Mike McLaughlin : 124.
Amit Walia : So six points higher so cloud and cloud NRR the 118 that we reported could be equivalent to 124 like a bunch of other companies also report. So we feel very good about it.
Unidentified Analyst: Got it. Thank you. And then as a follow-up can you help us understand the general puts and takes around 2024 revenue growth? Thanks.
Amit Walia: I think that will be an incredibly good discussion at the Investor Day four weeks, right? I guess the four weeks and a few days away, I would love to share that with you and I think you will get a ton of details from us as to we think about it. I think I’ll let Mike cover that but four weeks and we’ll be talking about it.
Michael McLaughlin: In general, though, as you’ve probably heard me say before it’s more or less a free line excel spreadsheet. It’s how fast is cloud going to grow and how fast our self-managed and maintenance going to decline. There’s a four factor which is how much of that self-managed decline and maintenance decline is actually migration from those two buckets into the cloud bucket but it’s a pretty simple model. You can see historically how maintenance has declined. We think that’s going to continue self-manage is starting to decline as we’ve deemphasized selling self-managed at the beginning of this year we’ll be able to give you some better guidance about what to expect in that bucket when we meet you in December. And then we have good momentum on cloud growth. And again, we’ll give you more sense for our expectation in about a month.
Unidentified Analyst: Got it. Thanks for taking my question.
Operator: Our next question comes from Fred Havemeyer with Macquarie. Your line is open.
Fred Havemeyer: Hi. Thank you very much. Congratulations also on cloud growth in the quarter. I think it’s one of those things that continues to be impressive to see within the tumultuous model. I want to focus on a topic I hope it’s not a little too tired at least for me at the moment but just generative AI-related use cases and more specifically efficiencies perhaps you can find within your own business and with your clients. We’ve seen a lot of use cases around generative AI for data labeling and more efficient perhaps like data transformation capabilities. So I’m curious just big picture here. How might you see your strategy around utilization of generative AI evolve? And do you think that there are additional areas you can gain efficiencies through using this technology?
Amit Walia: Great question Fred. And I think I’ll put two three categories. One is Informatica for AI use cases, which is like forget even if you did not don’t have CLAIRE. To do AI customers need to have holistic data good quality data, governed data things like that and I can go on and on and data labeling is one of those examples. So that’s informatic for AI. So if companies want to do AI they need data management they need IDMC and we are part of that workflow. Second is AI within Informatica which is clear and how clear GPT and clear copilot are embedded within our products and they naturally make our products the AI coming out of products to drive more intelligence and more automation for their customers so they can do more with less and they can do things that they could never do which — so that’s second benefit that we get from — so because our products become a lot more valuable for them.
Third is I think where you probably were also asking how we use Gen internally within the company for a variety of our own running the company, right? And so we’re doing all three we are participating in the first two in the context of driving our business. And the third one is basically making ourselves a lot more smarter nimbler productive and totally as a company. So all of those three are focused on right now.
Fred Havemeyer: Thank you very much.
Operator: Our next question comes from Koji Ikeda with Bank of America. Your line is open.
Koji Ikeda: Hey, guys. Thanks for taking the question. Just one for me here. I wanted to ask you a question on IPUs and curious to hear what the overall end markets perception of the IPU pricing model shaping up today now that it’s been off for some time. I mean, you did mention in your prepared remarks 60% of new cloud bookings is coming from IPO. So that’s a pretty good indication. But maybe some qualitative commentary could be helpful. And then also you mentioned that 15% of cloud bookings is coming from transitions from power centers. So do you believe that the IPU unit could have a potential to accelerate the migration of legacy power center users out there? Thanks for the time.
Amit Walia: The answer to the second part is, yes. So the first part is by the way like you said, all new bookings are consumption. IPO and non-IP, the non-IPO with MDM, which is a record space. Now, we don’t have it on IPO because customers like to buy by records. So and customers love it, because look what’s not to like? It’s statically simple and customers have to just figure out what they want to do and they can start small and grow a base, like I said we — because we solve mission-critical workloads, typically customers want to buy a good price bar game so they want to invest in the future. So I think customers have — I have not met one customer who has not liked it. If anything, our job is to keep telling customers because sometimes they buy, they forget that they have the IP to do anything.
So we keep driving that rationale. But I think right now, I think there are three words that our customer base have learned and our goal is to make sure that they all memorize it. IDMC, CLAIRE, IPO these are three words that we want everybody in the world to learn, so pretty good about it. And I think yes migration, obviously, they get IPU so they can also start a small migration will start up, full migration, give them all that nibbled.
Operator: Our final question today comes from Howard Ma with Guggenheim. Your line is open.
Howard Ma: Great. Thank you for taking the question. I wanted to ask about the expense side, or I should say the profit side. I was surprised to see gross margin tick up sequentially, because I thought given the higher cloud mix that it said would decline. So can you — I guess for Mike, can you comment on I guess on gross margin. And also as you — I don’t want to steal away any thunder from the Analyst Day. But on the expense side as you deemphasize investments in self-managed and I guess power center too, although I’m pretty sure you’ve already deemphasized a lot of R&D investments there. How should we think about margins I guess both on gross margin and the OpEx line as time plays out? Thank you.
Mike McLaughlin : Thanks for the question Howard. So I’ll start with gross margin. You should continue to expect some volatility in our gross margin from quarter-to-quarter. It’s for a couple of reasons this quarter; one is despite what I’d like to happen our cloud COGS don’t grow completely linearly with cloud ARR revenue. We put up new pods in certain geographies and that creates a lumpy expense in a particular quarter when we spool it up and then as that pod gets filled up the marginal cost which is lower than the average cost follows behind. And so in earlier quarters this year we saw more of that lumpy onetime spool up cost than we did in Q4, where we benefited from new revenue for the most part going into existing pads and therefore had lower marginal cost per dollar of revenue.
