Informatica Inc

NYSE:INFA

Earnings Call Transcript 2021-Q4

[Operator]

Good afternoon, everyone and welcome to the Informatica's Fourth Quarter and Full Year 2021 Earnings Conference. Call. My name is Tamia and I'll be your event specialist today. After the speakers’ remarks, there will be a question-and-answer session. If you would like to ask a question, please. [Operator Instructions]. Thank you. I will now like to introduce our host, Victoria Hyde-Dunn, Vice President Investor Relations.

[Victoria Hyde-Dunn, Vice President of Investor Relations]

Thank you. Good afternoon. And thank you for joining us to review Informatica's fourth quarter and full-year 2021 earnings results. With me on the call today are Amit Walia, Chief Executive Officer, and Eric Brown, Chief Financial Officer. Before we begin, we have a couple of reminders. Our earnings press release, and slide presentation are available on our Investor Relations website at investors. informatica.com. During this call, we will be making comments of a forward-looking nature. Actual results may vary materially from those expressed or implied as a result of various risks and uncertainties. For more information about some of these risks, please review the company's sec filings, including the section titled Risk Factors included in our most recent 10-K and upcoming 10-K filing for the full year 2021. These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements, except as required by law. Additionally, we will be discussing certain non - GAAP financial measures. These non - GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of these items to the nearest U.S. GAAP measure can be found in today's press release, and in our slide presentation available on Informatica's Investor Relations website. With that, it's my pleasure to turn the call over to Amit.

[Amit Walia, Chief Executive Officer]

Thank you, Victoria. Good afternoon, everyone, and thank you for joining us as we review our fourth-quarter and full-year 2021 results and strategic priorities and guidance for 2022, we completed our first year end as a public company, and I'm very pleased to the results for the team delivered. We met our commitments and established an all time quarterly record for total revenue supported by strong operational performance and profitability. Our success is driven by our strategy of cloud-first, cloud reader, with the secular dealer of digital transformation. Now let me turn to business highlights from the fourth quarter. Total revenues grew 8% year-over-year to a record $407 million above the high end of guidance, driven by subscription revenue of $230 million which grew 23% year-over-year. Total ARR grew 17% year-over-year to over $1.3 billion with strong contributions from subscription ARR, up $802 million, which grew 32% year-over-year, exceeding the high end of our guidance. Cloud ARR grew 40% year-over-year to $317 million and now represents 23% of our total ARR up three percentage points year-over-year on a growing base. Q4 was also an impressive quarter of sales execution with an ability to sell large [Indiscernible] be year bill to new and existing customers. Remaining performance obligations on RPO, grew 26% year-over-year to $1.2 billion. Our good, diverse customer demand but in provide the Intelligent Data Management Cloud platform, strong sales execution, and robust engagement with our strategic partners. Be focused on and generated strong new customer additions and continued expansion and upsell activity from our existing customs. Our account platform differentiation continues to result in strong enterprise performance and give you some examples here. We added 26 subscription enterprise customers that spend $1 million or more in subscription ARR ending the fourth quarter with a record 153 customers, an increase of 47% year-over-year and 20% sequentially. At the end of Q4, we 1,600 customers that spend greater than a $10000 in subscription ARR and 22% increase year-over-year. 55% of subscription customers are Net new and our average subscription annual recurring revenue for our customer in the fourth-quarter grew over $221,000 at 21% increase year-over-year on an active base of more than 3,600 subscription customers. By leveraging our sizable billion investment in R&D over the last 5 years. Now, any 5% of our subscription ARR comes from the net new products on IDMC. Our AI engine CLAIRE is embedded in the IDMC platform to drive intelligence and automation at scale, enabling us to process 27.8 trillion cloud transactions per month as of December 2021. In summary, we're seeing great expansion across the board of the portfolio, both in large enterprises and in expanding commercial customer base. But turning to go-to-market, let me highlight some customer wins to give you some color on our execution. Starting with North America, TiVo, which everybody knows is the second-largest wireless carriers in the U.S and a long time Informatica customer. We're excited to announce that we have signed a new multiyear agreement with them to use Informatica MDM Customer 360 SaaS platform to support their initiatives around T-Mobile for business. Looking into the Asia-Pacific region, a new public sector deals with Petronas, a Malaysian oil and gas company wholly owned by the government of Malaysia and ranked among the Fortune Global 500. Medtronic embarked upon our in-store transformation initiatives that has identified multiple new digital projects that require access to a single complete, trusted view of technical master data within the upstream business. Because of the complexity, Petronas ended up master data management product design for all architecture sites, including centralized, consolidated and coexistence. Petronas took Informatica as a long-term partner, beginning with an initial and mutant limitation and growing globally across all Petronas group companies. Another notable new deal in our EMEA region is the Alshaya, a leading retail privatized Operator for international brands, including at Gianetti, changed our Starbucks, The Body Shop, Cheesecake Factory, Victoria's Secret, and less them to name a few. This company operates more than 4,000 stores across the Middle East and North Africa, Russia, Turkey, Central and Eastern Europe has been a key online and digital businesses. Recognizing the depth of our Intelligent Data Management Cloud platform as, Informatica, end-to-end business, 360 platform. Our partnership with Microsoft and our Azure Marketplace presence added additional value to [Indiscernible] up in its long-term digital goes. Another great example of Ximen expand customer stories, Healthways. I think anybody knows this a 150 your company. They are four main operating companies, several aerospace deepened SPOS system, the electrical growth versus a long-term incremental of PowerCenter customer and they also have a strategic partnership with Microsoft and the preferred cloud vendor rose going to a directive digital transformation where data is a key, confident that had digital transformation. This all value in our IDMC Cloud platform, selecting, Informatica as a strategic partner that their initial invest Axon, data quality, and the enterprise data catalog to solve these challenges. Q4 was also highlighted by increased collaboration with strategic partners. We had strong engagement with our ecosystem and global system integrator partners, winning new deals. On a picture of our management position in the market, that customers really value. In the fourth quarter, the number ecosystem [Indiscernible] grew over 2.5 times year-over-year. And the marketplace transaction volume grew four times year-over-year, indicating excellent traction with key ecosystem partners. On the product innovation side, we extended our partnership reached, where even the launch partner for Snowflake covenant accelerated program, and also big data governance badge reflecting our ability to deliver data democratization, data protection, and data governance for the Stoelting. At AWS reinvent conference we announced new solutions like inadvertent data covenants and dealer democratization for data bases definitely. We announced Cloud Modernization programs at AWS, Microsoft and GCP. We also announced an expansion of our strategic partnership with Google Cloud at Google Cloud Next. A great example of a strategic partner holding is of the Bank of Montreal, the fourth largest bank in Canada and based in North America by assets serving 12 million customers. BMO had a goal for all of their decisions to be data-driven and realized that they have to elevate the data management practices and use of data and analytics. Limited by existing technology, BMO recognized the new for comprehensive end-to-end data management solution. And they are leveraging Informatica solutions, including Axon Data Governance, Enterprise Data log -- Data Catalog, and Informatica Data Quality. In addition, BMO partnered with deployed during the evaluation and continues to collaborate posted on the delivery. The strategic partnership of Informatica and Deloitte's will allow the multi-year digitally-powered bank that draws on actionable insights. Now let me turn to product innovation. Let me continue to democratize data and enables data-driven decision-making for our customers to real-time analytics, data governance, data shutting and intelligence. Beginning with the launch of an industry first Informatica cloud data marketplace that provide self-service data sharing with a seamless date shopping experience of consumers of all skills across a hybrid multi-platform and price. Powered by CLAIRE, our AI engine, will enable customers to easily buy and share real-time data and AI analytical models more broadly and effectively and we automate memory tasks. Second, we added more cleared power automation, including sensor deleting systems, automated apt to update synchronization, automated changed it a capture, automated MLX and data off capabilities, automated influence for data quality routes, automated chemo matching, and automated curation of data assets for improving customer productivity at scale. Third, we are having data engineers and application developers accelerate development and increase the performance of data pipes for data warehouses in lakes and application modernization excuses. We extended our EPR management support, but third-party APIs to enable customers to better manage and secure all of the enterprise data and business APIs. Next, as we've noted earlier, we continue to see strong interest from our on - prem customer wanting to modernize to the cloud and leverage our cloud-native IDMC platform. We improved automation tools and expanded support for additional systems including maintenance, enhancing feature support for Axon and AWS flexion. Real time support and handling of advanced strong commission including data quality, transformation, and continuations. Today, 2% of our installed base is migrated to the cloud at a 1.9x conversion rate from maintenance ARR to cloud ARR. And more recently, we achieved FedRAMP certification, making the most stringent global security standards and Fed regulations, getting a couple of customers piece of mind and best-in-class cloud data management platform to help them modernize, drive efficiency, and deliver digital first experiences for their employee and citizens across the country. Lastly, Informatica's differentiated cloud technology platform is consistently recognized by industry analysts. Beginning with Gartner, we are proud once again to be named a leader in the Gartner Magic Quadrant, the master data management solution. This is our sixth time in a row and positioned Informatica as one of the longest running leaders in the Magic Quadrant. We recently received a strong reading in Gartner's 2021 Vendor Rating report in three categories, including strategy, products, and technology. We are fortunate to be one of the 32 companies that Gartner covers in this Vendor Rating across the globe. We were also wanted a 2021 new product of the Year by the business intelligence group for Informatica as IDMC platform. And see our unrecognized and Informatica as a top-100 cloud company in 2022 We have strong momentum coming out to 2021 and it could not be more excited about the opportunities in front of us this year. Our strategic priority and key it is investment attributed. It begins with product innovation to enhance capabilities and drive more use cases for Acthar IDMC platform. Second, continues to scale and expand our global enterprise sales motion. And third, strategic partnership expansion. Let me. give you a brief explanation of all of them. First around product innovation, the breadth of our IDMC platform, unparalleled and no other products in the market today provide a suite of seven best-in-class, best-in-breed solution, PowerBack, CLAIRE, [Indiscernible], and over 50,000 plus metadata connectors. We look forward to sharing a lot more on product innovation at Informatica world in May, which is our user conference. Second, we continue to expand our global sales motion. Our global sales solution is two form, landing new customers into the IDMC platform, and expanding installed customer base through selling income accruals across The seven desktop product and Optima. With maintenance renewal rates of 95% and subscription renewal rate of 92% on a great customer base, we have ample opportunity for London and expand with new use cases. As we scale our go-to-market internally with strategic partners, we are amplifying focus on industry driven go-to-market sales motion. We will create new routes to market to on mention of sales team s organized by verticals in popular geographies and increased emphasis on industrial use cases selling across the board. Additionally, we'll be investing more and more high-velocity selling motion for the property buyers. Our new consumption-based pricing model continues to provide more flexibility and allows us to attract new customers and drives increased adoption of the IDMC platform within existing customers. Third, earning plug strategic partners. This past year, we deepened our strategic relationships with our hyperscalers and cloud ecosystem partners doing AWS, Microsoft Azure and GCP Snowflake and database. And this year, we will continue to expand our cost, sale, and marketing opportunities. With our GSI partners, we're doubling down even more current engagements and forging new partnerships. Since 2020, when we launched our customer and partner certification program, today we have certified more than 17,000 individuals across GSI and channel partners. When introducing a new selling motion to accelerate the migration of on - prem workload to Cloud to our GSI partners. And some of our largest strategic partners are doing migrations in terms of excellence with access to our migration factory tools to help customers migrate from on - prem workloads to cloud seamlessly as necessary. We continue to deliver on our commitments. I'm proud of the execution from 5,500 plus Informaticans across the bill to help us achieve a very strong 2021. And recently, welcome, Jim Kruger as a Chief Marketing Officer. Jim has more than 25 years of experience driving high velocity sales motion within enterprise, cloud software company including demand gen, brand, product and solution market. We believe the resiliency of our recurring revenue model and strong cash flows will help us to achieve double-digit revenue growth this year. The operating health of the business is solid and we're on track to deliver $1 billion in subscription ARR in 2022. Quite an impressive journey for Informatica, which I think back in 2015, we were left at $100 million in subscription ARR. With that, let me hand the call over now to Eric.

[Eric Brown, Chief Financial Officer]

Thank you, Amit. And good afternoon, everyone. Q4 was a strong finish to our first fiscal year end post - IPO, and we delivered a very good quarter. Let me provide some commentary on the results before discussing our expectations for Q1 and full-year 2022. Turning to our Q4 results, we delivered for 6.7 billion in total revenues with 8% year-over-year growth, which was above the high-end of our guidance range. Our results were driven by healthy expansion and upsell activity from our existing customers and new customer additions, including large enterprise deals. In fact, for the full-year, we observed strong new customer momentum and grew new logo, total contract value, or TCV by 29% year-over-year. In terms of revenue contribution, 90% of total revenues are recurring and highlight the stability of our financial model. This strived the better-than-expected cash flow, I will discuss later. Subscription revenues increased 23% year-over-year to $229.7 billion and were better than our internal expectations. Subscription revenues represented 56% of total revenues as compared to 49% year ago, and reflects strong customer demand for our cloud solutions. Maintenance and professional services revenues were flat year-over-year as expected at 166.8 million and represented 41% of total revenues for the quarter. Stand-alone maintenance revenue represented 34% of total revenues. Consulting and education revenue may have the difference and fluctuates based on customer requirements representing 7% of total revenues. And lastly, professional license revenue was $10.2 million in the quarter down as expected, 60% year-over-year and represented about 2.5% of total revenues. As a reminder, we are not actively selling perpetual licenses to new customers and expect perpetual licenses to remain an insignificant percentage of total revenues. Our shift to a recurring revenue model is effectively complete. As Amit mentioned earlier, we have strong global sales execution for the quarter. Revenue from the U.S grew 8% year-over-year to $247.4 million, representing 61% of total revenue. International revenue grew 7% year-over-year to $159.3 million, representing 39% of total revenue and up 2 percentage points sequentially. We continue to see opportunities in front of us as countries outside the U.S. look to the cloud as part of their digital transformation. Now, turning to ARR. Total ARR increased 17% year-over-year to $1.36 billion in the fourth quarter. We added $200 million in net new ARR in 2021 versus the prior year. We are introducing total ARR as a new full-year guidance metric for 2022 and are on our way to over 1.5 billion in expected total ARR this year. Subscription ARR increased 32% year-over-year to $802.3 million in the fourth quarter above the high end of guidance, and driven by new subscription customer growth and cross-sell from existing customers. Subscription ARR represented 59% of total ARR up 7 percentage points year-over-year, and up 2 percentage points sequentially. As we guide to $1 billion in expected subscription ARR in Fiscal 2022, we know at today that are only about 30 other public technology companies currently at this one billion-plus scale of subscription ARR. Cloud ARR increased 40% year-over-year to 317 million in the fourth quarter and was in line with expectations. Cloud era represented 40% of total subscription era up three percentage points from a year ago and up one percentage point sequentially. We added $90 million and net new cloud ARR in 2021 versus the prior year and net new cloud ARR in 2021 increased 50% year-over-year in dollar terms as compared to 2020, indicating strong cloud momentum. We expect approximately 40% year-over-year cloud ARR growth in each quarter in fiscal 2020, maintaining this high-growth while scaling the business. Lastly, maintenance ARR was flat year-over-year at $557.9 million with strong renewal rates and represented 41% of total ARR down 7 percentage points from a year ago. As a reminder, we have significantly reduced sales with professional licenses in favor of cloud offerings, and this will naturally result in a gradual decline in maintenance ARR overtime. As a result, we expect maintenance ARR of approximately $525 million for full-year 2022. Subscription net retention rate or subscription NRR in Q4 was 114% flat year-over-year. As I mentioned last quarter, we expect to see fluctuations in this metric due to the mix of new bookings from new customers versus existing customers and the timing of large initial deal sizes expanding in the first year. We remain focused on driving subscription ARR above 120% as a longer interim goal. Now, turning to consumption-based pricing 2021 marks the first full year of our consumption-based pricing model, featuring Informatica processing units, also known as ITUs. IP has a lot customers to dynamically and seamlessly choose how they use any of our cloud solutions and services. In 2021, Ikea's represented approximately 20% of cloud ARR, and this percentage increased by approximately three times compared to 2020. And in the fourth quarter, approximately 43% of our cloud and net new bookings were IPO based, indicating accelerating uptake of this offering. Before moving to our profitability metrics, I would like to point out that I will be discussing non - GAAP results for the fourth quarter, unless otherwise stated. Our gross margin was 82.3% and we maintain a stable level throughout the year, and that was standing the mix shift to cloud. Consistent with expectations, we accelerated investments in Q4 across all functional areas to capture the significant momentum we're seeing in the market as we continue to hire, make investments to support growth, and prepare for public company operations. We have several strategic priorities in 2022 and view this as an important year to continue investing in sales and marketing, research and development in partner ecosystem initiatives. Q4 non-GAAP operating income was $95.1 million slightly above our expectations. Adjusted EBITDA was $101.3 million and net income was $54 million. Net income per diluted share was $0.20 based on $275.4. million diluted shares outstanding. The basic share count for Q4 was $267.5 million shares. Capital structure and cash flow updates. We ended the year a strong cash position with cash plus short-term investments of $496.4 million, net debt was $1.3 billion and with full-year adjusted EBITDA of $377.4 million, this resulted in a net leverage ratio of 3.7 times down from 6.2 times last year. Looking ahead we expect the business will naturally deliver due to our healthy cash margins and we intend to steadily reduce our net leverage ratio over the next two to three years to approximately two times. Unlevered free cash flow after tax was $104.5 million in the fourth quarter. And for the full-year unlevered free cash flow after taxes $332.2 million, approximately $38 million above guidance midpoint. Operating cash flow in Q4 was $86.3 million, an improvement of 10%, and operating cash flow was $228.7 million for the full year. An increase of 36% year-over-year due to top line revenue growth, strong renewals, and working capital efficiencies. RPO grew 26% year-over-year to 1.2 billion. We're pleased with the growth in RPO, however, we continue to believe ARR as the best metric to understand the businesses performance as it removes variability associated with billings and contract duration. Now, key modeling assumptions. Before heading for the first quarter and full year 2022, I'd like to provide some additional color on certain financial model assumptions. First, let me discuss our expectations for non-GAAP operating income. As we mentioned last quarter, total revenues and non-GAAP operating income ranges are in part dependent upon the mix of ARR additions of cloud versus self-managed subscriptions. Self-managed subscriptions are subject to ASC 606, upfront revenue recognition, as opposed to cloud subscriptions which are recognized ratably over time. Cloud ARR represents 40% of subscription ARR as customers purchased more cloud offerings on the IDMC platform, we expect the mix of cloud ARR as a percentage of subscription ARR to gradually increase. And also, as Amit mentioned, we have ample, high-quality business opportunities which require incremental expenses given the healthy cloud market environment. We're of the opinion that making these investments will position us even better to achieve our long-term non - GAAP operating income margin of 36 to 39% of total revenues. Second, let me discuss our expectations for P&L tax rates. We reported 2021 non-GAAP net income and a non-GAAP tax rate of 22%. For 2022, we are estimating a 23% non-GAAP tax rate. Looking at Fiscal 2023 and beyond, we continue to expect a long-term steady-state non-GAAP tax rate of 24%, which reflect where we expect cash taxes to settle based on our structure and geographic distribution of operational activity. Third, let me discuss our expectations for shares outstanding. For the first quarter of 2022, we expect basic weighted average shares outstanding to be approximately 280 million shares and diluted weighted average shares outstanding to be approximately 286 million shares. For the full year 2022, we expect basic weighted average shares outstanding to be approximately 284 million shares and diluted weighted average shares outstanding to be approximately 288 million shares. Our IPO lockup expires, invested options and eligible shares can be traded starting February 28th, 2022. We estimate that approximately $256 million shares of Class 8 common stock, including approximately $11 million invested options will become eligible for sale in the public market at the opening of the market on February 28th. Fourth, let me discuss our expectations for unlevered free cash flow after tax. Our outlook for full-year 2022 takes into account three factors: improving net income, a discrete non-operational item, and an increase in investment in strategic growth initiatives. The one discrete nonoperational item is higher expected cash taxes of approximately $23 million grew by U.S. federal tax requirements to capitalize R&D beginning in 2022 versus expensing those costs in period. While there's still a possibility that legislation will be enacted that the first requirement is to capitalize R&D. We are including higher cash taxes current outlook, as will be required to make these payments unless the existing laws amended by legislation before the end of March. Guidance taken all this into account, we are establishing guidance for the first quarter of 2022, Monday, March 31, 2022 as follows. We expect total revenues in the range of 357 million to 367 million representing approximately 8% year-over-year growth at the midpoint of the range, we expect subscription ARR in the range of 830 million to 840 million, representing approximately 30% year-over-year growth at the midpoint of the range. We expect cloud ARR in the range of $333 million to $339 million representing approximately 40% year-over-year growth at the midpoint of the range. And we expect non-GAAP operating income in the range of $66.5 million to $73.5 million. We are establishing guidance for the full-year 2020 and then December 31th, 2022 to as follows, we expect total revenues in the range of $1,585,000 to $1,605,000 representing approximately 10% year-over-year growth at the midpoint of the range. We expect total ARR in the range of one billion 510 million to 1 billion, 540 million, representing approximately 12% year-over-year growth at the midpoint of the range. We expect subscription ARR in the range of $990 million to $1 billion, $10 million, representing approximately 25% year-over-year growth at the midpoint of the range. We expect cloud ARR in the range of 438 million to 448 million representing approximately 40% year-over-year growth at the midpoint of the range, we expect non-GAAP operating income in the range of $325 million to 345 million. And we expect unlevered free cash flow after tax in the range of $323 million to 343 million. And by the end of 2022, we expect to further deleverage to under three times on our net debt to adjusted EBITDA ratio. In summary, 2021 was an excellent year with 40% year-over-year cloud ARR growth, a quarterly record for net new cloud ARR dollar additions, better-than-expected total ARR growth and predictable cash flow generation with proven unit economics. We believe we are well-positioned to achieve our guidance of 1 billion in subscription ARR and 1.5 billion in total ARR by the end of 2022. And before closing, I would like to note an upcoming event. As Amit mentioned, we're planning to host Informatica World, our annual user conference, the week of May 23rd, in-person and online. If you are interested in attending, please reach out to Investor Relations. Thank you very much for your continued support. And, Operator, you may now open the line for questions.

[Operator]

Thank you. We will now begin the Q&A session. [Operator Instructions]. The first question is from the line of Kash Rangan, Goldman Sachs, your line is now open.

[Kash Rangan, Goldman Sachs]

Hello, guys. Congratulations on a really strong finish for the year. This is fantastic. We hear the cloud momentum and the cloud partnerships and that intrigue me greatly your comments on the AWS partnerships and the others. Where are we in the cycle of these partnerships and the ability of these partners to bringing Informatica into the kind of seven-figure deals Informatica? And it's on, it's all and could generate. But obviously with the help of this partnership, they are cloud. There warehousing is taking off. I'm curious to see the leverage you can get from these partnerships in addition to the technical stuff, could this lead to more leverage in the business? And then second and China follow-up for me is the composition of your product family as it represents new ARR. We are already, you're seeing the changes happening with ARR. And but if from product segments that you have on the core IDMC platform, what is showing up increasingly, that's thank you so much.

[Amit Walia, Chief Executive Officer]

Thank, Kash. I hope all is well. To the partnerships, look, we are really extremely happy already under the partnerships. I said before, all of our -- when we talk about the 85% of subscription that are coming from new products, all of them and all of the data we're housing and the cloud workload was on all in the context of AWS Redshift, on Synapse, on GCP smoothly data mix. So all of them are already creating. And then as you know, not to knock gate on now medium to more complex workload. We had done a fair bit of engineering work with these partners in the last many years to grow our business in that direction already. They're walking improved more context towards and which is why we are green many, many more technical work. As we speak, including migrations of PowerCenter took cloud with them. And they're already seeing that traction as we go in that. So I'll give you the example, there are many quarters incentives that did partners have for their own salespeople. Market-based investment customers connecting via to their marketplaces. So all of those are the as we speak, which is what I event at good index with Thomas. And a new -- we love towards Informatica LOI. You expect to see many, many modern, these unaltered coming out both on the product and go-to-market type. So we're seeing that deal win and then some of that uplift examples I mentioned where either VDI ecosystem partners as well as in modernizing. And again, as you know the context of cloud and productions, once the alignment expansion naturally takes or so given begin, you already shared that grown and at-as naturally day wins to grow from there on-wards. On the mix, I am not very comfortable, automatically says. We've talked about key journeys, data-led and data leaks, data governance and privacy, and business 360. In fact, this year, we've added a fourth journey which is all around up modernization and hyper-automation. When I look at the thing like I said in process 50% on the day. That remaining is the other 50% will MDM or development combined all of them ongoing. You saw so many examples are being covenants, deals, MDM deal, and leader integrated deals, VC payments around all of them.

[Eric Brown, Chief Financial Officer]

Kash, your question about the product, family trajectory. And again, I'll reference this the high growers role to the overall subscription ARR growth rate of 32%. So the call out for the product is growing well above that, 32% year-over-year in terms of sub ARR, will be data quality and EDC. Thomas point any journey one undertakes requires data quality in general, as well as cataloging. And so we continue to see really strong growth from the [Indiscernible] and MDM is also, was also very strong for us in the quarter as well. So those would be the three product family calls.

[Kash Rangan, Goldman Sachs]

Thank you so much.

[Operator]

Thank you, Mr. Rangan. The next question is from the line of Mark Murphy with JPMorgan. Your line is now open.

[Mark Murphy, JPMorgan]

Thank you very much. And I'll add my congrats on the hills of Kash's comments. So Amit, we've heard from some infrastructure software companies, that they're mentioning a little slower consumption at year-end and tying that in with more companies being shutdown around the holidays, more vacation where company shutdown. Did you find a way to back that trend or is consumption still too early for you to really be noticeable

[Amit Walia, Chief Executive Officer]

Awesome, great question. I mentioned nice thought, tremendous growth in commercial, we've seen a progress. You need to build on that. The beauty for us in consumption, because we have these seven big product families getting on the IDMC portfolio. We provide customers the flexibility to not only use consumption for in particular use Keirstead any begin, but naturally grow from a use case to another use case. anything. That would give customer a peace of mind that they can get. A lot of time you defined customers begin to the use case and discovered that they would move onto fee more than in and when we have heart initially and that's what we thought a leading see any slowdown per se. To be honest, in Q4 on anything related to that, if anything, just gave RV for feedback interfering with that. Customers nowadays, they like the transparency, the like the flexibility and more importantly, they loved ability that it bringing down the value of across all of the capabilities on the platform, across the new sublease and nice targetability operationally by blend, cloud and consumption-based pricing. In particular.

[Eric Brown, Chief Financial Officer]

The things they normally add on what's one of the operational metrics that we have provided a number of total IDMC platform transactions are transactions per month. And so we noted a 65% increase year-over-year. I think that's one of the highest year-over-year increases we've seen. So into the year and we see accelerated use of our platform.

[Mark Murphy, JPMorgan]

Okay. So it sounds like you completely bucked that trend in every way possible. So Eric, the question I wanted to ask you on the financials is what would you say is the dynamic that is causing, I believe a slightly higher expense load in 2022, while at the same time, you're guiding above, at least above our model on the unlevered free cash flow. Especially with -- you mentioned higher cash taxes, which would seem to make that tougher to accomplish. So is it possible to unpack that for us a little?

[Eric Brown, Chief Financial Officer]

We can offer really good 2020. We noted just over 35% growth in operating cash flow here year-over-year. So let's clearly well ahead of ARR growth and revenue growth, et cetera. So the overall mechanics of the business are doing well. We completely moved through radical model and we've been seeing very high renewal rates and best you are mediates renewal rates continue to be higher than our own internal expectations. For example, in subscription is in line as well. Cash flow in general is working out quite well as we had planned. Against that for 2020, Amit noted the areas where we're going to have increased spend. It's a go-to-market, specific industry verticalization is a good example there. And even more investment in the partner ecosystem. That's going to take the form of go-to-market investments, and potentially also some R&D investments to bring us closer. So it all orients around the IDMC big advantage. And so despite the higher cash spending that we're expecting in 2022, we're doing low enough for the mechanics for the business to have that good opening guide on 2022 unlevered free cash flow.

[Mark Murphy, JPMorgan]

Okay. Well said and very, very clear. Thank you for that.

[Operator]

Thank you, Mr. Murphy. The next question is from the line of Alex Zukin with Wolfe Research. Your line is now open.

[Alex Zukin, Wolfe Research]

Thanks, operator, and congrats on a great quarter guys. I guess maybe just the first one for me is I want to ask about the cloud consumption dynamics specifically, it was pretty impressive to hear there was 40% of new bookings for cloud coming from that motion in Q4. I guess I want to ask, what you anticipate that percentage being for Fiscal '22. And of the cloud business specifically and maybe exiting that year as well. And if you think about how much of that usage will be driven by net new customers versus migrations

[Amit Walia, Chief Executive Officer]

Any [Indiscernible] that last groups stocks again. Let me give you some color or new existing and then I think we'll just on the mortgage numbers. So yield number. We you saw 50 type of non subscription customer s I gave you. We are focused on both customers. We are focused on existing customer landing to grow on, on existing customers who are using our maintenance legacy products to use our new subscription products as a net new customer than you saw these numbers we gave you. So we are equally focused on above, one of their beauty the last stack is the deliberate that I think about it, that once these line [Indiscernible] key product. We basically drive a lot of operational workflow, so we have focused on both. Lightspeed that existing customer. So we'll look back into goal. You would see us talk about it and then talk about some of the details on the net new growth over there. [Indiscernible]

[Eric Brown, Chief Financial Officer]

Yes, I would say that if -- and again, Q4 is obviously a very active quarter in terms of overall net new bookings. And so we have 43% of the cloud of new bookings to talk in the form of IPUs and we get the highest quarter ever. We also noted that overall cloud ARR to the 40 is about 20% IPUs, is less like the average stat. I would expect you will see a quarter in the near future where IPUs are well worth of 50%. It's really resonating with customers. But I wouldn't try to estimate an overall average 22 staff for IPO is relative to total ARR. So I'll pass on that but clearly we wonder drive as much cloud sales to IPUs overtime because we think the flexibility is really, really resonating and the 43% staff is something we wanted to share with this group so you could understand kind of the upward inflection in this key cloud trending.

[Alex Zukin, Wolfe Research]

Super helpful, I guess just the other one for me would be around DBNE. Clearly sequentially, a solid number, but a little bit lower and then you mentioned the volatility that can jump around between quarters. Can you walk through kind of what maybe specifically was the tougher compare or anything else that kind of drove that number in the quarter and how should we expect it to trend maybe into Q1 and maybe first half of the year?

[Eric Brown, Chief Financial Officer]

I want to make sure I understand the question. You said the [Indiscernible] so you're referring to?

[Alex Zukin, Wolfe Research]

TBSR, NRR.

[Eric Brown, Chief Financial Officer]

NRR. Sure. Yeah. No, no, it's fine. So it's a great question. So 114% is what we had in the industry. Q4 is basically identical, what we had in Q4 a year ago. And one of the things that is important to understand about NRR is that we don't have a precise model to know in any given quarter how much of the net new bookings are going to come from an existing customer, which will be additive to NRR, or whether the booking comes from a brand -- branding net new logo. Because in that case, for example, in cloud migrations where customers have been maintenance only, they take our subscription for the first time, they make a new contribution to the NRR staff for a full-year. And so I think that for us it's really more of a mix of bookings from existing customers versus net new. We called out with that you had a significant increase in new logo TCB, up 29% year-over-year. And so I think that affect what we're doing is more business with net new logos and unfortunately, they weren't answer the NRR stat in the current period, we have to wait 12 months.

[Alex Zukin, Wolfe Research]

Perfect. Thank you, guys.

[Operator]

Mr. Zatzkin, the next question is, from the line of Koji Ikeda with Bank of America. Your line is now open.

[Koji Ikeda, Bank of America]

Hi, this is more along on or Koji. So just actually a follow-up on NRR. You guys have mentioned this ICBM, the cloud data marketplace, as a new product and it's categorized as data as service. So I was wondering if that has any contribution to the decline of NRR.

[Amit Walia, Chief Executive Officer]

So any type -- Data-as-a-Service is different from cloud marketplace, too different. So Data-as-a-service is a separate product category that, yes, you're right. We've talked about that and the lower than delivering result always net diluted NRR number. And we've always said that as the cloud business grows, that little good thing that the state onto naturally NRR band mix we grew. So data on the service side and the data marketing side are two fundamentally very different things. Data marketplace is a very strategic product that we launched. We're very excited about it. It actually -- we're offering that builds on top of our data covenant that I thought offering allows large enterprises to have one days in a very shopping cart, we had go sets data for any kind of user adhering to all kinds of governance and access per policies of an enterprise. And that definitely has been very well received. But two very different products and very different dynamics.

[Koji Ikeda, Bank of America]

Great. Thanks, for clarifying that on, just follow up on that. So that is leveraging the AI, the CLAIRE it's my understanding. How can customers leveraging news other alternatives for the more per type thing. Data or kind of what's Thimet synergy to backfill steady you offered here.

[Amit Walia, Chief Executive Officer]

Absolutely. So care is embedded in every product and in the context of a market bit to give you an example of what care does, send your user the message you want to access to a particular data and you go to the market base and like an Amazon shopping card experience, your drag and drop the data sets you want that you don't have access. CLAIRE automatically the euro and access to automatically nose under the covers, the owner of that data in an automatic being under broke delay goes to the owner of the ratable, give you access and not be with a bit of work flow. Things like that that could have never been done before. And it integrates obviously with all kinds of governance, access management policies that exist within an enterprise. So it obviously in a very big rate, automates the process. In those of that working with other providers, look, our goal is data used by a tribute officer as a holistic capability or top of every place where data is sitting, it could be sitting in Snowflake data store, it could be sitting in any azor (ph), it could be sitting in anything on prem. They need that on top of that because data is dispersed and they don't want wrong people to get access to wrong data, offering them challenges. So that's how the value comes to fair.

[Koji Ikeda, Bank of America]

Great. thanks for the clarifying.

[Amit Walia, Chief Executive Officer]

Thank you.

[Operator]

Thank you. Just as a reminder, please limit your questions to one per participant. Our next question is from. The line of Matt Headberg with RBC Capital Markets. Your line is now open.

[Matt Headberg, RBC Capital Markets]

Hey guys, thanks for taking my question. I'll keep it to one here. You guys just delivered 40% cloud ARR growth and you're guiding to 40% this year. So with no implied deceleration there, I guess I'm wondering what kind of visibility you have to that business? And maybe a question in conjunction with that, what sort of maintenance conversions since your guidance assume obviously you saw 1.9 X uplift this quarter. I believe that's even better than the 1.8 seen previously, but sort of wondering what sort of assumptions you've made there for cloud ARR growth.

[Amit Walia, Chief Executive Officer]

Matt, thanks for the question. Hopefully, you're getting that warmer weather now where you are. We actually are seeing acceleration. I think the one thing that -- it's a great question because I like to put it to this group. Veny (ph) had a 40% ARR growth rate. But that underlying number is going every quarter. So it is an accelerating number. We are not seeing that the number was small, so the growth rate is high, and if the number gets big, the growth rate goes down. We are seeing what's going to keep the same growth rate even as the underlying cloud the ARR number is growing in size. So as I mentioned, when we guided to a cloud ARR number for this year is guiding to a 40% number of a much bigger base than then we close our 2021. So from there, we think we are absolutely accelerating growth because we are scaling to a much, much bigger number. I'll let Eric add on to more of that.

[Eric Brown, Chief Financial Officer]

Yeah, maybe just put three numbers against that. So the following numbers, 60 million, 90 million in approximately 125 million. So where does that represent? That's the net new ARR additions in 2020, actual 60 million $90 million is 2021 actual and $125 as well we're expecting to add. So if you take our midpoint guide cloud ARR, subtract that from [Indiscernible] ARR in the 2021 actual, that's a $125 million. So the current point, we're accelerating plus $60 plus $90 plus $125.

[Amit Walia, Chief Executive Officer]

And then the other question also like to come back to back on migration was the North migration look, we bought it that you've heard me talk about. We are fundamentally focused on driving cloudy on our group from both net new workloads and migration workers. And you will see that all of our subscription growth, all upon the outlook has come a 100% of net new workers. None of the 85% of their work loads of subscription ARR coming from new workloads. There is time the order legacy data eligible. So if I mean, so we've been maniacally focused on driving new workloads to make shopping Gail piece of that pie, that of our customers linked to the Cloud. And my additions are leaning. You saw, I think Optiv talked about 1% of maintenance and 90. Now, group percentage migrated, it's a big number, of course, maintenance will hop a billion dollars. We expect to see more and more momentum there. You saw I talked about the more and more automation, more and more GSI-leveraging migrations factories, going together with the ecosystem players. Expect that to grow also. We're going to drive both to drive Cloud ARR.

[Matt Headberg, RBC Capital Markets]

Thanks, guys.

[Operator]

Thank you, Mr. Headberg. The next question is from the line of Andrew Nowinski with Wells Fargo. Your line is now open.

[Andrew Nowinski, Wells Fargo]

All right. Thank you. Good afternoon. I just had a question on your FedRAMP Certification that you mentioned. I was just wondering if you could provide any color on maybe the federal contribution in 2021. And what you're assuming or what kind of contribution you think the Fed could have as it relates to your guidance for 2022, now that you have that high level of certification? Thanks.

[Amit Walia, Chief Executive Officer]

Andrew, how are you? You don't guide to a particular mix breed combined with biggest fad. But I can tell you that fad in tech, there's a big focus on us out the globe, U.S expect business, obviously, so much to spend. Our goal is to make sure background for the eight critical mark, to make sure up better customers who want to go to the cloud, all of them are existing customers. They want to start new workloads, and you'll see a lot of modernization being needed to act for them to be comfortable there. And we've covered daily average is extremely important. So if we expect FedRAMP to be a great part of this year, and then obviously we've got a new report of our portfolio there, so that should drive more monitoring as we are expecting more from them, naturally, us to invest with many customers. And you know, we also have made many tables that we invest FedRAMP and were all in. These states have different flavors. So for example, the state of Texas end-of-period effect round that we watch are defined. California has another one. All of those, it's not a big spend and we expecting comes from sled point of view as well this year.

[Andrew Nowinski, Wells Fargo]

Thank God. Thank you.

[Operator]

Thank you, Mr. Lewinsky. And next question is from Karl Keirstead with UBS. Your line is now open.

[Karl Keirstead, UBS]

Thank you. Maybe to Eric. Eric, I'd look to press on your guidance for 10% revenue growth in calendar 22. It's not that different than the 9% you just put up in 21 despite the progress you've made on diversifying the portfolio, despite the mix shift to higher growth subscription, despite the fact that you're lapping the decline in perpetual license sales. So clearly there is an offset. My guess is that maybe the maintenance roll-off is accelerating in 2022, but maybe you could unpack that for us. Thank you.

[Eric Brown, Chief Financial Officer]

It's a great question. And maintenance is part of it. As of Q4, 2021 and we have achieved what I'll call peak maintenance. Right. So with the level perpetual license that we have next year, 2022 is the first year where we're going to have going about flat. So we were rest of the decline of perpetual hit the bottom, and as a result, there's none of net new adds -- new maintenance to keep maintenance flat. And so that's where we gave the total ARR guide metric for the first time, speaking very explicitly, see the maintenance ARR assumption loft 5.25 at the EBITDA midpoint. So with that decline there it drives the decline in overall yield GAAP revenue as well. And the other thing too, of course, is that we're expecting a higher relative mix of our net new bookings in Cloud versus self-managed. And again, is where all the self-managed skipped that to fix this revenue acceleration. With more net new business going into rental Cloud versus self-managed. And now the expected decline past peak maintenance, those are what causes the GAAP revenue growth year-over-year to be at that 10% level.

[Karl Keirstead, UBS]

Got it. And just a follow-up to that. I would imagine that as these trends continue into the following years and your mix of cloud goes up that we should see this at least modest growth acceleration continue beyond '22. Are you willing to go there, Eric?

[Eric Brown, Chief Financial Officer]

Almost time over several years, we expect GAAP revenue to eventually catch up to a pure ratable cloud model. It's just that, you have to flush through the decline. You have to find the natural bottom and perpetual. And then you have to kind of complete or make sure that net new cloud away from 606. And so we completed the first. We're still, again, increasing year-over-year, our expected ads of cloud versus self-managed. Once we get through that and then, the GAAP revenue year-over-year growth, we believe can accelerate from where it is, and we will be specific but it can be north of 10% year-over-year.

[Karl Keirstead, UBS]

Yes. Okay. Great answer. Thanks a lot, Eric.

[Operator]

Thank you, Mr. Keirstead. The next question is from the line of Patrick Colville with Deutsche Bank. Your line is now open.

[Patrick Colville, Deutsche Bank]

Thank you so much for taking my question. I actually want to do a little follow-on calls just then because as I crunched the numbers for the quarter and the North, the guide. I guess where I lifted estimates most of my model was maintenance ARR and why I didn't let estimates quite as much was a subscription ARR up inclusive of the cloud there. So I guess, could you unpack that for us because we're the comments you just made just now suggest that fiscal '21 peak maintenance. But as I unpack the guidance to me, it looks like actually maintenance holds up pretty strong versus what we may be expecting three months ago in fiscal '22.

[Eric Brown, Chief Financial Officer]

Yeah, I think it's a question of [Indiscernible]. The decline that we're calling. And again, we're giving you the midpoint for Q1 at 5.30, a little bit of variability, obviously. So the midpoint is meaningful, but as is the range there since this -- it's a large number that we're working off of the 5.58. So, again, the point is where the point it's going to decline. We've been clearly articulated that in with the goal posted of 5.25. And beyond that, you've got one and then you'll just have to have a fill in the other assumptions for, for Q2 and Q3. We would emphasize, of course, we're expecting flat perpetual lasers year-over-year. And so just want to make sure you have that point. There is obviously no additional maintenance versus year ago aided to offset the expected maintenance declined.

[Patrick Colville, Deutsche Bank]

And can I just -- I mean very quickly, it just an area where there might be upside risk in fiscal 22 or not really in maintenance others?

[Eric Brown, Chief Financial Officer]

We're very comfortable with the 525 midpoint of May dense at the end of the year.

[Patrick Colville, Deutsche Bank]

Thank you so much.

[Operator]

Thank you, Mr. Colville. The next question is from the line of Phil Winslow with Credit Suisse. Your line is open.

[Phil Winslow, Credit Suisse]

Hi, thanks for taking my question. Just wanted to unpack the net retention number, the 114, obviously, that's jumped around between 114 and 116. But why don't you talk through just the gross retention trends that you're seeing with that in terms of and then also in terms of upsell, is there anything that you've seen a trend in terms of contribution there over the past year that's driving the upsell component of that and then how you think about that into the coming year? Thanks.

[Eric Brown, Chief Financial Officer]

Again, I just want to kind of emphasize are really important. The NRR statistic is very dependent upon a very sensitive too. The bookings mix of net new versus existing customers. And one of the things we're -- very clearly I called out, was the fact that in Q4, 2021 of our overall net new bookings, much more came from brand new customers new logos and those met zero contribution to the NRR statistic. And so as we look back over the trend lines, we had a 114% in Q4. Our last year, a 114% in Q4 of this year -- Q4, as you know, seasonally in terms of like IO net new bookings, and it's the most activity for net new. And so therefore it's going to have the most variability in terms of the mix of Q4 activity. It comes from new customers versus existing -- sub-customers, which would be additive to NRR.

[Operator]

Thank you, Mr. Winslow. The next question is from Tyler Radke with Citi. Your line is open.

[Tyler Radke, Citi]

Hey, thanks for taking my question. I wanted to ask you just about kind of your new level of performance. I know you've talked about some of the strength there, particularly on ACV, but could you just give us the total customer number, how that's trending and how should we just think about the pace of new logos versus maybe some real old legacy, maintenance customers moving on, just the dynamic that impacts total customer count? Thank you.

[Eric Brown, Chief Financial Officer]

I'll maybe take the first part of that and then pass to Jonathan for common. So we reported the number of some Eric customers greater than a million so a 153 versus 104 in Q4 last year. So that's an excellent growth rate and large enterprise customers, just as important and as interesting is the breadth of the greater than 100000 saw the air our customers. So we had 1660 greater than 100K sub era customers as of the end of Q4, 2021, compared to 1,361 on a year-ago. And then also the average ARR per customer is again up very nicely year-over-year to 221,000 versus 183,000. So what we're seeing is great success with very large customers, continuing to purchase either more as an existing customer, or we were adding new $1 million sub customers as well. But the rest of participation as well. So the cohort behavior is very good as evidenced by that band of greater than a 100K, with the average ARR stem.

[Amit Walia, Chief Executive Officer]

And I think there has been number dynamics and look, our goal has been to continue to drive the penetration of our IDMC platform. And as much as the barton, it has finance existing customers expanding, which we are maniacally focused on. We talk about renewal rates. Our focus on customer success. But in all the new selling worship of dial, high-velocity selling going to products the top end of the enterprise allowed us to penetrate new customers also is just equally important. And we're going to stay focused on board because we again -- I go back to what I said before. We know our products solve very high value operational use cases. Very sticky, very hydro gold rates. We land in naturally expand. So we're going to go focused on new customers as much as existing customer expansion.

[Tyler Radke, Citi]

Great. Thank you. And I guess just on as you think about the planning process for 2022, are there any tweaks you're making to go-to-market organization either from a structure or incentive perspective to accelerate Cloud?

[Amit Walia, Chief Executive Officer]

Yes, I mentioned that, look, we're at -- from what people are doing already, we're adding industry motion. So we have absolutely going to will focus down in terms of focus on key industry verticals. Content around that, go-to-market motions, and so that's definitely media they've been investing in, bringing in new leaders as well. The other one is but high been obviously selling. Obviously Cloud allows us the ability to now start small and easy for departmental buyers, business buyers who want to buy small. And in fact, as Jim comes out or has come on board his experiencing. another help us accelerate that. And lastly, the industry also with our GSI is and our hyperscalers partners that Musial industry-leader discussions happening like center around the Loi ignoring Azure or Snowflake, bringing it all together. And then of course, lastly is continuing to make sure we can make the whole migration of our maintenance-based to the Cloud a lot more seamless, bringing in more and more GSI partners in the mix, so they can dig that work with our customers. So those are the areas where we are investing and bring more this year.

[Tyler Radke, Citi]

Thank you.

[Operator]

Thank you. Mr. Radke, there are no additional questions waiting at this time. I will now turn the conference over to Amit for any additional remarks.

[Amit Walia, Chief Executive Officer]

Thank you. Well, thank you all for joining today. We as you can hear from us, we are very excited about the future of Informatica. We have an opportunity and we are delivering on our commitments. And also we are differentiating ourselves in the marketplace with our IDMC platform. Best-of-breed products are upmarket enterprise focused. And these multiple growth opportunities that I talked about, $44 billion cam. We are unique company. We know how to run a business at scale. We're talking about a billion-dollar of subscription ARR this year with great unit economics, great cash flows, at great profitability. We know what running a business scale is across the globe. And again, I'm extremely thankful to all employees across the globe, our customers, our partners, and our shareholders for their continued support. So if you have a great afternoon. Thank you very much.

[Operator]

That concludes the Informatica's fourth quarter and full year 2021 earnings conference call. Thank you for your participation. You may now disconnect your lines.