Informatica's Q1 2025 Earnings Call: Contradictions in Cloud Renewal Rates, Modernization Deals, and GenAI Revenue Impact

Renewal rate trends and improvements, impact of modernization deals on net new business, cloud ARR and guidance, cloud renewal rates and operational changes, and GenAI impact on revenue are the key contradictions discussed in Informatica's latest 2025Q1 earnings call.



Cloud Transition and ARR Growth:
- Informatica's cloud subscription ARR grew to over $848 million, above the midpoint of the guidance range, representing 30% year-over-year growth.
- This was driven by strong new cloud workloads, net expansion with existing customers, and modernization deals.

Operational Improvements and Renewal Rates:
- The company implemented operational changes to address renewal missteps, seeing improved cloud renewal rates, which were consistent with expectations.
- These improvements were supported by a new retention operating model leveraging AI models for risk account identification.

Impact of Modernization and Migration:
- Approximately 10.7% of Informatica's maintenance and self-managed ARR base had been modernized to the cloud or was in the process by the end of Q1.
- This migration led to increased roll-off of maintenance and self-managed ARR and contributed to double-digit declines in these areas.

AI Adoption and Usage:
- Informatica reported over 175 customers using GenAI capabilities on its IDMC platform, with approximately 200,000 LLM calls excluding GPT in Q1 alone.
- The increase in AI agent usage and GenAI app development is driving AI workload demand and adoption across various enterprise use cases.