Informatica CEO Walia On ARR And Cloud Growth, An Oracle Alliance And Surging Data Governance Demand

Informatica CEO Amit Walia says the data management and integration technology developer is making big gains in cloud computing and growing annualized recurring revenue—and the uncertain economy isn’t slowing the company down.

Less than a year after going public, Informatica, a leading developer of data management, data integration and data governance software, is reporting impressive growth across a number of key performance indicators including annualized recurring revenue (ARR) and sales of cloud software.

The company’s robust performance also comes amid growing economic uncertainty, with some business leaders and economists saying the U.S. may be in a recession. CEO Amit Walia (pictured) acknowledged that uncertainty in a recent interview with CRN but maintained that Informatica’s offerings are so mission-critical for so many customers right now that there has been little impact.

“I think, definitely, customer buying cycles have been elongated. There are more reviews and scrutiny for every deal,” Walia said. “But having said that, here‘s the beauty of our business: We serve mission-critical workloads. Digital transformation is here to stay.”

Informatica, founded in 1993 and based in Redwood City, Calif., was public for many years before being taken private in a $5.3 billion deal in 2015 by the Canada Pension Plan Investment Board and private equity firm Permira. The company went public again in October 2021.

Informatica essentially re-created itself during the six years it was private, according to Walia, including completely overhauling its product line and debuting its flagship Intelligent Data Management Cloud platform. The company also has completed a transition to selling its software on a subscription basis.

The company recently reported that in its 2022 second quarter (ended June 30) total revenue reached $372 million, up nearly 9 percent year over year. That report included a number of important statistics for Informatica including 16 percent growth in total ARR to $1.4 billion, 31 percent growth in subscription ARR to $896 million, and 42 percent growth in cloud ARR to $373 million.

The company now has 175 customers with $1 million or more in subscription ARR spending, up 51 percent year over year, while its cloud platform is processing more than 38 trillion transactions per month.

Financial statistics aside, Informatica has continued to innovate around its cloud platform and CLAIRE AI engine, introducing Informatica Data Loader for Google BigQuery in May and Informatica Enterprise Data Integrator for the Snowflake Data Cloud in June.

Informatica also has been establishing strategic alliances with Microsoft and—somewhat surprisingly— longtime rival Oracle. And the company recently unveiled significant enhancements to its Global Channel Partner Program including advanced certifications to expand partner capabilities and incentives to boost partner profitability.

Here‘s a rundown of CRN’s conversation with Walia. The interview has been edited for length and clarity.

What were the biggest takeaways for you from the second quarter?

If I summarized it in three things, No. 1 is that our business is accelerating. And particularly the cloud business has been accelerating very rapidly. [For] our cloud ARR, the annual recurring revenue, we‘ve guided the street [investors] to 40 percent year-over-year growth. We actually grew 42 percent in this quarter. In fact, in Q1, we grew 43 percent. So we continue to grow very handsomely on the cloud side.

The overall subscription business is also growing very handsomely at 31 percent. And our average subscription ARR, which is a testament to [our] new offerings, has grown handsomely. In fact, the million-dollar-plus subscription ARR customers grew 50 percent-plus year over year. And in parallel, our cloud platform, Intelligent Data Management Cloud [IDMC], its usage is growing very handsomely—at the end of last quarter was 38.5 trillion transactions a month, which is growth of 77 percent year over year.

What were the key drivers for your quarterly results?

I think the key drivers are in three categories. On the product side we obviously have had many, many innovations. We announced at [the] Informatica World user conference that we continue to be No. 1 in all the four [Gartner] Magic Quadrants we compete in. I talked about the IDMC cloud platform, that 38.5 trillion transactions. We’ve announced so many innovations with all our products. One of them was multitenant master data management on our IDMC platform. With that we now have all of our products available on the cloud-native platform. So that‘s on the innovation side [where we] continue to punch very, very aggressively.

On the go-to-market side, we gave you the stats on how handsomely the business has grown and I think a great testament to that is some great customer examples [including] HDFC Bank, Abu Dhabi [Department of Culture and Tourism} and Norwegian Cruise Lines. I think a great stat there is that our customers who spend more than $1 million subscription annual recurring revenue with us grew 51 percent year over year to 175 customers.

And more and more customers are buying the entire platform. The platform, by the way, has consumption-based pricing so customers can pick any product and expand into any [other Informatica] product very, very seamlessly.

Third is something we‘re extremely proud of: We call ourselves a Switzerland of data. Partnerships are very important because customers expect us to support multi-cloud, native cloud, hybrid cloud anywhere and [we are] a very close partner of AWS, [Microsoft] Azure, GCP [Google Cloud Platform], Snowflake and Databricks. In fact, at Informatica World, we had all of them on the main stage with us. We also announced the launch of our new partnership with Oracle. And we were chosen as the preferred partner for Oracle Cloud for data integration and data governance.

And we also expanded our global system integrator partnerships. Last quarter we expanded a partnership with Wipro and we joined the [Wipro] FullStride Cloud Services [program] as a premier collaboration partner. We also expanded our partnerships with KPMG and Infosys as they have created their Centers of Excellence on us to drive [cloud] migrations. And then, of course, across the globe we work pretty closely with a lot of other boutique partners, resellers and distributors.

With the recent report that the U.S. recorded a second quarter of GDP decline, some people think we are in a recession. What impact are you seeing from the macroenvironment right now? And has that had any impact on the second-quarter results?

I think it‘s hard for all of us to agree what’s happening in the market with whichever word we want to use. But let‘s be very clear, there is an uncertain macro [environment] out there, and I think none of us would disagree with that. Everybody’s dealing with FX [foreign currency exchange rates] and that’s why we held our guidance for the full year on ARR and operating income. But like Microsoft, like everybody else, we reduced our guidance for revenue because of FX—purely because of the effects when we have 35 percent of our business come from non-U.S. [sources]. So we‘re seeing FX headwinds.

I think, definitely, customer buying cycles have been elongated. There are more reviews and scrutiny for every deal. We saw that and we saw the linearity of big deals degrade, more deals coming towards the end of the quarter, which are all symptoms of an uncertain macro[environment]. I don‘t think any of that stuff will change in the second half, to be honest. I think the uncertainty is going to be here.

But having said that, here‘s the beauty of our business: We serve mission-critical workloads. Digital transformation is here to stay. I was in London two weeks ago and I met with large customers [and] the transformations that they want to do, they know these are multiyear transformations. They can’t slow them down. As I said, we serve mission-critical workloads like helping Unilever manage their supply chain, helping HDFC [Bank] move from the [on-premises] world to a digital world serving their customers. These are long-term growth initiatives that companies continue to invest in.

So that‘s a tailwind for us. I think with the pace of transformation the demand for our offerings, the pipeline, remains pretty healthy. But still, it’s an uncertain macro [environment] and we have to be very cautious and thoughtful.

So what kind of guidance are you providing for all of 2022?

We are [providing guidance] for total ARR to be in the range of $1.52 billion to $1.55 billion. That’s a pretty significant ARR. Within that, we are calling for cloud to be between $438 million and $448 million, somewhere in that range. And cloud is growing 40 percent—you can see that for the first half of the year. Our goal is to continue to grow cloud north of 40 percent, basically.

Our goal is to take that—basically, we are a cloud-first company—and take our subscription business and make it a cloud-only business. That‘s what we are maniacally focused on and we look at the subscription ARR growth rate of 31 percent and the cloud ARR growth rate of 42 percent this quarter—that tells you how much faster cloud is growing. Our goal is to just completely drive cloud, cloud, cloud.

I asked earlier about the drivers of business overall. How about the drivers specifically for cloud right now?

When we think of the drivers, generally for the use cases we serve, we have seen good demand across all of them. And, by the way, every enterprise customer has all of these. First of all is analytics, next-gen analytics, which in our world is cloud data warehouses and data lakes supporting analytics, making sure that everybody has data at their fingertip so they can make decisions. So that continues to be a pretty big one.

Second, tied to data integration and analytics. is more application integration and hyper-automation. Everybody wants to hyper-automate their business-to-business process. Automation is basically 100 percent dependent on automating all the applications that run the business processes.

Third is what we call MDM [master data management] and [Informatica’s] 360 applications. These are out-of-the-box applications: Customer 360, Supplier 360, Product 360. Everybody wants to understand their customers better, whether acquiring new customers or managing existing customers, how to cross-sell, upsell, how to manage churn. How to manage a supply chain, how to on-board new suppliers with Supplier 360. Or bring out new products and track how each product is doing with Product 360. So that part of the business is on fire.

And what sits on top of everything is data governance and privacy. Everybody‘s worried about that, whether it’s a regulated industry or not. What we see more and more is everybody wants to democratize data. But data democratization comes with a lot of risks. Everybody wants to make sure that there is a method to the madness, and governance and privacy becomes a very important driver of that.

Companies want to get more data to more information workers, more decision-makers and so forth. But then you have to make sure that it's not being abused or going to the wrong places, right?

The segmentation of data becomes very important. A big help that we are giving customers is by automating a lot of these workloads through our investment in AI.

CLAIRE‘s job is to do two things, intelligence and automation. First of all, through AI, you can automate many things. And then intelligence can tell you things that you don’t know, as an example such as when you‘re matching customer records. You have a lot of rules and things that are built into the product, but CLAIRE can recommend things to you that you would not know. CLAIRE helps you in automating, which helps customers in productivity and lowering costs, but also helps with intelligence [to] uncover new things to grow your business.

You mentioned the Oracle partnership. Informatica and Oracle have traditionally been rivals. What's the nature of this partnership and how do you get around the fact that in some areas you are competitors?

The world has changed significantly. What was there in the world of [on-premises computing] does not happen in the world of cloud. We are at such a scale that in the world of cloud Oracle is a great partner. They‘ve been behind the other big [cloud] hyper-scalars. They’ve invested a lot, to their credit, [and] they‘ve come a long way. And they want to move mission-critical workloads sitting in on-prem Oracle [systems] and the majority of those workloads are running on our on-prem product.

We are investing in moving those customers to the cloud, Oracle is investing in migrating those customers to the cloud [and] Oracle realizes that we have the best cloud offering. It‘s a very natural thing. So in the world of cloud, they are not competing with us at all. We are their chosen partner, the preferred partner, for data integration and data governance. I think it’s a great opportunity for customers running mission-critical workloads on Oracle. There is a lot of risk involved in migrating these workloads and working together with Oracle and Informatica [that] we can help them move those workloads to the cloud.

Are there specific product announcements that Informatica has made this year that help to complete the company’s technology picture?

I talked about MDM [master data management]. The multitenant MDM coming on our platform completes the platform. We now have every product available in the multitenant fashion. So that‘s pretty big.

Second, we launched an offering called the Data Loader. And Data Loader, basically, is a free, zero-code, zero-install, simple offering. Our goal there is to go after the departmental business user who wants to do all of these data management activities, very narrow use cases. That offering for us is a pretty important launch and over the course of time allows us to really put it in the hands of business users.

And the third one is the breadth of data governance. I said data governance is on fire. Everybody talks about that. We talked about integrating it with [Microsoft business analytics software] Power BI, which Microsoft is pushing very hard, and integration with Snowflake, and so on and so forth. So you can see data integration and data governance are becoming a layer on top of all of these platform providers because that‘s what CEOs need to manage that data complexity.

Talk about your work with systems integrators and the channel overall going forward this year, specifically as relates to these new products or these trends we've discussed.

We’ve been an extremely channel- or partner-friendly company. We talked about ecosystem players, we talked about GSIs [global systems integrators]. More GSIs have built practices on us, which is very important for customers to succeed. A good part of our business goes through the channel in Europe and APJ [Asia-Pacific and Japan]. And even in the U.S. we use channels in different regions.

Our goal is to keep partners [focusing on] things like migrating on-prem[ises] to cloud, we are providing those migration utilities, those migration playbooks, to our partners so they can help migrate customers to the cloud. We are ultimately a software company. We want our partners to help drive these initiatives for our end customers. And those are areas where partners are super excited because that gives them only better relationships with the customers and do things that they do best while we continue to sell what we do best.

Any closing thoughts?

I think we’re a very unique company. I think there are very few companies that will be able to transform at the scale at which we have. And if I just kind of step back, our guidance for [Wall Street] is $1 billion of subscription ARR this year. If you go back in time, when we started our innovation transformation in 2016, we barely had any subscription ARR. So, if you think of seven years, the company has gone from almost nothing in subscription to $1 billion—all coming from new products. And now that‘s fueled by cloud growing significantly faster.

We‘re pretty proud of that. All driven by three things: innovation—we spend $1 billion on R&D and innovate. Huge customer centricity—our renewal rates are mid-90s. And, of course, a deep, deep product line and partnerships. I think that continues to define us in the eyes of our customers.