Informatica at Cantor Fitzgerald: Navigating Growth and Challenges

On Tuesday, 11 March 2025, Informatica (NYSE: INFA) presented its strategic insights at the Cantor Fitzgerald Global Technology Conference. While the company reported a slight shortfall in Q4 expectations, it highlighted significant growth in cloud ARR and its robust position in the data management sector. CFO Mike discussed both the challenges and opportunities ahead, emphasizing Informatica’s commitment to innovation and customer engagement.

Key Takeaways

• Informatica reported a 34% growth in cloud ARR, slightly below the 34.5% target.
• Renewal rates were lower than expected, attributed to specific customer situations.
• Informatica is focusing on cloud modernization driven by GenAI needs.
• The company is leveraging AI to enhance user experience and drive future growth.
• Informatica aims to address renewal challenges with proactive measures.

Financial Results

• Cloud ARR Growth: 34%, slightly below the guidance of 34.5%
• Total ARR Growth: 6%, below the expected 7%
• Non-GAAP Operating Margin improved by over 400 basis points year-over-year
• Unlevered Free Cash Flow exceeded the high end of guidance
• New logo growth in the cloud was 8%, bringing the total to approximately 2,500 customers
• The company forecasts a 25% cloud growth in 2025

Operational Updates

• 68% of net new ARR in the cloud over the last 12 months was from new logos or new data workloads
• Expectation of 70% from new customers/workloads and 30% from modernization in 2025
• Less than 10% of the on-prem base has been modernized, with $900 million as potential migration candidates
• Modernization deals accounted for over 35% of total bookings in Q4, though they yield 20% less net ARR initially

Future Outlook

• Informatica is not heavily factoring GenAI into the 2025 forecast but sees it as a key growth driver
• Focus on managing complexity and supporting multi-cloud environments
• Addressing lower renewal rates and balancing modernization with net-new deals
• Opportunities in cloud modernization and expanding within existing enterprise customers

Q&A Highlights

• Competition includes hyperscalers with native tools, but Informatica offers solutions for complex, multi-cloud environments
• Incentives are more effective internally to ensure collaboration for renewals
• Multi-cloud capability positions Informatica well in the AI data stack

Informatica’s strategic focus on cloud modernization and AI integration positions it for future growth, despite current challenges. For more details, refer to the full transcript below.

Full transcript - Cantor Fitzgerald Global Technology Conference:

Tom Blakey, Analyst, Kantor: Oh, I think we’re I think we’re moving here. As people, run-in and out from the next meeting to the other, this room will start to fill up here, for the transcript, I suppose. My name is Tom Blakey. I cover infrastructure software here at Kantor. We’re delighted to have the CFO of Informatica here with us and IR on the front row, Victoria Hyde Dunn.

So maybe just without further ado, just you just reported the fourth quarter earnings. Maybe for those who weren’t able to listen to the call, what were you pleased with and what did not unfold as as expected?

Mike, CFO, Informatica: Yeah. Sure. First of all, thanks for having us here

Tom Blakey, Analyst, Kantor: at your

Mike, CFO, Informatica: inaugural conference.

Tom Blakey, Analyst, Kantor: Thank you.

Mike, CFO, Informatica: We’ll be here many years.

Tom Blakey, Analyst, Kantor: Thank you. Thank you for being so generous with your time.

Mike, CFO, Informatica: In the future from now. So it was a quarter that did not meet all of our expectations for sure. But that being said, it was one that directionally was consistent with our strategy and gives us increased confidence that we’re on the right path and that we have in this highly dynamic and fast growing space of data management that we’re well positioned and, have the opportunity to create a lot of value in the future. We delivered cloud ARR growth of 34. We had called for 34 and a half, so it was a little shy of that, and we can talk about it.

But that’s the largest dollar amount of NAR that we’ve ever delivered cloud wise in the history of the company and represented excellent execution on our part of our sales force. And strong receptivity of our products by our customers. We delivered total ARR growth of 6%. Now we’d expected it to be closer to 7%, so not where we thought, but reflects the fact that we are managing the decline of our on prem business while we grow the cloud business, and we’re migrating a very healthy portion of those on prem customers to the cloud. We delivered operating margin improvement, non GAAP operating margin of over 400 basis points improvement year over year versus 2023.

And our free cash flow, unlevered free cash flow after tax exceeded the high end of our guidance. We felt good about all of that. We felt badly about not meeting our expectations.

Tom Blakey, Analyst, Kantor: Mhmm.

Mike, CFO, Informatica: And the places where we fell short started with renewal rates. We did not see the renewal rates we and maintenance part of our business. So self managed and maintenance are decline businesses. That’s legacy on prem software that we’ve sold in the past. And then the cloud business, of course, is the growth business in the future.

Those decline rates were roughly 2%. Those renewal rates were roughly 2% lower than what we had forecast coming into the quarter. Start with the fact that on the cloud, they’re still in the low nineties. So we feel as those as a gross renewal rate is nothing to be embarrassed by, and we delivered a net retention rate of over a 20%, a 24% to be clear. But it’s 2% lower than what we forecast going into the quarter.

That had to do in our analysis, not with a changing competitive intensity, not that we’re losing deals to other, competitors, but rather more or less one off idiosyncratic situations that happened in, you know, a handful or a couple handfuls of customers where they had bought software two or three years ago and the use case was over scoped and they ended up not implementing as much as they thought they were going to, so they downsold that. They bought software two or three years ago and the corporate mandate to conduct a global governance project, for example, shifted directions in terms of prioritization. In one case, because the CDO who sponsored the project left the firm. Another was an M and A situation where one of our large enterprise customers had a three way spin and our software stayed with two of the three, and the third one decided to, go to out to RFP. That customer is now part of our pipeline for selling them a new deal in 2025.

It was it was stuff like that.

Tom Blakey, Analyst, Kantor: That’s that’s an interesting jump off point there, Mike. What are the these renewal trends seem to be spooked the shares, obviously. We got some inbound on there, from questions from investors. It seems like if it’s idiosyncratic, renewal rates are sometimes extrapolated in Excel. Right?

So talk to us about what you expect in terms of continued trends in the count of ’25 with regard to this metric. You talk about you could go back and sell that customer or this was an idiosyncratic loss or, you know, because renewal rates are sometimes maybe even are, you know, unfairly extrapolated.

Mike, CFO, Informatica: Yep. Well, that’s exactly what we’ve done in terms of our guidance forecast. Interesting. So we’ve taken our actual 2024 experience and pushed that through into 2025 with respect to the cloud. For the on prem stuff, that renewal rate is declining because it’s been end of sale for two years, and so it’s not detailing more and more out of date.

So we expect that renewal rate to decline. But we’ve also shifted that renewal rate in ’25 down by two points versus what we would have guided to Right. Prior to the end of q four. So in a sense, we’ve we’ve we’ve extrapolated everything into ’25. Now we are hopeful that it’s better than that, and we’ve taken actions to organizationally, in terms of incentive structures and some systems and processes that will allow us to do better on catching some of those idiosyncratic things earlier and addressing them with the right Yeah.

Teams to to, you know, save and rescue more of those situations, but we haven’t assumed any of that in our forecast going forward.

Tom Blakey, Analyst, Kantor: Maybe double click on that. That’s an interesting point about and maybe nothing even specific. Just what can you do? Like, if I’m a customer, and you labeled it as idiosyncratic before, but now we’re talking about the next customers. Or maybe it’s back to that customer.

Like you said, there’s an opportunity at that existing customer. It seems like there’s a few there’s always a myriad of opportunities to go back and try to change renewal rates. What are you doing precisely or with the go to market changes there?

Mike, CFO, Informatica: Rigor around catch you know, identifying, catching, and acting on the early warning signals. So

Tom Blakey, Analyst, Kantor: For the for the customer? As an

Mike, CFO, Informatica: customer. Right? So we have really good telemetry from our cloud products that tells us how they’re using it, how many IPs they’re consuming, on what services they’re being used on. And we have data from our help desk. You know, we provide maintenance.

We provide support and and maintenance. And so how many times they’re calling in, what they’re asking about. And then we have direct relationships with those customers on the FieldTail side because there are expand opportunities. So we have account executives in there who should know what’s going on and not only with respect to new business, but how’s it going with the stuff you bought last year or the year before that. That information is there, but sometimes folks don’t focus on it early enough.

Yeah. And so making sure that we are surfacing that information not two, three months before the renewal, but six, nine, ten months before the renewal or more so that we can see that there’s a, at risk renewal coming up and then deploy the right team against it. So that’s the awareness piece and the and the focus piece. And then to get the right team deployed against it, you need incentives. Of course.

Because field sales, their first job is to sell new software. Renewals, their job is to renew what’s out there. But for a big enterprise renewal at risk or it’s under deployed or the workflow or the the the workload has been stalled, it often requires field sales and technical sales to get in there and almost resell the deal. And you gotta make sure that the field sales team in the right situation is properly incentivized to work hand in hand with the renewals team to get the right outcome. And we had a process in place for doing that, but it was sort of ad hoc, one off unpredictable.

And so we’ve made that more formalized so that when renewals team raises their hand and say, hey, we’ve got a yellow flag and it’s nine months ahead of time, here’s how we’re going to incentivize field sales to collaborate with us and

Tom Blakey, Analyst, Kantor: get to the right outcome. So this sounds pretty real time, if I’m understanding correctly. And these things are probably galvanizing pretty quickly. Again, just as a remedial spectator here, what are you seeing? I mean, you’ll give us some anecdotes in terms of what you’re seeing.

You know, hey. I I’ve raised my hand. There’s a flag. You helicopter in with me, and what what are you seeing?

Mike, CFO, Informatica: It’s it’s it’s a little bit too early to declare victory. We’re enterprise software company with typical enterprise software linearity. The fourth quarter is 35% plus of our year and first quarter is less than 20% of the year. So that’s a new business basis, which means since most deals are one year or two year very few are one year, two year, or three year, or four year, the renewals follow that. So there haven’t been many renewals come up

Tom Blakey, Analyst, Kantor: Okay.

Mike, CFO, Informatica: In the months of January and February. But that being said, I can give you a % assurance that everybody is laser focused on this because it was, you know, it was an impactful mess, and we have put all hands on deck to address it. But whether these structural changes that we’ve made, again, which aren’t massive, we’re not changing the deck chairs around, we didn’t fire anybody, and we’re not doing a massive change to compensation system. They’re kind of around the edge of marginal things. But whether those work and we sort of have autopilot focus on this in 2025 remains to be seen.

Tom Blakey, Analyst, Kantor: So let’s shift back to something a little bit more fun to talk about in terms of your cloud business very successfully. You talked about the fast growth rates. You talked about the solid NRR and the expansion rates there. And I’ve always been interested in the growth from expansion deals and net new logos. And we can talk about that as well.

But just along the lines of that kind of color, talk about what you’re seeing in terms of cloud migrations. And we can start higher level and talk about what’s kind of driving those. But I’d love to kind of double click in terms of from a sustainable perspective, how that, that net expansion of that expansion business and new logo business is currently growing.

Mike, CFO, Informatica: There’s two or three levels to that question. Yep. So let me try to answer it from the top. If you think about our cloud growth, it’s made up of big picture two components. One is net new customers or new workloads with existing customers.

Yep. So it’s greenfield. It’s not, something that has to do with a legacy on prem implementation that we may have with them. So in the past, that’s been about well, to be precise, in the last twelve months of our net new ARR in the cloud over the last twelve months ending 12/31. Sixty ’8 percent of that was brand new logos Informatica or new data workloads in the cloud.

And that’s all. And that’s 68% of the total. That’s actually down. It was 75% of the total at the end of q three for the LTM, and we’ll talk about that dynamic. It’s an important one.

But at a high level, think about it in 2025 as being roughly seventy, thirty. 70 percent new customers, new workloads, 30% modernization of existing cloud workloads onto existing on prem workloads, sorry, whether maintenance or or subscription, into the cloud. So 7030, ’1 or the other. Second big picture thing that I would add is that our logo growth in 2024, new logo growth in the cloud was about 8% to roughly 2,500 customers, 24, a 67 or 68. We are feel very good about that.

But some who focus on companies that have a different target audience than we do aren’t blown away by that number. We’re not a new logo dependent company. We serve the large enterprises, roughly speaking, the Fortune 2,000. And that’s a land and expand business. Yeah.

And so we had 8% new logo growth in the cloud last year, but we had a 24% net retention rate with our existing logos. So that net retention, that expansion is more important than new logos. Both are important. We focus on both, of course. But it’s really important that you understand that when we land in an enterprise customer, that that first use case is never the TAM in that customer.

It’s a small part of it. And there’s lots and lots of expansion room once we get them on the platform, once we get them on the IP pricing model, good things start to happen. Okay. So that’s point two. Then the third point is the con the modernizations themselves.

Right? So I talked about 30% of that cloud NAR being from modernization. We’ve been doing that for three or four years. It’s been accelerating and it accelerated a lot in q four. It was north of 35% of our total bookings in q four.

And in fact, one of the reasons why our cloud ARR coming out of the year was not quite where we forecasted to be and part of the reason why we guided to 25% for ’25 in terms of cloud growth rather than probably, you know, several points higher than that is because that mix of migrations versus net new is is higher, so more migrations. That’s because there’s an accounting outcome of a modernization migration deal that in the near term, in the initial term of the cloud deal, yields less net ARR than we report than in that new deal. And so that mix matters. It’s it’s unfortunate, but it’s just the way the accounting rules, and there’s no way around.

Tom Blakey, Analyst, Kantor: What kind of real what difference is that? What kind of relative difference is that?

Mike, CFO, Informatica: It’s about

Tom Blakey, Analyst, Kantor: 20%.

Mike, CFO, Informatica: Twenty %. Wow. Average. So, you put those things together and the the dynamics underlying the modernization business, although it’s growing really fast, and the contribution is valuable and has a really, really great net present value over the long term, masks a little bit the actual underlying growth in the total cloud business.

Tom Blakey, Analyst, Kantor: Is there, you know, some something that’s happening, some dynamics happening in the market that’s pulling in the modernization?

Mike, CFO, Informatica: It’s simply put the demand to modernize to the cloud by our customers. And the pressure to do that just gets greater every day. Part of it is if we’re ever gonna do Gen AI at scale, our data has to be in the cloud, so it’s accessible and, and governable. But it’s more fundamental than that. There’s still so much on prem and hybrid workloads out there that need to be modernized.

That’s what’s that’s what’s driving it. And just as a quick statistic, if you look at the total amount of our on prem base that’s been modernized, it’s less than 10%. So we’ve still got $900,000,000 of on prem maintenance and on prem subscription that are candidates to be migrated over time. It’s not gonna happen in all in 2025. It’s gonna be a multiyear period to because making the decision

Tom Blakey, Analyst, Kantor: to migrate is a is a consequential one that takes

Mike, CFO, Informatica: a lot of migrate is a is a consequential one that takes a lot of planning and people don’t do it overnight. But it’s a big but it’s a big opportunity that will remain ahead of us for a long time. One more comment on that though is that most of our cloud growth is net new, winning in the marketplace, head to head with a competition for a new logo or a new workload. A minority of our growth is coming from modernizing our existing on prem customers to the cloud. So you should not take away the fact that we are simply mining our base.

We’re actually because we have the best product on the industry’s only platform serving as a switch from a lot of data, most of what we do is winning in the marketplace against the competition.

Tom Blakey, Analyst, Kantor: The $900,000,000 a lot of custom a lot of software vendors will give a statistic about moving, modernizing software. You get to get rid of hardware. You get to get rid of labor. Is there a money multiplier that you’ve offered in the past about the 900 moving on prem? And then related to that, I believe, why would you not, as a firm, a as a as a vision, just change incentives there for the customer, you know, make it economic in some way or or for the firm itself to kind of hasten that migration?

Mike, CFO, Informatica: There’s no doubt that cloud

Tom Blakey, Analyst, Kantor: software is more valuable to the customer than on prem software. Yeah. Because they don’t

Mike, CFO, Informatica: have to buy the servers. They don’t have software. Yeah. Because they don’t have to buy the servers. They don’t have to buy the stores.

They don’t have to maintain it. They don’t have to patch it. They don’t have to worry about the security, etcetera, etcetera, etcetera. The uplift multiple in terms of what that cloud software is worth versus on prem varies by type of software, varies by firm. Historically, our uplift multiple has been two to one.

Tom Blakey, Analyst, Kantor: Two to one.

Mike, CFO, Informatica: Now we have actually guided that to be lower in 2025. We’ve guided it to be 1.5 to 1.7. And it’s really important to understand why we guided that down and why we expect that uplift multiple to go down. It’s not because we’re lowering price. We’re not lowering price to incentivize people to move.

The price per IPU, which is the Informatica processing unit, the fungible consumption token that is all we use to sell our software, is the same IPU per IPU for a new workload or a migration workload. We’re not increasing discounting. It’s not because we’re lowering price. It is because the nature of those workloads that we are now addressing in that $900,000,000 base are the ones that naturally generate the need for fewer IPUs to reproduce what you’re doing. So initially, when we were migrating what was years ago a $1,200,000,000 base, we wanted the Salesforce to focus on those customers that were using their software in a way and who were priced based on historical purchases they made a decade or more ago so that it would generate the highest possible uplift multiple.

We didn’t know how the cloud contracts would behave. Would they drag additional sales? Would they have good utilization? Would they renew at a good rate? So we focused them on those that went from one to two or one to 2.5.

Right? And we put guardrails and incentives around to focus them on that part of the installed base. We now have enough experience with cloud migrations that we know that once customers modernize to Informatica on the cloud, they drag a significant amount of expansion sales with it. Their utilization during the term of the cloud deal is excellent, and they renew at a higher rate than our average deal. So we’re now willing to open the aperture, if you will, for the sales force to go after that portion of the 900,000,000 that will naturally generate the need for less IPUs and therefore, a lower uplift multiple.

Tom Blakey, Analyst, Kantor: So it’s not

Mike, CFO, Informatica: so put another way, it’s not about where they land in terms of the number of I the the price they’re paying for IPUs or number of IPUs they need. It’s where they came from. Does their existing deal today, are they underpaying for value today or overpaying for value? And so it’s an output of that, not because of price. So we’re lowering that to make sure we’re, allowing customers the opportunity to go, but we’re not throwing incentives at them.

You know? Because incentives in our business don’t work. Moving your cloud data infrastructure from on prem to the moving your data infrastructure from on prem to cloud is a complicated, time consuming, expensive process. And we’re only a small part of it. A typical enterprise would have hundreds, if not thousands of applications that are generating data, dozens, if not hundreds of cloud repositories, analytic data stores, etcetera.

You’ve got to rationalize all those. You’ve got to get a GSI in the middle to do all the implementation, and you have to do the Informatica software. So customers modernize when they’re ready, not when we provide incentives. So we’re not doing that.

Tom Blakey, Analyst, Kantor: Very clear answer. Just double clicking on the 1.5 to 1.7. I don’t want to mischaracterize. Is there a this is this sounds like pretty in-depth research that you’ve done at the firm. I gotta admit.

Is there a the only word that keeps coming to mind, Mike, while you were talking was quality. Is there a different is this is this you can characterize the word differently, please, for me. But is there a lower quality of workload coming on to the Informatica Cloud at this particular juncture? And if that’s the case, why?

Mike, CFO, Informatica: Yeah. That’s an interesting way to look at it. The answer is no.

Tom Blakey, Analyst, Kantor: Because I would think it’s Lower quality defined by me is just used less. Yeah. Tell me what

Mike, CFO, Informatica: I mean. So, yes, because they need less, but not lower quality in terms of what utilization is going to be, how much expansion they’re gonna do, and what their renewal rate is gonna be. All of those are as high quality as anything we’ve done the past. It’s just that from where they started in terms of how they’re using our on prem software today and what they’re paying for it, they need fewer IPUs Yep. Than the folks we’ve converted in the past.

Tom Blakey, Analyst, Kantor: Maybe stop and pause here for the audience if there’s any questions.

Mike, CFO, Informatica: Thank you for presenting, to the cloud this way? You know, it’ll be better for both of us. Yeah. So let me try to answer those in order. So competitive intensity from folks like Snowflake and others that are could be perceived creeping trying to creep into our space in data integration.

The hyperscalers, the cloud data warehouse providers have their own captive native tools to do some of what we do. Those tools are good enough in many cases. If you’re not multi cloud, if you have no hybrid sources, and you don’t need to connect to the broadest array of data sources possible, and if you’re comfortable as a customer with the vendor lock in that using their data warehouse and their data integration tools provides. That’s a fact of life. It is a competitive environment.

It is a competitive environment out there. And in those kind of situations, we generally don’t even compete because they’ll give their tools, their good enough captive tools away for free. And if you have the appetite to sort of roll your own with that and live with the vendor lock in, good for you. We’ll see you in a couple years when you realize the downsides of that. So it’s important though to understand that that some of the comments that folks in that category make about data integration in terms of its importance to their business create a misunderstanding about what is competitive with us and what is not.

So I have heard I haven’t heard them personally, but I I I’ve been told that those companies cite some pretty big numbers in terms of percentage of their revenue that they say comes from data integration or data management. Like, 25% of their total revenue comes from data integration. That is not what that is not our TAM. When they say that, that is the storage and compute consumed by the data integration workloads, the transformations, the data quality, the the governance and catalog that is being pushed down and their compute resources are being consumed to do that. They don’t have a data integration SKU.

They don’t have a data integration SKU. They have storage SKUs, and they have compute SKUs. What is frequently the case is that that workload that is consuming compute and storage is being written and managed by us in using informatic IDMC and pushed down. We don’t do the compute. We don’t do the storage.

We design the pipeline. We design the transformation. We use our drag and drop tools and our recipes to, in a super efficient way, create the SQL code that’s then pushed down to those platforms where it runs and they generate revenue from that. So don’t be confused by the big numbers they cite about how much data integration. That’s not taking food off of our table.

Now with respect to your incentive question, to get people to migrate, it is a fair it is a fair question, and it’s a it’s a net present value question, frankly, that we think about regularly is should we do something unnatural to accelerate this? I used to cover companies like, Yeah. Look, it’s a reasonable thing to consider. We’re a profitable company over 30% gross margin, and our goal is to deliver high single digits and ultimately double digit total growth in combination of our cloud growth and our declining on prem business. And that’s the financial model we’re working to.

But look, you can disagree that maybe you should sacrifice your profitability and take it down to 10 or 15% and go through, you know, eighteen, twenty four months of of the valley of death there, but that’s not our strategy.

Tom Blakey, Analyst, Kantor: Any more questions from the audience? It will just shift to AI. I mean, Informatica benefits from AI, be it at the epicenter of data in general, but maybe just double click on that kind of higher level statement. What are you you’ve given a lot of examples here in terms of the forensics, in terms of the usage and the yellow flags of the renewals. I’m just very impressed with what you guys are doing to look inside the usage of your product.

Help us understand take the use as an opportunity to help us understand what Informatica is being used for or, you know, currently with AI and what the current trends you’re seeing maybe heading into ’25 here.

Mike, CFO, Informatica: So for us, AI means two things. One is what we call GenAI from Informatica. Emphasis on the word from. So that’s our Clare GPT. It’s a service on the IDMC that you consume with IPUs, which is our consumption token unit.

And it’s a GPT based interface that allows the user of our platform to be better, smarter, faster through all the benefits of natural language GPT, not only interpreting what you want when you type in a sentence and then figuring out what the next question to ask you is and refining and all the cool stuff that GPT does. But increasingly, it has capabilities to use g p to use GenAI technologies to look at your data state and automate in an automated way, build data pipelines for you and find data quality issues and so forth. That GenAI from Informatica is a it’s a service. It’s like a co pilot, but supercharged. We’re the only ones that have it.

We’re likely to be the only ones that are gonna have it for a good long time because you’ve got to have a platform that has horizontal visibility of your data for it to be of any use. And it’s an adoption. It’s a user experience. It’s a productivity enhancer. So we’re gonna win more business.

We’re gonna win more new deals because we have ClearGPT, Because if you buy us versus the competition, you’re gonna be able to get more out of it and get more out

Tom Blakey, Analyst, Kantor: of it. They’re connectors just to look at other platforms.

Mike, CFO, Informatica: Absolutely. Other data. Yeah. Absolutely. So we don’t charge very much for it.

In fact, we’ve announced that we’re gonna continue to allow people to use it for free through the rest of this calendar year because we want people to use it to build more pipelines and to create more quality rules and to establish more governance on their data, which is what consumes IPs in bulk, not just using our GPT GPT agent. So that’s Gen AI from Informatica. Super important, differentiates from the competition, but we’re not gonna monetize that or the monetization of that is not gonna be noticeable. What is gonna be noticeable in the future in terms of financial impact is Informatica for Informatica for GenAI. From Informatica for GenAI.

Right? So this is using the IDMC platform, which doesn’t require clear GPT, to manage your data for a GenAI workload. That’s where the real money is gonna be. And you’re right. We are in the middle of that based upon the importance of data for Gen AI.

We’re seeing it in terms of proof of concept and trials. We’ve got over a hundred customers who have stood up orgs, which is a word for, you know, an environment in our cloud platform that we can see from our telemetry telemetry are using Gen AI functionality, like connecting to LLMs, doing unstructured data transformations. And so we know that those are Gen AI workloads. And in some cases, we have direct relationships. We’re tracking them directly, and we have case studies that we talk about publicly.

But none of those have materially gone into production and started to consume a meaningful amount of IPs. The test environment doesn’t doesn’t generate much. Right. Furthermore, in our pipeline tracking, we see the increase year over year in the number of pipeline opportunities that are tagged as Gen AI related is multiples more than it was at this time last year.

Tom Blakey, Analyst, Kantor: That’s not the clear side. That’s the

Mike, CFO, Informatica: That’s the Informatica for Gen AI. That’s using Informatica for a Gen AI workload at the customer. That’s where the money is gonna be. Now we haven’t baked anything really materially into 25 forecast for that because it’s so unclear when those are gonna turn into big production level, activities, but the signs are there. And not and

Tom Blakey, Analyst, Kantor: not to be pedantic, you you you you’re saying GenAI, but this is also related to Agentic AI. Is that accurate? Because you said that you Yep. You have connectors and you know? Okay.

Mike, CFO, Informatica: Yep. Now I I don’t wanna overstate. I mean, we we don’t do the agentic part per se. So if you’re using Salesforce’s agentic model, right, we can be the data backbone to get all of the data from all of your stuff that is all over the place that that Gen AI model that Gen AI agent needs into the right place in their case case in data cloud. But if you’re using somebody else’s agentic platform or tooling, we can dump it all into Snowflake or BigQuery or whatever that agent needs to get out the data, and we can control its quality, and we can provide the access rights, and we can make sure there’s no PII and that sort of thing.

Tom Blakey, Analyst, Kantor: Okay. Because from a strategic perspective, you know, we get a lot of questions from investors, and we think about it ourselves. Like, what does the AI data stack look like in the future? Will it be something on the hyperscalers and all be in still in S3 and Blob? I mean, and there’ll be some sort of layers.

We’ve been through twenty, thirty years of software iterations here in middleware. It’s a overused term that isn’t really used anymore. So where back to that forensics, where are you kind of seeing you said you haven’t baked any of this into 25, so that’s a positive. But what’s the likelihood? Or where are you kind of seeing initial trials where Informatica has given you the, you know, the confidence that they will be part of that future, you know, AI related data stack?

Mike, CFO, Informatica: It that confidence is based upon two things, complexity and multi cloud. For those customers that are that are, yeah, that are that are able to stay able and willing to stand up in a an agent that uses a limited and constrained set of data sources, and the data, once it’s cleansed and merged and deduplicated and governed is in one place with a big high ring fence around it, that’s not our business. Right. But that’s not the way the enterprise works. Enterprise has enterprise has data all over the place.

It’s in all kinds of formats. Those formats are changing every day. Enterprises are becoming more multi cloud, not less multi cloud. And for that customer, it’s just by definition, there’s nobody else that can handle that the way we do. So we feel very good about the durability of our relevance in that even as formats change and stacks may look different, that somebody needs to manage that complexity.

And on the data side, that’s Informatica.

Tom Blakey, Analyst, Kantor: It’s a great place to end. I you might have to take okay.

Mike, CFO, Informatica: So we don’t share that, specifically. And win rates are hard because is it versus top of funnel? Is it mid funnel? Is it when there’s an RFP? There’s very common.

The type of customers, they’re large enterprise and they’re dispersed across all the usual categories, financial services, health care, pharma, manufacturing, retail, federal government, state local government. We’re not excessively concentrated in any part of the economy. It’s it’s really quite broad. The common theme is larger customers with more complexity that values having the best in class products on a platform where they don’t have to stitch together point products. It’s future proofed against all the conceivable changes in formats, and it works across all your clouds and and your on prem data as a switch line of data rather than a captive tool.

That’s where that’s where we went. Great. Thank you.

Tom Blakey, Analyst, Kantor: Michael, thank you very much for your time. Very much. Thanks for having us.

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