Matt VanVliet: Okay. Very helpful. And John Mullen has been in the head of the sales organization here for quite a while now. Anything you’d point to that has been, as you look back kind of a meaningful shift in either the process or just the flat-out execution? And then you touched on kind of the continued expansion of the SI partnerships would you credit him with much of that? Or is it really just a maturation of the industry, they’ve been investing in the Guidewire practice for a long time, and he’s just sort of enhanced that? Anything you’d highlight that he’s really kind of brought to the table that has been a sea change for Guidewire?
Mike Rosenbaum: Yes. John has been an incredible addition to the leadership team here. I would also say that David Laker, who joined us has been an incredible addition, Michael Mahoney, he’s been an incredible addition to the leadership team. We feel great about the customer components of our team. And now it also give a lot of credit to Christina Colby, who’s our Chief Customer Officer, and what she’s done to ensure that we’ve driven the follow-through around making sure that these projects are successful. I feel great about the team and the innovation and the energy that this team has brought to the company. It’s for sure their contribution. It’s also part for sure, driven by the maturation of the product and the general increased experience that we have as an organization and the ecosystem around what it takes to be successful with these projects.
I think we’ve talked numbers at times about the conversations that we have with the — with these insurance buyers certain not exactly wanting to be on the vanguard of these new programs and wanting to kind of wait until they see the success of other companies who are charting the course ahead of them. Well, that maybe is starting to kick in, right, as you’re seeing numbers in the triple digits now of Guidewire Cloud customers and tens of — maybe not 100 yet, but growing every quarter by over a dozen successful production go-lives. That experience helps us sell that experience helps gain the confidence we need to get these deals across finish line. So certainly, it’s John and the rest of the team that we’ve added, but it’s also a lot of things that contribute to that success.
And I would just highlight one additional thing that I think kind of John has helped us think about, and it’s reflected in somewhat in the prepared remarks and how I’m describing where we are as a company is we have an opportunity now to think more deeply about and focus our attention around the insurance specific value that we can embed into our products, into our solutions, into our platform. We spent a huge amount of time and effort around building a platform that was going to work worldwide that was going to be successful, secure, reliable and that was going to enable us to scale this thing efficiently and really run the top Tier 1, Tier 2, Tier 3 insurers all over the world on our platform. And that’s never done. I don’t want to get ahead of myself and say we’re finished because we’re not.
But it’s got to the point now where we can start to refocus our attention around what innovation we can bring to help run claims processes more efficiently to underwrite risks more effectively, to embed analytics more effectively and harness the data and analytics that the system is creating and John has really helped bring that expertise around the insurance industry and what can really move the needle for insurance carriers worldwide. He’s really helped us see that. And so I just — like I said, I’ll just sum it up by saying I feel great about the team and it’s like a lot of these factors contributing to the success that we saw in the quarter.
Matt VanVliet: Great. Thank you.
Operator: Thank you. Our next question is from Ken Wong with Oppenheimer. Please proceed with your question.
Ken Wong: Great, thank you for taking my question. Mike, I just wanted to maybe touch on 1 of the trends you guys called out last quarter in terms of the ARR pushing a little bit to the right and some of that caused by some kind of DWP visibility across your customers. You guys didn’t really mention it this quarter. Is it fair to assume that perhaps some of that has started to fade? Or in any case, any update on that front?
Mike Rosenbaum: Sure. So we definitely are continuing to work through and deal with a very challenging environment for the insurance industry. And that still exists. We called it out in Q3. We touched on it a bit. I touched on it a tiny bit in this quarter. We did, however, see an exceptional sales result in the quarter. And what I would chalk that up to is the idea that the insurance companies can see the investment in Guidewire stretching way beyond the immediate economic conditions that they’re operating through right now. And even in some cases, thinking about Bag wire as a mechanism for dealing with these challenges more effectively if they have an agile, reliable core system that is not holding them back, but instead enabling them to connect with customers in different ways to open up new channels to brokers operate their claims processes more effectively.
So it is still a challenge. And I would say it does have an impact on the types of deals and the structures of the deals that we are negotiating and closing with these companies. But we were able to have, as I said, an exceptional outcome in the quarter. And so both things can be true. But — so that reality, I suppose, in the insurance industry still exists, and we’re working with our customers very carefully to help them navigate this.
Jeff Cooper: Yes, the only thing I would add is last quarter, we talked about being cautiously optimistic about our ability to transact through this environment. I think coming out of Q4, we’re obviously thrilled with our ability to transact. But we did see — and we talked about this in the prepared remarks, we are seeing some of these ramps taking a little bit longer than what we had seen historically to materialize into meaningful ARR that has that impact in FY ‘25 more so than FY ‘24. So we are continuing to see that theme that we kind of introduced last quarter a bit, but obviously thrilled with our ability to transact in the quarter.
Ken Wong: Got it. Got it. Yes. Great to see the fantastic results in this tough environment. And then, Jeff, just quickly on subscription and support gross margins, ’25, again, a nice step-up from where you guys are closing out in — I mean, sorry, ’24 from where you guys are closing on fiscal ’23. I guess when I look at the exit trajectory, you guys are at $58 million. Can you maybe walk us through some of the puts and takes in I guess, to — why would it be higher building off of what was a very strong Q4 number?
Jeff Cooper: Yes. Obviously ’23 delivered a lot of margin expansion. And over the last 18 months, this has been a huge focus for us. I think we’ve executed quite well. There’s a variety of things that we’ve kind of taken advantage of — to kind of have that move in ‘23. As we look ahead to ‘24, we have a lot of deals that were transacted. And so we’ll start to see those customers using the platform. We’re seeing our existing customers start to use the platform in a bit more scale. So we’re — we have that flowing through our model, combined with the overall revenue growth. But I think as we look ahead, we’re proud of the trajectory we’re seeing in ‘24 and how that sets us up for kind of both our near-term and long-term targets?
Ken Wong: Got it. Okay, fantastic, guys. Thank you so much.
Jeff Cooper: Thank you.
Operator: Thank you. Our next question is from Michael Turrin with Wells Fargo. Please proceed with your question.
David Unger: Hey, thanks. This is David Unger on for Michael Turrin, tonight. Just one for me. Great to see the meaningful cash on the balance sheet with a seasonally strong 4Q. Can you guys remind us the best way to think about capital allocation, pecking order at this point in the cycle? Thank you.
