Teradata Corporation (TDC)

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Teradata (TDC)

Q4 2010 Earnings Call

February 10, 2011 8:30 am ET


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


Gregory Halter - Great Lake Review

Wamsi Mohan - BofA Merrill Lynch

Brad Reback - Oppenheimer & Co. Inc.

Bhavan Suri - William Blair & Company L.L.C.

James Wood - Susquehanna Financial Group, LLLP

Edward Maguire - Credit Agricole Securities (USA) Inc.

Matt Summerville - KeyBanc Capital Markets Inc.

Amelia Harris - Merriman Curhan Ford & Co.

Kathryn Huberty - Morgan Stanley

Nabil Elsheshai - Pacific Crest Securities, Inc.



Welcome to the Q4 2010 Teradata Earnings Call. My name is Sandra, and I will be your operator for today's call. [Operator Instructions] 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 fourth quarter earnings call. Mike Koehler, Teradata's CEO, will begin today by summarizing Teradata's 2010 Q4 and full year results. Steve Scheppmann, Teradata's Chief Financial Officer, will then provide more details regarding our financial performance, as well as our 2011 guidance. Darryl McDonald, Teradata's Executive Vice President of Applications, Business Development and CMO, 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, transaction-related items, as well 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 found 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

Good morning, everyone, and thanks for joining us today. Teradata finished 2010 with record revenue, operating income and earnings per share for both the fourth quarter and for the full year. We were particularly pleased with our 20% constant currency product revenue growth for the year, as well as our overall constant currency revenue growth of 12%.

During the year, we continued to invest in our four key growth initiatives to go broader and deeper into the market: R&D to accelerate innovation in our technology and to broaden and strengthen our data warehouse offerings; consulting services to help customers get the most value from their Teradata investment and expand our market and customer presence; partnerships to increase the number of solutions available on Teradata and increase our market coverage; and sales territories to expand our market coverage.

We met our objective of ending 2010 with 475 territories and target finishing 2011 with at least 505. These investments had a meaningful impact on our results in 2010. Teradata had its highest revenue growth in the last 10 years, the highest number of new customer wins since 2002 and the highest number of new customer wins ever in a quarter in the fourth quarter.

In addition, we made key acquisitions with xkoto, Kickfire and Aprimo to strengthen our technology and expand our solutions and market opportunity. We are well positioned as we enter 2011. Looking at the region results, the Americas had a stronger-than-expected fourth quarter with revenue up 14%. For the full year, revenue grew 19% and was up 18% in constant currency. Overall, the Americas had an outstanding year and took market share as evidenced by product revenue growth of over 30% for the year and a record number of new customer wins in the fourth quarter and for the full year.

New customer wins included: Univision, the largest Spanish-language television network in the U.S, selected Teradata to support and improve its advertising sales operations. Univision will combine historical sales data with day-to-day transactions and provide intraday reporting via new executive passports in order to quickly capitalize on revenue opportunities. Also, one of the top U.S. financial services companies chose Teradata to integrate channels to provide a better customer experience and ultimately increase revenues; Service Management Group, a leading multinational customer experience analytics firm, is converting to Teradata's data warehouse appliance from Netezza's Twin Fin. SMG is now able to provide a higher level of service to its clients by leveraging Teradata's mixed workload, complex analytics and volume capabilities that we offer with our appliances versus the competition; and one of the largest coffee retailers in the world, which is using Teradata in partnership with SaaS, to quickly create new and innovative data sets to better operate their business.

Other new customer wins included Western Refining, a win in the oil and gas industry; Live Nation Entertainment, the online ticket seller and leading promoter of concerts; a Fortune 100 company in the healthcare industry; and Arcos Dorados, the largest restaurant operator in Latin America.

The Americas also had strong activity with existing customers such as: Electronic Arts, which is expanding its EDW as EA grows its online consumer business; Vonage, which is expanding its EDW to include marketing and customer care analytics; a Fortune 100 pharmaceutical benefits company that has a Teradata EDW is now deploying a Teradata appliance to support analytics for 10 years of Medicare history; and at Navy Federal Credit Union, where Teradata is supporting realtime inbound marketing and adding geospatial analytic capabilities. Other expansions in the quarter included CVS, GE Healthcare, Office Depot, PepsiCo, Ace Hardware and Xcel Energy.

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