Informatica Inc.

Thank you for attending the Informatica Corporation Fiscal Q1 2023 conference call. My name is Alyssa 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. If you would like to ask a question, please press star 1 on your telephone keypad. It is now my pleasure to pass the conference over to our host, Victoria Hyde-Dunn, Vice President of Investor Relations. You may now proceed, Victoria.

Thank you. Good afternoon, and thank you for joining us to review Informatica's first quarter 2023 earnings results. Joining me on today's call are Amit Walia, Chief Executive Officer, and Mike McLaughlin, 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 10Q and 10K filing for the full year 2022. These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements except as required by law. Additionally, we'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. gap measure can be found in this afternoon's press release and 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 for the call today. Q1 results were strong, and we're off to a great start to the year. Key financial metrics exceeded the high end of our guidance range, driven by traction from enterprise customers purchasing new cloud workloads. Subscription ARR grew 20% year-over-year and cloud subscription ARR grew 41% year-over-year. Importantly, approximately 90% of cloud new bookings came from new workloads with the remaining coming from migrations of on-prem maintenance customers. Total revenues increased 1% year-over-year due to slower than expected decline in maintenance revenue and strong renewal rates. Non-GAAP operating income was $85 million. We continue to execute across all of our strategic initiatives. The resilience and durability of our business are demonstrated by consistent 93% plus renewal rates, strong net retention rates, and 80% plus gross margins. We continue to deliver balanced, profitable growth as we accelerate our complete transition to a cloud platform. And with our very strong cash position, we expect to reduce our net debt leverage ratio to approximately two times by the end of this year, which is six to 12 months ahead of our commitment at the time of the IPO. We are encouraged by the early momentum of our cloud-only consumption-driven strategy. Our strategy continues to gain interest as seen in the sales mix shift from self-managed to cloud net new ARR and closing new cloud views. Over 90% of the new business pipeline is comprised of cloud opportunities. We're also seeing early adoption of our new flexible ITU consumption program. And keeping to our commitments, we are introducing a new cloud subscription net retention rate beginning this quarter to provide more visibility into our cloud strategy. Mike will share that statistic later in the call. We're also well positioned to help our customers, no matter where their data resides. Through our IDMC platform, we serve multi-hybrid environments, which include on-premise and multi-cloud workloads. Customers with their own speed and strategy will move data into a full public cloud or a hybrid cloud. We have the technology capabilities to serve our customers' data environments and support their digital transformation journey from on-time to cloud through a single cloud data management platform, IDMC. We are bringing an enterprise-grade data management platform with best-of-breed solutions combined with the simplicity and flexibility of consumption-based pricing for our customers. Now looking at the macro environment, like last quarter, we continue to observe elongated sales cycles for new deals, deal scrutiny, and to a lesser extent year-over-year foreign exchange headwinds. Cloud adoption remains healthy while customers and prospects continue to be measured in how they purchase given the macro environment. We expect this to continue for the remainder of the year. Taking this all in, we are reiterating our full year 2023 guidance. It is appropriate to remain prudent this early in the year as we navigate an uncertain macroeconomic environment while transitioning to a cloud-focused new sales model. Now turning to our Q1 business highlights, we continue to deliver product differentiation and innovation that matters to our customers. Our unique IDMC platform advantage includes a best-in-class suite of solutions, processing mission-critical workloads at a scale with 50,000 metadata-aware connections, now leveraging 23 petabytes of active metadata in the cloud. To give you some examples, some recent product innovation highlights. First, in our analytic services, we launched the industry's only free cloud data loading integration and ELT and ETL service with Informatica cloud data integration free and paid out. These services allow us to entry into departmental ingestion and integration use cases and target data practitioners and non-technical users in marketing, sales, and revenue operation teams to build data pipes within minutes. Next, we launch new data services on IDMC that process industry standards and custom messages for healthcare, retail, manufacturing, and FinServ solutions. These data services can use HIR and FHIR standards to exchange messages with healthcare partners. The NACHA standard to exchange messages with financial services partners. and the EDIFACT and EDI X12 standards to exchange messages with manufacturing and retail partners. Turning to MDM and the MDM 360 app services, we announced the availability of MDM SaaS on the Google Cloud platform. We continue to scale our customer 360 solution by launching extensions to master legal entities to support regulatory compliance requirements like Basel III and FATCA, helping banks comply with global legal entity identifier foundations. And lastly, in data governance, data quality, and data marketplace services, we introduced a new data quality accelerator bundle for Sensor, data profiling capabilities for the SAP ecosystem, bulk data enrichment and curation capability in data governance and catalog, and expanded UI customization and search in data marketplace. Now, AI has been a part of our DNA. Actually, since 2017, when I launched AI Claire, RAI Claire at Informatica Worlds, The ITMC platform powered by Clare AI, which in the last couple of years has continued to scale and grow as we've curated thousands of machine learning algorithms under the cover of AI, Clare, today processes 54 trillion mission-critical cloud transactions per month as of March, a 69% increase year-over-year, demonstrating strong customer usage of our platform. Last week, we unveiled our latest innovation, Clare Generated Classifications, a groundbreaking solution designed to streamline data classifications for automated data governance in organizations. Clare automates the complex process of creating data classifications, saving both time and resources for organizations by using an organization's metadata and data patterns. As a result, we estimate a 70% plus reduction in time required to curate and create classifications. To give you a real-life example, A leading automotive company witnessed the transformative power of Clare's generated classifications I just talked about firsthand. Previously, this company had a team of 10 data domain curators working for two years to create 200 data classifications. With the help of Clare, they generated 400 classifications, 200 of the original, and an incremental 200 in a matter of minutes. This remarkable outcome demonstrates the power of Clare's driving automation at operational scale. Our consistent focus and commitment to delivering product differentiation and innovation has won us recognition from industry analysts and thought leaders. Informatica is recognized as a leader in the inaugural IDC Marketscape Worldwide Cloud Integration Software and Services 2023 Vendor Assessment Report. We were also recognized as a leader in the Forrester Wave Data Management for Analytics Q1 2023 report. And we are proud again to be named to CRN's Cloud 100 2023 list for the second consecutive year. And we also recently published our inaugural sustainability report, which speaks to our commitments to environmental, social, and governance matters. This report reflects how we continually strive to support our customers, communities, and colleagues. Our cloud-native AI-powered data management platform continues to resonate in the market with enterprise customers. In Q1, Customers spending more than $1 million in subscription ARR increased by 27% year-over-year to 208 customers. Customers spending more than $100,000 in subscription ARR increased 11% year-over-year to 1,921 customers as we continue to process new workloads and drive ARR growth across customers of all sizes. Our global sales and customer success teams have done a terrific job unlocking value for our customers increasing customer engagement through mission-critical workloads, and upselling with new use cases leveraging our modern IDMC platform. I'll give you a few examples. Gilead Sciences is a biopharmaceutical company that focuses on antiviral drugs, advancing innovative medicines to prevent and treat life-threatening diseases including HIV, viral hepatitis, and cancer. Building on its existing MDM usage, Gilead is expanding with new use cases to leverage IDMC's cloud data governance and catalogs data integration, data marketplace, and additional MDM solutions to evolve the critical business systems, centrally manage the data, and help them scale for the future. Cathay Pacific Airlines, the flagship carrier of Hong Kong, they are supporting the new operations model, and they've adopted a cloud modernization strategy. The Cathay Pacific team recognized that the cloud strategy would require a holistic, modern integration platform capable of handling operational cloud and hybrid integration, application integration, as well as data catalog and data governance. A power center customer for over a decade, Cathay Pacific expanded the partnership with Informatica to modernize the data integration of the cloud. We also see success with that ability to sign new cloud logo wins. Daimler Truck, headquartered in Germany, is one of the world's largest commercial vehicle manufacturers with over 40 production sites across the globe and more than 100,000 employees. They manufacture trucks and buses such as the Mercedes-Benz, Freightliner, Western Star, and Farmers Build Buses brand names. In addition to financing, leasing, fleet management, investments, and insurance brokerage services, Daimler Truck chose Informatica's IDMC platform for their global data marketplace project. They will leverage the IDMC capabilities to build a bridge between data producers on one side and data consumers on the other side, maximizing data's value, increasing productivity, and supporting business initiatives. We continue to expand our ecosystem with increased partner engagement momentum. We recently launched a new Microsoft Azure Pod in Dubai to scale our market reach in the Middle East and partner with regional customers as they grow their data management environment. We also expanded our departmental low-friction service offerings for our new cloud data integration free and pay-go that I talked about with support for Amazon Redshift, Microsoft Synapse Analytics, Google BigQuery, Snowflake, and Databricks. And Informatica was a launch partner for Snowflake's Telecom Data Cloud. Our GSI partners are creating solutions with the help of Informatica practitioners to accelerate customers' data-driven strategies on IDMC. Current solutions that are being marketed jointly include MDM as a service with Deloitte, Medicare Medicaid with KPMG, and Rapid Reference Data with Cognizant. Many other solutions are in process of being created with GSI and larger boutique services partners. Our migration factory program has expanded to more than 45 partners. Almost half are already delivering projects and have been awarded work. Today, we have migrated 4% of our legacy base over to IDMC, up from 3.6% last quarter at a 2.1 conversion ratio. In summary, we're pleased with our execution in Q1. We are focused on maintaining our business for a balanced, profitable growth, and delivering on a cloud-only consumption-driven strategy and our business priorities. We crossed a very important milestone in the first quarter, which is $1 billion in subscription ARR. And as we walk into the second quarter, we expect to cross half a billion in cloud subscription ARR. These significant milestones validate that the product innovation and the go-to-market investments that we've made over years resonate with enterprises across the globe while we continue to deliver continuous profitability and cash flow growth. As I wrap up, I'd like to thank all of my Informatica colleagues across the globe for the hard work and continuous commitment. I would also like to thank our partners, customers, and shareholders for supporting Informatica. We look forward to hosting many of you next week at Informatica World User Conference in Las Vegas. With that, let me turn the call over to Mike. Mike, take it away.