INFA - Earnings call transcript Q4 2024

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Operator

Good afternoon, and thank you for joining the Informatica Inc. Fiscal Q4 2024 Call. My name is Kate, and I will be your operator for today's call. [Operator Instructions]

I will now turn the call over to Victoria Hyde-Dunn, Vice President of Investor Relations. proceed. Please

Victoria Hyde-Dunn

Good Earnings you Conference Kate. Fourth joining and XXXX Quarter Call. afternoon, you, for thank Informatica's Thank

Officer. Joining Chief me Financial Executive Walia, Officer; and today Mike McLaughlin, are Amit Chief

couple begin, we we a Before of have reminders.

earnings on Investor available Relations presentation our investors.informatica.com. press release at Our slide are and website

on will after IR the conference prepared remarks the Our call be posted website concludes.

result may or call, of uncertainties. a Actual a results comments implied and will expressed forward-looking those making differ various be we from During the materially risks of as nature.

on For our law. more and review we and including including forward-looking by titled information the statements revise about these obligation information no XX-Q update risks, required assume based or XXXX. Factors, filings XX-K some statements, the as publicly the please of year of in Risk as recent forward-looking full filings, today, company's most except to for our SEC These section are

financial Additionally, reconciliation and we afternoon's GAAP in Relations in be items discussing financial can and certain with addition performance non-GAAP will the nearest release These to this be these measure found a our A for, Informatica's GAAP. press financial slide measures measures available presentation on accordance in to, prepared of website. are of not substitute U.S. non-GAAP measures. Investor

is that, to over it my With pleasure to call turn Amit. the

Amit Walia

on everyone call. welcome the you, to and Thank Victoria,

pivotal a was year XXXX strategy. our for in consumption-driven Informatica cloud-only,

ask the to momentum year, will unfold throughout fourth overall explain anticipated. experienced the details. provide briefly Mike did we and quarter I While as additional why not

forecast. lower with, To were begin renewal than rates

were and addressed. issues transformation the business are related underway through our to work model we be to cloud-only, As of to some execution identified renewals complexity

resolve success initiative resources have it to to this We XXXX. allocated throughout expect and customer

deals and upsell creates term platform. for This opportunities cloud and Second, is quarter for we services a of as in for year IDMC it to more on development and significant positive the this closed long migrations. record on-premises the cloud modernization itself a reacceleration saw very cross-sell

ARR However, than due give it has and higher new of treatment accounting and customers net was subscription subscription the we migration roll-off self-managed the the to which ARR, the expected. maintenance period; during X short-term dynamics: of migration-related, ARR lower credits

a renewal self-managed contracts. the term saw reduction we Finally, in for subscription length

short does revenue business, this forecast. to negatively While a cloud the led impacts revenue eager to to arises did but ARR, in ASC their positive due cloud foreign and GAAP customers XXX. not to This faster XXX GAAP affect which journey quickly. meet not ASC more it with with than that outcomes is from due impacts it sign professional in anticipated, factors, is we term us for along headwinds, happening long start It negatively exchange our mainly lower the term. again services our These

Mike will projections. factors our in adjusting detail expectations he profitability to explain and these guidance, when are for our As growth greater we and provides account XXXX

are going. minute results, the we take of where turning and been in Before we've to context broader a frame like to I'd to where Informatica

future the by few of At on cloud-only, are state. the our out beginning of platform. set to final our on-prem solutions a the XXXX, the have management IDMC since to data start sale products, later. strategy us alongside in only of selling of in those We we announcing years became we transformation cloud-native our a phase innovative committing of marked final the started who on-prem end platform the of and goal solutions our For consumption-driven fully became XXXX, create been achieved When public, transformation. most with the Informatica we our and phase industry's private Informatica first now this

phase Navigating been third at times. have challenging this

strategy consumption-driven of health underlying our cloud-only, very remains the factors, aforementioned the cloud and strong. Sometimes, our business

large, healthy cloud business very high-growth business. end-of-sale with Our declining our even on-prem is

you examples. grew our total representing half QX, year-over-year, XX% ARR. of few nearly To subscription a ARR cloud In give

We XX% of end net cloud year. XX% XX% ARR cloud the the the of ARR to came expect with subscription new from expansion, XX total ARR growth coming almost approximately accounting in the for to In QX, by that mark customers and $X new months trailing of of hit billion Informatica. cloud workloads in new XXXX, approximately from

workloads continue amongst growth expect to existing new customers. for new to cloud majority of be our new the We net wins and cloud

Our rate we the ARR more count by quarter, number by continue for was million year-over-year. customer per cloud XX% year, year-over-year. cloud $XXX,XXX with to Informatica The Cloud average a X% and the the customer spending cloud XX% retention cloud $X and growing XXX% grew of grew pipeline. ARR than net was see in healthy customers

online the We XX% IPOs of with Austin, name company of Takeda, and doubling. sales an world's opportunities with customers, technology closed U.S.-based a to travel year on-prem record the nearly migrations, won financial which cloud to Lumen modernization of expansion of in-term a grew and net new largest deployments with City few. and expansion Bank, with including services year-over-year, cloud deals a some We Axis Yamaha company,

of All and XXXX delivering free year-over-year. flow XX% unlevered strong after-tax this Full accomplished non-GAAP year-over-year income profitability. adjusted operating grew grew while was year cash XX%

leader innovation the continue data market. We remain in to management the

platform, management and hybrid. and data the AI-powered products extremely supporting that built multi-vendor, complex cases only best use management multi-cloud data the operational, have difficult, are We workloads on

Data Magic Quadrant Governance industry a the leader choice as named XXXX by leader for and the Gartner being in for Gartner data for XXXX cloud position supported time. platform report the customer XXth consecutive is in Analytics named Quadrant the Platforms being inaugural Tools Data Integration Our management a recognition, and including of Magic for

over issuing their over year. deeply We our the engage ecosystem from hyperscaler XX,XXX IDMC, enhancing partners, XXXX, prior partners, certifications including with and practices on XX,XXX in XXX up GSI

IDMC ability AI and to and successfully per a IDMC the over platform over XXX our XXXX, month, billion comprehensive Lastly, which grew capture confident At in according we innovation product transactions remain CLAIRE capabilities. $XX through in market end to this of with year-over-year. trillion cloud opportunity processed GenAI XX% cloud pursuing with our the platform addressable IDC,

With our them datascape data connectivity including XXX both we on from now customers, AI with for on RAG are [ platform. using ] and IDMC. With and LLMs for Informatica, GenAI enterprise have for use capabilities data Informatica which for the capabilities use customers about AI ingestion empowered customers GenAI app for GenAI available to processing, and unstructured the data orchestration. pipelines, simplify GenAI these and include we GenAI, Informatica to IDMC processing, readiness

Snowflake all for and Informatica Databricks. has previously announced plus AI blueprints hyperscalers,

have insights X customers or prompts data optimization months, to enterprise we decision last sentiment executed analysis, The XXX,XXX augmentation, include few. name automation, these business cases GPT. seeing calls excluding retrieval LLMs, and and support, and process the are a business CLAIRE Over use to

IDMC's company, some customer an using analysis IDMC for accelerate enhancing decision-making global rapid Utilizing a development, gain is users insights to is Cloud, biotech access is which these great developing realized outcomes. agent engagement for To recipes Informatica up insurance and health solutions and one AI out-of-the-box framework systems. with community deployment, from quickly A company a and leading a stories, claim solution holistic with is patient for by you give OpenAI data building executives company and claim to support. local Google An move service business relevant powered enabling our program on internal and speeding data-driven using These support will RAG over care production products cost nonprofit and programs A and quickly, resources access time. reducing pilot processing. center helps resources This are quality. health using all enhancing is IDMC. and to insights, California-based

we GenAI outside now Pacific United using With XX% CLAIRE GPT and GPT the States. expanded from our and customers of Asia recently CLAIRE services EMEA, Informatica, across are Canada,

announce of our costs We XXXX. to the capabilities of are CLAIRE at to GPT customers. for AI demonstrates advanced no pleased while our our services maintaining providing continuation solutions XXXX throughout This commitment cost-effective extension additional promotion

Our and Informatica sharing product look customer and innovations forward at expanding we IDMC AI May. more platform are to in capabilities, the GenAI conference our World on with

achieved in closing, significant In we XXXX. progress

Informatica in as their $X look XXXX, thank support. execute scale our am ARR to to for to partners, the we cloud ongoing and I like business, much have of to team. customers we I incredibly shareholders proud While billion would

away. With turn over Mike. Please it to take Mike, call that, the let me

Michael McLaughlin

Thank key metrics everyone. with our and The short afternoon, falling good not did you, fourth our expectations, Amit, meet quarter forecast. of of XXXX

a Before the with diving into numbers, the to I'd miss. my high-level discussion begin driving the factors remarks like of

not expected. did fundamentals our cloud as we strong, business play factors remained the out While multiple of

for maintenance. self-managed percentage by First, our roughly which excludes churn, refer for we both approximately impact by and renewal migrations, What cloud forecast. to points customer as rates and versus our point forecast increased percentage the X.X natural subscriptions X of than lower

saw cloud this we quarter. deals acceleration significant Second, of a modernization

significantly modernization contribution deals of result, as bookings than of new deals a bookings of to cloud a percentage As quarters. was X/X the compared expected. total in were mid-XXs higher cloud over our new the prior in QX Modernization to on-premise cloud

results credits While ARR long-term a and good of maintenance net thing to our customers and because we cloud-only overall, period. consistent our strategy short-term, of give lower the treatment this the result the in is with the in subscription it new during migration accounting

which cloud reflected is in of our than key than the subscription modernizations and ARR modernization-related driver roll-off lower higher of self-managed third a positive was completed of This long-term on expected ARR. being total The customer time, forecast QX maintenance trend. success

impacted time a these happening revenue addition than renewal to QX revenue QX, expected. trend. But self-managed greater forecast that term X to our forecast of to year, more and reduction saw for contracts. factors term that continued this length on-premise, in reduced than We we ARR, GAAP was this by we reflect the In in decline length impacted further at average renewal in the

our in this mentioned, beginning data modernization for on-premise that we for believe future. their of which more expect reflects be positive to workloads, the Amit of will are customers fact us the plan As we

dollar GAAP headwind ARR. forecast both the were and and U.S. lower impacted revenue, strengthening than to Finally, services FX of GAAP the a revenues November unfavorable revenue professional to in due

on-prem the now the X.X% which the well growth midpoint the was So base X% our starting me driven let cloud below ARR guidance. by at year and with to numbers, with accelerated net billion, increase with workload Total migrations that, to expansion our of over cloud The $X.XX as cloud. of new primarily was strong from ARR. finished get year, existing total an customers as QX the prior

rates basis year-over-year and ARR the for quarter million the year-over-year $X by on year. negatively fourth a Foreign a total full $X.X on for million exchange impacted basis

of the new trailing rate ARR cloud XX% was months was of a quarter higher-than-expected as approximately ARR million below $X year subscriptions of a midpoint percent lower driven $XXX primarily from now net on-prem cloud ago. million, to cloud subscription that October about total in the to represents a of year-over-year. of modernization cloud from result XX XX% customers quarter. of up XX% by total of guidance came the cloud increase cloud renewal Next, the from ARR, Approximately Cloud ARR deals contribution new this coming XX% this new new and subscription and XX% This Informatica. growth workloads expansion, with bookings subscription our

new Modernizations net up subscription accounted XX% for quarter. XX% of our from last X-quarter cloud trailing ARR,

retention cloud Our our in XXs. was and gross was rate the net low renewal cloud XXX% in rate the quarter,

by impacted $X.X and year-over-year. Foreign on $XXX,XXX basis million ARR subscription quarter-over-quarter exchange negatively cloud a

the down which XX% to roll-off workloads to $XXX IDMC migrated longer was This actively sell, of declined on-prem year-over-year in the Self-managed and and to X% quarter we down million. subscription natural the churn platform. due cloud the of no sequentially effects ARR,

as maintenance down Most third ARR. The we points. past, The XX component Maintenance the total in $XXX completed. now sold to is greater more total was churn maintenance million, was perpetual approximately on-premise somewhat of for basis which of greater represents X% natural decline than ARR of decline projects modernization-related ARR slightly to higher year-over-year XX% rate ARR than is forecast expected. than the due of about roll-off licenses a forecast, were of

year-over-year XX% sum which is ARR simply billion. $X.XXX to self-managed ARR, and ARR, cloud the subscription Subscription grew of

last beginning summary longer count we provide quarter, As metrics, renewal rate. including subscription no customer we and in indicated will QX, ARR,

Modernizing on-prem strategy. base the Informatica's IDMC customer to is important our an part of

our up of the of X.X% ARR X.X% QX, been has end modernizing, in to the of the cloud is self-managed base modernized and from last process or maintenance quarter. As

uplift X.X down modernizations, have average last on life-to-date from quarter. ARR We X.X these a ratio

and was we XX% in ratio in this ratio Over quarters, average a ratio, been decline uplift modernization the Cloud X.X. reflects for X bit past our expecting lower PowerCenter uplift X.X to expect to in a the average average Edition of which deals QX. more modernizations, X.X. were approximately to This modernization had We XXXX uplift over decline

typically this that rates lower have net comfortable and cloud term very deals. as upfront, found expansion better expansion we have have they significant non-modernization are modernizations sales in uplift ratio healthy with We renewal new than drive

to review for of quarter the quarter. a fourth like the I'd year-over-year. $XXX our Now results million, for fourth decrease of GAAP X.X% revenue XXXX revenues total were

but Foreign headwind revenue exchange $X.X to forecast rates approximately $X a of beginning the quarter. basis, revenues a at about our year-over-year FX impacted total rates million FX positively compared million by on to was the

the renewal renew, subscription Total revenues average of for guidance November. below lower due in per lower-than-expected primary the of rate, services strengthening dollar lower X duration revenue that professional were subscriptions and did self-managed ASC million October due accounting standards factors: U.S. revenue self-managed approximately lower midpoint our $XX to XXX the upfront the of to renewals

or Cloud approximately revenues, growing year-over-year. subscription was of revenue $XXX XX% XX% total million

due reminder, these a revenue differ period the between recognition the to to rates and difference from metrics X growth As relative will timing period. ARR, of

Self-managed support XX% or total was revenue year-over-year. declined and subscription license revenue of $XXX million and XX% combined

on-premise upfront we've to out impact GAAP of mentioned our recognition on recognized the added recognized of to help the component from upfront a revenue, has significant software which and the our our revenue ASC new ratably new XXX of impact more to on investors bookings table provide clarity investor upfront this revenue. impact materials, breaks of a renewals revenue reported order contract As the our before, In revenue. license

from the upfront table, for As million. revenues declined recognized revenue you'll QX self-managed by $XX versus XXXX. full million year, by declined upfront And recognized that see $XX

upfront quarter disclosure our and investor will be in revenue We ratably forward going materials every XX-Qs. providing this of our recognized XX-Ks versus in recognized and

percentage The million was $XXX was year-over-year quarter. versus roll-off. to represented and total was modernization maintenance points and XX%, for rate of renewal decline down last XX% quarter. primarily rate the due revenue X Maintenance renewal X% revenue about greater-than-forecast This

million. Professional services includes implementation, $X.X down million consulting which about $XX to revenues, education, and were year-over-year

revenue in and continue services for this that XXXX. reminder, to share of As assume our our our a has we implementation services a work expect declining been trend greater partners as customers,

to U.S. growth Turning to International U.S. $XXX million, year-over-year the revenue. the decline is primarily X% X% geographic declined business. million, of distribution representing license total of and year-over-year declined $XXX to total XX% The to our XX% in representing revenue revenue of revenue approximately in services. revenue. decline attributable year-over-year self-managed support

profitability unless cloud. our QX, I'd note, results Now like Please I non-GAAP metrics. percentage remain to move maintaining was discuss stated. to In healthy We the margins on year-over-year. on business higher margin our focused to X.X point as gross otherwise our gross will XX%, transitions

ago. Operating $XX the Operating operating expenses revenue. was margin October forecast basis year for lower lower point were a but the a improvement than below our quarter, was by XX.X%, income midpoint guidance approximately our from due of XXX to million

year $XXX million $XXX shares. basis net based over XXX was million operating was income and share XXX share million. full approximately margin diluted the per points income year. outstanding prior Adjusted $X.XX the shares. was XXXX, Basic was EBITDA count million For approximately on by XXX Net diluted improved

U.S. unlevered free after-tax $XXX forecast and Adjusted FX dollar the for cash quarter primarily lower paid million held $XX.X in gains consistent due taxes on Cash flow expectations. in balances midpoint with $XX of unrealized cash our subsidiaries. the above was to foreign than million, guidance, million, interest was cash

to activity. like provide share an repurchase our update I'd on

of X.X average common spent A we of repurchase million price purchases. shares the open $XXX $XX.XX through During at stock market million fourth quarter, an to Class

to $XXX intend spent for million $XX X.X week, an million million. approved at market under open remaining January the authorization a this Additionally, as quarter. have another in We share bringing these repurchase account, shares In of our available last February through X our as additional about price an similar average shares yesterday repurchasing total have of these reduced to million dollar XX, result the repurchase earlier into continue repurchase by $XXX quarter, this our million $XXX And of repurchases. we as repurchases the authorization, $XX.XX. our volumes $XXX stock targeting total, of total to remainder count we X.X% from share million we Taking program. Board

million. strong of the position months December. $XXX fourth EBITDA of was of X.Xx the trailing of a was at We year-over-year. increase in end This quarter investments ratio million Net an resulted with of in and cash ended plus cash XX short-term a $X.X adjusted net leverage $XXX billion, million debt $XXX

in and upon end as lowered cloud as uplift to total lower dynamics self-managed self-managed than on-prem expectations. the our of a to Now and planned. due previously ARR revenue total lower and ratio, have income forecast to unfold expand renewal expected saw relative we shorter business total had in Based cloud GAAP we deals forecast expected free we our our rates set I'll had in lower flow We term changes lower the we turn cash guidance renewal revenue. our for maintenance, slightly our the result length, decline operating guidance. XXXX at These assumptions percent for to will average assuming QX, not margin forecast previously modernization our of than modernization our prior services. and XXXX cloud And several professional growth to continued and a points bookings, higher

medium-term offered the growth end We levels XXXX, to expect XXXX. increase in the to but provided total of total the first guidance revenue at ARR in not and we

new but to guidance later providing so do we expect this year. time, not are at We this medium-term

ending the refer full to of Note establishing guidance XX, are we midpoint XXXX. year that guidance for the all all rates Taking the range. into following this December growth account, the

billion in revenues billion, year-over-year total constant representing $X.XX be basis. GAAP $X.XX to the growth X.X% approximately of expect on a range approximately or to X.X% currency We

to representing expect year-over-year X.X% in constant currency to We or ARR billion, the growth approximately billion approximately total basis. of $X.XXX $X.XXX on a be range X.X%

We approximately $X.XXX XX.X% XX.X% on expect of to cloud ARR approximately a currency in billion, subscription to representing basis. $X.XXX billion or the range year-over-year growth constant be

We expect to And X.X% decrease. year-over-year free be $XXX million $XXX of flow in to million, we to the the after-tax X.X% non-GAAP adjusted expect range representing $XXX growth. operating cash approximately income representing to of unlevered million, in be range $XXX approximately year-over-year million

XXXX, first XX, the for is follows. March ending guidance Our quarter as

We be representing million year-over-year million, constant approximately X.X% range the expect $XXX in total or growth GAAP of basis. a X.X% $XXX currency to to revenues approximately on

total We billion expect X% of representing currency billion, to approximately on growth a basis. or in $X.XXX range ARR to constant be the approximately X% $X.XXX year-over-year

We growth in of XX.X% to currency or year-over-year a subscription expect the on $XXX cloud million approximately basis. representing to range constant XX% ARR be million, $XXX approximately

be operating range non-GAAP to approximately in expect We decrease. representing $XX of X.X% income $XXX to million, the year-over-year million

table the on FX a XXXX includes negative expected basis. for press a constant The QX release showing and year currency full impact

information. like For few provide of modeling purposes, I'd more additional to a pieces

First, be unlevered $XXX of tax cash after to million the the free million. in quarter flow range adjusted $XXX for first we expect to

SOFR spread Second, first for cash for the paid X-month million million forward rates using points. year we the estimate based approximately basis on approximately XXX interest in and $XXX a will interest credit be of and quarter full $XX

of be rates, tax XXXX XX%, year reported full consistent rate the expect For full and that XXXX. non-GAAP to we a tax we year in of

rate XX%, cash XXXX. $XX are about 'XX $X the year taxes we higher be million reflects of to and and Cash tax million in fiscal XXXX is at jurisdictions non-GAAP which under taxes steady-state $XX than expected which where enacted laws. we expect in normalized to the long-term our million, taxes beyond, tax full operate in Looking currently a

share our assumptions. count lastly, And

XXX quarter, shares outstanding expect approximately average and to average first million the weighted XXX For to basic shares diluted million weighted approximately shares. shares outstanding we be be

of to pursue the not do approximately repurchases be shares diluted full of outstanding Please expect shares the the intend now quarter. shares. to share be basic year, and end the million note average between to we For million and forecasts average XXX impact we weighted count weighted that include the XXX outstanding shares the approximately share

that, the Vic turn back And call Q&A. I'll for with to

Amit Walia

we The start $X we step in excited fundamental need We've ARR and momentum, before identified very the them. as moment of remains addressing and me although track we're had to let quite in fourth on as for said, reach not health billion the Vic, the subscription improvement, consumption-driven cloud-only strategy cloud take steady our strong, cloud working year, actively remarkable areas our Look, a quarter business planned. that Q&A, are a did go and XXXX. to be I and on milestone back. throughout we

With that, proceed Vic, let's to Q&A.

Victoria Hyde-Dunn

please. Thank open questions, let's Great. you. Operator, lines to the

Operator

Wolfe come from [Operator Instructions] Alex Zukin Research. with line the first The of will question

Aleksandr Zukin

basically what think the wants what's understand, you point, that issues Amit, in I faced the are what there guidance? the of to conservatism on you you Obviously, side. the board. retention understand was fixing Because about and confidence understanding That maybe that? level little ask to that level wanted everybody the like of across on of I you've felt cohorts. are kind And the just I'd help the a happened quarter, cloud in embedded? one get and on a areas embedding that better us of cycles of just given for just bit year full rates How renewal the I these

Amit Walia

for question. Thanks Alex. the Sure,

talk and the Mike we me Let how take what can the into part. baked happened guidance that about

and time, And has and for a and have right? a very and has good job renewal worked of of throughout, or one potential the renewal, you other more what has be cloud look, give we've the issues; renewals we two renewal sense the particular an of it I'll on the organizational, ahead signs working that, could execution, a more of at do One an delivered orange Look, operational time. our operational that. incentive-driven issues, high team, they this a the had you to example that orange issues. the Look, fantastic was operational give to be example issues. rate, is of was And of typically, rates outperformed team identified kinds flashing of ahead

of changes. at in a But look, look, don't may some example period a I to have think exact it We something it. later know well. was comes -- is to answers, example one. that we XXX.XX like they new able of comes in and solve but operational lot great they know example things person That's And exec a delay precise it's and in and happened. quite Basically, That's cases particular for it sponsor the and have at risk. we project relatively And late. a that or renewal directionally it. great exec that, particular it strategy, to that. change great catch new point, want sponsors may be solve like come it, is know how that, kind cases, We it. by a to time And of they of an upfront. a our the caught didn't A shelve we'll teams time And the that

a color is loss is a a partial full not that going of and I'm bit a And the issues also. I'll renewal, customer I In bunch partial it's of XXX%. other The renewal. it it's said, now." is cases, a to of the not going renewal customer churn a on, other have do give only the "Look, every little So churn

those predicting the short. we cases, in fell those these it But job does of can are fantastic upfront kind making our we sure things. and So happen. And make of team a

the would exactly account of team this renewal team had for account does the in it the I gave a important organization Like, but it's that incentive and they in in team them and know where, some team, the cracks. to know would are, sponsor examples some fell Some issues changes, in renewal not that, success cases, if plugged case, the be the cases, team together. know, you example not through and and,

the that done putting through those lot right the are that examples. things a is working for together be And These incentives we well. the are everybody know. that fixed all stable Again, has more. have very, in We place very to a team very this

We examples Alex. solve work have are do them, but to those that, of to

XXXX Mike to that give I'll the it into to we guidance. baked how say

Michael McLaughlin

will not we XXXX. than year and cited that much the it positive as to worse rates increase Alex, what in we that prepared without actions expected, that we've rates. into improve impact, we basically described. how result of the have in So of assuming pushed what XXXX that Amit work a the in consistent were we through hopeful the are guidance. remarks renewal a We're they the in any going of experienced but those they QX we're We're renewal putting can with XXXX, are hard to as But full

Aleksandr Zukin

And both just maybe as you. it. Got you then for of or follow-up for either a of

is And management into the Have of of changing, elements to of rank, kind just the kind about talent evolve think technology you after respect changes mostly If the those kind in conservatism environment that changes guide? these X types elements competitive market embedded occur. as maybe any of all Is stack the projects with X? framework of again, or any the demand there's events, and X? embedded, is versus it probably of the execution typically it versus of kind kind of you

Amit Walia

you Many embedded questions, of answer let Alex, me kind the across give board. the

of deals closed First creation demand expected renewals. the the pipeline remained incoming ended it as was we Actually, to that to we the year quarter, be. the all, with we course where We the about for all said, incoming actually this raw steady is I pretty that us or as cycle of talked good. throughout tied demand same

through we examples the So that did GenAI not saw of gave see how anything that that project I we saw we XXX If did customers not anything, you anticipate. using telemetry.

create, we the in "Hey, here, is we context to In IDMC fact, we healthy are saw about of said, as GenAI, looking our are in which at a customers we Xx which increase looking pipe GenAI. attributable pipe the sit at

you to of that." and the the half we do as the POCs come year. us As that for at look demos, pipe first seeing show We are

in change we didn't that to any So that see area.

I look, changes, a on very, will world. terms of that of repeat in well-oiled that the very side organization machine we have And

in We the there, our have renewals some that years of well, delivering who's been performed run leader renewal for who's a has a XX company, team significantly best has the in industry. this rates

I think the issues. identified has team the

operational through. made changes. not work course of Like the year, confident have that they'll very assumptions. have incentive-related it in any We Mike baked said, we I'm over improvement the

work but end-to-end have questions. your the full that's answer We to to do,

Operator

The next Bank of Koji from question line America. comes Ikeda with the of

Koji Ikeda

follow to up the renewals. on maybe I wanted

having bit we right just difficult I'm from so partners. view out heard as little customers and more of your a pretty now, And lot it a considering time mission-critical hard and renewals we've that are that squaring a why there, Informatica,

just pricing you I too. renewals. mentioned being dig I an trying get wanted is with the other things don't getting Informatica to Is for just Amit, Is So understand on. I into away shifted bit, issue? that competition to from of little I a comment budgets mean, else? something I'm it. kind what going mean, on going better? are

Amit Walia

today. a Alex. perfect I was answering further through Sure, not it look, of for I answers for that think may there's always you Koji. going what portion And be me have let Look, pass to I

could it a like ton our renewal of of said, way, of can own loss increase issues I've out loss through to $X.XX did the or with customer customer. mean that fix. if be reduction went those. a $X.XX that internal we of be of we mathematically, we've saw all it, said, $X was is. partial the It had XXX% with not in a particular it a like And operational a As us. By we execution I But There's I those it churn lot they us, still a average or And of that. it project, will a and whatever be into to is. $X.XX, bunch may or talked of whatever comes dug of lot it or so the

anything before in here is adding business. before of things where X dynamic over now, is seen gone our a imagine, I increase eye a you of book the there. at that different looking the competitive in every up Like Xst of we any business haven't said, Jan it's quarters in can quarter that off or took absolutely accounting-wise, say not As from everything bunch I'm or than Koji, XXX% our true, to and any before We but we saw there. and over through book opportunity going see the sit X ball. we to we've didn't quarters of little

And has one comp that very other this of look, engine part the is well. is that the a

these out what And the take the say, things now of the while we done, we end happening, that, new at be And focus a know not year. sometimes granted. to as trying lot net I for to tend us of to the we, happened on take are and think would all and do. business it did we And us I and close to year to have should honest, it

Michael McLaughlin

just cloud I'd Remember, a things, X%. Koji, for subscription by annualized self-managed down add a additional color. for on renewal couple came of the rates about blended basis

that it of or of the X%, or thesis that's doesn't, overall our business the an So stickiness in view, X% talking when fundamental growing big the But a you're product impact. overall. change business, the the a in nature reflect has about

can that's see You we make own judgment, but how your it.

Secondly, for higher it there's company like pretty low we but it's in expected, still and XXs, But quarter-to-quarter software in the X% are in signal. for in was than the improvement still that's the good cloud precise going much We're with rates the think get we a mentioned the ourselves. not versus room as the more than that to call, renewal too XXs. low we noise because

Koji Ikeda

Got GAAP push I understand: FX. know guide to? in a maybe reasons, X which for totally and professional the to And is of Mike. revenue it. X services release, of it's you, And out I press difficult so X. And guess and you laid the total other for Why the follow-up more I

renewal durations You did now, also rates just another issue. as talk but about

just And I'm GAAP question trying guide model? aspect. is the is, the with really the so understand total predictability hard Informatica really I just revenue mean the to

Michael McLaughlin

accounting day, the It And just do me we new renewals XXX it's self-managed. it's of sell let with any hard. end really primarily because around don't the the at standard. to explain ASC has why. upfront actively And Look, Yes.

really forth. we've that's talked it a of of and small customers book the It's as about, government about itself, of Some piece it. renewals. But sells to so

lower get not about we an there's year or nonrenewal our because on of forecast, forecast was not And big of at talked between we recognized so TCV XX% numbers recognized self-managed outsized just renew, a X X negative that was points had which on you're negative those renewal upfront something anywhere for recognizing year, of it's and doesn't than fast. it's nonrenewal. X And if percentage really of renewal and XX% revenue rate contract, or impact the about versus not

that's and recognition the renewed piece based year, a contract. same work. second upfront term basic it's revenue upfront it's the years, $XXX goes it's your The X-year if Then And by total $XXX that TCV. more that's of TCV the and a concept. contract the the the actually, a $XXX value because down deal of percentages is If length, is on X.X way or amount, for revenue

So length. and term it's renewal variables, just very sensitive to rate the X those the

Operator

the Hedberg line RBC. next question from will of come The Matt with

Matthew Hedberg

I guess some deals were balance these the driven Edition? Cloud year? deals of by the pace how I of about modernization modernization should And guess, deals, think these the through PowerCenter of migration on we the

Michael McLaughlin

was in QX. was And in that modernizations But mostly XX% QX. modernization. in happened the XX% yes, It of well. which of move The So to X/X Data Cloud customers Edition. total PowerCenter lumpy. to pace we versus the QX terms bookings, ready booked migrations, is Exhibit going as were increasing future were about in in are now quarters, in it's those an A that more of Master QX as remainder mix, be what Management portion is the QX of Of than

a of Going new XX-XX forward, and forecast we customers versus workloads. have about modernizations net mix

we in had Before the results in we had mid-XXs. the expecting QX, were we something

what But variability adjusted is to stronger growth, momentum, be now year pipeline we've noticeable. a of full So stronger modernizations we see quarter-to-quarter the will our 'XX. bigger forecast in reflect

a expecting though, mix. full the XX-XX year, about we're Over

Amit Walia

take I'll And I this just think a on one. step back again, Mike, sorry,

you While while as has here customer its handicap a landing natural short have, obviously, talked anticipated IDMC that but the on sitting benefit. forecast not has can in about we we modernization, a it appreciate, are Mike term, the meeting but

plus with new to and shared. the NNB, of do all, mod as other also of deals non-mod of want machine, come the the we've platform portion stuff customers well-oiled part also, First expansion is IPO bookings, a because a very

it's related So It good has term see. thing. accounting issues in what the is a which short us, other for we obviously

Matthew Hedberg

it. Got

to kind lower future? said think X.X. Or I could the do expected. sounds guess, range this I like maybe think drift of slightly was then stabilized point any the think And just It that continue uplift, in you to path? more here like you a on that's in there Okay. to migration that X.X the reason is that, at of lower

Michael McLaughlin

And it is give sooner after it initial once modernizes multiple, of forth, they're it customer of what number to and is amount a happen. And we cycle if better a and we customer economic parts. the they opportunity big they're the life let think Modernization which or out of stabilized, basis. good on credits has broadly One the Informatica. it's and We modernization, Yes. big upon so but just a cycle third movement of things for to bit answer more that the little in about of that on of me value the life category strike happens turns lot on that all, the away the modernization that value view so a It's versus opportunity. a we cloud, a customer everybody it. is modernize, a question how modernization later, the the what the understands strategy moving uplift terms the customer modernized cloud. the that when so part happens the view And deal customer we

I remember drag to it. time but new repeat I'll the I to additional initial booking apples-to-apples sales of The the typically addition referred modernization in And this, at modernizations requirement signing.

than So buy them of the quality advanced IPUs to and data XXX replicate that access on features they IDMC and they all their offer typically data more modernization, governance will because need for the be would just there's that realize That's required stuff point can they they buy great more platform, and than with modernization. IPUs more they one. the control, so do

the is importantly, and workloads at Again, cohort have we utilization we good that renew they're things non-modernization that new to we a of we have have very once it's be sort see deals that a as higher of and consistent statistically modernization during up significant well. net expansion those implemented what we is And renewed, they rate very with Second, deal sticky, term now found much does than and the XXX%, find think to modernization because overall, then very third deal and healthy. running, that and found they is are they're do. a and

and we're the somewhat together put that's it the equation, initial because of part So lower when with comfortable you put all that picture. cycle into you life very that value only ratio a uplift

planning, price primarily organization of impact lot customers they The a that a in has their modernize budget, period. does there's because lot We've a willingness that primarily ready price. of modernize they're to particular to there's on based when there's Now lot, happen. about a a talked modernize don't lot of

for the every quarter different have periods. that forecast continue range It at be reflective And uplift we that so get value, fact life every we will We lower on cycle may stable, of pretty to we're because be we customers it the the think to to cycle happy life look in the context we're multiple the are margin, 'XX that. modernize that's choose of of those terms future going is customer but to under to somewhat it value year, that accepting. in and of and

Operator

Brad of with comes line question next Bank. from The the Deutsche Zelnick

Brad Zelnick

But why similar we you're dramatic make look Because change. that or doing guide? the right, and out into to transitions things, get go companies renewals, kind think common, take results people disruption swap to root having factored underlying what's what much other is all we within you causes as several at various appreciate are that it's execution could How that. quarters through related like to identified these especially to I you'd look software internally I your these this? And at understand Amit, control. the and you've of specifically issues the address if

Amit Walia

comment making organizational disruptive on actually taken we've So two are comment I'll how changes. that things. into guide. then the We make again, and guide not any One as the I'll to Mike let

beginning, And plan not. some and the And successfully way, has that delivered team. it way transition we was has are the to we of when That there renewals and throughout. us detailed been I from team very, well-oiled cloud, for whether And the basically we maintenance, with repeat whole very fix all of a that very throughout. to uncover the issues, best-in-class We collectively will to by the subscription, multiproduct has have this, us leader team to a digging renewals gone a have it. team in we've from to the through deep through like maintenance gone the time

Now necessarily as it are not time. you quarter-based, said, renewals like can I takes imagine,

also but make that to So to going make to forward. take to we're the that level we time the of time, just to whole to make going the happen and going better take fix changes, execution that are a opportunity not basically just what to happen, happened us take take

changes not there. over So we looking wholesale are to make

reason we know for what delivered repeat the day the out me for has throughout day that, us. team let in, because So

tracking people already have manifold, are in, been process doing obviously There rigor. the are are That the the how that have we and make made, sure that's increased operational we financial of or definitely, of happens, on a and incentives we are lot how business at and forth, incentives, other and we baked cross-coordination that's changes so and like what tracking so that doing. how we business has do

year, rolled it what stuff in for the hand So I'll I for just that but over, that the saw said forward guide. with QX think we we all have Mike happening,

changes happened that over expect those the year. over want finish to sure as course to we time to the make have So not confidence we tremendous properly giving But want anything are will get sooner. for to XXXX. we all to happen We there we have do able of I that be the

Michael McLaughlin

procedures to can and mentioned, They're additive. changes add the systems are that that processes and adds making is and And Amit not about. implementing the additional in the you're as only talking that thing we're disruptive that, I the way that we're

so of being there And making any to the them make It's things see risk an changes opportunity don't worse. of that we're implementing a I better.

Brad Zelnick

follow-up. could hear, a good ask That's If to Mike. just I

cloud out as that less base. self-managed adding same sticky the new expect in that in to Why you're be being than churn thing higher tenured the going we called You happen cloud? will well? customers legacy shouldn't the as less Are

Michael McLaughlin

We're years. self-managed different, off point. because at it X get to end the innovating have of has not been sale completely realize It's Brad, some to that and for it customers they

have And punitive on-prem off. no who to don't future they doing And it. so in anything to everybody us not is today, dramatic we're with realizes but to get them or move that have and there's force they off,

market where products, got innovating, growing a only best we've different have use the are cases. and the very, have we then us from very the platform, cloud, so sticky And behind we we

Amit Walia

that, same to same workloads the do cloud, the only platform on are non-AI of the capabilities and all ability add in at to customers to that time. where available the AI have AI And

the products. all I not all non-cloud the on anybody So they're for you, the cloud. That's examples on gave available

Operator

from line with Baird. of next come The William will question the Power

Ioannis Samoilis

for Samoilis Ioannis is on This Will Power.

more the alluded just Cloud the are the would on lower I actually forward. be to how be other why play post-modernization uplift lower follow Any But color in going in the Or what's higher can wanted Just Edition that important up the definitely you're know ratio. just the seeing of concentration, Is expecting lower expectation, uplift be the prepared informing higher wanted the clear the than ratio. your what's deals. you XXXX? reason a on questions PowerCenter uplift the that at concentration to couple of on informing there? there And elements appreciate ago to a uplift expectation for ratio remarks, initial about I great. you're the activities comments even

Michael McLaughlin

move, just it the price modernize it, away the providing customers finding Thanks. incentive that to we spot but as really sweet any experience to and financial folks is that in with enough It much value have causing the some are of mix. primarily discovery more for concentration sure. giving of we're so we But Yes, where not faster. is about not of

combination mix, in field a but of and of of the the it's So terms and the outcome works in gone doesn't pricing to that's of it's to where of actively it's gone. behavior want what why what modernization. the volume watch the And the and we pricing terms achieve we pace

Operator

of Howard from line the with Guggenheim The next Ma question comes Securities.

Howard Ma

net are from XX% customers, for are And guess of Amit they coming What's give on? if on so, either clarify, net are these new vertical Where Informatica? us those you or IDMC landing just some of the new color that's new I customers? of to you or can they Great. industry ARR in can mix IDMC terms customers more product families size coming which from? these and the Mike,

Michael McLaughlin

but mix of for varied. think they pile a net the folks glimpse on, once disclosure new. but are And up accounts a year, of let a X% X% that the materials, yes, Amit to going I'll And that. We're And not really in customer absolutely investor broad, year-over-year. And get that diverse is healthy are our by XX% customer I way, you'll of Well, the annual was you'll us. count quarter, it's coming see give our highly cloud count. every It's basically and growth. to that what it

Amit Walia

of give that. I'll you examples Yes,

particular diverse. very not all, vertical. a of first to it's, It's yes, tied think, I industry necessarily

is we supply their manage Of are in to news platform core most with can verticals, chain. you leveraging the course, that visibility basically They expect GenAI the our into build-out. have whole semiconductor basically the the like, the company

of our new net of now top companies are In couple are across a so that. X world to board. the It's XX them customers, the similar It's right customers semiconductor fact, around the which just This as insurance tech, are that. end health course, mix companies, that like up being services well or there into of is well. financial the as companies international things largest. not care, And and

companies. the are kind of those So

of platform. multiple think company The is more as used cataloging, includes both Data data both on about as semiconductor the integration, and to products we that supply well then Management IDMC app I and capabilities. integration you analytics integration, said, use the than when looking quality capabilities. their Master ingestion, And around always kind data those data manage use I it's as that And say, cases the chain, some quality, those other like and because, get of cases, of includes cases products use think

those see. we what So are

Michael McLaughlin

customers, And they large yes. tend be to

Amit Walia

all be these to customers. Yes, tend large

case, our large SMB, not or end customers, it's in mid-market. always or So necessarily low

Michael McLaughlin

and predominance enterprise. say always, large And is per the is the XX% customer. investor see as ARR $XXX,XXX to materials per but also wouldn't I our now our you customer can grew that average year-over-year close cloud from

So do transfer customer market. simple few that's to data from warehouse, the needs mid-market to small X our a that data apps not and

Howard Ma

X.X. X.X Got along. you that it. follow-up, X.X it's the the not lower the a your are IPUs And dragged there in time And to I'm additional but uplift, as explanation Mike, are included in that that's X.Xx, at earlier to ratio, mentioned that assuming of uplift

you if true? would whole, migration then those, were that And the include to prior? Xx it if initial is to So relative the you will, make

Michael McLaughlin

Yes, getting you're I what think I see at.

other it drag, So sounds not modernization. of realized, great along, first signing uplift but can in drag we signed the stuff do to mean is "There's good a time way, they workload, bad at they with the up word, like all, the IDMC. the It's I modernize a It's it first of the later. uplift when initial

more to apples-for-apples the to migrated above use let's need IPUs So that what we on-prem buy over That's stuff." and run workload. some additional

or historical to clear. of time uplift. ratio. hopefully, the not do modernization The the signing So that's uplift It's on-prem only ratios X.X cloud X.X to include additional that apples-to-apples

Howard Ma

That's Mike. helpful, super

but I Like, probably I you're billion bit right, know amount billion. have like of natural this bigger, of And initially, migration, and where that $X at. the sorry for I'm billion, help additional it much? getting to forgotten on get $X.X how the think billion, becomes upon lose guiding as later a gap think the $X.X on to that and cloud Like, amount versus does $X you little in some that mix the at you ARR, contract amount bigger. ARR time the think to I now, sizing was close you closer of that on cloud Because add renewal? follow-up is, like the you tried the follow-up, gets so out like that migration

Michael McLaughlin

gross of a where accounting the period, And prepared know But I that the the we the get don't the software, the number, we debit average, new the I of contribution because we endorse new old amount term billion, against be, that for that we in on-prem right, stuff that $X.X of the get that maintenance don't modernizations to that want directionally. less in Look, and years. cloud you're you to tried it cloud to translates that. that the for ARR on software, remarks cloud Yes. have have sell to subscription entire total that to got at deal, rule bigger happens into credits which X.X the deal

that of actually potential the understand the in a it's full the is hidden to but or short yes, don't as going Because amount, the total, greater we renews. customer lower ARR ARR less accounting be, near-term they're when paying. term, to they customer the amount, back percent about care show to than full the So end contribution the ARR sees that unlock paying sell the the it the the migrations requires us more

renew a an renewal, that's without if is. So when even to actual for it, we it up lift, value uplift what the contract price comes

more the as future it drag is in the those term, of things more of more short the we an renew. it, a unlock it is So in periods do benefit but

Operator

from the comes question next line Patrick of The Scotiabank. with Colville

William Vandrick

I Colville. GenAI. agents, the Informatica? then on Vandrick AI XXX for using for year for does This think of given for it XXXX customers is here? will Patrick Informatica more AI you And is Amit, What agentic take adoption widespread mentioned mean Joe enterprise what

Amit Walia

customers. be Number I questions. get always one for where enterprise different serving we one -- because wrapped the can up everybody that that, purposes, practical of those customer two counts remind things end all around So is can everybody

work the insights better over that's a a the from out AI building company figure own doing basically or a these us to customers they framework, to care trying the use of POC company; So problems, Like, very their small you do are company patient and to mission-critical care get system. not trying internal enterprise now figure health Google and any are customers phase gave to large right engagement, to These example, health trying I in a there for it small any cases. that examples Cloud out. biotech leveraging to are solve are

can into are term customers, large when you So customers small, into upside XXX bigger they the look but when over think production. of meaningful long obviously of course go these that translates

your let world. we and agentic, ML a we I think To look, that, on me in launched you, the -- remind question when given were CLAIRE XXXX it's in great

GPT CLAIRE stay we we of tuned. on as benefits more are the got the and many that one obviously, the using more put over that for has about that talked years, of been we CLAIRE could get world preview we then to as by, launched. the And could And when last of So hone customers many, out able well. it terms of coming and exciting GenAI instantly the GPT CLAIRE CLAIRE announcements. in many were to Obviously, came copilots the world

I will basically all we'll you Informatica hopefully them think see see get to you at which World, did. of

William Vandrick

sneak in is XXXX? I about for how in should U.S. federal that think And Mike. could of one if And we segment much government? How Informatica's business

Michael McLaughlin

any we Yes, that it's it watching no And X%. but different indication today it. was than less yesterday, we're have than it's

Operator

of with from The Truist. the question comes next line Jump Miller

William Miller Jump

But maybe or $X.XX. $X.XX mentioned just to $X talked about to you and one. I'll keep partial going even it renewals

it? recover competition. the is no the to pipeline something You remains like, in that curious, mentioned with chance change Just in that

So going. that where is just curious

Amit Walia

is mean, the ever RPOs I answer give up. don't Look, yes. mean, Yes. I

that's think for a not And will cases work cases may right. and emerge I a that I many the basically thing is way in customer platform basically the of losing period differently. use think very them time, had use new their important because over where, to present absolutely a we've back team

So was did in a over all reduced that mean of In we lost yes, that lower cases, there. customer. it important the why answer rate not is the cases, to a renewal which reminding partially footprint is that we the lot just

use team are time, as for same the I at But course. of said, lose customer. doesn't yes, the So what other sight of that cases

Michael McLaughlin

and negotiate to rights for specific a just to future frictionless to by of do certain unit. not ability is they're new And some help a just later that, don't buying When they at buy recover they them that up model new things. or to or we new the giving contract in capacity. products do they need They on, And when have made processing periods, we pricing more completely less They're or the themselves downsell use Informatica more, have, find cases renewal, the reduce service. they IPUs.

Operator

the from of comes question UBS. next Dietz Austin with The line

Austin Dietz

X% equation talking like felt we like update any should thoughts like just that the overall currency return thinking the constant a for sounds ARR might the And forward? But a year. growth Informatica about it going Mike, we're on year, growth how this to about double-digit initial you be at given framework guide previously. it later little

Michael McLaughlin

the additional to expect growth both 'XX we We're prepared higher that to say those not metrics, revenue, is of we this Yes. have in in ARR on and at providing did do that time. remarks than guidance What 'XX that, any expect prior of so the Stay we lower thought half. base later of We additional than course. not tuned. QX, providing But a do off first in end the guidance. to had we're beyond do

Austin Dietz

ARR Okay. And the growth guidance. cloud then just on XXXX

growth year deals to year sort For to XX% more this and XXXX, I of we're this know here -- to sort where growth from, XX% talking it's in coming to in as well. cloud think, go of decent migration rate the roughly I decel year about next a

growth but pieces if through think hit talk I you ARR maybe So guide. cloud just we've some on factors, of the to could XXXX the the moving

Michael McLaughlin

sure. Yes,

versus XXXX, hypothetically expected going been and XX.X% cloud We Even than for XXXX, we that if we So expected primary they for the talked landed guided was two cloud learned expected. the XXXX would otherwise, guidance right? that always that would we ended QX subscription XXXX, things renewal what as account of the reduction that's be migrations at of We of have there. for the done in growth we are XX.X%, versus XXXX start contribution growth had 'XX would and bookings have lower had the higher software what in to Those two two ARR about the forecasting guided Versus XX-XX had growth had the we we in what to XX.X%. at sort we have for learned things have we gross are total and the that's rate. QX, lower different amount guided exactly are guidance XXXX. in let's that there than we drivers, would are that, so in not and been lowered we

Operator

Q&A the final for remarks. now will the the team management over session. I concludes call That turn to back

Amit Walia

Well, need heard you. it we to Look, Thank know is you Mike I to issues as you we've about fiscal on of over on, look, thought appreciate the the Having course, and from we work it, dialing QX as all what the XXXX. year. work that are team heard from end and, like said everybody in. anticipated said, we I didn't as we that, me,

it the healthily the to profile have. growth cloud are $X spite XXXX our a of I to of growing a actually and step continuing and time we and, you our and our a that back in taking for all continue stuff, commitments, of of with against actually think ARR landmark year into as look execute that average profitability billion with hits I NRR, where I to walking We mark all ASP, today. $X we XXX%-plus million-plus customers business at remain thank course, committed the that

Operator

your may That you participation, now your all today's call. disconnect and Thank you concludes for lines.

Informatica (INFA) 13 Feb 252024 Q4 Earnings call transcript