Jeff Cooper : Thank you.
Operator: Our next question comes from the line of Parker Lane with Stifel. Please proceed with your question.
Parker Lane : Yeah, hi, guys. Thanks for taking the question. Mike, I was hoping you could dive in a little bit more on to use Guidewire on-prem as a stepping stone of the cloud. I think it was three insurers that opted for that during the quarter. Why is that the right approach today? And then two, when they talk about the modernization side of it and the eventual migration to cloud, when a customer has made that decision today, are they still thinking about this as a maybe multiple years down the road? Or does it accelerate the time line to perhaps the next 12 to 18 months?
Mike Rosenbaum : Yeah. Thanks for the question. So first of all, I want to make sure everybody understands that. I think that this is a sort of a positive attribute of the choices we’ve made about the technical architecture. Obviously, in a perfect world, you would want everybody that goes straight to cloud. But every single customer is different, the circumstances around their overall enterprise environment are all very, very unique, and there’s a lot of different variables that are at play in terms of a customer making this sort of decision. And now in one case, you could say like a customer has just got the rest of the enterprise all on-prem, Guidewire is on-prem, and they want to add a core component of the insurance suite to that implementation.
And that just makes sense for them to do that modernization on a Guidewire core, but without making the overall lease to cloud, and that may be driven by the overall strategy — the cloud — overall cloud strategy of that customer. Other circumstances, there’s going to be some regional differences around people’s proclivity to accept cloud as a safe and secure place and we’re constantly working on that and we’re constantly making progress. But like I’ve said a couple of times, I mean, these decisions are 20, 30-year decisions. And if we can get ourselves established and we can make sure that the customers are crystal clear about the real strategic direction of the company and acknowledge clearly that eventually these implementations will move to our cloud.
I see it as a positive characteristic. I’ll also refer to you to Boda that we called out in the prepared remarks. This is a customer that made a decision to go on-prem and in the process of that implementation made the decision to move to cloud. And so this happens. And so even though we are doing these deals, and it probably seems — and even to me, sometimes seems like as a bit of a head scratcher. There is real logic behind this, and I do think that it’s a positive characteristic of the architecture and the strategy of our company. Especially as you think about Guidewire, I know it’s tough sometimes, but if you think about Guidewire over a 10- or a 20-year time horizon, this makes a lot of sense.
Parker Lane : Got it. Very helpful feedback. Thanks, again.
Mike Rosenbaum : Thank you.
Operator: Our next question comes from the line of Michael Turrin with Wells Fargo Securities. Please proceed with your question.
Michael Turrin : Hey, thanks for taking the question. Just in terms of capital allocation, I mean you announced the buyback. You’ve clearly been active around. Can you just provide us with an update on how you’re assessing the trade-offs and uses of cash in the current environment? And then just the second part, I’ll ask upfront. On the free cash flow side, negative for Q1, but you’re holding on to the cash flow from operations guide for the fiscal year. Can you just remind us anything we should be mindful of in updating models around seasonality on the free cash flow side? Thank you.
Jeff Cooper : Yeah. So on the capital allocation side, we’re obviously executing on our $200 million accelerated repurchase program once we complete that, which we expect to complete in Q3, we’ll revisit the authorization for the other $200 million. We continue to think that where Guidewire is trading today that there’s no greater use of our cash at this point in time than buying back some of our shares. But it’s important for us to maintain flexibility to allow for inorganic activities should those arise in this environment. So we think that the $400 million share repurchase program that we have authorized allows us to kind of walk that line and do both. So we feel that, that’s the right posture for us. With respect to cash flow, we obviously guide on an annual basis.
There can be a lot of movements on a quarter-to-quarter basis. The results in Q1 were very much in line with our internal expectations and how we thought this year would play out. And in fact, some of the — we slightly adjusted our operating income expectations, and that has an impact on cash flow. So slightly more confident into the range. There can be a lot of movements in terms of collections at the end of the year that causes us to provide a somewhat wide range there, but no adjustments to how we think about the full year.
Operator: And our next question comes from the line of Joseph Vruwink with Baird. Please proceed with your question.
