Big-data company Informatica’s stock falls on mixed results and soft guidance

Investors bailed on the big-data management company Informatica LLC today after it posted mixed financial results and offered guidance for the current quarter that came up short of expectations.

The company delivered first-quarter earnings before certain costs such as stock compensation of 22 cents per share, falling just short of Wall Street’s target of 24 cents. But it made up for it with revenue, which rose 4% from a year earlier, to $403.9 million, exceeding the Street’s consensus estimate of $392.1 million by a good distance.

All told, Informatica squeaked out a slight profit of $1.34 million in the quarter, down from the $9.3 million net profit it posted in the year-ago quarter.

The company also reported strong cloud subscription-based annual recurring revenue of $848 million, up 30% from a year earlier, while its gross margin increased by a percentage point, to 82%.

Informatica is a major player in the enterprise data management industry. Companies use its flagship software product Intelligent Data Management Cloud to transfer data between disparate computing systems. In general, it’s not easy to send data from one application to another, because such systems can store information in various different formats, making them incompatible. With its software, Informatica adapts the information that needs to be moved to the correct format.

As such, a company can take data from its sales logs and analyze it in another system to obtain insights into its customer’s buying habits. In addition, the Intelligent Data Management Cloud can be used to synchronize information between different systems, enabling two subsidiaries to share product pricing information easily, for example. The software is also used as a tool to feed format-friendly information to data-hungry generative artificial intelligence applications.

Informatica Chief Executive Amit Walia (pictured) said the company has gotten off to a “strong start” to fiscal 2025, saying it exceeded midpoint expectations across all of its key revenue and profitability metrics. In particular, he highlighted the cloud subscription ARR growth, which was driven by new workloads, an expansion of existing customer’s workloads, and migrations from its on-premises software.

“The growth of our cloud platform at scale demonstrates the mission-critical nature of data management,” Walia said.

There’s little doubt that Informatica is providing a useful service to enterprises, but shareholders tend to prioritize short-term interests over long-term prospects, and they were clearly unhappy with its guidance for the current quarter.

The company is guiding for second-quarter revenue of between $391 million and $411 million. It’s a fairly wide range that suggests uncertainty lies ahead, and the midpoint trailed the analysts’ consensus estimate by some distance. Wall Street is looking for second-quarter sales of $412.3 million. Notably, the midpoint of Informatica’s range also suggests flat revenue growth from a year earlier.

The full-year picture does look a bit better, though, with Informatica targeting a range of $1.67 billion to $1.72 billion, which is more or less in line with Street’s $1.69 billion target. Executives said they also expect cloud subscription ARR to jump by 27% in the current quarter, adding that the company is on track to hit $1 billion by the year’s end.

Still, investors seemed to be a tad disappointed, as Informatica’s stock fell more than 3% in the wake of the report. That means the stock is now down 26% in the year to date.

Photo: SiliconANGLE