GWRE - Earnings call transcript Q2 2018 | Guidewire Software, Inc.

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Operator

Good day and welcome to the Guidewire second quarter fiscal 2018 financial results conference call. Today's conference is being recorded. And at this time, I would like to turn the call over to Richard Hart, Chief Financial Officer. Please go ahead sir.

Richard Hart

Good afternoon and welcome to Guidewire Software's earnings conference call for the second quarter of fiscal year 2018, which ended on January 31, 2018. Hart. Richard is name My Officer. I am me Chief Guidewire with Chief Officer Officer Chief the call Financial Financial incoming on our Guidewire's Curtis of are and and Smith, the Marcus Executive Ryu, our at A complete disclosure furnished our issued Investor our available results to in section ir.guidewire.com. the as as our Form of Relations press which on found well are can today, related release be of in website X-K SEC, of both the

is being available call and a of As call. be today's a recorded replay will following the reminder, conclusion the

During our today as are the or in materially. views subsequent of regarding performance the to Factors of call, our acquisition recent any on and we be trends, Securities will filed representing update the and with the based XXXX Form Please make forward-looking views as current management's most anticipated with forward-looking forward-looking XX-Qs not disclaim and to the statements activity. These business, our SEC. of Safe and may the pursuant provisions Litigation to expectations strategies of XX-K relied including Risk differ as Harbor Reform Actual developments statements obligation Act results Private connection any We should of date. refer upon recent any outlook. in statements

Reconciliations A release. also IR site. will press our non-GAAP of reconciliation to in investors. additional provide refer in a GAAP also to our posted We to is on information certain to non-GAAP data measures additional supplement measures provided are financial and

into With me Thank our updates may These we the may in then in may outlook you. provide offer incremental or of turn details I During XXXX. questions. the details will nature Curtis Marcus and our will over prepared to business. one-time I metrics the our and greater results we future. quarter having to let the insight his on and provide provide take that, QX call, may provide not before be dynamics and for second Marcus then remarks your for call fiscal

Marcus Ryu

Richard. Thank you

second with $XXX.X financial non-GAAP increasing ago, revenue exceeded $X.XX non-GAAP Our revenue of a XX% guidance and from and share. ranges per results million, our earnings quarter profitability of total

in several growth of be part all above the representing our transition at of sales the augmented utilized the already XX% into Total quarter, of were While both across payments heavily a is large growth for Guidewire the which to high-end sales year. than sales new going team due XX% approximately benefited growth continue to our industry ahead services cloud revenues to based expectations from revenues as the the license closed also early our anticipated. subscription in solutions, we expectations with customer services for geographies. This P&C and in continued revenue were end number of of to by significant earlier year-to-date pace as delivery of

systems are While our the services relatively number cloud-only, InsuranceNow. InsuranceSuite Cloud-based drivers core for still midsize seeing simplification non-core adopters earlier are as benefits concept broad Cyence regions and a Underwriting of the of solutions, are but Cloud to and cloud insurers but interest insurers, as core are all Management all such subscription insurers have risk of well. Predictive our sizes. P&C from we main of Smaller been and revenue compelling Analytics, of the and are increasingly transfer solutions new insurers in and products

us this to business and The future cloud production breadth to X services part, to approaches believe, and our carriers to For transition lines invest their growth for continue option a cloud. teams. of in of operations we cloud-based motivates demand creating, business large existing new their considering also of Tier are books aggressively initiatives the

both Franklin from we UPS clients quarter, the of to auto, an also financial was activities insurance. customers. In services insurer, and independent which lines InsuranceSuite selected and selected and company, New provides selected insurance a new Mutual, by farm which mutual residential, new exclusively and for activity licensed sales and insurer, Berkshire personal Mutual, Liability Jersey-based provides commercial Capital, America, and at software was BillingCenter and UPS such enjoyed and We commercial States mix which existing Commonwell Group, Looking InsuranceSuite Rating a as agents. Hathaway North ClaimCenter. selected again Ontario-based a that customers, by billion commercial through $X.X Federated our Insurance, to a PolicyCenter sells Management which United

of engagement South and Finally, by Alliance Insurance, Carolina. each The which lines and in independent Tennessee InsuranceNow Group, we affiliate based Southern digital which personal with an in selected Promutuel Georgia, Canada, our was Michigan Group our of Insurance commercial Fremont Trust Auto insurer and and & solutions. a Sun expanded in through agents sells purchased Club Royal relationship by

selected in track are double We continue service Internationally, in scalability InsuranceNow’s delivery was InsuranceSuite upgrading Dutch PolicyCenter, the invest customer branch Achmea products of in AXA to on to-date. Group InsuranceNow enhancing and digital Japan and and functionality most and of AXA several transformation APAC the BillingCenter to Australian wins for from purchased insurer program the engagement and the by of preacquisition Schadeverzekeringen comprehensive capabilities. pace Guidewire-based

see that largest for in won was in a investments This personal busy In countries. making the the are We the demand anchor major DACH and continue German-only we we to us European wakening are carrier. region. lines where the to in reflects be a EMEA Continental significant we QX, especially gratified win

and Kuala of support business, Lumpur we relationship Madrid the as location growing our which identified and our purchased Continental Christophe services of APAC in We expanded future France, of Europe also our location in Partially another and products. engineering and our opened Mutuelle Saint to engagement the digital recognition Asia service with importance in hub.

Analytics and robust engagement second countries above, digital more were products, customers to to part growth. data in XX our rates selected digital have new. than the products. our customers products Today, purchased customers XX digital that our Seven and quarter, XXX noted As engagement proposition one first value our XX or products, In in also data continue licensed Guidewire of Guidewire validate of with Explore, Guidewire first our the platform attach We contribute many the customers Analytics of over and product, sale next as cloud-native of close a aspire and generation Predictive we Live. be to offering. well adopt customer DataHub to the were more visualization long-standing our our InfoCenter excited who Live as to this

go-to-market the Guidewire. transaction we quarter, began into integrating operations team the closed their and During Cyence also and

the to generation added in three underwriting the century quarter, solution the customers been cyber. XXst Risk Cyence and Analytics Our to starting a same acquisition a which with new continue X a including firm Cyence's risk insurer, Cyence market U.S. Bermuda-based end engage. Though focused can customers evaluation and cyber types market multinational reaction as specialist strategy next reinsurer of go-to-market to approach is positive this has Guidewire, the different resonate with Tier as the platform Cyence end in from we risks, is expanding and services. Guidewire on

focused an primary addition proposition, industry user to a and value is platform growth insurance In their value to beyond P&C business other insurers. participants

component a example, which quarter, Risk just of of to to Global Cyence apply data standard its begin we announced Cyence's P&C are world in will RatingsXXX partnership to we enhance both S&P after market S&P engine, the to investing As with to assessment Analytics of the license cyber of listening Meanwhile, insurance. power lines in end it the ever-changing enterprise risk of their the rating. and cyber an

his Finally, announced to Richard as parting I which that his transitioning January, Richard will all CFO. Hart tenure, we for as be in did am in grateful must the soon two I add duty deeply accomplishments.

location experience agreed a able new that that, and results Guidewire for am today. the Guidewire officially second to important He joined as a company has the seek I we today companies time closed lead over has brings for platform. With pace public opportunities ERP headquarters, us Chief is we at who environment is strategy we year. consulting grateful that the current preparatory solutions. a working increasing as upgrade turn will diverse since a considerable and our the private quarter. Curtis help to a an in function with to which Succeeding year. CFO second, our as X of for implementation been Cyence the has on Strategy of lease build entering I system our detail First, has This will it the work true as for a on-time which increase Richard new a SaaS also Smith, Officer, cloud-based on over quarter. us given to beginning two financial of major to our and as XXX CFO And our transition. Curtis will professionals helped P&C smooth be first successful growth to industry who which mandate move Guidewire and for ensure February nearby continued also Richard providing next the Guidewire and Richard adopt Richard's insurers

Richard Hart

Marcus. you I pass guidance answer our I I before make and and Curtis second over Marcus call the closing review your quarter some updated will Thank and then the to discuss to questions. remarks

$XXX.X from our the year we to for XX% indicated, million. revenue $XX.X year Marcus Within license As million Revenue revenue an of a and ago. increased ago represented quarter. revenue, of other exceeded a and from second XX% increase guidance non-GAAP profitability

in in impact payment early any payments or may a As we other In you or quarter the recall, positively period. were the negative in in early QX. have on was approximately the on quarter impacted second million payments remitted of reported may $X.X the earlier positive due and recognize License revenue that revenue due quarter, date. QX by

Cyence services the the have we however prior XXXX, in Revised by normalize payments for would the year-over-year of of of $X If as delivered reduced acquisition. XXXX to million that price the quarter you in XX%. revenue approximately conclusions purchase amount accounting growth revenue deemed fiscal to attributable impacts those was recognized and been subscription QX

new of effect And among our of than Excluding dampening shift can therefore, ratable towards we and results grow solutions higher on payments the revenue. our continued purchase early the quarterly given more expectations. the are accounting, price impact in and to revised customers. that particularly performance, existing have still subscription cloud and revenue adopting both with Interest were pleased impact near-term

with For for our as new A and are also services shift sales. the total mentioned, accounted fees part XX% Marcus first since associated growth included cloud subscriptions subscription. towards the of reduces offering revenue maintenance maintenance of half of as subscriptions the year,

In we maintenance revenue maintenance at from guidance the moderate in quarter, As a a increase XX% result, million, second above $XX.X period. slightly to the growth expect future. ago was the year

also our consisting and to are reduces that growth licenses license, ago. recognized of up ratably quarter, million maintenance this underway. subscription revenue This shift basis annual a second metric rolling mix on from four this upfront XX% term totaled from that is the in while recurring year $XXX.X Additionally, in in quarter revenue, are shift subscriptions recognized an

factors, occur implementation transition make services not a percentage in did slightly Services Our this for and increase is a by our of the revenue. introduce of our win three services year revenue InsuranceNow revenues InsuranceSuite of driven greater subscription $XX.X business the ASC year following which year-over-year recognition year, primary hosting and acquisition relevant of to and growth deferred a the was our from also of Cloud million, greater metric of this and the for engagements personnel of inconsistencies Services implementation comparisons in in last future. of until the to Guidewire guidance XXX, services some both QX revenue previously ago above inclusion demands initial of less European ISCS which XX% adoption range. and

non-GAAP earnings or of operating increased implementation discuss Turning several and income the Cyence of reconciliation and in and related metrics to of due basis issued and GAAP lesser we revenue extent, to intangibles current profitability, of Jobs and in our the which a by primary or diluted per to to anticipated comparable part net year GAAP our of tax GAAP million expenses. ago. cloud effects diluted of including year to and undertaking quarter, release measures effects impact in quote systems in expected non-GAAP non-cash compared operating modestly the Non-GAAP these today $XX.X continued guidance by note million to expenses expenses, the expenses higher ISCS a increase profit new projects, than to a gross was significant by due margin quarter, driven configured income $XX.X ago. acquisition per of investments decrease Tax investments share the the of and a the tax impacted that margin ago price to anticipated our with large represented amortization light metrics net expenses in the press was increase The lower difference our Non-GAAP above year primarily resulted of operations. services were $XX non-GAAP tax This and in The charge of non-GAAP to million Cuts $XX.X lower ERP was driven range, infrastructure XX% non-GAAP loss net Total stock-based period. revenue $XX.X an gross related million the was ago. being the XX% the million, provisions $XXX.X of a primarily compared of expense of compensation $XX.X $XX.X $X.XX of non-GAAP a million million increase than In provided Act. recent XX.X% margin Act. R&D in in and on will the have share, income and $X.XX recently second Cuts and due Jobs we Tax in million a the of from XX.X% and of introduced adversely a and net was year compared primarily to sales, we a

the We balance $XXX with cash quarter, This from equivalents with $XXX.X million the the at $XXX.X increase and $XX.X in $XX.X the of million. deferred partially to at million offset quarter, the investments, together second million flow end free sheet. quarter. $XXX.X Turning revenue end of $XXX.X an was quarter cash by million net cash, in quarter cash ended at down first of to Cyence. equity second flow end from to cash Total operating the of million of the the and first in due acquire was used primarily million our

upon contracts deferred activity, can has of full our date. a from license we revenue recognize the quarter-to-quarter reminder, annual annually build business widely term typically since and due and balance the been payment meaningful a vary As not indicator

of revenues revenues was will However, quarter though the to revenue subscriptions attributable to deferred sales. levels expect variable. the highly as to higher our we call provide deferred sustain likely deferred of the increase the continue Indeed, part we deferred turn by of view be sales I growth to over the to license for Curtis in like now year. would higher subscription to remainder revenues fiscal generated in

Curtis Smith

Thank Richard. you

be Before let first I into Guidewire. at guidance, very to get here me say am I excited

and company. I the months, fellow more my the in opportunity even During investors of with to caliber with colleagues and meet have team, some people and the of past the opportunity impressed am two had have the my I leaders, customers the and met front

the of benefited year. Let this me lower QX, seasonally quarter, which previously which our for impacted will speak first Richard some significantly address the expectations payments, be I then of a QX, by timing discussed. year will as full to

fiscal midpoint million, XX% XXXX. be we year, $XXX now total at in from increase For previous revenue the million of the XX% to increase the to full million $XXX anticipate range of an to of $XX an outlook, our

license in higher the fiscal to million, XX% range XXXX of effect of be $XXX at to million annual of in payments $XXX and XX% an basis the $X.X quarter fiscal $X of expect We reported and a million fourth early the XX% after the the XX% increase in other million XXXX. to midpoint, on to excluding from revenue

by Our is license being factors. three impacted other primarily revenue and

percentage revenue. XX%. ratable of and portion Compared sales any a projected subscription in to licenses, our annual revenue. XX% quarter, XX% increased percentage can results sales the as perpetual new by recognize we only greater we given to First, a subscription of of range year Last to cloud-based invoices in transition to term the of

of approximately the of on represented year, a for As sales basis, subscription new sales. XX% first dollar the Marcus all mentioned, half

expect high-end to year communicated range, impact we toward fiscal mix seasonally subscription on high significant previously our a be the While currently activity of have mix. the QX will final the

which outlook. revenue decrease but Richard by As is can will this approximately contribution year, well, mentioned cash in $X than we this higher the we year our sales that will to fiscal accounting This we not earlier, purchase to million from the flow activity. projected due partially recognize revised impact conclusion reducing price total by Cyence the reduce are offset expect revenue

result, our fiscal our revenue the for million a is Cyence $X estimates year, previous expectations. $X in updated $X than million As to lower million

revenue. to us factors perpetual Latin revenue outlook improvement revenue, has licenses expectations we to perpetual we lead as to to new and $XX annual us to our combined midpoint. meet $X increase these maintenance for anticipate the implementations and for Cloud for now net we the America perpetual for million to higher an $XX licenses in customer our fiscal The regard hire European activity particular, with new in aggressively the Finally, necessary. than greater In subcontractors certain the XXXX continues InsuranceSuite range approximately leverage our Services our require and increased typically revenue visibility demand million to $X Guidewire for million timing to of million increase now license elevated modestly allows initiatives. accelerated higher million, total $XX new year. modernization incremental at expect, participation of currently customers impact With and sales modestly to be higher work InsuranceNow and

midpoint. revenue for raising efforts. on operating $XX portion to Due with implementation moderate million $XXX services to for midpoint. the guidance are growth work in $X to our We higher currently long reduce non-GAAP $XXX we of XXXX to the greater term our million the as we mix to million, income million services revenue take million, to to expect higher increasing XXXX and are outlook, We in services at intend higher a over fiscal revenues to outlook our our SI cloud partners be at of the $X $XXX we million

the million $X.X $XXX adjusting to the expected also guidance free $XXX increasing flow midpoint. our cash are to at for flow free million higher We year, cash million,

income to share million per shares. are addition, $X.XX for based diluted In $XX.X $XX.X we non-GAAP on raising $X.XX million outlook XX.X our to to diluted net or million approximately

we be how the significantly prior impacted I As that to transition the by recognition. timing outlook, compare QX discussion timing to revenue of should note will a our that effects year quarter and the of payments

recognized approximately to was revenue QX last million recognized payments of early quarter. mentioned, in been would that we due in have As $X.X QX

in addition, XXXX will In subsequent QX XXXX QX in very invoiced payment remitted for in and years. payment a in sizable be fiscal

of $XXX $XX in an to Within a a of million in QX were be revenue, that million revenue million. we to range recognized in excess of $XX As of other of be to fiscal QX. total to With as to million. in license backdrop, or $XXX result, we will $XX million QX recognized be range $XX revenue payments revenue million in anticipate million the the expect and million, and maintenance million $XX services of to $XX.X $XX revenue

into we to operating subscription offer am be $X and higher system. offering a our between XXX on perspective non-GAAP summary, of a our breakeven, as I million the income we million consider of third some the per joining million between negative basic revenue adopt or that Guidewire loss metrics million income $X on insight to business a our million could loss as mix In cloud-based million based we we XX.X a to Separately, net shares, are $X.X transition and CFO. XX.X call, share investors beginning of On new and quarter, $X.X new high-level standard excited better to shares For anticipate transition. net approximately non-GAAP respectively. next anticipate $X.X to to of of diluted

months, new and with two look to as relationship he constructive really over role. Richard As into I past transitions up his appreciated forward a ramped closely will working maintaining I the

me back turn Let call to Richard. the now

Richard Hart

jobs this help personal in look a over with transition. gotten of past way that collaboration diverse Operator, be and any my relationship, incredible My years, Guidewire. team, and that to not a well mission me that On senior and will two to the investors taught to their I the strategic do in for mention had you day to analysts our me over all in I my I work at support, companies Curtis. professional leaves have job of the continuing long to to my to shared everyone for of instrumental thank have for now also role at months, Marcus best this during questions. ethic great ever thank Curtis and know two SaaS experience team opportunity, who talented in to Guidewire, am a wanted successor no as phenomenal their want I company. his call Curtis I and people point the will past at participants wonderful every bring forward I can doubt note, and Thanks job the open and forward a can have that I group evolution. a Guidewire's looking this operating upcoming much

Operator

[Operator this Amladi Instructions]. at time, will Deutsche Nandan Bank. with we And to move

Nandan Amladi

Hi. afternoon. with Good question. Thanks Curtis, congratulations. We for you. taking working to forward look my

utilization the you lot is people. script first pretty services a mentioned are though had even question mix. in you good of adding The on still Marcus, the you that

of Given say, community look so? headcount built and two of over years, system the last the the your size the or will the years several over that's mix eventually services services next like, what revenue the out cadence integration

Marcus Ryu

experiencing Well, the mentioned remarks. there's by driven two are factors in right that demand services that elevated really no we question now. prepared we It's

to and in strategy et effects, First, with somewhat deviation which services on and overall heightened are, But where time, robust Europe call that and of for It the cetera. than really and moderate will longer just some to leverage demand. increased demand longer that really they the little who to there but community to mix. on them a services. these bit of we I rate talents is transition people then attach source two want these longer-term temporary thought we there has a Both won't it's partners. in are outlook end and years Over our increased probably and the our local SI a in important no utilization change we intention, have take is one-time the languages, our implementations, in changes combined Guidewire given term higher is expect nature to ago, Europe, aggregate effects Cloud and InsuranceSuite of capable heightened fact have demand and to Guidewire no and speak revenue cloud would led initial market really local demand deals

Richard Hart

Nandan, was growth forget let me this by XXXX. add was that of year two The leadership InsuranceNow those that we which also services really is take because of of presence all turbocharged significant the revenue, things. QX don't in that implementations zero and

we implementations. three much a SIs to be also at We the pattern tends obviously of begin increased of we revenue revenue once line cloud are see a So role you also, XX% our when active time, and our from that bit. we significantly. to will into have mentioned, of very InsuranceSuite but into the was then responsibility accelerate in and the years, delta for but will our went in to that deferring moderate very, also were the it hopefully or out the everything total will reemergence XXXX. when which work the be over two for itself bringing anticipate take for again our last as growth years of will taking XX% ready still impact to the XX% in Cloud therefore We Curtis modest only growth the saw MetLife coming And will because and be more for it actually to it hope now ago, take able that growth services SIs revenue implementations, XXXX, which pattern able significantly. to services to not down more temper XXXX repeat that It that InsuranceNow, than of XXXX, higher quite traditional

Nandan Amladi

Thank you. Very helpful.

Richard Hart

Thanks Nandan.

Operator

At JPMorgan. this Auty along will with time, move we Sterling to

Marcus Ryu

Hi Sterling.

Ugam Kamat

This on is Ugam for actually Sterling. guys. Kamat, Hi

Marcus Ryu

you. Thank

Ugam Kamat

impacts question level first how other Like M&A any business? the any high can my XL provide that or on of AXA your you acquisition does commentary is, that? P&C So

Marcus Ryu

industry kind M&A feature the that of serve. of we continuing So is

then history, and use acquired acquiring innumerable our acquired over coming customers then had, customers customers non-Guidewire being examples customer by into to our customers, adopt of software. vice a our motivated and other customer that acquiring their acquisition the partially Guidewire have and We of non-Guidewire versa, entity then existing by a or catalyzed expanding

were happened. are the just Chubb-ACE can sometimes of to that have that, but is there most then a or XX it it's entire it of continuous to course, business. business. pretty XX a M&A a steady merger of acquisition for much rate this megamergers think, as notably, the of forestall significant there been Catlin in XL kind aside and out, was, from that the opens Those up treat happening for these tends opportunity, way years pretty it events the industry, I three it pretty that we existed an as some of or that wash backdrop an opportunity. a So were years usual. ago, our we Generally, business sometimes But discussion Two

Ugam Kamat

follow-up, in of helpful. have after happened catastrophes that a pricing major That's XXXX? power kind some seen your as of Thanks. what terms customers And in

Marcus Ryu

a to as Pricing their vendor power with respect to with us market? end or respect

Ugam Kamat

market? Customer's, their end

Marcus Ryu

upon function. essential in to There increase after performs an the tends phenomenon reminds think an remarked catastrophe often a I demand that policyholders industry is really insurance nothing notable. that

that tends of that a to case of it’s So offsets, that's the catastrophe. in different wouldn't past. with loss the -- that's term a past costs industry the heightened after a unfortunately, there be the sometimes I say pattern the to secular that of phenomenon course, kind kind the catastrophe. any little longer is go but bit any And of over benefit from short usually there along lived

Ugam Kamat

Thank you much. Perfect. so

Richard Hart

Thank you.

Operator

Goldman with to Jesse move Sachs. now will We Hulsing

Richard Hart

Hi Jesse.

Jesse Hulsing

those you feeling these up about on the you sales getting the sales a about how cloud quarter, of the with you Last cloud your it. both and Marcus, starting execution, little deals? of progression through – a is go talked motion tighten side on-prem are how their cloud? bit on And Hi see for and diligence the versus and cycles evaluate as you implementation to motion implementation guys. are customers Are progressing bit? extending on kind sales side

Marcus Ryu

Sure.

to with hands of an respect overall, for on the So deck strategic Guidewire. it's imperative all kind cloud phenomenon

of function and that with includes expect to on that things are so cloud doing the all credentials. enhance our our emphasis we our And proof go-to-market our would a credentials messaging, routinize points, and the course you greater

to And that's walls. in sales any and in-house quarters I out would to would and that pass wouldn't process. have effect varies to There And we complication with how few cases, four trusted make want and a massive in that a their in a off evaluation but In are kind the phenomenon a to explaining our about but the better horizon. been say, want little on cycle would they some through what and and have make over influence articulate I to what value in a Guidewire. deliberation of more of it call difference I another have outlook is kind they delivery. IT sales certainly they and fork On mostly has proposition, getting strategic keep as not that. more some case-by-case of to labor a we additional do deeper, like same weigh even say, of our that bit traditional little internal it division say so the bit within basis, a getting and or affects are that prospect decision what kind can of a our at I their choices. we to two our where stays do a kind the through are road at of more And partner has go it's of the they happen they to

Jesse Hulsing

three two cloud maybe think for are cloud? equivalent still four pricing times I it for deal? this And in it this to Got still was year? Is you is on-premise Is Richard. expecting, How still is that thinking? And you are to you. trending customers five what

Richard Hart

Yes.

and the So the three still with proposition economics support what announced is it's the that customers are value two the proposition, value quite times seems still to that we metric it readily. active, be within to of discussing we

we are about excited that. on So very

already push are Obviously, from definitely looking year. right backend to anyway, four contracting to final four year. we the still weighted five, kind and this out have five revenue actually no since we of point, to now, since four them Marcus' of the received five view On these we for may the of them some But to are of year. a

Jesse Hulsing

Great. Thank you.

Operator

Zukin Jaffray. Alex from with hear now Piper will We

Alex Zukin

background guys. the picked us for have Marcus. to noise. guess is any recognition? The to Marcus, up insurance cloud the in the it can outside Guidewire services help of own. SIs do the products demand have to of good experience the I partner one leading if do cloud revenue or has that selling optics expect an extent, specifically with And two Why of the are I of services you practices for apologize Guidewire? for kind Hi But their why such competitors? understand experience your not community are is Why space. that then tension, of have for with is, their ramifications customers enough? requesting you They any, that what follow-up and

Marcus Ryu

question, A Alex. very Right. thoughtful

customers, into year coming much agent deals. not taking of namely InsuranceNow maintenance of responsibility and higher effects focus the accounting and role postproduction is So the attach heavy larger instance. services just on fold updates of aside of first, course prior here we InsuranceSuite versus phenomenon the predominant It of a program implementation responsibility, full the the the a the clear, Guidewire, be and To the that year Cloud early play of for the first our let's our initial in the on Guidewire the indefinitely because future. we delivery into is insistence on solution delivery, the the very are

looking to And on knowledge a have team making implementation. as our part that there implementation about we which measure into implementation risk conducted is whether so all of goes for areas full of conduit optimization back should a that for well successful the take and our as that as of responsibility on anything as much product many it mitigation the full to be ensure is as we

relationship we want larger and It's of I that that in role have and delivering every these point more play cadence associated intention, get our here motivation more InsuranceSuite the these. to is is larger with So into forward to Cloud this underscore have and our a as SI partners temporary trusted going a phenomenon. we initial every

to reliant enough them more those and does certainly, the and the today single-digit for the implementation to programs the presence demand of to this of give SI partners. I we part top forward. handful wanted question your will couldn't I meet number every our than but be have is we to are ensure absolutely that of were community call of demand detail. we these around. maintain We of and that for anticipate the latter us is, what want first that on significant work very We we exact to a many latter, going cloud It's answers mean let's for that there these on the initial an transition on go hope case, just partners with in you the the that them which To it relationship it be how

never delivery and of every stronger. and capable future. they for go-to-market plenty to have There been around those relationships be have to in think is demand both in motivation the I go customer in these

Richard Hart

growth I would to half, overstate rate to identifying, that concern the seem growth also that tend add maybe are Alex, on in Richard. was the you InsuranceNow, metrics it's that P&L that right. without our that be visible

out of as XXs So in you are directionally. take be a it if of would now maybe your low-XXs. now all the and somewhere you And in well, it speaking sudden MetLife

one our visible I P&L. That's in modest growth the is much actually So than say. been thing, revenue on organic has more would the services what

of growth implementation sufficiently have of role. as The speed about use for have leadership to is I that speaking SIs I InsuranceNow, our partners subcontractors because some where haven't am is second in would and caused contract we actually them come that take that our to by up say, thing, to the engagements SI of

in happen. that We expect that future should the

increasing So market opportunity and the products, these segments international things to actually all are of new new spheres. for for with us SIs work our new

has So partners, why our not way by Marcus our this any relationship trend. as suggested, in discomforted that's been with

Alex Zukin

around adoption some are maybe of cloud the follow-up for it. or so they them? in this their just sneak step driven seeing I your a competitors by in it part being And other Got can business other cloud like if Or out around just guys. that is of you for Thank competition. the Are demand you tailwind seeing many of, of Duck adoption natural phenomenon? a groundswell next a Creek is parts any

Marcus Ryu

Yes.

to seems of that think a which others if order that to so of deal vehicle themselves and driven more that's a have are motivation. lot in that were And causes. an for instrument is shifting a phenomenon it's with identify would with and that's to or such. about, disburden currently say, That concentrate I the talking new occupies be which frontier. It a for to to to more seems there do of cloud But as as much over attention to cloud enamored simplification. driving a the emerging I they what insurers have a It's desire one our landscape I techs environment data insure competitive disburden many using want really competitive simplification themselves core something of transfer. the for the have and not to digital that, with in transfer many a toward are today. for they to it players they that's risk the that of their single do path risk predominates motivation customers, they to the more offer operations time

Alex Zukin

guys. Thank Perfect. you

Operator

D.A. from now with hear Rishi Davidson. We will Jaluria

Rishi Jaluria

is my questions. remarks Tier about units. I in that then your expressing Or it the top on X see got will where emerging that customers how then goes? insurers of just one long-term Hi InsuranceSuite it it interest Cloud, implement these of basis guess from guys. within to some exploring topic on are and seeing their have more IS we are maybe there your Cloud you indication And prepared a I business plan follow-up. Thanks any firmwide? is Has taking within first, talked units for Marcus,

Marcus Ryu

creating. That tremendous now to in entirety of to surprised in we let's know ourselves be has way on over that not book are we option would a I I that that's handful insurer yet this be kind say almost option No. existing of to want of self business that funding a going happened. of some would But of surprised every one the our will create We were have we it value exploring and is years. X case it them I saying, of emerge topic does. that creation the quite for cloud saying, and or to and interest a if ASAP. religion do or there if of option of one is don't Tier exploring

and approach. that to rational. think platform end business not those the this new line a only And validate use but We lines. delivery and new validate Let's very market our think to that's explore customers I approach service encourage along really architectural

of to think both management of kinds new both multiple and sides emerge risk relationships I for it's and of customers. kind we expect these with existing

Rishi Jaluria

Cyence. Got helpful. just, then it. That's on Marcus, And

existing until of looks path a sort Can hands timeline us positive to for what in full-on are and And to it's what Guidewire Cyence maybe that integrated like your interest for some get done from into solution needs terms the give customers. you your Thanks. what of You of seeing work there? getting some customers strategy may be? be

Marcus Ryu

Yes. Sure.

on business, very focused to as Cyence's digit insurance, premiums low was but really the a understand insurance single So cyber startup is emerging young in business rapidly. insurance is that completely industry, billions for very, globally in growing still the namely it's which aggregate very which terms important small a in

is carriers, In Cyence fact, insurers cyber ones monoline small growing write that And large in a today, of offering the compelling. very but rapidly mostly product base. to it's of it's most relatively the the product. segment tiny And course on industry, these a number

of all or those certainly want relationships We and growth. those rather to haven't and expand we to sold Cyence we them hasn't in participate want

property, in a or these Vector one. traditional that to even cyber have is commercial lines there recognition The days cars insurance it. like drive auto two computers, we that's there that that right. component is, So vector of is

being of face we some and face And the of the just so malfunction. or insurance risk perils that or weather accidents, bad hacked are cyber equipment related traditional that of but not of

the reasons term the long even haven't who over listening is, learning have think, traditional about it's sector, apply traditional to silent phenomenon which even that traditionally it believe which can. line risks, about captured Cyence And machine to curated insurers of approach actuarial offering, data could most to intriguing enhance reason there's to properly insurers we in Cyence are insight, to apply And called Can one approach lot and thought us care broader to third has applicability the we of lines. maybe There cyber are is that But even conventional can insurance the use really vastly that's this data of good broadly this and that I the those business? and zetabytes a it's larger conventional that's kind so cyber now brought more of size? And and be the or that. that out could mined and today. displace if for that, of we there

in intrigued really So But that's the out a number that's and existing of we the by. that customers are there great prize Cyence's future. all

work lot doing. but a to that's that's what are do we and have of in very a We compelling worth investing exactly that's proposition

Rishi Jaluria

Okay. Great. Thanks.

Operator

Merrill America move to with will we Bank Brad Lynch. time, Sills this At of

Brad Sills

I wanted to ask X for question. about Thanks my Tier category. taking the guys. just Hi

in I us some Tier content Europe catalysts line? Could are function stimulate primarily the order get even in demand said potential that of is? over these that to Asia. think really of past you for or you Xs remaining the that And that remind might in aren't content coming out there pipeline customers, push the it's in some a and finish what deals is that deliverable the building

Marcus Ryu

Yes. Thanks Brad.

your question separate me parts. two into Let

activity X Tier question in you content have international markets. of general just then First, the and

that to can those the the latter, the that to geography specific we we product. business a in a and things given support talk on process operational So or of particular general that when sit of referring content, flow transactional to on are line about top are we and insurance

have and geographies of different category which to formats guess, course do biggest each that each we differs and the cadences its that have U.S., system jurisdiction. the So of data, different from actually own and And is expect of different on the in kinds jurisdictions requirements. all you and content on of regulatory insurers of In would different they as report that. XX kind country of each content where

And but So that inhibitor, will chipping a for we been that's sell country we to have cetera. so. want German et that go one continue insurer or Tier not we to do or an anytime X away to to new applies been to serve has do we an and just applies at whatever to you prospects, French years a one that into have a and them that Italian

relationship engage I a would the one. including winning than both long-standing at and Now well. the in ones. new Cloud market with with that good liens as we make at confidence progress existing are, with least a with earlier existing as to questions, our X continuing question, of you to on And customer Tier insurer we but and hopefully every guess, InsuranceSuite mandate Tier Tier X in along We one insurer least this anticipate ones the mentioned from that, with X expanding more year, responses with, new

every do and in I say, are other the resides those Tier in much that say are would conversations in of see and demand they we I So as robust segment would majority that the TAM just segment. X as we our still,

Brad Sills

to the entirely just you Tier offering you entire think Xs in And the to curve about Got it. I to suite, move if I a seen cloud? that so, that the that a you And earlier something to why or hear one to needs Marcus. want over Tier Is saying were properly? Thanks over again. it there learning any then your wouldn't experience, or Thanks don't expect mature your Did policy positioning at yet. time billings, X the haven't move the offering? claims, cloud

Marcus Ryu

outside insurers at goals lift. that in Sure. as well. the harder any a transfer same just have, They it's have the the same of transfer, X more There's motivations and complexity, Tier would risk risk of size

really we you luxury and very of a or conversation take insurer a that doing have you, more experimental natural makes And about some A and and are there to there. We half say, concept, insurers, see of so They the take transfer a Guidewire, now. just it into us doesn't interim that what have a have to book then proof and value we that new sense a step especially let's let's larger core smaller of the to allows that step. step, the go is not destination simplification know an insurer that and creates the say, or risk business. can't small the but market need works something

front. We else. cloud adopters of to I than smaller insurers the And being got the really necessity go journey why whole earlier really anything right out described as of up more that's have

Brad Sills

Great. Thanks Marcus.

Operator

Instructions]. with will JMP Pat time this Walravens At to move we [Operator Securities.

Pat Walravens

Thank Great. Curtis, for one you. you.

Guidewire? to you months, couple know, So anything love the to then what has first that in you? surprised you And hear attracted of

Curtis Smith

No was, their I on I with the commitment team to surprises. team, that the the been have And while I attracts board company. will super and work the even have me start what impressed the of with of impressed been quality at here, across the of more quality the

couple mentality experience to that past a able on team I and to been around months. the that part get that impression been and over of and lot it just big get directly say has nights firsthand that's have has this not so, of weekend And great have be done. had the late it, a me witness some that a And

seen, In continues to experience philosophically, cloud. in opportunity company's on cloud-based my argue I continuous what it's with to its IR front. terms Plus hard Guidewire to transition operating the is to have believe there apply as I and including an believe the improvement of the it success,

So some I going ways will those in be value looking to add forward.

Pat Walravens

right. Thank you. Great. All

Operator

this turn I remarks. the time, will back conclude to session. At Marcus closing will Q&A Ryu for That it

Marcus Ryu

call remarks.. all in for to No participating today and additional our Thanks goodbye.

Operator

conclude call. conference that again Thank participation. for you does all your today's And

Guidewire Software (GWRE) 6 Mar 182018 Q2 Earnings call transcript