Informatica (INFA) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Results Overview CEO Commentary Informatica CEO Amit Walia highlighted strong Q2 2025 performance, exceeding key revenue and profit targets driven by significant cloud subscription ARR growth, reaffirming IDMC's AI data management leadership and Salesforce transaction progress - The company demonstrated strong performance in Q2, with all key revenue and profitability metrics exceeding the midpoint of expectations, and cloud subscription ARR growing by 28% year-over-year[4] - Informatica's CLAIRE AI-powered IDMC platform maintains a leading position in AI, assisting customers and partners in building trusted data foundations, simplifying governance, and achieving seamless data asset integration[4] - The company continues to advance its transaction with Salesforce[4] Financial Highlights In Q2 2025, Informatica's cloud subscription ARR reached $901 million, growing 28.2%, with total ARR at $1.72 billion, up 3.1%, and GAAP total revenue increasing 1.7% to $407.3 million Key Financial Metrics for Q2 2025 | Metric | Q2 2025 | Year-over-Year Growth (Constant Currency) | | :-------------------------------- | :---------------- | :----------------------------- | | Cloud Subscription Annual Recurring Revenue (ARR) | $901 million USD | 28.2% | | Total Annual Recurring Revenue (ARR) | $1.72 billion USD | 2.9% | | GAAP Total Revenue | $407.3 million USD | 0.7% | | GAAP Cloud Subscription Revenue | $209.9 million USD | 30.1% | | GAAP Operating Loss | $(0.1) million USD | N/A | | Non-GAAP Operating Income | $109.4 million USD | N/A | | GAAP Operating Cash Flow | $24.6 million USD | N/A | | Adjusted Unlevered Free Cash Flow (After-Tax) | $58.7 million USD | N/A | Business Highlights: Product Innovation and Partnerships Informatica achieved significant Q2 2025 business growth and product innovation, with cloud transactions up 33%, cloud subscription NRR at 120%, and cloud subscription ARR customer growth of 7%, launching new AI services and expanding key cloud partnerships - As of June 30, 2025, 128.2 trillion cloud transactions were processed monthly, representing a 33% year-over-year increase[11] - As of June 30, 2025, the cloud subscription Net Retention Rate (NRR) reached 120%[11] - As of June 30, 2025, the number of cloud subscription ARR customers reached 2,509, a 7% year-over-year increase[11] - Announced the launch of AI Agent Engineering and CLAIRE Agents, designed to build, connect, and manage intelligent multi-agent AI systems and automate complex cloud data operations through a unified no-code environment[11] - Expanded partnerships with AWS, Databricks, Microsoft, NVIDIA, Oracle, Salesforce, and Snowflake, introducing new products and features such as GenAI capability certifications, AI agent integrations, data integration, and Master Data Management (MDM) extensions[11][12][15] Strategic Business Developments Pending Acquisition by Salesforce Informatica announced a definitive acquisition agreement with Salesforce on May 27, 2025, and will not hold an earnings call or provide financial guidance due to the pending transaction - Informatica announced on May 27, 2025, that it has entered into a definitive agreement to be acquired by Salesforce[13] - Due to the pending transaction with Salesforce, Informatica will not host an earnings conference call or provide financial guidance[14] Industry Recognition Informatica was recognized as a leader in multiple industry reports, including the 2025 Gartner® Magic Quadrant™ for Integration Platform as a Service and Forrester Wave™: Master Data Management Solutions, Q2 2025 - Recognized as a leader in the 2025 Gartner® Magic Quadrant™ for Integration Platform as a Service[15] - Recognized as a leader in the Forrester Wave™: Master Data Management Solutions, Q2 2025[15] - Recognized as a leader in the Nucleus Research iPaaS Technology Value Matrix 2025 and a Champion in the Bloor Research Master Data Management Market Update 2025[15] Definitions of Non-GAAP Measures and Key Metrics Non-GAAP Financial Measures Definitions This section defines Informatica's non-GAAP financial measures, including non-GAAP operating income and margin, Adjusted EBITDA, and Adjusted Unlevered Free Cash Flow (After-Tax), explaining how they provide a clearer view of operating performance by excluding non-cash or non-recurring items - Non-GAAP operating income and margin, along with non-GAAP net income, exclude stock-based compensation, amortization, restructuring, and acquisition-related costs, adjusted for income tax effects, to provide comparable operating performance analysis[21] - Adjusted EBITDA assesses the company's profitability relative to its balance sheet debt by adjusting GAAP net income (loss) for income taxes, interest, stock-based compensation, and amortization, among other items[22] - Adjusted unlevered free cash flow (after-tax) represents operating cash flow less purchases of property and equipment, adjusted for interest payments, sponsor-related costs, and acquisition and restructuring costs, serving as a measure of the company's long-term liquidity[23] Key Business Metrics Definitions This section defines Informatica's key business metrics, including Annual Recurring Revenue (ARR) and its segments (Cloud Subscription ARR, Self-Managed Subscription ARR, Maintenance ARR), and Cloud Subscription Net Retention Rate (NRR), used to track the annual cash value of recurring contracts and existing customer growth - Annual Recurring Revenue (ARR) represents the annualized billing amount for all active maintenance and subscription agreements, serving as a key indicator of the annual cash value of all recurring contracts[24] - Cloud Subscription ARR, Self-Managed Subscription ARR, and Maintenance ARR represent the portions of ARR attributable to hosted cloud contracts, self-managed subscription contracts, and maintenance contracts, respectively[25][27][28] - Cloud Subscription Net Retention Rate (NRR) measures the company's ability to sell additional products to its existing cloud subscription customer base, calculated by comparing contract values for the same customer cohort across different periods[29] Revenue Disaggregation Principles This section outlines Informatica's revenue recognition methods, categorizing revenue as recognized over time (cloud subscription, self-managed subscription support, maintenance), at a point in time (self-managed subscription license), and as services are rendered (professional services), noting the reclassification of perpetual license revenue to reflect a cloud-first strategy - Cloud subscription revenue, self-managed subscription support and other revenue, and maintenance revenue are all recognized over the contract term[30] - Self-managed subscription license revenue is recognized at a point in time when the software license is made available or the subscription term commences[31] - Professional services revenue is recognized as services are rendered[32] - Due to the transition to a cloud-first, consumption-driven strategy, perpetual license revenue has been combined with self-managed subscription license revenue, with prior periods retrospectively adjusted for comparability[33] Consolidated Financial Statements (GAAP) Consolidated Statements of Operations Informatica reported a GAAP net loss of $46.49 million in Q2 2025, compared to a net income of $48.28 million in the prior year, with total revenue increasing to $407.3 million from $400.6 million, but operating income shifting to an operating loss of $0.089 million Consolidated Statements of Operations Summary (As of June 30) | Metric | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | H1 2025 (thousand USD) | H1 2024 (thousand USD) | | :-------------------------------- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | Subscription Revenue | 287,034 | 264,306 | 571,044 | 516,304 | | Maintenance and Professional Services Revenue | 120,310 | 136,319 | 240,197 | 272,928 | | Total Revenue | 407,344 | 400,625 | 811,241 | 789,232 | | Operating Income (Loss) | (89) | 9,464 | 33,738 | 12,689 | | Net Income (Loss) | (4,649) | 4,828 | (3,309) | 14,162 | | Basic Net Income (Loss) Per Share | (0.02) | 0.02 | (0.01) | 0.05 | | Diluted Net Income (Loss) Per Share | (0.02) | 0.02 | (0.01) | 0.05 | Consolidated Balance Sheets As of June 30, 2025, Informatica's total assets slightly decreased to $5.2547 billion from $5.2795 billion at December 31, 2024, with cash and cash equivalents increasing to $1.0523 billion, total liabilities decreasing to $2.8702 billion, and total stockholders' equity rising to $2.3845 billion Consolidated Balance Sheets Summary (As of) | Metric | June 30, 2025 (thousand USD) | December 31, 2024 (thousand USD) | | :-------------------------------- | :----------------------- | :----------------------- | | Cash and Cash Equivalents | 1,052,275 | 912,460 | | Total Current Assets | 1,934,423 | 1,987,519 | | Total Assets | 5,254,719 | 5,279,532 | | Total Current Liabilities | 961,282 | 1,090,717 | | Total Liabilities | 2,870,182 | 2,972,218 | | Total Stockholders' Equity | 2,384,537 | 2,307,314 | Consolidated Statements of Cash Flows In Q2 2025, Informatica's operating cash flow was $24.576 million, investing cash flow was $51.675 million, and financing cash outflow was $1.291 million, resulting in a net increase of $96.01 million in cash and cash equivalents, with H1 operating cash flow significantly increasing to $178.8 million Consolidated Statements of Cash Flows Summary (As of June 30) | Metric | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | H1 2025 (thousand USD) | H1 2024 (thousand USD) | | :-------------------------------- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | Net Cash from Operating Activities | 24,576 | 24,852 | 178,750 | 156,494 | | Net Cash from Investing Activities | 51,675 | (71,640) | 45,336 | (67,210) | | Net Cash from Financing Activities | (1,291) | (8,025) | (120,793) | (15,910) | | Net Increase (Decrease) in Cash and Cash Equivalents | 96,010 | (56,603) | 139,815 | 66,022 | | Cash and Cash Equivalents at End of Period | 1,052,275 | 798,465 | 1,052,275 | 798,465 | Non-GAAP Reconciliations and Supplemental Metrics GAAP to Non-GAAP Net Income Reconciliation This section reconciles GAAP net income (loss) to non-GAAP net income by adding back non-cash or non-recurring items like stock-based compensation, amortization, restructuring, and acquisition-related costs, adjusted for income tax effects, to provide a more comparable view of profitability, with Q2 2025 non-GAAP net income at $56.985 million and diluted non-GAAP net income per share at $0.18 GAAP to Non-GAAP Net Income Reconciliation (As of June 30) | Metric | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | H1 2025 (thousand USD) | H1 2024 (thousand USD) | | :-------------------------------- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | GAAP Net Income (Loss) | (4,649) | 4,828 | (3,309) | 14,162 | | Stock-Based Compensation Expense | 71,886 | 68,576 | 133,502 | 132,677 | | Amortization of Intangible Assets | 25,548 | 32,745 | 50,870 | 65,518 | | Acquisition-Related Costs | 12,028 | 2,403 | 12,028 | 7,205 | | Non-GAAP Net Income | 56,985 | 71,232 | 126,052 | 140,456 | | Non-GAAP Diluted Net Income Per Share | 0.18 | 0.23 | 0.41 | 0.45 | GAAP to Non-GAAP Operating Income Reconciliation This section reconciles GAAP operating income (loss) to non-GAAP operating income by adding back items such as stock-based compensation and amortization of intangible assets, with Q2 2025 non-GAAP operating income at $109.4 million and a non-GAAP operating margin of 26.9% GAAP to Non-GAAP Operating Income Reconciliation (As of June 30) | Metric | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | H1 2025 (thousand USD) | H1 2024 (thousand USD) | | :-------------------------------- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | GAAP Operating Income (Loss) | (89) | 9,464 | 33,738 | 12,689 | | Stock-Based Compensation Expense | 71,886 | 68,576 | 133,502 | 132,677 | | Amortization of Intangible Assets | 25,548 | 32,745 | 50,870 | 65,518 | | Non-GAAP Operating Income | 109,373 | 114,860 | 230,938 | 224,116 | | Non-GAAP Operating Margin | 26.9% | 28.7% | 28.5% | 28.4% | Adjusted EBITDA Reconciliation This section reconciles GAAP net income (loss) to Adjusted EBITDA by adding back income taxes, interest, stock-based compensation, and amortization, with Q2 2025 Adjusted EBITDA at $112.7 million and H1 at $237.5 million Adjusted EBITDA Reconciliation (As of June 30) | Metric | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | H1 2025 (thousand USD) | H1 2024 (thousand USD) | | :-------------------------------- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | GAAP Net Income (Loss) | (4,649) | 4,828 | (3,309) | 14,162 | | Income Tax Benefit | (30,807) | (19,081) | (30,187) | (44,545) | | Interest Expense | 29,552 | 38,333 | 59,009 | 77,430 | | Stock-Based Compensation Expense | 71,886 | 68,576 | 133,502 | 132,677 | | Amortization of Intangible Assets | 25,548 | 32,745 | 50,870 | 65,518 | | Adjusted EBITDA | 112,674 | 118,713 | 237,543 | 230,187 | Adjusted Unlevered Free Cash Flow Reconciliation This section reconciles operating cash flow to Adjusted Unlevered Free Cash Flow (After-Tax) by adjusting for property and equipment purchases, interest payments, and other specific costs, with Q2 2025 Adjusted Unlevered Free Cash Flow at $58.705 million and a margin of 14% Adjusted Unlevered Free Cash Flow Reconciliation (As of June 30) | Metric | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | H1 2025 (thousand USD) | H1 2024 (thousand USD) | | :-------------------------------- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | Net Cash from Operating Activities | 24,576 | 24,852 | 178,750 | 156,494 | | Less: Purchases of Property and Equipment | (1,561) | (1,175) | (4,708) | (1,565) | | Adjusted Free Cash Flow (After-Tax) | 28,480 | 33,315 | 184,453 | 178,513 | | Add: Interest Paid | 30,225 | 37,922 | 60,227 | 75,704 | | Adjusted Unlevered Free Cash Flow (After-Tax) | 58,705 | 71,237 | 244,680 | 254,217 | | Adjusted Unlevered Free Cash Flow (After-Tax) Margin | 14% | 18% | 30% | 32% | Key Business Metrics (ARR, NRR, Customers, Transactions) This section presents Informatica's key business metrics, including various Annual Recurring Revenue (ARR) types, Cloud Subscription Net Retention Rate (NRR), cloud subscription ARR customer count, and monthly cloud transaction volume, demonstrating the company's continuous cloud business growth and expanding customer base Key Business Metrics (As of June 30) | Metric | 2025 (thousand USD) | 2024 (thousand USD) | | :---------------------------------------- | :---------------- | :---------------- | | Cloud Subscription Annual Recurring Revenue | 900,963 | 702,600 | | Self-Managed Subscription Annual Recurring Revenue | 399,177 | 493,935 | | Perpetual License Maintenance Annual Recurring Revenue | 419,548 | 471,697 | | Total Annual Recurring Revenue | 1,719,688 | 1,668,232 | | Cloud Subscription Net Retention Rate (Global Parent Level) | 120% | 126% | | Total Cloud Subscription Annual Recurring Revenue Customers | 2,509 | 2,340 | | Cloud Transactions Processed Monthly (trillion) | 128.2 | 96.6 | Disaggregation of Revenues This section details Informatica's revenue sources by recognition method and type, highlighting strong cloud subscription revenue growth and declining self-managed subscription support, maintenance, and license revenues, reflecting the company's ongoing shift to a cloud-first strategy Disaggregation of Revenues (As of June 30) | Revenue Type | Q2 2025 (thousand USD) | Q2 2024 (thousand USD) | H1 2025 (thousand USD) | H1 2024 (thousand USD) | | :---------------------------------------- | :----------------------- | :----------------------- | :-------------------- | :-------------------- | | Cloud Subscription | 209,931 | 161,422 | 409,866 | 312,860 | | Self-Managed Subscription Support and Other | 40,964 | 48,908 | 82,460 | 97,499 | | Maintenance | 102,919 | 116,482 | 206,128 | 234,160 | | Total Revenue Recognized Over Time | 353,814 | 326,812 | 698,454 | 644,519 | | Self-Managed Subscription License (Recognized at a Point in Time) | 36,139 | 53,976 | 78,718 | 105,945 | | Professional Services | 17,391 | 19,837 | 34,069 | 38,768 | | Total Revenue | 407,344 | 400,625 | 811,241 | 789,232 | Net Debt Reconciliation This section provides Informatica's net debt reconciliation, showing the company's net debt decreased to $515 million as of June 30, 2025, from $591 million at December 31, 2024 Net Debt Reconciliation (As of) | Metric | June 30, 2025 (million USD) | December 31, 2024 (million USD) | | :---------------------------------------- | :----------------------- | :----------------------- | | USD Term Loan | 1,814 | 1,823 | | Less: Cash, Cash Equivalents, and Short-Term Investments | (1,299) | (1,232) | | Total Net Debt | 515 | 591 | Additional Company Information Forward-Looking Statements This section contains forward-looking statements regarding Informatica's proposed acquisition by Salesforce, management plans, product advantages, and market partnerships, which inherently involve risks and uncertainties that could cause actual results to differ materially from expectations, advising investors to exercise caution and refer to SEC filings - The press release contains forward-looking statements regarding Informatica's proposed acquisition by Salesforce, management plans, the potential benefits of AI and machine learning in products, and market and partnership relationships[15][16] - Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations, including those related to the Salesforce acquisition, macroeconomic conditions, customer attraction and retention, product development, and competition[17] - Investors should not place undue reliance on forward-looking statements and should consult the "Risk Factors" sections in the company's annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC for additional information[16][18] About Informatica & Contacts Informatica is an AI-driven enterprise cloud data management leader, empowering businesses to unlock the full value of data and AI through its CLAIRE® AI-powered Intelligent Data Management Cloud (IDMC) platform, natively integrated with major cloud providers, serving over 5,000 global customers, with investor and public relations contacts also provided - Informatica is an AI-driven enterprise cloud data management leader, empowering businesses to unlock the full value of data and AI through its Intelligent Data Management Cloud (IDMC) platform[36] - The IDMC platform, powered by CLAIRE® AI, offers a suite of industry-leading integrated solutions to connect, manage, and unify data across any cloud, hybrid, or multi-cloud environment[36] - The platform is natively integrated with all major cloud providers, data warehouses, and analytics tools, serving over 5,000 customers in nearly 100 countries, including more than 80 Fortune 100 companies[36]