Informatica Inc Q3 2024 Earnings Call Transcript

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

Question: Koji Ikeda - Bank of America - Analyst : A couple for me here. So when I look at the deck and I look at the medium-term expectations of a 31% to 33% cloud subscription ARR growth between fiscal '23 and '26. That was given a year ago. And so we're essentially a one-third of the way through it, and you guys have been performing well above that range. So when I look at that CAGR, it does imply that cloud ARR begins to decelerate here pretty soon. But it has been a year since you've given that medium-term expectation. So curious to hear what you've learned over the past year that's given you more confidence in that medium-term target? And what could happen from here that could drive that medium-term growth CAGR higher?

Question: Koji Ikeda - Bank of America - Analyst : Got it. And just a follow-up here. When I look through all the metrics, everything looks pretty good, except for one, and I was hoping to get a little bit of color on it. When I look at the 1 million-plus customers, it's $264 million. I know that's up 18% year over year. But when I look at it compared to the second quarter, it's down a little bit sequentially from [272]. So could you help walk us through that a little bit, please?

Question: William Power - Baird - Analyst : Okay. Great. Mike, maybe just starting on results in the quarter and guidance, it looked like some slight upside in the quarter and continued strong cloud trends that you reaffirmed the full year guidance. And I just wonder if there's anything you're recalling out any sort of caution around with respect to Q4 or any changes in tone of conversations or linearity kind of as you move through the quarter that might be informing kind of Q4 versus Q3.

Question: William Power - Baird - Analyst : Okay. That's great. And then maybe just any kind of qualitative commentary you can provide on the cloud growth breakdown, I know you noted 50% of the growth of the ARR split between, I guess, data integration and the other half, at least that was a big chunk of it, they have MDM, catalog, governance. Anything to call out with respect to trends you're seeing in either of those buckets? And one or the other that you think could be a bigger growth driver as you move forward here?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : It seems like both cloud native wins as well as cloud migrations are doing well, and it really does feel like PowerCenter cloud is driving some pretty significant momentum there. I'm wondering, as we think about going into Q4 and into '25, are there mechanisms in place to drive even faster migrations there now that a lot of the technology -- and the sort of the cloud-first sales focus is in place?

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Got it. And then maybe Mike, one for you. You had a really strong quarter and you reiterated guidance, which, I mean, I think you talked about stable macros. It feels like a conservative guide for 4Q. I guess my question is when I look back last -- to last 4Q, you guys had a really strong quarter. And I don't know if there was a function of like budget flush last year that you saw and you're not anticipating it this quarter -- or this year, I should say. I'm just sort of curious if you could maybe talk about like what you normally see from a budget flush -- December budget flush. Are you anticipating any of that this year?

Question: Jaiden Patel - JPMorgan - Analyst : Great. This is Jaiden on for Pinjalim. To follow up on an earlier question, can you talk a little bit more about any trends you saw in the public sector customers in the quarter?

Question: Tyler Radke - Citi - Analyst : Amit, I'm curious, for customers where you've seen adoption of Open Table formats like Iceberg. Have you noticed any meaningful changes either positively in terms of Informatica utilization or IPU credits or too early to tell, just would just love your perspective on that theme based on the customers that you've worked with. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 9:00PM, INFA.N - Q3 2024 Informatica Inc Earnings Call

Question: Tyler Radke - Citi - Analyst : Great. I appreciate the answer there. And Mike, if I look at your updated guidance for the full year, you took up cloud ARR, which is good to see solid performance in the quarter. Subscription it looked like it stayed the same and self-managed did decline a bit more sequentially than you've seen recently. So is the way to think about that incremental cloud subscription rates, is that kind of coming more from migrations? Or is it hey, you're just seeing a bit more falloff on the self-managed business, but you're more than offsetting that or offsetting that just on the strength of new business? Just help us understand kind of the puts and takes there.

Question: Patrick Colville - Scotiabank - Analyst : Congrats on all the momentum you guys are seeing. I guess I just want to ask Amit and Mike about the 2024 guidance. So I guess what was implied for 4Q both on the cloud ARR line and on the total ARR line, I guess the guidance for 4Q implies kind of a net new ARR, sequential net new ARR, but we haven't -- Informatica has never reported before. I mean if my math is correct, it points to [$63 million] of net new total ARR and $88 million of net new cloud ARR. So I guess what gives you confidence going into 4Q to guide to those levels?

Question: Patrick Colville - Scotiabank - Analyst : Great. Okay. Yes, that's very clear. I guess I want to ask just for my follow-on, please, around migrations versus net new ARR. I mean what many investors like about Informatica is you have both of those kind of pickers. But specifically on the migrations, the disclosure Informatica provides this quarter, on a TTM basis, 24% of new ARR from migrations, very impressive, but I guess a slight downtick versus last quarter. Why would migration, net new ARR contribution downtick, given the launch of PowerCenter Cloud Edition a year ago. Like I would have expected a net uptick. So any color you could provide there would be super helpful.