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Informatica Management Discusses Q2 2012 Results - Earnings Call Transcript

Stocks in this article: INFA

Sohaib Abbasi

Thank you, Stephanie. As we reported earlier this month, after 31 consecutive quarters of consistent results, we fell well short of our own expectations in Q2. This afternoon, I will outline the key reasons for the disappointing Q2 results and the aggressive steps we are taking. I will then comment on the key measures to effectively scale the organization to the next level and discuss reasons for our continued conviction in the long-term opportunity.

In EMEA, we clearly did not fully anticipate the increasing impact of the macroeconomic uncertainty on the first synch cycles of our customers. Partly due to the leadership transition in EMEA, we did not exhibit the level of rigorous multi-quarter pipeline management discipline required to adapt rapidly to the changing environment.

As a consequence to the sales, pipeline conversion rate was lower than expected in Q2. With stricter purchasing controls, deals took longer than expected as evidence that our customer value proposition remains compelling. Even though deals are taking longer, deals are getting done.

In Q2, we closed a large deal with a major European government agency after a long quarter sales cycle. Informatica products will play a critical role for this agency's imperative to provide better citizen services while reducing fraud. By centralizing information for its systems, the agency will be able to offer a more efficient payment system for work incentives.

In the U.S., our results reflected the collateral impact of the European macroeconomic uncertainty, as well as changes in our sales organization. We saw several customers begin scrutinizing their purchasing cycles, with additional steps for approvals and diligence, as well as downsizing for their recurring purchases. And we now recognize that the Q1 changes in our sales organization to increase distribution capacity for growth and customer success, including changing sales territory assignments took longer than expected and affected the quality of our business pipeline.

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