Guidewire Software, Inc. (GWRE) Earnings Call Transcript & Summary

And we're live again. Thanks for joining us for the first and hopefully, recurring Bank of America U.S. Insurtech Conference. I'm broadcasting live from One Bryant Park in New York City, Bank of America headquarters. It's a very hot day in New York City. I keep saying so, and it's true. But for this segment, we're going to change things over a little bit, and we're going to go out to the Bay Area, where we have the Guidewire team who are ready to take over here. And my colleague, Brad Sills, is going to be doing most of the Q&A here. We do have the Veracast software, which you're watching if you're watching me right now. And on that software, you can type in a question, and I will ask the question. Unfortunately, I hope this is the last of the virtual conferences that I do because I'd love to see everyone's shining faces but you can't ask questions. So before I turn things over to Brad, a few introductions. From Guidewire, we have Priscilla Hung. She is President and Chief Operating Officer. She oversees product development, security, cloud operations, customer success, alliances, corporate development, venture investment and enterprise business operations. Priscilla jointed Guidewire in 2005 from Ariba. She is a veteran of Sun Microsystems, Uniface, Compuware, Pyramid, Oracle, Siemens. She sits on the board of Vonage. We're really pleased to have her. We also have Alex Hughes, he is also on. He's the VP of Investor Relations over at Guidewire. And he is an Investor Relations veteran. I just went through the long list of places where he's provided that service, and it's astounding. And we have our very own Brad Sills, who covers enterprise software for us. He's been on Wall Street since 2005, was at Barclays before joining us here at Bank of America. And he also has corporate-size grids and Microsoft and Ariba. And so we're just really pleased to have Brad here. And I'm going to quiet down at least for part of this, but remember, ask your questions, I'll pipe up. Let me turn over to Brad. Thank you all 3 of you for coming, and I'm going to pipe down.

Thanks, Josh, and thanks Priscilla and Alex for joining us. Can you guys hear me okay?

Yes.

Great. Okay. Excellent.

Well, good. Well, it's great to be with you Priscilla. Priscilla and I actually used to work together at Ariba. So it's great to be working with you again here today, and it's been a lot of fun watching Guidewire over the years under your leadership. So thanks for joining us. Alex, thanks for joining as well. So as Josh said, we have some questions here that we'll go through that we'll kind of ask you, Priscilla and Alex. You guys chime in where you'd like. And we'll hand it over to Josh. He's got -- I think he's got some questions he'd like to pose as well. So with that, why don't we just get started? Again, so thanks for joining. So everyone in the property and casualty industry is aware of Guidewire. It's a brand name, tech provider that we've all followed over the years. Why don't we just start kind of high-level company history? What was the impetus for starting the company? And where is the company today in terms of they're addressing the evolving needs of customers? So why don't we just start with just kind of a little bit of background on Guidewire and kind of the history of the company.

Absolutely, Brad. Thank you for having us today. I'm very delighted to spend some time with you and the rest of the group today. The Guidewire history, I can speak about that for an hour. I would love to be brief. So please, if you have additional questions, feel free to share. So Guidewire was founded in 2001 and the whole premise and the mission of the company, honestly, in the last 20 years has never changed. We're steadfast and laser-focused in one and only one huge market, which is the underserved $2.5 trillion premium a year property and casualty space. And right from the beginning, our mission has been to provide technology, modern technology, to allow the P&C insurance carrier, to engage with the customer, to run efficiently and also to innovate. Now when you first started, I would say that our mission was to transform the P&C insurance industry simply from the green screen cobalt-based mainframe systems that are hugely custom-built, cranky, archaic, and we would like to transform them to Java with on-prem paradigm. And we have been successfully doing that in the last 15 of the 20 years of our history. And as a result, we enjoy being our leadership position of the industry. And today, if you look at the broad market, roughly about 25% of the global DWP is under Guidewire management. Now I would say that in the last couple of years, while the mission has not changed as the modality and paradigm under which we deliver that transformation has changed as public cloud infrastructure like AWS, Azure and others become much more popular and trusted and mature. So therefore, about a couple of years ago, like starting with about 2015, we started to transform our business model from on-prem to cloud services. But the core mission has not changed. And how do we deliver that transformation and the positional value to the P&C insurance industry and using -- leveraging the cost, take advantage or pull the benefits, technology benefits and fast access to innovation and so on and so forth of cloud services. And there are 2 other things additional to that, right? And one is digital transformation, the other one in data analytics. So digital transformation. We all know that we can hardly leave the phones behind. It's almost like we're missing a limb. And that's only one aftermath of it. I think all the consumers around the world, especially consumer of insurance industry and also the last few generations are in the long accepting no digital interface with any of the providers, including insurance companies where they buy product. So therefore, the whole digital transformation is front and center and has always been one of the strategic imperatives of this industry. Now as we all know in the last 15 months, COVID accelerated that because during COVID, we're all locked down, we couldn't go out. So how do you actually serve your claimants if they have an accident and they want to file a claim. They have a hailstorm damage to the roof, how do you actually process the claim without sending an adjustment on site, right? And also the increased authorization of IoT and intelligent devices like intelligent cars, intelligent home, all this stuff, really necessitate the acceleration to action because of COVID. Now the other thing that layer on top is the whole topic of data analytics, which all by itself is a huge market. You think about what Guidewire do is, we provide core system to the insurance industry on-prem and also now in the cloud. Core system really has the entire book of business that the carriers chose to run in Guidewire in the operating -- in our systems. So imagine that it is a well knowledge. Being able to extract recorded, analyze it and also intelligently using machine learning or artificial intelligence solution from Guidewire using close to processing, you're really able to equip the carriers to really make intelligent decisions and serve the customer better in real time. So I would say that, in short, the mission has not changed since the founding of the company, but the modality has changed. We're now emphasizing on cloud, layer on top data analytics and also enable our customers to transform digitally.

Do we have a [ guest ]?

I don't have a question.

Sorry about that. My audio cut out, but I think I'm back online.

Okay.

Sorry about that. Okay, great. Excellent. I got all that, except for the [indiscernible] Priscilla, and there's a lot to dive in there. So we'll get to that. We'll get into all those different areas that you mentioned that the company is innovating in later. But you mentioned earlier a $2.5 trillion TAM. It's a big number, obviously. How do you think about where Guidewire plays within that bigger premium TAM, if you will? How do you just -- how do you view the addressable market? What is the penetration today? And where is the incremental opportunity for Guidewire to pick up more share from here?

Absolutely. So as I mentioned earlier, the market is $2.5 trillion. And right now, only 1/4 of that, according to our estimation, is under management by the Guidewire system. So first of all, there is still huge 75% of the $2.5 trillion out there up for grabs. And according to our market research, up to half of those remaining 75% are still using green screen, cobalt, mainframe systems, right? So eventually, the last cobalt programmers would walk out of that data center, right? You're going to have to find a way to move your system of record and your business processes out of those mainframe systems. So it's not really a matter of if it's going to happen, it has to happen, right? So those are all remaining huge opportunity for Guidewire to go back to the core is to transform these core system to the cloud. Now if you look at the existing installed base, right, the 25%, we are the only system, core system in the market today that serve all markets from the most complex biggest Tier 1s all the way to the Tier 3, 4 systems. Our system can serve the small and it can scale up to the really big multinational global insurance company. So not only that, if you look at installed base, the share of wallet we have those customers are not necessarily 100%. So the whole principle of land and expand and increasing share wallet just within the installed base ourselves, but then about $2.5 billion of ARR additional routine [indiscernible] just for the installed base. Now how do we do that, right? First of all is, the bigger the customer, you will be surprised that they're still running the core system operations across the heterogeneous environment. Now of course, we were like 100% of those running at Guidewire, but that's not the case. We still have a lot of very big clients that are still running on mainframe, right, within that installed base. Those are the opportunities to [indiscernible] them to the Guidewire cloud service. And also, we have opportunities to serve them using Guidewire cloud. When a customer would like to now take advantage of the elasticity of the cloud to very quickly spin up new products, target new audiences, new geography. In the past, if it is only on-prem, it might take like a year or more to be able to launch that offering. But to take advantage of Guidewire Cloud, we have many clients that start greenfield or lab projects or test and learn in nearly weeks, right? So without cloud, it would not have been possible. So those are all greenfield and lab opportunities of Guidewire. And in the last and greenfield opportunities, I would want to add that does not only apply to installed base. It applies to the remaining 75% as well. For new logo and new customers that are not currently Guidewire installed base, we can first capture those opportunities by having them use the Guidewire system when they start new business, almost like an entree into the book of business so that they can gain confidence with us, familiarize themselves with our cloud services before they find new pool trigger to take the remaining large book of business to the cloud, right? Those are our sort of our principles. But of course, layer on top of that is what I mentioned earlier, because we do have, in addition to the cloud, complementary but super valuable portfolio to offer to all market like data analytics and also the digital transformation as well on top of that. So we think that we -- even though that we are a 20-year old business, there's still tremendous untapped opportunity for the company.

Sure. Absolutely. And you mentioned earlier, Cobalt. I mean this is such a legacy technology. We look at market share data from some of the industry analysts like IDC and Gartner, and you have that pack man chart that just shows a small sliver of core systems for insurance that is just packaged software. And so I guess my question is, what is it about the industry that is such that the adoption cycle, forget about cloud, but even just a modern system like yours that is fully integrated across the core 3 systems, even that adoption cycle is still fairly early on. So maybe if you could just comment on the existing environment. What is it about this industry that is kind of slower moving, if you will, to modernize? And what is the catalyst for a customer to -- what is the pain point that they're dealing with when they come to Guidewire for a change in implementation?

Well, absolutely. So there are a couple of things. So first and foremost, the insurance industry overall is about accessing risk, right? And so inherently, it is a very conservative industry and any change is a risk. And they're also very, very thoughtful. Now if you look at the Guidewire system that we offer to the market, it is just not any bolt-on marketing system, so to speak. It is a core system. Core system meaning that -- and the claim system. It is a policy underwriting and management system. And this is a billing system. That is the heart, the pumping, the core business processes of any giving insurance company. It is absolutely mission-critical. If we all have ourselves today, how we had transplant would you like to do? I think we have a choice is 0, right? But if you heart is broken, right, you're going to have to make a choice. So I think that the way I see this is we are in the heart of the insurance company. So they were going to be having a very long thoughtful process to make sure that they understand what the risks are and they gain confidence in you. They know that you are the partner. They know that you'll be right there with them in the good times and the bad times. And also many of those, to be honest, would like to wait and see, right? So even within this very conservative market, we still have [indiscernible] who are innovators who are within this conservative market. It is a [indiscernible], right? Those are about what the early adopters of our cloud services. But however, when you think about like what is the motivation to act is for the back half of that population who are in the wait-and-see mode, I can say that it is very hard to find a single CIO that do not already have some form of a cloud agenda. Now they may not want to add today. It might be a year, it might be 3 years or 5 years from now, but everybody that we spoke to are thinking about it in the varying different stages of making that transition. So for those wait and see, what we need to do is to continue to focus on what we do. We need to continue to execute, continue to make sure that our cloud service continue to mature and improve every single day with laser focus on customer success. We are very, very, very focused on making sure that every single one of our cloud customers no matter how big or small they are will be successful and have a pleasant experience running the core system and account service. So once you continue to build up that portfolio and confidence, it will be shared with the rest of the market, and that's where an adoption will really kick in, right? And also, of course, as I mentioned, things move, right? So we're living in the digital world and also the customer would love to make intelligent decisions. And it's really difficult to do that like you are still seeing on the mainframe system, right? You can put what I call listing on the pig to snap on digital insurtech and do a customized integration to your back-end, it might -- that is just kicking a countdown the road. But eventually, you're going to have to transform the core. So we are right there with them when they are ready. And there are many reasons as well because the underlying infrastructure running on plan systems today are all in varying stages of being [indiscernible], thinking about the databases, thinking about the web service, all that stuff has a very different stages of EOL. So our customers would need to think about how long do they want to sit on an obsolete technology stack, right, so that is also a motivation stuff.

Absolutely, absolutely. That makes a ton of sense. That's great. And so you -- earlier, you alluded to the Guidewire Cloud platform. Obviously, a lot of work, a lot of re-architecture that is in there for the cloud. Maybe if you could elaborate a bit on what is the platform? And how is it architected for the cloud? And then also, maybe it would be helpful to compare that to the self-managed cloud that you also offer. And so you've got the different options for the cloud. What makes it attractive for one versus the other? Maybe we could just start with just the GWCP. What's in there today? What is the -- there's been a lot of effort on the engineering side to rearchitect it for true cloud. So I think if you could elaborate on that, that would be helpful as well, please.

Absolutely. Absolutely. So GWCP put already in Guidewire Cloud platform. So I would say that before I articulate what it is, I would like to share with the audience in terms of what is our approach or strategy to really transform from an on-prem solution to the cloud, right? So early -- a couple of years ago, when we think about what is the best way that path forward, there really wanted to wait. One is you abandon ship, you forget about this on-prem investment for like 15, 16 years and completely start with a completely brand-new coal line and develop a SaaS software. Or we do what we do today, which is rather than completely abandon what we had is to preserve what we have developed over the years and also preserve the existing investment sometimes can be decade of investment of the on-prem customer, investment than not. And what we do is we slowly and gradually developed a multi-tenant, highly efficient technology platform underneath it, we call it Guidewire Cloud. And also we provide signs of services like microservices, arraying or payment or disbursement and slowly and gradually refractor some of the monolithic on-prem technology to the cloud. This is like what we believe is the best way to approach it because 2 things, that is what our customer wants, right? Imagine that we tell them the only way for you to go to a car is to forget about what you have and completely to reimplement that will be a much harder combination, right? And the way that we do it by slowly and gradually taking the modern look and have won efficiently on our cloud services and off net by more and more cloud services in this hybrid single-tenant and multi-talent approach is the best way to facilitate a smooth transition of the installed base to the cloud. Now what is the difference? The difference is when you're on-prem, we develop the software, we ship it to you and you run it on your data center. So you implement it with the SI or the professional services, but ultimately you own the application management of the Guidewire Solution, including ongoing maintenance, including all the upgrades. When you're in the on-prem paradigm, our releases, new releases is usually shipped every 18 to 24 months. So -- and because these are complex systems, and our customers typically have very complex and customized integrations and because we're very flexible, right, so that makes the upgrade pretty expensive and pretty involving. Now oftentimes, our customers don't upgrade every release, meaning that they don't upgrade every 18 to 24 months, and they typically skip the release. So that means that your ability to access the latest and greatest feature and function, it's like a 4-year cycle, right? So that is not the [indiscernible] to access innovation. And also the upgrade itself is consuming, right? So then if you go to the cloud, we are responsible to update all the releases for you once you take your book of business to the cloud, right? So we're responsible for the entire application management cycle for the Guidewire cloud service, right? And the release cycle on GWCP is going to be every 6 months for the [indiscernible] release, the bank release, the Cortina release, which was the latest release that we offered to the market. Every 6-week release, a necessity, a couple of things and is very welcome by customer. One is, you no longer need to do those expensive forklift upgrade yourself anymore, right? It's our responsibility. And every 6 months allow you to break big IT projects into small chunks and allow you to access innovation, new features benefit much faster if you choose to, right? Now -- and all these resources that our customers used to dedicate to having to manage Guidewire on-prem now can be redirected to do something else that could help to grow the business or be much more responsible for the business need. So all that is incredibly valuable to our customers. So I think that is the kind of main difference between on-prem and also cloud services. And also, I think the division labor is different and also the business and the technology value that can divide from the cloud is very motivating for our customer to adopt the cloud solution.

Absolutely. No, that makes a ton of sense. Okay. Great. And earlier, you alluded to the ecosystem. Maybe we could shift gears to the marketplace. I think it'd be helpful to kind of explain what that is? And what value does that bring to your customer base?

Absolutely. So if you look at implementing Guidewire any core systems, right, it is tiny complex because each customer has varying degree of complexity in managing the business. The more -- the bigger you are, the Tier 1, 2, the most complex and customized or business process we sell in order to serve the customer competitively. Now one of the key cost of implementing and maintaining any core system is the cost of integration. Now integration could be integrating some of -- more of the customized code that the customer develop themselves or the third party, right? Many customers have somewhere between 18 to 40 integrations to third-party company. So our paradigm has always been from day 1, ever since I joined the company, is to embrace and [indiscernible], the biggest, the better or solution technology partnership. The reason is that more of these ISV join our ecosystem. And being able to provide the kind of prebuilt integration to our core, faster it is for our customer to adopt the complete solution end-to-end, also including all these complex and numerous integration. So that's -- what is marketplace? Marketplace is really is the common platform, customer and partner facing like for all these ISV solution partner to offer the prebuild integration that is downloadable from this one common repository. So today, we have 120, according to our last report in Q3, 120 entities, companies who have some varying degree of prebuilt integration to be downloadable in the marketplace, we have 700 assets today that our customers can have access to. So I think that we're going to continue to emphasize on the marketplace, and we're going to recruit more and more of these partners, and so that we can continue to drive the cost of integration down, continue to promote adoption of Guidewire cloud services and continue to allow our customers to access more and more innovation, including insurtech that is not necessarily directly available from Guidewire.

Makes a ton of sense. Okay. Great. And then back to the cloud discussion earlier. You mentioned the Guidewire cloud platform, the multi-tenant benefits and the single-tenant hosted option. What -- when does it make sense for a company to go to one versus the other? What are the hurdles to multi-tenant feet? And what are the benefits? I know you alluded to it earlier, but I think maybe just to elaborate it a little bit more, double click on that concept.

Absolutely. So first of all, our [ customer ] today is a combination of multi-tenant infrastructure provided by the backup cloud platform in addition to single tenancy that we are running the customer in a single-tenant modality, and also we never share data among customers. So it is a single-tenant and also multi-tenant combined environment. And to be very frank, when referred to embark on this journey a couple of years ago, the customer not necessarily came to us and say, "Can you give me one of those sales force or workday like multi-tenant core solution?" Not a single person asked for this. What they're asking for is, "I would like you to help me to not having to upgrade again," right? I would love to be able to access your new features and innovation much, much quicker, right? And I want to have access to prebuild integration so it might drive my ROI, the return on investment in a level that, my management would continue to support the project, right? And I would like to be able to respond to the market much quicker without having to do all these things well within weeks, not months or years. So those are the actions of the business and technology requirements. So we come up with this modality to answer those needs for the market. Multi-tenanting not -- it's not the reason for us to provide the cloud services. It's just happening to be the way we offer this purpose-built car solution, right? So therefore, in terms of like adopting Guidewire cloud, it's going back to what I mentioned is all these problems that our customers have been facing over decades, they would like them to solve it and to solve them by looking them to the cloud.

Sure, sure. That makes sense. And so multi-tenancy is not today, at least not an option. How do you gain efficiencies and scale in the kind of single-tenant hosted model that the GWC platform? There's a lot of scale already built into it by virtue of the fact that it's microservices-oriented, and I know there's a huge engineering effort behind that. And with the Aspen release in particular. So if you could just elaborate on just the sources of leverage over time as you guys embark on this new architecture around micro services that are kind of built into the GWCP?

Yes. Exactly. So your comment about the multitenancy, it's not available. It's -- I would say, it's hardly true, Brad, right? So because the customer is not like I want a multi-tenant solution, and we don't give it to them. It is not something like this. But in fact, the carrier would never allow the data to be shared, they will much prefer the modality that we have today, which is one more instance, 1 year instance and they want to make sure that they're not sharing, right? So -- and we're all right with that. Now in terms of the multi-tenancy of the basic infrastructure of GWCP running a war, running the web services. And this is something that we can through volume and also through aggregated resources, we believe that we can run it much more efficiently than an individual customer doing the project themselves, right? So I think that, that is where we create leverage and that -- and also, of course, the more we practice, the better it is, right? And now we're [indiscernible], we're a lot more mature than what we started back in 2015. So I think that right now to take advantage of multi-tenancy is to, for us, to run the service a lot more efficiently compared to the customer. In addition to the fact that they don't have to worry about that, right, they don't have to worry about buying hardware, buying software, buying database licenses, acquiring dating data center, and they can actually really pivot those resources to do something that is probably much more beneficial to growing the business and responding to the market need.

Makes a ton of sense. Great. Excellent. Well, Josh, I want to turn it over to you. I know you had some questions as well.

Well, so first off, coming out, there's a question from the audience. I guess they're lingering from the previous session. And they said -- the question is as a core and mission-critical system platform for so much the insurance industry, is Guidewire able to purchase as much cyber insurance as it desires and needs?

Okay. So in terms of cyber insurance, that's an interesting one. So as you may know, we do have a cyber analytics platform today called Science Swiss Analytics, and we have been offering that to the market for quite some time right now. And we heard a lot about cyber attacks and all the stuff going on, which is like terrible. Now however, if you look at the insurance industry, the -- right now, not that many carriers are writing type insurance today, okay? I think that the top 10 is the majority of the market share of the total market. So -- but we do think that, that will go eventually and that the risk continue to increase. And also the more and more people desiring to buy this sort of cyber insurance product. So I would say that the science with [indiscernible] product is why they do serve the carriers who are willing and understand how to underwrite cyber insurance, right? So -- but we need that market to grow. We need more and more carriers to believe that it is an insurable risk, and they understand that will accumulate risk in sort of how to price it? And to what kind of audience? How do you rate it? So I think that as long as that market continue to grow and continue to have more than 20 top insurers offering cyber insurance, then the ability for us to offer the cyber analytics to the market will continue to grow. With that said, the technology platform, which we call the data listening platform, it's basically the basis of the core technology to enable us to service the kind of a final risk analytics to a customer. It's not only tied to cyber insurance. We can use the same data listing platform to apply to traditional lines of business, which we're doing that right now. We're offering to small business. We're also thinking about expanding to other line of business like Worker's Comp. So I think that even though that we do have a line of business that we address that is cyber, we can leverage to core investment in that platform to other traditional lines as well.

And I guess just the nature of the audience question, I guess they also want to understand what the Guidewire's cyber need is for itself. Given that you have so much data, you are oral for the insurance industry, how well protected are you? How well protected do you need to be, given all the data you have access to and whatnot. I think that they want to understand your -- and then I think the question might not even be such [indiscernible], we were trying to frame the size of the cyber market. And so you might be a good example that we can learn from a little bit. But here we are, we know more about it than anybody. And here's something we think we need.

Yes. Excellent question. So different question than the question being asked in the fall. Now one of the very, very important responsibility for us providing the P&C insurance of cloud service is security. And we have quadrupled or more the investment in the team within Guidewire information security to make sure that with all the processes, all the compliances, we have the right skill set in-house expanded by people that we need to hire from the outside. We need to make sure that we have a secure product development life cycle. We make sure that we have all the [indiscernible] related before all these basic hygiene are becoming the most secure and most scalable, much more trusted -- most trusted P&C insurance cloud service like that, we are not going to keep, we're not going to give us that. Now back to the point I made earlier that we are serving the most conservative risk-averse sector in the market. If there is a breach, it doesn't matter how fast we run or how we perform and how much they like us. It's going to house really devastating impact to us and our relationship with our customer. We just can't let it happen. So with that said, from a technology process and people perspective, we will do everything we can and we'll try to improve every single day, right? And there are some big components that [indiscernible] offered by the government, and we're going to do that and more. The second thing is, we have to understand that we are offering cloud services to very sophisticated clients in the Tier 1 and the Tier 2, who have been running their own on-prem premises with much security, right? So they know what they're doing, and they know what they are giving up, and they allow us to take over the whole implementation. So with that said, we have to make sure that we, at least, be as secure as for our customers have been running their on-prem and more. So that will be motivated to hand over, right, the Guidewire core allocation management to Guidewire on the cloud. So all things considered, it is incredibly important, not only cyber, right, not only cyber. Now of course, just like any other enterprises, we're not any special. We are exposed to cyber attack just like everybody else. But I would say that internally from IT processes and development and also in mission security perspective, we're doing everything we can in order to make sure that we're the most trusted and most secure platform out there.

And given, I mean, look, after your discussion, I mean, there's so much optionality right now with what you guys can do in terms of your core business, your expansions, your deployment of capital. I guess like internally, we were sort of say, like backward looking 5 years into the future. How should we judge your deployments? And what measures do you think internally are you saying, "Well, here's where we could go. There's so many ways to measure it." How are things going to look differently and how we know that the business plan was a success? What are your internal sort of goalpost that you're using to frame in the next 5 years?

Absolutely. So that in our earnings call, if you follow it, I think that Jeff Cooper and my CEO, Mike Rosenbaum also have discussed about how investors should think about how to measure us. So I think that, that will continue to be the case. Now from the internal business perspective, I would tell you that our goal is continue to rely the focus on serving the property and casualty space. Now you can say that why not expand to other verticals. But if you think about focus, think about what needs to get done and the remaining market, we still have 75% out there of the $2.5 trillion DWP that are not under Guidewire management, it's a full graph. So our eyes on the ball to transform that mainframe core of the remaining 75% of the $2.5 trillion to use the Guidewire Cloud service. That is a big bogey, right? And also, again, going back to the installed base that we're not 100% shareholder yet. There is still a lot of rent and expand opportunity for us. And also, when you think about just the InsuranceSuite core, we have 300 or so of those customers. Right now, we only have like 10% using Guidewire Cloud. We have 90% of our core system today waiting to be taken to the cloud. That is a lot of opportunity. So internally, for instance, how our [ measure ] operations [indiscernible] to the Street is customer acquisition, customer satisfaction is incredibly important because we have to build the reputation, build and continue to build the confidence so that the remaining the customer weighting would be -- would gain more confidence to go to the cloud. So we need to continue customer success. So what I would say is continue customer expansion, customer acquisition and also the robustness and maturity of Guidewire Cloud platform, right? Now even though that we're now on the third release, it is still only the third release. This is a 20-year old business. The third release, meaning that 18-year-old multi-tenant GWCP. We have a lot of top to grow in order for this platform to continue to better and better every day. So we stated internally, our measure customer success and that will measure the velocity of acquisitions of Guidewire Cloud services.

And we think about 25% share, there's going to be some competitors who have an adjacent product to yours. There's going to be some customers who need what you offer, but just don't choose to buy and maybe they're going to be unsuccessful. What is a share of the market that we should think about that? If Guidewire had X share, penetration is getting to where it should be. Is that 50% of the market? Is that 70%? What is the reasonable shares like this is saturation or at least approaching saturation?

So first of all, we are far from saturation, right? So it's only -- yes. So today, it's our saturation. A little bit years and years. I mean 10 years from now, I might still say that you thought saturated. But at this point, we don't see the line of sight of saturation at all. So first of all, we continue to execute in doing what we're doing. Now of course, there are competition. And -- but I would say that the competitive landscape hasn't really changed for us, really. Now we have a lot of insurtech, but they don't really do what we do, like the breadth and depth, and the scalability is not comparable to what we can offer to the market. But the traditional competitors is the same old view that we have seen in the last 20 years is really hasn't changed. So therefore, we just continue to execute. We continue to aim to be better. And honestly, if you ask me, I would say we want to aim at 100% penetration of the remaining open market for us, right? Anything less than that would not be our goal. That I'll be happy with. Now -- but is it really realistic that we're going to win 100%? Probably not, but we'll definitely try as hard as we can to win all of them, right? It's how we're thinking about it.

I would just add on that. I mean, obviously, in vertical SaaS, there's the potential for a higher share than you would see in horizontal. In our case, we have a tremendous asset in our customer base. So we have over 400 insurance brands running on Guidewire that have very complex workflow. So for us, it's about moving them over to the cloud, moving meaningful DWP to the cloud and demonstrating to the rest of the industry that hasn't yet modernized that if you're going to pick any one, you're going to pick Guidewire. And if we execute on that, then I think that unlocks a lot more market for us. And really, the options for those customers, I think, aren't that vast. I mean it's going to be Guidewire or do the same.

I just want to say you're at the wire here. And I really appreciate Priscilla and Alex for sharing your time. Brad, too, I mean, coming from my corps really help me out here. Thank you so much. I wish you the best. I received questions as they're coming in, happily forwarded them on to you. But if you want a feedback, we'll try and get them. But good luck. Ours is a very interesting story, and it's [indiscernible] how the technology in terms of cross-pollinating together. Everyone be well, and we'll be in touch. Thank you.

Thank you very much, Josh and Brad. Thank you.

Thanks, Josh.

Thanks, Josh. Thanks, Priscilla. It's a pleasure, and Alex.

Thanks, Brad.

Thank you.