued interest of $1.1 million. See Note 6 “Debt.”

See the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2024 for additional information regarding the Company’s contractual obligations.

Legal Proceedings

From time to time, the Company is involved in various legal proceedings and receives claims arising from the normal course of business activities. The Company has not recorded any accrual for claims as of ~~April~~October 3031, 2025 or July 31, ~~2024~~2025. The Company has not accrued for estimated losses in the accompanying condensed consolidated financial statements as the Company has determined that no provision for liability nor disclosure is required related to any claim against the Company because: (a) there is not a reasonable possibility that a loss exceeding amounts already recognized (if any) may be incurred with respect to such claim; (b) a reasonably possible loss or range of loss cannot be estimated; or (c) such estimate is immaterial. The Company expenses legal fees in the period in which they are incurred.

Indemnification

The Company sells software licenses and services to its customers under Software License Agreements (“SLA”) and Software Subscription Agreements (“SSA”). SLAs and SSAs contain the terms of the contractual arrangement with the customer and generally include certain provisions for defending the customer against any claims that the Company’s software infringes upon a patent, copyright, trademark, or other proprietary right of a third party. SLAs and SSAs also generally indemnify the customer against judgments, settlements, fines, penalties, costs, and expenses resulting from a claim (“Losses”) against the customer in the event the Company’s software is found to infringe upon such third-party rights.

The Company has not had to reimburse any of its customers for Losses related to indemnification provisions and no material claims against the Company were outstanding as of ~~April~~October 3031, 2025 or July 31, ~~2024~~2025. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases under various SLAs and SSAs, the Company cannot estimate the amount of potential future payments, if any, related to indemnification provisions.

The Company has also agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of these persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that may enable the Company to recover a portion of any future amounts paid.

87. Stock-Based Compensation Expense and Shareholders’ Equity

Stock-Based Compensation Expense

Stock-based compensation expense related to stock options, ~~and~~ Stock Awards, and ESPP purchase rights is included in the Company’s condensed consolidated statements of operations as follows (in thousands):

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Three Months Ended

~~Nine Months Ended~~

April 30,

October 31,

2025

2024

~~2025~~

~~2024~~

Stock-based compensation expense

4043,~~367~~449

3638,~~809~~167

~~119,398~~

~~109,411~~

Net impact of deferred stock-based compensation

(10133)

(~~159~~107)

~~(33)~~

~~(237)~~

Total stock-based compensation expense, net

4043,~~357~~316

3638,~~650~~060

~~119,365~~

~~109,174~~

Stock-based compensation expense is included in the following categories:

Cost of subscription and support revenue

3,~~598~~450

3,~~183~~140

~~10,511~~

~~10,059~~

Cost of license revenue

32—

—36

~~104~~

~~148~~

Cost of services revenue

5,~~055~~700

4,~~729~~802

~~15,218~~

~~14,161~~

Research and development

1011,~~267~~259

109,~~003~~824

~~30,560~~

~~30,127~~

Sales and marketing

1011,~~832~~822

9,~~349~~688

~~31,400~~

~~25,268~~

General and administrative

1011,~~573~~085

910,~~386~~570

~~31,572~~

~~29,411~~

Total stock-based compensation expense

4043,~~357~~316

3638,~~650~~060

~~119,365~~

~~109,174~~

Total unrecognized stock-based compensation expense related to the Company’s Stock Awards and ESPP purchase rights as of ~~April~~October 3031, 2025 is as follows:

	Unrecognized Expense(in thousands)		Weighted Average Expected Recognition Period (in years)
Stock Awards	~~297~~414,~~590~~392		2.14
Total unrecognized stock-based compensation expense	$	297,590
ESPP purchase rights	1,598		0.2
Total unrecognized stock-based compensation expense	$	415,990

Stock Awards

A summary of the Company’s Stock Awards activity under the Company’s equity incentive plans is as follows:

	Stock Awards Outstanding
	Number of Stock Awards	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)(1)
Balance as of July 31, 2024	3,202,066	$	86.60	$	480,534
Balance as of July 31, 2025	2,672,857	$	117.25	$	604,654
Granted	1788,~~006,028~~982	$	~~176~~234.0125
Released	(1482,~~149,635~~304)	$	~~98.~~90.85	$	~~202~~121,~~473~~985
Canceled	(9820,~~340~~101)	$	98130.5894
Balance as of April 30, 2025	2,960,119	$	111.81	$	606,144
Balance as of October 31, 2025	2,959,434	$	152.65	$	691,442
Expected to vest as of April 30, 2025	2,960,119	$	111.81	$	606,144
Expected to vest as of October 31, 2025	2,959,434	$	152.65	$	691,442

(1) Aggregate intrinsic value at each period end represents the total market value of Stock Awards at the Company’s closing stock price of $233.64 and $226.22 on October 31, 2025 and July 31, 2025, respectively. Aggregate intrinsic value for released Stock Awards represents the total market value of released Stock Awards at date of release.

InCertain ~~September 2023 and September 2024, certain~~ executive officers ~~were~~have been granted Stock Awards that cliff vest after three years, subject to continued service until such time, with the opportunity to increase the number of vested awards based on Company financial performance and, for a select number of awards, the market performance of the Company’s common stock. The fair value of the awards will be recognized over the three-year performance period and may increase or decrease depending on the estimated attainment of the Company’s financial performance criteria. The Company determined the fair value of the portion of the awards subject to the market performance of the Company’s common stock using a Monte Carlo simulation model, which included the following assumptions:

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Nine Months Ended

Three Months Ended

April 30,

October 31,

2025

2024

Performance period

~~September 11, 2024 to September 11, 2027~~*

September 1311, ~~2023~~2024 to September 1311, ~~2026~~2027

3-year historical volatility

~~36.0%~~*

3536.0%

3-year risk free rate

~~3.4%~~*

43.54%

*No Stock Awards subject to a market performance condition were granted during the three months ended October 31, 2025.

For the portion of the award subject to the market performance of the Company’s common stock, stock-based compensation expense is recognized over the requisite service period regardless of whether or not the market condition is ultimately satisfied, subject to continued service over the period.

~~Prior~~The toCompany ~~fiscal~~recognized ~~year~~stock-based ~~2024,~~compensation ~~certain~~related ~~executives~~to ~~and~~PSUs ~~employees~~ of ~~the~~$7.6 million ~~Company~~and ~~received~~$6.3 million ~~PSUs,~~during ~~which~~the ~~vest~~three ~~over~~months ~~three~~ended ~~years~~October 31, ~~with~~2025 ~~50% vesting annually over the three-year performance period~~ and ~~the~~2024, ~~remaining 50% vesting at the end of the third year~~respectively.

The Company recognized stock-based compensation related to PSUs of $7.1 million and $4.6 million during the three months ended April 30, 2025 and 2024, respectively, and $19.2 million and $11.7 million during the nine months ended April 30, 2025 and 2024, respectively.

Stock Options

A summary of stock option activity under the Company’s equity incentive plans is as follows:

	Number of Stock Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value(1)
				(in years)	(in thousands)
Balance as of July 31, 2024	166,838	$	65.63	7.9	$	14,088
Balance as of July 31, 2025	109,958	$	64.09	6.8	$	17,828
Granted	—	$	—
Exercised	(456,~~755~~171)	$	6966.3688		$	41,~~910~~152
Canceled	—	$	—
Balance as of April 30, 2025	121,083	$	64.21	7.1	$	17,019
Balance as of October 31, 2025	103,787	$	63.92	6.5	$	17,614
Vested and expected to vest as of April 30, 2025	121,083	$	64.21	7.1	$	17,019
Vested and expected to vest as of October 31, 2025	103,787	$	63.92	6.5	$	17,614
Exercisable as of April 30, 2025	121,083	$	64.21	7.1	$	17,019
Exercisable as of October 31, 2025	103,787	$	63.92	6.5	$	17,614

(1) Aggregate intrinsic value at each period end represents the difference between the Company’s closing stock price of $233.64 and $226.22 on October 31, 2025 and July 31, 2025, respectively, and the exercise price of outstanding options. Aggregate intrinsic value for exercised options represents the difference between the Company’s stock price at date of exercise and the exercise price.

Share Repurchase Program

In September 2022, the Company’s board of directors authorized and approved a share repurchase program of up to $400.0 million of the Company’s outstanding common stock. Share repurchases under the program may be made from time to time, in the open market, in privately negotiated transactions and otherwise, at the discretion of management of the Company and in accordance with applicable federal securities laws, including Rule 10b-18 of the Exchange Act, and other applicable legal requirements. Such repurchases may also be made in compliance with Rule 10b5-1 trading plans entered into by the Company.

During the three ~~and nine~~ months ended ~~April~~October 3031, 2025 and 2024, the Company did not repurchase any shares of common stock. As of ~~April~~October 3031, 2025, $138.2 million remained available for future share repurchases subject to our compliance with the terms of the Credit Agreement.

258. Segment Information

The Company has one reportable segment that conducts business globally and is managed, operated, and organized on a consolidated basis. The Company’s chief executive officer is the chief operating decision maker. Since the Company operates in one segment, financial information, revenue by type, and revenue by geographic area presented in the condensed consolidated financial statements represents the operations of the Company’s single segment.

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The following table presents selected financial information for the Company’s single operating segment (in thousands):


	Three Months Ended October 31,
	2025			2024
Total revenue	$	332,639		$	262,901
Adjusted cost of revenue(1)	113,159			96,046
Stock-based compensation expense	9,150			7,978
Amortization of intangible assets	808			485
Total cost of revenue	123,117			104,509
Gross profit	209,522			158,392
Gross profit margin	63		%	60		%
Adjusted operating expenses(2)	156,054			132,148
Stock-based compensation expense	34,166			30,082
Amortization of intangible assets	647			882
Acquisition holdback expense	177			—
Total operating expenses	191,044			163,112
Income (loss) from operations	18,478			(4,720)
Income (loss) from operations margin	6		%	(2)		%
Adjusted interest income (expense) and other income (expense)(3)	7,064			8,281
Changes in fair value of strategic investment	(60)			53

Amortization of debt issuance cost	(980)			(545)
Retirement of debt	—			(300)
Income (loss) before provision for (benefit from) income taxes	24,502			2,769
Provision for (benefit from) income taxes	(6,806)			(6,370)
Net income (loss)	$	31,308		$	9,139

(1) Adjusted cost of revenue excludes stock-based compensation expense and amortization of intangible assets

(2) Adjusted operating expenses excludes stock-based compensation expense, amortization of intangible assets, and acquisition holdback expense

(3) Adjusted interest income (expense) and other income (expense) excludes changes in fair value of strategic investment, amortization of debt issuance cost, and retirement of debt

9. Subsequent Events

On November 7, 2025, the Company acquired all outstanding shares of ProNav Technologies Ltd., a Canada-based knowledge management platform purpose-built for the P&C insurance industry, for net cash consideration of approximately $34 million, subject to customary transaction adjustments. The acquisition will be accounted for as a business combination. The Company has not completed its acquisition accounting for this transaction, and is in the process of evaluating the impact of the business combination on its consolidated financial statements.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the Risk Factors included in Item 1A of Part II of this Quarterly Report on Form 10-Q. All information presented herein is based on our fiscal calendar. Unless otherwise stated, references in this report to particular years or quarters refer to our fiscal years ended in July and the associated quarters of those fiscal years. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Overview

Guidewire is the platform that property and casualty (“P&C”) insurers ~~trust~~rely on to engage with customers, innovate, and ~~grow~~operate more efficiently. Our platform combines core systems ~~leverage~~of ~~data~~record ~~and~~with ~~analytics~~digital, ~~digital~~analytics, and artificial intelligence (“AI”) capabilities. AsWe aserve ~~partner~~insurers toof ~~our~~all ~~customers~~sizes, weranging ~~continually~~from ~~evolve~~global carriers to ~~enable~~regional ~~their~~and ~~success~~local ~~and~~providers, ~~assist~~helping them innavigate ~~navigating~~ a rapidly changing insurance ~~market~~landscape.

Our foundational core products, ~~are~~ InsuranceSuite ~~Cloud,~~and InsuranceNow, ~~and~~are delivered primarily as cloud-based subscription services. Historically, InsuranceSuite has also been available for self-managed installations. These products ~~are~~serve as transactional systems of record, ~~that~~fully ~~support~~supporting ~~the entire~~ insurance ~~lifecycle~~operations, including ~~insurance~~ product definition, ~~distribution,~~policy ~~underwriting~~administration, ~~policyholder services, and~~ claims management. ~~We also sell digital engagement~~ and ~~analytics products~~billing. Our digital engagement products enable digital sales, omnichannel service, and enhanced claims experiences for policyholders, agents, vendor partners, and field personnel. Our analytics offerings enable insurers to manage data more effectively, gain insights into their business, drive operational efficiencies, and underwrite new and evolving risks. To support P&C insurers globally, we have localized, and will continue to localize, our suite of products for use in a variety of international regulatory, language, and currency environments.

~~InsuranceSuite~~In ~~Cloud~~addition, iswe aprovide ~~highly~~digital ~~configurable~~engagement ~~and~~products ~~scalable~~that ~~product,~~enable ~~delivered~~seamless assales, aomnichannel service, and ~~primarily~~enhanced ~~comprised~~claims ofexperiences ~~three~~for ~~core~~policyholders, ~~applications (PolicyCenter Cloud~~agents, ~~BillingCenter Cloud~~vendors, and ~~ClaimCenter~~field ~~Cloud)~~personnel. ~~that~~Our ~~can~~analytics beproducts ~~subscribed~~allow insurers to ~~separately~~manage orand ~~together.~~use ~~These~~data ~~applications~~more ~~are~~effectively, ~~built~~gain onbusiness ~~and~~insights, ~~optimized~~improve ~~for~~operational ~~our~~efficiency, ~~Guidewire Cloud Platform (“GWCP”) architecture~~ and ~~leverage~~underwrite ~~our~~emerging ~~in-house cloud operations team~~risks. ~~InsuranceSuite~~To ~~Cloud is designed to~~ support ~~multiple~~insurers ~~releases~~worldwide, ~~each~~we ~~year~~localize toour ~~ensure~~products ~~that cloud customers remain on the latest version and gain fast access~~ to ~~our~~address ~~innovation~~diverse ~~efforts.~~regulatory, ~~Additionally~~language, ~~InsuranceSuite Cloud embeds digital~~ and ~~analytics~~currency ~~capabilities natively into our platform~~requirements. ~~Most new sales and implementations are for InsuranceSuite Cloud.~~

~~InsuranceNow~~InsuranceSuite is a ~~complete,~~highly ~~cloud-based~~configurable ~~application~~and ~~that~~scalable ~~offers policy~~product, ~~billing~~delivered as a service, and ~~claims~~primarily ~~management~~comprised ~~functionality,~~of ~~plus~~five ~~pre-integrated~~core ~~document~~applications ~~production~~(PolicyCenter, ~~analytics~~ClaimCenter, BillingCenter, and ~~other~~the ~~capabilities,~~recently announced PricingCenter and UnderwritingCenter) that ~~increases~~can ~~agility~~be ~~without~~subscribed ~~adding~~to ~~complexity~~separately or together. ~~InsuranceNow~~These isapplications ~~hosted~~are built on ~~Amazon~~and ~~Web~~optimized ~~Services~~for our Guidewire Cloud Platform (“~~AWS~~GWCP”) architecture and ~~managed~~leverage by our ~~internal~~in-house cloud operations team. InsuranceSuite is designed to support multiple releases each year to accelerate delivery of new capabilities and ensure that cloud customers remain on the latest version and gain fast access to our innovation efforts. Additionally, InsuranceSuite embeds digital and analytics capabilities natively into our platform. Most new sales and implementations are for InsuranceSuite.

~~InsuranceSuite~~InsuranceNow ~~for~~is ~~self~~a complete, cloud-~~managed~~based ~~installations~~application isthat ~~comprised~~offers ofpolicy ~~three~~administration, ~~core~~claims ~~applications~~management, ~~(PolicyCenter~~and billing functionality, ~~BillingCenter~~plus pre-integrated document production, analytics, and ~~ClaimCenter)~~other capabilities, that ~~can~~increases beagility ~~licensed~~without ~~separately~~adding orcomplexity. ~~together~~Like ~~and~~InsuranceSuite, ~~can~~InsuranceNow beis ~~deployed~~hosted on GWCP and ~~updated~~managed by our ~~customers~~internal cloud operations team. InsuranceNow is currently only available in the United States, and ~~their~~is ~~implementation~~generally ~~partners.~~suited to mid-market carriers and managing general agents whose needs are often not as complex as a typical InsuranceSuite customer.

~~Our~~We reach customers ~~range~~directly ~~from~~through ~~some~~our ofglobal ~~the~~sales ~~largest~~team and in partnership with third-party global ~~insurance~~system ~~companies~~integrators or(“SI’s”). ~~their~~Because ~~subsidiaries~~our platform is central to ~~predominantly~~insurers’ ~~national~~operations, orcustomer ~~local~~evaluation ~~insurers~~cycles ~~that~~are ~~serve~~often ~~specific~~extensive, ~~states~~particularly ~~and/~~when multiple products are involved or ~~regions.~~when ~~Our~~insurers ~~customer~~are ~~engagement~~moving isto ~~led~~GWCP byfor ~~our~~the ~~direct~~first ~~sales~~time. ~~team~~Sales ~~and~~processes ~~supported~~typically byinclude ~~our~~detailed ~~system~~due ~~integrator~~diligence ~~(“SI”)~~and ~~partners~~customer reference checks. WeOur ~~maintain~~growth ~~and~~depends ~~continue~~on tocontinuously ~~grow~~enhancing ~~our~~existing ~~sales~~products, ~~and~~introducing ~~marketing~~new ~~efforts~~capabilities, ~~globally~~ensuring efficient cloud operations, expanding local content, and ~~maintain~~providing ~~regional~~access ~~sales~~to ~~centers~~innovation ~~throughout~~through the ~~world.~~Guidewire Marketplace.

~~Because~~We sell our ~~platform~~products isprimarily ~~critical~~through tosubscription services for our ~~new~~platform and ~~existing~~cloud-delivered ~~customers’~~products. ~~businesses,~~We ~~their~~generally ~~decision-making~~price ~~and~~our ~~product~~subscription ~~evaluation~~services ~~process~~for isthe ~~thorough,~~core ~~which~~products ~~often~~based ~~results~~on inthe anamount ~~extended~~of ~~sales~~Direct ~~cycle.~~Written ~~These~~Premium ~~evaluation~~(“DWP”) ~~periods~~managed ~~can~~on ~~extend~~our ~~further~~platform, ifwith acertain ~~customer~~cloud-delivered ~~purchases~~products ~~multiple~~priced ~~products~~based on usage or isother ~~considering~~metrics. aInitial ~~move~~subscription toagreements aare ~~cloud-based~~generally ~~subscription~~five ~~for~~years ~~the~~in ~~first~~duration, ~~time~~with annual renewals thereafter. ~~Sales~~In tosome ~~new~~instances, we have customers ~~often~~that ~~involve~~sign ~~extensive~~contracts ~~customer~~with ~~due~~an ~~diligence~~initial ~~and~~term ~~reference~~of ~~checks.~~seven ~~The~~years ~~success~~or oflonger. ~~our~~Subscription ~~sales~~revenue ~~efforts~~is ~~relies~~recognized onratably ~~continued~~over ~~improvements~~the ~~and~~contract ~~enhancements~~term. toWe ~~our~~also ~~current~~offer ~~products~~term licenses, ~~the~~primarily ~~introduction~~for ofexisting ~~new~~on-premise ~~products~~customers, ~~efficient~~as well as support and ~~secure~~professional ~~operation~~services. Support is typically priced as a percentage of ~~our~~license ~~cloud~~fees ~~infrastructure~~and recognized ratably, ~~continued~~while ~~development~~most ofprofessional ~~relevant~~services ~~local~~are ~~content~~billed ~~and~~monthly ~~automated~~on ~~tools~~a ~~for~~time-and-materials ~~updating~~basis. ~~content~~However, ~~and~~certain ~~successful~~services ~~implementations~~engagements are based on a fixed fee and ~~migrations~~revenue is recognized on a percentage of completion basis.

26Over the past few years, we have primarily been entering into cloud-based subscription arrangements with our new and existing customers, and we anticipate that subscription arrangements will continue to be a significant majority of annual new sales going forward. We may decide to change certain contract terms in new arrangements to remain competitive or otherwise meet market demands which may impact the way we recognize revenue and/or Annual Recurring Revenue (“ARR”).

To extend our technology leadership in the global market and to drive operating efficiency, we continue to invest in product development and cloud operations to enhance and improve our current products, introduce new products, and advance our ability to securely and cost-effectively deliver our services in the cloud. Continued investment is critical as we seek to assist our customers in achieving their technology goals, maintain our competitive advantage, grow our revenue, expand internationally, and meet evolving

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Wecustomer ~~sell our suite of products through subscription services for our platform and cloud-delivered products and term licenses for our self-managed products~~demands. WeIn ~~generally~~certain ~~price our products based on the amount of Direct Written Premium (“DWP”) that will be managed by our products. Our subscription~~cases, ~~term~~we ~~license,~~may ~~and~~also ~~support~~acquire ~~fees~~skills ~~are typically invoiced annually in advance. Subscription services are generally sold with an initial term of between three~~ and ~~five~~technologies years with optional annual renewals commencing after the initial term. Subscription revenue is recognized on a ratable basis over the committed term, once all revenue recognition criteria are met including providing access to ~~the~~manage ~~service.~~our ~~Term~~cloud ~~licenses~~infrastructure ~~are primarily sold to existing on-premise customers~~ and ~~are~~accelerate ~~typically an initial commitment with optional renewals thereafter. We may enter into term license arrangements with~~ our ~~customers~~time ~~that~~to ~~have~~market ~~an initial term of more than one year or may renew license arrangements~~ for ~~longer~~new ~~than one year. Term license revenue is typically recognized when software is made available to the customer~~products, provided that all other revenue recognition criteria have been met. Our support revenue is generally recognized ratably over the committed support term of the licensed software. Our support fees are typically priced as a fixed percentage of the associated license fees. We also offer professional servicessolutions, ~~both directly~~ and ~~through SI partners, to help our customers deploy, migrate, and utilize our platform, and suite of products~~upgrades. ~~A majority of our services revenue is billed monthly on a time and materials basis.~~

Over the past few years, we have primarily been entering into cloud-based subscription arrangements with our new and existing customers, and we anticipate that subscription arrangements will be a significant majority of annual new sales going forward. We may decide to change certain contract terms in new arrangements to remain competitive or otherwise meet market demands which may impact the way we recognize revenue and/or ARR.

Our track record of success with customers and their implementations is central to maintaining our strong competitive position. We rely on our global services team and SI partners to ensure that teams with the right combination of product, business, and language skills are used in the most efficient way to meet our customers’ implementation and migration needs. We have extensive relationships with SI, consulting, technology, and other industry partners. Our network of partners has expanded as interest in and adoption of our platform has grown. We encourage our partners to co-market, pursue joint sales initiatives, and drive broader adoption of our technology, helping us grow our business more efficiently and enabling us to focus our resources on continued innovation and further enhancement of our solutions.

We work closely with our network of ~~third-party~~ SI partners to facilitate new sales and implementations of our products. Our partnership with leading SI partners allows us to increase efficiency and scale while reducing customer implementation and migration costs. We continue to invest time and resources to increase the number of qualified consultants employed by our SI partners, develop relationships with new partners in existing and new markets, and ensure that all SI partners are qualified to assist with implementing our products. We believe this model will continue to serve us well, and we intend to continue to expand our network of partners and the number of certified consultants with whom we work so we can leverage our SI partners more effectively, especially for future subscription migrations and implementations.

We face a number of risks in the execution of our strategy, including, but not limited to, risks related to ~~expanding~~fluctuations toin ~~new~~our ~~markets,~~results ~~managing~~due ~~lengthy~~to ~~sales~~factors ~~cycles,~~largely ~~competing~~outside ~~effectively~~of inour ~~the global market~~control, ~~relying~~reliance on sales to a relatively small number of large customers, ~~developing~~and ~~new~~the orrelated ~~acquiring~~substantial ~~existing~~negotiating ~~products~~leverage ~~successfully~~of these customers, ~~making~~lengthy ~~long-term~~and ~~pricing~~variable ~~commitments~~sales and implementation cycles, competing effectively in the global market, growing our ~~customer~~business ~~contracts~~and ~~based~~managing onour ~~available~~expanding ~~information~~operations, development and ~~estimates~~use ~~about~~of ~~our~~AI ~~future~~in ~~costs~~an evolving regulatory environment, making long-term pricing commitments based on cost estimates that may change, ~~increasing~~expanding ~~the overall~~ market ~~acceptance~~adoption of our cloud-based ~~products~~offerings, maintaining customer satisfaction and renewals ~~of our products~~, and cost-effectively and securely managing the infrastructure of our cloud-based customers. In response to these and other risks we might face, we continue to invest in many areas of our business, including product development, cloud operations, cybersecurity, introduction of new products and/or new features, implementation and migration services, and sales and marketing.

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Seasonality

We have experienced seasonal variations in our license revenue and, to a lesser extent, in our subscription revenue as a result of increased customer orders in our fourth fiscal quarter, which is the quarter ending July 31. We generally see significantly increased orders in our fourth fiscal quarter due to efforts by our sales team to achieve annual incentives. Because we recognize revenue upfront for term licenses compared to over time for subscription services, changes in the mix between term license and subscription services may impact our quarterly results. Additionally, any significant multi-year term license or term license non-renewal could impact quarterly results. Subscription sales now represent the significant majority of total sales and, as a result when compared to term license sales, the revenue we recognize in the initial fiscal year of an order is lower, deferred revenue is higher, and our total reported revenue growth may be adversely affected in the near term due to the ratable nature of these arrangements. Over time, this ratable revenue dynamic will dampen the impact of seasonality on our revenue.

Our services revenue is also subject to seasonal fluctuations, though to a lesser degree than our license revenue and subscription revenue. Our services revenue is impacted by the number of billable days in a given fiscal quarter. Our second fiscal quarter, which is the quarter ending January 31, usually has fewer billable days due to the impact of calendar year end holidays in Europe and the United States. Our fourth fiscal quarter usually has fewer billable days due to the impact of vacations taken by our services professionals. Because we pay our services professionals the same amount throughout the year, our gross margins on our services revenue are usually lower in these quarters. This seasonal pattern, however, may be absent in any given year.

Global Events

Global events have adversely affected and may continue to adversely affect workforces, organizations, economies, and financial markets globally, leading to economic downturns, ~~inflation~~inflationary pressures, and increased market volatility. For instance, ongoing conflicts such as the war between Russia and Ukraine, continued geopolitical instability in the Middle East, escalating tensions in the South China Sea, ~~inflation~~currency exchange fluctuations, changes in interest rates, changes in trade policies and practices (including the imposition of tariffs), previous bank failures in the United States and Switzerland, and supply chain issues have contributed to global economic and market volatility in recent years. We are unable to accurately predict the full impact that these global events will have on our results of operations, financial condition, liquidity, and cash flows due to numerous uncertainties.

Our business and financial results have been and may in the future be impacted due to these disruptions, which may affect our ARR and revenue growth rates, sales cycles, services revenue and margins, operating cash flow and expenses, employee attrition, hiring and onboarding necessary personnel, allowance for collectibility of accounts receivable and unbilled receivables, and the ~~change in fair value of strategic investments. Additionally, inflation levels and political uncertainty are impacting the global economy and have magnified the impact of these disruptions.~~

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change in fair value of strategic investments. Additionally, inflation levels and political uncertainty are impacting the global economy and have magnified the impact of these disruptions.

Our customers may be unable to pay or may request amended payment terms for their outstanding invoices due to the economic impacts from these disruptions, and we may need to increase our accounts receivable allowances. A decrease in orders in a given period could negatively affect our revenue and ARR in future periods, particularly if experienced on a sustained basis, because a substantial proportion of our new software subscription services orders is recognized as revenue over time. Also, the global economic impact of these disruptions could affect our customers’ DWP, which could ultimately impact our revenue as we generally price our products based on the amount of DWP that will be managed by our products. As a result of these developments and the related economic impact to our business, we may be required to record impairment related to our operating lease assets, investments, long-lived assets, intangible assets, or goodwill.

We will continue to monitor and evaluate the nature and extent of these global events on our business.

Key Business Metrics

We use certain key metrics and financial measures not prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) to evaluate and manage our business, including ARR and Free Cash Flow. For a further discussion of how we use key metrics and certain non-GAAP financial measures, see “Non-GAAP Financial Measures” in this Quarterly Report on Form 10-Q.

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Annual Recurring Revenue (“ARR”)

We use ARR to quantify the annualized recurring value outlined in active customer contracts at the end of a reporting period. ARR includes the annualized recurring value of term licenses, subscription agreements, support contracts, and hosting agreements based on customer contractual terms and invoicing activities for the current reporting period, which may not be the same as the timing and amount of revenue recognized. ARR reflects all fee changes due to contract renewals, non-renewals, expansion, cancellations, attrition, or renegotiations at a higher or lower fee arrangement that are effective as of the ARR reporting date. All components of the licensing and other arrangements that are not expected to recur (primarily perpetual licenses and professional services) are excluded from our ARR calculations. In some arrangements with multiple performance obligations, a portion of recurring license and support or subscription contract value is allocated to services revenue for revenue recognition purposes, but does not get allocated for purposes of calculating ARR. This revenue allocation generally only impacts the initial term of the contract. This means that if we increase arrangements with multiple performance obligations that include services at discounted rates, more of the total contract value would be recognized as services revenue, but our reported ARR amount would not be impacted. During the ~~nine~~three months ended ~~April~~October 3031, 2025, the recurring license and support or subscription contract value recognized as services revenue was $83.1 6 million.

If a customer contract contains invoicing amounts that increase over the contract term, then ARR reflects the annualized invoicing amount outlined in the contract for the current reporting period. For example, given a contract with annual invoicing of $1.0 million at the beginning of year one, $2.0 million at the beginning of year two, and $3.0 million at the beginning of year three, and the reporting period is subsequent to year two invoicing and prior to year three invoicing, the reported ARR for that contract would be $2.0 million.

As of ~~April~~October 3031, 2025, ARR was $~~960~~ 1,063 million, compared to $~~864~~ 1,041 million as of July 31, ~~2024~~2025. We measure ARR results on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates.

Free Cash Flow

We monitor our free cash flow, as a key measure of our overall business performance, which enables us to analyze our financial performance without the effects of certain non-cash items such as depreciation, amortization, and stock-based compensation expenses. Additionally, free cash flow takes into account the impact of changes in deferred revenue, which reflects the receipt of cash payments for products before they are recognized as revenue, and unbilled accounts receivable, which reflects revenue that has been recognized that has yet to be invoiced to our customers. Our net cash provided by (used in) operating activities is significantly impacted by the timing of invoicing and collections of accounts receivable, the timing and amount of annual bonus payments, as well as payroll, commissions, payroll taxes, and other tax payments. Our capital expenditures consist of purchases of property and equipment, primarily computer hardware, software, and leasehold improvements, and capitalized software development costs. For a further discussion of our operating cash flows, see “Liquidity and Capital Resources – Cash Flows.”

	Nine Months Ended April 30,
	2025		2024
	(in thousands)
Net cash provided by (used in) operating activities	$	56,036	$	1,971
Purchases of property and equipment	(2,336)		(4,668)
Capitalized software development costs	(10,972)		(9,429)
Free cash flow	$	42,728	$	(12,126)

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	Three Months Ended October 31,
	2025		2024
	(in thousands)
Net cash provided by (used in) operating activities	$	(67,398)	$	(62,305)
Purchases of property and equipment	(4,878)		(843)
Capitalized software development costs	(5,088)		(4,233)
Free cash flow	$	(77,364)	$	(67,381)

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. Accounting policies, methods, and estimates are an integral part of the preparation of condensed consolidated financial statements in accordance with GAAP and, in part, are based upon management’s current judgments. Those judgments are normally based on knowledge and experience with regard to past and current events and assumptions about future events. Certain accounting policies, methods, and estimates are particularly sensitive because of their significance to the condensed consolidated financial statements and because of the possibility that future events affecting them may differ markedly from management’s current judgments. While there are a number of significant accounting policies, methods, and estimates affecting our condensed consolidated financial statements, which are described in Note 1 “The Company and Summary of Significant Accounting Policies and Estimates” to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2024~~2025, our revenue recognition policies are critical to the periods presented.

There have been no material changes to our critical accounting policies as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2024~~2025.

Recent Accounting Pronouncements

See Note 1 “The Company and Summary of Significant Accounting Policies and Estimates” to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a full description of recent accounting pronouncements adopted, including the dates of adoption, and recent accounting pronouncements not yet adopted.

Results of Operations

The following table sets forth our results of operations for the periods presented. The data has been derived from the condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q which, in the opinion of our management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to fairly present the financial position and results of operations for the interim periods presented. The results of operations for any period should not be considered indicative of results for any future period. This information should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2024~~2025.

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	Three Months Ended April 30,
	Three Months Ended October 31,
	2025		As a % of total revenue		2024		As a % of total revenue
	(in thousands, except percentages)
Revenue:
Subscription and support	$	~~181~~222,~~823~~203	6267	%	$	~~137~~169,~~970~~742	5765	%
License	5741,~~233~~967		1913		5637,~~210~~370		2414
Services	5468,~~452~~469		1920		4655,~~498~~789		1921
Total revenue	~~293~~332,~~508~~639		100		~~240~~262,~~678~~901		100
Cost of revenue:
Subscription and support	5763,~~411~~927		2019		5154,~~185~~024		21
License	~~892~~644		—		~~837~~881		—
Services	5258,~~507~~546		18		4649,~~429~~604		19
Total cost of revenue	~~110~~123,~~810~~117		3837		98104,~~451~~509		40
Gross profit:
Subscription and support	~~124~~158,~~412~~276		4248		86115,~~785~~718		3644
License	5641,~~341~~323		1913		5536,~~373~~489		2414
Services	19,~~945~~923		12		696,185		—2
Total gross profit	~~182~~209,~~698~~522		6263		~~142~~158,~~227~~392		60
Operating expenses:
Research and development	7278,~~915~~317		2524		6668,~~134~~880		2726
Sales and marketing	5764,~~768~~258		2019		5051,~~487~~478		2120
General and administrative	4748,~~547~~469		1615		42,~~302~~754		1816
Total operating expenses	~~178~~191,~~230~~044		6158		~~158~~163,~~923~~112		6662
Income (loss) from operations	418,~~468~~478		15		(164,~~696~~720)		(62)
Interest income	1314,~~794~~650		54		1013,~~824~~606		45
Interest expense	(3,~~668~~312)		(1)		(12,~~686~~062)		(1)
Other income (expense), net	34(5,~~074~~314)		12(2)		(64,~~535~~055)		(32)
Income (loss) before provision for (benefit from) income taxes	4824,~~668~~502		176		~~(14~~2,~~093)~~769		~~(6)~~—
Provision for (benefit from) income taxes	2(6,~~677~~806)		1(2)		(86,~~615~~370)		(42)
Net income (loss)	$	4531,~~991~~308	168	%	$	(59,~~478)~~139	(2)	%

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	Nine Months Ended April 30,
	2025		As a % of total revenue		2024		As a % of total revenue
	(in thousands, except percentages)
Revenue:
Subscription and support	$	529,403	63	%	$	397,239	58	%
License	158,297		18		161,318		23
Services	158,189		19		130,425		19
Total revenue	845,889		100		688,982		100
Cost of revenue:
Subscription and support	170,531		20		149,173		22
License	2,715		—		3,539		1
Services	152,401		18		139,345		20
Total cost of revenue	325,647		38		292,057		43
Gross profit:
Subscription and support	358,872		43		248,066		36
License	155,582		18		157,779		22
Services	5,788		1		(8,920)		(1)
Total gross profit	520,242		62		396,925		57
Operating expenses:
Research and development	212,063		25		194,061		28
Sales and marketing	164,698		19		144,249		21
General and administrative	132,010		16		121,502		18
Total operating expenses	508,771		60		459,812		67
Income (loss) from operations	11,471		2		(62,887)		(10)
Interest income	43,122		5		31,727		5
Interest expense	(9,913)		(1)		(5,061)		(1)
Other income (expense), net	(36,270)		(4)		(9,501)		(1)
Income (loss) before provision for (benefit from) income taxes	8,410		2		(45,722)		(7)
Provision for (benefit from) income taxes	(9,443)		(1)		(22,860)		(3)
Net income (loss)	$	17,853	3	%	$	(22,862)	(4)	%

Revenue

We derive our revenue primarily from delivering cloud-based services, licensing our software applications, providing support, and delivering professional services.

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Subscription and Support

AThe majority of our revenue consists of fees for our subscription services, which are generally priced based on the amount of DWP that is managed by our subscription services. Subscription revenue is recognized ratably over the term of the arrangement, beginning at the point in time our provisioning process has been completed and access has been made available to the customer. The initial term of such arrangements is generally ~~from~~five ~~three~~years, tothough ~~five~~in some instances customers have entered into contracts with an initial term of seven years or longer. Subscription agreements contain optional annual renewals commencing upon the expiration of the initial contract term. A majority of our subscription customers are billed annually in advance. In some arrangements with multiple performance obligations, a portion of recurring subscription contract value may be allocated to license revenue or services revenue for revenue recognition purposes. For example, in arrangements with multiple performance obligations that include services at discounted rates, a portion of the total contract value related to subscription services will be allocated and recognized as services revenue. Additionally, agreements to migrate an existing term license customer to subscription services contain multiple performance obligations, including a provision to continue using the term license during the subscription service implementation period. Under these migration agreements, a portion of the total contract value related to subscription services could be allocated and recognized as term license and support revenue in the period renewed or delivered.

Our support revenue is generally recognized ratably over the committed support term of the licensed software. Our support fees are typically priced as a fixed percentage of the associated term license fees. We generally invoice support annually in advance. Support related to subscription arrangements is included in subscription revenue, as support is not quoted or priced separately from the subscription services.

License

AThe ~~substantial~~ majority of our license revenue consists of term license fees. Our term license revenue is primarily generated through license fees that are billed annually in advance during the term of the contract, including any renewals. Our term license fees are generally priced based on the amount of DWP that will be managed by our licensed software. Our term licenses are sold under an initial term with optional annual renewals after the initial term. Term license revenue for the committed term of the customer agreement is generally fully recognized upon delivery of the software or at the beginning of the renewal term. We do enter into license arrangements that have an initial term of two or more years and renewal terms of more than one year which results in significantly higher revenue in the initial year of the committed term than arrangements for our subscription services.

Services

Our services revenue is primarily derived from implementation and migration services performed for our customers, reimbursable travel expenses, and training fees. A majority of our services engagements are billed and revenue is recognized on a time and materials basis upon providing our services, while certain services engagements are based on a fixed fee and revenue is recognized on a percentage of completion basis.

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	Three Months Ended April 30,
	Three Months Ended October 31,
	2025				2024				Change
	Amount		As a % of total revenue		Amount		As a % of total revenue		($)		(%)
	(in thousands, except percentages)
Revenue:
Subscription and support:
Subscription	$	~~166~~207,~~464~~459	5763	%	$	~~120~~152,~~430~~858	5058	%	$	4654,~~034~~601	3836	%
Support	1514,~~359~~744		54		1716,~~540~~884		86		(2,~~181~~140)		(1213)	%
License:
Term license	5741,~~115~~967		1913		5537,~~005~~370		2315		24,~~110~~597		412	%
Perpetual license	118		—		1,205		—		(1,087)		(90)	%
Services	68,469		20		55,789		21		12,680		23	%
Services	54,452		19		46,498		19		7,954		17	%
Total revenue	$	332,639	100	%	$	262,901	100	%	$	69,738	27	%
Total revenue	$	293,508	100	%	$	240,678	100	%	$	52,830	22	%

	Nine Months Ended April 30,
	2025				2024				Change
	Amount		As a % of total revenue		Amount		As a % of total revenue		($)		(%)
	(in thousands, except percentages)
Revenue:
Subscription and support:
Subscription	$	480,981	57	%	$	343,152	50	%	$	137,829	40	%
Support	48,422		6		54,087		8		(5,665)		(10)	%
License:
Term license	158,179		18		160,017		23		(1,838)		(1)	%
Perpetual license	118		—		1,301		—		(1,183)		(91)	%
Services	158,189		19		130,425		19		27,764		21	%
Total revenue	$	845,889	100	%	$	688,982	100	%	$	156,907	23	%

Subscription and Support

We anticipate subscriptions will continue to represent a significant majority of new arrangements, including customers migrating from existing term license arrangements to subscription services, in future periods. Due to the ratable recognition of subscription revenue, growth in subscription revenue will lag behind the growth of subscription orders and will impact the comparative growth of our reported revenue on a year-over-year basis. If we complete a higher percentage of subscription arrangements towards the end of a given period, our short-term growth rates will be negatively impacted. Due to the seasonal nature of our business, the impact of new subscription orders in our fourth fiscal quarter, our historically largest quarter for new orders, is not fully reflected in revenue until the following fiscal year.

34Subscription revenue increased by $54.6 million during the three months ended October 31, 2025, compared to the same period a year ago, primarily due to the impact of cloud transition agreements entered into and provisioned since October 31, 2024, new subscription agreements, and the renewal or extension of subscription services at the fully ramped annual fees after the initial committed term.

~~Table~~Support revenue decreased by $2.1 million during the three months ended October 31, 2025, compared to the same period a year ago, primarily due to customers migrating from on-premise term licenses to subscription services. Support related to subscription arrangements is included in subscription revenue, as support is not quoted or priced separately from the subscription services. As customers enter into a subscription agreement to migrate from an existing term license agreement, the timing and amount of ~~Contents~~revenue recognized will be impacted by allocations of the total contract value between the license, subscription, and support performance obligations. As a result, we expect the increase in subscription orders as a percentage of total new sales and customers migrating from term licenses to subscription services will result in lower support revenue in the future.

Subscription revenue increased by $46.0 million and $137.8 million during the three and nine months ended April 30, 2025, respectively, compared to the same periods a year ago, primarily due to the impact of cloud transition agreements, new subscription agreements entered into and provisioned, and the renewal or extension of subscription services at the fully ramped annual fees after the initial committed term.

Support revenue decreased by $2.2 million and $5.7 million during the three and nine months ended April 30, 2025, respectively, compared to the same periods a year ago, primarily due to customers migrating from on-premise term licenses to subscription services. Support related to subscription arrangements is included in subscription revenue, as support is not quoted or priced separately from the subscription services. As customers enter into a subscription agreement to migrate from an existing term license agreement, the timing and amount of revenue recognized will be impacted by allocations of the total contract value between the license, subscription, and support performance obligations. As a result, we expect the increase in subscription orders as a percentage of total new sales and customers migrating from term licenses to subscription services will result in lower support revenue in the future.

License

Revenue related to new term licenses and multi-year term license renewals is generally recognized upfront and, as a result, no additional license revenue is recognized until after the committed term expires. As a customer enters into a subscription agreement to migrate from an existing term license agreement, the timing and amount of revenue recognition will be impacted by allocations of total contract value between license, subscription, and support performance obligations. License revenue growth has and will be negatively impacted as subscription sales increase as a percentage of total new sales and as customers migrate from term licenses to subscription services instead of renewing their term licenses.

~~Term license revenue increased by $2.1 million during the three months ended April~~ 30, 2025, compared to the same period a year ago, primarily due to higher renewals and, to a lesser extent, expansion orders within our existing customer base, partially offset by the impact of customers that migrated from a term license to a subscription service.

~~Term~~Table ~~license~~of revenue decreased $1.8 million during the nine months ended April 30, 2025, compared to the same period a year ago, primarily due to agreements that migrated from a term license to a subscription service and, to a lesser extent, fewer expansion orders within our existing customer base, partially offset by an increase in license renewal fees. Contents

Term license revenue increased by $4.6 million during the three months ended October 31, 2025, compared to the same period a year ago, primarily due to an annual renewal after the end of a multi-year commitment entered into during the three months ended October 31, 2020 by a customer, partially offset by the impact of customers that migrated from a term license to a subscription service.

Ongoing revenue related to migration agreements is recorded as subscription revenue.

Services

Services revenue increased by $812.07 million ~~and $27.8 million~~ during the three ~~and nine~~ months ended ~~April~~October 3031, 2025, compared to the same ~~periods~~period a year ago., ~~Services revenue increased~~ due to ~~improved operational focus that resulted in~~ higher utilization of services employees and ~~more~~ new subscription implementation and migration projects ~~than projects that were completed over the past year~~.

As we successfully leverage our SI partners to lead more implementations and migrations, we expect our services revenue could befluctuate ~~flat~~between ~~or decline in the near-term~~periods. Additionally, services revenue overall may continue to be impacted by contracts with lower average services billing rates and investments in customer implementations, including fixed fee or capped arrangements, to accelerate customer transition to the cloud. In these arrangements when a project extends longer than originally anticipated, the average billing rate we recognize may decrease, which can result in revenue adjustments and lower gross profit. As we continue to expand into new markets and develop new products, we have, and may continue to, enter into contracts with lower average billing rates, make investments in customer implementation and migration engagements, and enter into fixed price contracts.

Cost of Revenue and Gross Profit

Our cost of subscription and support revenue primarily consists of personnel costs for our cloud operations and technical support teams, cloud infrastructure costs, development of online training curriculum, amortization of intangible assets, and royalty fees paid to third parties. Our cost of license revenue primarily consists of ~~development of online training curriculum,~~ royalty fees paid to third parties, and amortization of intangible assets. Our cost of services revenue primarily consists of personnel costs for our professional service employees, third-party subcontractors or consultants, and travel costs. In instances where we have primary responsibility for the delivery of services, subcontractor fees are expensed as cost of services revenue. In each case, personnel costs include salaries, bonuses, benefits, and stock-based compensation.

We allocate overhead such as information technology infrastructure and software expenses, information security infrastructure and software expenses, and facilities expenses to all functional departments based on headcount. As such, these general overhead expenses are reflected in cost of revenue and each functional operating expense.

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Cost of Revenue:

	Three Months Ended April 30,
	Three Months Ended October 31,
	2025		2024		Change
	Amount		Amount		($)		(%)
	(in thousands, except percentages)
Cost of revenue:
Subscription and support	$	5763,~~411~~927	$	5154,~~185~~024	$	69,~~226~~903	1218	%
License	~~892~~644		~~837~~881		55(237)		7(27)	%
Services	5258,~~507~~546		4649,~~429~~604		68,~~078~~942		1318	%
Total cost of revenue	$	~~110~~123,~~810~~117	$	98104,~~451~~509	$	1218,~~359~~608	1318	%
Includes stock-based compensation of:
Cost of subscription and support revenue	$	3,~~598~~450	$	3,~~183~~140	$	~~415~~310
Cost of license revenue	32—		—36		32(36)
Cost of services revenue	5,~~055~~700		4,~~729~~802		~~326~~898
Total	$	89,~~685~~150	$	7,~~912~~978	$	~~773~~1,172

	Nine Months Ended April 30,
	2025		2024		Change
	Amount		Amount		($)		(%)
	(in thousands, except percentages)
Cost of revenue:
Subscription and support	$	170,531	$	149,173	$	21,358	14	%
License	2,715		3,539		(824)		(23)	%
Services	152,401		139,345		13,056		9	%
Total cost of revenue	$	325,647	$	292,057	$	33,590	12	%
Includes stock-based compensation of:
Cost of subscription and support revenue	$	10,511	$	10,059	$	452
Cost of license revenue	104		148		(44)
Cost of services revenue	15,218		14,161		$	1,057
Total	$	25,833	$	24,368	$	1,465

Cost of subscription and support revenue during the three months ended October 31, 2025 increased by $9.9 million, compared to the same period a year ago, primarily due to increases in cloud infrastructure expense of $4.7 million from increased transaction volume on our cloud services, personnel costs of $3.1 million due to higher headcount, professional services of $1.1 million, royalties of $0.3 million, internal-use software amortization of $0.3 million, and amortization of intangible assets of $0.3 million primarily driven by intangible assets acquired during the quarter ended April 30, 2025.

Cost of subscription and support revenue during the three months ended April 30, 2025 increased by $6.2 million, compared to the same period a year ago, primarily due to increases in cloud infrastructure expense of $3.9 million from increased transaction volume on our cloud services, personnel costs of $2.5 million, and internal-use software amortization of $0.5 million, partially offset by a decrease in professional services of $0.6 million.31

Cost of subscription and support revenue during the nine months ended April 30, 2025 increased by $21.4 million, compared to the same period a year ago, primarily due to increases in cloud infrastructure expense of $20.7 million, personnel costs of $1.7 million, internal-use software amortization of $1.1 million, and royalties of $0.7 million, partially offset by a decrease in professional services of $2.8 million.

Cloud infrastructure expense continues to benefit from the efficiencies that we are achieving from our development efforts associated with our GWCP platform and the five-year agreement we entered into with a cloud infrastructure services provider. As a result of efficiencies that we are seeing from our previous investments in cloud operations and development efforts, we continue to critically evaluate headcount additions, professional services contracts and third-party software costs, along with other investment opportunities. However, we expect cost of subscription and support revenue to increase in absolute dollars due to the increased number of customers utilizing our cloud services, the volume of transactions by our cloud customers, and the impact of inflation and other macroeconomic events.

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~~The~~As ~~$0.1 million~~a ~~decrease~~result inof efficiencies that we are seeing from our continuous investments in cloud operations and development efforts, we critically evaluate headcount additions, professional services contracts and third-party software costs, along with other investment opportunities. However, we expect the cost of ~~license~~subscription and support revenue ~~during~~to increase in absolute dollars due to the ~~three~~increased ~~months~~number ~~ended~~of ~~April 30,~~customers ~~2025,~~utilizing ~~compared~~our tocloud services, the ~~same~~volume ~~period~~of atransactions ~~year~~by ~~ago~~our cloud customers, ~~was~~and ~~not~~the ~~significant~~impact of inflation and other macroeconomic events.

The $0.8 2 million decrease in our cost of license revenue during the ~~nine~~three months ended ~~April~~October 3031, 2025, compared to the same period a year ago, was primarily due to ~~decreases~~a decrease in personnel costs of $0.3 million. Personnel costs associated with the development of online training curriculum ~~included~~are ~~with~~primarily ~~the~~focused ~~latest~~on ~~releases~~our ofcloud ~~InsuranceSuite~~services, ofthus ~~$0.5~~contributing ~~million~~to ~~and~~the ~~royalties~~decrease in cost of ~~$0.3~~license ~~million~~revenue.

We continue to anticipate lower cost of license revenue over time as our term license customers transition to cloud subscription agreements.

The $68.19 million increase in cost of services revenue during the three months ended ~~April~~October 3031, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $4.6.9 million due to higher headcount, subcontractor expenses of $10.9 million due to implementations involving our SI partners, ~~and~~ professional services of $0.25 million, ~~partially~~travel ~~offset~~expenses byof a$0.4 ~~decrease~~million, inand ~~travel~~web hosting expenses and software subscription costs of $0.63 million.

~~The~~We ~~$13.1~~had ~~million~~625 ~~increase~~cloud inoperations ~~cost~~and oftechnical ~~services~~support ~~revenue~~employees ~~during~~and ~~the~~909 ~~nine~~professional ~~months~~services ~~ended~~employees ~~April~~at October 3031, 2025, compared to ~~the~~563 ~~same~~cloud ~~period~~operations aand ~~year~~technical ~~ago,~~support ~~was~~employees ~~primarily due to increases in subcontractor expenses of $7.5 million due to implementations involving our SI partners, personnel costs of $5.7 million,~~ and 794 professional services ofemployees ~~$0.3~~at ~~million~~October 31, ~~partially offset by a decrease in travel costs of $0~~2024.~~4 million.~~

We had 591 cloud operations and technical support employees and 836 professional services employees at April 30, 2025, compared to 604 cloud operations and technical support employees and 750 professional services employees at April 30, 2024.

Gross Profit:

	Three Months Ended April 30,
	Three Months Ended October 31,
	2025				2024				Change
	Amount		Margin %		Amount		Margin %		($)		(%)
	(in thousands, except percentages)
Gross profit:
Subscription and support	$	~~124~~158,~~412~~276	6871	%	$	86115,~~785~~718	6368	%	$	3742,~~627~~558	4337	%
License	5641,~~341~~323		98		5536,~~373~~489		9998		~~968~~4,834		213	%
Services	19,~~945~~923		414		696,185		—11		13,~~876~~738		~~(2,719)~~60	%
Total gross profit	$	~~182~~209,~~698~~522	6263	%	$	~~142~~158,~~227~~392	5960	%	$	4051,~~471~~130	2832	%

Our gross profit increased $4051.51 million during the three months ended ~~April~~October 3031, 2025, compared to the same period a year ago. Gross profit was primarily impacted by ~~increases~~the increase in subscription and support gross profit due to the increase in subscription revenue and cloud operations efficiencies,. ~~and~~Services ~~services~~contributed to the increased gross profit due to anhigher ~~increase~~utilization inof ~~service~~services ~~revenue~~employees inand ~~conjunction~~higher ~~with~~revenues ~~the~~from ~~completion~~new ofsubscription ~~certain~~ implementation ~~projects that required significant investment by us~~ and ~~higher~~migration ~~utilization rates~~projects.

Our gross margin increased to 6263% during the three months ended ~~April~~October 3031, 2025 from 5960% during the same period a year ago. Gross margin was primarily impacted by the increases in subscription and support revenue at a higher margin due to cloud operations efficiencies, and services revenue due to completion of certain implementation projects that required significant investment by us and higher utilization rates.

	Nine Months Ended April 30,
	2025				2024					Change
	Amount		Margin %			Amount		Margin %			($)		(%)
	(in thousands, except percentages)
Gross profit:
Subscription and support	$	358,872	68	%		$	248,066	62	%		$	110,806	45	%
License	155,582		98			157,779		98			(2,197)		(1)	%
Services	5,788		4			(8,920)		(7)			14,708		(165)	%
Total gross profit	$	520,242	62	%		$	396,925	58	%		$	123,317	31	%

We expect subscription and support gross margin to continue to improve, though at a slower rate than in recent years, as we increase the number of cloud customers. We expect services gross margin will continue to improve as we gain additional efficiencies, but could fluctuate between periods based on the use of subcontractors to supplement our internal services team. We expect license gross profit to decline over time due to customers migrating from licenses to subscription services but can fluctuate quarter to quarter depending on the timing of renewals and license allocation from migration orders. Overall, we expect gross margins to continue to improve over time as improvements in subscription and support gross margin and services gross margin will more than offset the negative impact of revenue shifts away from high margin license revenue.

Our gross profit increased $123.3 million during the nine months ended April 30, 2025, compared to the same period a year ago. Gross profit was impacted by an increase in subscription and support gross profit due to the increase in subscription revenue and cloud operations efficiencies and improvements in services gross profit due to the completion of certain implementation projects that required significant investment by us and higher utilization rates, partially offset by a decrease in license gross profit due to lower license revenue as customers migrate to subscription services.

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Our gross margin increased to 62% during the nine months ended April 30, 2025, from 58% during the same period a year ago. Gross margin was primarily impacted by the increase in subscription and support revenue at a higher margin due to cloud operations efficiencies and improvements in services gross margin due to completion of certain implementation projects that required significant investment by us and higher utilization rates.

We expect subscription and support gross margin to continue to improve, though at a slower rate than in fiscal year 2024, over the next several years as we gain additional efficiencies and increase the number of cloud customers. We expect services gross margin to improve over time, but quarterly results may fluctuate, depending on the usage of subcontractors to supplement projects, investments in customer projects, and the utilization level of our services employees. We expect license gross margins to remain stable but gross profit to decline in general as customers migrate from licenses to subscription services, though this trend could be offset in certain periods in which we enter into new multi-year term licenses or multi-year term license renewals. Overall, we expect gross margins to continue to improve over time as improvements in subscription and support gross margin and services gross margin will more than offset the negative impact of revenue shifts away from high margin license revenue.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. The largest components of our operating expenses are personnel costs for our employees and, to a lesser extent, professional services. In each case, personnel costs include salaries, bonuses, commissions, benefits, and stock-based compensation. We allocate overhead such as information technology infrastructure and software expenses, information security infrastructure and software expenses, and facilities expenses to all functional departments based on headcount. As such, these general overhead expenses are reflected in cost of revenue and each functional operating expense.

	Three Months Ended April 30,
	2025			2024			Change
	Amount		As a % of total revenue	Amount		As a % of total revenue	($)		(%)
	(in thousands, except percentages)
Operating expenses:
Research and development	$	72,915	25%	$	66,134	27%	$	6,781	10	%
Sales and marketing	57,768		20	50,487		21	7,281		14	%
General and administrative	47,547		16	42,302		18	5,245		12	%
Total operating expenses	$	178,230	61%	$	158,923	66%	$	19,307	12	%
Includes stock-based compensation of:
Research and development	$	10,267		$	10,003		$	264
Sales and marketing	10,832			9,349			1,483
General and administrative	10,573			9,386			1,187
Total	$	31,672		$	28,738		$	2,934

3832

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	Nine Months Ended April 30,
	Three Months Ended October 31,
	2025				2024				Change
	Amount		As a % of total revenue		Amount		As a % of total revenue		($)		(%)
	(in thousands, except percentages)
Operating expenses:
Research and development	$	~~212~~78,~~063~~317	2524%	%	$	~~194~~68,~~061~~880	2826%	%	$	189,~~002~~437	914	%
Sales and marketing	~~164~~64,~~698~~258		19		~~144~~51,~~249~~478		2120		2012,~~449~~780		1425	%
General and administrative	~~132~~48,~~010~~469		1615		~~121~~42,~~502~~754		1816		105,~~508~~715		913	%
Total operating expenses	$	~~508~~191,~~771~~044	6058%	%	$	~~459~~163,~~812~~112	6762%	%	$	4827,~~959~~932	1117	%
Includes stock-based compensation of:
Research and development	$	3011,~~560~~259			$	309,~~127~~824			$	~~433~~1,435
Sales and marketing	3111,~~400~~822				259,~~268~~688				62,~~132~~134
General and administrative	3111,~~572~~085				2910,~~411~~570				~~2,161~~515
Total	$	9334,~~532~~166			$	8430,~~806~~082			$	84,~~726~~084

Research and Development

Our research and development expenses primarily consist of personnel costs for our technical staff and consultants providing professional services.

The $69.84 million increase in research and development expenses during the three months ended ~~April~~October 3031, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $56.7 million associated with higher headcount and headcount added through acquisitions, professional services of $01.5 million, ~~and~~web ~~software~~hosting ~~subscription~~expenses ~~costs~~of $0.7 million, and travel expenses of $0.23 million.

~~The~~Our ~~$18.0 million increase in~~ research and development ~~expenses~~headcount ~~during~~was ~~the~~1,279 ~~nine~~at ~~months ended April~~October 3031, 2025, compared ~~to the same period a year ago, was primarily due to increases in personnel costs of $15.3 million associated~~ with ~~higher headcount, software subscription costs of $~~1~~.0 million~~,167 ~~cloud~~at ~~hosting costs of $0.7 million~~October 31, ~~travel costs of $0~~2024.7 ~~million, and professional services of $0.4 million.~~

~~Our~~We expect our research and development ~~headcount~~expenses ~~was~~to 1increase in absolute dollars due to inflation and investments to enhance and develop our product and services,~~204~~ atbut ~~April 30~~decrease as a percentage of revenue as we focus on hiring in lower cost regions. We continue to dedicate internal resources to develop, ~~2025~~improve, ~~compared~~and ~~with~~expand 1the functionality,~~115~~ ~~at April 30~~efficiency, ~~2024~~and security of our solutions in the cloud. Research and development expenses may also increase if we pursue additional acquisitions.

We expect our research and development expenses to increase in absolute dollars due to inflation and investments to enhance and develop our product and services, but decrease as a percentage of revenue after our recent period of significant investment in cloud platform capabilities as overall hiring slows and we focus on hiring in lower cost regions. We continue to dedicate internal resources to develop, improve, and expand the functionality, efficiency, and security of our solutions in the cloud. Research and development expenses may also increase if we pursue additional acquisitions.

Sales and Marketing

Our sales and marketing expenses primarily consist of personnel costs for our sales and marketing employees. Included in our personnel costs are commissions, which are considered contract acquisition costs and are capitalized when earned and expensed over the anticipated period of time that goods and services are expected to be provided to a customer, which we estimate to be approximately five years. Sales and marketing expenses also include travel expenses, professional services for marketing activities, and amortization of certain acquired intangibles.

The $712.38 million increase in sales and marketing expenses during the three months ended ~~April~~October 3031, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $6.9 million associated with higher headcount, ~~including~~which ~~higher~~includes the impact of contract acquisition costs and stock-based compensation, marketing and advertising expenses of $43.85 million due to the timing of Connections, ~~marketing~~our annual customer conference, which was held in the second quarter of fiscal year 2025 and ~~advertising~~in ~~costs~~the first quarter of ~~$1.1~~fiscal ~~million~~year 2026, ~~cloud~~travel ~~hosting~~expenses ~~costs~~ of $12.05 million, ~~travel~~and software subscription costs of $0.31 million, ~~and~~partially ~~software~~offset ~~subscription~~by a decrease in web hosting costs of $0.2 million.

39Our sales and marketing headcount was 534 at October 31, 2025, compared with 483 at October 31, 2024.

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The $20.4 million increase in sales and marketing expenses during the nine months ended April 30, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs, including contract acquisition costs and stock-based compensation, of $15.4 million, travel costs of $2.5 million, cloud hosting costs of $2.0 million, professional services costs of $0.4 million, and software subscription costs $0.4 million, partially offset by lower intangible assets amortization costs of $0.2 million.

Our sales and marketing headcount was 497 at April 30, 2025, compared with 475 at April 30, 2024.

We expect our sales and marketing expenses to continue to increase in absolute dollars due to inflation and investments to support ongoing growth, but decrease as a percentage of revenue as overall hiring slows after our recent period of investment to build out our customer success team and add analytics and cloud sales capabilities.

General and Administrative

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Our general and administrative expenses include executive, finance, human resources, information technology, information security, legal, and corporate development and strategy functions, and primarily consist of personnel costs and, to a lesser extent, professional services, software costs, and cloud hosting costs.

The $5.27 million increase in general and administrative expenses during the three months ended ~~April~~October 3031, 2025, compared to the same period a year ago, was due to increases in personnel costs of $2.15 million driven by higher headcount, ~~professional~~bad ~~services~~debt ~~cost~~expenses of $2.1.3 million, ~~travel~~professional ~~costs~~services of $01.51 million, and ~~software~~travel ~~subscription~~expenses ~~costs~~ of $0.47 million.

~~The~~Our ~~$10.5 million increase in~~ general and administrative ~~expenses~~headcount ~~during~~was ~~the~~481 ~~nine~~at ~~months ended April~~October 3031, 2025, compared towith ~~the~~464 ~~same~~at ~~period a year ago~~October 31, ~~was~~2024. ~~due~~General toand ~~increases~~administrative inheadcount ~~professional~~includes ~~services~~facilities ~~costs of $3.9 million,~~ personnel ~~costs~~whose ~~of $2.9 million, travel costs of $1.8 million, bad debt~~ expenses ofare ~~$1.0~~allocated ~~million,~~across ~~software~~all ~~subscription~~functional ~~costs of $0~~departments.~~5 million, and cloud hosting costs of $0.2 million.~~

Our general and administrative headcount was 468 at April 30, 2025, compared with 452 at April 30, 2024. General and administrative headcount includes facilities personnel whose expenses are allocated across all functional departments.

We expect that our general and administrative expenses will increase in absolute dollars due to inflation and investments required to support our strategic initiatives, grow our business, and meet our product and information security, compliance and reporting obligations, but decrease as a percentage of revenue as overall hiring and investments slow.

Other Income (Expense)

	Three Months Ended April 30,
	Three Months Ended October 31,
	2025		2024		Change
	Amount		Amount		($)		(%)
	(in thousands, except percentages)
Interest income	$	1314,~~794~~650	$	1013,~~824~~606	$	21,~~970~~044	278	%
Interest expense	$	(3,~~668~~312)	$	(12,~~686~~062)	$	(1,~~982~~250)	~~118~~61	%
Other income (expense), net	$	34(5,~~074~~314)	$	(64,~~535~~055)	$	40(1,~~609~~259)	~~621~~(31)	%

	Nine Months Ended April 30,
	2025		2024		Change
	Amount		Amount		($)		(%)
	(in thousands, except percentages)
Interest income	$	43,122	$	31,727	$	11,395	36	%
Interest expense	$	(9,913)	$	(5,061)	$	(4,852)	96	%
Other income (expense), net	$	(36,270)	$	(9,501)	$	(26,769)	(282)	%

Interest Income

Interest income represents interest earned on our cash, cash equivalents, and investments.

Interest income increased $31.0 million ~~and $11.4 million~~ during the three ~~and nine~~ months ended ~~April~~October 3031, 2025, ~~respectively,~~ compared to the same periods a year ago, primarily due to the higher amount of funds available for investment ~~due to the net cash received~~ from our October 2024 debt offering, ~~and~~partially ~~positive~~offset ~~cash~~by ~~flow~~lower interest rates.

Interest Expense

40Interest expense includes both stated interest and the amortization of debt issuance costs associated with the outstanding amount due on the aggregate principal amount of our 1.25% Convertible Senior Notes due 2025 (“2025 Convertible Senior Notes”) and the aggregate principal amount of our 1.25% Convertible Senior Notes due 2029 (the “2029 Convertible Senior Notes”, together with the 2025 Convertible Senior Notes, the “Convertible Senior Notes”). The amortization of debt issuance cost is recognized on an effective interest basis. Our 2025 Convertible Senior Notes were partially retired in October and December 2024, and were fully settled on their maturity date of March 15, 2025. Interest expense also includes commitment fees on our undrawn 2025 Credit Facility and amortization of issuance costs associated with our revolving credit agreement recognized on a straight-line basis.

~~Table~~Interest expense for the three months ended October 31, 2025 consists of ~~Contents~~stated interest of $2.2 million, non-cash interest expense of $1.0 million related to amortization of debt issuance costs, and $0.2 million of commitment fees on our undrawn 2025 Credit Facility. Interest expense for the three months ended October 31, 2024 consists of stated interest of $1.5 million and non-cash interest expense of $0.5 million related to the amortization of debt issuance costs.

Interest expense includes both stated interest and the amortization of debt issuance costs associated with the outstanding amount due on the aggregate principal amount of our 1.25% Convertible Senior Notes due 2025 (“2025 Convertible Senior Notes”) and the aggregate principal amount of our 1.25% Convertible Senior Notes due 2029 (the “2029 Convertible Senior Notes”, together with the 2025 Convertible Senior Notes, the “Convertible Senior Notes”). The amortization of debt issuance cost is recognized on an effective interest basis. Our 2025 Convertible Senior Notes were partially retired in October and December 2024, and were fully settled on their maturity date of March 15, 2025. Interest expense also includes the amortization of issuance costs associated with our revolving credit agreement recognized on a straight-line basis.

Interest expense for the three months ended April 30, 2025 consists of stated interest of $2.4 million and non-cash interest expense of $1.1 million related to amortization of debt issuance costs. Interest expense for the three months ended April 30, 2024 consists of stated interest of $1.3 million and non-cash interest expense of $0.4 million related to the amortization of debt issuance costs.

Interest expense for the nine months ended April 30, 2025 consists of stated interest of $6.8 million and non-cash interest expense of $2.8 million related to amortization of debt issuance costs. Interest expense for the nine months ended April 30, 2024 consists of stated interest of $3.8 million and non-cash interest expense of $1.3 million related to the amortization of debt issuance costs.

Other Income (Expense), Net

Other income (expense), net includes foreign exchange gains and losses resulting from fluctuations in foreign exchange rates on monetary asset and monetary liability balances that are denominated in currencies other than the functional currency of the entity in which they are recorded. Our monetary assets and liabilities denominated in currencies other than the functional currency of the entity in which they are recorded consist primarily of trade accounts receivable, unbilled accounts receivable, trade accounts payable, and intercompany receivables and payables. We have significant transactions in the following currencies: Australian Dollar, British Pound, Canadian Dollar, Euro, Indian Rupee, and Polish Zloty. Other income (expense) also includes changes in the fair value of our strategic investments and expenses related to the retirement of a portion of our 2025 Convertible Senior Notes.

Other income (expense), net during the three months ended ~~April~~October 3031, 2025 was ~~income~~expense of $345.13 million, compared to expense of $64.51 million during the same period a year ago due to fluctuations in foreign currency exchange rates.

Other income (expense), net during the nine months ended April 30, 2025 was expense of $36.3 million, compared to expense of $9.5 million during the same period a year ago, primarily due to $53.6 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes, partially offset by a $25.5 million favorable impact related to fluctuations in foreign currency exchange rates and $2.0 million higher gain from the sale of strategic investments.34

Provision for (benefit from) Income Taxes

We are subject to taxes in the United States as well as other tax jurisdictions and countries in which we conduct business. Earnings from our non-U.S. activities are subject to local country income tax and may also be subject to U.S. income tax.

	Three Months Ended April 30,
	2025			2024			Change
	Amount			Amount			($)		(%)
	(in thousands, except percentages)
Provision for (benefit from) income taxes	$	2,677		$	(8,615)		$	11,292	(131)	%
Effective tax rate	6		%	61		%

	Nine Months Ended April 30,
	2025			2024			Change
	Amount			Amount			($)		(%)
	(in thousands, except percentages)
Provision for (benefit from) income taxes	$	(9,443)		$	(22,860)		$	13,417	(59)	%
Effective tax rate	(112)		%	50		%

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We recognized an income tax expense of $2.7 million and an income tax benefit of $8.6 million for the three months ended April 30, 2025 and 2024, respectively, and an income tax benefit of $9.4 million and $22.9 million for the nine months ended April 30, 2025 and 2024, respectively. The change in the income tax benefit (expense) recorded for the three months ended April 30, 2025, compared to the same period a year ago was primarily due to an increase in income before taxes and non-deductible executive compensation, offset by an increase in tax deductions from stock-based compensation, the U.S. Foreign-Derived Intangible Income (“FDII”) deduction, and research and development credits. The decrease in the amount of income tax benefit recorded for the nine months ended April 30, 2025, compared to the same period a year ago, was primarily due to an increase in income before taxes and the debt retirement expense which is non-deductible for tax purposes, offset by an increase in the deductions for stock-based compensation, FDII deduction, and research and development credits.Taxes

~~The~~We ~~effective~~are ~~tax~~subject ~~rate~~to oftaxes 6%in ~~for~~ the ~~three~~United ~~months~~States ~~ended~~as ~~April 30,~~well ~~2025~~as ~~differs~~other ~~from the statutory U.S. Federal income~~ tax ~~rate~~jurisdictions ofand ~~21%~~countries ~~primarily~~in ~~due~~which towe ~~the~~conduct ~~impact~~business. ofEarnings ~~tax deductions~~ from ~~stock~~our non-~~based~~U.S. ~~compensation,~~activities ~~research~~are ~~and~~subject ~~development~~to ~~credits,~~local ~~and~~country ~~the~~income ~~FDII~~tax ~~deduction,~~and ~~which~~may ~~were~~also ~~partially~~be ~~offset~~subject byto ~~non-deductible~~U.S. ~~executive~~income ~~compensation~~tax.

The effective tax rate of (112)% for the nine months ended April 30, 2025 differs from the statutory U.S. Federal income tax rate of 21% primarily due to the tax deductions from stock-based compensation, research and development credits, and the FDII deduction partially offset by the non-deductible debt retirement expense and non-deductible executive compensation.


	Three Months Ended October 31,
	2025			2024			Change
	Amount			Amount			($)		(%)
	(in thousands, except percentages)
Provision for (benefit from) income taxes	$	(6,806)		$	(6,370)		$	(436)	7	%
Effective tax rate	(28)		%	(230)		%

We recognized an income tax benefit of $6.8 million and an income tax benefit of $6.4 million for the three months ended October 31, 2025 and 2024, respectively. The change in income taxes recorded for the three months ended October 31, 2025, compared to the same period a year ago was primarily due to an increase in deductions from stock-based compensation, partially offset by an increase in income before taxes and non-deductible executive compensation and a decrease in the foreign derived intangible income deduction and research and development credits due to U.S. tax law changes under H.R. 1 enacted on July 4, 2025.

In the United States, on July 4, 2025, H.R. 1 was signed into law. Among other provisions, the legislation reinstated immediate expensing for domestic research and experimental expenditures, extended 100% bonus depreciation for qualified property placed in service beginning January 20, 2025, and made certain other provisions of the Tax Cuts and Jobs Act permanent. The legislation has multiple effective dates, with certain provisions effective in fiscal year 2026 and others effective from fiscal year 2027. We recognized the fiscal year 2026 tax effects of the legislation in our income tax benefit for the three months ended October 31, 2025.

The effective tax rate of (28)% for the three months ended October 31, 2025 differs from the statutory U.S. Federal income tax rate of 21% primarily due to tax deductions for stock-based compensation and research and development credits, partially offset by state taxes and certain non-deductible expenses, including the limitation on executive compensation. During the three months ended October 31, 2024, the impact of tax deductions for stock based compensation on the effective tax rate was magnified by the near breakeven pretax income.

Non-GAAP Financial Measures

In addition to the key business metrics presented above, we believe that the following non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to our financial condition and results of operations. Management uses these non-GAAP measures to compare our performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation, and for budgeting and planning purposes. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with other software companies because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, many of which present similar non-GAAP financial measures to investors. However, our management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP.

The non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled non-GAAP measures used by other companies. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in our financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. We urge investors to review the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures included herein and not to rely on any single financial measure to evaluate our business.

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The following table reconciles the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below (in thousands, except share and per share data):

	Three Months Ended				~~Nine Months Ended~~
	April 30,				April 30,
	October 31,
	2025		2024		~~2025~~		~~2024~~
Gross profit reconciliation:
GAAP gross profit	$	~~182~~209,~~698~~522	$	~~142~~158,~~227~~392	$	~~520,242~~	$	~~396,925~~
Non-GAAP adjustments:
Stock-based compensation	89,~~685~~150		7,~~912~~978		~~25,833~~		~~24,368~~
Amortization of intangibles	~~485~~808		485		~~1,455~~		~~1,455~~
Non-GAAP gross profit	$	~~191~~219,~~868~~480	$	~~150~~166,~~624~~855	$	~~547,530~~	$	~~422,748~~
Income (loss) from operations reconciliation:
GAAP income (loss) from operations	$	418,~~468~~478	$	(164,~~696~~720)	$	~~11,471~~	$	~~(62,887)~~
Non-GAAP adjustments:
Stock-based compensation	4043,~~357~~316		3638,~~650~~060		~~119,365~~		~~109,174~~
Amortization of intangibles	1,~~234~~455		1,367		~~3,879~~		~~4,101~~
Acquisition consideration holdback	—177		~~(542)~~—		—		~~143~~
Non-GAAP income (loss) from operations	$	4663,~~059~~426	$	2034,~~779~~707	$	~~134,715~~	$	~~50,531~~
Net income (loss) reconciliation:
GAAP net income (loss)	$	4531,~~991~~308	$	(59,~~478)~~139	$	~~17,853~~	$	~~(22,862)~~
Non-GAAP adjustments:
Stock-based compensation	4043,~~357~~316		3638,~~650~~060		~~119,365~~		~~109,174~~
Amortization of intangibles	1,~~234~~455		1,367		~~3,879~~		~~4,101~~
Acquisition consideration holdback	—177		~~(542)~~—		—		~~143~~
Amortization of debt issuance costs	~~1,058~~980		~~434~~545		~~2,782~~		~~1,296~~
Changes in fair value of strategic investment	~~103~~60		(~~298~~53)		~~341~~		~~(298)~~
Gain on sale of strategic investment	—		—		(3,671)		(1,758)
Retirement of debt	—		300
Retirement of debt (1)	—		—		53,565		—
Tax impact of non-GAAP adjustments	(20,335)		(12,667)
Tax impact of non-GAAP adjustments	(13,576)		(10,469)		(38,327)		(29,289)
Non-GAAP net income (loss)	$	56,961	$	36,691
Non-GAAP net income (loss)	$	75,167	$	21,664	$	155,787	$	60,507
Tax provision (benefit) reconciliation:
GAAP tax provision (benefit)	$	2(6,~~677~~806)	$	(86,~~615~~370)	$	~~(9,443)~~	$	~~(22,860)~~
Non-GAAP adjustments:
Stock-based compensation	78,~~175~~314		25,~~890~~575		~~17,910~~		~~10,108~~
Amortization of intangibles	~~219~~279		~~108~~200		~~580~~		~~380~~
Acquisition consideration holdback	—34		~~(43)~~—		—		25
Amortization of debt issuance costs	188		3480		~~417~~		~~120~~
Changes in fair value of strategic investment	1812		(238)		47		~~(23)~~
Gain on sale of strategic investment	—		—		(463)		(191)
Retirement of debt	—		44
Retirement of debt (1)	—		—		6,756		—
Tax impact of non-GAAP adjustments	11,509		6,776
Tax impact of non-GAAP adjustments	5,976		7,503		13,080		18,870
Non-GAAP tax provision (benefit)	$	13,530	$	6,297
Non-GAAP tax provision (benefit)	$	16,253	$	1,854	$	28,884	$	6,429

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	Three Months Ended				~~Nine Months Ended~~
	April 30,				April 30,
	October 31,
	2025		2024		~~2025~~		~~2024~~
Net income (loss) per share reconciliation:
GAAP net income (loss) per share — diluted	$	0.5436	$	(0.~~07)~~11	$	~~0.21~~	$	~~(0.28)~~
Non-GAAP adjustments:
Stock-based compensation	0.4751		0.44		~~1.39~~		~~1.31~~
Amortization of intangibles	0.0102		0.02		~~0.05~~		~~0.05~~
Acquisition consideration holdback	—		~~(0.01)~~—		—		—
Amortization of debt issuance costs	0.01		0.01		~~0.03~~		~~0.02~~
Changes in fair value of strategic investment	—		—		—		—
Gain on sale of strategic investment	—		—		(0.04)		(0.02)
Retirement of debt	—		—
Retirement of debt (1)	—		—		0.63		—
Tax impact of non-GAAP adjustments	(0.24)		(0.15)
Tax impact of non-GAAP adjustments	(0.15)		(0.13)		(0.45)		(0.35)
Non-GAAP net income (loss) per share — diluted	$	0.66	$	0.43
Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation	—		—		—		(0.01)
Non-GAAP net income (loss) per share — diluted	$	0.88	$	0.26	$	1.82	$	0.72
Shares used in computing non-GAAP net income (loss) per share amounts:
GAAP weighted average shares — diluted	85,880,643		82,500,109		85,654,903		82,105,357
Pro forma weighted average shares — diluted	86,451,737		85,960,868
Non-GAAP dilutive shares excluded from GAAP net income (loss) per share calculation	—		1,453,086		—		1,293,859
Pro forma weighted average shares — diluted	85,880,643		83,953,195		85,654,903		83,399,216

(1) During the nine months ended April 30, 2025, we recorded a $53.6 million loss on retirement of debt in other income (expense) comprised of a $53.3 million loss on extinguishment of a portion of the 2025 Convertible Senior Notes and a $0.3 million loss on the induced conversion of a portion of the 2025 Convertible Senior Notes. Prior to the first quarter of fiscal year 2025, there were no transactions similar to the retirement of debt in any periods presented on the condensed consolidated statements of operations.

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Liquidity and Capital Resources

Our principal sources of liquidity are as follows (in thousands):

	April 30, 2025		July 31, 2024
	October 31, 2025		July 31, 2025
Cash, cash equivalents, and investments	$	1,~~243~~409,~~742~~264	$	1,~~129~~483,~~453~~197
Working capital	$	~~907~~967,~~055~~166	$	~~457~~962,~~899~~613

Cash, Cash Equivalents, and Investments

Our cash and cash equivalents are comprised of cash and liquid investments with remaining maturities of 90 days or less from the date of purchase, primarily commercial paper and money market funds. Our investments primarily consist of corporate debt securities, U.S. government and agency debt securities, commercial paper, asset-backed securities, and non-U.S. government securities, which include state, municipal, and foreign government securities.

As of ~~April~~October 3031, 2025, approximately $6582.10 million of our cash and cash equivalents were domiciled in foreign jurisdictions. We may repatriate foreign earnings to the United States in the future to the extent that the repatriation is not restricted by local laws or there are no substantial incremental costs associated with such repatriation.

Working Capital

Our working capital increased to $907.1 million as of April 30, 2025 compared to $457.9 million as of July 31, 2024, primarily due to proceeds received from the issuance of the 2029 Convertible Senior Notes in October 2024 and operating cash flow, partially offset by settlement of the 2025 Convertible Senior Notes and the purchase of capped calls related to the 2029 Convertible Senior Notes. We are required to, and have the ability to, settle the principal of the 2029 Convertible Senior Notes in cash and any conversion premium in cash, equity, or a combination of both.

Revolving Credit Facility

In December 2024, we entered into a revolving credit agreement (the “Credit Agreement”), which provides for a senior secured revolving credit facility in an aggregate principal amount of $300.0 million (the “2025 Credit Facility”). At our discretion, it allows flexibility for an uncommitted upsize of the aggregate principal amount of the 2025 Credit Facility or the establishment of incremental term loan facilities, in each case, as further set forth in the Credit Agreement. As of ~~April~~October 3031, 2025, there were no outstanding borrowings under the 2025 Credit Facility and we were in compliance with related covenants.

Share Repurchase Program

In September 2022, our board of directors authorized and approved a share repurchase program of up to $400.0 million of our outstanding common stock. During the ~~nine~~three months ended ~~April~~October 3031, 2025, we did not repurchase any shares of our common stock. As of ~~April~~October 3031, 2025, $138.2 million remained available for future share repurchases subject to our compliance with the terms of the Credit Agreement.

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Cash Flows

Our cash flows from operations are significantly impacted by the timing of invoicing and collections of accounts receivable, annual bonus payments, as well as payments of payroll, commissions, payroll taxes, and other taxes. We expect that we will generate positive cash flows from operations on an annual basis in the future, although this may fluctuate significantly on a quarterly basis. In particular, we typically use more cash during our first fiscal quarter, which is the quarter ending October 31, as we generally pay cash bonuses to our employees for the prior fiscal year and seasonally higher sales commissions from increased customer orders booked in our fourth fiscal quarter of the prior year. Additionally, our capital expenditures may fluctuate depending on future office build outs and software development activities subject to capitalization.

We believe that our existing cash and cash equivalents and other sources of liquidity will be sufficient to fund our operations for at least the next 12 months. Our future cash requirements will depend on many factors, including our rate of revenue growth, the expansion of our sales and marketing activities, the timing and extent of our spending to support our research and development and cloud operations efforts, investments in cloud infrastructure, cybersecurity, and operating costs, and expansion into other markets. We also may invest in or acquire complementary businesses, applications or technologies, or may execute on a board-authorized share repurchase program, which may require the use of significant cash resources and/or additional financing.

The following summary of cash flows for the periods indicated has been derived from our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q (in thousands):

	Nine Months Ended April 30,
	Three Months Ended October 31,
	2025		2024
Net cash provided by (used in) operating activities	$	56(67,~~036~~398)	$	1(62,~~971~~305)
Net cash provided by (used in) investing activities	$	(~~178~~138,~~576~~765)	$	(4577,~~067~~601)
Net cash provided by (used in) financing activities	$	~~81,565~~413	$	14415,507

Cash Flows from Operating Activities

Net cash ~~provided~~used byin operating activities was $5667.04 million for the ~~nine~~three months ended ~~April~~October 3031, 2025 compared to net cash ~~provided~~used ~~by operating activities~~ of $262.03 million during the ~~nine~~three months ended ~~April~~October 3031, 2024. This $545.1 million increase in cash ~~provided~~used byin operating activities was attributable to a $~~123~~36.1 million ~~decrease~~increase in cash used by working capital activities, offset by a $31.1 million increase in net ~~loss~~income, after excluding the impact of non-cash charges such as deferred taxes, stock-based compensation expense, depreciation and amortization expense, ~~loss on retirement of debt,~~ and other non-cash items~~, partially offset by a $69~~.~~1 million increase in cash used by working capital activities.~~

Cash Flows from Investing Activities

Net cash used in investing activities was $~~178~~138.68 million for the ~~nine~~three months ended ~~April~~October 3031, 2025 compared to net cash used in investing activities of $4577.16 million during the ~~nine~~three months ended ~~April~~October 3031, 2024. The $~~133~~61.52 million increase in cash used ~~in investing activities~~ was primarily due to higher net purchases in excess of maturities and sales of available-for-sale securities compared to the same period a year ago of $~~105~~57.30 million, ~~$26.7~~an ~~million~~increase ~~cash~~in ~~paid~~purchases asof ~~purchase~~property ~~consideration~~and ~~for~~equipment ~~the~~primarily ~~acquisition~~due ofto ~~Quantee,~~new anoffice ~~increase~~build inout ~~strategic investments purchased~~ of $1.4.0 million, and aan ~~decrease~~increase in ~~cash~~capitalized ~~received~~software ~~from~~development ~~the~~costs ~~sale~~ of ~~strategic investments of~~ $0.89 million, ~~partially~~ offset by ~~lower~~a ~~purchases~~decrease ofin ~~property~~the ~~and~~purchase ~~equipment~~of ~~and~~strategic ~~capitalized~~investments ~~software development costs~~ of $0.8 million.

Cash Flows from Financing Activities

Net cash provided by financing activities for the ~~nine~~three months ended ~~April~~October 3031, 2025 was $810.64 million compared to ~~minimal~~$415.5 ~~cash~~million provided by financing activities for the ~~nine~~three months ended ~~April~~October 3031, 2024. This $81415.61 million ~~increase~~decrease in cash provided ~~by financing activities~~ was due to $~~671~~413.86 million in net cash received, ~~net~~during ofthe ~~paid~~three ~~issuance~~months ~~costs~~ended October 31, ~~from~~2024 related to the issuance of the 2029 Convertible Senior ~~Notes~~notes and ~~$3.2~~related ~~million~~capped ~~cash received from the issuance of common stock upon exercise of stock options~~calls, ~~partially~~in ~~offset~~addition ~~by $353.5 million used~~ to ~~retire~~the ~~$220.9~~retirement ~~million~~of ~~aggregate~~a ~~principal~~portion ~~amount~~ of the 2025 Convertible Senior ~~Notes, $179~~notes.1 ~~million~~The ~~used~~remaining todecrease ~~settle the outstanding principal~~ of ~~the 2025 Convertible Senior Notes at maturity,~~ $581.85 million ~~used~~is toattributable ~~purchase capped calls related~~ to ~~the~~fewer ~~2029~~proceeds ~~Convertible~~from ~~Senior~~stock ~~Notes,~~option ~~and $2~~exercises.~~1 million used to establish our revolving credit facility.~~

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Commitments and Contractual Obligations

~~Except~~There ~~as discussed below, there~~ have been no material changes in our contractual obligations and commitments other than in the ordinary course of business since our fiscal year ended July 31, ~~2024~~2025.

~~During~~See ~~the~~our ~~nine~~Annual ~~months~~Report ~~ended~~on ~~April 30,~~Form ~~2025,~~10-K ~~we retired $220.9 million aggregate principal amount of the 2025 Convertible Senior Notes in cash~~ for ~~$354.0 million, which included related accrued interest of $0.5 million, and issued $690.0 million aggregate principal amount of~~ the ~~2029~~fiscal ~~Convertible~~year ~~Senior~~ended ~~Notes. In March 2025~~July 31, ~~we fully settled at maturity the outstanding $179.1 million aggregate principal amount of the~~ 2025 ~~Convertible~~for ~~Senior~~additional ~~Notes~~information ~~through~~regarding ~~aggregate~~our ~~cash~~contractual ~~payments totaling $180~~obligations.~~2 million, which included related accrued interest of $1.1 million. See Note 6 “Debt.”~~

~~See our Annual Report on Form 10-K for the fiscal year ended July 31, 2024 for additional information regarding our contractual obligations.~~38

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Off-Balance Sheet Arrangements

Through ~~April~~October 3031, 2025, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in interest rates and foreign currency exchange rates. We do not hold or issue financial instruments for trading purposes.

Interest Rate Sensitivity

Our exposure to market risk for changes in interest rates relates primarily to our cash, cash equivalents, and investments. Our cash, cash equivalents, and investments as of ~~April~~October 3031, 2025 and July 31, ~~2024~~2025 were $1,~~243~~409.7 3 million and $1,~~129~~483.5 2 million, respectively, primarily consisting of cash, money market funds, corporate debt securities, U.S. government and agency debt securities, commercial paper, asset-backed securities, and non-U.S. government securities, which include state, municipal, and foreign government securities. Changes in interest rates, primarily in the United States, affect the interest earned on our cash, cash equivalents, and investments, and their market value. A hypothetical one percent increase in interest rates is estimated to result in a decrease of $56.21 million and $35.3 million in the market value of our available-for-sale securities as of ~~April~~October 3031, 2025 and July 31, ~~2024~~2025, respectively. Any realized gains or losses resulting from such interest rate changes would only occur if we sold the investments prior to maturity.

Additionally, our 2025 Credit Facility, which was undrawn as of ~~April~~October 3031, 2025, bears interest at floating rates, including (i) for U.S. Dollar-denominated loans, at our option, either the bank’s base rate plus 0.25% to 1.25% per annum or term SOFR (as defined in the Credit Agreement) plus 1.25% to 2.25% per annum, and (ii) for alternative currency-denominated loans, the applicable alternative currency rate plus 1.25% to 2.25% per annum, with margins determined based on our total net leverage ratio, thus exposing us to potential interest rate fluctuations should we decide to access the facility.

Foreign Currency Exchange Risk

Our results of operations, ARR, and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Australian Dollar, British Pound, Canadian Dollar, Euro, Indian Rupee, and Polish Zloty, the currency of the locations within which we have significant operations. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. We believe our operating activities act as a natural hedge for a substantial portion of our foreign currency exposure because we typically collect revenue and incur costs in the currency of the location in which we provide our services. However, our relationships with our customers are long-term in nature so it is difficult to predict if our operating activities will provide a natural hedge in the future. Additionally, changes in foreign currency exchange rates can affect our financial results due to transaction gains or losses related to revaluing certain monetary asset and monetary liability balances that are denominated in currencies other than the functional currency of the entity in which they are recorded. Our monetary assets and liabilities denominated in currencies other than the functional currency of the entity in which they are recorded consist primarily of trade accounts receivable, unbilled accounts receivable, trade accounts payable, and intercompany receivables and payables. For the ~~nine~~three months ended ~~April~~October 3031, 2025 and 2024, we recorded a foreign currency ~~gain~~loss of $145.0 3 million and ~~a foreign currency loss of~~ $113.5 8 million, respectively, as a component of other income (expense) in our condensed consolidated statement of operations primarily due to currency exchange rate fluctuations. We will continue to experience fluctuations in foreign currency exchange rates. If a hypothetical ten percent change in foreign currency exchange rates were to occur in the future, the resulting transaction gain or loss is estimated to be approximately $5566.19 million. As our international operations grow, we will continue to assess our approach to managing our risk relating to fluctuations in currency rates.

Fair Value of Financial Instruments

We do not have material exposure to market risk with respect to investments in financial instruments, as our investments primarily consist of high-quality liquid investments purchased with a remaining maturity of three years or less. We do not use derivative financial instruments for speculative or trading purposes. However, this current position does not preclude our adoption of specific hedging strategies in the future.

Our strategic investments in privately held securities are in various classes of equity. The particular securities we hold, and their rights and preferences relative to those of other securities within the capital structure, may impact the magnitude by which our investment value moves in relation to movements in the total enterprise value of the company in which we are invested. As a result, our investment in a specific company may move by more or less than any change in value of that overall company. In addition, the financial success of our investment in any company is typically dependent on a liquidity event, such as a public offering, acquisition, or other favorable market event reflecting appreciation to the value of our investment. All of our investments, particularly those in privately held companies, are therefore subject to a risk of partial or total loss of invested capital.

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ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that, as of such date, our disclosure controls and procedures were effective.

Inherent Limitations of Internal Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~April~~October 3031, 2025 identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1.Legal Proceedings

From time to time, we are involved in legal proceedings that arise in the ordinary course of our business. Any such proceedings, whether meritorious or not, could be time consuming, costly, and result in the diversion of significant operational resources and/or management time.

Although the outcomes of legal proceedings are inherently difficult to predict, we are not currently involved in any legal proceeding in which the outcome, in our judgment based on information currently available, is likely to have a material adverse effect on our business or financial position. See Note 76 “Commitments and Contingencies,” to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, which are incorporated by reference herein.

ITEM 1A.Risk Factors

A description of the risks and uncertainties associated with our business is set forth below. You should carefully consider such risks and uncertainties, together with the other information contained in this Quarterly Report on Form 10-Q, and in our other public filings. If any of such risks and uncertainties actually occurs, our business, financial condition or results of operations could differ materially from the plans, projections and other forward-looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q and in our other public filings. In addition, if any of the following risks and uncertainties, or if any other risks and uncertainties, actually occurs, our business, financial condition or results of operations could be harmed substantially, which could cause the market price of our stock to decline, perhaps significantly.

SUMMARY OF MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS

The principal risks and uncertainties affecting our business include the following:

•our quarterly and annual results may fluctuate significantly due to a number of factors, including economic conditions, customer behavior, contract provisions and changes, operational costs and reliability, seasonality, and other uncertainties, which could impact our stock price;

•~~the~~our ~~market~~reliance ~~for~~on ~~cloud~~orders ~~services,~~from ~~including~~a ~~the~~relatively ~~migration~~small number of ~~our~~customers ~~existing~~in ~~term~~the ~~license~~P&C ~~customers~~insurance toindustry ~~cloud-based~~for ~~offerings~~a onsubstantial aportion ~~subscription~~of ~~basis,~~our revenue and Annual Recurring Revenue (“ARR”) and the ~~long-term~~related ~~pricing~~substantial ~~commitments~~negotiating inleverage ~~our~~of ~~customer~~these ~~contracts~~customers, ~~that~~as ~~are~~well ~~based~~as our dependence on ~~available~~customer ~~information~~renewals and ~~estimates~~expansions ~~about~~of ~~our~~their ~~future~~contracts ~~costs~~for ~~that~~our products, which may ~~change~~not occur;

•our reliance on orders from a relatively small number of customers in the property and casualty (“P&C”) insurance industry for a substantial portion of our revenue and Annual Recurring Revenue (“ARR”) and the related substantial negotiating leverage of these customers, as well as our dependence on customer renewals and expansions of their contracts for our products, which may not occur;

•lengthy and variable sales and implementation cycles, with factors beyond our control, including competitive pressures, potentially causing expenditure of significant time and resources prior to revenue generation;

•competitive attributes of our applications, including the need to continuously develop and enhance our products to satisfy customer demands, maintain market acceptance, respond to competitive pressures, and meet local requirements of international markets;

•failure to grow our business and manage our expanding operations, including internationally, effectively;

•~~exposure~~our toability ~~risks in relation~~ to ~~data~~expand ~~security~~adoption ~~breaches~~ of our cloud-based products, ~~unauthorized~~migrate ~~access~~existing toterm ~~our~~license customers’ orto ~~employees’~~cloud-based ~~data,~~offerings oron ~~breaches~~a ofsubscription ~~third-party~~basis, ~~technologies~~ and ~~systems~~manage welong-term ~~rely~~pricing oncommitments ~~and~~in ~~the~~our ~~related~~customer ~~impact~~contracts onthat ~~our~~are ~~ability~~based toon ~~effectively~~available ~~operate~~information ~~our~~and ~~cloud~~estimates ~~environment~~about ~~for~~future ~~our~~costs ~~customers;~~that may change;

•~~issues~~exposure into ~~the~~risks ~~development~~in ~~and~~relation ~~use~~to ofdata ~~artificial~~security ~~intelligence~~incidents ~~(“AI”),~~or asbreaches ~~well~~of asour ~~the~~cloud-based ~~use~~products, ofunauthorized AIaccess byto our ~~workforce,~~customers’ ~~combined~~or ~~with~~employees’ andata, ~~uncertain~~and ~~regulatory~~the ~~environment,~~related ~~may~~impact ~~result~~on inour ~~reputational~~ability ~~harm,~~to ~~liability,~~effectively oroperate ~~other~~our ~~adverse~~cloud ~~consequences~~environment tofor our ~~business operations~~customers;

•~~retaining~~issues ~~existing~~in the development and ~~hiring~~use ~~new~~of ~~personnel~~AI, ~~including~~as ~~managing~~well ~~personnel~~as inthe ause ~~hybrid~~of ~~work~~AI by our workforce, combined with an uncertain regulatory environment;, may result in reputational harm, liability, or other adverse consequences to our business operations;

•~~errors~~retaining orexisting ~~failures~~and inhiring ~~our~~new ~~products or services~~personnel, asincluding ~~well~~managing asa ~~service~~hybrid ~~interruptions~~and orgeographically ~~failure~~distributed of the third-party service providers we rely on, could impair the availability of our products, harm our reputation, lead to customer loss, increase liability claims, or harm our future financial resultsworkforce;

50•errors or failures in our products or services, as well as failures, security vulnerabilities, or service interruptions of third-party technologies and service providers we utilize, could impair the availability of our products, harm our reputation, lead to customer loss, increase liability claims, or harm our future financial results;

•dependence on the quality and effectiveness of our professional services, technical support, and SI partners, and successful development of our global direct sales force and the expansion of our relationships with SI partners;

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•dependence on the quality and effectiveness of our professional services, technical support, and system integrator (“SI”) partners, and successful development of our global direct sales force and the expansion of our relationships with SI partners;

•factors that could affect our gross and operating margins, including revenue mix and costs related to operating, securing, and enhancing our subscription services;

•pursuing acquisitions or partnerships may lead to management distractions, integration challenges, increased costs, and stockholder dilution, with risks including unforeseen difficulties, capital investment needs, and competitive pressures;

•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 and their impact on our stock price and its volatility and our customers, partners, vendors, or our business operations; and

•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.

Risks Related to our Business and Industry

We may experience significant quarterly and annual fluctuations in our results of operations due to a number of factors.

Our quarterly and annual results of operations may fluctuate significantly due to a variety of factors, many of which are outside of our control. This variability may lead to volatility in our stock price as investors and research analysts respond to quarterly fluctuations. In addition, comparing our results of operations on a period-to-period basis, particularly on a sequential quarterly basis, may not be meaningful. You should not rely on our past results as an indication of our future performance.

Factors that may affect our results of operations include:

•the impact of economic downturns and related market volatility caused by economic volatility, inflation, bank failures and associated financial instability and crises, political uncertainties, or other national and worldwide events on our business and the businesses of our customers, partners, and vendors;

•our ability to attract new domestic and international customers and renew existing customers;

•seasonal buying patterns of our potential customers and our ability to sell additional software and services to existing customers;

•the proportion and timing of subscription sales as opposed to term software licenses, and the variations in revenue recognition between these contract types;

•changes in contract durations of term software licenses and renewals or modifications of customer contracts;

•increases in costs related to cloud operations, cybersecurity, product development, and services;

•our ability to ~~develop~~expand ~~and achieve~~ market adoption of cloud-based services, including the impact of our customers transitioning from term software licenses to subscription services;

•erosion in services margins or significant fluctuations in services revenue caused by changing customer demand, negotiated professional services billing rates, investments in customer implementation and migration projects, utilization rates, or fixed fee contracts;

•our ability to enter into contracts on favorable terms, including terms related to price, payment timing, service levels, acceptance, and product delivery, especially with customers and prospects that possess substantial negotiating leverage and procurement expertise;

•the incurrence of penalties or having to renegotiate contract terms for failing to meet certain contractual obligations, including service levels, product development cycles and functionality, and implementation times and objectives;

•security and privacy concerns related to employee data, customer data, and systems that are accessed or otherwise used by our hybrid workforce and customers;

•employee retention, the ability to hire and onboard appropriate personnel, and the timing of hiring personnel and employee related expenses;

•our ability to realize expected benefits from our acquisitions and other strategic business transactions;

•reductions in our customers’ budgets for information technology purchases and delays in their purchasing decisions;

51•the impact of a recession or any other adverse global economic condition on our business, including public health crises, such as epidemics and pandemics, changes in political climate, geographic and political conflicts, and uncertainties with respect to trade tariffs, trade agreements, and other trade issues that may cause a delay in entering into, a failure to enter into, or cancellation of significant customer agreements or the fulfillment of professional service arrangements;

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•the impact of a recession or any other adverse global economic condition on our business, including public health crises, such as epidemics and pandemics, changes in political climate, geographic and political conflicts, trade tariffs, trade agreements, and other uncertainties that may cause a delay in entering into, a failure to enter into, or cancellation of significant customer agreements or the fulfillment of professional service arrangements;

•adverse litigation judgments, dispute-related settlement payments, or litigation-related costs;

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•future accounting pronouncements, changes in accounting rules, new tax laws or regulations, or tax interpretations and our related accounting policies, interpretations, and controls;

•fluctuations in foreign currency exchange rates; and

•the effects of inflation or deflation in the economies in which we operate, and their impact on interest rates, collection timeframes, and our revenue given the multi-year term of most customer agreements.

The foregoing factors are difficult to forecast, and these, as well as other factors, could materially adversely affect our quarterly and annual results of operations. Further, due to multi-year term licenses and multi-year term license renewals, increased cloud-based subscription services, timing of and billing rates for professional services engagements, and other ongoing aspects of our business, it is challenging to forecast our quarterly and annual results.

We believe our ability to adjust spending quickly enough to compensate for a potential revenue shortfall is limited and our inability to do so could magnify the adverse impact of a potential revenue shortfall on our results of operations. If we fail to achieve our quarterly forecasts, if our forecasts fall below the expectations of investors or research analysts, or if our actual results fail to meet the expectations of investors or research analysts, our stock price may decline.

IfOur wereliance doon ~~not~~a ~~receive~~relatively ~~customer~~small ornumber ~~market acceptance~~ of ~~our~~P&C ~~business~~insurance ~~model~~customers ~~focused~~for ona ~~delivering~~significant ~~cloud-based~~portion ~~offerings~~of onour arevenue ~~subscription~~and ~~basis,~~ARR orand ifthe wesubstantial ~~fail~~negotiating toleverage ~~meet~~of ~~stipulated~~these ~~service~~customers ~~levels~~could ~~with~~adversely affect our ~~subscription services~~business, ~~our~~ results of operations, ~~could~~and befinancial ~~harmed~~condition.

ToOur ~~address~~revenue ~~demand~~and ~~trends~~ARR are dependent on orders from customers in the P&C insurance industry, wewhich ~~offer~~may ~~customers~~be ~~the~~adversely ~~use~~affected ofby ~~our~~worldwide ~~software~~economic, ~~products~~environmental, ~~through~~public ahealth, ~~cloud-based~~and ~~offering~~political ~~sold~~conditions. onA arelatively ~~subscription~~small ~~basis~~number inof ~~addition~~customers tohave ~~our~~historically ~~self-managed~~accounted ~~offering.~~for ~~Our~~a ~~subscription~~significant ~~business~~portion ~~model~~of ~~has~~our ~~required~~revenue. aThe ~~considerable~~composition ~~investment~~ of ~~technical,~~our ~~operational,~~individual ~~financial,~~top ~~legal,~~customers ~~and~~has ~~sales~~varied ~~resources. Our software~~ and ~~cloud~~will ~~services~~continue ~~involve~~to ~~the~~vary ~~storage~~from ~~and~~year ~~transmission~~to ofyear. ~~customer~~Our ~~data,~~ten ~~including~~largest incustomers ~~some~~accounted ~~cases,~~for ~~personal~~20% ~~data,~~ and ~~security~~22% ~~breaches~~of ~~could~~our ~~result~~revenue in ~~the~~fiscal ~~loss~~years of2025 ~~this~~and ~~information~~2024, ~~which~~respectively. inAdditionally, ~~turn~~our ~~could~~ten ~~result~~largest incustomers ~~litigation,~~based ~~breach~~on ofARR ~~contract~~accounted ~~claims,~~for ~~indemnity~~20% ~~obligations,~~of ~~harm~~total toARR ~~our~~at ~~reputation~~July 31, ~~and~~2025. ~~other~~Customers ~~liabilities~~ for ~~us.~~these ~~Our~~metrics ~~cloud~~are ~~offerings~~calculated ~~will~~at ~~continue to be~~ the ~~focus~~parent ofcorporation ~~existing resources~~level, ~~require~~while usour tototal ~~hire~~customer ~~additional~~count ~~resources,~~is ~~and~~based ~~increase~~on ~~costs,~~entities ~~especially~~that inhave ~~cost~~placed oforders ~~subscription~~for ~~and~~our ~~support revenue, cost of~~ services ~~revenue,~~or ~~and research and development, in any given period~~products. WeWhile ~~may~~we ~~not~~expect bethis ~~able~~reliance to ~~efficiently~~decrease ~~scale~~over ~~such~~time ~~investments~~as toour ~~meet~~revenue, customer ~~demand~~base, and ~~expectations,~~subscription ~~which~~services ~~may~~as ~~impact~~a ~~our~~percentage ~~long-term growth and results~~ of ~~operations.~~revenue ~~Further~~grow, ~~the~~we ~~increase~~expect inthat ~~some~~we ~~costs~~will ~~associated~~continue ~~with~~to ~~our~~depend ~~cloud~~upon ~~services,~~a ~~such~~relatively assmall ~~the~~number ~~cost~~ of ~~third-party~~customers ~~infrastructure~~for ina ~~which~~significant weportion ~~rely~~of ~~to host~~ our ~~subscription~~revenue ~~services,~~and ~~may~~ARR befor ~~difficult~~the toforeseeable ~~predict~~future. ~~over~~As ~~time.~~a ~~Furthermore~~result, if we ~~may~~fail ~~assume~~to ~~greater~~successfully ~~responsibilities~~sell ~~for~~our ~~implementation~~products ofto ~~subscription~~one ~~services~~or ~~due~~more toof ~~our~~these ~~operating~~anticipated ~~and~~customers ~~maintaining~~in ~~the~~any ~~cloud~~particular ~~environment~~period ~~for~~or ~~our~~fail ~~customers.~~to Asidentify aadditional ~~result~~potential customers, weor ~~may~~if ~~face~~such ~~risks~~customers ~~associated~~purchase ~~with~~fewer ~~new~~of ~~and~~our ~~complex~~products ~~implementations~~ or ~~migrations~~professional services, ~~the~~defer ~~cost~~or ofcancel ~~which~~orders, ~~may~~fail ~~differ~~to ~~from~~renew ~~original~~their ~~estimates.~~license ~~Our~~or subscription ~~contracts~~agreements, ~~also~~or ~~contain~~otherwise ~~penalty~~terminate ~~clauses,~~or ~~for~~reduce ~~matters~~their ~~such~~relationship aswith ~~failing~~us, toour ~~meet~~business, ~~stipulated~~results ~~service~~of ~~levels~~operations, orand ~~other~~financial ~~contractual~~condition ~~provisions.~~would ~~Should~~be ~~these~~harmed. ~~penalties~~Additionally, beif ~~triggered,~~one ~~our~~or ~~results~~more of ~~operations~~these ~~may~~anticipated becustomers ~~adversely~~enters ~~affected.~~into ~~These~~or ~~penalties~~transitions ~~and~~to ~~costs~~a ~~could~~subscription ~~take~~agreement ~~the~~in ~~form~~any ofparticular ~~monetary~~period, ~~credits~~or ~~for~~if ~~current~~we orfail ~~future~~to ~~service~~achieve ~~engagements,~~the ~~reduced~~required ~~fees~~performance ~~for~~or ~~additional~~acceptance ~~services~~criteria orfor ~~products~~one or ~~upon~~more ~~renewal~~ of ~~existing~~this ~~agreements,~~relatively ~~and~~small anumber ~~customer’s~~of ~~renegotiation~~customers, orour ~~refusal~~quarterly toand ~~pay~~annual ~~its~~results ~~contractually~~of ~~obligated~~operations ~~subscription~~may orfluctuate ~~service fees~~significantly.

~~Revenue~~Furthermore, ~~under~~some of our ~~cloud-based~~customers ~~subscription~~include ~~model~~the isworld’s ~~generally~~largest ~~recognized~~P&C ~~ratably~~insurers. ~~over~~These ~~the~~customers ~~term~~have significant bargaining power when negotiating new licenses or subscriptions or renewals of existing agreements, and have the ~~contract.~~ability ~~Ratable~~to ~~revenue~~buy ~~recognition~~similar ~~results~~products infrom ~~lower~~other ~~revenue~~vendors ~~than~~or wedevelop ~~otherwise~~such ~~would~~systems internally. These customers have ~~recognized~~and may continue to seek advantageous pricing and other commercial and performance terms that may require us to develop additional features in the ~~initial~~products ~~period~~we ofsell ~~the~~to ~~customer~~them ~~agreement~~or ~~under~~add ~~term~~complexity ~~license~~to our customer agreements. ~~This~~We ~~effect~~have onbeen ~~recognized~~required ~~revenue~~to, and may again be ~~magnified~~required into, ~~any~~reduce ~~fiscal~~the ~~year~~average ~~due~~selling toprice ~~the~~and ~~concentration~~ARR of our ~~orders~~products, inalong ~~the~~with ~~fourth~~agreeing ~~fiscal~~to ~~quarter.~~ramps ~~Additionally,~~that ~~the~~delay ~~timing~~reaching offully ~~our~~ramped ~~customers’~~ARR, ~~decision~~in response to ~~transition~~these ~~from~~pressures. ~~self-managed~~If ~~licenses~~we are unable to ~~cloud-based~~avoid ~~subscription~~reducing ~~services~~our ~~could~~average ~~negatively~~selling ~~affect~~prices or ARR, our ~~ability~~results toof ~~forecast~~operations ~~the~~could ~~timing~~be harmed. In addition, consolidation among P&C insurers may further concentrate our customer base and ~~amount~~increase the negotiating leverage of our ~~revenue~~large incustomers, ~~any~~which ~~period~~could heighten pricing and margin pressures.

Acceptance of our cloud-based solutions may not develop as anticipated and could be affected by a variety of factors, including, but not limited to, cost, security, reliability, performance, customer preference, perceived value associated with such offerings, public concerns regarding privacy, and the enactment of restrictive laws or regulations. If the market for our cloud-based solutions generally does not evolve as expected, it could result in reduced customer purchases, reduced renewal rates, and decreased revenue, any of which will adversely affect our business, results of operations, or financial condition. Further, for any of our existing customers that have not yet transitioned to our cloud-based offering, any perceived negative impacts or incremental costs associated with the transition, or an accelerated transition schedule, may lead to customer dissatisfaction and provide our competitors with an opportunity to acquire these customers.

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We are continually updating our existing products and developing new products in an effort to offer customers greater choices on how they utilize our software. As our business practices in this area develop and evolve over time, we may be required to revise our current subscription agreements, which may result in revised terms and conditions that impact how we recognize revenue and the costs and risks associated with these offerings. Whether our product development efforts or business model will prove successful and accomplish our business objectives is subject to numerous uncertainties and risks, including, but not limited to, customer demand, our ability to further develop, manage, and scale infrastructure, our ability to include functionality and usability in such offerings that address customer requirements, our customers’ ability to successfully migrate to and implement our subscription services, tax and accounting implications, and our costs.

In addition, the metrics we and our investors use to evaluate our business model may evolve over the course of time as significant trends emerge. It may be difficult, therefore, to accurately determine the impact on our business on a contemporaneous basis, or to clearly communicate the appropriate metrics to our investors. If we are unable to sell our cloud offerings in light of the foregoing risks and uncertainties, our reputation could suffer and our results of operations could be harmed, which may cause our stock price to decline.

We have relied and expect to continue to rely on orders from a relatively small number of customers in the P&C insurance industry for a substantial portion of our revenue and ARR, and the loss of any of these customers would significantly harm our business, results of operations, and financial condition.

Our revenue and ARR are dependent on orders from customers in the P&C insurance industry, which may be adversely affected by worldwide economic, environmental, public health, and political conditions. A relatively small number of customers have historically accounted for a significant portion of our revenue. The composition of our individual top customers has and will vary from year to year. In fiscal years 2023 and 2024, our ten largest customers accounted for 23% and 22% of our revenue, respectively. Additionally, our ten largest customers based on ARR accounted for 22% of total ARR at July 31, 2024. Customers for these metrics are calculated at the parent corporation level, while our total customer count is based on entities that have placed orders for our services or products. While we expect this reliance to decrease over time as our revenue, customer base, and subscription services as a percentage of revenue grows, 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. As a result, if we fail to successfully sell our products to one or more of these anticipated customers in any particular period or fail to identify additional potential customers or such customers purchase fewer of our products or professional services, defer or cancel orders, fail to renew their license or subscription agreements or otherwise terminate or reduce their relationship with us, our business, results of operations, and financial condition would be harmed. Additionally, if one or more of these anticipated customers enters into or transitions to a subscription agreement in any particular period, or if we fail to achieve the required performance or acceptance criteria for one or more of this relatively small number of customers, our quarterly and annual results of operations may fluctuate significantly.

Our sales and implementation cycles are lengthy and variable, depend upon factors outside our control, and could cause us to expend significant time and resources prior to generating revenue.

The typical sales cycle for our products is lengthy and unpredictable, requires pre-purchase evaluation by a significant number of employees in our customers’ organizations, often involves a significant operational decision by our customers, and could be affected by factors outside of our control. Our sales efforts involve educating our customers about the use and benefits of our products, including the technical capabilities of our products, the potential cost savings achievable by organizations deploying our products, and the benefits and risks associated with cloud-based services. Customers typically undertake a significant evaluation process, which frequently involves not only our products, but also those of our competitors. We spend substantial time, effort, and money in our sales efforts without any assurance that our efforts will produce sales, and our customers have significant negotiating power during the sales process which may result in a lengthy sales cycle and significant contractual complexity. Additionally, we may be unable to predict the size and terms of the initial contract until very late in the sales cycle, which affects our ability to accurately forecast revenue and ARR. In addition, if we commit to include specific features in our base product offering at the request of a customer or group of customers, we may be unable to recognize revenue until the specific features have been delivered with our products. ~~Providing~~or ~~this additional functionality may~~ be ~~time~~subject ~~consuming and may involve factors that are outside of our control. Customers may also insist that we commit~~ to ~~certain~~penalties ~~time frames in which systems built around our products will be operational~~ or ~~that~~costs. ~~once~~Providing ~~implemented~~this ~~our~~additional ~~products~~functionality ~~will~~may be ~~able~~time toconsuming ~~meet certain operational requirements. Our ability to meet such timeframes~~ and ~~requirements~~ may involve factors that are outside of our control, and failure to meet such timeframes and requirements could result in us incurring penalties and costs and/or making additional resource commitments, which would adversely affect our business and results of operations.

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control. Customers may also insist that we commit to certain time frames in which systems built around our products will be operational or that once implemented our products will be able to meet certain operational requirements. Our ability to meet such timeframes and requirements may involve factors that are outside of our control, and failure to meet such timeframes and requirements could result in us incurring penalties and costs and/or making additional resource commitments, which would adversely affect our business and results of operations.

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. Implementing our products typically involves integration with our customers’ and third parties’ systems and creating or updating the digital experience, as well as adding customer and third-party data to our platform. This process can be complex, time consuming, and expensive for our customers and can result in delays in the implementation and deployment of our products. 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. Such failure could result from deficiencies in our product capabilities, performance issues, or inadequate service engagements by us, our SI partners, or our customers’ employees, the latter two of which are beyond our direct control. The consequences of such failure could include, and have included, monetary credits for current or future service engagements, reduced fees for additional products or upon renewal of existing products, potential reversals of previously recognized revenue, renegotiating existing customers’ contractual terms, and a customer’s refusal to pay their contractually obligated license, subscription, support, or service fees. In addition, time-consuming and delayed implementations may also increase the amount of services personnel we must allocate to the implementation for it to be successful, thereby increasing our costs and adversely affecting our business, results of operations, and financial condition.

Furthermore, our sales and implementation cycles could be interrupted or affected by other factors outside of our control. We have had, and may in the future have, restrictions on travel, which are in accordance with recommendations by the U.S. government, The Centers for Disease Control and Prevention, and other equivalent agencies in the locations in which we operate, and our customers, SI partners, and prospects have likewise enacted their own preventative policies and travel restrictions. Widespread restrictions on travel and in-person meetings have affected and could, in the future, affect services delivery, delay implementations, and interrupt sales activity. We cannot predict the duration or the extent of adverse impacts from pandemics and other global events on our business, results of operations, and financial condition.

We face intense competition in our market, which could negatively impact our business, results of operations, and financial condition and cause our market share to decline.

The market for our products is intensely competitive. The competitors we face in any sale opportunity may change depending on, among other things, the line of business purchasing the software, the application or service being sold, the geography in which the customer is operating, and the size of the insurance carrier to which we are selling. For example, we are more likely to face competition from small independent firms when addressing the needs of small insurers. These competitors may compete on the basis of price, the time and cost required for implementation, custom development, or unique product features or functions. Outside of the United States, we are more likely to compete against vendors that may differentiate themselves based on local advantages in language, market knowledge, and pre-built content applicable to that jurisdiction. We also compete with vendors of horizontal software products that may be customized to address needs of the P&C insurance industry.

Additionally, many of our prospective customers operate firmly entrenched legacy systems, some of which have been in operation for decades. Our implementation cycles may be lengthy, variable, and require the investment of significant time and expense by our customers. These expenses and associated operating risks attendant on any significant process re-engineering and new technology implementation, may cause customers to prefer maintaining legacy systems. Also, maintaining these legacy systems may be so time consuming and costly for our potential customers that they do not have adequate resources to devote to the purchase and implementation of our products. We also compete against technology consulting firms that either helped create such legacy systems or may own, in full or in part, subsidiaries that develop software and systems for the P&C insurance industry. Further, as machine learning, AI technologies, including generative AI technologies, and automated decision-making technologies (collectively, “AI technologies”) continue to evolve, our existing and potential customers may leverage evolving AI technologies to develop their own solutions that could reduce or eliminate the need for our solutions.

As we expand our product portfolio, we may begin to compete with software and service providers we have not competed against previously. Such potential competitors offer data and analytics tools that may, in time, become more competitive with our offerings.

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, such as generative AI), or if our customers or potential customers replace our solutions with custom-built software, then our revenue could be adversely affected.

We expect the intensity of competition to remain high in the future, as the amount of capital invested in current and potential competitors, including insurtech companies, has increased significantly in recent years. As a result, our competitors or potential competitors may develop improved product or sales capabilities, or even a technology breakthrough that disrupts our market. Continuing intense competition could result in increased pricing pressure, increased sales and marketing expenses, and greater investments in research and development, each of which could negatively impact our profitability. In addition, the failure to increase, or the loss of, market share would harm our business, results of operations, financial condition, and/or future prospects. Our larger current and potential competitors may be able to devote greater resources to the development, promotion, and sale of their services and products than we can devote to ours, which could allow them to respond more quickly than we can to new technologies and changes in customer needs, thus leading to their wider market acceptance. We may not be able to compete effectively and competitive pressures may prevent us from acquiring and maintaining the customer base necessary for us to increase our revenue and profitability.

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In addition, the insurance industry is evolving rapidly, and we anticipate the market for cloud-based solutions will become increasingly competitive. If our current and potential customers move a greater proportion of their data and computational needs to the cloud, new competitors may emerge that offer services either comparable or better suited than ours to address the demand for such cloud-based solutions, which could reduce demand for our offerings. To compete effectively we will likely be required to increase our investment in research and development, as well as the personnel and third-party services required to improve reliability and security and lower the cost of delivery of our cloud-based solutions. New competitors are able to develop cloud-based solutions without the cost of maintaining or migrating existing solutions and satisfying existing customer requirements, which may allow them to introduce new services and products more quickly and on more efficient technologies than us. This may increase our costs more than we anticipate and may adversely impact our results of operations.

Our current and potential competitors may also establish cooperative relationships among themselves or with third parties to further enhance their resources and offerings. Current or potential competitors may be acquired by other vendors or third parties with greater available resources. As a result of such acquisitions, our current or potential competitors might be more able than we are to adapt quickly to new technologies and customer needs, to devote greater resources to the promotion or sale of their products, to initiate or withstand substantial price competition, or to take advantage of emerging opportunities by developing and expanding their product offerings more quickly than we can. Additionally, they may hold larger portfolios of patents and other intellectual property rights as a result of such relationships or acquisitions. If we are unable to compete effectively with these evolving competitors for market share, our business, results of operations, and financial condition could be materially and adversely affected.

Failure to manage our expanding operations effectively could harm our business.

We have experienced consistent growth and expect to continue toexpanding ~~expand~~ our operations, including increasing the number of employees and broadening the locations and scope of our international operations. In particular, we have been expanding and plan to continue to expand our operations in India. Additionally, we operate a hybrid work environment in which a large portion of our workforce works either in-person on a part-time basis or remotely on a permanent basis, which brings challenges to managing our business and workforce. This expansion, ~~and~~combined with the complexity of managing a hybrid ~~work~~and ~~environment~~geographically distributed workforce, has placed, and will continue to place, a significant strain on our ~~operational~~managerial, ~~and~~administrative, operational, financial ~~resources~~ and ~~our~~other ~~personnel~~resources. ToFurther, ~~manage~~ our ~~anticipated~~ability ~~future~~to ~~operational~~expand ~~expansion~~geographically ~~effectively~~depends, wein ~~must~~large ~~continue~~part, toon ~~maintain~~our ~~and~~ability ~~may need~~ to ~~enhance~~attract, ~~our~~retain, ~~information technology~~ and ~~cybersecurity~~integrate ~~infrastructure~~managers ~~and~~with ~~financial~~the ~~and~~appropriate ~~accounting~~skills ~~systems~~to ~~and~~lead ~~controls,~~the ~~and~~local ~~manage~~business ~~expanded operations~~ and employees ~~in geographically distributed locations~~. ~~Our growth could require significant capital expenditures and may divert financial resources from other projects~~Similarly, ~~such~~our asprofitability ~~the~~depends ~~development~~on ofour ~~new,~~ability ~~enhanced,~~to oreffectively ~~more~~utilize ~~secure~~personnel ~~products~~with ~~or investments in cloud operations. If we increase~~ the ~~size~~right mix of ~~our~~skills ~~organization~~and ~~without~~experience ~~experiencing~~to anperform ~~increase~~services infor ~~sales of~~ our ~~products~~customers, weincluding ~~will~~our ~~experience~~ability ~~reductions~~to intransition ~~our~~employees ~~gross~~to ~~and~~new ~~operating~~assignments ~~margins~~on ~~and~~a ~~net~~timely ~~income~~basis. If we are unable to effectively ~~manage~~deploy our ~~expanding~~employees ~~operations~~globally oron ~~hybrid~~a ~~work~~timely ~~environment,~~basis ~~our~~to ~~expenses~~fulfill ~~may~~the ~~increase~~needs ~~more~~of ~~than~~our ~~expected~~customers, our ~~revenue~~reputation could ~~decline~~suffer orand ~~grow~~our ~~more~~ability ~~slowly~~to ~~than~~attract ~~expected,~~new ~~and~~customers we may be ~~unable to implement our business strategy~~harmed.

~~Our~~To ~~large~~manage ~~customers~~our ~~have~~anticipated ~~substantial~~future ~~negotiating~~operational ~~leverage~~expansion effectively, ~~which~~we ~~may~~must ~~require~~continue ~~that~~to wemaintain ~~agree~~and may need to ~~terms~~enhance our information technology and ~~conditions~~cybersecurity ~~that~~infrastructure ~~result~~and infinancial ~~increased~~and ~~cost~~accounting ofsystems ~~sales~~and controls, ~~decreased~~and ~~revenue,~~manage expanded operations and ~~lower~~employees ~~average~~in ~~selling~~geographically ~~prices~~distributed locations. Our growth could require significant capital expenditures and ~~gross~~may ~~margins~~divert financial resources from other projects, ~~all~~such as the development of ~~which~~new, ~~could~~enhanced, ~~harm~~or more secure products or investments in cloud operations. If we increase the size of our ~~results~~organization without experiencing an increase in sales of our products, we will experience reductions in our gross and operating margins and net income. If we are unable to effectively manage our expanding operations or hybrid work environment, our expenses may increase more than expected, our revenue could decline or grow more slowly than expected, and we may be unable to implement our business strategy.

Some of our customers include the world’s largest P&C insurers. 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. These customers have and may continue to seek advantageous pricing and other commercial and performance terms that may require us to develop additional features in the products we sell to them or add complexity to our customer agreements. These customers may also delay making payments under existing agreements, or at renewal, in an attempt to obtain more favorable terms from us. 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 steeper ramps that delay reaching fully ramped ARR, in response to these pressures. If we are unable to avoid reducing our average selling prices or ARR, our results of operations could be harmed.

Issues in the development and use of AI, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to our business operations.

We use, ~~and are continuously incorporating, machine learning and~~ AI technologies in our offerings and business, and we are ~~making~~continuing to make investments in expanding our AI capabilities in our products, professional services, and tools, including ~~the~~by ~~ongoing~~enhancing ~~deployment~~existing or developing new product features and ~~improvement~~functionality ofthat ~~existing~~use ~~machine~~or ~~learning~~incorporate ~~and~~AI technologies. AI technologies, asare ~~well~~complex asand ~~developing~~are ~~new~~rapidly ~~product~~evolving. ~~features~~We ~~using~~expect ~~generative~~that ~~and~~increased ~~other~~investment will be required to continuously improve our use of AI technologies. AIAs ~~technologies~~with ~~are~~many ~~complex~~technological innovations, ~~and~~there ~~generative~~are AIsignificant ~~technologies,~~risks involved in ~~particular~~developing, ~~are~~maintaining ~~rapidly~~and ~~evolving.~~deploying Wethese ~~face~~technologies ~~significant~~and ~~competition~~there ~~from~~can ~~other~~be ~~companies~~no asassurance ~~well~~that asthe anusage ~~evolving~~of ~~regulatory~~or ~~landscape~~our investments in ~~relation~~such totechnologies ~~these~~will ~~technologies.~~always ~~The~~enhance ~~introduction~~our ofproducts AIor ~~technologies~~services or be beneficial to our business, including ~~generative~~our efficiency or profitability. The use of AI, ~~into~~technologies in new or existing ~~products~~offerings may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or ~~security~~cybersecurity risks, privacy concerns, ethical challenges, or other complications that could adversely affect our business, reputation, or financial results.

55The complexity of our products that incorporate machine learning and AI technologies could result in unforeseen delays or expenses, or undetected defects, bugs, or new or unknown cybersecurity risks, vulnerabilities, and challenges, which may harm the market acceptance of new products, damage our reputation with current or prospective customers, cause significant remediation expenses, and may harm our business, results of operations, and financial condition.

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The ~~complexity~~uncertainty ofaround ~~our~~new ~~products that incorporate machine learning~~ and emerging AI technologies ~~could~~may ~~result~~require additional investment in ~~unforeseen~~the ~~delays~~development orand ~~expenses,~~maintenance orof ~~undetected~~proprietary ~~defects,~~datasets ~~bugs,~~and ormachine ~~security~~learning ~~vulnerabilities~~models, ~~which~~development ~~may harm the market acceptance~~ of new ~~products,~~approaches ~~damage~~and ~~our~~processes ~~reputation~~to ~~with~~provide ~~current~~attribution or ~~prospective~~remuneration ~~customers,~~to ~~cause~~creators ~~significant~~of ~~remediation~~training ~~expenses~~data, and ~~may~~development ~~harm our business, results~~ of ~~operations,~~appropriate protections and ~~financial~~safeguards ~~condition.~~for ~~Our~~handling ~~products~~the ~~may~~use ~~contain~~of ~~defects~~customer ~~when~~data ~~they~~with ~~are~~such ~~first introduced or as new versions or enhancements are released~~technologies, orwhich ~~their release~~ may be ~~delayed~~costly ~~due~~and ~~to unforeseen difficulties during development. Additionally, our products may have undiscovered vulnerabilities that~~ could beimpact ~~exploited by hackers or other malicious actors, potentially exposing~~ our ~~customers to adverse consequences~~expenses.

~~The~~AI ~~intellectual~~technologies ~~property~~may ~~ownership~~create ~~and~~content ~~license~~that ~~rights~~appears facially correct but is factually inaccurate or flawed. Our customers, ~~including~~employees, ~~without~~or ~~limitation~~others may rely on or use such factually incorrect or flawed content to their detriment, ~~copyright~~which may expose us to brand or reputational harm, ~~surrounding~~competitive AIharm, ~~technologies~~and/or ~~generally~~legal liability. In all events, the development, marketing and ~~generative~~use of AI technologies ~~specifically~~presents emerging ethical and social issues, ~~has~~and ~~not~~if ~~been~~we ~~fully~~enable ~~addressed~~or byoffer ~~competent~~solutions ~~legal~~that ~~tribunals~~draw scrutiny or ~~applicable~~controversy ~~laws~~due to their perceived or ~~regulations.~~actual ~~Further~~impact on customers or on society as a whole, ~~the~~we ~~use~~may experience brand or ~~adoption~~reputational ofharm, ~~third-party~~competitive AIharm, ~~technologies~~additional costs, ~~including~~and/or ~~generative~~legal liability. If our AI technologies development, ~~into~~deployment ~~our~~or ~~products~~governance is ineffective or inadequate, it may result in ~~exposure~~incidents tothat ~~claims~~impair the public acceptance of ~~copyright~~AI ~~infringement~~solutions or ~~other~~cause ~~intellectual~~harm ~~property-related~~to ~~causes~~individuals, ofcustomers ~~action~~or society, or result in our offerings not working as intended or producing unexpected outcomes.

~~The uncertainty around new and emerging AI technologies~~Further, ~~such as generative AI, may require additional investment in~~ the development ~~and maintenance~~ of ~~proprietary~~next-generation ~~datasets~~solutions ~~and~~that ~~machine~~utilize ~~learning models, development of~~ new ~~approaches~~ and ~~processes~~advanced tofeatures ~~provide~~using ~~attribution~~ or ~~remuneration~~incorporating toAI ~~creators~~technologies ofinvolves ~~training~~making ~~data,~~predictions ~~and~~regarding ~~development of appropriate protections and safeguards for handling~~ the ~~use~~willingness of ~~customer~~the ~~data~~market ~~with such technologies, which may be costly and could impact our expenses if we decide~~ to ~~expand~~adopt AIsuch technologies, ~~including~~over ~~generative~~legacy ~~AI, into our product offerings~~solutions. AIWe ~~technologies, including without limitation generative AI,~~ may ~~create~~be ~~content~~required ~~that appears facially correct but is factually inaccurate or flawed. Our customers, employees, or others may rely on or use such factually incorrect or flawed content~~ to ~~their~~commit ~~detriment,~~significant ~~which~~resources ~~may expose us~~ to ~~brand~~developing ornew ~~reputational~~products ~~harm,~~before ~~competitive~~knowing ~~harm,~~whether ~~and/or~~such ~~legal~~investment ~~liability.~~will In all events, the development, marketing and use of AI technologies, including, in particular, generative AI, presents emerging ethical and social issues, and if we enable or offer solutions that draw scrutiny or controversy due to their perceived or actual impact on customers or on society as a whole, we may experience brand or reputational harm, competitive harm, additional costs, and/or legal liability. If our AI development, deployment, content labeling or governance is ineffective or inadequate, it may result in ~~incidents~~products that ~~impair~~ the ~~public~~market ~~acceptance~~will ~~of AI solutions or cause harm to individuals, customers or society, or result in our offerings not working as intended or producing unexpected outcomes~~accept.

Further, the development of next-generation solutions that utilize new and advanced features, including AI and machine learning, involves making predictions regarding the willingness of the market to adopt such technologies over legacy solutions. We may be required to commit significant resources to developing new products before knowing whether such investment will result in products that the market will accept.

We may fail to set the optimal pricing and packaging of our products, which could negatively impact our growth strategy and ability to effectively compete in the market.

We may face challenges in selling our solutions to insurers that have internally developed their own proprietary software solutions, and we face competition from emerging and established vendors. As a result, these companies may offer lower prices, additional products or services, or other incentives that may impact our ability to maintain our prices.

The market for our products is constantly evolving, and our pricing and packaging decisions are made based on the best information available at the time, but may change significantly in the future from our expectations. We are continually analyzing and refining our pricing and packaging models to adapt to this dynamic environment. For example, we may need to change our pricing in future periods in response to market demands, the inflation, tariffs, and interest rate environment, or increased costs. Our contracts are often multi-year in duration and our inability to foresee changing events could impact the profitability of certain contracts. Further, as competitors introduce new products that compete with ours or reduce their prices, we may be unable to attract new customers or retain existing customers based on our historical pricing. As we expand internationally, we also must determine the appropriate price to enable us to compete effectively in each market. In addition, if our mix or bundle of products sold changes, then we may need to, or choose to, revise our pricing. As a result, we may be required or choose to reduce our prices or change our pricing model, which could harm our business, results of operations, and financial condition. In addition, we cannot predict whether our current or prospective customers, or the market in general, will accept these changes. If these adjustments do not gain acceptance, our business and operational results could be adversely affected. Failure to identify an optimal pricing and packaging strategy may harm our business and operational outcomes. Should customers reject our new or modified pricing plans, we may face increasing challenges in attracting new customers and retaining existing ones, particularly if we apply new pricing models to current customer subscriptions.

56If we are unable to expand adoption of our cloud-based subscription offerings, or if we fail to meet stipulated service levels, our results of operations could be harmed.

To address demand trends in the P&C insurance industry, we offer customers the use of our software products primarily through a cloud-based offering sold on a subscription basis. Our subscription business model has required, and will continue to require, a considerable investment of technical, operational, financial, legal, and sales resources. Our software and cloud services involve the storage and transmission of customer data, including in some cases, personal data, and security incidents or breaches could result in the loss of this information, which in turn could result in litigation, breach of contract claims, indemnity obligations, harm to our reputation, and other liabilities for us. Our cloud offerings will continue to be the focus of existing resources, require us to hire additional resources, and increase costs, especially in cost of subscription and support revenue, cost of services revenue, and research and development, in any given period. We may not be able to efficiently scale such investments to meet customer demand and expectations, which may impact our long-term growth and results of operations. Further, the increase in some costs associated with our cloud services, such as the cost of third-party infrastructure in which we rely to host our subscription services, may be difficult to predict over time. Furthermore, we may assume greater responsibilities for implementation of subscription services due to our operating and maintaining the cloud environment for our customers. As a result, we may face risks associated with new and complex implementations or migrations, the cost of which may differ from original estimates. 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 could 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, and a customer’s renegotiation or refusal to pay its contractually obligated subscription or service fees.

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Revenue under our cloud-based subscription model is generally recognized ratably over the term of the contract. Ratable revenue recognition results in lower revenue in the initial period of the customer agreement. This effect on recognized revenue may be magnified due to the concentration of our orders in the fourth fiscal quarter. Additionally, the timing of our customers’ decision to transition from self-managed licenses to cloud-based subscription services could negatively affect our ability to forecast the timing and amount of our revenue in any period.

While market acceptance of our cloud-based solutions has increased, our future growth depends on our ability to further expand adoption among existing and new customers. Factors such as cost, security, reliability, performance, customer preference, perceived value associated with such offerings, public concerns regarding privacy, and the enactment of restrictive laws or regulations could continue to affect the pace and extent of this expansion. If adoption or renewal of our cloud-based solutions does not grow as expected, we could experience reduced customer purchases, reduced renewal rates, lower ARR, and decreased revenue, any of which will adversely affect our business, results of operations, or financial condition.

In addition, the metrics we and our investors use to evaluate our business model may evolve over the course of time as significant trends emerge. It may be difficult, therefore, to accurately determine the impact on our business on a contemporaneous basis, or to clearly communicate the appropriate metrics to our investors. If we are unable to expand adoption of our cloud offerings in light of the foregoing risks and uncertainties, our reputation could suffer and our results of operations could be harmed, which may cause our stock price to decline.

Our business depends on customers renewing and expanding their license, support, and subscription contracts for our products. A decline in our customer renewals and expansions could harm our future results of operations.

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. Moreover, under certain circumstances, our customers have the right to cancel their licenses or subscriptions before they expire. We may not accurately predict future trends in customer renewals. Our customers’ renewal rates may fluctuate or decline because of several factors, including their satisfaction or dissatisfaction with our products, the prices of our products, the prices of products offered by our competitors, reduction in our customers’ business including their DWP, reductions in our customers’ spending levels due to the macroeconomic environment or other factors, or the sale of their operations to a buyer that is not a current customer. Additionally, customers may delay making payments under existing agreements, or at renewal, in an attempt to obtain more favorable terms from us.

Also, in ~~some~~certain limited cases, our customers have a right to exercise a perpetual buyout of their term licenses at the end of the initial contract term, which, if exercised, would eliminate future term license revenue. 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.

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, which may cause our stock price to decline.

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. As a result, a significantly higher percentage of our annual license revenue and cash receipts have historically been recognized in our fourth fiscal quarter. Since a substantial majority of our license revenue has annual renewals after the initial term of the contract, we expect to continue to experience this seasonality effect in subsequent years. Because of the upfront nature of revenue recognition for new multi-year term licenses and multi-year term license renewals, any quarter in which a significant agreement of this nature is signed, renewed, cancelled, or not renewed when scheduled to do so may be impacted.

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We currently anticipate that sales of, and revenue from, subscription services will continue to increase in the future. Subscriptions are recognized ratably over the term of the agreement after provisioning of the service. Over time, this may reduce the impact of our historic revenue seasonality, but in the near term the introduction of proportionally more subscription services into our revenue stream, together with their delayed and ratable recognition, will likely impact quarter-over-quarter and year-over-year revenue growth comparisons. Cash flow expectations and comparisons will most likely remain concentrated in the fourth fiscal quarter and could also be impacted because of the ramped nature of the annual installments of these multi-year subscription services arrangements. Additionally, ARR, which reflects the annualized recurring value of active customer contracts at the end of a reporting period, will be impacted by the seasonality of new sales orders and ramped nature of annual installments over the initial term, even if the revenue is recognized ratably.

Our quarterly growth in revenue or ARR also may not coincide with new orders or cash flows in a given quarter, which could mask the impact of seasonal variations. This mismatch is primarily due to the following reasons:

•our subscription arrangements are recognized ratably and only a portion, if any, of the revenue from an order is recognized in the same fiscal period of the order;

•subscription arrangements generally have ramped invoicing schedules over the initial term, which affects ARR and cash flows, but revenue is recognized ratably over the initial term;

•our term license agreements and multi-year term license renewals have annual billing arrangements even though revenue is recognized upfront for the entire committed term;

•as customers enter into a subscription agreement to migrate from an existing term license agreement or as we invest in certain cloud implementations to assist our customers with their migration to our cloud services, the timing of revenue recognition may be impacted by the allocation of revenue between different performance obligations;

•we may enter into agreements with future product delivery requirements, specified terms for product upgrades or functionality, acceptance terms, early termination rights, or unconditional return rights, which may require us to delay revenue recognition for a period of time; and

•revenue recognition may not occur in the period when the order is placed due to certain revenue recognition criteria not being met, such as delivery of the software or providing access to the subscription services.

Additionally, seasonal patterns may be affected by the timing of particularly large transactions and the number of renewals in a given quarter. Seasonal and other variations may cause significant fluctuations in our revenue, ARR, results of operations and cash flows, may make it challenging for an investor to predict our performance on a quarterly basis, and may prevent us from achieving our quarterly or annual forecasts or meeting or exceeding the expectations of research analysts or investors, which in turn may cause our stock price to decline.

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If we are unable to develop, introduce, and market new and enhanced versions of our products, we may be put at a competitive disadvantage.

Our success depends on our continued ability to develop, introduce, and market new and enhanced versions of our products to meet evolving customer requirements. Because our products are complex and require rigorous testing, new features, new functionality, and updates to our existing products can take significant time and resources to develop and bring to market. As we expand internationally, our products must be modified and adapted to comply with regulations and other requirements of the countries in which our customers do business. Additionally, market conditions may dictate that we change the delivery method of our products or the technology platform underlying our existing products or that new products be developed on different technology platforms, potentially adding material time and expense to our development cycles. The nature of these development cycles may cause us to experience delays between the time we incur expenses associated with research and development and the time we generate revenue, if any, from such expenses.

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. We have invested and intend to increase investments in research and development and cloud operations to meet these challenges. Revenue may not be sufficient to support the future product development that is required for us to remain competitive. If we fail to develop products in a timely manner that are competitive in technology and price or develop products that fail to meet customer demands, our market share will decline and our business and results of operations could be harmed. If our development efforts do not develop services, products or features that our customers find valuable, then we might incur impairment charges related to our capitalized software development costs.

~~We operate a hybrid in-person and remote workforce, which will subject us to certain operational challenges and risks and potential harm to our business.~~49

We operate a hybrid work environment in which a significant portion of our workforce works either in-person on a part-time basis or remotely on a permanent basis. As a result, we are subject to the challenges and risks of having a remote and hybrid workforce. For example, certain security systems in homes or other remote workplaces may be less secure than those used in our offices, which may subject us to increased security risks, including cybersecurity-related events, and expose us to risks of data or financial loss and associated disruptions to our business operations. Members of our workforce who work remotely may not have access to technology that is as robust as that in our offices, which could cause the networks, information systems, applications, and other tools available to those remote workers to be more limited or less reliable than in our offices. We may also be exposed to risks associated with the locations of remote workers, including compliance with local laws and regulations or exposure to compromised internet infrastructure. Allowing members of our workforce to work remotely may create intellectual property risk if employees create intellectual property on our behalf while residing in a jurisdiction with unenforced or uncertain intellectual property laws. Further, if employees fail to inform us of changes in their work location, we may be exposed to additional risks without our knowledge. Hybrid in-person as well as remote working may also subject us to other operational challenges and risks. For example, hybrid working arrangements may adversely affect our ability to recruit and retain personnel who prefer a fully remote or fully in-person work environment. Operating our business with both remote and in-person workers, or workers who work in flexible locations and on flexible schedules, could have a negative impact on our corporate culture, decrease the ability of our workforce to collaborate and communicate effectively, decrease innovation and productivity, or negatively affect workforce morale and retention rates. In addition, we expect to incur costs related to a hybrid workforce including, among other things, facilitating permanent remote work for a portion of our workforce and updating our offices to offer more collaborative workspaces. If we are unable to effectively operate a hybrid workforce, manage the cybersecurity and other risks of remote work, and maintain our corporate culture and workforce morale, our business could be harmed or otherwise negatively impacted.

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We operate a hybrid in-person and remote workforce, which will subject us to certain operational challenges and risks and potential harm to our business.

We, and many of our third-party providers, operate a hybrid work environment in which a significant portion of our workforce works either in-person on a part-time basis or remotely on a permanent basis. As a result, we are subject to the challenges and risks of having a remote and hybrid workforce. For example, certain security systems in homes or other remote workplaces may be less secure than those used in our offices, which may subject us to increased security risks, including cybersecurity-related events or incidents, and expose us to risks of data or financial loss and associated disruptions to our business operations. Members of our workforce who work remotely may not have access to technology that is as robust as that in our offices, which could cause the networks, information systems, applications, and other tools available to those remote workers to be more limited or less reliable than in our offices. We may also be exposed to risks associated with the locations of remote workers, including compliance with local laws and regulations or exposure to compromised internet infrastructure. Allowing members of our workforce to work remotely may create intellectual property risk if employees create intellectual property on our behalf while residing in a jurisdiction with unenforced or uncertain intellectual property laws. Further, if employees fail to inform us of changes in their work location, we may be exposed to additional risks without our knowledge. Hybrid in-person as well as remote working may also subject us to other operational challenges and risks. For example, hybrid working arrangements may adversely affect our ability to recruit and retain personnel who prefer a fully remote or fully in-person work environment. Operating our business with both remote and in-person workers, or workers who work in flexible locations and on flexible schedules, could have a negative impact on our corporate culture, decrease the ability of our workforce to collaborate and communicate effectively, decrease innovation and productivity, or negatively affect workforce morale and retention rates. In addition, we expect to incur costs related to a hybrid workforce including, among other things, facilitating permanent remote work for a portion of our workforce and updating our offices to offer more collaborative workspaces. If we are unable to effectively operate a hybrid workforce, manage the cybersecurity and other risks of remote work, and maintain our corporate culture and workforce morale, our business could be harmed or otherwise negatively impacted.

Real or perceived errors or failures in our products and professional services, including implementation and cloud support services, may affect our reputation, cause us to lose customers, and reduce sales and renewal rates, which may harm our business and results of operations and subject us to liability for breach of warranty claims.

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. Our products are often ~~installed and~~ used in large-scale computing environments with different operating systems, system management software, and equipment and networking configurations, which may ~~cause~~result in errors or failures ~~in our products~~ or ~~may~~ expose undetected errors, failures, or bugs in our products. 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. InAs ~~the~~is ~~past,~~common wewith ~~have~~complex ~~discovered~~ software, errors, failures, ~~and~~or bugs inmay ~~some~~be ofdiscovered in our offerings after their introduction. While we have implemented, and continually improve, a breadth of industry standard technology controls designed to ensure system stability and availability, we may introduce errors, design flaws, software bugs, and other issues into the environment, and fail to remediate them in a timely manner, which may cause serious or prolonged service interruptions to our customers. Additionally, our Guidewire cloud offerings rely on third-party services including AWS and Okta. Any material disruption, failure or slowdown in these services or the systems of third parties who we depend upon could cause outages or delays in our products, which could harm our reputation and adversely affect our results of operations.

We provide our customers with upfront estimates regarding the duration, resources, and costs associated with the migration and implementation of our products. Failure to meet these upfront estimates and the expectations of our customers could result from our product capabilities or professional service engagements performed by us, our SI partners, or our customers’ employees, the latter two of which are beyond our direct control. The consequences could include, and have included, monetary credits for current or future service engagements, reduced fees for additional products or upon renewal of existing products, renegotiation or modification of existing contracts that could potentially result in reversals of previously recognized revenue, or a customer’s refusal to pay its contractually obligated fees. In addition, time-consuming or difficult migrations and implementations may also increase the amount of services personnel we must allocate to the project, potentially without commensurate compensation, thereby increasing our costs, lowering our services margin, and adversely affecting our business, results of operations, and financial condition.

The license, subscription, and support of our products creates the risk of significant liability claims against us. Our license and subscription agreements with our customers contain provisions designed to limit our exposure to potential liability claims. It is possible, however, that the limitation of liability provisions contained in such agreements may not be enforced as a result of international, federal, state, and local laws or ordinances or unfavorable judicial decisions. Breach of warranty or damage liability, or injunctive relief resulting from such claims, could harm our results of operations and financial condition.

Our ability to sell our products is highly dependent on the quality of our professional services and technical support services and the support of our SI partners, and the failure of us or our SI partners to offer high-quality professional services or technical support services could damage our reputation and adversely affect our ability to sell our products to new customers and renew agreements with our existing customers.50

If we or our SI partners do not effectively assist our customers in deploying our products, successfully help our customers quickly resolve post-deployment issues, assist our customers in migrating from self-managed licenses to subscription services, and provide effective ongoing support, our ability to renew existing agreements and sell additional products to existing customers would be adversely affected and our reputation with potential customers could be damaged. Once our products are deployed and integrated with our customers’ existing information technology environment, our customers may depend on our technical support services and/or the support of SI partners or internal resources to resolve any issues relating to our products. High-quality support is critical for the continued successful marketing and sale of our products. In addition, as we continue to expand our operations internationally, our support organization will face additional challenges, including those associated with delivering support, training, and documentation in multiple languages. Many enterprise customers require higher levels of support than smaller customers. If we fail to meet the requirements of our larger customers, it may be more difficult to sell additional products to these customers or to transition existing license customers to subscription services, a key strategy for the growth of our revenue and profitability. In addition, as we further expand our cloud-based products, our professional services, cloud operations and support organizations will face new challenges, including hiring, training, and integrating a large number of new personnel with experience in delivering high-quality services and support for cloud-based offerings. Further, as we continue to rely on SIs to provide deployment, migration, and on-going services, our ability to ensure a high level of quality in addressing customer issues and providing a maintainable and efficient cloud environment could be diminished as we may be unable to control the quality or timeliness of the implementation and support of our products by our SI partners. Our failure to maintain high-quality implementation and support services, or to ensure that SIs provide the same, could have a material adverse effect on our business, results of operations, financial condition, and growth prospects.

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If we or our SI partners do not effectively assist our customers in deploying our products, successfully help our customers quickly resolve post-deployment issues, assist our customers in migrating from self-managed licenses to subscription services, and provide effective ongoing support, our ability to renew existing agreements and sell additional products to existing customers would be adversely affected and our reputation with potential customers could be damaged. Once our products are deployed and integrated with our customers’ existing information technology environment, our customers may depend on our technical support services and/or the support of SI partners or internal resources to resolve any issues relating to our products. High-quality support is critical for the continued successful marketing and sale of our products. In addition, as we continue to expand our operations internationally, our support organization will face additional challenges, including those associated with delivering support, training, and documentation in multiple languages. Many enterprise customers require higher levels of support than smaller customers. If we fail to meet the requirements of our larger customers, it may be more difficult to sell additional products to these customers or to transition existing license customers to subscription services, a key strategy for the growth of our revenue and profitability. In addition, as we further expand our cloud-based products, our professional services, cloud operations and support organizations will face new challenges, including hiring, training, and integrating a large number of new personnel with experience in delivering high-quality services and support for cloud-based offerings. Further, as we continue to rely on SI partners to provide deployment, migration, and on-going services, our ability to ensure a high level of quality in addressing customer issues and providing a maintainable and efficient cloud environment could be diminished as we may be unable to control the quality or timeliness of the implementation and support of our products by our SI partners. Our failure to maintain high-quality implementation and support services, or to ensure that SIs provide the same, could have a material adverse effect on our business, results of operations, financial condition, and growth prospects.

The use of AI by our workforce may present risks to our business.

Our workforce is exposed to and ~~uses~~is encouraged to use AI technologies for certain tasks related to our business. We have guidelines and policies specifically directed at the use of AI tools in the workplace. Nevertheless, the use of these AI tools, whether authorized or unauthorized, by our workforce, poses potential risks relating to the protection of data, including cybersecurity risk, exposure of our proprietary confidential information to unauthorized recipients, and the misuse of our or third-party intellectual property. Use of AI ~~technology~~technologies by our workforce, even when used consistently with our guidelines, may result in allegations or claims against us related to violation of third-party intellectual property rights, unauthorized access to or use of proprietary information, or failure to comply with open source software requirements. In addition, our employees may use AI tools for various ~~design and engineering~~ tasks, such as writing code and building content, and these AI technology tools may produce responses that appear facially correct but that are factually inaccurate or flawed, ~~responses~~which ~~that~~ could lead to errors in our decision-making, solution development, or other business activities, ~~which~~and ~~could~~ have a negative impact on our business, operating results and financial condition. Our ability to mitigate these risks will depend on our continued effective training, monitoring and enforcement of appropriate policies, guidelines and procedures governing the use of AI technology, and compliance by our workforce.

~~Revenue mix~~Further, aswhile ~~well~~use asof ~~declines~~AI intools to develop software code makes our ~~subscription~~development ~~and~~process ~~support~~more ~~gross~~efficient, ~~margin~~AI technologies have sometimes generated content that is “substantially similar” to proprietary or ~~our~~open ~~services~~source ~~gross~~code ~~margin~~on which the AI tool was trained. If the AI technologies we use generate code that is too similar to other proprietary code, or to software processes that are protected by patent, we could ~~adversely~~be ~~affect~~subject ~~our~~to ~~overall~~intellectual ~~gross~~property ~~margin~~infringement claims. We may also not be able to anticipate and ~~profitability~~detect security vulnerabilities in such AI generated software code. If our tools generate code that is too similar to open source code, we risk losing protection of our own proprietary code that is commingled with such code. Finally, to the extent we use third-party AI technologies to develop software code, the terms of use of these tools may state that the third-party provider retains rights in the generated code.

Our subscription and support revenue was 56% and 48% of total revenue for fiscal years 2024 and 2023, respectively. Our subscription and support revenue produces lower gross margins than our license revenue. The gross margin of our subscription and support revenue was 63% and 51% for fiscal years 2024 and 2023, respectively, while the gross margin for license revenue was 98% and 98% for fiscal years 2024 and 2023, respectively. We expect that subscription revenue will continue to increase as a percentage of total revenue as we contract with new cloud customers and existing customers migrate from term licenses to subscription services. Additionally, we are incurring expenses to operate our cloud services and manage our cloud operations which may not result in an improvement of our subscription and support gross margin. These trends, along with other factors, some of which may be beyond our control, may adversely affect our overall gross and operating margins. These other factors include the percentage of new customers that enter into subscription services agreements as compared to term license agreements, the revenue impact of allocating total contract consideration between license revenue and subscription and support revenue when existing customers transition from term license to subscription services agreements, investments in certain cloud implementations to assist our customers with their migration to our cloud services, continued growth and efficiency of our cloud operations and technical support teams, and the impact on the global economy as a result of economic volatility, inflation, tariffs, or other global events and disasters.

Further, our services revenue was 18% and 23% of total revenue for fiscal years 2024 and 2023, respectively. Our services revenue produces lower gross margin than either our license revenue or our subscription and support revenue. The gross margin of our services revenue was negative in both fiscal years 2024 and 2023. If we experience an increase in the percentage of total revenue represented by services revenue, due to acquisitions or other factors, such increase could reduce our overall gross and operating margins. Fluctuation in our services revenue can result from several factors, some of which may be beyond our control, including change in customer demand for our services team’s involvement in the implementation of and migration to new products, the rates we charge or discounts we offer for our services, our ability to bill our customers for all time incurred to complete a project, the extent and quality of implementations and migrations provided by our SI partners, the extent to which we subcontract services to those SI partners, and the impact on the global economy as a result of economic volatility, inflation, tariffs, or other global events and disasters. Additionally, the failure to improve, or the erosion of, our services margin, whether due to discounts related to encouraging customers to enter into cloud agreements or otherwise, particularly in combination with any increase in services revenue, could adversely affect our overall gross and operating margins. Our services margin may erode if we hire and train additional services personnel to support cloud-based services or markets prior to having customer engagements, if we make investments in customer migrations from self-managed term licenses to subscription services, if we enter into fixed fee services arrangements, if our services personnel are underutilized, if we subcontract out services without an adequate markup, or if we require additional personnel on unexpectedly difficult projects to ensure customer success, perhaps without receiving commensurate compensation.

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Revenue mix, as well as declines in our subscription and support gross margin or our services gross margin, could adversely affect our overall gross margin and profitability.

Our subscription and support revenue was 61% and 56% of total revenue for fiscal years 2025 and 2024, respectively. Our subscription and support revenue produces lower gross margins than our license revenue. The gross margin of our subscription and support revenue was 68% and 63% for fiscal years 2025 and 2024, respectively, while the gross margin for license revenue was 99% and 98% for fiscal years 2025 and 2024, respectively. We expect that subscription revenue will continue to increase as a percentage of total revenue as we contract with new cloud customers and existing customers migrate from term licenses to subscription services. Additionally, we are incurring expenses to operate our cloud services and manage our cloud operations which may not result in an improvement of our subscription and support gross margin. These trends, along with other factors, some of which may be beyond our control, may adversely affect our overall gross and operating margins. These other factors include the percentage of new customers that enter into subscription services agreements as compared to term license agreements, the revenue impact of allocating total contract consideration between license revenue and subscription and support revenue when existing customers transition from term license to subscription services agreements, investments in certain cloud implementations to assist our customers with their migration to our cloud services, continued growth and efficiency of our cloud operations and technical support teams, and the impact on the global economy as a result of economic volatility, inflation, tariffs, or other global events and disasters.

Further, our services revenue was 18% and 18% of total revenue for fiscal years 2025 and 2024, respectively. Our services revenue produces significantly lower gross margin than either our license revenue or our subscription and support revenue and has at times been negative. If we experience an increase in the percentage of total revenue represented by services revenue, due to acquisitions or other factors, such increase could reduce our overall gross and operating margins. Fluctuation in our services revenue can result from several factors, some of which may be beyond our control, including change in customer demand for our services team’s involvement in the implementation of and migration to new products, the rates we charge or discounts we offer for our services, our ability to bill our customers for all time incurred to complete a project, the extent and quality of implementations and migrations provided by our SI partners, the extent to which we subcontract services to those SI partners, and the impact on the global economy as a result of economic volatility, inflation, tariffs, or other global events and disasters. Additionally, the failure to improve, or the erosion of, our services margin, whether due to discounts related to encouraging customers to enter into cloud agreements or otherwise, particularly in combination with any increase in services revenue, could adversely affect our overall gross and operating margins. Our services margin may erode if we hire and train additional services personnel to support cloud-based services or markets prior to having customer engagements, if we make investments in customer migrations from self-managed term licenses to subscription services, if we enter into fixed fee services arrangements, if our services personnel are underutilized, if we subcontract out services without an adequate markup, or if we require additional personnel on unexpectedly difficult projects to ensure customer success, perhaps without receiving commensurate compensation.

Failure of any of our established products to satisfy customer demands or to maintain market acceptance could harm our business, results of operations, financial condition, and growth prospects.

We derive a significant majority of our revenue and cash flows from our established product offerings, including Guidewire InsuranceSuite ~~Cloud~~, Guidewire InsuranceNow, ~~Guidewire InsuranceSuite for self-managed installations,~~ and our digital and data products. We expect to continue to derive a substantial portion of our revenue from these sources. As such, continued market acceptance of these products is critical to our growth and success. Demand for our products is affected by a number of factors, some of which are beyond our control, including the successful implementation of our products, the timing of development and release of product upgrades, enhancements, and new products by us and our competitors, the cost and effort to migrate from self-managed products to subscription services, the ease of integrating our software to third-party software and services, technological advances that reduce the appeal of our products, changes in the regulations that our customers must comply with in the jurisdictions in which they operate, and the growth or contraction in the worldwide market for technological solutions for the P&C insurance industry. If we are unable to continue to meet customer demands, to achieve and maintain a technological advantage over competitors, or to maintain market acceptance of our products, our business, results of operations, financial condition and growth prospects may be adversely affected.

If we are unable to continue the successful development of our global direct sales force and the expansion of our relationships with our strategic partners, sales of our products will suffer and our growth could be slower than we project.

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, both large and small P&C insurers, and to manage our existing customer base. New hires require significant training and may, in some cases, take more than a year before becoming productive, if at all. If we are unable to hire and develop sufficient numbers of productive global direct sales personnel, sales of our products will suffer and our growth will be impeded.

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Our SI partners help us reach additional customers. We believe our future growth also will depend on the retention and expansion of successful relationships with SI partners, including with SI partners that will focus on products we may acquire in the future. Our growth in revenue, particularly in international markets, will be influenced by the development and maintenance of relationships with SI partners, including regional and local SI partners. Although we have established relationships with some of the leading SI partners, our products may compete directly against products that such leading SI partners support or market. Additionally, we are unable to control the quantity or quality of resources that our SI partners commit to migrating or implementing our products, the quality or timeliness of such migrations and implementations, or the effects of global events on our SI partners. If our partners do not commit sufficient or qualified resources to these activities, our customers will be less satisfied, be less supportive with references, or may require the investment of our resources at discounted rates. These, and other failures by our partners to successfully implement our products, would have an adverse effect on our business and our results of operations could fail to grow in line with our projections.

Our international sales and operations subject us to additional risks that can adversely affect our business, results of operations, and financial condition.

We sell our products to customers located outside the United States, and we are continuing to expand our international operations as part of our growth strategy. In fiscal years ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, $~~347~~431.96 million, ~~$331.5 million,~~ and $~~296~~347.29 million of our revenue, respectively, was from customers outside of the United States. Our current international operations and our plans to expand our international operations subject us to a variety of risks, including:

•increased management, travel, infrastructure, legal, and compliance costs associated with having multiple international operations;

•unique terms and conditions in contract negotiations imposed by customers in foreign countries;

•longer payment cycles and difficulties in enforcing contracts and collecting accounts receivable;

•the need to localize our contracts and our products for international customers;

•lack of familiarity with and unexpected changes in foreign regulatory requirements, including requirements around employee compensation and benefits;

•increased exposure to fluctuations in currency exchange rates, especially on revenue and ARR;

•highly inflationary international economies and related governments;

•geographic and political conflicts, such as the war between Russia and Ukraine, continued geopolitical instability in the Middle East, and the escalating tensions in the South China Sea;

•the burdens and costs of complying with a wide variety of foreign laws and legal standards, including without limitation any new or evolving laws and regulations relating to the use of data in AI, generative AI, machine learning technologies, climate-related disclosures, operational resilience, ~~and~~ data protection and privacy, particularly in the European Union (“EU”) and the United Kingdom (“U.K.”);

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•compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.K. Bribery Act of 2010 and other anti-corruption regulations, particularly in emerging market countries;

•compliance by international staff with accounting practices generally accepted in the United States, including adherence to our accounting policies and internal controls;

•import and export license requirements, tariffs, taxes and other trade barriers;

•increased financial accounting, tax and reporting burdens and complexities;

•weaker protection of intellectual property rights in some countries;

•multiple and possibly overlapping tax regimes, including certain Organization for Economic Cooperation and Development (“OECD”) proposals, such as the implementation of the global minimum tax under the Pillar Two model rules;

•government sanctions that may interfere with our ability to sell into particular countries, such as Russia;

•disruption to our operations caused by public health crises, such as epidemics and pandemics; and

•political, social, and economic instability abroad, terrorist attacks, and security concerns in general.

As we increase the number of products we offer, increase the number of countries in which we operate, and incorporate new technologies and capabilities into our products (including, without limitation, the use of AI, generative AI and machine learning technologies), the complexity of adjusting our offerings to comply with legal and regulatory changes will increase.

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As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. Any of these risks could harm our international operations and reduce our international sales, adversely affecting our business, results of operations, financial condition and growth prospects.

We may expand through acquisitions or partnerships with other companies, which may divert our management’s attention and result in unexpected operating and technology integration difficulties, increased costs, and dilution to our stockholders.

Our business strategy includes the potential acquisition of shares or assets of companies with software, cloud-based services, technologies, oras well as businesses that are complementary to ours. Our strategy also includes alliances with such companies. For example, we have made several acquisitions in the past, ~~including~~ most recently inour ~~April~~November 2025, weacquisition ~~acquired~~of ~~Quantee~~ProNav ~~sp.~~Technologies ~~z o~~Ltd.~~o. (“Quantee”)~~, a ~~Poland~~Canada-based ~~insurtech~~knowledge ~~company~~management ~~specializing~~platform inpurpose-built ~~dynamic~~for ~~pricing~~the ~~software~~P&C insurance industry. ~~Acquisitions~~From ~~and~~time ~~alliances~~to time, ~~such~~we asalso ~~our~~invest in private growth-stage companies to support strategic ~~partnerships~~initiatives, ~~with~~and ~~One~~such ~~Inc.~~investments involve the risk of partial or total loss of capital and ~~Smart~~may ~~Communications~~not generate a return. Acquisitions, alliances, and strategic investments are inherently risky and may result in unforeseen operating difficulties and expenditures, be dilutive to earnings, negatively impact margins, and ~~may~~fail ~~not~~to ~~result~~generate in the ~~benefits~~ anticipated ~~by such corporate activity~~benefits. In particular, we may fail to assimilate or integrate the businesses, technologies, services, products, personnel, or operations of the acquired companies, retain key personnel necessary to favorably execute the combined companies’ business plan, or retain existing customers or sell acquired products to new customers~~. Acquisitions and alliances may also disrupt our ongoing business~~, ~~divert~~or ~~our~~adequately ~~resources,~~test and ~~require~~assimilate ~~significant~~the ~~management~~internal ~~attention~~control ~~that~~processes ~~would otherwise be available for ongoing development~~ of ~~our~~the ~~current~~acquired business. Inin ~~addition,~~accordance wewith ~~may be required to make additional capital investments or undertake remediation efforts to ensure~~ the ~~success~~requirements of ~~our~~Section ~~acquisitions,~~404 ~~which~~of ~~may reduce~~ the ~~benefits~~Sarbanes-Oxley Act of ~~such~~2002 ~~acquisitions~~(“Sarbanes-Oxley Act”). WeOur ~~also~~due diligence may befail ~~required~~ to ~~use~~identify aall ~~substantial amount~~ of ~~our~~the ~~cash~~problems, orliabilities, ~~issue debt~~ or ~~equity securities to complete an acquisition or realize the potential of an alliance~~challenges, ~~which could deplete our cash reserves~~ and~~/or~~ ~~dilute~~ our ~~existing~~mitigation ~~stockholders.~~strategies ~~Following~~for anidentified ~~acquisition~~issues ormay ~~the~~not ~~establishment~~be ofeffective. anAs ~~alliance~~a ~~offering new products~~result, ~~the~~we ~~timing~~may ofoverpay, ~~revenue~~fail ~~from~~to ~~the~~achieve ~~sale~~expected ofsynergies ~~products that we acquired~~ or ~~that~~earnings ~~result from the alliance~~accretion, or ~~from~~incur ~~the~~unexpected ~~sale of a bundle of products that includes such new products~~costs, ~~may~~any ~~be different than the timing~~ of ~~revenue~~which ~~from~~could ~~existing~~harm ~~products. In addition,~~ our ability to maintain favorable pricing of new products may be challenging if we bundle such products with existing products. A delay in the recognition of revenue from sales of acquired or alliance productsbusiness, ~~or reduced pricing due to bundled sales~~prospects, ~~may cause fluctuations in our quarterly~~ financial ~~results~~condition, ~~may~~results ~~adversely~~of ~~affect~~operations, ~~our~~cash ~~operating margins~~flows, ~~and may reduce the benefits of such acquisitions~~ or ~~alliances~~stock price.

~~Additionally,~~Acquisitions ~~competition~~and ~~within~~alliances ~~the~~may ~~software~~also ~~industry~~disrupt ~~for~~our ~~acquisitions~~ongoing ~~of businesses~~business, ~~technologies~~divert our resources, and ~~assets~~require ~~has~~significant ~~been,~~management ~~and~~attention ~~may~~that ~~continue~~would tootherwise be, ~~intense.~~available Asfor ~~such,~~ongoing ~~even~~development ifof our current business. In addition, we ~~are~~may ~~able~~be required to ~~identify~~make anadditional ~~acquisition~~capital ~~that~~investments weor ~~would~~undertake ~~like~~remediation efforts to ~~pursue,~~ensure the ~~target~~success of our acquisitions, which may bereduce ~~acquired~~the bybenefits ~~another~~of ~~strategic~~such ~~buyer~~acquisitions. orWe ~~financial~~also ~~buyer~~may ~~such~~be asrequired to use a ~~private~~substantial ~~equity~~amount ~~firm,~~of orour wecash ~~may~~or ~~otherwise~~issue ~~not~~debt beor ~~able~~equity securities to complete ~~the~~an acquisition onor ~~commercially~~realize ~~reasonable~~the ~~terms~~potential of an alliance, ifwhich atcould ~~all.~~deplete ~~Moreover,~~our incash ~~addition~~reserves toand/or dilute our ~~failure~~existing tostockholders. ~~realize~~Following ~~the~~an ~~anticipated~~acquisition ~~benefits~~or the establishment of ~~any~~an ~~acquisition~~alliance offering new products, ~~including~~the ~~our~~timing of revenue from the sale of products that we acquired or ~~return~~that onresult ~~investment~~from ~~assumptions~~the alliance, weor from the sale of a bundle of products that includes such new products, may be ~~exposed~~different from the timing of revenue from existing products. In addition, our ability to ~~unknown~~maintain ~~liabilities~~favorable pricing of new products may be challenging if we bundle such products with existing products. A delay in the recognition of revenue from sales of acquired or ~~impairment~~alliance ~~charges~~products, or reduced pricing due to ~~acquired~~bundled ~~intangible~~sales, ~~assets~~may cause fluctuations in our quarterly financial results, may adversely affect our operating margins, and ~~goodwill~~may asreduce athe ~~result~~benefits of such acquisitions weor ~~do complete~~alliances.

62Additionally, competition within the software industry for acquisitions of businesses, technologies, and assets has been, and may continue to be, intense. Acquisitions may be subject to regulatory reviews, which could increase legal and compliance costs or delay, limit, or prevent completion of the transaction. As such, even if we are able to identify an acquisition that we would like to pursue, the target may be acquired by another strategic buyer or financial buyer such as a private equity firm, or we may otherwise not be able to complete the acquisition on commercially reasonable terms, if at all. Moreover, in addition to our failure to realize the anticipated benefits of any acquisition, including our revenue or return on investment assumptions, we may be exposed to unknown liabilities or impairment charges to acquired intangible assets and goodwill as a result of acquisitions we do complete.

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Incorrect or improper use of our products or our failure to properly train customers on how to utilize our products could result in customer dissatisfaction and negatively affect our business, results of operations, financial condition, and growth prospects.

Our products are complex and are deployed in a wide variety of environments. The proper use of our products requires training of the customer. If our products are not used correctly or as intended, inadequate performance may result. Our products may also be intentionally misused or abused by customers or their employees or third parties who are able to access or use our products. Because our customers rely on our services, products, and support to manage a wide range of operations, the incorrect or improper use of our products, our failure to properly train customers on how to efficiently and effectively use our products, or our failure to properly provide services to our customers may result in negative publicity or legal claims against us. Also, any failure by us to properly provide training or other services to existing customers will likely result in lost opportunities for follow-on and increased sales of our products.

In addition, if there is substantial turnover of customer personnel responsible, especially at the executive level, for the use and support of our products, or if customer personnel are not well trained in the use and support of our products, customers may defer the deployment of our products, may deploy them in a more limited manner than originally anticipated, or may not deploy them at all. Further, if there is substantial turnover of the customer personnel responsible for use of our products, our ability to renew existing licenses and make additional sales may be substantially limited.

We may not be able to obtain capital when desired on favorable terms, if at all, and we may not be able to obtain capital or complete acquisitions through the use of equity without dilution to our stockholders.

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We may need additional financing to execute on our current or future business strategies, including to develop new or enhance existing products, acquire businesses and technologies, service our existing debt, or otherwise to respond to competitive pressures.

If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our existing stockholders could be significantly diluted, and newly issued securities may have rights, preferences, or privileges senior to those of existing stockholders. If we accumulate additional funds through debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, thus limiting funds available for our business activities. We cannot be assured that additional financing will be available on terms favorable to us, or at all. If adequate funds are not available, or are not available on acceptable terms, when we desire them, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our products, or otherwise respond to competitive pressures would be significantly limited. Any of these factors could harm our results of operations.

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Risks Related to Data Security and Privacy, Intellectual Property, and Information Technology

If our products experience cybersecurity incidents or breaches, there is unauthorized access to our customers’ data, or unauthorized use of our products or any of these events are perceived to happen, we may lose current or future customers and our reputation and business may be harmed.

Our products and business involve the collection, storage and processing of customer data ~~(including~~and, in some cases, information that relates to individuals and/or constitutes personal data (including from our employees, business partners and others, and, in some cases, from our customers), and our products may provide business critical software and analytics necessary for our customers’ operations. As such, we may be an attractive target for data security attacks that threaten the confidentiality, integrity, and availability of our information technology systems and confidential information. Security incidents or breaches could result in public disclosure of confidential information or personal information, loss or modification of data affecting our customers’ operations, fraud or theft, ransom demands, or other misuse of confidential information or personal information, which in turn could result in our cloud services being perceived as not being secure, a reduction in customers using our products, as well as litigation, breach of contract claims, indemnity obligations, additional reporting requirements and/or oversight, restrictions on processing ~~customer~~ data, and other liabilities for our Company, all of which could lead to loss of revenue, a diminished ability to retain or attract new customers due to reputational harm, fines, costs, or other penalties or sanctions. While we have taken, and are continually updating and enhancing, steps to protect the confidential information, ~~and~~ customer data toand ~~which~~personal wedata ~~have~~that ~~access~~we steward, including confidential information we may obtain through our customer support services or customer usage of our cloud-based services, our security measures or the security measures of companies we rely on, ~~such as AWS,~~ could be breached. We rely on third-party technology and systems for a variety of information technology systems and related products and services, including, without limitation, cloud computing services, encryption and authentication technology, employee email, content delivery to customers, back-office support, and other functions. Our ability to control or prevent breaches of any of these systems may be beyond our control. Any failure by a third party to prevent or mitigate data security incidents, breaches or improper access to, or use, acquisition, disclosure, alteration or destruction of customer data could have adverse consequences for us. Because techniques used to obtain unauthorized access or infiltrate, sabotage, disable or degrade systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures despite our efforts in implementing and deploying security measures. The use of constantly evolving technologies by diverse threat actors, including state-sponsored organizations, opportunistic hackers and hacktivists, such as the increased use of AI technologies, are sophisticated and complex and may increase the velocity of such threats, frequency of incident cases, and otherwise magnifying the risks associated with these types of attacks. These attack vectors may include social engineering/phishing, malware (including ransomware), malfeasance by insiders, human or technological error, and as a result of malicious code embedded in open source software or the exploitation of bugs, misconfigurations or exploited vulnerabilities in software or hardware that is integrated into our (or our suppliers’ or service providers’) information technology systems, products or services. Although we have developed systems and processes designed to protect our and our customers’ data, prevent loss or unauthorized modification of data, ensure only authorized use of services, and prevent other cybersecurity incidents or breaches, including systems and processes designed to reduce the impact of a security incident or breach to a third-party vendor, such measures cannot provide absolute security, and our systems may be vulnerable to malware or physical or electronic break-ins that our security measures may not ~~detect. There can also~~ be noable ~~assurance~~to ~~that our cybersecurity risk management program and processes~~detect, ~~including our policies~~investigate, ~~controls~~remediate or ~~procedures~~recover from, ~~will~~or beto ~~fully~~avoid ~~implemented,~~a ~~complied~~material ~~with~~adverse orimpact ~~effective~~to ~~in protecting~~ our information technology systems, or confidential information~~. Individuals~~, ~~including~~supply ~~trusted~~chain ~~employees and contractors, who circumvent our security measures may misappropriate proprietary, confidential,~~ or ~~personal data held by or on behalf of us, disrupt our operations, damage our systems, or otherwise damage our~~ business. ~~In addition~~Moreover, we ~~may~~have ~~need~~acquired toand ~~expend~~continue ~~significant resources~~ to ~~protect~~acquire ~~against~~companies ~~data~~whose ~~security~~systems ~~breaches~~may orcontain ~~mitigate~~cybersecurity ~~the~~vulnerabilities ~~impact of any such breaches. Any~~ and/or ~~all~~unsophisticated ofsecurity ~~these issues could negatively impact our ability to attract new customers or to increase engagement with existing customers~~measures, ~~could~~which ~~cause~~may ~~existing~~expose ~~customers~~us to ~~elect~~significant ~~not to renew their term licenses or subscription agreements~~cybersecurity, ~~or could subject us to third-party lawsuits~~operational, ~~regulatory~~and ~~fines~~financial orrisks. ~~other~~Because ~~action~~our orproducts ~~liability,~~are ~~which~~integrated ~~could~~with ~~adversely affect~~ our ~~business,~~customers’ ~~results~~systems ofand ~~operations~~processes, ~~financial condition, or reputation. We cannot guarantee that~~ any ~~costs~~circumvention ~~and liabilities incurred in relation to an attack~~ or ~~incident~~failure ~~will~~of ~~be covered by~~ our ~~existing~~cybersecurity ~~insurance~~defenses ~~policies~~ or ~~that~~measures ~~applicable~~could ~~insurance~~compromise ~~will~~the beconfidentiality, ~~available~~integrity, toand usavailability inof ~~the~~our ~~future~~customers’ onown ~~economically~~information ~~reasonable~~technology ~~terms~~systems and/or atconfidential ~~all~~information as well.

In addition, data security breaches could expose us to liability under various laws and regulations across jurisdictions, increase the risk of litigation and governmental or regulatory investigation, and increase our costs for compliance. For example, we may need to notify governmental authorities and/or affected individuals with respect to certain data security breaches in light of a growing number of laws, including those in the European Economic Area (“EEA”), U.K., and the United States. Complying with such numerous and complex regulations in the event of a data security breach would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny and additional liability. We may also be contractually required to notify customers or other counterparties of a security incident, including a data security breach. 55

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~~Service~~In ~~interruptions~~addition, we cannot ensure that our cybersecurity risk management program and processes, including our policies, controls or ~~failures~~procedures, will be fully implemented, complied with or effective in all instances, and even if fully implemented, they may not fully protect our information technology systems or confidential information. Furthermore, given the nature of complex systems, software and services like ours, as well as the scanning tools we deploy across our ~~third-party~~networks ~~service~~and ~~providers~~products, even if we regularly identify and track security vulnerabilities, we may ~~impair~~be unable to comprehensively apply patches, confirm that measures are in place to mitigate all such vulnerabilities, or ensure that patches are applied before vulnerabilities are exploited by a threat actor. Individuals, including our employees and contractors, who circumvent our security measures may misappropriate proprietary, confidential, or personal data held by or on behalf of us, disrupt our operations, damage our systems, or otherwise damage our business. While to date no incidents have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future. In addition, we may need to expend significant resources to protect against cybersecurity incidents or breaches or mitigate the impact of any such incidents or breaches. Any or all of these issues that adversely impact the availability, integrity or confidentiality of our ~~products~~information technology systems or confidential information could negatively impact our ability to attract new customers or to increase engagement with existing customers, ~~which~~could ~~may~~cause ~~expose~~existing customers to elect not to renew their term licenses or subscription agreements, or could subject us to third-party lawsuits (including class actions), regulatory investigations and enforcement actions, fines and penalties, other action or liability, ~~damage~~and/or significant incident response, system restoration or remediation and future compliance costs, which could adversely affect our ~~reputation~~business, results of operations, financial condition, or reputation. We cannot guarantee that any costs and ~~harm~~liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future ~~financial~~on ~~results~~economically reasonable terms or at all.

WeIn ~~rely on services provided by third-parties to operate our products~~addition, ~~any~~data ofsecurity ~~which~~incidents ~~such services, if they encounter interruptions, failure,~~ or ~~slowdown~~breaches ~~for any reason,~~ could ~~cause~~expose ~~outages~~us orto ~~delays~~liability inunder ~~our~~various ~~products,~~laws ~~negatively~~and ~~affect~~regulations ~~our~~across ~~platform~~jurisdictions, ~~damage~~increase ~~our~~the ~~reputation~~risk ~~with~~of ~~current~~litigation and ~~potential~~governmental ~~customers,~~or ~~expose~~regulatory ~~us to liability~~investigation, ~~cause~~and usincrease ~~to lose customers, adversely affect~~ our ~~results~~costs offor ~~operations, or otherwise harm our business~~compliance. For example, we ~~host~~may ~~our~~need ~~platform~~to ~~using~~notify ~~AWS~~governmental ~~data~~authorities ~~centers~~ and/or ~~all~~affected ofindividuals ~~our~~with ~~cloud~~respect ~~products~~to ~~rely~~certain oncybersecurity ~~resources~~incidents ~~operated~~or bybreaches ~~AWS.~~in ~~Our~~light ~~operations~~of ~~depend~~a ongrowing ~~protecting~~number ~~our~~of ~~virtual~~laws, ~~cloud~~including ~~infrastructure~~those ~~hosted~~in bythe ~~service~~European ~~providers;~~Economic ~~preserving~~Area ~~the infrastructure’s configuration~~(“EEA”), ~~architecture~~U.K., and ~~interconnection~~the ~~specifications;~~United ~~and~~States. ~~maintaining~~Complying ~~access~~with tosuch ~~our~~numerous ~~products~~ and ~~the~~complex ~~information~~regulations ~~stored~~ in ~~virtual~~the ~~data~~event ~~centers~~of ~~and~~a ~~transmitted~~cybersecurity ~~over internet service providers. Although we have disaster recovery plans that use multiple virtual data center locations, any~~ incident ~~affecting~~or ~~our~~breach ~~service~~would ~~providers’~~be ~~operations~~expensive and ~~infrastructure~~difficult, ~~including~~and ~~but~~failure ~~not limited~~ to ~~those~~comply ~~caused~~with bythese ~~power~~regulations ~~loss,~~could ~~telecommunications~~subject ~~failures,~~us ~~unauthorized~~to ~~intrusion~~regulatory orscrutiny ~~malicious action, malware~~ and ~~disabling~~additional ~~devices, natural catastrophes, terrorism, wars, and other similar events beyond our control, could negatively affect our products~~liability. ~~A prolonged third-party service disruption affecting our platform for any of the foregoing reasons could be detrimental to our business.~~ We may also ~~incur~~be ~~significant~~contractually ~~costs~~required ~~for~~to ~~taking~~notify ~~other~~customers ~~actions in preparation for,~~ or inother ~~reaction~~counterparties ~~to,~~of ~~events~~a ~~that~~cybersecurity ~~disrupt~~incident ~~the~~or ~~third-party services we use~~breach.

~~Our~~Service platform is accessed by a large number of customers, often at the same time, and we do not control the operation of our third-party service providers. As we continue to expand the number of our customers and products available to our customers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or ~~delays~~failures inof our ~~products. In addition, the failure of~~ third-party ~~virtual data centers, third-party internet~~ service providers, or ~~other~~technology ~~third-party service providers whose services are integrated with our products, to meet our capacity requirements,~~ could ~~result~~disrupt ~~in interruptions or delays in access to~~ our products or impede our ability to scale our operations. In the event that our third-party service agreements are not renewed or are terminated, or there is a lapse of service, interruption of service provider connectivity or damage to such services, we could experience interruptions in access to our products as well as delays and ~~additional expense in arranging new third-party service providers, all of which could~~ harm our business.

~~Evolving~~We ~~policy~~utilize services and ~~regulatory~~technology ~~responses~~and intellectual property provided or licensed by unaffiliated third parties to AIoperate ~~and~~our ~~machine~~products, ~~learning~~including AWS, Okta and ~~their~~Datadog. Any interruptions, failure, slowdown, errors, defects, bugs, design flaws, or security vulnerabilities in our services or in third-party technology on which we rely could cause outages or delays in our products, negatively affect our platform, damage our reputation with current and potential ~~implications~~customers, ~~for~~expose ~~the~~us ~~fields~~to liability, cause us to lose customers, adversely affect our results of ~~information~~operations, ~~technology~~or otherwise harm our business. Our operations depend on our ability, ~~data~~and ~~privacy~~that of our service providers, to protect our virtual cloud infrastructure, preserve GWCP’s configuration, delivering capability, and ~~security~~interconnections, ~~may~~and ~~result~~maintain access to our products and to the information stored in ~~increased~~virtual ~~compliance~~data ~~costs~~centers and ~~associated~~transmitted ~~concerns~~over internet service providers. Although we have disaster recovery plans that use multiple virtual data center locations, any incident affecting our service providers’ operations and infrastructure, including software errors, bugs, design flaws, power loss, telecommunications failures, unauthorized intrusion or malicious action, malware and disabling devices, natural catastrophes, terrorism, wars, or other similar events beyond our control, could negatively affect our products. A prolonged third-party service disruption affecting our supply chain or our platform for usany of the foregoing reasons could be detrimental to our business. We may also incur significant costs for taking other actions in preparation for, or in reaction to, events that disrupt the third-party services we use.

AtOur ~~present,~~platform ~~various~~is ~~governments~~accessed ~~are~~by ~~taking~~a anlarge ~~interest~~number inof ~~technical~~customers, ~~developments~~often inat AIthe ~~and~~same ~~machine~~time, ~~learning~~ and ~~have~~we ~~responded~~do tonot ~~such~~control ~~developments~~the inoperation ~~various~~of ~~ways,~~our ~~including~~third-party byservice ~~issuing~~providers. ~~action~~As ~~plans~~we ~~for~~continue ~~risk mitigation and introducing legislation~~ to ~~generally~~expand ~~oversee~~ the ~~use~~number of ~~AI.~~our ~~For~~customers ~~instance, in the United States, recent executive actions have rescinded~~ and ~~replaced~~products ~~prior~~available ~~directives~~to onour ~~AI oversight~~customers, ~~directing~~we ~~federal~~and/or ~~agencies~~our ~~to reassess existing AI~~third-~~related~~party ~~regulations~~service ~~and~~providers ~~new~~may ~~policy~~not ~~priorities.~~be ~~The~~able ~~scope~~to ~~and~~scale ~~direction~~our oftechnology ~~orders, policies, rules and regulations related~~ to AIaccommodate ~~and~~the ~~machine~~increased ~~learning~~capacity atrequirements, ~~the~~which ~~federal~~may ~~level~~result in ~~the~~interruptions ~~United~~or ~~States~~delays in ~~the~~our ~~near future is uncertain~~products. ~~Meanwhile,~~In ~~various U.S. states~~addition, ~~including~~the ~~California,~~failure ~~Colorado,~~of ~~and~~third-party ~~Utah,~~virtual ~~have~~data ~~enacted laws that establish disclosure~~centers, ~~compliance,~~third-party ~~and~~internet ~~accountability~~service ~~requirements for certain uses of AI. In the EU~~providers, ~~the~~or EUother ~~Artificial~~third-party ~~Intelligence~~service ~~Act~~providers ~~(“EU~~whose AIservices ~~Act”),~~are ~~entered~~integrated ~~into~~with ~~force~~our ~~on August 1~~products, ~~2024, establishes a comprehensive, risk-based governance framework and applies~~ to, ~~among~~meet ~~other~~our ~~entities,~~capacity ~~providers~~requirements, ~~importers,~~could ~~and~~result ~~distributors~~in ofinterruptions ~~AI systems~~ or ~~general-purpose~~delays AIin ~~models~~access ~~that~~to ~~are~~our ~~placed~~products ~~on the EU market~~ or ~~put~~impede ~~into~~our ~~service~~ability orto ~~used~~scale inour ~~the EU~~operations. In ~~addition,~~ the ~~revised~~event EUthat ~~Product~~our ~~Liability~~third-party ~~Directive~~service ~~came~~agreements ~~into~~are ~~force~~not inrenewed ~~December~~or ~~2024~~are terminated, toor bethere ~~implemented~~is ~~into~~a EUlapse ~~member~~of ~~state~~service, ~~national~~interruption ~~law~~of byservice ~~December~~provider ~~2026.~~connectivity ~~This~~or ~~Directive~~damage ~~extends the EU’s existing strict product liability regime~~ to AIsuch ~~and~~services, ~~machine~~we ~~learning~~could ~~technologies~~experience ~~and~~interruptions ~~AI-enabled~~in ~~products~~access ~~(including software) and facilitates civil claims with respect~~ to ~~harm caused by AI. There is a risk that~~ our ~~current or future~~ products ~~may~~as bewell ~~subject~~as tomaterial ~~heightened~~delays ~~obligations under the EU AI Act~~ and EUmaterial ~~Product Liability Directive, which may impose~~ additional ~~costs~~expense onin ~~us,~~securing ~~increase~~alternative ~~our~~third-party ~~risk~~service ~~of liability~~providers, orparticularly ~~adversely~~where ~~affect~~such ~~our~~service ~~business.~~providers ~~New~~perform orcritical ~~evolving~~functions ~~regulations relating to rapidly evolving generative AI~~ and ~~machine learning technologies~~ may ~~impose~~not ~~additional~~be ~~rules~~readily ~~and~~replaceable, ~~restrictions~~all ~~on the use~~ of AIwhich incould harm our ~~products~~business.

Compliance with such global laws and regulations, including but not limited to the EU AI Act and any new or evolving regulations relating to AI and machine learning technologies, has and will continue to require valuable management, operating expenses, and employee time and resources, and any actual or perceived failure to comply with these laws and regulations or other actual or asserted obligations relating to privacy, data protection, or cybersecurity could lead to inspections, audits, regulatory investigations and other proceedings, significant fines, severe penalties, and other relief imposed by governmental agencies and regulatory bodies, and claims, demands, and litigation by our customers or third parties, which may reduce demand for our products and result in reputational harm, substantial damages and other liabilities.56

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~~Privacy~~We ~~concerns~~use ~~could~~technology ~~result~~and intellectual property licensed from unaffiliated third parties in ~~regulatory~~certain ~~changes~~of our products, and ~~impose~~we may license additional ~~costs~~third-party technology and ~~liabilities~~intellectual property in the future. This may include certain AI technologies that are, or may in the future be, integrated into our products and licensed from third parties. Our ability to provide these AI-enabled capabilities may depend on usaccess to specific third-party software or infrastructure, ~~limit~~and any loss of access, unfavorable changes in terms, incompatibility, or disruption in such technologies could reduce the functionality of our products, make them less appealing to customers, and harm our reputation and business. Any errors, defects, or security issues in this third-party technology and intellectual property or the integration of third-party technology and intellectual property with our products could result in errors that could harm our brand and business. Though we have not experienced any material impact to date, industry incidents involving vulnerabilities in third-party technology underscore the potential risks associated with the use of ~~information~~third-party technology and intellectual property. Moreover, licensed technology and intellectual property may not continue to be available on commercially reasonable terms, or at all, or otherwise will be subject to restrictions that under applicable law could adversely affect our ~~business~~proprietary software. The loss of the right to license and distribute this third-party technology could limit the functionality of our products and might require us to redesign our products.

AsEvolving ~~adoption~~policy ~~of our cloud-based products occurs, the amount of customer data, including customer personal data, that we manage, hold,~~ and~~/or~~ ~~collect~~regulatory ~~continues~~responses to ~~increase.~~AI Intechnologies ~~addition, our products may collect, process, store,~~ and ~~use~~their ~~transaction-level~~potential ~~data~~implications ~~aggregated~~for ~~across insurers using our common data model. We anticipate that over time, we will continue to expand~~ the ~~use~~fields ~~and collection~~ of ~~personal~~information ~~data~~technology, ~~as greater amounts of such personal~~ data ~~may be transferred from our customers to us. We recognize that~~ privacy, and ~~data~~ security ~~has~~may ~~become~~result ~~a significant issue~~ in ~~the~~increased ~~United~~compliance ~~States,~~costs ~~Europe, the U.K.,~~ and ~~many~~associated ~~other~~concerns ~~jurisdictions~~for ~~where we operate~~us.

~~Many~~At ~~federal~~present, ~~state,~~various ~~and~~governments ~~foreign legislatures and government agencies have imposed,~~ are ~~considering~~taking ~~imposing,~~an orincreased ~~are~~interest ~~considering~~in ~~changing~~developments ~~restrictions~~in ~~and~~AI ~~requirements~~technologies ~~about the collection, use,~~ and ~~disclosure~~are ofresponding ~~personal data. Changes~~ to ~~laws~~such ordevelopments ~~regulations~~in ~~affecting~~various ~~privacy could impose additional costs and liabilities~~ways, including ~~fines,~~by onissuing usaction ~~and~~plans ~~could~~for ~~limit~~risk ~~our~~mitigation ~~use~~and ofintroducing ~~such~~legislation ~~information~~ to ~~add~~generally ~~value~~oversee ~~for customers, including, for example,~~ the ~~California~~use ~~Consumer~~of ~~Privacy~~AI. ~~Act~~In ~~and~~ the ~~California~~United ~~Privacy Rights Act~~States, ~~which~~federal ~~substantially~~and ~~went~~state ~~into~~authorities ~~effect~~have ~~on January 1~~introduced, ~~2023~~ and ~~other~~may ~~state~~continue ~~privacy~~to ~~laws~~introduce, ~~enacted~~requirements ~~in recent years. New EU laws~~ related to ~~the~~AI ~~use of data~~oversight, ~~including the Digital Services Act~~disclosure, ~~the~~and ~~EU Data Act~~accountability, and the EUscope AIand ~~Act,~~direction ~~may~~of ~~impose~~such ~~additional~~laws ~~rules~~ and ~~restrictions~~policies onremain ~~the~~uncertain. ~~use~~In of the ~~data in our products. Additionally~~EU, ~~evolving regulations aimed at enhancing financial sector resilience, such as~~ the ~~Digital~~EU ~~Operational~~Artificial ~~Resilience~~Intelligence Act, ~~may~~(“EU ~~impact~~AI ~~our~~Act”) ~~operations~~establishes bya ~~requiring~~comprehensive ~~adaptations~~governance framework for ~~risk~~AI ~~management~~ and ~~compliance,~~similar ~~potentially~~efforts ~~leading~~are toemerging ~~increased~~in ~~costs~~other ~~and operational adjustments~~jurisdictions. IfNew ~~we were required to change our business activities~~ or ~~revise~~evolving orregulations ~~eliminate~~relating ~~services, or~~ to ~~implement~~rapidly ~~burdensome~~evolving ~~compliance~~AI ~~measures,~~technologies ~~our business and results of operations could be harmed. We~~ may beimpose ~~subject~~additional torules ~~fines, penalties,~~ and ~~potential~~restrictions ~~litigation,~~on including class action lawsuits, if we fail to comply with applicable privacy and/or data security laws, regulations, standards, and other requirements. The costs of compliance with and other burdens imposed by evolving privacy-related laws, regulations, and standards may limit the use ~~and~~of ~~adoption~~AI ofin our products ~~and reduce overall demand~~.

~~Furthermore,~~Compliance ~~concerns~~with ~~regarding~~such ~~data~~global ~~privacy~~laws and~~/or~~ ~~security~~regulations may ~~cause~~require ~~our~~valuable ~~customers’~~management ~~customers~~and toemployee ~~resist~~time, ~~providing~~resources, ~~the~~and ~~data~~operating expenses, and ~~information~~any ~~necessary~~actual or perceived failure to ~~allow~~comply ~~our~~with ~~customers~~these tolaws ~~use~~and ~~our~~regulations ~~products~~or ~~effectively.~~other ~~Even~~actual ~~the~~or ~~perception~~asserted ~~that~~obligations ~~the~~relating to privacy, ~~and/or~~data ~~security~~protection, ofor ~~personal~~cybersecurity ~~data~~could islead ~~not~~to ~~satisfactorily~~inspections, ~~managed~~audits, orregulatory ~~does~~investigations ~~not~~and ~~meet~~other ~~applicable~~proceedings, ~~legal~~significant fines, ~~regulatory~~severe penalties, and other ~~requirements,~~relief ~~could~~imposed ~~inhibit~~by ~~sales~~governmental ofagencies ~~our~~and ~~products~~regulatory bodies, and ~~could~~claims, ~~limit~~demands, ~~adoption~~and oflitigation by our ~~solutions,~~customers ~~resulting~~or inthird aparties, ~~negative~~which ~~impact~~may onreduce demand for our ~~sales,~~products ~~reputation~~and result in reputational harm, substantial damages and ~~results~~other liabilities, all of ~~operations~~which could harm our business.

Privacy concerns could result in regulatory changes, and compliance with ever-evolving privacy and data protection laws could impose additional costs and require significant resources, and any actual or alleged failure by us or our vendors to comply could result in significant liabilities, limit our use of information, cause negative publicity and/or an erosion of trust, and adversely affect our business, results of operations, and financial condition.

As adoption of our cloud-based products expands, the amount of customer data and transaction-level data that we manage continues to increase. We anticipate that over time, we will continue to expand the use and collection of personal data as greater amounts of such personal data may be

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