Informatica
‘s second-quarter financial results edged guidance, but the company took a somewhat conservative approach by keeping its full-year revenue forecast in place.
In late trading Wednesday, Informatica shares were 4.5% higher, trading at $19.20 each.
Informatica (ticker: INFA), which provides cloud data management software, reported second-quarter revenue of $376 million, up 1% from the year earlier quarter. Its top line surpassed both the company’s guidance range of $355 million to $365 million and the Wall Street consensus forecast at $360.6 million. On an adjusted basis, Informatica earned 17 cents a share in the quarter, a nickel above Street consensus. Under generally accepted accounting principles, or GAAP, the company lost 53 cents a share in the quarter.
“Q2 was a clean beat,” CEO Amit Walia said in an interview with Barron’s.
Looking forward, Walia sees Informatica as a significant beneficiary of the generative artificial intelligence trend.
“There is no AI without data,” he says. Walia notes that the company’s business—creating a holistic view of corporate data, while ensuring data quality and adding data privacy controls—is crucial to companies building out large language models.
“The stuff we do becomes more important,” he says. “We could not be more excited. For us, it’s a tailwind.”
Informatica’s results can be a little messy: The company is going through a business model transition, moving to a cloud-focused approach and away from its traditional on-premise approach. That shift always results in slower top-line growth because of the accounting rules on revenue recognition—Walia says that’s why analysts and investors tend to focus more on the growth of annualized recurring revenue, or ARR.
Informatica said subscription-based ARR was $1.04 billion, up 16% from a year ago, and slightly above its forecast of $1.02 billion to $1.03 billion. Cloud subscription ARR was $513 million, up 37%, and above the company’s forecast of $501 million to $507 million.
For the September quarter, Informatica sees overall revenue of $395 million to $405 million. At the midpoint, that’s a little below the Street consensus of $403.3 million, but still represents growth of 8%. The company sees subscription ARR of $1.05 billion to $1.06 billion for the period, up 13%, with cloud subscription ARR of $537 million to $543 million, a 35% increase.
For all of 2023, the company continues to see revenue of $1.57 billion to $1.59 billion, a 5% increase at the midpoint of the range. But Informatica increased its forecast for full-year non-GAAP operating income to a range of $420 million to $440 million, from a previous estimate of $400 million to $420 million. The company also raised its adjusted free cash flow forecast to between $370 million and $390 million, from $340 million to $360 million previously.
No doubt some investors will be disappointed that the company isn’t increasing its full-year revenue forecast.
“We want to make sure we are not getting ahead of ourselves,” Walia said. “Enterprise spending still remains cautious. This allows us to de-risk the guidance for the second half.”
Informatica shares are 13% higher so far this year.
Write to Eric J. Savitz at [email protected]
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