Informatica Inc. (NYSE:INFA) Q4 2023 Earnings Call Transcript
Informatica Inc. (NYSE:INFA) Q4 2023 Earnings Call Transcript February 14, 2024
Informatica Inc. beats earnings expectations. Reported EPS is $0.32, expectations were $0.29. Informatica Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good afternoon, ladies and gentlemen. Thank you for joining today's Informatica Fourth Quarter 2023 Earnings Conference Call. My name is Tia, and I will be your moderator for today's call. [Operator Instructions] It is now my pleasure to introduce your host, Victoria Hyde-Dunn, Vice President of Investor Relations. Please proceed.
Victoria Hyde-Dunn: Thank you. Good afternoon and thank you for joining Informatica's Fourth Quarter and Full Year 2023 Earnings Conference Call. Joining me today are Amit Walia, Chief Executive Officer and Mike McLaughlin, Chief Financial Officer. Before we begin, we have a couple of reminders. Our earnings press release and slide presentation are available on our Investor Relations website at investors.informatica.com. Our prepared remarks will be posted on the IR website after the conference call concludes. During the call, we'll be making comments of a forward-looking nature. Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties. For more information about some of these risks, please review the company's SEC filings, including the section titled Risk Factors included in our most recent 10-Q and 10-K filings for the full year 2023.
These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements, except as required by law. Additionally, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of these items to the nearest U.S. GAAP measure can be found in this afternoon's press release and on our slide presentation available on Informatica's Investor Relations website. It is my pleasure to turn the call over to Amit.
Amit Walia: Well, thank you, Victoria, and thank you, everyone, for joining us today. I will start today's call by summarizing 3 key points. First, Informatica closed an outstanding fiscal 2023, outperforming all the top and bottom line guidance metrics for the fourth quarter and the full year. This was driven by a relentless focus on executing our cloud-only consumption-driven strategy, and strong customer momentum. These results are a testament to the power of AI-powered IDMC platform and category leadership in data management as a mission-critical component of the modern data stack. Second, at our December Investor Day, we shared Informatica's innovation journey to deliver the best data management product on the industry's only AI-powered data management platform in a multi-vendor, multi-cloud, hybrid approach.
Last year, we executed very strongly against that strategy, and I believe we are entering Informatica most exciting year ahead. And third, our cloud-only consumption-driven strategy has multiple growth engines. Ongoing digital transformation, on-premise migration to Cloud and Gen-AI to fuel cloud growth and drive long-term value creation. Now let's discuss these topics in more detail. Turning to results. We exceeded the high end of all our guidance metrics. In the fourth quarter, Cloud subscription ARR grew 37% year-over-year to $617 million. Subscription ARR increased 14% year-over-year to $1.1 billion and total ARR rose 7% year-over-year to $1.6 billion. For the full year, total revenue grew 6% year-over-year to $1.6 billion. Non-GAAP operating income increased 32% year-over-year to $462 million and adjusted unlevered free cash flow after tax rose 56% year-over-year to $451 million.
We are pleased to have delivered a net debt leverage ratio of less than 2x, which is ahead of our IPO commitment by one full year. We also achieved 2 new annual milestones. We grew subscription revenues to $1 billion and cloud subscription revenue to $0.5 billion. At our December Investor Day, we shared early thoughts on 2024 guidance. We are raising full year non-GAAP operating income margin expectations and reaffirming all remaining metrics including that we should expect cloud subscription ARR growth of 35% for the full year of 2024. Our level of engagement with enterprise customers is stronger than ever. Supported by our growing partner ecosystem, customer success initiatives and healthy cloud pipeline. In the full year, approximately 75% of cloud new bookings came from new cloud workloads and the expansion of existing cloud engagements.
We are attracting new customers, expanding opportunities within existing customers and driving new workloads in G2K markets through our industry sales, enablement teams and partners. Customer spending more than $1 million in subscription ARR increased 17% year-over-year to 240 customers. We had a record number of customers spending more than $5 million in subscription ARR, which grew 57% year-over-year. We pride ourselves on being the Switzerland of data and have accelerated ecosystem co-selling with Microsoft Azure, AWS, GCP, Snowflake and Databricks and announced a new strategic partnership with MongoDB. We launched a Canada point of delivery on Microsoft Azure which enables access to IDMC as an Azure-native service purchase through Azure Marketplace.
At Microsoft Ignite, as one of the first ISV design partners for Microsoft Fabric, we announced a new native app for Microsoft Fabric to seamlessly deliver data quality, data observability and data integration as well as multiple new connectors for Microsoft Fabric. At AWS re:Invent, we announced certification of our AWS HealthLake integrations, including HealthCare and Life Sciences specific data, connectivity and format support as well as master data management accelerators for provider and payer. We are a launch partner for Amazon S3 Access Grants, delivering scalable permission management for S3 Data Lakes for a cloud data marketplace and data access management capabilities, leveraging our recent Privitar acquisition. With both Microsoft and AWS, we showcased Gen AI solutions at Microsoft Azure open AI and Amazon Bedrock, demonstrating how a trusted data foundation with IDMC enables customers to deliver enterprise-grade Gen AI conversational apps.
With Snowflake, we announced the general availability of SuperPipe for Snowflake integrating complex ERP and CRM data to 3.5x faster than previous approaches and a public preview of our first Snowflake native app, the enterprise data integrator, enabling users to use SuperPipe seamlessly from within the Snowflake product experience. With Databricks, we enhanced Databricks verified unity catalog support for our cloud data integration and cloud data integration free services. Lastly, we formed a new strategic partnership with MongoDB to deliver modern cloud-native trusted data-driven apps across financial services, insurance and healthcare verticals. This partnership combines the benefits of MongoDB Atlas with our MDM SaaS solution. GSIs continue to expand their data and AI practices by enabling the practitioners at scale on IMDC.
They also showed strong interest in taking solutions to market with IMDC. Lastly, Deloitte announced that they have partnered with Informatica and Workiva to launch a simplified ESG compliance offering by combining Informatica's AI-powered IDMC, Workiva's cloud-based regulatory reporting offering and Deloitte's technology, operational and domain experience. [Sourced wins] [ph] where partners bring Informatica into new opportunities increased to 31% of new business in 2023 as more partners doubled down and build their data and AI practices on Informatica translating into more mind share and partners recommending Informatica more often. Our Partner Migration Factory Program continues to perform strongly to continue to accelerate our modernization strategy.
We now have over 50 partners, including 8 of our GSIs certified as part of our program and strong interest in Power Center Cloud Edition. We also launched an MDM Modernization Program and began treating the first partners during the quarter. In Q4, we added many new product innovations to IDMC. I'll just try to summarize a few otherwise we'll run out of time. In Market Data Management and 360 Apps, we enhanced intelligent data matching capabilities to deliver better match outcomes and expanded our trust framework, very important for enterprise customers and released a new connector for high-volume data extraction. MDM extension for SAP enables customers to migrate to the cloud by creating a reliable version of supplier data, reducing risk and accelerating the move to SAP S/4HANA.
Lastly, we added a location master extension that helps optimize the supply chain and engage more effectively with customers. Cloud data governance and catalog now supports easy use of custom workflows and UI customization. We also introduced a new web browser extension called QuickLook for sharing information and providing data intelligence insights. Our advanced scanner connectivity now includes Oracle, [ClickCloud] [ph] and TIBCO Spotfire with increased depth of Microsoft Power BI scanning and understanding of data workflows. In Gen AI, the CLAIRE Metadata Foundation enables collecting and preparing high-quality Metadata from each organization. Let me remind, IDMC is the metadata system of record for enterprises. We added auto cataloging, making it seamless for an organization's data management metadata to be auto catalog in the central metadata inventory.
This will help CLAIRE GPT and Copilot to work from a very rich base of prepared metadata, enabling data teams and business users to work with data more effectively. CLAIRE Copilot now has masking recommendations for auto classified sensitive columns and CLAIRE-based auto mapping recommendations for no code users in INFACore. These updates help gather high-quality metadata for AI. Streamline the process of protecting sensitive data and create complex data pipelines. And lastly, and I know you are, I'm just hear about Privitar, we are on track to integrate Privitar's data access management capabilities into IDMC, including using IPOs to consume Privitar's capabilities. We're excited about these capabilities and look forward to broad availability later this month.
Now that innovation always translates into great customer stories. So let me share a few. An outstanding new customer is Royal Caribbean Group, a leader in the vacation cruise line industry offering cruises throughout the world. As a part of system-wide modernization effort, they're investing in new financial, loyalty and reservation systems, which requires a modern master data management solution to ensure success. We have selected our MDM SaaS to support the modern MDM strategy to support superior guest experiences and customer loyalty with the power of high-quality data. Pella Corporation is a window and door manufacturing company with operations across the United States and select regions of Canada. In partnership with Microsoft, Pella selected our MDM SaaS and cloud data quality to manage and ensure the quality of their products, customer and supplier data to optimize their supply chain and inventory operations across the enterprise.
enGen is a leading global health tech company that offers a full suite of products and services across the entire health care value chain. They chose to partner with us with our MDM and broader IDMC solutions to centralize their customer and provide master data, which will drive more administrative efficiencies and better health outcomes through care delivery and customer care. Now a great customer expansion story is in Australia, The University of Sydney, Australia's oldest university and home to approximately 75,000 students. The University has been a long-standing Informatica's power center and MDM customer for over 2 years and have successfully undergone cloud migration projects for both areas. Their recent purchases for cloud master data management, data governance, data integration and data quality solutions reflect a platform expansion across the enterprise to further enable data sharing, enhance the university's experience for their students and faculty and prepare their data foundation to effectively leverage AI.
We are leaders in our core markets and our commitment to product differentiation and innovation continues to earn us formal recognition from industry analysts. Informatica is a leader in the 2023 Gartner Magic Quadrant for Data Integration Tools Support. This marks the 18th consecutive time, we have been positioned highest on the ability to execute access, and furthest on the completeness of vision access. We also received a strong rating in the product service and technology methodology categories for the 2023 Gartner vendor rating report, being the only data management provider that Gartner covers in that report. In research published by Forrester, Informatica received a leader rating in the inaugural Forrester Wave Cloud Data Pipeline's Q4 2023 report and a leader rating in the Forrester Wave Product Information management Q4 2023 report.
This happens by building great products that help customers solve real mission-critical business problems, creating value for them. Now during Investor Day in December, we presented 3 reasons illustrating how we at Informatica are their data management choice for enterprises. As a reminder, we firstly build the best data management products period. Second, we have the only AI-powered data management platform in the market called IDMC, which is powered by RPI CLAIRE. And third, we support extremely difficult mission-critical workloads that are multivendor, multicloud and hybrid through on IDMC platform. Last year, we executed very strongly against our cloud-only strategy, and I believe we are entering Informatica's most exciting year ahead. Our unwavering focus is to deliver profitable, accelerated growth while executing a cloud-only consumption-driven go-to-market strategy and enhancing our AI-powered IDMC platform capabilities.
That platform, IDMC processed 86 trillion mission-critical cloud transactions in December, growing a whopping 62% year-over-year. We have a unique and differentiated AI-powered platform, helping enterprises automation, data intelligence and increased efficiency to drive more workloads and many, many use cases. As I look ahead to 2024, we will fuel cloud growth in 3 ways. The first is through ongoing digital transformation. We have not done that yet across the globe within enterprises. Generative AI, hyperautomation, direct democratization, building and deploying modern digital apps cloud databases and analytics are some of the fundamental technology initiatives driving innovation, efficiency and success in this digital era. There is a tremendous amount of work still to be done to help customers become innovative digital companies including vendor consolidation.
Enterprises need to move away from bespoke tactical tools and adapted end-to-end data management platform that treats data strategically to drive digital transformation. Second, we are unique to have $1 billion of on-prem maintenance and self-managed ARR Migrating customers to the cloud is a very important priority. Approximately 25% of Cloud new bookings in full year 2023 came from migrations. In the full year, we closed over 110 Cloud Monetization deals, which grew 35% year-over-year. Now as a reminder, we introduced Power Center Cloud addition in August of last year to significantly lower the time to modernize from on-prem power center to IDMC. In Q4, Power Center Cloud addition was 60% plus of our modernization deals. And lastly, in very early stages is Gen AI, which is opening access to new customer opportunities.
There is no Gen AI without data. And for data to have value, it needs core data management such as holistic data, clean data, govern data, accessible data, guess what, all of that is data management, driven by IDMC. And CLAIRE, our AI engine is embedded in all our solutions leveraging ML algorithms and NLP metadata to drive intelligence and productivity, leveraging and accessing our 50,000-plus metadata were connections and now leveraging 40 terabytes of active metadata in the Cloud. CLAIRE Copilot is live today. CLAIRE GPT is in private preview with 300-plus customers already signed up, and we plan to expand the preview to select partners by the end of this month. Today, private preview customers use CLAIRE GPT for data discovery, metadata exploration cases, finding the right data sets for analytics and AI.
We are making significant progress towards an expected launch in the second quarter. In summary, our strong results demonstrate that Informatica with our AI-powered IDMC platform and category leadership in data management is a mission-critical component of the modern data stack. We are firing on all cylinders in a $62 billion plus cloud market opportunity. Informatica has been the best data management products on the industry's only AI-powered data management platform, IDMC, powered by AI CLAIRE, solving complex mission-critical workloads that are multi-cloud, multi-vendor and hybrid while delivering significant value to our customers. It's also a special time for the company. As we celebrate our 30 years of heritage, driven by innovation and customer centricity.
I'm incredibly proud of our accomplishments and very excited about the opportunities ahead on our cloud-only consumption-driven journey. Informatica is a very special company. I completed 10 years last year myself. We have innovators, customer-centric, and we stay true to our values that are data. We look forward to sharing more product innovation at Informatica World in May and invite you to join us over there. Thank you to all our employees across the globe, our customers across the globe and our partners across the globe for making it a remarkable year. With that, let me hand the call over to Mike. Mike, please take it away.
Mike McLaughlin: Thank you, Amit, and good afternoon, everyone. Q4 was another solid financial quarter across the board with key growth and profitability metrics exceeding our expectations, delivering a strong close to 2023. I'll begin the review of our Q4 results by reminding everyone how to best understand Informatica's ARR and GAAP revenues. Our ARR and revenue fall into 3 major categories; cloud subscriptions, which delivered 37% ARR growth in FY '23 and self-managed subscriptions, which we no longer actively sell and are therefore gradually declining and maintenance on on-premise perpetual licenses, which is also in gradual decline. As I discussed at our December Investor Day, the trajectories of these 3 categories of ARR and revenue, that is the strong growth of our cloud business and the gradual decline of our self-managed subscriptions and maintenance are the direct result of our cloud-only strategy, and we expect more of the same in FY '24 and beyond.
With that in mind, let's start with total ARR, which was $1.63 billion in Q4, an increase of 7% over the prior year. This was driven primarily by new cloud workloads, strong net expansion with existing customers and steady renewal rates. We added $109 million in net new total ARR versus the prior year. Foreign exchange negatively impacted total ARR by $7 million on a year-over-year basis. Cloud subscription ARR at the end of Q4 was $617 million, a 37% increase year-over-year and $8 million above the midpoint of our November guidance. Cloud subscription ARR now represents 38% of our total ARR, up from 30% a year ago. Foreign exchange negatively impacted cloud subscription ARR by approximately $2.3 million on a year-over-year basis. New cloud workloads, strong net expansion with existing customers and steady cloud renewal rates drove cloud subscription net new ARR of $166 million year-over-year and $67 million quarter-over-quarter.
Approximately 75% of fiscal 2023's cloud net new ARR came from new cloud workloads and expansion of existing cloud engagements with the remaining 25% coming from on-premise customer migrations. Our cloud subscription net retention rate at the end user level was 119% in the fourth quarter, up 2 percentage points year-over-year and up 1 percentage point versus last quarter. As we discussed at our December Investor Day, this metric defines the customer cohort for NRR at the beginning of the year ago period at the end user customer level. If we instead define the measurement cohort at the global parent level, our Q4 NRR was 125%, up 2 percentage points year-over-year and 1% sequentially. Self-managed subscription ARR declined in the quarter as expected to $516 million, this was down 2% sequentially and down 5% year-over-year.
This was a slightly slower decline than we forecast in November. Subscription ARR, which is simply the sum of cloud ARR and self-managed ARR grew by 14% year-over-year to $1.13 billion, which was $25 million above the midpoint of our November guidance. Foreign exchange negatively impacted subscription ARR by approximately $5.6 million on a year-over-year basis. We saw good growth in our average subscription ARR per customer, which reached over $298,000 in Q4, a 13% increase year-over-year. The third component of total ARR is maintenance for on-premise perpetual licenses sold in the past, which now represents about 30% of total ARR. Maintenance ARR was down approximately 6% year-over-year to $494 million, in line with expectations. As Amit discussed, the migration of our on-premise customer base to IDMC and the cloud is a large opportunity for us.
The introduction of Power Center Cloud Edition in Q3 of last year has helped accelerate the volume of signed migrations of our power center maintenance space. We're also seeing momentum from our self-managed base migrating to our cloud, and our on-premise MDM customers are beginning to migrate their on-prem solutions. So as a result, we are updating our migration reporting metric to include our entire on-prem base, not just maintenance. As of the end of Q4, we have migrated 4.8% of our maintenance and self-managed ARR base to cloud, up from 3.7% last quarter. We have a life-to-date average 2:1 ARR uplift ratio on these migrations, including Power Center and MDM including only maintenance migration, as we have historically reported, our migrated base in Q4 was 6.5%, up from 5% last quarter.
These 3 ARR components summed to 7.2% total ARR growth year-over-year. Cloud subscription ARR growth of 37% drove this increase, offset by gradual declines in self-managed subscription and maintenance ARR. We expect similar trends to continue in 2024 as a direct and intentional result of our cloud-only consumption-driven strategy. Now I'd like to review our revenue results for the fourth quarter. GAAP total revenues were $445 million, an increase of 12% year-over-year. This exceeded the midpoint of our November guidance range by $15 million, due primarily to a slower-than-expected decline in self-managed revenue. Revenue from our Privitar acquisition was not material in the quarter. Foreign exchange positively impacted total revenues by approximately $2.6 million on a year-over-year basis.
As we have previously discussed, the accounting impact of our mix shift to cloud subscription sales and away from self-managed on-premises sales creates a headwind to GAAP revenues. If our cloud versus self-managed new bookings mix were the same this quarter as it was in Q4 of last year, total revenues would have been approximately $28 million higher than we reported. For the full year, revenue would have been $72 million higher. Subscription revenue increased 26% year-over-year to $300 million, representing 67% of total revenue compared to 60% a year ago. Our quarterly subscription renewal rate was approximately 89%, down 3.7 percentage points year-over-year due to lower self-managed subscription renewal rates, offset by higher Cloud Subscription renewal rates.
For the full year, our subscription renewal rate was 92%. Maintenance and professional services revenues were $143 million, representing 32% of total revenue in Q4, in line with expectations. Maintenance revenue represented 27% of total revenue for the quarter. Our maintenance renewal rate in the quarter was 95%, in line with prior periods. Implementation, consulting and education revenues comprised the remainder of this category, down $7 million year-over-year, consistent with last quarter. And I have one additional call out to revenue. Starting this quarter, we will be disclosing GAAP revenue from cloud subscriptions in our quarterly reports. In Q4, cloud subscription revenue was $140 million or 47% of Subscription revenues, growing 39% year-over-year.
For the full year, cloud subscription revenue was $500 million, also growing 39% year-over-year. As a reminder, due to the timing differences between revenue and ARR recognition, the relative growth rates of these 2 metrics will differ from period to period. Turning to the geographic distribution of our business. U.S. revenue grew 7% year-over-year to $279 million, representing 63% of total revenue, while international revenue grew 21% to $166 million. Using exchange rates from Q4 last year, international revenue would have been approximately $7 million lower in the quarter, representing international revenue growth of 16% year-over-year. Turning to consumption-based IPUs. Approximately 45% of fourth quarter cloud new bookings were IPU based deals.
IPUs now represent 47% of cloud subscription ARR, up 2 percentage points sequentially. The remainder of our Q4 cloud bookings were primarily for customer or supplier records for our MDM products, which is also a multiyear committed consumption-based pricing model. Now I'd like to move on to our profitability metrics. Please note that I will discuss non-GAAP results unless otherwise stated. In Q4, our gross margin was 83%, up 1 percentage point year-over-year, and operating expenses were consistent with expectations. As part of our November 2023 restructuring plan, we incurred non-recurring restructuring charges of approximately $32 million in the fourth quarter of 2023. We expect approximately $3 million to $5 million of restructuring expenses to be incurred in the first quarter of 2024, consistent with the range we provided in November.
We continue to estimate the cost savings benefited these restructuring actions in 2024 will be approximately $84 million on a GAAP basis and approximately $70 million on a non-GAAP basis. Operating income was $162 million in the fourth quarter, growing 42% year-over-year and exceeding the midpoint of our November guidance range by $22 million. Operating margin was 36.4%, an 8-percentage point improvement from a year ago. Adjusted EBITDA was $166 million and net income was $97 million. Net income per diluted share was $0.32 based on approximately $305 million outstanding diluted shares. Basic share count was approximately 293 million shares, and please note that we did not repurchase any Class A common stock as part of the $200 million share repurchase authorization we announced in November.
Fourth quarter adjusted unlevered free cash flow after tax was $155 million, $31 million better than expectations due to higher operating income performance and cash collections. Adjusted unlevered free cash flow after tax margin was 35% and grew about 12 percentage points year-over-year. Cash paid for interest in the quarter was $38 million, in line with expectations. We ended the fourth quarter with a strong cash position with cash plus short-term investments of $992 million, an increase of $276 million year-over-year. Net debt was $850 million, and the trailing 12 months of adjusted EBITDA was $479 million. This resulted in a net leverage ratio of 1.8x at the end of December. I'm pleased to share that we delivered on our IPO deleveraging commitment of less than 2x, 1 year early.
Turning now to 2024 guidance. We are reaffirming the 2024 pre-guidance we shared at our December Investor Day. We expect our cloud subscription ARR to grow by 35% year-over-year in 2024, off of a higher base than we expected in early December. We expect total ARR and GAAP total revenue growth to inflect in 2024 and grow faster than in 2023, also off of a higher base than originally forecast. And we expect to grow our non-GAAP operating income margin by 420 basis points from our FY '23 guidance margin of 27.8%, which is a 300 basis point increase from our actual full year 2023 margin of 29%. Taking all this into account, we are establishing the following guidance for the full year ending December 31, 2024. Note that all growth rates refer to the midpoint of the guidance range.
We expect GAAP total revenues to be in the range of $1.685 billion to $1.705 billion, representing approximately 6.3% year-over-year growth. We expect total ARR to be in the range of $1.718 billion to $1.772 billion, representing approximately 7.3% year-over-year growth. We expect subscription ARR to be in the range of $1.261 billion to $1.295 billion, representing approximately 12.8% year-over-year growth. We expect cloud subscription ARR to be in the range of $826 million to $840 million, representing approximately 35.1% year-over-year growth. We expect non-GAAP operating income to be in the range of $533 million to $553 million, representing approximately 17.5% year-over-year growth, and we expect unadjusted unlevered free cash flow after tax to be in the range of $535 million to $555 million, representing approximately 20.8% year-over-year growth.
Our guidance for the first quarter ending March 31, 2024, is as follows; we expect GAAP total revenues to be in the range of $375 million to $395 million, representing approximately 5.4% year-over-year growth. We expect subscription ARR to be in the range of $1.135 billion to $1.155 billion, representing approximately 12.2% year-over-year growth. We expect cloud subscription ARR to be in the range of $645 million to $655 million, representing approximately 34.5% year-over-year growth. We expect non-GAAP operating income to be in the range of $97 million to $117 million, representing approximately 26.2% year-over-year growth. Now for modeling purposes, I'd like to provide a few more pieces of additional information. First, we expect adjusted unlevered free cash flow after tax for the first quarter to be in the range of $102 million to $122 million.
We expect quarterly free cash flow linearity in FY '24 to be similar to FY '23. Second, we estimate cash paid for interest will be approximately $39 million in the first quarter and approximately $144 million for the full year, using forward interest rates based on 1-month SOFR. For tax rates, we reported a 2023 non-GAAP tax rate of 23%, and we expect that rate to continue for fiscal 2024. Looking at fiscal 2025 and beyond, we expect a long-term steady-state non-GAAP tax rate of 24%, which reflects where we expect cash taxes to eventually settle based on our structure and geographic distribution of operational activity. Cash taxes in 2024 are expected to be consistent with 2023. Lastly, our share count assumptions. For the first quarter of 2024, we expect basic weighted average shares outstanding to be approximately 297 million shares and diluted weighted average shares outstanding to be approximately 310 million shares.
For the full year of 2024, we expect basic weighted average shares outstanding to be approximately 302 million and diluted weighted average shares outstanding to be approximately 315 million. In summary, we are very pleased with our strong performance in 2023. We successfully transitioned to our Cloud-only consumption-driven strategy and solidified the foundation upon which we will deliver accelerating total growth in 2024 and beyond. Operator, you can now open the line for questions. Thank you.
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