Informatica, an enterprise cloud data management leader, announced financial results for its fourth quarter and full-year 2023, ended December 31, 2023.
“Informatica closed an outstanding fiscal 2023. Once again, we outperformed all growth and profitability guidance metrics, showcasing Informatica’s relentless focus on executing a cloud-only, consumption-driven strategy. We delivered cloud subscription ARR growth of 37% year-over-year, $500 million in cloud subscription revenue, and surpassed $1 billion in subscription revenues,” said Amit Walia, Chief Executive Officer of Informatica. “Our momentum is driven by demand for our AI-powered IDMC platform and category leadership in data management as a mission-critical component of the modern data stack. We are committed to delivering the best data management products on the industry’s only AI-powered data platform, solving complex workloads that are multi-cloud, multi-vendor, and hybrid while delivering significant value to our customers.”
Fourth Quarter 2023 Financial Highlights:
- GAAP Total Revenues increased 12% year-over-year to $445.2 million. Fourth quarter total revenues included a positive impact of approximately $6.8 million from foreign currency exchange rates (FX) year-over-year. Adjusted for FX, total revenues increased 10% year-over-year.
- GAAP Subscription Revenues increased 26% year-over-year to $300.1 million. GAAP Cloud Subscription Revenue increased 39% year-over-year to $140.3 million and represented 47% of subscription revenues.
- Total ARR increased 7% year-over-year to $1.63 billion. Fourth quarter total ARR included a negative impact of approximately $0.4 million from FX year-over-year.
- Subscription ARR increased 14% year-over-year to $1.13 billion. Fourth quarter subscription ARR included a negative impact of approximately $1.4 million from FX year-over-year.
- Cloud Subscription ARR increased 37% year-over-year to $616.8 million. Fourth quarter cloud subscription ARR included a negative impact of approximately $0.8 million from FX year-over-year.
- GAAP Operating Income of $36.8 million and Non-GAAP Operating Income of $161.9 million.
- GAAP Operating Cash Flow of $101.0 million.
- Adjusted Unlevered Free Cash Flow (after-tax) of $154.8 million. Cash paid for interest of $38.3 million.
Full-Year 2023 Financial Highlights:
- GAAP Total Revenues increased 6% year-over-year to $1.60 billion. Full-year total revenues included a positive impact of approximately $2.6 million from FX year-over-year.
- GAAP Subscription Revenues increased 17% year-over-year to $1.0 billion. GAAP Cloud Subscription Revenue increased 39% year-over-year to $499.9 million and represented 50% of subscription revenues.
- Total ARR increased 7% year-over-year to $1.63 billion. Full-year total ARR included a negative impact of approximately $7.0 million from FX year-over-year.
- Subscription ARR increased 14% year-over-year to $1.13 billion. Full-year subscription ARR included a negative impact of approximately $5.6 million from FX year-over-year.
- Cloud Subscription ARR increased 37% year-over-year to $616.8 million. Full-year cloud subscription ARR included a negative impact of approximately $2.3 million from FX year-over-year.
- GAAP Operating Income of $33.6 million and Non-GAAP Operating Income of $462.3 million.
- GAAP Operating Cash Flow of $266.3 million.
- Adjusted Unlevered Free Cash Flow (after-tax) of $451.2 million. Cash paid for interest of $147.3 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.”
Fourth Quarter 2023 Business Highlights:
- Processed 86.0 trillion cloud transactions per month for the quarter ended December 31, 2023, as compared to 53.0 trillion cloud transactions per month in the same quarter last year, an increase of 62% year-over-year.
- Reported 240 customers that spend more than $1 million in subscription ARR at the end of December 31, 2023, an increase of 17% year-over-year.
- Reported 1,988 customers that spend more than $100,000 in subscription ARR at the end of December 31, 2023, an increase of 4% year-over-year.
- Achieved a Cloud Subscription Net Retention Rate (NRR) of 119% at the end-user level and 125% at the global parent level as of December 31, 2023.
Product Innovation:
- Expanded partnership with Microsoft: announced Informatica’s Intelligent Data Management Cloud (IDMC) capabilities will be directly embedded as a native application within Microsoft Fabric for data profiling, quality, observability, and integration in the first half of 2024; launched Azure Point of Delivery (POD) in Canada to scale our market reach; showcased integrations and solutions with Microsoft Azure Open AI to enable enterprise Gen AI use cases with a trusted data foundation from IDMC; and built high-scale, high-performance IDMC connectors for Fabric OneLake, Lakehouse and DataWarehouse to serve customers’ analytics use cases.
- Expanded partnership with Amazon Web Services (AWS): announced IDMC support for Amazon Bedrock customers to improve the accuracy of key generative AI use cases; earned AWS certification for IDMC integrations with AWS HealthLake, a HIPAA-eligible service that provides Fast Healthcare Interoperability Resource (FHIR) Application Programming Interfaces (APIs) to help healthcare and life sciences companies securely store, transform, transact and analyze health data; and named a launch Partner for Amazon S3 Access Grants, delivering scalable permission management for S3 data lakes with Informatica's Cloud Data Marketplace.
- Expanded partnership with Snowflake: announced availability of Superpipe for Snowflake integrating complex ERP and CRM data into Snowflake up to 3.5X faster than previous approaches; and announced the public preview of our first Snowflake native application, the Enterprise Data Integrator, enabling users to use Superpipe seamlessly from within the Snowflake product experience.
- Expanded partnership with Databricks: announced Databricks-verified Unity catalog support for Cloud Data Integration and Cloud Data Integration Free services.
- Launched a new strategic partnership with MongoDB to deliver modern, cloud-native, trusted, data-driven applications across financial services, insurance and healthcare verticals to combine the benefits of MongoDB Atlas with Informatica’s Master Data Management (MDM) SaaS solution.
November 2023 Restructuring Plan:
- In conjunction with the previously announced November 2023 restructuring plan (the “November Plan”), the Company recorded restructuring charges of $31.6 million in the fourth quarter 2023. The November Plan is intended to further streamline the Company’s cost structure as a direct result of its cloud-only, consumption-driven (“CoCd”) strategy announced in January 2023.
- The Company expects to record approximately $3.0 million to $5.0 million of additional restructuring charges in the first quarter 2024.
Upcoming Events:
- On February 27, 2024, the Company is scheduled to host investor meetings at the Wolfe Research Software Conference in New York.
- On March 4, 2024, the Company is scheduled to participate in a fireside chat discussion at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco at 2:10 p.m. Pacific Time. A live webcast and replay will be available on the Company's Investor Relations website.
First Quarter and Full-Year 2024 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.
Based on information available as of February 14, 2024, guidance for the first quarter 2024 is as follows:
First Quarter 2024 Ending March 31, 2024:
- GAAP Total Revenues are expected to be in the range of $375 million to $395 million, representing approximately 5.4% year-over-year growth at the midpoint of the range.
- Subscription ARR is expected to be in the range of $1.135 billion to $1.155 billion, representing approximately 12.2% year-over-year growth at the midpoint of the range.
- Cloud Subscription ARR is expected to be in the range of $645 million to $655 million, representing approximately 34.5% year-over-year growth at the midpoint of the range.
- Non-GAAP Operating Income is expected to be in the range of $97 million to $117 million, representing approximately 26.2% year-over-year growth at the midpoint of the range.
Based on information available as of February 14, 2024, guidance for the full-year 2024 is as follows:
Full-Year 2024 Ending December 31, 2024:
- GAAP Total Revenues are expected to be in the range of $1.685 billion to $1.705 billion, representing approximately 6.3% year-over-year growth at the midpoint of the range.
- Total ARR is expected to be in the range of $1.718 billion to $1.772 billion, representing approximately 7.3% year-over-year growth at the midpoint of the range.
- Subscription ARR is expected to be in the range of $1.261 billion to $1.295 billion, representing approximately 12.8% year-over-year growth at the midpoint of the range.
- Cloud Subscription ARR is expected to be in the range of $826 million to $840 million, representing approximately 35.1% year-over-year growth at the midpoint of the range.
- Non-GAAP Operating Income is expected to be in the range of $533 million to $553 million, representing approximately 17.5% year-over-year growth at the midpoint of the range.
- Adjusted Unlevered Free Cash Flow (after-tax) is expected to be in the range of $535 million to $555 million, representing approximately 20.8% year-over-year growth at the midpoint of the range.
The Company is assuming constant FX rates for the year based on the rates at the start of the planning period. For reference purposes, the assumed FX rates for our top four currencies in full-year 2024 are as follows:
|
Currency |
Planned Rate |
|
|
EUR/$ |
1.10 |
|
|
GBP/$ |
1.27 |
|
|
$/CAD |
1.32 |
|
|
$/JPY |
141 |
Using the foreign exchange rate assumptions noted above, the Company has incorporated the following FX impact into 2024 guidance:
|
Q1 2024 |
Full-Year 2024 |
||
|
Total Revenues |
~$2.5m positive impact y/y |
~$6.0m positive impact y/y |
|
|
Total ARR |
~$1.0m negative impact y/y |
~$1.0m positive impact y/y |
|
|
Subscription ARR |
~$1.0m negative impact y/y |
- |
|
|
Cloud Subscription ARR |
~$1.0m negative impact y/y |
~$1.0m negative impact y/y |
In addition to the above guidance, the Company is also providing first quarter and full-year 2024 cash paid for interest estimates for modeling purposes. For the first quarter 2024, we estimate cash paid for interest to be approximately $39 million. For the full-year 2024, we estimate cash paid for interest to be approximately $144 million, using forward rates based on a 1-month SOFR (Secured Overnight Financing Rate).
In addition to the above guidance, the Company is also providing a first quarter and full-year 2024 weighted-average number of basic and diluted share estimates for modeling purposes. For the first quarter 2024, we expect basic weighted-average shares outstanding to be approximately 297 million shares and diluted weighted-average shares outstanding to be approximately 310 million shares. For the full-year 2024, we expect basic weighted-average shares outstanding to be approximately 302 million shares and diluted weighted-average shares outstanding to be approximately 315 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 fourth quarter and full-year 2023 financial results and financial outlook for the first quarter and full-year 2024 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 148703. 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.
