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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 10-Q
_____________________________
(Mark One)
| | | | | |
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2024
OR
| | | | | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-40936
_____________________________
Informatica Inc.
_____________________________
(Exact name of registrant as specified in its charter)
| | | | | | | | | | | |
Delaware | | | 61-1999534 |
(State or other jurisdiction of incorporation or organization) | | | (I.R.S. Employer Identification No.) |
| | | |
2100 Seaport Boulevard Redwood City, California | | | 94063 |
(Address of Principal Executive Offices) | | | (Zip Code) |
(650) 385-5000
Registrant's telephone number, including area code
_____________________________
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Class A Common Stock, $0.01 par value per share | INFA | The New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | |
Large accelerated filer | x | | Accelerated filer | o |
Non-accelerated filer | o | | Smaller reporting company | o |
| | | Emerging growth company | o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The registrant had outstanding 258,888,613 shares of Class A common stock and 44,049,523 shares of Class B-1 common stock as of July 24, 2024.
TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Report” or “report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Report include, but are not limited to, statements about:
•our ability to attract and retain customers;
•the possible harm caused by adverse economic, industry and market conditions in the United States and globally, including due to inflationary pressures, volatility and uncertainty in the financial services industry, shifting foreign exchange rates, geopolitical disruptions, the effect of global health crises, and their impact on our business and operations;
•the possible harm caused by a security breach or incident, significant disruption of service, or loss of, or unauthorized access to, users’ data;
•our expectations and management of future growth;
•the possible harm caused by customers terminating or failing to renew their subscription or maintenance contracts;
•our future financial performance, including trends in revenue, costs of revenue, gross profit or gross margin, and operating expenses;
•our ability to transition our customers to subscription- and cloud-based offerings;
•the effect of legal and regulatory changes, including those related to data localization and transfer;
•our ability to attract and retain key personnel and highly qualified personnel;
•the impact of our restructurings and related charges on our business, results of operations and financial condition;
•our ability to effectively train and incentivize our sales force;
•our ability to respond to technological changes and evolving industry standards;
•our ability to maintain, protect, and enhance our intellectual property;
•our ability to successfully identify, acquire, and integrate companies and assets;
•our ability to upsell and cross-sell within our existing customer base;
•our ability to prevent serious errors or defects in our products and services;
•the demand for our platform, cloud-based solutions or data management solutions in general;
•our ability to compete successfully in competitive markets;
•our ability to protect our brand;
•our ability to successfully execute our go-to-market strategy;
•our ability to manage our international operations;
•our ability to build and maintain relationships with strategy partners;
•our ability to achieve or maintain profitability;
•our expectations regarding cost savings and expenses;
•our ability to manage our outstanding indebtedness;
•our ability to offer high-quality customer support;
•plans regarding our stock repurchase authorization;
•the impact of interest rate or foreign currency exchange rates upon our financial performance, operations, and cash flows;
•our expectations regarding new product launch dates;
•the distribution of Class A common stock by certain of our stockholders; and
•the increased requirements associated with being a public company, including reporting, governance and internal controls, and related expenses.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Report.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Report. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Report to reflect events or circumstances after the date of this Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Part I - Financial Information
Item 1. Financial Statements
INFORMATICA INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value data)
(Unaudited)
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2024 | | 2023 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 798,465 | | | $ | 732,443 | |
Short-term investments | 330,072 | | | 259,828 | |
Accounts receivable, net of allowances of $4,787 and $4,414, respectively | 318,739 | | | 500,068 | |
Contract assets, net | 83,172 | | | 79,864 | |
Prepaid expenses and other current assets | 252,689 | | | 180,383 | |
Total current assets | 1,783,137 | | | 1,752,586 | |
Property and equipment, net | 144,137 | | | 149,266 | |
Operating lease right-of-use-assets | 51,351 | | | 57,799 | |
Goodwill | 2,345,753 | | | 2,361,643 | |
Customer relationships intangible asset, net | 609,927 | | | 669,781 | |
Other intangible assets, net | 8,830 | | | 17,393 | |
Deferred tax assets | 15,415 | | | 15,237 | |
Other assets | 163,255 | | | 178,377 | |
Total assets | $ | 5,121,805 | | | $ | 5,202,082 | |
Liabilities and Stockholders’ Equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 20,506 | | | $ | 18,050 | |
Accrued liabilities | 43,863 | | | 61,194 | |
Accrued compensation and related expenses | 94,317 | | | 167,427 | |
Current operating lease liabilities | 14,834 | | | 16,411 | |
Current portion of long-term debt | 18,750 | | | 18,750 | |
Income taxes payable | 869 | | | 4,305 | |
Deferred revenue | 685,734 | | | 767,244 | |
Total current liabilities | 878,873 | | | 1,053,381 | |
Long-term operating lease liabilities | 39,932 | | | 46,003 | |
Long-term deferred revenue | 11,805 | | | 19,482 | |
Long-term debt, net | 1,798,140 | | | 1,805,960 | |
Deferred tax liabilities | 20,728 | | | 22,425 | |
Long-term income taxes payable | 40,110 | | | 37,679 | |
Other liabilities | 6,401 | | | 4,554 | |
Total liabilities | 2,795,989 | | | 2,989,484 | |
Commitments and contingencies (Note 14) | | | |
Stockholders’ equity: | | | |
Class A common stock; $0.01 par value per share; 2,000,000 and 2,000,000 shares authorized as of June 30, 2024 and December 31, 2023, respectively; 258,810 and 250,874 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 2,589 | | | 2,510 | |
Class B-1 common stock; $0.01 par value per share; 200,000 and 200,000 shares authorized as of June 30, 2024 and December 31, 2023, respectively; 44,050 and 44,050 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | 440 | | | 440 | |
Class B-2 common stock; $0.00001 par value per share; 200,000 and 200,000 shares authorized as of June 30, 2024 and December 31, 2023, respectively; 44,050 and 44,050 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively | — | | | — | |
Additional paid-in-capital | 3,664,821 | | | 3,540,502 | |
Accumulated other comprehensive loss | (47,700) | | | (22,370) | |
Accumulated deficit | (1,294,334) | | | (1,308,484) | |
Total stockholders’ equity | 2,325,816 | | | 2,212,598 | |
Total liabilities and stockholders’ equity | $ | 5,121,805 | | | $ | 5,202,082 | |
See accompanying notes to condensed consolidated financial statements
INFORMATICA INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| | | | | | | |
Revenues: | | | | | | | |
Subscriptions | $ | 264,306 | | | $ | 227,589 | | | $ | 516,283 | | | $ | 441,511 | |
Perpetual license | — | | | 13 | | | 21 | | | 819 | |
Software revenue | 264,306 | | | 227,602 | | | 516,304 | | | 442,330 | |
Maintenance and professional services | 136,319 | | | 148,386 | | | 272,928 | | | 299,089 | |
Total revenues | 400,625 | | | 375,988 | | | 789,232 | | | 741,419 | |
Cost of revenues: | | | | | | | |
Subscriptions | 47,367 | | | 38,626 | | | 94,205 | | | 74,310 | |
Perpetual license | — | | | 213 | | | 5 | | | 393 | |
Software costs | 47,367 | | | 38,839 | | | 94,210 | | | 74,703 | |
Maintenance and professional services | 34,501 | | | 43,864 | | | 68,379 | | | 87,023 | |
Amortization of acquired technology | 1,027 | | | 2,889 | | | 2,061 | | | 5,763 | |
Total cost of revenues | 82,895 | | | 85,592 | | | 164,650 | | | 167,489 | |
Gross profit | 317,730 | | | 290,396 | | | 624,582 | | | 573,930 | |
Operating expenses: | | | | | | | |
Research and development | 79,234 | | | 87,707 | | | 158,888 | | | 169,746 | |
Sales and marketing | 147,453 | | | 134,500 | | | 284,886 | | | 263,038 | |
General and administrative | 48,962 | | | 38,756 | | | 99,408 | | | 80,116 | |
Amortization of intangible assets | 31,718 | | | 34,348 | | | 63,457 | | | 68,639 | |
Restructuring | 899 | | | 471 | | | 5,254 | | | 27,724 | |
Total operating expenses | 308,266 | | | 295,782 | | | 611,893 | | | 609,263 | |
Income (loss) from operations | 9,464 | | | (5,386) | | | 12,689 | | | (35,333) | |
Interest income | 13,765 | | | 9,920 | | | 27,172 | | | 17,503 | |
Interest expense | (38,333) | | | (37,466) | | | (77,430) | | | (72,517) | |
Other income, net | 851 | | | 2,531 | | | 7,186 | | | 3,161 | |
Loss before income taxes | (14,253) | | | (30,401) | | | (30,383) | | | (87,186) | |
Income tax (benefit) expense | (19,081) | | | 122,065 | | | (44,545) | | | 181,634 | |
Net income (loss) | $ | 4,828 | | | $ | (152,466) | | | $ | 14,162 | | | $ | (268,820) | |
Net income (loss) per share attributable to Class A and Class B-1 common stockholders: | | | | | | | |
Basic | $ | 0.02 | | | $ | (0.53) | | | $ | 0.05 | | | $ | (0.94) | |
Diluted | $ | 0.02 | | | $ | (0.53) | | | $ | 0.05 | | | $ | (0.94) | |
Weighted-average shares used in computing net income (loss) per share: | | | | | | | |
Basic | 300,930 | | | 287,109 | | | 298,913 | | | 286,004 | |
Diluted | 314,934 | | | 287,109 | | | 313,716 | | | 286,004 | |
See accompanying notes to condensed consolidated financial statements.
INFORMATICA INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| | | | | | | |
Net income (loss) | $ | 4,828 | | | $ | (152,466) | | | $ | 14,162 | | | $ | (268,820) | |
Other comprehensive (loss) income, net of taxes: | | | | | | | |
Change in foreign currency translation adjustment, net of tax benefit (expense) of $32, $(139), $238, and $89 | (5,352) | | | 3,502 | | | (25,332) | | | 15,252 | |
Available-for-sale debt securities: | | | | | | | |
Change in unrealized (loss) gain, net of tax benefit (expense) of $6, $(9), $32 and $(33) | (16) | | | 27 | | | (97) | | | 101 | |
Cash flow hedges: | | | | | | | |
Change in unrealized gain, net of tax expense of $44, $297, $132, and $605 | 132 | | | 908 | | | 401 | | | 1,849 | |
Less: reclassification adjustment for amounts included in net income (loss), net of tax (expense) benefit of $(24), $85, $(99), and $371 | (73) | | | 259 | | | (302) | | | 1,133 | |
Cash flow hedges, net change | 59 | | | 1,167 | | | 99 | | | 2,982 | |
Total other comprehensive (loss) income, net of tax effect | (5,309) | | | 4,696 | | | (25,330) | | | 18,335 | |
Total comprehensive loss, net of tax effect | $ | (481) | | | $ | (147,770) | | | $ | (11,168) | | | $ | (250,485) | |
See accompanying notes to condensed consolidated financial statements.
INFORMATICA INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2024 |
| | Class A Common Stock | | Class B-1 Common Stock | | Class B-2 Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total Stockholders' Equity |
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | | |
Balances, March 31, 2024 | | 255,502 | | | $ | 2,556 | | | 44,050 | | | $ | 440 | | | 44,050 | | | $ | — | | | $ | 3,601,372 | | | $ | (42,391) | | | $ | (1,299,162) | | | $ | 2,262,815 | |
Stock-based compensation | | — | | | — | | | — | | | — | | | — | | | — | | | 65,470 | | | — | | | — | | | 65,470 | |
Shares withheld related to net share settlement of equity awards | | (1,016) | | | (10) | | | — | | | — | | | — | | | — | | | (30,838) | | | — | | | — | | | (30,848) | |
Issuance of shares under equity plans | | 4,324 | | | 43 | | | — | | | — | | | — | | | — | | | 28,817 | | | — | | | — | | | 28,860 | |
Net income | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,828 | | | 4,828 | |
Other comprehensive loss | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (5,309) | | | — | | | (5,309) | |
Balances, June 30, 2024 | | 258,810 | | | $ | 2,589 | | | 44,050 | | | $ | 440 | | | 44,050 | | | $ | — | | | $ | 3,664,821 | | | $ | (47,700) | | | $ | (1,294,334) | | | $ | 2,325,816 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2023 |
| | Class A Common Stock | | Class B-1 Common Stock | | Class B-2 Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total Stockholders’ Equity |
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | | |
Balances, March 31, 2023 | | 242,222 | | | $ | 2,423 | | | 44,050 | | | $ | 440 | | | 44,050 | | | $ | — | | | $ | 3,352,312 | | | $ | (34,032) | | | $ | (1,299,555) | | | $ | 2,021,588 | |
Stock-based compensation | | — | | | — | | | — | | | — | | | — | | | — | | | 55,208 | | | — | | | — | | | 55,208 | |
Shares withheld related to net share settlement of equity awards | | (739) | | | (8) | | | — | | | — | | | — | | | — | | | (11,092) | | | — | | | — | | | (11,100) | |
Issuance of shares under equity plans | | 2,465 | | | 25 | | | — | | | — | | | — | | | — | | | 4,147 | | | — | | | — | | | 4,172 | |
Net loss | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (152,466) | | | (152,466) | |
Other comprehensive income | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 4,696 | | | — | | | 4,696 | |
Balances, June 30, 2023 | | 243,948 | | | $ | 2,440 | | | 44,050 | | | $ | 440 | | | 44,050 | | | $ | — | | | $ | 3,400,575 | | | $ | (29,336) | | | $ | (1,452,021) | | | $ | 1,922,098 | |
See accompanying notes to condensed consolidated financial statements.
INFORMATICA INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended June 30, 2024 |
| | Class A Common Stock | | Class B-1 Common Stock | | Class B-2 Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total Stockholders' Equity |
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | | |
Balances, December 31, 2023 | | 250,874 | | | $ | 2,510 | | | 44,050 | | | $ | 440 | | | 44,050 | | | $ | — | | | $ | 3,540,502 | | | $ | (22,370) | | | $ | (1,308,484) | | | $ | 2,212,598 | |
Stock-based compensation | | — | | | — | | | — | | | — | | | — | | | — | | | 129,571 | | | — | | | — | | | 129,571 | |
Issuance of shares under employee stock purchase plan | | 936 | | | 9 | | | — | | | — | | | — | | | — | | | 13,788 | | | — | | | — | | | 13,797 | |
Shares withheld related to net share settlement of equity awards | | (2,366) | | | (24) | | | — | | | — | | | — | | | — | | | (76,667) | | | — | | | — | | | (76,691) | |
Issuance of shares under equity plans | | 9,366 | | | 94 | | | — | | | — | | | — | | | — | | | 57,627 | | | — | | | — | | | 57,721 | |
Payments for dividends related to Class B-2 shares | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (12) | | | (12) | |
Net income | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 14,162 | | | 14,162 | |
Other comprehensive loss | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (25,330) | | | — | | | (25,330) | |
Balances, June 30, 2024 | | 258,810 | | | $ | 2,589 | | | 44,050 | | | $ | 440 | | | 44,050 | | | $ | — | | | $ | 3,664,821 | | | $ | (47,700) | | | $ | (1,294,334) | | | $ | 2,325,816 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Six Months Ended June 30, 2023 |
| | Class A Common Stock | | Class B-1 Common Stock | | Class B-2 Common Stock | | Additional Paid-in Capital | | Accumulated Other Comprehensive Loss | | Accumulated Deficit | | Total Stockholders’ Equity |
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount | | | | |
Balances, December 31, 2022 | | 239,749 | | | $ | 2,398 | | | 44,050 | | | $ | 440 | | | 44,050 | | | $ | — | | | $ | 3,282,383 | | | $ | (47,671) | | | $ | (1,183,189) | | | $ | 2,054,361 | |
Stock-based compensation | | — | | | — | | | — | | | — | | | — | | | — | | | 105,550 | | | — | | | — | | | 105,550 | |
Issuance of shares under employee stock purchase plan | | 1,112 | | | 11 | | | — | | | — | | | — | | | — | | | 16,120 | | | — | | | — | | | 16,131 | |
Shares withheld related to net share settlement of equity awards | | (739) | | | (8) | | | — | | | — | | | — | | | — | | | (11,092) | | | — | | | — | | | (11,100) | |
Issuance of shares under equity plans | | 3,826 | | | 39 | | | — | | | — | | | — | | | — | | | 7,614 | | | — | | | — | | | 7,653 | |
Payments for dividends related to Class B-2 shares | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (12) | | | (12) | |
Net loss | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (268,820) | | | (268,820) | |
Other comprehensive income | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | 18,335 | | | — | | | 18,335 | |
Balances, June 30, 2023 | | 243,948 | | | $ | 2,440 | | | 44,050 | | | $ | 440 | | | 44,050 | | | $ | — | | | $ | 3,400,575 | | | $ | (29,336) | | | $ | (1,452,021) | | | $ | 1,922,098 | |
See accompanying notes to condensed consolidated financial statements.
INFORMATICA INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | | | | | | | | | | | | | |
| | Six Months Ended June 30, |
| | 2024 | | 2023 |
| | | | |
Operating activities: | | | | |
Net income (loss) | | $ | 14,162 | | | $ | (268,820) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | |
Depreciation and amortization | | 6,066 | | | 8,471 | |
Non-cash operating lease costs | | 7,335 | | | 9,024 | |
Stock-based compensation | | 129,600 | | | 105,550 | |
Deferred income taxes | | (1,576) | | | 3,998 | |
Amortization of intangible assets and acquired technology | | 65,518 | | | 74,402 | |
Amortization of debt issuance costs | | 1,790 | | | 1,704 | |
Amortization of investment discount, net of premium | | (2,848) | | | (1,751) | |
Debt refinancing costs | | 1,366 | | | — | |
Changes in operating assets and liabilities: | | | | |
Accounts receivable | | 176,418 | | | 159,247 | |
Prepaid expenses and other assets | | 8,197 | | | 27,081 | |
Accounts payable and accrued liabilities | | (92,022) | | | (103,327) | |
Income taxes payable | | (74,812) | | | 128,750 | |
Deferred revenue | | (82,700) | | | (37,742) | |
Net cash provided by operating activities | | 156,494 | | | 106,587 | |
Investing activities: | | | | |
Purchases of property and equipment | | (1,565) | | | (3,115) | |
Purchases of investments | | (269,555) | | | (147,925) | |
Maturities of investments | | 202,032 | | | 151,700 | |
Sales of investments | | — | | | 23,798 | |
Other | | 1,878 | | | — | |
Net cash (used in) provided by investing activities | | (67,210) | | | 24,458 | |
Financing activities: | | | | |
Payment of debt | | (11,347) | | | (9,376) | |
Payment of debt refinancing costs | | (1,349) | | | — | |
Proceeds from issuance of debt | | 1,971 | | | — | |
Proceeds from issuance of common stock under employee stock purchase plan | | 13,797 | | | 16,131 | |
Payments for dividends related to Class B-2 shares | | (12) | | | (12) | |
Payments for taxes related to net share settlement of equity awards | | (76,691) | | | (11,100) | |
Proceeds from issuance of shares under equity plans | | 57,721 | | | 7,653 | |
Net cash (used in) provided by financing activities | | (15,910) | | | 3,296 | |
Effect of foreign exchange rate changes on cash and cash equivalents | | (7,352) | | | 583 | |
Net increase in cash and cash equivalents | | 66,022 | | | 134,924 | |
Cash and cash equivalents at beginning of period | | 732,443 | | | 497,879 | |
Cash and cash equivalents at end of period | | $ | 798,465 | | | $ | 632,803 | |
Supplemental disclosures: | | | | |
Cash paid for interest | | $ | 75,704 | | | $ | 71,062 | |
Cash paid for income taxes, net of refunds | | $ | 31,843 | | | $ | 48,886 | |
Non-cash investing and financing activities: | | | | |
Purchases of property and equipment recorded in accounts payable and accrued liabilities | | $ | 279 | | | $ | 780 | |
See accompanying notes to condensed consolidated financial statements.
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Organization and Description of Business
Informatica Inc. (the “Company” or “Informatica”) delivers data management products powered by an artificial intelligence ("AI") platform that connects, manages, and unifies data across multi-vendor, multi-cloud, hybrid systems at enterprise scale. The platform enables the Company’s customers to accurately track and understand their data, allowing them to create 360-degree customer experiences, automate data operations across enterprise-wide business processes, and pursue holistic data-driven digital strategies by guiding workload migrations to the cloud. The Company’s platform includes a suite of interoperable data management products that leverage the shared services and metadata of the underlying platform, including products for Data Catalog, Data Integration & Engineering, API & Application Integration, Data Quality and Observability, Master Data Management, Customer and Business 360 Applications, Governance and Privacy, and Data Marketplace. The Company was incorporated as a Delaware corporation on June 4, 2021.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements include those of the Company and its subsidiaries, after elimination of all intercompany accounts and transactions. The Company has prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).
In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, which include recurring adjustments necessary for the fair statement of the Company’s financial position as of June 30, 2024 and the results of operations for the three and six months ended June 30, 2024. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.
Segment Reporting
The Company manages, monitors and reports its operating results and financial position as a single operating segment. The Company’s chief operating decision-maker (“CODM”) is its Chief Executive Officer who makes operating decisions, assesses financial performance and allocates resources based on consolidated financial information. As such, the Company has determined that it operates in one reportable segment.
Use of Estimates
The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP, which require management to make certain estimates, judgments and assumptions in determination of performance obligations and standalone selling price used in revenue recognition, the realizability of deferred tax assets, uncertain tax positions and stock-based compensation. Management believes the estimates, judgments, and assumptions upon which it relies are reasonable based on information available at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Any material differences between these estimates and actual results will impact the Company’s unaudited condensed consolidated financial statements. The Company assesses these estimates on a regular basis, however actual results could differ from estimates due to risks and uncertainties.
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in “Note 2. Basis of Presentation and Summary of Significant Accounting Policies” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 22, 2024. There have been no material changes to these policies during the three and six months ended June 30, 2024.
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09.
Note 3. Cash, Cash Equivalents, and Investments
The following table summarizes the Company’s cash, cash equivalents and investments as of June 30, 2024 and December 31, 2023 (in thousands).
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2024 | | 2023 |
| | | |
Cash | $ | 163,229 | | | $ | 185,498 | |
Cash equivalents: | | | |
Time deposits | 129,975 | | | 72,302 | |
Money market funds | 501,271 | | | 474,643 | |
Commercial paper | 3,990 | | | — | |
Total cash equivalents | 635,236 | | | 546,945 | |
Total cash and cash equivalents | $ | 798,465 | | | $ | 732,443 | |
Short-term investments: | | | |
Time deposits | 225,112 | | | 153,550 | |
Commercial paper | 66,427 | | | 73,767 | |
Corporate debt securities | 8,349 | | | 3,964 | |
U.S. government and agency securities | 30,184 | | | 28,547 | |
Total short-term investments | $ | 330,072 | | | $ | 259,828 | |
Total cash, cash equivalents and investments | $ | 1,128,537 | | | $ | 992,271 | |
See Note 5. Fair Value Measurements of the Notes to Condensed Consolidated Financial Statements of this Report for further information regarding the fair value of the Company’s financial instruments.
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 4. Available-For-Sale Debt Securities
The following table summarizes the Company’s available-for-sale debt securities as of June 30, 2024 (in thousands).
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 |
| Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value |
| | | | | | | |
U.S. government securities | $ | 30,185 | | | $ | 2 | | | $ | (3) | | | $ | 30,184 | |
Corporate debt securities | 8,369 | | | — | | | (20) | | | 8,349 | |
Commercial paper | 70,456 | | | 2 | | | (41) | | | 70,417 | |
Total | $ | 109,010 | | | $ | 4 | | | $ | (64) | | | $ | 108,950 | |
The following table summarizes the Company’s available-for-sale debt securities as of December 31, 2023 (in thousands).
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| Amortized Cost | | Unrealized Gains | | Unrealized Losses | | Fair Value |
| | | | | | | |
U.S. government securities | $ | 18,596 | | | $ | 5 | | | $ | — | | | $ | 18,601 | |
U.S. government agency securities | 9,949 | | | — | | | (3) | | | 9,946 | |
Corporate debt securities | 3,963 | | | 1 | | | — | | | 3,964 | |
Commercial paper | 73,701 | | | 76 | | | (10) | | | 73,767 | |
Total | $ | 106,209 | | | $ | 82 | | | $ | (13) | | | $ | 106,278 | |
There were no realized gains or losses related to available-for-sale debt securities for the three and six months ended June 30, 2024. As of June 30, 2024, the fair value of the Company’s available-for-sale debt securities with contractual maturity of one year or less from the condensed consolidated balance sheet date was $109.0 million.
As of June 30, 2024, the gross unrealized losses that have been in a continuous unrealized loss position for less than 12 months were less than $0.1 million, which were related to $91.9 million of available-for-sale debt securities. There were no gross unrealized losses that have been in a continuous unrealized loss position for more than 12 months.
The Company did not recognize any credit losses related to the Company’s debt securities during the three and six months ended June 30, 2024. Unrealized losses related to available-for-sale debt securities are due to interest rate fluctuations as opposed to credit quality. The Company does not intend to sell these investments. In addition, it is more likely than not that the Company will not be required to sell them before recovery of the amortized cost basis, which may be at maturity.
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 5. Fair Value Measurements
The Company uses a three-level fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based on whether the inputs to those valuation techniques are observable or unobservable. The three levels of fair value hierarchy are set forth below. The Company’s assessment of the hierarchy level of the assets or liabilities measured at fair value is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
Level 1 Quoted prices in active markets for identical assets or liabilities.
Level 2 Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities. The Company does not have any assets or liabilities classified as Level 3.
Fair Value Measurement of Financial Assets and Liabilities on a Recurring Basis
The following table presents information about the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis as of June 30, 2024 and indicates the fair value hierarchy of the valuation (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Total | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
Assets: | | | | | | | |
Time deposits | $ | 355,087 | | | $ | 355,087 | | | $ | — | | | $ | — | |
Money market funds | 501,271 | | | 501,271 | | | — | | | — | |
Commercial paper | 70,417 | | | — | | | 70,417 | | | — | |
Corporate debt securities | 8,349 | | | — | | | 8,349 | | | — | |
U.S. government securities | 30,184 | | | — | | | 30,184 | | | — | |
Total cash equivalents and investments | 965,308 | | | 856,358 | | | 108,950 | | | — | |
Foreign currency derivatives | 493 | | | — | | | 493 | | | — | |
Total assets | $ | 965,801 | | | $ | 856,358 | | | $ | 109,443 | | | $ | — | |
Liabilities: | | | | | | | |
Foreign currency derivatives | $ | 50 | | | $ | — | | | 50 | | | $ | — | |
Total liabilities | $ | 50 | | | $ | — | | | $ | 50 | | | $ | — | |
There were no transfers between Level 1, Level 2 and Level 3 categories during the three and six months ended June 30, 2024.
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents information about the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis as of December 31, 2023 and indicates the fair value hierarchy of the valuation (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Total | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) |
Assets: | | | | | | | |
Time deposits | $ | 225,852 | | | $ | 225,852 | | | $ | — | | | $ | — | |
Money market funds | 474,643 | | | 474,643 | | | — | | | — | |
Commercial paper | 73,767 | | | — | | | 73,767 | | | — | |
Corporate debt securities | 3,964 | | | — | | | 3,964 | | | — | |
U.S. government and U.S. government agency securities | 28,547 | | | — | | | 28,547 | | | — | |
Total cash equivalents and investments | 806,773 | | | 700,495 | | | 106,278 | | | — | |
Foreign currency derivatives | 486 | | | — | | | 486 | | | — | |
Total assets | $ | 807,259 | | | $ | 700,495 | | | $ | 106,764 | | | $ | — | |
Liabilities: | | | | | | | |
Foreign currency derivatives | $ | 44 | | | $ | — | | | $ | 44 | | | $ | — | |
Total liabilities | $ | 44 | | | $ | — | | | $ | 44 | | | $ | — | |
Note 6. Goodwill and Intangible Assets
Goodwill
The following table presents the changes in the carrying amount of the goodwill for the six months ended June 30, 2024 (in thousands):
| | | | | | |
| Amount | |
Ending balance as of December 31, 2023 | $ | 2,361,643 | | |
Measurement period adjustment | 234 | | |
Foreign currency translation adjustment | (16,124) | | |
Ending Balance as of June 30, 2024 | $ | 2,345,753 | | |
Goodwill represents the excess of consideration paid over the estimated fair value of net tangible and identifiable intangible assets acquired in business combinations.
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Intangible Assets
The carrying amounts of the intangible assets other than goodwill as of June 30, 2024 and December 31, 2023 are as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2024 | | December 31, 2023 |
| Cost | | Accumulated Amortization | | Net | | Cost | | Accumulated Amortization | | Net |
Acquired developed and core technology | | $ | 880,684 | | | $ | (873,146) | | | $ | 7,538 | | | $ | 880,758 | | | $ | (871,085) | | | $ | 9,673 | |
Other intangible assets: | | | | | | | | | | | | |
Customer relationships | | 2,156,400 | | | (1,546,473) | | | 609,927 | | | 2,159,179 | | | (1,489,398) | | | 669,781 | |
Trade names and trademark | | 81,605 | | | (80,313) | | | 1,292 | | | 81,651 | | | (73,931) | | | 7,720 | |
Total other intangible assets | | 2,238,005 | | | (1,626,786) | | | 611,219 | | | 2,240,830 | | | (1,563,329) | | | 677,501 | |
Total intangible assets, net | | $ | 3,118,689 | | | $ | (2,499,932) | | | $ | 618,757 | | | $ | 3,121,588 | | | $ | (2,434,414) | | | $ | 687,174 | |
The Company amortizes its intangible assets over their remaining estimated useful life using cash flow projections, revenue projections, or the straight-line method. Total amortization expense related to intangible assets was $32.7 million and $37.2 million for the three months ended June 30, 2024 and 2023, respectively. Total amortization expense related to intangible assets was $65.5 million and $74.4 million for the six months ended June 30, 2024 and 2023, respectively.
The allocation of the amortization of intangible assets for the periods indicated below is as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Cost of revenues | $ | 1,027 | | | $ | 2,889 | | | $ | 2,061 | | | $ | 5,763 | |
Operating expenses | 31,718 | | | 34,348 | | | 63,457 | | | 68,639 | |
Total amortization of intangible assets | $ | 32,745 | | | $ | 37,237 | | | $ | 65,518 | | | $ | 74,402 | |
Certain intangible assets are recorded in foreign currencies; and therefore, the gross carrying amount and accumulated amortization are subject to foreign currency translation adjustments.
As of June 30, 2024, the amortization expense related to identifiable intangible assets in future periods is expected to be as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| Customer Relationships Intangible Asset | | Other Intangible Assets | | Total Intangible Assets |
| | | | | |
Remaining 2024 | $ | 56,990 | | | $ | 3,124 | | | $ | 60,114 | |
2025 | 99,522 | | | 2,127 | | | 101,649 | |
2026 | 86,531 | | | 1,427 | | | 87,958 | |
2027 | 75,089 | | | 686 | | | 75,775 | |
2028 | 65,242 | | | 530 | | | 65,772 | |
Thereafter | 226,553 | | | 936 | | | 227,489 | |
Total expected amortization expense | $ | 609,927 | | | $ | 8,830 | | | $ | 618,757 | |
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 7. Borrowings
Long term debt consists of the following (in thousands):
| | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
| | | |
Dollar term loan | $ | 1,832,812 | | | $ | 1,842,188 | |
Less: Discount on term loan | (5,868) | | | (6,441) | |
Less: Debt issuance costs | (10,054) | | | (11,037) | |
Total debt, net of discount and debt issuance costs | 1,816,890 | | | 1,824,710 | |
Less: Current portion of long-term debt | (18,750) | | | (18,750) | |
Long-term debt, net of current portion | $ | 1,798,140 | | | $ | 1,805,960 | |
As of June 30, 2024, the Company had an outstanding dollar term loan for a carrying amount of $1,816.9 million and a fair value, based on Level 2 inputs related to fair market value, of $1,840.8 million. As of December 31, 2023, the Company had an outstanding dollar term loan for a carrying amount of $1,824.7 million and a fair value, based on Level 2 inputs related to fair market value, of $1,848.3 million.
Credit Facilities
The Company has a credit agreement with JPMorgan Chase Bank, N.A., as agent, for a syndicate of lenders (the “Credit Agreement”). Under the Credit Agreement, the Company borrowed $1.9 billion of dollar term loans (the “Term Facility”) and obtained $250.0 million of commitments under a revolving credit facility (the “Revolving Facility” and, together with the Term Facility, the “Credit Facilities”).
The Term Facility matures on October 29, 2028 and is repayable in quarterly installments of 0.25% of the initial principal amount thereof, with the remaining amount due at maturity. The Revolving Facility matures on October 29, 2026.
The Company may prepay all or part of the Credit Facilities at any time. Subject to certain exceptions and limitations, the Company is required to prepay the Term Facility with the net proceeds of certain occurrences, such as the incurrences of indebtedness not permitted to be incurred under the Credit Agreement, credit sale and leaseback transactions and asset sales. The agreement also requires mandatory prepayments of the Term Facility with excess cash flow as specified in the terms of the Credit Agreement.
On June 11, 2024, the Company refinanced the Credit Agreement with Amendment No. 2 (the “Amendment”), with JPMorgan Chase Bank, N.A., as agent, for a syndicate of lenders. The Amendment reduced the applicable margin from 2.75% to 2.25% and eliminated the previous credit spread adjustment effective June 11, 2024. The Amendment is predominantly accounted for as a modification. The loss on any extinguished debt within the syndicate was immaterial. The Company incurred transaction fees of approximately $1.4 million, which were recorded as a component of Other income, net on the Condensed Consolidated Statements of Operations. Other than the foregoing, the material terms of the Credit Agreement remain unchanged.
Effective June 11, 2024, the borrowings under the Term Facility bear interest, at the Company’s option, either at (i) Term SOFR1 plus the applicable margin of 2.25% or (ii) the base rate plus 1.25%. The base rate is defined as the highest of (a) the Federal Funds Rate plus one half of 1%, (b) the rate of interest in effect for such day as published by the Wall Street Journal as the “prime rate,” and (c) Term SOFR Rate for a one-month interest period plus 1.00%; provided that the base rate shall not be less than 1.00% per annum. Term SOFR is subject to a “floor” of 0% per annum. The Term Facility was issued with 0.125% of original issue discount.
1 Term SOFR is SOFR based on the interest period selected
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Effective June 11, 2024, the Revolving Facility accrues interest at a per annum rate based on either, at the Company’s election, (i) Term SOFR plus the applicable margin for Term SOFR loans ranging between 2.00% and 2.50% based on the Company’s total net first lien leverage ratio or (ii) the base rate plus an applicable margin ranging between 1.00% and 1.50% based on the Company’s total net first lien leverage ratio.
No amounts were outstanding under the Revolving Facility as of June 30, 2024 and December 31, 2023. There were $1.4 million and $1.6 million of utilized letters of credit under the Revolving Facility at June 30, 2024 and December 31, 2023, respectively.
The Company guarantees the obligations under the Credit Agreement. All obligations under the Credit Agreement are secured by a perfected lien or security interest in substantially all of the Company’s and the guarantors’ tangible and intangible assets. The Credit Agreement also provides for a borrowing facility of $15.0 million, which is available on a same day basis and a letter of credit facility of $30.0 million. The Credit Agreement also includes an uncommitted incremental facility subject to compliance with certain leverage tests and borrowing limits.
Accrued interest is payable (i) quarterly in arrears with respect to base rate loans, (ii) at the end of each interest rate period (or at each three- month interval in the case of loans with interest periods greater than 3 months) with respect to Term SOFR loans, (iii) the date of any repayment or prepayment, and (iv) at maturity (whether by acceleration or otherwise). The Company is also obligated to pay other customary closing fees, arrangement fees, administrative fees, commitment fees, and letter of credit fees. Under the Credit Agreement, a commitment fee is payable on the daily unutilized amount under the Revolving Facility at a per annum rate ranging from 0.25% to 0.35% depending on the Company’s total net first lien leverage ratio.
The Credit Agreement requires that, as of the last day of any fiscal quarter if on such date the aggregate principal amount of all (a) revolving loans, (b) swingline loans, and (c) letter of credit obligations (in excess of $15 million) exceed 35% of the revolving loan commitments, the total net first lien leverage ratio cannot exceed 6.25 to 1.00. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement. Under certain circumstances, a default interest rate equal to 2.00% above the then-applicable interest rate will apply during the existence of an event of default under the Credit Agreement. The Company was in compliance with all covenants under the Credit Agreement as of June 30, 2024.
The Credit Agreement, among other things, limits the ability of the Company and its restricted subsidiaries to incur or guarantee additional indebtedness; pay dividends or make distributions or redeem or repurchase capital stock; prepay, redeem or repurchase certain subordinated debt; make certain loans or investments; create liens; merge or consolidate with another company or transfer or sell assets; enter into restrictions affecting the ability of certain restricted subsidiaries to make distributions, loans or advances to the Company or its restricted subsidiaries; and engage in transactions with affiliates. These covenants are subject to a number of important limitations and exceptions, which are described in the Credit Agreement.
Future minimum principal payments
Future minimum principal payments on the Term Facility as of June 30, 2024 are as follows (in thousands):
| | | | | |
Remaining 2024 | $ | 9,375 | |
2025 | 18,750 | |
2026 | 18,750 | |
2027 | 18,750 | |
2028 | 1,767,187 | |
Total | $ | 1,832,812 | |
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 8. Disaggregation of Revenue, Deferred Revenue, Remaining Performance Obligations, Credit Risk and Capitalized Costs to Obtain a Contract
The following table presents the disaggregation of revenue by revenue type, consistent with how the Company evaluates its financial performance, for the three and six months ended June 30, 2024 and 2023 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| | | | | | | |
Revenues: | | | | | | | |
Cloud subscription | $ | 161,422 | | | $ | 119,244 | | | $ | 312,860 | | | $ | 231,022 | |
Self-managed subscription license | 53,976 | | | 56,878 | | | 105,924 | | | 107,427 | |
Self-managed subscription support and other | 48,908 | | | 51,467 | | | 97,499 | | | 103,062 | |
Subscription revenues | 264,306 | | | 227,589 | | | 516,283 | | | 441,511 | |
Perpetual license | — | | | 13 | | | 21 | | | 819 | |
Software revenue | 264,306 | | | 227,602 | | | 516,304 | | | 442,330 | |
Maintenance | 116,482 | | | 124,851 | | | 234,161 | | | 250,226 | |
Professional services | 19,837 | | | 23,535 | | | 38,767 | | | 48,863 | |
Maintenance and professional services revenue | 136,319 | | | 148,386 | | | 272,928 | | | 299,089 | |
Total revenues | $ | 400,625 | | | $ | 375,988 | | | $ | 789,232 | | | $ | 741,419 | |
Revenue by geographic location for the three and six months ended June 30, 2024 and 2023 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| | | | | | | |
North America | $ | 272,065 | | | $ | 256,589 | | | $ | 530,120 | | | $ | 507,626 | |
EMEA | 88,655 | | | 80,992 | | | 175,365 | | | 157,994 | |
Asia Pacific | 30,983 | | | 29,825 | | | 63,962 | | | 59,421 | |
Latin America | 8,922 | | | 8,582 | | | 19,785 | | | 16,378 | |
Total revenues | $ | 400,625 | | | $ | 375,988 | | | $ | 789,232 | | | $ | 741,419 | |
In the three months ended June 30, 2024 and 2023, the Company’s revenue from customers in the United States was $256.3 million and $239.0 million, respectively. In the six months ended June 30, 2024 and 2023, the Company’s revenue from customers in the United States was $498.3 million and $472.4 million, respectively. No foreign country represented 10% or more of the Company’s total revenue during the three and six months ended June 30, 2024 and 2023, respectively.
Deferred Revenue
As of June 30, 2024 and December 31, 2023, deferred revenue was $697.5 million and $786.7 million, respectively.
The amount of revenues recognized during the three and six months ended June 30, 2024 that were included in the opening deferred revenue balance as of January 1, 2024 was approximately $225.2 million and $520.5 million, respectively. The amount of revenues recognized during the three and six months ended June 30, 2023 that were included in the opening deferred revenue balance as of January 1, 2023 were approximately $198.0 million and $459.7 million, respectively.
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Remaining Performance Obligations from Customer Contracts
As of June 30, 2024, the Company’s remaining performance obligations were $1.56 billion. The Company expects to recognize approximately 65% of its remaining performance obligations at June 30, 2024 as revenues over the next twelve months and the remainder over the next two to three years.
Concentrations of Credit Risk and Credit Evaluations
No customer accounted for more than 10% of revenue during the three and six months ended June 30, 2024 and 2023. At June 30, 2024 and December 31, 2023, no customer accounted for more than 10% of the accounts receivable balance.
Capitalized Costs to Obtain a Contract
Capitalized costs to obtain contracts consist of sales commissions and related payroll taxes (together “deferred commissions”). The changes in the capitalized costs to obtain a contract for the six months ended June 30, 2024 were as follows (in thousands):
| | | | | |
| Amount |
Ending balance as of December 31, 2023 | $ | 237,991 | |
Additions, net | 29,553 | |
Commissions amortized | (41,066) | |
Revaluation | (2,183) | |
Ending balance as of June 30, 2024 | $ | 224,295 | |
As of June 30, 2024, $77.4 million of deferred commissions balance was included in prepaid expenses and other current assets and $146.9 million of deferred commissions balance was included in other assets in the condensed consolidated balance sheet.
Note 9. Restructuring
On January 10, 2023, the Company announced a plan to reduce its workforce by approximately 450 employees, representing approximately 7% of the Company’s then-current global workforce, and a closure of an office in Israel (the “January Plan”). The January Plan was intended to better align the Company’s global workforce and cost base with its cloud-only, consumption-driven (“CoCd”) strategy and related business needs. As of December 31, 2023, the Company recorded $28.2 million of restructuring expenses in relation to the January Plan, including $1.1 million related to the right-of-use assets impairment charge for the office closure. These costs were paid as of December 31, 2023.
On November 1, 2023, the Company announced a plan to reduce its workforce by approximately 500 employees, representing approximately 10% of the Company’s then-current global workforce, and reduce its global real estate footprint (the “November Plan”). The November Plan was intended to further streamline the Company’s cost structure as a direct result of the CoCd strategy announced in January 2023. For the year-ended December 31, 2023, the Company recorded $31.6 million of restructuring expenses in relation to the November Plan, including $0.4 million related to the right-of-use assets impairment charge for the reduction in office space. For the six months ended June 30, 2024, the Company recorded $5.2 million of restructuring expenses in relation to the November Plan, including $0.5 million related to the right-of-use assets impairment charge for the reduction in office space. Of the total charges incurred under the November Plan, $32.4 million was paid as of June 30, 2024 and the Company expects to substantially pay the remaining amount in 2024.
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 10. Derivative Financial Instruments
The Company’s earnings and cash flows are subject to market risks as a result of foreign currency exchange rate and interest rate fluctuations. The Company uses derivative financial instruments to manage its exposure to foreign currency exchange rate which is inherent to its ongoing business operations. The Company and its subsidiaries do not enter into derivative contracts for speculative purposes.
Foreign Exchange Forward Contracts
The Company enters into foreign exchange forward contracts in an attempt to reduce the impact of foreign currency exchange rate fluctuations and designates these contracts as cash flow hedges at inception. The objective is to reduce the volatility of forecasted cash flows and expenses caused by movements in foreign currency exchange rates, in particular the Indian rupee. The Company is currently using foreign exchange forward contracts to hedge the anticipated foreign currency expenses of its subsidiary in India.
The Company recognizes in earnings amounts related to its designated cash flow hedges accumulated in other comprehensive income during the same period in which the corresponding underlying hedged transaction affects earnings. As of June 30, 2024, a net unrealized gain of $0.3 million accumulated in other comprehensive loss is expected to be reclassified into earnings within approximately the next twelve months.
The Company has forecasted the amount of its anticipated foreign currency expenses based on its historical performance and projected financial plan. As of June 30, 2024, the remaining open foreign exchange contracts, carried at fair value, are hedging Indian rupee expenses and have a maturity of approximately twelve months or less. These foreign exchange contracts mature monthly as the foreign currency denominated expenses are paid and any gain or loss is offset against operating expense. Once the hedged item is recognized, the cash flow hedge is de-designated and subsequent changes in value are recognized in other income, net, to offset changes in the value of the resulting non-functional currency monetary assets or liabilities.
The notional amounts of these foreign exchange forward contracts in U.S. dollar equivalents were to buy $108.4 million and $109.6 million of Indian rupees as of June 30, 2024 and December 31, 2023, respectively.
Balance Sheet Hedges
Balance Sheet hedges consist of cash flow hedge contracts that have been de-designated and non-designated balance sheet hedges. These foreign exchange contracts are carried at fair value and either did not or no longer qualify for hedge accounting treatment and are not designated as hedging instruments. Changes in the value of the foreign exchange contracts are recognized in other income, net and offset the foreign currency gain or loss on the underlying net monetary assets or liabilities. The notional amounts of foreign currency purchase contracts open in U.S. dollar equivalents were to buy $12.7 million and $12.2 million of Indian rupees at June 30, 2024 and December 31, 2023, respectively. There were no open foreign currency contracts to sell at June 30, 2024 and December 31, 2023, respectively.
The following table reflects the fair value amounts for designated and non-designated hedging instruments at June 30, 2024 and December 31, 2023 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2024 | | December 31, 2023 |
Fair Value Derivative Assets(i) | | Fair Value Derivative Liabilities(ii) | | Fair Value Derivative Assets(i) | | Fair Value Derivative Liabilities(ii) |
Designated hedging instruments | | | | | | | |
Foreign currency forward contracts | $ | 478 | | | $ | 50 | | | $ | 340 | | | $ | 44 | |
Non-designated hedging instruments | | | | | | | |
Foreign currency forward contracts | 15 | | | — | | | 146 | | | — | |
Total fair value of hedging instruments | $ | 493 | | | $ | 50 | | | $ | 486 | | | $ | 44 | |
_____________
(i)Included in prepaid expenses and other current assets on the condensed consolidated balance sheets.
INFORMATICA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(ii)Included in accrued liabilities and other liabilities on the condensed consolidated balance sheets.
The Company presents its derivative assets and derivative liabilities at gross fair values in the condensed consolidated balance sheets. However, under the master netting agreements with the respective counterparties of the foreign exchange contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same currency with a single net amount payable by one party to the other. The derivatives held by the Company are not subject to any credit contingent features negotiated with its counterparties. The Company is not required to pledge nor is entitled to receive cash collateral related to the above contracts. As of June 30, 2024 and December 31, 2023, there were no derivative assets or liabilities that were net settled under the master netting agreements.
The Company evaluates prospectively as well as retrospectively the effectiveness of its hedge programs using statistical analysis.
The before-tax effects of derivative instruments designated as cash flow hedges on the accumulated other comprehensive loss and condensed consolidated statements of operations for the periods indicated below are as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six months ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
| | | | | | | |
Amount of gain recognized in other comprehensive loss(i) | $ | |