Guidewire Software : 2020 Analyst & Investor Day Presentation

Guidewire Analyst Day

October 13, 2020

Safe Harbor

This presentation is for informational purposes only and is not an offer to sell securities or a solicitation of an offer to buy any securities, and may not be relied upon in connection with the purchase or sale of any security.

This presentation is proprietary and is intended solely for the information of the persons to whom it is presented. It may not be retained, reproduced or distributed, in whole or in part, by any means (including electronic) without the prior written consent of Guidewire Software.

This presentation contains forward-looking statements. All statements other than statements of historical fact contained in this presentation are forward-looking statements, including, among other things, statements related to our financial projections for fiscal year 2021 and our long-term operating model; expectations regarding near- and long-term trends in financial results, operating metrics, and key growth metrics such as ARR, Fully Ramped ARR, and Cloud ARR; competitive positioning and future demand for our products and services; the size of the future market opportunity for P&C core modernization and analytics; continued momentum for our business; expected growth in our partner ecosystem and marketplace; expected benefits of our shift to providing cloud-based services; the timing and nature of future product developments, including developments related to Guidewire Cloud Platform such as speed of cloud provisioning; and expected benefits to our customers from current and future products, including efficiency gains from further development of Guidewire Cloud Platform. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only current predictions and are subject to known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. These forward-looking statements are subject to a number of risks, including those described under the heading "Risk Factors" in our periodic reports we have filed with the Securities and Exchange Commission. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this presentation.

In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. See the Appendix for a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure. These non-GAAPfinancial measures may be different from non-GAAPfinancial measures used by other companies.

This presentation contains statistical data that we obtained from industry publications and reports generated by third parties. Although we believe that the publications and reports are reliable, we have not independently verified this statistical data.

The following is intended to outline our general product direction. It is intended for informational purposes only, and does not, and shall not, constitute binding agreements or contractual obligations of any sort. It is not a commitment to deliver any software or functionality. The development, release, and timing of any features or functionality described remains at the sole discretion of Guidewire.

Positioning Guidewire for Cloud Growth

Mike Rosenbaum, CEO

Property and Casualty Insurance Is Our Chosen Domain

Source: National Weather Service (Quad Cities Office). Image in public domain.

It Is Our Privilege to Have the Opportunity to Serve This Industry

Founded in 2001

And We Are Happy to Serve in Any Way We Can

P&C Insurance Is a $2.5 Trillion Global Industry

~1,500 insurers

Americas

EMEA

APAC

Tier 1 50+

>$5b

Tier 2

$1b to <$5b

Tier 3/4/5

<$1b in DWP

250+	$1,082b	$746b	$631b

~1,200Global

$2.5t DWP

Source: SwissRe Institute "Sigma, No 4/2020"; P&C insurance includes workers compensation, medical insurance and accident & health written by life insurers; Guidewire Analysis

For More Than 19 Years, We Have Delivered an Unprecedented Level of Customer Success

100% P&C

FOCUSED

MARKETPLACE

90+ PARTNERS

100s

of APPLICATIONS

CUSTOMER COMMUNITY

62

CLOUD CORE

400+ CUSTOMERS

INSURERS

TRACK RECORD

1,000+

IMPLEMENTATIONS

8

R&D SCALE

DELIVERY SCALE

700+

GUIDEWIRE

10,900+

PARTNER

CONSULTANTS

We Strive to Execute a Simple Mission Every Day

Be the platform P&C insurers

trust to engage, innovate, and grow efficiently

Every Insurer Is Driving These Three Essential Imperatives

ENGAGE		INNOVATE		GROW

Make insurance	Accelerate new	Achieve profitable
convenient through	product introduction	growth through
digital transformation		operational efficiency

All supported, enhanced, and optimized through data and analytics

Legacy Systems Are Still Holding Insurers Back

• 24-hour,batch-based systems prevent fluid, convenient customer interactions
• Rigid, inflexible systems hinder business agility
• Limited data capture and support for modern analytics

Resulting in 75% of IT budget spent simply "keeping the lights on" *

* Novarica Research, 2018.

Guidewire Delivers the Most Complete P&C Platform in the World

Digital Experience

Ecosystem

Core Processing

Policy

Claims

Digital

Analytics

Billing

Underwriting

GW for Salesforce

Risk Insight

Guidewire

Product and Data Content

Marketplace

Application Platform

Data Platform

Business

Admin/Developer

UI Framework &

Visualization & Machine

Access & Integration

Configuration

Tooling

Design System

Learning

Services

Tooling

Integration

API Gateway

Business Logic

Prep & Conformity Services

Acquisition & Intake

Framework

Engine

Services

DevConnect

Common Cloud Services

Alerts

Auditing

Authentication

CI/CD Pipeline

Discovery

Logging & Monitoring

Security & Governance

Provisioning

Implementation

& Operations

System

Integrator &

Consulting

Partners

Guidewire

Professional

Services

Guidewire

Operations &

Support

Cloud

Operations

Assurance

Services

InfoSec

Customer

Support

Cloud Infrastructure

A Platform Trusted by 400 Insurers Ranging from New Ventures to the Largest and Most Complex

Guidewire Cloud: Easier to Manage, Easier to Upgrade, Easier to Innovate

•	Starts with 19 years of experience: InsuranceSuite 10 and InsuranceNow	G
• Standardized infrastructure with Guidewire Cloud Platform
•	Built-in data and analytics		F
•	Externalized cloud-native services complementing the core		E
•	Six-month release cycles	D

CORTINA

Data & Analytics

Externalized Services

Guidewire Cloud Platform

InsuranceSuite 10 or InsuranceNow Base

Majority of Core DWP Opportunity Remains Untapped

Tier 1: >$5B DWP		Tier 2: >$1B to <$5B DWP		Tier 3/4/5: <$1B DWP
Guidewire Cloud		Guidewire Cloud		Guidewire Cloud
				Guidewire
		Guidewire		Self-Managed
Guidewire
	Self-Managed
Self-Managed

100% = $1,150 billion

100% = $730 billion

100% = $620 billion

DWP Penetration by Tier

Source: SwissRe Institute "Sigma, No 4/2020"; Guidewire Analysis

Majority of Core DWP Opportunity Remains Untapped

Core DWP - Americas		Core DWP - EMEA		Core DWP - APAC
Guidewire Cloud		Guidewire Cloud		Guidewire Cloud
		Guidewire		Guidewire
			Self-Managed
		Self-Managed
Guidewire
Self-Managed

100% = $1,082 billion

100% = $746 billion

100% = $631 billion

DWP Penetration by Region

Source: SwissRe Institute "Sigma, No 4/2020"; Guidewire Analysis

P&C Core Modernization and Analytics Present a Significant Market Opportunity

DWP Monetization (ARR)

+~$8b

					Analytics and Data Offerings
				That Complement Core Platform
+$2.5b			+$9b
Current Customers:
Expand DWP,
Cross-Sell Products,
and Upgrade to Cloud			New Customer Wins
$0.6b
Current Fully
Ramped ARR
					DWP Penetration

Source: SwissRe Institute "Sigma, No 4/2020"; Guidewire Analysis

We Continue to Achieve High Competitive Win Rates

Core System Decisions

Core System Decisions by DWP

GuidewireUndisclosed

Guidewire

		Guidewire
		(Cloud
Undisclosed		Upgrades)
	Guidewire (Cloud	Upgrades)

Source: Guidewire Analysis; includes DWP for new core system decisions, which is not necessarily incremental to Guidewire's total DWP under management. "Undisclosed" includes decisions where selected vendor was unknown or decision was to build internally.

Partners Engaged for Guidewire Cloud and Self-Managed Deployments

10,900 Guidewire-trained SI consultants

FY09	FY11	FY12	FY13	FY14	FY15	FY16	FY17	FY18	FY20
FY09	FY10	FY19	FY20

Certified Guidewire Cloud Consultants

700		632
600
500
400
300
200	74
100
0
FY19		FY20

Note: Guidewire Analysis: tracks total number of consultants who have gone through Guidewire training, self-study, or partner trained programs

Guidewire Marketplace: 600 Apps from More Than 90Partners and Guidewire

• Open, flexible, plugin-based approach accelerates insurtech innovation
• Poised to accelerate due to cloud adoption and standardization

Our Vision for Accelerating the P&C Industry Platform

	Marketplace
Leading P&C	Solutions
Platform &	Syndicated
Install Base
Data
	R&D
	Investment

Shared

Analytics

Cloud Customers

	P&C
Net New	Platform
Customers	Value

Our Priorities for the Fiscal Year

Continue to execute

Define clear upgrade

Unlock greater

Execute on cloud

on cloud

to Guidewire Cloud

platform value

business model

transformation

through analytics

Executing on Guidewire Cloud

Diego Devalle

Chief Product Development Officer

Cloud Transformation Strategy

• Based on proven InsuranceSuite 10
• Modularize InsuranceSuite core via APIs
• Extend with new cloud-native functionality
• Business-friendly,codeless configuration

Leverage

Proven

Platform

Transition

When

Ready

• Infused analytics for real-time decisioning

Proven Platform Modernized for the Cloud

Cloud-Native Extensions

InsuranceSuite

Guidewire Cloud Platform

Cloud Infrastructure (AWS)

InsuranceSuite

Fast Cadence Releases Began the Journey

2020	2021	2022
	Cortina D Release	E Release F Release

2020.1H	2020.2H	2021.1H	2021.2H	2022.1H	2022.2H
(May 2020)	(November 18, 2020)	(April 2021)	(October 2021)	(April 2022)	(October 2022)

Accelerates innovation and feature delivery with seamless upgrades

Guidewire R&D Profile
FY 2019	FY 2020	FY 2021
R&D Investment Allocation	R&D Investment Allocation	R&D Investment Allocation
30%	35%	20%	45%	10%	55%
		Bay
		Area

Self-Managed	Guidewire Cloud	Self-Managed	Guidewire Cloud		Self-Managed	Guidewire Cloud
10%	25%	10%	25%		10%	25%

Digital

Data & Analytics

Digital

Data & Analytics

Digital

Data & Analytics

Top Investment Priorities: Last 3 Years

Guidewire Cloud		Integration		New Product
Platform		Framework		Innovations

Investment Allocation by Release

60%

25%

15%

55%

25%

20%

Evolution of Guidewire Cloud Platform:

Limited Economies of Scale

Guidewire Cloud

• Lift and shift of InsuranceSuite apps unique to each cloud customer
• Single database clusters with custom resource provisioning per application instance
• Simplified system configuration (single app server)
• Custom network topologies and connectivity

Customer 1	Customer 2	Customer 3	Customer n

GUIDEWIRE CLOUD PLATFORM

CLOUD INFRASTRUCTURE (AWS)

Digital Channel		Application		Infrastructure
Configuration		Configuration		& Operations

Guidewire Cloud

Evolution of Guidewire Cloud Platform: Standardized PaaS for Efficiency and Effectiveness

• Dedicated to shared and isolated resources

Customer 1

Customer 2

Customer 3

Customer n

• Incremental scaling to on-demand and dynamic scaling
• Manual, error prone provisioning to automated, infrastructure-as-code provisioning
• Custom network topology to standardized and expandable network topology on single control plane (PaaS)
• Custom logging to unified approach to observability (logging, metrics, APM, etc.)

GUIDEWIRE CLOUD PLATFORM

(GWCP)

CLOUD INFRASTRUCTURE (AWS)

Digital Channel		Application		Infrastructure
Configuration		Configuration		& Operations

Guidewire Cloud Platform: Capabilities

1. Automated Cluster Management
2. Hybrid Tenancy Model
3. Multi-RegionDeployments
4. Authentication Service
5. Guidewire Cloud Console
6. Observability Services
7. Property/Configuration Service
8. Migration Services
9. Base Cloud Functionality
10. API Gateway

Provides elastically scalable runtime environment to create, configure, and manage Kubernetes clusters.

Supports running InsuranceSuite on multi-tenant cloud infrastructure that interoperates with multi-tenant cloud microservices.

Supports Guidewire Cloud deployments at scale across multiple regions worldwide.

Provides federated authentication service that integrates with Customer Identity Providers (IDPs) for platform access and authorization.

Enables self-service operational control and troubleshooting for cloud customers.

Provides integrated logging, monitoring, alerting, and metrics for all Guidewire Cloud workloads.

Enables externalization of InsuranceSuite configuration properties to support dynamic environment provisioning and setup by tenants.

Allows for migration and import of existing policies and claims from customer legacy systems.

Provides all the base cloud functionality needed for standard cloud deployments.

Provides single point of entry for accepting and processing all API calls that access core platform functions and services.

GWCP: Balancing Efficiency and Capability

2. Hybrid Tenancy Model

GWCP: Cloud Provisioning Improvements

2. Hybrid Tenancy Model

5. Guidewire Cloud Console

R&D Investments Improving Cloud Efficiency

Banff	Future Releases
100%
	CloudOps Process Optimization
GWCP
	Integration
	Framework

Note: Illustrative and not drawn to scale.

Simplifying the Cloud Upgrade

Sandia Ren, VP, Cloud Transition Practice

Guidewire Is Defining a Clear Path to

Guidewire Cloud for Our Self-Managed Customers

Guidewire Is Defining a Clear Path to

Guidewire Cloud for Our Self-Managed Customers

Defining and enabling the upgrade path

Guidewire Is Defining a Clear Path to

Guidewire Cloud for Our Self-Managed Customers

Defining and		Building tools
enabling the		and automation
upgrade path		for increased
		efficiency

Guidewire Is Defining a Clear Path to

Guidewire Cloud for Our Self-Managed Customers

Defining and		Building tools		Enabling
enabling the		and automation		successful
upgrade path		for increased		transition
		efficiency

Our Prior Cloud Upgrade Strategy Had a Stopover on InsuranceSuite 10

We Saw an Opportunity to Get the Majority of Implementations to Guidewire Cloud Faster

InsuranceSuite implementations by version

Now, InsuranceSuite 8, 9, and 10 Implementations Have a Direct Upgrade Path to Guidewire Cloud

InsuranceSuite implementations by version

The Fastest, Most Effective Way to Get to Guidewire Cloud Is a Direct Path

Begin realizing		Reduce complexity
cloud benefits		of upgrading to
faster		Guidewire Cloud

For InsuranceSuite 8 Customers, the Time to Act Is Now

Dates to consider

September 2020	July 2022
Primary	• Oracle 12.1 end of life
Support	• SQL Server 2012 end of life
has ended
• Java 7 support ends

For InsuranceSuite 8 Customers, the Time to Act Is Now

Dates to consider	Time to upgrade!
September 2020	July 2022
Primary	• Oracle 12.1 end of life

Support	• SQL Server 2012 end of life
has ended
• Java 7 support ends

Every Customer Has a Path to Guidewire Cloud

Upgrades have always been a part of	Guidewire is ready to partner with
the Guidewire value proposition	customers on their path to the cloud

Hastings Mutual Guidewire	Guidewire Cloud Transition Practice (2020)
Onsite Team (2004)

Unlocking Value Through Analytics

Roger Arnemann, GM, Analytics and Data Services

Insurers Need Analytics More Than Ever

Sharing Economy		Small Businesses		Work from Home		IoT

Catastrophes & Pandemics		Cybercrime		Social Inflation		Analytics TAM

~$8b

Source: Guidewire internal research

Exposures Are Changing Overnight

Joe's Pizza now does takeout only

Sally's Pizza now has outdoor seats and messengers

PredictAnticipate the Future with Guidewire Analytics

Past performance is no guarantee of future results

The Industry's First Closed-Loop Analytics Platform Makes Insurers Brilliant in the Moment

1. Leverage your data	2. Enrich your insight
•	Guidewire Data Platform	•	Cyence Data Listening Engine
•	Power app ecosystem	•	Cyence Risk Factors by LOB
•	Contextual risk comparison	•	Compare - syndicated data
		•	Behavioral & nonobvious data

Guidewire

Core

4. Learn continuously	3.	Embed intelligence
•	Continuous underwriting	•	Predictive Analytics - at the edge
•	Portfolio performance tracking	•	Model, build, deploy, and monitor
•	Outcome-driven model refinement	•	Bring your own model (BYOM)
•	Hypothesis A|B testing to quantify intuition	•	Open source integration

Succeed in the Growing Cyber Market

#1	$6t	$20b
Threat to	Global loss	Ransomware
US security	by 2021	global loss: 5/min
Source: Director of National Intelligence, 2019	Source: Cybersecurity Ventures, 2016	Source: Cybersecurity Ventures, 2019
	Cyence for Cyber
1,000+	47	1.2M
Data points	Risk factors	Policies
		Source: Guidewire system metrics, 2019

Improve Workers' Compensation Outcomes

$56b	40	cents	$10b
		per dollar
US direct	US expense	US reserve
premium written			deficiency
Source: AM Best, 2019	Source: NCCI, 2020	Source: NCCI, 2020

Cyence for Small Business Workers Comp

	700+	101	~1%
			Risk factors	Loss ratio
	Data points

improvement

Source: Results achieved by a Guidewire customer

Improve Auto Claims Outcomes

		6m	$185b	5-10%
		US auto accidents	US claims		US claims
		per year - 11/min	in 2019		leakage
		Source: Driver Knowledge, 2020	Source: Insurance Information Institute, 2020		Source: Cognizant, 2018
		Guidewire Predictive Analytics
							~3%
						1 day
		5 days
		Train a model				Deploy a solution		Loss ratio
								improvement

Source: Results achieved by a Guidewire customer

Drive Results with Guidewire Analytics

"Guidewire Predictive Analytics and Guidewire Cyence for Small Business have significantly improved our quoting process, resulting in profitable growth, increased new business, and improved customer retention."

"After conducting a review of data analytics services available in the market, we found that Cyence's data science capabilities and engineering expertise offered us the best solution to address the challenges of today's data-driven world."

Dominic Weber

Adam Rich

VP and Chief Actuary	Head of Underwriting Technology
Society Insurance	Beazley

Growing into a Cloud-Based Model

Jeff Cooper, CFO

Financial Highlights

Leader in the Large, Underpenetrated and Evolving P&C Insurance Tech Market

Growing Momentum and Leadership Position in Cloud Based Core Systems

Long-Term Customer Relationships with Very Low Churn

Cash Flow Positive with Strong Unit Economic Model

Direct Written Premiums Under License

$ in billions

10-yr CAGR

17%

$518

	$289
$107
FY10	FY15	FY20
Annual Recurring Revenue
$ in millions	10-yr CAGR
	23%		$514

	$219
$67
FY10	FY15	FY20

Note: Direct Written Premiums (DWP) are the total premiums an insurer receives for policies before reinsurance. Annual Recuring Revenue (ARR) includes the annualized recurring value of term licenses, subscription agreements, support contracts, and hosting agreements based on customer contracts. All components that are not expected to recur (primarily perpetual licenses and services) are excluded. Four Quarter Recurring Revenue serves as a proxy for ARR prior to 2018.

Benefits of Model Shift to Cloud

TAM Expansion

New Division of Labor with Guidewire Role Expansion

Spend on Core System

On-Prem Cloud

Guidewire		HW / Infra
Runtime			Implement / Upgrade

Customer LTV		Scale Matters More
Recurring Revenue	Choosing the Right Partner is

Consequential

Sticky Core Systems of Record

Market Share Key to Building

Vertical Industry Platform

Long Customer Relationships

Analytics and Ecosystem

Opportunity

Cloud Enables Guidewire to Best Service the P&C Insurance Industry

Note: Spend on Core System is illustrative and not drawn to scale.

Shift Is Already Under Way

Cloud New Sales Compare with Total New Sales

100%

75%

50%

25%

0%

FY16	FY17		FY18	FY19	FY20
			Cloud		Self-Managed

Note: New Sales is defined as incremental Average Contract Value from sales activity in the period.

ARR Normalizes for Divergent Revenue Patterns

• Subscription and Support Revenue

−	Ratable revenue recognition over the duration of the	$ in millions	$566
	committed term	$535	$538
−	Cloud software usually provisioned in 30-60 days post
	$514
	deal execution

• License Revenue
• • Upfront revenue recognition over the duration of the committed term
  • Standard duration is 2-year initial terms followed by annual renewals
• ARR
• • Annualized recurring value for all term licenses, subscription agreements, maintenance and hosting contracts
  • Excludes perpetual licenses and professional services
  • Aligns to annual invoicing amounts in ramped agreements

$471

$460

FY19	FY20		FY21*
		Subscription, Support & License Revenue		ARR

* Midpoint of outlook, provided on September 2, 2020.

Long-Term ARR Growth

$ in millions

ARR

$514

$67

$460

$412

$347

Four Quarter Recurring Revenue

$268

$219

$182

$150

$104

$82

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

FY18

FY19

FY20

Note: Four Quarter Recurring Revenue was defined as last four quarters of Term License and Maintenance revenue and was a proxy for ARR prior to our business model transition and adoption of ASC 606. ARR results are as of the FX rate at end of the respective fiscal year.

Cloud Momentum Driven by InsuranceSuite Cloud

Total Cloud ARR

$ in millions	2-yr CAGR

58%$155

$104

$62

FY18 FY19 FY20

InsuranceSuite Cloud ARR

$ in millions	2-yr CAGR

149%$97

$59

$16

FY18 FY19 FY20

Note: Cloud ARR is defined as ARR from sale of Cloud products only. ARR for InsuranceSuite Cloud (IS Cloud) is defined as ARR from IS Cloud deals only. For self-managed customers upgrading to IS Cloud, the ARR of the migration contract is accounted for in its entirety in Cloud ARR upon start date of IS Cloud migration contract, with the previous self-managed ARR being reduced to zero.

Ramped Contracts Provide Tailwind to ARR

Fully Ramped ARR defined as:

• Annualized value of recurring revenue at year five for ramped contracts
• Ramped pricing agreed to with customers and based off pricing schedule outlined in contract
• Pricing schedule may extend beyond the committed contract period
• Pricing schedule is time-based and not milestone based

			Fully Ramped ARR			Aggregated Ramps: InsuranceSuite Cloud Deals Since FY2018
$ in millions
	2-yr CAGR		$610
		Backlog		18%
		ARR	$545
			$440

FY18

FY19

FY20

YR1

YR2

YR3

YR4

YR5

Note: Aggregated Ramps shows the incremental ARR from InsuranceSuite Cloud deals signed in FY2018, FY2019 and FY2020 and aggregated into a single cohort. This analysis only includes incremental ARR as a result of the InsuranceSuite Cloud deals and excludes any existing ARR that the customers had prior to signing the Cloud deals.

Aggressively Investing in Cloud

Subscription & Support Revenue Mix

Subscription & Support Gross Margin

27%77%

66%

21%

55%

17%

FY18

FY19

FY20

FY18

FY19

FY20

Note: Subscription & Support revenue mix is defined as Subscription and Support Revenue as a percent of Total Revenue. Subscription and Support Gross Margin is reported on a non-GAAP basis. For a GAAP to non-GAAP reconciliation please see the appendix.

R&D Investments Improving Cloud Efficiency

Banff	Future Releases
100%
	CloudOps Process Optimization
GWCP
	Integration
	Framework

Note: Illustrative and not drawn to scale.

ARR Acceleration As the Industry Embraces Cloud

Cloud Upgrades

Convert previously modernized self-managed systems to our Cloud offering

New Core System Wins

Large amounts of DWP is still managed by legacy systems

New & Existing Customers

Complement the Core

Capitalize on our "Strategic High ground" in the core to sell value added offerings

New & Existing Customers

Existing Customers

NON-GAAP

Model at $1b and $1.5b in ARR

			Cloud Transition Phases
	Early		Mid	Late
	FY20A	FY21
		Target Model
		Midpoint Outlook
ARR	$514m	$566m		$1b	$1.5b
Cloud ARR %	29%	35-40%	~75%	~95%
Total Revenue	$742m	$728m		$1.2b	$1.7b
Subscription & Support	55%	39-41%	66-68%	73-75%
Gross Margin
Total Gross Margin	61%	~55%	60-62%	66-68%
Operating Margin	14%	0%	14-16%	26-29%
Operating Cash	15%	9%	17-19%	29-32%
Flow Margin

Note: FY21 midpoint of the outlook is from the outlook provided on our earnings call on September 2nd, 2020. Margin numbers are non-GAAP. For actuals, please see appendix for a reconciliation of GAAP to non-GAAP numbers. Operating Cash Flow Margin assumes company is not a cash taxpayer.

Capital Allocation Prioritize Organic Growth and Inorganic Flexibility

$1.4b

~$200m

~600m

~$600m

• Recurring revenue model with upfront payments results in efficient cash generation
• Minimum Cash reflects:
• • Conservative customers base that values liquidity
  • Long-termnature of customer commitments
  • Early stages of Cloud transformation
• Potential M&A reflects desire to maintain balance sheet flexibility to pursue inorganic growth opportunities
• Returning excess cash to shareholders through open market share repurchase

Minimum Cash Potential M&A Excess Cash

Note: Cash balances are rounded to the nearest $100 million.

Q&A

Appendix

Customer Definition Update

• Updated customer definition in Fiscal 2020 resulted in a lower aggregate count due to insurers previously counted as customers being consolidated under a single contracting entity
• As of July 31, 2020, we had over 340 customers using this updated definition, approximately the same number as of July 31, 2019
• Customers may represent multiple Insurance Brands and we have over 400 insurance brands using our software
• As of July 31, 2020, we had 303 customers who have licensed one or more of our Core products, or core customers, for a total of $518 billion in DWP under license
• As of July 31, 2019, we had 300 core customers for a total of $504 billion in DWP under license

Note: Core Customers include customers who have purchased BillingCenter, ClaimCenter, PolicyCenter or InsuranceNow.

Reconciliation of Non-GAAP Subscription & Support Gross Margin

	2018	2019	2020	2021 (E)
GAAP Subscription & Support	59%	51%	42%	31% - 33%
Gross Margin
Non-GAAP adjustments:
Total stock-based
3%	3%	4%	3%
compensation
Amortization of intangible	15%	12%	9%	5%
assets
Non-GAAP Subscription &	77%	66%	55%	39% - 41%
Support Gross Margin

Reconciliation of Non-GAAP Gross & Operating Margin

		Stock-based	Amortization
As % of Revenue	GAAP	of Intangible	Non-GAAP
Compensation
		Assets
2020
Gross Margin	54%	4%	3%	61%
Operating Margin	(3)%	14%	3%	14%
2021 (E)
Gross Margin	49%	5%	2%	55%
Operating Margin	(21%)	18%	3%	0%

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