Teradata Corporation (TDC)

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Teradata (TDC)

Q1 2011 Earnings Call

May 05, 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.

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

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 Q1 2011 Teradata Earnings Call. My name is John, 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 first quarter earnings call. Mike Koehler, Teradata's CEO will begin today by summarizing Teradata's 2011 Q1 results. Steve Chapman, Teradata's Chief Financial Officer will then provide more detail regarding our financial performance, as well as our increased guidance for 2011. 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 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 excluding stock-based compensation expense, acquisition-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 are 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 on today on the 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. Teradata got off to a good start in 2011, with Q1 revenue of $506 million, up 18% over Q1 of 2010. Non-GAAP operating income was up 27% over prior year and non-GAAP EPS of $0.48 was up 17%, despite a much higher effective tax rate.

Our increased focus and investments in R&D, consulting services, partnerships and sales territories are helping Teradata to accelerate revenue growth and increase new account wins. New customer wins in the first quarter were the highest ever recorded during the past 10 years.

In addition to the 4 key growth initiatives we have been executing in the past 3 years, we have now added 2 strategic platforms for future growth with our recent acquisitions: Aster Data for unstructured big data and Aprimo for integrated marketing management and applications.

Turning to the region results. The Americas revenue was up 22% over a strong Q1 in 2010, when revenues grew 23%. The Americas also had a record Q1 for data warehouse new customer wins. Wins included some of the largest companies in financial services, healthcare, retail and travel.

United Airlines is replacing a large competitor's data warehouse with Teradata to improve real-time customer interactions and enhance revenue management. A leading healthcare solutions company is implementing Teradata to drive new insights, enhance collaboration and speed the exchange of critical patient information.

Another great new customer win was one of the largest retailers in the U.S. We now have 8 of the top 10 global retailers relying on Teradata for operational and strategic insights. Retail was strong in the U.S. and also globally in the quarter. Other wins included one of the largest rental car companies, Blue Cross and Blue Shield of Minnesota and Royal Sun and Alliance Insurance (sic) [Royal & Sun Alliance Insurance] in Canada.

The Americas also had a good quarter with Aprimo new customer wins, including AutoNation and Designer Shoe Warehouse, which is a Teradata customer and has purchased Aprimo's Marketing Studio On Demand to enhance marketing operations.

Upgrade and expansion activities in the Americas were particularly strong in Q1. Walmart, one of our longtime valued customers is implementing their next-generation integrated data warehouse with Teradata. Walmart is partnering with Teradata to strengthen its analytic capabilities and also help meet sustainability goals, with a 50% reduction in floor space and a 40% reduction in energy consumption from our latest data warehouse technology.

Best Buy is upgrading their Teradata system to better measure store operations and profitability. More than 40,000 Best Buy users interact with their Teradata system, processing about 2 million queries everyday.

In the government sector, the United States Postal Service added dual active capability to its integrated Teradata warehouse for their mission-critical applications. And the U.S. Navy is expanding their Teradata environment to help provide integrated insights around aircraft maintenance, flight and usage information.

Other expansions in the Americas included, Boeing, Discover, Ford and WellPoint in the U.S. and BBVA [Banco Bilbao Vizcaya Argentaria] bank over in Mexico. The Europe, Middle East and Africa region also had a good Q1, with revenue growing 18% over prior year to $125 million and up 15% in constant currency.

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