Andy on Enterprise Software

Informatica marches on

October 20, 2007

Informatica had a very solid quarter indeed, with revenue up 22% at USD 96 million, of which USD 41 million was licence revenue (also up 22%). Maintenance is now a handy USD 38.3 million and consulting/services USD 16.7 million. These are very healthy ratios for a software company, as recurring maintenance is the best revenue of all; consulting at less than 20% of revenues means that the company is still a proper software company and not a consulting firm in disguise. Interestingly, growth in Americas was 15%, but growth outside was 36%.

The company revealed that 43% of its use cases were in the context of data warehousing, and its largest verticals were financial services, hi-tech and public sector.

Informatica is an interesting example of how a company can prosper when its main competitor (Ascential) is taken out of the market by a behemoth (IBM). Commentators often assume that being taken over by a behemoth means greater muscle, yet often the behemoth is distracted, bureaucratic and annoys the key staff of the company it has taken over. This can leave an independent competitor in an almost unchallenged position. This effect is amplified when the vendor in question is competing in a market where platform neutrality is important, as data integration and business intelligence are.

One small storm cloud in all the blue sky that Informatica is seeing is that SAP’s purchase of Business Objects will presumably have some effect on the OEM deal that SAP has with Informatica (since Business Objects own rival ETL technology from Acta). However based on the history of Ascential’s own OEM deal with SAP which preceded this one, I doubt that, even in the worst case, this would have much financial significance (my sources told me that Ascential never made much money of that deal) even if SAP dropped the deal entirely, which is by no means clear.