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II

Informatica Inc. (INFA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $428.3M, down 3.8% YoY and ~$29.7M below the midpoint of prior guidance, driven by lower renewal rates, shorter renewal terms (ASC 606 impact), a deliberate shift of professional services to partners, and FX headwinds . Cloud Subscription ARR grew 34% YoY to $827.3M, but came in ~$8.7M below guidance on lower cloud renewals and a higher mix of on‑prem-to-cloud modernization deals (short-term ARR drag) .
  • Profitability remained strong: GAAP operating margin rose to 14.8% (+650 bps YoY) and non-GAAP operating margin reached 37.9% (+150 bps YoY); adjusted unlevered FCF (after-tax) was $180.9M, ~$24M above guidance midpoint .
  • FY25 guide introduced: revenue $1.670–$1.720B (+3.4% YoY mid), Cloud ARR $1.019–$1.051B (+25.1% YoY mid), non‑GAAP op income $546–$566M (+3.5% YoY mid); adjusted unlevered FCF (after-tax) $540–$580M (down ~3.3% YoY mid) .
  • Capital allocation: repurchased ~$130.3M of stock from Q4 through 2/12, Board added $400M to the authorization (total $800M; $669.8M remaining), with ~$100M targeted in Q1’25 .
  • S&P Global Wall Street consensus was unavailable at the time of fetch; comparisons to estimates are therefore not shown. Where relevant, comparisons are made versus company guidance (note explicitly) [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

  • Cloud momentum and scale: Cloud Subscription ARR +34% YoY to $827.3M; Cloud NRR 124% at global parent level; cloud revenue +33% YoY to $186.8M .
  • Structural profitability: Non-GAAP operating margin expanded to 37.9% (+150 bps YoY) in Q4; adjusted unlevered FCF (after-tax) of $180.9M beat midpoint by ~$24M .
  • Strategic AI/product progress: Expanded GenAI blueprints across hyperscalers; Databricks AI functions in Native SQL ELT; Google Cloud governance general availability; CLAIRE GPT expanded internationally . “The power of our cloud-only, consumption-driven strategy was evident throughout 2024” — CEO Amit Walia .

What Went Wrong

  • Renewal pressure and ASC 606 sensitivity: Lower renewal rates and shorter renewal terms on self-managed contracts reduced upfront license revenue; Q4 upfront self‑managed license revenue fell ~$46M YoY .
  • Mix shift to modernization: Higher share of on‑prem-to-cloud migrations increased near-term ARR drag (credits net against ARR during migration), contributing to Cloud ARR underperformance vs guidance .
  • Professional services decline and FX: Intentional shift to partners reduced services revenue; FX strengthened USD vs planning assumptions, pressuring ARR/revenue vs forecast .

Financial Results

Core P&L vs prior quarters and guidance context

Note: Consensus estimates via S&P Global were unavailable; comparisons to expectations reflect company guidance.

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$400.6 $422.5 $428.3 (below guide midpoint by ~$29.7M)
GAAP Diluted EPS ($)$0.02 -$0.05 $0.03
Non-GAAP Diluted EPS ($)$0.23 $0.28 $0.41
Non-GAAP Operating Margin (%)28.7% 35.8% 37.9%

Revenue Disaggregation (segments)

Revenue Component ($USD Millions)Q2 2024Q3 2024Q4 2024
Cloud subscription$161.4 $175.8 $186.8
Self-managed subscription support & other$48.9 $46.6 $44.8
Maintenance$116.5 $115.3 $110.9
Self-managed subscription license (point-in-time)$54.0 $65.5 $65.8
Professional services$19.8 $19.2 $20.0
Total Revenue$400.6 $422.5 $428.3

KPIs and subscription metrics

KPIQ2 2024 (6/30)Q3 2024 (9/30)Q4 2024 (12/31)
Cloud Subscription ARR ($M)$702.6 $747.8 $827.3
Subscription ARR ($M)$1,196.5 $1,218.8 $1,274.4
Total ARR ($M)$1,668.2 $1,681.8 $1,725.5
Subscription NRR (End-user)106% 105% 104%
Cloud NRR (Global Parent)126% 126% 124%
Maintenance ARR ($M)$471.7 $462.9 $451.0
Maintenance Renewal Rate96% 94% 92%
Subscription Renewal Rate90% 89% 90%
Customers >$1M Subscription ARR272 264 284
Customers >$100k Subscription ARR2,038 2,074 2,110
Cloud transactions per month (trillions)96.6 101.3 110.7

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
GAAP Total Revenues ($M)Q4 2024$448–$468 $428.3 Lower vs guidance (miss)
Cloud Subscription ARR ($M)Q4 2024$829–$843 $827.3 Slight miss
Subscription ARR ($M)Q4 2024$1,265–$1,299 $1,274.4 In range
Total ARR ($M)Q4 2024$1,718–$1,772 $1,725.5 Near midpoint
Non‑GAAP Operating Income ($M)Q4 2024$162–$182 $162.3 Low end
GAAP Total Revenues ($M)Q1 2025N/A$380–$400 New
Total ARR ($M)Q1 2025N/A$1,673–$1,697 New
Cloud Subscription ARR ($M)Q1 2025N/A$840–$852 New
Non‑GAAP Operating Income ($M)Q1 2025N/A$98–$112 New
GAAP Total Revenues ($M)FY 2025N/A$1,670–$1,720 New
Total ARR ($M)FY 2025N/A$1,755–$1,795 New
Cloud Subscription ARR ($M)FY 2025N/A$1,019–$1,051 New
Non‑GAAP Operating Income ($M)FY 2025N/A$546–$566 New
Adjusted Unlevered FCF (after-tax) ($M)FY 2025N/A$540–$580 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
AI/GenAI initiativesCLAIRE GPT launched in NA; blueprints with Azure/Snowflake/Databricks; >96.6T monthly transactions; partnerships expanded Blueprints across all major hyperscalers; Databricks AI functions in ELT; Google Cloud governance GA; CLAIRE GPT expanded to EMEA/APAC/Canada; ~110.7T monthly transactions Accelerating platform breadth
Cloud modernizationQ2/Q3 modernization momentum; planned pricing/partner strategies Modernization rose to >1/3 of new cloud bookings; uplift ratio trending to ~1.5–1.7; near-term ARR drag, long-term renewal strength Mix shift toward modernization
Renewal rates & term lengthQ3 subscription renewal rate 89%; maintenance 94% Lower renewals vs forecast; shorter self‑managed terms cut ASC 606 upfront revenue; cloud gross renewal low-90s Deteriorated near term
Professional servicesIntentional shift to partners (lower services revenue) Further decline in services revenue per strategy Declining by design
FX/macroFX headwinds updated in guides USD strengthening drove headwinds vs forecast; quantified FX impacts in FY25 guide Sustained FX drag
Capital returnsNew $400M authorization (Oct) $103.2M repurchases in Q4; $27.1M YTD; added $400M (total $800M); targeting ~$100M in Q1’25 Increasing buybacks
Regional/geographyQ3 broad demand US revenue -6% YoY; International -1% YoY; US still 62% of revenue Mixed geography

Management Commentary

  • “Although we encountered unexpected headwinds in the fourth quarter, we're entering 2025 with strong fundamentals and clear line of sight to reaching $1 billion in Cloud Subscription ARR” — CEO Amit Walia .
  • “Total revenues were ~$30M below midpoint due to lower upfront revenue from self‑managed renewals, shorter renewal terms, lower professional services, and USD strengthening” — CFO Michael McLaughlin .
  • “Modernizations accounted for 32% of trailing 4‑quarter cloud net new ARR; cloud NRR was 124% and gross renewal low‑90s” — CFO .
  • “We are adjusting our expectations… ARR and revenue growth lower than previously planned in 2025; expect improvement in 2026 off a lower base” — CFO .

Q&A Highlights

  • Cloud renewal rates: Issues were operational and incentive alignment; actions underway; FY25 guidance assumes Q4 renewal rate levels without improvement baked in .
  • ASC 606 sensitivity: GAAP revenue highly sensitive to self‑managed renewal rates and term lengths due to upfront recognition rules .
  • Modernization uplift and mix: PowerCenter Cloud Edition ~80% of Q4 modernizations; uplift ratio guided ~1.5–1.7; modernization mix forecast ~30% of cloud bookings in FY25 (lumpy quarterly) .
  • New customer composition: ~40% of TTM cloud net new ARR from net‑new customers; predominantly large enterprises across industries; average cloud ARR/customer rose ~24% YoY to ~$335k .
  • Government exposure: <5% of revenue; stable outlook .

Estimates Context

  • S&P Global Wall Street consensus was unavailable at the time of request; therefore, beats/misses vs Street are not shown. Comparisons to expectations are made relative to the company’s prior guidance, where applicable [GetEstimates error].
  • Given Q4 shortfalls vs guidance (revenue and Cloud ARR) and a lower FY25 growth framework, Street models likely need to adjust down for near-term ARR/revenue growth, incorporate shorter self‑managed terms, lower services, and FX headwinds, while maintaining robust non‑GAAP margin and FCF assumptions .

Key Takeaways for Investors

  • Q4 revenue/EPS were pressured by renewal rates and shorter terms in self‑managed contracts, plus FX and services mix, but cloud business fundamentals (NRR, customer growth) remain strong; non‑GAAP margin/FCF execution is solid .
  • Expect 2025 growth deceleration in ARR and revenue vs prior plans as modernization mix rises; watch for renewal rate recovery and term normalization as key swing factors .
  • Modernization deals are a near‑term ARR headwind but improve lifecycle value (drag-along IPUs, healthy in-term expansion, stronger renewal rates) — positive medium-term cloud monetization .
  • Capital returns are turning into a meaningful catalyst: $800M authorization, $669.8M remaining, and ~$100M targeted in Q1'25; net leverage ~1.1x with $1.2B cash/ST investments .
  • AI/GenAI product velocity and ecosystem breadth (Databricks, Google Cloud, Snowflake, AWS, Azure) continue to differentiate; monitor adoption scaling from pilots to production and impact on cloud consumption/IPUs .
  • Near-term trading: stock likely reacts to Q4 miss and FY25 growth reset, partially offset by strong margin/FCF and buyback. Medium-term thesis hinges on modernization throughput, NRR durability, and achieving ~$1B Cloud ARR in FY25 .
  • Watch FX and pro services partner transition as ongoing model headwinds/tailwinds; scrutinize ASC 606 impacts on GAAP revenue vs ARR to avoid misinterpreting fundamental demand .