Over time, that work becomes smaller and smaller. But we have some of that modeled in the year that ended up not happening as much as we had originally thought in Q2. And so some of those costs have shifted into Q3 and Q4 but when we look at it all together, we started the year with an outlook of around 46% subscription support margins are now guiding to 51% to 52%. So we’re really pleased with the progression that we’ve seen as we work through the year. And it’s a variety of things. It’s a lot of focus and some of it is also the subscription revenue line has firmed up a bit. Some of that is linearity. Q2 was a very healthy bookings quarter for us, a little bit higher than what we were expecting going into in the quarter. And so that linearity also helps on the margin side.
Operator: Next question is from the line of Matt VanVliet with BTIG.
Matt VanVliet: Apologies for any background notes here. But I guess when you look at the competitive landscape out there and sort of the pipeline of deals that you’ve already either gone live or in late stage of deployment today. Are you seeing any of your existing customers? Maybe just kind of check the box and say, and we’re moving to Guidewire. We’re not even going to put this out for competitive bid as they move to the cloud or I guess how are you thinking — or how are you hearing from your their appetite to move to the cloud without really needing to go out and see what else is in the market?
Mike Rosenbaum: Well, I’ll take that. So for an existing Guidewire customer that is already up, already running with a deployed claim center, deployed pulse center in the deployed billing center, our whole strategy is to make it highly unlikely that it would make any sense for them to replace that implementation with something other than Guidewire. We are trying to minimize that switching costs. I think we largely have minimized execution products. The switching cost is not 0, as we’ve talked about previously, there is some amount of switching costs and it is a project. But I would hesitate to say that I have I’m trying to think if I’ve seen a single situation in which somebody has said, we’re going to put the whole thing kind of going to open up the whole strategy and look at it just because it’s so clear that most of the implementation of Guidewire is supported in Guidewire Cloud, right?
So Guidewire on-prem can mostly be upgraded to Guidewire Cloud as opposed to reimplemented on a competitive core system. And that’s fundamental to our strategy. We didn’t start over with the product made any sense, and it would have caused us to have to abandon that customer base. And so we’re not yet — that isn’t just a perfect push the button and the thing upgrades, but it’s much, much better and much more logical for a big deployed, excuse me, insurance company sort of opening it up to competitive bid. Now there still is competition out there for the greenfield implementation lines of business. And we do see existing Guidewire customers saying, “Hey, even though we’ve got Guidewire already for this new line of business that’s not yet modernized, they will do RFPs for that, and we will compete for that business and we compete favorably in those circumstances, and that does occur.
But for the existing base, it’s unlikely that, that would be a dynamic we would worry about, just not because we’re the best. It’s just because that’s fundamental to the strategy here.
