Informatica Inc. (INFA) Earnings Call Transcript & Summary

I will just jump right in. Okay. We're live. Welcome back, everybody. I'm Brad Zelnick with the Deutsche Bank software team. And we are delighted for this session to be joined by the Chief Financial Officer of Informatica, Mr. Eric Brown. Eric, thanks for joining us.

Brad, thanks so much for inviting us here. It's great to see you in person again. Looking forward to this.

Likewise. Thank you. Format of the session is a fireside chat. We've got a number of prepared questions that I'm going to ask Eric. And if time permits towards the end of the room -- end of the session if we have time, maybe we'll take some questions in the room. And with that, maybe we will dive right in.

So Eric, it would be great to just get your take on how you see the data landscape today and how Informatica plays within it. And if you could just give a level set for everybody of what the Informatica today is all about.

So absolutely. So we broadly enable what's referred to as cloud modernization, digital transformation, et cetera, which is different expressions for describing how businesses are looking to take and leverage data assets to be more efficient, better serve their customers, increase their customer retention rates, et cetera. So data is at the center of this and data now hosted on scalable cloud systems is part of that. And so what we do is we sit kind of at the crossroads of that. We're an infrastructure player. We have the only cloud data management platform that serves every single use cases. We'll get into this in a little more detail here. But in summary, we have always been in the data management space for 25-plus years. We allow people to move data in and out of source systems, cleanse it, control it, secure it, so they can ultimately populate it, say, in a Snowflake and drive these high-value applications to drive, again, customer satisfaction, retention, et cetera. So we're in the midst of that entire cloud migration, digital transformation landscape.

Thank you for the level set. Actually, Informatica came up several times in a conversation with Snowflake just the other day. But then I think about the company, you mentioned 25 years. You've got a really rich history. And in particular, I distinctly can see, I think we all can see that the portfolio has really expanded, especially since the company initially went private in 2015. And a key theme that keeps coming up in our broader conversations in the space is vendor consolidation. Do you expect data management to tend towards a converged delivery model? And what type of accounts or situations do you find point products or point solutions out there most competitive?

Yes. I do expect convergence to continue because, particularly at times like this where budget dollars are a bit tighter, if you need, say, for example, 7 different classes of data management technology, data integration, data quality, data governance, just to mention a few, you can either try to piece this together with half a dozen different vendors or purchase a single platform. And so a platform, as long as it's a good platform, as best-of-breed solutions is can provide a lower total cost of ownership. And so that's really kind of the main differentiation that we have versus our competitors. And one of the other things you can do with the converged platform is that you can introduce a very customer-friendly pricing and consumption model. And what we've done is offer something called IPs, Informatica Processing. So it's kind of token-based system. But the way to think about it is if you're going to spend $200,000 a year or 7 different vendors, let's say, you've got unused capacity in 4 of the 7, you can't take those excess dollars and use them on the other 3, where there's higher net today, and those dollars are basically lost and sunk. The IPU allows the customer to use any of our cloud products on the platform seamlessly, dial it up or down in real time so they get maximum benefit from the dollars that they spend. And so that further enhances kind of the TCO advantage that we have by having this integrated cloud platform supported by this consumption-driven IPU system.

On the IPUs with them being fungible in that way, it drives customer value, which is great. It's what you always want to see. Is there any -- even if near-term counter effect of kind of deflating the near-term revenue opportunity or thinking about it the wrong way?

No, I think that just -- you have to be disciplined upfront and size the use cases correctly with your customers so that they're purchasing the correct amount of initial IPUs, just like you would want to size it correctly, if you had a per C or per CPO or some other kind of licensing scaler. Because over time, if you've over licensed anyone, then you're going to get partial renewals. So we design the IPU so that the customers can grow past their initial entitlement in a natural manner. So it's consumption-led. And our plan is we sell these contracts. And a year, 18 months in, people will come back to us and say, "We're at the initial allocation. We're past it. we need more IPUs." So it leads to a very low latency, easy upsell process. And so we're focused on sizing them correctly and making them very useful. Again, the fact that it can be used across our entire platform is about enhancing utility.

I could appreciate the utility benefit, especially during times like right now, where customers are all always, but even more so now trying to do more with less. Maybe just on a different topic, Eric, we increasingly hear about data intelligence and having a data catalog as critical for deriving maximum value of enterprise data, which, in many cases, you see a lot of sprawl. And competitively, we hear a lot of traction from newer companies like a Calibra or Relation, for example. How often are you competing versus complementing these solutions? And why do you win when you win? And what do you need to do better to maybe drive that win rate even higher?

Yes, we compete head-to-head with them. Again, it's 1 of our 7 product families. And so the advantage we have is that EDC for us, Enterprise Data Catalog is part of the integrated IDMC platform. And so not only do you get kind of utility with consumption-based pricing, as I just mentioned, but one of the things we built in very early on is a design principle into our IDMC platform was infused AI. And by that, what that means is that as a customer as not just one customer, but as our customers use IDMC platform, the product itself becomes smarter. It becomes more efficient at identifying and cataloging as example sources because it sees unknown inputs that get matched and it learns over time. And the entire installed base gets the benefit of that. And so we have AI-powered enterprise data catalog. To your point, it's an important category. Organizations, if they're going to make a big commitment to digital transformation, it all requires data, which is cleansed and house and then used for high-value analytics, but the precursor to all that is figuring out where your operational data resides, what it is. And one of the things that we have that's a huge built-in advantage, really a true competitive moat versus these are smaller start-ups, by the way, the ones you mentioned, is the concept of a library of metadata aware connectors. And so once we identify the data, we have 50,000 metadata aware connectors. We can actually provide immediate utility and the ability to transform because that's what you want to do, just catalog and leave it there. You want to catalog and leverage. And so that next step action, which always occurs, we have a huge built-in advantage.

It seems the integrated nature of the platform is definitely an advantage. Maybe just as we think about the broader portfolio, approximately what percentage of the business today is derived from what we think of maybe as more traditional data integration, power center and cloud data integration use cases? And how do you expect that to trend going forward?

Yes, it's interesting. So I'll answer kind of top-down. So DI, you can -- if I think about our total current subscription ARR base, which is about 900 million, rough and tough, about 1/3 of it is DI-related overall. But inside that, if you say, well, how much is kind of older traditional power center on-prem versus cloud DI, the significant majority of our DI is all cloud, and all the growth rates are in cloud DI. We've effectively -- we've end of sale or selectively end of sale on-prem traditional power center. And so there's huge demand for DI. The use case now is movement into these scalable cloud systems.

We've touched on this maybe a little earlier, but to come back to the ecosystem, Informatica is increasingly recognized for the broad ecosystem that you have. Makes sense. You've been around a long time. Everybody knows who Informatica is and the leadership that you have of the categories that you're in. But most notably with the hyperscalers and connectivity with the likes of Snowflake or Salesforce as examples. You recently further expanded your partnership with Snowflake. It would just be great if we could double-click on this announcement and remind the audience of its importance.

Yes. We had 2 recent announcements with Snowflake. So the first spoke to us building and bringing to market a data loader with a specialized data integration tool designed to take data from basically anywhere and bring it into Snowflake. And so Snowflake is an extremely important ecosystem player. They're a persistent layer. Their business model is to drive all existing data on-prem into just their cloud. And our data loader does just that. We're offering it on the marketplace. And we actually have 2 versions of it in terms of business model. One is traditional paid for. The other is a freemium model. And so one of the things we've noted, there's a couple of start-up companies that do just one thing, move data from on-prem to Snowflake. And what we decided to do is we've simplified our very capable IDMC platform and built workflows, such that this free data loader can take a certain amount of data on-prem, very rapidly populating the Snowflakes, so people can do the trials, POCs, et cetera, then of course, they can transact through the Snowflake marketplace and go to a paid mode. So we're taking direct aim at some smaller companies that had some traction in that kind of freemium space. The second announcement would have been in June, obtained to our partnership for enhanced data governance integration support of Snowflake. So data governance is very, very important. Because if you want to transform a business, you want to make business more broadly available democratization of data, but who exactly gets what data is a real governance challenge. And it was less important 5 years ago where data wasn't as broadly distributed, but the path forward is data democratization. And so what we've done is we've teamed up with Snowflake so that when you're using the combined Informatica and Snowflake data governance, product offering, you basically have end-to-end visibility and data lineage. So the data transform could start with action by an Informatica product. We would tag and identify the sources. So think of it as like identifying specific columns of data where they came from. And then when we transfer the data into Snowflake or persistence layer, there's a clean record of exactly what all that data has moved through. So this concept is end-to-end data lineage as it goes from, say, an on-prem system to a state-of-the-art Snowflake is really important. So we're really excited about that. Both organizations recognize the importance of data governance in this era of data democracy.

And I know it's only recent that you announced this, but that's -- it seems like it's got to be really huge. But the interest level's been...

The response has been really high. People are really pleasantly surprised that a comprehensive end-to-end governance and lineage solution like this is being brought to market by 2 of the industry's key players.

Well, just on the topic of ecosystem. You also recently launched a new strategic partnership with Oracle, which I'm old enough to remember. I would think of Informatica and Oracle as competitors or to some degree of coopetition amongst the 2, right? Oracle Warehouse builder once upon a time, again, dating myself. But bringing Informatica solutions to OCI, Oracle's Cloud Infrastructure, what's the strategy behind this partnership? And why now? And what does it mean?

So our platform today, IDMC has been offered to the 3 hyperscalers, AWS, who were in GCP. So Oracle OCI now becomes our fourth hyperscaler platform. And the business rationale for right now is, it's fairly straightforward. We like Oracle, have a lot of on-premise customers. And if you look, for example, we talked earlier about our power center installed base. The majority of our power center installed base is operating on Oracle, clearly #1. The #2 and 3 drop off very, very quickly. So we have a large shared on-prem installed base with Oracle. And so we have -- we're very nicely jointly incented to take that and move it to IDMC Cloud powered by OCI. And so there's great alignment here. And in the past, we've had other flavors of partnership with Oracle-embedded OEMs, et cetera, that have gone very, very well for both organizations. So we're very excited about that. We just launched it. You'll hear more about it in 2023.

We'll look forward to it. I think just as I've been around long enough, you've been around. I don't want to date anybody, but you see kind of cycles of competition, cooperation and especially in the cloud is really interesting to see and look forward to how it all plays out. If you had to name one key opportunity for improvement as a company, either from a product or go-to-market perspective, what would it be here?

I'd give you kind of 1 1/2. So I'll start with the half. I wouldn't cite anything on the product portfolio side that we need to better because we have the only pristine multi-tenant cloud, fully integrated, build from scratch, not M&A cloud data management platform. It's complete across all the product areas, best-of-breed, Gartner upper right-hand, leadership rated across the board. That's all good. The half, I would say, is that it's not going to be a product per se, but it's a capability and product capability that we're building and improving over time is our migration. We have migration utilities. We call it the migration product -- migration factory. To the extent that we can increase automation, we'll be able to increase the rate at which we can move our maintenance customers to the IDMC platform. So it's not a GA product. That's why scored is 0.5. The other 1.0 kind of improvement area would be along the following lines. We're starting to scale our cloud business. This year, we'll end up, in terms of $1 billion total subs ARR guidance midpoint, 45% cloud ARR, 55% self-managed or on-prem. A year or so from now, we'll move the past 50-50. And so one of the things that we want to continue to see is the increased go-to-market efficiencies associated with a true multi-tenant cloud model. So efficiencies of upsell, cross-sell through consumption-based IPUs, et cetera. We want to see more and more of that. So we get more and more sales leverage as we continue our path towards cloud ARR.

Cool. Makes a lot of sense. I've got to ask the macro question. I wouldn't be doing my job if I didn't. And unfortunately, it just -- it remains top of mind for investors. Your Q2 execution was strong. However, you did -- you didn't raise your full year ARR guide just given the backdrop. And now that we're 2/3 of the way through Q3, how is demand and pipeline trending relative to what you baked into your guidance? Because many are talking about longer sales cycles and deal scrutiny. Are things -- I always believe nothing standing still. Things are usually getting better or getting worse, even if nominally. So what can you tell us since you last reported?

Sure. So just I'll little set kind of what we said for through Q2, then I'll respond to your kind of Q3 question. So we did observe some elongated sales cycles through Q2. It wasn't specific to any geo or any industry. We're fortunate in that because we've moved to cloud by design. Our ASPs are lower. We no longer have to swing for the fences last day of the quarter with a $5 million license deal. So there is more scrutiny on higher-value TCV commitments in IT. And so if your business requires a bunch of $10 million deals last 3 days of the quarter, it's probably a lot tougher for you. It's not tough for us in that respect because we have lower ASPs. But there is more scrutiny, and you have to lean more heavily into kind of a TCO argument for -- and again, that comes back to the kind of the platform point that we would make there. We also saw some customers delayed payments to us. We don't have any bad debt write-offs, but we saw our DSOs tick up. And we saw this back in '08, '09, kind of things get a little bit wobbly at the macro level, companies just lay pay their vendors. And so we actually -- we did see that, and we reflected that in our updated guide for the full year. So now fast forward to today, here we are 2/3 of the way through Q3, we see no net change in terms of the factors that we called out on our Q2 earnings call. So 2 months then, things are playing out, as expected. It's still a bit of a cautionary environment. The big deals require a little more time, a couple more signatures to get through, but it is playing out as we expected when we gave our guidance on the last call.

Fair enough. And since you brought up DSOs, to what extent does it make sense? Think about a business like yours is about lifetime value of the customer. And in tough times, it seems we -- or entering into, however you think about it, what extent does it make sense to be there, deliver value to that customer, take the ARR quite frankly, but extend payment terms to them where -- I don't know how far you can really go out. But how creative can you be in helping finance your customer effectively?

Yes. To kind of put it in perspective, last year in Q2, my DSOs were 76 days. They were about 72 days. This Q2, they were 76. So we went plus 4 days. Still for an enterprise company, that's still...

Still within reason.

That's within reason. So I think we have maybe optimized working capital last year, and now we're back to slightly elevated levels. Again, we have super high-quality customers. I want to stress our bad debt, incident rate has not changed at all, right, because we're heavily concentrated on F1000. And we have really high renewal rates, 94%, 95%. So this is temporal in our experience. We've seen this before. It does it in any way, shape or form impact our long-term view on levered free cash flow margins, et cetera. And then to your point, these are high-quality customers. The end-of-late paying us a couple of days, that's tolerable. We don't like it. We're not changing the stated terms of the deals.

Got it. To your point I got to ask. Is there ever a situation where you'll book the deal and not invoice the customer for some extended period of time?

No. No, we don't do that. If we're going to book a deal, it has to meet all the criteria, credit check, collectibility et cetera.

They go to ARR, if it's not being invoiced?

Zero change on how we do that.

Just want to be really clear, Awesome. Good to hear. Maybe just moving on. Cloud ARR, up 42%; subscription ARR, up 31%; maintenance, only down 2% year-on-year. Could you just remind the audience of the dynamic between these 3 buckets over the next few years? Is it fair to assume that maintenance will continue to exhibit a graceful decline with subscription and cloud ARR driven largely by incremental use cases?

Correct. We -- I'll use some round numbers here. We're about $1.5 billion in ARR, 1/3 of it; a little over $500 million is maintenance ARR; and the balance is subscription. So our midpoint guide for this year, sub is $1 billion even and maintenance is rough and tough $500 million, a little above that. We fully expect that our maintenance base will gracefully decline. So we have a renewal rate of $95. We're not selling any net new perpetual licenses. So there's nothing net new going into the maintenance bucket. So it can -- mathematically, you can only. It's actually declining a bit slower than what we thought. Actually, the renewal rates are a bit higher than what we thought. It just kind of proves how sticky those operational workloads on the legacy power center, incredibly sticky. And so like all the business, 97%, 98% of the sub ARR and the cloud ARR is being driven by net new workloads. We've barely scratched the surface of migrations, and we're driving 42% cloud growth, basically net new workloads. Our plan is to drive to 1 billion of sub ARR and beyond. Get the overall mix of sub ARR to 50% cloud and then drive it well past 50 and accelerate the rate of migrations. We think we have an abundance of time to do the migrations because it's extremely difficult for us as the vendor to move those workloads with the customer. It's impossible for them to move those workloads without Informatica. So it will always be there for the time when the customer is ready to modernize because it requires work on their part, we can't do it end to end. So things are playing out as we expected. Cloud ARR growth is a bit higher. As you noted, our target is 40. We just posted 42. So things are trending very well in terms of cloud. And it's driven by net new workloads.

On the migration side, it makes sense you got to meet the customer where they are in their journey, especially if they're inevitably going to be coming over. It's just a matter of when not if. On the maintenance side of the equation, to what extent have you seen benefit? Is it -- am I correct to assume that you've got CPI increases built into those on-perm contracts and you've got the benefit as of late?

In the majority of our contracts, we're able to do like CPI or local CPI equivalent. The other thing we're starting to do is we're offering enhanced higher price maintenance contracts, so extended support. So the normal support contract is 5 days a week, for example.

24/7.

Yes, 24/7. And again, we're -- we just kind of started to roll this out. And the uptake in interest rates because, again, like these power center installs go down. The companies, the supply chain shuts down, they can't close their books like operational workloads. So we're able to get -- I wouldn't call it strictly speaking, a price increase because we have that. We're able to sell [indiscernible] enhanced extended support, which is a higher -- kind of higher margin. So we're -- you see the maintenance space very, very actively today. And we talk about this expected graceful decline, and that's what we thought at the time of the IPO, is playing out exactly, if not slightly more favorable to what than what we thought today.

Got it. And that was -- the spirit of my question of more favorable, how much of that is pricing versus units, but I guess like you said.

It's a combination of both, like the primary renewal rate is a bit higher than what we expected, and we're getting a bit more than we expected.

Good to see. Just back to the IPOs, which we talked about. And I think I'm pretty clear on what the benefits are and how it's good for the customer, good for Informatica. I think you had said represented about 30% of cloud ARR. Can you just give us more of a prospective view to put a fine point on like IPUs? What's the goal? Where do we get to?

Yes. And in terms of the current number, so yes, 30% is the amount of existing cloud ARR denominated IPOs. So if we look at Q2 new bookings activity for cloud, just under 50% was denominated in IPOs. 2 years ago, it was 0. We've gone to 0 to basically 50% of our net new bookings-denominated IPs. The objective is to drive that as quickly as possible to 90%.

and your sales folks are incentivized on it?

Yes. And again, the customer versus the alternate kind of licensing scalers, it's very attractive from a customer point of view because again, it has just higher built in utility. So on an equivalent dollar basis, the customer is going to say we prefer IPOs.

Got it. Makes sense. Can we talk margins?

Sure.

All right. Cool. So non-GAAP op margin, 19% in Q2. You maintained 22% guidance for the full year in an environment that's tougher to predict. How do you approach running the business just in the context of balancing growth and margin, like over the coming 1 or 2 years, where is the core focus for informatics deployment of both R&D and sales and marketing dollars?

Yes, we have a disproportionate advantage in R&D spend relative to most other companies. We've operated a captive R&D and customer care office in India for more than 15 years. And so rough and tough, we have 2,000 of 6,000 employees located in India. Obviously, the cost advantage is tremendous versus North America. So for the dollars that we spend in R&D, we get way more output. That's just a built-in advantage that we have. And R&D will continue to be a priority area of spend. But I think we can get more output at a lower price because of what I've just described here. Other areas of emphasis are -- and this is, in part, R&D kind of partnering related is continued support and tie in to our key ecosystem partners. So as a hyperscaler, for example, adopts a new vertical solution or a new set of solutions, we want to be right there with them to take full advantage to provide that end-to-end experience for the customer. The data governance example, Snowflake was a perfect example of that. So we'll continue to invest in those types of key ecosystem initiatives, which are a combination of R&D, product management and kind of our partner, Oracle LED. Sales capacity, primary sales capacity for the generation of sub NAR and cloud NAR remains a priority as well. With respect to margin management, one of the things we've been able to do is you look back, if you look at our 6- to 7-year journey from privatization in 2015 to today, 2022, so notwithstanding the fact that we had a purged $350 million of perpetual license annually out of the P&L to basically 0, we've been able to do 2 things: maintain non-GAAP op margins at 20%, low 20s, and maintain non-GAAP gross profit margins at 78% to 80%. So if you think about that, perpetual license, 100% margin being mixed in with cloud, 80% margin, 75% to 80% gross margin, that's quite a feat. So we're really good at optimizing cloud COGS. We have scale. We pay attention to how we would negotiate our hyperscale contracts, the way we architect an IDMC, multi-tenant cloud. I can tell you that if you look at a single tenant product being converted to IDMC multi-tenant, in some cases, our COGS go down by a factor of 10 to provide the same customer experience. And so we're engineering in COGS and gross profit margin efficiencies. And then in the OpEx area, we get unusual leverage on things like R&D, as I mentioned. So that's kind of where we are. We have been able to stay at this kind of like 80% middle line, kind of 20% bottom line.

That's helpful context. And just as we think about where we are point in time into the back half of the year, you did mention that you plan to slower hiring, just slow hiring with a focus on key areas, can you just double-click on this for us? What's your strategic priorities? How you're thinking about the hiring environment more broadly? Is it getting easier out there? I mean I know you've got your captive capability in India and whatnot, but even more broadly your observations.

Well, I'll answer the maybe second question first. I think compared to, say, 12, 18 months ago, it's getting a bit easier for us to hire. The reason being back 1 year, 1.5 years ago, there are a lot of private growth at all cost companies hiring in the -- broadly speaking, the data landscape, like we touched upon some of those names. The polarity is completely reversed on them, right? The bell will toll when they have to raise another $100 million, $200 million to fund their growth at all cost, pivot to breakeven. And the 409A values will get cut by 75%, and that's happening. People like look at that and say, look, my stock has gone down by 75%. I'm not going public anytime soon. I can read the tea leaves, right? Everyone reads Yahoo! Finance. And what was competitive in terms of talent, the polarity is reversing our favor. So that's good news for us, I think, kind of looking forward. The other question was like how do we think about hiring managing costs. So we made the call beginning of June that this was a -- some type of slowdown. And at that point in time, we started to adjust our hiring plans. So we're still hiring, but just not as many as what we thought in our original 2022 operating plan. And when we have attrition, we actually go back and just double click and say, we sure we want to backfill. Is this a priority area. So this is also the sense of kind of stack ranking now across all the different functions. We're still fully funding all those areas I mentioned. Those are untouched. But by definition, we're not fully funding all the other things I did mention. So we're able to do that. And because we started on this, I think, very early in the year, we're not going to wake up in the middle of Q4 saying oh, we should, of course, correct. And we've already course corrected.

Helpful. Thank you for the color. I'm going through my list here. We talked about -- yes, so as we've talked about a number of different things. I'm going to ask you a big-picture question. Fast forward 5 years from now, what will Informatica look like as a business compared to today?

Yes, it's going to be really, really exciting. I think about our overall journey, which 5 years from now is kind of an interesting place to end up. There's kind of a 3-phase transition. So we've gone through Phase 1, which is to go from pure perpetual license to subscription. That was initially led with on-premise products, kind of perishable products, relicensed, repackaged is on-premise subscription, your term licenses. We've built the IDMC platform. That's done. We're just approaching the 50-50 mix of cloud ARR inside of total sub ARR. Fast forward to 5 years, we're like 80%, 90% cloud. I don't know if it's 90% because we have so much on-prem, significant majority of cloud ARR and our overall sub AR mix with like all the benefits and attributes of natural expansion in cloud. So we're way past the 1 billion in cloud at that point. Predominant mix of sub -- inside of sub being denominated in cloud. IPU is probably representing 50%, 75% of the Cloud ARR at that point in time and a really good motion established. I talked about the data loader, why is that important for us? That's our entree into SMB. It's a product-led premium approach into that market that we've never touched. We're an enterprise company, 250,000 average sub ARR. We're talking about penetrating efficiently 25,000 to 50,000 ASPs with a product-led data loader. So play that over 5 years, that will translate to significant expansion of overall logos.

Awesome. I think we've got a couple of more -- a couple minutes left. I'll ask you one final question. What is it that you think is most misunderstood by investors about Informatica today?

I think that people look at a couple of traditional top line metrics like overall GAAP revenue growth. And rough and tough, it's 10%. It's like, it's not that exciting compared to some other companies. And you have to double-click one more layer to say, "Well, there's $535 million of ultra-high-margin maintenance that's incredibly sticky, that's basically dragging that growth rate down." That maintenance base grows by minus 5%, and it's 1/3 of the mix. And so you have to take the time to separate that out and form a view of like what's that worth? Can it migrate? Is it sticky? We know it's very, very sticky. We're going to migrate a big portion of it over time. And then you have to then look at that $1 billion or so in sub ARR. So when you look at that growing 31% to your point, that's when it starts to become more interesting. You peel the onion, and go one more layer and your license cloud going to 42, that's driving sub. So therefore, self-managed is kind of like, by definition, about 20% growth rate. So you realize that cloud is the growth engine inside of a $1 billion business. And it's just a question of time in mix, as I noted before, cloud ARR becomes the vast majority of overall sub ARR. So you have to click through like 3 levels and then kind of extrapolate a little to kind of compound that. So more people are starting to kind of drill into that. We're very consistent in how we describe the business. And one of the things we do, you can look at our reported numbers and metrics, we have an abundance of metrics. So you can see exactly what's going on. There's total ARR maintenance ARR, sub ARR, cloud ARR. So you can see exactly what's happening in terms of mix and differentiated growth rates per my description there.

Awesome. Well, Eric, with that, we're out of time. Thank you so much. This was great.

Great. Thanks, Brad.