Teradata Corp at Wells Fargo TMT Summit Transcript

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

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : And I guess a good place to start is for those maybe who aren't familiar, can we just start with a little bit of background about the company, and a bit on just kind of the transition that the company has been going through over the past couple of years.

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Great. So I'm sure we'll double click on a lot of those things.

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : So I guess let's just start off with talking a little bit about the cloud transformation journey. I think it's about 38% of the ARR last quarter. It's been growing at a nice clip. Can we just kind of talk a little bit about that journey you're on, maybe what inning we're in? And I guess, just some of the underpinnings of kind of how a transition with the customer goes and just kind of any insight around that transformation period.

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Great. And I guess, just kind of as a follow-up there. When we think about kind of innovating across both hybrid or both on-premise and cloud products, how do you guys kind of balance like putting innovation to, I guess, two separate platforms in a way and any context you could give just around like are there any areas left on the cloud products where you think the on-premise product has it, but we need to add that? Or anything vice versa that you'd kind of point out there?

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Okay. Great. That's very helpful. And one piece that I wanted to talk a little bit about is just on macro. So I think in the software environment, it's been a choppier macro over the last couple of years. I think particularly last quarter, you called out on the large transformative deal side, a little bit of breaking those deals apart into smaller pieces. I guess can you kind of give additional context around what transpired in the quarter there with the large deals and just kind of where we are in the macro environment?

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Okay. Great. And then I guess on that front in the context of just kind of the $1 billion ARR target for the cloud business. I guess what would you -- if you had to distill like these are the key catalysts to get us there, the key drivers to get us to that path to $1 billion, yeah, just what would those drivers be? And just kind of how do you think about that path going forward?

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Okay. Great. And that kind of segues well into the next question, which is when we think about the NRR of those maybe more mature cloud customers or the customers that may be started only on cloud, how do we think about just kind of the expansion rates that you're seeing there relative to some of the transitioning customer expansion rate.

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Okay. Great. That's super helpful context. When we think about the context of some of those large deals being broken up in stages, how does that kind of play into the, I guess, more near-term retention rates? And just kind of anything else to call out with. You mentioned healthcare. Is there anything there that's kind of you've seen stabilize? Or how do we think about it?

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Great. Okay. I want to change gears a little bit here. Talk a little bit about generative AI. I think you got two years ago about this time frame, ChatGPT picked the world by storm. It's all everyone talks about now. How should we think about Teradata's positioning in terms of generative AI and we'll start there and then a couple of follow-ups.

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Great. And I think on the last call, there was a lot of mention about the generative AI innovation going into the platform. When we think about ClearScape, to bring your own LLMs. Is there anything in particular that gets you most excited about the AI opportunity? I know we talked a little bit about the workload there. But I guess from a product, future functionality standpoint, what gets you most excited?

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : That makes sense. I guess when we think about, that's starting to show up in numbers. I think a lot of the analyst community is always trying to figure out when is all of the generative AI revenue going to start to flow in. And so I guess, I know it's probably hard to distill what's an AI workload versus. So I guess like any context, like do you get the feel that customers are starting to use some of those heavier compute workloads and you're seeing that show up more. Is there anything that you're hearing from your customer competition?

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Okay. Great. Now I want to turn over to the profitability a little bit and margins. We've talked a lot about the innovation side. We've talked a lot about the hybrid cloud strategy, how do you kind of factor in the balance of margin expansion and growth when you have kind of exciting opportunities in front of you?

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Okay. Great. You mentioned the go-to-market aspect of things. Just want to understand, I guess from -- you talked about wanting to get the execution input there. And you mentioned sales efficiency side, taking out that layer. I guess when we think about like the stage in terms of that starting to bear fruit, kind of where are we at today? And how do we think about that heading into next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 5:30PM, TDC.N - Teradata Corp at Wells Fargo TMT Summit

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Okay. Great. And then I guess one more on the margin side of things. You talked a lot about generative AI from the standpoint of a product and driving workloads and ultimately, revenue and bookings. But on the margin side, I could imagine that with cogeneration tools, there's a lot of ways that you can kind of infuse it into the R&D organization, customer support use cases. I guess, internally, what use cases are you looking at for potentially improving some of the efficiency or productivity at the organization.

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Okay. Great. We have a few more minutes here, so I want to give an opportunity to open up to the community with us in the room. Is there anyone that has any questions? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 04, 2024 / 5:30PM, TDC.N - Teradata Corp at Wells Fargo TMT Summit Unidentified Participant (inaudible - microphone inaccessible)

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : All right. Great. I think we're about up on time here, but I wanted to give you an opportunity. Anything else that you want to leave us with today?

Question: Richard Poland - Wells Fargo Securities, LLC - Analyst : Well, on that note, thank you, Claire, for joining us. It was wonderful to have you.