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Teradata Management Discusses Q2 2012 Results - Earnings Call Transcript

On today's call, we will also be discussing certain non-GAAP financial information, which excludes stock-based compensation expense and other special items as well as other non-GAAP items, such as free cash flow and constant currency revenue comparisons. A reconciliation of our non-GAAP results to our reported GAAP results and other information concerning these measures is included in our earnings release and on the Investor page of Teradata's website, which can be found at teradata.com. A replay of this conference call will also be available later today on our website. Teradata assumes no obligation to update or revise the information included in this conference call whether as a result of new information or future results.

I'll now turn the call over to Mike.

Michael F. Koehler

Thanks, Gregg, and good morning, everyone. Teradata had another strong quarter in Q2, with revenue growth of 14% as reported and 18% in constant currency. And for the first half, revenue was up 20% in constant currency while going against last year's record first half revenue growth of 17% in constant currency.

Non-GAAP operating income grew 31% in the quarter to $188 million, and non-GAAP EPS of $0.77 was up 28% over prior year. Non-GAAP operating margin of 28.2% was 390 basis points higher than the previous best quarter of 24.3%, which was achieved in Q2 of 2011. The record operating margin was driven by solid execution across the company and a significantly favorable revenue mix.

In the quarter, higher-margin product revenue grew faster than services revenue. And within the product revenue, higher-margin EDWs grew faster than the appliances. And within the services revenue, higher-margin maintenance grew faster than Consulting. It is rare when all 3 revenue mixes line up favorably like this in a quarter. Overall, we were pleased with our better-than-expected second quarter results and where we stand at the end of the first half.

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