It's my pleasure today to introduce you to Mike McLaughlin, CFO of Informatica. We've also got Victoria Hyde-Dunn here, the Head of Investor Relations for it. And if you have any questions in the audience that you'd like me to weave into the conversation, just feel free to raise your hand and I'm happy to get you a microphone. This is webcasted, so wait for the microphone to ask a question and we'll make sure we get it into the conversation. Mike, thanks for joining us today. Thanks for having us. Great location, great conference so far. Yeah. Why don't we start by just giving your thoughts on the, maybe recapping some of the key takeaways from the Q3 earnings call. You know, I see the cloud ARR was really something that stood out to me. It was really strong growth again and you gave a nice breakout of the different drivers of that cloud ARR this quarter. I think 25% from, like, new customers and 50% from the new workloads and then another 25% from modernization. So that was an interesting disclosure. But I'd love to hear kinda your thoughts on some of the key takeaways from the call. Sure. It was, at a high level, another consistent quarter for Informatica that is on the path to the medium-term guidance that we offered at our investor day in December of 2023. The cloud continues to grow in the mid-30s as we've expected it to, driven, as you pointed out, by approximately three-quarters of the growth being from new customers, new logos, new workloads from existing customers, and then 25% of that growth roughly coming from migration contributions of customers that are existing maintenance, users or self-managed subscription customers of Informatica moving their workloads to the cloud with what has historically been a, a two-to-one uplift. Put another way, of the 35.5%-36% growth we delivered in the quarter, 27 percentage points of that was from new customers and new workloads winning in the marketplace against the competition. And the last seven or eight percentage points of that was from migrating our existing customer base from their on-prem installed base to our cloud IDMC platform. It's consistent with the plan we've had all year and we're pleased to deliver another step on the road to getting to our long-term goals, which are double-digit, specifically 11% total ARR growth by the time we exit 2026 and double-digit total revenue growth in 2027 'cause there's a lag between those two metrics in a business like ours. The other components of what goes on in any quarter, of course, are the decline of our on-prem components. So the cloud is growing very nicely as we've discussed, but the on-prem business, which is maintenance from perpetual licenses sold in the past and on-prem self-managed subscriptions, also sold in the past and which are end of sale, those two buckets of revenue and ARR are in decline and will be in decline forever for Informatica 'cause we're not selling new into those buckets. We're only selling cloud. And those declined in line with our expectations. The maintenance bit of it declined in the mid-single digits and the self-managed decline was approximately 11%. The self-managed decline is higher as that's a less seasoned base than the maintenance component. And we expect that decline to accelerate in Q4 and we're guiding that to be 13%, again, according to plan. The maintenance decline is gonna be in the neighborhood of 6%-7%, again, very much consistent with what we've expected, for the year. All of those add up to a total revenue growth rate that's in the mid-single digits. As I described, as the cloud continues to grow and the sell and the on-prem continues to shrink, that's gonna blend up to an accelerating growth rate in the years ahead. Specifically, we expect total ARR growth to be faster in 2025 than 2024. We expect total revenue growth to be faster in 2025 than 2024. We expect that to be the same in 2026. The total ARR will grow faster in 2026 than 2025. Total revenue will grow faster in 2026 than 2025. That's because exiting this year, the cloud portion of our total revenue in ARR is gonna be almost 50%. It'll cross that threshold early in 2025. It'll be circa 60% in the end of 2025. It'll be 70% at the end of 2026 and so on, which will lead us to be what we think will be a sustainable double-digit grower, in the years ahead. That was a great overview. Thank you. And I do wanna get into some of the drivers of each of those three different buckets: the cloud, you know, of course, maintenance and self-managed. But maybe before we do that, when I think about maybe the underlying commonalities between whether it's a new customer coming to Informatica or a new workload getting deployed in Informatica or even an existing customer converting to cloud, I would imagine that they're all going through that same sort of process of modernizing their infrastructure, when they come to Informatica or when they come to launch a new workload. And so why, I guess, when a company undergoes this modernization of their entire infrastructure stack and they're leveraging more, you know, solutions like a Databricks or a Snowflake or a MongoDB, I guess, why would Informatica be part of, or how is Informatica part of that modernization effort? I'll answer that by starting with a brief description of what we do for those who maybe are familiar with it as you. We do data management, which means moving data from your sources, those essentially are your applications of which modern enterprise has hundreds, moving those in an organized and orchestrated and controlled way into your targets for data. And I say targets 'cause most enterprises have more than one data warehouse or data lake that they use for reporting, analytics, and data science. We catalog, govern, and curate that data, and we orchestrate workflows associated with data tasks. So telling the applications to give me the data, pushing it into the data warehouse, transforming it either on the way to the data warehouse or in the data warehouse itself using pushdown technology, and then in many cases using our app integration capabilities to orchestrate the applications, the analytical or reporting applications, or even operational applications that will pull that data out of the data warehouse and use it for a task. So when a company is moving their on-prem workload to a cloud infrastructure, to a cloud architecture, again, using Snowflake or Databricks or Redshift or BigQuery or any number of those types of targets for data, they need us to do all the work that I just described. Now, we target the enterprise, not the mid-market, and there's a few reasons for that. There are myriad ways to do your data management. You can do data management without Informatica, of course. There are point products that do pieces of it. There are companies that do mass ingestion, i.e., the bulk transfer of data from those applications into the data warehouse. There are companies that do the transformation piece, the transformation of the data either in flight or at the data warehouse. There are companies that do the data catalog and governance. There are companies that do the mastering of that data, which is our master data management business. And for companies that have relatively simple needs, that don't have much complexity and are willing to stitch those products together to get to the end goal, those products are fine for them. But the target audience for our services is the large, global, complex enterprise that needs what Informatica uniquely provides. That is a collection of the unambiguously best products in the data management sector. Category by category, whether it's data ingestion, whether it's data quality, whether it's master data management, whether it's data governance and catalog, we have the objectively best products according to Gartner, Forrester, and all the other waves. Good enough products are fine in some cases, but if you need the best products because you have the most sophisticated needs, you come to us. We offer those products on the industry's only true cloud-native multi-tenant, single logon, single pane of glass, single consumption-based pricing model platform. It's not just a platform meaning that the various products have the same suffix on them and we call that a platform. No, this is a built-from-the-ground-up cloud-native single logon, single pricing model platform that integrates all those best products together. So for companies that value having the ability to do it all on a pre-integrated basis and the ability to expand using the same pricing tokens, they come to Informatica. And the third piece, the third leg of the stool is that we do that supporting all of your vendors, i.e., all of your applications, all of your targets, all of your clouds. So every one of the clouds that you would consider using, we support deeply. And we support your cloud and hybrid or on-prem data management needs from our cloud platform. So if you put those together, we have the best products on the industry's only platform, as what we call Switzerland of data supporting all of the sources and targets of data and on-prem. Nobody else has that. And it's the enterprise customer that really values that. And that's where we win and that's where we play. And so, getting back, long answer to your initial question around Snowflake and Databricks, that's why we're relevant to that kind of a situation. Yeah. I think the complexity of the enterprise is largely underappreciated by many. I, you know, I was a software developer for a good portion of my life and writing interfaces to and from a lot of applications, just sending data and trying to massage the data. It works, it worked, you know, 30 years ago. But when you have, anytime you add a new application to your environment or a new workload or an application is upgraded or changed, like, changing that entire workflow process would be chaotic, I think, in a large environment. I don't know how you would do this without Informatica going forward. You're absolutely right. You know, we compete against companies that facilitate that approach. Mm-hmm. That have point tools that allow folks who are wanna be developer or engineering intense in the way that they manage and move and keep their data up to date. So it is possible to do that, but it creates a lot of complexity. It creates a lot of tech debt. It creates a lot of maintenance burden. Mm-hmm. Compared to doing it with Informatica, where, you know, it's modern, low-code, no-code, you know, drag and drop, tightly integrated, high-level semantics, and that efficiency benefit is where we shine. Okay. So now there's some larger companies like Salesforce that are trying to build out, you know, they have more than one application. They have a suite of applications that they're offering to customers. They're trying to build out this middleware layer, you know, to keep all their applications interconnected. I guess, how are, I mean, do you see them as, is that taking away any opportunities for Informatica? I know that, you know, being the Switzerland of data, there's a lot more applications that you integrate with beyond, of course, Salesforce. But are other companies like them trying to do this and trying to become more interconnected and? You are seeing them talk about that a lot. In a specific way, it is a reality and it's true, but it's a way that doesn't impact us. It creates a lot of confusion and I think misunderstanding out there about what they are trying to do and what we do. The confusion arises this way. If you look at companies like that who are exposing data management or data access or data federation models that connect their different silos in a better way for their customers, what they're really talking about is data federation, data sharing, data virtualization is another buzzword that gets used for it where you leave your data where it is, but through the process of certain connectors and APIs and collaboration on formats that your applications or even your data analytics apps can reach out to those silos of data when they need the data rather than move it into a data warehouse or data lake or data lakehouse, and then access it for those purposes. That the laws of physics make that a narrow use case for ad hoc queries. That sort of federation of data approach can work okay. Historically, it's been very brittle because you have to maintain all those connectors and you change one API or format and you potentially, you know, take the whole, you know, thing down. Mm-hmm. But it is, but it is something that is a real use case and it can be done, but it doesn't have any relevance on the main part of the market, which is what we serve, which is where you need the mass of your data from many, many applications, if not all of them, to be in a place that has a super optimized storage format, a super optimized query engine so that you can access it and use it in high-performance, cost-effective ways rather than sort of one-off ad hocs. So what you are hearing from Salesforce and others is real, but it's not our core market and it's not the value that we provide. Got it. Okay. Another, maybe just shifting gears over to GenAI, it's another high-level topic that I you know, get a lot of questions on. And, I've always viewed Informatica as sort of this maybe more of a you know, a critical component of the GenAI stack as you build out, whether you're using an LLM for inference purposes or even building more of a GenAI application. But I would love to hear your views on you know, how do you see Informatica benefiting from this increased spend on GenAI? Our tagline that we're very proud of is, "Everybody is ready for GenAI except your data. Except your data. And frankly, that's what we are hearing from customers that as CIOs and CDOs and others get serious about enterprise-grade GenAI applications, they're quickly realizing that data is the fuel and their data in most cases is not where it should be and the quality that needs to be or governed in the way that it would need to be to be effectively or, even regulatorily used in GenAI applications. And that's where we fit in, is that we bring your data together. We curate, curate and quality control it. We, we govern it and we orchestrate it into workflows that use LLMs, vector databases, and, and RAG architectures. So kind of the same use cases as what you're doing, providing to all other applications, kind of treating an LLM as another mission-critical application that the enterprise uses that needs the data in the same format that. That's a good way to look at it. Okay. That it doesn't fundamentally alter the architecture of what we do. It means that in addition to the other users of data that we support, we have to support LLMs. So if you look at our demos of how we do GenAI data management, and these are real use cases that customers have in POC right now in the drag-and-drop, no-code workflow where you're setting up your GenAI-based application, you get to, you know, do something. We've got all the data from all the different sources. We've cleansed it and transformed it and decided what is appropriate to use and what's not based on governance rules. Okay. Now you have to do something with it. It's a drop-down menu that says, "Which LLM, you know, are you going to use and where is it? Mm-hmm. And before that, we've got a drop-down that says, "Okay. Which vector database do you want us to put all of that data into?" Before that is, "What transformations, what, what vector-based transformations like chunking and so forth do you want us to use to get it into that vector database?" Fundamentally or conceptually, that's the same thing we have been doing for 30 years. Mm-hmm. But it's just new endpoints and technologies. Got it. Okay. Well, maybe I wanna go back to dig into the cloud ARR trends that you're seeing, and kind of go back to one of your earlier points on where you started this conversation that, you know, total ARR growth is going to accelerate next year and the year after. If we look at the underlying growth drivers of cloud ARR, I guess how are you thinking about, like, the digital transformation which over the last two years I think has largely been put on hold and with GenAI you know taking a lot of the focus from investment from organizations now? Like, how are you thinking about what's driving that cloud ARR acceleration next year and the year after? Is it GenAI or is there a resumption of maybe app modernization or both or? For us, it's not really a change in the environment. It's a continuation of what we've been feeling. Mm-hmm. And selling into for the last two years. There was clearly a shift in the environment in 2022. Mm-hmm. Following a shift in the environment in 2020 due to, you know, COVID and then the lack of, you know, COVID. But 2023 and 2024 have felt pretty stable and the demand that we've benefited from, we think, is gonna be essentially the same flavor of demand in 2025. There's hopefully going to be more appetite and demand for digital/cloud transformation, but doesn't need to be. Doesn't. More than what we've had in the past. And we hope there's genuine revenue-generating AI demand, which GenAI demand, which has all been sort of POC demand so far. But again, doesn't have to be. We just need to have an environment that is equally robust and equally distributed in terms of the nature of the demand that we've seen the last couple of years. Okay, so stable environment and you still get the acceleration. Okay. Got it. And the reason why we have that acceleration, cloud revenue growth is, this isn't guidance yet, but it will be lower in our guidance in 2025 than 2024. It's just a matter of scale. We're gonna exit this year with $836 million of ARR according to guidance, cloud ARR. And that's still gonna grow in the 30s%. I'm confident in 2025, but it's gonna be lower than this year. But the shrinking parts are gonna get smaller. Are smaller. Yeah. And by the way, the shrinking parts are gonna shrink even faster in 2025 than they did in 2024, for reasons mostly related to AI, you know, migrations. But because the shrinking part is getting smaller and the growing part is getting larger, it's gonna blend that total growth rate up. Mm-hmm. Doesn't require a change in the end market, doesn't require a change in demand or the macro. I think you already touched on this, but in terms of, you know, fighting for those new workloads or new customers, is there any competition that you're seeing other than point product vendors trying to capture a piece of that puzzle? Or is there anyone out there that you compete against regularly? The three categories of competitors that we see are those point products, which I talked about before. Mm-hmm. That you have to stitch together yourself. And many of those are good products, but they're narrow. We have the cloud service provider, the hyperscalers, the cloud data warehouse providers themselves. So those folks have a certain amount of proprietary tools that they can use that you can use with their cloud data warehouse inside their walled garden. And for simple single cloud use cases, those are sometimes sufficient. And then there's the roll-your-own, you know, crowd that, you know, you also mentioned. Those three categories of competitors have always been there. They always will be there. But we, when there's a situation, for example, where a customer has a simple use case with one cloud, and the good enough tools provided by the cloud provider do the trick, we don't compete there. But when it has a level of complexity that requires the level of sophistication that we provide, that's where we compete and that's where we win. And that's why we partner so well with those cloud data warehouse providers and cloud service providers that on paper look like they're competitors to us because Azure Data Factory is, has tools that look a lot like ours, you know, on paper. So does AWS Glue look a lot like ours on paper, but they work within their walled garden and they're not as sophisticated nor as connective as ours are. And so in the situation where those tools work well enough, we don't compete there and, you know, the business goes to those partners and that works great. And where our solutions are the best solution, we partner tightly with those folks shoulder to shoulder and win the business together. Got it. Okay. On the other two segments I wanna talk about, the maintenance and the self-managed piece, maybe we'll start with the maintenance first. That's been a surprisingly, I would say, consistent segment of your business that's declining, like, over the last two years in the, you know, I don't know, is it 6%? Yeah. It's about 6%. Yeah. So. Yep. How are you able to keep that so stable? I mean, are customers migrating over at a very stable pace or are you in some amount of movement? So the way to think about that decline is in two pieces. The decline of both maintenance and our on-prem self-managed subscription business has a component of what we call natural churn. So that's the business that churns or goes away because of normal enterprise software reasons. The use case went away. The company went out of business. There was some other fundamental change or we lost it to a competitor. It's not very common, but not zero, of course, where we lose the business to a competitor. We call that natural churn. And then on top of that is the migration-related churn. So it's folks who have made the decision with us to move that workload, that on-prem workload, whether it's a maintenance workload or a self-managed subscription-based engagement to the IDMC, our cloud platform. And they do so historically, as I've talked about, at typically on average a two-to-one uplift from what they were paying as either maintenance or self-managed. They pay us on average twice that amount for the cloud solution. So there's two components, the natural churn and the maintenance and the migration churn. In the maintenance bucket, the natural churn's very stable. We've been in business for 30 years. We've been selling perpetual licenses. We were selling perpetual licenses with maintenance for 2025. The average tenure of our existing maintenance customer is 12 or 13 years. So it's very season-based. Mm-hmm. And if you've already renewed your maintenance for 12 or 13 years, the chance of you renewing it the 14th year is pretty darn high. So the natural churn in that bucket is low and consistent. And then it's the migration churn on top of that. I'll maybe anticipate your next question, which is, let's have the same conversation about the self-managed. Right. Subscription bit 'cause it's also in decline, also has the same two components. The natural churn and the self-managed piece is higher than the maintenance churn because it's a less seasoned business. We only had been selling that for the last eight or nine years, and it's end of sale now as of the beginning of 2023 'cause now we only sell cloud. It is a less seasoned base and therefore it has more potential churn. The natural churn in that business, we find that it's in the sort of five-ish%, five to six-ish% range for maintenance is in the high single digits now for self-managed, and it's probably gonna be in the low double digits next year. Again, it's what we expect. It's all embedded in our medium-term guidance. There's no surprise there. And then on top of that is the migration churn. That migration churn is what is the difference between, you know, 5-5.5% natural churn in maintenance and the 7% maintenance decline that we have so far this year. Mm-hmm. It's the difference between the, call it, you know, 9% natural churn in self-managed and the 13% that we're gonna report, in terms of total decline in fiscal 2024. Both of those are fiscal 2024 numbers. Looking ahead to 2025, we expect the natural churn in the maintenance base to be consistent. We expect the natural churn in self-managed to be higher. Again, it's a product that we went end of sale on only seven quarters ago. And it's just a less sticky base as there's more shelfware out there as there is, you know, in any company and so forth. And then the migration churn is gonna be higher also, as the dollars of migrations that move from both of those buckets to the cloud, accelerates. The migration churn sounds like it's probably a lot of it is in your control there where you can influence them to move to your cloud solution. If they're the natural churn, if they're just moving off the platform, is there anything you can do? The natural churn is just like any other churn in any other cloud business. Yeah. Right? So you, at the end of the contract term, you talk about whether you wanna renew it, right? Mm-hmm. We have a really great team that does that, and we have good telemetry ahead of the renewal, so we know whether it's at risk and all that sort of stuff. That's all blocking and tackling. The migration churn is sort of yes and no. Well, it is a proactive decision by the customer to make that move. We do have the ability to sell the customer on the solution and the value of moving, but we don't have, frankly, a lot of leverage on forcing them to move. They move when they're good and ready. Making a digital transformation move like that for a mission-critical or operational workload is not a casual decision. You have to move the whole thing. Informatica's just a bit of it. Mm-hmm. You have to pick a cloud service provider. You have to use the right cloud-based apps. You gotta make a lot of architectural decisions and investments. It's gonna take a lot of professional services and systems integration in a lot of cases, and so it's a consequential, big dollar, time-consuming decision, and they do it when they're ready, so we don't have a lot of control in that sense, over it. Your visibility, I would imagine, you know when these customers are coming up for a renewal and their contracts are coming to an end. So when you think about the visibility you have on that churn, especially some of the natural churn as they come due for renewal, is probably something that's easier to maybe it helps you forecast those. For sure. Yep. And the, you know, we don't just wait around for renewal to have the migration conversation. Mm-hmm. I mean, we are in front of we have thousands, not 10,000, but more than 1,000, you know, on-prem customers. And we know exactly when those renew, but we don't wait for that to have the migration conversation. We are actively in front of that base. We have a special team that does nothing but that. We have special architects and pre-sales that focus on it. So yes, we're very active about that. But at the end of the day, there's only so much we can do to force people, you know, to make the move. They do it when the rest of their organization is ready and when they have the budget and the time and the bandwidth for it. I suppose the only risk that you see here is really the churn element of, you know, not hitting your ARR guidance in the coming year, and if you can, maybe if you look at 2024 on your expectations at the start of the year for churn, how was that playing out relative to what you were expecting at the start of the year? It's been pretty consistent. The one thing that did surprise us was the duration of our on-prem renewals. Not in the maintenance base because those are almost all 12-month renewals. It's just the standard for maintenance as you renew it on an annual basis. But for the self-managed subscription, those are multi-year deals. And because they're on-prem, they're subject to ASC 606. So we have to accelerate a significant portion, most of the TCV of the deal and recognize the day we sign it. And so if it's a three-year renewal, that TCV is a lot higher than if it's a two-year renewal. Mm-hmm. And so we're accelerating more revenue on the day we sign the renewal if it's a three-year renewal versus a two-year renewal due to ASC 606. I wish we didn't have to do that. We have found in 2024 that the average term of the renewals, so customers who aren't ready to migrate yet, they're not churning, but they appear to be setting themselves up so that they have the flexibility to migrate sooner. So they're instead of signing a three-year renewal, they're signing a two-year. Yeah. Instead of signing a two-year, they're signing a one-year. They're buying themselves more time? So that buying themselves more flexibility, and so that brings in the average duration, which reduces the ASC 606 revenue. Mm-hmm. That we realize on the renewal date. So that's why. That's one of the two reasons why we brought down our revenue guidance at the end of Q2 for fiscal 2024. No, we didn't touch our ARR guidance 'cause the dynamic they just described does not impact ARR. Mm-hmm. If it's a revenue impact only. But we did see that, and that has surprised us. Okay. That's helpful. If there is any other questions out there now, I'm happy to weave them in. Otherwise, we're gonna use the remaining minutes to kinda talk about next year and some higher-level macro. Okay. So 2025, I guess, now that we're past the election, a lot of maybe a lot of organizations probably had some uncertainty going into it. And what are you hearing from customers in terms of not necessarily Q4 budget flush, but how they're thinking about the spending environment next year relative to what it is this year? I wouldn't say we have a meaningful signal on that yet. Certainly not a consistent one. We serve financial services, healthcare, retail. Mm-hmm. Manufacturing. We serve geographies all around the world. But nothing has bubbled up that's a consistent theme. There's obviously puts and takes. Potentially more lenient regulatory environment could be a positive in some industries. You know, potentially higher tariff regime could be a big negative in some industries. Mm-hmm. So we don't have a great pulse on that yet. I would say that's pretty consistent. We did about half a dozen fireside chats yesterday at the conference here, and the same question was asked, of course. I think a lot of the CFOs that were on stage also said the same thing in that it's that they're expecting more of a flat to similar spending environment next year, and that's from a customer perspective, not a guidance perspective, but just. Yeah. That's what we're anticipating. That's our sort of base assumption for sure. Okay. Got it, and I guess in terms of if the market spending environment stays flat, it sounds like, and doesn't get worse, doesn't get better, you still have the opportunity with GenAI as being a bigger growth driver for you next year where you can still get that acceleration and growth. It, you know, independent of a change in the macro or a change in spending environments? It will be potential upside. I don't wanna oversell it. I don't wanna overhype it. Everybody's done a better job at that than I could. We have numerous customers that are using Informatica for GenAI-based proof of concept, workloads at enterprise scale. None of those are meaningfully in production yet. None of them are generating a material amount of revenue. We would hope to see that at some point in 2025. But it's a lot harder than maybe the average Joe would think. And, at enterprise scale, standing up a chatbot or writing marketing copy or, you know, summarizing a meeting, you know, is different than, revolutionizing a insurance claim processing workflow to use GenAI to interpret the pictures that the agent sends in as to whether the how much that damage is really gonna cost, which is one of the use cases that. Mm-hmm. Customer that a customer of ours is using Informatica for as the backbone for that process. And to do that, there's not only accuracy issues, but there's governance issues and regulatory issues that just take time to work through. So potential for upside in 2025 for sure, but it's not, you know, that, that our year rides on it or that the. Mm-hmm. Acceleration of the revenue and ARR growth rates in 2025 depend on it. All right. Well, thank you very much for coming to our conference today. We certainly appreciate it. This has been really helpful. Of course. Thank you, Andy.