Guidewire Software, Inc.
For the period ended Jan 31, 2026. Filed Mar 6, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jan 31, 2026 · Filed Mar 6, 2026
GWRE$161.41-3.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-10-31; filed 2025-12-04.
0001528396-25-000244
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-01-31; filed 2026-03-06.
0001528396-26-000014
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 132 previous paragraphs and 148 current paragraphs.
94 unchanged; 37 reworded; 11 added; 1 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 12 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (11)
Current report
Cost of subscription and support revenue during the three months ended January 31, 2026 increased by $4.8 million compared to the same period a year ago, primarily due to increases in personnel costs of $2.4 million due to higher headcount, cloud infrastructure expenses of $1.2 million, amortization of intangible assets of $0.6 million, and royalties of $0.3 million.
Current report
The $21.9 million increase in cost of services revenue during the six months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $16.2 million due to higher headcount and subcontractor expenses of $4.0 million due to implementations involving our SI partners.
Current report
Our gross margin increased to 64% during the six months ended January 31, 2026 from 61% during the same period a year ago. Gross margin increased due to the growth in subscription and support revenue which continues to outpace personnel and cloud infrastructure costs.
Current report
The $13.1 million increase in research and development expenses during the three months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $11.8 million associated with higher headcount.
Current report
The $18.8 million increase in sales and marketing expenses during the six months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $13.1 million associated with higher headcount, which includes the impact of contract acquisition costs, travel expenses of $3.1 million, and marketing and advertising expenses of $2.5 million, partially offset by decreases in amortization of intangible assets of $0.3 million and web hosting costs of $0.3 million.
Current report
The $6.6 million increase in general and administrative expenses during the three months ended January 31, 2026, compared to the same period a year ago, was due to increases in personnel costs of $4.9 million, driven by the impact of annual salary increases, an increase in the annual bonus accrual and stock-based compensation, professional services expenses of $1.0 million, and facilities costs of $0.6 million, partially offset by a decrease in software subscription costs of $0.4 million.
Current report
Interest income decreased $3.2 million and $2.2 million during the three and six months ended January 31, 2026, respectively, compared to the same periods a year ago, primarily due to lower interest rates.
Current report
Other income (expense), net during the six months ended January 31, 2026 was income of $21.6 million, compared to expense of $70.3 million during the same period a year ago due to $53.6 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes during the six months ended January 31, 2025. Additionally, during the six months ended January 31, 2026, we recorded a foreign currency gain of $21.7 million, compared to a loss of $20.2 million during the same period a year ago due to fluctuations in foreign currency exchange rates.
Current report
During the three months and six months ended January 31, 2025, the effective tax rate differs from the statutory U.S. Federal income tax rate of 21% primarily due to the debt retirement expense which is non-deductible for tax purposes and other permanent differences related to stock-based compensation, research and development credits, foreign earnings taxed in the U.S., the FDII deduction, and certain non-deductible expenses, including the limitation on executive compensation.
Current report
In January 2026, our board of directors authorized and approved a new share repurchase program of up to$500.0 millionof our outsta nding common stock. Share repurchases under this program may be made from time to time, in the open market, in privately negotiated transactions and otherwise, at the discretion of our management 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.
Current report
During the three and six months ended January 31, 2026 , we repurchased 740,995 shares of common stock at an average price of $199.99.
Removed paragraphs (1)
Previous report
Interest income increased $1.0 million during the three months ended October 31, 2025 compared to the same periods a year ago, primarily due to the higher amount of funds available for investment from our October 2024 debt offering, partially offset by lower interest rates.
Reworded paragraphs (37)
Previous wording
We face a number of risks in the execution of our strategy, including, but not limited to, risks related to fluctuations in our results due to factors largely outside of our control, reliance on sales to a relatively small number of large customers and the related substantial negotiating leverage of these customers, lengthy and variable sales and implementation cycles, competing effectively in the global market, growing our business and managing our expanding operations, development and use of AI in an evolving regulatory environment, making long-term pricing commitments based on cost estimates that may change, expanding market adoption of our cloud-based offerings, maintaining customer satisfaction and renewals, 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.
Current wording
We face a number of risks in the execution of our strategy, including, but not limited to, risks related to fluctuations in our results due to factors largely outside of our control, reliance on sales to a relatively small number of large customers and the related substantial negotiating leverage of these customers, lengthy and variable sales and implementation cycles, competing effectively in the global market, growing our business and managing our expanding operations, development and use of AI in an evolving regulatory environment, making long-term pricing commitments based on cost estimates that may change, expanding market adoption of our cloud-based offerings, maintaining customer satisfaction and renewals, cost-effectively and securely managing the infrastructure of our cloud-based customers, and the impact of these and other factors, including the impact of AI on the insurance and software industries, on our stock price and its volatility. 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.
Previous wording
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.
Current wording
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, an increase in term licenses due to renewals or expansion orders, or non-renewals may impact our 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.
Previous wording
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.
Current wording
Our services revenue is also subject to seasonal fluctuations, though to a lesser degree than our license 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.
Previous wording
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 three months ended October 31, 2025, the recurring license and support or subscription contract value recognized as services revenue was $3.6 million.
Current wording
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 six months ended January 31, 2026, the recurring license and support or subscription contract value recognized as services revenue was $4.6 million.
Previous wording
As of October 31, 2025, ARR was $1,063 million, compared to $1,041 million as of July 31, 2025. We measure ARR results on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates.
Current wording
As of January 31, 2026, ARR was $1,121 million, compared to $1,041 million as of July 31, 2025. We measure ARR results on a constant currency basis during the fiscal year and revalue ARR at year end to current currency rates.
Previous wording
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, 2025.
Current wording
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. Certain figures included in this document have been subjected to rounding adjustments. Accordingly, figures shown in the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. 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, 2025.
Previous wording
Subscription 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.
Current wording
Subscription revenue increased by $61.1 million and $115.7 million during the three and six months ended January 31, 2026, respectively, compared to the same periods a year ago, primarily due to the impact of cloud transition agreements entered into and provisioned since January 31, 2025, new subscription agreements, and the renewal or extension of subscription services at the fully ramped annual fees after the initial committed term.
Previous wording
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 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.
Current wording
Support revenue decreased by $1.7 million and $3.8 million during the three and six months ended January 31, 2026, 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 that the small percentage of term licenses 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.
Previous wording
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.
Current wording
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 are a significant majority of total new sales and as customers migrate from term licenses to subscription services instead of renewing their term licenses.
Previous wording
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.
Current wording
Term license revenue increased by $0.4 million during the six months ended January 31, 2026, 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.
Previous wording
Services revenue increased by $12.7 million during the three months ended October 31, 2025, compared to the same period a year ago, due to higher utilization of services employees and new subscription implementation and migration projects.
Current wording
Services revenue increased by $14.4 million and $27.1 million during the three and six months ended January 31, 2026, respectively, compared to the same periods a year ago, due to higher utilization of services employees and new subscription implementation and migration projects.
Previous wording
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.
Current wording
Cost of subscription and support revenue during the six months ended January 31, 2026 increased by $14.7 million compared to the same period a year ago, primarily due to increases in personnel costs of $6.3 million due to higher headcount, cloud infrastructure expense of $6.0 million from increased transaction volume on our cloud services, amortization of intangible assets of $0.9 million, and royalties of $0.7 million.
Previous wording
As a result of 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 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.
Current wording
We expect the 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.
Previous wording
The $0.2 million decrease in our cost of license revenue during the three months ended October 31, 2025, compared to the same period a year ago, was primarily due to a decrease in personnel costs of $0.3 million. Personnel costs associated with the development of online training curriculum are primarily focused on our cloud services, thus contributing to the decrease in cost of license revenue.
Current wording
Cost of license revenue decreased by $0.5 million and $0.7 million during the three and six months ended January 31, 2026, respectively, compared to the same periods a year ago, primarily due to decreases in personnel costs of $0.3 million and $0.7 million, respectively, and to a lesser extent, decreases in royalties. Personnel costs associated with the development of online training curriculum are primarily focused on our cloud services, thus contributing to the decrease in cost of license revenue.
Previous wording
The $8.9 million increase in cost of services revenue during the three months ended October 31, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $6.9 million due to higher headcount, subcontractor expenses of $0.9 million due to implementations involving our SI partners, professional services of $0.5 million, travel expenses of $0.4 million, and web hosting expenses and software subscription costs of $0.3 million.
Current wording
The $12.9 million increase in cost of services revenue during the three months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $9.3 million due to higher headcount and subcontractor expenses of $3.1 million due to implementations involving our SI partners, partially offset by a decrease in professional services of $0.3 million.
Previous wording
We had 625 cloud operations and technical support employees and 909 professional services employees at October 31, 2025, compared to 563 cloud operations and technical support employees and 794 professional services employees at October 31, 2024.
Current wording
We had 651 cloud operations and technical support employees and 947 professional services employees at January 31, 2026, compared to 591 cloud operations and technical support employees and 802 professional services employees at January 31, 2025.
Previous wording
Our gross margin increased to 63% during the three months ended October 31, 2025 from 60% 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.
Current wording
Our gross margin increased to 64% during the three months ended January 31, 2026 from 62% during the same period a year ago. Gross margin was primarily impacted by the increases in subscription and support revenue at a higher margin.
Previous wording
Our gross profit increased $51.1 million during the three months ended October 31, 2025, compared to the same period a year ago. Gross profit was primarily impacted by the increase in subscription and support gross profit due to the increase in subscription revenue and cloud operations efficiencies. Services contributed to the increased gross profit due to higher utilization of services employees and higher revenues from new subscription implementation and migration projects.
Current wording
Our gross profit increased $103.5 million during the six months ended January 31, 2026, compared to the same period a year ago. Gross profit was primarily impacted by the increase in subscription and support gross profit due to the increase in subscription revenue. Services contributed to the increased gross profit due to higher utilization of services employees and higher revenues from new subscription implementation and migration projects.
Previous wording
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.
Current wording
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 and scale our cloud platform. 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 revenue 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.
Previous wording
The $9.4 million increase in research and development expenses during the three months ended October 31, 2025, compared to the same period a year ago, was primarily due to increases in personnel costs of $6.7 million associated with higher headcount and headcount added through acquisitions, professional services of $1.5 million, web hosting expenses of $0.7 million, and travel expenses of $0.3 million.
Current wording
The $22.5 million increase in research and development expenses during the six months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $18.5 million associated with higher headcount, professional services of $1.5 million, and web hosting expenses of $1.3 million.
Previous wording
Our research and development headcount was 1,279 at October 31, 2025, compared with 1,167 at October 31, 2024.
Current wording
Our research and development headcount was 1,340 at January 31, 2026, compared with 1,144 at January 31, 2025.
Previous wording
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 as 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.
Current wording
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 as 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. Our research and development expenses may also increase as we dedicate more resources to our software development efforts and our investment in AI-driven solutions for our customers, as well as if we pursue additional acquisitions.
Previous wording
The $12.8 million increase in sales and marketing expenses during the three months ended October 31, 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, which includes the impact of contract acquisition costs and stock-based compensation, marketing and advertising expenses of $3.5 million due to the timing of Connections, our annual customer conference, which was held in the second quarter of fiscal year 2025 and in the first quarter of fiscal year 2026, travel expenses of $2.5 million, and software subscription costs of $0.1 million, partially offset by a decrease in web hosting costs of $0.2 million.
Current wording
The $6.0 million increase in sales and marketing expenses during the three months ended January 31, 2026, compared to the same period a year ago, was primarily due to increases in personnel costs of $6.2 million associated with higher headcount, which includes the impact of contract acquisition costs, and travel expenses of $0.7 million, partially offset by a decrease in marketing and advertising expenses of $1.0 million due to the timing of Connections, our annual customer conference, which was held in the second quarter of fiscal year 2025 and in the first quarter of fiscal year 2026.
Previous wording
Our sales and marketing headcount was 534 at October 31, 2025, compared with 483 at October 31, 2024.
Current wording
Our sales and marketing headcount was 547 at January 31, 2026, compared with 496 at January 31, 2025.
Previous wording
The $5.7 million increase in general and administrative expenses during the three months ended October 31, 2025, compared to the same period a year ago, was due to increases in personnel costs of $2.5 million driven by higher headcount, bad debt expenses of $1.3 million, professional services of $1.1 million, and travel expenses of $0.7 million.
Current wording
The $12.3 million increase in general and administrative expenses during the six months ended January 31, 2026, compared to the same period a year ago, was due to increases in personnel costs of $7.4 million driven by the impact of annual salary increases, an increase in the annual bonus accrual and stock-based compensation, professional services of $2.2 million, bad debt expenses of $1.3 million, travel expenses of $1.0 million, and facilities costs of $0.9 million, partially offset by a decrease in software subscription costs of $1.1 million.
Previous wording
Our general and administrative headcount was 481 at October 31, 2025, compared with 464 at October 31, 2024. General and administrative headcount includes facilities personnel whose expenses are allocated across all functional departments.
Current wording
Our general and administrative headcount was 476 at January 31, 2026, compared with 474 at January 31, 2025. General and administrative headcount includes facilities personnel whose expenses are allocated across all functional departments.
Previous wording
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 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.
Current wording
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 costs 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.
Previous wording
Interest expense for the three months ended October 31, 2025 consists of 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.
Current wording
Interest expense for the three months ended January 31, 2026 consists of 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 January 31, 2025 consists of stated interest of $2.9 million and non-cash interest expense of $1.2 million related to the amortization of debt issuance costs.
Previous wording
Other income (expense), net during the three months ended October 31, 2025 was expense of $5.3 million, compared to expense of $4.1 million during the same period a year ago due to fluctuations in foreign currency exchange rates.
Current wording
Other income (expense), net during the three months ended January 31, 2026 was income of $27.0 million, compared to expense of $66.3 million during the same period a year ago due to $53.3 million of expense related to the retirement of a portion of our 2025 Convertible Senior Notes during the three months ended January 31, 2025. Additionally, during the three months ended January 31, 2026, we recorded a foreign currency gain of $26.9 million, compared to a loss of $16.0 million during the same period a year ago due to fluctuations in foreign currency exchange rates.
Previous wording
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.
Current wording
The change in income taxes recorded for the six months ended January 31, 2026, compared to the same period a year ago, was primarily due to an increase in income before taxes, an increase in non-deductible executive compensation, a decrease in the FDII deduction, a decrease in research and development credits due to U.S. tax law changes under H.R. 1 enacted on July 4, 2025, offset by an increase in the deductions for stock-based compensation.
Previous wording
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.
Current wording
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 provision for the three and six months ended January 31, 2026.
Previous wording
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.
Current wording
The effective tax rate of 19% and 8% for the three and six months ended January 31, 2026 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.
Previous wording
As of October 31, 2025, approximately $82.0 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.
Current wording
As of January 31, 2026, approximately $82.5 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.
Previous wording
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 three months ended October 31, 2025, we did not repurchase any shares of our common stock. As of October 31, 2025, $138.2 million remained available for future share repurchases subject to our compliance with the terms of the Credit Agreement.
Current wording
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. We began repurchasing shares under this program during the first quarter of fiscal year 2023 and completed the program in December 2025.
Previous wording
Net cash used in operating activities was $67.4 million for the three months ended October 31, 2025 compared to net cash used of $62.3 million during the three months ended October 31, 2024. This $5.1 million increase in cash used in operating activities was attributable to a $36.1 million increase in cash used by working capital activities, offset by a $31.1 million increase in net income, after excluding the impact of non-cash charges such as deferred taxes, stock-based compensation expense, depreciation and amortization expense, and other non-cash items.
Current wording
Net cash provided by operating activities was $44.6 million for the six months ended January 31, 2026 compared to net cash provided of $23.7 million during the six months ended January 31, 2025. This $21.0 million increase in cash provided by operating activities was attributable to a $104.1 million increase in net income, after excluding the impact of non-cash charges such as deferred taxes, stock-based compensation expense, depreciation and amortization expense, and other non-cash items, offset by an $83.1 million increase in cash used by working capital activities.
Previous wording
Net cash used in investing activities was $138.8 million for the three months ended October 31, 2025 compared to net cash used in investing activities of $77.6 million during the three months ended October 31, 2024. The $61.2 million increase in cash used 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 $57.0 million, an increase in purchases of property and equipment primarily due to new office build out of $4.0 million, and an increase in capitalized software development costs of $0.9 million, offset by a decrease in the purchase of strategic investments of $0.8 million.
Current wording
Net cash used in investing activities was $204.6 million for the six months ended January 31, 2026 compared to net cash used in investing activities of $130.5 million during the six months ended January 31, 2025. The $74.0 million increase in cash used was primarily due to $33.3 million net cash paid as purchase consideration for the acquisition of ProNav, higher net purchases in excess of maturities and sales of available-for-sale securities compared to the same period a year ago of $26.0 million, an increase in purchases of property and equipment primarily due to new office build outs of $6.5 million, a net $7.2 million impact from strategic investment activity, and an increase in capitalized software development costs of $1.0 million.
Previous wording
Net cash provided by financing activities for the three months ended October 31, 2025 was $0.4 million compared to $415.5 million provided by financing activities for the three months ended October 31, 2024. This $415.1 million decrease in cash provided was due to $413.6 million in net cash received during the three months ended October 31, 2024 related to the issuance of the 2029 Convertible Senior notes and related capped calls, in addition to the retirement of a portion of the 2025 Convertible Senior notes. The remaining decrease of $1.5 million is attributable to fewer proceeds from stock option exercises.
Current wording
Net cash used in financing activities for the six months ended January 31, 2026 was $134.3 million compared to $259.9 million provided by financing activities for the six months ended January 31, 2025. This $394.2 million increase in cash used was primarily due to $148.2 million in cash paid for shares repurchased under the authorized and approved share repurchase programs, and $1.9 million from fewer proceeds from stock option exercises, offset by $13.4 million of proceeds received from the issuance of common stock under the employee stock purchase plan. Additionally, during the six months ended January 31, 2025, $259.5 million in net cash was received related to the issuance of the 2029 Convertible Senior Notes and related capped calls, in addition to the retirement of a portion of the 2025 Convertible Senior Notes and $2.1 million was used to establish our revolving credit facility which did not recur in the current year.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Term license revenue decreased by $4.2 million during the three months ended January 31, 2026, compared to the same period a year ago, primarily due to agreements that migrated from a term license to a subscription service.
Current report — wording carried from elsewhere
Our gross profit increased $52.4 million during the three months ended January 31, 2026, compared to the same period a year ago. Gross profit was primarily impacted by the increase in subscription and support gross profit due to the increase in subscription revenue from cloud migration and new subscription orders. Services contributed to the increased gross profit due to higher utilization of services employees and higher revenues from new subscription implementation and migration projects. These increases were partially offset by a decrease in license gross profit due to lower license revenue as customers migrate to subscription services.
Current report — wording carried from elsewhere
Interest expense for the six months ended January 31, 2026 consists of stated interest of $4.3 million, non-cash interest expense of $2.0 million related to amortization of debt issuance costs, and $0.3 million of commitment fees on our undrawn 2025 Credit Facility. Interest expense for the six months ended January 31, 2025 consists of stated interest of $4.4 million and non-cash interest expense of $1.7 million related to the amortization of debt issuance costs.
Current report — wording carried from elsewhere
We recognized an income tax expense of $14.4 million and an income tax benefit of $5.8 million for the three months ended January 31, 2026 and 2025, respectively, and an income tax expense of $7.6 million and an income tax benefit of $12.1 million for the six months ended January 31, 2026 and 2025, respectively.
Current report — wording carried from elsewhere
The change in income taxes recorded for the three months ended January 31, 2026, compared to the same period a year ago was primarily due to an increase in income before taxes, an increase in non-deductible executive compensation, a decrease in the Foreign-Derived Intangible Income (“FDII”) deduction, and a decrease in research and development credits due to U.S. tax law changes under H.R. 1 enacted on July 4, 2025.
Current report — wording carried from elsewhere
During the three and six months ended January 31, 2025, we did not repurchase any shares of common stock.