Teradata Corporation (TDC)

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Teradata Corporation (TDC)

Q3 2010 Earnings Call

November 4, 2010 08:00 am ET


Gregg Swearingen - IR

Mike Koehler - President & CEO

Steve Scheppmann - CFO

Darryl McDonald - EVP of Business Development and Marketing


Wamsi Mohan - Bank of America

Bhavan Suri - William Blair and Company

Kathryn Huberty - Morgan Stanley

Alex Kurtz - Merriman & Company

Nabil Elsheshai - Pacific Crest Securities

Matt Summerville - KeyBanc

Ed Maguire - CLSA

Brad Reback - Oppenheimer



Welcome to Teradata's Third Quarter 2010 Earnings Conference Call. My name is, Christine, and I will be your operator for today's conference. 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, Vice President, Investor Relations. Mr. Swearingen, you may begin.

Gregg Swearingen

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

Our discussion today includes forecast 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 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, 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.

Mike Koehler

Thanks, Gregg, and good morning, everyone. Teradata has delivered another strong quarter in Q3, with revenue growth of 15% and operating income growth of 20% versus prior year. Product revenue was up 27% in the quarter and for the year is up 25%. This is the highest total revenue growth and product revenue growth we have achieved during the past 10 years.

Data volumes continue to growth exponentially, with new data types coming from new data sources. As companies look to bring these new data elements together with traditional data, this makes for an attractive market opportunity for Teradata and our integrated active data warehouses. This has also created demand for our appliances to address big data and other evolving opportunities in large single-subject data marts. We continue to innovate on many fronts to capitalize on the evolving landscape from big data to advanced analytics, to enterprise marketing management, to mobile intelligence. These innovations are translating into growth in our customer base and growth in the number of customers that Teradata serves. New customer wins, year-to-date, are at our highest levels in six years.

Turning to the regions, the Americas had strong growth again in Q3, with revenue of $292 million, which was up 18% over 2009. New account wins included a world-leading manufacturer of aircraft engines, which will integrate and analyze large volumes of text analytics. This will them to quickly detect and react to changes that impact its forecasting and manufacturing schedules, which will, in turn, reduce inventory and service cost.

Other new account wins included a major high-tech manufacturer and Procter & Gamble and a leading department store retailer as well as the top two banks in Mexico and one in Chile. Customer upgrades and expansions included WellPoint, which has added our solid-state drive appliance to deliver critical care alerts to hospital staff and physicians within seconds.

Our Extreme Performance Data Warehouse, the 4600 Appliance is enabling new time-sensitive, mission critical, breakthrough applications that were not possible before. Additional upgrades and expansions in the quarter included Nationwide Insurance, Caterpillar Logistics, and Enterprise Holdings, which includes Alamo, National, and Enterprise Rent-A-Cars, and one of the world's largest retailers and one of the world's largest manufacturers of phones and computers.

Overall, the America is having an outstanding 2010 today, in terms of total revenue growth, product revenue growth and new customer wins. In EMEA, Q3 revenue of $109 million was equal to prior year, but it was up 7% in constant currency. New account wins included Unilever, a leading consumer packaged goods company. We're working with CPG manufacturers around the world to immigrate, explore and analyze their consumer and retail point-of-sale information to better understand preferences and build brand loyalty. EMEA also had four government new account wins with two in Turkey and one each in Italy and Belarus.

The government sector, as you all know, is an under-penetrated vertical for Teradata and is a big opportunity for us. Upgrades and expansions in the quarter included Lufthansa, which is adding operational over active decision making and is also redesigning their customer loyalty program and integrating it with partner airlines, and we had expansions at Lloyds, DHL, Telenor Pakistan, the Italian Tax Authority, COOP Norden, Mobinil in Egypt, and a Chronopost International in France.

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