Informatica Inc.

Good afternoon, everyone, and welcome to the Informatica's fourth quarter and full year 2021 earnings conference call. My name is Tania, and I'll be your event specialist today. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. Thank you. I would now like to introduce our host, Victoria Hyde-Dunn, Vice President, Investor Relations.

Thank you. Good afternoon. Good afternoon. And thank you for joining us to review Informatica's fourth quarter and full year 2021 earnings results. With me on the call today are Amit Walia, Chief Executive Officer, and Eric Brown, Chief Financial Officer. Before we begin, we have a couple of reminders. Our earnings press release and slide presentation are available on our investor relations website at investors.informatica.com. During this call, We will be making comments of a forward looking nature. Actual results may vary 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 10Q and upcoming 10K filing for the full year 2021. 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'll 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 today's press release and in our slide presentation available on Informatica's Investor Relations website. With that, it's my pleasure to turn the call over to Amit.

Thank you, Victoria. Good afternoon, everyone, and thank you for joining us as we review our fourth quarter and full year 2021 results and strategic priorities and guidance for 2022. We concluded our first year end as a public company, and I'm very pleased with the results that the team delivered. We met our commitments and established an all-time quarterly record for total revenue, supported by strong operational performance and profitability. Our success is driven by our strategy of cloud-first, cloud-native, with the secular tailwinds of digital transformation. Now we turn to business highlights from the fourth quarter. Total revenues grew 8% year-over-year to a record $407 million above the high end of guidance, driven by subscription revenue of $230 million, which grew 23% year-over-year. Total ARR grew 17% year-over-year to over $1.3 billion, with strong contributions from subscription ARR of $802 million, which grew 32% year-over-year, exceeding the high end of our guidance. Cloud ARR grew 40% year-over-year to $317 million, and now represents 23% of our total ARR, up three percentage points year-over-year on a growing base. Q4. was also an impressive quarter of sales execution with our ability to sell large multi-year deals to new and existing customers. Remaining performance obligations on RPO grew 26% year-over-year to $1.2 billion. Our growth drivers were customer demand for Informatica's intelligent data management cloud platform, strong sales execution, and robust engagement with our strategic partners. We focused on and generated strong new customer additions and continued expansion and upsell activity from our existing customers. Our cloud platform differentiation continues to result in strong enterprise performance. I'll give you some examples here. We added 26 subscription enterprise customers that spent $1 million or more in subscription ARR, ending the fourth quarter with a record 153 customers, an increase of 47% year-over-year and 20% sequential. At the end of Q4, we have 1,600 customers that spend greater than $100,000 in subscription ARR, and 22% increase year-over-year. 55% of subscription customers are net new, and our average subscription annual recurring revenue per customer in the fourth quarter group over $221,000, a 21% increase year-over-year on an active base of more than 3,600 subscription customers. By leveraging our sizable billion-dollar-plus investment in R&D over the last five years, now 85% of our subscription ARR comes from the net new products on IDMC. RAI Engine Clare is embedded in the IDMC platform to drive intelligence and automation at scale, enabling us to process 27.8 trillion cloud transactions per month as of December 2021. In summary, we are seeing great expansion across the board with our portfolio, both in large enterprises and an expanding commercial customer base. Now turning to go-to-market, let me highlight some customer wins to give you some color on our execution. Starting with North America, T-Mobile, which everybody knows is the second largest wireless carrier in the US and a longtime Informatica customer. We are excited to announce that we have signed a new multi-year agreement with them to use Informatica's MDM Customer 360 SaaS platform to support their initiatives around T-Mobile for business. Looking to the Asia-Pacific region, a new public sector deal is with Petronas, a Malaysian oil and gas company wholly owned by the government of Malaysia and ranked among the Fortune Global 500s. Petronas embarked upon a digital transformation initiative that had identified multiple new digital projects that required access to a single, complete, trusted view of technical master data within their upstream business. Because of this complexity, Petronas needed a master data management product designed for all architecture styles, including centralized, consolidated, and coexistence. Petronas chose Informatica as a long-term partner, beginning with an initial MDM implementation and growing globally across all Petronas Group companies. Another notable new deal in our EMEA region is with the Alshaya Group, a leading retail franchise operator for international brands, including H&M, B.S. Chang, Starbucks, The Body Shop, Cheesecake Factory, Victoria's Secret, and West Ham, to name a few. This Kuwait-based company operates more than 4,000 stores across the Middle East and North Africa, Russia, Turkey, Central and Eastern Europe, as well as scale online and digital businesses. Recognizing the depth of our intelligent data management cloud platform, Alshaya chose Informatica's end-to-end business 360 platform. Our partnership with Microsoft and our Azure marketplace presence added additional value to Alshaya in its long-term digital goals. Another great example of land and expand customer story is Rolls-Royce. I think everybody knows this 150-year-old company. They are four main operating companies, civil aerospace, defense, power systems, and electrical. Rolls-Royce is a long-time Informatica Power Center customer, and they also have a strategic partnership with Microsoft as a preferred cloud vendor. Rolls-Royce is an aggressive digital transformation where data is a key component to that digital transformation. They saw value in our IDNC cloud platform, selecting Informatic as a strategic partner with their initial investment in Axon, data quality, and the enterprise data catalog to solve their data challenges. Q4 was also highlighted by increased collaboration with our strategic partners. We had strong engagement with our ecosystem and global system integrated partners winning new deals, a reflection of our Switzerland of data management position in the market that customers really value. In the fourth quarter, the number of ecosystem co-sell wins grew over two and a half times year over year, and the marketplace transaction volume grew four times year over year, indicating excellent traction with key ecosystem partners. On the product innovation side, we extended our partnership reach where we were the launch partner for the Snowflake Governance Accelerated Program and earned Snowflake's Data Governance Ready badge, reflecting our ability to deliver data democratization, data protection, and data governance for the Snowflake Data Club. At AWS reInvent Conference, we announced new solutions for AWS in data governance and data democratization for Databricks's Delta Lake. We announced Cloud modernization programs with AWS, Microsoft, and GCP. We also announced an expansion of our strategic partnership with Google Cloud at Google Cloud Next. A great example of a strategic partner coordinated with the Bank of Montreal, the fourth largest bank in Canada and eighth in North America by assets, serving 12 million customers. BMO had a goal for all of their decisions to be data-driven and realized that they had to elevate their data management practices and use of data and analytics. Limited by existing technologies, BMO recognizes the need for a comprehensive end-to-end data management solution, and they are leveraging Informatica solutions including Axon Data Governance, Enterprise Data Clock, Data Catalog, and Informatica Data Quality. In addition, BMO has partnered with Deloitte during the evaluation and continues to collaborate wholesale on the delivery. The strategic partnership of Informatica and Deloitte will allow BMO to be a digitally powered bank that draws on actionable insights. Now let me turn to product innovation, where we continue to democratize data and enable data-driven decision-making for our customers through real-time analytics, data governance, data sharing, and data intelligence. Beginning with the launch of an industry-first informatics cloud data marketplace that provides self-service data sharing with a seamless data shopping experience for consumers of all skills across a hybrid, multi-platform enterprise. Powered by Clare, our AI engine, we enable customers to easily find and share real-time data and AI analytical models more broadly and effectively, and we automate memory tasks. Second, we added more Clare AI-powered automation, including self-integrating systems, automated app-to-app data synchronization, automated change data capture, automated MLOps and DataOps capabilities, automated inference for data quality rules, automated schema matching, and automated curation of data assets for improving customer productivity at scale. Third, we are helping data engineers and application developers accelerate development and increase the performance of data pipes for data warehouses, data lakes, and application modernization use cases. We extended our API management support for third-party APIs to enable customers to better govern, manage, and secure all of their enterprise data and business APIs. Next, as we noted earlier, we continue to see strong interest from our on-prem customers wanting to modernize to the cloud and leverage our cloud-native IDNC platform. We improved automation tools and expanded support for additional systems, including mainframe, enhancing feature support for Azure and AWS Redshift, real-time support, and handling of advanced transformation, including data quality transformations and configurations. Today, 2% of our installed bases migrated to the cloud at a 1.9x conversion rate from maintenance ARR to cloud ARR. And more recently, we achieved FedRAMP certification, meeting the most stringent global security standards and Fed regulations, giving our government customers peace of mind, and best-in-class cloud data management platform to help them modernize, drive efficiency, and deliver digital-first experiences for their employees and the citizens across the country. Lastly, Informatica's differentiated cloud technology platform is consistently recognized by industry analysts. Beginning with Gartner, we are proud once again to be named a leader in the Gartner Magic Quadrant for master data management solutions. This is the sixth time in a row and positions Informatica as one of the longest running leaders in the MDM Magic Quadrant. We recently received a strong rating in Gartner's 2021 vendor rating report in three categories, including strategy, products and technology. We are fortunate to be one of the 32 companies that Gartner covers in this vendor rating across the globe. We were also awarded the 2021 New Product of the Year by the Business Intelligence Group for Informatica's IDMC platform. And CRN recognized Informatica as a top 100 cloud company in 2022. We have strong momentum coming out of 2021. And we could not be more excited about the opportunities in front of us this year. Our strategic priorities and key areas of investment are threefold. It begins with product innovation to enhance capabilities and drive more use cases for our cloud IDNC platform. Second, continue to scale and expand our global enterprise sales motion. And third, strategic partnership expansion. Let me give you a brief explanation of all of them. First, around product innovation. The breadth of our IDNC platform is unparalleled and no other product in the market today provides a suite of seven best-in-class, best-in-breed solutions powered by Clare, our AI engine, and over 50,000-plus metadata-aware connectors. We look forward to sharing a lot more on product innovation at Informatica World in May, which is our user conference. Second, we continue to expand our global sales motion. Our core sales motion is twofold, landing new customers into the IDNC platform and expanding installed customer base through selling new cloud workloads across the seven best of the products I talked about. With maintenance renewal rates of 95% and subscription renewal rate of 92% on a growing customer base, we have ample opportunity for land and expand with new use cases. As we scale our go-to-market internally with strategic partners, we are amplifying the focus on industry-driven go-to-market sales motions. We will create new routes to market through a combination of sales team organized by verticals in top tier geographies and increased emphasis on industry-aligned use case-based selling across the board. Additionally, we'll be investing more and more in high-velocity selling motion for departmental buyers. And our new consumption-based pricing model continues to provide more flexibility and allows us to attract new customers and drive increased adoption of the IDMC platform within existing customers. Third, turning to our strategic partners. This past year, we deepened our strategic relationships with our hyperscalers and cloud ecosystem partners including AWS, Microsoft Azure, GCP, Snowflake, and Databricks. And this year, we will continue to expand our co-seller marketplace opportunities. With our GSI partners, we are doubling down even more on current engagements and forging new partnerships. Since 2020, when we launched a customer and partner certification program, today we have certified more than 17,000 individuals across GSIs and channel partners. We are introducing a new selling motion to accelerate the migration of on-prem workloads to cloud through our GSI partners. And some of our largest strategic partners have built migration centers of excellence with access to our migration factory tools to help customers migrate their on-prem workloads to the cloud seamlessly with less risk. We continue to deliver on our commitments. I'm proud of the execution from 5,500 plus informaticans across the globe to help us achieve a very strong 2021. And we recently welcomed Jim Kruger as a Chief Marketing Officer. Jim has more than 25 years of experience driving high-velocity sales motion within enterprise cloud software companies, including demand gen, brand, product, and solution market. We believe the resiliency of our recurring revenue model and strong cash flows will help us to achieve double-digit revenue growth this year. The operating health of the business is solid. And we are on track to deliver $1 billion in subscription ARR in 2022. Quite an impressive journey for Informatica, which when I think back in 2015, we were less than $100 million in subscription ARR. With that, let me hand the call over now to Eric. Eric.