Guidewire Software (GWRE) 7 Sep 232023 Q4 Earnings call transcript

Greetings, and welcome to the Guidewire Fourth Quarter and Full-Year Fiscal 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Alex Hughes, Vice President, Investor Relations. Alex. you, Thank

begin. You may

Financial our operator. President Good is found both Alex in of Relations available the Form can which you, Cooper, everyone. well be Rosenbaum, issued section our disclosure afternoon, Investor as Relations. Vice to Chief Investor Jeff of website. our and are today Executive in Hughes, A And complete Chief of Thank Officer; results X-K I'm of Officer. with Mike release furnished press today as related SEC, our the me on

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in statements. may results to actual such assumptions differ cause on those information that For from set risks, uncertainties forth and the materially

release, posted reconciliation are of and the to investors. basis are certain reconciliation measures non-GAAP to of data commentary on website. our refer will measures A in profitability, IR additional also our provided provide in GAAP stated information also supplemental financial expenses otherwise. non-GAAP unless on press is All We a to additional on margins, non-GAAP to a

turn that, over call to Mike. With I'll the

expressing never hard going to felt in to culture all new and for and harder-than-expected, think the last but afternoon and a determination I and of determined joining their few years. and contributed to sincere the to fabulous this want approach cloud start software if Good daily today. work company, call for all Alex. on being a Guidewire category delivery for honest, us everyone was the model easy, to team of its I Pivoting a a progress thanks would by appreciation ended we're to you, Thank this sometimes the being everyone these steady be fiscal year. company it but that up result culminated leading

the sales unprecedented validate track. results fourth right very The were and on quarter we that are

that is the vertical the and steadily long-term with have are industry, building profitable, growth and impact lasting commensurate franchise will positive a on market leader. a produce a We P&C that insurance durable, will

the We in at the bringing under up and our million closed XX just We up quarter, XX% cloud $XXX deals the XX%. XX. year fully total finished million to $XXX in year in ARR, for ARR, ramped

the P&C I'm something the of, cloud built, geological the proud platform goals, is supporting acceptance results next of And our ahead and Underlying a growing industry's industry a these particularly positive year we solution operating of that significantly at in capable requirements, the aspirations. margin, that plan. generation we the have finished

a challenging and world We more efficient and and with with dynamic. dynamics operations and sizes to quickly new are respond distribution them to platform through new working carriers to in market innovation to to be their customers very manage of over now industry's products to business with uniquely help are and all positioned all engage channels the ways optimize the innovate help

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engage, and cloud leading innovate innovation to and towards affords industry redirect insurers efficiently. our this the opportunity us very now serving products focus to and clearly our the grow are the We platform that position enable

us As an takeaways that to call important end I incredible out and for want an to I are several key said, it strategically. was incredible year

broad-based in up both success saw in First, our see position quarter great new in approach and migrations. this a and X for suite with of we is on-prem insurers. momentum platform. in cloud logos balanced go progress and market notable geographies saw momentum cloud a and The to forward market. bolsters insurance Tier validation all Guidewire key strength We centered platform continued the our confidence sales made ecosystem We our on to the

time. Allstate at now this win one insurance our with a suite partnership the full and in relationships Insurance, auto Guidewire a core lines quarter, Based highlights with closing Canada. success these X over the North business XX Tier insurers on relationship to is of include have potential to of XX at XX of systems the the This quarter insurers, X some progress win in phenomenal expand leading specific their exciting and Cloud brands Sales quarter. form with globally, includes Tier XX of Progressive top this including with where deals America, we non-personal

segment set this This and fact requirements. validates of placed of have we the strategic it's focus very market specific the demanding always that on and unique

platform by further expansion is insurance Guidewire wins This local IAG, serve. a on the of GWCP insurer validation Pacific a is choice Australian to major to market combined of We with we required right Asia tremendous key the global our in market. This every success three our content in and international in with two ensure platform. Cloud was leading commitment approach drove policy Europe also and adopt highlighted a center Guidewire from

on our in our this platform cloud center growing our I Guidewire and competitive to market displacements the an opportunity Insurance to that momentum to signals from processes of in believe in I West previous speaks rare record market claim to QX, there and we are mentioned Bend Mutual in As agreement move their takeouts. have our continue in calls, with completed strength And claims we is competitive to track vision. area alignment for recent us see platform, the industry

a Tier X a at And finally, represented competitive insurer, also it its takeout insurance which five last the win was in now great to largest achieve see years.

challenging I were to is I stress in decision expected and P&C transformation that have with close, was us last forward quarters gratifying core consequential to in strategic they these a embark carriers our complex As on quarter highly of through supports that very the dynamic last driving almost the to of so relationship on and The working the and company environment through a midst every are this deals the world. working the in believe the I decades. insurance market of follow is that in has mentioned and call this many to trust It insurers fact our placed expected look see on based we company.

on as fiscal with to ecosystem make industry Turning to this Supporting this XX% X,XXX now over integrator momentum these Guidewire growing is Guidewire continue be with adoption, valuable and to to and XX,XXX the ecosystem cloud continue new grew our Cloud who we and in we consultants Platform quarter, enter XX finished the system in over the healthy total fiscal year partners a transition year. core in cloud. that continued We our go of a cloud lives of certified we deployments position are success. progress for Sis,

were the our leverage talk efficiency, and Jeff along operating beat our in grow but Additionally, ensure year. a also this a Diego overall. significant more back we cloud it us are model. secure our better in teams steadily efficiency target operating their efficiency company crossed means we to able cloud into reliable The of and this building driving development gives into doing we're that will about margin to service, that ahead work to we and continue continue improvements we This plan drive is increased with milestone more minute, tremendous. confidence achieve in product not we to are out but positive will targets was only grow that and a meaningful Devalle

fiscal our healthy. ‘XX pipeline entering Finally, is

path continue competitive and enhance continue non-GAAP the analytics we for This release, marketplace new margin. of we position $X hone sets customers our up improves applications clear XX% to on targets as billion each our with continue us we and offerings. operating ARR our ‘XX our our to year of offer as a capability to in data improves. The to of grow the we value and proposition As partner ecosystem to our gives and us our well fiscal platform

in they we Jeff deal how dynamics will But our seeing translate our and talk and business, success tracking ARR towards are we platform, fully great targets. the how pipeline, feel coming and QX, ramped ARR. to the tremendous our about more our long-term of customers a are about out

Jeff. it turning before comment Last over to

and more positively While in to financial a the we of the we done potential industry targets, meaningfully created us the have to are position to our hit we we've are work proud of proud we serve. impact put

us and decisions the our industry, the transfer platform corporations drive processes and affords as better cloud leading efficiency improve focus broader which of amplify position the now manage opportunity families, for Our the industry helps We business on ultimately to outcomes. the and the P&C people, can insurance legitimately improved that risk.

I'm mission about on all sitting Guidewire everyone in driving very forward. continue motivated excited I'm and this confident at of that this potential are behalf to we

Jeff turn With to financials. over I'll to discuss it that, the

million, currency Mike. constant Thanks, year-over-year ahead ended expectations. Fourth up ARR of $XXX.X XX% our at quarter a basis on

$X.X year-end our activity Making then quarter. measure update this modestly year on of ahead rates. strong we ARR ARR in expectation the very and a to ARR was by constant update basis million. $XXX.X resulting due million, in of This reminder, a currency impacted As throughout for the ARR FX outcome sales

compared was saw XX% again, execution growth ramped which Mike a in currency defined on as grew ramped customer This of As reflection QX and annual acceleration noted, a ARR, largest ever. this year is XX% the our tremendous a activity. and constant meaningful basis. quarter outlined price our sales contracts is last the QX better-than-expected is year-over-year Fully with fully

was the our revenue all to have cloud, $XXX Total year-over-year. all of QX strategy and which to strength subscription XX% million, validation for to line. in total cloud Our revenue. be activity ahead visible Total ARR, in subscription of is a see across move industry. the revenue, comprised up Cloud of It XX% due as exciting Notably, includes was year to of progression which million, expectations modernize for XX% that continues grew work to of cloud is products sales stronger the performance we components revenue ARR. for this our $XXX investment to contracted year-over-year of ARR customers our our and

Since subscription revenue was products. $XX delivered year-over-year. In just of CAGR million, support XX%. have revenue from primarily $XXX XX% and was over XXXX, million, up acquired that point, Subscription we our five-year a

support and discuss XX% to up on year-over-year. million. was margin Turning basis, our XX%, Overall gross profit percentage a increase which improvement to margin year last ago. subscription This XX% the on Subscription XX%, point year, $XXX a line. over non-GAAP will year, margin gross driven gross fiscal compared for we profitability was was X an was by

the running We are with at on platform expected cloud a scale. associated delivering benefits

was the under overall services utilization positive includes ago. This we ago. margin QX, time services breakeven, to have Notably, is X.X% our about negative some Services arrangements, compared gross XX.X% bid away just year year subcontractors, X.X% fixed to lowering compared for rates. due multi-quarter to moving in gross a talking was strategy positive increasing reliance been on from that that a and

'XX our progress with and this expect FY to into pleased are beyond. here continue We and

X% activity than ended for range shares at total our better-than-expected million year. $XX.X expense Overall stock-based our Operating of services the offset last a XXXX than stock-based strong year, profit. employee ended low issued management $XX.X due better than gross the compensation was expectations million, million guidance compensation million revenue, up repurchase levels. in due higher-than-expected compared little $XXX higher income effects Total and to and and Share attrition dilution. to $XX.X outstanding with more was

share. year, at ended at million an flow million. $XX per price bought average the of we the X year For cash $XX.XX shares Operating

priority to expansion. are We strategic cash, the million our margin in of our ended multiple to industry's $XXX.X XXXX of with in quarter investment quarter. the business cloud our drive core efficiency and cash key After pleased in drive a was in years collections systems, adoption equivalents with We investments. and

strong pleased profitability key see We to are progress measures this year. with

our We cash long-term are generation accelerated have position. established market-leading and confident in as potential we our the leadership cloud

turn Now outlook. our me let to

growth the into ARR For currency embedded force ARR million to XX% growth we representing committed 'XX, at fiscal these our to XX%. expect rates FY $XXX XXXX, XX% to In The to cloud expect constant accelerate between million, $XXX we are and driving behind contracts. midpoint. of ramps

ramps we our As look see metric of XX% fiscal for noted, I've ramped in of deals already When annual XXXX, three, is full growth year This this fiscal pronounced at XXXX. fees grew the which shape ARR sold is year. the we XXXX. the on since highest a acceleration this in

the $XXX for to Total between be revenue expected and year $XXX million million. is

be XX% of $XXX approximately as installed continued million million, to base approximately expect will We $X subscription revenue our that in about revenue representing $XXX by will subscription cloud, support the growth. a decline migration year-over-year and Support result in million of revenue. resulting

reminder, for included the cloud fee. license As are subscription in customers a revenue support to activities support term attaches customer

We revenue to expect steady migrations. license due decline cloud progress to on

Our outlook approximately for revenue services million. $XXX is

are to We with with approach shifting our this standardize our This services approach. our Guidewire allows investments partners Platform. have align to to Cloud us made more work industry work who partners cloud to large together on

margins the margins be approximately to margins total gross expect approximately support XX%. professional for services gross year Subscription XX%. be gross approximately and XX% to be to We and

this drive between operating for income, an operating respect with we year. the expect as are to fiscal continue million improvement. million and work to income of We pleased to With we progression $XX margin $XX

We operating to in expect in year fiscal expenses growth XXXX. to be muted continue

in million. Cash is flow fiscal be expected between from $XX and to million operations $XXX XXXX

are capitalized software the million including between development costs. and for expectations CapEx $XX year million million, Our in $XX $XX

release, QX but can found Our press in be outlook more bit me a earnings provide our color. let

deals in first expect have sales quarter, slip the growth activity many for strong expectations. ARR impacts QX, sequential QX, we not so did typical which we Given seasonality our into

of and and approximately approximately We support services of subscription $XXX expect million. $XX revenue revenue million

sales and related commission flow. are to which employee out paid QX, in QX expenses cash bonuses impacts annual Also,

follow we we experienced a from result, similar pattern a last expect As to cash to operations flow what year.

Finally, for targets let a tracking comment 'XX me some now. FY about make been our we that time have

address detail comment We at a more quickly Day, will in here. but to our Analyst make wanted this I

achieving of to the billion our remain on strength revenue ARR of and also tracking to QX $X in Total activity range. is prior Mike sales As noted, achieving goal. focused we the demonstrates path target that our

and On side, at the closer ahead for cash of gross Day total discussed that discussed the expectations ranges. margins subscription gross the we're operating margins are for our flow a now fiscal margins, of finish progressing and we to from bit previously margin operations Analyst expected support XXXX plan high and end margin, last to

confidence to our allow are FY us long-term We with the thrilled progress to deliver in increasing targets. we made 'XX towards

at the thanks In to for cloud bring. we're special team fiscal company fiscal Guidewire to of for has what have the Guidewire, We was will business in want a through built a helping what summary, finance tremendous manage excited and and I to able what are complicated XXXX team accomplish give been transition. XXXX model proud

questions. open that, to let's the With call

be you. now Thank Thank We’ll [Operator Instructions] question-and-answer conducting session. you. a

Our proceed first Becker with is question Please William from question. Blair. your with Dylan

for some there's help 'XX I parts is moving a 'XX ramped here. to can that activity little of job it subscription encouraging instilling I level guess just transition. on on sounds to puts Jeff, Great the the like bit relative sense really the Mike starting what's healthy, the outlook guys. targets. of time-based the and still color and outcomes activity sales of guess maybe of an the offset Jeff, kind the Hey, kind here, confidence guide give a like some Thanks. of relative model the the takes you set us appreciate obviously, And and tone on is the services seems very with 'XX? clear front, kind and but of of

So fees number of rollout to our schedule, more shape taking contracts. impacted know, be with We in these the environment that with we're QX. support activity We're we in as these develop. cloud time bit ramps contain some we're their these transact We Yes, in typically thrilled including implementation investment. the of you potentially call the were quarter case strategy to to and we factors, activity last the that our ramps, and and multiple can the what ramps, ability we of are by a business noted little thrilled committed of And seeing the contracts a with right? saw insurers years absolutely.

Ultimately, I ARR and the with ramped getting That what most of also the really in thrilled that attractive the we to our saw outcome. an care I was value growth to drive underpins XX%. quarter fully is about that fully to activity ramped

And slower FY had that backlog material we as really development so we we some of in of the how about. analysis the come inspected and good underpin a a into of the much impact see that an cohort see QX, off 'XX, acceleration bit giving how of 'XX. sight longer-term But deals activity kind FY of outlook in in that little for did in the ARR targets -- talked a of in our and the us line also will our we we

just in foundation set as for thrilled general, think FY we 'XX us So 'XX. to about with FY activity and the up the

Great.

Okay. very level, Jeff. you and what can a intelligent that foundational like courses analytics idea right, of shift maybe these to embedded from an helpful. underwriting switching That's the models. and how to kind a over Mike, Thanks, look of in core

you You both of core fuels there importance map innovation innovation, emphasis like that this product what sense the versus how a and shift traditional your on the well? what but in it system carrier guys. maybe road strategic can as incentivizes but out was called a of Thank perspective ongoing change look from also does how an kind

we're we about winds terms our script Great Guidewire. taking up very was vision carriers aligned -- much being Thanks, talking in what where the think the of strategic with in it platform question. to Dylan. And I I and for what

an system policy the database definition needs be. what of I a most for record needs of maybe claims much to and see system to It anything record. we with But core insurance do of a platform necessitates an platform connection about because to boring think that just a to if basic be that really -- with you doing opportunity at core builds. more innovative think so company

running not better it's build platform, able the to And any and to incredibly interfaces to systems on intelligence automation. you transaction. piece to connect hard brokers, into to this to We've of any it's drive process workflow it's core it's to also ensure agents, worked integration, to they as embedding be the that data, analytics so just to say, every digital obviously, And to need analytics, and you're is customers, system. that connect efficiency we're connect capturing business

every analytics connect happening that's storing into single them our We're to to in analytics to data every the companies able do that period-over-period business need thing change, multi-period, platform, do that really complex available to basically just to stored be insurance able they be to systems run do of to able that be they and need be as to to on deep in use to and predictions to run decisions. the better business operational the to sort able platform financial to make allowed these

that industry our know, starting I the this up in year. attitude, more for to We we've that this easier execution better harness to customers We demand in said, see and we broad that and and I it's efficient, QX reality this product saw platform, we fiscal in the for and don't industry. of that the picked in see easier with that we're And that want easier like be insurance done all to and think and like leverage.

of we're be So I efficient, it. the question, and and get to get more the going like industry do because that part smarter we is to excited really think

solid a you Thank guys. again it congrats Perfect. on and Appreciate very QX.

lot. a Thanks

you. Thank

Goldman Our your Please with with next question. Sachs. Kumar question proceed is from Kevin

question. the your Mike, on other vendors. Thanks displacing for comment on taking

that quarters row that's a you called in think X that I out.

or common there as a is these curious, themes modernizations? forward? I'm pain a So point you specific theme that's going catalyzing Do some durable this view

depends. running better a just And there's platform multiple are frustration with is we and I'd with not understood to associated of There's track say, say up. successful with -- It I'd the in to is where of there's this. -- frustration this with our vendors. production part have one. But context to, specifically bit establish yes, implementations vision bit maybe the is it's and alignment thanks of now installed say certainly It's like incumbent the that our what innovation on for the the record live that and it a been that system. question. vendors I the coming would frustration able

perspective partnering I think and get a get think get it years my absolute I through it painting and go it the sell ahead if to and project at there's get been Guidewire, an around companies implemented about the four to us with in and change it and live confident now of confident and vision becoming this running. is vendors. that integrators having feeling in helps very that we're with experience might norm the much alignment other that's feeling something the these sort more the to something something But systems juxtaposed companies in vision are to that very be

sort of it We so we're was this of to out a legacy of perspective case, change think one is to targeting positive Guidewire of what But quarters are thought market open could this. that addressable you Guidewire. that in is broaden row in redefinition call That's systems like seeing modernized, how modernized is important the for reasonable already we kind to but that systems. up, identify us. that And called might not a of significant total about we because you you a if a couple it it only think

very, very about you, it. excited that quarter excited to we're ecosystem. excited other every to to these more fold examples, the and welcome we the And to Guidewire so tell see customers And but

what's guess pipeline to more of terms And helpful. confident migrate? terms being implication really migrations? I you of your to about partners. of ask acceleration, wanted Great. specialization TCO out in general, And then the in migration there are the rolled the to in that's I That's feeling

can learning people, the necessarily a migrations. going rate about we it's bring in that projects we what more run confident We to more broader extending feeling things business do successfully wouldn't ecosystem bear that to group that. the that that horsepower the definitely all go that identifying sort that the these expertise, smoothly. We're in need to for to have or work us. of to executing that of I pipeline excited say ensure of of these to so we're hard change SI about that we And do

signal more it the we you think to the confident -- is as now specific got with and like years. I that programs start horsepower ensure enough to that forward specialization partners so in should see that to It's we these demand we're partners to the extend next the so can enough build go to these few meet I said, we've

new great progressing been and is quarters balance it's Really, couple very well. also to between customer over the the past us and for which our see the of migration the then base, new in business of bookings deals

So I guess, picked quarter. yes, program, we've you that launched that that glad this on up

congrats and on Thanks the quarter.

Hey, thanks a lot.

Thank you.

question Our with from next question. with is Please proceed your Parker Stifel. Lane

looks the 'XX? Jeff, Thanks. cloud context XX go XX acceleration questions. is fairly for for there in baking the thanks of like that the in guys, ramps in of and Mike here, Hi Is primarily something of else you're conservative. is deals, outlook it reflection pronounced a Or taking the lives Yes. there? fiscal XXXX

Yes.

guide expect give 'XX to that contracted ARR waterfall, 'XX, into it's us on already that beyond. expect the what provided. Then the what the should visibility good Jeff we and agreements 'XX, we've already projection have contracted that gets think shape based on we like of see we've said, pipeline good we like to in Jeff what into explained the us fiscal will should in the right, internally very call two I done. for a ramps we add flow that the and visibility One, that things. model based we pretty we that into already completed we that

really to how if really doing right want really you powerful we're you now. But -- great how business is what's I understand want the think critical and

in we we you fiscal XX% look 'XX hey, and growth coming growth If in And the felt in confident flow based that ARR of at ARR could still effectively fiscal off ramped the that. we we in that the are year-to-year. could to targets. signal the got in that with 'XX, the on rents we And stick to looked at ARR, fully guide acceleration comfortable

it. So that's driving what's

that we Like it unique of great bookings, we and up these able to signed so get was to it's and of the years we do. may we as be nice be sign relationships a the fully on a for business nature the for. that that us out did. year But And the visibility be it committed was great, have much into contracts ARR year as it to deals much to this ramped able add is

services a Got combination it. you one. here, more of subscription quick year Is one margins, a next reflection Jeff, profit Very a for helpful. of the both? just for gross or And or solid you the outlook improvements on made support and

long-term are margins drive generation support and ultimately subscription going the this the look, cash to business. of mean, I Yes.

have in that have the But a positive I significant, there year, this our improvements plan look made to to we services driver. to the organization and that's work so healthy. I And want to the that's QX, the as we're been margin strategic services very we've the pushing margin returning continue a business, We we key think moving of drive We solid lot very back that think to high-value almost do at work. forward. partners. think

going we're to business, more basis. that to manage we gross manage as dollar And profit

That's good that's outcome was for And our dollar guide. profit the our little into below came Guidewire. a million bit but so above in $XX gross a our expectations, implied revenue if

that So but to we contribute, which organization's feel in ability the confident is great.

quarter. Makes sense. Thanks the again, Thank Congrats guys. you. on

you. Thank

you. Thank

with proceed BTIG. Please Matt from your is question. question with next Our VanVliet

little a question. guess up following Yes. Good point. I last taking afternoon. Thanks for the on bit that

cloud with more able skidding at is tell as the overall on point ramped truly up. to the business, more of expanding us fully FY some happens business? impacting as from the to deals key gross you legacy levels 'XX, more indicators is too get the of down underlying that complexity the more a and to your Looking margin shift little that are costs answer at early the you sort maybe Or ramped mix of realizing profile. is Obviously, it get to of of specific the more some support those you the margin that it deals look around of or cloud efficiencies any But really there migrating? those on wind customers given

and deals, going more in going take my to a say. cloud sell quick ran been margins we happen of it. by you continuing platform. to more continuously cloud, Expanding the And this view efficiency as cloud at have ramp time I'm into continuing fully to to improve Jeff those add executing deals selling values let to pass are I'll the as to over the

of it's both those So things.

against we So becomes we're each very that headcount increasing these release. that we're services way a the top more and platform carefully, that line we're such using manage optimizing period, the expense continuously efficient fixed each

said, Cloud let's want two with it. not previous going manage right say, the dependent So by into did the to margins or of other our to we the that -- those customers I combined are customers, targets things need do say, projects, legacy these to sort be drive dependent through and execute margins. calls way through we're quarters, That's migrate work efficiencies to those but transitions. We achieve to people these targets. going those versions But those our to cloud. as of to We're hit platform. to you in -- with I've the able what we're and phase see I are the the first think think Guidewire those and engineering retiring them. like, think, the going what can I on we're grow to them don't of I these, improved like, we're that on going

manage I Platform. are kind And that. Guidewire look, the those started mean, developed cloud on standardized just think add. Yes. I'd of Cloud the I platform. as this outset, scaling We transition, -- for cohorts And learning we customers we that more what our through requirements we we some early of now

platform, ready folks hired make the now to bit successful. I we that as that a can we in make scaling that investment. early some talk period time a function to think for that cloud the we're us building sure sure you've And heard we had leverage operations out cohorts were of

demand cloud we had So incremental count don't ahead benefits for. the that need because to we've and now hired planned we're scale add we of head curve that operations seeing

playing In thought the out would. kind general, of we it way is this

here Now thing that cash in embedded other is the lose ARR is cycles. that collection

we're And of a so where really sold cohort deals dynamic Subscription in we XXX. FY the When the about, we we seeing normalizes have talked 'XX. FY step-up revenue under that that look at 'XX. healthy in ASC this

very subscription growth. durable continued percent seeing of of our also guide are and contributing story. which midpoint healthy expansion so implies obviously margin the XX-plus revenue revenue to And the And we is kind growth, subscription

And helpful. a would either in for the of you of Anything been, look of or now. execution? quite John to a the organization you Mullen you SI of on as while that? sales been of him Very the credit here you'd kind point has partnerships And expansion Okay. much head back just in the the has the meaningful continued kind flat-out shift process with then touched that

that a the maturation in time, that? highlight the that been sort enhanced you'd Guidewire? investing been for Anything they've table of and long a it really just industry, of a brought kind Or to change of Guidewire just sea the he's he's for really is has practice

credit the addition, to been an incredible has that We leadership feel here. leadership I team would Laker, the successful. that David projects Chief and has been Customer And customer also our incredible driven the what these sure follow-through addition to our now an Mahoney, to it a of of to around making John Colby, the we've who's she's great say Michael us been done an team. Officer, ensure joined Christina who he's are that team. addition lot give Yes. about components incredible also

the feel general this experience the successful what to of takes that has innovation increased that with we brought and be sure, maturation for I and team It's and It's for it the about the have the around projects. an ecosystem the their sure great contribution. the by part team the product as also these organization and energy to company. driven

wait of charting of at -- course the insurance to on I are wanting vanguard conversations certain we've the wanting the other the ahead kind new be and buyers companies of have think not talked see of these about with who we the times until exactly to programs them. that with these they numbers success

experience numbers now across that customers we quarter gain sell starting Guidewire successful line. kick every by seeing you're is experience maybe deals dozen the digits triple a maybe that right, helps Well, need Cloud of these production get as not to us over of -- to but helps in, finish in go-lives. the confidence and tens growing That XXX yet,

that but that So added, the a rest of certainly, to contribute we've team John and that lot it's also the things it's of success.

in Tier over don't around And insurance amount into finished John not. would platform. really run just going helped company that prepared scale was our into to embed focus has a think X, our efficiently thing about, more of and X solutions, have we're and we're specific time platform around We spent worldwide deeply our Tier effort successful, because and going the us I'm we Tier be I reflected top ahead a say to and thing additional world done. one is that all get our our myself and never somewhat us the reliable enable of it's this where we huge to now secure, insurers work that's we And that that and to going as how X, an I the are about a on want can think to of describing building was to think attention remarks was opportunity products, kind that in value and highlight the into platform. I

can and carriers worldwide. start expertise what got really insurance effectively innovation can really embed and helped attention He's insurance we help system the more it's to data processes needle and more for where really creating can point claims helped the around has to the efficiently to around more is the to the that industry refocus bring But move and bring analytics harness run what John our to that that. effectively, we us now see underwrite risks analytics

And factors contributing in it and the great about the said, team to of so saw like I saying that just up I it's lot feel we like these quarter. success I'll -- by the just sum a I

Great. Thank you.

you. Thank

Ken your from with Our next Wong question. question Oppenheimer. Please with is proceed

visibility to the by last you and some called taking for of right your of I thank on wanted my pushing to Mike, touch maybe Great, little kind out some ARR of trends in the you a customers. bit quarter question. that just X guys caused across of DWP the terms

that didn't assume mention quarter. some guys Is to perhaps on Or to fade? it You started really this any in of fair update it that front? case, has that any

Sure.

that We continuing that So way it to We did, the exists. work now. for with that however, exceptional investment is a the we on are the immediate sales and the they're I through can challenging very economic companies And tiny beyond on We bit. it what see touched insurance quarter. the the conditions an QX. And that chalk would Guidewire insurance result bit in out see stretching a to I deal in in right through up idea in still environment operating touched industry. definitely it quarter. called this a

with connect up if cases, effectively operate is system back, enabling different processes brokers wire instead customers effectively. their new some And more they mechanism holding as Bag more them ways not have claims in a agile, to core about for but with dealing even in that open challenges reliable them to these channels thinking an to

still is a it challenge. So

it quarter. would were the are the we have, of exceptional closing But the have types the And impact able deals of to say as in companies. an structures and negotiating on said, deals I outcome that I with these an and does we

reality, our carefully and in -- suppose, both insurance to so customers exists, them so And things industry we're with navigate working the But this. very can I still help that be true.

Yes, our add we through environment. optimistic about is I quarter, would the thing talked this being transact last to about cautiously only ability

ramps more did materialize meaningful so I a and in historically we ‘XX. But think obviously ability into we're to the than prepared has talked we ARR seeing to with in ‘XX our bit we coming out we are that longer than QX, thrilled transact. these some seen -- taking little FY remarks, that of impact had of what FY about see this

So kind we that obviously to transact in are to quarter with bit, last quarter. that continuing a of but ability the our thrilled introduced we see theme

you margins, a step-up look number? tough in out are closing in subscription a be from guys Got of again, us guess, you nice walk are I results quickly to Can closing it. Great of environment. at see the 'XX, guys are where building Jeff, you the fiscal through I to it. I And strong trajectory, and on Got you when guess guys just Yes. 'XX. would I exit off sorry, takes this what maybe then, QX some puts gross mean, million. where the $XX at support -- higher from in was on fantastic -- it 'XX very why and

has delivered been months, a a the 'XX expansion. this over lot Obviously XX us. last Yes. margin huge of And focus for

things in of a of to of ‘XX. of -- I kind well. taken variety think advantage have kind that There's that we've we've executed move quite

have were look that ahead a As to we transacted. lot we ‘XX, of deals

use our to platform. start seeing start we'll using see the so customers scale. a more And the bit existing in We're customers to those platform

So as that ahead, us seeing we model, have think long-term and I we're with both we for the kind flowing our we're through But ‘XX proud our trajectory -- how near-term of that overall combined in we're look up growth. of revenue and sets the targets?

it. Got

so guys. fantastic, Thank Okay, you much.

Thank you.

you. Thank

proceed Michael next from question. Our Wells Fargo. is your Please with question Turrin with

for Turrin, Unger is thanks. tonight. Hey, Michael This David on

sheet you. to Can on think seasonally us capital Great a pecking me. order cycle? the point balance at with for XQ. remind to the one the allocation, see meaningful Thank best way strong you about Just in guys cash the this

balance we are -- mean, we very Yes. sheet. strong I Look, from having benefit a

appreciate these decisions our customers customers long-term consequential are Our that are making.

of do $XXX range. they kind kind partner talked can and of companies running about million need talked that minimum that about they to the the this we the appreciate well-capitalized a about that we've in business, we've talked really past, to support cash as operations of million in balance a we certainly with. seeing what $XXX When So

been activity. doing repurchase have some We

we then And in space. are long-term, the think obviously a acquirer logical we over our

strategic in we where we cloud -- where transition. for good environment That's in about cash the some cash. about And it. we maintain we're think are So how an very feel now

about start And strategic more more, will to be and so continue it's you to we with possible us could a thinking a M&A. bit cautious and although that respect bit M&A disciplined be see price

Great, you. congrats. Thank

Thank you.

Thank you.

Bank America. Please Our your next of Michael is with question question. proceed Funk from with

could. Yes, And thank question. if the I maybe two-part, a you for

the the in fewer confidence slipped XQ. To think Maybe pipeline, for then answer contributed how pipeline, unique in the that along into year? addition question, are? anything the that about the pipeline mentioned size that those of deals You And guidance happened earlier to to there. far to I deals how deals guidance also, in the talk in XQ, contributes and the for

in terms ways, Yes, we for the us of percentages a a sure. deals strong close normally you closing, was team in Like of in just that very it and said, our which vision relative and lot expect validates would to execution. QX,

So this is phenomenal.

have end deals software into have up with you great slip QX. companies. And QX, the into when fewer a quarter you you first deals Sometimes, slipping

slightly factors that like news, not close deals right? QX bad it's the perspective, You want better news. early, the to into that's So

that success. in about now about to year. over a We've fiscal in throughout of couple prepared business those a the years of described the -- about customer things, good Speaking feel we're the we lot track remarks. right I feel strengthening, our point direction. good the position in past real We linear to my pipeline, drive the that good in visibility the the record we we're are the for The more position, hard worked is about competitive all year. feel only we product have the as confidence We have the of good

can. fiscal So much as deals earlier pulling possibly in as of the the we year

into say, thing this into closed going that us just gives amount significant year's I'd the customers. ARR is we there's ramps ramped the Jeff the also and a talked with about, of thinking over way keep how I'm our but to Guidewire is the we we This that percentage ability in is building increasingly But transact company. a way running investing. way is what think flows other the about confidence, ARR years. fully multiyear This we the that about think flows And mind project about the closed, our like to as a like to business, do. few we're we in next

durability These that. are establishing of and really decades we're that speaks the to relationships relationships the long

-- appropriate fiscal And we we're feel ARR so QX, or also feel Yes, confidence how And it's acceleration it's a why a -- fiscal talking now in about how and in that's that -- it's we project we're for we it's business lot year the very -- of in good think that's to sense then executing and it's 'XX. just we're of right us think reasonable -- the like also year. why we almost about like And talk we're about talking 'XX. fiscal

the hopefully, enough sense So confident business right you how gives of we that in now. are a of

Thank much. It very did. you

it. Appreciate

are the further questions floor this comments. would closing hand Thank for There any no over you. to back I like time. Mike at to Rosenbaum

exceptional for in an you thanks, to Connections the of at in say all fiscal Nashville the I to say, hopefully, participating everybody the for wanted can was excited just just going you everybody person QX make Analyst us Day We're you really our exceptional We it November. an it. call forward in see up year. prospects and event if see and coming of business we'll that wanted today. is seeing And I not hosting to We'll -- looking in everybody, forward. about

much. So very thanks

conference. concludes today's This

your at disconnect may your time. this Thank You you for lines participation.