TDC - Earnings call transcript Q3 2018

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Operator

Good afternoon. My name is Kelly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradata Q3 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the prepared remarks, there will be a question-and-answer session Thank you. to call like Swearingen. to now would turn over the Gregg I go Please ahead.

Gregg Swearingen

for and our our CFO will discuss us earnings afternoon. provide cases. our joining Good Thanks Then will Officer, for guidance. offerings, call Oliver Lund, financial then our and President Chief use Operating our update call. Teradata's will XXXX product and Mark on CEO, on Culhane, be an today. results Ratzesberger, strategy, Vic quarter third customer

and other forecast that are Our statements. includes discussion information considered forward-looking today

be statements reflect a XX-Q excludes to impairments, XX-K, discussing are software these cause information, uncertainties our our expense While will stock-based factors compensation are earnings current Teradata's financial On results subject non-GAAP and number that such and asset outlook, other and to reorganization, other differ acquisition, as actual transformation-related and we special risk described which and in certain they materially. filings costs, release, capitalized call, items These in costs. of with risks described items today's SEC. could development including the

over during the of results. provided turn on Teradata result call to assumes website. or information future items these also in later earnings our conference as our at no as our page conference will release results to update replay I on GAAP non-GAAP information this reconciliation And today constant such comparisons. included other discuss be to or and will Vic. results will information free cash of other and the of Investor revise available call non-GAAP call, the new measures obligation now, currency a revenue is We concerning flow A and this whether our teradata.com. A

Victor L. Lund

exceeded quarter as this uptake. you to number of our of obviously performance guidance the Good the our our our guidance. The subscription me you for exceeded plan. well number, earnings everyone, adjust highlight afternoon, we This for was high our as XX% end When welcome call. and revenue quarter gave the third

guidance that exceeded earnings saw our range. per end of also share You our the high

being driven market focused success unique is Our our the not customer by which broadly. strategy our is on set,

the largest the world account which have in of technology in segment the spend and make analytically analytics. XXX driven They globally. the total market half over them characteristics Our is of for world unique they companies

First, they generate amount that data a large growing is of exponentially.

they have thousands consist ecosystem of data complexity. investments instances, driving large their obviously in of Second, very data which

unique going requires remain the business. Third, we finally, view isn't they're to that dealing not they perform future. to know to analytic it This about to and their appear a the has strategy outcomes. It them. and is that deliver requires who horizon solutions trust history complex a difficulty there have strategy, that answers in for with existing requires hard require their questions is work, foreseeable bright, considers encounter a They that ecosystem their the partner associated of going a risks shiny journey for object that's investment, is environment very understand delivering be environment Obviously this the And at a they and scale. to a on the ability going partner. is the they understands filled with and hope their Teradata to hybrid us. environments. scale smart They that

have. a unique, they starting are why to research base thank assessment delivering require There is are closing, in is prove improved is not Teradata body the interested And independent Gregg and our of answers to with appear giving questions supports opportunity that assessment I'd unique ours to of you, for happy with has if only. to customers performance. In to way, increasing will so, they like research and involvement delivering share they solutions. be us why that Either that and of our our been our you our it. the them customer some unique this

time you to understand delivered to that have stay who company. through to took we turn operating thank that grateful new that, strong are also to listen our We the quarter-over-quarter. a Oliver. are and teams I'd change like the With I'll unique focused it managed over in and and performance fact

Oliver Ratzesberger

Vic, we Thanks, redefining our about made we Since have everyone. good advancements and achieved. talk spoke, I'm afternoon, we in to what significant business. repositioning have excited last and

very underscore hard will We three and takeaways. have productive. Today, been key been it work at has I

set a strategy and a find new we positioning. our we new new First, brand course launched to bold

platform. do, third, the validated customers realize remains value to Teradata of answers the new a by the need. our having introduced powerful And Vantage, customers phenomenal center our as they at in commitment we they response our analytics we Second, everything from

or information actionable provide our challenged deliver Just become toughest data address XXX% customers' our has an infrastructure. differently pervasive We call defines to a solutions of XX course Teradata into anywhere absolute anytime. we business industry transformation think turn necessity. and of competitive intelligence data, world where in new real at to business any the means digital to a analytics, answers innovate all it intelligent problems. the and scale challenges about answers resulting months companies journey customers. time data our regardless the and deliver we set began we to a deliver new for across the the time. the answers rapidly volume scale leveraging relevant Teradata to world intelligence. we Pervasive This is value it, do category, We insights And ability for creating, we The devise to ability their creating at new to brand ago, the

and analytics by landscape today's Teradata and choice are of offers Earlier, on-premises rise hybrid clouds, Vic at largest today's enterprises matter our we above whether in and about technology October, business bold that determined across Armed focused world's reposition introduced was cost with leading Teradata or a a direction, we public deployed and team new their opportunities a environment. the analytic power new now work overcoming is the also our challenges businesses challenges we our industry up In named flexibility to headquarters. positioning, data. day, and Diego through people new on the as-a-service, Every and complexity, mission with answers formerly Our corporate the to leading these brand. the strategic of as live the business. against. spoke how enabling brand inadequacy to to time new leaders San Concurrent the transform deliver with amplify

analytics authentic that us of provider lead are our confident as role bold in enthusiastically our cloud new We leading embrace direction firmly to brand we the analytics, the and positions and software. hybrid

analytic technology data answers a Vantage engines so our next-generation uncover functions the new that Vantage enterprises to actionable we purposefully allows launched and by focused empowers agile scalable, the enables their anywhere, this Vantage work tool leverage Vantage, tools decision-making, they to and value platform. are or beyond integration learn analyze of and new anything, wide best our learning clouds, able all having streamlined does autonomous Vantage as also enterprise of business to Teradata and that environment access optimized to analytic their business launch, analyze with Users descriptive, With about all enterprises analytics, tools toughest to we predictive they to commodity Teradata reinvention, they remained scale of move where worry data access variety need. innovation the on-premises, are of This this third-party visualization to questions. provide platform and a and where language warehousing Vantage's or tightly the integrating deliver provides at without public or on analytics can by or in deployed time popular access that all or and prescriptive to is the and users this more, data, analytics a already and During customers all matter. drive the to they across languages best. them their also on machine know located. data as-a-service. infrastructure allowing is functions, meeting

uncovering essential organization. to the Teradata to the functions held just new for data-driven the short capabilities was flexible our to of for Vantage and digital in and these sheer return do. tool to help enterprises on that bring Vantage timely Conference, And intelligence of automation intelligence ago, Universe to we stronger reliable, increasingly learning AI and available the in customers faster business, actionable enables the we and a I answers center Only rapid, volume two as and in scale feeds become weeks across artificial our data nothing Teradata are learning Together, increases, business. data. at powerful our machine compete for intelligence mentioned investment earlier As to drives customers. scale Vantage Teradata most Customer does the positioning so we of have keeping But our Analytics world. pervasive brand and and reality that committed amazing. response everything This, cloud-based scale deliver make the machine actionable turn, and

longstanding of to increase drive of Speaking to I'd to Fortune added the the customer XXX to and new supply a efficiency it of and that and performance. replacing Teradata hospital momentum. the its focus cloud and improved increased software customer large chain like some its other share competitors wins We the company industry migrated use and A a at recent of Teradata our healthcare demonstrate environment U.S. government fleet. benefits its as expertise consumption analytics on customer leveraged and manufacturer business new outcomes. cases healthcare uptime services A amazing, U.S. improve public its Netezza of realized our

is to can support list it a tell for seeing consumption we by of I've analytics global as card Teradata challenge to consumers. are healthcare the get of in a one just as Teradata. through in A but are product inputs identity increased drive using geographies. positive is its added now customer better customer company of case One we root companies financial a causes. migrated customer consolidating Oracle its world's very increase world traction at largest all of you declare its multinational to channels the use We the and that Teradata analytics. partial that helping status we can the and quo and gone Teradata We environment the significantly digital to to environment what credit cloud. from industries public across consumption the thereby company new numerous to in real displaced technology service largest company new I modernize at banks confidently

day Our businesses power we Teradata team is of are live through people every work the how transforming that data. proving and

of work. aren't time I and mentioned would going new increased most has to like this call uses, of customer productive one this our very us. I body been our defined Thank earlier, our Teradata opportunity delivered to entire during bold forward We've And and above to significant the soon. and rewarding, energizing I public extremely our history we use and anytime team upcoming is As delivering incredible a launched is let's the over a Analyst brand, new for part in stop and turn more offers rising the strategy, Being of this thank now Mark. Day. sharing to for an look you. to transformation

Mark A. Culhane

afternoon, Thanks, Oliver, another and good everyone. achieved quarter. We solid

performance expected. our movement transactions subscription quarter as accelerated more third continued in completed by via saw to was than Our we subscription highlighted transactions QX

working, puts high of XXXX to is shift to which The the than expected us subscription to XX%. clearly of subscription-based and of our of expectations, just pace year-to-date our happening expect QX, even now is expected or be XX% strategy internal Our In subscription our transition ago. exceed our the faster XX%. bookings full-year XX mix and bookings subscription to component slightly to at above previously range were we XX% at for end continues days our the based,

our subscription reported end slightly We X% in to range. Given in exceeded more guidance the revenue last to of revenue transaction being switch million, our constant and as quarter year transaction, a guidance had the we a of flat below a perpetual perpetual our was $XXX in transaction this the resulted range. reported our high based, we Had expected closed with as which transactions have day would shifted currency. than large QX prior expected, subscription on increase

in in upside our significant where went subscription QX expectation. resulting revenue Just transaction perpetual as a we experienced based forecasted to

This from a favor quarter, a deciding transaction. the we the purchase customer we Teradata experienced over perpetual to last will with switch day purchase, on of which the quarter subscription to perpetual of a always opposite, the

X% which includes it As significant it revenue forward. and upgrade QX, subscription as ARR currency. license based benefit related long will run benefits in the going a maintenance rights add or revenue from constant ultimately and was and perpetual increase X% in recurring in $XXX future year-over-year Recurring million of us revenue transaction

earnings QX low-single based QX coupled we FX is revenue transactions FX to contributing in was additional our revenue in That the with subscription incurred loaded resulted the QX net of not a license and digits. which impacting during flat approximately with bookings headwind call, mentioned software recurring growth, XX%. we in QX revenue, headwinds which significant during Perpetual resulted QX back-end decrease X.X% XXXX. significantly from recurring million, impact As year-over-year on quarter traditional foreign revenue of $XX currency revenue ARR and on-premise perpetual in hardware of quarter,

was million We the expect from that now hardware is up are more transactions. $XXX shifts X% of decline a but will And decreased subscription our mix QX XXXX. related. perpetual front, continue subscription-based to QX purchasing their on hardware revenue as consulting software which year-over-year some perpetual in revenue customers basis, Since our purchased towards most majority revenue bookings

our As focusing Teradata's group on our have lead a shifted to Correspondingly, consumption that XXX the XXX. we we on are top consulting the to top of software focus opportunities. within strategy reminder, increased engagements analytical

result, a decline expect As on XXX, lower-value, to our consulting we as we services. our focus margin-related overall lower non-top reduce revenue

higher-margin to of billion. consulting results currency ARR $XX the higher-value margins as more XXX% after inclusion focus on ARR, total prior QX, to ARR which and total growth we $X.XX negative currency negative for of we consulting. improve year-over-year. was million at in QX business Within expect However, impacts, our $XX ARR end than of subscription-based increased impact, million, more

ARR subscription-related ARR to while related subscription, mix from to bookings shift upgrade declining our our is we our business to more see perpetual maintenance prior and as growing As rights customers to shift continues subscription.

Our of from approximately from billion, XX% an X% XX, yearend and increase XX% backlog end XXXX. $X.X was increase from increase June of XXXX the XXXX, QX

than margin basis, my QX $X.XX Teradata's please in items was excludes overall higher otherwise as EPS our on guidance highlight items I Before of release. comments and both which was stated third QX results note other and quarter results, today special $X.XX on which stock-based driven higher $X.XX to compensation identified higher reflect continued the in operating in unless non-GAAP continue and our such gross than operational our a earnings in reported performance. by operating resulted range focus upside spending, The in our EPS to $X.XX XXXX. expense expense

was XX.X% XXXX. XX.X% margin. in of our Gross margin gross recurring Turning to revenue QX versus

based prior current revenue year. As recurring expected, the mix perpetual of versus maintenance our the revenue subscription includes than more revenue

hardware revenue compared prior software was to predominantly year the revenue The a over XXs We as of fourth Gross recurring lower investments. margin margin prior subscription and expect the of to due our QX our in was mix year related be XX% being efficiencies approximately margin XX.X% to year. we revenue the in XXXX. the perpetual XX.X% of quarter as as portion longer term compared current XXXX year of related to improve for higher versus to our gain and but the leverage low in

forecast the consulting mid-XXs to we to gross perpetual our be range transactions, year. range and compared QX full low expectations in and the Given for expect be in revenue margins QX And revenue X.X% perpetual X.X% in to to XXXX. current of margin for our XXs improved QX

seasonal We margins due continue the making in to continue expect and operational to on this improve the focus of to business. we trend QX significantly profitability as our improvements

XX.X% approximately full better forward be versus and going was third to of XXXX. our our in continue continue XX.X% company. gross consulting year align to the third the improve to the expect Overall of to XX% we quarter in business margins We to quarter for strategy consulting the the margin as

year. the in XXs be to to approximately QX We and for range full be XX% expect margins low gross

Turning $XXX third million selling, to expenses general $X million decreasing administrative operating in of were or X% QX, from and the expenses, quarter XXXX.

sales We expense versus Analytics million the increase $XX Research Customer in commissions the our the fourth to Teradata $XX rebranding as expense higher increased well was in Conference. expect due quarter annual third development activities marketing million quarter to XXXX. and company SG&A related our as and of to seasonally our of

Operating We the the was X.X% to QX for XXXX. slightly in expect QX be XX.X% level. R&D quarter expense QX margin than lower in versus

from expect term longer the was rate improve for quarter QX largely on margin XX.X% the slightly operational tax tax We focus to continue to XXXX U.S. rate the in of XX.X% QX lower and our in QX operating to we spend. Teradata's improve as third than XXXX expected as non-GAAP due reform.

in XX% expect and expect the rate We our continue to approximately quarter fourth be high-teens. rate tax tax year to a full

Turning cash million were from flow, expected, in transactions compared XXXX. QX, our million capital $X improvements XXXX. The expenditures of $XX quarter XXXX cash used moving activities increase primarily of QX was mix to in in net Capital an to used subscription. increased the to of operating Diego to driven in San headquarters as QX million third $XX in was, the million in increase CapEx and by $XX

a flow of our third expect cash flow million the we As perpetual cash was the quarter $XXX Based and result, was range. we expected. negative $XX view QX, which what continue free subscription roughly in transaction current $XXX in free to full-year on to million million for

XX, of million. $XXX As cash September was XXXX

$XXX stock shares. $XX for third of bought $XXX approximately remaining approximately the we X.X million shares end During leaving bought of million Through the million the quarter. of the the X.X quarter, repurchase million Teradata authorization we quarter, third million end of at third us or share with

in to billion range versus we quarters billion subscription point versus guidance, business $X.XX range, million based on the on to be in almost $XX fluid. very expected to headwind QX Turning QX million translates current continue lower This Currently, XX two $X.XX and X%. is for perpetual and by shifting to QX going despite in experienced well predicated the revenue our additional forecasted days an million, than million the transactions increase XXXX as is total we past as the of revenue to year to subscription year ago. be $XXX as of to QX revenue percentage currency approximately prior perpetual have can to which $XXX our outlook faster expectations $XX full in the revenue consulting expect which

$X.XX $X.XX year, weighted This the million. for on be weighted the outstanding is QX. quarter, XXX full expected shares outstanding average million approximately XXX of in of to expect for is And EPS $X.XX fourth shares terms on average to in based full-year we In to the EPS range, based $X.XX.

to our like with for metrics. I'd an Now, you following provide key expectations update on full-year the

terms In ARR. adjustment of activity we XX% in approximately growth ARR, in QX. to mind, $X.X billion due after of currency is on headwind, of X.X% Keep of this currency impact for base over accelerating a in expect XXXX

guidance recurring expect We as high XX%, we of our expect X%, increase range bookings previous reported, And be in revenue to higher. and at of constant slightly currency. approximately XX% subscription the new to mix if not to end

to This operator, clearly high, financial it's strategy and platform buy company the Analytics wanted close, our attended is As and our And to are our easier customers I I Customer customer analytics most that, from our with about very take weeks future for conference, they It that I from I ago. of engagement work which market now spent customer extremely Conference available is positive amount mention very customers. favorably with the strategy opportunity. I with a Teradata At clear our a resonates talking results. time was believe of significantly speak pleased to to them. newly we with that broadens And the few is significant ready questions. our in discussions up importantly, and interest Teradata. Universe the Everywhere that Teradata hear Vantage is and those

Operator

go comes Cowen line Please Wood Your from ahead. first Derrick of & question from the Company.

J. Derrick Wood

guide congrats, versus due subscription or you And what pipelines the my strong your are now guess QX sounds QX recognized what beat expectation. previously. saw else QX, quarter your incremental is the coming you first is there QX than it Thanks. for question in this QX guys that was higher in generally on to something I'm your Great. implied bookings bookings a curious, guide like I And ago? QX and is fully in QX is

Mark A. Culhane

this Mark. Yeah. is Thanks, Derrick,

a in So, and ago. than yes, it's bookings subscription we what both. to in QX of QX QX. our starts through strong that Clearly, quarter we flow activity pipeline yes, And a were secondly, robust is quarter more had expecting

combination So, it's a both. of

J. Derrick Wood

on And on with guys more the mean, you question Vantage. really strategy hardware, of product then a I focus help software business to focus than direction think I IT. shows more versus and should line Okay. on that your

have see users just a roll play catalyst the growth on you Vantage as do So that a maybe will this out? you targeting boost gotten – and being you've guys And the longer this near-term as feedback cycles, new this use focus in – you new maybe on or and application is Vantage. out long share cases, on is to you some Thanks. sales take something that could architecture,

Oliver Ratzesberger

This under Yeah, now see that rollout Everywhere, so, on can adoption in Analytics powered had million our And next level the actually one prospects idea you and and rollout, from is We minutes to Vantage user customers. or to talk customers customer to strength of Teradata Vantage heard customers offering production to Vantage driver their of by this and machine against Vantage that on Teradata stage generation we from business stage XXX and million advanced game learning. the Oliver. above Teradata and about Derrick, rollout Vantage. strategy. a ideation for production We started XXX we've talked their how score XX up been you've various of up Universe our conference, that's with at of elevated lines really on had have that by absolutely ability Vantage. speakers of We said, building we is models, of experience about changing now those our with that for is Everywhere. the of business in Yes, a

see of this base. our big be yes, one with clearly And, of is going absolutely will accelerators resonating strategy we our this forward. customer So, that the

J. Derrick Wood

the for Great. color. Thanks

Operator

Lynch. comes next Please Wamsi Mohan from line go Your Merrill from the question ahead. of

Param Singh

Hi. Thank for is Singh you. This on Wamsi. Param

to Firstly, mix I CapEx for this, what say, into public of what going higher And wanted platforms does AWS? of sense on hosted. mean XXXX? like cloud subscription amount just calendar Was with subscription, a the that get is going

Mark A. Culhane

on-prem, this the to still long So, a in on-prem. versus break to majority XXX we We deal cloud the with. vast Mark. continues be is workloads hybrid but is enterprise-class don't and top that a This out time for the going market we be serve the environment

to we'll and As provide at our call. it Day relates XXXX, more commentary on XXXX our Analyst on QX both ultimately

Param Singh

Got it.

one call, could cash stabilize tempered to mix or follow-up on the do the be following think do guess year flow, just So, you higher you I there? expect subscription it that the into given

Mark A. Culhane

No, I possible it's grows over terms has where that we free flow. land I've that of and That driver quarters last that couple depending the XXXX in on XXXX of for continue subscription said mix. to cash say big now on a to

we ways that – that flow subscription the moves free moderate in does and cash saw those of of and have impacts cash which kinds you free but we're impacts doing some business have that to As flow to as the quarter. finance

Param Singh

back get Thank you. queue. I'll Okay. in

Operator

open. comes go your ahead, Lenschow line Your Raimo Please Barclays. next from question from is

Raimo Lenschow

Can stay subject, on I Mark. Thanks. Hey. that

you quarters have modeled. to lower of little flow directly So, better people forward, the look this if quarter to number that linked a for than this? the a is it it way subscription still with if where comes cash flow the kind lower about think subscription I that right kind you're often performance? that So, bit obviously at Is the cash next going of for quarter, was going quarter, strong couple a have of

Mark A. Culhane

will higher cash few can that Yes, a subscription on to But have well. free cash some of finance as flow. again, free flow we impacts here. there's impact quarters things So, look

and corporate to my to thing our cash call, Dayton headquarters we the And moving Dayton so, remarks of in out flow help have announced of of the primary we that spent on drivers. our well. impacts the in Diego San Two, headquarters. here And shifted prepared clearly drove of part we three were moderate third will Those money as of out and That's results mentioned the was is we that. as folks the some relocation free QX. the impact which what to on

look and that it be subscription perpetual Going forward, what ultimately like. will versus does

Raimo Lenschow

Okay. maybe Perfect. for And one follow-up Oliver.

we what quite very a you past, in just what of a little of stands when you people in how's the We bit with talk to are in other Vantage kind the industry? obviously understanding unique have terms merger, has you industry. terms customers bit offering. so, the the thinking that of Hadoop saw see And versus evolving a etcetera. Can Like, Cloudera-Hortonworks doing customers with in analytics talk (XX:XX) but in movement you the have Like, changed. the of Teradata for of what guys obviously

Oliver Ratzesberger

Yeah. I'd be happy too.

hundreds, work get that. and get now. reminding hands consolidate. high-end segment, of typical in companies, companies that to lot feel another. need And data problems complexity scale, seen has is silos XX at everyone, the thousands to can a we Many silos, we the have is the or market of can We form their the count amount of So, we for in theme data technology we at last endless even rid could the have is Teradata in this within they because one go-to-market with our of one silos. that level, a or of simplify right? the of now of scenario competitors largest on. which are coming to they every almost we model, focusing that departmental they lot on large-scale, number are need we by years. We have almost only keep in this required run are executives and is saying, They largest Because of that We companies, only run a organizations. – in longer data uniquely these a our out – with And are the hundreds that increasingly, kind no very positioned. head work And any as lower Again, users. of these technology technology one saying only that operate sustain to we silos of have business this very they can out companies the executives the thousands today there us are where adopted seeing smaller In they off know they're need some control. is for to – these them

message And a so, Everywhere important so gotten that why has been And helping customers. level with our that with started Teradata new these customers to It's is really has to these Vantage, that. simplify this focus us. we with

if we when so right not now point them of world, often Teradata with eliminate that solutions. customers talk basically do it is so, executives know and TCO center of the lower us around many and to a know the silos. We top up it than we front is complexity that And us topic the comes helped quite lot much with data spending can hundreds and dozens, so money with

Raimo Lenschow

Perfect. done. Well Thank you.

Operator

Your next Wells open. question your Please of go comes Fargo. from Winslow Phil ahead, line is the from line

Philip Winslow

And color guys, of my Hey, taking question. appreciate on terms the all impact. FX the for in thanks, quarter

Just of couple a follow-ups to that.

we as And impact And one of you sense if what to will follow-up look currency linger into trying for quick a impact there just start to recurring to that wonder model impact can kind of as and just next thank next is for year year? into the QX? First, forward, that. then the the you get what QX, guidance you sort for I of currency delineate in

Mark A. Culhane

Yeah.

we headwind into said of point currency coming QX. another we've expect So,

of headwind be into X we expected points, the So, walking it's X quarter now it'll X. point

do the end currency clearly try be X we ago. get we think us I foreign it's last to we the to up the is year forecast in – XXXX, point we what start and of would for can't to thought What can't, we the not over course see going do. know to going everyone of from year few it's else a So, a to or what don't we it mean But quarters. till headwind and been

Philip Winslow

then a here. competitive And it. front just on the Got follow-up

you Vantage, feedback What about you the – talked mentioned about ago, Oracle. that talked in a Obviously, core marketplace. of question, obviously the just last couple your unleashed You vision the Hadoop players. And weeks the on just of that has couple been?

And then the what quarter, Just those? displacements what behind were competitive drivers the you was the this early in terms of feedback? saw

Oliver Ratzesberger

Yes.

the earlier customers year was high lined very got we got the on as of beginning we've because the customers – So, of alpha/beta first before interest very the several availability. announced up already we've this publicly even feedback, all, year,

we a to we by seats of that get quotes from experience. the XXX hands-on and we we technology This the you such, really the what well weeks little couple want a give with from is conference wanting and of mark. resonating conference interested a of on answers offering the were really lot move just very focusing we to Vantage just as outcomes. announced oversubscribed Coming XXX that just our from customer ago, is just is solutions have have about statements of a their that, Analytics out conference, base. As they We lot at to from And people that had with hitting are planned the brand of on saying Universe the this. to customers share launched departmental stat hands this Vantage They and point in.

funnel promising interesting So, is indications very very are the for and early us.

Philip Winslow

it. the second the next Got question, quarter. And Yeah.

Victor L. Lund

get I'll that. Vic. listen So

the I the playing with on to to attack really The a that The about is ability scale. say well your other is very, that that off different ability Vantage, an problems. analytics think scale to customers. our an end very thing customers from future And solutions biting would up compounding is you opposed enterprise is striking about chord just analytics enterprise with

about have predictable their that to fact, gauge can that's analytics people with solution a their it important them timeframe for I a as the where point because the enterprise And allows interest investment, it. really ability returns business difference, it they on drive ready talk their more versus here. In early when gets they're to and

Philip Winslow

Thanks, guys. Got it.

Operator

Your from next ahead. Please Bernstein from comes Research question Dane line of Crane go (XX:XX).

open. is line Your

Unknown Speaker

to a why for A wondering question Mark on growth. bookings subscription not your I'm yet is than currency constant is in. me increase selling looks you. to? even you like in fitting is for the you you there's Or expected, recurring given really for subscriptions faster license due expected mix for subscription full expected the year than the increase less for revenue growth. the guidance to It Thank lot Is recurring revenue bookings it revenue grow that because mix. or in previously higher than expecting of recurring or Thanks Hi. bookings? increasing perpetual an duration faster the ratable you're

Mark A. Culhane

Dane So, (XX:XX). yeah,

we recurring backend QX book and QX. So, that mind growth growth. is in revenue yes, ARR subscription driven is in loaded whatever being Keep by in totally

quarter's starts There expression day, every the it best, not period we itself of time one at of do So, right? a subscription worth before it's to be following revenue. deal can starts expressing and

the businesses it's on front, have Perpetual and And all year point sets anything but the QX bookings so, that's following don't do revenue the it be we're express year revenue. we're you the up subscription in going no really QX and current biggest what growth, at recurring driver. doesn't recurring with like themselves different where for that to that to

Unknown Speaker

Okay.

unit in terms expectations for of your key change growth? no volume So, or core

Mark A. Culhane

No, not XX was days ago. from what it

Unknown Speaker

Got it. That's helpful.

Thanks on very congrats Great. much and the quarter. nice Okay.

Mark A. Culhane

you. Thank Great.

Operator

Your line Brad comes from go ahead. question next of Stifel. the from Please Reback

open. Your is line

Brad Robert Reback

Deferred quick of use Great. Mark, Thanks. question. this quarter. big cash a was revenue

have little to would would on strength, XQ commentary function reverse some was. bookings should negative been the Thanks. a the thought Given extent? more that it little in just it have and quarter itself that less a in linearity I than a Is of or

Mark A. Culhane

Yes. Two Brad. things there,

we're expressed huge it's line. starts revenue revenue then the So, perpetual the and billion is you're the that's of subscription the said portion by in balance the we revenue XXX%. as $X.XX and, biggest growing that deferred adding, our although still in the portion get of revenue to prepared That license-related gets ARR of And push in maintenance a is is adding to that historical recognized but offset still into one the related, deferred comments and out deferred in maintenance big across excess And revenue. is yes, of comes today QX. is that year downward then

the the built. when is So, phenomenon, that's that the maintenance seasonality of gets and really

the uptick believe renewals. of actually and So, yes, big in really QX QX out seasonally, bill in maintenance when QX we'll grows all it see, we we it'll

Brad Robert Reback

there's we about one XXXX that progression of margin. think new maybe follow-up you Obviously, overall the quick in should half think the the the Is seasonal Thanks. then result half benefits point? back services broadly? as see year. about in gross the starting should the And the we How second on XXXX the or starting point

Mark A. Culhane

Yes.

So, question. great

way that that this seasonality given improves projects milestones causes the done there that business. consulting been Historically, to in margin. are always certain to and margin quarter, on large the has QX is revenue a recognized tend just accepted the which So, get to ultimately QX, be

see the of of XXXX. end of we year kind it QX, up on across the over it's we in full there a point QX will overall, margins forward we of the But has XXXX. into then But end always from and builds where what year's XXXX starting sort So, improve low going QX, been our QX.

Brad Robert Reback

very Perfect. much. Thanks

Operator

Your next Please Citi. line Tyler from Radke question comes of the from go ahead.

line open. Your is

Tyler Radke

much. Question very Hi. Oliver. for you Thank

if legacy re-platforming uptick, Oracle talked that, what an driving think lot something competitive on displacements I about. that's case. be that the and the mentioned like historically seeing just a you seen and you've might of curious an or acceleration if of I'm Netezza in And you're some it's not you that's So, kind think you call. feel

Oliver Ratzesberger

what complex is base, enterprise other Yeah. Great existing we customers. years. exactly really technologies even our these level made that just came consolidating customer share-of-wallet believe simplification the My and top is XXX answer that question. This, are these and these drive silos technologies brand-new out often data the in that It's data technologies, from infrastructures at third-party within silos, will something Yes. the these of is, driving, in is replacing yes, absolutely. recent

now come us the all customer these that Teradata increasingly single customers we And say have they and instance We that our instances have are realize, that and they conversations of in or better. XX sudden them XX will serve that, base. a seeing a first of much to are

Tyler Radke

Mark. the year. the to understand And follow-up I Great. for ARR wanted full a target just for

higher I are more metric, you. if talked a of bookings growth, with you you said of currency. – that you've higher bookings in wouldn't uplift. a it X% XQ subscription we seeing because just Thank it's bookings-based go continue about XX% in but to mix? I'm than that which be to deals, seeing subscription what saw expect that's presumably But since mix. in why the think curious you're higher And subscription Like, number you terms

Mark A. Culhane

Yeah.

a of up points So, yes, that constant it's currency. in from XX% It's as couple reported.

depend the turns So, we on what continue out. mix of to It will expect that. QX

because that perpetual, on several down a there's have as potentially customers those range pretty for expectations perpetual taking with conversations QX transactions forecasted We broad on it also them are of about subscription.

on it be could bookings metric one metric bookings And in get you higher, and said, as clearly, is you So a right? it day. healthy can a

plays And so, out. we'll it see how

I the XX%, be conservative trying be at think we're cautious could certainly and to but it higher.

Tyler Radke

you. Thank Okay.

Operator

We have time one more question. for

Capital Keith open. Please go your will from ahead, question Bachman line come last Markets. from is BMO Our

Jung Pak

gross to the And think of margin It's your as the increase? higher gross subscription to guide relative maintenance? Thanks. a Pak Jung recurring due Keith Bachman. about revenue subscription forward question how QX. on margins Hi. should recurring mix continues had of I to we mix that for XX% Is for going

Mark A. Culhane

said as minimum world best XX%. XX-ish in But year for we approximately and be term the in XX%, recurring function But that better up is to class to impacts. has of subscription a some expect us of traditional would mid-XXs, in we type it's the you of – I yes, be made. investments the than scale the that related becoming low-XXs. is basis the leverage of expect versus XX%, mix as could in over Longer be So, would that it maintenance the that subscription leverage and more we of today time, us QX. tick subscription perpetual full-year subscription-related related, in I on expect change. sort that the expect be back we've we some made, the to threshold low-XXs. We're think investments we've need we'll higher significant ticks of is And the we which a the to get revenue, and we full across

Jung Pak

help any Can was what Americas X% happened follow-up. had to in deal a down Thanks. constant have impact. I And understand us if Great. the shift currency. and there you subscription

Mark A. Culhane

Americas, than so, way subscription faster clearly moving to they're Yes, international.

the So, referenced then And been year-over-year. was large a revenue I perpetual one basis, transaction. reported clearly Americas' transaction impact that's an on an

so, perspective it to but faster. revenue a down they're much, subscription And – year-over-year being that puts total from much clearly moving

that it's year a of I'm vast year-to-date last pleased moved across to ago. the versus actually So, given they've subscription amount business year XXXX flat with

Jung Pak

you Thank much. Great. very

Operator

Vic for conclude I call will our Lund over comments. turn to closing the now does That Q&A session.

Victor L. Lund

Perfect. joining Thank you, all so us much today. for here

there in to that at our can you like. as you, most our our seeing And listen we're December beyond And long and Bernardo. XX. color give all what on will more update it. and expectations around Again, where and on the going and end XXXX more Mark strategy that of you be detail if hear hopeful we We of you to QX. can you We to thank guidance taking Day how positioning forward our here give time Analyst term said, we looks look will all not, the for Rancho some around we're

Operator

That conference call. concludes today's

now disconnect. may You

Teradata (TDC) 1 Nov 182018 Q3 Earnings call transcript