Earnings Preview: Informatica

Informatica (INFA) is expected to report Q2 earnings Thursday, July 17, before  after market close, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 16c for EPS and $109.91M for revenue, according to First Call.

Analyst Views

Informatica shares are lower Wednesday, after Piper Jaffray's Mark Murphy cut his rating on the stock to Neutral from Buy, based on his view that some large domestic deals slipped out of Q2. Murphy does not expect a Q2 earnings miss, and said Informatica should hit its guidance range of $108M to $111M in revenue and pro forma profits of 14c to 16c. But Murphy also said there is "a reasonable chance" some metrics, including license bookings, ASPs and deal volume, "could show some modest signs of strain" when you back out its recent acquisition of Identity Systems. Murphy thinks Q3 guidance could be short of the consensus of $113M and 17c.

Roth Capital, in a recent note, said that an ongoing issue for Informatica is big-deal dependence; the compares are tough with 8 seven-figure deals in Q2 2007 and 5 in Q3 2007. While the recent history has been for Informatica to beat and raise guidance by a little; Roth Cap doesn't think that such a scenario would boost the stock much, and the firm is hard pressed to think that Informatica would guide any more aggressively than that given the macro environment. Thus, Roth Capital recommended to clients to remain on the sidelines.

Key issues for the conference call: Forward guidance; guidance on deal flow and size; an update on the integration of the Identity Systems acquisition; thoughts on the macro environment and its effect on Informatica; an update on the announced increase of $75M in the company's share repurchase plan back in April; and commentary on competition from existing focused vendors and the prospect of stronger future competition from the other leading database vendors.