TERADATA CORP /DE/ Q4 FY2024 earnings call

• Steve McMillan noted in 2024, they advanced in their strategy with a hybrid cloud platform for Trusted AI, delivered $609M in Cloud ARR and $1.474B total ARR. They announced Claire Bramley's departure and Charles Smotherman as Interim CFO. They restructured go-to-market, executed cost actions, reoriented for AI, launched partnerships (Nvidia, major CSPs), and introduced innovations like Enterprise Vector Store, GenAI use cases. • Claire Bramley mentioned Q4 Cloud ARR grew 18% Y/Y CC, Total ARR down 4% Y/Y CC. Non-GAAP EPS exceeded guidance due to cost optimization. They see drivers for Total ARR growth in 2025 including go-to-market changes, improved retention rates, and monetizing 2024 innovations. Cloud ARR to approach 50% of total ARR by end of 2025.

In 2024, Teradata delivered $609 million in Cloud ARR and $1.474 billion of total ARR. Fourth quarter recurring revenue was $351 million, down 6% year-over-year as reported and down 4% year-over-year in constant currency. Recurring revenue as a percentage of total revenue was 86% up from 81% in the prior-year period. Fourth quarter total revenue was $409 million, down 11% year-over-year as reported, and 9% in constant currency. For the full year, recurring revenue was $1.479 billion, a decrease of 1% as reported and an increase of 1% in constant currency. Total revenue was $1.750 billion, down 5% as reported and 3% in constant currency.

• 2025 Cloud ARR growth expected 14%-18%, Total ARR flat to 2% growth. • Q1 2025 recurring revenue expected minus 4% to minus 6% Y/Y CC, total revenue minus 6% to minus 8% Y/Y CC. • Non-GAAP diluted EPS expected $2.15-$2.25, free cash flow $250M-$280M. • FX and ARR exit rate in 2024 impact free cash flow, Q1 free cash flow slightly negative.

• FX headwinds negatively impacting free cash flow. • Total ARR exit rate in 2024 affecting free cash flow. • Deal elongation and stage migrations impacting cloud ARR growth.

Q: Chirag Ved asked about how customers and prospective customers are thinking about cloud migrations.

A: Steve McMillan said deal elongation persisted, customers balancing on-prem and cloud, and 30+ GenAI POCs using Teradata technology.

Q: Chirag Ved asked about factors giving confidence in ARR guide.

A: Claire Bramley said they factored in stage migrations, deal timing, limited reliance on large deals, improved retention, and go-to-market changes.

Q: YC asked about pipeline mix and open paper formats.

A: Claire Bramley said 50-50 expansion/migration, new logos small contributor; Steve McMillan mentioned Enterprise Vector Store as unique capability.

Q: Erik Woodring asked about company turnaround.

A: Steve McMillan said cloud first pivot laid foundation, new AI/GenAI marketplace and sales execution transformation needed.

Q: Nehal Chokshi asked about ARR trajectory.

A: Claire Bramley said Q1 is lowest growth, erosion drops off in second half.

Q: Matt Swanson asked about GenAI POC commonalities.

A: Steve McMillan said leveraging existing Teradata tech, CX solutions, cost-efficient enterprise scale AI.

Q: Raimo Lenschow asked about open table format and leading indicators.

A: Steve McMillan said open table format is critical, Teradata supports Apache Iceberg and Delta Lake; Claire Bramley said cloud ARR at low end, total ARR below range in Q1 due to erosion.