Second is IPU pricing is killer reduces the whole selling cycle of talking about so many different pricing models that exist and makes the conversation strategic and value driven. You go drive value into customer. That’s what you can go low, you can go high, in fact, more often than not, customer wants to then say, oh, geez, I know I’m going to do this mission-critical workload. I want to do this more with you, beautiful. So we have a very strategic look. Third one is, the whole strategic partner ecosystem that we have built with the Hyperscalers, the Snowflakes and the Databricks and the GSIs, it’s very important. Because large G2K transformation projects basically do not happen by one tool doing a small corner project that happens with scale vendors going in and helping customers drive value.
The tri-factor of this is what is bearing fruit.
Operator: Our next question comes from the line of Howard Ma with Guggenheim.
Howard Ma: Great. I also want to add my congratulations on a strong finish to the year that had no lack of challenges. Amit, I wanted to ask you about the expanded cloud technology partnerships that you had called out. So I’m talking specifically Microsoft fabric and SuperPipe with Snowflake, Databricks Unity Catalog, the integration of MDM with MongoDB. Can you give us a sense of the organizational alignment that it takes to establish these partnerships? And how much of a barrier to entry do you think it is to competitors? And so that’s one part. And then the second part is, if we were to think about the data and the amount of revenue that Informatica generates from these partnerships across hyperscalers, sounds like Databricks, MongoDB versus other data sources and destinations, is that former group? Is that going to approach 100% at some point in the near term? Thank you.
Amit Walia: Sure, Howard. So I think our first question, look, Rome wasn’t built in a day. These partnerships for us have not, they didn’t start that yesterday. In fact, many, many years ago, we started working with Azure. We started working by the way. We were the partner, we launched partners with Redshift. Then, Redshift came up with AWS and the GCP when BigQuery came out and with Snowflake, very, very early days of Snowflakes and Databricks. So we’ve been working with them from very early days. And I think while it is becoming a lot more visible now, every time something new comes out, we are design partners. We won the design part of the here with AWS. We’ve been working with them for so many years. We are the design partner for Microsoft Fabric.
So you can see we are there at the table with them and they’re conceiving the new technologies because our joint customers want that. So these partnerships have come from a long time, and it has built technology thrust, go-to-market trust, customer trust. So it comes from that place. And hence, they multiply. And today, we are seeing the snowball effect of that one. And so that’s the way to think about it. Second is, I think look, the 100% comment, we shared at our Investor Day. And the way to think about it is, clearly, the new workloads are growing. But when you think of an enterprise, the reason why I hesitate on the 100% things if you look at a data warehousing project in an enterprise, right, data is still coming from old sources and new sources, right?
So in that context, IDMC is pulling data from the old mainstream, but also from the new Microsoft or new MongoDB database or the new Snowflakes on and so forth. It’s going to be both, of course, the latter will continue to grow bigger in size as more and more data gets housed, there is an example. But the old ones will not become zero because data is still sitting over there. As that stuff gets retired, naturally, it won’t matter to us. Our job is to bring make sure that we can connect and manage the entire data landscape of the enterprise. Hence, I hesitate to talk about the zero-sum game. But of course, all our growth and all our investments, as you can see, is pivoted towards the future, and that’s what we invest in.
Operator: Our next question comes from the line of Fred Havemeyer with Macquarie.
Fred Havemeyer: Congratulations to the team for a really strong quarter here. I wanted to ask about the transactions that you’re seeing flowing through cloud. I mean 62% year-over-year growth and transactions is really impressive. And as you’re ramping, of course, rather continuing to grow cloud, how should we think about this overall cloud metric? Is it something illustrative here, just in general, showing that you have a tremendous increase in usage, or is this something that we should be considering as like perhaps proxy related to IPUs?
Amit Walia: So think about it as usage. So I was not correlated to ARR and all. The best indicator of that is that it is — it means that it’s more activity more usage of our products — through IPUs on our platform. So obviously, customers are doing more and more and more work. And I look at it, that’s what it is. And that’s the way we track that very, very closely. We see exactly what action is happening. So that’s that it’s a directional sense to say, heavy activity, which means that we don’t have products sitting on shelf. People go, use it. And that covers a broad swath of usage. It could be governance usage. It could be a master data management usage. It could be ELT usage, it could be pure data quality usage. All of those kind of things are baked into this transaction metric that we share.
Operator: Our next question comes from the line of Tyler Radke with Citi.
Tyler Radke: Yes. You talked about how you’re seeing kind of a greater appetite from customers to do transformations. And earlier this week, we heard from Teradata some pressure on some large customer losses. And it does seem like as IT budgets are picking up, the move to the cloud is accelerating. I’m wondering, I guess, first, if I look at your non-cloud business, the On-prem subscription ARR and maintenance, those were a bit stronger than expected. So could you just unpack again what was driving that? And then secondly, if we are seeing this broader shift to the cloud, how do you kind of think about the timing of when that happens to your on-prem base? Is it tied to these large core system migrations or is it completely independent event.
Amit Walia: Tyler, so you’re right. The Self-managed Subscription portion of our 3 buckets of ARR and revenue did outperform our expectations for 2023. Maintenance was pretty close to in line and cloud outperformed also, as you can see, based on the results versus the guide. But the Self-managed did end up higher than we thought. And it turns out that there are a meaningful number of customers out there that are federal government that are agencies that have difficulty moving to the cloud in the short term. We have tertiary geographies that are not Cloud ready. And those customers still need our product and still get a tremendous amount of value out of product. So much of the outperformance was some of those customers adding on to their existing implementation because they need more, not because they don’t want to go to the Cloud eventually, but they just.
Now it’s a small number, so forecasting it has a pretty high standard deviation around it and just ended up that landed higher than we thought. We still do not emphasize that. We don’t actively sell it as because it is end of sale. And frankly, we’re happy with it because it means we have a lot of happy customers that want to stay with us as a company and as a brand, those will eventually become cloud customers for us in the future. Now with respect to the pace of that migration, I think that was the second part of your question, it is accelerating. And you can see it in the year-over-year compare of ’22 to ’23. And you can see it in the quarterly progression Q3 and Q4 after we introduced Power Center Cloud edition. So we do expect an accelerated pace in 2024.
The strong majority of our cloud growth will still be new customers and expansions of existing cloud workloads, not migration, but migrations are accelerating, too, and we’ll have a somewhat greater contribution to our total growth in 2024.
Operator: Our last question comes from the line of Stefan Schwartz with Wells Fargo.
Andrew Nowinski: I’m on for Andy Nowinski. Thanks for setting me in. Wanted to ask relative to your commentary on cloud workloads. Past quarter, the hyperscalers talked about cost optimization coming to an end. Are you seeing similar trends in your cloud ARR pipeline for this upcoming year, maybe a similar kind of inflection?
Amit Walia: I wish we had optimization in our business. So we went belly up, so we have to be worried about going belly down. No, look, tongue-in-cheek, sorry. I think look we have always been focused on mission-critical workloads. We did see, as you see during those times where our performance has been very steady. We didn’t see significant getting ahead in terms of selling excess capacity to be very honest. When we sell IPUs, we are maniacal about selling it against mission-critical workloads and our customer success team, make sure that the customers get into business value creation asap. So I think that, we haven’t seen, we didn’t run into those to be very honest, if I could use that word of cost optimization for us. Yes, we do see, on the other hand, what is happening towards there and that I see. We’ve been very steady in terms of selling the mission-critical workloads across our platform. And hence, we’ve been in some more solid growth but steady growth.
Mike McLaughlin: And part of that is the fact that unlike some of those companies that suffered from optimization in 2023 and 2022. We have multiyear committed contracts with our customers. So they pay us a year in advance. They’re multiyear commitments. They’re not month-to-month. Your bill changes based upon how much you use. So to that extent, simply structurally were not as subject to the swings of optimization versus expansion.
Operator: Thank you. There are no additional questions waiting at this time. I would like to pass the conference back to the management team for any closing remarks.
Amit Walia: Thanks, operator. Well, look, I know we are a little bit over time. Thank you for staying back. Well, look, I think as you can see, we’re pretty excited about where we are with our cloud-only consumption strategy. Year one of that was obviously executed very well. We’re into year two. And with this stage basically, like I said, it’s all about continuing to maintain our focus and execution. We have a great place in the market. Ongoing digital transformation migration and, of course, now GenAI continue to be the three vectors driving our growth. We look forward to continuing our execution this year. And for a lot of you, hopefully, we’ll see you at Informatica World in May this year. Thank you.
Operator: That concludes today’s conference call. I hope you all enjoy the rest of your day. You may now disconnect your lines.
