Informatica Inc Q4 2024 Earnings Call Transcript

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

Question: Alex Zukin - Wolfe Research, LLC - Analyst : Hey, guys, Thanks for taking the question. Maybe just help us understand a little bit about retention rates on the cloud side. That was one of the areas I felt like I just wanted to get a better understanding of kind of what happened there on these renewal cycles and cohorts. How are you fixing that? And what are you embedding for the full year in guidance because I think everybody wants to basically understand, given the issues that you face in the quarter, what's the level of confidence, and the level of conservatism that you've embedded? Obviously, on that point I just ask across the board.

Question: Alex Zukin - Wolfe Research, LLC - Analyst : Got it. And then maybe just as a follow up for both of you or for either of you, if you think about just the kind of the demand environment versus the execution framework versus kind of competitive elements in the market as projects evolve and and techno technology is changing, kind of maybe stack rank, is it all three? Is it mostly one of the three. Again, kind of embedded typically after these types of events, there's probably, talent changes or management changes that that occur. Have you embedded any conservatism with respect to any of those elements and to the guide?

Question: Koji Ikeda - Bank of America - Analyst : Yeah. Hey, thanks so much for taking my questions. I wanted to maybe follow up on the renewals. And so I'm just having a hard time squaring why renewals are a little bit more difficult right now considering that Informatica is -- we view it as pretty mission critical out there. We've heard that from a lot of your customers and partners. So I just kind of don't get it. Is the competition getting better, is pricing an issue? I mean, you mentioned other things going on. I wanted to dig into that comment a little bit too. I mean, our budgets being shifted away from Informatica for something else. I'm just trying to understand what is going on with renewals.

Question: Koji Ikeda - Bank of America - Analyst : Got it. Thank you, Mike. And maybe a follow up for you, Mike. Why is GAAP total revenue so difficult to guide to? And I know in the press release, you laid out four reasons and two of which I totally understand, the push for professional services and FX. And I guess it's more of the other two. We did talk about renewal rates just now, but also duration is another issue. And so, the question is, it is the predictability just really hard with the Informatica model? I mean, I'm just trying to really understand the GAAP total revenue guide aspect. Thank you.

Question: Matthew Hedberg - RBC Capital Markets - Analyst : Thanks for my questions. I guess on the migration deals, were some of these modernization drills driven by power in a cloud edition? And I guess, how should we think about the pace of these modernization deals through the balance of the earth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 13, 2025 / 10:00PM, INFA.N - Q4 2024 Informatica Inc Earnings Call

Question: Matthew Hedberg - RBC Capital Markets - Analyst : And then maybe just on the slightly lower uplift, I think you said 1.5 to 1.7. It sounds like that was expected. I guess, is there any reason to think that could continue to drift lower in the future or do you think that's like more of a stabilized range here at this point in kind of the migration path?

Question: Brad Zelnick - Deutsche Bank - Analyst : Great. Thank you very much. Amit, I appreciate why you'd look internally at the root causes underlying these results and what's within your control and the execution issues you you've identified related to renewals, I think we kind of understand that, but what are you doing specifically to address this? How much disruption is factored into the guide because it's common as we all look at software and various other companies that go through similar things. That transitions like these could take several quarters to get right, especially if you're having to swap out people or make dramatic change.

Question: Brad Zelnick - Deutsche Bank - Analyst : That that's good to hear Mike. If I could ask just to follow up, you called out less tenured self-managed as being higher churn than the legacy base. Why shouldn't we expect that the same thing will happen in in cloud or the new customers in cloud that you're adding going to be less sticky as well?

Question: Howard Ma - Guggenheim Securities LLC - Analyst : Great. Thank you. I guess for either Amit or Mike, the 40% of IDMC net new ARR that's coming from new customers, could you just clarify, are those net new to Informatica? And if so, can you give us some more color around these customers? Where are they coming from? What's the mix of these customers in terms of size or industry vertical and which IDMC product families are they landing on?

Question: Howard Ma - Guggenheim Securities LLC - Analyst : Got it. And as a follow-up, -- the lower uplift ratio, the 1.5 to 1.7 times. Mike, you mentioned in your explanation earlier that there are additional IPUs that are dragged along. If you were to -- and I'm assuming that's at the time uplift, but it's not included in that 1.5 to 1.7 times. If you were to include those. So is that true? And then if you were to include those, would it make the initial migration hole, if you will relative to the 2 times prior?

Question: Howard Ma - Guggenheim Securities LLC - Analyst : That's super helpful, Mike. And sorry for the additional follow-up, but I think the natural follow-up to this is, so you're guiding to $1 billion in cloud ARR now, right? I think initially, it was probably closer to like [$1.4 billion] if you were to -- because you lose out on a little bit of the cloud ARR, like the forgone amount at time of migration. And as the migration mix becomes fear, that amount gets bigger, like if you were to -- have you tried sizing -- how much -- I think you know where I'm getting at, like if you'd add on that to be $1 billion, like does that help close some of that gap versus that [$1.4 billion], does the amount get later out upon contract renewal.

Question: Joe Vandrick - Scotia Bank - Analyst : Hi. This is [Joe Vandrick] on for Patrick Colville. I think you mentioned 100 enterprise customers using Informatica for GenAI. What will it take for more widespread adoption here? And then given 2025 is the year of AI agents. What does Gen AI mean for Informatica?

Question: Joe Vandrick - Scotia Bank - Analyst : Thanks. And if I could sneak one in for Mike. How much of Informatica's business is US federal government? And how should we think about that segment in 2025? Thank you.

Question: Miller Jump - Truist Securities, Inc - Analyst : Hey, thank you all for taking the question. I'll give you the one. Just you mentioned partial renewals and talked about $1 going to maybe $50 or even $0.75. Just curious, like, is that something that remains in the pipeline with the chance to recover it? You mentioned no change in competition. So just curious where that is going.

Question: Austin Dietz - UBS - Analyst : Hey Mike, it felt like we were talking about a return to double-digit growth previously. It sounds like you might update the framework a little later this year, but just given the 3% constant currency ARR guide for the year, like any initial thoughts on how we should be thinking about the overall book wage in Informatica going forward?

Question: Austin Dietz - UBS - Analyst : Okay. Thanks so much. And then just on the 2025 cloud AR growth guidance, for growth to go from I think roughly 34% this year to 25%, next year here in 2025, it's a decent detail on the growth rate to where, and I know we're sort of talking about more migration deals coming to cloud this year as well. So I think we've hit on some of the factors, but maybe you could just talk through the moving pieces to the 2025 cloud ARR growth guide.