Teradata(TDC)2025-02-12 01:41Financial Data and Key Metrics Changes - In 2024, the company delivered 1.474 billion in total ARR, with Cloud ARR growing 18% year-over-year and total ARR declining 4% year-over-year in constant currency [8][30] - The cloud net expansion rate was 117% in Q4 2024, while total recurring revenue for Q4 was 277 million, representing a 16% margin, with 78% of free cash flow returned to investors through share repurchases [32][38] Business Line Data and Key Metrics Changes - Recurring revenue as a percentage of total revenue increased to 86%, up from 81% in the prior-year period [35] - Fourth quarter total revenue was 1.479 billion, a decrease of 1% as reported and an increase of 1% in constant currency [36] Market Data and Key Metrics Changes - The company anticipates Cloud ARR growth of 14% to 18% and flat to 2% growth in total ARR for 2025 [29][44] - The company expects a negative currency impact year-over-year of 150 to 200 basis points on 2025 revenue outlook [40] - The company is seeing increasing interest in its Hybrid AI differentiation, which should lead to higher on-prem expansion [34] Company Strategy and Development Direction - The company is focused on returning to total ARR growth in 2025, with a disciplined approach to managing its financial plan while investing in technology strengths [12][17] - The company has restructured its go-to-market organization and introduced innovations to strengthen its hybrid trusted AI platform [11][12] - The company is emphasizing the importance of operating effectively across both cloud and on-prem environments to meet diverse business needs [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted that despite a challenging year, significant actions were taken in 2024 to position the company for growth in 2025 [11][28] - Management expressed confidence in returning to total ARR growth, citing improved retention rates and the impact of go-to-market changes [33][50] - The company is optimistic about the potential of its AI and GenAI solutions, which are expected to open new market opportunities [67][78] Other Important Information - Claire Bramley, the Chief Financial Officer, is transitioning to a new role outside the industry, with Charles Smotherman assuming the interim CFO position [9][10] - The company has launched new partnerships, including with Nvidia, to enhance its AI capabilities [12][18] Q&A Session Summary Question: Customer perspectives on cloud migrations - Management noted that customers are balancing their on-prem and cloud footprints, with around 30 different GenAI proof-of-concepts currently in execution [55][56] Question: Confidence in ARR guidance - Management explained that the guidance was set with a different approach, limiting reliance on large deals and factoring in deal timing and stage migrations [59][60] Question: Dynamics of the pipeline for 2025 - Management anticipates a 50-50 mix of migrations and expansions, with new logos contributing less to overall growth [65][66] Question: Need for more decisive actions for growth - Management emphasized the importance of continuing the transformation journey and leveraging new AI capabilities to capture market opportunities [78][79] Question: Factors affecting EPS and free cash flow - Management highlighted FX impacts and the decline in revenue due to negative ARR as key factors affecting EPS and free cash flow guidance [82][84] Question: Expectations for ARR and cloud ARR improvement - Management expects improvements in retention rates and visibility into sales productivity to drive ARR growth in 2025 [91][92] Question: Open table format and its relationship with structured data - Management sees open table format as an opportunity to enhance performance and integrate AI capabilities across various data types [116][118]