Coming off strong quarterly results that beat analysts’ forecasts and sent its stock to a 52-week high, data integration vendor Informatica Inc. is preparing to resume steady long-term growth with healthy profitability, Chief Executive Amit Walia said in an interview with SiliconANGLE.

Cloud subscription annual recurring revenue grew 37% year-over-year, to $617 million, and made up 47% of all subscriptions. Informatica surpassed $1 billion in subscription revenues for the first time, indicating that it has successfully shed nearly all of its perpetual license business, which was down 70% year-over-year.

“Cloud is now the biggest part of our business, and it ladders up the growth rate,” said Walia (pictured). Growth slowed to a crawl between 2019 and 2022 as the company navigated its business transition, he said, “but starting this year, the rate is growing.”

Part of that process involved laying off 10% of its workforce in November, a move Walia said at the time was prompted by the superior economies of the cloud business model. “We had many duplicative costs that we had to take out,” he said. “At this stage, we are in growth mode, hiring account reps, engineers, renewal reps and customer success managers. Whatever we had to do to get the company to where it is, we’re done with that.”

Interest costs a ‘non-event’

Responding to criticism by one analyst of the company’s reported interest expense, which was nearly 10% of total revenues in fiscal 2023, Walia called the issue a “non-event. We have $1 billion of cash, and we generate a lot of cash,” he said. “We can pay our debt anytime we want to, but we choose to maintain the flexibility of keeping the cash on our balance sheet.”

A key metric underlying his optimism is the 86 transactions per month that took place in Informatica’s Intelligent Data Management Cloud during the most recent quarter. That’s up 62% from 53 trillion monthly transactions in the same quarter last year.

A transaction is any event that moves, transforms or catalogs data. “It is an indicator of usage of our services; the higher the usage, the more the adoption and the more the renewal,” Walia said. Informatica achieved a 119% cloud subscription net retention rate in the quarter, meaning that customers, on average, increased their spending at renewal time.

Flywheel effect

Walia sees the cloud delivery model that allows customers to turn on any of its seven services, ranging from data cataloging to master data management, at any time, as a way to accelerate revenue per account.

“Customers, on average, are using a couple of products, so we have much more opportunity to drive further expansion of product usage,” he said. “We can track everything the customer is doing so our customer success team can go back and tell them how much more they can do with their current use case. They have the capability as part of consumption pricing and can immediately start using it.”

Walia believes the current feeding frenzy over generative artificial intelligence will put further wind in the company’s sails. Studies have shown that the top reasons enterprises are moving slowly to deploy large language models is concerns about accuracy, bias and hallucination problems.

Data integration technology is well-positioned to allay those fears, he said. “We understand where data is coming from, what has happened to it, who has manipulated it, who has modified it, who has accessed it and where it’s going,” he said. “Those are very important things for having confidence that the stuff going into the models is correct and not garbage in/garbage out.”

Photo: Informatica