Greetings, welcome to the Guidewire's Fourth Quarter and Fiscal Year 2019 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I'll now turn the conference over to Curtis Smith, CFO. Mr. Smith, you may begin.

Good afternoon and welcome to Guidewire Software's earnings conference call for the fourth quarter of fiscal year 2019, which ended on July 31, 2019. I'm Curtis Smith, Chief Financial Officer of Guidewire. And with me on the call are Marcus Ryu, Guidewire's Chairman of the Board and Mike Rosenbaum, our Chief Executive Officer. A 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, both of which are available on the Investor Relations section of our website at ir.guidewire.com. As a reminder, today's call is being recorded, and a replay will be available following the conclusion of the call. During the call, we will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding trends, strategies and anticipated performance of the business. These forward-looking statements are based on management's current views and expectations as of today and should not be relied upon as representing our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. Actual results may differ materially. Please refer to the risk factors in our most recent Form 10-K/A and 10-Qs filed with the SEC. We will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP to GAAP measures is provided in our press release. Reconciliations and additional data are also posted in a supplement on our IR website. During the call, we may offer incremental metrics to provide greater insight into the dynamics of our business. These details may be one-time in nature, and we may or may not provide updates in the future. With that, let me turn the call over to Marcus and Mike for their prepared remarks, and then I will provide details on our results before providing our outlook for the first quarter and fiscal year 2020. We will then take your questions.

Thank you, Curtis. I'll provide some commentary on our fourth quarter and full-year results before handing the call over to our CEO, Mike Rosenbaum, to share his observations from his first month leading the Company and to frame our ambitions for fiscal 2020 and beyond. When I introduced Mike a month ago, I underscored that the transition was motivated by opportunity, not by challenge. Our performance in the fourth quarter in 2019 substantiated our momentum in pursuing that opportunity, while also reinforcing that we are still in the early days of our journey. Our full-year financial results were ahead of our total revenue and profitability guidance ranges, with total revenue of $719.5 million and non-GAAP earnings of $1.45 per diluted share. Underlying these results was our strongest bookings quarter ever, exceeding our internal targets. Fully 81% of our new software sales came at subscriptions for our offerings delivered via Guidewire Cloud, bringing the total amount to 65% for the year, well above the 40% to 60% we had anticipated at the beginning of the year. Since subscription revenue was recognized ratably instead of upfront like our term licenses, our reported revenue would have been meaningfully higher if the mix between subscription and term licenses have been within our expected range. Nonetheless, this was a welcome result, as it substantiates the demand for Guidewire Cloud and for transitioning P&C core systems to the cloud in general. The primary driver of subscription bookings in the fourth quarter was of course, InsuranceSuite via Guidewire Cloud. These are the most complex and strategically significant transactions in the Company's history. So it was a remarkable result to close six new such deals in the quarter. It is further encouraging that this number includes four new customers, as well as two customers with existing InsuranceSuite implementations…

Thanks, Marcus, and thanks to those of you joining us on the call today. Guidewire's fourth quarter capped another strong and transformative year for the Company with nine InsuranceSuite cloud deals in the year and now a total of 13 InsuranceSuite cloud customers as of the end of the year, we are thrilled with the demand we see in the market for both new and existing customers. With a customer base of 380 insurers in a market of nearly 4x that amount, the vast majority of which have yet to upgrade from legacy systems, we believe that we are still in the early days of the transformation to a modern, more agile core systems. InsuranceSuite via Guidewire Cloud and the improved total cost of ownership and business agility it provides insurance carriers will accelerate this transformation. When I spoke with you a month ago, I indicated that I believe Guidewire was well positioned to extend our long-term leadership in this market with an industry standard platform and that we're further benefiting from the transition to a cloud delivery model. I also mentioned the incredibly strong culture here and the deep sense of customer commitment embedded in that culture. My initial impressions, I have to say have not just been validated, but to a large extent reinforced and amplified. The dedication to this industry and to the modernization of its core systems is evident throughout the organization and our partner ecosystem. Our singular focus on this industry and the trust customers like USAA, American Family, EMC and Gore are placing in us to run their mission-critical core systems as a service is, I believe truly unique. I also want to give my initial impressions of some of the exciting innovation and future opportunity we are seeing in our analytics and data…

Thank you, Mike. Total revenue for the year was $719.5 million, an increase of 10% from a year ago and above the high end of our guidance range. Fiscal 2019 license and subscription revenue finished at $385.3 million, representing a 25% year-over-year increase. As we have previously noted, year-over-year license and subscription revenue comparisons are impacted by the adoption of ASC 606, which affects the timing of revenue recognition of our term license contracts. Additionally, fiscal 2019 growth benefited from the reclassification of $12 million in hosting revenue from services, license and subscription and from the 10-year term license deal signed in Q1, which was previously discussed. Normalizing for the impact of these items, the growth rate would have been 18%. Subscription revenue for the year was $65 million, representing 95% year-over-year growth. As Marcus discussed, subscriptions as a percent of total new sales were above our expectations at 65% for the full-year, reflecting the increasing demand for our cloud-based services. Perpetual revenue for the full-year was $2.1 million compared with $11.8 million in 2018, and consistent with our intention of reducing perpetual license sales. Maintenance revenue for the year was $85.4 million, representing a 10% year-over-year increase and was above our guidance range. Services revenue for the year was $248.8 million in the upper end of our guidance range compared with $266.5 million a year ago. This year-over-year decline was largely driven by investments to ensure the success of cloud customers, increased SI participation and the aforementioned $12 million hosting revenue re-class. Turning to profitability. We will discuss these metrics on a non-GAAP basis, and we have provided the comparable GAAP metrics and a reconciliation of GAAP to non-GAAP measures in our earnings press release issued today, with the primary differences being stock-based compensation expense, amortization of intangibles, the…

Yes. Thank you. [Operator Instructions] Our first question is from Ken Wong with Guggenheim Securities. Please proceed.

Hey, great. Thanks a lot for taking the question. The first question maybe for Marcus or Mike. I'm just wondering, what do you guys think drove the heightened cloud activity in the quarter? And as far as Tier 1s, do you think the TIA – the USAA signing will kind of – you'll get some halo effect there and drive more customers from the larger customers to cloud?

Yes, Ken. This is Marcus here. The demand for cloud isn't really a quarter-to-quarter phenomenon. It's a much longer horizon kind of phenomenon than that. And as we talked about in previous calls, we've been seeing heightened demand for quite some time, driven I think by secular factors, by our maturation in the capabilities, and as well as our kind of assertiveness that the cloud was going to be the primary locus of technology innovation for Guidewire in the industry overall. We worked hard to bring a lot of these conversations to fruition and to get them done within the year to live up to the commitments that we had made. And it was fantastic to be able to close six within the quarter. It was very, very demanding for the team. But I think the sense was that we were not so much constrained by – not at all really constrained by demand, but just by the – as we've talked about before by the sheer complexity of these really strategic relationships. So the kind of trends we're looking at is much more than a one quarter phenomenon and we're really gearing up many facets of the company for this to be a longer phenomenon.

Let me just add to that. I think the demand that we saw is a great validation for the strategy of the company. And the talent and especially, as you mentioned, the wins at these Tier 1 insurers really point to the validation of that strategy and the commitment that we've made to be able to successfully deliver these systems via Guidewire Cloud. So we're certainly excited about the momentum that we see.

Okay. Got it.

A little additional commentary, Ken. As you highlighted, we were thrilled to secure a mandate from them. They are hugely respected insurer in our market as well as one of the largest players. And it was striking that they wanted to start a relationship with us in an entirely cloud-based fashion that was one of their starting assumptions for this core system initiative on their part. And it was fantastic to be able to convert that and get it closed within the year. I do think it will be a much noted transaction and of course, we have to deliver against it, or to be the positive that we expect. But it was definitely one of the highlights for the year.

Got it. And then Curtis, you touch on the ARR growth that you saw, the fully ramped ARR growth. Any kind of rough quantification of what those ARR numbers were last year and this year? Or perhaps maybe just a sense of what total cloud ARR for your 13 customers look like?

Yes. In a few days here, Ken, we will be publishing that ARR number in our 10-K. So you'll be able to see that then when it comes out. We just want to provide the growth rate today both on a constant currency and on an absolute basis to understand that and some of the things that were impacting that we talked about in Q3. And then we will have an opportunity when we get to Analyst Day to talk a little bit more about our fully ramped ARR transition metric.

Got it. That would be helpful. Thanks a lot guys.

Our next question is from Sterling Auty with JPMorgan. Please proceed.

Hey, thanks. Hi, guys. It's Jackson Ader on for Sterling tonight. So the net customer count ending the year flat at 380. What about gross customer additions? How did that track maybe versus both your expectations and in previous years?

Go ahead.

I'll take it. I would say, first of all, I think it's important to understand that we did add a significant number of core suite customers during the year. And I think when you look at the actual count of customers year-over-year, what we saw was a significant number of proof-of-concept deals that were really just validating a use case for cyber. But what's exciting is, is that the ones that where we're able to really establish a strong partnership with those become much more meaningful partnerships. And I think that those customer counts are more in line with what you would typically imagine, the definition of a core suite customer is for Guidewire. But to answer your specific question, 18 gross customer adds during the year, which I think is a very positive sign.

Okay. Great. And then just a clarifying question on the mix that we should be expecting of new sales being cloud going forward. I think there was a mention of the outlook, but I didn't quite catch it.

Yes. So last year, we provided a range of 40% to 60% new subscription sales as a percent of total sales. And we ended up for the year above the top end of that range at 65%. This year, we provided a range of 55% to 75% of new subscription sales as a percent of total new sales. And initially as we indicated are targeting the midpoint of that range. For now, we give that range again because as we experienced this year, if we see much stronger subscription sales, that's a good thing, but it does have a negative impact on the recognized revenues for the year.

Great. Okay. Thank you very much.

Our next question is from Michael Turrin with Deutsche Bank. Please proceed.

Hey, there. Good afternoon, and thanks for taking the questions. Can we first talk more about the ramped deal structures? Are the fully ramped deals already under contract? Are those projections based on what you would expect to see as usage grows? And it sounds like somewhere between year three and year five is when you would expect those deals to hit fully ramped, is that right?

That's right. It's somewhere between year three and year five. And for these subscription customers, we always provide a five-year pricing schedule. But when we are doing our fully ramped ARR calculation, it may not be part of the contracted term. So some of these contracts maybe three years, but we will still be looking at the ARR amount in years four or five when it gets fully ramped, when we calculate that fully ramped ARR. So most of our contracts are moving in the direction of five years. The ramps – typically, the ramps for these companies typically take place in years three to five. The fully ramped number typically happens in years three to five.

And just to be clear, I think you were also asking, it leaves open the opportunity that we'll sell additional products into those customers during that period of time.

Right. Okay. And then, thinking about margin trajectory from here. If guidance holds, this will be the third consecutive year of margin declines. I understand there is a lot of sort of moving pieces in terms of this model and the move to 606 on top of everything else. But is there a point at all where you're expecting margins can trough, as we work through these transition impacts? Or does that three-year to five-year ramp in ARR mean this transition could continue to play out over that timeframe as well?

Yes. Thanks for the question. We've noted. And before and today that while the increased subscription demand is happening and that's a positive thing, it does have a shorter-term impact on our profitability. And that said, we remain confident about our long-term profitability levels. The other thing I would add to that is that this is one of the reasons we're emphasizing ARR, fully ramped ARR and free cash flow as indicators of our progress. And when we get to Analyst Day in a couple of weeks, we'll be able to provide some more discussion around that point.

Okay. Got it. Thanks. Good luck to both Marcus and Mike to transition.

Thank you.

Thank you.

Our next question is from Chris Merwin with Goldman Sachs. Please proceed.

Okay. Thanks for taking my question. I think you mentioned that if the cloud transition accelerates, revenue could be $30 million lower. And it seems like in the last few quarters, the execution has been great. And you've been trending ahead of expectations on cloud. So when we look at this updated guidance for fiscal 2020 on license and subscription revenue, how would you qualify your visibility into that relative to prior quarters when you were earlier in the transition? Thanks.

Thanks, Chris. I'd say – Marcus here. I'd say that we've really updated sense of the shape of the demand is coming to us now. We are still in the early innings of the transition, both for us and for the market, but substantially more clarity. And I think an improvement in our ability to guess what form the demand will come as opposed to guessing at it. Also I'd point out that we were only really enthusiastically in the market with respect to the cloud in a broad-based market way, halfway through the year and our Connections user conference last year. And so that kind of threw a – that created a wrinkle relative to our starting year assumptions. I think there was a great deal of market learning in the latter half that's now been internalized and is reflected in our outlook. As you see, there is a pretty meaningful step up in the proportion of our bookings that we expect to come in subscription form and that's just going to continue to increase into future years. I think we've bracketed it pretty – it's a fairly broad bracket, but right now from where we sit, we are pretty confident it's going to fall within those. It's always possible that things could accelerate even further. But I think we've had enough conversations with our customer base now to know that it's not yet a complete binary switch from self managed to cloud and that the mix is likely to fit within that range that we put out.

One thing I'd just add to that is that the range we gave, the $55 million to $75 million and the $30 million number, that is if we came in at the very top of that range versus the very bottom of that range, the revenue difference would be $30 million or more specifically a 1% shift in that subscription as a percent of new sales would equal about $1.5 million shift in revenue.

Okay. That's great. Thanks and then just a follow-up on margins. Yes. As you might speak to this more at Analyst Day, but thinking about that gross margin for the cloud business at scale as you sort of ramp up hiring there and I'm sure there's still a lot of visibility to be gained, but how are you thinking about that? And I guess, when we think about the margin, your updated margin guidance, was that more a reduction in gross margin or is that more a reduction due to higher OpEx? Just curious, what was the main thing driving that? Thanks.

Yes. So we're definitely seeing and we noted in the quarter, right, our gross margin overall was 62% versus 61% last year That was largely because the cloud operations hiring that we expected in Q4 got pushed into this year. So as we've noted, a big part of our hiring will take place in our subscription COGS related to our cloud operations as we ramp up now for the demand we're seeing there. So that will put overall pressure directly on our subscription margin, but then that will impact our overall gross margin. So we see that happening in the near-term here. And we expect that until we start to see some of these other efficiencies from our operations going forward.

Okay. Thank you.

Our next question is from Tom Roderick with Stifel. Please proceed.

Yes. Hi, Matt Van Vliet on for Tom, tonight. Thanks for taking my questions. I guess as you look at the overall demand pipeline that you're seeing out there, how would you – or how much you donate the demand across your major regions? There's been a lot of talk obviously around Europe weakening from a macro standpoint. Curious if you're seeing that much in overall demand or what those conversations are looking like between U.S., Europe and APAC, in particular?

I can offer some commentary Matt. I'd say, so far we've been – this has been true for most of our history. We've been kind of buffered from the macro and political questions that maybe other companies are a little more vulnerable too that it's just generally not foremost on insurers' minds. But Europe is still a more challenging frontier for us in general, not so much for macro reasons, but just because of the difference in requirements regulatory regime, et cetera. And we continue to just put additional effort into that – into the continent because it's such a large portion of our TAM and because we had – we continue to get very encouraging signs for the demand. We did not close quite as much in Europe as we might have hoped at the start of the year. But I think our outlook overall on the TAM and the demand for what we can do there is really unchanged. Also there has been a natural – there was a very concentrated company focus on making our internal and externally communicated targets for new cloud relationships. And it was natural to do that, focused in North America. Of course we did have that one very substantial European cloud deal that we talked about in Q3, MACIF. But that was another factor, I think in the shape of the bookings that we ultimately quoted in the year. But every outlook that we have over a multi-year horizon relies on probably faster growth in Europe than in North America, at least with respect to our progress of the company.

And then a quick follow-up, on the ramped deals, is there a potential that those ramp more quickly? Are they tied to specific milestones? Or are they truly calendar based ramp-up deals?

You can generally think we are going to date certain relationships that may have an out. And that out is something that would only be exercised if the program were to severely disappoint expectations. I think even our ability to negotiate those out will be – will only be enhanced with greater market progress and customer referenceability in the cloud. But they are almost always just kind of date certain markers and a schedule that's rolled out over time.

All right. Great. Thanks.

Our next question is from Tyler Radke with Citi. Please proceed.

Hey. Thank you. Can we talk a little bit about the ramped deals? I'm just curious if you have had to kind of – if you're finding ourselves having to either extend the longevity of the ramps or may kind of incremental more ramped deals than you were previously. And then just a follow-up, as we – just to kind of understand the mechanics behind the new ramped ARR number. I guess, what gives you the confidence that those customers will ultimately pay that, given that it appears that year four and year five are beyond what is contractually committed? Thank you.

Sure. And let me just explain on the ramps. They are more pronounced for our migration customers. And there are logical reasons for that. Our existing customers who are migrating to the cloud, they're already paying a full fee for their term license in year one of their cloud transitions. And so those are where we saw those ramps more pronounced. The timing of the ramp is pretty consistent though on being three years to five years. But a little bit of a steeper ramp for those migration customers for the reasons we just talked about. The second part of your question around the fully ramped ARR. For all of our end customers, we include a five-year pricing schedule in there. More and more of our contracts now are moving to the five-year committed term, but some of them have less than that. And so these customers are very committed to that cloud journey. We are with them, too. And our expectation and moving into the arrangements with them is two years or three years in. They will continue to focus on that ramp and on the implementation. And that's why we put those pricing schedules in place. Going forward, we do expect too, that those pricing schedules will be part of the actual five-year contractual term.

One thing I'd add just because this was one of the things that I've dug into a little bit. Very specifically in the first 30 days. I think you want to understand or think about consider the nature of the implementation of the partnership and the commitment that Guidewire and the customer make into these systems. The track record of the Company as it relates to successfully deploying these core systems and those systems then lasting very, very significant periods of time. I think lends itself to the surety associated with that financial metric. And so I think that's an important thing to consider when you look at this metric.

Great. Thank you. And maybe I might have missed this, but did you talk about the expectations on a number of InsuranceSuite cloud deals for fiscal year 2020. Do you think that's still a good metric to track or would you encourage just to look at kind of this ramped ARR number? Thank you.

Yes. Thanks for the question. And we did in the last couple of years talk about the number of IS cloud deals as a transition metric. And so we reached that transition when we talked about the four to eight IS cloud customers last year and coming in at nine at the top end of that range. And so we think that was helpful. And in the first couple of years – but it was a transition metric. And now we think what will be more helpful is a focus on our ARR and our fully ramped ARR metric going forward. So we will not be providing that number of IS cloud deals forecast going forward. We will however, at the end of every quarter report the number of IS cloud deals that we signed up in the quarter.

Thank you.

Our next question is from Brad Sills with Bank of America. Please proceed with your question.

Hi, guys. Thanks for taking my question. Just wanted to ask about the implementation cycles for InsuranceSuite cloud, I know it's a limited sample set. But how are you feeling about kind of the learnings you've had there? What are some of those learnings and your confidence level and maybe seeing more compressed cycles and then also kind of channel readiness to take on more of these implementations?

Yes. Brad, I'll speak to kind of the experience to date and then maybe Mike can comment on his outlook and intentions for the future there. I think the – as we've always said, the cloud is not some silver bullet that makes a complex transformation program suddenly simple. There is still a vast amount of business change and an integration work. And just core operational transformation that has to have – that always goes along with one of our programs and all of that is the same in a self-managed or a cloud mode. That said, because we take on full post-production responsibility in the cloud for the project, if you will, we kind of exert a greater moral authority to insist that the program conform to certain standards. And I think we have greater leverage to drive us to a highly standardized program. And we've been able to do that with our – to an increasing degree with each of our cloud relationships. And we're certainly starting the newer relationships very much in that shared spirit with the customer that they recognize they are better off, the more conform and the more standardized they can be. Now in terms of really driving a step function improvement in total cost of ownership and the speed of implementation, that requires certain product enhancements and architectural platform improvements that are at the top of our priority list and we'll be announcing a couple, I think. I think we really see consequential changes in that direction at Connections that we're excited about. And that will really be an important part of driving the long-term demand and economics that we want out of the cloud transition.

Great.

Yes. I'd say, if you think about the overall story of the situation right now, you've hit on what I would describe as my number one priority, is to helping to ensure that were continuing to standardize in a line and drive the type of collaboration that we need between all the teams necessary to ensure that these are implemented successfully and efficiently each and every time. We're seeing steady progress. And then as Marcus said, we're excited to talk about some pretty innovative new additions to the approach that will continue that track towards more efficient delivery and better execution in terms of the overall system implementation. The centralization of that work that's represented through our participation in running these systems is just overall a very, very beneficial thing for the whole industry. And aligning the teams here in our product development organization around that exercise is going to be very, very positive for all of our customers. So I'm excited for that to be top of my list in terms of coordinating and executing here at the Company.

Great. Thanks, guys. And then one more if I may just on digital and data. It sounds like that business is really going well. It's close to 100% attached it sounds like on these new deals. Are there any use cases you would point out that are – you're seeing some commonalities there and how has that changed over say a year-ago or even a couple of years ago? Thank you.

Yes. Brad, I would say that every insurer right now has – is engaged at some phase of what they would call in their own language a digital transformation, reinventing themselves for a new digital era of customer service. Even the most kind of business commercially focused – commercial lines focused insurers still thinks about kind of consumerization of the experience that they have to provide to all of their counterparties. So digital is a predominant theme across the industry as it is in other industries, I'm sure. And so more and more digital is just a native part of the program and data is close behind that. And one of the other catalyst for the cloud, I think is a promise that we still have to fulfill, but the promise that by having a much more standard and conforming implementation running in the cloud that our customers' access to their operational data will be dramatically enhanced, as well as all kinds of options to syndicate and experiment with the data in ways that the industry is really hungering for. So I think data and digital are becoming less and less add-ons to a core system project as inherent to the rationale for the programs to begin with. And I think we're very well – we've been very well positioned for that and more and more, they will just become kind of native parts of the whole offering.

Great. Thanks, Marcus.

Our next question is from Pat Walravens with JMP Securities. Please proceed.

Hi. This is Joey on for Pat. Thank you for taking our question. We are wondering how competitive the cloud wins in the quarter were and if maybe you can provide an update on the competitive landscape? Thank you.

Certainly, a number of the cloud wins were actually directly competitive. No new names that you wouldn't be familiar from following us, but a number of them were competitive, including even existing customers. That said, well now that we're contemplating the cloud, we know, let's revisit, let's check out our options across the market. We had a couple of those as well as net new customers that of course, compared us to competitive choices. The second part of your question, I'd say there is really no change in the competitive landscape. I mean, we say this pretty much period after period. There aren't really new entrants into our market there. Every deal is very consequential for us and for any of our competitors. So of course, they are all very fiercely contested. But I'd say the dynamic is pretty much exactly the same as it has been for quite some time now.

Thank you.

Our next question is from Bhavan Suri with William Blair. Please proceed.

Hey, guys. This is Dylan Becker on for Bhavan. Thanks for taking our questions. Just one quick one here. I guess it sounds like the mix of new deals versus conversion is about 50/50 for this past year. As we look forward, how should we expect to see this mix going to continue to develop? And yes, just kind of interested in how you guys are kind of viewing that opportunity over time.

Well, I think, first of all, I think it's an incredibly positive sign that we're adding new cloud customers just directly, right? And it kind of speaks to what I was saying before about how the improvements that we're able to make to the overall system, total cost of ownership and implementation expense that are delivered via cloud should accelerate demand for core systems migrations in the first place. So I'm excited about that mix and excited to see that the opportunity for us is most definitely not just a conversion of the self-managed on-prem installed base. So we'll see how that ratio develops over time, but I think it's a very, very positive sign what we were able to achieve for the last fiscal year.

And then a quick follow-up if I may. Just – I know, Q4 of this past year was very cloud heavy. Looking into 2020, should we expect to see any more – any kind of linearity around cloud deals are expected to be Q4 heavy again. Any insight there would be helpful? Thanks.

My sense is that you shouldn't expect a change in the business dynamic associated with the way the company operates. And I think that is based on, I would say the complexity of the decision-making process for our customers. These are long sales cycles. These are very deeply considered and studied. And I don't think that we are yet at a point where that business dynamic is going to change.

Great. Thanks for taking my questions.

And our final question is from Rishi Jaluria with D.A. Davidson. Please proceed.

Hi, guys. This is actually Hannah on for Rishi. Thanks for taking my questions today. Just first one, as you look into 2020, what do you think are the biggest headwinds or risks to hitting your fully ramped ARR goal?

Well, I would say for our migration customers, it's the steepness of the ramp. And so those are one of the things that we're focused on here going forward. There was a lot of learnings that came out of 2019. And then we have a much bigger set of customers that we can talk to when we're contracting with our migration customers going forward.

Okay. Thanks. And then Mike, just broadly speaking, could you share anything that surprised you in the quarter either for the could…?

Sure, any surprises. To be honest with you, I've had an experience in the last 30 days, it has been much more about validation than surprise, which I think speaks to the – I don't know the very – is a deep consideration in study that I did as a company during the process of considering joining. But also I would say, just the handle on the business that both markets and the Board had, just time after time where there was a product or the execution or the cloud opportunity, it was more validation than surprise maybe just because we haven't talked enough about it. I mentioned it in the remarks. And I wouldn't say this is really a surprise as much as it is, I think an incredibly innovative opportunity for us in our data and analytics unit. I mean, we have this small thing about being able to take our data listening platform and apply it to risks beyond cyber, I think may sound like a small thing. But I think it points to something very, very transformational, not just for Guidewire, but for all of our customers. And I'm incredibly excited about that. So I wouldn't necessarily say it was a surprise, but it was great to see that, that use case validated and real because it points to a positive future for that team and for that use case.

Great. Thank you.

I would like to turn the conference back over to Michael Rosenbaum for closing remarks.

So I just wanted to say thank you all for joining us on the call today. We're excited about the opportunities ahead and look forward to seeing those of you who will be attending the Deutsche Bank Conference next week in Las Vegas, as well as our Analyst Day later this month here in San Mateo. And if you have not already registered and are interested in attending, please let us know. So thank you all very much and goodbye.

Thank you. This concludes today's conference. You may disconnect your lines at this time and thank you for your participation.