Guidewire Software, Inc. (GWRE)

Analyst Day 2020

← View all transcripts

Oct 13, 2020

All right. I see it's just past 10 Should we kick it off? Let's do it. Good morning from California. I'm Alex Hughes, Vice President of Investor Relations for Guidewire Software. I'm the newbie on the team here having just joined a little over 1 month ago, but I'm definitely excited to be part of this terrific company and a member of this great team. I also look forward to getting reacquainted with a number of you. I know we've worked together in previous positions I've had throughout my career and it will be great to reconnect as I come up to speed and hopefully become a better resource for all of you. As for today and as for this event, I think I probably speak for the entire team when I say we would have preferred to have done this event in person, but for obvious reasons that was not in the cards. But I think we've put together a solid virtual event for you with a great lineup of speakers and we're really excited to get it kicked off and started. Today, you're going to hear from 5 Guidewire's leaders, starting with Mike Rosenbaum, CEO, who will talk about Guidewire's terrific position within P&C and the opportunity ahead with the cloud. Next, you'll hear from Diego Dovale, our Chief Product Officer, who will talk about our progress to date and our plan for continued execution as we execute into a cloud based architecture. You'll also hear from Sandia Ren, who leads our cloud transition practice and who will talk about how we're simplifying the path for customers to upgrade to the cloud. Roger Arneman, our GM of Analytics and Data will also talk about the tremendous opportunity ahead to unlock value across the Guidewire platform through data and analytics. And then last but not least, batting cleanup and bringing it all together will be our CFO, Jeff Cooper, who will talk about our financial model and our outlook as we increasingly become a cloud driven business. Now before I hand it over to the speakers, just a couple administrative items. First, you should know that we did take these presentations yesterday because we just wanted to make sure we didn't run into any live on air glitches. 2nd, we will be doing Q and A at the end of the day. And if you do want to ask a question, just use the Q and A tool at the bottom of the Zoom app and submit it that way. If you want to ask it via video, just type in the phrase live question, that'll queue up the operator on the back end to bring you over to the panel and make sure you're unmuted, both video and audio. And through a couple of seconds of magic, they'll beam you up, so to speak, and you can ask your question via video. And I hope you take advantage of that because that will make the day feel much more like a dialogue, which is our intention. If you're not in a position to do that, you can just submit it normally through the Q and A app and I will do my best to read that on air when time permits and you'll have the whole management team here to address your questions, including Priscilla, our President. Other than that, I would just mention, in case you've managed to forget at this stage in your career, we will be making forward looking statements today. I won't read through this entire safe harbor, but I'll let you read it at your pleasure as we leave it up. And then the last point I would just make is that we will be making reference to non GAAP financial measures and you can find a reconciliation of that at the back of the presentation as well as the back of the deck that we will post on the IR site today after the event. So we're excited. I look forward to talking to you later today. And with that, I will hand it over to the speakers. Thanks very much for joining us today on our analyst call. As I think you realized, we did a recording of this on Monday, so yesterday, just to make sure we remove any of the risks associated with the bandwidth constraints with all of us having children at home doing homeschooling. But hopefully this goes well and we'll be live for the Q and A and you can ask us any questions that you want live at that time. I guess it's been about a year now, a little bit over a year since I joined the company and about a year since the last Analyst Day that we had with everybody in San Mateo at our headquarters. Obviously, we're making the best of this situation and hopefully we'll be able to put together a good presentation that it will give you a perspective on how we're positioning Guidewire for growth in the cloud and how we're dealing with this COVID pandemic just as effectively as we possibly can. So I'm going to get going here. So Guidewire's chosen domain is property and casualty insurance. The company was founded based on the principle that this industry deserved better software development and a company dedicated to serving what we consider to be a very important part of our society and a very important part of our economy. And this has been a particularly interesting year as it relates to property casualty insurance. What you see in the picture on the right, some of the damage caused by Direcho storm in the Midwest. The picture on the left is from Oregon actually in the fire season out west, really just incredible destruction that's happening right now across the country and somewhat across the world. I was reading this morning that Hurricane Delta, which is actually the 25th named storm in the North Atlantic this year, just a few shy of the record 28. For those of you who don't pay close attention to this, you run out of names in the alphabet at Z. And so we're up to delta and we'll see how much we get to. The other really interesting data point this year is that the complex fire in California this year was the first giga fire, which means that it burned more than 1,000,000 acres of land. But probably, I'd say the most interesting data point that I saw this year from the property casualty insurance industry was the $14,000,000,000 in rebates that they were able to provide back to customers in the U. S. Specifically around the COVID pandemic and just the drop in claims associated with people driving less frequently because of the pandemic created a surplus, which enabled this industry to give back $14,000,000,000 to people in the United States. And I know similar things have been happening all over the world. So this is our chosen industry. This is our chosen path. And we really think it's a privilege to have the opportunity to serve this industry. I personally think it's a privilege to have the opportunity to lead this company. And it's been a really interesting year for me, learning both the company and learning the industry. And what an incredibly interesting and important value that this industry really provides. And it's our privilege, I guess, to do it any way we can. This presentation that we're doing over Zoom and is a good example of the perseverance that I think this whole over the past couple of quarters about how we're dealing with the over the past couple of quarters about how we're dealing with the pandemic and how we're dealing with work from home environments. And I would say, we're doing the best we can. We're getting by and we're keeping the business going, just like all of the other people that we serve in the various companies in the property casualty insurance industry. It's an industry that works pretty effectively in either all remote or partially remote as safe as we possibly can be. And like I said, we're very, very happy to serve in any way that we can. So let me switch a little bit to talk about the industry overall. This slide hasn't changed much year to year. This is our picture of this $2,500,000,000,000 global industry. It's an industry that I think is very interesting in how concentrated it is, with 50 carriers in the Tier 1, 250 in Tier 2, we think overall there's about 1500 insurers that we have the potential to serve. And this is a multinational industry, Guidewire has the opportunity to serve customers, Americas, EMEA, Asia Pacific, Japan. It's a very, very large and very, very concentrated industry that I think suits an approach like we have at Guidewire being so specifically focused. We've been in business now for 19 years and really delivered an unprecedented level of success. I think the thing that we are all most proud of is the track record of successful implementations With over 1,000 implementations of Guidewire conducted across our 300 to 400 customers, it is really incredible the amount of sort of dedication and success that this has driven. We're now able to have over 800 individuals in our product development organization, over 10,000 consultants in a marketplace that I'm really proud of with hundreds of applications from almost 100 partners. And so over 19 years, we've really demonstrated that a company focused on property casualty industry can really generate a significant amount of success for our customers. So our approach actually is very simple. We strive every day to be the platform property casualty insurers trust to engage, innovate and grow efficiently. This is our mission. We think about this every day. We think about this in terms of optimizing all of the decisions that we make every day around really aligning to the business initiatives that are driving our P and C customers. And so I wanted to dig in and casualty insurance company is every property casualty insurance company is trying to rethink how they connect with their customers. They're trying to make insurance more convenient through digital transformation. It's very significant what's going on in the industry. There is customer after customer after customer that I talked to that is just saying we can't make it convenient enough. Our customers expect a sort of digitally driven convenient experience and the bar is constantly moving. And they're also trying to innovate. They're trying to accelerate growth through new product introduction And this basically means building new insurance products and also taking existing insurance products to new states and new domains. This is how companies grow in the property casualty insurance space. And so often and this is one of the things that I've personally learned this year, that innovation, that new product introduction, it's directly correlated to how agile they are with the IT systems that underlie their enterprise. And so to the extent that we can make a cloud platform like Guidewire easier for them to use, easier for them to introduce new products with, we can enable them to grow. Last pillar in this slide is growth. We're trying to grow efficiently, right? I had a very interesting conversation with one of our customers who said, look, Mike, anybody can grow an insurance company. The hard part is growing it efficiently, okay. And so underlying every business strategy at these insurance carriers is this necessity to become more and more efficient, to try to find every avenue to squeeze more efficient growth out of the system. And all of that has to do with running effective IT systems, running effective enterprise systems. And underlying all of it, this is an industry that is data based, right? It's all supported, it's all enhanced, it's all optimized through better data, more data and better and more analytics, okay? And this is how the mission of Guidewire sort of translates into the business initiatives and business strategies of our customers. The problem is that this industry is still held back by legacy systems. It's still held back by decades old systems that are just too slow to change. One of the things that one of the other things I learned this year is that a very significant amount of this industry operates on a batch based cycle, where new quotes are delivered every night on a 24 hour schedule when requests are processed by the mainframe system. And that's just not the world that consumers expect to live in today. They expect systems that are able to process things immediately in real time. They expect systems that are able to adapt and evolve as a business needs them to. And these legacy systems that exist in this property casualty landscape, it really just is holding back the innovation and the flexibility that's really what we think the next sort of generation of property casualty insurance system. For us, this is the enemy and this is what we're driving to fix with what we consider to be the most complete property casualty platform in the world. If you think back to one of the previous slides, I was talking about 19 years, 800 developers in our product development organization have put together something unprecedented in the history of this industry. And that is a complete platform that covers the complete insurance lifecycle from policy generation to billing to underwriting to claims with a digital layer, integration to CRM systems like Salesforce, analytics built in, risk insights built in. It is a very, very complete platform that's been developed over the 19 years of Guidewire's existence. It supports the strongest it supports the strongest partner marketplace in the world and the strongest SI partner ecosystem in the world. And like I said, it truly is unprecedented. And what's exciting for me and what's exciting for everybody at Guidewire is the level of success that it's been able to deliver across 400 insurance companies, ranging from the new ventures, new startups that are launching new lines of business to innovate and compete to some of the largest and most complex business optimizations and business transformations in the world. And what's incredibly exciting about my opportunity to join Guidewire is that the cloud and the transformation of Guidewire and the Guidewire services to be cloud based is going to be another level of innovation and improvement in this industry. We're going to make these systems easier to manage, easier to upgrade and we're going to give P and C customers an opportunity to innovate like they've never had before. And it really starts with the base of InsuranceSuite 10 and our InsuranceNow offering. These that basis is what we have chosen to use for our cloud platform. We add a layer on top of that with Guidewire cloud platform. We add externalized services on top of that and we add data and analytics services on top of that. We take the whole system and starting with Aspen, which we just released a few months ago, followed by Banff, which we're releasing in a month, followed by Cortina, which will be 6 months after that, and on and on and on through the alphabet until we get to Z. We are taking this market leading system and we're bringing it to the cloud. We are bringing our customers forward with us to this cloud platform. And like I said, I really do think that it's an unprecedented situation that we are looking at with this ability to deliver significantly more value to our customers through this approach to cloud. So let me talk a little bit about the market opportunity that this represents. Like I said to you before, it's a $2,500,000,000,000 industry. And when we look at it and measure our ability to sell a Guidewire product to that industry, you can sort of break it up by tiers. And as you can see here, we've had a lot of success in Tier 1, a lot of success in Tier 2, but there's still a very, very significant amount of market opportunity for Guidewire, both in terms of our ability to upsell our existing customer base to our cloud offering and then an opportunity to expand into the sort of customers that have yet to modernize. You look at this same data by region and the story that's told here is that, yes, we've been very successful in the Americas and there is a very significant opportunity for us in EMEA and another significant opportunity in APAC. So as successful as Guidewire has been in the past 19 years and over $500,000,000 in recurring revenue, we really see a very significant opportunity ahead. What we're trying to show you here on this slide is that, if you start with our fully ramped ARR, which at this point is $600,000,000 and then we expand by selling existing customers to our cloud product, we can expand to $2,500,000,000 Then if we expand with net new customer wins, just on that core InsuranceSuite and InsuranceNow platforms, that represents a $9,000,000,000 opportunity. And then add on top of that analytics and data offerings that will complement our core offerings. This is a very significant market opportunity. This is one of those things that I remember last year, there was a lot of discussion about whether or not Guidewire had enough room to grow, whether or not we had enough market opportunity based on the product set that we currently have. And I said yes a year ago and I said yes absolutely right now. We see just given the product set that we have right now, a very, very significant market opportunity if and when we execute. Switching gears a little bit to competitive, this is a question that I get quite a lot from investors and analysts. We have not seen the competitive dynamic change. Certainly, the competitive dynamic has shifted to cloud, But we think and see based on the data that you see here that we continue to win a very sizable percentage of the competitive decisions and especially the decisions when you weight them by the DWP that they represent. The Tier 1 and the Tier 2 use cases and the complexity that we are able to manage with our platform, the complete solution that we are able to deliver gives us an outsized advantage in the top two tiers of this industry. And I think that's what you see when you look at the data on the right side of this slide. Another thing that I spoke about last year and I'm incredibly proud of is how successful our partner programs and partner ecosystems have been. In a lot of ways, I think this is the best way to sort of truly measure the momentum of an enterprise software company, which is how many partners and consultants are making a living and running really good businesses based off of implementations and integrations associated with that core system. As you can see here on the right, we're now over 10,000 Guidewire trained systems integrator consultants. And it's a very, very healthy curve there from fiscal year 'nine all the way to 'twenty. And what we're particularly proud of this year is the growth rate in cloud consultants, which is an indicator to us of the fact that the cloud value proposition and the cloud transition that we're driving on our customer base is being recognized by our Guidewire cloud consulting partners. And the other side of the partner coin is our marketplace. We now have over 600 applications from 90 partners and also many of those applications built by Guidewire. But what's most exciting to me about this is that this is where you see the sort of economies of scale delivered by a common platform, right, where you have an open and flexible plug in based approach to innovation. I hear so often from customers who say, we're really excited to be to have Guidewire live, Guidewire is in production and now we get to start innovating with all of these InsurTech partners that are available on your marketplace and easily plugged in to our Guidewire core system in a way that was just physically impossible with the legacy system that we replaced. You can see this marketplace and the momentum here is growing. And this is one of those things that I think is just going to further accelerate once we're able to move the majority of our customers to a common cloud architecture. So this is one final slide from me that I want to use to help explain my perspective on the overall Guidewire strategy. This is something that I drew up to sort of explain myself to the company and the management team here at Guidewire and they encouraged me to share it with you. And so here's the explanation. I think the most valuable and important asset that Guidewire has is our customer base. You heard before me talking about the formation of the company. We are a company dedicated to the success of our property casualty customers, right? That is really, really important to understand. And like I said, I think it's the most valuable asset that we have at Guidewire. And the strategy very simply is to work with those customers to upgrade them to Guidewire Cloud. And in the process, that enables us to continue to invest in R and D and that enables us to continue to add value and improve the value of that property casualty platform. And what that's going to do, it's going to make the cloud platform more valuable and it's going pull in more of our customer base to that cloud platform. The other thing that cloud customers will do is they'll create the possibility for us to syndicate data and create shared analytics offerings that also improve the value of the property casualty platform. The other thing that cloud customers will do, and I just said this a minute ago with respect to our marketplace, is it's going to create a better mechanism for marketplace solutions to be plugged into that platform. It's going to create more demand customers. It's going to create more opportunity for partners and that's going to create more value in the property casualty platform. And all that taken together is going to create a cloud platform that's going to just be increasing and increasing and increasing in value and that's going to pull in the net new customers that represent the significant opportunity that I talked about before to expand our reach, right. So this is how I see this whole system working together, fitting together to help grow and accelerate the innovation that we deliver to our property casualty customers. So my priorities for the year line up to the rest of this presentation and the other speakers that we have invited to join this Analyst Day. Okay, so number 1 is we need to continue to execute on our cloud transformation. There's really no more important objective at the company. I sort of joke with my management team about this is priority 1, 2, 3, 4, 5, right? It's how are we executing on our cloud transformation. And Diego Duvalier, the Head of our Product Development Organization is going to walk you through that, right. The next thing is we're going to we are working very hard to define a clear upgrade path to Guidewire cloud and we've made some very significant improvements in making it easier for customers to move to Guidewire Cloud. And Sandia Wren, who drives our upgrade practice, is going to share with you her perspective and her vision for how we're going to be able to accelerate that in our customer base. And then we're going to talk about how to unlock more platform value through Guidewire Analytics. And Roger Anterman, who just joined us as the GM of our analytics group, is going to speak to this and share with you our vision for how we can add significant value to the overall platform, excuse me, through data and analytics. And finally, Jeff is going to talk to you about our business model and how that all relates to the financial metrics that we all know that you guys are interested in hearing our vision for the future on. So I appreciate the opportunity to speak with you today and look forward to hearing your questions during the Q and A. Thanks very much. Hello, everybody, and good morning, and welcome to the Analyst 2020. My name is Diego de Valle, I'm the Chief Product Development Officer, and I will walk you through to what is an update on our execution and a quick refresh on our strategy that we did introduce last year. So just for those of you that are new, I joined in 2018. The step of my journey here have been starting with restructuring the team. I kind of manage a team across the entire world, and I wanted to make sure that we had a team structure to deliver and to execute. Step 2 has been building a strategy. We just chatted a little bit and introduced a strategy of Guidewire Cloud last year. I'm going to touch upon a couple of pieces again in this presentation just to make sure that everybody is updated on what we're looking for and how we're structuring the future. And last but not least, we started our execution. I want to give an update on where we are in execution. So but let's start with strategy. So the most important thing is to remember is that we have decided to make our strategy based on InsuranceSuite 10. We have decided to modularize InsuranceSuite via API and basically carry all our customer over into this transition, moving our customer on top of iGUIDE to our cloud and leverage all the code that they've been working in refining across many years. Once customer is ready, we will be ready. You're going to see later in the presentation, Sandia Ranch is going to talk about our program to move our customer to our Geiger cloud as we speak. But just as again, I wanted to refresh that we have not decided to rebuild from scratch the platform. We have decided to kind of do something in some extent way more complex. That was empower our customer to use everything that is being coded until today, their investment and transition into the cloud in the most seamless way. Last year at Connection, we introduced this slide, so I just wanted to have a graphical visual cue for the story, right? So it's built on top of AWS. On top of that, we build it what we call our Guidewire cloud platform. We're going to talk extensively during my presentation. And on top of that, we're running now InsuranceSuite. And slowly but surely, we're going to kind of build and introduce cloud native extension to beef up cloud insurance suite in such a way that our customer will gradually get the benefit of innovation, while at the same time, they could leverage the code that is being, as I said, put in place for many years. But give you a quick update on the execution. So since last year, a lot of things happened. We moved from a 2 year cycle delivery into a 6 month cycle delivery. By the time we talk right now, Aspen is basically already old news. We launched it in May 2020, and this was our first cloud release in which a combination of the platform and the latest InsuranceSuite version was made available to all our customers. Since then, we shifted and working in Banff, and we're launching Banff November 'eighteen this year, so pretty much a month from today. And as we speak, probably 90%, I would say not probably, for sure 90% of our engineering team has shifted execution and they're already focusing on Cortina. This is a dramatic change in the way that we've been working. If you remember last year, I did mention that, that was a huge opportunity for the engineering team to sort of work on a cycle that was way more fulfilling and in some extent, way more exciting for the engineer itself. We are now in a position into which we deliver something to our customer and quickly after, we can see the benefit, we can see what works, we can see what we could improve and all that cycle is going to be on a 6 months' cadence instead of a 2 years' cadence. As mentioned here, the entire team is shifting on Cortina, and we are working on some very exciting new capability for the next releases. Just because in general, I really like to sort of go through a presentation and not change the sort of every year, we don't want to change the story, we want to make sure that it is a continuation. Going forward in the presentation, there are a couple of slides that for those of you that participated last year, they're going to look familiar. And this is on purpose, is to show you that we define a strategy and we're executing upon the strategy that we have designed and set the foundation last year. So let's start with something that you maybe recall. You probably recall the R and D investment and how it's distributed across 6 locations, 6 main locations around the world. Similar to last year, I want to share a little bit how the breakdown of the investment is distributed. We have in FY 'twenty that is just finishing, that is pretty much the percentage that we could allocate across the major area. And if you could recall, this is an increase compared to last year. And what you will see is that on the Guidewire cloud, we are continuously increasing the investment. Now what I want you to pay attention here is not that we are abandoning self managed, but I want to kind of keep in mind that when you see Guide to our cloud, basically this should be Guide to our cloud first. We first develop for cloud and then we bring back to our self managed customer everywhere that there is a business value and where it's possible. So don't look at this in term of reduced investment of Self Managed, but increased investment on Guidewire Cloud First. As you will see across the compared to last year, we've been increasing steadily on the Guidewire Cloud First investment, and we kept at the same level the investment around digital and data analytics, for which Roger later in the presentation will give you more insight. And going forward to next year, this path, this growth into a Guidewire cloud first investment will continue to happen. But now what I wanted to give you a little bit of more of insight is how are we spending that investment? What are our top three priority across engineering? And those top three priority didn't change across the last three years. We set up a strategy, as mentioned, toward 2018, while we released InsuranceSuite 10. And from there on, we've been executing those top three priority. On new product innovation, you can imagine and probably you know, our product is the most complete into the market right now. So what we really needed to sort of shift the priority or at least for this initial period as being on Guidewire cloud platform and integration framework. Just want to make an analogy to give you a sense of what Guidewire Cloud Platform is. Think about Apple back in the days when Steve Jobs came back. One of the first thing that he focused on was to fix the logistic and the supply chain. They had a problem of by the time you were ordering a product and the product was showing up in U. S. That was many weeks, many months, and by the time the customer were about to buy that product, probably that product was already old. So for us, in a similar way, Geidward Cloud Platform has been the infrastructure to put us in a position into which we can press a button and by pressing that button, we release the latest and greatest functionality to ideally all our customer. That investment was the key number one investment that we started with Aspen and we're continuing in BAMF. The second part of the investment has been the integration framework. So we, as mentioned last year, we've been building a solid layer of API around our core to gradually improve and make more efficient all the integration that our system rely upon. As you probably know, a vast portion of our installed base rely on very large number of integration. And the more efficiently we manage those integration, the more efficiently we monitor those integration, the more effective we're going to be on the long run. So again, look at the Agua Cloud Platform as the infrastructure, our assembly line and a complete change in our assembly line. As you probably know, we were delivering a self managed solution into which, in some extent, we were basically packaging a CD. And now we are pressing a button and refreshing a core for all our customer. Those two things are fundamentally different. And so we made a conscious decision of prioritizing the investment around the platform, prioritize the investment around the infrastructure and continue to allocate investments on the innovation, but doing that as a sort of gradually. And as you can see here, the percentage is very similar between the two releases, but you can start to see a little bit of the growth into the innovation. And this track of innovation gradually increased investment will continue to happen across the multiple releases. So now if you look at these 3 buckets, I think that for those of you in this presentation, the most interesting part are bucket number 1 and bucket number 2, what we call GWCP and what we call the integration framework. So let me walk you through the GWCP again. So last year, we introduced this slide. We basically said that there is a layer of things that are common across multiple customer and we packaged all the commonality into what we call GWCP. At the beginning, it was basically managing by scale. You can imagine that while we move the customer on to our cloud, we are going to reduce the configuration metrics to most as optimized as possible. Think about a single app server, Think about a single DB. Think about everything that by consolidating across a more repetitive approach, you start to get some advantage. What we like to call the magic number is the number 10. Once you start to move from 2, 3, 4, 5 customer and you start to get into 10 customer, you start to get into the threshold in which instead of building things head off for each customer, you can start building tooling and you can start building tooling and invest in tooling that gives you higher efficiency. Think about building a form. You build a form for 1 page on a website or you want to build a tool that auto generate all the form possible. If you only have one customer, most likely it's more efficient to build simply one form. If you start to have a multitude number of customer, you're going to kind of take advantage of building a tool that auto generate as many form as possible. So once we gradually increase the number of customer on cloud, we started to look at things like from a dedicated to shared resource. We start looking into how do we support dynamic scaling? How do we kind of start to build what we call infrastructure as a code in provisioning? And so all those things moving from an initial subset of customer to a larger number of customer have been instrumental to educate and structure a roadmap across GWCP. And with Aspen in May this year, we launched not only the latest version of InsuranceSuite, but also version 1 of GWCP. Now GWCP has multiple capability in multiple areas. Here I listed them kind of top 10 area of capability, but I'm pretty sure that it's going to be a little bit tedious and too many details for this audience. So I take 2. The first one is what we call hybrid tenancy model. So we got a lot of question about single tenant versus multi tenant. And so the direction in which we've decided to go, going back to my first point about leveraging customer existing code, was to go to an hybrid model, an hybrid model in which all our multiple insurance are managed within the same cluster and within the same cluster, we have the right isolation and the right kind of cost efficiency that we want to have. Kubernetes is offering us capability and option that were simply not possible a few years ago. So on one hand, there is, as we said, the all the customer that are running in a single cluster in an efficient way. On the left side, you start to see, if you remember my first slide, those new external service becoming enabled and those will be built in a full multi tenant native infrastructure. And we believe the combination of those two things is the right mix for us and for our customer to evolve into our Guidewire cloud. We have right now some of our early adopters that are running in a configuration that is exactly as you can see here. From a customer perspective, it's completely seamless. They start InsuranceSuite and they don't see behind the curtains what is happening. In reality, as mentioned, is what we call an hybrid tenancy model, in which one portion is single tenant and another portion is multi tenant. The second thing I want to kind of point your attention on is what we call Guidewire Council. The Guidewire Council is a key ingredient for enabling our provisioning and to make sure that our provisioning is as efficient as possible. If you go back a year ago, at pre Aspen, as you can see here, we had the timing that it was taken to provision an infrastructure was a couple of people 20 days. And if you look at where we are going into Cortina, it's 1 person, 15 minutes. So this is just one element. I mean, I don't want that you think that once we execute that, everything is complete. There are multiple elements off. But it's really important to understand that if you look at the number of customer that we have on GWCP, we move from launch. At launch in May, we had 0 customer on GWCP. Today, we have double digit. You can imagine the workload into our ops team to kind of onboard double digit customer within 4 to 5 months, customer that needs to be onboarded in different regions around the world. So the availability of JWCP across multiple regions, namely North America, Europe and within Europe, making a differentiation between France and UK and then going to Australia and Japan, there is like a gigantic need to kind of a repetitive process that is going to be, as I said, as much as possible, a couple of clicks. And so that is being a key aspect of the investment because otherwise we will not be able to support the demand and the requirement that is continuously coming at the speed that without those improvements, we will not be able to fulfill. So those are just a couple of things, And we could discuss more into a Q and A session if you guys have question about it. But at this point, we're really excited about our capability on GWCP and what we've been able to achieve in a short time lapse of 1 year. So I want to wrap all this up into one slide that hopefully is going to kind of visualize in a better way the entire strategy from an R and D investment perspective and what we're trying to achieve with that. So as you can see here, there is a couple of releases, the first two releases, Aspen and Banff, and the curve here is basically what we call sort of cost optimization based on scaling. It's what I discussed before. It's basically you're going to run more customer and because you're running more customer, you immediately have a little bit of efficiency by consolidating few aspects. As I mentioned before, a single DB or a single app server, There are a lot of things that you can get there, but at some point, that efficiency will plateau. You need to go into a sort of you need to play with different lever. And the first lever that we've been playing with is GWCP. Launched with Aspen, we're expecting that GWCP at full operational is going to give us an interesting improvement into the efficiency across. As mentioned, today, we're managing 6 regions with in the same way. When we refresh the code, we press the button and all the 6 regions at the same time get the latest version of the code. So GWCP is going to kind of enable us to kind of run-in the most efficient way insurance suite, the same insurance suite that we've been building for many years. We are now having the capability to run it efficiently and end up at the cost that is completely different than what we had at the beginning of the journey. Step number 2 is the investment in the integration framework. As mentioned before, integration is a big portion of the first implementation, but it's also an interesting cost in running those integration in a solid and maintainable way across the different year. So here, as you see, the curve here is slightly different. Why is it slightly different? Because from an integration framework perspective, we are starting delivering some key capabilities starting with Cortina. But then those capability needs to be implemented. So there is a sort of as you can see here, there's a couple of cycles that we are expecting it will take for those new integration capability to become enabled and to become adopted across the customer. This is a per customer views live. So you can imagine that some customer will be faster in adopting those and some customer will be slower in adopting those. For those faster, we will be more efficient from the get go. For those that will adopt that later on, we will be a little bit it will take a longer time to get into that point. So and with that, I kind of covered all my different topics. I'm open to Q and A later on, And I want to pass the ball to Sandhya Ren that she's going to talk about how and in which way we are efficiency moving, guide our customer into our cloud and what is the program that we put together to make that happen. Thank you. Hello, everyone. My name is Sandia Ren and I'm part of the professional service team here at Guidewire. I actually joined Guidewire almost 18 years ago and I started out as an engineer on our product development team building out the early versions of our products. A few years in, I joined our consulting team and I had the pleasure of working with a number of customers on their early Guidewire implementation. Over the course of the last 18 years, I've had the opportunity to start and grow a number of our Guidewire initiatives. One of them is the Guidewire Services Center, which is our distributed consulting team and we started that in 2011 and we've grown it to at its peak almost 200 people located in offices in 5 different offices across the globe. I was also a founding team member of our upgrade practice when we started having a volume of customers that were doing upgrades consistently. And I got to lead a team of developers to build out the first version of our digital products. I also had the opportunity to welcome and integrate a number of the products that came to us by way of acquisition. So this includes our data management products, predictive analytics as well as underwriting management. And over the last 10 years or so, I've looked after what we call our specialized consulting competencies. So these are competencies around upgrades, migration, infrastructure and testing. Nowadays, my focus is on cloud upgrades and that is how I'd like to spend my time with you today. Specifically, I look after our cloud transition practice. And this is a team that we formed at the beginning of this year that is focused on taking our existing customers and their path to Guidewire Cloud. We are grateful to have over 500 instances of our products in production with our customers And we want to make sure that every one of these instances has a clear path to Guidewire cloud. So our team comprises our upgrade center of excellence. So this is a team that has been doing full upgrades for customers for over 8 years. And we also have our data migration team, which is a group of highly specialized experts that have been spending a lot of time moving data from one place to another. So we want to use our depth of skill as well as our breadth of experience to make sure that each customer has a path to Guidewire Cloud. And we're doing this through 3 lenses. The first is around the upgrade path itself. So we recognize that our customers come from well they have different combinations of our products. There are different versions. And actually each of them are at different stages of their overall legacy transformation with Guidewire. So we want to make sure that we have a standard approaches to cloud that cover various situations that our customers are coming from. We believe that there is a right path for each customer and we're ready to determine work with them to determine which one that is. So with the purchase defined, we're also looking at the upgrade itself. So that means, what is involved? What do we actually need to do to take a self managed implementation and move it to the cloud. In this regard, we work alongside our product development and our cloud operations teams to ensure that the functionality that we need and any sort of operational capabilities that are needed are in place so we can support these custom upgrades. The second lens is around the effort for this upgrade. Within our upgrade center of excellence, we've always been evolving our process and methodologies to make each upgrade better than the last. So we're bringing all of these best practices and we're bringing the same innovative out of the box thinking to cloud upgrades as well. But in addition to that, we also have a very strong focus on automation. So we're looking for places where we can have automation and we're investing quite a bit in building tooling to increase our efficiency and lower the cost for these upgrades. This is something that will benefit all of our customers. And last but certainly not least is the delivery itself and the execution of these upgrades. So as you heard from Mike, we have a vast partner ecosystem and many of these partners are supporting customers that are looking to make a move to Guidewire. So our team is making sure that we at Guidewire aren't the only ones who are ready to support these upgrades, but that our whole community, which includes our customers as well as our partners is also equally well prepared. So I hope this gives you an idea of our cloud transition practice and what we're working on. Next, I'd like to give you an update on our upgrade strategy. So previously, our plan was to have InsuranceSuite 10 be the stepping stone to Guidewire Cloud. So any customer that had an implementation that was on a version prior to 10, the plan would be for them to upgrade to InsuranceSuite 10 first and then take a subsequent step to go to Guidewire Cloud. In reviewing our customer landscape, we saw an opportunity to get the majority of our implementations to Guidewire Cloud faster. Now on the right here, you can see this is a breakdown by version of the InsuranceSuite implementations that we have in production. So you can see that a good part of them and it's actually over 3 quarters of them are on InsuranceSuite 8 and InsuranceSuite 9. So that meant that all of these implementations would have to grade to 10 and then go to the cloud. And we just believe that we could do better than that. So we put our focus into finding a way to simplify the upgrade for these implementations. And the result is our cloud direct offering. So now InsuranceSuite 8, 9 and 10 implementations have a direct path to Guidewire Cloud. There's no longer a need to go through Insurance Suite 10. And this means that over 85% of those 500 plus implementations that I previously spoke about now have a direct upgrade path to Guidewire Cloud. We're pretty excited about this and we're pretty excited about CloudDirect because it reduces the complexity of the upgrade and allows our customers to start realizing benefits just that much sooner. And once they get on Guidewire Cloud, the burden of upgrades is lesson for our customers. So instead of having to do a major version upgrade every couple of years to leveraging features, they will get smaller, more frequent updates from Guidewire that will make available to them the latest innovations on our cloud platform. Now with the release of Aspen, there has been certainly an increase in customer interest about Guidewire Cloud, we're hearing, tell us more about it. And many of our customers are trying to figure out where it fits within their overall strategic environment. For our InsuranceSuite customers, we think that there are some upcoming dates that we believe will drive some urgency in their decision making process. And specifically, these are all around product support. So, InsuranceSuite itself is now in extended support, which means that support and its costs for InsuranceSuite A are higher. But the more pressing day that we're looking at is the one on the right here, July 2022. And you can see that the versions of Oracle, SQL Server and Java on which InsuranceSuite run all reach end of life. And running on an unsupportive platform gives you open to security risks and other vulnerabilities. So it's usually something that customers and companies in general try to avoid. So this essentially means that our customers who have InsuranceSuite A have about 2 years from now to upgrade and avoid being on this unsupported platform. So we're encouraging these customers to upgrade very soon and given our cloud direct offering to upgrade directly to the cloud instead of upgrading to InsuranceSuite 10. Again, doing so accelerates value and allows them to avoid that future upgrade to the cloud when they're ready to go. All right. So to sum it up here, if you wouldn't mind, humoring me with a trip down memory lane, we actually did our first customer upgrade back in 2004 with our first claims center customer. You can see the team that did it on the left here. I was actually already with the company then. I remember the excitement that the whole team had around this accomplishment because we knew back then that the best way for our customers to get continued value from our products is going to be through upgrades. So having implementations that can be upgraded has been a key value proposition for Guidewire from the beginning and the ability to do so is innate in our product's DNA. Over the years, we have along with our customer and partner community done 100 of these upgrades. And we've reaffirmed our commitment to upgrades a couple of times. First with the creation of the upgrade practice in 2,009 and then our upgrade center of excellence was just founded in 2012, where we really took innovation around upgrades to the next level. And now with our cloud offering, I'd like to say that we're doubling down on this commitment. We're going to keep customers current and we're going to accelerate the pace with which they can attain greater value. We formed our cloud transition practice and this team has a singular focus of taking existing self managed customers to Guidewire cloud. And our customers are interested. Our schedule for cloud assessments is actually full and the requests will keep coming in. So we believe we have all the right pieces in place, but more importantly, we believe that every customer has the path to Guidewire Cloud. We're ready and we're excited to take them there. Thank you for your time today. We are going into a 10 minute break and then after that you'll hear from Roger Arnhemont. Thank you. We are the fastest growing top player in the Life business in Italy and innovation has been the key element of that. And on the GI side, we would like to replicate this. This is our main ambition for the coming years. It is important to be the 1st mover. In Italy, all the players work with all technology, all systems, and it's very difficult for them to change. We will leverage the expertise of the buyer to try to be the 1st mover of the Italian market because this is clearly a key success factor factor to win in the insurance markets in the coming years. We decided to create a very strong core capabilities. And then adding to this core all the digital components from digital signature to digital payments to digital documentation, you create a kind of platform that is fully digital, is omnichannel scalable platform for the future because we also see the future more like an ecosystem. And we feel that we are much better placed now than we were only a year ago. Hello. My name is Roger Arneman, and I'm the General Manager of Guidewire Analytics. Before starting, as this is my first time with you, I'll share my background. I spent 15 years at Risk Management Solutions, quantifying catastrophic risk and ran global consulting teams, securitization teams and our data business unit. As Chief Product Officer at Nomus, we had price optimization for retail banks and as serving as Chief Product Officer at our sale, we built cyber insurance solutions. I would like to share why I'm so excited about our opportunity at Guidewire. I believe that we're just scratching the surface with what analytics will do to transform insurance. Paramount to our vision is first, that analytics are a closed loop. And second, analytics must be at the edge to make insurers, as we say, brilliant in the moment, meaning analytics delivered at the point of underwriting and claims handling, not at the back office with stale monthly batch processes. Guidewire is uniquely positioned to achieve this. Our Policy Center and Claim Center products are that edge, where decisions happen and delivering analytics has maximum value. Now let's set the stage. The world is changing rapidly. Here are a few examples. The sharing economy has disrupted the concept of ownership. We had a surge of small business growth, but now far too many are closing. Working from home has changed where we are, our hours, commutes and the tools we use. The Internet of Things creates an explosion of data. Catastrophes and pandemics catalyze tectonic changes that are reverberating beyond our lives and the physical assets that they've destroyed. Social inflation is leading to elevated payouts. Nature, frequency and severity of risk is shifting fast. To meet these challenges, insurers need analytics more than ever. And this is why insurance analytics is an approximately $8,000,000,000 total addressable market. In fact, Mike Rosenbaum said last year that analysts could become bigger than core. So I have some ground to cover. While the world is changing, exposures are changing even more quickly. For example, COVID-nineteen transformed the restaurant industry overnight. Countless restaurants have closed and will not reopen. Those that are open are not the same. In January, 2 pizzerias in Manhattan were identical, but now Joe's only does takeout and Sally's has outdoor tables and bike messengers. These present very different risk profiles, neither of which was what they looked like in January. But this story is not just about COVID. At Guidewire Analytics, we're helping insurers navigate accelerating change. Insurers are expert using the path to estimate the future and are really good at looking in the rearview mirror to drive the car forward. But that requires a future that is similar to the past and that is no longer sufficiently true. As they say, past performance is no guarantee of future results. We already help insurers assess risk. We cannot predict the future, but we can anticipate and respond faster. And we accomplished this with the industry's first closed loop analytics platform and makes insurers brilliant in the moment. I'm excited about our closed loop and want you to understand exactly how it works. 1st, we help you leverage your own data, the Guidewire data platform and an ecosystem of apps that can sit on top of that platform. And together those allow you to actually harness data you've created in the past and do contextual risk comparisons to see what you're looking at today and other risks similar to it in the past. 2, we help you enrich your insight. So the science data listening engine helps us gather information in real time that's pertinent to underwriting and handling a claim. We take that information and we convert it into science risk that are specific by line of business to answer individual questions. Part of the data that we collect is behavioral and also non obvious data. We use our Compare product to share claims information that's syndicated across multiple companies. We also embed intelligence. So our predictive analytics product allows us to build, deploy and monitor models. You can bring your own models and use open source integrations and do all of this at the edge in underwriting and claims handling. And to complete the loop, we learn continuously, including continuous underwriting. We can track portfolio performance and refine models with outcomes and do hypothesis AB testing to quantify intuition. And this whole closed loop process integrates with the core. There are 2 things that I want you to remember from this. The first, like a flywheel spinning faster and faster, differentiator to win core deals and spur cloud migration. So let's look at 3 by the numbers examples of our components in action. The top black bar is a challenge for cyber. In the Worldwide Threat Assessment, the U. S. Director of National Intelligence cited cyber as the number one threat to U. S. Security. By 2021, the cyber global economic loss is estimated to be $6,000,000,000,000 By 2021, the global ransomware economic loss is estimated to be $20,000,000,000 That's 5 ransomware attacks per minute. The lower bar is how Guidewire helps customers transform challenge to opportunity. We collect more than 1,000 data points and curate these into 47 risk factors. The risk factor is a derived analytic, often including multiple data points and it answers a specific question. For example, a ransomware risk factor is a number of exposed remote desktop protocol ports. And in 2019, we assessed the risk of 1,200,000 cyber policies for customers. The Cyence acquisition was about cyber and about expanding the data listening engine to more lines of business. Now let's look at how we're using Cyence for workers' compensation. The top black bar again is a challenge for workers' comp. In 2019, dollars 56,000,000,000 of premium was written in the U. S. Dollars 0.40 per dollar spent was on insurance expense, not actual losses, just expense. And it's estimated there's a $10,000,000,000 reserve deficiency in the U. S. To address the volatility of the workers' compensation line. The lower bar is how Guidewire helps customers transform challenge to opportunity. We collect 700 plus data points and curate these into 101 risk factors. An example of a risk factor for workers' compensation are web searches for plaintiff attorney nearby. As you might imagine, that increases the average payouts. For one customer, we demonstrated an approximate 1% reduction in loss ratio. And that's a lot. Using a simplified economic model, the $600,000,000 insurance book over 10 years creates 25% higher pre tax income and almost $100,000,000 of additional shareholder value just from a 1% reduction in loss ratio. 3rd, let's look at predictive analytics for auto. The top black bar again is a challenge for auto. There are 6,000,000 U. S. Auto accidents per year. That's 11 accidents per minute. In 2019, $185,000,000,000 was paid in U. S. Auto claims and 5% to 10% of claims payment is estimated to be avoidable leakage. The lower bar is how Guidewire customers transform challenge to opportunity. It takes 5 days to train a Guidewire predictive analytics model. It takes only one day to deploy a full model solution into production. For one customer, we demonstrated an approximate 3% reduction in loss ratio. These are three examples that we've given and here's some feedback from customers. Dominic Weber, VP and Chief Doctorate at Society Insurance says, Guidewire Predictive Analytics and Guidewire Science for Small Business have significantly improved our quoting process, resulting in profitable growth, increased new business and improved customer retention. Adam Rich, Head of Underwriting Technology at Beasley says, after conducting a review of data analytics services available in the market, we found that Cyence's data science capabilities and engineering expertise offered us the best solutions to address the challenges of today's data driven world. As we attack the $8,000,000,000 insurance analytics total addressable market, we strive to achieve 2 outcomes: drive compelling results for customers with closed loop analytics and making sure is brilliant in the moment. Thank you. I will now hand over to Jeff. Thanks, Roger. I'm excited to be here and thank you all for taking the time to be with us today. And I look very much forward to doing this in person next year, hopefully back in New York City. My name is Jeff Cooper and I'm the CFO of Guidewire. I joined Guidewire as VP Finance almost 3 years ago and I'm honored and excited to help lead Guidewire through this transition as we build upon our historical success and grow into a cloud based model. So let's just jump right in. I wanted to quickly touch on some key financial highlights. First, we are the clear leader in a large and underpenetrated vertical market. As Mike mentioned in his section, there is still much work to do to modernize core systems in our chosen domain. And there's still a long way to go to execute on our mission. The charts on the right hand side of the slide demonstrate how we have been successful over the last 10 years in carving out our leadership position, growing direct written premiums under license at a 17% 10 year CAGR and growing ARR at a 23% 10 year CAGR. 2nd, we are seeing early and growing momentum for our cloud based core and I will give you more detail on that as we work through the presentation. 3rd, when we win, we establish mission critical long term customer relationships with negligible customer churn. And 4th, we continue to be cash flow positive and benefit from strong unit economics, which will become increasingly apparent as we grow into our long term model. As most of you know, we are in the midst of a business model shift. This shift to the cloud is a significant change in how we engage with customers and this change offers benefits to the industry, to our customers and to investors. Foundational is that we are changing the relationship we have with our customers by expanding beyond just being a software vendor and building a new division of labor with our customers. As a software vendor, we captured a relatively small piece of the overall pie with respect to the spend that insurers make on core systems. As a cloud vendor delivering a core system as a service, we meaningfully expand this relationship and as a result expand our overall TAM. As we expand the relationship with our customers, we benefit from occupying very strategic real estate within an insurer's IT framework. We sell our service in a recurring subscription model and expect to continue to have long standing customer relationships with attractive customer lifetime value. And finally, as we move to the cloud, we believe that scale matters more. It is a very consequential decision to entrust a vendor to not only provide mission critical software, but to run that software on your behalf and deliver it as a service. We believe that market leadership and a track record of tackling the largest and most difficult projects will accrue to our benefit as the P and C industry starts to adopt cloud based core systems. Additionally, with a vertical market, there is an opportunity to build meaningful market share that creates compelling avenues to further monetize our strategic high ground in the core. And I thought Mike talked about that very effectively with his vision slides. With all of this in mind, we think it's a very exciting time to be at Guidewire and underlying these benefits is our foundational belief that the cloud enables us to best service our customers, it enables us to focus our R and D efforts, and it will over time allow us to best serve this industry as it adapts to evolving business imperatives. And this shift is already underway, with most of our new sales activity coming from our cloud products. This slide shows how much of our bookings comes from cloud. As you can see, we've had a pretty significant shift over the last 5 years. In fiscal 2020, we saw almost 70% of new sales come from cloud and in North America almost 80% of new sales came from cloud. We are pleased to see this shift starting already, but we also recognize that we are still in the very early stages of the demand curve for cloud in our vertical. Over the last couple of years, as we have seen cloud bookings increase and due to ASC 606, which has material impacts to term license revenue recognition patterns, we have seen increased complexity in our overall reported revenue results. So let me walk you through quickly our revenue recognition patterns. For subscription and support revenue, which includes cloud revenue and support revenue attached to self managed customers, we recognize the total contract value ratably over the committed term. For cloud, we start the clock on revenue recognition upon provisioning of the software, which for InsuranceSuite Cloud has historically taken between 30 60 days, although as Diego mentioned, we are getting much more efficient at this. For license revenue, once we have delivered the software, ASC 606 requires us to recognize revenue upfront for the committed term as opposed to recognizing revenue in line with our annual invoicing activity as we did under ASC 605. This has resulted in lumpier term license revenue after the adoption of ASC 606. Our standard term license contracts are 2 year initial terms followed by annual renewals. However, in some instances, we will see deal durations that are longer than our standard deal terms and it is also possible, although less common, to see shorter deal durations as well. I will also note that a big opportunity in front of us currently is the opportunity to migrate existing term license customers to our cloud products. This creates additional income statement complexity because in a migration, the customer continues to use the on premise software for a transition period. As a result, when we sell a cloud upgrade, some of the software revenue will be allocated to subscription and some will continue to be allocated to license Internally, we focus on ARR as a measure that normalizes for all of these different revenue patterns and the associated complexity. Our definition of ARR largely aligns to the annual invoicing activity for Prior to ASC 606 and the shift to the cloud, our software revenue in a given period was a good approximation for ARR. As we have worked through this transition, however, we do expect to see potentially meaningful deltas between these measures. In fiscal 2019 2020, reported software revenue ran ahead of ARR as we saw more multi year term license revenue. In fiscal 2021, that multi year activity creates a headwind to reported revenue going forward. But ARR normalizes for all of this. And ARR is not new for us. We have always thought about this business as a recurring revenue business. Prior to ASC 606, we relied upon a key metric called 4 quarter recurring revenue, which could be calculated off our income statement and was a great proxy for our current definition of ARR. We have a long history of growing our recurring revenue base, starting initially with 1 product ClaimCenter, then adding additional core modules with Policy Center and Billing Center, and then evolving beyond the core with data and digital, and now bringing this industry into the cloud. And as Mike noted when he discussed the market opportunity, there is still a long way to go to fully modernize this industry. This next slide drills down into recent ARR results to focus on our success in the cloud. So this is a double click into our ARR. Our ability to win and grow in the cloud is critical as we work to penetrate our TAM. While we are in the early stages of the cloud core system demand curve, we are seeing strong momentum for our cloud products. This is a view of our ARR by total cloud ARR and InsuranceSuite cloud ARR. The chart on the left shows the ARR of all of our cloud products, InsuranceNow, cloud delivered data products and InsuranceSuite and represents a 58% 2 year CAGR in terms of growth. The chart on the right isolates ARR coming from InsuranceSuite Cloud customers only. We are thrilled with this momentum as it represents an important view into how we think about future growth. We also thought it would be helpful to provide investors with a double click into our aggregate ARR today and we would expect to update this view at the end of our fiscal year. Another metric we have discussed during this transition is our fully ramped ARR. Given the strategic long term nature of our customer relationships, it is common for large cloud projects to have a multi year ARR ramp embedded into the customer agreement. As a result, our reported ARR from a new cloud customer is often significantly larger in year 5 than it is in year 1. As of the end of our fiscal year, we had $610,000,000 in fully ramped ARR. The chart on the lower right hand side of the page is a visualization of our InsuranceSuite cloud wins aggregated into a single cohort to give you a view into the overall average ramp schedule or the shape of the ramps that exist in our base. As we add new cloud customers and layer on new cohorts, we expect this to create a meaningful tailwind to our future ARR growth. We are seeing strong growth in subscription revenue, which is impacting gross margins. We are investing aggressively to make sure we are ready to execute on the cloud demand we see in front of us. As we move beyond the early stages of the adoption curve, we want to ensure we are well positioned to expand our market share as large insurers make the consequential decision to transition their core system framework out. To this end, you saw us expand the headcount attached to subscription and support revenue costs. In fiscal 2020, we ended fiscal 2020 with 378 employees in our cloud operations and technical support function, up from almost 200 the year prior. We expect hiring in this function to continue to be aggressive into fiscal 2021. As we exit fiscal 2021, we do expect to get more efficient and require less headcount as we add incremental customers. I wanted to repeat this slide that Diego previously presented because I think it is critically important. We are investing in our R and D to drive long term cloud operations efficiency. This slide is illustrative of the average cost for a typical Guidewire customer that moves from our initial approach to cloud and then transitions to the Guidewire cloud platform. The release of Aspen on top of Guidewire cloud platform was an towards building a more efficient cloud native offering. As we work through the large market opportunity to bring our installed base to the cloud, we recognize that we will have customers of varying degrees of complexity. Much of the opportunity in front of us is not greenfield lines of insurance that are starting from a clean sheet of paper in a relatively simplistic use case. What we are trying to tackle is the meat and potatoes of the industry. We believe our platform is uniquely positioned to meet the needs of this segment, but there is work to be done to get customers on to Guidewire Cloud Platform. So while we have much clearer line of sight into how we think about the path towards our long term margin profile, we also recognize it will take time to get customers there. As we exit fiscal 2021, we expect to require less headcount ads going forward that will allow for some gross margin expansion in fiscal 2022 and beyond. As we look ahead, our top line ARR growth drivers are clear and we are confident in our ability to drive ARR growth acceleration. First, we have a unique opportunity to expand with existing customers by upgrading their on premise instances to our cloud. We believe this will accelerate expansion ARR over the next 3 to 5 years. In fiscal 2020, our net renewal rate, which looks at a total cohort looks at total ARR for customer cohorts at the start of the year and at the end of the year, was just under 110%. If you look at customer cohorts that have bought InsuranceSuite Cloud, the net renewal rate is approximately 130%. This analysis includes customers that had InsuranceSuite cloud ARR at the end of fiscal 2019 compared to what they had at the end of fiscal 2020. This cloud opportunity is unique and exciting to Guidewire. 2nd, we still have ample white space to continue to modernize legacy systems at both new and existing customers. This work has been foundational to our growth since the beginning. And third, as we build success in the cloud and standardize a significant part of the industry on our cloud platform, there are opportunities to monetize this strategic high ground and complement our core offering. We are obviously already doing this today, but we expect this opportunity to grow in the cloud domain. So looking ahead, we are confident in our ability to accelerate ARR growth and continue to drive outsized cloud ARR growth rates for the near and long term. Okay. So a lot on this slide. But with this backdrop, I thought it would be instructive to help investors understand the expected profile of Guidewire at 2 stops along our journey towards becoming a multibillion dollar ARR business. This slide shows some key metrics as of the end of FY 2020 and FY 2021 for the midpoint of our outlook provided on our Q4 earnings call. We then show what the business could look like at $1,000,000,000 of ARR and 1,500,000,000 dollars At $1,000,000,000 we expect approximately 75% of our ARR to come from cloud products. Since cloud products sell at a higher price point, this equates to close to 60% of our customers who are in the cloud. Once we get to $1,500,000,000 we would expect to be much farther along in the business model transition. Over time, ARR and software revenue should converge even though we may experience some income statement complexity as we work through the early part of the shift. Embedded in this view is that we will continue to work aggressively with our partners on the implementation side of the business and that ongoing PS work will decline in the cloud. As a result, we are not modeling much services revenue growth. With this large opportunity ahead of us, we are investing in our cloud infrastructure, which is impacting subscription and support margins. We expect margins to decline in fiscal 2021, but we do expect some margin improvement in fiscal 2022, then more meaningful expansion thereafter as we optimize our cloud operations function to leverage the improvements to the product from a runtime Ultimately, we believe we should be able to capture mid-seventy percent subscription and support margins, driving the total margins close to 70% over the longer term. We then believe our operating margin should return to the high 20% range and cash flow from operations into the low 30% range with minimal CapEx requirements. Finally, with respect to the top line growth rate, which I know you all are wondering about and which drives the timeline behind this model, we do expect ARR growth to return to mid teens or higher. However, given the current economic uncertainty and the fact that we're still in the early adopter phase of insurers moving core systems to cloud, we recognize that it may take a couple of years to get to those levels. Cloud ARR will be a key driver and we expect to see sustained growth rates of our cloud ARR at above 30%. I know there's a lot to go through on the slide and I'm sure there'll be many questions as we move into Q and A. For my final slide, I wanted to touch on capital allocation quickly. As many of you saw, we did announce a $200,000,000 share repurchase program. With approximately $1,400,000,000 on the balance sheet and a recurring revenue model that continues to be cash flow positive, we felt comfortable that we could do this without impacting any potential strategic investment initiatives. We also recognize that we have a conservative customer base that appreciates a strong balance sheet, especially given the long term relationships that we enter into with our customers. Overall, we continue to be well capitalized, strong position to execute on the opportunity ahead. So with that, I think we can turn to Q and A. I will ask folks to be a bit patient as we work through Q and A in this new virtual format. So I look forward to answering any questions you all have. Thank you. Great. Thanks, Jeff. We do have a question teed up. It's from Sterling Auty at JPMorgan. All right, thanks. Can you hear me okay? Yes. Let's do this. Hey, Starla. Hey, how are you guys? All right. So, obviously, just given what just happened with the guide me outlook, I think we have to start the Q and A there. So Jeff, just looking at what you presented, the obvious question is going to be the timeframe around where you think you get to that mid range target and that long range target? Yes. Thanks, Sterling. And while we consciously didn't put target years on that slide and that was a conscious choice, We did try to provide some insights into how we think about growth. The commentary that I provided was that we do think that we would expect to see a return to 15% plus growth over the midterm, recognizing that we're at the early part of this demand curve. And so it may take us a little while to get back up to those levels as we start to see more meaningful adoption. We feel very good about the uniqueness of our ability to convert our existing customer base to our cloud. Talked a little bit about net renewal rates, which is a bit of a new metric that we are providing you all today. And so we said about just under 110 percent net renewal rate today. We think we can accelerate that because of this big cloud migration opportunity that we have in front of us. That creates a baseline to how we think about the growth profile. And then as we get more of our existing customers on our cloud and continue to win new customers and build that referenceability, we think we can return what we think of as the foundational market, the core modernization market to more normalized levels that would accrue on top of that. And then we also think that just the network effects associated with having a critical mass in the cloud will create ancillary opportunities on top of our core that we will be uniquely positioned to serve. So when you put all that together, there's a lot of excitement about our ability to get back into the high teens and we've talked in the past about even getting back up into the 20% range. We still think that's possible, but as we think about setting kind of near term expectations, getting back to 15% plus feels appropriate and recognizing that where we are in this adoption curve, it will take a year or 2 or a couple of years to get back to those levels. Got you. And maybe just one follow-up, Mike, for you, just from a high level, How do you think about kind of the appetite from the carriers to do these cloud migrations? One thing we've heard from some of the consulting partners that are out there is they're comfortable doing cloud for new endeavors, new lines of insurance, digital go to market, etcetera. But they just in a lot of these cases over the last 5 years did a system modernization. So maybe they're not quite as eager to do another lift and shift to the cloud? Yes, thanks for the question, because I think that question points to the degree to which we solve that points to the higher growth rates for our company. And I think a couple of things. Number 1, we can make it easier. It is nowhere near the level of effort associated with that initial modernization. And as one of the things I was Sandia said in her presentation, every single time we do one of these, we get a little bit better at it. We put a little more IP into the process and it becomes easier and easier and easier. We learn, the systems integrators learn. And I think that you're going to see that in the way this whole industry sort of moves to the cloud. It's going to increase. The battlefield, so to speak, the competition the vector of competition has to do with IT and business agility. And I think that's going to be delivered by cloud systems. And I think that imperative is going to you're going to see that imperative play out in the acceleration of these moves to the cloud. And so as we build the proof points, as we get better, as we continue to deliver more value, that's just going to improve. Just kind of translating that back into our guidance, I think there's just so many variables at play here. I think we feel comfortable about the guidance we've set for the year with the potential for that to accelerate going forward and we'll just keep updating everybody as we evolve. Sounds good. Thank you. Yes. Thank you for the question. Thanks, Sterling. Our next question comes from Rishi at D. A. Davidson. Might take a second to pop up. Hey, guys. Can you hear me? Yes. All right, great. Thanks a lot, Tim. I really appreciate all the detail. This is super helpful. One for Jeff and one for Mike. Jeff, going back to the target model, I think if we look at the model that you're guiding to at about $1,000,000,000 in ARR and compared to last year's model, which was somewhere near that, I believe, but it's $900,000,000 $950,000,000 in ARR. So pretty close, but you're talking about much lower operating margins. Is this a function of just lower subscription gross margin and a longer timeframe to get to kind of a more SaaS like gross margin there? Or is there incremental areas in R and D and go to market that you're investing? And I've got a follow-up for Mike. Yes, I think it's a combination of the 2. One of the things as we are working on in a more meaningful way this opportunity is a recognition of the varying complexity of the customer base that we're trying to bring over into our cloud environments and working through that. I mean, one of the things I feel very confident about is that we have a path to getting everybody on what we now call Guidewire cloud platform and getting everybody on a path towards achieving our target margins, but recognition that it may take a little bit longer to get there than we'd previously thought. Additionally, we are still continuing to invest very aggressively in our R and D and to make sure that we deliver the best products to this industry as we expand our TAM and continue to grow and expand our market share as we attack this all view that is further out, but once we are in a most of the way through this transition, what we think the model will look like. And one of the things to note on that is just the increasing confidence that we have into the gross margin profile of the subscription products and how we feel about that. All right, great. That's helpful. Mike, thinking about maybe the framing the longer term opportunity, not that the core P and C opportunity plus analytics and data isn't a massive opportunity. But as we think going out even more than 10 years past the cloud transition and increasing the penetration, How do you think about the opportunity to get into adjacencies like life insurance, for example, especially given the amount of customers that you have that also have a big life insurance practice as well? Yes, life insurance is one of the things that at least once a month, if not once a week, I have a discussion about. I think there's certainly that potential. I think we're building something pretty special in terms of the core platform, the core transaction, the base, the thing that what Diego talked to you about, about this hybrid tenant model of what else can we do with that. And life insurance is a possibility for us. There's probably other possibilities for us. But I don't want to distract the organization and sort of cloud that objective. I really wasn't kidding when I said priority 1, 2, 3, 4, 5 is this cloud transformation. So there I think about it a lot just because I that's my job and I don't write the code. But I want to make sure that all the people at the company that are writing the code that are focused can sort of focus on getting us through these next few years, making sure that the customer base is successfully moved to the cloud. And then we can look at things like life insurance and other opportunities for us to expand. But I really would I wouldn't tell you, we I really do see this core P and C opportunity with data and analytics as add on services as more than enough for us to grow into the potential over the next decade. So thanks for the question. Thank you. Our next question comes from Brad Sills with Bank of America. Great. Thanks, guys. Can you hear me all right? Yes, we can hear you. Excellent. Great. Another question on the margin target. When you look at that near term target, that 15% to 16%, you guys outlined some pretty bold initiatives with regard to GWCP and the investments you're making in the platform. CloudDirect is an interesting program here. When you think about where you could get upside to that target, could it would it be from just better execution, getting more shared components into GWCP, quicker migration, the CloudDirect program drives to InsuranceSuite cloud, are some of the variables you look to to say, gosh, maybe in a couple of years, we look back and we exceeded that target that could drive that? Yes. Let me Jeff, let me touch on it quickly and then you can add to it. Certainly execution is an important part of that, right? The more customers we get on the platform, the better that is going to look. I think we're excited about where we are, but we're still early days in terms of validating that this is going to work and getting feedback from customers about where they want to prioritize. I think also with respect to margin, you got to realize that Diego and team are balancing a whole bunch of different things, right? We're trying to deliver a scalable platform that works reliably, securely, effectively. That's a priority. We're also trying to add services on top of that platform that create more of a value proposition to convince customers to move to us. There's additional functionality that we're adding to the baseline of InsuranceSuite to just evolve the core platform. And so we're balancing all of those things to try to get to that sort of guide wire and customer base optimal balance between the innovation and the efficiency and all those things. There's definitely opportunity to see those things move more quickly. That's a possibility. But it's not I wouldn't say it's really our overriding goal. Our overriding goal is drive adoption and new sales of cloud, make sure that those customers are successful. And I think that the intention of the slides and the presentation today was to make it clear to you that we absolutely see a path towards that margin improvement that we will ultimately get to. So that's the way I would answer it. Jeff, go ahead. Yes. Nolan, I think Mike addressed it appropriately, but if we do see an acceleration of adoption, which would be a very exciting fact pattern for us, That could cause us to be investing a bit more to capture some of that early part of the market. So that could actually have a negative impact on that nearer operating margin target, but pull forward that longer term target. That's the way I think about it. I think it's kind of at $1,000,000,000 we feel pretty good with that range that we set, but that phenomenon could exist. Great. Thanks so much guys. And then one more if I may please. With the release cadence you guys are on now for Insurance Suite Cloud, it's looking more and more like a multi tenancy release cycle. And some of the components you talk about with shared components are looking more and more like multi tenancy. Is there a point where we might see just a full multi tenant suite where there's no need for any isolation on a single tenant level? Or is the industry just not moving in that direction? It's a great question. I'm going to let Diego give you his perspective before I answer. So go ahead, Diego. Sure. Hi, Brad. So I would say I will split the answer in 2 parts, all right. One part is that we have decided conceptually that we didn't want to do a sort of replace kind of approach, but an evolution approach, right. So I don't think that there is an answer that is, oh, this architecture is the right architecture and this is the wrong architecture. I think there is an evolution during the story, right? So if you ask me today, today, the core workflow and database are proprietary and needed to be isolated and we foresee that we continue to remain isolated and single tenant for a longer while. At the same time, we are working in continuing to slim the core and add some capability in external service. And the combination of this plus Kubernetes containerization is offering us an interesting kind of lever between what is efficient from a cost perspective. If you think about typical customer run the entire application inside of VM. Now we have this first level into which we can run into a cluster multiple applications. So it's one level that goes in the direction of improving the density. And as we know, the better the density, the better the cost. So I would say we're going to balance this on the way to go. And also keep in mind that if I go tomorrow to my customer and say, I have reimplemented completely everything, it's fully microservice enabled, but you have a sort of to recode completely your implementation to take advantage of that, that will be again too quick, too fast and too disruptive, right? So as Mike said and we pointed out, we need to balance the two things. There are also things that if we deliver too quickly, they will not be able to consume, right? So we need to move them along the way. So I think this first step that we've been doing is being kind of showing us that we are exactly on the right path and the combination of the two things, right. I mean, at Connection this year, we're going to kind of show to some of our executives that are part of our G SAC team. We're going to show them a live example of, let's call it like that, the sort of single tenant aspect that work in orchestration with multi tenancy in a seamless way. Customer is not really asking us, I want everything microservice enabled. They are asking us, I want to be able to evolve and I want to evolve seamlessly. So we think that this path that we are right now is the right mix and potentially that mix will shift the further down the road that we're going to go, right? So maybe you asked me the same question in 5 years and we're going to say, the only portion that is remaining single tenant is that little portion or is 50% smaller than it was used to be and it's not a problem anymore. We are not going to invest any energy and recode that because it works perfectly in the context of the new architecture. Okay. On the perfectly in the context of the new architecture. Only thing I'd add to that, Brad, and just whatever we do in terms of evolving the architecture of the system will be done in close conjunction with our customer base and what they're comfortable with and what the best practices are in the industry. I feel very, very good about our approach right now. And I've said this before, just because of the existence of these sort of hyperscale cloud platforms like Amazon Web Services. Just an incredible what you can do today and you can do it efficiently. And so I feel very good about the approach we have right now and any evolution that we take will be done in conjunction with these sort of Tier 1, Tier 2 P and C customers. So thanks. Sure. Makes sense. Thanks, guys. Hey, thank you very much. Thanks, Brad. Our next question comes from Chris Burren at Goldman Sachs. Okay. Thank you all very much for taking my question. So I appreciate those targets that you gave that showed, I guess, what cloud or I guess percentage of cloud ARR at the mid term and the long term. I guess I was curious like when we think about the components of that, how much we'd be thinking about coming from brand new customers versus the migrations of existing customers or expansion within a customer to new, say, line of business. Just curious like any update currently from a sales perspective, like where is the least friction? Where are you seeing the strongest demand particularly in the environment we're in? Just trying to get a sense of where you're seeing really good momentum as you head towards that target. Thank you. Thanks, Chris. Jeff, you want to answer that first or me? Yes, sure. I think there's a couple of ways to think about that question. There is a very near term way to think about it and how we think about the pipeline and the demand environment for fiscal 2021. And as we inspect our pipeline for fiscal 2021, we have noted in the past that there is a fair amount of migration activity. So that would be existing customers converting to our cloud. That being said, there is also sales folks are out there actively talking to new accounts as well. So but we do expect some of the early part of the curve to fall a little bit more heavily with existing customers, those folks that have a lot of trust with Guidewire. As I mentioned, this is a super consequential decision to entrust a vendor to run a core system of record on your view. That's how we think about the early demand curve in building the referenceability. The other thing we've talked about in the past is that as the industry is grappling with this shift to the cloud, we have seen a bit of a slowdown in terms of that blocking and tackling of core modernization activity. And I think the industry is assessing what this means and how this shift will take place. As we dealt more referenceability, we do believe that new customer, that new modernization engine will start to ramp up. As we think about kind of the mid and longer term targets, it's more balanced in terms of the overall demand between existing customers and new customer wins. And Chris, in terms of your question about what we're seeing in sales cycles and with the mix, I think we're seeing a variety of scenarios. One of the things that we pay a lot of attention to that you saw in Sandia's presentation was the sort of natural upgrade cycle and the existence of compelling events driving that upgrade cycle causing that conversation to happen. That strategy is underway regardless of our cloud strategy. The customers are thinking about what to do with these systems and how to move them forward. That creates opportunity for us to migrate existing customers. You also have the dynamic of companies launching new lines and new innovative products, bringing those to market as quickly as they can is obviously a priority. And so we're seeing existing customers and net new customers look at cloud as a vehicle for doing that quickly, right? And our goal is to make sure that all the customers are thinking through all of the options they have. And as Sandy has said, we like to chart with them what we think is the most optimal best approach based on the business initiatives and the sort of compelling events driving those situations. So we really do see a mix of sort of net new cloud upgrades and also net new lines. And that's what sort of comes up through the pipeline into the bookings and into the net new ARR that we're able to produce each quarter. Great. Thank you. And I just had one more follow-up on gross margins, just hoping to put a finer point on it. You gave the disclosure on InsuranceSuite Cloud ARR, which was very helpful. I think it's around $100,000,000 I mean, that's significant scale already. And so when we think about the gross margins on that, I don't think you said specifically what those were, but I know there's still a ramp period to come to get those up to the kind of mid-60s or even 70% level over time. So given I guess there's some other examples of vendors out in the industry that are slightly higher in terms of margin at lower scale. How do you think about like the trajectory of that ramp? What are some of those key investments you're making today to further optimize the platform? Because again, the scale is very impressive already for the InsuranceSuite cloud business. Yes, I mean, so we touched a little bit on how we think at a high level the key investments we're making in GP and getting customers on the Aspen release is a big part of how we drive efficiency into our current cloud customers. Most of our current cloud customers are not on GWCP, right? So, they went on to what we talk about internally as Guidewire Classic and we will work over time to migrate those customers over to the latest release in terms of our infrastructure. New customers will be going directly on to GWCP. And this is part of the complexity that exists within the customer base that we have that has an impact in near term margins, but we do feel confident in our path to getting everybody on that same architecture approach over the longer term. The only other thing I would note is, and I noted this a bit during the presentation, that subscription margins, we do expect at this point in time looking at how we think about the model to bottom out in fiscal 'twenty one and start to move up in the right direction in fiscal 'twenty two and then on pace of hiring. So this is on our current model. That's how we think about it. And we do think that over as we kind of exit fiscal 'twenty one, start to see more folks go on the latest release of our infrastructure leveraging Guidewire cloud platform that we can more linearly drive margin expansion in the years to come after fiscal 2021. One. Our next question comes from Tyler Radke at Citi. Hey, thanks and good afternoon, you guys. I wanted to ask you about some of the product specific catalysts or specific catalysts that you see driving more of these InsuranceSuite cloud migrations. I felt like in the past, you talked a lot about Aspen release and one of your biggest customers, I think USAA going live. But in the presentation today, it seemed like you're looking a lot further down the road. Diego talked about some of these things like integration framework and new product innovation that you're adding in addition to the Guidewire cloud platform. So just how are you thinking about like product specific catalysts or go live specific catalysts that are really have the potential to move the needle in terms of moving these big cloud customers over? Yes, let me give you a quick answer and then I'll let Diego chime in and actually anybody on the panel if they're interested. Because it's this is the I think the real exciting part of enterprise software is what are the new capabilities that you're building that are going to cause people to get more value from your product. And I want to say the most important thing, okay, is not any individual feature, but it is the concept that these new releases are easier to upgrade to, okay? So when you think about the presentation that you saw from us today, the thing that drives me maybe crazy or motivates me is that the percentage of the installed base that's not on InsuranceSuite 10, okay? That's what motivates me, is getting the our customer base to the latest release every single time. That's what's going to change this whole industry. It's going to change all of Guidewire's customer base. It's going to enable any of the things that we now list for you to be actually in people's hands, okay? And I think that's the underlying principle of what's changed sort of pre cloud to post cloud, right, is that the capabilities are in the customer's production environments. And so I'm going to turn it over to Diego and let other people talk about any of the specifics, but I want you just to realize that it's the upgrades that are really the core driver of innovation in our industry and what we're able to deliver. But Jager, you want to what do you Yes, absolutely. So if you guys remember last year, we did mention that this cloud transformation was exciting for the development team, for the engineering team. The engineering team was used to release every 2 years and the customer were taking in their end every 4, every 6, right? So now think about in that, why is that? Because the upgrade was a kind of complex effort event, right? So all the investment that we've been doing on the platform is an investment to make sure that that upgrade becomes as seamless as possible, that we could within a couple of clicks move our customer from Banff to Cortina. Now within with that infrastructure, then it will become way more important what kind of innovation do you have now. So if you remember last year, we said at Connection, we kind of launched portion of the innovation. Last year, we did focus on policy. And around policy, we did 2 or 3 things. 1 is APD that in general is a way to kind of describe your product model in a way that dynamic auto generation of API and UI. B, we invested in Jutro and on a framework that we have the ambition to make that Jutro framework becoming the best P and C library for any customer that wants to build kind of a digital interface. So that was the first piece. This year, we are continuing that kind of momentum into the innovation space and we would be launching at connection something around claims that we think is going to be pretty interesting. With the same kind of model that we kind of show the vision at Connection and then back it up on the functionality, right? But ultimately, for us, the biggest problem was, as Mike said, there is no value in a feature that the customer cannot use, right? So even if I have like a fantastic feature in hand and the customer is going to say, I'm going to add that feature, maybe able to use it within years, then the entire loop is wrong, right? Then by then, maybe the market has made 3 changes and that feature is not as important as it was. And also, if I don't have adoption, I will not have a capability to refine that feature to the perfect needs of the customer, right? So that's why the sort of investment was, let's make sure that we have the railroad from East Coast to West Coast. And once we have that one and is very reliable, we can put on top of that better trains. That's kind of the logic behind. Hey, I'd love, Roger, for you to give a quick answer here, because I think one of the things Roger talked about in his presentation was his closed loop approach to really designing core with analytics sort of as one thing, which I think has a pretty big potential in terms of what will get customers excited about the cloud. So I don't know, you want to add to that, Roger? Sure. Yes, I think that's a huge part of what the opportunity is, right? I see my role not as growing analytics business, but actually figuring out how to inject analytics into our core products. I think often we use the analogy of Netflix, right? It's so core to that offering, right. If they ever came out and said, there's a version of Netflix for half the price, but everything is just listed alphabetically and you don't have to just scroll your way through their entire catalog, right? It would be pretty useless offering. And so I think this isn't just about adding analytics to Guidewire's Quiver. It's really about understanding what does an analytically driven underwriting or claims experience look like, because that is the future experience. And so really embedding all that value in the point that you make the decision is the opportunity. Great. And just a quick follow-up for Jeff. I think at last year's Analyst Day, you talked about the return to potentially 20% plus ARR growth beyond FY2023 kind of in the long term. Obviously, a lot's changed in the world with COVID and some of the on prem deals slowing down last year. But maybe just help us understand, is that 20% plus still on the table? What are kind of some of the puts and takes as we think about long term modeling? Yes. I mean, I touched on this a little bit earlier, but if you think about our current net renewal rate being just below 110%, combine that with the exciting opportunity that we have to bring our customer base into the cloud that could accelerate that net renewal rate, how we engage with our customers. In addition to the industry eventually getting to that point where there is confidence and comfort at the macro industry level of insurers in adopting cloud, and then you layer on these other opportunities that sit on top of the core. We very much think the path towards high teens, even getting to 20% is in the realm of possibility. We're just we know we're recognizing we're at the very early stages of this demand curve and are being more measured in how we think about the near term opportunity. Thank you. Thanks, Tyler. Our next question comes from Ken Wong at Guggenheim. Great. Thanks for taking my question. Maybe I'll shift this one over to Sandia since she hasn't been bothered just yet. You mentioned that customers upgrading to InsuranceSuite 10, the initial plan was to kind of get them to self manage. It sounds like you guys are going with more of a cloud direct approach. I guess how receptive has the customer base been to that? And then if you could maybe elaborate on just kind of what keeps customers from kind of what keeps customers on the self managed and are they doing anything that might suggest a shorter timeframe for when they do move to cloud after an upgrade to IS10? That's a great question. So customers have been very receptive to that message. They're excited to hear that they don't need to do 2 steps to get to the cloud. And so I think that's what's really driven the interest in cloud, wanting to understand what exactly does that mean for me as a customer? Now I can go to the cloud, but what is that cloud offering? What are the value and the benefits that we'll get as we previously discussed? So I think they're interested and I think that's reflected in just the amount of requests that are coming in for us to do assessments for the work going to cloud and helping them understand what it means. To your question around how customers are thinking about cloud and why they're staying self managed, I think that our customers are planners, right? So they have a they've got their roadmaps and they put a lot of thought into it. And it's something that they're very cautious about each step that they take. They want to understand and make sure that it's the right step. So this we're at a stage, it's early days, right? And we found this new offering around CloudDirect. So that's exactly where we are. It's helping our customers understand where in the roadmap it fits and how it might change things. We also understand that our customers don't just run Guidewire. There are other systems that are at play too. So overall, we want to make our customers help them feel comfortable about moving part of their system into the cloud. So there are a lot of decisions to think through and a lot of aspects to think through. And like I said, our customers are cautious and they do their due diligence. And I think that's the stage that we're at right now with this cloud movement. Got it. Thanks, Sandia. And then maybe a follow-up sort of a DiegoJeff, maybe even a Mike question. But Diego, you touched on the magic number being 10 to drive efficiencies. And you guys now have 2 dozen ish customers. I think a lot of investors would have figured you guys have gotten a little more leverage on the margin side. Just wondering kind of how we should be thinking about the lag to get to better margins? And I realize there's some moving pieces as you called out, but would love a sense for is this just a matter of migrating through kind of each iteration of the releases or does this really require again kind of another 10, another 10 and at what point do we get to the leverage? Yes. So it's a combination of things. The first part is that, as you could imagine, when we talk about now a couple of dozen of customer, we have some in production and some in lower environment where projects kind of started and some where project just started or about to start, right? So now you overlay into this GWCT that became GA with Aspen. So now you need to kind of time this adoption with that aspect, right? So as Jeff mentioned, we have some of the customers that are live into our first incarnation of the platform that we call internally classic. And so those customers will have to be moved on top of GWCP. And so that move is going to be made at the specific time when, A, the capability will kind of make that move as seamless as possible, B, also based on customer requirement and needs and so on, right. So think about that is one piece. Since May, since we launched Aspen, any new net new customer will directly go to GWCP. But we had a period in which some of the projects started already and we were not kind of restarting them, right, because as you can imagine, every deal is a deal that has a kind of go live expectation date. So in some cases, for some of our customers, when we start to line up GWCP in May, we went back and saying, there are all those capability coming in May, but this is going to delay your project XYZ. Are you up to sort of reconsider the timeline or not? And so now think about I have a bucket of customers that are in this initial incarnation and a bucket of customer moving new. And so that is where the sort of mix come. And then there is what I did try to sort of visualize on the graph that Dan just picked up upon and kind of explained further is that there are 2 lever in general. 1 is the GWCT lever, into which we can run more efficiently across multiple region of the world with, as I said, density and leveraging as much as possible the infrastructure that we're building. The second piece is the API, the integration and everything that is around integration. As you probably know, a big portion of Guidewire implementation is to build those integration. When we move customer into our GWCP, they are not rebuilding all those integration. We're carrying them over with a lot of the integration as they are, right? As we improve our framework and we make a more efficient framework that is going to have capability for us for better monitoring, but most important to carry upgrade more seamlessly, then customer will need to adopt that, right? And so that is what in the graph was sort of there you will see a lag of adoption. Once our capability on the integration will become we start to cover 80% of the use case that we had in the past, then you will start to see a lag from those customers to adopt those. And so that is what we try to sort of show these 2 levers, right? One lever that is going to kind of be more immediate and all the net new customer will be on GWCP and then we will have to carry forward a few of them that were still on plastic. The second lever is readiness of integration and framework and customer adopting that new infrastructure. And so that is going to take a sort of step too. Yeah. And I think the only thing I would add, Ken, is as you think back as over the years, now that we're almost 3 years into this journey, I think some of the early viewpoints on how we would get to margin expansion were done more at the customer level. And now how we're investing is we're thinking about it very much at the platform level that will be leveraged across all of our future customers in a more meaningful way. And I think that's been a bit of a shift. I mean, getting GWCP instantiated kind of recognizing where all of our customers will go to rather than kind of thinking about how we can get much more efficient at a customer level as they come into our environment. And that was a really important mind shift for us to go through, but it requires a little bit more investment upfront that we can then leverage across the entirety of the customer base as we move forward. Got it. Great. Thanks a lot guys. Thanks, Ken. Our next question comes from Michael Turrin at Wells Fargo. Hey, Michael. Here we go. Very nice work on the webinar. This is pretty clean. So thanks. Good afternoon. I know it's still early, but just wondering is there anything you could share around initial customer or even partner receptivity since the launch of Aspen in May? We're used to kind of getting those panels, but can appreciate you're distilling it down here today. I mean, just anything to add in terms of what's providing what might be providing more confidence around that overall path to cloud? Seems like the timeline could be changing. Obviously, there's a lot going on, but the cloud direct approach seems like a good help there. So just any more sort of anecdotes that you picked up would be useful here? Biggest thing I'd say just to kick it off and I'd love for the rest of the team to chime in with what they've heard is, I would say, excitement about the ease around which the customer was able to absorb that Aspen release. And sort of if you can imagine or what you should imagine is at each customer site, there's a project with project managers and people assigned and work associated with building things and testing things and managing data and all the complexities of an IT project, of an enterprise software project. And then Guidewire comes along and says, here's Aspen. And so everybody looks at that and says, okay, well, we need to slot that in and how much work is that going to be and what's going to really happen. And the data points that I've received, that we've received are 100% positive. It did what it's supposed to do. We deployed it. It works. The test cases pass and we're on to the back of the project. So thank you very much. It's like a non event. And that's really exciting, right? That means we're headed in the right direction in terms of this approach. So that's my anecdotal feedback. The thing that I'm excited about sharing next is when we're able to tell you that a couple of customers are live, that they're in production, and then it's just going to build. So that's me. I don't know if Priscilla, we haven't called on you yet. Why don't you give us your perspective? Yes, of course. Michael, how are you? So you asked about the partners. So I would say that the partners have been operating in pretty much close collaboration or lockstep mode with us at the beginning of the cloud journey, way before SME, right? And we've been collaborating for a couple of years now. I think that some of the anecdotal information is, I will first look at the number of joint wins, right? The joint win has increased many, many times just compared to the year before. And all the big 4s are leading projects already and including some regional partners that are relatively new to our ecosystem as well. And I think one thing that I will pay attention to is the number of investment in training because training and certification, as you know, is a huge investment on behalf of our partners. So and the need to take people off the project and off billing and put them through training and certification. Now if you look at our numbers for this year, we reported in the Q4 earnings that we have now over 632 partners already gone through training and obtained the CARS certification. Now that is up about 33% from just a quarter ago and I would say over 7 50% compared to a year ago. Well, that is pretty much exponential, and we see the momentum continue. So I would say that, gathered from all the information that I've seen of activities that are personally closely tracked on a weekly basis, then they are also be excited about the perspective of doing joint projects together. Okay. That's helpful. I'd be remiss if I didn't go back to the target model as many have. But maybe just in terms of what's changed there, given the mid term scale looks somewhat similar, how much should we be thinking about the ramp deal structure as part of that? Is there anything that we should be thinking about as new customers layer onto the model? And you also provided cash flow from operations. I think we're used to seeing free cash flow there. So is there anything for us to be thinking about in terms of CapEx as we're layering this model into our forecasts? Thank you. Yes. The ramps are there is a layering effect of the ramps. And so that is a phenomenon that is more, I would say, more accurately reflected as we move forward, but not a significant driver of any major shift. There is some of the income statement complexity and noise that will exist in the midterm is embedded in that, which is why free cash flow margin is running ahead of operating margin in a bit more significant way. With respect to CapEx, we are doing some building build outs in Dublin and in Toronto in the near term that causes free cash flow to be a little bit lumpier than our CapEx to be a little bit lumpier in the near term, but over the longer term nothing to highlight and kind of back to more of our historical trends related to CapEx. Okay. Super helpful. Thank you. Thanks, Michael. Thanks, Michael. Yes. Okay. Our next question comes from Tom Roderick at Stifel. Hey, Tim. Yes, I think we're good to go here. Okay. So, Jeff, I'm going to start this question for you since it's a gross margin question. But, Priscilla, it might be helpful for you to jump in as well because it kind of deals with some of the resources sort of inherent in the question. So Jeff, you had a pretty interesting sort of structure between now and the midterm and then midterm and the long term with how the gross margin ramps for subscription and support. So I think what I'd be interested in understanding a little bit better is how much of that ramp in gross margin has to do with sort of shared infrastructure as you move to the cloud, just scale of the overall solution as opposed to some of the things that Diego laid out in terms of fewer resources required for implementation. What I'd love to understand, in other words, is how linear should that ramp be or is that something that sort of takes a few years and then you start to get the scale? I'll let you get that and then I'll layer on another one. Yes. I mean, I think I do think that the shared infrastructure and getting everybody on that same path is a big driver in how I feel comfortable about thinking about these longer term targets. Prior to the release of Aspen, that visibility was difficult for me personally. And so now that we have that path and that endpoint for customers is very helpful. There are there's a variety of levers as we think about how to move the needle that the infrastructure level is a big one, just automation and tooling and how we manage things internally and build up our efficiency and maturity running a cloud operations function is another one. And then the integration layer that Diego referenced is also a really big one. And you've probably heard us talk in the past that so much of the implementation work and ongoing runtime costs to support these core systems is all the unique integration points that exist within an insurer's IT landscape. And so anything we can do to simplify the complexity associated with running that will have a big impact in how we think about it. With respect to the linearity, foundational is how we get customers on to Guidewire cloud platform. And so as we move forward in fiscal 2021, it is our expectation that most, if not all the customers should start their journey on Guidewire cloud platform. It's possible that there is a very unique upgrade that has some unique requirements that may take a little bit longer to get them to guide to our cloud platform. But that is a critical step for us and that's something that we will be tracking internally, how many of our customers and how many of our new ones are going directly on to this conversion infrastructure that is much more efficient. Yes, good. Mike, let me just ask sort of a follow on question with respect to the go to market aspect of it. So I think the way you laid out some of the end of life thing of some of the features in InsuranceSuite 8. I don't know if that's the first time customers have seen some of these end of life features or if it's trying to be more pronounced. But knowing that the Tier 1s can be like pushing on a string a little bit in terms of giving their attention on the cloud and their willingness to go to the cloud, How do you get that installed base moving and is the go to market strategy shifting at all with respect to like, hey, guys, lay off the term deals, let's focus on cloud first, cloud only, that type of thing? Let me answer the question a little bit in reverse. Certainly, we are talking about in every deal, we are talking about cloud and Guidewire strategy around cloud. There's just no question about it. Now, our approach technically enables us to be able to offer our customer both options. They can take an on prem approach and go to cloud later. And we still are doing bookings that way and that possibility still exists. But we're talking about our cloud strategy with every prospect and every customer and that's crystal clear to every insurance company that we work with. As it relates to the I wouldn't describe them as features that are going away. I would just describe it as compelling events that are driving conversations around upgrade. So the version of SQL Server that they're on or the version of Java that they're running on their application server. There's just a complex environment that is required to be managed and updated alongside of a Guidewire on prem instance. And that's one of the benefits of moving this system to the cloud is that the customer no longer has to worry about all that, that we manage that. But so any time that happens, it creates an opportunity for us to describe the benefits of the cloud and why if they're going to go through a project, it doesn't make sense for them to go directly to the cloud. And so that's the way I would think about it, right. Like we are making sure across our entire customer base that we are having that conversation and we are giving our best recommendation that as much as possible hopefully aligns with the strategic objectives of our customers and gets to the right path. So, I don't know, Sandy, you may have something to offer on top of that, because you're sort of at the tip of the spear with respect to these conversations. What's your perspective? I think you touched on it. Every opportunity we get and the interest has definitely been there. We've been talking to customers about, hey, this the time to upgrade. And actually, I think we mentioned that the typical upgrade cycle before was 5 to 6 years for a customer. So this is about the time that InsuranceSuite customers would start thinking about that next upgrade. So kind of the timing along with these compelling events, it just all sort of work together for us to have this conversation at this time to say, hey, oh, by the way, you can go directly to cloud and look at all of these benefits. Once you get to cloud, you don't have to worry about these major version upgrades. You're going to be that much closer to our release cycles. What I really like about it is that they can choose which features are of benefit to them and implement them when they want it. This is also something different from before where you go to the next release, there are some features that are there, you have to implement it before you can go live. But instead, we deliver this plethora of features in the future and then customers can choose when they want to implement on their timeline. And so I think all of that is the timing was right. There were compelling events. It was also sort of time that InsuranceSuite customers were thinking about the next upgrade anyway. And so we're just trying to leverage that and make sure that every customer understands the offerings that we have and the benefits going directly to cloud. Okay. Thank you. Hey, thanks, Tom. Thanks, Tom. So we'll take a break from the live question for a second and I'll read one from an investor. What signpost are you using to ensure you are on track as you execute on a cloud transformation? How does Diego's efficiency curve translate to the P and L? Yes, that's one of the things that let me touch on this and Jeff, Diego, Priscilla, you guys can all jump in and answer this. I think one of the major things that we did this year and sort of there was a whole lot of work that sort of sat behind that slide that Jeff and Diego showed everybody. But one of the major things we did this year was map out a development roadmap that maps to tangible deliverables, each of which was going to drive a certain amount of efficiency in our ability to deliver a cloud platform, in our ability to automate the operations that either our operations team was taking on or even that a customer was taking on. And so behind that slide, there's literally hundreds of items that we have scoped and sequenced and planned and it gives us the confidence to be able to project the P and L efficiencies that you are seeing or that we're projecting, right? And so that's a big amount of work. And I would say it's somewhat is only possible based on the hard earned sort of experience we have in operating these systems with our early cloud customers. And that's just something that we did this year and gives us our ability to sort of make those projections. So feel free to jump in guys, whoever wants to add to that answer. So I will add just one thing. I mean, ultimately everything from an engineer perspective is metrics, right? What do you measure and how do you measure? So we looked at pretty much the entire cost and where that cost was allocated and we divided it in big bucket, right? So you start to think about the bucket of ops, how many folks in ops we needed to do X, Y, Z, how long and then when you go a level down and you say, okay, within ops, what are the number one activity that they normally spend time with it? And then within that activity, you break it down furthermore, right? And so this is how we kind of instruct the GWCP roadmap. When I was talking about 10 customer is the magic number, is a magic number because once you start to have 10, you start to pattern, right? You have pattern that you can start to recognize and say, oh, we spend X amount of ops dollars on the following thing that is common across these 10 customers. And then you use that to kind of say, okay, now this is the number one thing we're going to put on the roadmap. And then you go to the next level, right? For example, our AWS spend. How can we improve our AWS spend based on some kind of technical advancement that is going to be make us more efficient in using the resource and control that spend, right. So I would say the entire GWCP kind of roadmap is now linked to a sort of efficiency model and we would be able to kind of measure this across the year and come back next year, we kind of be able to say, okay, this is exactly the kind of how the curve looked like. And as I said, we have 6 months of history of customer on Aspen. We have not I don't want to share exactly when, but very closely we're going to have a couple of customer coming live and that is going to be a kind of key element for us to kind of validate those metrics. Great. Any other comments? I'll move on to Matt VanVleet at BTIG. All right. Yes, thanks for taking my question. I guess, going back to some of the TAM discussion early on, really highlighted the analytics and data portion of the platform as being something that could grow very, very substantially. And I think it was touched on a couple of different spots there. But curious how you're thinking on maybe a couple of different levels. 1, how you sort of price or kind of go to market with that? I know the majority of deals over the last several years have had a lot of those components attached. But just curious if you're rethinking on any kind of modular based pricing or how you think about those? And then secondarily, are you getting to the point where Match or any of those products can be sold as sort of a standalone, almost kind of a Trojan horse, if you will, of getting into customers that might have made some sort of upgrades over the past couple of decades over their systems, but could still use InsuranceSuite down the road, but maybe aren't willing to make that big investment right now? Yes, definitely. For value based pricing. It's a big opportunity, I think, for for value based pricing. It's a big opportunity, I think, for us to bring together the solution, right, so you get policy center, claims center, billing center, putting the analytics into that actual environment drives a lot more value than if it's off on the side and siloed. So I think we've got strong pricing in our analytics products already. When you bring the 2 together, right, it's 1 plus 1 equals more than 2. So I think that's a pretty strong opportunity that we're already seeing play out. And also as we bundle a lot of this capability together, we're finding for some of the deals now that analytics is actually at times even the bigger driver for the opportunity to move on to a Guidewire platform. So your comment about Trojan Horse, I think is a great one. The overlap between our analytics business and the core business isn't 100%, right? It's probably somewhere in the realm of maybe fifty-fifty. And so we have a lot of clients who already work with us on analytics that are not yet core customers. And so it's a great opportunity, right, to experience what it's like to work with Guidewire and ultimately not even Trojan horse, but very bluntly say this is a great experience with us in analytics, imagine how much better it is if you actually do that natively all in one place. And then, Jeff, I guess as you think about what the gross margin looks like, as you talk about putting more analytics on the edge, obviously there's some upfront hard cost of using especially someone like an AWS. But obviously, to Roger's point there, the value should far outstrip that at least in the long term. Are there other additional sort of capabilities or scale that you need to get to within the infrastructure portion, much like some of the other discussion on InsuranceSuite? Or is it all kind of bucketed into 1? Yes. I mean, as we think about the core cost of supporting infrastructure, that's really on the insurance suite side. So once we occupy that valuable real estate, that's why we are excited about some of these ancillary opportunities to further monetize that instantiation of the core system. And we should be able to do that in a very margin efficient way. All right, great. Thank you. Thank you. So I'll take another question written in here. Could you guys comment on the win rates you're seeing for cloud RFP? And how you think about that going forward? Yes, I would say, you got the competitive information that we provided in the presentation. I think to some extent is you should think about that as predominantly cloud, right? I mean, I don't think we're not breaking out specifically non cloud or cloud in terms of win rates. But I've said it a couple of times, we don't have any conversations around Guidewire and sales that don't include our vision for the cloud transformation that we're driving. And so customers are going to make a decision about the vendor that they choose and we're winning, I'd say, historically at historically consistent levels, cloud or non cloud. And I think it really, really is a very, very I can think of really only one conversation that I've had in the last year or so that where the customer has just said, we don't ever see the potential for moving to cloud. Every single other conversation I've had, 100 have said, well, we get it. We think we'll be there eventually. And it's just we have to slot it into our overall enterprise plans. And so that's my take is you ought to think about I think you ought to think about cloud win rates as just overall win rates because I think more and more it's just one and the same. So thanks for the question. Great. And another one for Jeff. How do you think in your capital allocation framework, how do you think about repurchasing stock versus investing in growth to hit that long term ARR target you've outlined? Yes. Obviously, our first priority is to have enough capital on the balance sheet to make sure that we can invest appropriately in organic initiatives and inorganic initiatives. So we feel that doing this repurchase would not jeopardize any of those strategic investments that we and that would include both inorganic and organic. So, we felt it was a good time to do it. And part of our thinking is we think that and Mike said this in his quote in the press release that this is a great time to be a shareholder of Guidewire and we believe in the long term and how we will execute against this transition. Great. And then we have another live question from Dylan Becker at William Blair. We got to get him promoted. That's right. There you go. Dylan, I think you're muted. There we are. There we are. Sorry about that, guys. Thanks for taking our questions. Just 2 kind of real brief ones. First, I guess, are there any with the InsuranceNow offer, we kind of had the replatforming and realigning the go to market initiatives kind of over the last year. Are there any stepping stones, takeaways? Obviously, that's a less complex kind of transition, But any key takeaways from that shift that maybe could be more broadly applied as we look to InsuranceSuite cloud? Yes. Let me I love the question. So I was really, really pleased, proud of our execution last year on InsuranceNow. The team came together, made a plan, went out, got some really important wins, helped get us reestablished with that offering. And I'm confident in our ability to execute going forward with insurance now. That approach actually just to give you a little visibility into the internal operations of Guidewire, Priscilla and I sat down and said, what did we learn from InsuranceNow? And we learned, hey, we have this a great GM, we have a great leader in sales, we have a great leader in marketing, we have a great leader in engineering. Let's take that model and use that approach to start to drive the individual businesses that represent Guidewire. How are we driving ClaimCenter? How are we driving PolicyCenter and BillingCenter? How are we driving Analytics? And so just that mindset of how are we operating these businesses internally, we've taken that approach to sort of evolve the way we're managing the organization. I feel really, really good about that. And I expect it will be one of the reasons I hope in a year that we're saying that we had a super year. I think one of the things that I'm just getting back to InsuranceNow and our execution there, we've learned a lot from that organization in terms of how to run an effective cloud operation. We're very Now it's different It's different segments of the market for sure, but there's a lot for us to learn just in terms of how they operate their approach to digital, their approach to professional services, their approach to upgrades, all of that sort of informs our ability to execute with InsuranceSuite. So thanks for the question. I'm happy for Priscilla or anybody else to jump in if you guys want to add anything to that question. I just want to add one thing on the technical part. I mean, echoing what Mike said. From a learning perspective, a lot of the needs that we kind of we have identified in InsuranceNow to run-in more efficiently on our cloud were packaged into the GWCP and we're working right now in making InsuranceNow running on GWCP and we're expecting substantial benefit from an operation perspective to also move InsuranceNow on top of GWCP. So that economy of scale that we were talking about before, 10 customer, 12, 13 and moving down, is kind of start to show to pay off across the different portion of engineering. Got it. No, thank you. That's very helpful. And then one other quick one too. I think now as we were talking about the CloudDirect initiative, maybe shifting sites from what was originally upgrading to IS10 and then taking customers to the cloud. So I think that's kind of been a big deterrent is in the past maybe around these burdensome very costly implementations and this seems like taking a piece out of the puzzle to make it more beneficial, faster, cheaper for the customers to migrate to the cloud. So if we kind of line that up with the 2 year kind of timeframe to sunset and you have what I think it was maybe like 40% of customers on kind of IS8 to date. Should we be thinking that of that kind of as a potential inflection point as we are starting to achieve more mass scale and transitioning migrating the existing customer base or I guess how well should we be thinking about that? Thanks. Absolutely, the like I keep saying, the compelling events associated with these upgrade cycles are that underlying business opportunity is reflected in our projection for the year. But as Jeff says, sort of the degree to which we're able to execute, we're able to get these proof points out there and build confidence and convince customers that now it's time to go. There's a potential for that to accelerate. But right now given the data points we have, we're confident in the projections we've made for the year. But when you when I look at the overall business opportunity, it's you're exactly right. All of those decisions, all of that energy in the customer base, all those projects, they if and like I said, if and when we execute, they create the opportunity for Guidewire to grow faster. Thanks guys for taking my questions. Thanks, Dylan. All right. I'm going to read a question on behalf of Pat Walravens at JMP. He says, Mike, look, I realize you weren't here for this, but can you help us understand why so many customers are on version 7, 8, 9? And why wasn't more able to be done to keep them from being so far back? Also, yes, who asked that question? Pat Walravens. Okay, Pat. Thank you very much. Okay. Very simple. It has nothing to do with me being here or not. It's simply this. When a software company takes responsibility for the upgrades, then the software company changes its approach to writing the next version of the code. Okay. It's as simple as that. And the mindset shift at a software company like Guidewire, when we say, wait a minute, we're responsible for that upgrade, then we say, okay, we have to make sure that the next version of the product makes the upgrade easier, okay? And that's what's happening, right? That's what gives us the ability to keep more of the customers current on the next version of the product. It's not to say that it was done poorly in the past, it's just the difference in the approach of a cloud company or a non cloud company, okay? And it has there's hundreds of little tiny things that Diego and his engineering organization are driving to make sure that that's true. And it is what it is. We have an opportunity, we have an architecture, we have an approach that I think is going to deliver a significant amount of value to our customer base through these upgrades. And it's just the matter of us taking a different approach to how we build the incremental releases of Guidewire. And I'm excited to help chart that course with the rest of this team and the rest of the people at Guidewire. But I kind of love the question because it kind of gets to the heart of what the difference is and how we're approaching this going forward and why choosing to partner with us right now and in the future just changes the dynamic of the relationship that we have with our customer base. And you really kind of touched on it and I think that it's really significantly going to improve the value that we're able to deliver to our customer base. So I don't know, I'm happy for anybody else to chime in, but kind of love the question. And I think it's really exciting to have the opportunity to sort of push on that with our customer base and our engineering organization. And I would like to add and maybe invite Sandia to chime in because she said something the other day and as someone who's a veteran at Guidewire that one of the innovations that Guidewire delivered to the industry was proving that core systems were even upgradable, which was a big innovation that Guidewire brought to this industry. So I don't know if Sandia has something to add. Yes. I think that's a big part of it is, our customers came from legacy systems where you saw the screenshot on the green screens, those were not upgradable. So it was a really big deal and a big part of our value proposition that you could upgrade. So I think that that's part of it, just that mindset shift. But also that our like I said, our customers are planners. They have a strategic roadmap. And these transformations take our multiple projects over multiple years. And so it's not really in the nature to be upgrading constantly, which is why, again, this cloud platform and our cloud offering is so great because it takes the burden away from customers and they can really focus on what will drive business value and allow them to engage, innovate and grow. Thank you. So we have Sterling Auty back from JPMorgan. Yes, thanks. Actually, I want to go right back to Sandeep. So I wasn't clear, we've had a lot of discussion around moving to the cloud, etcetera. But if we really pull it down, is there a sense of a timeframe that you can give us? How long does it take to get up and running for an existing customer that's on IS8, 9, 10 to get them up and running on the cloud? And then the follow on to that is, I want to make sure I understand this. When you say push the upgrade, every customer in a cluster is upgraded. So you're saying just like in a multi tenant fashion, all of them get that push to them. Is there any option that the customer says to say, wait a minute, hold on, time out, we've got a particular application that's relying on this, we want to maybe delay 60 days for a particular update? Okay. Thanks for the question. I think I'll take the first part and then Diego probably chime in a bit on the second. So with the first part, when it boils into it, these are cloud upgrades. So these will take about the same amount of time that our major version upgrades took. And that's anywhere from 9 months to a year or so. So that's really what we're working with. The nice thing there is that our customers are accustomed to that. So those who have done an upgrade recognize that, that is what it takes, the effort. And so that's really what it is with these cloud upgrades. There's more work to do in terms of the infrastructure side and moving things up. But generally, it's similar because when it boils down to it, it is a major version upgrade to our latest release. When it comes to cloud updates, I think that is something that we're learning about and working through. So our customer success organization actually works very closely with customers to help them understand what's coming next and again plan into their longer term strategic roadmap. As I keep saying, our customers are planners. So they look ahead and they see and they want to know what's coming, where should I slot that in and understand what is coming up. So and then I'll turn it over to Diego in terms of the other parts about the update. Yes. So Sterling, we have a combo of both, right? So ideally, what we want to do, we want to go to adding multiple, as I said, multiple customer within a cluster and manage them more efficiently. At the same time, some of the customer, they're asking us to be in a dedicated cluster. We have an option for that and we can price that differently the customers that are asking for that aspect. That's when it comes to, let's put it like that, for the single tenant portion of this hybrid model. For the multi tenant portion of this hybrid model, then we manage that differently. So that portion is going to kind of be within the upgrade, all the service will be upgraded. But there we have version control and we have a lot of different way to sort of give the sort of same kind of output from a customer expectation to control some of those things into their environment. Got it. And then Mike, Dave, one back to you. Every year that we hear the pitch around analytics, it sounds fantastic. It sounds like it's a no brainer for every carrier to be all in on analytics and drive their business. What are the big bottlenecks to getting better adoption of the analytics solutions? I think we've got and this is one of the things that's embedded in Aspen is we have to make it easier for customers to try a little bit of that analytics offering. And that has to do with changing the way we package it, changing the way we engineer it. It's that you instead of thinking about analytics as something you sell first you sell InsuranceSuite and then you sell analytics, we need to think about it as an add on to InsuranceSuite and that's going to create a differentiated excuse me, differentiation of InsuranceSuite, but it's also going to make it easier for us to sell a little bit of analytics offering. And so that's exactly the strategy is looking at this thing as one complete system that we expect customers to use a little bit of. It's also something and I think that we're changing we don't expect to replace everything that one of our customers is doing with data and analytics. We just want to augment the existing approach that they already have and make it better. And so those are the things that we're doing. I think it will help to accelerate what I think is already some really, really good products in IP and I look forward to seeing that happen. So hopefully that makes sense. It does. Thank you so much. Hey, thanks. I think we've exhausted the questions and that wraps up the day for Q and A. Jeff, did you want to make any closing comments? Yes. No, really appreciate everybody taking the time to join us today. I do have one final housekeeping item to do. So I will share my screen and tick through the appendix, so that is part of the record and this will be part of the presentation that is uploaded onto the website. So we have just a little bit of an update on the customer definition that people can consume at their leisure. And we have a reconciliation of non GAAP to GAAP in the appendix. And having done that, I will turn it over to Mike to make final comments and then we will end the call. All right. Thanks, Jeff. Just wanted to say thank you all for joining us today. I hope we did a good job dealing with the circumstances of all of us kind of working from home and managing this on Zoom. We really appreciate your attention and especially your questions And we look forward to talking to you or hearing from you or discussing all of this again at our next quarterly call. And I hope very much that a year from now, like we've said a couple of times, maybe we'll see you all in person in New York or maybe San Mateo. But that's it. Thanks very much and have a great day. Thanks, everyone.

• Slides