High Growth Subscription ARR Cloud Differentiation Q2 2023 Adjusted Unlevered Free Cash Flow Margin (after-tax)6 Guidance Q2 2023 Results Q2 2023 -3% YoY Change at Midpoint Subscription ARR Product Innovation: • Expanded partnership with Amazon: launched Amazon Web Services (AWS) Point of Delivery (PoD) in Japan to scale our market reach in Asia Pacific; launched Informatica's secure agent, Private Link, on AWS; and announced the availability of Cloud Data Integration-Free service for Amazon Redshift. • Exp ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q _____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-40936 _____________________________ Informatica Inc. ____________________________ ...

Financial Data and Key Metrics Changes - Total revenues increased by 1% year-over-year, driven by a slower-than-expected decline in maintenance revenue and strong renewal rates [4][41] - Non-GAAP operating income was $85 million, with an operating margin of 23.2% [4][68] - Subscription ARR grew by 20% year-over-year, with cloud subscription ARR increasing by 41% year-over-year [20][61] - GAAP total revenues were $365 million, exceeding guidance by over $3 million [41] - Gross margin remained stable at 80% [46][68] Business Line Data and Key Metrics Changes - Cloud subscription ARR was $483 million, representing 47% of total subscription ARR, up from 40% a year ago [37] - Maintenance ARR declined by 6% year-over-year to $513 million, comprising 33% of total ARR [39][61] - Subscription revenue increased by 8% year-over-year to $214 million, representing 59% of total revenue [44] Market Data and Key Metrics Changes - U.S. revenue grew by 1% year-over-year to $233 million, accounting for 64% of total revenue [45] - International revenue was flat year-over-year at $132 million, but would have grown by 5% year-over-year using last year's exchange rates [45] Company Strategy and Development Direction - The company is focused on a cloud-only consumption-driven strategy, with over 90% of the new business pipeline comprised of cloud opportunities [5][20] - The IDMC platform supports multi-hybrid environments, allowing customers to transition from on-premise to cloud solutions [6] - The introduction of a flexible IPU consumption program aims to enhance customer engagement and simplify access to the IDMC platform [21][84] Management's Comments on Operating Environment and Future Outlook - The management noted elongated sales cycles and deal scrutiny due to the macroeconomic environment, but cloud adoption remains healthy [7] - The company expects to maintain its full-year guidance while navigating an uncertain macroeconomic environment [24][70] - Management expressed confidence in the ongoing transition to a cloud-focused sales model, with expectations for continued growth in cloud subscription ARR [21][87] Other Important Information - The company reported a strong cash position with cash plus short-term investments of $798 million and net debt of $1.06 billion [69] - The company was recognized as a leader in the Forrester Wave: Data Management for Analytics, Q1 2023 report [12] - The company plans to host an Investor Day on September 5 in San Francisco [90] Q&A Session Summary Question: How does Informatica play into cloud cost optimization? - Management noted that their consumption model differs from hyperscalers, allowing customers to pay an annual fee for IPUs, which can be deployed across the platform [80][98] Question: What is the outlook for large customer momentum? - Management indicated that new bookings for cloud were primarily from new workloads, not migrations from self-managed customers [122] Question: How has the tone of customer conversations changed? - Management reported no significant changes in customer conversations compared to previous quarters, maintaining a consistent outlook [130] Question: What are the drivers for the cloud net retention rate increase? - Management highlighted that the increase in cloud net retention rate reflects strong customer engagement and usage of the IDMC platform [142] Question: How does the company view the competitive landscape? - Management acknowledged increased competition from API integration companies but emphasized their unique value proposition in the market [146]

Subscription Revenue and Growth - Subscription revenue for Q1 2023 reached $213.9 million, up from $197.7 million in Q1 2022, representing a growth of approximately 8.9%[137] - Total Annual Recurring Revenue (ARR) increased to $1,533.4 million in Q1 2023 from $1,397.0 million in Q1 2022, reflecting a growth of about 9.7%[160] - Cloud Subscription ARR rose to $483.3 million in Q1 2023, compared to $343.5 million in Q1 2022, marking an increase of approximately 40.7%[160] - The average Subscription ARR per customer increased from $231,000 in Q1 2022 to $270,000 in Q1 2023, showing a growth of about 16.9%[152] - Subscription revenues rose to $213.9 million, accounting for 59% of total revenues, an increase of 8% from $197.7 million in the prior year[198] Customer Retention and Acquisition - Subscription Net Retention Rate (NRR) was 110% for Q1 2023, down from 113% in Q1 2022, indicating a slight decline in customer retention[160] - Approximately 54% of subscription customers as of March 31, 2023, did not have a prior perpetual license maintenance contract, indicating successful new customer acquisition efforts[151] - Subscription Net Retention Rate (NRR) measures the contract value from the same set of customers year-over-year, indicating growth from price increases and additional sales[170] Revenue Composition and Strategic Shift - The perpetual license revenue as a percentage of total software revenue was 0% for Q1 2023, down from 1% in Q1 2022, reflecting a strategic shift towards subscription revenue[141] - Perpetual license revenues are expected to be less than 1% of total revenues as the company focuses on subscription-based licensing[178] - The company expects subscription revenues to account for substantially all software revenues going forward, as it has ceased active selling of perpetual licenses[199] Cost and Expense Management - Maintenance and professional services revenues decreased to $150.7 million in Q1 2023 from $161.9 million in Q1 2022, a decline of approximately 6.9%[143] - Total cost of revenues decreased by 2% to $81.9 million, with software revenue costs increasing by 44% to $35.9 million, now 17% of software revenues[203] - Research and development expenses increased by 9% to $82.0 million, representing 23% of total revenues, driven by higher personnel-related costs[208] - General and administrative expenses rose by 40% to $41.4 million, accounting for 11% of total revenues, primarily due to increased personnel-related expenses[211] - Restructuring costs increased to $27.3 million, representing 7% of revenues, due to a restructuring plan initiated in January 2023[213] Financial Performance - Adjusted EBITDA for Q1 2023 was $89,013, compared to $89,119 in Q1 2022, reflecting relative profitability adjusted for various expenses[175] - Total revenues increased by 1% to $365.4 million for the three months ended March 31, 2023, compared to $362.3 million for the same period in 2022, primarily driven by a 7% increase in software revenues[197] - Maintenance revenues fell to $125.4 million, representing 34% of total revenues, a decrease of 5% from $132.5 million[201] - Professional services revenues decreased by 14% to $25.3 million, accounting for 7% of total revenues, primarily due to reduced demand for consulting services[202] Cash Flow and Investments - Cash provided by operating activities was $69.9 million in Q1 2023, slightly down from $70.2 million in Q1 2022, with a net loss of $116.4 million adjusted for non-cash charges[221][222] - Net cash provided by investing activities reached $49.0 million in Q1 2023, significantly up from $6.2 million in Q1 2022, driven by $80.5 million in maturities of investments[223][224] - Net cash provided by financing activities was $14.9 million in Q1 2023, compared to $13.2 million in Q1 2022, mainly due to $16.1 million from the issuance of common stock under the ESPP[227][228] Debt and Interest - Long-term debt outstanding was $1.84 billion as of March 31, 2023, with a potential interest expense change of approximately $5 million annually for a 0.25% change in 3-month LIBOR[239] - The company plans to transition from one-month LIBOR to one-month SOFR starting in the second half of 2023, following the phase-out of LIBOR[240] - Interest income increased to $7.6 million for Q1 2023, up 1972% from $366 thousand in Q1 2022, while interest expense rose to $(35.1) million, a 173% increase from $(12.8) million[214] Tax and Currency Exposure - Income tax expense surged to $59.6 million in Q1 2023, compared to $1.2 million in Q1 2022, reflecting a 4927% increase primarily due to a higher valuation allowance[215] - Approximately 25% of cash, cash equivalents, and short-term investments are held by foreign subsidiaries, exposing the company to foreign currency exchange risks[220][241] - The company utilizes foreign currency forward contracts to hedge against fluctuations in foreign currency expenses, with notional amounts totaling $101.2 million for Indian rupees as of March 31, 2023[244]

Customer Base and Growth - The company has approximately 5,600 customers in approximately 100 countries and territories worldwide as of December 31, 2022[68] - The number of customers contributing more than $1 million in Subscription ARR increased from 104 in 2020 to 206 in 2022[68] - The number of customers contributing more than $100,000 in Subscription ARR increased from 1,361 in 2020 to 1,916 in 2022[68] - Approximately 90% of the company's total Subscription ARR for the year ended December 31, 2022, was generated from existing subscription customers[136] Customer Satisfaction and Retention - The company's renewal rates for subscription and maintenance in 2022 were 94% and 96%, respectively[81] - The Customer Satisfaction (CSAT) score for Q4 2022 was 4.7/5.0, with 77% of respondents rating the company 5/5[81] - The company's global customer support and success team consists of approximately 900 employees as of December 31, 2022[81] Revenue and Financial Performance - Subscription revenue growth rates were 15%, 26%, and 26% for the years ended December 31, 2022, 2021, and 2020, respectively, with subscription revenues of $857.2 million, $747.7 million, and $593.8 million for those years[134] - Maintenance revenue was $520.0 million in 2022, representing 35% of total revenue, compared to $558.5 million in 2021, which was 39% of total revenue[138] - The company incurred net losses of $53.7 million, $99.9 million, and $167.9 million for the years ended December 31, 2022, 2021, and 2020, respectively, with an accumulated deficit of $1,183.2 million as of December 31, 2022[191] - Amortization expense from acquired technology and intangible assets was $185.6 million, $241.0 million, and $284.0 million for the years ended December 31, 2022, 2021, and 2020, respectively[191] - Interest expense recognized due to debt incurred from the 2015 Privatization Transaction was $78.0 million, $132.4 million, and $149.4 million in the fiscal years 2022, 2021, and 2020, respectively[191] Cloud Strategy and Transition - The company has migrated approximately 3.6% of its installed base maintenance revenue to its cloud solution as part of its strategy to transition from perpetual licenses to cloud-based offerings[143] - The company's Intelligent Data Management Cloud (IDMC) platform is a key focus of its cloud-focused strategy, with increasing revenue derived from subscription-based offerings[142] - The company's agreements with AWS, Microsoft Azure, and Google Cloud have 3-year terms through 2024 or 2025, with termination clauses that could impact operations if triggered[144] - The company is directing significant financial and operating resources to implement a robust cloud offering, but there is a risk that the cloud offering may not develop as quickly as expected or scale to meet requirements[189] Market and Competitive Risks - The company faces risks related to security breaches and vulnerabilities, particularly as it integrates acquired companies and migrates self-managed products to its cloud platform[131] - Market competition is intensifying with new entrants, evolving customer requirements, and emerging technologies, particularly in cloud-based solutions[162] - The company’s ability to compete depends on factors like platform comprehensiveness, AI/ML integration, multi-cloud interoperability, and responsiveness to customer needs[164] - Increased competition and bundling strategies could impede the company's ability to sell additional products and services on favorable terms[165] - Consolidation among software vendors may lead to reduced market share or price reductions, harming the company's business and financial condition[166] Economic and Operational Challenges - Foreign currency exchange volatility negatively impacted revenues by approximately $48 million year-over-year in 2022[124] - The company experienced lengthening sales cycles, decreased pipeline conversion rates, and slower revenue growth in 2022[124] - High inflation in the U.S. and other geographies is increasing expense pressure to adjust salary structures to align with higher cost of living, potentially leading to higher voluntary attrition[152] - Sales force turnover, particularly in Q1, impacts software revenue generation, with new hires typically requiring nine months to reach full productivity[151] - Competition for skilled personnel, especially sales engineers with data management and cloud expertise, is intense, with competitors offering greater financial resources[150] Workforce and Organizational Changes - Company announced a workforce reduction plan in January 2023, cutting approximately 450 employees, representing 7% of its global workforce, with estimated non-recurring charges of $25 million to $35 million, primarily for employee transition and severance payments[147] - The company's corporate culture is considered a key contributor to its success, and maintaining this culture as the company grows is crucial to fostering innovation and creativity[213] Legal and Regulatory Risks - The company faces risks from legal and regulatory changes, particularly in data privacy and localization laws, which could reduce demand for cloud and professional services[148] - Data protection and privacy regulations, such as GDPR and CCPA, pose risks of enforcement actions, fines, and reputational damage[226] - Security breaches or unauthorized access to personal information could result in costly notifications, lawsuits, and negative publicity[227] - The company may face fines up to 20 million Euros or 4% of its annual global turnover under GDPR for non-compliance[230] - The company has incurred substantial expenses to comply with GDPR and may need further operational changes, potentially impacting revenue[230] International Operations and Risks - Approximately 31%, 33%, and 33% of the company's revenue was derived from outside the North American region for the years ended December 31, 2022, 2021, and 2020, respectively[254] - The company has approximately 2,700 employees in India as of December 31, 2022, making it susceptible to significant operating expense impacts due to exchange rate changes[262] - The company faces risks in international markets, including geopolitical disruptions, exchange rate fluctuations, slower collections, increased operating costs, and challenges in protecting intellectual property[255] - The company's international operations are exposed to risks such as wage inflation in India and Brazil, regulatory changes, and compliance with U.S. and foreign laws, including GDPR and FCPA[255] Debt and Financial Obligations - The company's total indebtedness as of December 31, 2022, was $1.84 billion[289] - Cash flows dedicated for debt service requirements totaled $98.6 million in 2022, including $14.1 million in principal payments and $84.6 million in interest payments[292] - Net cash provided by operating activities was $200.1 million in 2022, with $284.6 million before interest payments[292] - Approximately 35% of net cash provided by operating activities (before interest payments) was dedicated to debt service in 2022[292] - A breach of covenants under the credit agreement could result in an event of default, potentially accelerating debt repayment[300] Product and Market Acceptance - The company's traditional data management products, such as PowerCenter and PowerExchange, continue to comprise a significant portion of revenues, and a decline in market acceptance could decrease revenues[207] - Newer products may face market acceptance challenges due to customer budget priorities, macroeconomic uncertainty, and technical difficulties[210] - Market acceptance of products could be impacted by increased competition, technological shifts to cloud-based solutions, and customer confusion[211] Seasonal and Quarterly Fluctuations - The company's business is seasonal, with highest demand in Q4 and lowest in Q1, leading to fluctuations in quarterly bookings and cash flows[215] - Quarterly and annual results may fluctuate significantly due to factors like customer retention, market growth rates, and economic conditions[216] Strategic Investments and Acquisitions - Company acquired GreenBay Technologies in August 2020 for AI/ML solutions and Compact Solutions in July 2020 for metadata connectivity tools to enhance its CLAIRE-powered IDMC platform[157] - The company acquired GreenBay Technologies in August 2020 and Compact Solutions in July 2020, which present risks such as integration challenges and potential financial impacts[201][202] Open Source and Intellectual Property Risks - The company faces risks related to the use of open source software, including potential litigation and compliance with open source licenses[278] - The company has been subject to patent infringement claims, such as a suit filed by Akoloutheo LLC in March 2020, which was resolved for an immaterial amount[281] - The company's agreements with customers and partners require placing the source code of products into escrow, limiting control over third-party actions[286] Government Contracts and Compliance - Sales to government entities accounted for approximately 10% or less of the company's revenue for the past three fiscal years ended December 31, 2022[266] - Government contracts may require the maintenance of certain security clearances for facilities and employees, which can entail additional costs and delays[267] - The company's subsidiary, Informatica Federal Operations Corporation, is required to maintain facility security clearances and be insulated from foreign ownership, control, or influence[271] - Government contracts contain provisions that give the government rights to terminate contracts for convenience or default, potentially leading to unrecovered costs and liabilities[273] - The company reached a settlement of $21.9 million in March 2019 related to a civil False Claims Act investigation[276]

Financial Data and Key Metrics Changes - Total ARR for Q4 2022 increased by 11.5% year-over-year to $1.52 billion, driven by strong new business sales and subscription renewals [66] - Subscription ARR reached $994 million in Q4, representing a 24% year-over-year increase, with a net retention rate of 111% [67][68] - GAAP total revenues were $399 million in Q4, down 2% year-over-year, impacted by foreign exchange fluctuations [69][70] - Gross margin for Q4 was 82%, maintaining a stable margin throughout the year [71] Business Line Data and Key Metrics Changes - Cloud ARR increased over 42% year-over-year to $451 million, now representing approximately 45% of total Subscription ARR [99] - Maintenance ARR finished at $523 million, down 6% year-over-year, with a strong renewal rate of 96% [101] - Subscription revenue increased approximately 4% year-over-year to $238 million, representing 60% of total revenue [102] Market Data and Key Metrics Changes - U.S. revenue grew 6% year-over-year to $262 million, representing 66% of total revenues, while international revenue decreased 14% year-over-year to $137 million [103] - The company has migrated 3.6% of its maintenance installed base to the IDMC platform, up from 2.8% the previous quarter [53] Company Strategy and Development Direction - The company is transitioning to a cloud-only, consumption-driven strategy, focusing on expanding IPU adoption and launching a flexible IPU pricing model [1][63] - The strategic objectives include accelerating cloud migration opportunities and maintaining high renewal rates [63][64] - The company aims to streamline operations and improve efficiencies through its cloud-only model, which is expected to enhance operating leverage [73][96] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the uncertain macroeconomic environment but remains optimistic about the company's cloud-focused growth strategy [72][94] - Deal cycles are elongated, but the health of the pipeline remains strong, with a focus on digital transformation through data management [15][94] - The company expects total ARR growth of approximately 5% year-over-year for 2023, with a focus on balanced growth and profitability [107] Other Important Information - The company reported a net income per diluted share of $0.24 for Q4, with unlevered free cash flow after-tax of approximately $92 million [104] - A reduction in force was announced to align the cost structure with the new strategy, with estimated cost savings of approximately $50 million in FY2023 [106] Q&A Session All Questions and Answers Question: What attracted the new CFO to Informatica? - The new CFO was attracted by the company's financial model and its potential for delivering increased profitability as it grows [109] Question: Can you elaborate on the go-to-market strategy and sales incentives? - The company is focusing on converting maintenance to cloud and expects to see more net new workloads driving growth [112][113] Question: What are the assumptions around the ARR guidance? - The company sees headwinds in the macro environment but remains thoughtful about customer spending and deal cycles [122]

Where data comes to GAAP Financial Measures Investor Presentation This presentation contains forward-looking statements about Informatica and the environment in which Informatica operates. These statements may relate to, but are not limited to, expectations of future operating results or financial performance, market size and growth opportunities, the calculation of certain of our key financial and operating metrics, capital expenditures, plans for future operations, competitive position, technological capa ...

[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) The report contains forward-looking statements subject to substantial risks and uncertainties that may cause actual results to differ - Forward-looking statements relate to future events or financial/operating performance, identified by words such as 'may,' 'will,' 'should,' 'expects,' 'plans,' 'anticipates,' 'could,' 'intends,' 'target,' 'projects,' 'contemplates,' 'believes,' 'estimates,' 'predicts,' 'potential' or 'continue'[9](index=9&type=chunk) - Key areas covered by forward-looking statements include the company's ability to attract and retain customers, upsell and cross-sell, manage future growth, transition to subscription-based offerings, demand for its platform, impact of the COVID-19 pandemic and adverse economic conditions, competition, technological changes, future financial performance, and intellectual property protection[9](index=9&type=chunk) - Readers are cautioned not to rely on forward-looking statements as predictions of future events, as outcomes are subject to risks, uncertainties, and other factors described in the 'Risk Factors' section[11](index=11&type=chunk) [Part I. Financial Information](index=6&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the periods ended September 30, 2022 [Condensed Consolidated Balance Sheets](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Condensed Consolidated Balance Sheets (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | $1,132,181 | $1,171,790 | | Total assets | $4,657,598 | $4,986,263 | | **Liabilities** | | | | Total current liabilities | $736,452 | $941,611 | | Total liabilities | $2,687,409 | $3,002,587 | | **Stockholders' Equity** | | | | Total stockholders' equity | $1,970,189 | $1,983,676 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $371,951 | $361,807 | $1,106,337 | $1,037,345 | | Gross profit | $284,760 | $281,225 | $848,938 | $800,132 | | Income (loss) from operations | $2,589 | $28,657 | $(3,295) | $61,103 | | Net (loss) income | $(15,602) | $2,727 | $(49,294) | $(33,597) | | Basic Net (loss) income per share | $(0.06) | $0.01 | $(0.18) | $(0.14) | | Diluted Net (loss) income per share | $(0.06) | $0.01 | $(0.18) | $(0.14) | [Condensed Consolidated Statements of Comprehensive Loss](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20LOSS) Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(15,602) | $2,727 | $(49,294) | $(33,597) | | Total other comprehensive loss, net of tax effect | $(52,333) | $(13,696) | $(113,091) | $(23,797) | | Total comprehensive loss, net of tax effect | $(67,935) | $(10,969) | $(162,385) | $(57,394) | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY) Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Total Stockholders' Equity | $1,970,189 | $1,983,676 | | Accumulated deficit | $(1,178,808) | $(1,129,490) | | Additional paid-in-capital | $3,242,107 | $3,093,232 | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $139,347 | $142,393 | | Net cash used in investing activities | $(115,230) | $(22,365) | | Net cash provided by (used in) financing activities | $33,991 | $(46,673) | | Net increase in cash, cash equivalents, and restricted cash | $41,767 | $70,465 | | Cash, cash equivalents, and restricted cash at end of period | $499,863 | $418,686 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed disclosures for the condensed consolidated financial statements, covering organization and accounting policies [Note 1. Organization and Description of Business](index=12&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) - Informatica Inc. was incorporated on June 4, 2021, as part of a restructuring that made it the top-tier entity, with Ithacalux Topco S.C.A. as its predecessor[31](index=31&type=chunk) - The company completed its initial public offering (IPO) on October 29, 2021, issuing 29,000,000 shares of Class A common stock at $29.00 per share, generating **$915.7 million in net proceeds**[33](index=33&type=chunk) - Informatica has developed an AI-powered software platform (Intelligent Data Management Cloud, IDMC) that connects, manages, and unifies data across multi-cloud, hybrid systems, offering products for Data Integration, API & Application Integration, Data Quality, Master Data Management, Customer and Business 360, Data Catalog and Governance and Privacy[34](index=34&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The financial statements are prepared in accordance with U.S. GAAP and SEC rules, reflecting all necessary adjustments for fair statement[35](index=35&type=chunk)[36](index=36&type=chunk) - The company manages, monitors, and reports its operating results and financial position as a single operating segment, with its Chief Executive Officer as the chief operating decision-maker[38](index=38&type=chunk) - Revenue is derived from sales of cloud subscriptions, on-premises subscription licenses, subscription support, perpetual software licenses, and maintenance and professional services, recognized when performance obligations are satisfied[40](index=40&type=chunk)[41](index=41&type=chunk) - Remaining performance obligations were **$1.1 billion** as of September 30, 2022, with approximately **69%** expected to be recognized as revenues over the next twelve months[62](index=62&type=chunk) [Note 3. Cash, Cash Equivalents, Restricted Cash, and Investments](index=20&type=section&id=Note%203.%20Cash,%20Cash%20Equivalents,%20Restricted%20Cash,%20and%20Investments) Cash, Cash Equivalents, Restricted Cash, and Investments (in thousands) | Category | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $499,863 | $456,378 | | Restricted cash | — | $1,718 | | Short-term investments | $147,785 | $40,045 | | Long-term investments | $2,981 | — | | Total cash, cash equivalents, restricted cash, and investments | $650,629 | $498,141 | [Note 4. Available-For-Sale Debt Securities](index=21&type=section&id=Note%204.%20Available-For-Sale%20Debt%20Securities) Available-For-Sale Debt Securities as of September 30, 2022 (in thousands) | Category | Amortized Cost | Fair Value | Unrealized Losses | | :--- | :--- | :--- | :--- | | U.S. government securities | $7,960 | $7,957 | $(3) | | U.S. government agency securities | $30,515 | $30,501 | $(36) | | Non-U.S. government securities | $3,935 | $3,916 | $(18) | | Corporate debt securities | $21,748 | $21,608 | $(140) | | Commercial paper | $35,660 | $35,605 | $(56) | | Total | $99,817 | $99,587 | $(253) | - **No credit losses** were recognized related to the company's debt securities for the three and nine months ended September 30, 2022, as unrealized losses are due to interest rate fluctuations rather than credit quality[83](index=83&type=chunk) [Note 5. Fair Value Measurements](index=22&type=section&id=Note%205.%20Fair%20Value%20Measurements) - The company uses a three-level fair value hierarchy (Level 1: quoted prices in active markets, Level 2: observable inputs other than Level 1, Level 3: unobservable inputs) to measure fair value[86](index=86&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) Fair Value Measurement of Financial Assets and Liabilities (in thousands) as of September 30, 2022 | Category | Total | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | **Assets:** | | | | | | Total cash equivalents and investments | $509,972 | $410,386 | $99,586 | — | | Interest rate derivatives | $8,224 | — | $8,224 | — | | Total assets | $518,196 | $410,386 | $107,810 | — | | **Liabilities:** | | | | | | Foreign currency derivatives | $4,267 | — | $4,267 | — | | Total liabilities | $4,267 | — | $4,267 | — | - **No assets or liabilities were classified as Level 3** as of September 30, 2022, and December 31, 2021[88](index=88&type=chunk) [Note 6. Goodwill and Intangible Assets](index=24&type=section&id=Note%206.%20Goodwill%20and%20Intangible%20Assets) Goodwill (in thousands) | Metric | Amount | | :--- | :--- | | Ending balance as of December 31, 2021 | $2,380,752 | | Foreign currency translation adjustment | $(83,371) | | Ending Balance as of September 30, 2022 | $2,297,381 | Intangible Assets, Net (in thousands) | Category | Sep 30, 2022 (Net) | Dec 31, 2021 (Net) | | :--- | :--- | :--- | | Acquired developed and core technology | $25,670 | $54,857 | | Customer relationships | $822,159 | $948,556 | | Trade names and trademark | $17,094 | $24,042 | | Total intangible assets, net | $864,923 | $1,027,455 | - Total amortization expense related to intangible assets was **$46.9 million** and **$61.5 million** for the three months ended September 30, 2022 and 2021, respectively, and **$142.1 million** and **$184.9 million** for the nine months ended September 30, 2022 and 2021, respectively[102](index=102&type=chunk) [Note 7. Borrowings](index=26&type=section&id=Note%207.%20Borrowings) Long-Term Debt (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Dollar term loan | $1,865,625 | $1,875,000 | | Total debt, net of discount and debt issuance costs | $1,844,451 | $1,851,471 | | Long-term debt, net of current portion | $1,825,701 | $1,837,408 | - The company refinanced its credit facilities on October 29, 2021, with a new Credit Agreement, borrowing **$1.9 billion** of dollar term loans and obtaining **$250.0 million** of commitments under a revolving credit facility[107](index=107&type=chunk) - The Term Facility matures on October 29, 2028, and is repayable in quarterly installments of 0.25% of the initial principal amount. As of September 30, 2022, approximately **$1.8 billion was outstanding** under the Term Facility[108](index=108&type=chunk)[291](index=291&type=chunk) [Note 8. Disaggregation of Revenue and Costs to Obtain a Contract](index=28&type=section&id=Note%208.%20Disaggregation%20of%20Revenue%20and%20Costs%20to%20Obtain%20a%20Contract) Revenue by Type (in thousands) | Revenue Type | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Cloud and subscription support | $142,444 | $111,630 | $410,262 | $312,165 | | On-premises subscription license | $71,565 | $82,060 | $208,537 | $205,790 | | Subscription | $214,009 | $193,690 | $618,799 | $517,955 | | Perpetual license | $1,208 | $2,846 | $6,180 | $19,085 | | Software revenue | $215,217 | $196,536 | $624,979 | $537,040 | | Maintenance | $127,909 | $137,569 | $392,221 | $420,888 | | Professional services | $28,825 | $27,702 | $89,137 | $79,417 | | Total revenues | $371,951 | $361,807 | $1,106,337 | $1,037,345 | Revenue by Geographic Location (in thousands) | Region | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | North America | $258,557 | $245,899 | $757,489 | $698,972 | | EMEA | $74,598 | $79,050 | $231,081 | $225,781 | | Asia Pacific | $30,362 | $29,357 | $93,437 | $87,980 | | Latin America | $8,434 | $7,501 | $24,330 | $24,612 | | Total revenues | $371,951 | $361,807 | $1,106,337 | $1,037,345 | [Note 9. Derivative Financial Instruments](index=29&type=section&id=Note%209.%20Derivative%20Financial%20Instruments) - The company uses foreign exchange forward contracts as cash flow hedges to reduce the impact of foreign currency exchange rate fluctuations, particularly for Indian rupee expenses[120](index=120&type=chunk) - As of September 30, 2022, a net unrealized loss of approximately **$2.7 million** accumulated in other comprehensive income (loss) from cash flow hedges is expected to be reclassified into earnings within the next twelve months[121](index=121&type=chunk) - The company has two interest rate swaps outstanding with a total current notional amount of **$1.3 billion**, with a fixed rate of **1.525%**, designated as cash flow hedges of floating rate interest payments and maturing by December 2022[124](index=124&type=chunk) [Note 10. Stockholders' Equity and Equity Incentive Plan](index=33&type=section&id=Note%2010.%20Stockholders'%20Equity%20and%20Equity%20Incentive%20Plan) - The company's capital structure includes Class A, Class B-1, and Class B-2 common stock, with Class B-1 having identical rights to Class A except for director election/removal voting, and Class B-2 having no participating rights except for director election/removal voting and a nominal annual dividend[138](index=138&type=chunk) Total Stock-Based Compensation (in thousands) | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended Sep 30, | $34,155 | $4,033 | | Nine Months Ended Sep 30, | $97,988 | $9,918 | - As of September 30, 2022, total unrecognized stock-based compensation expense related to unvested RSUs and PSUs was **$259.5 million**, expected to be recognized over a weighted-average vesting period of **3.1 years**[155](index=155&type=chunk) [Note 11. Income Taxes](index=37&type=section&id=Note%2011.%20Income%20Taxes) Income Tax Expense and Effective Tax Rate (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Income tax expense | $2,782 | $3,783 | $10,757 | $15,683 | | Pretax (loss) income | $(12,820) | $6,510 | $(38,537) | $(17,914) | | Effective tax rate | -22% | 58% | -28% | -88% | - The effective tax rate differs from the U.S. statutory rate of 21% primarily due to foreign income inclusion under global intangible low-taxed income (GILTI), non-deductible stock-based compensation, and valuation allowances[157](index=157&type=chunk) [Note 12. Net (Loss) Income Per Share](index=38&type=section&id=Note%2012.%20Net%20(Loss)%20Income%20Per%20Share) Net (Loss) Income Per Share (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(15,602) | $2,727 | $(49,294) | $(33,597) | | Basic EPS | $(0.06) | $0.01 | $(0.18) | $(0.14) | | Diluted EPS | $(0.06) | $0.01 | $(0.18) | $(0.14) | | Weighted-average shares (Basic) | 281,859 | 244,689 | 280,361 | 244,670 | | Weighted-average shares (Diluted) | 281,859 | 249,311 | 280,361 | 244,670 | - Potentially dilutive securities (stock options, RSUs, PSUs, ESPP) were excluded from the computation of diluted net (loss) income per share for periods where their inclusion would have been anti-dilutive[160](index=160&type=chunk) [Note 13. Commitments and Contingencies](index=38&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) - As of September 30, 2022, the company had long-term purchase obligations of approximately **$193.7 million**, primarily related to multi-year contracts for software as a service[161](index=161&type=chunk) - The company provides assurance-type warranties for its software products (3-6 months) and service level provisions for its cloud services, with product warranty expense and obligations being immaterial to date[162](index=162&type=chunk) - The company is a party to various legal proceedings and claims arising from the normal course of business, including employment and intellectual property matters, and accrues for loss contingencies when probable and estimable[169](index=169&type=chunk)[170](index=170&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses its financial condition and operational results, highlighting the transition to a subscription-based revenue model [Overview](index=40&type=section&id=Overview) - Informatica has pioneered the Intelligent Data Management Cloud (IDMC), an AI-powered platform that connects, manages, and unifies data across any multi-cloud, hybrid system[174](index=174&type=chunk) - Subscription revenue grew to **$618.8 million** for the nine months ended September 30, 2022, representing **99% of total software revenue**, up from 96% in the prior year[176](index=176&type=chunk) - The company employs a 'land and expand' model to increase sales to its existing customer base, as evidenced by a **Subscription Net Retention Rate (NRR) of 112%** for the nine months ended September 30, 2022[183](index=183&type=chunk) [Factors Affecting Our Performance](index=42&type=section&id=Factors%20Affecting%20Our%20Performance) - Continued adoption of subscription products is crucial for success, with **Total Subscription ARR at $936.4 million** as of September 30, 2022, representing **27% growth year-over-year**. Cloud ARR grew at a rate of **39%** for the period ended September 30, 2022[187](index=187&type=chunk)[189](index=189&type=chunk) - New customer acquisition is a key growth driver, demonstrated by **54% of subscription customers** as of September 30, 2022, not having a prior maintenance contract[190](index=190&type=chunk) - Expansion within the existing customer base is vital, as evidenced by a **Subscription NRR of 112%** and an increase in average Subscription ARR per subscription customer from **$208 thousand to $252 thousand** year-over-year[191](index=191&type=chunk) - Global macroeconomic factors, including elevated inflation, global supply chain concerns, rising interest rates, foreign exchange headwinds, and geopolitical pressures (e.g., war in Ukraine), have adversely affected customer buying patterns and sales cycles, with increasing magnitude in Q3 2022[194](index=194&type=chunk) [Key Business Metrics and Non-GAAP Financial Measure](index=45&type=section&id=Key%20Business%20Metrics%20and%20Non-GAAP%20Financial%20Measure) Key Business Metrics (in thousands, except percentages) | Metric | Sep 30, 2022 | Sep 30, 2021 | | :--- | :--- | :--- | | Total Annual Recurring Revenue (ARR) | $1,467,751 | $1,287,472 | | Maintenance Annual Recurring Revenue | $531,357 | $551,723 | | Subscription Annual Recurring Revenue | $936,394 | $735,749 | | Cloud Annual Recurring Revenue | $400,271 | $287,246 | | Subscription Net Retention Rate | 112 % | 116 % | Adjusted EBITDA (Non-GAAP) (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $88,789 | $100,935 | $253,253 | $276,203 | [Components of Results of Operations](index=48&type=section&id=Components%20of%20Results%20of%20Operations) - Subscription revenues consist of cloud services, subscription-based on-premises licenses, and related support services. Cloud revenues are recognized ratably over the contract term, while most on-premises license revenues are recognized at a point in time[217](index=217&type=chunk) - Perpetual license revenues are generally recognized at a point in time upon software availability, but the company is focusing sales efforts on subscription-based offerings, expecting perpetual license revenue to remain immaterial[218](index=218&type=chunk)[219](index=219&type=chunk) - Maintenance revenues for perpetual licenses are recognized ratably over the contract term and are expected to gradually decrease as customers transition to subscription models. Professional services revenues are recognized as services are performed[220](index=220&type=chunk)[221](index=221&type=chunk) - Research and development, sales and marketing, and general and administrative expenses are all expected to increase in absolute dollars due to continued investment in products, customer acquisition efforts, and costs associated with operating as a public company[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) Total Revenues (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $371,951 | $361,807 | $1,106,337 | $1,037,345 | | Subscription revenues | $214,009 | $193,690 | $618,799 | $517,955 | | Perpetual license revenues | $1,208 | $2,846 | $6,180 | $19,085 | | Maintenance revenues | $127,909 | $137,569 | $392,221 | $420,888 | | Professional services revenues | $28,825 | $27,702 | $89,137 | $79,417 | - Total revenues increased by **3%** for the three months and **7%** for the nine months ended September 30, 2022, primarily due to a **10%** and **19%** increase in subscription revenues, respectively, partially offset by decreases in perpetual license and maintenance revenues[236](index=236&type=chunk)[237](index=237&type=chunk) - Cost of software revenues increased by **27%** for the three months and **28%** for the nine months ended September 30, 2022, primarily due to increases in fees paid to third-party vendors for hosting services, royalties, and personnel-related expenses[250](index=250&type=chunk)[251](index=251&type=chunk) - Research and development expenses increased by **27%** for the three months and **28%** for the nine months ended September 30, 2022, mainly driven by a **$12.8 million** and **$43.2 million** increase in salaries and other personnel-related expenses (including stock-based compensation), respectively, due to increased headcount[259](index=259&type=chunk)[260](index=260&type=chunk) - Interest and other expense, net, decreased by **30%** for the three months and **55%** for the nine months ended September 30, 2022, primarily due to a decrease in interest expense on interest rate swaps and a lower debt balance, along with an increase in interest income, partially offset by a decrease in revaluation gains on euro term loans[269](index=269&type=chunk)[270](index=270&type=chunk) [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) Cash Flows (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Cash provided by operating activities | $139,347 | $142,393 | | Cash used in investing activities | $(115,230) | $(22,365) | | Cash provided by (used in) financing activities | $33,991 | $(46,673) | - As of September 30, 2022, the company had **$647.6 million** in available cash, cash equivalents, restricted cash, and short-term investments, an increase from **$498.1 million** at December 31, 2021[273](index=273&type=chunk) - Net cash provided by operating activities for the nine months ended September 30, 2022, was **$139.3 million**, primarily driven by a decrease in accounts receivable and an increase in income tax payable, partially offset by decreases in accounts payable and contract liabilities[278](index=278&type=chunk)[279](index=279&type=chunk) - Net cash used in investing activities significantly increased to **$115.2 million** for the nine months ended September 30, 2022, primarily due to a **$181.2 million** in purchases of investments[281](index=281&type=chunk) [Critical Accounting Estimates](index=61&type=section&id=Critical%20Accounting%20Estimates) - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts, which are regularly evaluated[296](index=296&type=chunk) - **No material changes** to critical accounting policies and estimates were reported compared to the Annual Report on Form 10-K filed on March 24, 2022[297](index=297&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=62&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate sensitivity and foreign currency exchange risk [Interest Rate Sensitivity](index=62&type=section&id=Interest%20Rate%20Sensitivity) - The company's long-term debt of **$1.84 billion** is subject to interest rate risk; a hypothetical quarter-point change in interest rates would increase or decrease interest expense by approximately **$5.0 million** annually[299](index=299&type=chunk) - To reduce the financial impact of interest rate increases, the company entered into two interest rate swaps for a total notional amount of **$1.3 billion**, with a fixed rate of **1.525%**, maturing by December 2022[300](index=300&type=chunk) [Foreign Currency Exchange Risk](index=62&type=section&id=Foreign%20Currency%20Exchange%20Risk) - Foreign currency exchange rate fluctuations, particularly the strengthening U.S. dollar, adversely impacted reported revenue by approximately **$15 million** and **$32 million** in the three and nine months ended September 30, 2022, respectively[302](index=302&type=chunk)[376](index=376&type=chunk) [Foreign Exchange Forward Contracts](index=62&type=section&id=Foreign%20Exchange%20Forward%20Contracts) - The company enters into foreign exchange forward contracts as cash flow hedges to reduce the impact of foreign currency exchange rate fluctuations on its largest foreign currency exposures, specifically Indian Rupee expenses[303](index=303&type=chunk) - As of September 30, 2022, remaining open foreign exchange contracts are hedging Indian rupee expenses and have a maturity of approximately twelve months or less, with notional amounts to buy **$109.4 million** of Indian rupees[304](index=304&type=chunk)[305](index=305&type=chunk) [Recent Accounting Pronouncements](index=64&type=section&id=Recent%20Accounting%20Pronouncements) - The company does not expect the reference rate reform and the adoption of ASU 2020-04 and ASU 2021-01 to have a material impact on its consolidated financial statements and disclosures[76](index=76&type=chunk) [Item 4. Controls and Procedures](index=64&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concludes that disclosure controls were effective as of September 30, 2022, with no material changes in internal control [Evaluation of Disclosure Controls and Procedures](index=64&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, with the participation of the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were **effective at the reasonable assurance level** as of September 30, 2022[308](index=308&type=chunk) [Changes in Internal Control over Financial Reporting](index=64&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were **no changes** in internal control over financial reporting identified during the period that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[309](index=309&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=64&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) - Management believes that disclosure controls and procedures and internal control over financial reporting are designed to provide **reasonable assurance, but not absolute assurance**, that objectives are met due to inherent limitations in all control systems[310](index=310&type=chunk) [Part II. Other Information](index=65&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=65&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings but none are expected to have a material adverse effect on its financials - The company is a party to various legal proceedings and claims arising from the normal course of its business activities, including employment and intellectual property related matters[312](index=312&type=chunk) - **No current legal proceedings** are deemed by management to have a material adverse effect on the company's business, financial condition, results of operations, or cash flows[312](index=312&type=chunk) - Litigation is subject to inherent uncertainties, and an unfavorable outcome could result in a material adverse impact on the company's financial position and results of operation[312](index=312&type=chunk) [Item 1A. Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could adversely affect the company's business, including customer retention and security [Risk Factor Summary](index=65&type=section&id=Risk%20Factor%20Summary) - Key risks include the inability to attract and retain customers, non-renewal of subscriptions and maintenance contracts, rapid subscription revenue growth not being indicative of future growth, security breaches, and adverse macroeconomic factors (inflationary pressures, geopolitical disruptions, and the effects of the COVID-19 pandemic)[315](index=315&type=chunk) - Other significant risks involve challenges in successfully managing the strategy and business model transition for cloud- and subscription-based offerings, scaling operations, competing effectively, responding to technological advances, and successful research and development efforts[315](index=315&type=chunk)[316](index=316&type=chunk) [Risks Related to Our Business and Industry](index=67&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) - Failure to attract and retain customers or renew subscriptions could harm future results, as customers have no contractual obligation to renew and may terminate contracts, impacting revenue growth and predictability[318](index=318&type=chunk)[320](index=320&type=chunk) - Rapid subscription revenue growth in recent periods (**19.5% for nine months ended September 30, 2022**) may not be indicative of future growth, and sustaining it depends on factors like customer acquisition, expansion, and product development[322](index=322&type=chunk)[323](index=323&type=chunk) - Security breaches or incidents may compromise product integrity, create service outages, allow unauthorized access to data, harm reputation, and lead to significant liability and costs, especially with increasing cloud product development[324](index=324&type=chunk)[325](index=325&type=chunk) - Global macroeconomic factors, including inflationary pressures, geopolitical disruptions, and the COVID-19 pandemic, have adversely affected customer buying patterns, sales cycles, and payment timeliness, impacting revenue growth expectations[331](index=331&type=chunk) - Unsuccessful management of the cloud- and subscription-based business model transition, including the migration of traditional PowerCenter products to cloud solutions, could negatively affect results due to increased costs and potential delays[334](index=334&type=chunk)[337](index=337&type=chunk) - Fluctuations in quarterly or annual operating results, particularly for on-premises subscription license and perpetual license revenues, are expected due to sales cycles, new product introductions, and economic uncertainty, making period-to-period comparisons unreliable[364](index=364&type=chunk) - Sales prices may decrease due to competitive pricing pressures, discounts, and unfavorable foreign currency exchange rates, which adversely impacted reported revenue by approximately **$15 million** in the three months and **$32 million** in the nine months ended September 30, 2022[375](index=375&type=chunk)[376](index=376&type=chunk) [Risks Related to Regulation](index=89&type=section&id=Risks%20Related%20to%20Regulation) - The effective tax rate is difficult to project and can be adversely affected by changes in applicable tax principles, increased tax rates, new tax laws, revised interpretations of existing tax laws, and adverse results of tax examinations[415](index=415&type=chunk) - Failure to adequately protect personal information or comply with evolving global data protection and privacy laws (e.g., EU GDPR, California CCPA/CPRA) could lead to significant fines, enforcement actions, private lawsuits, and reputational damage[420](index=420&type=chunk)[424](index=424&type=chunk)[431](index=431&type=chunk) - The company is subject to increasingly complex regulatory and compliance obligations, including anti-corruption and anti-bribery laws (FCPA, UK Bribery Act) and governmental export/import controls, which may strain resources and divert management's attention[436](index=436&type=chunk)[439](index=439&type=chunk) [Risks Related to Our International Operations](index=95&type=section&id=Risks%20Related%20to%20Our%20International%20Operations) - International operations, which accounted for approximately **32% of revenue** from outside North America for the nine months ended September 30, 2022, expose the company to increased risks such as geopolitical disruption, foreign currency fluctuations, increased operating costs, and greater difficulty in protecting intellectual property[447](index=447&type=chunk)[448](index=448&type=chunk) - Fluctuations in foreign currency exchange rates, particularly the general strengthening of the U.S. dollar, negatively impacted reported revenue by approximately **$15 million** in the three months and **$32 million** in the nine months ended September 30, 2022[452](index=452&type=chunk) - Sustaining and expanding international business requires significant management attention and financial resources, with risks including developing localized products, managing diverse legal and cultural systems, and potential delays in growth[453](index=453&type=chunk)[454](index=454&type=chunk) [Risks Related to Our Sales to Government Entities](index=98&type=section&id=Risks%20Related%20to%20Our%20Sales%20to%20Government%20Entities) - Sales to government entities (historically **10% or less of revenue**) are subject to challenges such as budgetary constraints, high competition, lengthy sales cycles, and unique contractual provisions that are not typical of commercial contracts[457](index=457&type=chunk)[458](index=458&type=chunk)[463](index=463&type=chunk) - Failure to comply with complex procurement laws and regulations could lead to civil and criminal penalties, administrative sanctions (e.g., termination of contracts, debarment), and serious reputational harm[464](index=464&type=chunk)[465](index=465&type=chunk) - An agreement with the U.S. Department of Defense limits control over Informatica Federal Operations Corporation to maintain facility security clearances, and termination of this agreement could impact sales to U.S. government classified agencies[461](index=461&type=chunk)[462](index=462&type=chunk) [Risks Related to Our Intellectual Property](index=101&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) - The use of open source software in the company's technologies could lead to unanticipated license conditions, potential litigation, and requirements to offer solutions for no cost or make source code available[470](index=470&type=chunk) - The company faces intellectual property infringement claims, which can be costly to defend, result in product shipment delays, or require entering into royalty or licensing agreements, potentially forcing product redesign or discontinuation[472](index=472&type=chunk)[475](index=475&type=chunk) - Inadequate protection of proprietary rights (patents, copyrights, trademarks, trade secrets) could allow third parties to develop equivalent products, duplicate technology, or design around existing patents, harming sales efforts and requiring costly litigation[476](index=476&type=chunk)[477](index=477&type=chunk) [Risks Related to Our Indebtedness](index=103&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) - Substantial indebtedness (**$1.87 billion** as of September 30, 2022) could make it difficult to satisfy obligations, limit additional financing, and require a significant portion of cash flows to be dedicated to debt service, increasing vulnerability to adverse economic conditions[481](index=481&type=chunk) - Inability to generate sufficient cash flow to service debt obligations could lead to substantial liquidity problems, forced asset disposals, or restructuring, potentially resulting in bankruptcy or liquidation[485](index=485&type=chunk)[487](index=487&type=chunk) - Variable rate indebtedness subjects the company to interest rate risk; each quarter-point change in interest rates could result in approximately a **$5.0 million** change in annual interest expense on its indebtedness[494](index=494&type=chunk) [Risks Related to Ownership of Our Class A Common Stock and Our Capitalization Structure](index=105&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock%20and%20Our%20Capitalization%20Structure) - The market price of Class A common stock may be volatile due to various factors, including operating performance, market valuations, sales of shares, and analyst coverage, potentially leading to substantial costs from securities class action litigation[497](index=497&type=chunk) - Substantial future sales of Class A common stock by existing stockholders or through equity compensation plans could depress the market price and make it more difficult for the company to sell equity securities in the future[499](index=499&type=chunk)[500](index=500&type=chunk) - The Sponsors (Permira and CPP Investments) control approximately **86% of the combined voting power**, allowing them to significantly influence corporate actions and potentially delay or prevent a change of control, which could conflict with other stockholders' interests[501](index=501&type=chunk)[514](index=514&type=chunk) - The multi-class share structure may result in a lower or more volatile market price for Class A common stock and makes the company ineligible for inclusion in certain stock indices, potentially reducing investment by passive funds[505](index=505&type=chunk) [General Risk Factors](index=111&type=section&id=General%20Risk%20Factors) - Being a public company strains resources, diverts management's attention, and increases legal and financial compliance costs due to reporting and corporate governance requirements, potentially harming business and prospects[519](index=519&type=chunk) - Operations are vulnerable to business interruptions from fire, earthquake, power loss, telecommunications failure, natural disasters, acts of terrorism, war, and other geopolitical unrest, which could disrupt operations and recovery[522](index=522&type=chunk) - The company may be subject to litigation (governmental, intellectual property, commercial, employment, product liability, class action, whistleblower), and unfavorable outcomes could result in substantial damages, significant costs, and diversion of management's attention and resources[525](index=525&type=chunk)[526](index=526&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=112&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the use of IPO proceeds, primarily for repaying outstanding indebtedness, with no unregistered sales - There were **no recent unregistered sales** of equity securities[527](index=527&type=chunk) - Net proceeds from the IPO totaled **$915.7 million**, primarily used to repay outstanding indebtedness under the First Lien Credit Agreement and Second Lien Credit Agreement[529](index=529&type=chunk) - The remainder of the net proceeds, if any, is intended for working capital, other general corporate purposes, or the acquisition of, or investment in, complementary products, technologies, solutions, or businesses[529](index=529&type=chunk) [Item 3. Defaults Upon Senior Securities](index=113&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities - There were **no defaults** upon senior securities[531](index=531&type=chunk) [Item 4. Mine Safety Disclosures](index=113&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are **not applicable** to the company[532](index=532&type=chunk) [Item 5. Other Information](index=113&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - There is **no other information** to report[533](index=533&type=chunk) [Item 6. Exhibits](index=114&type=section&id=Item%206.%20Exhibits) This section provides an index of exhibits filed with the Form 10-Q, including officer certifications and XBRL documents - The exhibit index includes certifications from the Principal Executive Officer (31.1) and Principal Financial Officer (31.2), as well as certifications pursuant to 18 U.S.C. Section 1350 (32.1†)[536](index=536&type=chunk) - Inline XBRL documents are also included in the exhibits, covering the instance document, taxonomy extension schema, calculation linkbase, definition linkbase, label linkbase, presentation linkbase, and the cover page interactive data file[536](index=536&type=chunk) - Certifications attached as Exhibit 32.1† are deemed furnished and not filed with the SEC and are not incorporated by reference into other filings[537](index=537&type=chunk) [Signatures](index=115&type=section&id=Signatures) This section contains the signatures of the company's authorized officers certifying the report's submission - The report is signed on behalf of Informatica Inc. by Amit Walia, Chief Executive Officer and Director, and Eric Brown, Executive Vice President and Chief Financial Officer, on November 10, 2022[540](index=540&type=chunk)

Informatica Inc. (NYSE:INFA) Q3 2022 Earnings Conference Call October 26, 2022 4:30 PM ET Company Participants Victoria Hyde-Dunn - Vice President of Investor Relations Amit Walia - Chief Executive Officer Eric Brown - Executive Vice President & Chief Financial Officer Conference Call Participants Alex Zukin - Wolfe Research Matthew Hedberg - RBC Capital Markets Brad Zelnick - Deutsche Bank Andrew Nowinski - Wells Fargo Koji Ikeda - BofA Securities Tyler Radke - Citigroup Pinjalim Bora - JPMorgan Frederi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q _____________________________ (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-40936 _____________________________ Informatica Inc. ____________________________ ...