The day after his company’s stock dropped nearly 30% on financial results that exceeded analysts’ revenue forecasts but slightly undershot earnings estimates, the chief executive of Informatica Inc. expressed bewilderment at the market’s reaction.

“It’s a head-scratcher for me,” said Amit Walia (pictured), an eight-year Informatica veteran who became CEO a little over a year ago. “I spoke to every analyst who covers us. No one has downgraded us. The price targets have stayed the same.”

Of course, the stock market hasn’t been very nice to nearly anyone in the tech industry of late. The tech-heavy Nasdaq exchange is off about 13% this year. Even though Informatica trades on the New York Stock Exchange, its fortunes are tied to the rest of the technology industry.

“There is a strong disconnect between where the market is looking at things and where I’m looking at things,” Walia said. “We need to focus on the long term and keep everybody’s mind off watching the stock ticker.”

Informatica went public last October, six years after it was taken private by private equity firm Permira Advisers and the Canadian Pension Plan Investment Board. Its stock peaked at nearly $39 in December and closed yesterday at just over $20.

Steady growth

Walia’s bafflement may be understandable given that the company posted numbers that indicated it’s making strong progress toward shifting from license to subscription revenue while seeing healthy growth in the cloud. Revenue grew 9% in fiscal 2021, to $1.4 billion, and fourth-quarter sales of $406.7 million were more than $10 million ahead of analysts’ estimates. Its earnings of 20 cents per share were just a shade under the 21 cents the market expected.

The company’s cloud business grew 40% in the quarter and executives told analysts they expect that growth rate to be sustained through the next year. Equally important is that the 19-year-old company has successfully transitioned to a more predictable recurring revenue model. Subscription annualized recurring revenue of $802 million in the fourth quarter was up 32% over last year.

“We are done with licenses. We don’t sell them anymore,” Walia said. “Ninety percent of our business is recurring and our renewal rates are in the mid-90s.” The company told analysts it expects ARR of at least $1.51 billion in the next fiscal year.

Informatica’s Intelligent Data Management Cloud is used by enterprises to transfer data between disparate systems, a need that is growing as organizations seek to make better use of data they already have. With global data creation expected to grow 23% annually through 2025, according to International Data Corp., the need for integration services like Informatica’s should be strong. “Anything that creates data is a tailwind for us,” Walia said.

Informatica will stick to its data integration knitting for the foreseeable future, the CEO said.” Our total addressable market is growing by double digits to $44 billion,” he said, adding that he has “no reason” to go outside the core business.

Photo: SiliconANGLE