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Sees FY23 Total ARR in the range of $1.585B to $1.615B, representing approximately 5% year-over-year growth at the midpoint of the range. Sees FY23 subscription ARR $1.098B-$1.118B. Sees Fy23 cloud ARR $604M-$614M
Sees Q1 Subscription ARR in the range of $1.005B to $1.015B, representing approximately 19% year-over-year growth at the midpoint of the range. Sees Q1 Cloud ARR in the range of $462M-$468M, representing approximately 35% year-over-year growth at the midpoint of the range.
Reports Q4 revenue $398.781M, consensus $404.17M. "Our solid fourth-quarter performance capped a year in which we delivered cloud ARR and subscription ARR above expectations. We achieved new annual milestones that surpassed $1.5 billion in total ARR and total revenues and $450 million in cloud ARR. Our performance demonstrates the durability of our business model and our diligent execution to deliver balanced growth and profitability," said Amit Walia, Chief Executive Officer at Informatica. "Looking ahead, we are focusing on a cloud-only, consumption-driven strategy that is part of a multi-year plan driving new cloud business. With this strategy, we expect to streamline operational efforts as we aim to significantly improve operating leverage in 2023 and beyond."
Guggenheim analyst Howard Ma initiated coverage of Informatica with a Buy rating and $24 price target, calling Informatica "a uniquely positioned data management company growing profitably at scale" with "one of the stickiest customer bases within enterprise software." The firm sees total ARR consistently growing at a 10% to low-teens rate to reach $2.5B in four to five years, but adds that it sees risk of 2023 guidance being below consensus.
Deutsche Bank analyst Brad Zelnick lowered the firm's price target on Informatica to $21 from $23 and keeps a Buy rating on the shares. The analyst expects 2023 to be another volatile year for software stocks with investors seeking confirmation of a bottom as fundamentals "likely deteriorate further." The firm prefers earlier cycle names within software for 2023 over later ones, and tells investors to "selectively begin picking away at quality growth."
As previously reported, Scotiabank analyst Patrick Colville initiated coverage of Informatica with a Sector Perform rating and $15 price target. The company is transforming into a SaaS software vendor to capture growing cloud spend, but competition is increasing while Informatica is losing market share, the analyst tells investors in a research note. Colville adds that while he sees upside to consensus FY23 operating margin estimates, the management's long-term profitability target for Informatica "looks like a stretch".
Citi analyst Tyler Radke downgraded Informatica to Neutral from Buy with a price target of $18, down from $23. Following the company's recent leadership changes and Q4 guidance update, the analyst sees a challenging 2023 with go-to-market changes "amidst softer cloud demand." He expects the first half of 2023 to remain challenging from a demand perspective for the application software sector.
Informatica announced the appointment of Michael McLaughlin, a seasoned finance leader and most recently Chief Financial Officer of FICO, as Informatica's Executive Vice President and Chief Financial Officer effective January 16, 2023. McLaughlin succeeds Eric Brown, who has notified the Informatica Board of Directors of his intention to step down to pursue other opportunities. Brown's departure follows more than four years as Informatica's Chief Financial Officer. Brown will remain a consultant to the company through March 31, 2023, to support a seamless transition.
UBS analyst Karl Keirstead downgraded Informatica to Neutral from Buy with a price target of $18, down from $24. The accelerating mix shift to cloud from self-managed contracts does not seem to be adequately reflected in Street estimates for 2023/2024, which appear too high, Keirstead tells investors in a research note. Keirstead does not see material near-term potential for multiple expansion, especially in an economic downturn scenario.
