Informatica (INFA) - 2023 Q3 - Quarterly Report

Subscription Revenue and Growth - Subscription revenue increased to $703.3 million for the nine months ended September 30, 2023, compared to$618.8 million for the same period in 2022, representing a growth of approximately 13.6%[129] - Total Annual Recurring Revenue (ARR) reached $1,575.9 million as of September 30, 2023, up from$1,467.8 million in 2022, indicating a year-over-year increase of about 7.4%[153] - The average Subscription ARR per customer increased from $252,000 in 2022 to$284,000 in 2023, reflecting a growth of approximately 12.7%[146] - Subscription Annual Recurring Revenue (ARR) is a key metric, reflecting the annualized cash value collected over a 12-month period from subscription contracts, excluding maintenance contracts[158] - Cloud Subscription ARR is a subset of Subscription ARR, providing visibility on the size and growth rate of cloud-based contracts[161] - The company expects subscription revenues to account for substantially all of its software revenues going forward due to the cessation of active selling of perpetual licenses[191] Customer Retention and Acquisition - Subscription Net Retention Rate was 106% as of September 30, 2023, down from 112% in 2022, while Cloud Subscription Net Retention Rate improved to 118% from 115%[153] - 54% of subscription customers as of September 30, 2023, did not have a prior perpetual license maintenance contract, indicating successful new customer acquisition efforts[144] - The subscription renewal rate remained stable at 94% for both September 30, 2023, and 2022, while maintenance renewal rate was 95% in 2023 compared to 96% in 2022[147] Financial Performance - The company reported a GAAP net income of $79,276 thousand for the three months ended September 30, 2023, compared to a net loss of$15,602 thousand in the same period of 2022[167] - Adjusted EBITDA for the three months ended September 30, 2023, was $132,189 thousand, an increase from$88,789 thousand in the same period of 2022[167] - Total revenues increased by 10% to $408.6 million for the three months ended September 30, 2023, compared to$371.9 million for the same period in 2022, primarily driven by a 22% increase in subscription revenues[187] - Subscription revenues reached $261.8 million, accounting for 64$214.0 million (58%) in the same period last year[189] - Net income for the three months ended September 30, 2023, was $79.3 million, a significant improvement from a net loss of$15.6 million in the same period in 2022[187] Revenue Composition and Changes - Perpetual license revenues decreased by 83% to $0.2 million for the three months ended September 30, 2023, down from$1.2 million in the same period in 2022, due to the cessation of active selling of perpetual licenses[192] - Maintenance revenues decreased to $124.3 million (30$127.9 million (34%) in the same period last year[195] - The company expects Maintenance ARR to decrease in future quarters as it shifts focus from perpetual licenses to cloud-based subscriptions[157] - Maintenance revenues are expected to continue to decrease gradually in dollar value and as a percentage of total revenue due to the cessation of active sales of perpetual licenses[196] Expenses and Cost Management - Research and development expenses increased to $85.9 million for the three months ended September 30, 2023, compared to$80.4 million in the same period last year[187] - Sales and marketing expenses decreased to $130.0 million (32$132.3 million (36% of total revenues) for the same period in 2022, a 2% decrease[212] - General and administrative expenses increased to $41.9 million (10$31.3 million (8% of total revenues) for the same period in 2022, a 34% increase[214] - Research and development expenses are expected to decrease in absolute dollars as the company focuses on cloud products[177] Cash Flow and Investments - As of September 30, 2023, the company had $869.1 million in available cash, cash equivalents, and short-term investments, up from$716.1 million at the end of 2022[227] - Net cash provided by operating activities for the nine months ended September 30, 2023 was $165.3 million, compared to$139.3 million for the same period in 2022[230] - Net cash used in investing activities for the nine months ended September 30, 2023 was $53.0 million, primarily due to$255.1 million in purchases of investments[232] - The company anticipates continuing to acquire businesses and technologies to enhance product offerings, which may require raising additional funds for future acquisitions[235] Debt and Interest - As of September 30, 2023, the company had long-term debt outstanding with a carrying value of $1.83 billion, with a hypothetical interest rate change of 0.25$4.6 million annually[249] - Interest income increased to $10.4 million for the three months ended September 30, 2023, compared to$2.8 million for the same period in 2022, a 271% increase[221] - Interest expense increased to $39.3 million for the three months ended September 30, 2023, compared to$22.2 million for the same period in 2022, a 77% increase[221] Restructuring and Workforce Changes - The company plans to reduce its workforce by approximately 450 employees, representing about 7% of its global workforce, as part of a restructuring plan announced in January 2023[181] - Restructuring costs increased to $28.1 million (2$70.6 million, compared to an expense of $2.8 million in the same period of 2022, reflecting a change of 2637$108.7 million in U.S. dollar equivalents for Indian rupee expenses[253] - The company has cash flow hedges for its Indian Rupee expense exposure, hedging on a rolling twelve-month basis[251] - A hypothetical 10% increase in the value of all applicable foreign currencies relative to the U.S. dollar would have had approximately a $10.3 million negative impact on operating loss for the nine months ended September 30, 2023[251]