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Informatica Corporation (INFA)

Q2 2009 Earnings Call

July 23, 2009 5:00 pm ET


Stephanie Wakefield - Senior Director, IR

Sohaib Abbasi - CEO

Earl Fry - CFO


Tom Ernst - Deutsche Bank

Tom Roderick - Thomas Wiesel Partners

Mark Murphy - Piper Jaffray

Nathan Schneiderman - Roth Capital Partners

Brian Denyeau - Oppenheimer & Company

Brad Whitt - Broadpoint AmTech

Brent Williams - The Benchmark Company

Nabil Elsheshai - Pacific Crest Securities

Derrick Wood - Wedbush Morgan Securities

Patrick Walravens - JMP Securities

Brad Self - Barclays Capital

Daniel Cummins - Soleil



Good day ladies and gentlemen, and welcome to the Second Quarter 2009 Informatica Earnings Call. My name is Stacy, and I will be your conference moderator for today.

At this time, all participants are in listen-only mode, and we will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call Ms. Stephanie Wakefield, Senior Director of Investor Relations. Please proceed.

Stephanie Wakefield

Good afternoon and thank you for joining us today. I am here with Sohaib Abbasi, CEO; and Earl Fry, CFO to discuss our Q2 2009 results, and to talk about our outlook for the business. I will read the Safe Harbor statement and then hand it over to Sohaib for his comments.

Some of the comments we will make today are forward-looking statements, including statements concerning our being well positioned to pursue our growth strategy; our projected financial results for future periods; opportunities for growth in the data integration market; the expected benefit of those to our customers and products; the acquisition and integration of AddressDoctors, its employees and its technology; the planned use of our products by some customers for more than traditional data warehousing projects; the strength of customer demand for our products, customer adoption of our latest product lines, efforts being conducted with strategic partners, our announcement of PowerCenter Cloud Edition and Informatica On Demand PowerCenter Service, and our expectations regarding future industry trends and macroeconomic developments.

All forward-looking statements are based upon current expectations and beliefs. However, actual results could differ materially. There are many reasons why actual results may differ from our current expectations. These forward-looking statements should not be relied upon, as representing our views as of any subsequent date, and Informatica undertakes no obligation to update forward-looking statements, to reflect events or circumstances after the date that they are made.

Please refer to our recent SEC filings, including the Form 10-Q for the quarter ended March 31, 2009 for a detailed description of the risk factors that may affect our results. Copies of these documents maybe obtained from the SEC or by contacting our Investor Relations department.

During this afternoon's discussion, we will be using GAAP and non-GAAP numbers. Our GAAP numbers and a reconciliation of the GAAP numbers to the non-GAAP numbers are contained in the earnings press release and in the supplemental metric section of our Investor website at

Before I hand it off to Sohaib, I'd like to remind you that this call is being webcast, and will also be available for replay at www. I would also like to ask you when we get to the question-and-answer period, to please confine yourself to just one question. We will allow additional questions if time permits. Thank you.

Sohaib Abbasi

In Q2, 2009 we achieved record second quarter revenues and record second quarter operating income, making it our 19th consecutive quarter of record non-GAAP operating income.

Our sustained record results over the past five years, despite the unprecedented macroeconomic challenges, underscore the merits of our focused strategy to establish Informatica as the number one independent leader in the data integration, infrastructure software market.

Total revenues grew by 3% year-over-year to $117.3 million, and new license revenues are $48.7 million, were consistent with Q2, 2008 results. Adjusting for the negative impact of changes in currency exchange rates, total revenues would have grown by 9% and new license revenues by 5%.

Total non-GAAP operating income grew by 22% year-over-year, with non-GAAP operating margins up 22.6%, an increase of 350 basis points in operating margin. With non-GAAP EPS of $0.19, we achieved the most profitable second quarter ever. I would like to recognize and thank the Informatica team for their [exemplary] operational discipline.

As observed by some economists, the impact of the economic recession now varies by geographic regions. Specifically the macroeconomic environment is comparatively better in regions that were first affected by the recession. This change in macroeconomic impact is reflected in our regional results.

In the Americas, customers in certain industries such as financial services are starting to prepare for the macroeconomic recovery. In Europe, the more recent economic downturn continues to affect customer priorities and purchasing processes.

In Asia Pacific including Japan, we continue to benefit from relatively consistent customer demand. Across all major geographic regions, the prevailing macroeconomic outlook continues to shape the primary business strategies of our customers.

In turn, the associated IT initiatives have elevated the priority and urgency of the enabling data integration projects, as illustrated by our customer wins around the world.

In the Americas, the Investment Banking division of a large global bank selected Informatica for several business-critical IT initiatives. Using Informatica data quality, including identity resolution, the bank plans consolidate customer data from several [discrete] systems into one global CRM system, to help improve customer service and increase revenues.

Using Informatica B2B data exchange, the bank plans to build a real-time data warehouse for risk management. Also in the Americas, a leading energy company and Informatica Innovation Award winner, Duke Energy expanded its use of Informatica as an enterprise-wide standard for their Integration Competency Center.

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