Thank you for standing by, and welcome to the Duck Creek Technologies Third Quarter and Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. As a reminder, today's program may be recorded. I would now like to introduce your host for today's program, Brian Denyeau, Investor Relations. Please go ahead. Good afternoon, and welcome to Duck Creek's Earnings Conference Call for the Third Quarter of Fiscal Year 2021, which ended on May 31st. On the call with me today are Mike Jackowski, Duck Creek's Chief Executive Officer, and Vinny Chippari, Duck Creek's CFO. A complete disclosure of our results can be found in our press release issued today, which is available on the investor relations section of our website. Today's call is being recorded, and a replay will be available following the conclusion of the call. Statements made in this call may include forward-looking statements regarding our financial results, products, customer demand, operations, the impact of COVID-19 on our business, and other matters. These statements are subject to risks, uncertainties, and assumptions that are based on management's current expectations as of today, and may not be updated in the future. Therefore, these statements should not be relied upon as representing our views as of any subsequent date. We also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of non-GAAP to GAAP measures is provided in our press release, with the primary difference being stock-based compensation expenses, amortization of intangibles, change in fair value of contingent earn-out liability, and the related tax effect of these adjustments. With that, let me turn the call over to Mike. Thank you, Brian, and good afternoon, everyone. I'm pleased to report that Duck Creek continues to perform at a high level in the third quarter, underpinned by the growing demand of our SaaS platform, Duck Creek OnDemand. The global P&C industry continues to embrace the move to the cloud. Our SaaS market leadership puts us in a great position to disproportionately benefit from this trend. I'll begin with a quick overview of our financial results for the third quarter, which are well ahead of our guidance for all metrics. We reported total revenue of $67.9 million, up 26% year-over-year. This was underpinned by subscription revenue, which is our revenue derived from SaaS of $33.6 million, which grew 56% year-over-year. We were also profitable in the quarter with adjusted EBITDA of $5.5 million. We continue to see strong demand across all segments of the P&C market. Some of the deals we signed during the quarter included a meaningful win with AXIS Insurance, a leading global provider of specialty lines insurance and reinsurance. As an existing Duck Creek on-premise customer, AXIS is expanding its investment with us, choosing Duck Creek OnDemand to drive growth in their business by bringing new products to market faster than they could if they launch these products with their on-premises installation. With this new deal, AXIS is taking the important first steps towards the cloud and is utilizing Duck Creek OnDemand as its SaaS platform of choice. We also had a significant Duck Creek OnDemand buyup with an existing Tier 1 customer who is expanding the scope of their deployment on our OnDemand platform. This builds on the great success of this Tier 1 carrier who rapidly deployed a new product line on our SaaS platform in under six months. This important expansion is an example of Tier 1 insurers continuing to adopt SaaS technology and of the open-ended opportunity in front of us that we have with our larger customers. During the quarter, we announced that Argo Group, an underwriter of specialty insurance products, is currently engaged in the implementation of Duck Creek OnDemand's Policy, Billing, Claims, Industry Content, and Insights solutions. Argo is deploying Duck Creek OnDemand as a component of its multi-year initiative to integrate and simplify its technology and application stack to improve productivity and reduce expenses. Our partner ecosystem has been leveraging the power of Duck Creek's open architecture to enable customers to easily integrate with partner solutions. We've built an extensive collection of productized integrations to the most widely utilized P&C industry data and service solutions, which helps to reduce time to market and deliver compelling industry capabilities for our customers. During the quarter, we had several upsell wins where customers opted to take advantage of these new capabilities. Two I would note are Builders Mutual and Core Specialty Insurance. Additionally, we had two new carriers adopt Duck Creek standalone ancillary OnDemand products in the quarter. Texas Mutual, a tier two leading provider of workers' compensation insurance in the state of Texas, selected Duck Creek Distribution Management to manage the onboarding, compliance, and compensation of their more than 9,000 agents. Topa Insurance, a specialty insurance carrier writing business in 34 states, will leverage Duck Creek Reinsurance Management to manage their ceded reinsurance. We look forward to working with both these carriers to support their respective business strategies. Each of these wins represents a carrier that is looking for the right tools to help them deliver more value to their customers quicker than ever. This type of thinking was front and center at our recent annual v_Formation users conference, which was held virtually in early June. Since moving to a virtual experience last year, we have built a vibrant community of more than 3,000 attendees that are engaging with one another on an ongoing basis to share best practices and learn more about Duck Creek's ability to improve their business. The theme of this year's event was Creating the New Standard, which focused on the emerging transition to a flexible business approach that enables carriers to reinvent their businesses to meet the needs of customers now and in the future. We don't view the new standard as a technical document or a checklist of tasks. Instead, it is a demonstrable ability for carriers to move from existing static business strategies to flexible and predictable service models. The consistent feedback we get from customers is that their current IT stack and rigid hard-coded business rules prevent them from responding to the accelerated pace of the change in their markets. Some eye-opening stats that I discussed in my keynote speech included nearly 40% of all premium dollars in the U.S. are being consumed annually by operating and loss adjustment expenses. This hasn't materially changed in a decade, which means carriers are no longer driving efficiency gains from their current technology solutions. 60% of legacy IT system upgrades ended up disrupting some aspect of the carrier's business during the modernization process. 61% of carriers indicated it is taking them 6 to 12 months to take a new product from idea to implementation, which is simply too long in today's dynamic market. Three-quarters of insurers believe they need to re-engineer customer experiences to bring technology and people together in a more human-centric manner. Simply put, the status quo in core systems is not sustainable. Carriers increasingly recognize that their core systems must provide them with the flexibility and ease of use needed to respond to new customer preferences and behaviors quickly and at scale. Carriers will take different approaches to digital transformation, and we designed Duck Creek OnDemand to make it easy for them to follow the path that best fits their specific circumstances. Our low-code platform is designed to externalize process rule development and let carriers establish a repeatable, customizable end-to-end product factory, which allows them to iterate product rules quickly and seamlessly. A great example of this approach in action is UPC Insurance, who has used Duck Creek OnDemand to not only launch a new digital platform with new products for their core agency business, but has announced the launch of a new insurance startup, Skyway Technologies. Skyway is an entirely new sales channel for UPC, selling direct- to- consumer through an omni-channel experience that takes a consumer through a streamlined, easy-to-use digital buying process that can issue a bindable quote within two minutes. By leveraging Duck Creek's modern digital platform, UPC is able to launch its new business model in a matter of months. This is a great example of how customers are able to quickly find new ways to drive value from their existing investments made on top of Duck Creek. We're also very pleased with the continued adoption and customer success that we're seeing on our Duck Creek OnDemand platform. During the quarter, we had 20 customers successfully go live with Duck Creek products, including notable industry leaders like IAT, Auto-Owners Insurance, American National, and The Doctors Company. I'd like to highlight some specific examples that demonstrate our insurance technology leadership. We are proud to announce that GEICO, the second-largest private passenger auto insurer in the United States, completed the rollout of their auto and motorcycle business on Duck Creek across all 50 states. GEICO has executed a very ambitious strategy to modernize their core platforms for policy and billing to support their ongoing focus to deliver exceptional customer service. GEICO licensed Duck Creek Policy and Billing and deployed our solution in the Microsoft Azure cloud as a foundation to deliver a customized, yet simplified user experience for their customers and their policyholders. GEICO has continued to expand their use of Duck Creek since they started in 2017. This commitment builds on our ongoing partnership and proven success with GEICO. Today, GEICO has $10s of billions of written premium deployed on Duck Creek, which we believe sets a new benchmark among large Tier 1 personal lines insurers for deploying a new core system across the enterprise. This successful rollout positions GEICO to react quickly to future changes in customer demands and provide exceptional customer service. We also continue to show success outside of the United States as a successful deployment at Lawcover, a provider of professional indemnity insurance to law firms. As we announced in our fourth quarter fiscal 2020 earnings call, Lawcover selected the full Duck Creek OnDemand suite for their core system modernization effort. We're proud to announce that Lawcover has successfully gone live on our core suite, Policy, Billing, and Claims in just 11 months. Finally, during this past quarter, we hit a significant milestone with The Hartford as they successfully deployed their new personal auto product in two states on our Duck Creek OnDemand SaaS platform. This new modern technology platform, combined with The Hartford's product design, is critical to improving The Hartford's growth in personal lines by providing a contemporary, digital, and flexible experience for their customers. We are proud to partner with The Hartford, and their product launch represents an important step in our journey together. It's not only our customers that are recognizing the power of Duck Creek's platform. We were pleased to have recently won two awards from Celent, a leading independent industry analyst, for Duck Creek Claims as a leading claims technology and service in the EMEA property and casualty sector. Celent cited discussions with Duck Creek Claims users who praised the functionality and speed of the system and our overall approach to partnering with customers as key differentiators. As good as our solutions are today, we continue to invest in our platform and products to increase the value that we deliver to our customers. One example is the investment we are making in on-demand operations and development capabilities that provide our customers with tools and solutions aimed at streamlining and improving their IT operations and DevOps processes. We recently announced the availability of our OnDemand Control Hub, a utility that enables our customers' IT operations teams to independently deploy changes, monitor, and control their Duck Creek SaaS applications, as well as the extensions and integrations they built around those applications. The Control Hub serves as a one-stop shop for operators to manage their SaaS environments and see the status and health of their Duck Creek applications in one central location. We also continue to focus on expanding the functionality of our products and deliver incremental capabilities specific to some common insurance lines of businesses. We recently released several incremental enhancements aimed at the workers' compensation market that allows insurers to more effectively approve medical invoices, calculate injured worker benefits, and report data to regulatory bodies. As we look to the fourth quarter and beyond, we are incredibly excited about the opportunity ahead for Duck Creek. Interest in moving to the cloud has never been higher among P&C insurers. Duck Creek has established itself as a SaaS platform of choice in the industry. We will continue to make investments in our low-code platform that will further extend its value to carriers and enable them to deliver the product innovation and service experience that their customers require. We remain early in this multi-billion-dollar market opportunity. We feel very good about our ability to deliver high levels of profitable growth for the foreseeable future. I will now turn it over to our CFO, Vinny Chippari. Vinny, over to you. Thanks, Mike. Today, I'll review our third quarter fiscal 2021 results in detail and provide guidance for the fourth quarter and full year of fiscal 2021. Total revenue for the third quarter was $67.9 million, up 26% from the prior- year period. Within total revenue, subscription revenue, which is comprised solely of subscriptions to our SaaS products, was $33.6 million, up 56% year-over-year. In Q3, subscriptions represented 79% of our software revenue and 49% of our total revenue. Revenues from on-premise software, licenses of $2.5 million and maintenance of $6.3 million, are showing modest growth as expected and are down to 13% of total revenue. Services revenue was $25.6 million, up 6% year-over-year. Services revenue was in line with our expectation and reflects a notable step-up from the prior- quarter with the launch of several large service engagements. SaaS ARR, which we calculate by annualizing recurring subscription revenue recognized in the last month of the period, was $124 million as of May 31, 2021, up 64% from the prior- year. SaaS ARR continues to show strong momentum and reflects the strength of our SaaS business. As a reminder, SaaS ARR is a snapshot in time of subscription contracts that are generating revenue during the last month of a period and can be impacted by timing. For example, our largest deal in the quarter did not begin generating revenue within the quarter and was not included in our ARR number as of May 31st. SaaS net dollar retention as of May 31st, 2021, was 133%, well above our recent historical range. Over the preceding eight quarters, our quarterly SaaS net dollar retention has been in the range of 113%-121%, driven by a combination of high gross retention rates, sales of new products to existing customers, and growth of DWP for products already operating on our SaaS platform. This quarter, SaaS net dollar retention was well above this range, driven primarily by several large sales to existing customers in recent quarters and a core system upsell to a customer who initially bought Duck Creek Distribution Management. As mentioned on our prior calls, while our sales over time include a relatively balanced mix of land and expand opportunities, it can vary period to period based on pipeline progression. We currently expect that net dollar retention will return to historical levels in Q4. Now let's review the income statement in more detail. These metrics are non-GAAP unless otherwise noted, and we provided a reconciliation of GAAP to non-GAAP financials in our press release. First, on a GAAP basis, our gross profit for the quarter was $40.2 million, and we had a loss from operations of $544,000. We had a net loss in the quarter of $357,000, or $0.00 per share based on weighted average basic shares outstanding of 131.6 million. Turning to our non-GAAP results, gross profit in the quarter was $42.2 million, or a gross margin of 62.2% compared to 59.2% in the third quarter of fiscal 2020. Subscription margin in the quarter was 68.5%, driven by certain timing items and scale benefits as we continue to generate strong subscription revenue growth. Gross margin favorability from the timing of new hires and resourcing for new deals is expected to diminish in Q4. We are pleased with the continued strength in subscription margin, but I want to remind you there can be quarterly variation due to timing of when revenue recognition begins for certain contracts and the timing of expenses at the early stages of new deployments. We believe our subscription margins are an important demonstration of the scalability and performance of our SaaS platform. Service margins of 45% in the quarter came in ahead of our expectations, driven by a combination of sequential growth in professional services revenue and the timing of headcount additions in this group. We remain committed to bringing down our services margin by several points in the near- term and longer- term into the high 30s, which we believe reflects a sustainable utilization rate for our professional services team. Turning to operating expenses, R&D costs were $12.5 million, or 18% of revenue, down slightly year-over-year as a percentage of revenue. The 22% growth in R&D costs from the prior- year reflect our continued investment in product solutions and features that will generate additional value for customers. Sales and marketing expenses were $10.9 million, or 16% of revenue, down slightly with the prior- year as a percentage of revenue. Expense growth of 20% from the prior- year reflects continued expansion of our go-to-market resourcing in both U.S. and international markets, while travel-related costs and certain marketing programs continue to run below normal levels due to COVID-19 impacts. G&A expense was $14.1 million, or 21% of revenue, up from 18% in the prior- year period and in line with expectations. The growth in G&A expense year-over-year is related primarily to public company costs that we began incurring following our IPO in August. Over the course of this fiscal year, our G&A expenses have begun decreasing as a percentage of revenue, and we expect this to be a highly leverageable cost area moving forward. Adjusted EBITDA for the third quarter was $5.5 million, which was well ahead of our guidance, due primarily to a combination of better-than-expected revenue and lower-than-estimated costs and expenses tied to the pace of new hires. Adjusted EBITDA margin was 8% for the quarter, up from 7% in the prior- year period. This represents our 10th consecutive quarter of adjusted EBITDA profitability, an important indication of our ability to profitably generate high levels of subscription revenue growth. Non-GAAP net income per share for the quarter was $0.03, based on approximately 135.2 million fully diluted weighted average shares outstanding. Turning to the balance sheet and cash flow, we ended the quarter with $372 million in cash equivalents, and short-term investments, and we remained debt-free. Free cash flow for the quarter was $6.6 million, which was in line with our expectations. I'd like to finish by providing guidance for the fourth fiscal quarter. We expect total revenue of $68.5 million-$69.5 million. Subscription revenue is expected to be $32 million-$32.5 million. Adjusted gross margins are projected at 59%-59.5%. We expect adjusted EBITDA of $3.5 million-$4.5 million, and our non-GAAP net income is expected to range from $1.5 million-$2.5 million, or $0.01 to $0.02 per fully diluted share. For the full- year of fiscal year 2021, we are increasing our outlook to the following. Total revenue of $258 million-$259 million. Subscription revenue is expected to be $124 million-$124.5 million. Adjusted gross margins are projected at 60.5%-61%. We expect adjusted EBITDA of $15.6 million-$16.6 million, and our non-GAAP net income is expected to range from $9.6 million-$10.6 million, or $0.07 to $0.08 per fully diluted share. Please note that our fourth quarter guidance reflects the impact of the contract that we have been excluding from our SaaS ARR calculation coming to an end. We've long known this contract was winding down and has been incorporated in our guidance throughout fiscal 21. In the near- term, it will have an impact on our year-over-year subscription revenue growth rates as we comp against prior year periods that include this contract. To finish up, Duck Creek delivered another strong quarter. We're pleased with how the business is performing and how we're positioned for the future. We are benefiting from broad-based adoption and interest in Duck Creek OnDemand as the move to the cloud by the P&C insurance industry gains momentum. We are in the early stages of this replatforming and believe we're in a great position to deliver strong subscription revenue growth and improving profitability for years to come. We'd now like to open up the call to Q&A. Operator? Certainly, ladies and gentleman, if you have a question at this time, please press star then one on your touch-tone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of Sterling Auty from JP Morgan. Your question, please. Yeah, thanks. Hi, guys. I'm curious, how well known through the industry is the GEICO deployment? If it is well known, have you started to see an increase in inbound call volume similar to what Guidewire experienced when Nationwide went live, all those years ago? Hey, thanks, Sterling. Yeah, I would say that it is well known. We did do a public press release, I can't remember the exact date, several years ago. I would say that when we started this journey, it was not well known because GEICO wanted to wait to have some proven success on our platform before we were allowed to disclose it publicly. We did make the announcement. We are very proud and very excited to be announcing that they've completed the rollout across all 50 states. When I go look at what other top Tier 1 carriers in the personal line space have done relative to our ability to get this full deployment done in under a five-year period with GEICO, we think this is industry-leading, and we think it's really demonstrable of what's capable on the Duck Creek platform. We're very, very proud of it. That makes sense. One follow-up. You've announced, as has Guidewire, there's been a number of companies that have used you guys to launch new products into the market on the cloud platform. How should we think about the increasing revenue contribution that could potentially come from those contracts as those businesses grow themselves? Yeah. I think when we look at the revenue contribution of those new startup businesses, sometimes, Sterling, they're an atomic or a line of business that is running with full autonomy. The initial subscription opportunity starts relatively small and then grows over time. Most of the time, we're doing this with large Tier 1 carriers that are starting with a smaller book of business, and they're trying to get experience in the cloud. Then we know that the real opportunity is to eventually convert or migrate existing books of businesses over to our OnDemand platform. Again, I think I've highlighted this in the past, but we're seeing a lot of Tier 1 carriers start with new startup lines of businesses or smaller blocks of books of businesses to get experience with the cloud, and then we know that those will lead to larger opportunities for us here at Duck Creek. That makes sense. Thank you, guys. Yeah. Thank you. Thank you. Our next question comes from the line of Tom Roderick from Stifel. Your question please. Great. Thank you, gentlemen. Appreciate the chance to ask a question. I actually wanted to kind of piggyback on Sterling's question there on GEICO, because just the point about it being deployed on multiple lines, but across all 50 states. It brings up the regulatory question and the challenge carriers have in moving from state to state. Can you talk a little bit about some of the complexities that you worked your way through and how that might scale to other carriers that are thinking about such expansions? How does the cloud kind of play into that angle? Thanks for the question. I don't want to get into the specifics of the GEICO deployment, but what I will do is highlight the advantages of Duck Creek and how we can execute on state-to-state deployments faster than I think our competitors can. We talk a lot about our low-code platform, and one element of our low-code platform underneath it is a technical term called inheritance. What it allows carriers to do is take a whole product set and a product set of rules, inherit from it, and then derive kind of just small changes so that they can launch either new derivative products or launch into new states. On legacy technology, what we find is carriers have a lot of hard-coded logic, if then logic, if you will, state by state. If it's the state of New York, then do this and issue this document. If the state of California, then issue this document. In our overall platform, what we can do is more seamlessly reuse a common rule set so that carriers can launch across multiple states very, very quickly and with minimal effort. It reduces that launch time, and I think that's a true advantage of our low-code platform. Yeah. That's great. That's excellent detail. Vinny, you highlighted in the guidance and in the discussion point here one of the sort of long-anticipated contracts that's rolling off the books is in fact doing so next quarter. Seems like the subscription revenue guidance certainly bakes that in. How would you encourage us to think sort of directionally about net dollar retention, ARR, some other ancillary metrics that go into that as you kind of work your way through that? With that particular customer, is that now kind of off the books, or are there still opportunities ongoing to maintain and extend that relationship in the future with different product lines? Tom, I'll address the first part of the question and ask Mike to jump in on the customer relationship end of it. Since we knew from the time we carved out of Accenture that this was ultimately going away, we've always purposely excluded that account from both our ARR and net dollar retention metrics. The departure of that revenue stream for that particular contract won't impact the two reported metrics. What it will do is, the gap that has existed between ARR growth and subscription revenue growth, that will start coming together over the course of the next year or so as the impact of that contract winds off. I think, as you suggested, it has been considered in our guidance, of course, and won't be impacting the other two metrics other than subscription revenue itself. Tom, to jump in on the second half of your question, I'll say that they non-renewed or rolled off of this because they had a change in strategy, and this was consumed as a larger part of an Accenture contract when we carved out. We do maintain a strong relationship with this customer, and they continue to use other Duck Creek products in other areas of the business. We're very hopeful of expanding the relationship within the account. We do think there's future opportunity. Wonderful. Great detail. Nice job in the quarter. Thank you, gentlemen. Great. Thank you. Thank you. Our next question comes from the line of Chris Merwin from Goldman Sachs. Your question, please. Okay. Thanks so much for taking my question. I just wanted to ask one as it relates to the decision-making process of your larger customers. With the GEICO deal, you sort of mentioned the expansion there. For some of these larger logos, are you starting to see a more centralized process around picking vendors to migrate systems to the cloud as opposed to, I think, what it's historically been more of a very decentralized approach with certain owners of lines of business making their own decisions about which systems to use. Is that pattern changing at all? How best to think about the success you're having in large others like GEICO? Thanks. Yeah, Chris, I would say that we see both. I think there's a trend to have a bit more of centralized decision-making. Obviously, insurance companies, as much as all companies, are investing more in procurement and getting organized across the enterprise. Also remember there are some insurance carriers, especially some large Tier 1s, that very much pride themselves around having P&Ls or distributing operating businesses that can make their own decisions. I think in those types of carriers, we'll find that there is distributed decision-making, and they have their own decision-making rights. They may share information across the enterprise in that case. I think with some larger Tier 1s where we are expanding, it's because we are working with their group leadership or their enterprise leadership, and they see the success on Duck Creek in making broader commitments in a more centralized manner. I think that's boding well for some of the expansions that we're undertaking right now. Okay, perfect. Thank you. Maybe just a follow-up for Vinny on the ARR. It looks like it improved, I think, about $6 million sequentially, and obviously a big win in the quarter. The sequential improvement was a little less than a year ago. Just wondering how best to think about the seasonality here. Any other puts and takes around deals moving in and out of the quarter? Just anything else to note as it relates to ARR. Thanks. Yeah. Chris, I think the other thing I'd kind of reiterate is obviously on a one-quarter basis, we don't get too focused on the sequential changes, just because of the large deal sizes and small deal volume. That said, Q3 is typically a little bit seasonally low for us. Q2 and Q4 are our strongest seasonal quarters. In Q3 in particular, if you remember, we had a pretty strong quarter last quarter in Q2 when our large Q2 deal actually made it into Q2 ARR, and our larger Q3 deal did not make it into Q3. I'd chalk it up to timing, and just continue to encourage people to look at the ARR changes over a longer period than just one quarter. Understood. Thanks a lot. Sure. Thank you. Our next question comes on the line now. It's Saket Kalia from Barclays. Your question, please. Okay, great. Hey, guys. Thanks for taking my questions here. Mike, maybe first for you, I was wondering if you could talk a little bit about sort of the ebb and flow of conversion activity over the last couple of quarters. You've been pretty clear to say that conversions are going to be customer-driven, right, not necessarily Duck Creek-driven. I'm curious if you've seen any change in the pace of those conversion conversations at all this quarter. Does that make sense? It does make sense, Saket. I would say that I'm not sure that I would say that there's a change in pace. I will say that, and I'm glad that you highlighted our strategy, which is really for us to focus on our customer's strategy. What are the business objectives that they have? Really align our efforts to perhaps move them from on-premise into the cloud or into Duck Creek OnDemand when they have a strategic inflection point, whether they want to bring a new thing to market or do a digital transformation a different way or launch in a new channel. We're finding that strategy is working well. We're having very meaningful conversations with our customers about them adopting the cloud. We're having very meaningful conversations with our customers about their business strategies and how we can help accelerate those business strategies like we did with this case that we just announced with AXIS Insurance. I would say that we're making meaningful progress. With the announcement of AXIS, we now have seven on-premise core customers that are now migrating or adopting Duck Creek OnDemand core solutions in a meaningful way. We think it's showing good progress. Just note that because of this approach, we're not in control of the timing. Our customers are in control of the timing, and I think that's the way that we're going to continue to drive our strategy. Got it. Vinny, maybe for my follow-up for you. A lot of focus on that GEICO contract. It's great to sort of see across 50 states. I think Mike mentioned earlier that it was, I think, under a five-year sort of rollout. Can you just talk about how the ARR contribution there sort of works? I understand you don't want to get into detail on a particular customer, but does the completion of a rollout mean a meaningful ARR contribution this quarter? Have we seen most of that ARR contribution sort of happen in the past as the rollout was happening? Well, first, as it specifically relates to GEICO, Saket, I would point out that that was a license deal back in 2017. That's not in our ARR number. More generally speaking, the way we've seen continual increases in our larger Tier 1, in a lot of accounts, but particularly in our Tier 1 accounts, as they add either new products or more DWP onto the system. Another point of reference on that, it happens to be net dollar retention. A lot of times when you're seeing net dollar retention moving up, it's based on a continued rollout or a continued increased deployment in a large account. I think you see it both add ARR dollars over time in large accounts as they grow and contribute to the net dollar retention. Got it. Very helpful. Thanks for taking my questions here. Thank you. Our next question comes from the line of Brad Sills from Bank of America. Your question, please. Hi, this is Sherry Guo on for Brad Sills. Thanks for taking my question. I wanted to ask about the international opportunity, particularly in Europe and APAC. Can you share any insights on the demand environment there or any notable activity from these geographies in the quarter? Thank you. Hi, Sherry. Thanks for the question. We continue to make good progress on our international investments. I will still say that as a result of COVID and the lack of business travel still not ticking up, we're still cautious in terms of seeing progress in continental Europe. We are seeing continued success in Asia Pacific. As I talked about the go live at Lawcover and the pipeline is strengthening quite a bit in Asia Pacific. Across Europe, we're also very pleased with some of the discussions with some of our larger Tier 1 enterprise customers that are looking for new opportunities to launch new products, enable and do digital transformations in European regions. We think that will help us as we enter fiscal year 2022 as well. There's more to come, and we know that with our current investments, we knew that we weren't going to get results right away, and some of these results would start to take hold in fiscal year 2022 and beyond. Great. Thank you. In terms of your new wins or upselling, can you talk about how much the non-core assets represent as a product split? Where do you envision this to trend in the near and long- term? Thank you. Yes. What I would say on the non-core product split is, we don't give quarterly numbers or details on it, but when we look over the last year or two or period of time in our bookings, roughly speaking, about 75% of our bookings are from our core systems, policy billing claims, and then the non-core additional asset, about 25% of our bookings. That's really what we have been seeing. I think right now, I think that trend is going to hold for a while. We're looking at some opportunities to expand some of our non-core offerings, that may change over time. I think right now, that's a safe assumption for us. Got it. Thank you. Thank you. Our next question comes from the line of Bhavan Suri from William Blair. Your question, please. Great. Thanks, guys, and nice job again. I want to touch a little bit on the expansion in Europe, but focus on it from a product side. Historically, we've seen Europe typically lag the U.S. in terms of cloud acceptance, cloud growth. As you look at the wins, and you've had some good wins, but that's an area of investment growth. How much of the sale there is evangelical still, like the idea of cloud, but also the idea of low-code, no-code, right? Low-code, no-code, beginning to get buzz in the U.S. You're having a whole new way of deploying and letting customers manage their own rules, workflows, templates, et c. How has that sort of conversation happened with clients in Europe, and is there a lag or are they starting to get it and in sort of starting to see them, the flywheel action there start to play out a little bit? Help us sort of think through how that's playing out and what you're seeing from a demand and acceptance perspective as you invest in Europe. Great question. I would definitely say that there is a lag. I think it is one reason why we're advancing more of these conversations with our larger global Tier 1 customers, because they have experience with a low-code platform. They have confidence in SaaS. I will say that the flywheel is starting to spin in Europe, though. If I went back four or five years ago, I would say that, in Europe, they would entertain SaaS, but they really wanted an on-premise offer. When I fast-forward today and I look at our pipeline, they are very open to SaaS, but they also want an on-premise offer. They're balancing the two, of which we will not provide an on-premise offer. We will not even give them an option with an on-premise installation for a new customer in Europe. I think that is a little bit of a headwind for us, but I think the market is going to move fairly quick, especially as we start to get beyond the pandemic, start traveling, start meeting in person, start building our brand more effectively in Europe. I think that's going to help because I really think our success here at Duck Creek has helped accelerate the acceptance of SaaS here in the U.S., and I look forward to an opportunity of getting some momentum and traction in Europe. I think once we get several proof points, I think the market conditions will change considerably. Got you. That's helpful and kind of what I sort of expected would be playing out there a little bit on the lag part. I just want to touch about the cyber opportunity, and you and I have talked about this in the past, but I'd love to get an update here. It's becoming more and more common to hear about these cyberattacks, ransomware, et c. Again, I guess two parts to the question. One, are you seeing your customers say we need to have a cyber insurance product? Then two, how do you address that? Do they have the algos, the data, the actuarial work done for that? Because it feels like that's really early and we don't know what the drivers are, like exposure to how the network's security based, how much have you invested in security. I don't know how you think about that, but I'd love to understand, say, are your customers thinking about products to be offered there? It's small DWP, obviously, today, but that could be an area of growth. How does Duck Creek OnDemand fit from a product perspective in that scope? Yeah. I think, look, we work with several very large and successful cyber risks that have cyber products and cyber coverages on Duck Creek. We're very, very proud of our success in the space. We work with those carriers. We really focus and occupy the space of the product definition, the pricing of the product, selling of the product through distribution. Every carrier, if you look at how they look at analyzing the risk of cyber, they use very different techniques, different data, different providers, quite often you'll find different mindsets in terms of how they think about cyber. It is a rapidly growing product, and I think our product configuration capability gives a lot of carriers confidence that they can tailor their products to fit their unique needs and how they want to go to market. I think that's a strength of Duck Creek. They're just looking to the InsurTech community. There's a lot of providers that really provide data and analytics in this domain. Some of them are very compelling. Some of them, carriers will try and then move on to something else. For us, we're going to be about continuing to embrace the ecosystem. Easy to plug these providers in, similar to the way you would plug in a pay-as-you-drive provider as well for usage-based insurance. Right. To make sure that carriers can use the advanced algorithms for pricing. That's going to be our strategy, is to really maintain an open architecture approach to all these InsurTech providers. Got you. That's super helpful. Thanks, guys. I appreciate you taking the question. Thank you. Our next question comes from the line of Alex Zukin from Wolfe Research. Your question, please. Hey, guys. Thanks for taking the question. Maybe just the first one around kind of piggybacking on Sterling's question around new customers launching, new logos launching new brands when they adopt Duck Creek. When you think about the percentage of your new logo wins or lands, how many of those are resulting from that type of activity, versus maybe like a core system transformation or replacement? Well, Alex, it would be difficult for me to put a percentage to it, because we're just seeing that a variety of carriers are taking on different strategies. We're very pleased. For instance, this work that we announced with AXIS, we've been working with them with this on-premise relationship for many years. They have a new strategy of getting something new to the market very quickly, and they saw on-demand as a very rapid way of which they can get something done. With that's an example of us working with an existing customer that had a lot of experience with our on-premise products. In terms of new logos, I would say the majority of our new logos is not launching a new business opportunity. It's really re-platforming what they have. When I go look at our pipeline and what's coming through our pipeline, which I'm very excited about, I would say a lot of the new logo opportunities are digital transformations. We want to replace our policy billing or claims system. We want to have a new channel or distribution front- end in a digital capability. I would say that's still the vast majority of the opportunities that we're seeing. Got it. That's super helpful. Then maybe just kind of digging in a little bit on two metrics. Is it possible to just get maybe a little bit more sizing or kind of some just rough financial impact on SaaS ARR this quarter from that comment about the largest deal in the third quarter not being in the number this quarter? Roughly, what type of an impact had it been in, how that number would've changed? Apologies for the 2a question, but if you look at the guidance, maybe just a rough reminder of how much of the deal that's coming off the books in subscription revenue. Life- for- life, if that wasn't the case, what would the sequential kind of guide represent in terms of a growth rate? Yeah. Alex, on the second question, we really are not in a position from a confidentiality perspective of giving any details on the dollar value of that contract that's rolling off. I can't really do that. I can tell you that the impact on the growth rate, if you look at recent quarterly growth rates versus the Q4 guide, that's the majority of the change. We're not in a position where we can give any specific details on the dollar value. I'm sorry, can you remind me the first part of the question? Oh, the quarterly ARR growth. Quarterly ARR growth. Yeah, again, we don't want to comment on the value of any one particular deal, but I think if you look at kind of over a longer time period than a quarter and two, three, four quarters and look more in terms of what we've been averaging over the quarters, you can kind of get the sense of how a deal can swing from quarter- to- quarter, what the impact of that might be. We have said before, a core system deal tends to run into the millions, low to mid-single-digit millions. A deal like that moving from quarter- to- quarter can make it a little lumpier. That's why we had the big quarter in Q2 and not as much in Q3. Makes sense. Thank you, guys. Thank you. Our next question comes from the line of Mayank Tandon from Needham. Your question, please. Hey, good afternoon, guys. Actually, [Kalpesh] here from Mayank. Just one for me, but just wanted to see some of the upsell progress you guys have been making. It's been really strong. I was wondering if you guys could give any more detail in terms of how much of some of the upselling with existing clients is coming from clients adding additional products versus adding more DWP on the platform, just so we can get a little bit of sense for what's driving that growth. Yeah. I would say that, first off, we're very, very pleased with our ability to upsell and cross-sell and continue to show expansion, particularly in these large Tier 1 accounts. I think it really demonstrates the success that they're having on Duck Creek, and then upon that success, going across and buying more. We don't have the information to give you a percentage around how we grow within an account and whether it's new product, more premium, or a new division or line of business. What I will say is, in order that I would rank it is really a new division within a company. Licensing a new geography or a new division is probably our primary upsell opportunity. Very close second would be cross-licensing a major core product. I would say those are the two big drivers. We get more revenue, subscription revenue, quite often if carriers grow, obviously their premium. Because that is a stairstep manner, that would probably be third in line in terms of revenue contribution. That's really the rough order that I would give it. Great. That's really helpful. Thanks, guys. Thank you. Our next question comes from the line of Robert Simmons from RBC Capital Markets. Your question please. Hi, thanks. One for [Rishi]. Could you talk to what's baked into your gross margin guide for 4Q? It looks like a pretty steep decline quarter-over-quarter. Is that just from the timing of hires, or is there something else there to be aware of? Well, thanks for the question. The Q4 margin decline is a step down. It's more about Q3 being unusually high than is about whether Q4 is kind of more typical. Baked into that is an assumption that subscription margins, which have been running very high, largely based on pace of hiring do come down in Q4 to a more normalized range in the mid-60s. It's been running closer, more in the high- 60s of late. In addition, we've built in a slight anticipated decline in services margins in Q4. I would say that, while we're still committed to bringing down service margins over the long- term because our utilization rates are running so high right now, Q4 will remain reasonably pretty strong. Might come down a little, but won't come down much from Q3. Got it. Okay. Can you talk about in gross margins, how do we think about the difference between single-tenant and multi-tenant, and how big of a driver can that be over the next few years? Yeah, I think right now we are pleased with the success of our multi-tenant offering and the take-up of our multi-tenant offering. However, many customers are still opting for a single-tenant approach. We decided as a company, what we're not going to do is force an issue where a customer is not comfortable yet at committing to our multi-tenant platform. That puts us in a position that we're in essence running in mixed mode, right? We have some customers on multi-tenant. We have some on single-tenant with a lot of DevOps and a lot of automation. When we're in mixed mode, we don't get the full-on efficiencies of multi-tenancy. Right now in our long-term plans, there's not a commitment to improve margins because of multi-tenancy. I've stated this in the past, but I think as we look at buying behaviors and we look at migrations mostly tied to the maturity of the IT operations of the carriers that we're serving. If that starts to shift and we think we can get more progress on multi-tenancy, we'll of course revisit our margin profile. Right now, there's no commitment that we're ready to make on that. Great. Thank you very much. Thank you. Our next question comes from the line of Alex Sklar from Raymond James. Your question, please. Great. Thank you. Mike, a bigger picture industry question here, but what are you seeing in terms of broader IT budgets, and have those grown at all with premium this year? Within that, are you seeing any increased wallet share of IT budgets going towards core modernization products? Thanks. I'm glad you're asking about the industry. It's important for me. I would say that we're seeing that IT budgets are holding strong. It's hard to tell if they've grown, but I think they're holding strong just because a digital transformation and core system replacement, especially as the industry makes its way through the pandemic, is still a top priority for large insurers that are out there. Now we go look at the industry and the effect of the pandemic, I would say that the growth rate of the overall industry has dropped a little. Historically, it's averaged in the U.S. about 4.5%-5.5% growth in premium. When you look at 2020, it grew about 2.5%, and that was mostly driven by the decline in personal lines auto premium. It declined about 10%. Now, what we are seeing in those carriers is they're not aggressively changing their budgets. They're still investing in digital transformations, and they're really channeling investments into core transformations. The way that that has resulted for us is a strengthening in our overall pipeline. Our pipeline is as strong as we've ever had it, and it continues to grow quarter-over-quarter. We're quite pleased with the way the industry continues to look at digital transformations and technology investments. Okay, great. Thank you. Vinny, one more SaaS ARR question from me. Specifically, the delta between subscription revenue annualized and SaaS ARR looks like the largest it's been since kind of four quarters ago. We know the one aspect is that expiring contract, but can you elaborate if there's anything else that might be impacting that spread? Nothing really other than deal timing. Obviously, the largest impact is the legacy contract impact. Anything else is just simply timing related. Okay, great. Thank you. Yep. Thank you. Our final question for today comes from the line of Peter Heckmann from D.A. Davidson. Your question, please. Hey, good afternoon. Thanks for taking my questions. Just to go to that last point, Mike, on historical growth in DWP. Given that pricing in the market is hardening or it's certainly getting quite a bit harder in certain lines, would you expect DWP to grow at a rate perhaps greater than that 4%-5% over the next couple of years? Well, it's tough to say if the whole industry will, Peter. I will expect commercial lines to grow, and think of commercial lines as roughly half the market, maybe a little bit less. There has been a drag on growth rates on the commercial side because of workers' comp. Workers' comp has shrunk about 5% over the last two years because it's directly tied to payroll. I do think in the hardening of the market, we're going to see commercial lines premiums grow at a higher rate over the next year. It's tough to say. The good news for Duck Creek is, I've said this in the past, but in a hard market, carriers are trying to get more surgical in terms of where they take rate and how they take rate and increase rates. They want better technology to help them do that, more flexibility in their product design, more flexibility in their use of data and visualization of data to drive their pricing algorithms. That always leads back to a technology conversation. I think this hard market is definitely helping with some of the conversations that we're having with carriers on their technology back plane and how we can help them deliver on their strategies as they react to the hardening of the market. Okay. That's helpful. Just as a reminder, just as we see travel and T&E start to ramp back up post-pandemic and we go back to doing marketing, would that represent maybe about 100 basis points to get back to normal, or might that even be larger given increased marketing efforts internationally? I don't think it would be necessarily larger. I think we had commented a quarter or two ago that we thought the impact was probably roughly a point of revenue. As that kind of builds back up, it's almost all contained within the sales and marketing line. I think as we kind of get through fiscal 2022, we'll see that start coming back up a little bit as a percentage of revenue. Okay, thank you. The one thing to add to that is there will be a small effect on professional services as well as we bake back in rebuild expenses, which is a kind of a zero margin line item, but that'll be a small impact as well. Okay. Makes sense. Thanks. Thank you. This concludes the question and answer session of today's program. I'd like to hand the program back to Mike Jackowski for any further remarks. Okay. Thank you, everyone, for participating in our Q3 Earnings Call. Let me wrap- up by again highlighting that we're very pleased with our current results and our market success that's been demonstrated by our substantial growth in our subscription revenue of 56%, which we think continues to reflect the growing customer interest in our Duck Creek OnDemand products. Not only are we well-positioned as the insurance industry continues to transition to run core systems in the cloud, we believe we are enabling and leading the migration across the industry, allowing insurance carriers to leverage the cloud and innovate faster. Again, I appreciate everyone joining today. Thank you, and please be safe and healthy and well. Take care. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.