Teradata Corporation (TDC)

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Teradata (TDC)

Q2 2011 Earnings Call

August 04, 2011 8:30 am ET

Executives

Stephen Scheppmann - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Darryl McDonald - Chief Marketing Officer and Executive Vice President of Applications & Business Development

Michael Koehler - Chief Executive Officer, President, Director and Member of Executive Committee

Gregg Swearingen - Vice President of Investor Relations

Analysts

Wamsi Mohan - BofA Merrill Lynch

Brad Reback - Oppenheimer & Co. Inc.

Rahul Bhangare

Edward Maguire - Credit Agricole Securities (USA) Inc.

Matt Summerville - KeyBanc Capital Markets Inc.

Nabil Elsheshai - Pacific Crest Securities, Inc.

Katy Huberty - Morgan Stanley

Presentation

Operator

Welcome to the Q2 2011 Teradata Earnings Call. My name is Sandra, and I'll be your operator for today's call. [Operator Instructions] 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 2011 second quarter earnings call. Mike Koehler, Teradata's CEO, will begin today by summarizing Teradata's 2011 Q2 results. Steve Scheppmann, Teradata's Chief Financial Officer, will then provide more details regarding our financial performance, as well as our increased guidance for 2011. Darryl McDonald, Teradata's Executive VP of Applications, Business Development and CMO is also in the room as well.

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, 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 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 Koehler

Thanks, Gregg, and good morning, everyone. Teradata delivered strong growth in the second quarter with revenue up 24% over prior year and for the first half, revenue was up 21% and up 17% in constant currency. These results represent the highest growth quarter and first half Teradata has produced over the past 10 years.

Growth for the quarter and first half was led by strong performances in the financial services and retail industries. The increased investments we have been making during the past 3 years in R&D, market coverage, consulting and partners has been key to driving overall revenue growth and product revenue growth which has averaged more than 20% over the past 6 quarters. These investments have also paved the way to the highest number of new data warehouse customer wins ever recorded the past 10 years for our first half.

We are also experiencing good growth and activity with Aprimo. Bookings are up 30% versus prior year since joining Teradata at the end of January. Overall, Teradata had an excellent quarter in terms of revenue growth and non-GAAP operating income of $143 million, which was up 28% over Q2 of 2010 and non-GAAP EPS of $0.60, which was up 30%. My thanks go out to all Teradata associates who make it all happen.

The business drivers and market opportunity continue to favor Teradata. As corporations continue to operate in these times of economic uncertainty, 2 things are clear: Business is hypercompetitive, and corporations are dealing with more data and more new data types than ever before to gain critical insights into their business. This was evident in the first half, when we added 10 customers to our Petabyte Club, doubling the number of customers we have with petabyte-size data warehouses to 20.

All of these big and complex data presents an opportunity and a threat to corporations. The ones who are able to manage the data and extract new insights and precision from it will have an advantage over their competitors. The corporations that don't manage its data explosion and extract value from it, will be stuck with the increased cost from the data and will be at a competitive disadvantage.

More and more corporations are turning to Teradata's unique technology and consulting capabilities to take advantage of this opportunity. I'll be sharing some examples as we go through the region highlights for the quarter.

The Americas continued strong growth we started seeing in the beginning of 2010. Revenue was up 21% over a very strong Q2 in 2010 and up 21% for the first half of 2011. The Americas had another good quarter with new customer wins including CBS Interactive, one of the premier global online content providers, which will use Teradata, integrate customer data with advertising data from Hadoop for new insights.

MercadoLibre, the largest online auction house in Latin America will use Teradata to integrate web data and to provide access to external users so that they can make better buying decisions. SUBWAY, which is implementing Teradata to increase profitability and improve customer satisfaction from analytics. And Razorfish, one of the world's largest interactive agencies, will use Aster Data to provide highly differentiated digital marketing services by mining multi-structured behavioral data from their websites.

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