Guidewire Software, Inc.

Greetings. Welcome to the GuideWire Third Quarter Fiscal 2024 Financial Results Conference Call. At this time, all participants are on 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 cell phone 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, Shamali. 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 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 this 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, 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 prior and forthcoming quarterly reports on Form 10-Q filed and to be filed with the SEC for information on risks, 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, expenses are on a 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 and thanks everyone for joining today. I'm incredibly excited to share the results of our third quarter and discuss the momentum we are seeing in our business. Q3 was another very strong quarter and puts us in great shape heading into the final stretch of our fiscal year. We have all worked very hard to establish Guidewire Cloud Platform, and our insurance suite applications as the trusted worldwide standard for P&C insurers. And I think our Q3 results and year-to-date results clearly show that we're paying off. In April, we released Jasper, our 10th release in under four years, which delivers increased agility in commercial lines while also expanding hazard hub data for Canada. This release and our continued innovation across our platform and applications improve customer agility, speed, and business intelligence. We are helping our cloud customers innovate faster and make better data-driven decisions across the insurance lifecycle. I'm now more confident than ever that the continual iterative improvements we have demonstrated to customers through our cloud platform's consistent release schedule are helping to align more of the industry around our platform, and this general confidence is resulting in our improved business momentum. In the third quarter, we closed eight InsuranceSuite cloud deals, bringing our total InsuranceSuite cloud deals year-to-date to 24, which is a 33% increase year-over-year. We also saw sustained strength with Tier 1 insurers, including four Tier 1 deals in the quarter. Our continued deal momentum speaks to the tremendous progress we have made establishing the reputation of Guidewire Cloud Platform, but also the much-improved fiscal year linearity our sales teams are driving. We have been working for the past few years to establish a more linear quarter-to-quarter approach to sales, and I'm very happy with the more balanced year-to-date outcome. It was also a strong quarter for cloud migration activity, with a total of five insurance-week cloud migrations. Our customer base is our most valuable asset, and a significant part of our cloud strategy has been anchored around the objective to successfully migrate every single one of our on-prem customers to our cloud platform. Continuing to drive these cloud transitions ensures that we remain the industry leader. It sets us up for further cloud expansion activity down the line and demonstrates the feasibility of Guide to Our Cloud to new insurers. Deal activity in the quarter was particularly strong in our Asia-Pacific region, where we had four cloud migration deals in Australia. We are building on our established cloud position in North America with higher engagement and momentum internationally, and it's great to see this pay off in the quarter. Last month, we conducted three highly successful Guidewire insurance forums, with one in London, one in Sydney, and one in Tokyo. These events serve as important customer touchpoints and an opportunity for the broader Guidewire ecosystem to come together and share ideas and feedback. They are a powerful vehicle we use to influence our existing pipeline, generate new opportunities, and help ensure that existing customers are up to speed on all the product innovation we have planned. Each event brings together insurance professionals from leading customers and partners to discuss the future of the PNC industry. In Sydney, over 135 insurance professionals heard Simone Labadee, CEO of AOE Nisei Doan New Zealand, discuss her goals for rapid growth on the cloud, how new Guidewire products and features, including APD, Data Platform, and Jutro, are helping them launch new products quickly and increase customer convenience. In Tokyo, nearly 150 people heard Nakagawa-san, President and CEO of Saison Automobile and Fire Insurance, part of Sampo Group, which was the first insurance company in Japan to deploy Guidewire Cloud, discuss their strategic journey, progress to date, and experience with Guidewire Cloud. In addition, Eric Marcot, VP of IT at Beneva, shared how Guidewire helped the company accomplish an increase in sales and a decrease in time required to train new team members from three to six months to less than a month. Since upgrading to Guidewire Cloud, Beneva has completed three updates, which is in stark contrast to the 12- to 18-month upgrade duration that they were used to when on-premise. Last month, we emphasized our commitment and aspirations for the Asia-Pacific region with the hire of Shaji Setu as our Asia-Pacific Managing Director. Shaji has lived in Sydney, Australia for over 30 years, and he brings an extensive track record of driving strategic IT programs and insurance outcomes in the region. This leadership addition will further strengthen the connection between Guidewire's global capabilities and the local needs of our customers. We made a similar leadership addition to the EMEA region two years ago when we named Will McAllister as Managing Director and have been very pleased with the progress we are making and he is leading in Europe. In April, we were in London for Guidewire's Europe Insurance Forum. It was also an incredible event, with over 250 attending across 70 insurers and 44 customers. Leading insurers, such as AXA and Beasley, attended and spoke to the importance of agility and the objectives that they have ahead with Guidewire. I am especially pleased with the progress we are making with the London market, where we are bridging our global capabilities with its specialized content needs. We are seeing a high level of market engagement worldwide, and combined with the increasing maturity of our platform, we continue to grow our pipeline, both in size and quality of engagement. This momentum and general confidence help position us very well for this fiscal year, and more importantly, our longer-term outlook. Turning to our ecosystem, another key element of our strategy is to expand the partner community surrounding Guidewire, which helps to accelerate customer adoption, deployments, and time to market. We are seeing the SI community increasingly engage in Guidewire projects. There are over 38 SIs working with us today, and in the third quarter, the number of cloud-certified partner professionals from these firms increased 27% year-over-year to 8,900. Similarly, Our solution partner community continues to expand. Guidewire Marketplace now has over 210 solution partners. As our marketplace expands with each release and as adoption of these applications increases, we reduce customer costs and accelerate their time to value on our platform. But maybe the most notable and impressive example of our growing global momentum and ecosystem came in May when we held our inaugural Developer Summit in Bangalore, India. Nearly 500 people attended this event with participation from our leading partners such as EY and PwC. It was a great opportunity to introduce Mohammad Anzi, the new leader of our India operations to the community. Anzi joins us from SAP where he led the largest R&D center outside of Germany. We're excited for him to join us and help drive our strategy execution and growth in India. We also ran a hackathon, which attracted over 125 entries and made me extremely proud of the progress that we've made in our cloud platform. This event marks a commitment to India as a source of innovation through Guidewire employees, but also connects us more closely to a community of technology professionals who have dedicated their careers to improving the insurance industry by leveraging Guidewire software. Finally, let me turn to the continued progress we are making driving platform scale and efficiency. As you know, we've been focused on expanding platform efficiency and gross margin, and it's great to see the team's progress reflected in third quarter subscription and support gross margins, increasing 10 percentage points year over year. This puts us now ahead of plan, and we are confident that we will continue to drive improvements here as we continue to execute new approaches to cloud operations and drive more automation and self-service tooling across our platform. This quarter is another validation of the investments we have made and further proof that these investments have produced and will continue to produce long-term profitable growth. Our software is mission critical and a core system of record for our customers. We price our software as a percentage of an insurer's direct written premium and are therefore tied directly to the value our customers create underwriting and insuring against risk and the associated premiums they charge. This structure creates a durability to our software business at a time when companies across industries are working to gain efficiency and, in many cases, reduce workforces. This stability combined with our success in instantiating our market-leading cloud platform gives me confidence in our model and our ability to invest in further innovation to create new growth opportunities in the future. With that, I'll now turn the call over to Jeff.