WEBVTT - The Next Generation of Intelligent Data Processing

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Tim

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<v Speaker 1>Steneveek on Bloomberg Radio. Well, very lucky to have with

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<v Speaker 1>us this afternoon, a trio of CEOs. We're to our

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<v Speaker 1>second right now, and it's the CEO of the enterprise

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<v Speaker 1>cloud data management provider Informatica, the company reporting results on Wednesday.

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<v Speaker 1>Investors and analysts, well, they really liked what they saw.

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<v Speaker 1>Informatica boosted its adjusted operating profit guidance for the full year,

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<v Speaker 1>the guidance beating the average analyst estimate, and matty Yesterday's

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<v Speaker 1>shares surg to close more than sixteen percent higher and

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<v Speaker 1>continued hire today by another one point six percent. We've

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<v Speaker 1>got the company's CEO. I'm at Wallya joining us right

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<v Speaker 1>now this afternoon. Good to have you with us. It's

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<v Speaker 1>good to have you. It's good to talk to you again.

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<v Speaker 1>It's been more than a year since since we last connected.

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<v Speaker 1>What worked out so well for you for the quarter

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<v Speaker 1>and what's your outlook for the year.

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<v Speaker 2>Pleasure to be in the show, Tim, thanks for having

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<v Speaker 2>me while we had a great quarter and a great

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<v Speaker 2>first half. Well, I think look, we've been a company

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<v Speaker 2>that has the flipped to the cloud business model, all

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<v Speaker 2>led by a platform intelligent data management cloud. And what

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<v Speaker 2>the analysts saw and they've been expecting, is that we

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<v Speaker 2>exceeded our expectations for growth in the top line a

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<v Speaker 2>cloud err crew thirty seven percent. And obviously in these

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<v Speaker 2>transitions people typically lose profitability. We actually exceeded our non

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<v Speaker 2>gap operating income and a unlivered free cash flow and

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<v Speaker 2>we raised the guidance for that for the year.

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<v Speaker 3>So I think growth on the top line boosting the

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<v Speaker 3>bottom line.

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<v Speaker 2>I think in a time like this, that's hard to

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<v Speaker 2>do and that's what our teams accomplished.

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<v Speaker 4>Well, that's the great news I do want to read

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<v Speaker 4>you from Cities Take on your earnings. They described the

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<v Speaker 4>fundamentals as still underwhelming, with aggregate growth continuing to decelerate,

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<v Speaker 4>but having said that, they do have a great outlook

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<v Speaker 4>on the stock. So talk to me about how you

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<v Speaker 4>would respond to that. What would you say about the fundamentals?

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<v Speaker 3>Thank you Madison.

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<v Speaker 2>Well, look, I think when you're going through a cloud

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<v Speaker 2>business transition, that's why our investors focus on a revenue

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<v Speaker 2>always takes ahead because of the whole accounting revenue recognition,

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<v Speaker 2>and I think this year our revenue from an accounting

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<v Speaker 2>point of view has taken the hit because of obviously

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<v Speaker 2>the cloud ratible recognition model.

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<v Speaker 3>But the cloud business.

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<v Speaker 2>That's growing very well sets up very well for as

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<v Speaker 2>we look forward finishing this transition this year. So that's

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<v Speaker 2>what it is. But it smooths out and look at

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<v Speaker 2>arr it basically shows you the intrinsic business grew very handsomely.

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<v Speaker 2>When you look at the entire cloud industry growing thirty

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<v Speaker 2>seven percent, was ahead of the market.

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<v Speaker 1>I mean, what are you hearing from customers right now?

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<v Speaker 1>We talked earlier in our program about advertising companies seeing

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<v Speaker 1>a pullback in advertising from some of the biggest tech firms.

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<v Speaker 1>We've seen some of the biggest tech firms do a

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<v Speaker 1>massive number of layoffs just this year. What are you

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<v Speaker 1>hearing from your customers?

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<v Speaker 2>Well, I think look, if you step back and look

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<v Speaker 2>at the enterprise software market, customs are generally cautious. I

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<v Speaker 2>think stock market has a different performer than how enterprise

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<v Speaker 2>it budgets out. I think people are thoughtfully spending. It's

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<v Speaker 2>still a very cautious environment. There's deal velocity is still

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<v Speaker 2>not as it was before all.

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<v Speaker 3>Of those things happening. But what's happening in.

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<v Speaker 2>That is people are prioritizing, They're spent towards things that

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<v Speaker 2>I can be creative to the top line or to

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<v Speaker 2>the bottom line, and areas like data, data, analytics, security,

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<v Speaker 2>those are the things that.

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<v Speaker 3>Move up the stack, and that's what I'm hearing. And

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<v Speaker 3>of course right now, JENNI is there.

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<v Speaker 2>Clearly everybody's talking about it, and I think when I

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<v Speaker 2>talk to enterprise customers, they are in the middle of

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<v Speaker 2>so where of all the things that I can do,

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<v Speaker 2>how do I begin?

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<v Speaker 3>Where do I begin?

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<v Speaker 2>Which technologies do I bet on? And very worried about

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<v Speaker 2>all the governance.

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<v Speaker 3>Aspects of GENI. Those are some of the biggest things

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<v Speaker 3>that I'm hearing from customers globally.

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<v Speaker 4>One thing that I can stop thinking about too, and

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<v Speaker 4>I can't wait to get your take on is companies

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<v Speaker 4>that are changing up their capital allocation when it comes

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<v Speaker 4>to their it spend to invest in AI so that

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<v Speaker 4>they can ride the AI rally and wave here. I

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<v Speaker 4>wonder what you're ta take is on who should not

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<v Speaker 4>be over investing in AI right now? Are there any

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<v Speaker 4>types of firms companies that you think shouldn't be over

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<v Speaker 4>investing in AI and should stick to their typical it spend.

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<v Speaker 3>Madison's a great question.

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<v Speaker 2>I'll say, Ai or Jenny I in particular right now,

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<v Speaker 2>tremendously overhyped in the short term, and I would say

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<v Speaker 2>tremendously underestimated.

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<v Speaker 3>In the lockdow what you mean by that, but I mean,

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<v Speaker 3>like the hype.

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<v Speaker 2>Cycle around that is so high that to the point

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<v Speaker 2>that you were saying that people may walk into it

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<v Speaker 2>with ice closed because it's just the shiny object to

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<v Speaker 2>go do something, and to me, the thoughtful way to

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<v Speaker 2>do something about.

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<v Speaker 3>First of all, it's going to be an inflection curve.

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<v Speaker 2>It will help customer companies both increase productivity and increase

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<v Speaker 2>intelligence driving the entire P and L. But you need

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<v Speaker 2>to be thoughtful about it. Where do you spend which

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<v Speaker 2>projects are they going to drive the revenue line or

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<v Speaker 2>the bottom line.

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<v Speaker 3>An example for that is we have our clear gptem

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<v Speaker 3>our own.

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<v Speaker 2>Clear engine, which is part of our plag from the

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<v Speaker 2>GPT version of that, where customers are in private preview

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<v Speaker 2>working with it. Where insurance companies looking at the claims

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<v Speaker 2>fraudulent claims that they get, can they increase the preciseness

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<v Speaker 2>or efficiency of that from eighty eight percent.

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<v Speaker 3>To midnineties, and that's a massive revenue. So I think

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<v Speaker 3>companies have to figure out which use cases.

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<v Speaker 2>Matter and don't just walk into it just because it's

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<v Speaker 2>the right now, the shiny object.

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<v Speaker 4>You said that it's underestimated long term, why aren't we

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<v Speaker 4>going to start to feel the power that AI has

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<v Speaker 4>in your view.

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<v Speaker 3>I think we'll see it in next year.

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<v Speaker 2>I think enterprises are always a little a step or

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<v Speaker 2>two behind consumers. All of us have used chat GPT,

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<v Speaker 2>My kids are using it. You and I are probably

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<v Speaker 2>using it. It's very easy to do.

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<v Speaker 3>It's the free.

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<v Speaker 2>Data of the Internet that we can access. But if

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<v Speaker 2>I'm an enterprise, it's your data. Privacy covenants are huge

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<v Speaker 2>issues around it, so on and so forth. I know

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<v Speaker 2>how our customers are playing with our product around GPT.

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<v Speaker 3>You will see use cases next year where they will

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<v Speaker 3>get tangible back be out of it.

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<v Speaker 2>But you know, like anything, it will take a curve

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<v Speaker 2>and I do think that the next eighteen months are

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<v Speaker 2>going to be very, very monumental, and I think they'll

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<v Speaker 2>be fun because we will see value coming out of it.

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<v Speaker 1>How are you attracting and retaining talent? Just in the

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<v Speaker 1>last forty five seconds that we have with you.

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<v Speaker 2>I think always focus on innovating. Innovation attracts talent. We

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<v Speaker 2>are blessed that in the world we live in data analytics,

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<v Speaker 2>it's the hot space to be so you know, talent

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<v Speaker 2>wants to work on those innovative projects, especially in the

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<v Speaker 2>world of AI.

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<v Speaker 3>There is no AI without data.

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<v Speaker 2>So we've been benefiting by these trends that are benefiting

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<v Speaker 2>our ability to hire good talent.

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<v Speaker 1>All right, I think we're going to have to leave

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<v Speaker 1>it there. I really appreciate you taking the time this afternoon,

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<v Speaker 1>Amid Walia. Good to talk to you. Like I said,

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<v Speaker 1>it's been over a year since we last spoke. Really

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<v Speaker 1>appreciate you joining us and taking us through the numbers

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<v Speaker 1>and also the outlook on AI for the remainder of

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<v Speaker 1>the year. That's the CEO of Informatica. I'm a Walia

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<v Speaker 1>joining us on this Friday afternoon.