Also, during the course of today's call, we will refer to certain non-GAAP financial measures. A reconciliation schedule showing GAAP versus non-GAAP results has been provided in our press release issued after the close of market today.Finally, at times in our prepared comments or responses to your questions, we may offer incremental metrics to provide greater insight into the dynamics of our business or our quarterly results. Please be advised that this additional detail may be one-time in nature and we may or may not provide an update in the future. With that, let me turn the call over to Marcus for his prepared remarks, and then I will provide details regarding our fourth quarter and full year results and our outlook for fiscal 2013. Marcus Ryu Thanks, Karen; and welcome to all of you. I'm pleased to report that our fourth quarter was a strong finish to a very good year for Guidewire, including revenue and profitability that were again both ahead of our expectation. Total revenue of $67.6 million grew 33% from a year ago and was $4.6 million above the high end of our guidance. And similar to Q3, all revenue lines this quarter performed well. As an enterprise, we care most about growing our base of recurring revenue, deriving from multiyear licenses and ongoing maintenance agreements, both of which are built annually and on which we have historically enjoyed extremely high renewal rates. Our full year term license revenue was up 24% year over year and our rolling fourth quarter recurring revenue, which add term license and annual maintenance together, totaled $104 million at the end of fiscal 2012, up 28% from $81.9 million at the end of fiscal 2011. Our revenue upside flowed to the bottom line to produce non-GAAP operating income of $9.6 million in the quarter, which was also above the high end of guidance, and yielded a 14.3% non-GAAP operating margin. Non-GAAP net income was $0.10 per share, $0.05 above the high end of guidance. We ended the year with 837 employees, up 29% from a year ago.
Though headcount grew considerably during the quarter, with an all-time recruiting high of 68 new employees, we did not reach the even more aggressive headcount growth built into guidance, and this contributed to our earnings upside. We continue to recruit and have aggressive hiring plans across the company.A primary driver to our overall financial outperformance in the fourth quarter was our services revenue which at $30.8 million was up 60% from a year ago, considerably ahead of plan and reflecting unexpectedly strong growth in the number and scale of our implementation. As we shared in our last two calls, utilization rates are above our long-term target, particularly as our systems integrator partners ramp up their knowledge and credentials in the policy and suite domains as they did with ClaimCenter over the last several years. In the meanwhile, it is important to understand that our professionals services form the foundation for our lifelong, highly referenceable customer relationships, which drives market share gains and which we believe will impose a formidable barrier to entry for new entrants. Our services are also profitable and provide positive cash flow, and the demand for Guidewire services reflects our current momentum in replacing legacy policy systems, the largest segment of the multibillion-dollar market for insurance core systems software. Our experience suggests that the complexity and criticality of policy replacement leads to this segment being several years behind claims, but upwards of 50% to 75% more valuable per unit premium. So we are very encouraged by the strong demand we are experiencing as exemplified by several strategic sales in the fourth quarter that I'd like to highlight. Read the rest of this transcript for free on seekingalpha.com