Guidewire Software, Inc.

Greetings. Welcome to the Guidewire Third Quarter Fiscal 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Alex Hughes. You may begin.

Thank you, operator. Good afternoon and welcome to Guidewire Software's earnings conference call for the third quarter of fiscal year 2021, which ended on April 30th. My name is Alex Hughes. I am Vice President of Investor Relations. And with me on the call today is Mike Rosenbaum, Guidewire's Chief Executive Officer, and Jeff Cooper, Guidewire's Chief Financial Officer. A complete disclosure of our results can be found in our press release issued today, as well as in our related form, 8K Furnished to the SEC, both of which are available on the Investor Relations section of our website. Today's call is being recorded, and a replay will be available following the conclusion of this call. Statements made on this call include forward-looking statements regarding our financial results, products, customer demand, operations, the impact of COVID-19 on our business, and other matters. These statements are subject to risks, uncertainties, and assumptions, and are based on management's current expectations as of today and should not be relied upon as representing our views at any subsequent date. Please refer to the press release and risk factors in documents we file with the SEC. including our most recent annual report on Form 10-K and our quarterly report on Form 10-Q to be filed with the SEC for information on risks, uncertainties, and the assumptions that may cause actual results to differ materially from those set forth in such statements. We also will refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP to GAAP measures is provided in our press release. Reconciliations and additional data are also posted in the supplement on our IR website. And with that, I'll now turn the call over to Mike.

Thank you, Alex. Good afternoon, everyone, and thanks for joining us today. I'm pleased to say that we had a great third quarter with both ARR and subscription revenue coming in ahead of guidance. We continue to build on our cloud momentum with key cloud wins, migrations, notable cloud deployments, and the third release of our cloud platform, Cortina. Cortina is the latest in our twice-yearly release cycle for the Guidewire cloud platform and includes numerous advances and innovations that bolster our position as the leading cloud solution for P&C insurers. On today's call, I'll provide more color on each of these areas and talk about how and why our performance in the quarter gives us increasing confidence in our cloud transformation. Then I'll turn it over to Jeff to discuss our financial results and outlook. Starting with sales activities. We closed eight cloud deals in Q3, five for InsuranceSuite Cloud, and three for InsuranceNow. We continue to see very healthy year-over-year growth in deal count, and year-to-date we've had 11 InsuranceSuite Cloud deals up nearly 2x compared to the same period last year. Sales activity in the quarter showed strength across Americas and Asia-Pacific regions and included the following highlights. FCCI Insurance Group, a middle market commercial property and casualty insurer, headquartered in Sarasota, Florida, and writing in 20 states plus Washington, D.C., decided to upgrade Claim Center to the Guidewire Cloud platform and replace their existing billing system with Billing Center Cloud. This will allow FCCI to simplify its IT environment and benefit from the continuous upgrades and innovation cycle provided by Guidewire Cloud. An existing Claim Center and Billing Center customer specializing in commercial trucking and auto insurance chose Policy Center on Guidewire Cloud in a first step towards adopting Guidewire Cloud more broadly. Key factors that impacted their decision were a need to increase their speed to market with new insurance products, seamless integration with claim center and billing center, and lower overall total cost of ownership. RLI Insurance Company, a Tier 2 specialty insurer headquartered in Illinois, was in the middle of a claim center version 10 upgrade when they decided to accelerate straight to Guidewire Cloud. This will allow them to stay current with the claim center roadmap to improve automation and dynamic claims processing while aligning with their cloud-first strategy to improve speed to market. This is a great example of how our effort to streamline cloud upgrades accelerates customer adoption. Aoi Nisei Dawa Insurance New Zealand, a subsidiary of MS&AD in Japan that provides motor insurance through the Toyota Dealer Network in New Zealand, selected InsuranceSuite Cloud after an extensive competitive review. Key differentiators included our product breadth, our proven ability to scale, and our cloud innovation roadmap. This is a first great win at AOE, which will allow us to demonstrate our cloud platform to the larger MS&AD group. Earthquake Commission, or EQC, a New Zealand crown entity that conducts natural disaster research, education, and provides insurance to residential property owners, elected to migrate Claims Center Cloud from V8 for our cloud's compelling financial case, improved configuration tools, and strong innovation roadmap. This is a Guidewire-led migration that utilized our cloud direct framework. We also continue to gain momentum with InsuranceNow, which is our all-in-one core offering targeted at smaller insurers in North America and where we tend to see the broadest competition. An MGA headquartered in Nashville selected InsuranceNow for its product versatility, and for the maturity of Guidewire. This will be a cognizant-led implementation, which demonstrates early momentum with partner-led implementations of InsuranceNow. After an extensive review, we also saw InsuranceNow selected by Lidditz Mutual Insurance Company, a provider of homeowners and business insurance through a network of independent agents. Additionally, a long-time Tier 1 customer chose to invest in another instance of InsuranceNow, to support an additional business unit for its versatility, rich feature set, and ability to scale. This customer leverages both Insurance Suite and InsuranceNow as they have many different business units who each have different core solution needs. And finally, in a great example of how InsuranceNow can scale as our customers grow, we significantly expanded our partnership with Andover Companies, a Tier 3 insurer who has been an InsuranceNow customer since 2017. We also continue to see healthy activity and strong demand for data and analytics, with six deals in the quarter. Our science business continues to grow as insurers are seeing growing demand from policyholders looking to safeguard against the threat of increasing frequency and severity of cyber risk around the globe. Notable wins in the quarter for science include Donegal Insurance Group, Ascot U.S. Services, and eSentire. eSentire, a global leader in managed detection and response, represents an exciting use case for science outside of insurance. In addition, we also had a great digital win in the quarter at Automobile Club of Southern California. The AAA affiliate carrier, an existing insurance weed customer, wanted to improve their digital presence, and our UTRO framework enabled their team to create compelling digital journeys faster and cheaper than with their existing alternative. While this was not a cloud deployment, I want to point out that the architecture of the digital solution and how it aligns to our cloud platform was a key factor in the decision and points to an intention to eventually move to our cloud platform. Turning to customer success, 12 customers went live on implementations for 30 Guidewire products globally, and we were particularly pleased to see two initial go-lives on the Guidewire cloud platform. Aviva Italy, a leading Tier 1 insurer, successfully deployed InsuranceSuite on Guidewire Cloud Platform in less than nine months and experienced immediate cost reduction in application maintenance operations. The Hartford, a leader in property and casualty insurance, was able to deploy InsuranceSuite Cloud for the Putty insurance brand and achieve full end-to-end functionality in less than six months. Putty provides a direct-to-consumer quote-and-buy experience for contractors and handymen, allowing the purchase of usage-based insurance for as little as a few hours of coverage. In the quarter, we also saw Insurance Australia Group, Australia's largest insurer, go live on PolicyCenter, BillingCenter, and Digital. This was a large transformational project, four years in the making, and included partners PWC, Tenzing, and Cognizant. For large transformations like this, an insurer will often focus on modernizing their core systems first before moving to the cloud. We're excited about this go-live and look forward to continuing to support IAG on its journey. With that, let me turn to discussing Cortina, our most recent Guidewire cloud release, which I'm very excited about and we are all very proud of. Cortina represents a significant step forward in advancing our cloud strategy and is a major expansion of the innovation, efficiency, and ease of integration for customers. It demonstrates the advantage of combining Guidewire's depth and breadth with the speed, ease, and efficiency of the cloud and the large amplifying ecosystem of solution partners who can more easily plug in through open APIs and standardization. I'm especially happy about Cortina because the key enhancements contained in it exemplify how the platform has evolved and will continue to evolve how the pieces work together and build on each other, and how now, after three releases, it's more and more apparent how powerful this innovation machine will become for our customers. Cortina included three important examples of innovation that I want to highlight. First, we introduced a new integration gateway as a native part of Guidewire's platform. The integration gateway orchestrates API calls to and from insurance suite and third-party applications and greatly simplifies the approach customers take to integrating Guidewire to other systems. This simplifies process automation and enables insurers to create their own differentiating workflows based on an ecosystem of connected apps and services. It's a great example of the type of thing that is repeated over and over and over again with every single implementation of Guidewire around the world. By centralizing and standardizing the approach to integration with InsuranceSuite, we can make this important part of every implementation faster and cheaper and more reliable. Second is Data Studio. a new data management tool built on top of our Guidewire data platform that enables customers to access, create, and publish business-ready data sets whenever they are needed. Now, every single Guidewire cloud platform customer automatically has out-of-the-box access to a data lake populated with the event-driven data streamed from InsuranceSuite and paired with Data Studio. This enables customers to quickly and easily define and publish these data sets to be used for any reporting and analytics requirements they have. Again, this foundational platform capability reduces the costs associated with initial implementations and makes ongoing innovation on the platform much faster and more effective. Finally, we have now made it possible to run InsuranceNow on the Guidewire Cloud Platform, which will extend many of the Guidewire Cloud Platform benefits like scalability, monitoring, and easier integration to our InsuranceNow customers. And this will also drive greater efficiency for Guidewire. It's a critical first step in extending the innovation and benefits from InsuranceSuite and Guidewire Cloud to our InsuranceNow customers. Switching gears to our SI ecosystem and marketplace, we continue to see tremendous enthusiasm and excitement across Guidewire's global partner community. We ended the quarter with more than 1,600 consultants from 31 partner companies who have now earned the advanced certifications required for Guidewire InsuranceSuite Cloud implementations. And this is up 36% from the end of last quarter and continues to demonstrate the strong demand for partner implementation services and Guidewire Cloud. Additionally, Cognizant and Deloitte qualified for the cloud specialization within our Partner Connect program, joining PwC, EY, and Capgemini as key systems integrators who have earned this designation. This growth in certified consultants and partner specializations is proof of the opportunity our SI partners see in the future of Guidewire Cloud. We also saw continued momentum with our marketplace partners. There are now over 700 applications from Guidewire and 120 partners, and we added a record number of partners and partner applications in the quarter. As we continue to grow this marketplace, we deliver more and more value for customers by enabling InsurTechs to innovate on top of and in conjunction with our platform. As I mentioned just a minute ago, Cortina delivers a very significant new integration capability that I expect will unlock innovation and accelerate the development of simple, repeatable plug-and-play integrations on our marketplace. Finally, Cortina also includes Guidewire usage-based insurance, which is a package set of products and services built on the Guidewire platform and integrated with key capabilities from our partner ecosystem, such as TrueMotion and Cambridge Mobile Telematics. It's the industry's first end-to-end usage-based insurance solution, supporting the entire lifecycle from quote to claim. In summary, we continue to execute well across the key elements of our strategy, including cloud deals, go-lives, and our partner ecosystem, and our Guidewire cloud roadmap. Customer interest and engagement continues to grow, and activity levels are high as we close out our fiscal year. We feel good about our cloud pipeline and long-term position in the markets, And I continue to be very confident in the connection between our successful short-term execution and the long-term outcome we're driving towards in 2022 and beyond. I'll now turn the call over to Jeff to discuss the financial results in more detail.