Guidewire Software, Inc. Q1 FY2025 earnings call

• Key Themes from Connections: Strong demand for cloud-based solutions, maturity of cloud platform driving referenceability, agility and flexibility resonating with industry, partner ecosystem momentum.
• Cloud Demand: 9 deals in Q1, including wins with Zurich Insurance Group (global framework agreement), Arch insurance, and others. International momentum in Europe (added 3 cloud customers) and Asia Pacific (strong quarter in Australia and New Zealand).
• Customer Examples: Travelers CTO shared positive experience with migrating to PolicyCenter on Guidewire Cloud; IAG COO spoke about efficiency and innovation from consolidating to a single claims platform.
• Generative AI: Shared vision to infuse generative AI in platform and solutions, received positive customer feedback.
• Partner Ecosystem: 33 SI partners (including PwC, Deloitte, etc.) and marketplace partners launched new technology and integrations.
• Operating Model: Leverage in operating model with subscription and support gross margin at 70% in Q1.

InsuranceSuite Cloud: Q1 had 9 deals, with strong demand at the high end of the market. Of 7 total InsuranceSuite Cloud deals, 5 were with Tier 1 insurers. Subscription and support revenue in Q1 was $170 million, reflecting 33% year-over-year growth. Subscription and support gross margin was 70% in Q1. InsuranceNow: Had one net new win and an expansion during the quarter.

• Fiscal 2025 Outlook: ARR outlook $995M-$1.005B, total revenue outlook $1.155B-$1.167B. Subscription and support gross margin expected ~69% for the year. Q2 outlook: ARR between $909M-$914M, total revenue $282M-$288M, subscription and support revenue ~$175M, services revenue ~$48M.

Statements include forward-looking ones subject to risks, uncertainties, and assumptions. Actual results may differ from forward-looking statements. Refer to press release and SEC filings for more risks.

Q: Dylan Becker asks about cloud migration pacing and subscription support gross margins.

A: Mike Rosenbaum discusses cloud migration confidence and Jeff Cooper explains subscription support gross margin dynamics including customer usage and engineer reallocation.

Q: Ken Wong asks about the Zurich global framework agreement and subscription support gross margins.

A: Mike Rosenbaum explains the significance of the Zurich global framework and Jeff Cooper details gross margin components and impacts.

Q: Parker Lane asks about services growth and partner vs internal work.

A: Jeff Cooper and John Mullen discuss services utilization, balance between internal and partner work.

Q: Alex Sklar asks about cloud migration pacing and GenAI engagement.

A: Mike Rosenbaum and John Mullen talk about cloud migration pacing and GenAI conversation prevalence in customer interactions.

Q: David Unger asks about Tier 2/3 customer engagement at Connections.

A: Mike Rosenbaum and John Mullen discuss Tier 2/3 customer engagement and GenAI implications.

Q: Aaron Kimson asks about GenAI pricing model and workers' comp activity.

A: Mike Rosenbaum talks about GenAI pricing being premature and workers' comp segment activity.

Q: Alexiv Gogolev asks about ARR growth and cost optimization.

A: Jeff Cooper comments on ARR reporting and cost optimization related to resource reallocation