Q1 2024 Informatica Inc Earnings Call

Sierra: Good afternoon, ladies and gentlemen. Thank you for joining today's Informatica first quarter 2024 earnings conference call. My name is Sierra, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. It is now my pleasure to introduce your host, Victoria Hyde-Dunn, Vice President of Investor Relations. Please proceed.

Good afternoon, ladies and gentlemen, thank.

Thank you for joining today's Informatica first quarter 2024 earnings conference call.

Sierra: My name is Sierra and I will be your moderator for today's call.

Sierra: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.

Speaker Change: It is now my pleasure to introduce your host Victoria Hyde Dunn, Vice President of Investor Relations. Please proceed.

Victoria Hyde: Thank you. Good afternoon, and thank you for joining Informatica's first quarter 2024 Earnings Conference Call. Joining me today are Amit Walia, Chief Executive Officer, and Mike McLaughlin, Chief Financial Officer. Before we begin, we have a couple of reminders.

Speaker Change: Thank you good afternoon, and thank you for joining Informatica first quarter 'twenty 'twenty four earnings conference call. Joining me today are a niche well, yeah, Chief Executive Officer, and Mike Mclaughlin Chief Financial Officer.

Victoria Hyde: 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. However, actual 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 filing for the full year 2023.

Speaker Change: 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 don't Informatica Dot com, our prepared remarks will be posted on the IR web site. After the conference call concludes during.

Victoria Hyde: 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 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 Informatica's Investor Relations website. With that said, it's my pleasure to turn the call over to Amit.

Speaker Change: During the call, we will be making comments of a forward looking nature actual 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 sections titled risk.

Speaker Change: Factors included in our most recent 10-Q and 10-K filing for the full year 'twenty 'twenty. Three 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.

Speaker Change: Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not as substitute for measures of financial performance prepared in accordance with GAAP.

Onit: 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 Informatica Investor Relations website with that it's my pleasure to turn the call over to on it well. Thank you Victoria. Thank you everyone for joining us today I will start today's call.

Amit Walia: Well, thank you, Victoria. Thank you, everyone, for joining us today. I will start today's call by summarizing three key points. First, we delivered a solid first quarter, executing our cloud-only consumption-driven strategy. In line with our pre-announcement last week, we delivered all key growth and profitability metrics above our midpoint guidance, and we are reaffirming full year 2024. Second, we further accelerated Informatica's product innovation journey to deliver the best data management products on the industry's only AI-powered data management platform, serving a multi-vendor, multi-cloud hybrid means of modern enterprise.

Ankit: By summarizing three key points.

Ankit: We delivered a solid first quarter executing our cloud only consumption driven strategy.

Anil: In line with our pre announcement last week, we delivered all key growth and profitability metrics above our midpoint guidance and we are reaffirming full year 2020 for guidance.

Anil: Second we further accelerated informatica product innovation journey to deliver the best data management products on the industry's only AI powered data management platform, serving a multi vendor multi cloud hybrid needs of modern enterprises.

Amit Walia: We launched Cloud Data Access Management, our new data access and governance solution based on technology from our acquisition of PrivatArch. As we head into the Informatica world, we plan to launch ClearGPT, our generative AI chat interface on the IDMC platform.

Anil: We launched cloud access management or new data access and governance solutions based on technology from our acquisition of <unk> last year.

Anil: As we head into Informatica Award, we plan to launch payout GPT, our generative AI chat interface on the <unk> platform.

Amit Walia: First, as we shared at our investor day, we are focused on consistently executing our cloud-only consumption-driven strategy across three growth engines. Ongoing Data-Driven Digital Transformation, on-premise to cloud migration, and Genii to fuel cloud growth and drive long-term value. Now, let's discuss these topics in more detail.

Anil: <unk> and.

Anil: As we shared at our Investor day.

Anil: We are focused on consistently executing our cloud only consumption driven strategy across three growth engines.

Anil: Ongoing data driven digital transformation.

Anil: Our on premise to cloud migration and Jenny.

Anil: The field cloud growth and drive long term value creation.

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

Amit Walia: Turning to the first quarter results, cloud subscription ARR grew 35% year over year to $653 million. Subscription ARR increased 13% year-over-year to 1.16 billion, and total ARR rose 7% year-over-year to 1.64 billion. Total revenue grew 6% year-over-year to 389 million, and non-GAAP operating income increased 29% year-over-year to 109 million. Adjusted unlevered free cash flow after tax was 183 million.

Anil: Turning to first quarter results cloud subscription <unk> grew 35% year over year to 653 million subs.

Anil: Subscription me out at increased 13% year over year to 1.1 dollars 6 billion and total rose 7% year over year to $1 6 billion.

Anil: Total revenue grew 6% year on year to 389 million and non-GAAP operating income increased 29% year over year to $109 million.

Anil: Adjusted Unlevered free cash flow after tax was $183 million.

Amit Walia: We increased opportunities with existing customers and drove new workloads in G2K markets to our sales teams and our partners, supported by a healthy cloud pipeline. Approximately 72% of our cloud net new ARR in the trailing 12, came from new cloud workloads and expansion. Customers that spend more than a million dollars in subscription ARR increased 24% year-over-year to 258 customers.

Anil: We increased opportunities with existing customers.

Anil: And drove new workloads in <unk> markets to our sales teams and our partners supported by a healthy cloud pipeline.

Anil: Approximately 72% of our cloud net new Iraq in the trailing 12 months came from new cloud workloads and expansions.

Anil: Customers that spend more than $1 million in subscription, Iran increased 24% year over year to 258 customers.

Amit Walia: We saw strong growth in average subscription ARR per customer, which now has reached $310,000, a 15% increase year-over-year. We closed many new logos and expansion deals with great companies in the quarter that highlight our platform advantage. Let me share a few.

Anil: We saw strong growth in average subscription per customer, which now has reached to $310000, a 15% increase year over year.

Anil: We closed many new logos and expansion deals with great companies in the quarter that highlight our platform advantage, let me share a few.

Amit Walia: University Hospitals of Derby and Burton, UHDB, part of the NHS Foundation Trust, a leading provider of healthcare services across the Midlands region of the UK, is undertaking a transformational electronic patient record consolidation program. As a part of this strategic initiative, UHDB has chosen IDMC as its platform of choice. IDMC, specifically its cloud data governance, cloud data integration, and cloud data quality modules, will play a critical role in connecting disparate data sources across UHDB's hospital network. Dubai Islamic Bank is a large Islamic bank in the UAE.

Anil: University hospitals of Derby important USD be part of the NHS Foundation Trust, a leading provider of health care services across the Midlands region of the U K is undertaking a transformational electronic patient record consolidation program.

Anil: As a part of the strategic initiatives you HDD has chosen <unk> as its platform of choice.

Anil: <unk>, specifically is clouded our governance cloud data integration and cloud data quality modules will play a critical role in connecting disparate data sources across Uhd's Hospital network.

Anil: Dubai Islamic Bank is the largest bank in the UAE. The recently purchased <unk> to address the data quality data governance and data marketplace requirements, which will ensure proper reporting to the business.

Amit Walia: They recently purchased IDMC to address their data quality, data governance, and data marketplace requirements, which will ensure proper reporting to the business, support compliance with central bank regulations, and enhance their customer experience. Bridgestone, a global leader in premium tires and sustainable mobility solutions, is partnering with us and our MDM solutions to support them in managing and ensuring the quality of their products, suppliers, financial information, and customer data to optimize the supply chain and inventory operations across the globe.

Anil: <unk> compliance with Central Bank regulations, and enhance the customer experience.

Anil: Bridgestone a global leader in premium tires in sustainable mobility solutions is partnering with us and our MDM solutions to support them in managing and ensuring the quality of their products suppliers financial information and customer data to optimize the supply chain and inventory operations across the globe.

Amit Walia: We at Informatica are the Switzerland of data and the only data management partner at scale that manages data of any type, any pattern, any complexity, or any workload across any location. We continue to co-sell with our ecosystem partners such as Microsoft, AWS, GCP, OCI, Snowflake, Databricks, and MongoDB. We also made new announcements with Snowflake and GCP at Google Cloud. With Google Cloud, we announced a new MDM extension for Google BigQuery to simplify and accelerate the use of high-quality trusted data from Informatica to power Gen AI workloads with Vertex AI and Google Gemini and customer data platform workloads with Google BigQuery and Lookout. We also announced a global expansion with a new point of delivery on Google Cloud in Saudi Arabia. Finally, with Snowflake, we announced comprehensive integration with and support for Snowflake. Snowflake's Native Data Governance and Privacy Commission

Anil: We had informatica or the Switzerland of data and the only data management partners scale advantages did up anytime any pattern any complex deep or any workload across and location.

Anil: We continue cross selling with our ecosystem partners, such as Microsoft AWS, GCB, OCI Snowflake database and Mongo DB.

Anil: We also made new announcements with snowflake in GCB at Google Cloud next.

Anil: With Google Cloud, we announced a new MDM extension for Google Big query to simplify and accelerate the use of high quality trusted data from Informatica to power Jennie O workloads, with what HCI, and Google Gemini and customer data platform workloads with Google Big query and look.

Anil: We also announced a global expansion with the new point of delivery on Google Cloud in Saudi Arabia.

Anil: With Snowflake, we announced comprehensive integration with and support for Snowflake Horizon Snowflakes need to beat our governance and privacy controls. We were also one of snowflakes launch partners for Snowflake Horizons partner ecosystem.

Amit Walia: We were also one of Snowflake's launch partners for Snowflake Horizons Partner Ecosystem. Our GSI partners continue to create solutions with IDMC embedded to take to market. For example, PCS recently launched an enterprise cloud data pipeline to ingest a multitude of disparate data types and process and provision the data for a range of smart data-driven businesses. Meanwhile, Capgemini released a retail-specific version of the ESG Sustainability Hub built on IBM. Our Partner Migration Program continues to expand, with 55 partners now in the Power Center Modernization Program.

Anil: Our GSI partners continue to create solutions with IBM Z embedded to take to market for.

Anil: For example, BCS recently launched an enterprise cloud due to pipeline to ingest a multitude of disparate data types and process and provision the data for a range of smart data driven business apps.

Anil: Cap Gemini reduced retail specific version of the ESG sustainability hub built on IBM.

Anil: Our partner migration program continues to expand with 55 partners now in the power Center modernization program. The Master data management modernization program that was launched at the end of last year saw its first batch of six partners complete training and more partners have been approved to join the program and are taking the on demand training.

Amit Walia: The Master Data Management Modernization Program, which was launched at the end of last year, saw its first batch of six partners complete training. Ten more partners have been approved to join the program and are taking the on-demand training.

Amit Walia: Innovation remains paramount at Informatica. Let me discuss a few net new product innovations on IBM C. In the MDML 360 apps, we delivered a new visual experience that is modern, accessible, and AI-enabled, and very important for our business. Along with its updated user experience, data stewards are also empowered to get deeper insights with self-service reporting capabilities, enhanced survivorship options, and simplified management of complex hierarchies.

Anil: Innovation remains Paramount at Informatica, Let me discuss a few net new product innovations on IBM Z.

Anil: In the MDM and 360 apps, we delivered a new visual experience that is modern and accessible and AI enabled and very important for our business users.

Anil: Along with its updated user experience data stores are also empowered to get deeper insights with self service supporting capabilities.

Anil: Enhanced survivorship options and simplified management of complex hierarchies.

Amit Walia: Cloud data governance and catalog enable deeper ecosystem support for Microsoft Fabric Data Warehouse, hosting on OCI to seamlessly govern data and new data scanners for MariaDB Server and DB2. Additional profiling support is also included for Teradata, SAP HANA, SAP BW, and external tables for Oracle, Azure Synapse, and Athena. In February, we launched a new cloud data access management solution. CDAM enhances data security and privacy with capabilities that help organizations reduce the time it takes to safely provision data. Mitigate the risks associated with data misuse and simplify compliance with laws and regulations.

Anil: Cloud data governance and catalog enabled deeper ecosystem support for Microsoft fabric data warehouse hosting on OCI to seamlessly government data and new data scanners for Maria BB server and DVT.

Anil: Additionally, providing support is also included for <unk> data SAP, Hana SAP, BW and external tables for article Azure synapse and Athena.

Anil: In February we launched our new cloud data access management solution.

Anil: <unk> enhances data security and privacy with capabilities that help organizations reduce the time it takes to safely provision data.

Anil: To mitigate the risks associated with data misuse and simplify compliance with laws and regulations.

Amit Walia: CDAM is based on the technology from our acquisition of Privatar in July of last year and has been integrated into IDMC to enable data use and sharing with policy-based controls that are automated using classifications and metadata in a cloud data governance category. Integration with IDMC means that data can be consistently protected for hybrid and cloud data platforms with cloud data integration or use in conjunction with the cloud data market to accelerate the delivery of trusted data products and related assets to all data consumers through self-service.

Anil: <unk> is based on the technology from our acquisition of <unk> in July of last year and has been integrated into <unk> to enable data use and sharing with policy based controls that are automated using classifications and metadata and our cloud data governance catalog.

Anil: Integration with <unk> means that data can be consistently protected for hybrid and cloud data platforms with cloud data integration are used in conjunction with Columbia marketplace to accelerate the delivery of prostate data products and related assets to all data consumers through self service.

Amit Walia: Now turning to modernization, we have close to a billion dollars of on-prem maintenance and self-managed ERR. Approximately 28% of cloud net new ARR in the trailing 12 months came from on-prem to cloud migration, which is up three percentage points sequentially as cloud customer modernization deals are starting to accelerate.

Anil: Now turning to modernization.

Anil: We have close to $1 billion of on Prem maintenance and self managed CLO.

Anil: Approximately 28% of cloud net new era in the trailing 12 months came from on Prem to cloud migrations.

Anil: Which is up three percentage points sequentially as cloud customer modernization deals are starting to accelerate.

Amit Walia: We closed over 30 cloud modernization deals, which grew over 100% year-over-year. We are seeing stronger customer adoption of PowerCenter Cloud Edition, which represented over 80% of all modernization deals, up from 60% last quarter. Modernization projects are all operational mission-critical workloads.

Anil: We closed over 30 cloud modernization deals, which grew a 100% year over year we.

Anil: We are seeing stronger customer adoption of power Center cloud edition, which represented over 80% of all modernization deals up from 60% last quarter.

Anil: Modernization projects are all operational and mission critical workloads once the modernized it enables cross selling into new workloads more easily allows us to upsell and cross sell IBM Z in the future.

Amit Walia: Once we modernize, it enables cross-selling into new workloads more easily, allowing us to upsell and cross-sell IDMC in the future. Frontier Communications, one of the largest pure-plate fiber-to-the-home providers in the U.S., is a great customer expansion and modernization story. Their recent investment with Informatica enables the modernization of their on-prem platform to IDMC, including data integration, MDM, and data governance. This will accelerate their plans to improve the customer experience and master address data with Informatica's MDM solution. Another great modernization story, Sodexo, a global leader in sustainable food and valued experiences at every moment in life: learn, work, heal, and play.

Anil: Frontier Communications, one of the largest pure play fiber to the home providers in the U S is a great customer expansion and modernization story. The recent investment with Informatica enables the modernization of the on Prem platform provide DMC, including data integration MDM and data governance.

Anil: This will accelerate the plans to improve customer experience and master address data with Informatica MTM solution.

Anil: Another great modernization solely sodexo, a global leader in sustainable food and valued experiences at every moment in life learn work and play.

Amit Walia: So DEXO is leveraging IDMC in its group data platform built on Azure, as well as to prepare its upcoming migration of its supply master data management platform in North America from on-prem to cloud. We continue to hear from industry analysts that we are an innovation leader and are pleased to be recognized as the leader in the 2024 Gartner Magic Quadrant for Integration platform as a service. This is the ninth time that Gartner has positioned Informatica as a leader in this report.

Anil: So <unk> leveraging IBM seen its group data platform built on Azure as well as to prepare its upcoming migration of its supply Master data management platform in North America from on Prem to cloud.

Anil: We continue to hear from industry analysts that we are an innovation leader and are pleased to be recognized as the leader in the 2020 for Gartner Magic quadrant for integration platform as a service. This is the ninth time that Gartner has positioned it for mitek as the leader in this report.

Amit Walia: We will also be named a leader in the 2024 Gartner Magic Quadrant for augmented data quality solutions report. Gartner positioned Informatica as the furthest on the completeness of vision access as well as the highest on the ability to execute access. We were also recognized as a leader in the Forrester Wave for Enterprise Data Fabric Q1 2024, where Informatica received the highest score for current office.

Anil: We were also named a leader in the 2020 for Gartner Magic quadrant for augmented data quality solutions report.

Anil: Gartner positioned informatica as the furthest on the completeness of vision axis as well as the highest on the ability to execute axis.

Anil: We were also recognized as a leader in the Forrester wave for enterprise data fabric Q1, 2024, Informatica received the highest score for current offerings.

Amit Walia: Now looking ahead, let me share some observations regarding Gen AI and our strategy for executing it. Look, I firmly believe that the next phase of digital transformation will be fueled by Gen Ed, which is poised to drive outsized innovation and productivity gains for enterprises. As we enter the Gen AI revolution, enterprises are realizing that developing an AI strategy actually requires creating a data strategy first. The reality is that everyone is ready for GENI-I, except your data. Informatica is driving the modern data management stack for Gen AI enterprise architectures as the only comprehensive and at-scale AI-led data management platform. Preparing data for a GENI-R project involves collecting data.

Anil: Now looking at let me share some observations regarding gen AI and our strategy for executing against it.

Anil: I firmly believe that the next phase of digital transformation will be fueled by January which is poised to drive outsized innovation and productivity gain for enterprises.

Anil: As we entered the journey I'd evolution enterprises are realizing that developing AI strategy actually requires creating a beta strategy first the <unk>.

Anil: Is that everybody is really put a journey I accept your data.

Anil: Informatica as driving the modern data management stack with <unk> enterprise architectures as the only comprehensive and at scale AI led data management platform.

Anil: Preparing data for Jennie O projects involve collecting data.

Amit Walia: Cleaning Data, Cataloging Data, Ensuring Quality, Mastering, Governing, and Accessing it through Informatica's IDMC. We hear time and time again from customers and partners that the breadth of IDMC's solution is mission critical to processing their workload. IDNC processed 92 trillion mission-critical cloud transactions in March, growing 69% year-over-year.

Anil: Cleansing data cataloging data, ensuring quality mastering governing at accessing it through <unk>.

Anil: We hear time and time again from customers and partners that the breadth of <unk> solutions as mission critical to processing their workloads.

Anil: <unk> processed 92 trillion mission critical cloud transactions in March growing 69% year over year.

Amit Walia: CLAIRE, our AI engine, is embedded in all our solutions, leveraging ML algorithms and NLP on metadata to drive intelligence and productivity, accessing over 50,000 metadata-aware connections, and now leveraging over 48 terabytes of active metadata in the cloud. Our efforts to assist customers with their AI strategy or Gen AI strategy are divided into two categories. Informatica for Gen AI and Gen AI from Informatica, both available from the IDMC platform. In the area of Informatica for GenEI, we are already well underway with our new API and AMP integration services, where customers can use services for a simple, no-code way to add advanced GenEI capabilities to existing IBM C implementations. This makes it easier for developers to use different Gen-AI models, us being now the citizens of these models, and let customers update their apps with Gen-AI capabilities without changing any code.

Anil: Clear our AI engine is embedded in all of our solutions leveraging MLR go to them and MLP on meta data to drive intelligence and productivity accessing over 50000 metadata about connections and now leveraging over 48 petabytes of active metadata in the cloud.

Anil: Our efforts to assist customers with their AI strategy.

Anil: <unk> strategy is divided into two categories.

Anil: Informatica for genuine.

Anil: Jenny from Informatica, both are available from the IBM Z platform.

Anil: In the area of Informatica for journey II, we are.

Anil: Already well underway with our new API, an application services, where customers can use services for a simple no cord to add advanced genearch capabilities to existing Ibm's implementation.

Anil: This makes it easier for developers to use different <unk> models as being now the citizen of models and let customers update that ops with Jenny I capabilities without changing any code.

Amit Walia: Our GenAI solution with built-in software development life cycle and API governance drives better control, performance, and scalability, ensuring GenAI is ready for complex business needs. This is a fast-moving space as we innovate, and our customers use IDMC capabilities for their GenAI use cases. Now, in the area of Gen-AI from Informatica, we believe this is a game changer. To support our customers' AI journey, we have developed CareGPT, a transformational chat interface to do all of the complex data management tasks through NLP in a user-friendly format that will revolutionize and democratize data management throughout the enterprise.

Anil: Our Jennie O solution with built in software development lifecycle, and API governance drives better control performance and scalability and showed in <unk> is ready for complex business needs. This is a fast moving space as we innovate and our customers use ibm's capabilities for the journey of our use cases.

Anil: Now in the area of journey from Informatica. We believe this is a game changer.

Anil: To support our customers' AI, Johnny we have developed a clear GPT a transformational chat interface to all of the complex data management pass through MLP in a user friendly format that will revolutionize and democratize data management throughout the enterprise.

Amit Walia: Users will now be able to easily find relevant data assets, tables, columns, PII sensitive data, and more using NLP queries. They will also be able to explore data assets with, again, natural language questions to understand trends, KPIs, top customers, or any important insights. Additionally, CLAIRE-GPT will allow users to quickly understand the lineage of that data, the dependency of data assets, and search and explore business terms, definitions, data quality scores, which are the data owners and stakeholders associated with these data assets.

Anil: We users will now be able to easily find relevant data asset stables columns pis of davita and more using MLP equates they.

Anil: They will be able to exported assets with again natural language questions to understand trends Kpis top customers are any important insight.

Anil: Additionally, clear GPT will allow users to quickly understand the linkage of that data dependence of data assets in search and explore business terms definitions beat our quality scores, which are the data owners and stakeholders associated with these data assets.

Amit Walia: Users will then be able to generate new data products with ELT pipelines using MLP on data warehouses like Snowflake, AWS Redshift, Azure Synapse, Google BigQuery, and Databricks Delta Lake. While the operationalization of Genia Workload is in its early stages, we are extensively engaged with customers from various industries such as healthcare, financial services, manufacturing, and technology that are participating in a wide range of use cases as part of As we head into Informatica World later this month, we are pleased to announce that Clear GPT will be available to IDMC customers using our IPU consumption model.

Anil: Users will then be able to generate new data products with ELT pipelines using MLP on data warehouses like snowflake.

Anil: Friendship Azure synapse, Google liquidity and dws deadly.

Anil: Wildly operationalization of Jennie O workload is in its early stages. We are extensively engaged with customers from various industries, such as healthcare financial services manufacturing and technology that are participating in a wide range of use cases as part of the <unk> private preview.

Anil: As we head into Informatica World. Later this month, we are pleased to announce that the <unk> will be available to IBM.

Anil: Customers using our IPO consumption model.

Amit Walia: We believe this will be a tailwind for us for many years to come. As I wrap up, we are focused on consistently executing our commitments that we laid out on our investor day and driving ongoing data-driven digital transformation, on-prem to cloud migration, and journey out to fuel cloud growth and drive long-term value creation. The operational health of our business remains very strong, as evidenced by a predictable subscription revenue business model, a strong customer base, healthy cloud pipeline and retention rates, and strong unlevered free cash flow that has only continued to grow.

Anil: Believe this will be a tailwind for us for many years to come.

Anil: As I wrap up we are focused on consistently executing our commitments that we laid out on our investor day, and driving ongoing data driven digital transformation on Prem to cloud migration and Jenny Act fueled cloud growth and drive long term value creation.

Anil: The operational health of our business remains very strong as evidenced by a predictable subscription revenue business model strong customer base healthy cloud pipeline and retention rates and strong unlevered free cash flow that has only continued to grow.

Anil: We believe this continues to position us well for durable consistent future growth and profitability.

Amit Walia: We believe this continues to position us well for durable, consistent future growth and profitability. Thank you to all my Informatica colleagues for their hard work and continued commitment. I would also like to thank our customers, our partners, and our shareholders for their support. We look forward to sharing more product innovation announcements and some pretty cool demos at Informatica World 2024 later. With that, let me turn the call over to Mike. Mike, please take it away. Thank you, Amit, and good afternoon, everyone.

Anil: Thank you to all my Informatica colleagues for their hard work and continued commitment I would also like to thank our customers our partners and our shareholders for supporting US we look forward to sharing more product innovation and I'll spent that's a pretty cool demos at Informatica world going forward later this month.

Anil: Let me turn the call over to Mike Mike Please take it away.

Michael I. McLaughlin: Thank you, Amit, and good afternoon, everyone. Q1 was another solid financial quarter across the board, with all key growth and profitability metrics above the midpoint of our guidance, delivering a great start to the year. I'll begin the review of our Q1 results by reminding everyone how to best understand Informatica's ARR and GAAP revenue. Our ARR and revenue fall into three categories: cloud subscriptions, which delivered 35% ARR growth year over year; self-managed subscriptions, which we no longer actively sell and are therefore gradually declining; and maintenance on on-premise perpetual licenses, which is also gradually declining.

Michael I. McLaughlin: Thank you Amit and good afternoon, everyone Q1 was another solid financial quarter across the board with all key growth and profitability metrics above the midpoint of our guidance delivering a great start to the year.

Michael I. McLaughlin: I'll begin the review of our Q1 results by reminding everyone how to best understand Informatica IRR in GAAP revenues.

Anil: Our <unk> revenue fall into three categories cloud subscriptions, which delivered 35% <unk> growth year over year.

Anil: Self managed subscriptions, which we no longer actively sell and are therefore gradually declining.

Anil: And maintenance on on premise perpetual licenses, which is also in gradual decline.

Michael I. McLaughlin: The trajectories of these three categories of ARR and revenue are the direct result of our cloud-only strategy, and we expect this to continue going forward. With that in mind, let's start with total ARR, which was $1.64 billion, an increase of 6.7% over the prior year. This was driven primarily by new cloud workloads, strong cloud net expansion with existing customers, and stable subscription and maintenance real rates. We added $103 million in net new total ARR versus the prior year; foreign exchange negatively impacted total ARR by $1.2 million.

Anil: The trajectories of these three categories of <unk> and revenue are the direct result of our cloud only strategy and we expect this to continue going forward.

Anil: With that in mind, let's start with total IRR, which was $1 64 billion an increase of six 7% over the prior year.

Anil: This was driven primarily by new cloud workloads strong cloud net expansion with existing customers and stable subscription and maintenance real rates, we added $103 million and net new total IRR versus the prior year foreign exchange negatively impacted total IRR by $1 2 million.

Michael I. McLaughlin: Cloud subscription ARR was $653 million, a 35% increase year over year, and $2.5 million above the midpoint of our February guidance. New cloud workloads and strong net expansion with existing customers drove cloud subscription net new ARR of 169 million year over year and 36 million sequentially. Cloud subscription ARR now represents 40% of our total ARR, up from 32% a year ago. However, foreign exchange negatively impacted cloud subscription ARR by 791,000. Our cloud subscription net retention rate at the end user level was 119%, up one percentage point year over year and flat versus last quarter.

Anil: Cloud subscription <unk> was 653, million% to 35% increase year over year, and $2 5 million above the midpoint of our February guidance, New cloud workloads and strong net expansion with existing customers drove a cloud subscription net new <unk> of $169 million year over year and $36 million sequentially.

Anil: Cloud subscription there are now represents 40% of our total IRR up from 32% a year ago Foreign exchange.

Anil: <unk> negatively impacted cloud subscription IRR by 791000.

Anil: Our cloud subscription net retention rate at the end user level was 119% up one percentage point year over year and flat versus last quarter cloud subscription net retention rate at the global parent level was 124% flat year over year.

Michael I. McLaughlin: Cloud subscription net retention rate at the global parent level was 124% flat year over year. Self-managed subscription ARR declined in the quarter, as expected, to 505 million. This was down 2% sequentially and down 6% year over year. This was a slightly slower decline than we forecasted in February.

Anil: Self managed subscription <unk> declined in the quarter as expected to $505 million, which was down 2% sequentially and down 6% year over year. This was a slightly slower decline than we forecasted in February.

Michael I. McLaughlin: Subscription ARR, which is simply the sum of cloud ARR and self-managed ARR, grew over 13% year-over-year to $1.16 billion, which was $13 million above the midpoint of our February guide. Foreign exchange negatively impacted subscription revenue by approximately 1.1 million. The third component of total ARR is maintenance from on-premise perpetual licenses sold in the past, which now represents 29% of total ARR. Maintenance ARR was down approximately 7% year over year to $479 million. The migration of our on-premise customer base to IDMC in the cloud continues to be a large opportunity for us.

Anil: Subscription <unk>, which is simply the sum of cloud <unk> and self managed <unk> grew over 13% year over year to $1 6 billion, which was $13 million above the midpoint of our February guidance foreign exchange negatively impacted subscription <unk> by approximately $1 1 million.

Anil: The third component of total IRR is maintenance from on premise perpetual licenses sold in the past, which now represents 29% of total IRR maintenance era was down approximately 7% year over year to $479 million.

Anil: The migration of our on premise customer base to IMC in the cloud continues to be a large opportunity for us. The introduction of power Center cloud edition in Q3 of last year has helped accelerate the volume of signed migrations of our power center maintenance space and we are seeing early momentum from our self managed base migrating to a cloud platform as.

Michael I. McLaughlin: The introduction of PowerCenter Cloud Edition in Q3 of last year helped accelerate the volume of signed migrations of our PowerCenter maintenance base, and we are seeing early momentum from our self-managed base migrating to our cloud platform. As of the end of Q1, we have migrated 5.5% of our maintenance and self-managed ARR base to the cloud, up from 4.8% last quarter. We have a life-to-date average 2-to-1 ARR uplift ratio on these migrations, including PowerCenter and MDF.

Anil: As of the end of Q1, we have migrated five 5% of our maintenance and self managed Aero base to cloud up from four 8% last quarter, we have a life to date average to one <unk> uplift ratio on these migrations, including power Center and MDF.

Michael I. McLaughlin: These three ARR components summed to 6.7% total ARR growth year over year. Cloud subscription ARR growth of 35% drove this increase, offset by gradual declines in self-managed subscription and maintenance ARR. We expect similar trends to continue throughout 2024 as a direct and intentional result of our cloud-only consumption-driven strategy.

Anil: These three <unk> components summed to six 7% total <unk> growth year over year cloud subscription <unk> growth of 35% drove this increase offset by gradual declines in self managed subscription and maintenance error. We expect similar trends to continue throughout 2024 as a direct and intentional result of our collateral a consumption driven strategy.

Michael I. McLaughlin: And as we noted on our investor day, we expect total ARR and total revenue growth to begin accelerating this year as the fast-growing cloud subscription portion of our ARR becomes a larger portion of our total business. Now I'd like to review our revenue results for the first quarter. Gap's total revenues were $389 million, an increase of 6.3% year over year.

Anil: And as we noted on our Investor Day, we expect total IRR and total revenue growth to begin accelerating this year as the SaaS growing cloud subscription portion of our <unk> becomes a larger portion of our total business.

Anil: Now I'd like to review our revenue results for the first quarter GAAP total revenues were $389 million, an increase of six 3% year over year. This exceeded the midpoint of our February guidance by approximately $4 million due to strong cloud growth and a somewhat slower than expected decline in self managed revenue.

Michael I. McLaughlin: This exceeds the midpoint of our February guidance by approximately $4 million due to strong cloud growth and a somewhat slower than expected decline in self-managed revenue. Foreign exchange positively impacted total revenues by approximately 1.7 million on a year-over-year basis. Subscription revenue, which includes cloud subscriptions and self-managed subscriptions, increased 18% year-over-year to $252 million, representing 65% of total revenue, compared to 59% a Our quarterly subscription renewal rate was approximately 91%, down two percentage points year-over-year due to lower self-managed subscription renewal rates offset by higher cloud subscription renewal rates.

Anil: Foreign exchange positively impacted total revenues by approximately $1 7 million on a year over year basis.

Anil: Subscription revenue, which includes cloud subscriptions and self managed subscriptions increased 18% year over year to $252 million, representing 65% of total revenue compared to 59% a year ago.

Anil: Our quarterly subscription renewal rate was approximately 91% down two percentage points year over year due to lower self managed subscription renewal rates offset by higher cloud subscription renewal rates.

Michael I. McLaughlin: Revenues falling into our maintenance and professional services category were $137 million. Maintenance revenue represented 30% of total revenue for the quarter, and our maintenance renewal rate was 94%, down two percentage points year over year. Almost half of our maintenance gross churn came from maintenance to cloud migrations this quarter. Professional services, which include implementation, consulting, and education, make up the remainder of this category, and we're down $6 million year-over-year, consistent with last quarter. As we have seen in prior quarters, our implementation services revenue has been declining year-over-year, as our implementation partners assume a greater share of that work for our customers. We're pleased with this trend.

Anil: Revenues falling into our maintenance and professional services category were $137 million maintenance revenue represented 30% of total revenue for the quarter and our maintenance renewal rate was 94% down two percentage points year over year.

Anil: Most half of our maintenance gross churn came from maintenance to cloud migration this quarter.

Anil: Professional services, which includes implementation consulting and education make up the remainder of this category and were down $6 million year over year consistent with last quarter.

Anil: As we've seen in prior quarters, our implementation services revenue has been declining year over year as our implementation partners assume a greater share of that work for our customers. We are pleased with this trend.

Michael I. McLaughlin: Cloud subscription revenue was $151 million, or 60% of subscription revenues, growing 35% year over year. As a reminder, due to the timing difference between revenue and ARR recognition, the relative growth rates of these two metrics may differ from period to period. Turning to the geographic distribution of our business, US revenue grew 4% year over year to $242 million, representing 62% of total revenue, while international revenue grew 11% to $147 million. Using exchange rates from Q1 last year, international revenue would have been approximately $1.7 million lower in the red, representing international revenue growth of 10% year over year. Turning to consumption-based IPUs, approximately 59% of first quarter cloud new bookings were IPU-based deals.

Anil: Cloud subscription revenue was $151 million or 60% of subscription revenues growing 35% year over year as a reminder, due to the timing difference between revenue and <unk> recognition the relative growth rates of these two metrics may differ from period to period.

Anil: Turning to the geographic distribution of our business U S revenue grew 4% year over year to $242 million, representing 6% to 2% of total revenue while international revenue grew 11% to $147 million.

Anil: Using exchange rates from Q1 last year International revenue would have been approximately $1 7 million lower in the quarter, representing international revenue growth of 10% year over year.

Anil: Turning to consumption based IP use approximately 59% of first quarter cloud, new bookings, where ICU based deals the remainder of our Q1 cloud bookings were primarily for customer or supplier records for MDM products, which is also a multiyear committed consumption based pricing model.

Michael I. McLaughlin: The remainder of our Q1 cloud bookings were primarily for customer or supplier records for our MDM products, which is also a multi-year committed consumption-based pricing model. Now, I'd like to move on to our profitability metrics. Please note that I will discuss non-GAAP results unless otherwise stated. In Q1, our gross margin was 81%, up one percentage point year over year. We are focused on maintaining healthy gross margins as our business transitions to the cloud. Operating expenses were consistent with expectations.

Speaker Change: Now I would like to move on to our profitability metrics. Please note that I will discuss non-GAAP results unless otherwise stated.

Speaker Change: In Q1, our gross margin was 81% up one percentage point year over year, we are focused on maintaining healthy gross margins as our business transitions to the cloud.

Michael I. McLaughlin: As part of our November 2023 restructuring plan, we incurred non-recurring restructuring charges of approximately $4.4 million. We expect to incur approximately $4 million in additional restructuring charges for the remainder of full year 2021. Operating income was approximately $109 million, growing 29% year over year and exceeding the midpoint of our February guidance by over $2 million. Operating margin was 28.1%, a 4.9 percentage point improvement from a year ago. Adjusted EBITDA was $111 million, and net income was $69 million. Net income per diluted share was $0.22 based on approximately 312 million outstanding diluted shares. The basic share count was approximately 297 million shares.

Anil: Operating expenses were consistent with expectations as part of our November 2023 restructuring plan, we incurred nonrecurring restructuring charges of approximately $4 $4 million, we expect to incur approximately $4 million in additional restructuring charges for the remainder of full year 2024.

Anil: Operating income was approximately $109 million growing 29% year over year and exceeding the midpoint of our February guidance by over $2 million operating margin was 28, 1% a four nine percentage point improvement from year ago.

Anil: Adjusted EBITDA was $111 million and net income was $69 million.

Anil: Net income per diluted share was 22 based on approximately 312 million outstanding diluted shares.

Anil: Share count was approximately 297 million shares.

Michael I. McLaughlin: Adjusted unlevered free cash flow after tax was $183 million, significantly better than expectations due to faster cash collections and other working capital dynamics. We expect these favorable working capital factors to reverse in Q2, and therefore, Q2 free cash flow will be significantly lower than Q2 2023. As we've emphasized in the past, free cash flow can be highly volatile from quarter to quarter, which is why we only formally guide free cash flow on a full-year basis.

Anil: Adjusted Unlevered free cash flow after tax was $183 million significantly better than expectations due to faster cash collections and other working capital dynamics. We expect these favorable working capital factors to reverse in Q2, and therefore Q2 free cash flow will be significantly lower than Q2 2010.

Anil: Three as.

Anil: As we've emphasized in the past free cash flow can be highly volatile from quarter to quarter, which is why we only formally guide free cash flow on a full year basis, when we get to the discussion of Q2 expectations. Later in my remarks, Youll see that while Q1 free cash flow was significantly higher than expected in Q2 free cash flow is expected to be much lower.

Michael I. McLaughlin: When we get to the discussion of Q2 expectations later in my remarks, you'll see that while Q1 free cash flow was significantly higher than expected, and Q2 free cash flow is expected to be much lower, our free cash flow for the first half of 2024 should be in line with the historic linearity of that metric. And we are on track to deliver full-year free cash flow that is in line with our full-year guidance.

Anil: Our free cash flow for the first half of 2024 should be in line with the historic linearity of that metric and we are on track to deliver full year free cash flow that is in line with our full year guidance.

Michael I. McLaughlin: Cash paid for interest in the quarter was $38 million, in line with expectations. We ended the first quarter in a strong cash position with cash plus short-term investments of $1.1 billion, an increase of $315 million year-over-year. Net debt was $725 million, and the trailing 12 months of adjusted EBITDA was $502 million. This resulted in a net leverage ratio of 1.4 times at the end of the quarter. Now I'll turn to guidance.

Anil: Cash paid for interest in the quarter was $38 million in line with expectations. We ended the first quarter and a strong cash position with cash plus short term investments of $1 1 billion, an increase of $315 million year over year.

Anil: Net debt was $725 million and trailing 12 months of adjusted EBITDA was $502 million. This resulted in a net leverage ratio of one four times at the end of March.

Michael I. McLaughlin: Starting with the full year 2024, we delivered solid results in Q1 and are comfortable reaffirming all previously issued guidance for the year, reflecting confidence in our cloud-only consumption-driven strategy. It's worth noting the recent strengthening of the U.S. dollar against the euro, pound, and yen has resulted in FX-related revenue headwinds for fiscal 2024 compared to our previous assumptions. Despite this, we're maintaining full-year guidance for total revenues and ARR metrics as we're comfortable that we can offset the incremental headwinds from FX. You can find the details of our full-year guidance and FX assumptions in the press release we filed this afternoon.

Speaker Change: Now I'll turn to guidance starting with the full year of 2024, we delivered solid results in Q1 and are comfortable reaffirming all previously issued guidance for the year, reflecting confidence in our cloud only consumption driven strategy.

Speaker Change: It's worth noting that recent strengthening of the U S dollar against the Euro pound and yen have resulted in FX related revenue headwinds for fiscal 2024 compared to our previous assumptions. Despite this we are maintaining full year guidance for total revenues and are metrics that we are comfortable that we can offset the incremental headwinds from FX you can fall.

Speaker Change: The details of our full year guidance and FX assumptions in the press release, we filed this afternoon.

Michael I. McLaughlin: Next, turning to guidance for the second quarter, similar to the first quarter, we expect cloud subscription ARR to grow, while self-managed and maintenance ARR is expected to decline on both a sequential and year-over-year basis. With this in mind, we're establishing guidance for the second quarter, ending June 30th, 2024, as follows. We expect GAAP total revenues to be in the range of $394 million to $410 million, representing approximately 6.9 percent year-over-year growth.

Speaker Change: Next turning to guidance for the second quarter similar to the first quarter, we expect cloud subscription <unk> to grow while self managed and maintenance <unk> is expected to decline on both a sequential and year over year basis with this in mind, we are establishing guidance for the second quarter ending June 32024 as follows we expect GAAP total revenues to be in the range of 394.

Michael I. McLaughlin: We expect subscription ARR to be in the range of $1.168 billion to $1.188 billion, representing approximately 13% year-over-year growth. We expect cloud subscription ARR to be in the range of $687 million to $697 million, representing approximately 35% year-over-year growth. And we expect non-GAAP operating income to be in the range of $107 million to $119 million, representing approximately 29.1% year-over-year growth. For modeling purposes, I'd like to provide a few more pieces of additional information.

Speaker Change: 4 million to $410 million, representing approximately six 9% year over year growth.

Speaker Change: Subscription <unk> to be in the range of $1 168 billion to $1 8 billion, representing approximately 13% year over year growth.

Speaker Change: We expect cloud subscription <unk> to be in the range of 687 million to $697 million, representing approximately 35% year over year.

Speaker Change: And we expect non-GAAP operating income to be in the range of $107 million to $119 million, representing approximately 29, 1% year over year growth.

Speaker Change: For modeling purposes, I'd like to provide a few more pieces of additional information.

Michael I. McLaughlin: First, we expect adjusted unlevered free cash flow after tax for the second quarter to be in the range of $37 to $57 million. Now, I want to draw particular attention to the quarterly volatility of our free cash flow. So this expectation for Q2 is put in the right context. As I mentioned earlier, the working capital favorability that we experienced in Q1 was due to timing and other balance sheet dynamics.

Speaker Change: First we expect adjusted Unlevered free cash flow after tax for the second quarter to be in the range of 37% to $57 million.

Speaker Change: Now I want to draw particular attention to the quarter to quarter volatility our free cash flow. So this expectation for Q2 is putting the right context as I mentioned earlier, the working capital favorability that we experienced in Q1 was due to timing and other balance sheet dynamics. These factors should reverse in Q2, which is why Q2 Q2 adjusted <unk>.

Michael I. McLaughlin: These factors should reverse in Q2, which is why Q2 adjusted unleveraged cash flow after tax will be down quarter over quarter and year over year. However, when you look at our free cash flow expectations for the first half of 2024, which is $230 million at midpoint, you'll see that our first half cash flow generation is in line with our typical linearity and in line with our full year guidance. Furthermore, our expectation at the midpoint represents 103% of our non-GAAP operating income midpoint guidance, which is in line with the medium-term expectations we laid out at our investor meetings. Moving on, we estimate cash paid for interest will be approximately $39 million in the second quarter and approximately $152 million for the full year, using forward interest rates based on one month so far.

Speaker Change: Free cash flow after tax will be down quarter over quarter and year over year.

Speaker Change: However, when you look at our free cash flow expectations for the first half of 2024, which is $230 million of midpoint, you'll see that our first half cash flow generation is in line with our typical linearity and in line with our full year guidance.

Speaker Change: Furthermore, our expectation at the midpoint represents 103% of our non-GAAP operating income mid point guidance, which is in line with our medium term expectations, we laid out at our Investor day.

Speaker Change: Moving on we estimate cash paid for interest will be approximately $39 million in the second quarter and approximately $152 million for the full year using forward interest rates based on one month silver.

Speaker Change: Third with respect to taxes, our Q1 non-GAAP tax rate was 23% and we expect that rate to continue for the full year 2024.

Speaker Change: And lastly, our share count assumptions for the second quarter of 2024, we expect basic weighted average shares outstanding to be approximately 300 million shares and diluted weighted average shares outstanding to be approximately 313 million shares for the full year of 2024, we expect basic weighted average shares outstanding to be approximately 302.

Speaker Change: <unk> shares and diluted weighted average shares outstanding to be approximately 315 million shares.

Michael I. McLaughlin: Third, with respect to taxes, our Q1 non-GAAP tax rate was 23%, and we expect that rate to continue for the full year 2024. And lastly, our share count assumptions. For the second quarter of 2024, we expect basic weighted average shares outstanding to be approximately 300 million shares and diluted weighted average shares outstanding to be approximately 313 million shares. For the full year of 2024, we expect basic weighted average shares outstanding to be approximately 302 million shares and diluted weighted average shares outstanding to be approximately 315 million shares.

Speaker Change: In summary, we are pleased with our Q1 performance and we're off to a great start in 2024, we are focused on consistently executing our cloud only consumption driven strategy by delivering the best data management products on the industry's only cloud native consumption based platform, serving the multi vendor multi cloud and hybrid needs of the modern enterprise.

Michael I. McLaughlin: In summary, we are pleased with our Q1 performance, and we're off to a great start in 2024. We are focused on consistently executing our cloud-only consumption-driven strategy by delivering the best data management products on the industry's only cloud-native consumption-based platform, serving the multi-vendor, multi-cloud, and hybrid needs of the modern enterprise. Operator, you can now open the line for questions.

Speaker Change: Operator, you can now open the line for questions.

Operator: We will now begin the Q&A session. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you would like to remove a question, press star followed by 2. And if you are currently using a speakerphone, please pick up your handset before asking your question. Our first question today comes from Koji Ikeda with Bank of America. Please proceed.

Speaker Change: You may now begin the Q&A session.

Speaker Change: We would like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: If you would like to remove that question press star followed by Tim.

Speaker Change: And if you are currently using a speakerphone. Please pick up your handset before asking your question.

Speaker Change: Our first question today comes from Jackie <unk> with Bank of America.

Jackie: Please proceed.

Koji Ikeda: Thank you for taking my questions; just two for me here. First question, on the 1 million plus customer count, really strong net new customer additions there with plus 18 in the quarter. I think that's the strongest on record. So the question here is, is there a common theme among these customers that is driving the growth in the net new metric? Or maybe it's one or two particular use cases that are driving that strong growth.

Jackie: Okay. Thank you for taking my questions. Just two for me here first question on the 1 million plus customer count really strong net new customer additions there with plus 18 in the quarter I think that's the strongest on record.

Jackie: Question here is is there a common theme among these customers that is driving the growth and doesn't that new metric or maybe it's one or two particular use cases that is driving that strong growth and do you anticipate net new.

Jackie: 1 million plus customers to continue increasing in the future.

Amit Walia: Koji, good to hear from you. Well, first of all, great growth across the board, as you saw. I think on this one, across the board, I think IDMC has fully scaled out. Every offering is at scale on that. And the breadth of the use cases that it serves, more and more customers basically are landing with, hey, I can use it for many use cases, and multi-product entry points have increased.

Speaker Change: Okay. Good to hear from you well first of all.

Speaker Change: Great growth across the board as you as you saw I think on this one across the board I think look as <unk> has fully scaled out every offering that scale on that and the strength of the use cases that it serves more and more customers basically aligning with hey, I can use it for many use cases and multi product.

Speaker Change: And key points have increased so that's what's driving the increase in that particular size of the customer because these end up being the larger customers. They have attractive used cases and they have the need for IV <unk> for a variety of front office to back office, because that's what we are seeing and obviously.

Amit Walia: So that's what's driving the increase in that particular size of the customers because these end up being the larger customers. They have predictive use cases, and they have the need for IDMC for a variety of front office to back office use cases. That's what we are seeing. And obviously, we... Hope to continue to see you there.

Speaker Change: We.

Speaker Change: We continue to see that.

Koji Ikeda: Got it. And then just to follow up here for Mike, you know, I know you guys launched the IPU pricing model about a year ago, and I know there's a component of use it or lose it there. So just wanted to ask, were there any one-time benefits in this quarter from unused consumption?

Speaker Change: Got it and then just a follow up here for Mike I know you guys launched the IQ pricing.

Speaker Change: Pricing model about a year ago, and I know there is a component of use it or lose it. There. So just wanted to ask were there any onetime benefits in this quarter from unused consumption true ups.

Michael I. McLaughlin: No, not at all, Koji. We have actually been selling IPUs for longer than a year. It's been three and a half years. We introduced FlexIPUs last year, which was a special configuration designed for seasonal users rather than folks that consume IPUs consistently throughout the year. The way our IPU model works is it's a committed amount of capacity that you buy, and you pay for it upfront. We amortize that upfront cost per year.

Michael I. McLaughlin: No not at all Koji, we have actually been selling ipos for longer than a year, it's been three and a half.

Michael I. McLaughlin: We introduced <unk> last year, which was which is a special configuration designed for seasonal users rather than.

Speaker Change: Folks that consume Ips consistently throughout the year the way our IPO model works, it's a committed amount of capacity that you buy.

Speaker Change: And you pay for it upfront we amortize that.

Speaker Change: Per year, we amortize that as the year goes on on a ratable basis, regardless of the consumption of those Ips and the revenue that we recognized from the committed multiyear contracts that we signed for Ips.

Michael I. McLaughlin: We amortize that as the year goes on, on a routable basis, regardless of the consumption of those IPUs. And the revenue that we recognize from the committed multi-year contracts that we sign for IPUs can never go down, regardless of consumption. It can go up if folks run out of IPUs and come back to us to buy more, but there's no adjustment or true-up or anything like that that you might see in other consumption-based companies that have a different pricing model.

Speaker Change: Can never go down regardless of consumption.

Speaker Change: It can go up if folks run out of Ipos and come back to us to buy more but there is no.

Speaker Change: Adjustment or true up or anything like that that you might see another consumption based companies that have a different pricing model.

Koji Ikeda: Got it. Thank you for the clarification. Thanks guys for taking the questions. I really appreciate it.

Speaker Change: Got it. Thank you for the clarification, thanks, guys for taking the questions Super I appreciate it.

Matthew George Hedberg: Our next question comes from Matt Hedberg of RBC Capital Markets. Please proceed.

Speaker Change: Our next question comes from Matt Hedberg.

Matthew George Hedberg: With RBC capital markets. Please proceed.

Amit Walia: Great. Hey, thanks, guys. Congratulations on a strong Q1. I guess, you know, just maybe, from a high-level perspective, could you talk about the demand environment? You guys have such a broad coverage of global, you know, large enterprise customers. Is the demand environment kind of similar to what you saw in 4Q, despite, you know, like Koji said, you guys had a really strong, large customer quarter? Just sort of curious if you can characterize, you know, how customers are thinking about spending right now.

Matthew George Hedberg: Great Hey, Thanks, guys. Congrats on a strong Q1.

Matthew George Hedberg: I guess, just maybe some high level perspective could you talk about the demand environment you guys have such a broad coverage of global.

Matthew George Hedberg: Large enterprise customers.

Matthew George Hedberg: The demand environment kind of similar to what you saw in <unk>. Despite.

Speaker Change: You said you guys had a really strong large customer quarter, just sort of curious if you could characterize how customers think about spending right now.

Amit Walia: Matt, thanks for the question. Yes, I think the demand environment stays the same as we saw in Q4 as we saw in Q1. I think the additional commentary I'll add for you is that, needless to say, everybody has to, or everybody is prioritized in the top three initiatives for data-driven digital transformation. So we end up being the beneficiary of that because of the breadth of the use cases that we can solve through ID&C, whether it's front office, customer churn, or supply chain, or back office analytics, we serve the breadth of use cases. So that ends up allowing us to actually have a broad set of opportunities. Second is, obviously, the ability for us.

Matthew George Hedberg: Mark Thanks for the question, Yes, I think the demand environment stays the same as we saw in Q4 that we saw in Q1 I think the additional inventory I like to use that one is that needless to say everybody has to what everybody is prioritizing the top three initiative data driven digital transformation. So we end up being the beneficiary of that.

Matthew George Hedberg: Because of the breadth of the use cases that you can sell to I'd D&C, whether it's front office customer John our supply chain on our back office analytics. We so the breadth of use cases, so that ends up allowing us to actually have a broad set of opportunities within the past.

Matthew George Hedberg: Second is obviously the ability for us we obviously sub mission critical workloads, even the Modernizations you can see a increase because people are realizing that.

Amit Walia: We obviously serve mission-critical workloads. Even the modernizations you can see have increased because people are realizing that, hey, without modernizing and going to the cloud, they cannot get the benefits of Gen AI in the future. So it's having a bit of a tailwind for modernization, and we saw that. And with PowerCenter Cloud Edition and the launch of MDM modernization, obviously, that has definitely picked up steam for us. And lastly, it's early days. I've repeated many times the early innings on Gen AI.

Matthew George Hedberg: Without modernizing or going to cloud they cannot get the benefits of <unk> in the future. So it's having a bit of a tailwind for modernization and you saw that with power Center cloud edition and the launch of MD amortization, obviously that.

Matthew George Hedberg: Definitely picked up win for US and lastly, early days I've repeated many times early innings on Jennie O, but we definitely see that every organization wanting to do something over there and we are seeing the early green shoots of work happening on IBM Z and what gives you pretty going out we expect more in the second half and next year more and more in that area. We are absolutely.

Amit Walia: But we definitely see every organization wanting to do something over there, and we are seeing the early clean shoots of work happening on IDNC. And with Clear GPT going out, we expect more in the second half and next year, more and more in that area. We are absolutely seeing reprioritization of budgets moving towards doing things in that area. So we are benefiting from that, even though you can argue that overall IT budgets continue to be somewhat slower. But those are ways to think about the demand cycle for us.

Matthew George Hedberg: <unk> re prioritization of budgets moving towards doing things that are in that area. So we are benefiting from that even though you could argue that the auto likely budgets continue to be somewhat slower, but those are the ways to think about the demand technicals.

Amit Walia: Actually, that's a great dovetail into the second question. You know, once you get it, it seems like you guys are well positioned to leverage customer interest in Gen AI and really be part of the rails as customers think about preparing their data for Gen AI. Do you anticipate, I guess I should say,

Speaker Change: Actually that's a great dovetail into the same question. Once you guys. It seems like you guys are well positioned to leverage customer interest in <unk> and really being part of the rails as customers think about preparing their data for Jenny.

Speaker Change: Do you anticipate I guess I should say, how do you think gen. AI initiatives do impact sales cycles. Do you think there is a risk that maybe slows things down or customers kind of like think about that journey or maybe it maybe it accelerates things as customers are looking at you as a key leverage point.

Amit Walia: Say, how do you think gen AI initiatives impact sales?

Amit Walia: impact sales cycles? Do you think there's a risk that it maybe slows things down and customers kind of like think about that journey, or maybe it maybe it accelerates things as customers are looking at you as a key leverage point in their broader Gen AI decision? in looking at anything in that.

Matthew George Hedberg: In their broader journey I decisions.

Amit Walia: I think looking at anything in that area in the future is a hard one. I think the way I'm describing it this way is that the beauty of that, what we have is that with IDMC, remember when I said IDMC for? Customers can actually use IDNC for non-GENAI digital transformation projects, as we are doing today. And by the way, many of them have not yet been completed. We all know that.

Matthew George Hedberg: Looking at anything in that area in the future. This is a hard one I think I described with <unk>. The beauty of what we have is that with IBM Ibm's CFO Jamie.

Matthew George Hedberg: Tumors can actually use <unk> for non <unk> transformation project that they are doing today and by the way many of them have not yet completed we all know that and the CMI D&C platform can be used for Jenny I use cases. The example that I was giving you as a customer by the way a financial services company that does loan approvals for mortgage is leveraging our app integrate.

Amit Walia: And the same IDNC platform can be used for GENAI use cases. The example that I was giving is a customer, by the way, a financial services company that does loan approvals for mortgages, is leveraging our app integration capability to basically bring data from many places, you know, do all the cleansing, quality, and everything, and go through. We let them choose whichever LLM is good for them and get mortgage approvals in a matter of minutes. That was taking a long time.

Matthew George Hedberg: <unk> capabilities to basically bring data from many places.

Matthew George Hedberg: Cleansing quality in everything and go through we let them choose whichever LLM is good for them and get mortgage approvals happened in a matter of minutes that was taking a long time. So the beauty of the customers have the flexibility of saying, even if I wanted to start a small Jennie O project I can do that while others have to same platform same capabilities and on the other so that doesn't flow anything down there.

Amit Walia: So the beauty is that customers have the flexibility of saying, hey, even if I want to start a small GENAI project, I can do that while others have the same platform, same capability. And on the other hand, so that doesn't slow anything down. They have it; they can do it. They don't have to decide one way or the other. And, of course, CareGPT comes later and helps us. So that's the way customers are actually going.

Matthew George Hedberg: They can do it they don't have to decide one way or the other and of course get GPT comes later that helps us. So that's the way customers are actually going about it.

Speaker Change: Thanks, a lot.

Brad Alan Zelnick: Our next question today comes from Brad Zelnick with Deutsche Bank.

Speaker Change: Our next question today comes from Brad Zelnick with Deutsche Bank.

Brad Alan Zelnick: Please proceed.

Amit Walia: Great. Thanks so much for taking my questions. Amit, can you maybe just give us more color on PowerCenter Cloud Edition uptake and pipeline build? I heard the stat that 80% of modernization deals were influenced by that, and that's up from 60% last quarter. But any other color that you can share, and how much uptake is built into the guide for the full year?

Brad Alan Zelnick: Great. Thanks, so much for taking my questions.

Brad Alan Zelnick: Mick can you maybe just give us more color on power Center cloud edition uptake in pipeline building I heard the stat that 80% of modernization deals.

Brad Alan Zelnick: We're influenced by that and that's up from 60% last quarter.

Brad Alan Zelnick: Any other color that you can share on how much uptake is built into the guide for the full year.

Amit Walia: Well, I can tell you that modernization absolutely is, has accelerated, and we had shared with you that we expected and wanted to go in that direction. And I would say Q1 has shown that it is headed in that direction or absolutely well on that path.

Mick: Well I can tell you that modernization absolutely is has accelerated and B. We had shared with you on that would be expected and wanted to go in that direction and I would say Q1 has shown that it is headed in that direction are absolutely well on that path. So what obviously pilots into cloud edition makes it a lot easier for a customer.

Amit Walia: So, obviously, PowerCenter Cloud Edition makes it a lot easier for our customers and for us. So needless to say, that has become the lion's share, and we continue to expect to see that number pick up to be part of the PowerCenter monetization opportunities. And I think that's baked into our guide for the year. That's what we were expecting this year to be, for that to kick in. And Q1 proved that, and we expect that to continue to be part of our Cloud AR growth, which is what the guide that I gave you is well baked into that.

Brad Alan Zelnick: <unk> then for US would needless to say that has become the lion's share and we continue to expect to see that number even pick up to be part of the power center monetization opportunities and I think thats baked into our guide for the year.

Brad Alan Zelnick: What we were expecting for this year to beat for that to kick in and Q1 proved that and we expect that to continue to be part of a cloudy on our growth which is why in the guidance I gave you as well baked into that and as you remember from the Investor day discussion from December.

Michael I. McLaughlin: And as you remember from the investor day discussion in December, our both 24-month and medium-term guidance that we offered was based upon a buildup of what we think is TAM growth based upon external estimates sourced from IDC and others of mid-20%, mid-to-high 20% TAM growth plus migration-driven growth, and that sums up in 24 to our expectation of 35%. Doing that math another way, only 5 to 30% of the growth we expect in Cloud NAR should be, over time, coming from migrations. And that's entirely consistent with what we're seeing play out in Q1.

Brad Alan Zelnick: Both 24 and medium term guidance that we offered was based upon a buildup of what we think is the Tam growth based upon external estimates.

Brad Alan Zelnick: <unk> from IDC and others.

Brad Alan Zelnick: Mid 20% mid to high 20% Tam growth plus migration driven growth and that sums up in 24 to our expectation of 35%.

Brad Alan Zelnick: Doing that math another way.

Brad Alan Zelnick: 5% to 30% of our growth we expect in cloud nor should be over time coming from migrations and that's entirely consistent with what we're seeing play out in Q1.

Brad Alan Zelnick: Thanks, Micah. It's a helpful reminder, maybe just to follow up on maintenance AR, which was just a little bit below what we might have expected sequentially. And I appreciate the comments that you already shared in the prepared remarks, but anything else to call out, you know, whether it's any specific customer churn or anything else that maybe we're just not appreciating?

Speaker Change: Thanks, Mike. It's helpful reminder, maybe just to follow up on maintenance IRR, which was just a little bit below what we might've expected sequentially and I. Appreciate the comments you already shared in the prepared remarks, but anything else to call out.

Speaker Change: Whether it's any specific customer churn or anything else that maybe we were just not appreciating.

Michael I. McLaughlin: Thanks for bringing that up. It really is.

Michael I. McLaughlin: Yeah, Thanks for bringing that up it really is and I mentioned it briefly in my remarks that it may not have been obvious enough.

Michael I. McLaughlin: And I mentioned it briefly in my remarks, but it may not have been obvious enough. Almost half of the gross churn in our maintenance base this quarter was due to migrations from power center on prem to the cloud. So the, and again, harkening back to yesterday, when we talked about our expectations for the decline of both maintenance and self-managed services, the decline is made up of two components. One is what I call the natural churn, that is, customers who churn because they went out of business, or the use case went away, or they got bought by another company.

Michael I. McLaughlin: Almost half of the gross churn in our maintenance base. This quarter was due to migrations from.

Speaker Change: Power Center on Prem to the cloud so the and again Harkening back to Investor day, when we talked about our expectations for the decline of both maintenance and self manage the decline is made up of two components. One is what I call. The natural churn that's customers, who churn because they went out of business or the use case went away or they got bought.

Speaker Change: By another company that sort of exogenous churn that's independent of migration and then the other part of the churn will be from migrations moving from maintenance or self managed to the cloud.

Michael I. McLaughlin: That's sort of exogenous churn that's independent of migration. And then the other part of the churn will be from migrations moving from maintenance or self-managed to the cloud. So our main has churned this quarter; almost half of that was in that maintenance to cloud bucket. And the natural churn was very much in line with what we've been seeing quarter after quarter after quarter for the last several years.

Speaker Change: So our maintenance churn this quarter.

Speaker Change: Almost half of that was in that.

Speaker Change: Maintenance to cloud bucket and the natural churn was very much in line with what we've been saying quarter after quarter after quarter for the last several years.

Brad Alan Zelnick: Just one more. I apologize.

Speaker Change: Got it and just one more I apologize I don't mean to hog, but.

Speaker Change: What is the corollary to that be that we would expect to see cloud IRR, perhaps even stronger and I know this Q1 seasonality and a lot of the majority of that is coming from from new business not from migrations, but is there anything else that we're missing there as we think about the migration and the strengthened migrations that you'd call out as accounting for.

Michael I. McLaughlin: I don't mean to hog the limelight, but wouldn't the corollary to that be that we would expect to see cloud ARR perhaps even stronger? I know there's Q1 seasonality, and the majority of that is coming from new business, not from migrations. But is there anything else that we're missing there as we think about migration and the strength in migrations that you call out as accounting for what we see as behavior and maintenance?

Speaker Change: But what we see as the paper and maintenance.

Brad Alan Zelnick: No, you're not missing anything. It's doing exactly what we expected it to do. Our guide was based upon the mix of that new ARR and migration ARR being very much in line with what we saw, as were our projections for maintenance and self-management. So it's right down the fairway, and we're happy with it.

Speaker Change: No you're not missing anything it's doing exactly what we expected it to do.

Speaker Change: Our guide was based upon the mix of <unk>.

Speaker Change: Net new <unk> and migration IRR being.

Speaker Change: Very much in line with what we saw as where our projections for maintenance and self insurance. So.

Speaker Change: Right down the fairway and we're happy with it.

Andrew James Nowinski: Thanks for taking my questions, guys. Our next question comes from Andrew Nowinski with Wells Fargo. Please proceed. Good afternoon, everyone.

Speaker Change: Thanks for taking my questions guys.

Speaker Change: Yeah.

Andrew James Nowinski: Our next question comes from Andrew Nowinski with Wells Fargo.

Speaker Change: Our next question comes from Andrew Nowinski with Wells Fargo.

Andrew James Nowinski: Please proceed.

Andrew James Nowinski: Good afternoon, everyone. So I wanted to start with a question.

Andrew James Nowinski: On the sort of cost.

Andrew James Nowinski: <unk> trends Youre seeing we've heard from all of the major Hyperscale is not only have all talked about.

Andrew James Nowinski: Cloud cost optimization coming to an end and I'm just wondering.

Andrew James Nowinski: How correlated your results are too there to that trend.

Amit Walia: Well, I mean, look, I've said that all the time when the optimizations were going on. For us, one of the good things is that we never went crazy belly up, so going belly down has never happened for us because we serve mission-critical workloads. We were never over-penetrated into what I call nice-to-have workloads or selling to the very large startup community or the venture community that went up and down. We continued selling to enterprises where demand was very much tied to operational workloads, and we were very thoughtful about what we were doing.

Speaker Change: Well I mean look I.

Speaker Change: All the time.

Speaker Change: Optimizations are going on.

Speaker Change: One of the good things that we never went crazy belly up so going down is that what happened for us because we serve mission critical workloads.

Speaker Change: Would never over penetrated into what I call. It nice to have workloads are selling to the very large startup community or the venture community that went up and down we continued selling to enterprises, where demand was very much tied to operational workloads and we were very thoughtful about what we were doing.

Amit Walia: And in that case, I would say that you've consistently seen our cloud ARR growth. So it has been very consistent. You've also seen within that what we've talked about, net new versus migration has been very thoughtful, and you've also seen the adoption of a cloud or the usage of a cloud platform. You know, IDMC had, what, 92 trillion transactions a month, growing 69% year-over-year. And you've seen every quarter that number has very consistently grown in that 65% to 70% range. So for us, in some ways, that was kind of never a problem and has not been a problem today, and I just kind of don't see the problem.

Speaker Change: In that case, I would say that you've seen consistently our cloud growth. So it has been very consistent you'll also seen within that what we've talked about net new versus migration has been very thoughtful and you've also seen the adoption of our cloud or the usage of our cloud platform.

Speaker Change: <unk> got 19, prelim transactions, among growing 69% year over year and <unk> seen every quarter that number has very consistently grown in that 65% to 70% range. So for us in some ways that was kind of inevitable problem and has not been a problem today and I just don't see that problem yes.

Michael I. McLaughlin: Yeah, and I'll also just remind you and everyone else, Andrew, that because of the way the IPU consumption pricing model works, which is an upfront committed multi-year purchase of IPU capacity, we're not subject to revenue or ARR volatility based upon the actual consumption of those IPUs, unlike others in our space or adjacencies that are more of a direct drive consumption model that you can see in the quarterly results. Now, being said, our consumption, and our utilization trends for the IPUs are very good, and we feel very good about them, and, you know, we just haven't seen those utilization trends be particularly correlated to what we hear from some of those other companies you're referencing in terms of cost optimization this quarter or cost optimizations over the next quarter.

Speaker Change: So just remind you and everyone else Andrew.

Speaker Change: Because of the way the ICU consumption pricing model works, which is upfront committed multiyear purchase of ICU capacity.

Speaker Change: Not subject to quarter to quarter.

Speaker Change: Revenue, our IRR volatility based upon the actual consumption of those IP is unlike others in our space or Adjacencies that are more of a direct drive consumption model that you can see in the quarterly results.

Speaker Change: That being said our consumption or utilization trends of the IP is a very good and we feel very good about it.

Michael I. McLaughlin: We just haven't seen those utilization trends be particularly correlated to what we hear from some of those other companies youre referencing in terms of cost optimization this quarter or cost help us emissions over the next quarter.

Michael I. McLaughlin: I mean, I would – I have to plug our customer success team. They do a fantastic job of making sure the use cases customers buy for them – right after the sale, they go in and make sure that the –

Michael I. McLaughlin: I mean, I would have to plug our customer success team; they do a fantastic job of making sure the use cases customers buy for right after the sale; they go in and make sure that the adoption and the business allocation are there. So that team has created that almost like clockwork. Okay, thank you.

Speaker Change: I would remiss after plugged us customer success, the Midwest fantastic job of making sure the use cases customer by Florida unite after the sale to go in and make sure that be adoption in the business and the accretion is there so that gamers have created that as almost like clockwork.

Andrew James Nowinski: And then I just wanted to ask a question as it relates to, you know, the M&A news that we heard about intra-quarter. Did you see any disruption from that that prompted you to put out your pre-announcement? I think, Andrew, you saw the quarter we gave. I think Mike does a very good job of reminding everybody we guide to the midpoint, and I think the clean beat across that midpoint from top to bottom line is a great indicator of how we executed in Q1, which is, you know, in some ways, seasonally, a small quarter. We start the year, but we feel very good about where we are and all the metrics in terms of what we shared in the Q2 guide and for the year, which we feel pretty good about.

Speaker Change: Okay. Thank you and then I just wanted to ask.

Speaker Change: Question as it relates to.

Speaker Change: The M&A news that we heard about intra quarter did you see any disruption from that prompted you to put out your your pre announcement.

Speaker Change: I think Andrew you saw the quarter, we gave I think Mike does a very good job of reminding everybody. We guide to the midpoint and I think the clean bead across at midpoint from top to bottom line is a great indicator of how we've executed in Q1, because in some ways seasonally a small quarter. We started the year, but we feel very good about where we are and all of them.

Andrew James Nowinski: <unk> in terms of what we shared in Q2 guide for the year, but we feel pretty good about it.

Speaker Change: Understood. Thank you.

Amit Walia: Our next question today comes from Will Power with Bayard.

Speaker Change: Our next question today comes from will power with Baird.

Will Power: Please proceed.

Will Power: Oh, great. Thank you for taking the question. Maybe to start with you, Amit, I'd love to kind of hear about the early use cases you're seeing with Clear GPT. I mean, I trust we're going to hear a lot more about that in a couple of weeks. I realize it's still early, but Yeah, any early indicators there would be great.

Will Power: Oh, great. Thank you for taking the question.

Will Power: Maybe just to start with you admit I'd love to kind of here in the early use cases, you are seeing with Claire GPT I mean, I Trust, we're going to hear a lot more about that in a couple of weeks and recognize still early but.

Amit Walia: Yes, any any early indicators there would be great.

Amit Walia: No, indeed, Bill. I've been pretty excited about that. Obviously, at Informatica World, you'll see the main stage demo and what we're doing with that. And, as I've shared, we should be live with that product before we get there. We've had some great runs with the preview that we did, 300 plus enterprise customers using it, and I can tell you some great use cases. We saw a large health care provider basically through the chat interface being able to almost very, very quickly be able to allocate mission-critical drugs or their staffing across their different locations.

Michael I. McLaughlin: No. Indeed build I think we're pretty excited about that obviously medical world you will see the main stage demo and what we're doing with that and as I've said, we should be life of that product before we get there. We've had some great run with the preview that we did 300 plus enterprise customers using it and I can tell you some great use cases, we saw.

Amit Walia: A large healthcare provider basically through the chat interface being able to almost.

Amit Walia: Very very quickly be able to allocate mission critical drugs or the staffing across their different locations. So that basically gives them a much higher degree of fab and our patient care. All of you saw in the case of a large manufacturing company to be able to manage the supply chain by being able to understand and look at the data in real time and being able to do.

Amit Walia: So that basically can then give a much higher degree of patient care. Or we saw, in the case of a large manufacturing company, to be able to manage the supply chain by being able to understand and look at the data in real time and being able to do things. Or even a financial service company doing what I call more governance and data discovery for risk management purposes. So we saw a whole lot of those use cases. Again, the point is that it allows data management to be a lot more democratized and people to do things that probably take a lot more time, with a little bit less productivity.

Amit Walia: <unk> or even a financial service company doing what are called more governance and data discovery for risk management purposes. So we saw a whole lot of those use cases again the point being that it allows data management to be a lot more democratized and being able to do things that probably a lot more time with less productivity. So this all of those use cases in the preview.

Will Power: So we saw all of those use cases in the preview. I'm pretty excited about it once it goes GA. I think we expect, obviously, as we think about the adoption happening, it's going to be part of the IPU model as well over the course of the second half of this year. And then, walking to next year, those should definitely be things that we as a company are excited about.

Will Power: I am pretty excited about it once it goes I think we expect obviously as we think about the adoption happening is going to be part of the IPO model as well over the course of the second half of this year and then walking into next year that should definitely be things that we as a company and excited about.

Will Power: Okay, great. Yeah, I look forward to hearing more in a couple of weeks, I guess, and then maybe, Mike, maybe just quickly, you know, NRR, I guess at a customer level, I think 119%, I think, you know, flat sequentially, you know, still a healthy number. Any kind of puts and takes to think about as we kind of move through the year?

Speaker Change: Okay great.

Will Power: Hearing more here in a couple of weeks I guess and then maybe.

Speaker Change: Mike maybe just quickly.

Mike: <unk> I guess at a customer level I think of 119% I think.

Will Power: Flat sequentially.

Will Power: The healthy number any kind of puts and takes to think about it as we kind of move through the year. I mean is that does that kind of the right level to expect through the balance.

Michael I. McLaughlin: I mean, is that kind of the right level to expect through the balance? Yeah, it is. Well, there it'll be.

Michael I. McLaughlin: Yeah, it is. Well, it'll bounce around. If it's down a couple of points, don't panic. If it's up a couple of points, don't, you know, overly celebrate. This feels like about the center of gravity that we should expect for the next several quarters. Okay, thank you. Our next question today comes from Pinjalim.

Mike: Yes, it is well it'll bounce around.

Pinjalim: If it's down a couple of points don't panic, if it's up a couple of points.

Pinjalim: Overly celebrate.

Pinjalim: This feels like about the center of gravity that we should expect for the next several quarters.

Pinjalim: Okay. Thank you.

Pinjalim Bora: Our next question today comes from Pinjalim Bora with J.P. Morgan. Please proceed.

Pinjalim: Our next question today comes from pendulum Boral with J P. Morgan.

Pinjalim Bora: Please proceed.

Pinjalim Bora: Hey, This is Jane Patel on for <unk>. Thanks for taking the question.

Pinjalim Bora: Is it possible to understand the traction around your different product pillars, even if qualitatively across core data integrations MTN data governments are you seeing a little bit of a wind behind one versus the other thanks.

Amit Walia: Look, we don't break different product lines because the reality is, I've said that so many times, customers, when they do different projects, it's always a combination of multiple products on the platform. And that is the beauty of our story, that if you're doing an analytics project, in the case of GenAI, you're going to use integration, whether it's app integration or data integration, and you're going to use data quality as a bare minimum to bring data together and clean it, and make sure it's of high quality.

Pinjalim Bora: Look we don't break different product lines, because the reality is I've said that so many times customers when they do different projects. It's always a combination of multiple products on the platform that is the beauty of our story that if youre doing an analytics project in the case of journey II youre going to use integration, whether it's app integration or data integration, so youre going to use data quality.

Amit Walia: Minimum to bring data together and it can be that and make sure. It's of high quality and then of course as you are basically making sure that you are democratizing that you wanted to put somebody in a covenants so on and so forth, whether you do MDM or Google governance every project is deep.

Amit Walia: And then, of course, as you are basically making sure that you are democratizing that, you want to put in some governance, so on and so forth, whether you do MDM or you do governance, every project is a multi-product project. Our goal has always been that, beauty for us has been that we have the best products in the industry. So, whichever project you want to begin with, whichever product you want to go with, it's the best in the industry.

Amit Walia: Deep product project.

Amit Walia: Our goal has always been the beauty for US has been that we have the best product in the industry. So that whichever project you want to begin with with whichever product you want to go over it it's the best in the industry and the other beauty is that all of them end up being on one platform, which given it's consumption based pricing. The beauty that you can consume anything you can dial up dial down depending upon where you are and thats the flexibility.

Amit Walia: And the other beauty is that all of them end up being on one platform, which, given its consumption-based pricing, the beauty is that you can consume anything. You can dial up or dial down, depending upon where you are, and that's the flexibility and the scale that customers love.

Amit Walia: And the scale that customers love and hence we see so we also look at use cases governance has definitely been done very well all kinds of mastering use cases customer 360, or 60 are doing very well and of course in the world of analytics, which is Jenny I, our traditional analytics. They are obviously doing very well so all of them that's how.

Amit Walia: And hence, we see – so, we always look at use cases. Governance has definitely been done very well. All kinds of mastering use cases, customer 360, or supplier 360, are doing very well. And, of course, in the world of analytics, which is GenAI or traditional analytics, they are obviously doing very well. So, all of them, that's how we see the world versus through the lens of products.

Amit Walia: We see the world versus with the lens of products.

Speaker Change: Great. Thanks for thanks for taking the question.

Howard Ma: Our next question today comes from Howard Ma with Guggenheim Securities.

Amit Walia: Our next question today comes from Howard <unk> with Guggenheim Securities.

Howard Ma: Please proceed.

Amit Walia: Thanks. Amit, I really like the phrase that you said: everyone is ready for Gen-AI except for your data. You could even consider making that a company tagline. But I guess if we were to really pressure test that with your enterprise customer base, what portion is experimenting with Gen-AI use cases that require robust data quality, cataloging, governance capabilities, et cetera? Is it 100% at this point, or 50%? And what portion of your customer base is actively exploring Informatica for these Gen-AI driven capabilities?

Howard Ma: Thanks.

Howard Ma: Amit I really like the phrase that you said.

Amit Walia: Everyone is ready for Jennie O except for your data you could even consider making that a company tagline, but I guess, if we were to really pressure test that with your enterprise customer base. What portion is experimenting with Jennie are use cases that require robust data quality cataloging governance capabilities et cetera, as it is at a 100%.

Amit Walia: At this point were 50% and what portion of your customer base is actively exploring informatica for these gen AI driven capabilities.

Amit Walia: Thanks for the question, Howard. Howard, first of all, that is the company tagline right now, so the brand campaign that's going on. So I was a little bit... a bit self-serving in using that line.

Amit Walia: Well thanks for the question Howard our talk about that as the company tagline right now so the brand campaign, that's going on so I was a little bit.

Amit Walia: So, of course, when you come to Informatica, well, you'll see that tagline everywhere. And that, by the way, is something we go to customers with. And by the way, tag and cheek, it's actually very true.

Amit Walia: But self serving and using that line. So of course, the new content medical what you can see that tagline everywhere and that's by the way is something to go to customers with in bid by the way again tickets actually very true the reality of <unk> is that it's one of those times.

Amit Walia: The reality of Genii is that it's one of those times in history where everybody from the board level down is super excited about Genii. But the question is, the reality at the ground level is that data is struggling. So, we feel blessed that we have an opportunity to help our customers with that. Coming to your second question, look, that's what's happening right now.

Amit Walia: The history, where everybody at the board level down is Super excited about Jenny I haven't.

Amit Walia: The question is that the reality at the ground level at the data strongly.

Amit Walia: So we feel blessed that we have an opportunity to help our customers in that quarter.

Amit Walia: Second question.

Amit Walia: As I'm talking to customers, you know, whether it is coming bottoms up or coming tops down, the reality is that data is a mess. And people realize that the value in AI will come from how good a job you do with giving complete data, good quality, all the stuff that you just talked about. And that is very difficult to do.

Amit Walia: What is how can we make them as I'm talking to customers.

Amit Walia: Whether it is coming bottoms up becoming thoughts down the reality is that.

Amit Walia: Data is a pass and people realize the value in the hybrid come from how good a job you do with giving complete data good quality all of the stuff that you just talked about and that is very difficult to do and customers are realizing that that's the conversations our sales folks are having.

Amit Walia: And customers are realizing that, and that's the conversation our sales folks are having. So more and more of our conversations are like, hey, let's just talk about that. And when the aha moment comes from our customers is when they realize that, oh, first of all, we can help them with that. And the other aha moment for them, good Lord.

Amit Walia: More and more of our conversations are like Hey, let's just talk about the heightened you understand how to go about it.

Amit Walia: And then in the Ah ha.

Amit Walia: Hub moment comes from our customers is in their lives at all first of all if we can help them with that and the other album to them. Good Lord So if a hyatt <unk> right now here with Eni, Portugal. These ideals I can.

Amit Walia: So if I have IDMC right now here with me and I purchase these IPOs, can I use them right now for my Gen AI project? The answer is yes. You don't have to do anything.

Amit Walia: Use them right now for my for my Journey I project adapted yes, you don't have to do anything go added why because GPT can help you do things, even better but all the stuff that you need to be a journey. Our project is with year to date got an existing customer and with the new customer of course the value proposition is as we explained to them. So we are seeing that those are the conversations.

Amit Walia: Go for it. While GPD can help you do things even better, all the stuff that you need to do a Gen AI project is with you today if you're an existing customer. And with a new customer, of course, the value proposition is as we explain it to them. So we are seeing that. Those are the conversations. Informatica World will be all around these. You'll see our customers talking and learning, and the demos and all that stuff. But that's what we are hearing.

Amit Walia: And for medical will be all around this you can see our customers, we are talking and learning in the demos and all that stuff, but that's the that's what we are hearing and seeing right now.

Howard Ma: Okay, thanks, Amit. That makes a lot of sense. I have a follow-up question for Mike, too.

Speaker Change: Okay. Thanks that makes a lot of sense.

Speaker Change: I have a follow up for Mike too.

Michael I. McLaughlin: I actually want to circle back to Brad's question about quantifying cloud modernization, so in Q1, I believe, in your prepared remarks, you said 30 cloud modernizations up 100% year-over-year. How should we think about when they'll show up in cloud ARR? And I guess more generally, how should we think about the timing of modernization contributions to cloud ARR? Is it more second-half weighted, or should we think about more the benefits showing up next year, just because I believe there's a lag in cloud ARR recognition? Thanks.

Speaker Change: I actually want to circle back to Brad's question about quantifying the cloud modernization.

Michael I. McLaughlin: In Q1 I believe in your prepared remarks, you said 30 crowd monetization is up 100% year over year, how should we think about when they will show up in the powder are I guess more generally.

Michael I. McLaughlin: Should we think about the timing of the monetization contribution to <unk> is it is it.

Michael I. McLaughlin: More second half weighted or should we think about more so the benefits showing up next year just because they are I believe there is a lag in recognition.

Michael I. McLaughlin: Yeah, thanks Howard. And actually, it was more than 30. That was an approximate number. Just that quick clarification.

Speaker Change: Yes, Thanks, Howard and actually it was more than 30 that was an approximate number.

Speaker Change: Just quick clarification.

Speaker Change: Vacation so.

Michael I. McLaughlin: When we sign a cloud migration deal, there is a benefit to ARR at signing in that quarter. However, because of the credits that we provide to the customer against their existing maintenance stream while the migration is happening, that ARR that you see in the initial stages of the migration is not the full run rate ARR, the full amount that's actually being billed to the customer. And this is because of some accounting rules that, for better or worse, we, you know, we have to follow.

Speaker Change: When we sign a cloud migration deal.

Michael I. McLaughlin: There is a benefit too.

Michael I. McLaughlin: Our IRR at signing in that quarter. However, because of the credits that we provide to the customer against their existing maintenance stream, while the migration that's happening.

Michael I. McLaughlin: <unk> <unk> that you see in the initial stages of the migration is not the full run rate.

Michael I. McLaughlin: For the full amount, that's actually being built to the customer and is that because of some accounting rules that.

Michael I. McLaughlin: For better or worse.

Michael I. McLaughlin: We have to we have to follow.

Michael I. McLaughlin: So that being said, the lag in terms of ARR contribution is not great. So when we sign those and as the migrations accelerate... That goes into Cloud OR, and that's part of our forecast, and that is part of the build that underlies our 35% growth this year. One thing that is different with PowerCenter Cloud Edition is that traditional power center migration because the length of time it takes to migrate from power center on prem to the cloud using power center cloud edition is six months or less versus two years or less in the old version; maintenance is decommissioned more quickly.

Michael I. McLaughlin: So that being said.

Michael I. McLaughlin: Lag in terms of <unk> contribution is not great. So when we sign those and as the migration to accelerate.

Michael I. McLaughlin: That goes into collateral and Thats part of our forecast and that is part of the build that underlies our 35% growth this year.

Michael I. McLaughlin: One thing that is different with power center cloud edition that.

Michael I. McLaughlin: Traditional power center migration is because the length of time it takes to migrate from power center on Prem to the cloud using power Center cloud edition is <unk>.

Michael I. McLaughlin: Six months or less versus two years or less and the old version. The maintenance is decommissioned more quickly and so that churn out of maintenance shows up sooner than it would under the old style migration.

Michael I. McLaughlin: And so the churn out of maintenance shows up sooner than it would under the old style of migration. All that modeling gets, you know, very complicated, very fast, but I assure you that all of that is embedded in the guidance that we've provided for 24HR.

Michael I. McLaughlin: All of that modeling gets very complicated very fast.

Michael I. McLaughlin: But I assure you that all of that is embedded in the guidance that we've provided for 2004.

Michael I. McLaughlin: Very helpful, Mike. Thanks.

Speaker Change: Okay very helpful. Mike Thanks.

Patrick Edwin Ronald Colville: Our next question comes from Patrick Colville with Deutsche Bank. Please proceed.

Michael I. McLaughlin: Our next question comes from Patrick Colville with Deutsche Bank.

Patrick Edwin Ronald Colville: These proceeds.

Joe Vandrick: Hi, this is Joe Vandrick on behalf of Patrick Colville. I had one on PowerCenter cloud migration of the five and a half percent of maintenance and self-managed ARR. It's already migrated. Where do you see that percentage going maybe over the next year or two or over the medium term?

Speaker Change: This is Joe <unk> on for Patrick Colville.

Joe Vandrick: I had one on power center cloud migration of the five 5% of maintenance and self managed IRR.

Joe Vandrick: It's already migrated.

Joe Vandrick: Where do you see that percentage growing maybe over the next year or two or over the medium term.

Michael I. McLaughlin: Yeah, we're not providing a specific number on that. But I would point you instead to the medium term guidance regarding the contribution of migration related errors to cloud versus net new cloud sales. Now, we did share in the investor day that at the pace we expect, by the time we get to the end of our medium-term period, which is through the end of 2026, or the sort of directional medium-term model type of guidance that we gave in December, we will still have migrated less than half of that full base of Power Center Maintenance, on-prem maintenance, in general, and self-management.

Speaker Change: Yes, we're not providing a specific number on that but I would point you instead to the medium term guidance regarding the contribution of migration related.

Michael I. McLaughlin: <unk> to cloud versus net new.

Michael I. McLaughlin: Cloud.

Michael I. McLaughlin: Yeah.

Michael I. McLaughlin: Now we did share at the Investor day that.

Michael I. McLaughlin: At the pace, we expect by the time, we get towards the end of our medium term period, which is through the end of 2026.

Michael I. McLaughlin: <unk> are sort of.

Michael I. McLaughlin: Directional medium term model type of guidance that we gave in December.

Michael I. McLaughlin: We still will have migrated less than half considerably less than half of that full.

Michael I. McLaughlin: <unk>.

Michael I. McLaughlin: Power Center maintenance on Prem maintenance and general and.

Michael I. McLaughlin: That self managed.

Joe Vandrick: Got it, thanks. And then maybe one more for me. But I mean, there's been a lot of talk about generative AI on the call so far. I guess the takeaway is that, you know, the conversations are happening right now, but it's still early days and maybe to expect more of a meaningful contribution in 2025.

Speaker Change: Got it thanks, and then maybe one more for me but.

Joe Vandrick: I mean, a lot of talk about generative AI on the call so far.

Joe Vandrick: I guess is the takeaway that.

Joe Vandrick: The conversations are happening right now, but it's still it's still early days and maybe do you expect more of a meaningful contribution in 2025.

Amit Walia: Correct. I think it's all happening, and I think as we think about the latter half of this year, walking in the community, you should expect that.

Joe Vandrick: Correct.

Joe Vandrick: I think it's all happening and I think as we think about the latter half of this year walking into <unk>, you should expect that and by the way if you take a step back thats. The volume of any natural course for any technology transition when the cloud build out is happening the first happened it even funnier servers network storage all of those things where the first hydro that can be just what is happening right now.

Amit Walia: And by the way, if you take a step like that, that's following a very natural course for any technology transition. When the cloud build-out was happening, the first things happened at the intralayer: servers, networks, storage, all of those things were first. The highways had to be built, which is what is happening right now in the GNI world. And then, obviously, from the data layer and the apps layer, because the data layer obviously takes more work, more thinking, you just can't move that over there without the risk of, you know, governance, compliance, those kinds of things. So it's following its very natural course of technological evolution that, in some ways, the cloud also follows.

Amit Walia: In the <unk> and then obviously the data on that in the absolute because obviously it takes more work more thinking you just can't move that toward the end without the risk off.

Amit Walia: Covenants compliant those kind of things. So it's following its very natural course of technology evolution in that in some of these chemicals.

Joe Vandrick: All right, thanks. Thanks for taking my question.

Speaker Change: Alright, thanks, Thanks for taking my questions.

Joe Vandrick: Okay.

Tyler Maverick Radke: Our final question today comes from Tyler Radke with Citi.

Joe Vandrick: Our final question today comes from Tyler Radke with Citi.

Tyler Maverick Radke: Please proceed.

Tyler Maverick Radke: Yeah, thanks for taking my question. Maybe the first question for you, Mike, just as we look at the outlook for cloud AR for the full year, it does seem a bit more second half weighted relative to this point a year ago. I know migrations and some of these power center deals may be more second half weighted, just given the kind of historical maintenance seasonality. But could you just talk about why the seasonality might be a little more back and loaded this year and just kind of what gives you the confidence in that visibility?

Tyler Maverick Radke: Yes, thanks for taking my question.

Tyler Maverick Radke: Question for you Mike just when we look at the outlook for cloud. They are for the full year. It does seem a bit more second half weighted relative to this point a year ago, I know migrations and some of these power center deals.

Tyler Maverick Radke: May be more second half weighted just given the.

Tyler Maverick Radke: The kind of the historical maintenance seasonality, but could you just talk about why the seasonality might be a little more backend loaded this year.

Tyler Maverick Radke: Just kind of what gives you the confidence in that visibility.

Michael I. McLaughlin: Hey, Tyler, look, we expected this question, so we did our homework. If you look at where we were this time last year on this exact call one year ago, the guidance that we offered a year ago on that call in terms of first half versus second half linearity is virtually exactly what it is in the guidance that we're providing on this call this year. Now, I don't know what math you're looking at, but I'm happy to subcommittee.

Speaker Change: Hey, Tyler.

Michael I. McLaughlin: Look we expected. This question. So we did our homework. If you look at where we were this time last year on this exact call one year ago.

Michael I. McLaughlin: The guidance that we offered a year ago in that call in terms of first half versus second half linearity is virtually exactly what it is in the guidance that we're providing in this call this year.

Michael I. McLaughlin: Now.

Michael I. McLaughlin: I don't know what math, you're looking at but I'm happy to subcommittee, it's within two percentage points in terms of first half versus second half versus where we sat is exactly at this time last year. So there's really nothing different than theirs.

Michael I. McLaughlin: It's within two percentage points in terms of first half versus second half versus where we sat at exactly this time last year. So there's really nothing different than there was last year. It's the same pattern we saw last year.

Michael I. McLaughlin: Nothing to see here, it's the same pattern, we saw last year.

Tyler Maverick Radke: Got it. Helpful clarification. And then I'm just curious, as you think about the power center migration. To what extent are you looking at kind of, you know, moving up, and the support and the end of life dates on the, you know, traditional power center maintenance is essentially a lever to accelerate this? Is that something you're kind of contemplating here over the next few years? Patrick, first of all, look who you are.

Speaker Change: Got it helpful clarification and then.

Tyler Maverick Radke: Just curious as Youre thinking about the.

Tyler Maverick Radke: Power Center migrations to what extent are you.

Patrick: Looking at kind of.

Patrick: Moving up and the support end of life dates on the traditional.

Tyler Maverick Radke: Power Center maintenance.

Tyler Maverick Radke: Essentially a lever to accelerate this is that something you're kind of contemplating here over the next few years.

Amit Walia: Patrick, first of all, look, we serve mission-critical workloads for us. And I've said that many times that Empower Center is basically an integral part of our customers. literally, sometimes, some of them are closing their books on us.

null: Patrick first of all look.

Amit Walia: We serve mission critical workloads that our customers and I've said that many times that can power centers basically are integral part of our customers literally sometimes some of them are closing their books on us and as these part about migrations, we've been very thoughtful about what it causes a company is how we think about customers and how we want to make this happen fast.

Amit Walia: And as we've thought about migration, we've been very thoughtful about what our ethos as a company is, how we think about customers, and how we want to make this happen fast without disrupting our customers. And we'll never deviate from that path. So in that case, we're never a company that's basically going to go have a hammer and use that to solve problems, put it on a nail.

Amit Walia: Without disrupting our customers.

Amit Walia: And we will never deviate from that path. So in that case, we are now.

Amit Walia: We're a company that's classic economic will have a hammer to use that to solve.

Amit Walia: We're going to be very, very thoughtful. So that's how we think about it. And we talk to our customers very closely as we think about any such material decisions. So there will be no change to what we're doing. In some ways, I feel like with Power Center Cloud Edition, we're seeing a great uptick, as we just saw in Q1. And I also believe, philosophically, by the way, as we think about the medium to long term, that Genii, the conversation I'm having with customers, is something that I should say, geez, if I don't modernize and get to the cloud, the power of.

Amit Walia: Put it on the nail we're going to be very very thoughtful. So that is how we think about it and we talk to our customers very closely as we think about any such material decisions. So no change to what we're doing in some ways I feel like with Boston The cloud edition.

Amit Walia: We are seeing a great uptick as we just saw this Q1 and I also believe philosophically by the way as we think about the medium to long term that journey II is the conversations I'm, having with customers. As you would think that I have to say geez, if I don't modernize and get to the cloud the power of AI would not be there for me if I am not in the cloud. So that is also opening up a lot of ICT.

Amit Walia: AI would not be there for me if I'm not in the cloud. So that's also opening up a lot of eyes for people to say I should basically accelerate some of the things that maybe I was thinking. So we look at all of this goodness in terms of tailwinds for us versus using any kind of a hammer or a stick to drive.

Amit Walia: It should basically accelerated some of the things that maybe I was thinking so we look at all of those goodness in terms of tailwind for us versus using any kind of upped hammered on a stick to drive things.

Amit Walia: Yes.

Speaker Change: Thank you.

Speaker Change: Thank you all for your questions.

Tyler Maverick Radke: Thank you all for your questions. This will conclude the Q&A session, so I would now like to turn

Amit Walia: Yeah.

Speaker Change: This will conclude the Q&A session. So I would now like to turn the conference call back over to management for any closing remarks.

Amit Walia: Thank you. Well, look, I appreciate all the questions and everybody taking the time.

Speaker Change: Thank you well look I appreciate all the questions and everybody taking the time look I'll reiterate one thing that we had a very unique and a specialty company in the market beyond the scale at which we operate and the innovation that we're delivering the best products and the most at scale platform with clear the AI driving current.

Amit Walia: Look, I'll reiterate one thing: we're a very unique and a special company. In the market we are in, the scale at which we operate, and the innovation that we are delivering with the best products and at the most scale platform with CLAIRE, the AI driving current AI and Gen initiatives and with the Gen AI coming from us sets us up in a very, very unique position. We are always going to be very consistent in our execution, as you saw today, both from the top line to the bottom line.

Amit Walia: <unk> initiatives and with the journey on coming from US sets us up in a very very unique position.

Amit Walia: We are always going to be very consistent do not execution. As you saw today both from top line top line to bottom line and Thats, what Youll hear from US in our guide for Q2 as well as our guidance for this year I feel great about where we are David that innovation in our customer efforts excited about walking into medical board and look forward to seeing almost all of you that and you will get to see some.

Amit Walia: And that's what you hear from us in our guide for Q2, as well as our guidance for this year. I feel great about where we are today with our innovation and our customer efforts. I am excited about walking into the Informatica world. I look forward to seeing almost all of you there, and you will get to see some amazing innovations, some cool demos, and, of course, hear from our customers directly as to why they choose Informatica and why they help us drive our NLR, which is where it is today. So I'm excited about where we are.

Amit Walia: Amazing innovations of good demos and of course hearing from our customers directly as to why they chose Informatica and why they help us drive out analog which has been I guess today and so I'm excited about where we are and look forward to seeing all of you and Informatica Award and if not there then at the next earnings call.

Speaker Change: Thank you.

Operator: That will conclude today's conference call. Thank you all for your participation. You may now disconnect your lines.

Speaker Change: That will conclude today's conference call.

Speaker Change: Thank you all for your participation you may now disconnect your line.