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Teradata Corporation Q2 2010 Earnings Call Transcript

Teradata Corporation Q2 2010 Earnings Call Transcript

Teradata Corporation (TDC)

Q2 2010 Earnings Call

August 5, 2010 08:34 am


Gregg Swearingen - Investor Relations

Mike Koehler - Chief Executive Officer

Steve Scheppmann - Chief Financial Officer

Darryl McDonald- Executive VP of Business Development and Marketing


Wamsi Mohan - Bank of America

Katy Huberty - Morgan Stanley

Matt Summerville - Keybanc Capital Markets

Mark Kelleher - Brigantine Advisors

Alex Kurtz - Merriman & Company

Nabil Elsheshai - Pacific Crest Securities

Brad Reback - Oppenheimer

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Welcome to the Second Quarter 2010 Teradata Earnings Conference Call. My name is Sandra and I’ll be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we’ll conduct a question-and-answer session. Please note that this conference is being recorded.

I’ll now turn the call over to Mr. Gregg Swearingen. Mr. Swearingen, you may begin.

Gregg Swearingen

Good morning, and thanks for joining us for our 2010 second quarter earnings call. Mike Koehler, Teradata’s CEO, will begin our discussion summarizing Teradata’s second quarter results. Steve Scheppmann, Teradata’s Chief Financial Officer, will then provide more details related to our financial performance, as well as our updated 2010 guidance. Darryl McDonald, Teradata’s Executive VP of Business Development and Marketing, is also in the room to answer questions.

Our discussion today includes forecasts and other information that are considered forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risks and uncertainties that could cause actual results to vary materially. These risk factors are described in Teradata’s 10-K and other filings with the SEC.

On today’s call, we’ll also be discussing certain non-GAAP financial information, such as earnings per share, excluding stock-based compensation expense, free cash flow and revenue comparisons in constant currency. 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 at

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.



Thanks, Gregg. Good morning, everyone. Teradata had its best second quarter ever reporting revenues of $470 million, up 12% from Q2 of 2009 and operating income of $106 million, up 26% over the last year. Operating income, operating margin and gross margin rates were the highest of any quarter in Teradata’s history.

Our platform family appliances had a strong second quarter and are now installed in over 125 customers in 20 countries. This has been accomplished in a very short timeframe of approximately two years since they were launched. Our investments in the platform family, along with our investments in new territories and focus on new account acquisitions, are going well. New customer wins for the first half of 2010 was our strongest performance in the last five years. These were also key contributors to our revenue growth for the first half, which was up 12%, and product revenue, which was up 22% in constant currency.

Some highlights on a region perspective, the Americas delivered an excellent Q2 generating $281 million of revenue, up 23% from the second quarter of 2009 and product revenue up 42%. For the first half, revenue growth in the Americas was 23% with product revenue up 40% over prior year. The Americas had a strong quarter for new account wins, which included Frito-Lay where a Teradata enterprise data warehouse is replacing a competitor. Manufacturers like Frito-Lay will utilize geospatial location data to improve real-time distribution of their products.

W.W. Grainger, a Fortune 500 distribution company, will use Teradata to help analyze and improve overall customer relationships and customer value. Our ongoing partnership with SAP helped in this new customer win. Oklahoma Gas & Electric which is a new data warehouse appliance customer in the utility industry and one of our growth markets. We’ve had good activity with utilities as y look to improve operations today and prepare to leverage the large real-time data from smart meters actionable information.

Serasa Experian the Brazilian part of the world’s largest credit bureaus will rely up on the speed and scalability of Teradata to analyze massive volumes of data and develop new products.

The Americas also added another top five pharmaceutical company in the quarter and added one of the largest financial institutions in the world where we also replaced a competitor's data warehouse.

Other new customer wins with data warehouse appliances included Bank of New York Mellon, Aviva Canada and Skechers footwear where we are replacing a competitor system to improve the company’s wholesale business.

While the Americas had a great quarter for new customers they also saw broad-based growth with current customers in the quarter including AT&T, one of several customers who are members of our petabyte club, which are customers who have EDWs with over a petabyte of data. AT&T is enhancing its Teradata system to support 360 degree view of its customers for improved marketing, advertising and sales operations.

At eBay we announced during Q2 our collaboration to develop analytic competencies for better customer online experiences. Starting with a six petabyte Teradata appliance, eBay is analyzing 30 terabytes of customer interaction data each day. This is in addition to eBay’s purpose built or private cloud ETW implementation, which put them in Teradata’s petabyte club several years ago. This is a good example of customers leveraging different members of our platform family for different analytical needs.

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