Good day and thank you for standing by. Welcome to Duck Creek Technologies fourth quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during the session, you will need to press star one one on your telephone. I would now like to hand the conference over to your speaker for today, Brian Denyeau. You may begin. Good afternoon and welcome to Duck Creek's earnings conference call for the fourth quarter of fiscal year 2022, which ended on August 31st. On the call with me today is Mike Jackowski, Duck Creek's Chief Executive Officer, and Kevin Rhodes, Duck Creek's Chief Financial Officer. 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 on 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, and 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. You should not rely on forward-looking statements as predictions of future events as actual results and events may differ from any forward-looking statements that management make today. Additional information regarding the risks, uncertainties and other factors that could cause such differences appear in our press release and Duck Creek's latest Form 10-K and other subsequent reports filed by Duck Creek with the Securities and Exchange Commission. We will 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 differences being stock-based compensation expenses, amortization of intangibles, change in fair value of contingent earnout liability, and the related tax effects of these adjustments. With that, let me turn the call over to Mike. Thank you, Brian, and good afternoon, everyone. It's certainly a pleasure for me to share with you the success that we achieved in fiscal year 2022 and how we're thinking about fiscal year 2023. I'm pleased with our fourth quarter performance, which is a strong finish to the year. Deal activity in the quarter was significantly better than earlier in the fiscal year as we signed a number of exciting wins with carriers of all sizes. Our Q4 performance reflects good execution from our team and customers adapting to the macro environment as we expected. While current market conditions remain fluid, we enter fiscal year 2023 with momentum and optimism on our ability to capitalize on our growth opportunities. I'd also like to take this opportunity to send our best wishes to everyone in Florida and South Carolina who were impacted by the devastation of Hurricane Ian. Duck Creek is proud to support several insurers as they provide critical relief to their customers in this difficult time and help people, families, and businesses restore their lives. On today's call, I'll review some of our key achievements in fiscal year 2022 and the fourth quarter, and I'll provide an update on market dynamics and our early success with Prima XL, which we will now call Effisoft. Lastly, I will finish by reviewing our key priorities for fiscal year 2023. Let me start with a quick overview of our financial results for both the fourth quarter and the full year. For the fourth quarter, we reported total revenue of $80.7 million, up 14% year-over-year. This was underpinned by subscription revenue, which is our revenue derived from SaaS of $40.2 million, up 21% year-over-year. Our annual recurring revenue, or ARR, was $169.3 million, which resulted in 25% growth over the prior year. This includes just over $5 million of ARR from Effisoft. We are also profitable in the quarter with adjusted EBITDA of $6.8 million. For the full year, we reported total revenue of $303 million, up 16% year-over-year. Subscription revenue of $153.5 million, which resulted in 23% year-over-year growth, and Adjusted EBITDA of $24.2 million, which increased 43% year-over-year. Fiscal 2022 was an important year for the company and we delivered a number of notable highlights. We exceeded $300 million in revenue, which has nearly doubled in the last four years. We continue to have success executing on our land and expand strategy with important core SaaS deals with highly respected insurance carriers like SECURA, Tokio Marine and Starr Insurance. We saw an increased interest in migrating to Duck Creek OnDemand from some of our on-premise customers. Last quarter's win with Hollard Insurance was an important example of this opportunity, and we signed two additional migrations in the fourth quarter that I'll review in more detail shortly. We successfully completed our first acquisition as a public company with Effisoft. We also significantly strengthened our partner ecosystem, and we ended the year with more than 6,400 Duck Creek implementation experts across 23 systems integrators. The continued investment that these firms are making in their Duck Creek practices is a great indication of the growth potential they see in partnering with us. On the product front, we strengthened our support for consumer lines, launching our consumer access channel, our policyholder portal, and launching digital customer service in partnership with Glia. We expanded the digital capabilities of our platform and eased the burden of integration with the release of additional APIs and extension points, which provides carriers greater configuration power across our suite. We expanded the international support of our products, delivering support for localized insurance products for the U.K., Spain, and Australia, as well as the launch of Duck Creek Producer for international markets. More broadly on the international front, we've made progress on our efforts to expand our global footprint, landing our first Duck Creek OnDemand customer in Europe, considerably expanding our market share in Australia, and making instrumental investments in our products to develop localized insurance products. I am proud of what the Duck Creek team has accomplished in a year that saw significant changes in the market and the economy. We believe that our low-code SaaS approach empowers insurers to streamline their operations, launch and modify insurance products rapidly, and provide an industry-leading consumer and agent experience. We're confident that our delivered combination of better business performance and lower operating costs will resonate with customers in all market conditions. Our fourth quarter performance was a strong indication of our success. As we have discussed on recent earnings calls, customer demand and interest in modernizing their core systems to Duck Creek OnDemand, our industry-leading SaaS cloud platform, has remained quite strong. During the fourth quarter, we signed a number of SaaS wins, including some of the deals that we expected to sign earlier in the year. While sales cycles in Q4 remain subject to additional scrutiny and reviews, our understanding of how to manage through these additional steps has improved. While customers are still facing some of the same challenges we have discussed in recent quarters, we are encouraged by the sales performance in the fourth quarter and our pipeline entering fiscal 2023. I'd like to highlight some key wins in the quarter, which reflects the breadth of our success. We signed two sizable on-premise conversion and expansions in the quarter with AXIS Insurance and Coaction Specialty Insurance. AXIS has been a Duck Creek customer since 2016 and experienced great success, more than quadrupling the DWP under management on Duck Creek. As they look to take advantage of our latest product innovations, AXIS chose to migrate their overall on-premise installation to the full Duck Creek OnDemand. Speed to market was a major consideration in AXIS Insurance's decision to move to OnDemand to help facilitate their aggressive growth goals. Coaction Specialty Insurance selected Duck Creek OnDemand to upgrade the commercial specialty writers' core policy, billing, and commercial templates from their on-premise to our cloud SaaS platform. Duck Creek's technology suite will efficiently consolidate Coaction's technology solution onto Microsoft Azure cloud and to increase their speed to market and ease of connecting with customers and industry partners. We also closed a full suite OnDemand deal in Australia with Catholic Church Insurance, or CCI. CCI has been operating on legacy systems, and Duck Creek demonstrated the value, expertise, and advantages of moving to the cloud with Duck Creek OnDemand. I'm proud that Duck Creek was chosen to help improve service to their clients through better products and technology. An exciting new customer win in the quarter was with the California FAIR Plan, or CFP, which chose Duck Creek after a competitive market search of the top technology providers in the space. Duck Creek is doing a full suite replacement that moves CFP away from legacy systems. It was important for them to sign with a partner who offered a full end-to-end capability, including distribution management in the full suite of core systems. CFP has told us that Duck Creek's team, culture, ecosystem, and ability to support them long term were critical factors in this deal. Accenture, as our systems integrator provider, was also instrumental in partnering for supporting Duck Creek and helping the California FAIR Plan deliver on their overall strategy. Next, I'm thrilled to welcome Michigan-based Frankenmuth Mutual Insurance Company as our latest distribution management customer. Frankenmuth Insurance offers its products through an independent agent network. As part of their distribution strategy, they require a single technology solution that can operate as a sole source of truth for agency and producer data, which will allow them to execute on their plans for significant growth. Duck Creek proved to be the solution of choice to help them to continue to maintain positive relationships with their agency force by leveraging cost-effective and modern technology. We also signed some important expansions with our existing customers, including Starr Insurance Companies and Slide Insurance, who added additional digital enablement services and capabilities. We are very excited about a new go-to-market offering in digital customer service. It creates a great opportunity for carriers across the globe to seamlessly support customers in a digital world. This is built on the capability and new strategic partnership with ecosystem partner Glia that we announced in Q2. In Q4, we signed a significant deal with one of our existing customers, MedPro Group, a member of the Berkshire family and the largest medical professional liability provider in the industry. The combination of Glia and Duck Creek is essential for MedPro to create a seamless digital experience to modernize and enhance its customer service capabilities. We were also pleased with the very strong start we achieved with Effisoft. We closed the acquisition in July and have made great progress on our integration plans. We've been thrilled with what we have seen with the business since its closing. The product is world-class and an obvious market leader globally in the reinsurance category. We have received incredible feedback from customers on the capabilities of Effisoft's reinsurance management solution and how it drives substantial performance improvements and cost savings across an insurer's entire reinsurance offering. There is exciting momentum in the marketplace for our MXL, and we are pleased with the growing pipeline and the cross-sell opportunity within our base. We had an important early success with Effisoft in the fourth quarter, including wins with QBE, which made an additional buy-up to support their global strategic work, and in this instance, implementing QBE's European operations division. QBE is obviously an important reinsurance management customer, and we're thrilled to partner with them across our international business. We also won a key deal with France-based Matmut to undergo a major upgrade from their on-prem installation to our SaaS-based reinsurance management solution. This migration is consistent with the traction we see across our core business to transition on-prem customers to modern cloud-based SaaS. Turning to fiscal year 2023, we are focused on building upon our success in the fourth quarter and executing on our growth strategy. Some of our key priorities this year include expanding our efforts to migrate on-premise customers to the cloud. Now that we have successfully completed a number of on-premise migrations, we are taking those learnings to create a more standardized migration roadmap for customers. As we have done historically, we'll focus on situations where a migration is part of a broader strategic effort with the customer to bring a greater portion of their business onto the Duck Creek platform. Our second priority is to increase our footprint globally. Effisoft will help with our international expansion plans as we look to leverage our global footprint in several different countries. They have strong customer relationships with a number of international insurers, including AXA, Beazley, Covéa, QBE, and Allianz, among others. Having feet on the ground and referenceable customers in different countries is critical in our market. We believe there's a sizable opportunity to build upon Effisoft's success with our core systems modules. We'll also continue executing our cross-sell and upsell strategy. There continues to be a substantial opportunity to expand our penetration of both core and non-core systems among our existing Tier One and Tier Two customers. In addition, we believe there's a sizable opportunity to continue cross-selling distribution management, as well as begin selling Effisoft's industry-leading reinsurance management solution back into our installed base of more than 150 customers. On the product front, we'll continue to invest in our leading SaaS insurance platform with new targeted capabilities to extend our products, platform, and low-code configuration tools, weave AI and advanced analytics more natively into our platform, build additional international insurance products, and drive additional efficiencies to improve subscription gross margins through our focus on multi-tenancy, automation, and customer self-service. Finally, we will continue to expand and deepen our partner ecosystem. We recently hosted our annual partner summit, which highlighted the great momentum we have with our solution and delivery partners. We have developed a compelling partner program that is differentiated in how closely aligned Duck Creek is with our partners in pursuing new business opportunities. We are focused on leveraging our relationships with leading partners like Accenture, Capgemini, Coforge, and EY, among others, to drive a greater percentage of our new business wins through the channel. Finally, I'm thrilled to welcome Talvis Love to our board of directors. Talvis is SVP and Chief Information Officer of Baxter International, where he is responsible for the development and delivery of IT, digital strategies, cybersecurity, and risk across the enterprise. He also held previous CIO and technology positions at Cardinal Health and TD Bank. Talvis's extensive experience with technology, enterprise architecture, and cybersecurity will be an invaluable addition to our board. Before I turn the call over to Kevin, I just want to finish by reiterating our excitement about the future of Duck Creek. We have the best SaaS cloud core systems platform in the market, and we continue to strengthen our solution each and every quarter. Customer interest in moving to the cloud remains very high, and we are in a great position to benefit from this trend for years to come. We are focused on executing on our strategic priorities that will effectively balance investing for growth and generating profitability. With that, let me turn the call over to Kevin to walk you through the numbers. Kevin, over to you. Thanks, Mike. Today, I'll review our fourth quarter and fiscal year 2022 metrics and results in detail, and I'll provide guidance for our first quarter and full year fiscal of 2023. First, SaaS ARR at the end of the fourth quarter was $159.3 million, up 25% year-over-year. Reflecting on our performance this past year, while we experienced some elongated sales cycles earlier in the year, we had a strong fourth quarter performance as we closed in some of the opportunities that were building up in our sales funnel. As Mike noted, we had some good cloud migration deals in the quarter and still believe we can drive incremental subscription revenue growth within our base as they continue to adopt our SaaS solutions in addition to driving deals for new logos. Going forward, we are going to calculate ARR as an annual value of all contracts in force at the end of the quarter. We believe this will better represent our future expected revenue and will eliminate the timing of deals that are signed at quarter end. Total revenue in the fourth quarter was $80.7 million, up 14% from the prior year period and well ahead of our guidance. Within total revenue, subscription revenue, which is comprised solely of subscriptions to our SaaS products, was $40.2 million, up 21% year-over-year. In the fourth quarter, subscriptions represented 73% of our software revenue. Effisoft, which closed on July 12th, contributed approximately $2 million of revenue. Of which subscription revenue contributed approximately 40% during the quarter. Revenues from on-premise software licenses was $7.8 million and maintenance was $7.2 million. This represented 19% of total revenue, which was higher than in recent quarters and seasonally high for us in the fourth quarter, as we had several on-premise renewals in the quarter that impacted license revenue. Services revenue was $25.4 million, down 6% year-over-year. We continue to embrace our strong systems integrator network, and we are happy to have those integrators run point on most of our implementations. We are often subject matter experts and run alongside our partners to ensure implementations are on time and on budget, meeting our customers' expectations for a high return on their investment in our platform. SaaS net dollar retention as of the end of the fiscal year was 108%. SaaS net dollar retention in the quarter reflected the cumulative impact of the churn that we have discussed on prior earnings calls, as well as a lower mix of upsell activity. As we look ahead, SaaS net dollar retention is likely to be below some of the historical levels that we have seen, in large part due to the fact that on-premise migrations are not typically captured in our retention calculation. That has historically been a small part of our overall bookings, but is expected to increase going forward. Now let's review the income statement in more detail. These metrics are non-GAAP, unless otherwise noted, and we provide a GAAP to non-GAAP reconciliation of our financials in our press release. First, on a GAAP basis, our gross profit for the fourth quarter was $47.5 million, and we had a loss from operations of $2.1 million. We had a net loss in the quarter of $2.4 million, or $0.02 per share based on weighted average basic shares outstanding of 132.6 million. Turning to our non-GAAP results. Gross profit in the quarter was $50 million, for a gross margin of 62%, up 40 basis points compared to 61.6% in the fourth quarter of fiscal 2021. Subscription margin in the quarter was 64.5%, up 120 basis points compared to 63.3% in the fourth quarter of fiscal 2021. Total Adjusted Gross Margin was better than expected in the quarter due to strong subscription margin and a greater mix of licensed revenue. We are pleased with the continued strength in our subscription margin, but I want to remind you that there can be quarterly variation due to the 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, ease of use, and the performance of our SaaS platform. Professional services margins were 39.2% in the quarter and were in line with our expectations and our long-term target in the high 30% range. We continue to balance sustainable utilization rates in our ongoing efforts to increasingly leverage our systems implementation partners. Turning to profitability. Adjusted EBITDA for the fourth quarter was $6.8 million, which was ahead of our guidance, due primarily to a combination of better-than-expected revenue and lower than expected expenses. Adjusted EBITDA margin was 8.4% for the quarter, up 170 basis points from 6.7% in the prior year period. This represents our 15th 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 in the quarter was $4.5 million, or $0.03 based on approximately 133.9 million fully diluted weighted average shares outstanding. For the year, non-GAAP net income was $15.1 million, or $0.11 per share based on approximately 133.5 million fully diluted weighted average shares outstanding. Turning to the balance sheet and cash flow. We ended the quarter with $273 million in cash equivalents, and short-term investments, and we remain debt-free. Free cash flow in the fourth quarter was $15.7 million, which was up meaningfully from $6.9 million in the fourth quarter of fiscal 2021. For the full year, we generated $8 million of free cash flow compared to -$11 million in fiscal 2021. I would now like to finish with guidance. Beginning with the first quarter, we expect total revenue of $75.5 million-$77.5 million. Subscription revenue of $40.5 million-$41.5 million. We expect Adjusted EBITDA of breakeven to $1 million, and our non-GAAP net income is expected to range from -$1 million to breakeven or $0.01-breakeven on a fully diluted basis. For the full year fiscal 2023, we expect total revenue of $328 million-$336 million. Subscription revenue of $175 million-$179 million. Adjusted gross margins are projected to be at 60%. We expect Adjusted EBITDA of $25 million-$27 million. Our non-GAAP net income is expected to be in a range of $15 million-$17 million, or $0.11-$0.13 on a fully diluted share basis. There are several things to keep in mind as you think about our outlook. We continue to take a prudent approach to forecasting deal close rates. As Mike mentioned, our go-to-market team did a great job in the fourth quarter adapting to increased scrutiny we have seen on transactions in recent quarters. While we are encouraged by this performance, the environment remains fluid, and we believe it's too early to assume further improvements. We expect subscription gross margin to expand by 100-150 basis points year-over-year. On a total gross margin basis, this will be more than offset by our proactive efforts to bring down professional services margin to a sustainable level, as well as a lower mix of license revenue, as we do not expect the fourth quarter performance in fiscal 2022 to repeat itself in fiscal 2023, given some of the migrations that were booked in the quarter. In terms of seasonality, please keep in mind that the first quarter is typically our lowest bookings quarter, and we would expect sequential improvements in the SaaS ARR to be relatively modest. Finally, we expect Effisoft to contribute approximately $12 million-$14 million of revenue for the full year fiscal 2023. Effisoft will not make a meaningful impact to our adjusted EBITDA this year, as we will continue to make additional investments to integrate them into our business, into our SaaS platform. To wrap up, we are very pleased with how we performed in the fourth quarter. We are at the early stages of a large global growth opportunity and believe we are well-positioned to build upon the fourth quarter's results in fiscal 2023 and beyond. With that, we would like to open up the call for Q&A. Operator? Thank you. As a reminder, to ask the question, you will need to press star one one on your telephone. Please stand by while we compile the Q&A roster. Again, that's star one one to ask the question. Our first question comes from the line of Dylan Becker with William Blair. Your line is open. Yeah. Hey, guys. Thanks for taking the question. Maybe a higher-level kind of macro perspective too for you, Mike, here. As these are highly strategic discussions with those customers, there's probably, again, a multiyear kind of roadmap in place before it actually gets to that decisioning point. I guess, how are you thinking about the resiliency of the core system modernization initiatives among carriers, and if there maybe have been any shifts in priority relative to how they're allocating their internal IT resources? Sure. Thanks for the question, Dylan. Yeah, I would say even in the macro uncertainty, we continue to see strong demand for technology solutions. The pipeline continues to build. We continue to have very thoughtful conversations with existing customers as well as new customers. I think as insurers are looking at how to respond to changes in the marketplace, they know that technology is gonna play a key role in responding to these changes. These are changes like reducing overall expenses through automation or making product and pricing changes. However, what we are seeing is that carriers are being a little more conservative in terms of committing to big, long-term, multi-year, multi-transformational initiatives. They're going through some extra steps in terms of their decisions. You know, they are going into their fiscal year 2023 planning. We think that we've adjusted very well to this new environment in terms of our overall forecasting, and we've worked this into our guidance. You know, under the current environment, this is what we expect. You know, if things don't get worse, you know, we think we're gonna do quite well, you know, per our guidance for fiscal year 2023. Yeah, that makes sense. I would think that, again, that strategic roadmap helps add from a visibility perspective as well. As you think about those conversations and the value of the integrations and the partner ecosystem of being able to kind of build on top of the Duck Creek platform, how much has that served as a driver of broader adoption as well? It seems like a channel you guys have been investing in, but wondering how that ease of implementation, cost of the upfront burden there from some of these more complex systems maybe plays out as well. Thanks. Yeah. Thanks, Dylan. We do think it matters. Obviously, we obsess every day about how we can lower the cost of implementation for insurance carriers, how we can bring that burden down. One way we do that is by pre-integrating or pre-plumbing into many of the industry solution providers that are out there. That's why now in our ecosystem, we have over 80 solution providers, and within that, we've pre-built over 100 integrations with them. A lot of these, you know, just serve to displace workdays that would otherwise be workdays to integrate with our solution. We do think that is a key element and a differentiator of ours, and it's why we're investing in that space as well. Great. Thanks, guys. Thank you. Please stand by for our next question. Our next question comes from the line of Alex Sklar with Raymond James. Your line is open. Great. Thank you. Mike, I wanted to ask about the faster cadence of on-premise migrations you're talking about for next year. What's driving that change? I think in the past, you've talked about waiting until the customer's ready. Is that just a function of the customers are ready now, or is there anything proactive that you all are doing to encourage those moves? Yeah. Alex, I would say that our philosophy on migrations has not fundamentally changed. You know, we're not taking an approach to force customers down this path. We really wanna focus on a strategic inflection point for them. Back to your question around what has changed and how this is accelerating, I think one item is just our formation event, you know, this past spring, where a lot of customers came to the event, they saw the investments we're making in the cloud product. That certainly, you know, triggered a lot of discussions. They're also seeing, you know, we're being much more deliberative, sharing our roadmap with our customers so that they can see that the investment that we're making. I think many of them are drawing the conclusion that being on that strategic code line is gonna be very, very important for them. That's advanced several of the discussions with many customers. We're pretty excited about it, and we're gonna continue to focus on lowering that cost and coming up with more repeatable models to bring them into the cloud, and we think that'll help us, you know, hit our objectives in fiscal year 2023 as well. Okay. Great. Kevin, on the implied kind of profitability ramp as the year progresses, can you just talk about how much of that's being driven by the Prima XL acquisition? How much is seasonality? How much are kind of efficiencies that you're still going to get? Yeah, sure. I mean, part of my pre-prepared comments, we're not really gonna look for a lot of contribution from Effisoft in year from an EBITDA perspective, as we make some of those investments in, you know, bringing them into our platform, et cetera. What we are seeing is obviously with the guide, we are gonna see a acceleration of EBITDA, you know, come throughout the year. Fourth quarter, as you might as we just discussed, has a seasonally higher amount of license revenue in it than any other quarter. I'd say it's probably a little bit more back weighted towards the fourth quarter, but in general, that's what we're looking at. Okay, thank you all. Sure. Thank you. Please stand by for our next question. Our next question comes from the line of Rishi Jaluria with RBC Capital Markets. Hey. Wonderful. Thanks so much for taking my questions. Maybe I wanted to go back to talking about the migrations and some of the success that you're seeing with existing customers and migrating them to the cloud. Can you maybe talk a little bit more about what sort of incentives you know, you are giving customers, if any, to you know, not force them obviously, 'cause I know that's not your approach, but to maybe give you know, softer incentives to drive those migrations? When we think about like a multiplier uplift from the early migrations, what does that tend to look like? I've got a follow-up. Sure, Rishi. In terms of incentives, you know, we're in deep discussions with our customers around their overall approach to migrate. We're looking at, you know, we've developed tooling internally to help them offset some of the things that they have to take care of, so we have some automation on how we're doing that. In terms of the overall financials, you know, they understand that our SaaS product is a different product, so they have to move to that. We'll come up with a mechanism of which we would, in essence over time, sunset their on-premise agreement and then move them over to the new SaaS, fee or structure. In terms of the way that our deals look on the SaaS side of things, they look like typical new customer SaaS deals for us, because, you know, customers understand that they're gonna realize more value that's tied to that overall product. Got it. That's helpful. When we think about international, you talked about some of the, you know, efforts you're making to grow the presence there and then bringing in some of the learnings from Effisoft. Longer term, how should we be thinking about, you know, the international business? Right now, it's still, you know, mid- to high single digits as a percent of revenue. Over time, you know, how should we be thinking about what that looks like for Duck Creek as a whole? Thanks. Yeah, Rishi, you're right. Today, our international business is mid- to high-single digits. I do want to highlight that we classify it as international if it's contracted international. We do have several customers that have a contract that sits on U.S. paper, and they will have usage rights internationally. But, you know, we are excited about some of the recent momentum that we've had. You know, last quarter, we talked about Hollard in Australia. This quarter, a win with Catholic Church. And, you know, we have a buildup of our pipeline in Europe and some things happening there. I think over time, what you can expect is we'll have more bookings internationally relative to our international presence, so our growth rate. Now, I don't think you're gonna see us, you know, kinda jump up to double digits anytime soon in terms of our overall share of revenue. We think we're gonna grow more internationally than we will organically in the U.S. We're pretty excited about some of the discussions that we are having with carriers outside of the U.S. right now and excited about the progress we're gonna make in fiscal year 2023. Finally, we think the acquisition with Effisoft helps us. It helps us with relationships with international players as well as a global footprint, you know, to build off of as we engage in those conversations and look at our go-to-market strategy as well. Awesome. All right. Thank you so much. Thank you. Please stand by for our next question. Our next question comes from the line of Parker Lane with Stifel. Your line is open. Yeah. Hi. Thanks for taking the questions and congrats on the quarter. Curious with the uncertainty that's out there right now, if you're seeing customers demand or ask for shorter deal durations, or if that's something that, you've actively engaged in over the last quarter, or if that's not the case? Thanks. Yeah. Thanks, Parker. I would say that we have seen more conservative behavior from our customers, and I think that the way that that's manifesting itself in our deal flow is, especially in the tier ones and twos, perhaps smaller deal sizes to start out. We're not seeing that deal duration is shrinking on us. We think that, you know, when customers, you know, do these types of projects, you know, they tend to be committed over the long term. They know that, you know, they have to go through a substantial project to get that live. Once they start building premium, they have to be committed to the platform. We're not seeing, you know, I'm gonna say the length of the term of our contracts be reduced. We are seeing in the larger carriers our average deal size reduced, but we do think that still represents good buy-up opportunity in the future. Nothing, you know, concerning for us. It's just out of the gate, we're gonna get less, but I'm not gonna say a shrinkage of the deal term, or the length. Got it. Understood. I think it was last quarter that you had a couple of contract renegotiations or reworkings and, maybe there was an anticipation of some of that in the future, again, with all the disruption out there. Was there any of that during the quarter, or do you anticipate any of that in your 2023 guidance? The answer is no. There's nothing this quarter that came up. Kevin, you know, you could talk about, you know, some of the assumptions that you made coming into the Q4 guide and how that's impacting us. Yeah. I think from a guide perspective. Sorry, Parker, could you just repeat the question really quickly for me? I was a little distracted by that. Were you asking about the guide? Yeah. Last quarter, you called out some contract renegotiations or at least one large one that impacted. Yeah, wondering if there's any of that baked into the FY 2023 guide? No, I got you. Okay. We did bake in, of course, churn assumptions that we would have in 2023. I will say, like, a couple of the things, like I made a comment last quarter that I was being a little bit conservative on about $600,000. That actually did play out well for us, so we were able to actually, you know, solve for that in the fourth quarter. That's why we did have a little bit, you know, a better contribution in the quarter, in the fourth quarter. Like, in general, I would say we are pretty much in line with what we'd expect from normal kind of churn in 2023, and it's all baked in. Got it. Nothing unusual there. Okay. Appreciate you taking the question. Thanks. Okay. Thanks. Thanks, Parker. Thank you. Please stand by for our next question. Our next question comes from the line of Saket Kalia with Barclays. Your line is open. Okay, great. Hey, guys. Thanks for taking my questions here. Mike, maybe just to start with you, I'd love if you could just comment on the competitive backdrop at all or just anecdotally on win rates. I mean, I know that can ebb and flow kind of quarter to quarter, but as you sort of do a postmortem on the year, how do you feel about sort of you know the win rate and sort of the shots that you're getting on goal as you think about just the you know the competition in this market? Yeah. I would say overall, we're pleased with our competitive positioning. You know, we have not seen broadly that our win rates have changed. You know, some of our competitors are aggressively going into their install base and migrating, you know, several of their on-premise customers, and we don't always get an opportunity to compete with that. I will say that, you know, for instance, this quarter, you know, several of the deals that I mentioned were highly competitive with some of the most notable players in our industry, and we feel like, you know, we're getting great feedback and we're coming out on top. You know, I think broadly, you know, not a lot has changed in terms of the overall win rate that we've seen over this past year. Got it. That's really helpful. Kevin, maybe for you know, helpful to understand the, you know, how the ARR methodology is gonna change, and I think it makes a ton of sense. You know, I understand historically we haven't guided to ARR here, but are there any comments or just any sort of guide rails that you wanna make sure we know as we think about ARR for next year? Yeah, sure. I think, you know, fundamentally I'm simplifying the metric, which is the same metric that it's always been, but it's the timing of deals when they used to come in. I think our old, you know, I know our old method was take the revenue in the quarter and multiply that by 12. The way our methodology of revenue in the past was, you know, trying to there was a cutoff period, if you will, in the quarter that you would either not or, you know, would or not take revenue in the quarter based on provisioning and that sort of thing. I think I'm just simplifying it, to be honest with you. At the end of the quarter, through the end of the quarter, if we land a contract, then we're gonna include that in our ARR calculation. Looking back over time, 'cause we did look at that, it doesn't really change what we've done historically from an ARR perspective. There's just, you know, some timing that we had one quarter versus another, but not material. For me, in the future, I just think it makes sense to simplify it and make sure that at the end of the quarter, if I've got a contract in place, whatever that contract value is for that year is what we're gonna put in the ARR calc. Got it. Makes a ton of sense. Thanks, guys. Good bye for you. Thanks, Saket. Thank you. Please stand by for our next question. Our next question comes from the line of Alex Zukin with Wolfe Research. Your line is open. Hey, guys. Thanks for taking the question. I'm sorry I missed a little bit of it. If the questions were done then I apologize. I guess I wanted to ask what's driving NRR at that 108 level, that deterioration? What gives us confidence or what gives you guys confidence that that's gonna stay stable from here? Then I have a quick follow-up. Yeah, you know, when you think about the net dollar retention rate, right? There's ARR and there's net dollar retention rate, right? I think you're asking about the net dollar retention rate, the 108%. It's been higher traditionally on that. When you break down, you know, where, how, what our growth is, right? There's upsells, like, you know, more capacity. There's cross sells, you know, take reinsurance management and cross sell it across the base. Then there's new logo activity, and then there's like migrations to the cloud. When you think about what, you know, doesn't get included in the net dollar retention rate, it's those last two categories. Typically, new logos and then migration activity don't get included in the net dollar retention rate. We're seeing, you know, a bit more of our bookings in the future come through new logo activity and migration activity. So that's why we think that the 108, it's not a bad number. As a matter of fact, when you think about a SaaS business that, you know, the 108 to 110, 115, it's actually a very good number. We're retaining customers, they're happy customers, and we're still, you know, upselling those customers. As a percentage of overall bookings, we think that that's gonna be a little bit lower. Then ARR captures all four of those activities. It captures all four, so you can see with the 25% growth year-over-year in ARR activity, that's more indicative of capturing all of that. Got it. Just a clarification question. I guess if the $12 million-$14 million that's coming from the acquisition, how much of that is going into subscription? Given the change to the simplification of the ARR calculation, that is likely gonna change some of the patterns around seasonality that we've seen. I just wanna understand, are we gonna get a look back and a bridge to the previous years of ARR calculated under this new method so that we can better understand those seasonal trends? I can make it simple for you, Alex. There's about $5 million that we had from ARR from the acquisition. We had said that earlier, but you must have missed it. That's no problem. In terms of our bridge, like, as we look at the ARR calculation that we have today and we look back over time, it doesn't substantially change. Like, there is no bridge that's needed to be given because effectively in one quarter versus another quarter, if you're missing just a small amount in one quarter, it's made up in the next quarter. Our ARR calculation in general over the last several years is still very consistent with the new methodology. Just to remind, you know, our new methodology is basically just any deal that we close within the quarter and the value of that on an annualized basis, we'll capture an ARR. Got it. Just that $12 million-$14 million for next year, is that going all into subscription or how is that getting broken down? Oh, sorry. Yeah, the $12 million-$14 million, 40% of that approximately is subscription. Perfect. Thank you, guys. You're welcome. Thanks, Alex. Thank you. Please stand by for our next question. Our next question comes from the line of Pete, Peter Heckmann with D.A. Davidson. Your line is open. Thank you. Good afternoon, everyone. Given your comments on win rates and maybe a little bit more momentum in the business, it's certainly early, but I guess has there been anything changed in your mind that Duck Creek shouldn't be able to get back to 20%-25% subscription revenue growth, once we've lapped this one customer loss and some of the slowdown? Yeah. Pete, you know, obviously you could see what's in the high end of our guide, for next year. We do think our guide is reflective of, you know, the two dynamics, right? The challenging selling environment that we're seeing because of the macro environment that we made some adjustments to. We did talk about, you know, some of the churn that we've recently had. With that said, you know, if the environment were to normalize and get back to the buying behaviors that we had seen two years ago or a year ago even, yeah, we think that this business and the opportunity in front of us, would definitely normalize above 20% subscription growth. We feel very confident on that. You know, there's a lot of opportunity, that's out there. You could see this. There's continues to be a lot of pent-up demand as carriers look at replacing their legacy systems and a ton of opportunities in tier ones and twos. Now, what's gonna happen this fiscal year with some of the macro uncertainty and their buying behaviors, we're still watching very closely how they react to that. The good news is we're seeing carriers already work new additional rates into the system. Even the first half of the year, AM Best reported that the top 100 carriers have taken over 10% of rate increases. That's good, you know, 'cause they're getting to a place where they're gonna at least try to offset some of the inflation that they've seen. We're still seeing some conservatism in buying. I'm gonna say long term, we are very ambitious and we believe that if everything normalizes on the buying side, that this business should expect subscription growth over 20%. Okay. Okay, that's good to hear. Then just in terms of the balance sheet, how are you thinking about additional M&A, potentially, other uses of capital? What would you consider to kind of be the minimum cash that you wanna keep on the balance sheet? Would you be willing to go into a net debt position? Yeah, I mean, I think right now the way we look at it is we're gonna be a disciplined acquirer. You know, I want to emphasize, even as we went after Effisoft, that was something that I got very proactive on and something that strategically said, this is a space we wanna be in. It had a halo effect of being, you know, a European-based business that helps our global expansion as well. I think with the cash on the balance sheet, we will always look to be a disciplined acquirer. If it's the right thing that drives the right growth strategy, I think it's something that we would go after in action. Right now, we feel really good about our capital position. You know, with the cash on the balance sheet, the fact that we carry no debt, that, you know, we have lots of dry powder, so to speak, to go after what we need to. I think right now it's more opportunistic. I think we're in a good position as we sit today. Okay, I appreciate it. Thank you. As a reminder, ladies and gentlemen, to ask a question, you will need to press star one one on your telephone. Please stand by for our next question. Our next question comes from the line of Kyle Peterson with Needham & Company. Your line is open. Hey. Hey, Kyle. Good afternoon, guys. This is Kyle Peterson. I'm I'm from Needham. Thanks for taking the questions. Just wanted to kind of square with the commentary. I think you guys kinda hinted that, you know, some of the bookings and demand seemed to actually improve as the quarter progressed, which kind of runs a little contrary to what we're seeing with, you know, a lot of other software companies in the space. Is some of this just your kind of geographic mix business that you guys are a little heavier on the domestic front and have a smaller international business today? Or is there anything else going on that we should be mindful of with regards to bookings? Yeah, Kyle, I wouldn't say that our Q4 result was because of our international presence or our, you know, geographic outreach. What I would say is, you know, I've been talking about the fact that many deals throughout the year we've seen push. We were excited that a couple of deals that did push, we did finally get closed, and then we had a couple close on the timeframe that we expected, and that helped. You know, our seasonal bookings, you know, Q4 is typically, you know, one of our stronger quarters. We do expect bookings to be lighter in Q1 'cause from a seasonality perspective, it is usually one of our lighter quarters. We're planning for that in our overall guide, and you can see that in the overall numbers. I think to answer your question more broadly on this overall concept, you know, when others are reporting, you know, the opposite. You know, one thing that I'll say is, you know, insurance is, you know, an industry that tends to do quite well through economic ups and downs, just because, you know, for many aspects of insurance, it's not a discretionary expense, like retail would be or like marketing expense would be. You know, you need to have insurance to have a mortgage on your house, to drive your cars or, you know, we need insurance to run our business. I think, you know, that helps. Now really what it's about carriers addressing the inflation and can they get rates to offset it because they are seeing an impact in their loss ratios. That takes a little bit of time, and some of them are working that in their rates. Now they're gonna set their fiscal year 2023 budgets. We still think it's gonna be conservative in fiscal year 2023. Again, I think, compared to other industries, I think it's, an industry that will probably, you know, work through some of the economic uncertainty better than other industries. Got it. That makes sense. That's helpful. You know, maybe just a quick follow-up on, you know, inflationary pressures and impacts you guys are kind of seeing in your own business. There's the profitability overall, but particularly in the services gross margin side was, you know, really impressive in light of, you know, what a lot of, whether it's the SIs or other companies in the space have been kind of reporting here. How are you guys kinda managing wage pressure and just other, you know, cost inflation? I know you guys kinda guided toward, you know, the services growth margins cooling off a little bit in the coming quarters, but how have you guys been able to navigate that, and how should we think about, you know, inflationary pressures in your business, you know, over FY 2023? Yeah. Maybe I'll answer that. Maybe I'll cover that. I mean, you know, we all, right? We all are gonna have wage inflation. We're all gonna have cost inflation from vendors. We've done actually a really good job recently of doing some good negotiations on the vendor side to keep some of that inflationary, you know, growth, in check. We're also, you know, focusing on making sure that where we can get CPI increases in the business. That we're able to generate that to offset some of that inflation that one would experience on the cost side as well. When you can kind of neutralize it a little bit from a revenue versus the expense side, that's a lot better. I think that that's a good way to approach it, and it's all, if you will, that is baked into our guidance, both on the expense side as well as the CPI increases. Kyle, I'll just add, I think one thing we're quite proud of is the discipline that we've run this business. You could see, you know, we hit some strong profitability to finish the fiscal year. I think we do run the business with discipline. As Kevin said, you know, we have some mechanisms on the revenue side that could help us, DWP-based pricing, so if they raise premiums, you know, it's not an every, you know, it's kind of a stairstep approach, so we don't always get it, but in many circumstances we do, as well as CPI in many of our contracts. You know, we think we got protections on both sides as we exercise vigilance on the expense side and the revenue side. Got it. That's really helpful and appreciate the color. Thanks, guys. You're welcome. Thank you. I'm not showing any further questions. I would now like to turn the call back over to Mike for closing remarks. Okay. Thank you everybody for participating in our Q4 and fiscal year 2022 earnings call. We're proud to end our fiscal year with a strong Q2 that exceeded our expectations for all key metrics. We're also thrilled to close the deal with Effisoft, which positions Duck Creek to be the leader in reinsurance management and also assist in our ambition to expand globally. We head into fiscal year 2023 with terrific momentum as we finish fiscal year 2022 with our SaaS ARR of $169.3 million, up 25% from prior year. Let me just wrap by again emphasizing that we have an enormous opportunity to continue to grow as the insurance industry continues to migrate core systems to the cloud. Thank you and have a good evening. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.