GWRE - Earnings call transcript Q3 2024 | Guidewire Software, Inc.

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Operator

Greetings. Welcome to the Guidewire Third Quarter Fiscal 2024 Financial Results Conference Call. [Operator Instructions] Please note, this call is being recorded. I will now turn the conference over to your host, Alex Hughes.

You may begin.

Alex Hughes

Shamali. you, Thank Vice Hughes, Investor Relations. I'm President Alex of Rosenbaum, with Officer. and Officer; today Mike me is Chief Jeff Executive And Cooper, Chief Financial complete on well results release our the website. SEC, Form disclosure in which to Relations A press are section of our our available X-K can furnished issued Investor in as found as both our the related today of of include recorded, following made of is events being operations, and ones call the on other and of call will demand, available our a on financial Today's be local, our call. Statements conclusion the this customer geopolitical results, forward-looking regarding replay business matters. national products, and impact the uncertainties views statements subsequent be should based assumptions not are current as date. upon today These risks, on representing as of and subject relied are any our and expectations to management's as of and refer on cause quarterly recent filed risks, that statements. forth our risk the factors for such assumptions press SEC and report uncertainties including differ our and annual and the filed information may be Form in on and Please with and we SEC, most results with XX-K from prior to the those on to materially release set file documents reports Form XX-Q actual the forthcoming to

Mike. website. And will to non-GAAP to release. basis that, non-GAAP to in press the stated to are provided Reconciliations is the on posted investors. measures We unless our profitability, of measures turn also are information call refer I'll supplement with additional GAAP IR a on and certain A in All additional margins, to also now our over data provide financial non-GAAP expenses commentary on otherwise. reconciliation

Mike Rosenbaum

to year. in in into I'm results thanks, joining business. QX our today. us fiscal share stretch our seeing was the quarter are very the momentum great afternoon, everyone, Thank third and our shape you, quarter puts final incredibly Good discuss of and and the another strong Alex. we of for excited heading

released very insurers. to trusted Platform results and April, worked P&C insurance as QX hard also commercial data all customer suite I work show clearly This establish results intelligence. in our continued improve off. In HazardHub release innovation year-to-date years, business for agility Cloud while paying release lines, XXth And Jasper, our our platform which under and We have in expanding and increased for and the we Canada. applications think delivers standard agility, our that Guidewire our X across speed worldwide and applications,

that Cloud better faster to more customers helping resulting decisions align We more the now are make platform, of increase customers across iterative deals bringing release consistent InsuranceSuite improvements InsuranceSuite through and our we demonstrated the have our improved confident Cloud than confidence helping we momentum. In deals, general the closed cloud ever data-driven in are quarter, cycle. I'm cloud X year-over-year. innovate schedule, continual our and insurance life which total the this platform's our our to year-to-date industry XX% XX, around a is third business to is

with the X X X Tier strength including sustained deals saw in also We quarter. Tier insurers,

we progress driving. have establishing the Guidewire fiscal Platform, our also deal Cloud made but linearity speaks tremendous are improved teams momentum reputation continued year the sales the Our to of much

with outcome. sales, quarter few approach more the activity for very X quarter-to-quarter been also past more of for and the was linear strong years migrations. a It balanced year-to-date cloud have establish InsuranceSuite with We Cloud total migration to working to happy a I'm a

to that new demonstrates deals cloud has us around successfully transitions of where leader. these base is and been to platform. Our drive cloud sets the customers we cloud significant a our on-prem Pacific activity cloud single insurers. Deal the migration to strategy objective the asset our migrate and had activity in customer every Asia Australia. expansion we in ensures particularly our Cloud the line valuable region, anchored further to one strong most cloud our our industry down Continuing part in was remain X quarter Guidewire for up It feasibility the of of

to part strategic and launch XXX was Labadi their convenience. In features, the partners discuss on date [ for goals and Sydney, Cloud with of insurance and heard to Tokyo, Sompo brings London, the customers internationally, Zealand, on opportunities existing higher America Insurance Simon leading They P&C a established nearly the have future with These progress planned. them and building over we company together our events New pay and are great together quickly of rapid important opportunity with earning, and ideas successful and ], event in position how CEO points including Sydney cloud highly pipeline, increase product in that see as on in to it's ] the come Nisin [ and in Guidewire and people Each one are ] insurance customers of the Guidewire and discuss Tokyo. customer serve all discuss off We generate and the X touch APD, North Saison and our President and from to Data CEO powerful momentum conducted quarter. Last to deploy up Guidewire Platform existing helping professionals month, this one forums, share engagement in new Guidewire professionals in Oi Automobile are and ecosystem to help we influence are [ customer Fire broader ensure of feedback. experience growth first Group, products XXX heard speed innovation insurance an Japan vehicle new Nakagawa-san, new her Insurance, products Guidewire for the use which to Cloud. industry. In cloud one we Jutro

Australia XX- company time similar aspirations commitment region Cloud, in Beneva as the and Beneva, train he such [ and spoke completed the pleased how VP our has [ ] have has Asia specialized our region incredible extensive with in to in the EMEA month, accomplish updates, In decrease leadership addition, strategic over upgrade attended XXX further will to making, attending especially Marcoux, made agility when are were to team as the were and pleased and with local have to also needs. importance Shaji to the we a the X across event April, in the Will lived for been and upgrading the used Eric emphasized our ] its XX-month to rep ] years, over they making Pacific years with to Guidewire's is capabilities Director. the an of from customers. of Europe IT which Sydney, insurance Leading for for are an was increase at when sales in addition duration we is and McAllister progress connection Europe. In in Guidewire the members London on-prem. Last Pacific Managing global with This objectives that We leadership brings between the where I'm market, content of the Sethu programs Guidewire a with required addition track XX [ as It in driving Guidewire's insurers X leading Shaji he with to helped global ahead customers. of new region. AXA they and contrast XX very than capabilities and and an IT bridging Managing less Since progress X Beazley Insurance are London to a ago insurers, months X XX hire named we needs Director month. our Asia and we Guidewire. that stark shared we with outcomes and Forum. the strengthen

high are and This in position fiscal for grow the and our We our pipeline, both and increasing this engagement importantly, more size very general longer-term momentum helped quality of seeing we confidence of our us continue well platform, with level market worldwide engagement. combined year a outlook. and to maturity

system. our to Turning

of Another key is to market. accelerate and our time expand to helps element to Guidewire, the community partner surrounding adoption, deployments which customer strategy

the the now SI the solution Marketplace third partners. professionals cloud-certified X,XXX. Similarly, working increasingly community today. firms We has community of Guidewire Guidewire continues quarter, XXX SIs us are number There to ] from partner over engage And to are year-over-year XX% in with solution our in over seeing expand. increased XX these projects. partner [

joins adoption us and of our to ecosystem the of this participation our with value us great time expands marketplace release applications ]. help the opportunity SAP, these XXX partners the such summit to he new Germany. where each But impressive in on costs the developer a Anzy India. inaugural We're Nearly May their we community our our event As our and center attended him held the and increases, when E&Y PwC. It from example most and excited outside execution of our growth introduce our maybe largest in Anzy, Mohammed join to global to [ and for R&D we of India. with momentum in drive came accelerate as India people and platform. reduce and operations strategy leading Bangalore, leader led customer notable from growing was

a by over platform. careers but of insurance employees we've technology source our to leveraging the me progress of India us to of community their in professionals marks also more who dedicated Guidewire extremely Software. We a made the which entries a that to proud also Guidewire innovation attracted as This cloud hackathon ran event XXX commitment a connects industry made closely and through have improving

let making, we platform efficiency. driving scale continued to and are turn Finally, me progress the

we expanding great quarter margin, plan, new cloud third As ahead drive percentage the you across know, that here we've been platform. more This to and to self-service tooling focused are see gross will and now improvements support as execute drive we to increasing efficiency and points automation continue of reflected year-over-year. continue and gross platform confident us team's and progress our and in operations to puts approaches subscription we margins it's XX on

growth. these investments validation of have to investments further produce made that and This quarter is continue profitable we and will produced proof long-term have the another

in I'll a record confidence further of core to over combined and the model to many the our durability tied create directly charge. This creates future. With to working across instantiating underwriting This Jeff. platform software Our now and are, premiums as business the against in a customers. system gives reduce our invest our companies and are premium the call and a efficiency new stability, in time opportunities turn [ that, price with our industries for risk cases, an cloud to our therefore, direct the our gain ability they our insurer's customers structure value market-leading our ensuring success to of innovation We associated workforces. in software in ] me to growth is when written mission-critical and create software a at percentage and

Jeffrey Cooper

million $XXX at Mike. benefited cloud Thanks, finished and expectations our board. QX across the from surpassed durable ARR demand.

accommodate true-up of our activity As of environment. Services was the see revenue improve. we and million. and quarters, improved points recent bookings well utilization first in to We year. Total point written low continue in areas expectations and XX% X term renewal all arrangements. linearity a as we basis in and of License our upon to than license and risk $XXX strength up revenue. We due Subscription result of was us to revenue increased as saw expansions price revenue quarters grow results as have rates seen as deal premiums, sets we customers' continued XX%, costs for revenue grew discussed customers' and XX% insurers better-than-expected better the up DWP off from rates rising we benefited the of revenue direct have DWP quarter claims last and grew grew software momentum. a support inflation was on subscription

to cloud lead us We are thrilled that and continue of we to programs. to investing industry, majority expect this are the help modernize them our partners the

their working ensuring We volume mix also equilibrium our to cloud adopted and are and that healthy. find supporting we growth are that our standards professional the to are are partners with right portfolio ensure services while hard

services which Subscription XX% continues infrastructure margin and to for million. ago. XX% ahead track to non-GAAP margin and XX% we ago. of was support This Overall will a with XX%, $XXX compares expectations gross Gross was Turning profitability year the was basis. to gross profit increased Services a million, our XX%. gross was favorably margin which compared profit efficiency. gross due third discuss on was a cloud quarter, to year $X

expenses. on growing in We and ability profit will line. Overall, quarter. due stable relatively our million operating in to expect the to expected basis margin to services This the operating the dependent top third be was $XX outperformance lower was drive better organization revenue be than cost and the profit

margin million operating and QX Stock-based for operating equivalents momentum. was We with up last was be $XXX year. continue ended cash profit quarter. from quarter flow investments. million, with We in cash, to X% Operating the the thrilled and million cash compensation $XX the $X of

for fiscal our our the outlook. year to allows confidence million. to outlook million pipeline reinforces XXXX, raise year Strong Turning full and $XXX QX to outlook us in our activity to in healthy targets adjusting we $XXX full the are and our ARR a

to We commitments or comfortable prospects in at as to are result of we growth is 'XX. XXXX, in ARR more when year it I fiscal manifest consider is XX% expect significant great in customers above itself ramped deal grow ramped and long-term on momentum QX for the ARR Guidewire expect fully you ramped to XX% ARR making delivered top a which fiscal Cloud. fully fully

delivering foundation longer-term on strong growth targets. a building are We our for

fully metric on year-end an basis. on ramped at disclose annual more detail is will We we this ARR a as provide

assumes As the rates If of then update would on rates we fiscal at exchange end ARR million year-end. ARR a see of negative as currency adjustment. our updated a year, reminder, exchange we ARR rates, outlook today $X last foreign based current and we our exchange

revenue, and discuss quantify respect and subscription expectations year-end. With subscription revenue for increasing certainly this our will are and at revenue. we We support this to

adjustment subscription adjusting both subscription are approximately a to $XXX million representing approximately and We of revenue instances. revenue positive $XXX to million in million $X and support

revenue We million and revenue million. expect of approximately $XXX license $XXX approximately services of

million million, revenue adjustment midpoint. result, million the total our $XXX a for a $XX to As outlook at is $XXX positive

we'll be non-GAAP and and for basis, to We expect services a margins discuss continue expectations, XX% expect and now X%. which Turning we between on year. to Subscription and and gross profitability, margins support between to X% exceed XX% gross still margins the

expect result, growth for gross year. to million, year. With adjustment to year-over-year. $XXX profit XX% for a still positive X% we we and million million at full an midpoint. the operating between operating overall the income, $XXX compensation the expect stock-based $XX As now respect million margins This expect represents approximately in of We $XX fiscal be representing approximately

increasing We million are year. the expectations million our fiscal for $XXX also to cash $XXX from flow operation between and

progress. We proud are our of

Day, As Analyst ahead to $X we fiscal to our targets discussed 'XX ability confident goal. we we achieve look billion at remain our ARR in

We opportunity investment the are targets. With of bit that, can achieving is to accelerate still gross targets some our you product creating clearly open an questions. call our a margin margin tracking ahead while and this for operating operator,

Operator

first Our of from Instructions] line with question [Operator Kumar Kevin comes Sachs. the Goldman

Kevin Kumar

Guidewire, a some wanted I to seeing perhaps purchases. obviously, ask for are that's delaying customers some vendors question to And deal around the demand activity. in software softness environment. strong where large contrast us other really with

of prioritizing you in in So kind general, and you're modernization? bit carriers a how Mike, large these what can are seeing market talk P&C about thinking about just today core system the

Mike Rosenbaum

appreciated. Sure. Kevin, question. thanks for much the Very

platform things Number ability of net new steadily one making, is build. I So broader that are sort describe would successful confidence ] -- decisions of years our bigger, demand the about objectives, with about about turn the multi-decade of have, enterprise in continue companies and these process, business confidence as thinking X [ the with longer helps. We've say talked see around around that we are with side. go they're us. the if have pipeline the of side, growing also the would how in that decade, software terms also these of to there's meeting record the related modernizations sort but for to establishing track it partnerships that that think the implementations And the relates as their we these to successful success and a more be I certainly that. build I implementations these to these to these market. These on between through these general not customers, somewhat migration going insurance that both is companies decision-making But we disconnect

data-driven something other what to said, that's going over see we very like think them make I recognizing companies is so really modern be a these software to bit of decade. the a out, profitable that platform disconnect to and for analytical, that see I that's core and matters and them successful that between better, grow decision-making much purchases process. decisions with agility enable going And help there's We a a

quarter-to-quarter decision-making of be process the and that maybe so seeing. [ And that can outside and stresses sort other other done folks sectors other industries are ]

confidence led us. And a continue so to And the confidence you momentum up, add and gives see fiscal for QX rest things those and it year. we to of QX, great us in and and it the just build X

Kevin Kumar

margins. then And Jeff one maybe on helpful. for That's

have I last quarters. support couple think margins gross the of for stable and relatively subscription been

So and cloud percent to margins next about inflection you maybe closer kind figure the that have of should in how that talked past? point we team ] the about think that XX-plus [ pushes the

Jeffrey Cooper

mean, can we've see gains our increasing I point sustained That's environment We're The drive cloud that big demand platform we thrilled invested higher delivering Yes. done But and we a this margin saw fiscal margin with third, this I is progression progress. as supports we opportunity go the how And in the see targets. and efficiency of cloud we I long-term We time. that and margins. of year, efficiency drive in operations that see drivers And we X we probably which an team how through platform. into scale, long-term in to benefits year a engineering continue strong, made part tremendous and as those the we've progress the that as won't inflection is job think types to done. growth. more function linear think some of continue that recognize to we of it delivery. And subscription finding towards can into not tremendous tremendous. work to think they're was the all the decisions continue drive scale more platform. there's kind gains has on I thinking more the over architecture mean the the

Operator

the with question next Dylan Becker William of comes Blair. Our from line

Dylan Becker

to data some Maybe, share ] shifts wonder dynamics IT that with maybe job auto. improving to and versus those are lines innovative, you're more nice carrying you. some seen P&C gains business here. of over conversation I momentum share, interesting from of and over like Really that enablement about in the things time? of decisioning We've are having alignment, Mike, how for [ more how customers customers thinking that fueling similar carriers gaining additional

Mike Rosenbaum

appreciate sort to we I It's the Yes. of all that use question. think sort hard the case the the that when and we complexity the lines with ] you describe regions and all of the all business tiers about of Guidewire sometimes [ support.

call that I compete of product in inflation facilitate kind appropriate the that. to Guidewire operations, that operate specifically we're a one the they where continue are consistently adjust carriers able that competing, to and to is quickly and effectively the up it's rates, markets are the to to circumstances, and very carrier's common able continue to the effectively systems around prices being agility it set like to able ability as the we're system to in in claims theme -- adjust to changing being auto this shock able line let's most the up. adapt to coming successfully expense was to of And terms as business adjust the jumping of you compete might that seeing. Certainly, say, was what risk price, relates there is a to carriers that think of

of what that transformations do We're effectively that to carrier to seeing as ends aspirations And with of carrier most up insurance effectively. a markets be big so adjusting lines and commercial they in the can these like big in international commercial but market. agile that to agile a a proposition more part these to we're is value with of use the platform to around being selling be just more able would that the interest competitive from system you lot the quickly And we around support a carriers having compete is It's a being around Guidewire say, extend when transformations. and I auto, selling -- part this their insurance. and more we're lines

Dylan Becker

actually, And [ too, segue great. Mike. the bit a That's second it's question, to ]

calls And well. the I commercial think the side. within out Jasper release on recent some as you've content agility commercial that most had success

way there if market you I well. think that efforts called about commercial maybe side right could the your as opportunity. here on out thinking of you of London on elaborate But the and the

Mike Rosenbaum

to. Yes, happy

was efficiency I efficiency So almost is phase industry of high-volume to on of interactions was insurance in consumers broader those a a modernization industry more phase this quotes interesting modernization so these into phase that exposed the the a core the where the directly that we're is this of focused is And and day. requirements in and the personal is is for about order now there lines is we're was that That of system the transitioning where around is think this -- was driven this repetitive, component industry of this lines, now of highly what commercial on by modernization commercial convenience getting focused the seeing industry things in where there shifts. But in lines. effort the terms driving the -- core customer business digital is -- there the was for systems. one

commercial ] maybe were is business whereas The focus [ bit the so side attention. personal as the somewhat on sort a lines lines left the getting lines side. of little more And to more commercial was

to their think -- And they're what's the and from product win market effectively quickly very market the to so commercial This Guidewire. that very, of advantage new line, going themselves take very matters. Westfield to and line being Guidewire customer Specialty and able about have and can seeing where in they're really customers of based as we've Guidewire as with they really agility, can really, of products where effectively deliver be very, what fast talked establish enabling ours we like modern that taking share an in partnership and using on systems see to they opportunity feedback a of products specialty or create a in great adjust space create is them products day. what the previously, degree they

So about architecture right cloud platform, right that things it's of interesting we're place take cases one these to very now common lines now. the apply this think a of I of center it and to that is in policy common a yes, company able puts business the across this collection us positive use

Operator

comes Our Wong the from Oppenheimer. next of with line Ken question

Hoi-Fung Wong

I wanted tough to circle off up Any color well that year. on the fully premium, ramped comp? about are kind higher the should thinking the that? ARR we Is what comment. up cloud the what like be kind of are just It confidence up up have set it that's step the Is a driving it some on seems of true-ups, migration, wrap business? of the your like you in really guys causing of to step-ups, customers factors

Mike Rosenbaum

the We're going value of generally the with and number. Generally, all would demand of fully in the close the right? healthy ramp to we the nature, in seeing see flow makeup these ramped for activity little coverage into us -- addition do just bit QX the of shows very term look And long we the a the that that in we're expect the deals quarter when that deals, lot in associated a just ] healthy above, [ to will I then pipeline. the that being to we at the detail, answer of as somewhat like we're question opportunities, confident the demand, Well, ratios.

ARR ramped some in a and ARR percentage So of customer. and as the but you're agreement a shows the long-term activity hopefully over time that up flows lot booking with of number, in shows up aware, this is into

of and engagements that a we deals this in company in of inspection long see the the terms signal and so the And quality have of just term. strength the is we the an that

Hoi-Fung Wong

Okay. the coming year maybe QX, that, little guide, we maybe fully 'XX strength off the the Perfect. the off very guide coming full actual lighter Should obviously, of building the QX, kind realization commentary, marry of think as obviously, down that Jeff, And a is about ramped then ARR of strong QX. which is with still QX, but we line?

Jeffrey Cooper

about look Yes. right it. as That's And to we are. way the we we're with where thrilled pipeline for the the think obviously year, at

tend million we on a to business we did annual much than we raise at that the $X about raise [ guide did followed $X million the ] last the ARR terms midpoint. As think quarter. more quarter-to-quarter, by That

So that's confident commitments. for as exists. ahead And to very a the progression as at those the excitement QX, us. And and that leaning we a are feeling make pretty more customers fully demand of profile willingness platform healthy little excited towards the there's clearly look is outcomes ramped we're bit about a that long-term in maturity the

Operator

D.A. Our from line with of the next Heckmann Peter question comes Davidson.

Peter Heckmann

the effect some regards just do how even trade-off need higher premiums guess, that you really is about you with raise of about us Can the does or to catastrophe remind risks. just personal lines I work? frequency the commercial markets, which DWP? in like the how And as think company the pricing insurance of certain given adjusted relative mean, that, to exiting I face to

Mike Rosenbaum

approach the then touch pricing ] resetting carriers exiting and Jeff with respect to give price I'll a to let DWP. markets. And on context [ on I'll you

Jeffrey Cooper

Yes, sure. Yes.

a foundationally, written So are baseline direct our our contracts embedded built around customer contracts. premium that's into

at inspection instances have of annual basis. may what there where of of the [ annual direct longer-term a direct ] uncommon to ability a it it's grow. before take couple into written little that inspect premium that customers ability for look we And renewal, higher contract written see purchase a is. them premium the We to that But they're room years on to a the basis. sort are than to at Typically, an typically, initial running direct premium written we not slightly give bit today on have an to

Mike Rosenbaum

markets the in Yes. you exiting carriers headlines news within business a and markets. And the specific specific exiting on I'll of lines give carriers and perspective about

-- We it's change. The you to for broad-based so approach necessity who conversations really about think does change, entering can markets reason as demand not right? more but as markets I have of in carriers to And just any insurance P&C can and the to those those in that than excited serve provide different quite a a growth well, demand, Guidewire. lot take who for as broad-based ability necessity, of and are carriers to our platform could this with so the servicing a think particular are carriers does driver change enter interested

so kind counterbalances let's And say, to actually leave the market. because our for customers of one shrinking a deciding they're that concern, of

It's [ really how these it. what about approaches the see dynamic California ] the creative especially facilitates everybody into with have can effective the effective if provide we've in and interesting for I coverage. conversations how necessity, markets that's So think our agility like this about homeowners entry and market to P&C very platform we is California you some entry, a here with to had servicing need

So it zoom is something balances really closely, kind out. that that if us something dynamic but of out we've you is for tracked very

Peter Heckmann

X number ] right? It year? That's this if it like of Okay. year. looks one, helpful. am is And fourth new missed [ just can net the right, then And quarter. X, But new last me And logos I then net you like what for number tracking last was the the of looks logos about I remind far number year. so

Mike Rosenbaum

up like be where tough specifically. not the very hesitant kind that we agreements regard. or sometimes that we we the on different business think I with complex considered we're am I want look get don't that comfortable lot something in a a with I say out as sort classify customers, countries say our sales logo. year. of achieving of be through of relationships would to we're if can it our a growth time because say that the might as are growth logo I mix new our call. that number might new just comfortable the I the it to iterative very as seeing of in year-over-year proceed we with you multinational It's we're this throw we wrong have It's in that -- a fiscal to give and the would of would sometimes

Jeffrey Cooper

of then workloads And lot and that new of our being how point, so new running this in activity, the modernization customers. cloud migrations complex you are logo expansions. at new a that modernized on we to about industry count currently customers. get There's systems modernization and with Mike's existing talk can often we legacy Pete, that activity And do hierarchies a to are quite

Operator

Our next with question Rishi comes from the Jaluria line of RBC.

Rishi Jaluria

our less I to Can want to you outside took a there with of shift to through you of And made get managing ratable the linearity. more start you about kind just walk to steps comment that the model. maybe about this us a year, proxy use the own of right your should QX this think follow-up. think got Or inclusive beyond I've as guide, we And number to is future about models seasonality? quick year's we how the years? for

Mike Rosenbaum

Yes.

we it And objectives tough get And to sales what to targets, lot of those opposed for to way more creation bookings to lot we be by market a -- a business to And we're month with it run internal success. just for enables about That that just month continuous the has what point sales cadence it the -- QX it's us. effectively. a around But adjust just outcomes kind to setting have ahead so seeing. we achieve. really pulling and targets very And every enables and running doing trying running which QX that us around just thinking every a year. We're rigorously the and with ship of of monthly manageable in for QX just of single we for this of the QX really to this train the linearity to maturation the and forward processes, in as X-year makes more want and do it's company. great almost the want the of and booking those everybody's pipeline generally the see generation, sort -- creates tracking while approaching through this more us about taken reset then steer objectives approach activity. So -- maturation It around are we're far us a business curve. and at can to another deals pipeline our for what every internally single week, setting

Jeffrey Cooper

depth breadth to depth not inspect material X in X get the -- some add I and of kind kind And the way. But than just linear a thing would the or of as us has is to more in the the obviously, we we of only it. matured, pipeline of allowed recognize certainly, can't The it have need different drive that pipeline of years of Yes. has ago allows was behaviors. those previously. place breadth we a had platform front and much is, us the that in to that We

Alex Hughes

What was part of question? the your second

Mike Rosenbaum

continue sort to to I of progression bookings expect we'll linear drive next year. approach this

hoping it out. to smooth seasonality, so will I'm And continue

Jeffrey Cooper

at we mean I look we track in how and think changed bookings, a look of as expectation falling modeling years, that's certainly think half as -- And I to for see. little dynamic we've first number had behind our about of we I the a that a we're the in little this record back Yes, bit right. I half. would up is that's catching forward. year, great -- which bit, And a

Rishi Jaluria

really we've been a like kit, to maybe perspective, Okay. generative of and it's is about AI And coding leverage then Jutro. for seen gen value opportunity Can Since really at speed look wanted that adoption as even picking a last from Connections that faster -- lot Jutro. with before? than you far announced us an year, about Wonderful. ask That's what maybe to think to helpful interest. there just time a developer has we what question AI use helpful. given up I you even up a to you through walk is cases And just so

Mike Rosenbaum

for Yes, question. Great sure.

our experiences everybody's So directly our platform Jutro ability PolicyCenter. for customers' benefit, to And just digital ClaimCenter, systems. supporting create of for is that's typically, core our technology top on

the consumer, could and of the account efficient or like claims also a update carriers cheaper this efficient, the application that of experience has can And experiences. management carrier. make process agent, customers, -- the just of be efficient better, push so more ] and type to for [ customers good. build our right, more for integrated with the to system. that sort so faster directly much order [ it of to ] good our customers quoting has create Jutro, instead experiences we first, of this things specifically agents stand-alone is, the delivery good system, -- and can just operation. It's general directly have a can core convenient business to customers more we creating into for some to for of cloud and far flow separate far and on these or able good experiences or loss kind create Adoption notice our we'll We very in core And synchronized for are achieve. digital make And be these been more a

now We have GA. product the -- is

And of so projects. a across on terms projects to programs built the cloud real get out out the we're wild, with the GA customer out these into number base into into working in of Jutro world the

in is see happy customer with their to a one and we're Australia, very, more opportunity efficient. experience with as of date, micro in work further these this to our to that one get carriers can [indiscernible] accelerate the progress with Just think through of we us of big actually to going. excited But that being getting talking this We these available state. customer base. We're Jutro customers to packaged actually the creation applications were first around they top use were -- about digital these us. get to went experiences claims just a in for great contents with working little create sort They of also supporting launched a these were a program experiences like project of they're of the very and generally well. that us time And with about very the us that the the flow very, Jutro-driven over adoption with through where partner more

standard with generative Your enhanced, pilots and will software offered familiar this will with. is that certainly today. that teams is all based think which on any language, technology React -- programming this are very This that AI the scope question the about is just web available this the over is are which improved development various We program, AI be great. world like digital generative

can with in this future React-based they application of applications those of this And a interact to and just terms connecting Guidewire. head think start so as

yes, mechanisms going and help we kind improving in for these forward. enhancing coding think So of efficiency AI generative certainly can

for thanks anyway, the question. So

Operator

of with next comes from Our question line the VanVliet Matt BTIG.

Matthew VanVliet

doors of wasn't product the APAC business. maturation there a -- of of get continuing some the Anything more out drivers some over there deals on do you of side team little on performance few that got what things done. the that as ago? How knock doing with that and and on working to versus quarters what's you're sort just and the sort maybe improving cloud much deals, is particular, a Maybe in I called the bit wanted in his maybe sort to dig a of line other provide specific little were that John you us on of and can detail of

Mike Rosenbaum

Yes.

a think, just And the and touching in had a what that smaller that cloud talking this hard map with, work. to on few establish, customers. of and been quarter lot -- Asia about Pacific, a be the John creates connection build their Australian XX came in proven. organization Australia the objectives road objectives. also what ago, we've of past been cloud And the kind make stories. live success big just of worth few Australia, number that But makes program there supported years was this of in and fact now insurance was that we with sense That thing of over number was we've in early the and achieve North but in record about trust success years' A these of companies I planted together minutes their very, successful. relationships from stories we can strong more quarter just a track all to really, very is to of and working confidence back the of the to came business America, a and lot result in to Australia, I and the relating over their kind deals been between number based in to hard is things lot their there able of sales that together sure resulted modernization direct demand. And came a align have that back these will a on there long able we've sort together So had seeds worldwide. the really in We more that programs the we've generally or

these about that mentioned so and all remarks, into Asia in the prepared Australia. But continue the phenomenal leader excited in bring really in I things -- Pacific. quarter And to joining. we're He's we're incredible an Shaji excited a -- we're to very all drive up added family momentum to our Guidewire

lot I got and room success. grow this on a think to build we've more there

Matthew VanVliet

there? acceleration can gross road an just quick on map reinvestments targeting a it more in then then things already? sort quarter. Jeff. And strategic of looks the standpoint, specifically pretty from additional on the big talked help you And just X a you Helpful. you're sort that us is right. of through it margin of the like there? Or came anything with All about, One, perpetual details follow-ups, Any deal

Jeffrey Cooper

So the customer. there was any of perpetual new sort expansion perpetual deal, existing orders wasn't on deal, that an just of

lines. was but blip question? a nothing a of anything then the or along bit would second little And a as was trend it the highlight I So what

Matthew VanVliet

some upside that in You maybe accelerate mentioned going to margins to are platform. gross the investments the

if was that or... curious things forward Just just pulling

Jeffrey Cooper

Yes.

clearly of our next targets So we ahead tracking for established tracking the targets for look, that we're We're of margin ahead already year. gross year. this

to very see creates a out for in. to that been there's invest expansion watch to us that lot us opportunity So We occur. there -- of think for exciting that's that

to a early advantage so have see momentum the think of take targets overall look to that this looks operating but at And so on clearly think margin, we areas bit our as are about. FY still -- ahead 'XX, targets tracking into we think I I healthy we right investment and gross margin

Operator

of question with Sklar James. comes the next Alex line Our from Raymond

Alexander Sklar

demand. Mike, customers just Can the helping of solution around closer staying faster a kind to today cloud drive you comments talk latest cloud maturity your of lot Is the or any demand factoring of cloud your and X kind half adoption? release and in broader to where a way today ago? of that piece is it stands about year versus of characterize there

Mike Rosenbaum

that a what process the a question. experience I been because been around appreciate incredible update from just of these terms sure focus we a a twice-a-year establishing what the current that on-prem. the scale are cloud about we being for and customers measure we've they do can they once do building can do Sure. this it the the it's the it and of things we're release a and bit were to the this series our for change some see a a the take they're do do it once, comfortable for this that of XX- InsuranceSuite as Board, a future. in proposition earn different either has in value once trust, focus taking -- really trust the But securely release last updates. days, teams very current this prudent. on enough to with operations improved these like run these the we our of how And year they're made environments on it to terms promise and that their that very in very, And or that customers of and our customer and cloud relative completely time bunch that their such the in us technically real and a big cadence release and been in N-X cloud, that was ensuring and carefully the whole impact measure apprehensive point, and stay we update, applications. to our track and -- maybe N-X, their we very alongside you has There's we weekly, first cloud around we cloud, to phases minimal, And that feel they cloud the really, went them can infrastructure closely they terms is our the a they it enable customers reliably and relative was release with -- is. We and current also a at even running little once work to of number they in the run engineering cadence. But version for of -- Xx like just track of twice, in release in that Like these this they production really release that year. and Xx-a-year used their we one part behind. doing them establishing making and nonproduction as the Thanks to they the the XX-month in they imagine, to we through and that's programs that we cadence have N-X for ability shifted or state or with each talk N-X

or of current that this really we agility, the functionality really ran we -- Like talk the cloud. So slides this It's talking Jutro of we proposition world. for prospects is to digital functionality. going with important [ the This product value keep I so that is It's would be slides AI one naught prepared generative to all well. able or possible. over whole as about the all workflow one to deliver or process talked the we update if about the customers ] be my part and these of that in the remarks, because able makes functionality groundbreaking all functionality weren't It's customers. of well it's with about was events

And year company. so been this really, really it's a and well, for the gone achievement that's big, big

So thanks for the question.

Peter Heckmann

maybe that We Mike. have just fourth linearity. quick a ARR the on follow-up guide. right. quarter appreciate Jeff, all obviously I you All for around Rishi's question color,

implied might QX I you not fully strength reflect schedule. also the just ramp of bookings, given that think ramped

deals the wanted is that looking clarify, is in comment linearity the and fully of of terms [ you smoother at rest the ramp [ QX, too? ] are that just of side, added fourth is versus a in kind mix ] an the of the I quarter on reliance seeing in there phenomenon year? ramped to So less Or aspect you're

Jeffrey Cooper

Yes.

QX momentum I and interesting think look seeing some come as was really at communicate I we the trying as we [ deal there where to as ] we're look at think exist, what ramps. may upside is of that and some we and the longer-term across commitments upside some

ARR with So as of we're lot ramped look is on more coming the activity the overall interesting at momentum deal a but side, in the thrilled there, kind upside of that we those outcomes.

So [ that's pattern an ] exciting us. for fact

Operator

Our next JPMorgan. of question comes with Gogolev from the line Alex

Alexei Gogolev

us insight When cloud Mike, on ready some haven't I'm products. prem still upgrade most cloud? do into software customers to customers ] assuming be to you I if migrate guys give they received and versions. [ think you you old these wondering introduce since was the the any to would that are could the that started

year be these customers do will So or to of a XXXX, you think many consider XXXX pivotal migration? would cloud when begin

Mike Rosenbaum

cloud every them single I their with updates question. is support that plans with them the say their objectives understand make the We process. with We implementations. them, engage would you to or for closely. of upgrades much very align in off-prem ability our work to Thanks one say, these to and and to either to continued customers consideration as Yes. objectives the

still continue support the fixes. of our implementations It's a component big on-prem when it. We need support revenue. security to We they with customers

perspective, from investment of just going releases. just innovation, to very into those a product there's sort no It's innovation new minimal

reliably more And with innovation. relationship them. systems has operate benefit also support so we more our and where be still on-prem, Guidewire But so real is. just the product we much do to all do safely that's the the in can efficiently much customers and that very the clear And on-prem those with customers can and effectively, and we of the with try cloud, more focus so to

of migrations their occur. other objectives. decision-making inside process. And IT that because it's dealing other when There's will that into objectives so with the Guidewire of program It's projecting environment, just they're not in often very factors a these terms and Guidewire exactly customer's challenging

something world. [ work X years. customer been objectives. can working But them single sequence this our think demand. getting every kind all most to that's their frequently Guidewire. a the where is cloud is base over and the like they they and But to occur It's have so asset of it we're remarks, about valuable time. and of said ] with out said, one discussion in And just them them And Guidewire do of prepared with in upgrade that with plan think the and I we of moved up. firmed have a as when other And supporting the those customers timing and and have IT company's culturally, change sense of will a Cloud in would committed for fiscal fiscal on-prem is happen them. XXX% to makes the towards I projecting our are I And ethos them, of that we There's we're is lot see all that what and to are say, those long Cloud like around in that to I where commitments our fiscal those that and 'XX, proceed we of I plans 'XX, terms those support. But around Guidewire 'XX, implementations, with

Alexei Gogolev

for strategy margins improve would in Perfect. revenue partners very this service amount And midterm, you Jeff, would forward? question of additional quick not add the to and significant capacity of a on help passing low-margin labor going mean ] which need talent potentially your you. that Does [ to

Jeffrey Cooper

partner at highly-strategic up work to to services world work help this that with we We try size we done. tackle the strategy. work that there's We we resources, a SIs organization. to the with need today. staff a the that's our ] allow have to best of this massive Yes. [ modernize significantly, that get with And quite amount to look way scale all if and partners have we in And I skilled organization us have that think to it us Guidewire we to think would the the not to industry. right want And tackle global to opportunity. is and were that to in

our basis. to resources we So where dividing as have people kind And we equilibrium to execute think finding this the our we against this utilized are through I well. exciting opportunity, cost an we right partners process think opportunity highly-skilled as of that up tackle labor have go our look point of as appropriately the ahead, and and right

So that's what tackling. we're

Operator

Our the next question Fargo. comes with Wells of Michael Turrin from line

David Unger

on tonight. It's David for Turrin Unger Michael

seeing talk terms tier? trends just differences either to the you're in the of cycle? And sales or Can one you Just us. guys note through from any by geography

Mike Rosenbaum

know the Yes. I I not don't or out difference in particular cycle. change sales whether call in any

[ that open system very very feel Our in ] deep whereas connection still a hasn't for to some component like we changed. deals like very multiple We and sales years, in customers that are a long, Guidewire cycles their our great often of are often closed connection enterprise. we've is got and running

able It's long seen get generally for them of cycle. to market I And confidence so enables that we're and in wouldn't time. of the have deals sort a a we that a relationship the in we've we've of based the and momentum to and us open change that today. working and much say price a in have just established larger pull a closed opportunity an kind the on for

Operator

Our next question from Citibank. Tyler comes of the with line Radke

Unknown Analyst

deal quarter, impact line on having question to recent to to on the later activity their Peter line to Jeff. is start AI you the Curious systems those your invest projects here. platform? in more This sooner rather down for have Rack. as and AI are Mike wanting customers of just if than introduce applications modernize on the on if Tyler is any Congrats I one and

Mike Rosenbaum

kind long answer this give to is of a and It to think question. And certainly, going I'm the AI, great you I answer question. question. a I'll

for big data very matters company. efficiently effectively. That Guidewire machine programs an If And to broadly, learning insurance using to make and big is at techniques and AI decisions AI more a to machine more modernization is learning deploy getting deal. company data better a access you -- part insurance of Guidewire and better much operate an to make predictions, say to and

AI this broaden to like apply the getting top sense like is a your to this mainframe flows that platform flows. there claims generative a of think AI, to I is think, system, absolutely to policy do suite legacy This a you Trying right generative core system system. to features modernizing around Guidewire, on If is application modern and impossible. I a virtually

PolicyCenter think it -- effectively and improved the to talk embed for significant prepared customers, sort generative insurance, see and taking when about operate then order members the have like to an tedious amount customers run I is [ what's in as are this to that people insurance that are facilitate ] logical ClaimCenter us generative about better steps the we where of a so in in as certainly AI, And thinking generative of conversations right? So step. team of of future I'm it's is AI applied products a towards and now Guidewire. facilitated Guidewire tasks that company we having step platform to we features the be could And is for a a to functionality for being starting do using to with and will helping Guidewire AI with doing that efficiency people advantage logical terms within and and

thinking a Guidewire are the so with what the that's helpful, their boost to decision. benefits about that's and And associated

very like drive transformation to very, general relate aligned going generally and that's program decision. kind still to to of it's but Guidewire helpful So a has a

Operator

question the with line comes next JMP. of from Citizens Aaron Our Kimson

Aaron Kimson

any Could you Jeff on of mentioned accelerated his provide as color of remarks? the end specific the product prepared investments, areas at

Mike Rosenbaum

more a that PolicyCenter, -- said Sure. to opportunity questions, I during the We to, to enhance make that of markets. We components digital continue and markets them continue lot to have Like ClaimCenter, can London Guidewire the during effective. see of applications and number applications just to one in. applying InsuranceNow digital one, invest talked better we we about about the thinking we're strategy content for London

landscape invest countries in There's landscape different localization things enhancements and about regions. of just different that accelerate that requirements. across have further You our There's product we product the think can we today. the to to in growth the

there's our And high AI using approaches. decade, work our of make investment analytics going now us we better facilitate opportunity underwriting broaden to and underwriting rating. There's that wealth just a in companies And interest approaches insurance and make this like to we really a industry can can and for of degree established to analytics, you and created more and product AI AI, ourselves modern that customers insurance for see work else cloud kind life next the using where scale platform it's And around us. have think better pricing we and now generative lot cycle. that for better for the apply have we a more right them processes I to perspective of over start across efficient. for and of agile them for to confidence the to enhance and about outcomes and

think he's on going to that work. is investment industry be where we to so product that, investment, grow focused enhance company innovation effectively. that's what apply we more more about for time the We're we it's getting was past and and that phase strategically, now can talking can our where making support so of And this our sure to infrastructure about, ability kind cloud that like and where of needed period

Aaron Kimson

then [indiscernible]... And helpful. Very

Mike Rosenbaum

repeat can it? Sorry, you

Aaron Kimson

back, the those nimble the Board going ], is CEO, on fraction to [ your last engineering a of Ryu in capture -- talked one ] about are accelerate many products become vertical see former the playing ] and of [ you productivity member, do the vertical believe's where cost. he [ more specific on insurance Yes. Stepping and lot a Marcus spectrum [indiscernible] out over co-founders, market? more trains at of provide upstarts are the software value things month software's of going X ] to applications to verticals time. of LLMs [ between Mike, current allow on software vertical that future

Mike Rosenbaum

We that world financial and very time a the of or is remain conclusion LLMs is to highly-regulated of about insurance lot a launched I to put about a record this. we tell have the P&C the creating obligations code about of rigorous, specifically sort thinking that very system position. core I ago. will that I software about a good the necessity over of amount Yes. feel and really the all strong spent and on of in every long size that our and that. a you, feel package very that And enterprise that's companies complicated supports going have industry track Guidewire very, world investment generation, about going to platform my specifically for -- long, record year to when so the business support. about life. I this feel line good very our position, every works that of carrier we have we

a powered don't submission people database-driven making solve next digital top commercial different within tool set the and on that the the are It in right company insurance make more and this generative for approaches facilitate structured date less by purpose facilitate serve about of less us think for and more to can efficient. of where computer applications like the But database-oriented And I we've sort will had AI It partner to that we the AI. now those problems gives ClaimCenter that that will solve creation of we solved are with systems. now had ability the these generative lines features the quite insurance more PolicyCenter data, will AI problem. today, generative AI different companies maybe complex, partner for we've with vertical. It Guidewire effectively or decisions to years, think processes will we facilitate systems very XX generative them XX will I be talked with. core insurance

terms in, us we're generative vertical position the is software very, that forward. strong going think I very AI help and So will in only of

speak on So that's Thanks probably, I it's I'm the to category industry. question. can't for position but to the I insurance not about appropriate for specifically position the to very my in Guidewire's -- me to speak vertical relative general. P&C. P&C could confident But

Operator

Our Funk next with question comes from Mike of America. Bank line the of

Unknown Analyst

Mike. on Matt is This for

Just a quick one for me.

growth in one-to-one remind costs how DWP we us Can You and because us that link the growth this DWP because in help be quantify of inflation. year that there Understanding out contribution thinking DWPs models and pricing. isn't are overall of factoring growing our tiered going to should between growth rising claim and a forward? called you about

Jeffrey Cooper

we this we've basis. accelerate DWP renewals an I couple a elements sure. years. so true-up of our mean see part to -- on pretty the Yes, seen and is last annual and consistent that CPI over of Certainly, model,

some longer. Given contracts how of are it works the like

more customers they of have the Some than DWP bought running. are currently

in last bit order over historically. itself. So and true-up it it's a or some little this was and of ] contributed seen to take elevated to time incremental probably what as growth half versus percentage we've then sort will [ manifest percentage year of a an year But well

Operator

the of Thank reached Mike we over for the now question-and-answer back and turn have session. I'll remarks. end to you, Rosenbaum closing the call

Mike Rosenbaum

of hope excited just look the everybody be and I incredibly forward everybody about we great about will momentum a and what that see joining. thank and wanted for talking to business QX. We're seeing QX the in the results to we

we'll joining later. very much see today, thanks and for you So

Operator

lines conference, Thank today's your And time. and participation. may disconnect this at you concludes you for your this

Guidewire Software (GWRE) 4 Jun 242024 Q3 Earnings call transcript