Good day everyone. Welcome to the Guidewire Third Quarter Fiscal 2015 Earnings Conference. Today’s call is being recorded. At this time I would like to turn the conference over to Mr. Richard Hart, Chief Financial Officer. Please go ahead, sir.

Good afternoon and welcome to Guidewire Software Earnings Call for the third quarter of fiscal 2015 which ended on April 30. I’m Richard Hart, Chief Financial Officer of Guidewire and with me on the call is Marcus Ryu, Guidewire’s Chief Executive Officer. The complete disclosure of our results can be found in our press release issued today as well as in our related Form 8-K furnished to the SEC. To access the press release and the financial details please see the Investor Relations section of our website at ir.guidewire.com. As a reminder today’s call is being recorded and the replay will be available following the conclusion of the call. During today’s call we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be reflected upon as representing our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. These risks are summarized in the press release that we issued today. And for a further discussion of the material risks and other important factors that could affect our actual results please refer to our annual report on Form 10-K for the period ended July 31, 2015 and subsequent Form 10-Qs which are on file with the SEC. Also during the course of today’s call we will refer to certain non-GAAP financial measures. A reconciliation schedule showing GAAP versus non-GAAP results as been provided in our press release issued after the close of market today. Additionally we are providing detailed reconciliation data as well as recurring revenue calculations in the supplemental post -- supplement posted on our website at ir.guidewire.com. Finally, at times in our prepared comments and responses to your questions, we may offer incremental metrics to provide greater insight into the dynamics of our business and our quarterly results. Please be advised that this additional details maybe one-time in nature and we may or may not provide an update in the future. I'll turn the call over to Marcus for his prepared remarks, and then I will provide details on our third quarter of fiscal 2015 and our outlook for the fourth quarter and the full fiscal year.

Thanks, Richard. Our third quarter results were at the high end or above expectations for revenue and profitability. Total revenue was $85.4 million with license revenue in the upper half of our guidance range and services revenue exceeded expectations. Our stronger than expected services revenue was driven by higher than anticipated demand for senior Guidewire personnel on implementation projects that were initiated in the quarter which were due in turn to increasing sales of our newer products which typically require a higher ratio of Guidewire project involvement. Services revenue can vary quarter to quarter due to the product and geographic mix of new and completing implementations, however, I reaffirm our expectations that services revenue will continue to decline over time as a percentage of total revenues. On a rolling four quarter basis, recurring term license and maintenance revenue was $209 million, an increase of 26% from a year ago. We continue to target term license revenue growth of approximately 20% in fiscal 2015 despite foreign exchange headwinds which we expect will reduce our year-on-year term license growth by over 3 percentage points. Before I speak in detail of the progress we've made in the third quarter, it is important for me to note that the complexion of our end of year pipeline is somewhat unique this year due to the maturation of discussions with a significantly higher number of than usual of tier 1 prospective clients, to which we expect to finalize agreements in the quarter with at least three tier 1 clients, i.e. insurers that reach $5 billion in direct written premiums. This is contrast to the past when we have secured no more than one or at most two new tier 1 customers in a given quarter. This potential is very exciting for us considering the significant lifetime…

Thank you, Marcus. As Marcus mentioned, we achieved solid results in our third fiscal quarter, exceeding our total revenue outlook and coming in at the high end of earnings expectations. Total revenue was $85.4 million, above the high end of our guidance. License revenue was $33.3 million in the quarter, of which term license represented $30.8 million, 9% higher than the third quarter of 2014. We, as others, have been impacted negatively by foreign currency rate declines relative to the dollar. In the third quarter changes to currency rates from the same period last year reduced term license revenue by approximately $1.8 million. We also noted in our last call that recognition of $2.9 million in term license revenues was accelerated into the second quarter, and of this amount, $1 million was term license we rescheduled to recognize this quarter. Absent these effects, term license revenues would have increased 19% year-over-year. Maintenance revenue was $12.2 million for the third quarter, up 17% from a year ago. Services revenues of $40 million were above our expectations. We have consistently expressed our perspective that services revenues will fluctuate from quarter to quarter depending on how capacity utilization may be affected by customer decisions to extend existing projects or accelerate new ones during the quarter. In addition, we have noted that the implementation of new products require more Guidewire resources and will continue to do so until our partners can come up to speed. In this quarter both dynamics worked to deliver services revenues above our outlook. Nevertheless, services revenues were roughly flat compared to a year ago, consistent with our long-term strategy to decrease services revenue as a percentage of total revenue. The declining services trend is more apparent on a year-to-date basis, with services revenues representing 44% of total revenues, down…

Thank you. [Operator Instructions] We'll go first to Sterling Auty with JPMorgan.

Yes. Thanks. Hi, guys.

Hi, Sterling.

All right. Since I'm first up, let's hit a couple of these areas that I'm already getting emails and I think it's on everybody's mind. Let's talk first about the guidance for the fourth quarter. Put into context for us the impact on license revenue that how you're gauging, or looking at the probability of the tier 1 business closing, and like you said, the moving parts of it versus the FX versus anything. Because I think a lot of people are looking at what you did with the total full year license guide, the bottom end came up, but the top end came down. And I think that's making some people nervous.

So, Sterling, I think Marcus has mentioned this on several occasions. When you have a pipeline like we do of very significant tier 1 customers, there is an added uncertainty of exactly how those initial licenses are going to be, are going to come in-house and how many of those tier 1 companies we'll actually license in the quarter. We feel very good. We have more tier 1 than we've ever had before but that uncertainty requires us to have a slightly conservative perspective when we give guidance. So we feel very comfortable right now that the guidance we've given is something we can easily achieve. Currency impact is something I think we need to take a little bit in a different way. We have about $10 million of total revenue impact from FX. So if you look at the currency rates last year when we get guidance to the currency rates in the fourth quarter where we sit today, that 10% has driven down our growth by about 3.5%. I think that has to be taken separately from the guidance for the fourth quarter because we know what the currency impact is and during the last quarter's call we told people that we were starting to edge at the high end of that 100 to 300 basis point range and therefore part of that currency impact had already been taken into account.

Got you. And then maybe on the marketing side and then I'll just jump back in the queue. You talked about the continued investment in R&D which would be negative for margins in 2016. You're talking about the revenue mix still moving more towards license which is positive for margins overall. How do we balance these two out? And I know you're not going to give us guidance for next year but can you at least maybe directionally tell us margins down, flat or up?

I think we feel very comfortable as the 16% operating margins that we delivered this year we can deliver next year. So I definitely do not think we will operate this company and put any more pressure on our margins. To the extent that we make additional investments in R&D which we are claiming to make, I think those will balance out with efficiencies and other parts of the business.

Got it. Thank you.

Thanks, Sterling.

We'll move next to Brent Thill with UBS.

Thanks. Marcus, just on -- you mentioned these big transactions, and I'm just curious, you were a little more specific around the number of transactions and does that state that you feel these are such for late stage deals that you feel more confident to call that these are coming in or is there something else that's going on? I'm just curious why you called out the specific number.

Well, reading through our transcripts from previous earnings call, I think we came to feel we were a being a little bit coy about these conversations. It's a frequent topic of interest among investors to know how these conversations at the top end of the market have been going because they obviously represent a large portion of the total demand in the industry we serve. And we've always said that we've -- that we're advancing a lot of these conversations I think and going very well, and that we are hopeful of them culminating in an actual transaction. And it seems fair to provide a little bit more clarity and specificity, given that they are going to be in all likelihood a very material part of the bookings achievement in the last quarter of the year. The uncertainty element that I mentioned both in the prepared remarks and Richard underscored is still the case in that with a tier 1 conversation, it's -- well, in any sales situation you have at least two areas of uncertainty, which is are we going to win the deal? And exactly when will it be executed? With a tier 1 there's a third dimension of uncertainty which is exactly what will they license on what schedule. And that's just inherent in the fact that you have a very big enterprise contemplating a major transformation with lots of different angles of attack. So we're in -- we're grappling with the final stages of a number of those conversations here in the fourth quarter, and it will obviously have a material impact on exactly where we end up, but we feel very positive about them and we wouldn't be so specific about a number if -- first if we didn't have more than that number in play, and if they weren't going well.

Okay. And Richard, just on the license guidance range, I think that's where maybe some of the controversy is relative to kind of when you look at last Q4. You haven't assumed a lot of those deals in that guidance closing in Q4, it sounds like.

I think we -- I guess the better way to suggest what we did was kind of probability wait, not only whether or not they would land in Q4 but also what the constitution of those transactions would ultimately be. So we put a certain amount of conservatism in our set of expectations.

Okay. And just maybe one quick follow-up on the earnings number, this is the first time I can recall that you haven't come ahead of the -- that the high end was relative to your guidance. Is there -- was there something on the expense side that maybe caught you off guard? Or is this FX?

Well, actually I think FX doesn't play here because FX is -- there's a hedge for FX where the effects on FX from an operating income perspective is only about $2.5 million. But if we spent any more than you anticipated it was because our hiring during the quarter was higher than we anticipated for R&D.

Okay, great. Thank you so much.

We’re a little bit ahead of plan, Brent.

Great. Thank you.

We’ll hear now from Tom Roderick with Stifel.

Yes, hi. Matt Van Vliet on for Tom. First question on some of the newer products or the noninsured suite products, where are those trending in terms of total revenue mix or total bookings mix as we’re looking forward and seemingly seeing a lot more uptake?

The uptake has been very strong and I’d say we’re probably a little ahead of where we had hoped to be in terms of the attach rate that we’re enjoying with the newer products and our customers, in particular, in the data management domain, which is encouraging. It is a -- they are contributing to our total bookings amount, but it’s still obviously a relatively small minority of the total bookings that we anticipate for this year, growing both in absolute and relative terms into next year. In terms of revenue, it’s important to keep in mind some of the products like the Guidewire Live products are sold on a task basis and therefore all the license revenue is ratable as opposed to what we have traditionally called the heartbeat model where an entire year of revenue is recognized on the finding and then on the anniversary date. But that’s a relatively minor in fact given that the total bookings quantum is still a small minority of the total bookings for the company.

And then on the Guidewire Live product, I know you’ve talked about before the number of customers you have on there that are both providing data; and then also, how many are maybe paying for the actual product. Do you have any update there in terms of either numbers, or growth, or just directionally helping us out there?

Sure. We’ll be specific with the numbers and the metrics at yearend, as we’ve done each year. We’re trying to stick to the discipline of updating customer counts and other market metrics on an annual basis. I can tell you qualitatively that adoption has been good and that we’ll be getting a lot of participation from our customers in sending us data on a continuous basis. The big difference that we think we can now undertake is that with Spotlight we’re talking about underwriting or policy-related data as opposed to just claims data which has been all the Guidewire Live applications addressed up to this point. So that’s a pretty meaningful expansion of scope for us and therefore new sales opportunities with all our PolicyCenter customers going forward.

Then lastly, touching on some of the tier I pipeline. How many of those deals are at least in question with the entire suite versus maybe just one or two of the major elements?

So we have a very exciting spectrum of pursuits in the tier 1, including all of our products, including newer products, especially data management, and then also incidentally in all three theaters, so tier 1 conversations in North America, in EMEA and in APAC, which is also highly encouraging to us.

Great. Thank you.

And from Pacific Crest Securities we'll go to Brendan Barnicle.

Thanks so much. Richard, just a quick follow-up. If we look at the rolling four quarters, should we be adding back the $10 million in FX impact to sort of normalize that on a comparisons basis?

Actually that's an interesting question and one that I hadn't considered, but I think if you look at the effects of FX on a quarter-by-quarter basis, it would be a good way of looking at the effect on growth that FX has had on us. So that I don't -- I think you would have to add back on a quarter-by-quarter basis about $2 million, and $4 million in Q4, and I think you would get to that 3.5% impact on growth.

Great. And then also can you remind us again why you guys have made this stock compensation accounting change?

Well, actually that was a decision that was made before I came on board, but I think if I remember correctly it was a change that more clearly reflected both the benchmarks in our industry, how they were doing business, and was clearly expensed stock-based compensation over time. So primarily it was a decision to bring us in line with our peers.

Great. And then Marcus, in addition to Guidewire Live, you mentioned some cloud-based I think sales situations. Are those situations ones where the SI is running the application for the client and you're just supplying the software? Or is it a combination of Guidewire Live? Just wondering, you mentioned it in the script and I wasn't familiar with that situation.

Sure. It's -- well, really the cloud is -- can be thought of first and foremost as a delivery option. So instead of having the applications sit on an enterprise's servers in their data center it's managed by some third party. And that's not just a matter of keeping the machines running, it's also the care and the feeding and the adaptation of the application over time. So this is particularly attractive to the smaller organizations with smaller IT departments, and there's growing demand in the market for that. Our current approach to it is to partner closely with a number of our SI partners who have offered their variations on deploying in that mode, and we've had a couple of announcements of customers that have chosen to license our software that way. And that's a model in which we -- they have our software under traditional license model but they may have a separate relationship with our systems integrator partner that covers the full, all the care and feeding of that application in the cloud.

Terrific. Thanks for the clarity, I appreciate it, guys.

Brendan, just one clarification. I mentioned $10 million that was the FX effect on our total revenue. If you were looking at our rolling fourth quarter that merely impacts only license and maintenance, and the effect on license and maintenance was more $6 million over the course of the year.

And so should that $6 million be spread equally or weighted more towards to the back end of the year?

It will be weighted more towards the back end of the year.

Okay, great. Thank you.

We'll hear now from Walter Pritchard with Citi.

Hi, thanks. I guess, Marcus, for you, on the -- Richard, a clarification on the sort of looking into 2016, you didn't make any comment on maintenance and you've talked in the past and put in your releases about the rolling or the trailing 12 months' recurring revenue. Is there some sort of relationship we should expect that would change with maintenance as we look at next year?

Not that I considered, no.

Okay. And then just Marcus, on the term license I guess you look at the rate you've grown term license over the last couple of years, it's actually been comfortably north of 20. It sounds like you have some nice customer traction coming on that should impact the numbers next year. Should we think about that 20 as kind of a minimum or how should we think about that given what you've done the last couple years and some incremental business here on top of that?

I think the most forthright way that I can respond to that is to say it's a target that we've set for the whole company and it's kind of our identity that we will be a 20% of recurring revenue grower as an organization, that's the central business metric and that's the way that we discuss it internally. So I think it's appropriate to keep that consistent with how we talk externally. Obviously we aim for as high as we can go but it would be very, very disappointing indeed if we were not to achieve that.

Okay, great. That makes sense. Thank you.

And from Deutsche Bank we'll go to Nandan Amladi.

Hi, good afternoon. Thanks for taking my questions. So, Marcus, you touched on this at the beginning of the call in your script, but as larger projects -- as customers make larger commitments and some customers perhaps want you involved in the implementations as we saw this quarter, how will that impact your transition to the SI community that you plan to build over the next several years?

Actually that transition is going just fine and that includes some of our largest customer relationships. So a number of the tier 1 implementations that we have underway or are in phase 2 or phase 3 of the program have actually very modest guideline involvement, the small single digit number of Guidewire full time consultants. Now we never want that number to drop to zero. That's not good for anyone but it's very healthy to keep it at a small number and it's actually not materially different between small and large customers or at least it doesn't fit the pattern if you might naively expect. We have some very large projects where assistant integrators are performing the vast preponderance of the work. The main driver of higher Guidewire services involvement tends to be a newer product. We talked in the past you'll recall about the kind of enablement curve that SIs have to go up. They did it in the ClaimCenter and then they did with Policy and BillingCenter and now they're doing it with data management and we hope a future new product as well. And then secondly, a geographic dimension in that systems integrators are often not enabled to the same degree in geographies where we have fewer customers for obvious reasons and this kind of cyclical pattern where in the newer country or geography where we have less of an install base we're doing a somewhat heavier percentage of work. When we close deals in those that needs those characteristics there's kind of uptick in services demand from us.

Thanks. And then you said you met your headcount target particularly for R&D. What does that do to your pace of product releases as we look into fiscal 2016?

Yeah. That's in a way it was sort of a pleasant operational surprise or I should say it's something that we like many technology companies have been challenged with which is to meet our operational recruiting ambitions and this is the year we've actually done it in the R&D team. So a lot of credit go to the HR and recruiting team that have achieved it this year. And that's part of a larger program of accelerating well both expanding and accelerating our product development trajectory and we've set a number of pretty ambitious internal goals about accelerating the pace at which we deliver both new releases of existing products as well as introduce new products in especially the newer product families for us in data and analytics and in digital interaction. So it's not the sole driver of that. There are other organizational changes and improvements that we have to undertake additional leadership, et cetera, but clearly having the capacity to undertake a much broader portfolio of products is essential as well and I think we have the team to do that now.

Thank you.

We'll hear next from Alex Zukin with Stephens.

Hey guys. Thanks for taking my questions. Just first one for me, just given the tier 1 pipeline commentary, I was wondering if you could talk qualitatively about the tier 2 and tier 3 pipeline. Can I have you ensure that the tier 1 deals don't take up too much of your attention?

Always a challenge. In terms of executive bandwidth, a tier 2, tier 3, or even tier 4 customer can be just as demanding, because it's important to remember that the significance of the decision on behalf of the principal of our customer is just as consequential for a small customer as it is for a huge customer. And we take that responsibility seriously and we have to invest out of principal to principal conversation, even with the companies with less premium than those in the tier 1. In terms of the sales force's focus, it has not really made a difference, because a lot of these conversations that have gone on, in some cases for years. And sometimes they have a stop and are quality, or sometimes they can even get to the altar and then not get completed for reasons beyond our control. That's happened multiple times in our past, just part of the market we operate in. And so we treat every customer or new prospect pursued as a long term journey, and it's a bit of a coincidence that the clustering of some of the largest ones that we've been involved in kind of coming to fruition or we anticipate coming to fruition in this current quarter.

Got it. And just a follow up. Is it possible to quantify high level how much GWP these tier 1 customers could potential represent?

It's a very wide spectrum. So if you were to add up the total numbers that go under the logos that we are in conversation with, it's a very large number indeed. But again, back to the same commentary we've referred to a couple times now, exactly what will be in the frame of initial license, there's quite a large range of possibility on what could be in the initial license. And in some cases a relationship could be structured such that they commit to a program of rollouts over time and potentially or in fact, legally committed to, but then the licensing that goes along with that follows the natural curve as they bring on more premium or commit to more premium as the project evolves. So the total scope in question, the total premium that I think we're beginning to now have access to should we fulfill our plans for the quarter is very material relative to our current base.

Got it. And then just the last one. With respect to these three tier 1 deals, does that at all impact how fickle you can kind of diversify away on the services line?

I don't necessarily see that as related. There are just too many other variables in question. But I will say that when we, for obvious reasons, when we secure a new tier 1 relationship, in makes a very difference to the SI partner that's involved in that and they're typically very heavily involved in the sales pursuit. And they tend to invest disproportionately heavily in winning those opportunities because they see it as an opportunity to grow a long-term, a really, really long-term and strategic relationship that'll be important for their practices. So we get a lot of SI focus and collaboration on these very large opportunities and that's good for our partnership and the ecosystem.

Got it. Well, congratulations, and happy hunting, guys.

Thank you.

We'll hear now from Justin Furby with William Blair & Company. Justin Furby - William Blair & Co.: Hi, guys. Thanks for taking my questions. Marcus, I was just curious if you could provide your assessment in terms of where you are with your cloud strategy relative to the competitors out there? And how reliant going forward are you going to be on your partners with that strategy? And I guess maybe a second, a follow-up to that is, if you look at the opportunity set today, just curious what percentage of that in terms of core systems, would you say involve insurers that are really interested in cloud? And maybe what does that look like a year ago?

Right. Let me take that second part of your question, first. I'd say 100% of insurers have an interest in the cloud at some level in their enterprise. Right? That's -- and many, many of them, including the largest and most traditional of them, have already embraced SaaS applications somewhere in their environment. Right? Of course the real question is, how do they think about SaaS and cloud-based deployments for their core transactional systems of record? Their mission-critical insurance systems, the area that we focused on. And there you're going to see a very, very wide spectrum, from organizations that say they would like to accelerate a transition to that world as soon as possible, if only there were suitable applications that met all their other criteria, to those who say, not even close, this is proprietary data, this is our most important -- these are our most important systems, it's going to be a long time before we would contemplate that. So a wide spectrum, but an unmistakable kind of directionality to it and we see ourselves actually as potentially one of the catalysts of that happening faster than some in the industry might currently be thinking. Now the first part of your question was, I think, part of really the more competitively, our competitors are -- operate in the same world that we do. They have to -- they're having -- they're hearing the same that we're hearing. Some of them -- well first of all, most of our competitors tend to focus on the smaller tier of the market, and that's not to disparage them. That's -- we care about that tier just as much, but they tend to focus there, where those conversations have maybe more of an appetite to look for, a kind of transfer…

So we haven't started really modeling 2016 in any particular way, both on top line and bottom line. We're starting to have some idea. We're just going to our planning stages. I can't speak intelligently about where the rolling four-quarter average will run to. But obviously, the rolling four quarter average is a derivative number to our basic goal of driving term license growth of 20% year-over-year. So that number over time will be affected by how successful we are and what the timing of those transactions are that will drive us to that 20% growth. The timing of those particular transactions in any particular quarter is going to drive that number in different way. Justin Furby - William Blair & Co.: Okay. Great. Thanks.

At this time, I'll turn the conference back to you all for closing remarks.

No closing remarks. Thank you for participating.

Thank you.