Guidewire Software, Inc.

Greetings. Welcome to the Guidewire first quarter and fiscal 2023 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'll now turn the conference over to your host, Alex Hughes. You may begin.

Thank you, Operator. I'm Alex Hughes, Vice President of Investor Relations, and with me today is Mike Rosenbaum, Chief Executive Officer, and Jeff Cooper, 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 our Investor Relations section of our website. Today's call is being recorded, and a replay will be available following the call. Statements made on the call today include four looking ones regarding our financial results, products, customer demand, operations, the impact of local, national, and geopolitical events, and our business and other matters. These statements are subject to risks, uncertainties, and assumptions that are based on management's current expectations as of today and should not be relied upon as representing our views as of any subsequent date. Please refer to the press release and the risk factors and 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 assumptions that may cause actual results of different material from those set forth in such statements. We also will refer to certain non-GAAP financial measures to provide additional information to investors. All commentary on margins, profitability, and expenses are on non-GAAP basis unless stated otherwise. 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 very much for joining us today. We're off to a solid start in the fiscal year with steady and consistent execution towards our goal to modernize the technology platforms supporting the global property and casualty insurance industry. ARR and subscription revenue both finished ahead of our expectations, and notably, subscription and support growth margin came in better than our expectations. You have heard me say before that we feel privileged to serve a critical and essential industry, one that helps families and businesses manage risks so that they can better plan and grow. Insurers need an agile core platform that effectively engages consumers, that supports faster innovation with new products and distribution channels, and that enables them to grow efficiently. Guidewire Cloud Platform delivers this agility, and I'm pleased to share the progress we continue to make in expanding its depth, adoption, and deployment. The momentum around Guidewire, our ecosystem, and our cloud platform was on full display at our recent Connections Conference held in October in Las Vegas. With nearly 2,800 people attending in person, we saw record attendance more than doubling from the prior year and representing broad participation across customer segments, partners, and regions of the world. At Connections, we announced FLED, our sixth platform release. FLED builds on our previous releases to deliver improved self-service tooling for faster production deployments and introduces a new approach to release updates. Cloud customers can now update their implementations to new releases far more easily, which will structurally change how customers approach upgrades. allowing them to stay on the latest Guidewire version and take advantage of platform and application innovation more continuously. We also released our digital framework, Tutro, which enables customers to launch new digital experiences built on InsuranceSuite quickly and easily. Together, these product capabilities provide much greater speed and agility to our customers and help us manage our customers' cloud deployments far more efficiently. But the real highlight of Connections was hearing customers share their cloud visions, journeys, and outcomes with Guidewire. USAA, which has served US veterans and their families for 100 years and has over 13 million members, is halfway through a multi-year modernization journey to increase engagement, innovation, and efficient growth. Guidewire Cloud Platform is a key foundation of this journey And already, USAA has been able to introduce a touchless claims experience for members and launched its new small business insurance line of business in less than nine months. Frigg, the largest property and casualty insurer in Scandinavia, with over 5 million customers, moved to Guidewire Cloud Platform with the goal of fully automating the claims process to further drive efficiency and customer satisfaction. Trigg has already been able to reduce the amount of time spent per claim by 26% and the percentage of claims leakage by 58%, while also significantly increasing customer satisfaction. AOE Insurance, part of Nisei Doa Insurance, the eighth largest insurer in the world, was able to replace its core system with Guidewire Cloud Platform in 12 months and achieved greater flexibility, security, and optimization. They were able to double their new business capacity by reducing manual steps and cutting claims acceptance time in half. As we continue to increase platform maturity with each release, we are driving healthy adoption across existing and new customers. Over 20% of our core InsuranceSuite customer base has already adopted Guidewire Cloud Platform, and we added another four cloud wins in the first quarter. Vaudois Group, a Swiss Tier 2 insurer founded over 125 years ago, chose to upgrade to InsuranceSuite on Guidewire Cloud Platform for a major part of its book of business to achieve greater operational excellence. Vaudois Group initially adopted InsuranceSuite self-managed, but before deploying, elected to upgrade to Guidewire Cloud. Santa Lucia SA, a Tier 2 insurer in Spain, selected InsuranceSuite on Guidewire Cloud Platform for their largest line of business, funeral insurance and end-of-life support. Santa Lucia decided to modernize policy, claims, and billing on GWCP because of our market-leading presence, combined with our platform adaptability and flexibility. This is our first InsuranceSuite Cloud customer in Spain, and we're excited about the future potential in this market. Builders A mid-sized mutual insurer specializing in workers' compensation and construction operating in 22 states selected full insurance suite on Guidewire Cloud Platform to replace their legacy mainframe-based system and to establish a new technology framework that improves their customers' experience, increases productivity, and supports future growth. Finally, RBOS Farm Mutual Insurance based in Texas adopted insurance now for its functionality, configuration, upgradability, and self-service capabilities. In addition to these cloud decisions, we also saw three insurers, including one in Japan and one in South Africa, opt to begin a modernization with Guidewire on-prem. While the vast majority of sales activity over the past few years has been cloud, We do see cases where an insurer decides it makes sense to begin on-prem. Our technical approach facilitates this path, and our perspective is that as long as the customers understand the strategic direction we are following and acknowledge that an eventual transition to cloud will come, we can support this approach. In one of the deals, an existing Tier 1 on-prem claim center customer selected PolicyCenter for a new modernization project. to support specialty lines. In another, the selection was based on the native integration of data and analytics into Claims Center, which will enable the creation of a better claims experience through real-time modeling and targeted straight-through processing. This example supports our strategy to deliver a fully modernized core platform with data and analytics embedded throughout the insurance lifecycle. We also saw HazardHub continue to accelerate in the quarter. This was highlighted by a meaningful deal at Frontline Insurance Company, a large home and commercial property insurer operating in Florida, Alabama, Georgia, and the Carolinas. Frontline will use HazardHub's granular risk scoring for their direct-to-consumer business, Open House, to inform customer acquisition and core underwriting strategies. We are very pleased with the continued success of this product as it offers us a new, faster sales cycle and a more flow-based business that might in the future complement our core system sales dynamic. Turning to operations. At Analyst Day, we talked about our focus on driving improved platform efficiency as we expand breadth and adoption. In the first quarter, this translated into progress in subscription and support gross margins. This is an area we will continue to stay focused on and expect to improve steadily as we deploy more customers in the cloud, roll out new self-service capabilities, and generally improve the efficiency of our cloud platform. While at the same time, always continuing to ensure that our customer implementations are resourced and managed to ensure the greatest possible degree of success. In the first quarter, we executed a number of new insurance suite production deployments on Guidewire Cloud Platform, including DFINITY Insurance, a Tier 2 insurer in Canada known for industry-leading innovation, a two-time winner of Guidewire's Innovation Award, migrated to Guidewire Cloud Platform with over $2.5 billion in personal lines in production. Already, it is seeing 40% faster consumer transactions, 12% faster broker transactions, and an 8% increase in quote volume. We also saw a Tier 2 insurer with over 90 years of history offering auto, homeowners, and other personal lines to members in 23 states go live with Claims Center on GodWire Cloud Platform. This deployment lays a strong foundation to build on as this customer embarks on further transformation. In addition, a large farm mutual insurer in Texas went live with InsuranceSuite on Guidewire Cloud Platform. This is a company with over 100 years in operation, and Guidewire Cloud Platform will help them maximize operational efficiency as they pursue further growth. And finally, let me just close by discussing our partner community and ecosystem. Our system integrator community has been and will remain critical to our differentiation and long-term success. SI's are currently involved in over 60 Guidewire cloud projects and growing this total will remain a strategic focus for us. The number of Guidewire consultants at Systems Integrators grew to over 20,000 at the end of Q1, up by 28% year over year. We also continue to see cloud momentum build in this community with the number of cloud certified consultants sustaining growth of over 100% year over year and passing 5,800 at the end of Q1. This gives our customers a valuable bench of cloud-trained professionals to draw on as they start down the path of modernization or embark on cloud upgrades. We are also seeing momentum in our solution partner community. In the first quarter, 19 more solution partners joined Guidewire's marketplace, bringing the total to nearly 180. We also announced a few important new strategic partnerships at Connections. We partnered with One Ink, a digital payment solution for P&C insurers that offers comprehensive digital payments options and automated inbound and outbound payments. Our collaboration will make it possible for our cloud customers to deploy these solutions significantly faster than they were able to in the past. We've also partnered with Appian, a leading workflow automation platform to enable our cloud customers to rapidly create and manage cloud-based digital experiences and business process automation. And we partnered with Ernix, a leading dynamic pricing engine, to accelerate insurers' speed to market in defining, updating, and optimizing insurance products that are already in market. In summary, Q1 was a great quarter and a solid start to the fiscal year. We continue to expand our platform in critical areas. We continue to sell new modernizations and cloud upgrades. We continue to expand our ecosystem and deliver successful production go-lives and continue to make steady progress on cloud operating efficiency. All of these critical elements of our plan that reinforce each other and demonstrate steady progress towards strategic cloud leadership in our market. With that, I'll turn it over to Jeff.