Teradata Corp Q4 2024 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Chirag Ved - Evercore ISI. - Analyst : Claire congratulations on the new job. It's been a pleasure partnering with you and your team over the last several quarters. Steve, maybe first for you. Are you able to comment on how your customers and prospective customers are thinking about cloud migrations at this point? And cloud growth from the hyperscalers came in a little lower than, I think, a lot of investors anticipated. Just wondering if you could double click on what you're seeing internally with data platforms?

Question: Chirag Ved - Evercore ISI. - Analyst : Got it. And Claire, one for you. Can you speak to the factors that give you confidence in the ARR guide, which is stable and slightly deselling Cloud ARR growth. You've seen improved return rates in the back half of 2024. But at the same time, cloud [NRR] has dealed -- so would appreciate any clarity you can provide here?

Question: Erik Woodring - Morgan Stanley. - Analyst : And Claire I'll echo everyone's comments. Well -- well, great good luck with everything. Steve, if we take a step back, I appreciate the work you and the team have done here. There's been a lot of work kind of across the stack, both from a technology, go-to-market, people, personnel, approach, et cetera. for the better part of 10 years, Teradata has been in the period of transformation. And I would argue, as we look into 2025 it's nice to see some expectations for a bit of growth on the total ARR side, but recurring revenue is still down, Cloud ARR growing, I think, below some expectations. And so I guess my broad question is just -- does there need to be more kind of divisive action taken to accelerate this company turnaround and kind of get back to a regular cadence of growth. Just as I think about the backdrop of probably the most prolific AI spending environment, that we're going to see in our lifetime. Just help me understand what needs to get done to move on from transformation to? This is the normal Teradata kind of growing consistently, et cetera? And then I have a quick follow-up.

Question: Erik Woodring - Morgan Stanley. - Analyst : Okay. I appreciate all that feedback. And then Claire, you're guiding to for cash flow and EPS at the midpoint, that's down slightly year-over-year. I understand FX has become an incremental headwind. But you've also gone through a period of kind of cost cutting and cost transformation. And so can you maybe just help me understand why it might not be paying off as much next year, kind of the building blocks to how you get to slight declines in those metrics and especially if you believe you've embedded some conservatism in there? Just how we should be thinking about that?

Question: Nehal Chokshi - Northland Capital Markets. - Analyst : Claire, you mentioned that you expect ARR and cloud ARR to improve as you go through calendar '24. In order for that to happen, on a bookings basis over the next 2 quarters, can you describe what that trajectory needs to be -- is it a similar level of acceleration that you're expecting in the back half to drive that? Or is it going to have to be a significantly more greater acceleration to drive that overall ARR and cloud ARR acceleration?

Question: Nehal Chokshi - Northland Capital Markets. - Analyst : I see. And then can you characterize exactly how much was on-premise erosion in calendar '24? And what's your expectation for calendar '25 and millions of dollars?

Question: Matthew Hedberg - RBC Capital - Analyst : Yes. This is Matt Swanson on for Matt. Steve, a little bit earlier, you mentioned 30 different gen AI proof of concepts. And I was just wondering if you could go a little bit deeper into maybe the commonalities between those and why they're choosing Teradata. It sounds like maybe it's a little early for those to be driven by some of the exciting stuff coming like the Vector store, AI on-prem, but just if there's any sort of common characteristics that you're seeing?

Question: Matthew Hedberg - RBC Capital - Analyst : And then, Claire, I think you mentioned kind of the 3 pieces of return to ARR growth was the go-to-market changes last year, improved full year retention rates and then monetize the innovation in 2024. And they're obviously very related, but is there a way to kind of think about how you rank those in terms of contribution to ARR next year? Or how you're kind of thinking about the progression to get to your guidance?

Question: Raimo Lenschow - Barclays. - Analyst : Perfect. Claire, we will miss you, first of all. Let's start with that. And a more fundamental question to start. If you think about the open table format, obviously, there's a big discussion, but obviously, you guys come out of the structured world. How do you see that relationship evolving between open table format, which is kind of not something, but like having everything in 1 month of data lake or is this kind of the more structured, more structured data, kind of data warehousing that you guys grew REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 11, 2025 / 9:30PM, TDC.N - Q4 2024 Teradata Corp Earnings Call up with, like how do you think that relationship will grow out over time? And how is that -- how is your -- how do you think you can play this and maybe play this differently? And then I have one follow-up.

Question: Raimo Lenschow - Barclays. - Analyst : Yes. And then Claire one for you, like Obviously, we're kind of looking at the kind of the -- we're trying to look at leading indicators. If you think about like, can you talk a little bit about some of the dynamics like billings this quarter public cloud ARR this quarter, like to us, they came on more on the weaker -- on the weaker side. Is there some one-off stuff that we kind of need to be aware of? And you might have answered that earlier in the call, I apologize, you cannot discussed it already.