Industry Summary Articles

Informatica, a leader in enterprise AI-powered cloud data management, announced financial results for its second quarter 2024, ended June 30, 2024.

"We are very pleased with the continued customer momentum and consistent execution from our cloud-only, consumption-driven strategy, enabling us to beat and raise our Cloud Subscription ARR, Subscription ARR and bottom-line profitability outlook,” said Amit Walia, Chief Executive Officer at Informatica. “CLAIRE GPT, now generally available in North America, along with our best-of-breed IDMC platform capabilities, solidifies Informatica’s position as the leader in enterprise AI-powered cloud data management with AI and Generative AI capabilities for modern enterprises.”

Second Quarter 2024 Financial Highlights:

• GAAP Total Revenues increased 6.6% year-over-year to $400.6 million. Total revenues included a negative impact of approximately $1.6 million from foreign currency exchange rates (FX) year-over-year. Adjusted for FX, total revenues increased 7.0% year-over-year.
• GAAP Subscription Revenues increased 16% year-over-year to $264.3 million. GAAP Cloud Subscription Revenue increased 35% year-over-year to $161.4 million and represented 61% of subscription revenues.
• Total ARR increased 7.8% year-over-year to $1.67 billion. Total ARR included a negative impact of approximately $2.0 million from FX rates year-over-year.
• Subscription ARR increased 15% year-over-year to $1.20 billion. Subscription ARR included a negative impact of approximately $1.1 million from FX rates year-over-year.
• Cloud Subscription ARR increased 37% year-over-year to $703 million. Cloud Subscription ARR included a negative impact of approximately $0.7 million from FX rates year-over-year.
• GAAP Operating Income of $9.5 million and Non-GAAP Operating Income of $114.9 million.
• GAAP Operating Cash Flow of $24.9 million.
• Adjusted Unlevered Free Cash Flow (after-tax) of $71.2 million. Cash paid for interest of $37.9 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 2024 Business Highlights:

• Processed 96.6 trillion cloud transactions per month for the quarter ended June 30, 2024, compared to 60.7 trillion cloud transactions per month in the same quarter last year, an increase of 59% year-over-year.
• Reported 272 customers that spend more than $1 million in subscription ARR at the end of June 30, 2024, an increase of 28% year-over-year.
• Reported 2,038 customers that spend more than $100,000 in subscription ARR at the end of June 30, 2024, an increase of 5% year-over-year.
• Achieved a Cloud Subscription net retention rate (NRR) of 119% at the end-user level and 126% at the global parent level as of June 30, 2024.

Product Innovation and Business Updates:

• Launched CLAIRE GPT in North America: the first GenAI-powered data management assistant grounded by enterprise metadata intelligence leveraging Informatica's Intelligent Data Management Cloud™ (IDMC) capabilities.
• Expanded global presence in Saudi Arabia: announced plans to open an office in the Kingdom to align with the Saudi government’s vision for becoming a cloud-first, data-driven state ahead of the World Expo 2030.
• Expanded partnership with Microsoft: announced Informatica's Data Quality Microsoft Fabric Native Application allowing Fabric customers to leverage AI-powered data profiling and data quality services to discover, cleanse, enrich and remediate data quality issues in Microsoft OneLake; announced public preview of IDMC as an Azure Native ISV Service within the Azure Management Console and Azure Marketplace; and announced availability of Cloud Data Access Management (CDAM) for Azure, a policy-based access management, providing a centralized control plane for both data governance and access.
• Expanded partnership with Snowflake: announced availability of Native SQL ELT support for 250+ Snowflake functions; announced Informatica’s GenAI blueprint for combining Snowflake’s Cortex AI service with IDMC services including Cloud Data Integration, Cloud Data Quality, Cloud Data Cataloging and Governance, Cloud Data Access Management, Master Data Management and Cloud Application Integration orchestration delivering a retrieval augmented generation (RAG) solution; launched Informatica's Enterprise Data Integrator (EDI) Snowflake Native Application leveraging Snowflake's Streamlit user interface and Snowpipe Streaming; and launched CDAM for Snowflake, a policy-based access management, providing a centralized control plane for both data governance and access.
• Expanded partnership with Databricks: announced IDMC platform verification for Unity Catalog to manage data lineage and governance; announced Informatica’s GenAI blueprint for Databricks DBRX customers to develop RAG-based GenAI applications; launched native SQL ELT capabilities to develop ELT pipelines for Databricks compute; and announced availability of Informatica’s Cloud Data Integration-free service (CDI-Free) offering via Databricks Partner Connect.
• Expanded partnership with Oracle: launched Cloud Data Governance and Catalog service natively on Oracle Cloud Infrastructure (OCI).
• On June 11, 2024, the Company repriced its $1.8 billion outstanding debt, reducing the applicable interest rate margin from 2.75% to 2.25% and eliminating the Credit Spread Adjustment related to the transfer from LIBOR to SOFR (Secured Overnight Financing Rate). This repricing will save approximately $11 million in pre-tax interest expense on an annual basis on Informatica’s current debt balance going forward.

Upcoming Events:

• On Monday, August 5, 2024, the Company is scheduled to host investor meetings at the KeyBanc Technology Leadership Forum in Vail, CO.
• On Wednesday, August 28, 2024, the Company is scheduled to participate in a fireside chat discussion at the Deutsche Bank Technology Conference in Dana Point, CA, at 11:00 a.m. Pacific Time. A live webcast and replay will be available on the Company's Investor Relations website.
• On Wednesday, September 4, 2024, the Company is scheduled to participate in a fireside chat discussion at the Citi Global TMT Conference in New York, NY, at 1:20 p.m. Eastern Time. A live webcast and replay will be available on the Company's Investor Relations website.
• On Tuesday, September 10, 2024, the Company is scheduled to participate in a fireside chat discussion at the Goldman Sachs Communacopia & Technology Conference in San Francisco, CA, at 2:25 p.m. Pacific Time. A live webcast and replay will be available on the Company's Investor Relations website.
• On Wednesday, September 11, 2024, the Company is scheduled to host investor meetings at the Wolfe Research TMT Conference in San Francisco, CA.

Third 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 July 30, 2024, guidance for the third quarter 2024 is as follows:

Third Quarter 2024 Ending September 30, 2024:

• GAAP Total Revenues are expected to be in the range of $412 million to $428 million, representing approximately 2.8% year-over-year growth at the midpoint of the range.
• Subscription ARR is expected to be in the range of $1.199 billion to $1.219 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 $738 million to $748 million, representing approximately 35.2% year-over-year growth at the midpoint of the range.
• Non-GAAP Operating Income is expected to be in the range of $139 million to $151 million, representing approximately 13.2% year-over-year growth at the midpoint of the range.

Based on information available as of July 30, 2024, guidance for the full-year 2024 is as follows:

Full-Year 2024 Ending December 31, 2024:

• Updating GAAP Total Revenues from $1.685 billion to $1.705 billion to a range of $1.660 billion to $1.680 billion, representing approximately 4.7% year-over-year growth at the midpoint of the range. This reduction is driven primarily by three factors. First, as a direct result of our strategy to shift more of our customers’ implementation and support work to our professional service partners, we now expect professional service revenues will be lower. Second, due to the lower average duration of self-managed subscription renewals, we now expect lower upfront recognized self-managed subscription revenue per ASC 606 accounting standards. Third, due to the recent strengthening of the U.S. dollar against the Euro, Pound, and Yen, we now expect increased FX-related revenue headwinds of approximately $4 million compared to previous assumptions.
• Reaffirming 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.
• Raising Subscription ARR from $1.261 billion to $1.295 billion to a range of $1.265 billion to $1.299 billion, representing approximately 13.2% year-over-year growth at the midpoint of the range.
• Raising Cloud Subscription ARR from $826 million to $840 million to a range of $829 million to $843 million, representing approximately 35.5% year-over-year growth at the midpoint of the range.
• Raising Non-GAAP Operating Income from $533 million to $553 million to a range of $538 million to $558 million, representing approximately 18.5% year-over-year growth at the midpoint of the range.
• Raising Adjusted Unlevered Free Cash Flow (after-tax) from $535 million to $555 million to a range of $545 million to $565 million, representing approximately 23.0% 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:

Using the foreign exchange rate assumptions noted above, the Company has incorporated the following FX impacts into 2024 guidance:

In addition to the above guidance, the Company is also providing third quarter 2024 Total ARR for modeling purposes. Total ARR is expected to be in the range of $1.660 billion to $1.690 billion, representing approximately 6.3% year-over-year growth at the midpoint of the range.

In addition to the above guidance, the Company is also providing third quarter and full-year 2024 cash paid for interest estimates for modeling purposes. For the third quarter 2024, we estimate cash paid for interest to be approximately $36 million. For the full-year 2024, we estimate cash paid for interest to be approximately $146 million, using forward rates based on 1-month SOFR and a credit spread of 225 basis points.

In addition to the above guidance, the Company is also providing a third quarter and full-year 2024 weighted-average number of basic and diluted share estimates for modeling purposes. For the third quarter 2024, we expect basic weighted-average shares outstanding to be approximately 304 million shares and diluted weighted-average shares outstanding to be approximately 312 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 313 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 2024 financial results and financial outlook for the third 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 653349. 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.

To view the original press release, please click here.

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