Informatica Inc at Goldman Sachs Communacopia + Technology Conference Transcript

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

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Before we get into the mechanics of the quarter commentary, et cetera, I just wanted to take this opportunity for you to level us on what -- what does Informatica look like? Just give us an overview how the company has changed post the first buy-out through the stages of private equity ownership? What are we investing into at this stage at a high level?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : And tell us, Eric, if you don't mind, the cloud transformation, so you transform from licenses to subscription and now looks like from Informatica 3.0 almost. What does that Informatica 3.0 looks like before we get into the details?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Got it. Got it. I know that you're the CFO, but you're also an engineer undergrad, right. You're an engineer or...

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Okay. All right. That's close enough. That's close enough. That's really, really tough. I mean there was benzene rings, man, I mean, pretty tough stuff. I guess, so what I was going to ask you was the cloud product road map versus the on-prem road map, is there any difference there that could incentivize the customer to take the cloud churning as the first blush as opposed to on-prem? 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 13, 2022 / 11:30PM, INFA.N - Informatica Inc at Goldman Sachs Communacopia + Technology Conference

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Got it. Got it. I'm curious as CFO, you probably see data integration within Informatica. How is that working out in Informatica? How heavily are you invested in your own cloud internally to do all the integration of data and quality?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Every for SaaS apps, the new company.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : That's great. Have you gotten this question before?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Perfect. Late evening coffee inspiration. That's -- I really like how you walk through the 75 systems and that's orders of magnitude complicated integration setup you've got going on. It's not just one talking to the other, but one talking to potentially 2 or 3.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Yes. And so those Azure. I'm curious as the CFO, how you chose Azure and sort of -- it's incidental of this discussion. I'm just curious, since you have a big ATL implementation data integration, data quality, MDM, et cetera, et cetera.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Exactly. Exactly. And I'll get to the good stuff about the things that Amit has been talking about that 85% plus of cloud workloads are from cloud-based data warehouses and not from on-premise data warehouses. We'll get to that in a second. Let's get to the macro. Let's get the macro out of the way. You've been through quite a few cycles, and I've been through a couple of cycles. We saw large deal elongation with respect to close, linearity the quarter were a little bit tough. How is it all shaking out from where you are today? Are you incrementally surprised or things sort of stabilized versus your assumptions?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Yes. Meaning, you experienced back in the loaded linearity in Q2. you assume the same to be the case in Q3, and it's not surprised you in that regard, right?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Got it. Got it. But Q2 was a surprise, but things flipped and see the sales cycle has got a longer and...

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Got it. Got it. I've been tracking this half-hearted joke all day long, and I don't think people have been laughing for it, but my recommendation for you've heard it right. Extended sales cycles and more levels of scrutinies to add more sign here fields and your doctor saying, you got to center around to the CFO. If you want to take a look at this as simple. What are you guys doing?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Yes, yes, more purchasing cycles, just more [Signcare], electronic and send the hello to DocuSign and get people to.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Tremendous value proposition. Right now, this is the time.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Link up with an Anaplan to do the revised planning and...

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Got it. Got it. So Eric, you talked about external payment terms with some customers that caused you to take a more last year -- not last year, but more conservative view of cash flow guidance. And you -- we all went through 2008, 2009. How -- what is different in this cycle? Because back then, was a liquidity crisis. People do not know they would have access to money. This time, it's not a liquidity crisis. It feels like, hey, price, they're going to go higher, so I should be making a long-term contract today with a tech company like Informatica. So I get visibility into my price as opposed to holding back and you guys might raise prices. It sounds like there's counterintuitive behavior, not only with you guys, but from other companies, customers too. Where are you today as you reassess your cash flows and you're ready to collect invoiced customers?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Could you not insert inflation accelerators, inflation penalties, inflation induced penalties, late payment that is based on some cost of capital...?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Yes. I want to talk, I want you to talk about the consumption model. It was actually a bit of a surprise that we first talked about that accounts for 50% of net new cloud bookings, and in aggregate terms, 30% of cloud ARR. How do you structure your consumption contracts? Is there not a base minimum and then some variability? Or is it all variable? How do customers structure these contracts? And how do they eat into these segments?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : So it's 80% divided by a number of days, months and the last day, they don't use of the 20, boom.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Rev rec is based on the 100 IPUs?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Okay. Got it. 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 13, 2022 / 11:30PM, INFA.N - Informatica Inc at Goldman Sachs Communacopia + Technology Conference

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : They overextend their contracts and to 120 IPUs?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : It's like dealing with my kids. You get 45 minutes of video games a day goes to 50, 55. You have to sleep at 10:30, 10:35, 10:40. Overages. I should slap a consumption model overage price and take away some of their...

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Got it, something like that. So we talked about the consumption model. We're now what, 9, 10 months into this macro funk. How are renewals happening for some of these cloud contracts? At this stage, these are probably renewals of deals that were down in Q3 last year. How do you see the pipeline shaping up for renewals? How our customers, especially on the consumption business model, you're likely to see changes? Maybe I'll size down a little bit or maybe keep the same level of commitment, but you're seeing the Mongos and the Snowflakes even the Datadogs walked in wane a little bit. What is your expectation of how these consumption contracts go for renewal?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Got it. Any reparations, especially after Snowflake talked about lower consumption trends with customer-facing, consumer-facing e-commerce companies. Obviously, you guys are at the front end of that whole cycle. So if they're seeing less consumption, you should have seen it even earlier or maybe it's very, very quick? Any correction with Snowflake and what their customers are going through with respect to slow down? And does that pertain to you, your business? Or are you more insulated from what's happening with Snowflake consumer?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : You say production is it OLTP?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Got it. Got it. Next I want to talk about, I want you to talk about CLAIRE, the AI engine. At this stage of the economic cycle when labor costs are going higher. IT talented short supply, is there wood to chop with the AI and CLAIRE?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Something you can charge more. Is there a premium price? Or does it come with the platform?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Any thought to pricing leverage? Do you have pricing leverage with your product family?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Like 49... 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 13, 2022 / 11:30PM, INFA.N - Informatica Inc at Goldman Sachs Communacopia + Technology Conference

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : (inaudible) there.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Yes. I want to touch on the maintenance installed base. it's a blessing and a curse, right, it occurs because it's a big anchor on your growth rate. It's a blessing because it could be something. Where do we stand now? I had a chance to come out Informatica world and good buzz, good vibes with your customers and partners. So you have some goodwill. I mean Informatica is a company that takes really good care of your customers. Good job chief customer officer. It happens to be somebody that I've known from my grads school. But how do you take that goodwill that you've built with your customers to help them, especially ones that are sitting on maintenance to see the light at the end of the tunnel? Because that 1% moving to the cloud going to 2%, that's going to take a long time. It feels like you need not linear progression, but not only near progression like geometric, there's got to be some buzz. Look at these customers that just switched out maintenance and vendor cloud and boom, everybody else wants to do it, could be in for some nonlinear progression with maintenance conversions.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : So you say 2% -- is it 2% of the maintenance base revenue or 2% of your cloud revenues that came from maintenance.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Okay. Okay. So is there a way to look at the maintenance dollars that have converted over?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Should (inaudible) because it's a 1.4 multiple, right?

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Got it.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Okay.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : 20 was sitting in maintenance is something smaller than that divided by 1.4. 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 13, 2022 / 11:30PM, INFA.N - Informatica Inc at Goldman Sachs Communacopia + Technology Conference

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Okay. Got it. Right. That makes sense. Okay. We had it drawn math, you got it right. Yes.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : I know we've got two more minutes. Any questions? Do you have any questions? Unidentified Analyst I was kind of curious to hear (inaudible). So (inaudible)

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Wonderful. And that, and I think we're at the end of 40 minutes. Thank you, Eric.

Question: Kasthuri Gopalan Rangan - Goldman Sachs Group, Inc., Research Division - Analyst : Thanks for coming down. Appreciate it and spending time with us, and thank you for your questions as well. Drinks on me at 6:00 down the lobby level. We have a client who is actually going to be performing. We heard Max Jellinek perform. Guy is genius. Not because he's a client. Really is awesome. So see you all down there.