Mike McLaughlin: Yeah. Thanks, Howard. And actually, it was more than 30. That was an approximate number. Just that quick clarification. So, when we sign a cloud migration deal, there is a benefit to cloud ARR at signing in that quarter. However, because of the credits that we provide to the customer against their existing maintenance stream while the migration is happening, that ARR that you see in the initial stages of the migration is not the full run rate ARR, the full amount that’s actually being billed to the customer and this is because of some accounting rules that, for better or worse, we have to follow. So, that being said, the lag in terms of ARR contribution is not great. So, when we sign those and as the migrations accelerate, that goes into cloud ARR and that’s part of our forecast, and that is part of the build that underlies our 35% growth this year.
One thing that is different with PowerCenter Cloud Edition than traditional PowerCenter migration is, because the length of time it takes to migrate from PowerCenter on-prem to the cloud using PowerCenter Cloud Edition is six months or less versus two years or less in the old version, the maintenance is decommissioned more quickly. And so, the churn out of maintenance shows up sooner than it would under the old style of migration. All that modeling gets very complicated very fast, but I assure you that all of that is embedded in the guidance that we’ve provided for 2024.
Howard Ma: Very helpful, Mike. Thanks.
Operator: Our next question comes from Patrick Colville with Deutsche Bank (sic) [Scotiabank]. Please proceed.
Joe Vandrick: This is Joe Vandrick on for Patrick Colville. I had one on PowerCenter Cloud Migration. Of the 5.5% of maintenance and self-managed ARR, it’s already migrated. Where do you see that percentage going maybe over the next year or two or over the medium-term?
Mike McLaughlin: Yeah. We’re not providing a specific number on that, but I would point you instead to the medium-term guidance regarding the contribution of migration-related ARR to cloud versus net new cloud sales. Now, we did share in the Investor Day that at the pace we expect, by the time we get to the end of our medium-term period, which is through the end of 2026 guidance or directional medium-term model type of guidance that we gave in December, that we still will have migrated less than half — considerably less than half of that full base of PowerCenter maintenance, on-prem maintenance in general and self-managed.
Joe Vandrick: Got it. Thanks. Then maybe one more for me. A lot of talk about generative AI on the call so far. I guess is the takeaway that the conversations are happening right now, but it’s still early days and maybe to expect more of a meaningful contribution in 2025?
Amit Walia: Correct. I think it’s all happening and I think as we think about the latter half of this year, walking into 2025, you should expect that. By the way, to take a step back, that’s following a very natural course for any technology transition. When the cloud build-out was happening, the first happened at the infra-layer. Servers, network, storage, all of those things were the first. The highways had to be built, which is what is happening right now in the GenAI world. And then, obviously, from the data layer and the apps layer, because data layer obviously takes more work, more thinking, you just can’t move the app over there without the risk of governance, compliance, those kind of things. It’s following its very natural course of technology evolution that, in some ways, cloud also follows.
Joe Vandrick: All right. Thanks. Thanks for taking my question.
Operator: Our final question today comes from Tyler Radke with Citi. Please proceed.
Tyler Radke: Yeah. Thanks for taking my question. Maybe the first question for you, Mike, just as we look at the outlook for cloud ARR for the full year, it does seem a bit more second half weighted relative to this point a year ago. I know migrations and some of these PowerCenter deals may be more second half weighted just given the historical maintenance seasonality. But could you just talk about why the seasonality might be a little more backend-loaded this year and just what gives you the confidence in that visibility?
Mike McLaughlin: Hi. Hey, Tyler. Look, we expected this question, so we did our homework. If you look at where we were this time last year on this exact call one year ago, the guidance that we offered a year ago in that call in terms of first half versus second half linearity is virtually exactly what it is in the guidance that we’re providing in this call this year. Now, I don’t know what math you’re looking at, but I’m happy to subcommittee. It’s within 2 percentage points in terms of first half versus second half versus where we sat at exactly this time last year. So, there’s really nothing different and there’s nothing to see here. It’s the same pattern we saw last year.
Tyler Radke: Got it. Helpful clarification. And then I’m just curious, as you’re thinking about the PowerCenter migrations, to what extent are you looking at kind of moving up end-of-support, end-of-life dates on the traditional PowerCenter Maintenance as essentially a lever to accelerate this? Is that something you’re kind of contemplating here over the next few years?
Amit Walia: Patrick, first of all, look, we serve mission critical workloads for our customers and I’ve said that many times that a PowerCenter is basically an integral part of our customers. Literally, sometimes some of them are closing their books on us. And as we’ve thought about migrations, we’ve been very thoughtful about what our ethos as a company is, how we think about customers, and how we want to make this happen fast without disrupting our customers, and we’ll never deviate from that path. So, in that case, we’re never a company that’s basically going to go have a hammer to use that to solve, put it on a nail. We’re going to be very, very thoughtful. So, that’s how we think about it. And we talk to our customers very closely as we think about any such material decision.
So, no change to what we’re doing. In some ways, I feel like with PowerCenter Cloud Edition, we’re seeing a great uptick as we just saw in this Q1. And I also believe philosophically, by the way, as we think about the medium- to long-term, that GenAI, the conversation I’m having with customers is opening their eyes to say, geez, if I don’t modernize and get to the cloud, the power of AI would not be there for me if I’m not in the cloud. So, that’s also opening up a lot of eyes. People will say, I should basically accelerate some of the things that maybe I was thinking. So, we look at all of those goodness in terms of tailwinds for us versus using any kind of a hammer or a stick to drive things.
Tyler Radke: Thank you.
Operator: Thank you all for your questions. This will conclude the Q&A session. So, I would now like to turn the conference call back over to management for any closing remarks.
Amit Walia: Thank you. Well, look, I appreciate all the questions and everybody taking the time. Look, I’ll reiterate one thing that we’re a very unique and a special company. In the market we are, the scale at which we operate and the innovation that we are delivering with the best products and at the most at scale platform with, CLAIRE, the AI driving current AI and gen initiatives and with the GenAI coming from us sets us up in a very, very unique position. We are always going to be very consistent in our execution, as you saw today, both from topline to bottomline, and that’s what you hear from us in our guide for Q2 as well as our guidance for this year. I feel great about where we are today with our innovation and our customer efforts.
Excited about walking into Informatica World. I look forward to seeing almost all of you there and you will get to see some amazing innovations, some cool demos, and of course, hearing from our customers directly as to why they choose Informatica and why they help us drive our NRR, which is where it is today. So, I’m excited about where we are and look forward to seeing all of you at Informatica World, and if not there, then at the next earnings call. Thank you.
Operator: That will conclude today’s conference call. Thank you all for your participation. You may now disconnect your line.
