Informatica Inc.

Good afternoon, everyone, and welcome to Informatica's Fiscal Q2 2022 Earnings Conference Call. My name is Tia, and I will be your event specialist today. After the speaker's prepared remarks, there will be a question and answer session. Thank you. I would now like to introduce our host, Victoria Hyde-Dunn, Vice President, Investor Relations. You may proceed.

Thank you. Good afternoon. And thank you for joining us to review Informatica's second quarter 2020 earnings results. Joining me on today's call 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. Our prepared remarks will be posted on the IR website after the conference call concludes. During the call, we will be making comments of a forward-looking nature. Actual results may differ 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 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 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. It is my pleasure to turn the call over to Amit.

Well, thank you, Victoria, and good afternoon, everyone, and thank you for joining us today. Well, let me begin by saying that we are very pleased to deliver Q2 results that exceeded the high end of our guidance. Total revenue growth was 9% year over year, with subscription annual recurring revenue growth being 31% year over year, and cloud ARR growth being 42% year over year. We strengthened our cash position and beat the high end of guidance for non-GAAP operating income. Our IDMC platform is the growth engine for new and existing enterprise customers running mission-critical workloads, and we continue to observe the expected mischief from self-managed to cloud. And importantly, we are on track to deliver $1 billion in subscription ARR by the end of this year, a milestone few software companies can achieve. We are also reiterating our full year 2022 guidance for all ARR metrics and non-GAAP operating income. We are, however, slightly lowering total revenue guidance to reflect foreign exchange headwinds. Now, let me share business insights from the second quarter, then observations for the second half of the year before I hand over the call to Eric to recap Q2 financial results and provide full year and Q3 guidance. Now, I have previously talked about how we have prioritized our R&D investments to accelerate cloud-first workloads through product innovation and strategic partnerships. In May this year, we hosted our annual customer conference called Informatica World. Our theme was data is your platform. Thousands of customers attended in person and virtually, including strong engagement with executive levels and a broad range of user personas from around the globe. We unveiled many industry-leading new data management capabilities to help customers and strategic partners across all levels, functions, and IT realize greater business value out of their data. To provide further detail and context, I'll frame my comments today on three strategic priorities and our investment focus. I'll begin with product innovation, then I'll go to strategic partnership expansion, and finally, to go to market. So let me begin with product innovation. We have been accelerating our pace of innovation to meet our customer needs to drive digital transformation and build that intelligent data enterprise across four distinct journeys. Let me begin with the first journey, analytics, where we are democratizing and simplifying data engineering workload execution. We launched a new product called Data Loader to simplify data management for departmental users. Our Data Loader is a no-cost, zero code, zero DevOps, and zero infrastructure-acquired SaaS offering that will help departmental users across an organization to move from data to insights in minutes. Data Loader's simple three-click experience is now available for Google BigQuery, Snowflake, and Databricks. We also announced a private preview of InfaCore, a simple plugin for any development and data science framework, which simplifies composing data pipes by turning thousands of lines of code into a single function, allowing users to consume, transform, and prepare data from any source within their integrated development environment. Now turning to our second customer journey, MDM and Business 360 apps. We are accelerating our investment in pre-built business 360 apps that enable customers to easily rationalize, combine, and share customer, supplier, and product data from hundreds of data sources into a single version of the truth and drive business insights. In that context, we expanded a longstanding collaboration with Microsoft Azure and announced a software as a service version of our multi-domain master data management for Microsoft Azure. Informatica SaaS version of MDM on Azure uses AI and ML to help customers create a data foundation that provides a golden record of truth that spans overlapping, conflicting, and related data across customer, supplier, and product. Informatica SaaS MDM will be generally available for purchase from the Azure Marketplace in August. With the addition of this multi-tenant native MDM, we have now completed our product roadmap with all products on our IDMC platform available at SaaS multi-tenant offering. I'm excited about that. We also expanded our cloud-native multi-tenant MDM with two additional purpose-built applications, Supplier 360 to speed up the onboarding of suppliers, improve collaboration and reduce risk, and product 360 to efficiently acquire, manage, and publish relevant, trusted, and rich product data. Now turning to the third customer journey, data governance and data privacy, where we are enabling predictive data intelligence in the cloud with integrated governance, catalog, data quality, and data marketplace capabilities powered by broad and deep cloud native metadata intelligence, empowering data users of all skills to find, understand, trust, and access the data needed for all use cases. We expanded data governance capabilities with Microsoft's Power BI. We also announced the expansion of our partnership with Snowflake to collaborate on deeper integration between Snowflake and Informatica's cloud data governance and catalog service. We continued expansions of our scanners with even deeper penetration into Salesforce, SAP, and Microsoft Azure ecosystems. We added new intelligent capabilities on a data quality suite for anomaly detection, which automatically highlights potential data quality issues that are very hard to detect for users. And our automated data classifications delivered out of the box have nearly doubled, enabling our customers to reliably identify even more critical data elements related to PII and other domains. And lastly, for our fourth customer journey, app integration and hyper automation. where we are integrating and connecting apps to automate end-to-end business processes. Within that, we announced a brand new API Center as a one-stop shop to create, deploy, monitor, duplicate, and retire APIs. It provides a single integrated view of all APIs within an enterprise to drive productivity, transparency, and usability. The API Center can also auto-generate data APIs in minutes that deliver integrated, trusted, and governed data along with the business process automation that is simple, fast, secure, and more dependable for leveraging Informatica's API gateways. It is through our IDMC platform that we enable organizations to treat data as their platform to address these mission-critical workloads. And to give you some more context, the breadth of our IDMC platform remains unparalleled and provides a suite of seven best-in-breed solutions that are powered by Clare, our AI engine, with over 50,000 metadata-aware connections and leveraging 11 terabytes of active metadata in the cloud. IDMC is delivering mission-critical solutions that serve an ever-increasing base of global customers and operates at a significant scale, processing 38.5 trillion cloud transactions per month as of June 2022, which is an increase of 77% year-over-year and approximately 20% sequentially. Now let me turn to our next priority, where we are striving to make Informatica the easiest to do business with and to win together with our partners as we are being the Switzerland of data within the enterprise ecosystem. Now, I talked about Informatica World. Informatica World featured marquee customer marquee speaker participation from all of our strategic ecosystem partners, including Thomas Kurian, CEO of Google Cloud, Scott Guthrie, EVP Cloud and AI Group from Azure, Andy Mendelsohn, EVP at Oracle, Matt Garman, SVP Sales and Marketing from AWS, Christian Kleinemann, SVP Product at Snowflake, and Adam Conway, SVP Product at Databricks. I'm deeply honored to have these prestigious industry leaders share insights on how together We're helping our customers build an intelligent data enterprise and stay competitive in a digital-first economy. Beyond Informatica World, we continue to share more partner innovation. At Snowflake Summit, we announced a new enterprise data integrator for the Snowflake Native Application Framework, and we were highlighted as a partner in Snowflake's announcement of the Native Applications Framework. And we were awarded Snowflake industry competencies in financial services, and healthcare and life sciences, reflective of the significant joint customer adoption we have in these industries. At Databricks Data and AI Summit, we announced expanded support for Databricks SQL, advanced data quality for Databricks, expanded data governance and data cataloging with IDMC, and the private preview of InfoCore that I mentioned earlier, developer extension libraries for Databricks notebooks. We recently also joined the Data Cloud Alliance created by Google Cloud, which focuses on making data and analytics more accessible via modern data management technologies. And finally, a very important new strategic partnership is Oracle. Informatica is named by Oracle as a preferred partner for cloud enterprise data integration and governance for data warehouses and lake houses on Oracle Cloud infrastructure. With this partnership, IDMC has now become the most widely available data management platform supporting all key major cloud providers, AWS, Azure, GCP, and now Oracle. In the second quarter, the number of ecosystem co-sell wins grew over 105% year over year, and the marketplace transaction volume tripled year over year, indicating excellent traction with key ecosystem partners. And now turning to our global system integrator partners, where we continue to make improvements to the program to attract new partners, and our global system integrator partners continue to build Informatica in their solutions. In that context, Informatica joined Wipro's full-stride cloud services data platform as a premier collaboration partner alongside a select group of companies, including AWS, Microsoft, GCP, and Oracle. Informatica also expanded its partnerships with KPMG and launched two new offerings, KPMG Modern Data Platform and KPMG Powered Enterprise Data Migration. Several more partners established centers of excellence with access to our migration factories, including Infosys and KPMG, plus several regional boutique partners to support our customers in moving their on-prem workloads to the cloud. And in that, we continue to drive maintenance to cloud migrations. As you all know, and I've said that before, it has an approximately nine to 12 months lag to convert from maintenance ARR to cloud ARR once implementation is completed. Our differentiated cloud technology platform, IDMC, has been widely recognized by the marketplace and reflects our ongoing commitment to delivering product-led innovation at a global scale. We are proud to once again be named a 2022 Gartner Peer Insights Customer Choice for MDM. We've also been named the leader in both Forrester Wave's Enterprise Data Fabric and Enterprise Data Catalog for DataOps categories in Q2 of 2022. And more recently, Gartner named Informatica as one of the top vendors in the 2021 Event Stream Processing Platform's Worldwide Report. We were recognized as the second largest vendor with market share greater than IBM, Confluent, Software AG, TIBCO, and SAP. And finally, turning to our go-to-market sales motion. Our customer relationships remain very strong, as highlighted by the number of customers spending more than a million dollars in subscription ARR that increased 51% year-over-year to 175 customers. Additionally, customers spending more than $100,000 in subscription ARR increased 20% year-over-year to 1,791 customers. Our increasing focus on vertical industries is leading to deeper customer discussions. Earlier this year, we launched IDMC for retail. More recently, we announced and launched IDMC for healthcare and life sciences with customers like Blue Cross Blue Shield of Kansas City and New York City Health and Hospitals, as well as IDMC for FinServ financial services with customers like RBC Wealth Management, Banco Montreal, and Ferryman. We continue to take the platform and make it more relevant to enterprises, industries, and use cases. Now, let me give you some examples of our customer wins. Norwegian Cruise Lines, a leading global cruise company, purchased our IDMC platform, replacing several single product vendors, allowing them to take full advantage of all the capabilities on the platform, including data integration, data quality, API management, data governance, and master data management. Garance, a mutual insurance company based in France, Paris, with 250,000 members and €3.4 billion in assets under management, as a part of its digital transformation to drive their own innovation, improving their own operational excellence, and maintaining customer SAG, chose Informatica's Customer 360 SaaS to help them create a trusted single view for their customers and employees. HDFC Bank. The largest private sector bank by assets and world's 10th largest bank by market cap chose Informatica's MDM customer 360 and data quality to be deployed into HDFC's Azure cloud to create a trusted 360 degree view of their customers. Informatica will partner with Microsoft Azure architecture team to support HDFC's digital transformation. Another great example of a strategic partner co-win is with Abu Dhabi Ports Group. The company is undergoing a multi-district transformation program, which includes investments in people, processes, technology, and data to enable a data-driven culture. We leverage our deep relationship and jointly coordinated with Snowflake and Cognizant to demonstrate a two-partnership mentality in helping Abu Dhabi ports grow. We're also very pleased to see customers looking to modernize to cloud and leverage our cloud-native platforms. Volvo Group was one of the first customers to embark on a power center modernization journey towards the cloud. They're looking for a common data management solution to support all of its enterprise business units and plans to leverage their entire IDMC platform as a single data management platform across all of Volvo. So as a step back, in summary, we delivered outstanding Q2 results, which reflect a strong product and market fit, loyal and growing customer base, and our ability to execute in this early innings of a $44 billion TAM, in which we are consistently recognized as an industry leader with an expanded strategic partner ecosystem. Our cloud momentum remains strong, and we are continuing to process mission-critical workloads. I believe Informatica's best-of-breed solutions on our IBM C Cloud Data platform offer resilience and relevance to delivering customers' digital transformation needs. We are managing the business for long-term, durable growth, positive cash flow, and continued profitability. Lastly, even though we are ahead on ARR and profitability metrics for the first half of the year, we continue to remain prudent as we think about guidance for the second half and the full year. Thank you to all our employees, customers, partners, and shareholders for their support. And with that, let me now turn the call over to Eric. Eric.