TDC - Earnings call transcript Q4 2018

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Operator

Good afternoon. My name is Sheryl, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradata Q4 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator Mr. of you VP conference. begin Investor Swearingen, may Relations, your Gregg

Gregg Swearingen

begin followed afternoon. XXXX President CFO Lund, discuss for call. will Teradata’s welcome and guidance Teradata's provide our our call quarter Chairman Good Then to will earnings Chief fourth Executive And Mark our Oliver by Ratzesberger, and Officer. yearend new financial our new and today, Culhane, XXXX. Vic results

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

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

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

Victor Lund

laid the CEO my like would welcome. initial was ago, three calls, out In my President of and my I goals. I becoming I of Almost Gregg. you, honor years Teradata. to Thank given

our would First, in strategy a Teradata into drive with team the future. develop growth profitable that to customer-centric conjunction the

is endorsement Teradata. of to is would quarter makes strategy, team strong understanding a CEO the our as now CEO and and of by been Oliver that to our The Oliver team special, right experience confidence the objectives of our seasoned seasoned has leader include what driving our business met. a next The of forward. have success. the a capable are announcement Board right new drive that person and these an develop continue us customers’ He intelligence, fourth view an which for of Second, time. time results the ongoing needs. It at to drive our of pragmatic our

be team our While my is been still stronger. and in to accomplished, strategy confidence our much there has never Oliver?

Oliver Ratzesberger

revenue all value free excellent has once Good that EPS, His Board. analytics strategy, cash execution our world’s would his to for but invaluable, customer guidance to proud important as only in and success our strategy defines growth, well. has me start to afternoon, I XXXX and of am leadership Executive to important new what Vic Vic time together in history. transitions dedication a never as as data exciting revenue, the overall. I our QX flow. of company, the to extremely I relentless on of is been positioned ARR and share by uniquely to resulted have have Chairman the total accomplished pleased world The measures, again exceeded performance today. in winning deliver We strategic everyone. into companies. role not I recurring Teradata leading the and growth, that and am is he personally, thinking an This of guidance to like our Teradata been our including

across our have We financial results. this accelerating rates these visible is in all seen growth as measures

we had continue to customers transition faster than to subscription Our anticipated.

subscription-based peaking cover were detail. In are in fact, financials recurring these bookings Mark of for future solid in at XX% QX. of revenues. These evidence will foundation results XX% XXXX more our of our

highlight I Teradata will introduced us strategy, consolidating drive model and game-changing with customers we organization Now, acclaim positive these our our We our locations, while entire our moved of aligned XXXX significantly better our our to transitioned analytic Vantage our customer our our offerings. strategy, like to we to functions and it’s platform, shifted opportunities corporate reflect our optimized We would aligned helping repositioned Having our enhanced to analytics serve helping record efficiencies go-to-market refined approach gain and our some We achievements. broad to largest and targeted and a effective tightly adoption. subscription-based revitalized San greater brands the our and more We and be to it’s to around us and headquarters into results. delivering the profitability. strategy, successfully offerings that Diego, sets. fewer

described positioned at time require. call these to all massive address capabilities to megadata differentiated deliver the me pervasive we they the are of all let Day. the to needs companies to matter any deliver users how order these speed. scale and Next, that data, we shared as you our intelligence scale our at we address demanding data companies. and across Analyst applying of sophisticated to strategies and There with our leverage a analytics world’s require of the most a We we Teradata enable recent complex data in is uniquely infrastructure large-scale that of the

our imperatives us to that also win. are enabling five We strategic defined

consumption in ARR First, of driving recurring we and drives relentlessly focused turn revenue growth. are Teradata. on This

it experience, of about drive ARR purchase option our deployment software improving or imperative will this second only regardless not also customer but margin and This they believe consume that drive strategic desire. We Our is the simplify. to to radically growth, expansion. making much easier is the

it software third upgrade provision, our to accelerate to easy The leverage to making for time to is value. customers as-a-service imperative and pivots to purchase,

customers. Our our of with continued our transformation next imperative is Teradata go-to-market brands, and the our repositioning

and we will improving status finally, And excellence, our for operational can success quo the challenging raising analytics of to data the across efficiency are customers. organization. the what the deliver and execution expectations We mean

of we Teradata the to move customers another let’s share achieving that’s Vantage world. the powerful flagship and for analytics. the step some that is competition. leveraging our face I launch our against in most an a to conquer market record launched Now, first immediately took bold QX, winning scale industry’s how unprecedented they demonstrates of our will analytics challenges digital with with adoption Vantage to examples The customers In this are enterprise and platform increasingly showed level complex interest. Teradata Vantage. Vantage. platform We

predictive customized any release well is quickly holds of tightly companies. the they of only the descriptive, in and it so the These commodity to was needs on include that the history. platform in across languages analytics Vantage the to machine build our with Teradata’s Vantage analytics autonomous clouds, the fact, as-a-service. prescriptive and infrastructure Vantage In need. deployed received learning, basic fastest order allows engines best the and or public integrates for meet all or tools use customers and record that decision-making megadata optimized it’s analytics, to functions; extensible for option and on-premises, fully and work

benefits the realizing of are Vantage. customers Our

integrating creating manufacturer comprehensive supply analytic telecommunications environment provider Teradata quality global a expertise based of and aviation IoT A few consumption the has on on hybrid increased optimization. This allow with ERP, interconnected of manufacturing to developing chain as global the Switzerland help Teradata the its is a to Vantage multiple and ecosystem recognition driving is A our So, data investment of cases capabilities created the in is and modernized the technology examples. business, drive central a major was A of growth Vantage. capabilities of services people enable analytic Vantage evolution its assets. and foundation undertaking its them software. future added share for powerhouse increased of our to improved its me enterprise foundation. used and analytics analytical improved This new of

ARR enhancing and because to and focus examples are also right all its examples leadership scale complexity experience. deployed best-in-class to partnered the world-class life-saving derisked Azure and in subscribers all recent provides and manager are of and through than our boundaries Vantage based the growth make access automation. packaged functions, human decisions of and Teradata identified, company hybrid California with people from launch and building operational Vantage large these major subscribers unlimited to work millions data. customers U.S. to optimizer to executive access our Vantage answers users costs. QX. mission more data that from keep strategic high Teradata’s hallmarks of time then demand. users unified and user solution region. the of provided far a integrating And investment customers potentially with wildfires data embedded contacts the associated to using we effectively of decisions in to through and consumer instances. reflects of all across and our Cloud programs. in further and across goods architecture to the the driving the data with Teradata data reducing towers how limitations XXX complexities supporting features were algorithms since connect customers a capabilities area our A access machine new based business. workloads exceeds during adopting across and in the speed accelerate geospatial great wins cell workload Teradata capabilities. us handling businesses who customers a unlocks Together, of its power The our on transform on on-premises on just efficiently scalable its telco A megadata enterprise handful affected the the to live thousands among on This customers’ advanced These aircraft global are decisions ecosystem with driving allows simplified Building Our value

we strategy. Looking have a ahead winning to XXXX,

Our clear. focus is

our am confident We of company I and it. and excited am future to lead this to successful have are fantastic continue the path. I about great positioned opportunities well extremely

to CEO, and continue our work our have lines. company we and apart am to long-term best we innovation we create work shareholders. have the values, outstanding to the for focus and President it do evolve I value and of As grow develop encourage will and And associates their all, and our to people, continue enabling on committed started, culture customers the

it challenge team executing every customers our very turn do This at means what sincere Mark, As center do. thank they you industry team as to strategy Teradata all above, every I is show day am keeping they rise the day. the of while call our to winning of the and I work we to and the the a proud

will Mark discuss our Now, financial results.

Mark Culhane

afternoon well as momentum good close we quarter year, enter sets which Oliver for Thanks, a strong up delivered in our everyone. and XXXX. to QX and good We us

even but fourth importantly, Our more growth, strong highlighted EPS, quarter revenue not expected as flow generation. our by expected better revenue only total performance well recurring cash and as better was by than than our free and ARR

results. reflected significantly meaningfully on-premise guidance for as to year. from of guidance as full higher well good Our $XXX in well than to $XXX most our transactions, higher rates clearly it’s now and recurring for of guidance for of billion Recurring subscription XX% was a QX but financial guidance currency subscription-based maintenance total perpetual software subscription-based our which XXXX year contributing within a is Even expectations revenue constant Full range strategy transactions year-over-year the range a $X.XXX year-over-year of was we increase $X.XX of with This revenue linearity, guidance. to the bookings billion exceeded $X.XXX expectations were million. a $X.XX the $XXX revenue the billion, increase for growth exceeded was year recognized million, and the XX%. amount because is in recent to which demand Teradata bookings than revenue software being and our from subscription XX% in million XX% quarter. to working upgrade $X.XXX recurring XX% is our QX, better began and Full $XXX in million basis, of revenue XXXX. decrease currency billion, by of quarter of reported period. constant of hardware revenue expected above software. revenue Perpetual million, which revenues XX%, In Total revenue, which future XX% customer range current full relating resulted and revenue includes to billion. our the XXXX XX% on of year which well reduces license recurring Teradata’s recognition in our of was from QX, ahead in strong ahead more XX% $XX as to driven than both revenue expected, was shifting our of of license was our and than original as perpetual This increase both from beat when transactions XX% our

but X% now million, XX% constant currency. in perpetual to perpetual was in eventually Full Therefore, purchase continue purchasing XXXX down I X% revenue, some $XXX revenue in perpetual decline go currency. to we declined reported to in through our discussed upfront. we a Day flat transition, basis, therefore, a consulting predominantly we our hardware-related. continue And which our constant expect and on year was from December, are As our basis is at to Analyst start revenues hardware customers perpetual year-over-year expect selling $XXX year subscription million. QX to was and revenue $XXX most on QX XXXX, software as consulting million but Full customers as decreased from revenue

we on higher which companies and target market consumption strategy consulting reminder, to is that a analytics platform. shifting intended our relating to consulting higher are margin Teradata megadata to prioritize Vantage, our software-based to our increase As within focus business-related business value, of

As refocus our resources. and result, consulting as we consulting we our revenue expect overall to realign a decline

As reduction as well a margin. expect as we in revenue, make some on our short-term consulting this we impact meaningful shift, consulting

transaction quarter. million expect happy billion, we rights XXXX, subscription-based of up $XXX million to and longer-term. was we of remainder than ARR and shift, comprised this a in I At is to the XXX% maintenance license our currency million expected software constant report year-over-year. Day of million year-over-year am XXX% that in XXXX, ARR and XX% in perpetual $XXX of $XX because year. the end of upgrade I At as of XX% of $XXX more $XX ARR of end The more ARR grew consulting to business fourth However, from basis XXXX. said given $X.XXX believe our annual quarterly improved and Analyst over services. be as of not we provide was currency end the increase, We the nature managed subscription-based prior $XX this meaningful. ARR intend large margins million than constant the an on only breakdown in are the up ARR comparisons subscription-based our that at million, of December,

our from the more likely subscription. shift software rate we perpetual our business to continues growing attractive business ARR an maintenance and our upgrade to ARR to rates transactions, subscription-based As subscription-related while at from see to legacy related declining shift

For in constant incremental basis, we million was almost a million which $XXX XXXX, generated net on $XXX ARR, approximately currency. in

the at approximately backlog XX% billion, Our the end was of from third an from $X.X the year of XX% quarter of XXXX. the end and increase year-end

special a to basis, operating our results release. note, items my in please comments compensation Teradata’s results, excludes and our stock-based such reflect I Before as continue stated unless today QX expense on identified non-GAAP highlight other items otherwise, which earnings

in margin In terms line recurring QX XXXXand was in of gross with gross margin, versus revenue expectations. XX.X% our XX.X%

and as compared software the legacy year. subscription-based maintenance perpetual prior As mix more rights versus upgrade to expected, includes our recurring revenue current revenue, revenue

recurring the the subscription-based versus year fell revenue to due began year-over-year being to many to XX.X%, our which the than was the transaction. And via revenue year lower was year Full lower improved versus gross perpetual due customers software gross year, the their XXXX, as XX.X% in due period shift margin transactions. primarily margin margin consulting fourth gross margin purchasing the expected, recurring the which XX.X%, revenue result, QX XXXX. year revenue a versus quarter drove in QX prior subscription-based prior Full expectations. XX.X% perpetual to of in hardware-related gross decline gross than this Perpetual over year XXXX. margin consulting to as was was was margin Full of compare better revenue our revenue subscription. but but in prior year-over-year it the XXXX, margin shift improved As consulting X.X% XX.X%, the to XX.X% to The mix X.X% to decline. short while compared shift expected was

XX.X%, year to fourth improve largely due was the Overall in resources margins changes the shift transaction. to margin margin strategy. recognition to year continue was and mix prior consulting which revenue percentage timing gross going from to XX% quarter to as expect continue period. flat align compared our the roughly forward our one was of down We consulting to Full gross the the corresponding point, to subscription-based revenue we

in quarter Turning to from SG&A million, year due of XXXX. operating Vantage, operating of decline versus subscription of expense R&D year in lower expenses, XXXX, shifting million year QX, Full $XXX beginning year-over-year XXXX at to $XXX tax margin for platform. Teradata’s was XX.X% from as year fourth continue Teradata up line to than expectations was margin QX of in our XX.X%. Research impact the and line invest X%, in tax X.X%, our with $XX the with the Full $XXX or was XXXX. million in was down XX.X%, decreasing expectations. X%. software-based model. Operating largely XXXX. up selling, The $XX million was non-GAAP fourth general was and X% was quarter million administrative we XX.X% XX.X% non-GAAP expense fourth rate was analytics but the to the $XX.X% million, about expense the the of was quarter in QX Full versus Full XX%. rate of development $X our in

fourth which Full the than EPS year guidance revenue. quarter $X.XX of $X.XX. a result, expected $X.XX, to range our was EPS to by The recurring was driven As of EPS was higher $X.XX. our upside range than in higher the $X.XX again was in $X.XX, guidance than higher

provided by XXXX, for activities by quarter fourth was was of XXXX. used QX, of the compared expected, cash in QX capital $XX in XXXX. an software XXXX. million driven activities million million, development cash Full year improvements expenditures XXXX operating development in costs net used cash $XXX increase transactions additions million $XXX Diego for increase subscription. additions to capitalized Full million from net as in to to $XX to in operating compared compared million the QX the San year to of and flow, headquarters cost expenditures million to $XXX provided for and by year. capital and was to Cash was, $XX in Turning $XXX increased as and in software million $XX The cash to CapEx capital mix prior our moving capitalized was

result, flow quarter flow was year the cash full of guidance free million, million $XXX a to fourth As exceeded $XX free for $XXX cash our was which and range $XXX million million.

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

bought X.X During we stock shares approximately the Teradata of quarter, million $XX million. fourth for

full X.X repurchase remaining of $XXX had of the At we $XXX authorization. For million for million. shares million year, XXXX, bought share we the end

we the year-end XXXX, we transactions. due million growth repatriation of completed from planned Deferred During Both at XXXX. end $XXX of the of end the and the year. the in subscription-based to earnings of of increased the strong our increases million from foreign revenue million third the $XX beginning that $XXX were at increased quarter

to timing which other among variables guidance, the bookings currency Turning and is dependent fluctuations mix on and many including of factors.

headwind comparison Regarding full a four percentage one we the three with to first expect year-over-year headwind quarter. year, on point for currency, a revenue our point

expect XX% related full or bookings We to to year our transactions higher. be subscription-based mix approximately

in o to ARR XXXX. ARR, of XX% t approximately expect grow XX% terms we In

expect increase $XXX between XX% the We expect $XXX million recurring million. And approximately recurring we to XXXX. first in quarter, revenue to revenue in

year. and to We XX% as expected and to Recurring be to our revenue market. our as high XXs. in efficiencies the XXXX to on cloud expect revenue longer in prior is our engagements we realign gross But gain in improve consulting megadata approximately $XXX XXXX margin additionally, over resources decline in to expect target XXXX continue consulting we focus consulting low the revenue value term million subscription-related and we recurring our margin higher to investments. margin gross million decline continue to perpetual leverage to approximately expect we revenue XX% And $XXX

We XXXX. expect XX% to be XX% approximately perpetual gross to margins for

gross teens for X margin margins over levels. We year. improve the points we to And X in points margins operating gross we to from XXXX. expect total, the in improve low prior Thus expect consulting a to expect overall couple XXXX

rate is Our XX% non-GAAP XXXX. be to anticipated tax in again

EPS $X.XX As is And the shares a QX non-GAAP is for based quarter, $X.XX approximately result, This to o million full for EPS expected XXX rate, average to XX% to the in be t shares XXXX the $X.XX is based expected on million. be $X.XX of outstanding year and $XXX tax weighted average non-GAAP non-GAAP on outstanding. as first range year. same the weighted

the XXXX impacts functions free go-to-market cash flow $XXX adjusting cash be our as expect $XXX our million aligned related to operations to We restructuring to in strategy our for million. after reorganizing of we and range

flow to is to subject variables as expenditures Our transactions, reorganizing as limited projection the ultimate well of such not support capital transactions bookings to of free and the of subscriptions the to new our many including cash cash required subscription amount frequency mix, but operations. new payments subscription related billing

Vic for successfully And future As driving in over questions. for strategy are and forward here development of forward. very the my bright. leadership few at really our to the thank Clearly, advice and to strategy last working I is I the years. his Teradata with ready want and going with during time to valued Teradata have I continuing to counsel operator, I his vision execution close, we execute look our Oliver take that, and

Operator

from [Operator Reback from Instructions] Brad first Our comes Stifel. question

Your open. line is

Brad Reback

the Thanks. on of guide? being it you for guidance down XX% something quick you that meaningfully. some give the Can obviously real is and Mark, much. and in of XXXX guiding very you for us the about perpetual Thank takes going north at XXXX, are puts subscriptions into well

Mark Culhane

so, talking or mix bookings about margin? Yes, you are

Brad Reback

mix. Bookings

Mark Culhane

higher. maybe bookings or XX% Yes,

Brad Reback

Right.

Mark Culhane

range. certainly higher. now, we XX% But are So, plus at that right we see it can looking

$XXX that and different bookings where million then to it depending and which it in the as the continuing saw mix of can see move we where ultimately the million to quarters, perpetual on we XXXX there be takes magnitude on et clearly cetera. revenue falls, puts across and So are, could obviously, be impacts decline $XXX the

we in the part to of obviously this extremely that but, more the coming the cohort, So, what year customers are XXXX focused of seeing a set you more acquire on transformation that we subscription us our to different will. are it’s if that stuff existing back model are with and to pleased are from we move

Brad Reback

Got on of it. been a received? Oliver, believe And you maybe the then, year, how maybe sales highlights I the at comp quick this that’s calendar some beginning follow-up. high-level force changed plan, Thanks.

Oliver Ratzesberger

in Yes, Brad. drove, Thanks for ARR Day the did we reception same question. specifically with drive been focus And that ARR Indeed, on with it and very I focus changed the the that and The to just year increased metric. our believe go-to-market we go-to-market results to has will at that realignment actually focused ARR And increased field this think orientation our consumption, We positive. increased go-to-market primary ARR. not is XXXX. for we within Analyst company, we said the to already. the

Brad Reback

much. very Thanks Great.

Operator

you. Thank

ahead. Our next go Katy question Huberty from comes Stanley. Morgan from Please

is line Your opened.

Katy Huberty

Obviously, strong feedback here. budget flush end it and is starting building the afternoon. slower around the Good market is that is in is questions fourth what healthy but maybe and a the relates quite you. to how growth quarter, in there XXXX Thank obviously to a as the there the pipeline a year

you this and business year February? been as it change the comments there follow-up. any curious has pipeline mentioned if the but like just for as rate high-level of – a move deal to into your I what backlog, what in I you Then have relates looks think early January and any your So

Oliver Ratzesberger

business. this healthy Katy, change and Oliver. good are is in - If funnel. anything seeing the No a we very

our is of actually help that driving of XXXX, on and enterprise adoption continuous being us Vantage for especially the the the strategy base makes - the activity execution that seeing in are positive We platform. for business Vantage increased with very the customer

Katy Huberty

great question Okay. for Mark. Maybe That’s hear. to

EPS a recurring we even were lower in first the though The than is quarter line. expecting is revenue bit little

flow the anything relates quarter that or first about? mix should that be cost Just, it of is there we to in thinking hardware through as

Mark Culhane

be perspective from Thanks. I Katy. our end Hi, it’s range, an at quarter always of traditionally four we’d No, mean, EPS been the high the year. last the of lowest over

our through go-to-market rolled January. and of on some of month the in that are We out realignments going have we executed

on an So good feel impact. But really year we that are EPS perspective. has from a about where – we an feel full somewhat headed we basis,

callout a think to QX where don’t I So is. there specific is

Katy Huberty

Okay. you. Thank

Operator

Thank you.

Derrick comes Wood Cowen next question Our and Company. from from

open. Your line is

Derrick Wood

Great. Thanks.

push So Oliver. I Clearly, Based you on – to for more to guidance, on question area. you first acting guess sense how the consulting are us getting as aggressively the of could is engagements areas? effort how some to non-strategic much color in to and an And much the given SI? actually from as putting is getting are the a out give to kind latter Teradata-related engagements your Partners SI maybe you what new

Oliver Ratzesberger

and are we do general, is, out do yes, Teradata megadata our see in what of terms time, Day that in the to at type. what This ready we the are not of line and customers asking is In that this out what the before Vantage. about for be successful talk what in At to is Partners or of SI we business. us are will the the most and to adoption increase for point overall, of believe consulting doing we laid is us consulting on directly break focusing what aligning strategy for and business in not the Teradata than alignment the Derrick, really focus of drive is have but with direct ARR strategy them. what And to the But don’t helping driving it’s and Analyst we that a adoption. more business division go-to-market we what’s ever what Vantage this parts is we XXXX. So, professional just you Vantage focus

Derrick Wood

faster? bridge revenue deferred Okay. more recurring Mark, us and come recurring quarter why by short-term in with growth rev’s expect revenue growth deferred growing the XX% to down acceleration. mean, would I you in to And as I impressed this the in strength that the the help short-term XX% or then, Could am be we growth deferred should revenue?

Mark Culhane

this Mark. is Derrick, Hey,

obviously, So, QX That’s quarter. obviously growth in deferred we up ARR XXXX from recurring – showing very in revenue. revenue short-term we guided growth of XX%. have perspective robust a That’s for

it the the you and upgrade balance recognized peaks deferred the in will biggest is the during the but that’s balance again year QX. this related typically and all the revenue see candidly, QX And up that’s of build for the and due and across phenomenon it to of year quarter end part get bookings then business to So, then, maintenance historical year renewals which rate revenue to go license why been end back see are of pop you and as across four of revenue which a QX seasonality deferred for on time. is, the at revenue March, here, in January at it our perpetual of of you long the the see declining the gets off tend deferred work potentially

that’s So, there that front. happening really what’s on

Derrick Wood

done. Well sense. makes Thanks. That Okay.

Mark Culhane

bet. You

Operator

Thank you.

next from Merrill Bank comes question Our from Wamsi Mohan of Lynch. America

Your is line open.

Wamsi Mohan

would towards the subscription saw not there in color wondering most U.S. Americas looks in of a about more the of and can have any a you. you thank saw you versus sort what or the of it trends, bit I other and Americas, an your weaker international others helpful yes, share little stronger segment that acceleration like was with if opposite can you international Hi, just talk happen reporting is the be I follow-up.

Oliver Ratzesberger

QX up. but a subscription U.S. in bookings X% been of behind approximately the mix trailing driving bit the for what is, International all Americas bookings little and been exactly has has is subscription results year acceleration peaked is the it’s is bookings in QX this in here. leading And catching into terms long that mix, Yes, has

So, in quarter had strong mix they quarter, bookings that because extremely of look a business. high based than actually the very, Americas what makes are the that actually very revenues subscription smaller on

Wamsi Mohan

got thanks, Oliver. some guide strength get of $XXX that you. for of realignment the understanding you So the more $XXX you flow sense of Okay, headwinds give the free you some the can magnitude here? Thank you in costs? Mark, baking the the flow Can of and free sort cash of noted. cost trajectory to million reorg sort And on that the cash of us net of we of of are a mentioned those you million,

Mark Culhane

Yes.

WE working of that and attrition through sort other are between still Wamsi. have thanks, what So, and natural we is actions.

that where apples-to-apples though it’s to potentially why of the that’s we over do prior lands. on sort some tend basis, But include we’ve the on out. an year think where on from that that are depending if I even even of So, grow XXX called were we we

could be it’s meaningful a we And number of – obviously in QX. sense million, here more $XXX that it gets But have will than rolled of a out a it as then but so, what’s more across it’s XX.

Wamsi Mohan

for Okay. Thanks color Mark. the

Operator

Thank you.

Our next Chrane Zane from question comes Bernstein from Research.

open. line Your is

Zane Chrane

was taking for give should a of terms for you believe wondering acquired question. leads, could I in if XXXX expect thanks Hi, the in assets XXXX. us for my capital I we what sense $XX by million

your what wondering for are asset type Just that XXXX for expectations of acquisition?

Mark Culhane

Sure.

much the how are to versus on solution. magnitudes really to own expect to the continue it So, we definitely sheet be today. upfront expect I million-ish above to clearly we the higher. quantify be we that But subscribe want $XX think, entire have balance to the to hardware buy and the customer The it

Zane Chrane

XX%, a think ballpark Xx increase? Okay. that of we range? like Should any

Mark Culhane

million, I had potentially. $XX it’s to guess, million, million $XXX If $XX

Zane Chrane

That’s Gotcha. very helpful.

follow-up. quick Just

strength so standard that a rates what each an for us see was update make what renewals could rate to Or seem Is not material quarterly lot guys Analyst give and your us guys does can on Day there you maybe at renewal business. is? how maybe You talked on give of a present contracts the to QX? that your it risk of a renewal or kind something about we quarter – the the just KPI,

Mark Culhane

that haven’t then we’ve looked given – Yes, at loss We don’t we done talked our of That’s it and way. something that will existing haven’t we forward. under question consideration we they But customer that metric customers that’s a have not focus it grew ARR. a – on so, take moving about. becomes

own workloads business. doing why a not done underlying were or that, at else convert this they haven’t subscription asset and that part expand don’t do the the a they subscription. of XXX% we you that’s really say, doing as are we XXX% as, you that are licenses I see when a they renewal because to in bake call to renewal they particularly do et all historical everything where hey really subscription not, like count we And that or it’s true their when that their cetera So with

that’s – And so at across are but that’s contemplating looking something we the year.

Zane Chrane

Okay. That very much will and congrats. be great. Well, thanks

Operator

Thank you.

Our Karl from Bank. next question Deutsche Keirstead from comes

open. line Your is

Karl Keirstead

total QX Mark Well, revenue thanks. didn’t give guide. Mark. us on I’ve you XXXX, got both obviously two for

somewhat year to revs. gave pace to the guided the only QX us expect above you consulting that streams perpetual You you the decline full of in below? be might revenue comparable or for for what and Would or recurring

Mark Culhane

very perpetual down as few of expect I basis, we The and expect end to difficult to down or predict, right to a goes is the here these I absolute it of year-over-year. the in to would magnitude are because very an across fluid whether goes dollar but up saw be subscription go year-over-year. which transactions be XXXX, which on quarters perpetual line to

Karl Keirstead

revenue maybe for you expected that was in helps that you cash line. the we does that bit you. side on probably mind little Thanks I if that the Thank flow impact that. than was Okay. a mentioned why headwinds helped for there am second QX? any And then, the I It just that and in keep XQ. create in elaborate you on that P&L should and presume Mark, better you of terms wondering could linearity a follow-up.

Mark Culhane

flow in in revenue cash at in QX of where QX. cash bookings flows Earlier the landed we expectations recurring impact get over were yes. linearity up in those sequential $XX from all, ahead our QX. It not collected did versus and QX QX So, deals, of because drove most the million growth

are flow got comp of we and think and So, drove meaningful it force I be the recurring And teams were we expected. forth QX sales sales XXXX start which so dates recurring ARR growth, QX towards deals. in upside on inside shifting front plans generation we that important helped to higher in in timing in those term not But realize started revenue to QX. our than the discussed phenomenal did the by follow-through cash that contribution going revenue recognition into given

in because of ended our may closed we drive In a recurring recall, was got in done up QX a had currency also going call, QX we lot a very transaction impacts the that, perpetual early going that. you subscription QX thought the subscription $XX anticipated QX. helped addition, growth in and that as to I QX more and that contributing ultimately significant mean, of we’ve million with that growth deals lot of net up revenue we’ve put ARR but we in

Karl Keirstead

That’s very helpful. Thanks a lot, Mark.

Mark Culhane

bet. You

Operator

you. Thank

Phil Fargo. Our next question Wells Winslow, comes from

Your open. line is

Philip Winslow

taking for Hey guys. my Thanks question.

deployment Just are maybe versions – the a some sort of software. are customers just I cloud on just versus of sense model the sort go to want wanted options, subscription kind about I the you had for of you taking. the going subscription or if the just are get of business color appliance thinking the which – but maybe into also

that of trends? last kind saw of what Just kind of year sort maybe sort of you compare and about this how how mix maybe you of a sense think that

Oliver Ratzesberger

our invested demand back variety goes are They but this the hardware. are is into labs Oliver. even on customers our hardware, that deploy Phil, to base. our of production the of you we to Yes, as They question. on-premises. remarks into see options expand megadata whether various megadata and earlier as on-premises, for companies my a And their for options. bookings them are on. deployments run linked customer straight offer. gave A whether strategy I in is that ability commodity of asking hybrid hybrid strong where that experimentation see on We cloud deployments, focus deployments we a are heavily cloud virtual This that on, optimized in majority May the towards examples very great incentives from on-premises a and subscription still large is across with

Philip Winslow

get for Got and that how of do as you sort it. sort Would mean, for Spark, SQL-oriented. et flake do a your engines competitors cetera. with support competitors And more technology – different cetera, it cloud, one are support you positioning but with some store, well. et then, talked competitive likes mostly partner is and of are Day, you them trying kind guy, seeing things there. the other Vantage, the that your call then, to of is I languages Python, How partnering product data sort more in Python at integration of data There of about or storage the SQL up languages. language we the here, at to some question versus Analyst your SQL point on think obviously breaks their are also of just think single-point multiple engines about the of or precision about of one new in the

Oliver Ratzesberger

of solutions. I – think Yes, one most of differentiating a the companies. characteristics back megadata There so, lot for this goes to point is Vantage of

they from thousands optimize mentioned single companies you with of a data these and their deployments engines structure, a last it’s instance others within inherited scale they have dialects, and different lot a various cost their and us users point – to Therefore different very, virtualized that deployment. and it the like versions maintain of thousands in environment. grow give solutions companies to languages thousands over you turn Python, which that so languages, or single making decade applications ultimately lets experience integrate mentioned they companies this not megadata deployed have around difficult we if and choice different of can integrate companies In option very hundreds, of literally solution we that tell them the ecosystem, have reduce languages With that their have. that fact, simplify for for that have their with user a mega point into and Spark simplify their and of that these providing Vantage, of for the workloads different

others, that it’s interest directly and you like with our finding mentioned in reason. customer options is the really of three customer of And on advanced simplification dialect That that lot dialect storage top integrated so, for Vantage momentum positive of of what’s base. our base one a really one at Python, integration, SQL one dialect, our driving megadata engines

Philip Winslow

Great. Thanks, guys.

Operator

Thank you.

Our from comes Barclays. Raimo from next question Lenschow

line Your is open.

Raimo Lenschow

guide, my CEO. Vantage Teradata if new about direction? way. on had think XXXX the have feedback What’s you. Thank guys especially expanding question. Europe, about question – that do good you new taking entire in talked customers, Hey, Oliver, the as quest how series were we the in old thanks the from those the what’s of now, about you for large from luck the The think feedback about Teradata’s more kind very to you I your

Oliver Ratzesberger

deployment internal yes, appliance Clearly, So, as our very said, Vantage we multiple have and remember, deployed what obviously, bases ago series strategy, across we choices, the base. you a good Vantage. Vantage – reception customer years that on we like is companies focus XX megadata so and I have the out done variety pointed different the of have customer something And finds hardware probably XXXX we from we for at our of Teradata beginning platforms. platform. in have

various configure a platforms that through cases eliminating to build that hardware platform used prior on-premises has that hard the that hardware is compute IntelliCloud platforms the when software thereby storage used were We the platform. various software-defined This we’ve shift to to and are to remember, a needs and allowed platforms. us which environment because, one different the software-defined wired these where down and separating meet basically we from made is we in

pick create formats no to that it needs very is what by the in and storage makes optic get we're we we IntelliFlex with software-defined other with You compute, stores longer can but dial the story Vantage, that a imported it’s XXXX like a XXXX into storage. forever into powerful. And nature, will platforms, directly Vantage it can expanding SX up use place up was with dial now that

Raimo Lenschow

Perfect. That’s Thank helpful. really you.

Operator

Thank you.

Citi. Radke from next comes Tyler from Our question

is line open. Your

Tyler Radke

that remind walk is us just also kind adoption measuring that seen it how new at are share Hey, you I thank to congratulations you. strong of the Vantage Teradata? exactly consumed? you was go-to-market or purchased Is mention. us exactly version you that role. Oliver, you. us through Oliver, And the And could Thank how latest product the and customers on hoping of with upgrading could

Oliver Ratzesberger

make the several you, thank was Tyler. seamless simple as the Vantage technology as possible. Yes, a brought for we of goals migration big design together Yes, and over the as last customers years existing for we made one to that

migrate their without So, of datasets, customer necessary any any applications, . can versions Vantage into to data existing straight changes on Teradata prior structures, series

period terms Vantage in the optimistic production. of that software. out in very builds very short our for over as that is in of making for is talked reception have or is remarks, migration XXX And and the I a Vantage. almost that’s up compatible anything exclusively customers makes time path. good. we which and future of obviously rolling very fastest us fully All process Vantage the feedback driving predominantly obviously subscription in very that’s history, backward In Teradata mix. that easy that consumed ARR is adoption subscription of Customer the of are our in of

a that point complexity develop business what away that yes, deployments reducing capabilities and of other when handcrafted we as as solutions, of takes frameworks. and point integrated they ecosystems complexity if before and has it's so, comes their to the languages as of And of now of for customers in-house. lot our their to these from this heard big This side, length department analytical versions be Vantage, ease fact migrate of to the because part different has many well on IT

Tyler Radke

we saw, And Great. obviously, the a XXXX. Mark, services consulting for follow-up services - guidance for

disruption thinking in, Thank you the are cause? something are factoring minimizing in that you. group? thinking What the reductions? you about are could you that how of realigning terms consulting curious And about headcount Just how

Mark Culhane

Tyler. yes, so, Yes,

focusing our more our analytics Vantage customers So of to consumption are and around we drive it megadata software realigning platform.

we are less of which sets is, the consulting for and we skills new consulting are reorganizing we have various we expect the said this that practices So, because consequence yes, in we sake. around of revenue, not

a focus customers with consumption. megadata We are and clearly driving doing around consulting

margin So, profile, to that are for is, overall costs the to company. there going operating going profile of which is the the yes, lower improve be consequence

of it that builds the that has operating the phenomenon the attrition, which is the the been is that. margin lowest just throughout headcount which XXXX will in of we both why same is if that’s squarely reduction about in perspective through In what good are our business, from it terms nature then of driving our as where across versus is year, happens natural combination to traditionally QX which just But feel and process, and look it XXXX we of to a be and strategy. what quarter a happened you align

Tyler Radke

Thank you.

Operator

very And thank much. you

back will final Ratzesberger We are the turn out for I remarks. now of Oliver call time. to

Oliver Ratzesberger

to you XXXX. very really with our everyone. say, in Thank QX much, summarize, are To and performance I pleased excellent want we Yes,

people. our First big a like to reiterate and I’d thank foremost, Teradata you to great

success possible their Our our not have customers. to without dedication been would

for XXXX. As said, very we we and well we believe are optimistic very positioned

strategy is working. definitely Our

is and committed day. customer that, are to execution Thank a we underway Our With in driving and long-term again shareholders. value our success we look you continued and for updating you forward well to have great much May. very

Operator

Thank very ladies concludes This much you call. gentlemen. today’s and

now disconnect. may You

Teradata (TDC) 7 Feb 192018 Q4 Earnings call transcript