Teradata Corp at RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference (Virtual) Transcript

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

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : Cool. Well, okay, let's start out with kind of the obvious. And you and I and Chris and the whole team, we've been talking a lot over the past year. And this is -- it sounds trivial, but it is a different Teradata on so many levels. And I think it starts with the executive team, yourself, Hillary, Claire, the whole gang really is taking a new perspective, a cloud-first perspective on the world. And so maybe just start out by maybe drilling down a bit more on that. And obviously, it's a generic question, but I think just to set the table on why this is a different Teradata. And if you hadn't looked at it in a while from an investor perspective, it bears looking.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : So that's a great lead-in here. I think Teradata, before you and a lot of the -- and Hillary and some other folks got there, I mean I think Teradata was going to be focused on cloud, but I don't know that they were necessarily sort of like all in, right? And like everything that you guys do from a go-to-market to an up-sell from a product development is all cloud facing. Can you talk about sort of the heavy lifting that's been done really to position Vantage to where it is today, where it is a modern data warehousing cloud solution that from an ROI perspective -- and RBC is a big Teradata customer, it still is best-in-class from an ROI perspective on a cloud-native side? I don't think a lot of people sort of recognize that.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : So I want to get to some of the technology differences because I think people throw out data lake, data warehouse, and you've had a really interesting approach to, I think, bringing analytics to the data. Before we do that, though, Steve, I think a lot of us can appreciate the -- your comments on how you've inverted your R&D to cloud spend. And I think that's certainly evident to us when we look at the products and talk to customers. I think the more challenging aspect, from my perspective and I think a lot of investors, is the sales and marketing side, convincing the market that Teradata is not only a viable alternative to maybe some cloud-native sort of names that work similarly like a Snowflake or a Databricks, but that it's superior in a lot of regards. Talk about sort of the heavy lifting on the go-to-market side to help back up the heavy lifting that's already been done on the sales and marketing side or on the R&D side to really change the perception of the market. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 17, 2021 / 3:15PM, TDC.N - Teradata Corp at RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference (Virtual)

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : I know you touched on a lot of really good things. We're getting some great questions from investors, so I'm going to pivot to those because it really fits in well with our conversation here. But your last comment on adding more new customers in Q3 than prior quarters and the expectation of more in Q4, you know this because we've talked about this. But I think your ability to articulate that in numbers, granted we're starting on a small base, coming from 0 historically of new customers, I think will be well received by The Street. So as you -- as I'm sure you are aware, the ability to articulate that, I think, would go a long way to showing people that this is not just moving dollars from an existing customer from on-prem to the cloud, but actually a multiplier effect on the land, but -- and also the expand. So I want to -- you know that, but just to sort of say it publicly here. So there was a question from an investor. You talked about some of the differences versus sort of cloud-native people. There was a question specifically on Snowflake. And there were some granular pieces that I think are interesting to this question. Effectively, it said, now this is relative to Snowflake. How are you different when it comes to concurrent user ability, separation of compute and storage layer and really just kind of that ROI pricing as it relates to Snowflake?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : I think an important piece -- I get a lot of questions from investors on what -- well, Teradata is a data warehouse story. And I don't believe in data warehouses in the future. I think it's more of a data lake strategy. But what you just said was that you think it's both, right? Your ability to put SQL, inject SQL where the data is effectively is a data lake strategy. And I think there's that misconception still in the market that, oh, they're just a data warehouse, right? And data warehouses are going away. It's much more of a complex question and answer to that. And you effectively alluded to that in your answer, so I appreciate that. The follow-up question to that one, in terms of like the cloud ARR component, and it kind of gets to the storage and the compute. But just a finer point on that question, and so the question is, is all cloud ARR product? Or is there some hosted cloud revenue in there as well?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : That's great. That's great. By the way, Steve, we're getting a lot of really, really good questions from -- I thank everybody for submitting these. We're going to keep working through these. This next one is one that I know the answer to, but I'm going to ask it. And I guess -- so the question just is how much of cloud ARR growth is from net new versus conversion from the base? And I know you haven't disclosed that. How do you think, though, about -- I mean you'll talk to it and you just said you've added some new customers. I mean how do you expect to talk about that? Maybe put some numbers around that in the future. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 17, 2021 / 3:15PM, TDC.N - Teradata Corp at RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference (Virtual)

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : Two questions from investors that are kind of similar. It all -- it revolves around the expansion of cloud workloads. So I'm going to kind of -- for those that ask these questions, I'm going to try to blend them together. Effectively, the question is, what trends are you seeing in expansion rate for these cloud customers? And the follow-up to that is you just said it's north of 130%. The question was, why not give an exact disclosure to kind of help us understand the magnitude of the expansion happening there rather than just north of 130%?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : Perhaps new customers or something of that nature? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 17, 2021 / 3:15PM, TDC.N - Teradata Corp at RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference (Virtual)

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : That's great. That's great. There's a question really around the cloud ARR trajectory. And thank you for asking that question. I guess as -- and we have 7 minutes left, Steve. This is -- again, I knew this will go fast. And these questions are fantastic. I really appreciate everybody submitting these things. The question is around kind of the long-term cloud ARR guidance. But I wanted to put a finer point on what happened on the Q3 quarter because a lot of the stock sold off as you lowered your cloud ARR expectations this year being one of -- arguably one of the most important metrics on the new Teradata. Can you describe to me -- because we had a great conversation off-line about what happened in Q3, what happened subsequently in October and presumably March. And what are you trying to signal The Street in terms of your ability to sort of hit and exceed these numbers on a go-forward basis? And then I'm going to ask the question that's a little bit longer term in nature.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : It sounds like you're sitting in the data center right now. The Teradata data center is just humming. So that's great. I mean because I think what I took away from our call back was it's a timing thing more than anything. And you are so really encouraged with what you're seeing early in 4Q, but want to build that repetition on being able to exceed guidance and you're still sort of early in this sort of cloud trajectory. And so it seemed to me like it was more conservatism than anything. But it sounds like 4Q is off to a strong start. Now the question that the investor asked and this was really a dovetail to that is does the revision to the '21 cloud ARR guidance affect the previous guidance given for 2022 cloud ARR growth of 70%?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : So that's great, Steve. So it sounds to me like what happened in Q3 and the Q4 guide doesn't have a bearing on 2022. And the follow-up question to that, does this alter the growth trajectory required to hit $1 billion cloud ARR by 2025? And I presume the answer is no, but it was their -- that was the question.

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : So maybe just -- we have 2 minutes, and I can use 32 more minutes. To wrap up, Steve, we started the conversation with this is a different Teradata. And I think you've talked to a lot of points of why, in fact, it actually is. And it sounds like there's going to be some additional disclosures that can further drive that point home. For those investors that are still maybe on the skeptic side or nonbelievers, what would you tell us around your level of confidence here? I'm not talking just about 1 quarter, but I'm talking about multiple years of execution. How high is that confidence that you have that we'll look back in 2025 and maybe you're more than $1 billion of cloud ARR? Where is your confidence level? And where should our confidence level be there?

Question: Matthew George Hedberg - RBC Capital Markets, Research Division - Analyst : If we're talking about $1 billion of cloud ARR, I think investors can be optimistic that the stock won't be a $47 stock if that does, in fact, play out. And so I think, yes, from our perspective, Q3 in many regards because I think sort of the growing pains of progression towards $1 billion. But listening to you, it certainly feels like the confidence level is high. And so really, we're out of time, unfortunately. So I see, for anybody on the line here, thank you for the questions. Those were really good. Feel free to reach out to me. I can put you in contact with Chris or Steve and the rest of the team. But really, guys, from all of us at RBC, thank you. I think it was a great conversation to sort of continue this education that it is a different Teradata. From all of us, the best of luck as you sort of close out Q4 and look towards next year. But thank you again for your time, Steve. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 17, 2021 / 3:15PM, TDC.N - Teradata Corp at RBC Capital Markets Global Technology, Internet, Media and Telecommunications Conference (Virtual)