Teradata Corporation (TDC)

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Teradata Corporation (TDC)

Q1 2010 Earnings Call

May 6, 2010 8:30 am ET

Executives

Gregg Swearingen – Investor Relations

Michael Koehler – President and Chief Executive Officer

Stephen Schepmannn – Chief Financial Officer

Darryl McDonald – Executive Vice President, Business Development and Marketing

Analysts

Wamsi Mohan – BofA Merrill Lynch

Matt Summerville – Keybanc Capital Markets

Katie Huberty – Morgan Stanley

Nabil Elsheshai – Pacific Crest Securities

Mark Kelleher – Brigantine Advisors

Alex Kurtz – Merriman & Company

Derrick Wood – Wedbush Securities

Brad Reback – Oppenheimer & Company

Presentation

Operator

Welcome to the Teradata Q1 2010 earnings call. My name is Sandra, and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will 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 first quarter earnings conference call. Mike Koehler, Teradata's CEO, will lead our discussion highlighting Teradata's first quarter results, after which Steve Schepmannn, Teradata's chief financial officer, will provide more details relating to our financial performance as well as our 2010 guidance. Darryl McDonald, Teradata's executive VP for 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 will also be discussing certain non-GAAP financial information such as earnings per share, 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 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 will now turn the call over to Mike.

Michael Koehler

Thanks, Gregg, and good morning everyone. Teradata started the year strong with record first quarter revenue of $429 million, operating income of $86 million, and EPS of $0.39. Operating margin improved to 20% in Q1 from 16.3% in Q1 of 2009.

Revenue was up 17% as reported and up 12% in constant currency over Q1 2009, which was not an easy prior year comparable. Revenues grew 5% in constant currency in Q1 of 2009. Product revenue grew 27%, which was our highest growth quarter during the past 9 years. And all three regions grew revenues, and each reported strong double-digit product revenue growth. Overall, it was a great start to 2010.

The Americas had an outstanding Q1 generating $252 million in revenue, which was up 23% from the first quarter of 2009. New customer wins we can name included Kohl's Department stores and Movistar, a mobile phone provider in Peru.

Expansions and upgrades in the quarter including Macy's, CVS Caremark, Cabela's, Overstock.com, and Electronic Arts in the U.S and Rogers Communications and Hudson's Bay Company in Canada.

With the return to a more stable economic climate in the U.S., we saw strong activity across most industry segments. In particular, in manufacturing, financial services, retail, and health care.

Turning to EMEA, revenue of $106 million in the first quarter was up 9% from the first quarter of 2009. Adjusting for currency, revenue in EMEA was up 3% over a prior year comparable that had strong growth in constant currency of 12%. New customer wins we can name included Cajasol, a financial services institution that merged with another bank in Spain and is integrating data from the two banks into a Teradata EDW, and EOS Group, a financial services company in Germany.

EDW expansions and upgrades included [arp lease]; BBVA; Dahmler; Volvo Cars; TNT Express; Telefonica Spain, which is converging their wire line and wireless businesses into an integrated EDW; [inaudible] Telecom, one of the largest wireless providers in France, which is adding web and social network data for analytics as well as customer segmentation and regulatory compliance; Pannon, a leading mobile operator in Hungary, expanded their Teradata relationship manager CRM application to provide multistep, multichannel, and multi-offer campaigns for better customer life cycle marketing; and Shop Direct, the U.K.'s largest internet retailer, which is deploying Teradata integrated web intelligence to load near real time web browsing data into its EDW. It can now understand customer intent as well as purchase history to better drive marketing campaigns and grow revenues.

Asia-Pacific/Japan reported $71 million of revenue in the first quarter, up 9% from the first quarter of 2009 and down 1% in constant currency.

APJ had a record first quarter for new account wins, including NTT Solmare which is the number one content provider for mobile phones in Japan and will use Teradata in an active environment examining web logs to analyze customer navigation and deliver more effective web-based marketing; one of Australia's largest retail companies, which selected Teradata and SAS over strong competition from an incumbent based upon the value they saw from the integrated and advanced analytics environment that we provide.

Star Track Express, an Australian logistics services company, is implementing a Teradata active data warehouse as the foundation for their active information management strategy. Their vision includes integrating data from multiple operational systems with geospatial capabilities in order to optimize loading and routing for their fleets. And a top-three mobile operator in Indonesia, which is implementing an active enterprise data warehouse.

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