In fact, it also as I said makes the business a lot more nimble and fast, because we just don’t need ten people to go structure a deal as an example if I may use that. And of course, in a lot of cases cloud makes it a lot simpler and easier for customers to engage and buy from us or even use for us. All of those things play into that. And I think I’ll touch on one thing that maybe you didn’t ask is that timing for us was a very important critical decision maker. Look, we talked a lot about whether it’s January or now. We start our new fiscal year in January. We knew where we were and we basically wanted to have a fast start to next year. We see good traction against IDMC. So we thought look we’re not — there’s a lot of quota-carrying capacity.
In fact they’re not touching any of that stuff. So we feel good about Q4 as you heard from our guide. We wanted to get this thing done so we can plan and have the right people in all the right roles. So we not only finish well but have a fast start to 2024. Mike, you can cover Ithaca please.
Mike McLaughlin : Sure. Alex, let me see, if I can unpack the Ithaca and buyback authorization announcement. So I’ll start with Ithaca. I think LP was an investment vehicle that was established in 2015 in conjunction with the Informatica go-private transaction. At that time there was a group of large institutional and strategic shareholders who wanted to invest in the deal alongside our lead investors Permira and CPPIB. Ithaca was established to hold the shares of those strategic and institutional investors and that vehicle has been controlled in terms of the boats and decisions about disposition or distribution of the shares by Permira since 2015. Ithaca was designed at the outset to terminate on the two-year anniversary of the IPO of Informatica.
That IPO as you know was in October of 2021, so that two-year anniversary is upon us. In the months leading up to that planned termination the holders of 51.4 million of the 60 million shares in the Ithaca vehicle chose to extend the life of Ithaca for at least another year and leave it subject to the governance provisions that have been in place since 2015. The holders of 8.6 million shares that’s four holders have chosen to take the distribution of their shares and they will once that distribution happens have control of the votes and they’ll be making individual decisions about any dispositions of those shares going forward. We expect that distribution to take place sometime in the next two to five business days. Now there’s three important pieces of context around the Ithaca distribution.
First of all, the four entities that are receiving shares are all large institutions or strategic investors that know Informatica well and they have experience in investing in public equities. Secondly, we have no indication from any of these holders that they have an intention to sell their shares in the near term. And then third the buyback authorization. So let me talk about that. The buyback authorization is not by any means a signal that we’re changing our capital allocation policy. Informatics continues to prioritize investment growth, deleveraging on a net basis and strategic and tactical M&A as uses for our balance sheet cash and our free cash flow. So why are we doing the buyback? Well, the buyback authorization gives us the flexibility to engage with any potential sellers of large blocks of shares and to negotiate private off-market transaction to purchase those shares if it’s available on terms that are attractive to Informatica.
We don’t intend — although we do have the flexibility to be buying shares in the open market rather we’re targeting the opportunity to buy large blocks of shares in private transactions. So there’s no change in capital allocation policies. There’s no attention to reduce our public float rather it’s the ability to be flexible and nimble if the opportunities to buy shares in large blocks becomes available. Long explanation let me see if that answers your question and do you have any follow-up talks.
Alex Zukin: It sounds like the two are a bit linked, if I’m reading the commentary correctly.
Mike McLaughlin: Yes. You are reading it correctly. Look. we recognize that we have relatively low liquidity and that any large sales in a short period of time can dislocate our stock for purely technical reasons. The buyback gives us the ability if large sellers are so willing to negotiate off-market private acquisitions of those shares if they’re on mutually favorable terms. They’re linked in that regard.
Alex Zukin: Super helpful. I appreciate it guys, thanks again.
Operator: Our next question comes from Matt Hedberg with RBC. Your line is open.
Matt Hedberg: Great. Thanks for taking my question guys and congrats from me as well on the results. Maybe following up on Alex’s question. I think what stood out to us in addition to cloud NRR accelerating sequentially but also it looks like large customer growth also accelerated on a sequential basis, which is great to see. I guess I’m kind of curious given the comments on macro and demand that you talked about curious on the sustainability or durability of elevated cloud NRR. And I mean is that a trend given this increasing push to cloud that could perhaps continue into next year?
Amit Walia: Matt, thanks for the question. So look we don’t guide to NRR. We’ve said that many times. And ARR is a number that can go up and down over the course of quarters in a year. We obviously look at it very carefully thoughtfully in the full context of a year. I’ve said many times that we look at it and we care a lot about it but we don’t 100% solve for it, because when we acquire a new customer that customer is zero value add to NRR, but incredibly important for us because we know forever that when we land a customer given the mission-critical workload that we saw we get a customer for life. So that’s statement number one. But to your question on large customers, look, we solve multi-use case problems through one platform that has multiple products.
And that serves large enterprises always very well. Second is, large enterprises inherently have complexity. They turn to us. Large enterprises also are gravitating towards. They don’t want to build a pancake to solve and build a new modern data architecture. They rather have one platform and a few ancillary teams around it. All of those things are benefiting us. And then last but not the least like we’ve talked about migration. I mean a good part of migration also comes from large customers that are trying to move to cloud now taking old power center to our cloud. All of those things are driving to the large enterprise or larger customers fabricating towards us with the bank.
