Teradata Corporation (TDC)

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Teradata Corporation (TDC)

Q4 2009 Earnings Call

February 11, 2010 8:30 am ET

Executives

Michael Koehler – President & CEO

Stephen Scheppmann – CFO

Darryl McDonald – CMO

Gregg Swearingen - IR

Analysts

Wamsi Mohan – BofA Merrill Lynch

Kathryn Huberty – Morgan Stanley

Mark Kelleher – Brigantine Advisors

Alex Kurtz – Merriman & Co.

Matt Summerville – Keybanc Capital Markets

Nabil Elsheshai – Pacific Crest Securities

Derrick Wood – Wedbush Securities

Greg Halter – Great Lakes Review

Presentation

Operator

Good morning ladies and gentlemen and welcome to the Teradata fourth quarter 2009 earnings call. (Operator Instructions) I will now turn the call over to Mr. Gregg Swearingen.

Gregg Swearingen

Good morning and thanks for joining us for our 2009 fourth quarter earnings conference call. Michael Koehler, Teradata’s CEO will lead our discussion highlighting Teradata’s fourth quarter and full year results.

After Michael’s remarks, Stephen Scheppmann, Teradata’s Chief Financial Officer will provide more details relating to our 2009 financial performance as well as our 2010 guidance. Darrell McDonald, Teradata’s Chief Marketing Officer, who is responsible for strategy and business development 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 risk 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 will also be discussing certain non-GAAP financial information such 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 www.teradata.com. A replay of this conference call will also be available later today on that 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 will now turn the call over to Michael.

Michael Koehler

Thanks Gregg, and good morning everyone. Teradata finished the year with a record fourth quarter and 2009 reporting revenues of $496 million, up 1% from a strong fourth quarter in 2008 when revenues grew 9% in constant currency.

Revenue for the full year was $1.17 billion, down 3% from 2008 and down 1% in constant currency. The Teradata team had strong execution in 2009 with meaningful gross margin improvements, particularly in our services business and excellent expense management which allowed us to deliver increased operating income and increased earnings per share on lower revenue.

More importantly our results for 2009 included investments for our futures. Increased investments in R&D, our partners, and additional sales territories. We extended our technology lead with innovative new releases in our data base software, Purpose-Built platform family, Teradata virtual storage, and in key analytical applications.

As a result we have positioned ourselves stronger as we enter 2010. Looking our business from a regional perspective, the Americas region had a strong Q4 generating $300 million of revenue, up 5% from the fourth quarter of 2008 and on top of a prior year Q4 when revenues were up 14% in constant currency.

Revenue for the full year was roughly flat with 2008 at $981 million. Overall solid performance for 2009. In Q4 the Americas brought in a number of significant new accounts including Southern Cal Edison, one of the largest utility companies in the US. We are placing additional focus on utility companies as they transform power generation and distribution through the implementation of smart grids and smart metering technology.

Navistar, one of the largest wireless companies in Chile, is installing a data warehouse and Teradata relationship manager to consolidate customer information and create personalized offers. United Supermarkets, a regional grocery in Texas, which is leveraging our Teradata accelerate program, which allows new customers to get started quickly and easily as they deploy an integrated data warehouse.

A leading Fortune 500 health insurer who serves more than 70 million consumers and Caterpillar Logistics, a subsidiary of Caterpillar which is one of the top five supply chain and logistic businesses in the US, which will use Teradata to support service parts management, demand forecasting and inventory planning, and supporting very high data volumes with roughly five terabytes of new data per day.

The Americas region also saw a broad based upgrade activity in the quarter including Dell, which is both a customer and supplier, upgraded its data warehouse and is adding active applications to support its strategy of delivering global [BI] including executive dashboards. Direct TV which uses Teradata to load and analyze set top information, to provide better content and support to their subscriber base.

One of the top three beverage manufacturers in the US which is integrating Teradata with its SAP supply chain management and demand planning applications. One of the top five motion picture studios in the world is expanding their Teradata warehouse in support of their DVD and Blu Ray inventory application. One of the largest toy retailers added to their Teradata system to support organic growth and additional workload from consolidating data marks. The Teradata solution also enabled the retailer to analyze sales every 15 minutes which was extremely valuable in the days leading up to the holiday shopping season. And also Lowe’s, Sirius, and The Gap were among expansions in the quarter.

In EMEA revenue of $106 million in the fourth quarter was down 7% from the fourth quarter of 2008. For the full year revenue was $430 million, down 5% from 2008. Adjusting for currency full year revenue in the EMEA region was up 2% from the prior year which was a good performance for 2009.

Read the rest of this transcript for free on seekingalpha.com