Earnings call transcript Q4 2022

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Operator

Hello, everyone. My name is Drew, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Teradata Fourth Quarter and Full Year 2022 Earnings 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

like Christopher the of Lee, Development. and now your Investor over host Corporate today, Senior to would conference hand to Relations I Vice President

conference. You begin your may

Christopher Lee

quarter morning, and Good to welcome Teradata's full XXXX earnings and year call. fourth

Executive financial and today, Claire outlook. results Chief and Teradata's Teradata's lead who Officer, by will Chief our McMillan, our Officer, Steve will Bramley, Financial President call followed discuss our

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

to our later of to the our current to are to Teradata today's of note outlook, this XX-K today, that risk These While a these XXXX subject could file Form results made forward-looking undertake number and SEC and are actual are factors statements differ forward-looking obligation and statements or that uncertainties the no in reflect duty year we as Please earnings for release in risks they These intends statements. month. filings. update are cause described ended XX, materially. December

today's other measures, items expense which compensation certain as in stock-based we exclude and non-GAAP financial will On items earnings release. such described our be special discussing call,

on included otherwise, discussed our constant a We other cash at investor.teradata.com. numbers and such Investor Unless in which A non-GAAP reconciliation page currency the basis. accessible non-GAAP on Relations GAAP results all stated is revenue earnings to as will flow and measures today's call comparisons. on of free our items discuss also are is non-GAAP website of release,

will later be today available on replay website. A this conference our call of

the I will turn Steve. now, to And over call

Steve McMillan

introduction. Chris thanks and us, the joining for Thanks everyone. morning, Good for

fourth robust quarter, off capping Teradata year. a delivered strong a

from for especially macroeconomic of pleased considering very are in metrics hit challenges all operations full year, key our that Russia. the the We our ceasing we

migrations million, our XX% quarter ARR in constant $XXX largest propelled was Demonstrating incredible workloads the as as differentiated and for quarter of by larger delivered new, expansions. our last team cloud cloud than leader, ever, healthy of year-on-year cloud growth nearly year. platform, QX XX% public increase a resulting the drove a customer was currency, incremental fourth our This in momentum demand that of

finished year year-over-year in We outstanding driven of in X% ARR sequential the constant cloud very the strong, quarter, fourth growth Total million $XXX activity. by Our also generated currency. up

In steady, of addition, is business our migrations subscription see the It's growth. in team's the remained performance light great on-prem cloud. fueling healthy ARR even overall that cloud in total to to

Looking results transformation. at our our progress positive strategic showcase impact board, our tremendous across of the the

cloud-first, the short market. just more consistency. delivered Just remarkable ahead set six-fold and and over we executed future, cloud-first up ago, results growth the in well two a with than stepped entire on that determination team years of our have be would and growth we Teradata declared we our with sights cloud; Once

illustrate am I successful analytics. a and right, was transition these that pivot strategic data results and leader market-recognized to Our our proud very in cloud

in they extend The are possible, among absolutely them the in We warehouse, their technology on-prem, and and markets. demanding with the customers we need the hear and a complex data them serve capabilities customers cloud, from best with analytics now they provides where that to or that edge data whether regularly most need lake, capabilities their Teradata best-in-class meet hybrid are the we or house, our model. lake now, they that world's help enterprises,

future. to gives customers will dedication and Teradata confidence our in data the will capabilities of that analytics bringing the the technology strength they need success full Our customer keep and

Teradata. Teradata they customers remain high migrations workloads we expand in cloud, customers transition also and to seeing the that with are as when cloud, are with pleased see We to start the

remained solid quarter. XXX% expansion net at in the Our rate cloud in

nearly cloud logos XX% and quarter in than the in brought in new customers fourth accelerated logos. in more as sellers last XXXX. the new added momentum our year We Our new

Our new just examples. I'd industries. a accounts to share multiple from all few and like geographies across come

platform and strategy, and Azure internal of to leveraging internal positions a office our Teradata in to selected address its capabilities Leveraging business. an curate the that modernizing client Teradata in alliance, is challenges businesses building to the Kyndryl its with companies position being Kyndryl its component for go-to-market out chief as data data It data key zero. its delivering while on team cloud use acquire excellent key face. insights and

it Teradata chose help products. analytics from A major data AWS on Japanese IoT on provide consumer electronics their manufacturer to derived

information of government enterprise the uplift government Australian data large data initiative. underpinning and its vendors. practices enable a information international with the procured This customer enterprise A of the has strategic collaboration with platform, competitive was within agency program partners. number across analytics Azure and department, and won management KPMG basis against new other Australia's This and sharing department's strategic a the will better was entire as on Teradata win to its

a of are wins to the people testament Teradata. These

driven, agile execution, accountable each other win. helps being market of in culture Our and truly us to

As company, we embrace everyone transformed in future. the have and lean has see been to amazing the it

in us the that has successful company mantra been with pivot will of what our our facets heard cloud. our do say This throughout have acted "we transformation, as the do." You we to we and urgency all say commitment

VantageCloud completely to end launched of the Teradata at rearchitected organization Lake cloud ClearScape engineering and our platform Analytics analytics native, data and and QX. we fantastic Our

are positive these pleased capabilities. response the We of powerful quite market incredibly with the launch to

leveraging powerful building, customers get is pipeline we and to have business value. Lake our meaningful already product new Our

XXXX, major advancing employees, up. partner significantly we we partners, out motion; training approach. from organization building made strengthen ground the win partner to our leading capabilities, thousands partner-centric When building a continue of our increasingly win, and and with strides In we partner-first our we

built resellers. growth cloud providers, our ISVs, the robust partnerships Our deep the intrinsically tied systems is cloud leading integrators, service and to teams with have

deals In and fact, partnership in of partners service were systems largest with our providers. XX% integrator won key cloud cloud

element key as in to a partnering our ahead, we growth. Looking remain committed

area. deep continue partnerships We invest market in in this momentum will to building accelerating and

very named in Cloud leader recognition year received that Capping a news the the continued an data in in Database reports XXXX off positive Management was Gartner analytics. Gartner cloud Teradata years leadership. our leader from This a Quadrant Systems. of two row Magic for a in that XX We being makes impressive important cloud named denote fantastic were

another sweep, Lake, One Traditional consecutive four these Cases each scored cases. Warehouse made streak of in has winning in had Teradata Number One in for Warehouse, a We highest all row Use use in Capabilities Data Cloud the Critical we as the Analytical cases Analytics. second in leading year use full in One report. in year Teradata again Number Streaming Number Logical and in Data DBMS garnered Gartner for the One This that is Data Number a scores

as a among are of recognition analytics leaders validates our that We and cloud this leader data. strength in proud

great market In a comes we made XXXX, such with in we XXXX rewarding citizen, America's ESG of obligation and be leader Capital's in as the and companies. Newsweek's most an most very program, list responsible companies corporate hold America's Just Ranking to Being duty is reports, processes, responsible governance. paramount. key also our act to as strides included just a It of

were is ESG eight named of for World year one broad. in its commitment in Our we leading deep row, as companies, the Index sustainability-driven the we to Index American Sustainability for time. In were a XXth the North and in recognition Dow Jones' included and

our year, about I what throughout hear. more hearing be you confident will unwavering am and commitment you that will to the ESG like You

and more As have progress we to great tremendous who turn financial want share made Claire, to we over I that performance, XXXX in call the will in about I future. confidence our our emphasize

on in forward team earnings focused share steadfastly is significant targets. delivering on to We entire strong Our preparing record take per step track profitability we XXXX. extend of and another generating to our look our remain

in diluted total outlook the per and on we both XX% $X is cloud We in per share forecast is to billion-plus year-over-year. of Our our more earnings accelerating than non-GAAP share XXXX cloud and XXXX ARR meet goal remain $X.XX of increase XXXX. midpoint. ARR, track This a almost at growth

and believe for our strategic transformation is results. firmly right proof is our We in Teradata, the

customer stand people our and durable differentiated Our to dedicated good remain success, strong We and to and free on execution profitable technology we growth the our sales delivering cost discipline. continue flow. will cash firmly is in our commitment market,

the turn Claire. to over now call Let's

Claire Bramley

you, morning, and Thank everyone. Steve, good

delivered These results year. Steve's we strong in our to share on for full outlined Investor finish momentum great strategy delivering and enthusiasm metrics all both the Teradata progress on XXXX in XXXX. Day. I demonstrate quarter and fourth our our on the

Some quarterly highlights and annual include:

XX% track to to reported, as achieve in and scale ARR ability XXXX ARR drive growth $X on billion. our grew showing XX% cloud over target of currency our constant Public at fiscal and year-over-year cloud

operations. Russian reported, as Total $X.XXX and X-point billion, negative impact growth currency decline of ceasing constant year-over-year from our ARR in despite a X% X%

$XXX year-over-year decline recurring constant and X% quarter reported. as a in Fourth currency X% is revenue which of growth a million,

of For the $X.XXX achieved we recurring year, billion revenue.

revenue exiting the growth, excluding A impact currency. return to after ARR annual of Russia and and

quarter outlook of diluted Fourth the $X.XX, earnings which is $X.XX outlook $X.XX, earnings range. our above high-end the $X.XX share range. share above of non-GAAP non-GAAP per which per was Full-year diluted is high-end of our

million, a flow cash million. of free quarter Fourth $XXX year resulting flow of in $XXX full cash free

enables performance Teradata team's achieving of strategy. which on-track growth current our in cloud-first, the profitable proud environment, to am I remain the entire with

details Let starting me financial on more now some revenue. with our results, share

Recurring our over period resulting by strong recurring in cloud was is up $XXX team, the revenue was last growth X year. from driven year-over-year. points percentage which The strong constant revenue, revenue, total percentage as a of was million. Fourth X% revenue quarter currency by growth execution go-to-market XX%, same

there was recurring headwinds exiting by quarter, This net from $X related Russia the offset of was upfront positive In currency. approximately and a million. tailwind revenue to

and impacts presentation the earnings of in year, business. quarter revenue and demonstrating the ARR growth the the full Our underlying to provides fourth

the $XXX is was given Russia X% develop ecosystem. as and constant due Fourth to million, year-over-year reported. a strategic total primarily robust and year-over-year a business, decline declines The consulting decline quarter flat in pivot partner in to our revenue currency exiting

healthy XX%. be dollar continues Moving gross gross higher recurring profit mix The primary was fourth quarter to The to generation. quarter another of healthy of approximately driver fourth a of in reported gross period of the million $XXX and revenue. margin We profit, profitability. profit generation our

For of increasing driven profit, outlook to continues we XXX we a scale. as the provided the gross in year-over-year start mix basis or decline our year, an XX.X%. in-line revenue gross cloud with by billion point business our approximate cloud the of $X.X reported primarily XXXX, of at of This is margin

margin XX.X%. profit an Fourth quarter's million, was $XX of or operating operating

focused to while Total slightly operating are growth. investments sequentially flat maintain positive our future return-generating were down discipline prioritizing and year-over-year. continue We that cost on expenses

$X.XX. currency and partially non-GAAP above a share the by offset of was recurring slight per outlook higher range high-end diluted revenue earnings quarter which our saw by Fourth upfront We taxes. from $X.XX, is benefit

in XXXX, we flow capital with of free million. cash and year the approximately start the allocation. million the at $XXX to outlook of in-line of cash flow generated Turning We free $XXX gave

We continued flow. and our XX% to XXXX sheet to take our balance returned cash strong advantage of of free shareholders

For full or repurchased X.X million $XXX shares, approximately we million year, in approximately total. the

Before to like context: I provide for to XXXX, financial I'd our annual set make the some comments outlook

We growth platform, drive cloud the leverage momentum and in cloud, expansions, continue VantageCloud to ARR. that intend to total workloads, logos. new adoption be and XXXX more In activities on from both indirect we our to resulting direct in migrations, our drive and of focused

We hybrid solution ARR market. growth best with total in the will enable the

a progress We solid cloud as On scale continue expect grow gross in headwind total cloud slight revenue. year-over-year on we benefits. improvement we we achieving as margin to gross a anticipate margin,

continue will to that we in maintain prioritized attractive return. cost an our margin, expect and result we discipline, operating make to On investments

quarter's in XXXX we of payments flow, convert cash cash cash cash free to our but one-time higher like last everyone offset forecasted by tax on will had more flow million, in be the of The that call. we durable will to mentioned quarter restructuring non-recurring XXXX. a a profit the remind free into $XX I'd higher flow, and first benefit than Regarding free tax payments earnings refund

from commitment, at remain in return we capital cash increasing have On at shareholders free we while invest our Demonstrating growth. and allocation, least to this XX%. flow XX% to returning least to to committed of are been continuing target significant capital

and cash We in free sustainability to our confidence returns-based disciplined resilience and capital of allocation. our the approach in have flow

relationships customer our We has workloads enterprise the run that believe on model a strong mission-critical Teradata resilient business our given platform. and

prudently not keep to conservative is but increased macro-economic outlook. our thinking continue We the XXXX be on are spend. influenced scrutiny to starting It and it eye on close see enterprise pervasive, has our environment yet a in to

diluted to year-over-year Our as X%; of range in total ARR XXXX in follows: is to to cloud flow grow is of $X.XX; the million public annual to share of $X.XX X% X%; of total range X% X% to the the is $XXX is free grow to the in grow range is XX%; be of to be outlook per revenue expected grow X%; anticipated the expected million. is for projected projected year-over-year range range non-GAAP of in year-over-year in in to to total to anticipated recurring cash range to ARR is XX% to the year-over-year $XXX revenue earnings

for some of XXXX: of other approximately XX%; a approximately tax weighted million. shares average million; modeling assumptions Here rate are XXX.X expense non-GAAP of $XX outstanding

be the to of We be tax $X.XX million. quarter weighted to be the earnings XXX.X XXXX, the approximately of to diluted XX% For first project and anticipate share non-GAAP $X.XX. in average range we rate the outstanding non-GAAP per shares to

provided on our we towards at September the open Q&A, we XXXX Day. Investor call goals provide I'd our overview Before like XXXX brief financial progress the to a for

track $X ARR on remain achieve billion XXXX. to over of cloud We in

For revenue we in-line fiscal point, of of us, in revenue, using we and the provided headwinds, strong lower a total and compound are that the growth XXXX We've fourth forecast the the growth total building the future starting which exogenous momentum rates recurring exit the XXXX Day. end just as about at now with quarter. we we ARR, are we talked demonstrated believe behind annual on Investor

the the Day, the we shared cloud margins you margin in We with XX% at operating profile drive in also an on Investor low profile margin improving to remain range. track with gross

million, cash for $XXX exit free macro the of current a conservatism based $XXX which Russia of to between million and accounts environment. introducing are XXXX We on the in for range flow

profitable I'd like look to healthy we are and and by about growth excited return to that conclude we future a in shareholders. to achieved restating XXXX what driving forward

Thank please you for time for much Operator, open can the very your call we questions. today.

Operator

comes today Citi. Our Radke question first Instructions] Tyler [Operator from from

is now open. Your line

Tyler Radke

was wondering commentary QX. the environment, strong Obviously, the you. little macro on Thank Good a you a morning. bit. on expand it that Claire, could I'm if on really

you into cloud pointed there Thank just maybe seeing how you your deals decision-making the out, your you slipped ARR are QX? out ahead guidance. were incorporating ARR of of As XXXX? are outlook and you. are where place that line in Where elevated to that And taking for

Claire Bramley

morning, you good Yes, Tyler. question. the Thank for

So, as is economic all XXXX XXXX we also volatile know, macro pretty environment. and from a

significant any to changes behavior. seeing not customer are We

remarks, little prepared mentioned a bit but We scrutiny, as pervasive. are seeing I my of in that's not

the and were our we team's XXXX. had strong with that as of So, the pipeline. execution strong on pleased We delivered pipeline our mentioned a QX very we team well at last earnings, and extremely

that about So, into also But XXXX are we we that the are momentum we sure volatility factored to have that excited we have make and XXXX. into in the that new the want we our conservative given year. and going

throughout with and our will will done we models that and update continue update closely. always, As you information. to monitor We've team the XXXX, and we latest the

Steve McMillan

And still look solutions for through I is there from marketplace. certainly of that's and reports, industry in marketplace. you customers. analytics the I'll see We're player that if demand robust data that we're think analytics all just a our data the Tyler. and that, add to And the in seeing something you

to So, to they respond pains. turbulent use want these them help to macroeconomic data

really our the without artificial. customers, We, It's in believe data interesting intelligence great like artificial of that seeing artificial interest just is rise intelligence.

usage the insight for that data these built of to best of ML complex into We're (ph) being our AI engines quality and the sets lot those] Teradata our [of that the engine of us terms set. possible so, in enable analytics capability example. of uptick activities, to the model seeing that are from provider customer really apart a providing really the capability And customers of

even marketplace industry from is that -- I from experiencing in a fantastic an perspective, reflect think macroeconomic that we're though these pains, segment So, we're results opportunity. everybody fantastic and seeing marketplace

Tyler Radke

assumptions? understandable long-term of a a if little be as update long-term a long-term come of follow-up, bit your think from bit cash obviously, currency. Analyst than some for margins? assuming on to then, appear higher lower Thanks. guidance, And you further. for wondering it's Day. next year change assumptions initial you flow, tax unpack the a relative which the your and But tax are just could in What I'm Claire, any Russia little the kind that bit given And I on free to gross modeling for rates

So, you if could that kind unpack the just all takes downward flow? of the puts revision driving in and cash free

Claire Bramley

Yes, absolutely, Tyler.

so of So, saw biggest as and the we that as exogenous currency in said, impact Russia you you is XXXX, because highlighted. the being headwinds

cash end free So looking of changed goals specifically. XXXX on our that's XXXX of why financial the flow, we've to out from kind

of keeping is margin aligned that to much in actually Investor out are operating Day, margin? goals in how range. what is And the XX% low rate we We laid our which

ones XXXX. So Investor that, we've ARR our line our and, kept with cloud in the key public numbers are obviously, in that Day

free those to on look to obviously, higher rate, we're taxes tax and, taxes a partly due we're as we mainly paying the higher The forward, paying cash that cash flow came as and exogenous due income we're down headwinds generating. higher more

thing benefit did from, QX that XXXX. one tax get mentioned we XXXX of was I the remarks, in as my refund that in The prepared in

comes a out that's benefit obviously, forward. and So, for moving XXXX one-time non-recurring that

Tyler Radke

Thank you.

Claire Bramley

much, you Thank very Tyler.

Operator

question comes from Morgan Stanley. Woodring from today Erik Our next

open. Your Please now go line is ahead.

Erik Woodring

build I feel the you on Great. AI Steve, like something so Thank Generative much. wanted just rage. all I it's said. that just to you today,

the just interest you about months, ARR last, either how to a Would if for impacting platform? double and a maybe little generally Vantage your there And guys? have to Teradata has it, follow-up. status of types while around cloud you if I comments, then, is change more has month just this your just the click in kind there. unpackage the double been just know are comment bit so, workloads in call wanted quo for love these Would And Thanks. let's your click love any this of on or a I could if been to three growth

Steve McMillan

thanks, in that for tremendous our capability, analytics can a just terms of data the cases data Yes, We're we branded an Yes, Erik. we're at model fact not warehouse. models customers. warehouse, lake, ClearScape And was the analytics one use Teradata customers capabilities of grandmother's management data fraud enterprise your really is reasons and and QX launched that a the the platform end powering we're of emphasize Analytics of numbers ops models risk ops really for is capability, train AI banks, that for data engine for the like inside our we the today. retailers, our to

that making we're customers. terms really real our for outcomes in of business So,

And critical inside high-quality may they it's Teradata, copy models the core been an that's absolutely and mission they not only know that not basing customer. that the activities have to that it's of those extracted that's data modified, that, are real on because data utilizing

if it's for So, for looking reduce (ph) and customer, Hopefully, really a it's at stress see optimizing bank AI we use airline if those business at next a looking customer models a best [and question, maximize how retailer their] its it's say to flight your if sustainability, action cases advanced an at all Erik. looking operations that to ML and answers or driving profile, of that's models, using Teradata value. utilizing those analytic

Erik Woodring

new similar? help days? I customers? calendar if earlier comment in understand bring follow-up think 'XX of the this back about a new Thank you logos is just than than Maybe profile calendar to those door XX% excuse just providing What the 'XX. in maybe step Again, on able made Steven. No, you better in And in you some one different? very -- level, if calendar detail XXX maybe and Anything of me, you another 'XX take in more looks that's with maybe logos over just the cohort us the new that high you, looks more the were helpful. Thanks. can call last

Steve McMillan

cloud-first the a a years, and In company. take reflect to I'll to to ARR. Yes, those cloud from -- years a we have over over a take million and X.X well $XXX business of $XXX last well And for outlook transform as that million had we've grown back X.X sure. X.X step our short as that XXXX just of journey is cloud

the rapidly execution executed but and smaller to doing, new growing The transformation expected of that that and making that world new much most insight and we looking logos that migration logos starting we started will time expect compare business just the us the available all start are and with complex with we're be us take we those new It's we journey in as capability. still customers that that logo by those it we we kind the over companies grow working engine cases of activity to and in small the in size it the activities use have biggest out is of of as with in when cloud. terms from its some solutions to those

part So, part us future that the into growing small our is motion it's for see a the we logo future. a key we building, of but new how see

Erik Woodring

the for details, Thanks Super. Steve.

Steve McMillan

Erik. Thanks,

Operator

comes Our from Wood Cowen Co. next from & question Derrick

is now line open. Your

Unidentified Analyst

on about a guys. how ARR think, [Andrew] on-prem, It's on Can Thanks, business I quarter. the quarter. Hey, renewals on That Derrick. you talk strong and would, the strong. Steve, imply congrats was for size us How on renewals has large how last is few visibility business your And could versus you year those months? XXXX? your this versus ballpark expectations? this over renewal tracked base changed the (ph) for

Steve McMillan

just maybe bit some Yes, give I'll management renewals of I'll from and of a a you a perspective, let expansion a comment team landed great Claire From renewals the the the business. quarter of numbers. on-prem our around renewals business. our on little

very even we're some them on-prem stayed customers. as As remarks, and migrating on-prem cloud into of taking cloud we into steady, turning cloud ARR though the that said her and in -- our prepared ARR said Claire

marketplace you reports, say And the then industry single that to flat the digit at growth. on-prem market, if look a they is low

QX pipeline saw that opportunities quarter. that terms team for to the in of see activities result in XXXX to renewal fantastic a execution pleased of really by [selecting] forward and get No renewals for out of unanticipated opportunities were we we terms the or (ph) bringing steady overall. So, to space, the

we have inside robust I the Teradata executing reliable, renewal engine consistent results. really is think generating that

Claire Bramley

Yes, that adjust fact strong highlight thing the Russia growth growth. a currency, for have that's as on and I cloud positive. clearly, that we the only the you really the strong would But ARR numbers really total fact obviously, just if is ARR well,

and So -- continue as see our Steve in to about. we on-prem, expansions, talked

We as mentioned. continue renewals, to see you good

And that that executed so, momentum we as off XXXX. come saw XXXX, kick very throughout with of out we're we and pleased we're see QX. given continuing The that team way we the as headwinds those to

Unidentified Analyst

Yes, assuming? that's the Thanks. any year. be or pervasive well -- are implies not cloud helpful. yet migration this XX% scrutiny would in or as for great. pervasive, gets Claire, us new assumptions about comment, walk assumptions your this just cloud same enterprise net Is that activity it scrutiny you The on And kind sorry, but the the there? through what worse? XX% And ARR guide for Maybe ARR year of

Claire Bramley

Yes, sure.

renewals very similar migration see, is big on-prem, the strong of anticipated We're And in majority and expansion you - a seeing net cloud So, ARR growth opportunities continued the to anticipating to from in to saw migration cloud still expansion as our continue so come rate can and from we expansion. rate a in XXXX that strong as XXXX, XXXX. we're standpoint.

XXXX continue smallest volatile environment growth. expand, is us pretty logos become conservative and -- our expected we more slightly new is mentioned will to that And of portion of land now. to about as it's new a right part there been but Steve As still earlier for question the pretty logos, we've significant macroeconomic knowing the Erik's

With migration Lake those or through big happened good XXXX. as move from experimental-type workloads, our it expansion, help logos, XXXX, it's as opportunities of most launch So, that VantageCloud new to departmental logos. that and there coming in smaller a new see whether new we some opportunity we land

additional mention did a I bit little of scrutiny.

was it's take we changes and consideration that into customer our I As XXXX not but just pervasive. thought No derisk to to outlook. behavior, mentioned, important significant

Unidentified Analyst

Great. you. Thank

Claire Bramley

so you Thank much.

Operator

question next from Bennett Chad Our Craig-Hallum. comes from today

open. Your line is now

Chad Bennett

for Thanks questions. Great. taking my

the we cloud on more of drivers, side follow-up ahead, of right, I amount on of year, or to I Steve, think, you'd the migration at you just past you at if incremental that at expansion do migration to start deal. buying do this continue mentioned annualize net think, a the the actually consumption or what buying see initial do So, you at kind it we do? the And rate ARR if you see potentially Do that Thanks. point that, accelerate expect is? think

Steve McMillan

-- Thanks but it into we Yes, expansion increasing customers lot that for the net in point the cloud of XXX%, was the at at for question, the I think migration. making capacity terms made the were in actually account our rate taken point a fact Chad. constructing a of deal of the that

the in the workload is to customer the to So, to construct execute is going attractive customer deal a point for good that encapsulating job a that to that of that that, the migrate from in and anticipating require saving the cloud sales team forward in terms that at of commercial cloud.

questions great great the they on-prem from of on that to terms and workloads we the And had forward the increase to the happened of we it mission-critical that growth run also visibility as our prior things I think one have we've of kind the the one the patterns of customers call, as that nature perspective. relates and from encourages move some in the of into the that allow customers that world biggest to cloud. got have construct the insight capacity the in them that that us it's commercial very into proposition value on-prem to that historical an initial fact

we of the your the yes, migrations in growing of question, simply to at of to terms contract point answer expect migration. at in value do that So, growing continue terms --

grow we Our a healthy I opportunity we'll factors. say, basis to continue industry, at a from an XXX% see from but that, for do and net couple think that pretty of as-a-service expansion it's business, of in, rate do the to couple --

machine can we'll mission-critical the that use save great an actually Analytics will Cloud also from Two, how customers. workload too. Everybody's data learning, really warehouse where launches save but lake allow expansion save you AI, insights organization, we'll that their about from Data ClearScape we analytics. customers, utilize product talking value grow with derive our data our enterprise the your the and AI you perspective, One, like you've utilize that to to proposition that inside cases data got new and Lake could continue how data

that are new answers use question, we overall force the year to our new to this number. that Chad. our into really propositions enabling customers So, sales cases, drive drive value expansions Hopefully

Chad Bennett

And quick follow-up. Thanks. did. one It Yes.

do there maybe Thanks. any Just in there the on on Lake and Lake, sense of of standpoint, data real months, your it's the roughly or importantly, been into that, year, of Data a more it's of market just VantageCloud then kind few is how Lake, factored maybe perception kind management cloud out your platform? ClearScape much off. data know a VantageCloud well, -- secondly, five I months, ARR, this awareness a whether questions I'll mean, kind only unstructured hop But be more in broaden Just of target are I or two maybe early four handle especially from guide cloud that around is but quick. of cloud you year? out ability there to lake, your sense this

Steve McMillan

Yes.

So, Chad. I think a couple things, of

versus We're interest VantageCloud it's that break what's to lake tremendous seeing Lake. We existing our right? perspective, cases new on capability. customers with us. to VantageCloud use both respond kind immaterial, and our our going are enterprise from of workloads From customers demand the cloud We never our out and and traction

the point, VantageCloud from the perspective if warehouse it's your technology. that to best best utilizing what not market a do so, they end aware access make the utilizing QX -- very the can also lake they can was, launch data wanted at only very enterprise have lake of we data And to VantageCloud cloud solution, technology, Teradata very

using can our can to maybe just Snowflake And far hey, outpacing best store you data you deliver cloud. deploy may And insights the far an why you part in of of native you are been cases, the the a -- object or of we We taking out use propositions about message is, that your key of unstructured outpacing as object native we'll of one intelligent-native the now Number that analytical types and Gartner becoming enable across accessing a take on-prem or all One that's lower the Teradata that of using all to data have analytics how to the store in Databricks, have we four getting thinking customers maybe market. cost and the high-performance objects that engine of have. to continue

Chad Bennett

you. Okay. Thank

Operator

go Mohan Our ahead. question from of from next Please comes America. today Bank Wamsi

Wamsi Mohan

positive thinking Could Good the in share Thank that dynamics some far, that seen earnings right net a in dynamics would XXXX? revenue to morning. we headwind uplift that the Yes. XQ we in and and get assume we so thoughts we've that XQ and given should XQ? about be And around XXXX? neutral XXXX you. is a and it be consider to in of to upfront you Should XQ

Claire Bramley

that. take me let Yes, Wamsi. morning, Good

through the recurring impact. go said, you as we're revenue to cycle our starting of So, upfront

similar I with compared will to but we 'XX, point, of we that XXXX. 'XX saw So, think changes significant seasonality no to that in kind see year-over-year, expected your

So, and a benefit slight in benefit point, QX upfront, a year. less your throughout the of to then

you impact. factoring But material our and when year-over-year, look very year that's at as what seasonal well. we're So, the anticipating not changes, into total we're similar outlook

Wamsi Mohan

and And around comments on longer-term Claire. your margins. flow around Okay. follow-up then, margins, particularly a cash just Thanks,

what low your base XXXX, Or end, the it if trajectory you're Any margins, that's gross sort color the there? I size think that is? in exiting margins. you OpEx we of said blend not, you're still anticipating, towards the that the take coming higher is actions there a and if if there at look maintaining incremental offset? be revenue of might the up that Is in taking

(ph) on changes And flow Claire, does tax R&D the in in us 'XX if tax you on some And be could, much. free the cash any] one the -- you anticipating? credit? more you that cash headwind give 'XX. might you're versus just what [make Thank Could sorry, so on sizings potential that

Claire Bramley

Absolutely.

margin scale progress So, we're we our we to and an improvement cloud on through regards XXXX, assumptions making margin look our good yes, as we to all, gross so of operating first XXXX, in already as expenses Wamsi, gross that. had with out assumed so

XXXX that exit coming that to out of is for from gross So to definitely business. opportunity our an from margin opportunity scaling us grow of cloud rate the XXXX, an us our for

your efficiency To operating expenses anticipating are point, also we improvement.

with cut So, to anticipating XXXX to grow, out we significantly to although we're we continue not dollars, again, as there. anticipating are efficiencies

that what's driving income operating that's improvement. So

able There standpoint, we us significant of mitigate headwinds, that. we have weren't know, As of to headwinds those currency, whether headwinds. you offset from but did all to were big an EPS it's it's whether some Russia, we

discipline that we approach have, for So, efficiency. operate that we can the thanks we cost know

changes we're not over any significant planning So, reductions and time.

looking done earnings We earnings it nothing We as restructuring, materially last call have this we call, forward. mentioned and incremental but some mentioned.

purely gross gross expenses to operating improvement public coming margin margin as cloud and it's efficiencies operating scale at we perspective. and expansion the So, and continue from both

second flow I question, XXXX to your in from to with Moving bridge of terms follow-up question cash your think, of kind free XXXX.

that we pleased but in So, meet to we 'XX. benefit able that were again, $XXX $XX we did were have of that million, one-time QX million still

obviously, you So, unfortunately, that a into profitability, as and kind number of cash so flow, that that. we we, are is if that flow the a we growing account benefit offset free take get underlying take by have recurring durable That, free being kind from cash fact of restructuring.

cash restructuring and So, in higher versus XXXX have restructuring -- we incremental taxes. XXXX those

of million. 'XX from as get 'XX our to to to $XXX that's bridge flow you range get cash new So the million free to $XXX

Wamsi Mohan

much. so you Thank Okay.

Claire Bramley

Wamsi. you, Thank

Operator

Pat Our JMP comes from next Walravens Securities. question from

Your line is now open.

Pat Walravens

from say the ago? environment has Steve, changed great. competitive Thank you how it add years Teradata let for was three would my today Oh, and what congratulations. me you,

Steve McMillan

direct a into Hey, very for that's the point Pat, question. thanks --

I repositioned of think competitive terms In company. the environment, the we've

that best a So, on-prem we've systems company cloud the management warehouse, repositioned in focused have was a the as leader from being marketplace. in on database gone company enterprise and we data the

and continue moves they looking analytics, that And in being migrate have from or the to now cloud systems and differentiates not only the but ClearScape a data that at and unable us that's the their apart on VantageCloud now Analytics, were and have proposition. take And building that just capabilities that as setting they cloud investment choice their our the Lake the to are right we in customers perspective those cloud of the value launch to now. most to the on-prem workloads with complex

And ARR if this years, increased the I mentioned this of cloud it to remarks, its it's company my in last a at also in has Q&A you X.X $XXX million in and earlier look over -- what little six-fold session cloud the bit done ARR. prepared where

being deliver -- in that their You positioning and don't how customers our us changing need capabilities they into do integrate of and in complex workloads customers we're the us that your without our to most a that significantly environments in. view view that address strategic platform of that can the terms future to working environment the marketplace, the they how have

ago, think I compared a company. So, three we're to completely different years

Pat Walravens

a picture, helpful. agree. who -- I is And but I Yes, has evolved? how against, And it's you're in what -- but terms this think that big competing know of I

Steve McMillan

look CSPs think or and cloud you traditional Gartner in perspective. got services of [rate capabilities kind like terms AWS out perspective We check] Yes, the Quadrant, a from that really From -- native I clearly, think we competition, and you've a out] and from of the Snowflake the about pulls landscape competitive from or put native the in think Microsoft Oracles but about a IBMs, as new DBMS can then the about Google, think segments. it the see three it fantastic we cloud got we've if competitive differentiated -- can Magic native at there, [anyone (ph) Databricks. (ph) entrants with you from it the like capability. We

enables the a capabilities can enterprise across query have we per the perspective, that capabilities see, we differentiate also new of changed. an competition Teradata three win to segments cost completely from a us from from all just platform fundamental Our and platform perspective, next-generation perspective, of performance the

-- very the competition back a positioning confident now likes confident workload of in win sales can very to going platform about we to out the Teradata against from our we future as Databricks marketplace. and and Snowflake on and to So, feel take win feel teams

from of the decisions competitive And against a new come certainly, perspective we across from all logo is migration that perspective a activity. or

against that to none of new Our traditional They competitors those CSP smart something the really terms our proud I'm against Teradata against customers possible are can the in alone. native capabilities and stack of providers, and deal the marketplace in want make cloud they how organizations get the that sure deliver best competitively customers. the up delivering capabilities

Pat Walravens

you. Thank Awesome.

Steve McMillan

Pat. Thanks,

Operator

Ma Howard Our last from from question Securities. comes Guggenheim today

now open. line Your is

Howard Ma

I Okay. Great. a have Claire. one and Thanks me in. fitting for for Steve question for follow-up

the you significant you Steve. XXXX to about strategy and ask your buying in to continue I investment for forefront So, decisions? XXXX. to First of how customers' in will more put ecosystem want that a VantageCloud Steve, evolve in mentioned go-to-market making products at partner

from partner this sales incentive any from changes or specifically, a standpoint doing are in you notable incrementally what packaging? and a standpoint, So, pricing year, also

Steve McMillan

-- believe perspective, packaging and from through It's for thanks of most flexible XXXX. launched in terms model approach, the XXXX. a -- question, and in in consumption-based we dynamic both Howard. of I'll probably The pricing that's terms the order. effects certainty the just Yes, pricing start our a for our and us having gives models the P&L in certainly and new outlook pricing From that of marketplace. which reverse one We

for From systems ensuring the ecosystem. then We're with in invest work to us incentive potential SIs a sales with that terms investing an are in working XXXX. sales working and minds perspective, developers We're capabilities the as the being of in and more integrators. and area That's with both investment and consulting and enable that hearts and are continuing to in even incenting ecosystem [save] our of with customers, the we there customers ensure of they resellers and Teradata part we force be (ph) our capture teams to to terms incenting developer partners. CSPs their of help

example to of see of an in that I'll SIs, like that the systems transactions prepared had the that. the XX% said We engaged as remarks, mention Accenture We We'd to involved. XXX%. we tremendous from interest integrators large and take executed that

of utilize industry of integrators execute Accenture of an to have jointly system and only built perform solutions the having capabilities acceleration Teradata partnership that value terms scale, that the these in strategic to on some invest of we data masses going given solution to that in customers, industry our Some with that that. taking propositions we're of can continue see capabilities Teradata at require, those

I for know let and I'll there that. got a you've Claire, ask so stop you question

Howard Ma

for Thank the Steve. real you good Okay. Thank color. you,

guide, year implies of For last midpoint at XXXX incremental XXXX. question quick that versus cloud $XXX growth that ARR about $XXX the this your is of a in million Claire, for more one. expect The million that in migration year? to be it's to be the smoother we Or of weighted Thank because net a QX? cadence majority the of adds going Should the vast you. throughout

Claire Bramley

morning. Howard, So, thank and you, good

seen our continue yes, and we've XXXX. that seasonality in So, in 'XX will 'XX

able go to growth anticipating see earlier we we saw mean as are which quarters. year, seasonality XXXX. and you the from sequentially we year. does to the that more the anticipating ultimately throughout should be in the than So, in QX accelerate comps same we're But But throughout acceleration XXXX,

Howard Ma

so great. Thank much. you Okay,

Claire Bramley

you. Thank

Operator

now to the Steve back over will final remarks. no this call are McMillan time. at turn questions further his for There I

Steve McMillan

this have you hope very much us great morning, for and you a all I day. Thank joining you. Thank

Operator

concludes This today's conference call.

now You disconnect your may lines.

Teradata (TDC) 13 Feb 232022 Q4 Earnings call transcript