Guidewire Software, Inc.

Greetings and welcome to the Guidewire fourth quarter and full year fiscal 2023 financial results conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Alex Hughes, Vice President, Investor Relations. Thank you, Alex. You may begin.

Thank you, Operator. Good afternoon, everyone. 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. The 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 the call. Statements made on the call include forward-looking ones regarding our financial results, products, customer demand, operations, the impact of local, national, and geopolitical events 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 of any subsequent date. Please refer to the press release and risk factors and documents we file with the SEC. including our most recent quarterly report on Form 10-Q and our prior and forthcoming annual reports on Form 10-K, filed and to be filed with the SEC for information on risks and uncertainties and 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. All commentary on margins, profitability, and expenses are on a non-GAAP basis unless stated otherwise. A reconciliation of non-gap-to-gap measures is provided in our press release. Reconciliations and additional data are also posted in the supplemental on our IR website. And with that, I'll now turn the call over to Mike.

Thank you, Alex. Good afternoon, and thanks, everyone, for joining today. I want to start the call by expressing a sincere appreciation to everyone on the Guidewire team for all of their hard work and determination these last few years. Pivoting a software company leading its category to a new cloud delivery model was never going to be easy. But I think that if we're being honest, sometimes it felt harder than expected. But the culture of this company and the determined approach to steady and daily progress all contributed to and culminated in what ended up being a fabulous result for us this fiscal year. The fourth quarter sales results were unprecedented and validate that we are very clearly on the right track. We are steadily building a franchise that will have a lasting and positive impact on the PNC insurance industry and will produce the durable, profitable, long-term growth that is commensurate with a vertical market leader. We closed 17 cloud deals in the quarter, bringing our total for the year to 37. We finished the year at $763 million in ARR, up 15%, and just under $900 million in fully ramped ARR, up 17%. and something that I'm particularly proud of, we finished the year at a positive operating margin, significantly ahead of our plan. Underlying these results is a growing acceptance in the industry that the cloud solution we have built is the logical next generation platform capable of supporting the P&C industry's requirements, goals, and aspirations. We are uniquely positioned to be the industry's innovation platform, and are now working with carriers of all sizes all over the world to help them engage with customers in new and more efficient ways, to innovate and respond to market dynamics quickly with new products and distribution channels, and to optimize their operations to help manage through a very challenging business dynamic. The financial results this fiscal year clearly demonstrate a market position and sense of conclusion to what I would say was our cloud transformation. We are very clearly now the leading cloud platform serving our industry, and this position affords us the opportunity to redirect our focus towards the products and innovation that enable insurers to engage, innovate, and grow efficiently. As I said, it was an incredible end to an incredible year, and I want to call out several key takeaways that are important for us strategically. First, we saw broad-based strength for InsuranceSuite on the Guidewire cloud platform. we made notable progress up market with Tier 1 insurers. We saw momentum in all key geographies and continued to see balanced momentum in both new logos and on-prem to cloud migrations. The sales success this quarter is a great validation of our platform and ecosystem-centered approach and bolsters our confidence in our go-forward position in the markets. Sales highlights in the quarter include phenomenal progress with Tier 1 insurers, closing 11 Tier 1 deals this quarter. This includes a win at Progressive Insurance, one of the leading insurance brands in North America, where our partnership is specific to their non-personal auto lines of business, and a full suite win at Allstate Canada. Based on the success this quarter, we now have some form of core systems relationship with 13 of the top 15 insurers globally, including 12 with Guidewire Cloud. And with exciting potential to expand these relationships over time, this fact validates the strategic focus that we have always placed on this specific segment of the market and its very demanding and unique set of requirements. We also drove further global expansion of GWCP with three wins in Europe and two in our Asia-Pacific market. This international success was highlighted by a major commitment from IAG, a leading Australian insurer, to adopt PolicyCenter on Guidewire Cloud Platform. This is a tremendous validation of our platform approach and combined with the local insurance content required to ensure Guidewire is the right choice in every key market we serve. As I have mentioned in previous calls, we continue to see signals from the market that there is opportunity for us in competitive takeouts. And in Q4, we completed an agreement with West Bend Mutual Insurance to move their claims processes to Claims Center on the Guidewire Cloud Platform. Competitive displacements are rare in our industry, and I believe our recent momentum in this area speaks to our track record, strength of platform, and growing market alignment to our vision. And finally, it was great to see insurance now also achieve a competitive takeout at a tier three insurer, which represented its largest win in the last five years. As I mentioned in last quarter's call, PNC insurers are working through a challenging and complex environment that has stressed almost every insurance company in the world. The decision to embark on a core transformation in the midst of this market dynamic is consequential and I believe supports the fact that our relationship with these carriers is highly strategic and expected to last decades. It was very gratifying to see so many of the deals we were working on this quarter close and I look forward to driving the follow-through expected of us based on the trust that they have placed in our company. Turning to adoption, we continue to make progress in cloud deployments with 13 go-lives on Guidewire Cloud Platform in the quarter and we enter our new fiscal year positioned for continued success. Supporting this momentum is a healthy and growing ecosystem of SIs who continue to be valuable partners as we transition the industry to cloud. We finished the quarter with over 23,000 Guidewire consultants in our systems integrator ecosystem, and over 8,000 of these are now cloud certified, a total that grew 53% this fiscal year. Additionally, we continue to drive more efficiency in our cloud product and company overall. Jeff will talk more about this in a minute, but the significant improvements we are driving in cloud efficiency along with better operating leverage means we crossed back into positive operating margin this year. The work that Diego de Valle and our development teams are doing to not only ensure we're building out a secure and reliable service, but also beat their efficiency targets was tremendous. This is a meaningful milestone that we were able to achieve ahead of plan, and it gives us increased confidence that we will continue to grow, steadily grow into our target model. Finally, our pipeline entering fiscal 24 is healthy. As we continue to enhance the capability of our platform with each release, as we continue to grow our ecosystem of partner applications on our marketplace, as we continue to hone our analytics and data offerings, The value proposition we offer to our customers improves and our competitive position improves. This sets us up well for the new year and gives us a clear path to our fiscal 25 targets of a billion in ARR and 14% non-GAAP operating margin. Jeff will talk more about our deal dynamics and how they translate to ARR and fully ramped ARR. But coming out of a tremendous Q4, we feel great about the business, our pipeline, the success customers are seeing in our platform, and how we are tracking towards our long-term targets. Last comment before turning it over to Jeff. While we are proud of the work we have done to put us in a position to hit our financial targets, we are more proud of the potential we've created to meaningfully and positively impact the industry we serve. Our position as the leading cloud platform for the P&C industry affords us the opportunity to now amplify our focus on the business processes and decisions that drive improved insurance outcomes. We can legitimately improve the efficiency of the broader industry, which ultimately helps people, families, and corporations better manage and transfer risk. I'm very excited about this potential, and I'm confident in saying on behalf of everyone at Guidewire that we are all motivated to continue driving this mission forward. With that, I'll turn it over to Jeff to discuss the financials.