Duck Creek Technologies reported Q1 earnings that topped the Street’s expectations. The company posted $58.9M in revenue and $0.02 in adjusted EPS, outperforming consensus estimates of $55.6M in revenue and -$0.008 EPS. Duck Creek Technologies CEO Michael Jackowski joined Yahoo Finance Live to break down the details.
SEANA SMITH: Shares of Dove Creek Technologies-- we're going to put that up on the screen-- in the green today. This, of course, coming after the company beat the Street's expectations. You can see shares up just over 3% right now. We want to bring in Mike Jackowski. He is Dove Creek Technologies CEO. And Mike, great to have you on the show. Congratulations on the solid quarter that you guys just reported your subscription revenue, for example, jumping 59% year over year. Annual recurring revenue up 72% year over year. What's driving that type of growth?
MICHAEL JACKOWSKI: Thank you for having me, Seana. It's simply two things. First off, it's just a remarkable industry with a lot of opportunity. It's an industry that spends almost $90 billion annually on technology. But there's a lot of legacy in this industry and a lot of pent-up demand. And the second thing is, we have the leading SaaS solution in the marketplace. And carriers are increasingly looking for cloud-based solutions to accelerate new product development, launch digital initiatives. And, you know, we have the strongest SaaS technology in the industry.
ADAM SHAPIRO: Help us understand how it actually works in the real world experience. For instance, medical claim forms, doing everything digitally now. Not even mailing them, uploading. Is that the kind of behind the scenes stuff that you're making possible for these giant insurance companies to interact with people like us?
MICHAEL JACKOWSKI: Absolutely. You know, one thing that we look at all the time is what we call straight through processing. Insurance carriers have a lot of manual processing-- to your point, processing forms and documentation. And what we do is we turn that process into a digital process and allow the consumer to do a lot of things real-time.
So, for instance, quite often, it's a laborious process for you to add your 16-year-old driver, you know, a brand new driver to your auto insurance policy. And we'll allow somebody to log in and do that real-time, and then adjust their billing statement and send those bills out. So we're driving a whole new level in profound levels of efficiency in the industry.
SEANA SMITH: So, Michael, with all of that, it sounds like you have a lot of growth potential, then, in this space. Are we still in the early stages of that? And what does that growth potential look like?
MICHAEL JACKOWSKI: You know, for us, we are. We feel like we're in the very, very early innings of the industry, transitioning to cloud-based systems. You know, in the past, they would implement new technology. But mostly, those technologies were on-premise code-driven applications that were very rigid and inflexible. And now, they're looking for the cloud to accelerate.
And, you know, we have some great examples where we've taken carriers like Munich Re Specialty Insurance and gotten them live in 90 days and to accelerate their implementations. And in terms of overall potential, like I said, we're in the early industry, the early innings of the industry transition to use the cloud. And in front of us, we see about a $15 billion annual recurring revenue opportunity for us. And we're just in the beginning of tapping into that.
ADAM SHAPIRO: That $15 billion is exciting. I'm curious, though, do your clients-- potentially, the cost savings to them, as they make the transition to the cloud, are tremendous. Would you expect them to share it with us, the clients, or are they going to use it for their margin?
MICHAEL JACKOWSKI: Well, look, you know, one reason why we exist is to really make a profound impact in the holistic industry. I used to work for a remarkable leader that called insurance the oxygen of free enterprise that really helped to drive innovation in the world. But there's too much inefficiency.
And our objective, a broader objective for the greater good of society, is to drive more efficiency in the industry so that they can reduce their operating costs. And when we do that, it allows carriers the flexibility to lower prices, to offer more broader coverage, and indemnify people. So, we think the more that we continue to drive efficiency, that we'll serve the greater good for the overall society.