Apple did it and Microsoft is in the midst doing it but successful second acts in the lives of American technology enterprises are rare. Tech companies that rise to prominence tend to rely on one major success and subsequent minor hits or diminishing returns. Against this familiar setup, enter Informatica, a company enjoying a remarkable renaissance that goes against the usual tech-sector lifecycle trajectory.
Informatica made its name in ETL (extract, transform, load), the tripartite process of taking polyglot data types and wrangling them into a unified data store. But in 2015 it took its business away from the public markets and went away to do its own internal transformation. Informatica left the markets as a traditional software company and came back to them, having traded NASDAQ for the New York Stock Exchange, in 2021 as a cloud-focused, more modern-looking organisation.
“We asked ourselves ‘if we were a startup walking into this, what would we do?’” recalls Amit Walia, CEO since January 2020. Walia describes the “1.0” version of the company as a “single product, on-prem company specialising in ETL” and the “2.0” upgrade capitalising on “a significant opportunity in the data space with a multi-product, cloud-first approach, AI platform leadership and a 100% subscription model with over $1bn [in annual subs-based revenues].” Today, he says, “data integration just one of the seven things we do” alongside data cataloguing, master data management, data analytics, data governance, data quality and data marketplaces.
A pause for breath
The break from NASDAQ gave Informatica the space to “reinvent and grow”, Walia says, having been acquired by private-equity company Permira, an outfit with one of the most progressive reputations in a PE sector that was once seen as a shark pool but is increasingly becoming a nurturing zone that helps companies to go again. “PE has many shapes,” Walia says. “Some could have been cost-cutting but I said ‘if that happens, I’m out’. Permira is very growth-oriented.”
After being founded in 1993 and having soared to its first IPO in 1999, Walia says the Silicon Valley company was in need of a reboot.
“We were proud of the product but it was built for the old architecture,” he says. The answer lay in a radical reworking of the company so that today its roots in data integration account for only 25% of business. The formula was “no repackaging, no reformatting, no putting a new front-end on that old stuff”. Instead it would be based on one common architecture, a single consumption model, a unified back-end and, “as far as possible, one front-end so moving between products is like going from living room to a bedroom in a house”.
Fresh fields
Deep partnerships with cloud hyperscalers and the likes of Databricks and Snowflake were tapped and a five-year, $1bn software engineering programme created to build “a 100% Agile, microservices-based, cloud-native” new suite.
The consensus of wisdom is that such an effort is very hard to pull off outside of startups and scale-ups that can whip up an almost-religious fervour and offer rich rewards for success. But Walia says the company did it by tapping global development centres across north America, Europe and India. What certainly helped, however, was being away from the glare of the market spotlight to focus on innovation and growth rather than quarterly results. Life as a public company, Walia suggests, can be “sometimes demoralising for employees and taking that noise away can be helpful to becoming growth-oriented.”
The result he says is a company that is in the fabled “top right-hand corner” of Gartner Magic Quadrants and has a similar renewal rate to its old guise. The NYSE has reacted in a mixed way, cheering Informatica’s return to a spike of $40 per share but at time of writing the price is little over half that figure, still giving it a healthy market cap of over $6.2bn. Walia is sanguine, repeating the CEO’s mantra that if his company executes and is consistent, returns will come. “In soccer terms, we’re barely into the first quarter of the game,” he says.
A former McKinsey man, I suggest that his consulting background must have helped to correct the course for Informatica.
“Not really,” he says. “I’m an engineer and had a great set of clients, went to the tech industry and built products so I’m a pretty customer-centric product guy and a bit more big-picture as well as going into the technology weeds. So I knew we needed to build a new operations model, leverage cloud, leverage AI and help the intelligent data enterprise use that intelligence to predict things.”
Although focused clearly on cloud data management, he recognises that IT platforms will remain hybrid and multi-cloud for years to come. Informatica will need to still work with the old world, but he notes that the current ratio of $2 in cloud subscriptions for every $1 is a healthy ratio.
Walia’s Informatica is a fascinating example of companies that take a holiday from the markets and go again. Many others are doing, or trying to do the same: perhaps more technology companies will gain new leases of life – or second lives – as a result.
