Informatica Inc at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tyler Radke - Citi - Analyst : Yes. And I would say, definitely for the company of your size, the complexity is pretty significant. I think it's one you've done a good job of trying to distill. I know you have a new slide deck that you posted that's I think breaking that down, as well as the Analyst Day. But I guess as we think about the near-term demand environment and the puts and takes on what's driving your business, you recently reported Q2 results a month ago, and very strong cloud ARR growth in the middle of still a pretty uncertain macro environment. I guess talk to us about what you saw, what's giving you the confidence to raise the guide on FY25 ARR. I mean it's not a -- I'm not sure folks would consider you a beat-and-raise company per se. So I think the fact that you did raise it clearly signals something positive that you saw.

Question: Tyler Radke - Citi - Analyst : Yes. One of the things that stood out to me last quarter was just the large deal momentum. I think you -- in particular, you talked about a large, I believe, GPU manufacturer that signed a multimillion-dollar deal. Talk us through that use case and sort of what products and challenges they have and sort of what you're doing for them.

Question: Tyler Radke - Citi - Analyst : Got it. So that deal in particular was sort of 50-50 MDM and IPUs or -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 5:20PM, INFA.N - Informatica Inc at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : Yes. Okay. Got it. And certainly, that sounds like a really compelling use case, I guess, sort of related to AI because it's the chips that are making AI. But out at your conference in May, I think it was, out of Vegas, you had this tagline, is your data ready for AI?, which I thought was a great tagline. But I'm actually curious like as you -- of the new business that you're doing, how much of those use cases are actually GenAI or AI use cases? Because while that's really important and there's a lot of attention, there's also just a lot of basic operational non-AI use cases that oftentimes sort of get reprioritized just to kind of get your data state in order. So how do you sort of think about the mix of AI versus non-AI use cases in terms of the new business that you're...

Question: Tyler Radke - Citi - Analyst : Got it. Got it. Okay. One of the other main topics outside of AI is sort of the discussion around the industry of open table formats, iceberg tables has been very topical in the ecosystems of Snowflake and Databricks. How do you see this technology evolution at Informatica? Is there a potential risk that if more data gets stored in iceberg tables and maybe lives in a Snowflake or Databricks, there's less integration need? Or how do you sort of view that technology?

Question: Tyler Radke - Citi - Analyst : Yes. Got it. Yes, and I think it's still very early, I mean, even for Snowflake, they haven't really seen the full impact by the customers. But I appreciate the response and good to hear you're not really seeing it either. As I think about your partnerships and relationships with the hyperscalers and a lot of the leading ISVs, I mean, there's a lot of talk about it. I remember out at Informatica World, you have the -- I think you have this -- your conference was at the same time actually as Microsoft. So it was a virtual appearance, you had Scott Guthrie, had appearances from Databricks and Snowflake leadership. Talk to us through beyond just integrating with them. How much of a leverage in terms of go-to-market in terms of referrals and driving new business for you are those partners? And what's sort of the strategy going forward with them?

Question: Tyler Radke - Citi - Analyst : And that's the 30% you're talking about.

Question: Tyler Radke - Citi - Analyst : Right. Right. Okay. That's very comprehensive. And that 15,000 is -- of new consultants certified just in 2024?

Question: Tyler Radke - Citi - Analyst : That's a big number.

Question: Tyler Radke - Citi - Analyst : Yes. Yes. Got it. Got it. Okay. So sticking on sort of the go-to-market theme, there's been a number of evolutions of, obviously, the pivot to subscription and then the pivot to cloud-only recently. I guess as you step back and you sort of think about when the company made the pivot to cloud-only, which I think was right at the beginning when --

Question: Tyler Radke - Citi - Analyst : Two days, right. So cloud-first basically since you've been there. Would you say that this transition to cloud, it's happened faster than you would have expected? Or just sort of give us what's the biggest areas that surprised you as part of this pivot to cloud-only selling?

Question: Tyler Radke - Citi - Analyst : Yes. Definitely. And so on the IPU consumption, which certainly the vast majority of your cloud contracts now sort of being under IPUs, is impressive. Obviously, your consumption model is a little bit different than everybody else's, right? It's a little bit more consistent revenue recognition, which I think is good. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 5:20PM, INFA.N - Informatica Inc at Citi Global TMT Conference But help us understand the utilization of those IPU credits, and certainly, we're seeing pretty healthy net retention rates in cloud. But this is still somewhat of a new motion for you. So where are you sort of seeing those -- the utilization of those credits? And is there any risk that you're going to have to go through an optimization cycle like many of the other cloud consumption names have gone through?

Question: Tyler Radke - Citi - Analyst : Yes. That vision of sort of the telemetry dashboard is such a big contrast to where Informatica was 10 years ago.

Question: Tyler Radke - Citi - Analyst : Right, right. So contracts are usually two to --

Question: Tyler Radke - Citi - Analyst : Right. Got it. And as you think about the -- so I guess a couple of things. Number one, I think we look at your targets that you've laid out, you're assuming at least a 30% cloud CAGR over the next few years. Help us understand sort of the mental model of how you get there. You gave some great stats of, obviously, you got your net retention rate in the mid-120s. You're still adding pretty good new business, too, in terms of new logos. Is it sort of just extrapolating that going forward? Or anything you'd sort of point to that gives you confidence in that 30% being sustainable? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2024 / 5:20PM, INFA.N - Informatica Inc at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : Yes. And that's a great segue because I did want to talk a bit about the migration opportunity. You obviously have a really nice growing cloud business, but a huge chunk of the business is still sort of in the self-managed and maintenance piece. So how do you sort of think about the -- I guess, first, if we look at that book of business, is all of that -- does all that have the potential to move to cloud? And how are you thinking about the timing of that migration? And also, what levers do you feel comfortable using to sort of manage that migration?

Question: Tyler Radke - Citi - Analyst : Great. Well, maybe in the last minute, I'll open it up to you if there's anything you wanted to cover, just any message you wanted to leave with the audience before we wrap it up.