William McNamara : Okay, great. Thank you.
Mike Rosenbaum : Thank you.
Operator: And our next question comes from the line of Rishi Jaluria with RBC. Please proceed with your question.
Rishi Jaluria : Wonderful. Thanks so much for taking my questions. I wanted to maybe start out with coming out of Guidewire Connections. One of the pieces of feedback we got from the partners is cloud demand is definitely really strong and customers are very much interested in migrating to the cloud. But one of the things that some partners told me that is maybe holding them back, is that they’ve built so much customization and custom apps on-premise and that makes it harder to kind of migrate to the cloud version. Can you talk to what kind of steps you can take to make that migration path a little bit more painless? And then I’ve got a follow-up.
Mike Rosenbaum : Super question. So this is something we spend a lot of time thinking about, obviously. These things end up being super, super complicated. And so somewhat the answer to your question is 1,000 little details. But I’ll give you some examples. Number one, I think when we started the journey, we had a sort of view for the types of customizations, types of configurations, characteristics of the implementation that we thought were acceptable and not acceptable when those implementations landed on our cloud platform. As we’ve gained experience, we’ve been able to hone those requirements. And so maybe a lot more of those things that we thought at first were inappropriate or not something we could support that maybe they could be things that we could support them in certain ways.
And sort of that experience enables us to really hone what the requirements are for things like integrations or customizations that are running on the platform. The other thing that we could do is facilitate the conversion of those customizations to something that will work more effectively on cloud. An example here is we have something called Advanced Product Designer, which is sort of a new way to build out an insurance product on our platform. And when you use advanced product designer to build out that product on our platform, you just get a whole bunch of features for free, right? We’re able to build APIs, to be able to integrate that product into different applications. We’re able to make a digital interface for that product much more efficiently.
But for a customer that’s already built their products in the on-prem version of Guidewire, they were looking at having to rebuild that product using Advanced Product Designer, so we built something called APD retrofit, which is a mechanism for us to take most of the product definition that exists on-prem and convert it efficiently to an APD based product, which enables that customer to more smoothly transition to the cloud and take advantage more of the benefits of the cloud version of the product. And so that’s one example that is relatively important and strategic, but you want to think about lots and lots of these things that relates to the various components of an implementation. And those things will just build and build and build over time as we get more and more experience, and we do more and more of these migration projects.
So hopefully, that helps give you a little bit of color. But to the — what the partners are telling you is real. There is a difference between the on-prem implementations and what we really want to see and what the customers want to get out of the cloud implementation. And that, I would say, is just something that needs to be accounted for in the planning through each one of these migrations.
Rishi Jaluria : Got it. No, that’s super helpful. I appreciate that example. And then, Jeff, just a quick follow up to continue on the margin question. So we saw a continued improvement on the subscription gross margin side, right? If we did the kind of backing out math above 40% for the first time in a while. Anything just onetime to call out? I know you said not seasonality, but accounting or anything like that? Or is there any reason we can’t kind of straight line the sort of margin improvement we’ve been seeing for the past couple of quarters and kind of get it from that glide path from 40% to, call it, 60% over the next several years? Thanks.
Jeff Cooper : Yeah, nothing really onetime in nature. Sometimes it can take a little bit longer for Q4 is our largest deal, those customers to get provisioned up and running and start using some of the product infrastructure resources. So if you look at our guide for the year, our guide for the year is consistent with what we delivered in Q1, but in terms of onetime in nature, nothing in particular to call out, this has just been a lot of progress that we made over the last 12 months. You may remember, it was about a year ago when we — in Q1 last year, where we had a little bit of surprise in some of our cloud infrastructure costs, and we’ve done a lot of work to get that in a much healthier place. So yeah, in general, as you look over the longer term, and if you look at our long-term models, it is implied that there will be steady progression as we track towards those targets.
Rishi Jaluria : Awesome. Really helpful. Thank you so much, guys.
