Informatica soars on its AI-powered data management cloud growth

Enterprise cloud data management software provider Informatica Co. (NASDAQ: INFA) saw its shares surge 23% on its impressive Q3 2023 earnings report. The company resides in the computer and technology sector and provides a cloud-native data management platform powered by artificial intelligence (AI) to solve multi-hybrid workloads. Its software is scalable and vendor-neutral. Informatica has over 5,000 global customers with ample "land and expand" opportunities. Informatica is used by 85 of the Fortune 100 companies. Some of its well-known clients include Amazon.com Inc. (NASDAQ: AMZN), Ford Motor Co. (NYSE: F), The Proctor & Gamble Co. (NYSE: PG), Sanofi (NYSE: SNY), Raytheon Technologies Co. (NYSE: RTX) and Shell plc (NYSE: SHEL).

Cloud data management

Its PowerCenter flagship product is an extract, transform and load (ETL) tool. Informatica enables companies to extract data from various sources, transform it into a compatible format for the target system and load the data into the target system. The data is used to derive business intelligence and actionable ideas to make better data-driven business decisions.

Informatica processed 71.3 trillion monthly cloud transactions in Q3 2023, up 60% YoY. Informatica announced the private preview of CLAIRE GPT, its generative artificial intelligence (AI) powered data management capability. CLAIRE GPT will deliver advancements in natural language-based interface to Informatica's Intelligent Data Management Cloud (IDMC).

The November Plan restructuring announcement

On Nov. 1, 2023, Informatica announced its restructuring plan titled the November Plan. The company will reduce its workforce by 10%, or 545 employees, to streamline its cost structure and reduce global real estate expenses. The company unveiled its cloud-only consumption-driven (CoCd) strategy in Q1 2023 to continue delivering with a lower expense base, increasing its operating margins.

The November Plan will incur non-recurring expenses of $35 million to $45 million related to employee benefits and severance charges. The cost savings benefit is estimated at around $84 million on a GAAP basis and $70 million on a non-GAAP basis in fiscal 2024.

Growth forward

On November 1, 2023, Informatica released its third-quarter 2023 results for September 2023. The company reported an earnings-per-share (EPS) profit of 27 cents versus consensus analyst estimates for a profit of 24 cents, a 4-cent beat. Revenues grew 9.9% YoY to $408.6 million, beating the $401.03 million consensus analyst estimates. Total annual recurring revenue (ARR) rose 7% YoY to $1.58 billion. Subscription ARR rose 15% YoY to $1.08 billion. Cloud subscriptions ARR rose 37% to $550 million. Cloud Subscription net retention rate (NRR) was 118% in the quarter.

The Board of Directors approved a new stock buyback program authorizing the company to repurchase up to $200 million of its Class A Common Stock in the open market and through privately negotiated purchases from individual holders. Check out the sector heatmap on MarketBeat.

In-line guidance

Informatica issued in-line Q4 2023 GAAP revenue guidance of $420 million to $440 million versus $440.13 million consensus analyst estimates. Subscription ARR expectations range from $1.098 billion to $1.118 billion, up 11% YoY. Cloud Subscription ARR is expected to grow 35% YoY from $604 million to $614 million.

Full-year 2023 GAAP total revenues are expected to be between $1.57 billion to $1.59 billion versus $1.58 billion consensus analyst estimates. Total ARR is expected to grow 5% YoY to between $1.585 billion to $1.615 billion. Subscription ARR is expected to grow 11% YoY at the midrange point of $1.098 billion to $1.118 billion. Cloud Subscription ARR is expected to grow 35% YoY to $604 million to $614 million at the midpoint of the range.

CEO Insights

Informatica CEO Amit Walia commented, “We continue to accelerate our innovation-led cloud transformation to make IDMC, powered by our AI engine CLAIRE, the data management platform of choice for enterprises across the globe as they build their modern data architecture to drive their AI-driven digital transformation.”

Informatica analyst ratings and price targets are at MarketBeat. Informatica peers and competitor stocks can be found with the MarketBeat stock screener.

Weekly Cup Pattern

The weekly candlestick chart on INFA illustrates a cup pattern formation. The cup lip line formed in August 2022 after peaking at $23.87. Shares fell to a low of $13.29 in May 2023, where it formed a weekly market structure low (MSL) breakout through the $16.20 trigger. Shares completed the rounding bottom as the weekly relative strength index (RSI) rose to the 64-band as INFA surged closer to the $23.87 cup lip line driven by its Q3 2023 earnings spike. Pullback support levels are $18.71, $17.46, $16.20 weekly MSL trigger and $14.96.

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