Industry Summary Articles

Informatica, an enterprise cloud data management leader, announced financial results for its second quarter 2023, ended June 30, 2023.

“Q2 was another strong quarter for Informatica as we exceeded the high end of our guidance range for all our key performance metrics. Our intelligent data management cloud platform, IDMC, powered by our AI engine CLAIRE, uniquely positions us in the ‘AI and data-first world’ as we continue to deliver durable growth and profitability,” said Amit Walia, Chief Executive Officer at Informatica. “We are also excited to have closed on the acquisition of Privitar in July. We believe IDMC is becoming the most comprehensive and differentiated AI-powered platform at scale as we continue on our journey to be the enterprise standard for data management.”

Second Quarter 2023 Financial Highlights:

• GAAP Total Revenues increased 1% year-over-year to $376.0 million. Second quarter total revenues included a negative impact of approximately $2.2 million from foreign currency exchange rates (“FX”) year-over-year.
• GAAP Subscription Revenues increased 10% year-over-year to $227.6 million.
• Total ARR increased 8% year-over-year to $1.55 billion. Second quarter total ARR included a negative impact of approximately $1.9 million from FX year-over-year.
• GAAP Operating Loss of $5.4 million and Non-GAAP Operating Income of $87.5 million.
• GAAP Operating Cash Flow of $36.7 million.
• Adjusted Unlevered Free Cash Flow (after-tax) of $76.9 million. Cash paid for interest of $36.6 million.

A reconciliation of GAAP to non-GAAP financial measures has been provided in the tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Second Quarter 2023 Business Highlights:

• Processed 60.7 trillion cloud transactions per month for the quarter ended June 30, 2023, compared to 38.5 trillion cloud transactions per month in the same quarter last year, an increase of 58% year-over-year.
• Reported 213 customers that spend more than $1 million in subscription ARR at the end of June 30, 2023, an increase of 22% year-over-year.
• Reported 1,940 customers that spend more than $100,000 in subscription ARR at the end of June 30, 2023, an increase of 8% year-over-year.
• Achieved a Cloud Subscription net retention rate (NRR) of 116% at the end of June 30, 2023.

Product Innovation:

• Announced CLAIRE GPT, a generative AI-powered capability that will deliver the advancements of a natural language-based interface to Informatica’s Intelligent Data Management Cloud (IDMC), dramatically simplifying and accelerating how enterprises consume, process, manage, and analyze data. Alongside CLAIRE GPT, Informatica will extend AI copilot capabilities to automate more data management tasks and processes and provide greater observability across data. CLAIRE GPT will be available in private preview in the third quarter 2023.
• Announced Cloud Data Integration for PowerCenter, a new cloud modernization capability to help customers accelerate modernizing on-premises PowerCenter assets to IDMC while significantly lowering migration time, costs, and risk. Available in the third quarter 2023.
• Launched Independent Software Vendor (ISV) Innovate, a new ecosystem partner program empowering ISV partners to create and integrate solutions exclusively for IDMC.
• Launched IDMC for environmental, social and governance (ESG) Sustainability, which enables end-to-end data lifecycle, including discovery, ingestion, integration of data and applications, quality improvements, a single view of ESG data, governance, privacy, and data sharing, helping enterprises satisfy ESG initiatives and regulations.
• Expanded partnership with Microsoft: launched IDMC as an Azure Native ISV service; integrated IDMC with Microsoft Fabric; launched Informatica’s Cloud Data Governance and Catalog natively on Microsoft Azure; and announced that Informatica's secure agent, Private Link, will be available on Azure in late 2023.
• Expanded partnership with Amazon: launched Amazon Web Services (AWS) Point of Delivery (PoD) in Japan to scale our market reach in Asia Pacific; launched Informatica's secure agent, Private Link, on AWS; and announced the availability of Cloud Data Integration-Free service for Amazon Redshift.
• Expanded partnership with Google: launched Master Data Management SaaS natively on Google Cloud Platform (GCP); and launched GCP PoD in EMEA.
• Expanded partnership with Snowflake: launched new integration capabilities with the public preview of Superpipe; added support for the private preview of Informatica’s Snowflake native application for enterprise data integration offering via Snowflake Partner Connect; and added support for Apache Iceberg tables.
• Expanded partnership with Databricks: added support for Databricks Unity catalog across data integration, data quality, and data catalog and governance; added support for Databricks Connect; and added support for Databricks SQL and Databricks delta lake for Informatica’s PowerCenter to IDMC migration program.
• Expanded partnership with ZS, a global consulting firm: embedded IDMC with ZS’s cloud-native ZAIDYN platform for life sciences.

Corporate Updates:

• Completed the acquisition of Privitar, a leader in data access management and privacy software, on July 12, 2023. The acquisition expands Informatica's IDMC offerings, providing a richer set of capabilities to support new mission-critical workloads and use cases across data governance, data integration, catalog and privacy, data quality and master data management.
• Rescheduled Investor Day for December 5, 2023, in San Francisco, CA.

Third Quarter and Full-Year 2023 Financial Outlook

The Company provides the financial guidance below based on current market conditions and expectations and it is subject to various important cautionary factors described below. Guidance includes the impact from macroeconomic conditions and expected foreign exchange headwinds versus the prior year comparable periods. The acquisition of Privitar is expected to be immaterial to revenue and earnings in 2023.

Based on information available as of August 2, 2023, guidance for the third quarter 2023 is as follows:

Third Quarter 2023 Ending September 30, 2023:

• GAAP Total Revenues are expected to be in the range of $395 million to $405 million, representing approximately 8% year-over-year growth at the midpoint of the range.
• Subscription ARR is expected to be in the range of $1,050 million to $1,060 million, representing approximately 13% year-over-year growth at the midpoint of the range.
• Cloud Subscription ARR is expected to be in the range of $537 million to $543 million, representing approximately 35% year-over-year growth at the midpoint of the range.
• Non-GAAP Operating Income is expected to be in the range of $110 million to $120 million, representing approximately 37% year-over-year growth at the midpoint of the range.

Based on information available as of August 2, 2023, guidance for the full-year 2023 is as follows:

Full-Year 2023 Ending December 31, 2023:

• GAAP Total Revenues are expected to be in the range of $1,570 million to $1,590 million, representing approximately 5% year-over-year growth at the midpoint of the range.
• Total ARR is expected to be in the range of $1,585 million to $1,615 million, representing approximately 5% year-over-year growth at the midpoint of the range.
• Subscription ARR is expected to be in the range of $1,098 million to $1,118 million, representing approximately 11% year-over-year growth at the midpoint of the range.
• Cloud Subscription ARR is expected to be in the range of $604 million to $614 million, representing approximately 35% year-over-year growth at the midpoint of the range.
• Raising Non-GAAP Operating Income from $400 million to $420 million to a range of $420 million to $440 million, representing approximately 23% year-over-year growth at the midpoint of the range.
• Raising Adjusted Unlevered Free Cash Flow (after-tax) from $340 million to $360 million to a range of $370 million to $390 million, representing approximately 32% year-over-year growth at the midpoint of the range.

The Company is assuming constant FX rates for the year based on the rates at the start of the full-year 2023 planning period. For reference purposes, the assumed FX rates for our top four currencies in full-year 2023 are as follows:

Using the foreign exchange rate assumptions noted above, the Company has incorporated the following FX impacts into 2023 guidance:

In addition to the above guidance, the Company is also providing third quarter and full-year 2023 cash paid for interest estimates for modeling purposes. For the third quarter 2023, we estimate cash paid for interest to be approximately $39 million. For the full-year 2023, we estimate cash paid for interest to be approximately $149 million.

In addition to the above guidance, the Company is also providing a third quarter and full-year 2023 weighted-average number of basic and diluted share estimates for modeling purposes. For the third quarter 2023, we expect basic weighted-average shares outstanding to be approximately 289 million shares and diluted weighted-average shares outstanding to be approximately 294 million shares. For the full-year 2023, we expect basic weighted-average shares outstanding to be approximately 288 million shares and diluted weighted-average shares outstanding to be approximately 293 million shares.

Reconciliation of non-GAAP operating income and adjusted unlevered free cash flow after-tax guidance to the most directly comparable GAAP measures is not available without unreasonable effort, as certain items cannot be reasonably predicted because of their high variability, complexity, and low visibility. In particular, the measures and effects of our stock-based compensation expense specific to our equity compensation awards and employer payroll tax-related items on employee stock transactions are directly impacted by the timing of employee stock transactions and unpredictable fluctuations in our stock price, which we expect to have a significant impact on our future GAAP financial results.

Webcast and Conference Call

A conference call to discuss Informatica’s second quarter 2023 financial results and financial outlook for the third quarter and full-year 2023 is scheduled for 2:00 p.m. Pacific Time today. To participate, please dial 1-833-470-1428 from the U.S. or 1-404-975-4839 from international locations. The conference passcode is 237691. A live webcast of the conference call will be available on the Investor Relations section of Informatica’s website at investors.informatica.com where presentation materials will also be posted prior to the conference call. A replay will be available online approximately two hours following the live call for a period of 30 days.

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