Guidewire Software, Inc.GWRE

Guidewire Software, Inc. Fair Value Disclosure

10-KFiled Sep 11, 20254 min read
Fair Value of Financial Instruments
Available-for-sale investments within cash equivalents and investments consist of the following (in thousands):
July 31, 2025
Amortized CostUnrealized GainsUnrealized LossesEstimated Fair Value
Asset-backed securities$69,405 $69 $(17)$69,457 
Certificates of deposit80,970 — — 80,970 
Commercial paper130,628 — — 130,628 
Corporate bonds424,791 545 (138)425,198 
Foreign government bonds1,820 11 — 1,831 
Money market funds488,854 — — 488,854 
U.S. Government agency securities66,184 15 (70)66,129 
U.S. Government bonds64,187 36 (39)64,184 
     Total$1,326,839 $676 $(264)$1,327,251 
July 31, 2024
Amortized CostUnrealized GainsUnrealized LossesEstimated Fair Value
Asset-backed securities$58,812 $116 $(61)$58,867 
Certificates of deposit46,900 — — 46,900 
Commercial paper138,598 — — 138,598 
Corporate bonds245,817 564 (107)246,274 
Foreign government bonds5,590 21 (15)5,596 
Money market funds360,881 — — 360,881 
U.S. Government agency securities33,499 12 (12)33,499 
U.S. Government bonds89,928 72 (117)89,883 
    Total$980,025 $785 $(312)$980,498 

The Company does not consider any portion of the unrealized losses at July 31, 2025 to be credit losses. The Company has recorded the securities at fair value in its 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 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):
July 31, 2025
Less Than 12 Months12 Months or GreaterTotal
Asset-backed securities$11,393 $58,064 $69,457 
Certificates of deposit80,970 — 80,970 
Commercial paper130,628 — 130,628 
Corporate bonds220,890 204,308 425,198 
Foreign government bonds1,831 — 1,831 
Money market funds488,854 — 488,854 
U.S. Government agency securities13,188 52,941 66,129 
U.S. Government bonds45,743 18,441 64,184 
     Total$993,497 $333,754 $1,327,251 
Fair Value Measurement
Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
The Company applies the three-level valuation hierarchy when measuring the fair value of certain assets and liabilities:
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2—Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and
Level 3—Unobservable inputs that are supported by little or no market activity, which require the Company to develop its own assumptions.
Available-for-sale investments
The following tables summarize the Company’s available-for-sale investments measured at fair value, by level within the fair value hierarchy (in thousands):
July 31, 2025
Level 1Level 2Level 3Total
Cash equivalents:
Commercial paper$— $53,102 $— $53,102 
Money market funds488,854 — — 488,854 
Total cash equivalents488,854 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 $— $1,327,251 
July 31, 2024
Level 1Level 2Level 3Total
Cash equivalents:
Commercial paper$— $38,156 $— $38,156 
Money market funds360,881 — — 360,881 
Total cash equivalents360,881 38,156 — 399,037 
Short-term investments:
Asset-backed securities— 18,826 — 18,826 
Certificates of deposit— 46,900 — 46,900 
Commercial paper— 100,442 — 100,442 
Corporate bonds— 177,081 — 177,081 
Foreign government bonds— 3,756 — 3,756 
U.S. Government agency securities— 32,605 — 32,605 
U.S. Government bonds— 75,966 — 75,966 
Total short-term investments— 455,576 — 455,576 
Long-term investments:
Asset-backed securities— 40,041 — 40,041 
Corporate bonds— 69,193 — 69,193 
Foreign government bonds— 1,840 — 1,840 
U.S. Government agency securities— 894 — 894 
U.S. Government bonds— 13,917 — 13,917 
Total long-term investments— 125,885 — 125,885 
      Total$360,881 $619,617 $— $980,498 

Historical Timeline

Fiscal YearFiled
2025Sep 11, 2025Showing above
2024Sep 16, 2024
2023Sep 18, 2023
2022Sep 26, 2022
2021Sep 24, 2021
2020Sep 28, 2020
2019Sep 30, 2019
2018Sep 19, 2018
2017Sep 20, 2017
2016Sep 15, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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