In the second-quarter earnings released last week, revenues increased by 26% to $80.8 million. There was no growth in net income, which was $7.6 million, or $0.09 per share. Then again, the net income included expenses for stock options. Accounting for this, the company posted profits of $12.9 million, or $0.14 per share. Wall Street had expected profits of $0.12, so investors were impressed, sending the stock price up 9%.
In the past 10 years, Informatica has built software products that can manage a myriad of operating systems, databases, middleware, and other corporate applications. To replicate this - and test its effectiveness - would easily take a competitor several years. In other words, the company's software is a key competitive advantage.
What's more, this software is becoming increasingly important to customers. Suppose a company wants to implement SAP's
Informatica's sales pipeline is impressively robust, with 62 new customers in the second quarter, for a total of 2,612 clients. There were also 165 repeat customers, including big names like Duke Energy
Management has also been aggressive in striking partnerships to help juice up sales. Its relationship with SAP has been particularly successful, while its most recent partnership is a global agreement with Hyperion Solutions
If Informatica has any competition, it comes from individual companies that try to "hand-code" their own solutions. However, as technologies get more complex, and the Internet continues to grow, this approach becomes increasingly risky and inefficient. All this bodes well for Informatica. Given the depth of its software and its aggressive channel marketing, the company is poised for long-term growth.
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Fool contributor Tom Taulli does not own shares mentioned in this article.