Key Points
- Informatica is a leader in enterprise cloud data management, with 85% of the Fortune 100 companies as customers.
- Informatica reported strong Q4 2023 earnings and raised full-year 2024 guidance, citing generative AI as a secular growth driver that requires holistic, clean, governed, and accessible data, which is its wheelhouse.
- Informatica plans to launch its CLAIRE GPT in Q2 2024.
- 5 stocks we like better than Informatica
Informatica Inc. NASDAQ: INFA offers its artificial intelligence (AI) platform for enterprises to unify and manage their data to unlock transformative outcomes. The computer and technology sector company develops data management and integration tools through its AI-powered Intelligent Data Management Cloud (IDMC).
The company underwent a successful restructuring under its November Plan, which reduced headcount by 10%, which should result in GAAP cost savings benefits of nearly $84 million in 2024. Its cloud-only consumption-driven strategy helped drive a 37% increase in Cloud subscription revenues. Informatica claims 85% of the Fortune 100 companies as clients, including The Procter & Gamble Co. NYSE: PG, Amazon.com Inc. NASDAQ: AMZN, and Ford Motor Co. NYSE: F.
Partnerships with the cloud giants
Informatica partnered with the largest cloud providers like Microsoft Co. NASDAQ: MSFT to provide IDMC directly embedded as a native application within Microsoft Fabric in 2024. It expanded its partnership with Amazon.com Inc. NASDAQ: AMZN Amazon Web Services (AWS) for IDMC support for Amazon Bedrock customers to improve the accuracy of generative AI use cases. Get AI-powered insights on MarketBeat.
Informatica expanded its partnership with Snowflake Inc. NYSE: SNOW to provide data integration with Superpipe for Snowflake, which enables complex ERP and CRM data to integrate 3.5X faster than previous approaches. It will also launch its first Snowflake native application, Enterprise Data Integrator. Strategic partnerships with Mongo DB Inc. NASDAQ: MDB and Databricks were also expanded and launched, respectively, in Q4 2023. Check out the sector heatmap on MarketBeat.
Grinding forward
On February 14, 2024, Informatica reported Q4 2023 EPS of 32 cents, beating consensus analyst estimates by 2 cents. Revenues climbed 11.6% YoY to $445.18 million versus $432.22 million consensus estimates. GAAP operating income was $36.8 million. Non-GAAP operating income was $161.9 million. Subscription annual recurring revenues (ARR) grew 14% YoY to $1.13 billion for the full year 2023. Cloud subscription ARR rose 37% YoY to $617 million for the full year 2023. Total ARR rose 7% YoY to $1.63 billion for the full year 2023.
Fourth quarter 2023 metrics
Informative processed 86 trillion monthly cloud transactions in Q4 2023, up 62% YoY. Million-dollar ARR customers rose 17% YoY to 240. ARR of $100,000 or more customers rose 4% YoY to 1,988. Cloud subscription net retention rate was 119% at the end-user level and 125% at the global parent level. The November Plan restructuring charges of $31.6 million were recorded in Q4 2023, with an additional $3 million to $5 million expected of additional charges in Q1 2024.
Upside guidance for the full year 2024
Informatica issued in-line guidance for Q1 2024 with revenues of $375 million to $395 million versus $388.71 million consensus estimates. The company issued upside guidance for 2024 with revenues of $1.685 billion to $1.705 billion versus $1.68 billion consensus estimates representing a 6.3% YoY growth at midpoint. Total ARR is expected between $1.718 billion to $1.720 billion representing 7.3% YoY growth. Subscription ARR is expected to grow 12.8% YoY to $1.295 billion. Cloud Subscription ARR is expected to spike 35.1% YoY at midpoint ranging from $826 million to $840 million. Non-GAAP operating income is expected to rise 17.5% YoY at midpoint ranging from $533 million to $553 million.
3 growth drivers in 2024
Informatica CEO Amit Walia outlined 3 cloud growth drivers in 2024. First is the ongoing digital transformation for its existing and new customers, which includes fundamental technology initiatives like generative AI, building and deploying modern digital apps, cloud databases and analytics, and hyper-automation. Second, the $1 billion of on-prem maintenance and migration of customers to the cloud.
Generative AI doesn't happen without data.
Lastly, generative AI is opening access to new opportunities since there is no generative AI without data, which is Informatica's wheelhouse. Walia added, "And for data to have value, it needs core data management such as holistic data, clean data, govern data, accessible data, guess what, all of that is data management, driven by IDMC."
Walia continued, "And CLAIRE, our AI engine, is embedded in all our solutions leveraging ML algorithms and NLP metadata to drive intelligence and productivity, leveraging and accessing our 50,000-plus metadata were connections and now leveraging 40 terabytes of active metadata in the Cloud." Walia noted that preview customers are using CLAIRE GPT for data discovery and metadata exploration cases and is looking to launch in Q2 2024.
Informatica analyst ratings and price targets are at MarketBeat. Informatica's peers and competitor stocks can be found with the MarketBeat stock screener.
Daily ascending triangle breakout
The daily candlestick chart on INFA illustrates an ascending triangle breakout pattern. The ascending (rising) lower trendline formed at the $25.74 swing low on January 4, 2024. The daily market structure low (MSL) breakout triggered the $26.66 trigger on the following day. INFA staged a rally comprised of higher lows on pullbacks towards its flat-top upper resistance trendline at $31.24. INFA initially appeared to break down below the triangle into its Q4 2023 earnings release but formed a price gap to $33.10 the next day. The daily relative strength index rose and stalled flat at the 70-band. Pullback support levels are at $31.24, $30.48, $27.94 and $26.66.
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