Guidewire at Goldman Sachs Conference: Cloud Success and Strategic Growth

On Tuesday, 09 September 2025, Guidewire Software Inc. (NYSE:GWRE) presented at the Goldman Sachs Communicopia + Technology Conference 2025. The company's CEO, Mike Rosenbaum, discussed Guidewire's strategic transition to cloud services, highlighting both achievements and challenges. Key points included robust annual recurring revenue growth and the need to expand market penetration in the insurance industry.

Key Takeaways

• Guidewire has successfully transitioned to a cloud-based service, achieving nearly 20% ARR growth.
• The company aims to increase its market penetration from 20% to over 50%.
• Strategic partnerships, such as the Liberty Mutual deal, are set to define future operations.
• Guidewire is focusing on expanding its product offerings beyond core systems.
• The use of AI and Large Language Models (LLMs) is being explored to enhance insurance processes.

Financial Results

• Guidewire's ARR growth is nearing 20%, with fully ramped ARR exceeding this mark.
• The company has improved its gross margins, surpassing initial projections.
• Long-duration contracts with incremental ARR increases are indicative of the company's long-term health.

Operational Updates

• Guidewire's referenceability is enhancing win rates and customer confidence.
• The company is replacing legacy mainframe systems for many clients.
• Successful implementations in key markets like Japan, Germany, and the U.S. are crucial.
• The Liberty Mutual partnership is expected to set a benchmark for tier-one operations.

Future Outlook

• Guidewire plans to innovate in data, analytics, and AI, aiming to be seen as both a core systems leader and an innovation partner.
• The company is exploring opportunities in pricing, underwriting, and claims.
• Strategic application of AI is intended to improve insurance industry efficiency.

Q&A Highlights

• Discussions included the role of LLMs in augmenting insurance processes.
• Guidewire's balance of AI with regulatory compliance was addressed.
• The importance of explainability in AI decisions was emphasized.

For a deeper understanding of Guidewire's strategies and future plans, refer to the full transcript below.

Full transcript - Goldman Sachs Communicopia + Technology Conference 2025:

Adam R. Hotchkiss, Analyst, Goldman Sachs: I think we can probably get started here. We're at 8:09, so it'll be 8:10 in just a second. My name is Adam R. Hotchkiss. I cover the emerging software space here at Goldman Sachs. I'm really thrilled to have CEO of Guidewire Software, Mike Rosenbaum, here with us today. Thanks so much for kicking off the day with us.

Mike Rosenbaum, CEO, Guidewire Software: Hey, you're welcome. It's great to be here.

Adam R. Hotchkiss, Analyst, Goldman Sachs: Fantastic. I guess for those in the audience that are maybe a little bit less familiar with Guidewire's role in the P&C insurance ecosystem, maybe just give a quick refresher on what Guidewire does and the customers that you serve.

Mike Rosenbaum, CEO, Guidewire Software: Sure thing. We provide what's called core systems to the P&C insurance industry. The core systems you want to think about as sort of the ERP system, the heart and lungs of an insurance company. We manage everything related to policy administration, claims, and billing. You want to think about these things as very, very complicated implementations that are designed to operate for a very long time. Without Guidewire, the insurance company doesn't operate. That's why we like to say we're the heart and lungs of the operation. The company's been around for about 25 years, and we've established a pretty healthy market share in the overall P&C industry.

Adam R. Hotchkiss, Analyst, Goldman Sachs: That's great. Really good overview. You've been at Guidewire Software since 2019. I know there's been ebbs and flows in the business model moving from on-premises software to cloud. Talk a little bit about your experience through that journey, what you've learned, and how that's evolved to where we are today.

Mike Rosenbaum, CEO, Guidewire Software: Sure. I joined in 2019 when the company had just begun a transition or a transformation to becoming a cloud service. The company started as on-premises software, traditional on-premises software model, and had been very, very successful. Right around 2018, I think the company recognized, based on feedback from customers, but also some competitive pressure, that the future needed to be a cloud service. We needed to figure out how to make this software as a service model so that we could take responsibility for operating the software and updating the software. Ebbs and flows, it's a very, very difficult thing to do, to move a company that's already well established in a certain operating model and teach the company, teach the customer base, teach the ecosystem how to think about Guidewire Software as a service. Over the last six years, we've been incredibly successful, I would say.

Number one, validating that we can successfully run these applications as a service, that we can sell them as a service, that we can implement them as a service. I think most importantly, maybe, that we can operate them efficiently. One of the stories behind the company over the past couple of years has been really improving the gross margin associated with the software and how we're able to run it. As of right now, I think all that has gone extremely well. If you think about what I would have said would have been a success back in 2019, the conditions of the company right now, I would have accepted. It's gone very well.

Adam R. Hotchkiss, Analyst, Goldman Sachs: OK, so you have mentioned that Guidewire runs over 20% of direct written premium on your platform. What does that stat mean to you? When you think about what makes up that other, call it 70% to 80%, particularly on the mainframe side, but also on the on-premises side, what do you have to see or do to materially break into that market over time? Is there a cap we should think about in terms of, you know, there's just going to be some DWP that's never going to move to cloud?

Mike Rosenbaum, CEO, Guidewire Software: No, the cap's $100.

Adam R. Hotchkiss, Analyst, Goldman Sachs: OK.

Mike Rosenbaum, CEO, Guidewire Software: Right. First of all, it's very important for everybody to understand our pricing model, our packaging model. We don't charge per seat. What we do is we say that the value we deliver correlates to the premium that the insurance company is running on top of Guidewire. That's the core pricing metric that we use for selling the software. The measure of 20% of DWP is licensed to run on Guidewire describes effectively our penetration into the potential market. It's very unlikely that any company gets to 100% market share. Certainly, we aspire to that. I think we have a clear line of sight to continuing to improve this. It's not outside of the realm of possibilities that we would break through 50. I think that's very, very clear. The way to think about that is it sort of correlates to GDP.

The countries that have large economies, have large, mature P&C insurance industries, that's where the majority of that direct written premium is, and that's where our focus has been. When you think about how do we continue to make progress from 20% to 30% to 40% to 50% market penetration, it's really just about continuing to focus on ensuring that Guidewire can be implemented successfully in every single one of the regions all over the world. How do we continue to make progress in Japan? How do we make progress in Germany? How do we continue to make progress in the United States with the big, big tier-one or the largest insurance companies? That's our focus. That's how we continue to gain market share, let's say, and modernize these systems to Guidewire.

Adam R. Hotchkiss, Analyst, Goldman Sachs: Yeah, and maybe bifurcate that a little bit for us, that the U.S. opportunity breaking into the tier-one insurers, you know, those are such complex businesses. It's really important for them for there to be referenceability. Maybe talk a little bit about how that differs from what you need to do internationally, which I know there's a lot of local consideration there as well.

Mike Rosenbaum, CEO, Guidewire Software: Yeah. If you think back to what I said a minute ago about the implementations of these systems, they are very complicated. They're very risky. The biggest thing I like to think about is our buyer is thinking about Guidewire's great software, and we know it works. In the back of their mind, they're thinking, uh-oh, what happens if this three or four-year project fails? We're trying to minimize that failure rate to zero. We're trying to make sure that people accept that from Guidewire, you're going to get something that works, and you're going to get something that has a very, very small chance of failing. They're betting their careers on this decision, and they're somewhat betting the company's future on the decision to implement Guidewire. The key is that we need to establish a track record of almost perfect success.

I think then you say, OK, baseline that's there. Can we convince these very large insurance companies that this is a better approach than a build-your-own strategy? They can write, they have huge armies of developers. They have vast amounts of resources. We need to convince them that starting with a Guidewire platform gives them an advantage in the market that enables them to go faster than they could on their own. That's what helps us penetrate the United States. I think one of the magic things about our business model is we're taking that platform, that same platform, and applying it internationally. We apply the same product all over the world. To get penetration in these international markets, we need to tailor the software, the integrations, the unique regional requirements so that the implementation in each of these countries is faster and less risky.

That's what helps us win internationally. The combination of those two things is what helps us continue to take share.

Adam R. Hotchkiss, Analyst, Goldman Sachs: OK, very helpful overview. I think before digging into the business a little bit more deeply, I want to touch on the most recent quarter, most recent year actually for you. This is a third straight year where you've effectively re-accelerated, fully ramped ARR. A lot of momentum in the business. Maybe just walk us through what you're seeing in terms of cloud deals across migrations, new deals, expansions, how that's informing the acceleration in the business. Maybe just give us a quick overview of what you're expecting for next year.

Mike Rosenbaum, CEO, Guidewire Software: Obviously, it was a great quarter. It was a great fiscal year. We're very happy with the ARR growth rate almost touching 20%, and the fully ramped exceeding 20%. For people that don't understand this, Guidewire Software is, I think, relatively unique in enterprise software in that we do very long-duration contracts. The contracts that we do often include, or almost always include, ramps. We'll book an increase in our ARR, but we also have a contractual obligation from the customers to increase ARR over time. We report that as fully ramped ARR, which we like to think of as the real measure of the long-term health of the business. Guidewire Software is going to continue to grow ARR each year just based on the contracts that we've already secured.

Thinking back to what's going on in the business right now and what drove the success in the fiscal year and the quarter, I would say number one, most important thing is referenceability. I like to imagine, and I think it's generally true, that 100% of the customers that have chosen to go to Guidewire Cloud, that have chosen to partner with Guidewire Software, would tell their competitors, yes, it was a good idea. Yes, we're happy with that decision. That attitude that we have 100% referenceability is driving an increase in win rate. It's also creating more confidence in the model. It's creating more confidence in the teams that we have the ecosystem and the platform necessary to ensure that these things are successful. You also have to zoom back up a little bit and say, we're still replacing mainframe systems in a lot of our customer base.

That is still the model. You kind of forget that sometimes, that there is a lot of legacy software out there running the P&C insurance industry. Everybody knows that that has to be evolved, that has to be modernized. I think what we've done in the last couple of years is created a situation where we are logically and obviously the best choice in most circumstances. That is, in addition to 100 other things, fundamentally what's driving the business right now.

Adam R. Hotchkiss, Analyst, Goldman Sachs: OK, very helpful. I would normally save this question for later, but there's a lot been made by a number of sources around the potential share of workloads. I know we were talking about this suited for LLM augmentation in insurance relative to other categories. I think one of the striking things is you don't really hear a lot being said in the insurance space and amongst insurers themselves around AI displacement like you do, or just AI augmentation like you do in some of these other areas of software. How do you, as a company, balance those two things while also taking advantage of the opportunity?

Mike Rosenbaum, CEO, Guidewire Software: Yeah, so the insurance industry, you know, it's incredibly complicated. The transactions that you execute in insurance are not simple transactions. They are complex, consequential agreements. They're, you know, even on the claims side, like the simplest thing is, hey, I cracked my windshield, and here's the payment to go fix my windshield. You have to worry about the legalities. It's just incredibly complicated what they do. It has resisted this traditional automation, right? The traditional idea that you can create a workflow and automate something, and that's repetitive. The system just gets more and more efficient. The reality of the insurance industry is that it's driven by people. It's driven by people that are highly trained and highly experienced and have learned over sometimes decades how to operate in the insurance industry effectively. It resists this traditional technology automation.

LLMs are sort of, think of it as a new tool that gives us in the industry a mechanism to begin to automate or make more efficient a lot of these things that have traditionally been very, very, that have effectively been impossible for us to automate with tech. If you think about the challenge of an underwriter, a commercial lines underwriter is receiving from a business hundreds of documents that describe what that business does, describe the real estate that that business owns, describes the loss histories and the claims histories. All these documents flood into an underwriter. They have to be read. Someone has to read these things. Someone has to read these documents and pull out, extract out of those documents the information necessary that we can use to plug into our predictive model that says, here's how you should underwrite this risk.

Here's our estimate for how much you're going to make or lose from this risk. With LLMs, we can start to do that, right? With LLMs, we can start to augment what these people are doing in reading these documents and give them a boost. The other side of it is regulated, right? A significant amount of the industry basically can't change operations until state regulators and countries approve the changes. The concept of explainability really matters in insurance. You can't just say, you know, the magical model told me that. You have to tell the regulator. You have to tell the industry, here's why we made that decision. It's very challenging. LLMs, generative AI, creates this, it provides this new tool that we can start to use to incrementally, and I think it will feel slow, slowly improve the efficiency of the industry.

You're applying it to something that's $2.5-$3 trillion a year. The payoff here is immense, you know, but it's going to take some time and effort.

Adam R. Hotchkiss, Analyst, Goldman Sachs: OK, how do you then approach that conversation with your customers? How are customers, who I'm sure are reading the news just like you are, approaching you around the AI conversation?

Mike Rosenbaum, CEO, Guidewire Software: OK, the most important thing, and you know, this is exactly what our customers say to us. This is exactly the way we operate the company. You have to have the core system of record, the data systems that operate the company in order to be able to take advantage of LLMs. It's like a baseline starting point. Guidewire, without any first-party LLM or generative AI strategy at all, is still benefited by generative AI because every single company needs to have a core system that runs effectively, where the data is captured in an organized way and is made accessible to the analytics actuarial teams to make it accessible. We provide, if you want to talk in the lingo of LLMs, we provide the context that the LLMs need in order to make better decisions, in order to unlock this potential.

That's the most important thing about what we're doing right now, is we're building a system that will be, and is, think of it as LLM-friendly, that enables them, enables us, enables our partners to start to use these tools on top of insurance business processes. That's what I think also driving the company right now, is there's this additional reason for modernizing your systems. For a number of years, we were trying to make sure that you had great web interfaces and mobile interfaces to the back-office processes of an insurance company. They had great data and analytics so that you could create dashboards and operational analytics. Now we're trying to make sure we have the systems in place so that LLMs, as they evolve, will be able to increase the efficiency of the industry.

Adam R. Hotchkiss, Analyst, Goldman Sachs: That's really helpful. Let's take a step back to the business. What does the typical lifecycle look like for a Guidewire customer? Maybe bifurcate between a Guidewire on-premises customer who's moving to cloud and then a net new customer.

Mike Rosenbaum, CEO, Guidewire Software: Sure. You might imagine a Guidewire customer chose to buy our claims product 15 years ago, deployed it. They're successfully running us for claims. We come back to them and say, hey, there's an evolution now. You should move that to our cloud platform. We can provide all these extra benefits in the process. You have to change some things operationally, but it's going to get better. We think about migrating that customer to our cloud. At the same time, we say to them, what are you doing for policy administration? What does your billing system look like? Oh, those are legacy mainframe systems. It's too complicated for us to do all three programs at once. Let's do the cloud upgrade. Let's get claims to cloud. We talk to you again. We sell them policy administration and PolicyCenter. They do a project to modernize and attach to that BillingCenter.

We can say to them, you know, what are you doing for your digital interfaces? What are you doing for your data platform? We've got products that we can sell to them that attach to that situation, that overall ecosystem of Guidewire core applications. That same story can play out in terms of other, call it, lines of business that the customer is running. Hey, we're running ClaimCenter for our personal lines of business, but we've got this mainframe running our commercial lines. We have a conversation about taking that directly to cloud now. It kind of all adds up, getting back to what I was saying before about how we have really proven that this model works, and we really have created an ecosystem of professionals that can implement these things successfully.

Those conversations about what does your IT landscape look like right now, and how do we make a strategic plan with a company to get it all modernized and get it all to our cloud kind of depends on where they are in their journeys. It's really made the conversation a lot more strategic, a lot more long-term. Like I said, getting back to the quarter and the fiscal year, it's driving an acceleration in our business.

Adam R. Hotchkiss, Analyst, Goldman Sachs: Yeah, and maybe talk a little bit about the increased willingness of customers to take on maybe more lines of business than they used to at initial contract or take on multiple policy, billing, claims rather than just take on one. I know you've talked about the full InsuranceSuite. That's not something we were talking about a number of years ago. What's driving that increased willingness? How would you maybe quantify that?

Mike Rosenbaum, CEO, Guidewire Software: Certainly, referenceability is driving this. There was an anxiety about our readiness to succeed here, right? When we were having this conversation back in 2019, 2020, customers were looking at us and saying, how many times have you done this before? I don't want to be the first one to do this. I remember very specifically, I said this on a public call, I think, once, is I had many customers say to me, I 100% agree with what you're doing. Love it. Want you to be successful. I don't want to go in the first half. I want to go in the second half. I want to be the 51st percentile of, you know, cohort to go to cloud. It's amazing that now we're there, right? The change in sort of our ability to provide references, to learn, and you know, we've learned a lot.

We've gotten much better at running this system, updating this system, working with partners. That's all improved. That's really changed. That creates for the customers, for the prospects, let's say, kind of more confidence that they should contract for the full suite at the moment when they're negotiating one of the applications. Sometimes they still have a very complicated set of priorities to juggle with respect to what they execute when. The concept that they're in a better, they're going to have more negotiating power with us, let's say, when they make that decision once. The level of confidence they have that the whole thing is going to work just gives us, you know, the support we need in the buying cycle to be able to drive a full suite decision.

Adam R. Hotchkiss, Analyst, Goldman Sachs: That's helpful. What limits your growth then, right? I mean, we were talking about high teens growth, and now you're fully ramped 2022, ARR approaching 20%, presumably, right, relative to the DWP you're running on maybe one module. There's a revenue opportunity to capture that DWP across multiple. You talked about lines of business. That's all improving for you. When you think about the forward growth trajectory, is there anything that limits your ability to grow either in line with or faster than where you're growing today?

Mike Rosenbaum, CEO, Guidewire Software: There is certainly just a, you know, it's a concentrated industry. There is only a certain, there's not infinite insurance companies. It's a limited set of insurance companies. Within each of those insurance companies, there's a limited bandwidth in terms of their just ability to execute these programs. You do very often, you know, we'll have conversations where they say, look, we're just not in a position to be able to do this project right now. We've got X, Y, Z we've got to do first, and then we're going to come back to you in a year. You add that up, and it's like, you know, we work our tails off to increase that demand.

There is a constraint, right, that there's just so many projects that are going to come to market and be done in a year just based on the count of insurance companies and insurance IT organizations, insurance operations. What pushes us past that is what we're starting to do now in creating additional products that we can sell into that customer base. We've got this incredible position now with a cloud-based customer base, with a vertical use case that we can deeply study and bring unique products to market. We did this acquisition last year of a pricing platform called Quanti. That's an exciting opportunity for us to sell something incremental into our customer base, into the cloud-based, you know, customer base.

That is what I look at as if we can execute effectively in that extra products, kind of new product area, has the potential to push our growth rates higher because that stuff is not as limited to the core implementation constraint that I described a minute ago.

Adam R. Hotchkiss, Analyst, Goldman Sachs: Yeah, how do you think about that then? I know so much of the company's focus, and there is just such a revenue and DWP opportunity in those core modules. How do you think about resource allocation and things like that in order to take advantage of some of those adjacencies? You do have a lot of competition, right? I mean, you have the Verisks and some of the other folks in the world in data and analytics. Do you feel any limitation on what you can do outside of those core modules?

Mike Rosenbaum, CEO, Guidewire Software: Yeah, personally, and I think, you know, the management team, you know, we're all very focused, determined people. This is the most important thing, is that we will not lose sight of the need to focus and execute effectively on the core system opportunity for Guidewire Software and the commitment that we honestly have made to our customer base. You could tell yourself a story about how exciting it's going to be to make all these new products and get our attention diverted. We just cannot do that. We have something very special right now in going in the company around these core system projects and these core applications that we will not lose focus. We've gotten pretty good at it. We've really gotten much better at it in the last couple of years. That gives us a little bit of confidence.

It gives us a little bit of extra, I don't know, call it space operationally to focus on new things. That shows up in the way that we run the company within a fiscal year. It shows up in the way that we describe our objectives for a fiscal year. Literally, just six or seven months ago, I was saying, no, focus needs to continue to be core system execution. That needs to be the focus. The success we had in the year, the confidence that we've built with the ecosystem and the implementation success, the confidence that we have in sort of measured by, let's say, attrition rate, that's really improved to the point where we're starting to allocate more of our focus to these incremental applications. I don't feel constrained right now economically. I don't feel constrained about the opportunity space.

I do think you're going to start to see us talk more and execute more on these new ideas and these new applications. It shows up in the acquisition, like I said, of this company that we did last year, Quanti.

Adam R. Hotchkiss, Analyst, Goldman Sachs: Without announcing anything new today, obviously, at a high level, what are some of the most low-hanging fruit areas for you outside of the core?

Mike Rosenbaum, CEO, Guidewire Software: There is this opportunity in pricing and a pricing platform that ties cleanly to a rating engine. That is an opportunity for insurance companies to make changes more quickly for them to be able to tune their products to what they're seeing in the market. Things have been very challenging for the insurance industry over the past couple of years because we had this spike in inflation. We've seen an increase in the loss ratios associated with catastrophes and the % of risk associated with these natural disasters and catastrophes. That needs to be reflected in better, smarter pricing strategies for their products. They want more agility in pricing platforms. We see an opportunity there. I talked a minute ago about underwriting. We see a tremendous opportunity in commercial lines underwriting.

Just like the efficiency that is made possible now because of, call it, the smart strategic application of large language models to the practice of underwriting creates a potential for us to really do something special there, I think. I think there will be an improvement in underwriting efficiency in the industry, and I would love to drive that. I think we're in a great position to help do that. We're in an incredible position with respect to the ClaimCenter install base and the claims operations in the industry. Just like I said, smartly and strategically applying generative AI-driven tools, even traditional workflows and traditional analytics, gives us the ability to improve claims outcomes for insurance companies and for consumers. The other thing, I'm sorry, it's a long answer, but I don't want to neglect this.

Because we are now operating these systems on our cloud, we have access to a data asset that's very unique in the industry, that we have now created the pipelines and created the environments and applied really great data science teams to creating predictive analytics models that effectively are the combination of the number of Guidewire Software customers that have opted in to anonymously sharing data and information such that we can provide predictive models back to the industry. We're just getting started here, but it's a very special and unique thing that Guidewire Software can do based on the cloud install base and our access to those operational systems.

Adam R. Hotchkiss, Analyst, Goldman Sachs: OK, really helpful. I want to switch gears to the Liberty Mutual deal that you announced. Obviously, a longer duration deal than you've typically announced in the past and a pretty big expansion for you. Just walk us through why call that out the way you did on the call. What's so important about that deal to you? What does that tell you? Tell us, what should that tell us about your future?

Mike Rosenbaum, CEO, Guidewire Software: First of all, economically, financially, we thought it was such a consequential deal it was necessary to describe. We're thankful that we didn't want people running around trying to figure out who that was. It's great to be able to say that that was Liberty Mutual. This is a customer that's been part of Guidewire for a long, long time. We worked incredibly hard to understand what they were trying to accomplish with their system modernization and earn their trust to create this very, very consequential partnership for the company. I think back to when I first joined the company, there was a deal signed the day before I joined with USAA. USAA became the company that really worked with us to validate our cloud strategy and really stressed us out.

Of course, the people that we had in mind when we were building the next generation of Guidewire is make sure that USAA was successful. I sort of see this very similar. This deal is going to define for us what best-in-class tier-one core operations looks like for the next 10 years. It's incredible to have the opportunity to work with this team and really understand from them what do they need from us in order to make sure that they can differentiate and win in the market across claims, across policy. That is what we're all looking forward to. You just have to picture in your head this, it's not, they don't have unlimited resources, but almost effectively they do. They looked very carefully at what the world had to offer and chose to partner with us.

We're humbled and excited to make sure that this is a huge success and defines a pattern that I hope to replicate with other tier-one insurance companies all over the world. What we do with this deal over the next few years is going to define a pattern that can be replicated.

Adam R. Hotchkiss, Analyst, Goldman Sachs: OK, that's great. When you're in an RFP, what makes you win versus your competitors?

Mike Rosenbaum, CEO, Guidewire Software: It's just referenceability, in my opinion. Like, you know, we all have great technology. We have the best, OK? We have the best product. The most important thing is referenceability. It's kind of the culture of our company that we are going to do whatever it takes to ensure that these programs are successful. That's a big deal because there's just so much consequence to the success of these programs. The other thing I would say, which is a little bit of a nerdy answer, is that we have found the sweet spot between configuration and customization and scalability. We have found this, we have engineered this mechanism that enables us to let third parties do the implementation successfully, that it doesn't rely on Guidewire engineering to sort of save the day and add functionality at the last minute. There is this, like, you know, magical sweet spot.

These are heavily configured, customized systems. That's really important, you know, to ensure that they're successful. That's the demand. We have found a way to do that with our platform, with our applications that balances this ability to keep it updated, ability to keep it secure, ability to run it efficiently, but at the same time, allow a company like USAA to implement the software and run an insurance operation any way they want. I think that's kind of the secret, technically, of why Guidewire has been so successful.

Adam R. Hotchkiss, Analyst, Goldman Sachs: That's helpful. On the cloud transition, I think you're roughly at three quarters of your ARR now recognized as cloud ARR. Maybe talk about where you are in that transition, particularly because, you know, I think there's a difference between where you are on the logo side versus on the ARR side from a cloud transition perspective. Where are you and how are you sort of communicating with your on-prem customers?

Mike Rosenbaum, CEO, Guidewire Software: Yeah, you should, so the ARR is higher, obviously, in cloud. That causes the cloud ARR to be higher. Think of us as, you know, emphatically past the halfway point, you know. We're past the halfway point from an account perspective, OK? What we do, I kind of think of that as like rearview mirror, right? What we don't publish or talk about is we have a very clear conversation with every single one of our on-prem customers about where are you, like what's your proclivity to decide to go cloud this year, next year, the following year. We have a chart that we look at about like what's that look like. I'm very happy with the progress we're making there. We're past the halfway point.

All those customers that told me they don't want to go in the first half, we can go back to them and say, you're not, now you're in the second half. That's going very well. Over the past year or so, we have gotten more specific and more clear with our on-prem customer base about what dates we will be able to support the on-prem implementations and exactly how we'll be able to support them to give them enough time to make a plan to move to our cloud. I want no one to ever be surprised by this. I genuinely, I've said this every single time this topic comes up. I'm convinced that we will, at some point, successfully move them all to our cloud. That's our objective. I don't want to lose a single customer.

I want to make sure that this works for every single one of our customers. We're committed to doing that. It is going to stretch out, you know, let's say at least another five years. It's just the nature of what we do. I'm very comfortable that we're making that progress and we're seeing sort of this referenceability and the capability of the platforms start to bring and accelerate those migrations a little bit faster than we expected a couple of years ago.

Adam R. Hotchkiss, Analyst, Goldman Sachs: That's really helpful. I know we're coming up on time, but I wanted to ask one on margins.

Mike Rosenbaum, CEO, Guidewire Software: Oh.

Adam R. Hotchkiss, Analyst, Goldman Sachs: Just because I think the gross margin improvement has been so material, your ability to leverage your data ops and support teams, what's been driving that that's been ahead of your expectations? At a high level, I know we don't have Jeff on stage, but at a high level, how should we think about that trajectory going forward?

Mike Rosenbaum, CEO, Guidewire Software: This has been one of, I was just talking to our management team about this. It's like we are in, we're very lucky to have an incredible engineering organization. It's led by a guy named Diego Devalle. He is uniquely excited about driving gross margin, OK? Which is like we're so lucky to have him and to be so fired up about improving the operational efficiency of Guidewire Software. It takes, we took a risk, OK? We picked an architecture and we thought it was going to work and we got these customers live and we made it work. We just set about executing project after project after project that would make it all more and more efficient over time. Now we're improving the efficiency of the operations. At the same time, we're adding new customers and adding more customers on the revenue side.

You see this improvement in gross margin. It's really been phenomenal. We're ahead of schedule in terms of the projection that we made. We're very, very excited about it. It did, that drives the rest of the company. You know what I mean? That creates the economic surplus that facilitates our ability to invest in sales, facilitates our ability to invest in new products. It's a really important facet of what's driving the company right now. Thanks for, anyway, thanks for the question. It's like hundreds of projects and thought, you know, we just think, you know, what can make it more efficient? What can we make it more efficient? Which should we try next? Just grinding through those things to improve the operations of the company.

Adam R. Hotchkiss, Analyst, Goldman Sachs: OK, last question. Next 6 to 12 months, what is your biggest focus and priority as CEO? If you look even longer, next five years or so, what are you most excited about for Guidewire?

Mike Rosenbaum, CEO, Guidewire Software: Next 6 to 12 months, number one, we just got to keep running the company effectively, keep winning these deals, keep executing. Really, paired with that is make sure that I'm executing effectively on the new product innovation, new product execution, getting the feedback from early customers so that we can improve that. I would say five years from now, my five-year plan is that those new products, the products that surround our cloud, are successful enough that we're talking about them in five years as a whole other component to the top-line story and the value we're able to deliver to the P&C industry. Guidewire right now is known as the core system leader.

I would love in five years for people to think of Guidewire, our customers to think of Guidewire as the core systems leader and a real innovation partner in terms of data, analytics, LLMs, generative AI, and all these additional things that we're going to be able to do on top of the core systems.

Adam R. Hotchkiss, Analyst, Goldman Sachs: Fantastic. Mike, thanks for the time.

Mike Rosenbaum, CEO, Guidewire Software: Hey, thanks a lot.

Adam R. Hotchkiss, Analyst, Goldman Sachs: All right.

Mike Rosenbaum, CEO, Guidewire Software: Thank you.

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