Guidewire Software, Inc.

Greetings and welcome to the Guidewire second quarter of fiscal 2025 financial results conference call. As a reminder, this call is being recorded and will be posted on our investor relations page later today. I would now like to turn the call over to Alex Hughes, vice president of investor relations. Thank you, Alex. You may now begin.

Thank you, Grace. Hello, everyone. 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 its conclusion. Statements today 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 and clear our most recent annual report on Form 10-K. and our prior and forthcoming quarterly reports on Form 10Q 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, 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 supplement on our IR website. Finally, similar to last quarter, Investor Relations is conducting this earnings call via Zoom audio rather than a telebridge. This means we will manage the Q&A portion of today's call internally with the help of Grace Moderating, who you just heard from, and myself managing Q&A. Please be patient if we encounter any short pause in any of the handoffs during Q&A. And with that, I'll hand it off to Mike. Thank you.

Thank you, Alex. Good afternoon, and thanks, everyone, for joining us today. I want to start by extending my sympathy to those affected by the Los Angeles wildfires and the more recent floods in Kentucky. In 2023, there were 28 events in the United States that each caused at least a billion dollars of loss, and in 2024, there were 27. In Europe, flooding and convective storms caused $14 billion in insured losses in 2024, and the recent fires in L.A. are estimated to have caused an insured loss of $30 billion. The PNC industry acts as a financial backstop for families and businesses impacted by these catastrophes. More than ever, a well-functioning PNC market is critical to providing consumers, businesses, and communities the peace of mind and the confidence they need to invest and live with the risks associated with catastrophic weather events. This critical function is one of the reasons why everyone at Guidewire is proud to play a role in the insurance industry. Our mission is to provide a technology platform that powers agility in the PNC industry. which helps support a more vibrant and effective insurance market, one that helps people, businesses, and governments understand risk in economic terms and make rational decisions about these risks and how to prepare for, mitigate, and avoid them. This mission was established when Guidewire was founded. It has since motivated us to build a market-defining software category supporting insurance core systems and to ensure that through our cloud-based evolution, we will play a critical role in the industry for decades to come. Turning to the second quarter and the current state of our business, I could not be more pleased with our progress and the quality of engagement we have with the market. This includes steady progression and engagement with some of our largest on-prem customers. It is becoming more and more clear that the industry's transition to the cloud is steadily accelerating. Regarding the detail of the second quarter, we produced solid sales activity with ARR finishing above the high end of our projected range. We closed 12 cloud deals. This included four for full insurance suite deals, one insurance now deal, and a remainder for one or two core X center applications. As a reminder, full insurance suite deals include all three applications or X centers, as we sometimes refer to them, policy center, claim center, and billing center. Since launching Guidewire Cloud Platform, our thesis has been that we will see growing demand from new customers replacing legacy systems as we prove out our cloud capability with our customer base. In Q2, we welcomed five new customers, including one in Brazil and one in Belgium. A large global specialty insurers start their Guidewire journey with Billing Center and look forward to the opportunity to expand to Policy Center and Claims Center in the future. Finally, with respect to new customers, we closed a full suite competitive takeaway at a Tier 3 insurer that is a subsidiary of a larger entity where we see meaningful future growth potential. We also closed six cloud migrations in the quarter, which is critical for our ongoing intention and commitment to migrate 100% of our on-prem customer base to our cloud platform. And two of the six included expansion into new business lines or new core modules. Looking at our deals by geography, this quarter was led by North America and Europe, with about a third of the deals in Europe. Competing effectively outside the United States often requires us to invest in country and market-specific functionality, and I was particularly pleased to see this investment translate into three Tier 1 deals, including with two large London market insurers. Across the board, our sales activity in Q2 was concentrated at Tier 1 and Tier 2 insurers, where customer requirements are focused on the ability to handle significant complexity and scale. With respect to the industry overall, I've been asked regularly about the potential short-term impact of the California wildfires on Guidewire. Overall, I would say that the property and casualty insurance industry is incredibly resilient and is designed to absorb these types of catastrophes. The one silver lining from these recent events is that they have increased awareness in the importance of maintaining a high-functioning insurance market where insurers are enabled to evaluate and price risks responsibly. Turning to operations, we are seeing strong growth in cloud deployments, and customers are more efficiently taking updates, keeping them current with recent innovations in functionality. Instrumental to our success driving adoption and deployments is our growing cloud ecosystem of partners. There are now 26,000 Guidewire-focused practitioners across 38 system integrators, and the number of Guidewire cloud-certified professionals has passed 10,500. Another dimension of our partner ecosystem that is equally important to our long-term vision is our technology partners. As we've grown cloud, we've accelerated the number of cloud apps from both Guidewire and our technology partners. Guidewire Marketplace now has over 500 applications, including over 270 from technology partners. And there have been over 6,000 app downloads in just the first half of this year. In summary, it was a great quarter with continued momentum across the business. We feel great about how the year is shaping up and couldn't be happier with everyone in the company helping us to continue to deliver reliable ARR and revenue growth while simultaneously improving margins. All of this is based on an unwavering commitment to the success of every single customer program our company supports, which is ultimately what positions us well for the future. I'll finish with a personal note about one of the customers which really exemplifies our mission and the impact our platform can have in critical times. During the L.A. fires, California casualty leveraged Guidewire to proactively identify and rapidly contact over 400 at-risk policyholders, ensuring their safety and offering immediate aid, including needed housing. By overlaying fire map layers on address policies in Guidewire, They were able to identify total loss homes, often preempting customer assessments. This swift action enabled them to provide over 90% of total loss homeowners with full coverage payments within two months, so customers could move forward with plans to either rebuild or purchase a new home. We're proud to play our small role in this effort and industry. And with that, I'll turn it over to Jeff to discuss the financials.