INFA - NYSE

Good afternoon, and thank you, for attending today’s Informatica Corporation’s Fiscal Fourth Quarter 2022 Financial Results Conference Call. My name is Daniel, and I'll be your moderator for today’s call. All lines will be muted during the presentation portion of the call with an opportunity for questions-and-answers at the end. [Operator Instructions] It is now my pleasure to pass the conference over to our host Victoria Hyde-Dunn, Vice President of Investor Relations. You may now proceed, Victoria.

Thank you. Good afternoon and thank you for joining us to review Informatica's fourth quarter and full-year 2022 earnings results. Joining me on today's call are Amit Walia, Chief Executive Officer; and Mike McLaughlin, Chief Financial Officer. Before we begin, we have a couple of reminders. Our earnings press release and slide presentation are available on our Investor Relations website at investors.informatica.com. Our prepared remarks will be posted on the Investor Relations website after the conference call concludes. During the call, we will be making comments of a forward-looking nature. Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties. For more information about some of these risks, please review the company's SEC filings, including the section titled Risk Factors included in our most recent 10-Q and 10-K that will be filed for the full-year 2022. These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements, except as required by law. Additionally, we'll be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of these items to the nearest U.S. GAAP measure can be found in this afternoon's press release and our slide presentation available on Informatica's Investor Relations website. It is my pleasure to turn the call over to Amit.

Well, thank you, Victoria. Good afternoon, everyone, and thank you for joining us today. Before we begin, I would like to welcome our new Chief Financial Officer, Mike McLaughlin, to his first earnings call with us. Mike brings 30 years of extensive financial leadership experience and a successful track record, recently serving as the CFO at FICO. Mike has been with us for about a month and has already proven himself to be an incredible addition to the team, and I couldn't be more excited to have him join the Informatica leadership team. So welcome Mike. Now, I'll start with my reflection for 2022 and details on Q4 and the full-year highlights for the year. I will then share my observations for 2023. So let’s begin with 2022. 2022 as you all know was our first full reporting year as a public company. While the year witnessed external fluctuations with an uncertain macro environment, we delivered against our commitment to balanced growth. We exceeded Cloud ARR, Subscription ARR, and non-GAAP operating income guidance for the fourth quarter and full-year of 2022. In fact, Cloud ARR and non-GAAP operating results were also better than our initial expectations shared a year-ago in our February 2022 earnings call. We achieved four new annual milestones – we grew cloud ARR to over $450 million, subscription ARR to almost $1 billion, and surpassed $1.5 billion for both total ARR and total revenues. These results highlight the resiliency and durability of a balanced growth business model. Our accelerated investments in the cloud continued to bear fruit. All products are now on the IDMC platform, and we accelerated our strategic cloud partnerships with AWS, Azure, GCP, Oracle, Snowflake, and Databricks. We also received many awards from our partners and industry experts over the course of the year. Our IDMC platform, powered by our CLAIRE AI engine, processed 53 trillion transactions mission-critical may I say cloud transactions per month in December, a 91% increase year-over-year, demonstrating strong customer usage. With our modern cloud architecture, 50,000 metadata-aware connections, and leveraging 18 petabytes of active metadata in the cloud, IDMC is the only platform at scale in the market with all the data management capabilities, enterprises need to deliver measurable outcomes for data analysts, data scientists, data engineers, CIOs, and the CDOs. Our enterprise sales motion continues to strengthen, as evidenced by 93% plus renewal rates, gross margins up 82%, and strong global wins with enterprise brands serving mission-critical workloads. Lastly, while cloud migration remains in its early innings, we ended the year with solid momentum. We have migrated 3.6% of our maintenance installed base over to IDMC, up from 2.8% last quarter with a 2.1 conversion ratio. GSI and channel partners continued to scale their Informatica migration practices and provided more trained resources to meet customer demand. Now, turning to our strategic priorities and continued key areas of investment focus, let me share highlights from product innovation and then go-to-market. Beginning with Innovation, we prioritized our R&D investments to support accelerating the cloud roadmap and strategic cloud partnerships critical for our long-term success. IDMC is now the platform of choice as customers build the modern data stack at scale versus stitching together many solutions which takes time, is more risky, and definitely more expensive. Some innovation highlights amongst the many over the course of the year are here. In our Data Integration services, we recently announced the public preview of two new IDMC Services, ModelServe and INFACore. With ModelServe, you can put AI into action in minutes with a one-click, serverless deployment of AI/ML models with our IDMC. INFACore extends IDMC platform capabilities to Data engineers, Developers, and Data Scientists, directly in their own Integrated Development Environment, making them more productive by turning thousands of lines of code into a single function. In our MDM and 360 Applications services, we improved data modeling to allow more flexibility while managing multi-domain relationships, introduced a new real-time data enrichment framework, and tracked detailed usage and consumption metrics that accelerate cross-sell and up-sell opportunities for our customers with their end customers. In our Cloud Data Governance and Catalog service, we enabled data entity classification, which uses metadata intelligence to automate the labeling and categorization of data assets, helping improve data discovery, understanding, and governance of data assets. Now I want to talk a little about our AI engine, CLAIRE, that has continued to scale and power all our products on IDMC. Now we have been believers in the potential of AI to drive intelligence and automation. In fact way back we launched CLAIRE in 2018, and still then we have been refining it, growing it and it has now grown to subsea operational scale. I will give you two examples of CLAIRE in action – operational action. One, organizing customer data, CLAIRE can automatically classify, label, and relate datasets, saving users thousands of hours of tedious and manual work. An American Health Insurance provider saves $1 million monthly using these advanced AI capabilities. And other one is generating data pipelines: CLAIRE automates data pipeline generation by providing AI-based pair programmer, like GitHub Copilot. This improves data engineer productivity by accelerating development, automating repetitive tasks, and enabling more users to connect and integrate data quickly. Additionally, CLAIRE is intelligent so it becomes more and more accurate with each utilization, providing more targeted recommendations. More than 85% of IDMC Cloud developers tell us that they use this capability daily. Now as a pioneer in cloud data management, we are honored to be recognized for our commitment to product innovation. Informatica is recognized as a Leader in the 2022 Gartner Magic Quadrant for Data Quality Solutions. This makes 15 consecutive times of being a Leader, and Informatica is once again positioned highest on the ability to execute axis. Informatica also Scored Highest in three data quality use cases in the 2022 Gartner Critical Capabilities for Data Quality Solutions report and received a “Strong” rating by Gartner in Product/Services and Support/Account Management in the 2022 Gartner Vendor Rating report. Lastly, Informatica won the 2022 Digital Innovator Award from industry analyst Intellyx. Now let me turn to our go-to-market, where our ‘Switzerland of data’ partner position and our scaled platform with best-of-breed solutions position plays a very important role in customer engagement. This has allowed us to serve customers of all sizes across all geographies, towards choosing the IDMC platform to enable their digital transformations in the cloud. Momentum continued in Q4 from customers spending more than $1 million in subscription ARR, increasing by 35% year-over-year to 206 customers. We more than tripled the number of customers spending more than $5 million in subscription ARR. Customers spending more than a $100,000 in subscription ARR increased 15% year-over-year to 1,916 customers. We also closed over 80 cloud modernization deals in 2022, our highest ever in a single year and more than doubling the number of modernization deals lifetime to date. Customer success is an important priority for us. For the second consecutive year, Informatica has earned “an outstanding customer service experience” from J.D. Power in their Certified Technology Service & Support Program 2022. We also announced an Assurance Service to optimize and advance the customer experience on IDMC platform, with risk mitigation and observability at its core. Now co-selling with our ecosystem partners has proven very successful, as reflected in our continued acceleration of cloud marketplace transactions, which grew 43% year-over-year. We were honored with two partner of the year awards from AWS, including the 2022 Global Design Partner of the Year and the 2022 North America Data and Analytics partner of the year. We also announced a set of new integrations with AWS services to democratize access to data and expand IDMC to new user personas, such as data scientists and data developers. These integrations included native integration of Informatica’s Data Loader for AWS Redshift into the Redshift user experience and a new plugin providing access to IDMC capabilities to data scientists and data developers directly from AWS Sagemaker. We also saw substantial progress with our GSIs and Platinum Channel Partners. More than 20 partners have now been certified as a part of our cloud migration program and have built Centers of Excellence to deliver the work, including eight GSIs. We saw a significant increase in the amount of work that will be delivered by partners and from the Migration Factory deals that closed in Q4. We expect more to be delivered by our trained and certified partners, giving us the additional scale and faster time to value for our customers. We recognized a few of our esteemed partners at our Sales Kickoff held earlier this year in January. Global Partner of the Year was Deloitte, Global Innovation Partner of the Year was KPMG, Global Growth Partner of the Year was TCS, and Global Cloud Modernization Partner of the Year was Capgemini. We also saw continued strong growth with our Channel Partner program, which incentivizes our partners to source new opportunities and provides rewards when those opportunities close. Many of our partners doubled in their efforts to position Informatica in their customer base. We continue to win opportunities with new and existing customers. Let me give you a few examples, BayWa r.e. is a leading global renewable energy developer, service distributor, and energy solutions provider. Facing new supply chains they selected Informatica’s IDMC cloud-native platform with MDM Supplier 360 to keep in step with emerging requirements as they remain focused on actively shaping the future of energy. Another one, founded in 1945, Kaiser Permanente is recognized as one of America’s leading healthcare providers and nonprofit health plans. This past quarter we expanded our existing partnership with them, supporting the enterprise migration to the cloud as well as analytics tools that support this work. Federated Co-operatives Limited is Canada’s largest co-operative across 3,000 retail locations in 500 communities throughout Western Canada. FCL was looking for a better way to enhance insights, profitability, provide a differentiating customer experience, and drive sustainable organizational growth. A long-time Informatica PowerCenter customer, they selected Informatica’s IDMC platform to modernize its critical business systems, centrally manage their data, and help them scale for the future. So hopefully that gives you a good perspective of 2022 in Q4. Now let me turn to 2023 strategy. Well as I step back over the past 25 years, Informatica has pioneered many categories in data management – from ETL and its inception to Data Quality to Master Data Management to Data Catalog to Data Marketplace and now the most comprehensive at-scale cloud-native AI-powered data management platform, IDMC Intelligent Data Management Cloud. In my conversations with customers, CIOs, CDOs, and business buyers across the globe, our partners and as I look at market trends, including Informatica’s annual CDO Insights report, all clearly state that data management and digital transformation led by data is enabling – enabled by a cloud delivery model will continue to be a top priority of IT spending in 2023 and beyond. So through thoughtful planning, we are now transitioning to a cloud-only, consumption-driven strategy. We are looking to achieve three primary strategic objectives for long-term value creation: First, we will drive cloud-only organic growth for net new business on the foundation of our continued investments in innovation for IDMC. As you all know all of our IDMC suite of solutions are cloud-based. Cloud is already growing faster than self-managed, and most of our new business pipeline opportunities are cloud-only. IDMC offers a consumption-based pricing model that enables higher NRR for the cloud business. Customer interest in Informatica Processing Units, or IPUs, as we call it is continuously growing. Expanding on the success we have observed with IPUs, we will launch flex IPUs later this quarter to meet our customer’s seasonal usage patterns so that IPUs can be pre-purchased and consumed for 12 months. This is additive, to our current IPU model, which is pre-purchased and consumed monthly, thus enabling greater choice and flexibility for our customers. Second, we will continue accelerating cloud migration opportunities from existing maintenance customers while maintaining best-in-class renewal rates. Lastly, and most importantly, a cloud-only, consumption-driven strategy is part of a multi-year plan to drive balanced growth by managing the topline as well as significantly improving operating leverage. Focusing on this new model allows us to simplify our organization from hybrid to cloud-only, create operational efficiencies and synergies, and improve the speed of execution by being focused. This will enable us to create better operating leverage in our multi-year plan. Our 2023 guidance in that context is also appropriately prudent as we navigate an uncertain macroeconomic environment while transitioning to a cloud-focused sales motion. We are committed to balanced growth, creating operating leverage, investing in cloud product innovation and cloud-driven growth, and delivering a durable and sustainable business. I’d like to thank all Informaticians for delivering great results. And I also like to thank our partners, customers, and shareholders for their continued support of Informatica. With that let me turn the call over to Mike. Mike?

Thank you, Amit, and good afternoon, everyone. As a new member of the Informatica team, I am very pleased to be with you today. I’ll begin my remarks this afternoon with a review of our Q4 results. Total ARR for the fourth quarter of 2022 increased to 11.5% year-over-year to $1.52 billion, at the high end of our revised guidance range, driven by strong new business sales and Subscription renewals. This reflects $157 million in net new total ARR versus the prior year. For the full-year, foreign exchange negatively impacted total ARR by approximately $20 million on a year-over-year basis, in line with our expectations when we set our guidance in October. Cloud ARR increased over 42% year-over-year to $451 million, exceeding the high-end of our October guidance range by $20 million. We expected our sales mix to continue to shift from self-managed to cloud going into the quarter – but that shift happened even faster than we expected. Cloud ARR now represents approximately 45% of total Subscription ARR, compared to 40% in the prior year. We added $134 million in net new Cloud ARR during the year. As Amit has made clear, our cloud-native products are the core of Informatica’s growth strategy, and we are very pleased with our Q4 results in this segment. Turning to total Subscription ARR, Q4’s result of $994 million represents a 24% year-over-year increase, $4 million above the high-end of our guidance range, driven by new subscription customer growth and high renewal rates, in both our cloud and self-managed products. We added over $192 million in net new Subscription ARR versus the prior year. Subscription ARR is now approximately 66% of total ARR compared to 59% in the prior year. We also saw growth in our average Subscription ARR per customer in the fourth quarter. It grew to approximately $263,000, a 19% increase year-over-year on an active base of roughly 3,780 subscription customers, which is an increase of 152 subscription ARR customers on a year-over-year basis. Q4 Subscription net retention rate was 111%, down 1% sequentially. Beginning next quarter, we intend to disclose our cloud-only net retention rate as an additional indicator to measure our performance as we execute our cloud-only consumption-driven strategy. While we will not add this disclosure to our quarterly reporting until Q1 of fiscal 2023, I would note that our Cloud net retention rate was several percentage points higher than subscription NRR in Q4. Lastly, maintenance ARR finished in line with expectations, down 6% year-over-year at $523 million, with a strong renewal rate of 96%, up one percentage point year-over-year. For the full-year, foreign exchange negatively impacted maintenance ARR by approximately $12 million on a year-over-year basis. As a reminder, we have intentionally reduced perpetual license sales to an insignificant amount in favor of subscription offerings. This has naturally resulted in a gradual decline in maintenance ARR since we are not adding new maintenance customers each period. Turning to revenue, GAAP total revenues were $399 million in the fourth quarter, down 2% year-over-year, which was in line with our October guidance. Foreign exchange negatively impacted total revenues by approximately $16 million in the fourth quarter on a year-over-year basis, in line with October expectations. For the full-year, foreign exchange negatively impacted total revenues by approximately $48 million on a year-over-year basis. Subscription revenue increased approximately 4% versus Q4 last year to $238 million. Subscription revenue represented 60% of total revenue compared to 56% a year-ago. One reminder regarding our subscription revenue: as our mix of new sales shifts from self-managed subscriptions to cloud subscriptions, we recognize less GAAP revenue up-front at the time of signing each deal and more GAAP revenue ratably over the life of the subscription contract. For this reason, our GAAP revenue growth is lower than our ARR growth in quarters where our mix of new sales and renewals shifts to more cloud sales, as was the case this quarter. Our quarterly subscription renewal rate was 93%, up two percentage points from a year-ago. Our continued strong renewal rates reflect our software's mission-critical nature and outstanding customer support. Maintenance and professional services revenue were in-line with expectations at $156 million, representing 39% of total revenue in Q4. Stand-alone maintenance revenue represented 32% of total revenue. Implementation, consulting, and education revenues make up the remainder of this category, representing 7% of total revenue. Turning to the geographic distribution of our business in Q4, U.S. revenue grew 6% year-over-year to $262 million, representing 66% of total revenues. International revenue was down 14% year-over-year to $137 million, representing 34% of total revenues. Using exchange rates from Q4 last year, international revenue would have been approximately $16 million greater in the quarter, which would have represented an international revenue decline of 4% year-over-year. As we have emphasized, consumption based IPU pricing is a core part of our strategy. We are pleased to report that approximately 56% of Q4 cloud new bookings were IPU-based consumption deals. As of Q4, IPUs represented 38% of total Cloud ARR, up five percentage points sequentially. As Amit mentioned, we will release a new flexible IPU consumption pricing model later this quarter, and we are shifting our sales efforts to focus more on consumption-based engagements. As a result, we expect IPU adoption to continue to increase during the course of 2023. Now I would like to move on to our profitability metrics. Please note that I will discuss non-GAAP results unless otherwise stated. In Q4, our gross margin was 82%. We are pleased to have maintained a stable 80-plus percent gross margin throughout the year, even as our mix shifts to the cloud. Operating income was approximately $114 million for the quarter, exceeding the high-end of our October guidance range due to better-than-expected gross margins and reduced operating expenses. Operating margin was 28.5%, a five percentage point increase year-over-year. Adjusted EBITDA was $118 million, and net income was $69 million, a 17% and 27% increase year-over-year, respectively. Net income per diluted share was $0.24 based on approximately 287 million outstanding diluted shares. The basic share count was approximately 283 million shares. Q4 unlevered free cash flow, after-tax, was approximately $92 million, slightly below expectations even though we exceeded non-GAAP operating income guidance. This was primarily related to a greater-than-expected foreign exchange impact on certain working capital items, higher cash taxes, and higher cash commissions than we expected going into the quarter. We would have delivered unlevered free cash flow near the midpoint of our guidance range if not for these factors. We ended the fourth quarter in a strong cash position with cash plus short-term investments of $716 million. Net debt was $1.14 billion, and our trailing twelve months of adjusted EBITDA was $372 million. This resulted in a net leverage ratio of 3.1x. We expect the business to naturally de-lever to approximately 2.4x by the end of 2023 and then to approximately 2x by the end of 2024. Now, as I turn to guidance for 2023, let me give you some context regarding how we think about this year. First, a few comments about our revenue and ARR guidance. We feel it is prudent to be somewhat cautious with our topline expectations in 2023, given the continued uncertain macro environment and our transition to a cloud-only, consumption-driven sales model. From what we can see today, the overall demand environment appears restrained, but generally healthy for our industry-leading cloud products. And more than three-quarters of our new business pipeline is made up of cloud opportunities. However, as many other tech companies have also noted, deal cycles are elongated and deals face more budget scrutiny. Bottom line: deals are getting done, and our pipeline is strong, but we feel it is prudent to expect some headwinds during the year. We believe our focus on a cloud-only model will have tremendous long-term benefits in terms of growth and profitability. Our laser focus on cloud new business going forward will likely result in a decline in net new self-managed ARR in 2023. This is a direct consequence of our strategy, and we are convinced that moving crisply and decisively to a cloud-only model will create the most long-term value for Informatica. One more note with respect to our revenue and ARR guidance. Full-year 2022 saw considerable foreign exchange volatility, which had a material impact on our results. When forecasting our business, we assume constant FX rates for the year based on the rates at the start of the planning period. For reference purposes, we have included a table in the earnings press release with our expectations for FX impact on revenue and ARR in 2023. The second point I would like to emphasize regarding our 2023 guidance is our focus on balanced growth and profitability. One of the benefits of our cloud-only, consumption-driven strategy is the ability to streamline our go-to-market, customer support, and product development efforts significantly. As a result, in 2023, we expect more operating leverage in the business. The improved efficiencies of our cloud-only consumption model will begin to be seen this year and are reflected in the full-year non-GAAP operating income and unlevered free cash flow guidance. Furthermore, we expect this improved operating leverage to continue in 2024 and beyond, keeping us on the path to meeting our long-term non-GAAP operating income margin targets of 36% to 39% of total revenues. As you know, we announced a reduction in force last month to better align our cost structure with the efficiencies we expect to achieve with our new strategy. We estimate non-recurring charges of approximately $25 million to $35 million in Q1, primarily related to cash expenditures for employee transition, notice period and severance payments, and employee benefits. We estimate this cost savings benefit of these actions to be approximately $50 million in FY2023, which we have factored into our guidance. Third, and finally, let me discuss our expectations for P&L tax rates. We reported 2022 non-GAAP net income at a non-GAAP tax rate of 23% and we expect that rate to continue for fiscal 2023. Looking at fiscal 2024 and beyond, we expect a long-term steady-state non-GAAP tax rate of 24%, which reflects where we expect cash taxes to eventually settle based on our structure and geographic distribution of operational activity. Cash taxes are expected to be higher in 2023 than in 2022 by approximately $30 million due to higher U.S. and foreign taxes on our higher taxable income, lower tax credit utilization, and an $11 million U.S. federal tax refund in 2022 that will not recur in 2023. Taking all this into account, we are establishing the following guidance for the full-year ending December 31, 2023. Note that all growth rates refer to the mid-point of the guidance range, where applicable. We expect GAAP total revenues to be in the range of $1.57 billion to $1.59 billion, representing approximately 5% year-over-year growth. As mentioned above, ASC 606 on-premise software accounting can have a significant impact on our reported GAAP revenues, driven by the mix of on-premise versus cloud business in the period. In 2022, our subscription net new ARR mix was about 70% cloud and 30% self-managed. In 2023, we forecast the cloud portion of the mix to increase further, resulting in less upfront on-prem revenue recognition. If we had carried the same mix of 70% cloud and 30% self-managed net new into our 2023 guidance assumptions, we would have forecast approximately $80 million in additional FY2023 GAAP revenue. We expect total ARR to be in the range of $1.585 billion to $1.615 billion, representing approximately 5% year-over-year growth. We expect Subscription ARR to be in the range of $1.098 billion to $1.118 billion, representing approximately 11% year-over-year growth. We expect Cloud ARR to be in the range of $604 million to $614 million, representing approximately 35% year-over-year growth. As I discussed a few minutes ago, our guidance calls for a net reduction in self-managed ARR in FY2023, which is a direct consequence of our cloud-only strategy. We expect non-GAAP operating income to be in the range of $400 million to $420 million, representing approximately 17% year-over-year growth. And we expect unlevered free cash flow after-tax to be in the range of $340 million to $360 million, representing approximately 21% year-over-year growth. Our guidance for the first quarter ending March 31, 2023, is as follows, we expect GAAP total revenues to be $352 million to $362 million, representing approximately a 1% year-over-year decrease. We expect Subscription ARR to be in the range of $1.005 billion to $1.015 billion, representing approximately 19% year-over-year growth. We expect Cloud ARR to be in the range of $462 million to $468 million, representing approximately 35% year-over-year growth. And we expect non-GAAP operating income to be in the range of $74 million to $84 million, representing approximately a 5% year-over-year decrease. For modeling purposes, for the first quarter of 2023, we expect unlevered free cash flow after-tax to be in the range of $75 million to $95 million. For the first quarter of 2023, we expect weighted-average shares outstanding to be approximately 285 million shares and diluted weighted-average shares outstanding to be approximately 288 million shares. For the full-year 2023, we expect basic weighted-average shares outstanding to be approximately 289 million shares and diluted weighted-average shares outstanding to be approximately 298 million shares. Before closing, I’d like to share how excited I am about the opportunities ahead for Informatica. I have only been on board for about a month, but in these four short weeks, I’ve had the opportunity to see up close the strength of our cloud products, the quality of our installed base and brand, and our unmatched direct and partner go-to-market capabilities. I expect fiscal 2023 to be a pivotal year for Informatica, and I am thrilled to have the opportunity to be a part of the team. Operator, you can now open the line for questions.

[Operator Instructions] The first question comes from the line of Brad

Great. Thank you very much. Hello, Amit, and welcome Mike. We all look forward to working with you. Maybe a question for you, Mike, to start. You've come from a really successful company over to Informatica, and I was hoping you can talk about what specifically attracted you here? And perhaps, the low-hanging fruit that you see and any change in philosophy that you bring with you?

Hi, Brad. Thanks for the question. Well, as I started to get to know Informatica in the months leading to my move, I was very attracted by the sector that the company serves. It's a $40 billion to $50 billion TAM that's growing in the mid-teens or better. And Informatica is the clear leader in the space with a set of product capabilities delivered on the segment-only truly cloud data platform, and the company has a tremendous installed base of existing customers who are happy with the product, loyal product and willing and anxious to buy more as more product capabilities emerging and their needs emerge. And then they have a go-to-market capability that's really unmatched. The direct sales force is very experienced and capable and the indirect partner sales, which go through global systems integrators, VARs and cloud service providers leads to a go-to-market engine that is really tremendous. You combine all that with what is an operating model that turns out to have a lot of operating leverage in it. And in fact, if I'm going to try to compare what I expected to find in terms of what I found coming in, it's there where – I've been – expectations have been exceeded the most that this is a business that as it grows is going to deliver balanced profitability with that growth. And operating leverage, as we get more efficiency out of go-to-market and R&D, as we continue to grow the business at scale with the simplified, highly focused cloud-only, consumption-driven strategy. So I've been really happy to confirm all of the things that attracted me to the company now that I'm here and frankly, have been pleasantly surprised in a good way about what I found to be the financial model and its potential for delivering increased profitability as we grow.

Mike, that's really great to hear. Thank you for taking the time to explain that. Amit, maybe just one follow-up for you. All the cloud migration commentary and cloud ARR results are really encouraging and speaks to the value of IDMC. But if we look at overall workload migrations to the cloud across the industry, what we hear from the CSPs, they've been slowing materially. We can just see that if we look at Amazon's results last quarter. So other than the use case in that you're feeding high-value AI-related apps, is there anything else that you would share with us to think about in just reconciling what we're seeing more broadly across different types of workloads out there? Thanks.

Great question, Brad. So I think if you look at two things, obviously, majority of our cloud ARR growth, which obviously was great, comes from net new workloads, not migration. I'm going to talk about a second. And to be kind of, if you look at where customers are, each part of the stack looks differently. But the part of the stack we are in, the data stack is pretty much every digital transformation is a data transformation. And what we are benefiting from is not only the best-of-breed capabilities for that platform. And obviously, I talked about the CLAIRE AI now really feeding not just intelligence, but automation. So when I talk to customers productivity, having a platform that can simplify things for them, managing not only getting the best technology, but at reducing that risk and price leverage that they can bring it all on the platform. Those are all the things that are feeding into them. And the other one is that, look, we partner with everybody. Switzerland of data really comes handy. So customers choose best-of-breed or whether they want to go to one CSP and another data provider, but we are the only one that can glue all of them. All of those things create a nice snowball effect. Migrations, as you saw – look, I've said very clearly, all of last year, we're doing a lot of hard work behind the scenes to increase the velocity of that one and create a curve that has a higher gradient than what we have seen so far. We went from two-point something to now 3.6, expect more to happen. You've done the hard work of training departments. They are the ones who basically want to drive all the implementation through and also add deal discovery through. I fully expect that to continue to bear fruit over the course of this year. As I said, Q4, while everything was going down, very promising what we saw in migration. So that is an area that I do expect continued velocity increase and the gradient to get better than before.

Awesome. Thanks so much for taking my questions guys.

Thank you. [Operator Instructions] The next question comes from Matt Hedberg of RBC. Please proceed.

Great. Thanks for taking my question guys. I'd offer my congrats to you as well, Mike. Looking forward to working with you. Amit, following up on your comments to the last question. As you go along on cloud this year, I was wondering if you could talk, I guess, more about your overall go-to-market strategy. And I guess I'm really wondering like how does sales reps – how will they be incentivized this year? And you mentioned that there could be a stepped up focus on converting maintenance to cloud. Just maybe if you want you could double-click on that as well.

So two things over here, again, and I'll keep migration second and overall. Look, as we shared last year that we were in a hybrid product world, hybrid use case world, our reps had a hybrid [indiscernible]. They were selling cloud with a higher multiplier than self-managed, but we were chasing both. What we've done is for majority of our countries for all net new business, our teams have pivoted towards just cloud. So that's the quota they carry that's the [indiscernible] they have. Sure, certain parts of the world and certain areas like U.S. public sector that is self-managed because cloud has still has some inhibitor over there and we kept those teams compensated appropriately, but that's a much, much, much smaller percentage of the overall part of the new business that we are going after than cloud. So pretty much our teams are similarly – they're not now confused been both cloud and self-manage and a pick and choose. It's just cloud and our products are all on the same cloud platform. They're putting that in front of our customer. They're running at scale so on and so forth. So very clear, cloud code or cloud com, very similar focus, you just run and that's the only thing you have. That creates focus and simplicity and operational efficiency that we talked about. I didn't say that migrations will become a much bigger part of the business. I still keep saying, majority of our business is going to grow through net new workloads. I did say that, yes, we are the hard work we put behind the scenes on partners ramping will give us more fruit over the course of the year for migrations to growth. We fully expect and are focused on driving more migrations, but as we've said, Matt, and you’ve said the new business, just look at the velocity with which it continues to grow, and I'm really impressed with that. And last but not the least is, look, when customers settle on the platform, and a lot of our customers who may be potential migration customers, but they are running new workloads on IDMC, they will naturally get to the migration workload. We want to make sure we capture any workload on IDMC, we can get the migration later because it's a very sticky business that we saw.

Thank you. The next question comes from the line of Alex

This is Alan [indiscernible] on for Alex

So first of all, as I said, we continue to see that digital transformation efforts at every customer are run through the lens of data management. I've talked to hundreds of customers across the globe, and even in a macro environment, which is not necessarily – which still has headwinds out there, we talked about that. Customers know that, hey, look, I got to get at some point to transform our business and the only way I’ll do it is through having a better understanding of my customer or my supplier or having data covenants as I democratize all of them are data management use cases through the single platform, IDMC, that has all the services. What we saw coming out of Q4 demonstrated that, and that's what our conversations pipeline creation remains healthy. We continue to see deal cycles remain elongated, but the health of use cases help the pipeline gives us all of the comfort on everything is going to the lens of cloud. So hence, basically – and we've been talking about that all of last year that basically through that lens, we are pivoting towards the cloud-only mode. For all net new, we're not giving up on our maintenance base, renewal base. We have great best-in-class renewal rates and we continue to service those customers, and over the course of time, migrate them to cloud. On migration, pretty much 90% plus of our business comes from new workloads. So we feel pretty good about that. Migration is an area, where I said many times, we're going to continue to scale more, but majority of our growth has come from and will continue to come from new workloads as we scale our migrations.

Thank you. The next question comes from Kash Rangan of Goldman Sachs. Please proceed.

Hi. Thank you very much. Glad to hear the details here, Amit. Curious if you can expand upon the end of the quarter activity with respect to new deals and how you saw the close of the quarter and have things change with respect to the tone of net new business in the month of January. And then as you step back and look at the cloud transition, what is incrementally new by way of professional services, risk of implementation or the timing of implementation or product functionality that why you have the intent to move forward with the cloud, how should the customer propensity be any different? And Mike, I look forward to working with you. Congratulations.

Thanks, Kash.

Yes, Kash. So Kash, look at this way, the net new growth of ARR in 2022 was 70% cloud. So the momentum has been shifting towards cloud in a significant pace with the course of 2022. In fact, if I go back a year-ago, literally, we actually – in my – that February earnings call, we put more focus on cloud roadmap and cloud partnerships. We, in fact, did a bunch of that change that has borne the fruit over the course of this year. So momentum is towards cloud. Our products have scaled up on that platform. We have many new innovative features and pretty much as a digital transformation efforts are all cloud-centric. I've not seen a customer who wants to do on-prem anymore. Pretty much everybody wants to go to the cloud. They will want us to help them go to the cloud. So you can see the net new business growth. Now Q4 had great tailwinds, and look, we don't see any – we don't see a material change in the macro yet. So we were prudent in how we are thinking about this year. You heard my guide to what we saw this year. So we obviously – while we grew a lot more over the course of cloud ARR last year, we were being thoughtful on what it could be for the full-year. And hence, we gave the guide for 35% cloud ARR growth. We feel good about where the cloud business is, and cloud also, Kash, as you know, given cloud does not have a lot of old on-prem the complexity of implementation, customers can get going very quickly. Our customer success model is to drive technical and business value very quickly. So the time to value that cycle has been compressed. So customers get quick value, and like I talked about some productivity increases through AI. So customers benefit from that in the world of cloud and that's what gets them even more excited to pick up on cloud workloads.

Thank you. The next question comes from Koji Ikeda of Bank of America. Please proceed.

Koji, if you're speaking, you may be on mute.

Sorry about that. Can you hear me okay?

Can hear you now, go ahead.

Okay, thank you. Hey, Amit, hey, Mike. Thanks for taking the questions. I wanted to ask you a question on Flex IPU. I guess from a push-pull perspective, was this something customers were asking for? And maybe how should we be thinking about this new pricing model? Any changes does it create your revenue visibility? And also any rev rec considerations we should be thinking about with the Flex IPU pricing model? Thanks, guys.

So from the demand point of view, Koji, in fact, IPUs have been a stellar success. I think, Mike mentioned in the call, 54% of our IPU new bookings are – new bookings on cloud are IPU-based, and we see great traction. The simplicity of IPUs is what customers love. And in that vein, we also talk to customers that customers who want many different ways to consume IPU. So Flex IPU is nothing else but an additive thing to give customers more flexibility to transact with us. It does not have any material changes to what we are running in our go-to-market models. Again, remember, if we want to give customers more and more and more flexibility to consume IPUs, we know, given our renewal rates, customers adopt. They use. They basically become consumers for life of our platform. So it's in that spirit. And of course, we've been hearing customers on, but different use cases also then we want different things. One use case, they want regular IPUs and for a small seasonal use case they may want Flex IPUs. So it's managing those and sometimes we serve across an enterprise in many business units. It's managing a pretty large enterprise in the way in which we thought about this, we feel good about it. I think we'll see how the year goes with that.

And Koji, just an add to that. To super simplify the difference in the model from existing IPUs to Flex IPU, there's a lot to it. But from a financial standpoint, basically think of it as a monthly bucket versus a yearly bucket. Customers are buying a yearly bucket that they can use any time during the year as opposed to monthly user lose it. For that reason, it doesn't change the revenue recognition. It continues to be fully ratable and doesn't introduce any more usage volatility than you would otherwise see in the IP-based model.

Thank you. The next question comes from Pinjalim Bora of JPMorgan. Please proceed.

Hey, guys. This is Noah Herman on for Pinjalim. Thanks for taking our questions. Can you maybe just provide some of the assumptions around the ARR guidance? And just any other incremental commentary on macro would be helpful to included in those assumptions? Thanks.

I can give the macro and Mike can add to the guidance. Look, I think we said very clearly. We fully still see a macro where there are – that is special. There are headwinds. And I think – not a lot has changed from December 31 to whatever the date is today. So I think we've been very thoughtful about our customers are still in an environment, they are being thoughtful, careful. Deal cycles are remain elongated. I create remain remains pretty good, but I think we have to just be thoughtful and careful about that. So with that, we basically put one lens to our guidance. Second is, we – you heard from us, we are very clear in the cloud-only model. That's the part of the business is growing. That's where we wanted to go. We have been working hard towards it. We are absolutely very okay for the sake of focus, growth and all the right long-term tailwinds to a cloud model, which has higher NRR, higher cross-sell, upsell, the higher operational leverage model to give up on some self-managed deals on the side here and there if we had to. I'd rather have a very focused team driving the right long-term model opportunities. So those are all the things that we took in terms of how we thought about what we think the year could be like. And then I'll have Mike add to that as to our guidance do more so on it.

Sure. Maybe I can give a little bit of color around the various components. So starting with cloud ARR, that's a 35% growth guidance. That's a number that's well supported by our pipeline, and we think appropriately reflects the environment that we talked about that we expect to be more or less the same as it has been over the last couple of quarters. Self-managed ARR is down 8% at the midpoint of our guide for the year. And as I said, that's a direct consequence of our strategy to focus all of our go-to-market efforts in all of our material new product enhancements on cloud-only products in 2023, and we expect that to pay even more dividends in 2024. Maintenance is all a renewal game, and the renewal rate in Q4 was 96. We think that was a really outstanding opportunity. We're not expecting that to recur through the full-year. We're planning on a renewal rate and maintenance that's consistent with the 94% or so rate we've seen over time. And then in terms of renewal of our subscription cloud and self-managed products, again, we forecast a rate that's very consistent with the 93% that you saw in Q4, and you've seen in quarters past. I hope that helps.

The next question comes from the line of Andrew Nowinski of Wells Fargo. Please proceed.

Great. Thank you. Congrats, Mike, on joining Informatica. I just really have, I guess, a few clarifications. I know there's a revenue uplift when maintenance customers convert to cloud, but I'm wondering if you expect the same ARR uplift if a self-managed customer converts to cloud. And then I appreciate the beat on the operating income, despite missing revenue estimates, but I'm wondering why the sales and marketing was down 20% year-over-year in Q4? If that's – if there's something abnormal in there? Thanks.

So let me start with the ARR impact of a conversion from self-managed to cloud. There absolutely is an uplift because when you move from self-managed to cloud, Informatica takes responsibility for owning and running and monitoring the infrastructure. We do all the patching, the security bug fixes and all that sort of stuff. So there's a lot more value delivered to the customer for a cloud solution to the same use case versus a self-managed or on-prem solution. That multiple is not as consistent and statistically predictable as it is for the maintenance conversions because it depends a lot upon what capabilities they're converting to and often cases, there's more stuff that they're buying because of the advanced capabilities of the platform versus their existing solution, but yes, there is an uplift. And in terms of the ARR impact of that, we only record in total ARR the net increase. Now you would see a decrease in subscription – sorry, in self-managed ARR and an increase in cloud, but on a net basis, you'd only see the increase over the existing base. Sorry, operator, I apologize. That was a two-part question, I neglected to answer the second part. The reduction in sales and marketing expense year-over-year in Q4 was the impact of commissions and how those commissions end up hitting the P&L based upon the mix of cloud sales versus self-managed sales and the different ways in which we capitalize those commissions versus expense then in the period when the deal is closed. The exceedance of our guidance and the exceedance of our expectations was in the cloud segment, and for cloud commissions, we pay the same amount more or less to account executive for the deal, but for P&L purposes for GAAP, we capitalized that ratably over five years. And so we see less expense in the period. So that was the reason – that was the primary reason for the difference.

Thank you. The next question comes from the line of Fred Havemeyer of Macquarie. Please proceed.

Hey. Thank you for taking the question. I'd also say, welcome, Mike, and I look forward to working with you. I'd like to ask with the broader cloud ecosystem, so perhaps for Amit here. Just with the amount of integration that you're offering and just focus on going cloud-only and cloud-first sales, how would you describe the backdrop of demand for data in the cloud? And perhaps, some of your strategic partnerships with Snowflake, Databricks, et cetera, and some of the recent launches you had like the data connector with BigQuery and how all of this plays into overall cloud ARR?

Yes. I think that – look, if you look at the market demand, as I said, pretty much all of the big partners work with are cloud. You look at the demand, the new ARR growth that we have cloud. Pretty much all of digital transformation that's happening in the cloud. So we – and all the work we've done in the year has been to accelerate our cloud roadmap, so we can fulfill more of the demand. And you can see more and more over the course of the year, we could fulfill more of the demand in the context of cloud. Our whole platform is ready. The demand is there in cloud. So as we walk into this year, we're going to fulfill that demand pretty much all this cloud. As I said, barring some exceptions of some areas like U.S. public sector could be the case or some parkland geographies where they may still want some self-managed because cloud is not necessarily what they're going to do. But that's going to be a much smaller component. That's the demand side. That's how the pipeline is delicately created. That's what customers are asking us, and we are basically ready to fulfill it.

Thank you. The next question comes from the line of Howard Ma of Guggenheim Securities. Please proceed.

Hi, thank you. I have a question for Amit. If you were forced to do a rank order, which products and solutions on IDMC do you expect to drive the most incremental growth this year? So for instance, I believe MDM was the last product to become fully multi-tenant, right? So maybe it's MDM. We also keep thinking maybe the 360 use cases. Maybe CDGC. And the second part is, with this cloud-only model, are certain IDMC products better positioned for expansion relative to how your customers were consuming – relative to how self-managed customers specifically were consuming them? Thank you.

Howard, don't make me choose my kids. That's a harsh question. So I think I've said that many times and I’ll repeat that. Look, that's never the way we ever look at it. Because when we talk to a customer, and I said that like there are many use cases, but pretty much that's the beauty of the platform. I'll pick an example of take MDM, you said, right? So customer is implementing a customer experience project, and basically, that project becomes MDMs led. But to implement that hosting, they need the front-end MDM application. They need the core ETL to basically bring data from many places. They need data quality to make sure that the right quality of the data goes into this operational MDM through which they make a decision. And by the way, if we want after that, that MDM to be an operational use case, but also some other people to get data from their analytically to do what-if analysis, they want to put some governance on top. So when we talk to a customer in the context of a use case, we basically may begin with one use case, but it very quickly morphs into using many capabilities. So the whole platform gets used even what may be MDM led. In another case, it could be an analytics project with Snowflake, where ETL, quality governance has been used. So that's why we never look at one product over the other, we always look at it serve the use case. We have all the capabilities to make it very easy for a customer to do it in the most cost-efficient way, risk-efficient way with the best capabilities.

Thank you. The next question comes from Shebly Seyrafi of FBN Securities. Please proceed.

Yes. Thank you very much. So your international revenue growth ex-FX declined from 7% in Q3, positive to negative 4% in Q4. Just talk about some of the geographic trends you're seeing. And you also have the 7% headcount reduction announced in January, just can you talk about how much of that was international versus domestic? Thank you.

Yes. Look, I think we don't disclose as to whatever. Look, our – when we reduced our headcount, it was pretty relatively spread, and we wanted to make sure that we take out the right things where we had duplicative layers or the things that didn't mix. It was slowing us down from a cloud-only business. But of course, we are pretty well distributed across the globe. So whether it's the Americas or Europe or to be honest, India, where we have a pretty large presence. So it is pretty distributed. In terms of demand, look, we haven't seen anything in particular that is one area stronger than the other or one area necessarily much weaker than the other. We did not have much exposure to Russia in any way in that area as we've said that before. So that didn't really impact us much. We don't have a whole lot of exposure to China. So we don't have a whole lot of impact over there. We pretty much serve the large economies of the world, and I think all of them are facing the same kind of headwinds. It's a very unique one, right, inflation and all that stuff is hitting all of the large economies. So we're seeing healthy pipe grade in all of them quite evenly. And because they are also very well distributed across all verticals, and we kind of serve more mission-critical workloads, we were never into when the market went up with, let's say, serving crypto workloads or some other, we never did any of that stuff. So we see a pretty well balanced, same kind of headwinds, same kind of tailwinds across our big markets.

And Shelby, just to remind you, international is only about one-third of our business, and a quarter is only 25% of the year. So you get to be a smaller number that frankly is just subject to quarter-to-quarter variability that doesn't necessarily represent a trend. I think that's how to interpret Q4 international.

Thank you. The next question comes from Patrick Colville with Scotiabank. Please proceed.

Hey, thank you so much for taking my question. Could I just double-click on the cloud-only strategy? And I guess, I mean exactly what does cloud-only mean in practice? So like as sales compensation changed as a result of the cloud-only strategy, have product development dollars changed as a result of the cloud-only strategy? Just a bit more color to kind of see how this will translate into the business.

Absolutely. Yes, all of it has changed. Cloud-only once again, as I said, for all our new organic growth, we are leading with cloud pretty much, barring a few exceptions, I keep saying here and there, the U.S. public sector and things of that nature and that also will move to cloud very, very quickly. In that context, we do not have most of our large regions have moved to a cloud-only code account model. We are basically giving our reps not necessarily any confusion to choose one over the other. They only have cloud, so they only lead with cloud. They only sell cloud. They're entire code on cloud, and they get compensation at cloud. Pretty simple. Same way our entire product development has pivoted to cloud. We've finished the cloud putting everything there, but there's so much more to do over there. So all majority of our innovation is coming in the context of cloud, IDMC, the platform over there. Now what it is not? We have a very, very, very great set of customers who run mission-critical workloads on the products they use on us. You've seen our renewal rates didn't – haven't budged ever over the course of time. In fact, last year, we thought in a tough macro maintenance, renew rates may go down slightly and we went back and increased it because we didn't see any movement in that area. Same thing is for self-managed. We fully are going to keep helping our customers manage those workloads like we have done, and we know how to do it very, very well to basically make sure they get all the fixes. We have a support team and all that stuff to make sure that area continues to remain healthy from a renewal rate point of view. And of course, we're going to now help customers migrate to the cloud, and that's an area where I said, while we are in the early innings, we want to increase the velocity of that fund. But what cloud-only is that we basically want all the net new business to come primarily from cloud, and it's very clear, focused with no dilution of energy between one thing or the other.

Thank you. The next question comes from the line of Karl Keirstead of UBS. Please proceed.

Thanks so much. Maybe I'll direct this to Mike. If we could just talk about the trajectory of the revenue growth rate throughout calendar 2023. Obviously, you've guided to negative one in Q1, but positive five for the full-year. So you clearly are anticipating a pretty meaningful growth acceleration in the second half. Some of that might just be mechanical. FX turns your way, easier compares. Is that mostly it? Or if there's something a little bit more nuanced in the model that's resulting in that? Or if you're taking a more optimistic view of the spending environment in the second half, I'd love to unpack that a little bit. Much appreciate it.

Yes. Thanks for the question, Karl. It's a good one. And I guess I'll start my answer with the reminder that revenue for a mixed model company like ourselves in the software business is really hard to unpack from quarter-to-quarter because of the mix shifts, because of the acceleration from ASC 606 and so forth. But that being said, the linearity that we're planning in the year is many different from what we've seen in past years. We typically see one-third or more of our business closed in the fourth quarter, and there's kind of a linear slope down to the first quarter, which is the slowest quarter of the year. Nothing has changed in what we expect in fiscal 2023. With respect to the first quarter, yes, there's some mix change in that. And yes, there's an FX impact in that. If you look back at FX rates in the first part of last year versus this year. While they've come back a little bit in our favor, i.e., the dollars little weaker than it was in June, July, it's still stronger than it was in January. So it's those two effects and nothing structural that should make you think differently about ARR growth and ARR linearity and seasonality as the year goes on, which is really the best way to look at our business and what we're actually delivering in each quarter and each year.

The next question comes from the line of Tyler Radke with Citi. Please proceed.

Thanks for the question and welcome aboard, Michael. I wanted to direct the question that you appreciate it kind of hearing about your reasons on why you joined Informatica and the opportunities. Just as you think about the efficiency opportunities that you talked to, I was wondering if you could expand on that. Obviously, you're guiding to a pretty healthy amount of margin expansion for FY2023. A lot of that is probably coming from the restructuring, but how do you just think about the timeframe to reaching Informatica's long-term targets? And are there specific areas that you've identified in terms of low-hanging fruit that maybe could accelerate that path faster than what the company had targeted? Thank you.

Yes. Thanks for the question, Tyler. I'm not going to put a specific date on the long-term margin targets. They feel reasonable and achievable to me over the long-term. But sorry, I won't volunteer anything more specific than that. With respect to the nearer term operating leverage opportunities, if you look at the roughly 2.5 percentage points of operating margin expansion that we're guiding to in 2023 versus 2022, it's about two-thirds, one-third improvement sales and marketing as a percent of revenue and R&D as a percent of revenue. Maybe three quarters, one quarter. We want to keep investing in the products. We want to keep innovation coming, but frankly, with the simplified cloud-only strategy, we can do more with less in R&D. It's not going to be less literally, it's going to be more dollars, but we could be more efficient. Sales and marketing improves even more than that as we focus the sales force and focus the compensation in the way that Amit described. And so, again, probably 75% of the efficiency improvement this year is going to be in sales and marketing as a percent of revenue. Looking beyond that, that's sort of a waiting between the two is probably about right over the medium to long-term in terms of where the efficiency is going to come from as we scale and recognized leverage. Some will come from G&A, of course, too. We'll absolutely grow G&A at a slower rate than we grow revenue. So there will be some operating leverage that will be achieved there. But overall, I'm confident that we can continue to deliver operating margin improvement year-over-year for a good long time.

Thank you. And the final question comes from the line of Fred Lee of Credit Suisse. Please proceed.

Hey, Amit and Mike. Thanks for squeezing me in. Considering cloud migrations for maintenance, you're less than 4% install base. I was wondering, how the company plans to accelerate the migration from cloud – to cloud for maintenance? And is the internal expectation more linear progress or can we expect an inflection? Thank you.

It's a great question. Look, I think two things that you always have to remember that our customers are running mission-critical workloads with the existing on-prem implementations and one has to be as thoughtful as you think about migrations because you – basically, as I said, some insurance companies are closing their books on power sector. So you just have to be very thoughtful as you take them to the other side and make sure the business runs the same way. We absolutely are committed to increasing the velocity of migrations, and I think there are many other things. So one of them is that we wanted to scale our partners. We had to prove out the playbook so that we can give it to the partners and partners are being trained and enabled. So that's one area they spent a lot of energy last year and I’m feeling very good about it as we exit Q4. There are other things that as a team we are focused on. We'll share with you as we go along over the course of the year. It's not lost in us. That's a great opportunity, great value-creating opportunity and we want to do all the things that are right by us and the customer to make this happen and get that value for Informatica.

Thank you. That concludes our time of question-and-answer. I would now like to pass the conference over to the management team for closing remarks.

Thank you, operator. Well, look, first of all, thank you very much for taking the time today. As I welcome Mike again. Obviously, lots of question that I know you will get a chance to talk to them over the course of time and get to know him better. I'm very excited about the cloud-only consumption-driven strategy. I think it sets us up to the final chapter of the company to be the cloud-only company and to be candid. We are unique in some ways to having done eight business model transition before. You see how we took down license to almost zero, and where we are successfully now going to the migration to – or movement to the cloud model, and I'm very excited about that, given the installed base, the innovation and the customer centricity we have. Obviously, I look forward to sharing more over the course of this year. One opportunity, which a lot of you leverage last year is, Informatica World. It's our annual user conference run by customers, majority of the sessions are customers. I'd invite all of you to come to Informatica World again this year. It's going to be in Vegas again earlier in May. Reach out to Victoria, and she can get you connected. But I look forward to seeing you over there and most likely having you see our innovation and talk to our customers. Thank you, once again.