Q3 2023 Informatica Inc Earnings Call

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Unknown Executive: Hello and welcome to the Informatica in Fiscal Q3, 2020-3 Financial Results. My name is Aleya Malbin Kord making your calls today. If you would like to register a question during stage events, please press star, follow by one on your telephone keypad.

Hello, and welcome to the intramuscular fiscal Q3 2023 financial results.

My name is Ali and I'll be coordinating your call today.

I'd like to register your questions. Thanks, Giovanni Please press star followed by one on your telephone keypad.

Victoria Hyde: I'd now like to hand over to Victoria Hyde's done, Vice President of Investor Relations, Florious Yours, please go ahead. Thank you for joining Informatica's third quarter 2023 earnings conference call. Joining me today are Amit Walia, Chief Executive Officer and Mike McLaughlin, Chief Financial Officer.

I would now like to hand over to Victoria, Hyde Dunn, Vice President of Investor Relations Floor's Yours. Please go ahead.

Good afternoon, and thank you for joining Informatica third quarter 2023 earnings conference call joining.

Joining me today are <unk>, Chief Executive Officer, and Mike Mclaughlin, Chief Financial Officer before we begin we'd have a couple of reminders our earnings press release and slide presentation are available on our Investor Relations website at investors Dot Informatica Dot com, our prepared remarks will be posted on the IR website after the call.

Victoria Hyde: Before we begin, we have a couple of reminders. Our earnings press release and slide presentation are available on our Investor Relations website at investors.informatica.com. Our prepared remarks will be posted on the IR website after the conference call concludes. During the call, we will be making comments of a forward-looking nature. Actual results may differ maturely from those expressed or implied as a result of various risks and uncertainties. For more information about some of these risks, please review the company's SEC filings, including the section titled risk factors included in our most recent 10Q and 10K filings for the full year 2022. These four-looking statements are based on information as of today and we assume no obligation to publicly update or revise our four-looking statements except as required by law.

Call concludes.

During the call, we will be making comments of a forward looking nature.

<unk> results may differ materially from those expressed or implied as a result of various risks and uncertainties for more information about some of these risks. Please review the company's SEC filings, including the section titled Risk factors included in our most recent 10-Q and 10-K filings for the full year 2022.

These forward looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward looking statements except as required by law. Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance.

Victoria Hyde: Additionally, we will be discussing certain non-gap financial measures. These non-gap financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with gaps. A reconciliation of these items to the nearest U.S, gap measure can be found in this afternoon's press release and our slide presentation available on Informatica's Investor Relations website.

Prepared in accordance with GAAP.

A reconciliation of these items to the nearest U S. GAAP measure can be found in this afternoon's press release, and our slide presentation available on <unk> Investor Relations website at.

Amit Walia: It is my pleasure to turn the call over to on it. Thank you, Victoria. Thank you everyone for joining us today.

It is my pleasure to turn the call over to on it.

Victoria, Thank you everyone for joining us today.

Amit Walia: I will start today's call by summarizing three key points. First, we delivered a solid third quarter. We exceeded guidance across all top and bottom line metrics driven again by strong customer momentum and execution from a cloud-only consumption driven strategy. In addition to exceeding guidance in Q3, based on our strong performance of our raising, non-gap operating income and adjusted underward free cash flow after tax guidance for the full year. This is in addition to the raise we did on these metrics from a previous earnings call.

I will start todays call by summarizing three key points first.

Amit Walia: Second, we continue to accelerate our innovation that cloud transformation to make IDNC powered by our AI engine clear the data management platform of choice for enterprise across the globe as they build their modern data architecture to drive their AI driven digital transformation. Third, as we look ahead to next year, we remain committed to delivering talents, profitable growth while continuing to build on a successful cloud-only consumption driven strategy. As a part of this, we announced a restructuring today which I will discuss in more detail at the end of our works.

We delivered a solid third quarter, we exceeded guidance across all top and bottom line metrics, driven again by strong customer momentum and execution from our cloud only consumption driven strategy.

In addition to exceeding guidance in Q3 based on our strong performance, we are raising non-GAAP operating income and adjusted Unlevered free cash flow after tax guidance for the full year.

This is in addition to the raise we did on these metrics from our previous earnings call.

Okay.

We continue to accelerate our innovation led cloud transformation to make ibm's powered by our AI engine clear the data management platform of choice for enterprises across the globe as they build a modern data architecture to drive the AI driven digital transformation.

As we look ahead to next year, we remain committed to delivering balanced profitable growth, while continuing to build on our successful cloud only consumption driven strategy.

Part of this we announced a restructuring today, which I will discuss in more detail at the end of my remarks.

Amit Walia: Now let's discuss these topics in more detail. During the Q3 July, we exceeded the high end of guidance for ARR and revenue metrics. Cloud subscription ARR group 37% year away year to a record by 50 minutes. Our subscription ERR group 15% year over year and total revenue group 10% year over year. We strengthened our cash position and that beat the high end of guidance for non-gap operating income and adjusted on-theward free cash flow after taxes as well.

Now, let's discuss these topics in more detail.

Turning to Q3 results, we exceeded the high end of guidance for <unk> and revenue metrics.

Subscription <unk> grew 7% year over year to a record $550 million.

Our subscription <unk> grew 15% year over year, and total revenue grew 10% year over year.

We strengthened our cash position and beat the high end of guidance on non-GAAP operating income and adjusted Unlevered free cash flow after tax as well.

Amit Walia: The macro environment remains stable for the third quarter, consistent with the prior quarter. We continue to be encouraged by the momentum of a cloud-only consumption driven strategy as a sales makeshift for self-managed to cloud subscription ERR. With cloud subscription ERR now representing 51% of subscription ERR up from 43% a year ago. Approximately 85% of the quarters cloud new Brookings came from new cloud workloads and expansion with the remaining 15% from on-prem cloud migration.

The macro environment remains stable for the third quarter consistent with the prior quarter.

Continue to be encouraged by the momentum of our cloud only consumption driven strategy as the sales mix shift for self managed to cloud subscription AD hoc with cloud subscription now representing 51% of subscription.

Up from 43% a year ago.

Approximately 85% of the quarter's cloud new bookings came from new cloud workloads.

And expansion with the remaining 15% from on Prem cloud migration.

Amit Walia: Furthering the trend of accelerating migrations of our on-prem and maintenance based to IDNC, at the end of Q3V of now migrated 5% of that base to cloud compared to 4.5% of the end of YouTube. Customers adopting the IDNC platform with new users and use cases across organizations. In the third quarter, customers are spending customers spending more than 1 million in subscription ERR increased 70% year over year to 224 customers. Customers spending more than $100,000 in subscription ERR increased 70% year over year to 1,998 customers.

Furthering the trend of accelerating migration of our on Prem and maintenance based on <unk> at the end of Q3, we have now migrated 5% of that base to cloud compared to 45% at the end of Q2.

Customers adopting the <unk> platform, the new users and use cases across organizations.

In the third quarter customers are spending customers spending more than $1 million in subscriptions that are increased 17% year over year to 224 customers.

Customers spending more than $100000 of subscription that are increased 7% year over year to 1970 <unk> customers.

Amit Walia: Let me share a few customers' stories highlighting of best-to-great solutions capabilities on the IDNC platform. Mercedes-Benz France has been an informative customer for over 2 decades and has recently extended the partnership with us. IDNC will have the address evolutions of their data architecture and further enable use cases just data anonymization, mass ingestion, their quality and more to enhance their operations. All in the medical line is a leading cruise line company offering users throughout the world.

Let me share a few customer stories, highlighting our best of breed solutions capabilities on the IBM Z platform.

Mercedes Benz, France has been and Informatica customer for over two decades and has recently extended their partnership with us.

<unk> will help them address evolutions of the data architecture and further enable use cases, because data monetization mass ingestion data quality and more to enhance their operations.

Hollander Medical line is a leading crude line company offering cruises throughout the world.

Amit Walia: An existing cloud data integration and mass ingestion customer, they recently expanded their IDNC footprint, accelerating their power center more than the cloud and adding other platform capabilities. What a burger is an American regional fast food restaurant change according to San Antonio Texas. As an existing supermarket customer, they selected the IDNC platform to lay their cloud platform foundation as they seek to scale their number of locations to increase revenue and improve customer experiences in their restaurants.

An existing cloud data integration and mass ingestion customer the recently expanded their <unk> footprint accelerating the power center modernization to the cloud and adding other platform capabilities.

Water Burger is an American reasonably fast food restaurant chain headquarters in San Antonio, Texas, as an existing informatica customer selected the IBM Z platform to lay their cloud platform foundation as they seek to scale the number of locations to increase revenue and improve customer experiences in the restaurants.

Amit Walia: As the higher education industry is moving to cloud, Clemson University in South Carolina sought to partner with us to accelerate the enterprise transformation initiatives, recognizing our best-to-great IDNC platform to select our cloud data innovation, master data management and cloud data governance and catalog to create a single source of truth for the data driven strategy.

As the higher education industry is moving to cloud Clemson University of South Carolina sought to partner with us to accelerate the enterprise transformational initiatives are recognizing our best of breed Ibm's platform. The selected our cloud data integration Master data management and cloud data governance and catalog.

Create a single source of truth for their data driven strategy.

Amit Walia: Next, we added product innovation to IDNC's cloud native AI powered platform to improve productivity for customers and partners. In our cloud data governance and catalog service, we added REST APIs to extend the reach of rich metadata for our third party apps, expanded data classification capabilities for Databricks, Kafka, and Microsoft Power BI. An expanded breadth and depth of metadata connectivity with new scanners for Microsoft Synapse, SQL Script, Apache High, Urban Data Modler, Preview for AWS Flow and Microsoft AWS Cloud and Microsoft Power BI.

Next we added product innovation to Ibm's cloud native AI powered platform to improve productivity for our customers and partners.

And our cloud data governance, and Gaslog service, we address Apis to extend the reach of rich metadata for a third party apps expanded data classification capabilities for data bricks, Kafka and Microsoft <unk> and.

An expanded breadth and depth of metadata connectivity with new standards for Microsoft sent up sequel script Apache High urban data Modeler preview for AWS, and Microsoft AWS clue and Microsoft purview.

Amit Walia: Review. Our focus on IDMC becoming the metadata system of record for enterprises continues to accelerate. In our MDM and 360 app services, we added many innovations for data stewards for their productivity, including bulk edit to the change management process and dynamic modeling experience to capture context sensitive attributes, a very important feature for them. Our investment towards faster time to value continues as we launched a new material master extension design for centralized authoring and mastering of material data.

Our focus on <unk>, becoming the metadata system of record for enterprises continues to accelerate.

And our MDM and 360 App services, we added many innovations for data stewards for their productivity, including bulk edits to the bulk edit to the change management process and dynamic modeling experience to capture context sensitive attributes are very important feature for them.

Our investment towards faster time to value continues as we launched a new material market extension design for centralized auditing and mastering of material data. This when combined with the supply of 360 <unk> product with <unk> can manage the entire value chain of an item as it moves from raw material to finished product, which you can see.

Amit Walia: This when combined with supplier 360 and product 360 can manage the entire value chain of an item as it moves from raw material to finish product, which you can see is critical in terms of product innovation, shipping and profitability for companies. Turning to private art, we continue to make good progress integrating the technology capabilities into the IDMC platform and we should be done by the end of Q1 of 2024, including the ability to use IPUs to consume private art capabilities.

Is critical in terms of product innovation shipping and profitability for companies.

Turning to privilege.

We continue to make good progress integrating the technology capabilities into the IBM Z platform and this should be done by the end of Q1 of 2024, including the ability to use ipu's to consume product capabilities.

Amit Walia: Next, our AI clear is embedded in all our solutions, leveraging ML algorithms and NLP on metadata to drive intelligence and productivity accessing 50,000 metadata where connections. Now leveraging 36 parabytes of active metadata in the cloud and the platform processing over 71 trillion mission critical power transactions as of September 30th, growing 60% year over year. We continue to accelerate our progress in AI with clear GPT, now available in private preview as a native IDMC service.

Next our AI cleared is embedded in all our solutions leveraging MLR rather than an MLP on meta data to drive intelligence and productivity accessing 50000 metadata where connections now leveraging 36 petabytes of active metadata on the cloud and the platform processing over 71 trillion mission.

Our transactions as of September 30th growing 60% year over year.

We continue to accelerate our progress.

With clear GPT now available in private preview of the <unk> service, we will utilize the IPO to drive usage and help customers democratizes simplify that data.

Amit Walia: We will utilize IPUs to drive usage and help customers democratize and simplify that data. In the beta, we have enabled data discovery and metadata exploration use cases over the next few months, we will enable data exploration, ELT pipeline creation and content generation. As for clear co-pilot, which is already available to our customers, we release clear generated pipeline capability that allows customers to utilize AI to auto map sources to master data management targets. Additionally, we added clear powered Finops capabilities that help users set detailed runtime data management job parameters based on desired performance and cost SLAs.

In the beta we have enabled data discovery and metadata exploration use cases over the next few months, we will enable data exploration ELT pipeline creation and content generation.

As our co pilot, which is already available to our customers. We released clear generated pipeline capability that allows customers to utilize AI to automap sources to master data management targets.

We added cleared powered fin ops capabilities that help users that detailed runtime data management job parameters based on desired performance and cost estimates.

Amit Walia: Our commitment to delivering product differentiation and innovation has won us a recognition from industry analyst. Dressner advisory services ranked as the number one in its 2023 Dressner advisory services master data management market study. For the third consecutive year, Blue Research named us a champion in its market update for master data management 2023 portal. And for the fourth consecutive year, Constellation research has named in America to its Constellation shortlist metadata management, data cataloging and data governance.

Our commitment to delivering product differentiation and innovation has won us a recognition from industry analyst Dresner Advisory services ranked us as the number one in its 2023 Dresner Advisory services Master data management market stock market study for.

For the third consecutive year Blue research named US a champion and its market update for Master data management and 2022 report.

And for the fourth consecutive year constellation research is named Informatica towards constellation shortlist metadata management data cataloging and data governance.

Amit Walia: As for our commitment to customer centricity in ensuring our customer get value from a market leading product and IDMC, that is also one of the recognition from thought leaders. Our focus on our customers and their success is recognized by GLE power for delivering an outstanding customer service experience to customers globally under its certified assisted technical support program. This is the third consecutive year in Informatica on the certification and met the current software benchmark of customer satic. Excellence, the TSI or Technology and Services Industry Association named Informatica Alvinner in the 2023 innovation in customer portals that improved digital customer experience category.

As for our commitment to customer centricity, and ensuring our customers get value from our market leading product in <unk> that is also want us recognition from thought leaders.

Our focus on our customers and their success was recognized by J D power for delivering an outstanding customer service experience to customers globally under its certified assisted technical support program. This is the third consecutive year of Informatica arent the certification and met the current software benchmark for customer sat accidents.

The Tsi, our technology and services industry Association named Informatica, a winner in the 2023 innovation and customer portals that improved digital customer experience category.

Amit Walia: Turning to partners in Q3, we further co-selling activities with our ecosystem partners and announced new partnerships with Oracle Cloud and Google Cloud above and beyond the many existing partnerships that we have. At Oracle Cloud World, we announce the launch of a North America point of delivery on Oracle Cloud, which is now live and the expansion of a cloud data governance capabilities with the autonomous database and golden gate. We're also launch partner for Oracle Cloud's marketplace private offer program.

Turning to partners.

In Q3, we furthered co selling activities with our ecosystem partners and announced new partnerships with Oracle cloud and Google cloud above and beyond the many existing partnerships that we have.

At Oracle Cloud World, We announced the launch of our North America point of delivery on Oracle cloud, which is now live and the expansion of our cloud data governance capabilities with the autonomous database at Golden Gate Bridge.

We're also launched partner per article cloud marketplace private offer program.

Amit Walia: At Google Next, we announced a new solution combining us as MDM on Google Cloud with Google Cloud's customer data platform based on Google BigQuery. With our GFI partners, we've seen a significant increase in GSM partners doubling down with us and building their data and AI growth plans with IDMC as the standard solution. During the last quarter, we launched a joint strategic growth plan with LTI-mind3 to help customers accelerate cloud modernization and bring their data and AI to life across the 12,000 strong data and AI practice employees.

At Google next we announced a new solution combining a SaaS MDM on Google cloud with new cloud customer data platform based on Google Big query.

With our GSI partners, we've seen a significant increase in GSI partners doubling down with us and building their data and AI group has with <unk> as the standard solution.

During the last quarter, we launched joined strategic growth plan with LTI mindfully to help customers accelerate cloud modernization and bring that data and AI to life across the globe strong data and AI practice employees.

Amit Walia: We also became a launch partner for our digital for building a data and AI practice consisting of systematic IDMC skate people. Cap Gemini launched an ESC solution built on IDMC to help customers define an ESC data strategy and build a data management hub.

We also became a launch partner for brands to our digital while building a data and AI practice, consisting of informatic IBM seascape people gap.

Cap Gemini launching ESG solution built on IBM seem to help customers define an ESG data strategy and build a data management.

Amit Walia: In August towards the middle of the month, we launched power center cloud edition our new cloud modernization program that significantly lowers the migration time from on-prem power center to IDMC. In addition, it allows power center users more flexibility to manage the migration of individual workloads over time once the initial implementation of power center cloud edition is live. In the first quarter of its availability, and as I said, it was middle of the quarter, we saw one third of our migration deals using this new technology. Going forward, we expect the vast majority of our migrations to use power center cloud edition, which has the potential to accelerate power center maintenance migrations in future periods.

In August towards the middle of the month, we launched powered central cloud edition, our new cloud modernization program that significantly lowers the migration time from on Prem Power Center Dwight EMC.

In addition, it allows power center users more flexibility to manage the migration of individual workloads over time once the initial implementation of power Center cloud edition is light.

In the first quarter Opex availability and as I said it was middle of the quarter. We saw one third of our migration deals using this new technology.

Going forward, we expect the vast majority of our migration to use power Center cloud edition, which has the potential to accelerate power center maintenance migrations in future periods.

Okay.

Amit Walia: Now looking ahead, we continue to manage the business for long term durable code and let me give you some context on the restructure that we announced earlier today. Now, since 2016, Informatica has been on a product led innovation focus transformation journey. We are steadily invested in supporting our new product led self managed and cloud businesses driving our transition to a subscription business model. In January of this year, we transition to a cloud only consumption driven strategy as part of a multi earth plan to drive cloud centric balanced profitable growth as we ship from on-prem subscription to cloud data subscription. As a part of the strategy, we have been focused on simplifying our organization from hybrid to cloud creating operational efficiencies synergies and improving our agility and speed of execution.

Looking ahead, we continue to manage the business for long term durable growth and let me give you some context on the restructuring I would tell you to date.

Since 2016 Informatica has been on a product led innovation focused transformation journey.

We have steadily invested in supporting our new product led self managed and cloud businesses driving a transition to a subscription business model.

In January of this year with transition to a cloud only consumption driven strategy as part of our multiyear plan to drive cloud centric balanced profitable growth as the shift from on premise subscription to cloud native subscription.

As a part of the strategy, we have been focused on simplifying our organization from a hybrid cloud.

Creating operational efficiencies synergies and improving our agility and speed of execution.

Amit Walia: In that context, today, we announced plans to reduce our global workforce by approximately 10% or 545 roles and reduce our global realistic footprint. We made this decision as a part of the final step in our cloud-only consumption driven transformation to streamline our posture. The increased focus and simplicity of our cloud-only strategy will enable us to maintain our safe capacity while delivering continued best-in-class product innovation and customer satisfaction as an AI-powered cloud company with strong cloud subscription ARR growth.

In that context today, we announced plans to reduce our global workforce by approximately 10% or $5 45, rolls and reduced our global real estate footprint.

Mike will share with you the financial details later in the call.

We made this decision as a part of the final step in a cloud only consumption driven transformation to streamline our cost structure.

The increased focus and simplicity of a cloud only strategy will enable us to maintain our sales capacity, while delivering continued best in class product innovation and customer satisfaction as an AI powered cloud company with strong cloud subscription growth.

Amit Walia: You see the strong momentum in our business execution reflected throughout the year and in Q3 results that we reported today. We executed very strongly against all top line and bottom line metrics. We continue to see the same momentum going into Q4. We are confident in delivering strong growth fueled by AI tailwinds to data management use cases, new and expanding enterprise customer relationships, strong cloud net retention rates and our economies of scale.

Do you see the strong momentum in our business execution reflected throughout the year.

And in Q3 results that we reported today, we executed very strongly against all topline and bottom line metrics.

We continue to see the same momentum going into Q4, we are confident in delivering strong growth fueled by AI tailwind for data management use cases, new and expanding enterprise customer relationships strong cloud net retention rates on our economies of scale.

Amit Walia: We plan to discuss more at our investor day on December 5th. In close, I'm proud of our teams, thankful and grateful to our customers and partners for continuing to help drive our cloud focus growth.

We plan to discuss more at our Investor day on December five.

Inflows.

Im proud of our teams.

Tankful and grateful to our customers and partners for continuing to help drive our cloud focused growth with that let me now hand, the call over to Mike might be sticking away.

Mike McLaughlin: With that, let me now hand it all over to Mike. Mike, please take it away. Thank you, Met, and good afternoon everyone. Q3 was another solid financial quarter across the board with key growth and profitability metrics exceeding our expectations. As I did last quarter, I'll begin the review of our Q3 results by reminding everyone how to best understand Informatica's ARR and GAAP revenue. Our ARR and revenue fall into three basic categories.

Thank you Amit and good afternoon, everyone Q3 was another solid financial quarter across the board with key growth and profitability metrics exceeding our expectations.

As I did last quarter I'll begin the review of our Q2 results by reminding everyone how to best understand <unk> <unk> and GAAP revenue.

Our <unk> and revenue fall into three basic categories cloud subscriptions, which we have guided to AOR growth of 35% for the full year self managed subscriptions, which we are no longer actively selling and which we have guided to decline year over year in FY 'twenty, three and maintenance from perpetual licenses sold in the past, which we also expect a decline going.

Mike McLaughlin: Cloud subscriptions, which we have guided to ARR growth of 35% for the full year, self-managed subscriptions, which we are no longer actively selling, and which we have guided to decline year-to-year in FY23, and maintenance from perpetual licenses sold in the past, which we also expected decline going forward. We also earn a relatively small amount of revenue from implementation and education services, which we expect to decline slightly this year as our professional services partners perform more of that work for our customers. This service revenue is not Canada's ARR.

Forward.

We also earn a relatively small amount of revenue from implementation in education services, which we expect to decline slightly this year as our professional services partners perform more of that work for our customers. This service revenue is not counter this era.

Mike McLaughlin: With that in mind, I'll start with our total ARR for the quarter, which was 1.58 billion and increase of 7% over the prior year. This was driven by new cloud workloads and steady renewal rates. We added 108 million in net new total ARR versus the prior year. Foreign exchange negatively impacted total ARR by approximately 1.4 million in line with expectations when we set our guidance in August. Turning now to the three components of Informatica's ARR, cloud subscription ARR was 550 million, a 37% increase year of year, which was 10 million above the midpoint of our August guidance.

With that in mind I'll start with our total <unk> for the quarter, which was $1 $5 8 billion, an increase of 7% over the prior year. This was driven by new cloud workloads and steady renewal rates, we added $108 million and net new total <unk> versus the prior year foreign exchange negatively impacted total <unk> by approximately $1 4 million.

In line with expectations, when we set our guidance in August.

Turning now to the three components of Informatica say IRR cloud subscription <unk> was $550 million, a 37% increase year over year, which was $10 million above the midpoint of our August guidance.

Mike McLaughlin: Cloud subscription ARR represents 35% of our total ARR up from 27% a year ago. New workloads and strong renewal rates drove cloud subscription net new ARR of 149 million year of year and 37 million quarter of a quarter. Approximately 85% of the quarter's cloud new bookings came from new cloud workloads and expansion of existing cloud engagements with the remaining approximately 15% from on-premise customer migrations. Our cloud subscription net retention rate was 118% of 3% points year over year and up 2% points versus last quarter.

Subscription <unk> represents 35% of our total <unk> up from 27% a year ago, new workloads and strong renewal rates drove cloud subscription net new <unk> of $149 million year over year and $37 million quarter over quarter.

Approximately 85% of the corners cloud new bookings came from new cloud workloads and expansion of existing cloud engagements with the remaining approximately 15% from on premise customer migrations.

Our cloud subscription net retention rate was 118% up three percentage points year over year and up two percentage points versus last quarter.

Mike McLaughlin: Self-managed subscription ARR declined slightly in the quarter as expected to 528 million. This was flat sequentially and down 2% year over year in line with expectations. We expect self-managed subscription ARR to continue declining next year, yielding a negative year over year growth rate. This decline is the direct and intentional result of our cloud-only consumption driven strategy. Safety, subscription ARR, which is simply the sum of cloud ARR and self-managed ARR, who by 15% year of the year, 2, approximately 1.08 billion, which was more than 22 million above the midpoint of our August guidance.

Self managed subscription IRR declined slightly in the quarter as expected to $528 million. This was flat sequentially and down 2% year over year in line with expectations. We expect self managed subscription <unk> to continue declining next year, yielding a negative year over year growth rate. This decline is the direct and intentional resolve.

Of our cloud only consumption driven strategy.

Subscription IRR, which is simply the sum of cloud <unk> and self managed IRR grew by 15% year over year to approximately 1.08 billion, which was more than $22 million above the midpoint of our August guidance subscription IRR now represents over 68% of total IRR up from 64% a year ago foreign.

Mike McLaughlin: Subscription ARR now represents over 68% of total ARR up from 64% at year so. Foreign Exchange negatively impacted subscription ARR by approximately 1.5 million, again in line with the expectations when we set our guidance in office. The third component of total ARR is maintenance on perpetual licenses, which represents 32% of total ARR. Maintenance ARR was down 6% year of the year to 499 million in line with expectations. As a reminder, we no longer sell a meaningful amount of perpetual licenses.

<unk> negatively impacted subscription IRR by approximately $1 5 million again in line with expectations. When we set our guidance in August the.

The third component of total IRR is maintenance on perpetual licenses, which represents 32% of total IRR.

Maintenance IRR was down 6% year over year to $499 million in line with expectations. As a reminder, we no longer sell a meaningful amount of perpetual licenses as a result, we expect maintenance to continue declining gradually at a fairly constant rate through the third quarter of this year, we have migrated 5% of our legacy maintenance base to cloud.

Mike McLaughlin: As a result, we expect maintenance to continue declining gradually at a fairly constant rate. Through the third quarter of this year, we have migrated 5% of our legacy maintenance based to cloud subscription up from 4.5% last quarter with an average 2 to 1 ARR up list ratio. In total, these three components summed to 7% total ARR growth for the core. Cloud subscription growth of 37% growth is increased offset by intentional and expected gradual declines of self-managed subscription and maintenance.

<unk> up from four 5% last quarter with an average two to one <unk> uplift ratio.

In total these three components summed to 7% total AOR growth for the quarter cloud subscription growth of 37% drove this increase offset by intentional unexpected gradual declines of self managed subscription and maintenance this financial trajectory of high cloud growth combined with the gradual decline of self managed and maintenance is the dirt.

Mike McLaughlin: This financial trajectory of high cloud growth combined with the gradual decline of self-managed maintenance is the direct result of our cloud only consumption driven strategy. We expect these trends to continue in the fourth quarter and beyond. We saw good growth in our average subscription ARR could customer in the third quarter going to over $283,000 a 13% increase year year. We have 3,700 to 99 active subscription customers and increase the 78 subscription ARR customers year by year.

Correct result of our cloud only consumption driven strategy. We expect these trends to continue in the fourth quarter and beyond.

We saw good growth in our average subscription per customer in the third quarter growing to over $283000, a 13% increase year over year. We have 3799 active subscription customers an increase of 78 subscription IRR customers year over year.

Mike McLaughlin: Now I'd like to review our revenue results for the third quarter. Gap total revenues were 49 million increase of 10% year over year. This exceeded the midpoint of our August guidance range by 9 million due to a slower than expected decline in maintenance revenue and strong renewals. Revitable from our privator acquisition was not material in the quarter. Forex changed positively impacted total revenue by approximately 5 million by a year over year basis.

Now I'd like to review our revenue results for the third quarter GAAP total revenues were 409 million an increase of 10% year over year. This exceeded the midpoint of our August guidance range by $9 million due to a slower than expected decline in maintenance revenue and strong renewals.

Revenue from our <unk> acquisition was not material in the quarter.

Foreign exchange positively impacted total revenues by approximately $5 million on a year over year basis.

Mike McLaughlin: The accounting impact of informative shift to cloud subscription sales and away from self-managed on prem sales was ahead when to revenue again this quarter. If our cloud versus self-managed new bookings mix was the same disclosure as it was in Q3 last year. Total revenues would have been approximately 19 million higher than we reported increasing our year over year revenue growth rate to approximately 15%. Subscription revenue increased 22% year over year to 262 million representing 64% of total revenue compared to 58% of year ago.

The accounting impact of Informatica shift to cloud subscription sales and away from self managed on Prem sales was a headwind to revenue again this quarter, if our cloud versus self managed new bookings mix was the same this quarter as it was in Q3 last year total revenues would have been approximately $19 million higher than we reported.

Good increasing our year over year revenue growth rate to approximately 15%.

Subscription revenue increased 22% year over year to $262 million, representing 64% of total revenue compared to 58% a year ago, our quarterly subscription renewal rate was approximately 94% flat year over year.

Mike McLaughlin: Our quarterly subscription renewal rate was approximately 94% flat year over year. Maintenance and professional services revenues were 147 million representing 36% of total revenue to Q3 and line with expectations. Fanned along maintenance revenue represented 30% of total revenue for the quarter. Our maintenance renewal rate in the quarter was 95% also in line with prior periods. Implementation consulting and education revenues comprised the remainder of this category down 7 million year over year representing 5% of total revenue.

Maintenance and professional services revenues were $147 million, representing 36% of total revenue in Q3 in line with expectations Standalone maintenance revenue represented 30% of total revenue for the quarter, our maintenance renewal rate in the quarter was 95% also in line with prior periods.

The implementation consulting and education revenues combined.

Ah comprised the remainder of this category down $7 million year over year, representing 5% of total revenue the decline in services revenues due primarily to the lower attach rate of Informatica implementation services to new <unk> sale. Our implementation partners are taking on more and more of that work for us to focus on high value software and <unk>.

Mike McLaughlin: The decline in services revenues due primarily to the lower attachment of informatic implementation services to new IDMC sales. Our implementation partners are taking on more and more of that work. Bring us to focus on high value software and consulting sales. Turing through the geographic distribution of our business, U.S. Revenue is grew 8% year over year to 263 million, representing 64% of total revenue, while international revenue grew 14% year over year to 145 million.

<unk> sales.

Turning to the geographic distribution of our business U S revenues grew 8% year over year to $263 million, representing 64% of total revenue while international revenue grew 14% year over year to $145 million using exchange rates from Q3 last year International revenue would have been approximately $5 million lower in.

Mike McLaughlin: Using exchange rates from Q3 last year, international revenue would have been approximately $5 million lower in the quarter, representing international revenue growth to 10%. Consumption-based IP is our frictionless way to accept the IDNC platform and our core part of our strategy. Approximately 60% of food corner cloud new bookings were IP based deals. IP is now represented 45 of total cloud subscription, 45% of total cloud subscription error of 2 percentage points sequentially. The remainder of our Q3 cloud bookings were also sold under multi-year consumption-based pricing, such as customer or supplier records for our NDM products.

In the quarter, representing international revenue growth of 10% year over year.

Consumption based Ipos are a frictionless way to access the IMC platform and are a core part of our strategy approximately 60% of third quarter cloud new bookings were IP based deals.

It is now represent 45 of total cloud subscription 45% of total cloud subscription <unk> up two percentage points sequentially.

The remainder of our Q3 cloud bookings were also sold under multi year consumption based pricing such as customer or supplier records for our MDM products.

Mike McLaughlin: Now, I'd like to move on to our profanibility metrics, but you've note that I will discuss non-gap results in less otherwise stated. In Q3, our gross marginal is 82% up to percentage points year over year, even as our software sales mix shifts to the cloud, operating expenses were consistent with expectations. Operating income was approximately 1,028 million for the quarter, going 53% year over year and exceeding the midpoint of our August guidance range by 13 million.

Now I'd like to move on to our profitability metrics. Please note that I will discuss non-GAAP results unless otherwise stated.

In Q3, our gross margin was 82% up two percentage points year over year, even as our software sales mix shifts to the cloud operating expenses were consistent with expectations.

Operating income was approximately $128 million for the quarter growing 53% year over year and exceeding the midpoint of our August guidance range by $13 million operating margin was 31, 3% and eight eight percentage point improvement from 22, 5% a year ago, adjusted EBITDA was $132 million and net.

Mike McLaughlin: Operating margin was 31.3% and 8.8 percentage point improvement from 22.5% to year ago. Adjusted EBITDA was 132 million and net income was 81 million. Net income per diluted share was 27 cents based on approximately 297 million outstanding diluted shares. Basic share count was approximately 289 million shares. Q3 adjusted on leverage free cash flow after tax was 96 million. Better than expectations due to higher operating income performance 10 collections and lower cash taxes.

Income was $81 million.

Net income per diluted share was 27 based on approximately 297 million outstanding diluted shares basic share count was approximately 289 million shares.

Q3, adjusted Unlevered free cash flow after tax was $96 million better than expectations due to higher operating income performance in collections and lower cash taxes.

Mike McLaughlin: Adjusted on leverage free cash flow after tax margin was 23.5%. Cash paid per interest in the quarter was 38 million. Given mind that our free cash flow from quarter to quarter can be quite volatile based on working capital fluctuations in others, non-linear cash items such as tax bearers. We ended the third quarter in a strong cash position with cash plus short term investments of 869 million. Total debt outstanding was 1.85 billion and net debt was 978 million.

Adjusted Unlevered free cash flow after tax margin was 23, 5% cash paid for interest in the quarter was $38 million.

Keep in mind that our free cash flow from quarter to quarter can be quite volatile based on working capital fluctuations and other non linear cash items such as tax payments.

We ended the third quarter in a strong cash position with cash plus short term investments of $869 million total debt outstanding was $1 85 billion and net debt was $978 million or adjusted EBITDA over the 12 months through the end of the third quarter was 431 million, yielding a net leverage ratio of two three times.

Mike McLaughlin: Adjusted EBITDA over the 12 months through the end of the third quarter was 431 million, yielding a net leverage ratio of 2.3 times. Seving back and looking at our year-to-date results, we were very pleased with our execution so far in 15.23. And we feel like we have good momentum going into Q4.

Stepping back and looking at our year to date results. We are very pleased with our execution. So far in fiscal 'twenty to 'twenty three and we feel like we have good momentum going into Q4.

Mike McLaughlin: As I've discussed a few minutes ago, today we announced a restructuring plan that will reduce our global workforce by about 10%. And shrink our global real estate footprint. As a result, we expect to include non-recurring and curring, non-recurring restructuring charges of approximately 35 million to 45 million. With the majority incurred by the end of the first quarter of 2024. These charges will include cash expenditures from quality transitions, nose period and severed payments, employee benefits, real estate related charges and other costs.

As I discussed a few minutes ago today, we announced a restructuring plan that will reduce our global workforce by about 10% and shrink our global real estate footprint as.

As a result, we expect to include nonrecurring incur nonrecurring restructuring charges of approximately $35 million to $45 million.

With the majority incurred by the end of the first quarter of 2024.

These charges will include cash expenditures for employee transitions notice period, and severance payments employee benefits real estate related charges and other costs.

Mike McLaughlin: We estimate the cost savings benefit of these restructuring actions will be approximately 84 million on a gap basis or approximately 79 on a non-gap basis in fiscal 2024. With only a small amount of savings to this fiscal year. Importantly, this restructuring does not negatively impact our full year of 2023 guides. Turning now to guidance in Q4, we expect the same friends we have been seeing so far this year to continue. Namely, our new sales will be predominant cloud and we expect our cloud ARR to grow by 35% year over year.

We estimate the cost savings benefit of these restructuring actions will be approximately $84 million on a GAAP basis were approximately $70 million on a non-GAAP basis in fiscal 2024 with only a small amount of savings this fiscal year.

Importantly, this restructuring does not negatively impact our full year 2023 guidance.

Turning now to guidance in Q4, we expect the same trends we've been seeing so far this year to continue namely our new sales will be predominant cloud and we expect our cloud <unk> to grow by 35% year over year and because we are no longer selling a significant amount of self managed subscriptions or perpetual licenses self managed subscription <unk>.

Mike McLaughlin: And because we are no longer selling a significant amount of self-managed subscriptions or perpetual licenses, self-managed subscription ARR and maintenance ARR is expected to decline on both a sequential and year with your base. We delivered better than expected results again in Q3 and have good momentum going into Q4. Now being said, Q4 is our biggest quarter of the year still, face a considerable amount of uncertainty in the macro environment. Therefore, we believe it is prudent to reaffirm our previous few issues, full year guides for revenue and ARR.

And maintenance <unk> is expected to decline on both a sequential and year over year basis.

We delivered better than expected results again in Q3 and have good momentum going into Q4 that being said Q4 is our biggest quarter of the year, we still face a considerable amount of uncertainty in the macro environment. Therefore, we believe it is prudent to reaffirm our previously issued full year guidance for revenue and IRR.

Mike McLaughlin: With respect to our non-gap operating income and all under free cash flow, however, we are raising up full year guidance. We now expect non-gap operating income to be in the range of 430 to 450 million representing approximately a 25% year increase at the midpoint. We now expect adjusted unlovered free cash flow after tax to be in the range of 410 to 439 representing approximately a 46% year of year increase at the midpoint.

With respect to our non-GAAP operating income and all other free cash flow. However, we are raising our full year guidance. We now expect non-GAAP operating income to be in the range of $430 million to $450 million, representing approximately a 25% year over year increase at the midpoint.

We now expect adjusted Unlevered free cash flow after tax to be in the range of $4 $10 million to $430 million, representing approximately a 46% year over year increase at the midpoint.

Mike McLaughlin: At this point in the year, our fourth quarter guidance is simply a derivative of our full year guidance, so I'll just briefly give you the highlights. We expect gap total revenue will be in the range of 200, sorry, full of 20 to full 40 million representing approximately 8% year of year growth at the midpoint of range. We expect subscription ARR to be in the range of 1.098 billion to 1.118 billion representing approximately 11% year of year growth at the midpoint of range.

At this point in the year, our fourth quarter guidance is simply a derivative of our full year guidance. So I'll just briefly give you. The highlights we expect GAAP total revenue will be in the range of 200, sorry, $4 $20 million to $440 million, representing approximately 8% year over year growth at the midpoint of the range.

We expect subscription IRR to be in the range of 1.0, $9 8 billion to $1 118 billion, representing approximately 11% year over year growth at the midpoint of the range.

Mike McLaughlin: We expect cloud subscription ARR to be in the range of 604 million to 64 million representing approximately 35% year of year growth at the midpoint. And we expect non-gap operating income to be in the range of 1.30 to 1.50 million representing approximately 23% year of year growth at the midpoint.

We expect cloud subscription IRR to be in the range of 604 million to $6 $14 million, representing approximately 35% year over year growth at the midpoint.

And we expect non-GAAP operating income to be in the range of $1 $30 million to $150 million, representing approximately 23% year over year growth estimate.

Mike McLaughlin: For modeling purposes, I'd like to provide a few more pieces of additional information. First, we expect adjusted unlovered free cash flow after tax for the fourth quarter to be in the range of 1.304 million. Second, we estimate cash paid for interest will be approximately 40 million in the fourth quarter, and for the full year, we estimate cash paid for interest will be approximately 149 million. Further, with respect to income taxes, our Q3 non-gap tax rate was 23%, and we expect that rate to continue for the full year 2023.

For modeling purposes, I'd like to provide a few more pieces of additional information first and we expect adjusted Unlevered free cash flow after tax for the fourth quarter to be in the range of $1 $14 million to $134 million.

Second we estimate cash paid for interest will be approximately $40 million in the fourth quarter and for the full year, we estimate cash paid for interest will be approximately 149 million.

Third with respect to income taxes, our Q3 non-GAAP tax rate was 23% and we expect that rate to continue for the full year of 2023, we estimate full year 2023 cash taxes to be approximately $80 million on a GAAP basis, we expect the significant volatility of our income tax provision and rate to continue for the full year.

Mike McLaughlin: We estimate full year 2023 cash taxes to be approximately 8 million. On a gap basis, we expect the significant volatility of our income tax provision and rate to continue. For the full year 2023, we expect a gap tax provision in line with our tax taxes.

2023, we expect a GAAP tax provision in line with our cash taxes.

Mike McLaughlin: [inaudible] Yesterday, our Board of Directors approved a new share of purchase authorization that enables us to buy up to 200 million of our Class A common stock, through privately negotiated transactions with individual holders or in the open market. A committee of the Board will determine the timing and terms of any repurchase. While we do not currently have any specific plans to purchase shares, this authorization gives us the opportunity to move quickly if and when opportunities rise.

And lastly, our share count assumptions for the fourth quarter of 2023, we expect basic weighted average shares outstanding to be approximately 292 million shares and diluted weighted average shares outstanding to be approximately 297 million shares for the full year 2023, we expect basic weighted average shares outstanding to be approximately $288 million and dilute.

<unk> weighted average shares outstanding to be approximately $293 million.

Yesterday, our board of directors approved a new share purchase authorization that enables us to buy up to $200 million of our class a common stock through privately negotiated transactions with individual holders or in the open market.

Our committee of the board will determine the timing amount in terms of any repurchase while we do not currently have any specific plans to purchase shares. This authorization gives us the opportunity to move quickly if and when opportunities arise.

Mike McLaughlin: And finally, at our upcoming investor day on Tuesday, December 5th, we intend to provide a deeper understanding of Informatica's business strategy, product innovation, growth drivers, and financial objectives. If you're interested in attending in person, please contact Victoria.

And finally at our upcoming Investor Day on Tuesday December 5th we intend to provide a deeper understanding of Informatica business strategy product innovation growth drivers and financial objectives.

So then attending in person please contact Victoria.

Unknown Executive: I'm afraid you can now open the line for questions. Thank you. If you would like to ask a question, please press staff followed by one on the Telephone team map. If you'd like to withdraw your question, please press staff followed by two. When preparing to ask your question, please ensure your device is unmuted and locally.

Operator, you can now open the line for questions.

Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad.

Withdraw your question. Please press star followed by check.

When preparing to ask a question. Please ensure your devices and mutated <unk>.

Alex Soukin: But questions may come from Alex Soukin with Wolfe Research. Your line is open. Hey, guys, thanks for taking the question and congrats on a solid quarter. I guess maybe just the first one, when you mentioned the macro conditions not really changing in the quarter, can you maybe talk to what you're seeing, the combination of impact we've heard, obviously, from all the hyperscalers at this point, some of them talk about attenuating optimization trends and solid AI workloads as being a driver for consumption.

Our question today comes from Alex Zukin with Wolfe Research Your line is open.

Hey, guys. Thanks for taking my question and congrats on a solid quarter I guess, maybe just the first one.

When you mentioned the macro condition is not really changing in the quarter can you maybe talk to what what youre seeing the combination of impact we've heard obviously from all the hyperscale or at this point some of them talk about attenuating.

Optimization trends and solid AI workloads as being a driver.

For for consumption can you maybe just talk about.

Alex Soukin: Can you maybe just talk about what you're seeing out there in the market, some of these larger projects that you're attaching to because it does feel like you had some meaningful improvement in some of your consumption dynamics and cloud NRR actually went up. I'm curious if you can tie that in to any comment around stabilizing or bottoming trends there. Hey, Alex, thanks for the question. I hope you've done well. I think first is you have really realized that how unique we are.

What youre seeing out there in the market. Some of these larger projects that you are attaching too because it does feel like you had some meaningful improvement in some of your consumption dynamics and cloud and are are actually went up so I'm curious if you can tie that into.

Any comment around stabilizing or modeling trends there.

So hey, Alex Thanks for the question Hope you're doing well so look I think first is.

<unk>.

You have to really realize how unique VR. When you look at when you asked the question on Hyperscale is we basically are the Switzerland of data so and customers are looking to do whether it's an agile it out on AWS, how the GCB or in some cases, even how older are Mig.

Alex Soukin: When you ask the question of hyperscalers, we basically are the Switzerland of data. So when customers are looking to whether it's an Azure or an AWS or a GCP or in some cases of their house or a lake, we solve all of those use cases and master data management and governance use cases. So we kind of have an in big situation of we have basically sit in the middle of multiple different platforms.

<unk>.

Solve all of those use cases, and master data management and governance use cases, so we kind of have a big situation have you basically sit in the middle of August.

Alex Soukin: So then different demands can move from one to another. It doesn't really impact us one to one. So that's one. Second is look, we've always been focused on mission critical workloads and we've never shared what I've always said. Sometimes nice to have workloads that churn the fastest enough in a bad economy. And I think that has served us well. So when customers buy us, we're always buying us with the idea that I am in it for the last hour.

Put a different platforms. So when different demand can move from one to another it doesn't really impact us one point so thats one.

Second is we've always been focused on mission critical workloads and we've never changed what I've always said, sometimes it's nice to have workloads that churn the fastest in up in a bad economy and I think that that's the web so when customer bias all we are buying us diarrhea.

<unk>.

Alex Soukin: I'm a very minimal on these nice to have workloads. And that strategy has always worked very well for us. Of course, having the best products and a single platform, which also reduces the risk for a customer to go stitch together multiple products also helps them because they don't have to spend more money and create more risk in stitching things together. And then last but not the least like, you know what I'm hearing from customers a lot is look, customers are optimizing their spend data tied to AI is definitely amongst the top three.

Jonas.

Very minimal on these nice job workloads and that strategy has always worked very well for us of course, having the best products and a single platform, which also reduces the risk for a customer to go stitch together multiple products also helps them because they don't have to spend more money and create more risk and sticking things together and then last quarter or at least.

What I'm hearing from customers the largest look.

Optimizing this spending.

Data tied to AI is definitely amongst the top three if not the top two and all of those things are helping us and lastly, like I said our partnerships. We've been maniacally focused on that we talked about the hyperscale, but the GSI partnerships with them building practices building reference architectures all of those things create kind of a snowball effect on it.

Alex Soukin: It's not the top two. And all of those things are helping us. And lastly, like I said, our partnerships, we've been maniacally focused on that. We talked about the hyperscale, but the GSI partnerships with them, building practices on us, building reference architectures on us. All of those things create the kind of snowball effect or a tailwind effect as you would like to think about it all. Thanks. Perfect. And then maybe just a follow-up.

The fact that you might like to think about it Alex.

Perfect and then maybe just.

A follow up you mentioned the restructuring plan.

Alex Soukin: You mentioned the restructuring plan. Do you just need let because of the consumption dynamics that you're seeing in your customer base, do you just need less people to, you know, to facilitate that it's more product-led growth and self-service, and then maybe just an update on our comment on Ithaca and the share repurchase authorization as well. I think the first and might please cover the tech of when so yes and more to the first question that you said I think look I said I'd even think of the year that as we transition to the final version of our transformation cloud only there's a lot of hybrid duplicative things, you know, parallel things that we were behind that there was just no way around it.

Do you just need.

Because of the consumption dynamics.

Youre seeing in your customer base do you just need less people to.

To facilitate that its more product led growth.

And self service and then maybe just an update on our comment on.

And the share repurchase authorization as well.

I think the first and by Cliff color vertical wind, so, yes, and more to the first question that you said I think look I said tied to even the beginning of the year that as we transition to the final version of our transformation cloud only theres a lot of hybrid duplicative, taking phenobarbital things.

We had there was just no way around it we took one round of simplification that will be this year and certain other things like that and I have been saying that in every earnings call that there is more operating leverage that we feel we will be and I think those are all the things that we're doing that are not necessarily need as we think about the business a lot simpler for all the things you said in <unk>.

Alex Soukin: We took one round of simplification earlier this year and certain other things were there and I've been saying that in every on the call that there is more operating libraries that we feel we will be. And I think those are all the things that we were doing that are not necessarily needed we think about the business it's a lot simpler for all the things you said and many other things we don't need to play kind of things to maintain or to do in fact it also as I said makes the business a lot more nimble and fast because we just don't need and people to go structure and deal as an example if I may use that and of course in a lot of cases cloud makes it a lot simpler and easier for customers to engage and buy from us or even use from us all of those things playing to that.

The other things, we don't need duplicative things to maintain the do in fact.

It also makes the business a lot more nimble and fast because we just don't need 10 people to both structured a deal as an example, if I may use that and of course in a lot of cases cloud makes it simpler and easier for customers to engage and buyer from us or even use from us all of those things play into that and I think I'll touch on one thing that maybe you would end up because that timing for us.

Alex Soukin: And I think I thought one thing that maybe you didn't ask is that timing for us was a very important critical decision maker look we thought a lot about whether it's January or now we start on your fiscal year and January we knew where we were and we basically wanted to have a fast start to next year we see good traction against IDMC so we thought look we're not there's a lot of good a carrying capacity impact we're not touching any of that stuff so we feel good about Q4 as you heard from our guy we wanted to get this thing down so we can plan and have the right people and all the right holes so we not only finish weld but have a fast doctor 24 Mike you can go where to go please. Sure hi Alex let me see if I can unpack the Ithaca and buyback authorization announcements I'll start with Ithaca Ithaca LP was an investment vehicle that was established in 2015 in conjunction with the Informatica go private transaction.

Important critical decision makers look.

<unk> talked a lot about whether it is January one now we start our new fiscal year in January leading new dealer and we basically wanted to have a fast start to next year, we see good traction against IBM Z. So we probably look we're not there's a lot of quota carrying capacity in fact, they're not touching any of that stuff. So we feel good about Q4 as you heard from our diet. We wanted to get this thing done so we can plan.

And have the right people and all that I'd call. So we not only finished well but have a fast start to 2020 for.

Mike you can color into companies.

Sure Hi, Alex.

Let me see if I can unpack, the Ithaca and buyback authorization announcement, so I'll start with <unk> <unk>.

<unk> is an investment vehicle that was established in 2015 in conjunction with the Informatica go private transaction at that time, there was a group of large institutional and strategic shareholders, who wanted to invest in the deal alongside our lead investors Primera and CP IV.

Alex Soukin: At that time there was a group of large institutional and strategic shareholders who wanted to invest in the deal alongside our lead investors Primera and CPP. If it was established to hold the shares of those strategic and institutional investors and that vehicle has been controlled in terms of the votes and decisions about disposition or distribution of the shares by Primera since 2015. Ithaca was designed at the outset to terminate on the two year anniversary of the IPO of Informatica that IPO as you know was in October of 2021 so that two year anniversary is upon us.

<unk> was established to hold the shares of those strategic and institutional investors in that vehicle has been controlled in terms of the boats and decisions about disposition our distribution of the shares by Permira since 2015.

Alex Soukin: In the month leading up to that planned termination the holders of 51.4 million of the 60 million shares in the Ithaca vehicle chose to extend the life of Ithaca for at least another year and lead its subject to the governance provisions that have been in place since 2015. The holders of 8.6 million shares that's four holders have chosen to take the distribution of their shares and they will once that distribution happens have control of votes and they'll be making individual decisions about any dispositions of those shares going forward.

<unk> was designed at the outset to terminate on the two year anniversary of the IPO and Informatica that IPO. As you know is in October of 2021, so that two year anniversary is upon us.

In the months, leading up to that plan to termination the holders of 51 $4 million of the 60 million shares in the ethic of vehicle chose to extend the life of ethical for at least another year and leave it subject to the governance provisions that have been in place since 2015.

The holders of $8 6 million shares that's four holders have chosen to take the distribution of their shares and they will once that distribution happens have control of the votes and they'll be making individual decisions about any dispositions of those shares going forward, we expect that distribution to take place sometime in the next two to five business days.

Alex Soukin: We expect that distribution to take place sometime in the next two to five. Stays. Now there's three important pieces of context around the ethic of distribution. First of all, the four entities that are receiving shares are all large institutions or strategic investors that know Informatica well, and they have experienced an investing in public activities. Secondly, we have no indication from any of these holders that they have an intention to sell their shares in the near term.

Now there are three important pieces of context around the <unk> distribution first of all the four entities that are receiving shares are all large institutions or strategic investors that know informatica, well and they have experience in investing in public equities.

Secondly, we have no indication from any of these holders that they have an intention to sell their shares in the near term.

Alex Soukin: And then third, the buyback authorization. So let me talk about that. Demonic authorization is not, by any means, a signal that we're changing our capital allocation policy. Informatica continues to prioritize investment growth, deleverging on a net basis, and strategic and tactical M&A as uses for our balance sheet cash and our free cash flow. So why are we doing the buyback? Well, the buyback authorization gives us the flexibility to engage with any potential sellers of large blocks of shares, and to negotiate private off-market transaction to purchase those shares if it's available on terms that are attractive to Informatica.

And then third the buyback authorization. So let me talk about that.

The monarch authorization is not <unk>.

By any means a signal that we're changing our capital allocation policy Informatica continues to prioritize investment growth deleveraging on a net basis and strategic and tactical M&A as uses for our balance sheet cash and our free cash flow.

So why are we doing the buyback the buyback authorization gives us the flexibility to engage with any potential sellers of large blocks of shares and to negotiate private off market transaction to purchase those shares.

Available on terms that are attractive to <unk> we.

Alex Soukin: We don't intend, although we do have the flexibility to be buying shares in the open market, rather we're targeting the opportunity to buy large blocks of shares in private transactions. So there's no change in capital allocation policies. There's no attention to reduce our public flow, rather it's the ability to be flexible and nimble if the opportunities to buy shares in large blocks becomes available. Long explanation, let me see if that answered your question and you have any follow-up sellers.

We don't intend, although we do have the flexibility to be buying market shares in the open market. Rather we are targeting the opportunity to buy large blocks of shares in private transactions.

So theres no change in capital allocation policies. There is no attention to reduce our public float rather it's the ability to be flexible and nimble if the opportunities to buy shares and large blocks becomes available long explanation. Let me see if that answered. Your question do you have any follow ups.

Alex Soukin: It sounds like the two are linked if I'm reading the commentary correctly. Yes, you are reading it correctly. We recognize that we have relatively low liquidity and that any large sales in a short period of time can dislocate our stock for purely technical reasons. The buyback gives us the ability if large sellers are so willing to negotiate off-market private acquisitions as those shares if they're on mutually favorable terms. They're linked in that regard. Super helpful. I appreciate it guys. Thanks again.

It sounds like the two are linked.

If I'm reading.

The commentary correctly.

Yes, you are right you are reading it correctly look we recognize that we have relatively low liquidity and that any large sales in a short period of time can dislocate or stock for purely technical reasons. The buyback gives us the ability if large sellers are so willing to negotiate.

Good off market private acquisitions those shares if theyre on mutually mutually favorable terms they are linked in that regard.

Super helpful. I appreciate it guys. Thanks again.

Matt Hedberg: Our next question comes from Matt Hedberg with RBC. Your line is open. Great.

Our next question comes from Matt Hedberg with RBC. Your line is open.

Great. Thanks for taking my question guys and congrats from me as well on the results.

Matt Hedberg: Thanks for being my question guys and congrats for me as well on the results. You may be following up on Alex's question. I get what's fit up to us in addition to cloud NRR accelerating sequentially but also it looked like large customer growth also accelerated on a sequential basis which is great to see. I guess I'm kind of curious given the comments on macro and demand that you talked about. I'm curious on the sustainability or durability of elevated cloud NRR.

And maybe following up on Alex's question, what stood out to US in addition to cloud and our our accelerated sequentially, but also it looked like large customer growth also.

<unk> accelerated on a sequential basis, which is great to see I guess I'm kind of curious given the comments on macro and demand that you talked about I'm curious on the sustainability of durability.

Elevated called <unk>.

Matt Hedberg: Is that a trend given this increasing push to cloud that could perhaps continue into next year? Thanks for the question. We don't guide to NRR. We've said that many times. NRR is a number that can go up and down over the course of quarters in a year. We obviously look at it very carefully thoughtfully in the context of a year. I've said many times that we look at it and we care a lot about it but we don't 100% solve for it because when we acquire a new customer that customer is zero value add to NRR but incredibly important for us because we know we know forever that when we land a customer given the mission critical workflow that we solve we get a customer for life.

Trend given this increasing push to cloud.

Perhaps continuing into next year.

Matt. Thanks for the question. So look we don't guide to <unk>, We've said that many times.

That can go up and down over the course of quarters in the year, there will be obviously look at it very carefully and thoughtfully.

For context, a year I've said, many times that we look at it and we get a lot about it but we don't 100% self funded because when we acquire a new customer that customer is.

Zero value add to NR, but incredibly important for us because we know.

Vino forever that when we land a customer given the mission critical workload that we saw we get a customer for life. So that's step number one but to your question of the large customers look.

Matt Hedberg: So that's statement number one. But your question of large customers look, we solve multi-use case problems through one platform that has multiple products and that serves large enterprises always. Riva, Second is large enterprises, the inherently have complexity, they turn to us. Large enterprises also are gravitating towards, they don't want to build a pancake to solve and build a new modern data architecture. They rather have one platform and a few ancillary things around it, all of those things are benefiting us.

We solve multi use case problems through one platform that has multiple products and that serves large enterprises August with EBIT second is large enterprises inherently have complexity. They turn to US large enterprises. Also also are gravitating towards they don't want to bid a pancake to solve and build a new model.

Data architecture.

They'd rather have one platform and a few ancillary things around at all of those things are benefiting us and then last but not the least like you've talked about migration.

Matt Hedberg: And then last but not the least, like you've talked about migration, I mean a good part of migration also comes from large customers that are trying to move to cloud now, taking old power center to our cloud. All of those things are driving to the large enterprise or larger customers gravitating towards us with demand. That's super helpful.

A good part of migration also comes from large customers that are trying to move to cloud now taking all power Center block blood cloud all of those things.

Our <unk>.

Driving the large enterprise or larger customers gravitating towards us with demand.

Got it that's super helpful. I Am curious was there any sign of any <unk>.

Matt Hedberg: I'm curious, was there any sign of any vertical strength that you call out, you know, perhaps federal government or any other thing that was not word of the on the results? So really, we didn't, I mean Q3, as you all know, is the fiscal Q4 of federal government so that naturally is built like that from their functionality point of view. So there's nothing special to call out because that's always the case every year. No, we didn't call out any particular vertical that had an extraordinary effect on our numbers. Great.

Vertical strength that you call out perhaps federal government.

Or any other thing that was noteworthy on the results.

Unknown Executive: Thanks, Lucas.

But really we didn't have in Q3 as you. All know is the fiscal Q4 of federal government. So that naturally is built like that from the seasonality point of view. So there is nothing special to call out because thats always the case every year, but what we didn't call out any particular vertical.

Hi.

An extraordinary effect on our numbers.

Alright, Thanks, a lot guys.

Okay.

Brad Zelnick: We're not going to brag down next with Deutsche Bank. Your line is open. Great.

We're not trying to Brad Zelnick with Deutsche Bank. Your line is open.

Brad Zelnick: Thanks so much and good to see the solid results and the profitability for the full year. I mean, I wanted to hone in on partnerships, you know, Informatica has always been a partner of choice for the GSI's and other technology partners, but you really seem to be making an extra push here and I'd be curious, actually specific to Oracle. I took note of that relationship that you called out that you guys announced around their cloud world and there's just so much enterprise data that sits and work with database.

Great. Thanks, so much and good to see the.

The solid results in the profitability.

For the full year.

I wanted to hone in on partnerships.

Informatica has always been a partner of choice for the <unk> and other technology partners, but you really seem to be making.

An extra push here.

I'd be curious actually specific to Oracle.

I took note of that relationship that you called out.

You guys announced around their cloud world.

And there's just so much enterprise data that sits in Oracle database.

Brad Zelnick: I'd be curious, what's the initial reception to what you've announced, what kind of alignment is there in the field and is this something that will extend as well to the relationship that they now have with Microsoft Azure? All of the above Brad, first of all, terrific question. Look, when we think of our business, we think long term. I mean, we're not thinking of the next quarter, obviously, as you can imagine. Oracle is a pretty established large scale infrastructure company.

I'd be curious what's the initial reception to what you have announced what kind of alignment is there in the field and is this something that will extend as well to the relationship that they now have with Microsoft Azure.

All will be about breakfast all terrific question look when you when you think of our business. We think long term, we're not thinking of the next quarter. Obviously as you can imagine article is up pretty established.

Large scale infrastructure company, but you know that the databases are the data that allows us tremendous install base that a lot of that installed base was tied to a power center customer also and then they're actively going after new workloads that over a period of time. They will also be aggressively moving towards the cloud and obviously the partnership with Azure, which by the way is a great partner to us So I don't believe.

Brad Zelnick: Do you know that the databases or the data warehouse is tremendous install base? That a lot of that install base was tied to a power center customer also and then they are actively going up to new workloads that over a period time, they will also be exactly moving towards their cloud and obviously the partnership with Azure, which by the way, is a great part for us. So our belief is that by the way, the only data management partner of choice with OCI is no one else but us.

Data management partner of choice.

The OCI because no one else about us.

Brad Zelnick: They are very, very well enterprise centric like we are. So there's an active work that has been going on with our field teams, product teams and we're pretty bullish about what this will bear fruit or as we think about 2024 and beyond. A lot of work has to happen in the early days and I think the team has done a lot of that work. You've seen, they've come to our conference. We've got to their conference to talk about it.

Very very very well enterprise centric like we are so there is active work that has been going on with our field teams product teams and we're pretty bullish about what this will bear fruit as we think about 2024 and beyond a lot of more capital <unk> and I think the team has done on all of that work you've seen they've come to our confidence that we've got to the conference to talk about it I'm pretty excited about that.

Brad Zelnick: I'm pretty excited about that. And I think as you said, with Azure and OCI, the Azure being a great partner was that created an even easier way to get in front of our customers and reduces a lot of friction. So I'm pretty bullish about it. It's great to hear. Maybe if I could just follow up on the acceleration that you saw on now 5% of the legacy base, you know, having made the migration relative to what was for just 4.5%.

And I think as you said with Azure in OTI.

It's been a great partner of ours that creates an even easier way to get in front of our customers introduces a lot of friction so I'm pretty bullish about it.

That's great to hear maybe if I could just follow up on the acceleration that you saw on now 5% of the legacy base.

Having made the migration relative to what was just four 5%.

Brad Zelnick: You know, last quarter, any change, you know, in terms of incentives, carrot or stick or big customer cohort that came through or, you know, anything that should inform what we might think of in the quarters to come is to have that my progress. You know, on migrations, I think we've collected all the fuss about it so much. And I now say it in full candor. It's one of those things that I'm extremely happy about.

Last quarter Andy.

<unk> change.

In terms of incentives characteristic or big customer cohort that came through.

Anything that should should inform what we might think of in the quarters to come as to how that might progress.

No on migrations I think we've collectively all of us have talked about it so much and I'll say it in full candor. It's all of those things that im extremely happy about but at the same time, we look at that but I use this word but that won't be constructive dissatisfaction because there's so much more to do with Adam and it's a captive based on we want to get them to the cloud sooner than later.

Brad Zelnick: But at the same time, we look at that with, I use this word, I won't be constructive dissatisfaction because there's so much more to do over there. And it's a captive base and we want to get them to the clouds sooner than later. And I think we've done tremendous amount of work. I always said, look, we wanted to make sure we capture the new workloads and we get to the migration. We came to a point where we actively worked in first following for getting the customer pain points where he clear to us, getting it, getting in behind partners, creating all the migration utilities.

And I think we've done tremendous amount of work out August have look we wanted to make sure we capture the new workloads and we get to the migration. We came to a point, where we actively worked in for solving for getting the customer pinpoints would appear to us getting it's getting behind a partner's creeping on the migration of utilities. The last mile was we learned a lot from our customers and doing a round two.

Brad Zelnick: The last mile was we learned a lot from our customers and doing around two or version two of the product powers in the cloud edition that we launched in August came out and, by the way, was adopted very, very quickly. I think I shared a third of the deal with it into three powers in the cloud edition, given that the product G8 middle of the quarter and we expect a lion's share of this quarter to be that I look at that.

A version two of the project powered some of the cloud edition that we launched in August came out and buy the variables adopted very very quickly I think I showed a part of the deal we did and to achieve a power center cloud edition given that the product middle of the quarter and we expect the lion's share of this quarter. It will be that I look at that Thats definitely one.

Brad Zelnick: There's definitely one in one that absolutely will bend the curve and increase the slope of the curve and think about next year. And all the work that we have done with partners and other things is naturally going to help us do that. So not locked on us that that's an area where we're absolutely going to punch harder and expect more attention from us in that area as we think about next year. It's a big opportunity to at two to one.

That absolutely will bend, the curve and increase the slope of Dakota talking about next year and all of the work that we've done with partners and other things is naturally going to help us do that so.

Not lost on us that that's a.

We are absolutely going to punch harder and expect more attention from us in that area as we can call. It next year.

It's a big opportunity at 201 gentlemen, thank you so much thank you, Mike and Victoria as well nice Steph.

Unknown Executive: Thank you so much. And thank you Mike and Victoria as well.

Unknown Executive: Nice to have.

Unknown Executive: Next question please. Oh, next question.

Next question. Please our next question.

Andrew Nowinski: Oh, next question comes from Andrew Noinsky with Wells Fargo. Your line is open. Operator is the line so open. Hello. Can you hear me? Ladies and gentlemen, I think we've lost connection with us. Thank you for your patience as a way to reconnect them. Thank you. Two, one.

Our next question comes from Andrew Nowinski with Wells Fargo. Your line is open.

Operators and line fill up.

Okay.

Hello.

Can you hear me.

This is stefan on for Andy.

You hear me.

Ladies and gentlemen, thank we have lost connection with our speakers. Thank you for your questions as we reconnect him.

Okay.

Sure.

Okay.

Everyone.

Andrew Nowinski: Okay, ladies and gentlemen, we have our speakers back, Andrew, please continue with your question. Can you hear me okay? Yep, now we can. Okay, great. Thanks for taking my question and congratulations on the nice results out. You Cloud Arrow growth was the solid and.

Okay, ladies and gentlemen, we'd have all speakers back Andre Please continue with your question.

Can you hear me okay.

Yes, now we can.

Okay.

Great.

Thanks for taking my question and congratulations on the nice results.

Your cloud era growth was solid.

Amit Walia: Similar to last quarter, is any colleague can provide as it relates to trends going into the next year. Sure, I think philosophically, I think for the trends and two categories, things that I'll put them in AI and non AI categories, because I think a lot of Paul would be complete with if they don't touch AI look, there is a lot of work that's happening in the world of data. There is not necessarily tied to AI customers are still wanting to understand their entire business, whether it's a customer 360 use case to do term new customer acquisition supply chain, backend efficiencies data governance, there is a lot of work that's happening and data hence data management becomes incredibly important.

Similar to last quarter is there any color you can provide as it relates to.

Trends going into the next year.

Sure.

I think philosophically I think with the trend and boot categories things that I'll put them in AI and <unk> categories, because I think more call would be complete with the signal that Gi look there is a lot of work that's happening in the world of data that is not necessarily tied to AI.

Tumors are still wanting to understand the entire business and whether it's a customer 360 use case to be churn and new customer acquisition supply chain backend efficiencies.

B the governance there is a lot of work that's happening at data, hence data management becomes incredibly important and the <unk> is that while that demand is very strong that customers are after many years of experimenting with multiple things have also come to the point that they have to build a modern data architecture, we cannot.

Amit Walia: And the trend over there that we see is that while that demand is very strong, that customers have after many years of experimenting with multiple things have also come to the point that if they have to build the modern data architecture, we cannot stick it together with 50 60 unique little little little small tools over there, the cost and the risk is very high and that's where we have best to breathe and our black zone solves the case for them. So we see that.

Stitched together with 50 60 unique middle intellectual smart doable within the cost and the risk is very high and Thats, where we have best of breed and our platform solves the case for them. So we see that.

Amit Walia: Non AI I put purposely non AI that's still a lot of what going on across the globe, if you go up to a bank in the middle of nowhere, they're not necessarily running to AI tomorrow but they still have a lot of work to do around that business. Then we come to AI where basically tremendous amount of interest and I think as we all have learned that it's a fastest slow curve right now, everybody wants to do something this year we had a lot of our customers figure out what use cases they want to go into and in that case, we will see the first few use cases get into.

Non AI purposefully hike that is still a lot of work going on across the globe. If you go talk to a bank in the middle of nowhere they don't necessarily run into any IP model, but there's still a lot of work to do to run their business.

Let me come to AI, they're basically tremendous amount of interest and I think as we all have learned that it is the fastest slope curve right now everybody wants to do something this year, we had in all of our customers figure out what use cases, they want to go into and in that case, you will see the first few use cases get into test and then production next year.

Amit Walia: Test and then production next year and that's what the GSI is working with a lot of our customers with us and in that case, good quality data governance of data becomes paramount every enterprise customers worried about governance of data in the context of Jenny. We are seeing that now that is basically we see that walking into next year as well, so when I look at the business, those are all the things that are happening with simplification of the tech stack and not having 1000 flowers bloom. All of those things are the things that you see go our benefit.

The GSI that working with a lot of our customers are benign and in that get good quality data governance of data becomes Paramount every enterprise customers worried about governance of data in the context of Jamie we haven't seen that now that.

Basically we see that walking to mix. It has been so when I look at the business. Those are all the things that are happening with simplification of their tech stack and not having 1000 plus bloom all of those things are the things that youre seeing to our benefit.

Amit Walia: Great thank you for that and then just one more really color that you could provide on customer interest you're seeing so far in both privitar and clear gbt and private preview and as that interest tracking against your internal expectations. Very good so privitar by the way, like I said, in fact, Jenny I will be even more of a use case for a data are customers that they want to democratize data and they leverage like our governance and our data marketplace capabilities or even when they want to take MDM and operationalize that and democratize it to a bunch of users they need data access management, you can't have, and any data going to anybody, you cannot have the Wild West for data access management, which is basically think of a despair in the data stack, it's the identity and access management use case over here, it's not the same, but I'm just kind of driving an analogy, very important and especially for the large customers regulated industries, it is significant important.

Great. Thank you for that and then just one more is there any color that you could provide on customer interest you are seeing so far in both guitar clear GPT in private preview and has that interest tracking against your internal expectations.

Very good so predictable by the way like I said in fact journey I believe even more of a use case data our customers that they want to democratize data and deleverage like our governance and IBD market base capabilities or even when they do you want to take MDM and operationalize that and democratize into a bunch of users they need access management.

<unk> gone to have.

Any data going to anybody you cannot have the wild west for data access management, which basically think we're just in the data stack.

Didn't access management use case over here and it's hard to see them, but I am just kind of driving an analogy very important and especially for the large customers regulated industries. It is significantly important so we saw that and hence we accelerated our road map by buying <unk> pretty excited about it I think I've met a bunch of customers have all been very complimentary of what we have in.

Amit Walia: So we saw that and hence we accelerated our roadmap by buying privitar, pretty clear about it. I think I've met much of customers who all being very complimentary of what we have and I have done. As I said, our goal has been to get that on the IDMC platforms, it can be the cloud-naker service with IPOs and I expect that to obviously naturally be scaling from there and the attached to those use cases first.

As I said, our goal has been to get back on the <unk> platform. So it can be the cloud native service with Ipos and I expect that to obviously naturally be scaling from that would be attached to those use cases first.

Amit Walia: In terms of the clear GPT look, I think hopefully everybody first of all knows that we launched Clarence 2018, we've been driving a lot of AI workloads, AI productivity within our products embedded in our products for the last many years. So we're loving it right now, expect to hear more from us and that will be one of those things as we come towards the medical world next year, is going to have a lion's share of attention at the conference.

The cloud GPT look.

Hopefully everybody felt all along that we launched <unk>, we have been driving a lot of AI workloads AI productivity within our products embedded in our products for the last many years, we have taken the chat interface and put it on top of Ibs D. With <unk> clinical pilot is under NDA, we put it in hands of our customers private preview give us feedback flavor that bottoming out.

Customers, including our partners also the GSI partners the practices are.

Giving us feedback on that one very good early reception. We're also learning from customers, where they get productive would be that they want to take it we get tons of feature requests and all that stuff. So we are having right now expect to hear more from us and that will be the one of those things as we come towards the medical World next year is going to have a lion's share of attention at the conference.

Amit Walia: Great, thank you so much. Absolutely.

Great. Thank you so much.

Absolutely.

Patrick Colville: We now turn to Patrick Colvin with Starship Hank, your line is open. Hey, I'm it Michael Victoria, great to hear from you guys. So, I mean, when I look at numbers, cloud AR growth has not barely decelerated at all has been incredibly impressive, you know, what you guys have done, especially in the face of kind of tight IT budgets and public cloud vendors, you know, their growth momentum slowing. So I guess, you know, if IT spending is better next year than it was this year, and AI momentum continues.

We now turn to Patrick Colville with Scotiabank. Your line is now open.

Okay.

Hey, Amit Michael turn off great to hear from you guys.

So I.

I mean, when I look at numbers cloud <unk> growth.

Barely decelerated to the tool has been incredibly impressive.

You guys have done, especially in the face of kind of tight budgets and public cloud vendors.

That growth momentum slowing.

I guess, if it spending is better next year than it was this year and momentum continues I mean is there a world where we could expect in thematic as cloud Aero growth Reaccelerate.

Amit Walia: I mean, is there a world where we could expect in the Americas, cloud, air or growth, like we accelerate. Patrick, great question. Look, you know what I would just did that back to my exact team also that's what I keep telling them I want more. So we all want that, of course, right, I think look in all fairness right now we are being we're looking at we've been we've been very resilient for a reason, right, and I've always said that we focus on critical workload mission critical workloads for enterprise customers.

Okay.

Patrick Great question look.

Yes.

I would just give that back to my exact demos, so thats, what I keep telling them anymore. So that of course I think in all fairness right now we're being we're looking at we've been.

We have been very resilient for visa right and I've always said that we focus on critical workloads mission critical workloads running device customers hence.

We'll never Gabelli upward many down.

So that has served us very well.

Customers and you can I keep repeating customers that it matters a lot one enterprise customers you don't just pull a product over that and then let <unk> Newman and the world blows up your knockdown, we don't do that so innovation and customer centricity as visa neither deep build all the time, but it matters to those customers, while we come to Investor day and shared a lot about next year. So I can do that right now.

Mike McLaughlin: Well, we come to industry and share a lot about next year so I can do that right now. But we always ways everything on the positive side of the ledger and all things that can be a negative ledger and things through it, but investor they will give you a lot more color about next year and the medium, as well.

But we always we everything on the positive side of the ledger and all the things that can be I guess out of the Netherlands and think through it at the Investor Day, We'll give you a lot more color about next year and beyond.

Medium term as well.

Okay. Thank you and then I guess, just one more on the restructuring.

Amit Walia: Okay, thank you. And then I guess there's one more on the restructuring. You know, are there specific areas that you can share that were impacted? I mean, is it more, you know, is it kind of deemphasizing for example the self-managed domain within Informatica, you know, both in terms of the go-to-market and product dev and emphasizing cloud or, you know, is any kind of where you can double-click is the, you know, which areas are being, I guess, the emphasize and then as a result, maybe we'll share it with being more emphasized. So all of the above, Patrick, all of the above, including things like that look, for me, this has been, does you think about the company?

Are there specific areas that you can share that were impacted.

Is it is it is it.

It kind of Deemphasizing for example, self managed.

Domain within and dramatic both in terms of the go to market and product Dev and emphasizing cloud is there any kind of way you could double click it.

Yes.

Which areas are being I guess deemphasize and then as a result, maybe which are you being more emphasize.

So all of the above Patrick all of the above including things like that look.

For me this has been as you think about the company.

Amit Walia: And if, and I almost part of it, if you were a cloud-only company, you started today at this day, what would you be? So we also looked at that as to where do we simplify our organization's structures? Because I firmly believe in certain areas we basically were probably not as memorable and as fast-paced as we as I would like it to be. So we looked at those things, where are the right investments, where are the investment that we don't really need?

And I almost hardwoods, because if you were a cloud only company and starting today at <unk>. So we also looked at that as to where do we simplify our organization structures.

Because I firmly believe in certain areas, we basically were probably not as nimble and as fast paced as we as I would like it to be so we looked at those things where the right investments.

Yeah.

Investment that we don't really need and there can be also accelerate decision, making execution I've said that couple of times, even internally to my own teams.

Amit Walia: And where can we also accelerate decision-making, execution? I said that a couple of times we call a 10 people to make a decision on a deal. By the way, we need it slow down from a constant point of view. So all of those things we looked at end-to-end and came to the decision-making.

Stiller.

An example might people 10 people to make a decision on the <unk>, but we needed to slow down from a customer point of view, so all of those things and Duane and came to kimberly's decisions difficult decisions.

Amit Walia: Difficult decision, that we just announced today.

But we just got announced today.

Unknown Executive: All right, thank you so much for taking my questions.

Alright. Thank you so much for taking my questions.

Mhm.

Jaiden Patel: Our next question comes from Jayden Patel with KitchenLambora. Your line is open. Hey, guys, thanks for taking my questions. My question is, are you starting to see higher expansion rates among IPU-based customers and what should we expect looking forward to? Angela, the answer to that is yes. Obviously, the doctor would IP was quite a bit and we we care a lot about IP or option, IP or expansion, all of those things.

Our next question comes from Jonathan <unk> with <unk>. Your line is open.

Hey, guys. Thanks for taking my question.

My question is are you starting to see higher expansion rate amongst <unk> based customers and what should we expect looking forward.

The answer to that is yes, obviously, the doctor IPO quite a bit and we.

<unk>.

We care a lot about IPO option <unk> expansion all of those things we definitely have.

Jaiden Patel: We definitely have a team that focuses on IP expansion and I think that team will done an incredible job and we saw pretty good IP expansion. So that happened, of course, which obviously, team actually slows into NRR, that key that we shared. So yes, the answer to that is yes, and we both focus on IP or adoption and expansion. And both of them are maniacal focuses and the expansion part is worked out well and we'll continue to be at the end of my meeting.

Team that focuses on ICU expansion and I think that team has done an incredible job and we saw pretty good idea of expansion.

So that happens of course, which obviously naturally flows or NR depreciated. So yes, the answer to that is yes.

We bought both focus on IPO adoption and expansion and both of them are maniacally focuses in the expansion part has worked out well.

We will continue to be heavily invested in that.

And by the way one of the things that I think got it keep the manganese.

Jaiden Patel: That R NRR, we stated one way, I think we are, by definition, a bit of a conservative company, I guess. But if it looked at the other way that other companies also report, it could be equivalent to what 124? That's why, 124. So six points higher. So cloud NRR, I mean cloud NRR, the 18th that we reported could be equivalent to 124, like when you're at the companies also report. So we think very good about it.

That R&R, we stated one wave I think we are.

By definition a bit of a conservative company I guess, but if looked at the other way that other companies also reporting would be equivalent to 124 month LIBOR 124 tires, so six months higher so.

<unk> cloud and the one 8 billion that we reported could be equivalent to one would be for like a bunch of other companies also report so we feel pretty good about it.

Got it. Thank you and then as a follow up can you help us understand the general puts and takes around 2020 for revenue growth.

Mike McLaughlin: Got it, thank you. And then as a follow-up, can you help us understand the general puts and takes around 24 revenue growth? Thanks. I think that would be an incredibly good discussion at the end of that today, by July 4 weeks, right? I guess at the full weeks and a few days away, I love to share that with you and I think you will see, you will get a ton of details from us as to all we think about it.

I think that'll be an incredibly good discussion at the Investor day pendulum poorly right I guess after four weeks in a few days away I'd love to share that with you and I think you will see we got a ton of detail from us as to how we think about it I think I'll, let Mike cover that but four weeks and we'll be talking about it but in general, though as you've probably heard me say before.

Mike McLaughlin: I think I might cover that, but four weeks and we'll be talking about it. But in general, though, as you've probably heard me say before, it's... More or less a three-line Excel spreadsheet. It's how fast the cloud going to grow, and how fast are self-managed, and maintenance going to decline. There's a fourth factor, which is how much of that self-managed decline and maintenance decline is actually migration from those two buckets into the cloud bucket.

It's more or less a three line an excel spreadsheet, it's our fastest cloud going to grow and how fast our self managed and maintenance going to decline.

There is a fourth factor, which is how much of that self managed decline in maintenance decline is actually the migration from those two buckets into the cloud market.

Mike McLaughlin: But it's a pretty simple mock. You can see historically how maintenance is the decline we think that's going to continue self-manages, and the stories of decline as we devised selling self-managed at the beginning of this year. We'll be able to give you some better guidance about what to expect in that bucket when we meet you in December. And then we have good momentum on the cloud development. Again, we'll get you more sense for our expectation and about a month. Got it.

But it's a pretty simple math.

You can see historically, how maintenance has declined we think thats going to continue self manage is starting to decline as we deemphasize selling salt managed at the beginning of this year, we'll be able to give you some better guidance about what to expect in that bucket. When we meet you in December and then we have good momentum on the carload growth.

We will give you more.

That's where our expectation in about a month.

Fred Hagemeyer: Thanks for taking the question. Oh, next question comes from Fred Hagemeyer, where do you think of mine as I can.

Got it thanks for taking my questions.

Our next question comes from Craig <unk> with Macquarie.

Line is open.

Fred Hagemeyer: Thank you very much. Congratulations also on the cloud growth in the quarter. I think it's one of those things that continues to be impressive to see within each amount of this model.

Alright. Thank you very much congratulations also cloud growth in the quarter I think it's one of those things that continues to be impressive to see within each models model I wanted to focus on a topic I hope, it's not alone too tired of me at the moment, but just generally.

Amit Walia: I want to focus on a topic I hope it's not a little too tired at least for me at the moment, but just generally I believe it use cases and more specifically efficiency perhaps you can find within your own business and within your your clients. We've seen a lot of use cases around gender to AI for data labeling and more efficient perhaps like data transformation capability some curious just big picture here.

Related use cases, more specifically efficiencies, perhaps that you can find within your own business.

Sure.

Clients, we've seen a lot of use cases around generative AI for data labeling and more efficient, perhaps like Guinea transformation capabilities. So I'm curious just big picture here, how might you see your strategy around utilization of generative AI evolve do you think that there are additional areas to gain efficiencies.

Amit Walia: How might you see your strategy around utilization and gender to AI evolve and do you think there are additional areas you gain efficiencies through using a technology. Great question Fred and I think I'll put three three categories. One is informatica for AI use cases which is like forget even if it did not have clear to do AI customers need to have holistic data good quality data governed their data things like that and I can go on and on and data labeling is one of those examples.

Through using this technology.

Good question first and I think I'll put things Creek activity.

One is informatica 40, I'd use cases, which is like okay. Even if it did not have a clear to do AI customers' needs to have a holistic data good quality data govern that data things like that and I can go on and on and data labeling is one of those examples so thats part informatica for AI companies want to do.

Amit Walia: So that's called informatica for AI so if companies want to do AI they need data management they need ID and see and get part of that workflow. Secondly AI with an informatica which is clear and how clear GPT and clear go pilot are embedded within an app product and they naturally make our products the AI coming out of product to drive more intelligence and more automation for their customers so they can do more business and they can do things that they could never do.

They need data management, they need <unk> and get part of that.

Workflow.

Secondly, AI with Informatica, which is clear and how clear GPT and clear copilot that embedded within our products and didn't actually make our products the AI coming out our product to drive more intelligent and more automation for their customers. So they can do more with less and they can do things that they could never do.

Amit Walia: Which so that's second benefit that we get from so because our products become a lot more valuable for them. Third is I think very probably you're also asking how we use any AI internally within the company for a variety of our own running the company right and so we we're doing all three. All three we are participating in the first two in the context of driving our. Business and the third one is basically making ourselves a lot more smarter than the productive and double as a company. So all of those three are focused on. Thank you very much.

Which so that second benefit that we get from silver.

<unk> become a lot more valuable for them.

It is I think very probably would also asking how we use <unk> internally within the company for a variety of are all running the company right and so we are doing all three.

All three we are participating in the first two in the context of driving our business.

Business and the third one is basically making ourselves a lot more smarter nimbler productive internally in the company. So all of those three year focus on brands.

Thank you very much.

Koji Ikeda: Oh next question comes from Koji Akato with Bank of America your line is open. Hey guys thanks for taking the question just just want for me here I wanted to ask you a question, and on IPUs. And curious to hear what the overall end markets perception of the IPU pricing model, shaping up today. Now that it's done all for some time. I mean, you did mention in your prepared remarks 60% of new cloud bookings is coming from IPOs, that's a pretty good indication, but maybe some qualitative commentary could be helpful.

Mhm.

Our next question comes from Koji Ikeda with Bank of America. Your line is open.

Hey, guys. Thanks for taking the question just one from me here I wanted to ask you a question on on <unk> and <unk>.

Curious to hear what the overall end market perception of the ITU pricing model.

Giving up today now that it's been out for some time I mean, you did mention in your prepared remarks, 60% of new cloud bookings.

Is coming from IPO, So that's a pretty good indication, but maybe some qualitative commentary could be helpful. And then also you mentioned that 15% of cloud bookings is coming from from transition from power centers. So do you believe that the ICU unit could have a potential to accelerate the migration of legacy power Center users.

Koji Ikeda: And then also, you know, you mentioned that 15% of cloud bookings is coming from transition from power center. So, do you believe that the IPU unit kit have a potential to accelerate the migration of legacy power center users up there? Thanks, guys.

Thanks, guys.

Amit Walia: The answer to the second part is yes. So, to the first part first, by the way, like you said, all new bookings are consumption. IPU and non-IPU, the non-IPU with MDM, which is records based. Now, we, we don't have an IPU because customers like to buy records. So, and customers love it, because look, what's not to like, it's relatively simple. And customers have to just figure out what they want to do, and they can start small and grow their, or like I said, because we solve mission critical work, what's typically customers want to buy a good price margin, so they want to invest in the future. So, I think customers, I have not met one customer who is not selected. If anything, our job is to keep telling customers, because sometimes they buy this, forget that they have the IPU to do anything.

The answer to the second part is yes.

To the first part plus by the way.

Like you said, all new bookings our consumption.

IPO and non idea the non ideal with MDM, which is record space now we don't have it on IPO because customers like to buy my records, so and customers love It because look what's not to like X.

Particularly simple and customers have to just.

Figure out what they want to do and they can start small and grow there are like I said because these are mission critical workloads typically customers want to buy a good game, but they want to invest in the future. So I think customers are I have not met one customer.

If anything.

But to keep telling customers because sometimes they buy they forget that we have the idea to do anything so we have to keep driving that adoption, but I think right now I think the rewards of our customer base has not and our goal is to make sure that they all memorize it DMC cleared ICU.

Amit Walia: So, we have to keep driving that option, but I think right now, I think there are three words that our customer base has learned, and I go list to make sure that they all memorize it. IDMC, Claire, IPU. These are three words that we want everybody in the world to learn. So, pretty good about it, and I think, yeah, migration obviously they get ideas, so they can also start a small migration, or start a whole thing that makes them all technical.

Is a key word that we want everybody in the world So pretty good about it and I think yes migration, obviously, they get ideal. So they can also start monetization startup would've been relation mixed give them altogether.

Howard Ma: Our final question, today comes from Howard Manor, with Guggenheim, your line is open. Great, thank you for taking the question. I wanted to ask about the expense side, or I should say that the profit side. I was surprised to see gross margin and pick up sequentially, because I thought given the higher quantum excited that it would decline. So, can you, I guess, for Mike, can you comment on, I guess, on gross margin, and also, as you, I don't want to steal away any thunder from the analyst, but on the expense side, as you deanticize investments in self-managed, and I guess, in power-cender too, although I'm pretty sure you've already de-epicized about it, a lot of our investments there.

Our final question today comes from Howard <unk> with Guggenheim. Your line is open.

Great. Thank you for taking my question I wanted to ask about the expense side or I should say the profit side.

Surprised to see gross margins tick up sequentially, because I thought given the.

The higher Cognex had it that it would decline so can you I guess for Mike.

Can you comment on.

On gross margin and also as you and I don't want to steal away any thunder from the analyst day, but.

On the expense side as you deemphasize it.

<unk> and self managed.

And I guess power center too.

I'm pretty sure you've already deemphasize bought a lot of R&D investments there how should how should we think about margins I guess, both on gross margin.

Howard Ma: How should we think about margins, I guess, both on gross margin, and, and on the opx line, as time played that, thank you. Thanks for the question, Howard. So, with gross margin, you should continue to expect some volatility in our gross margin from quarter to quarter. It's for a couple of reasons this quarter. One is, despite what I'd like to happen, our cloud clogs don't grow completely linearly with cloud error revenue.

And on the Opex line as that as time plays out thank you.

Thanks for the question Howard.

With gross margin.

You should continue to expect some volatility in our gross margin from quarter to quarter.

It's for couple of reasons for this quarter one is.

Despite what I would like to happen our cloud Cogs don't grow completely linearly with cloud <unk> revenue.

Howard Ma: We put up new pods in certain geographies, and that creates a lumpy expense in the particular quarter when we spool it up, and then, as that pod gets filled up, the marginal cost, which is lower than the average cost, you know, follows behind. And so, in earlier quarters, this year we saw more of that lumpy one-time pod spool up cost than we did in Q4, where we benefited from new revenue for the most part, going into existing pods, and therefore, had lower marginal cost per second.

<unk> put up new pods in certain geographies and that creates a lumpy expense in the particular quarter. When we spool up and then at that part gets filled out.

The marginal cost, which is lower than the average cost.

Follows behind and so in earlier quarters. This year, we saw more of that lumpy one time spool up costs than we did in Q4, where we benefited from new revenue for the most part going into existing pods, and therefore had lower marginal cost per dollar of revenue.

Howard Ma: Scholar Revenue, the other thing going on our growth margin this quarter and has been throughout the year, which is a reduction in the amount of professional services that we're doing as a percent of our total revenue and professional services, I'm sure you know, are a low growth margin business. So if we lose and again, lose is not necessarily bad thing because it needs to our partners are doing it for us along as to focus on software.

Other thing going on in our gross margin this quarter and it has been.

Throughout the year, which is a reduction in the amount of professional services that we're doing as a percent of our total revenue and.

And professional services as I'm sure you know are a low gross margin business. So.

So if we lose and again Luke.

Not necessarily a bad thing because it needs to and our partners are doing it for us, allowing us to focus on software if we lose a dollar of professional services revenue we also lose.

Howard Ma: If we lose the dollar professional services revenue, we also lose 80% of cost or some number in that range. So those are the tailwinds to our growth margin this quarter. Our target, as we said before, is to maintain 80% plus growth margins going forward as far as we can see as we continue our transition and we'll talk more about that at investor back. Now with respect overall, you know, operating expenses, I guess all I can point you to now is the savings that we've estimated in 24 on again, the gap and non-gap basis that will result from the restructuring those savings are spread across the various categories of our spend are non-cog spend of course and, you know, you can you can add those dollar for dollar to your model today in terms of exactly what car the business they'll hit will give you more of that in the summer. Okay, fair enough. Thank you, Mike.

80 of Cogs or some number in that range. So those are the tailwind to our gross margin this quarter.

Our target as we've said before is to maintain 80% plus gross margins going forward as far as the eye can see as we continue our transition and will.

I'll talk more about that.

At Investor Day, now with respect to overall operating expenses I guess, all I can point you to now is the <unk>.

Savings that we've estimated in 2004 on a GAAP and non-GAAP basis that will result from the restructuring.

Those savings are spread across the various categories of our spend.

Our non Cogs.

Then of course.

And you.

You can add those dollar for dollar to your model today in terms of exactly what part of the business they'll hit will give you more of that in the summer.

Okay Fair enough. Thank you Mike.

Amit Walia: It's concludes our Q&A now on our hand back to the management thing for closing remarks. Oh, thank you. Well, look, I appreciate you all joining today.

This concludes our Q&A I'll now hand back to the management team for closing remarks.

Well. Thank you well look I appreciate you all joining today has been closed.

Unknown Executive: I'm closer. I'd like to just say that as we continue accelerating our innovation led cloud only consumption driven transformation. I couldn't be proud of our success. I'm not easy and we've been very thoughtful in our actions while delivering cloud growth, operating leverage and profitability. This is all due to a long term strategic focus and building best of the solutions on the IDMC platform and working tirelessly to make it powered by AI clear.

I'd like to say.

Let's say that as we continue accelerating innovation like cloud only consumption driven transformation I couldnt be proud of our success.

Couldn't be prouder.

Transformations are not easy and we've been very thoughtful in our actions, while delivering cloud growth operating leverage and profitability.

This was all due to our long term strategic focus on building best of breed solutions on the IMC platform and working tirelessly to make it powered by Ipi clear.

Unknown Executive: The data management platform which was for enterprises across the globe and we're excited about where we are excited about how we want to close the year and look forward to seeing you all it in yesterday in December. Thank you.

The data management platform of choice for enterprises across the globe and we are excited about where we are excited about how we will close the year and look forward to seeing you all at Investor Day in December. Thank you.

Unknown Executive: Ladies and gentlemen, today's call was now concluded. We'd like to thank you for your participation. You may now disconnect your lines. Thank you.

Ladies and gentlemen, today's call is now concluded. Thank you for your participation you may now disconnect your lines.

Yes.

Okay.

Okay.