teradata 2018 analyst day · strategic imperatives. relentlessly focus on consumption. pivot...
TRANSCRIPT
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Teradata 2018 Analyst Day
December 12, 2018
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Safe-Harbor Statement Statements in this presentation and remarks and responses made
in connection with this presentation include forward-looking statements that are based on current expectations and assumptions. These forward-looking statements include statements with respect to Teradata’s future plans, expectations, beliefs, prospects and intentions and are subject to a number of risks and uncertainties that could affect our future results and could cause actual results to differ materially from those expressed in such statements.
A detailed discussion of these risks and uncertainties is contained in Teradata’s U.S. Securities and Exchange Commission (SEC) filings, including the company’s most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.” Copies of these filings are available online from the SEC or the company’s investor page at: http://investor.teradata.com/financial-performance/sec-filings.
All information set forth in this presentation and related commentary is current as of December 12, 2018. Teradata undertakes no duty to update any statement in light of new information or future events.
Certain non-GAAP financial information regarding operating results is included with this presentation and may be discussed during the remarks and responses made in connection with this presentation to supplement Teradata’s consolidated financial statements presented on a GAAP basis. Reconciliations of the differences between GAAP and non-GAAP financial measures are available on our investor page at http://investor.teradata.com/financial-performance/historical-non-gaap-measures.
We believe that certain non-GAAP financial information (such as Teradata’s results excluding, among other things, stock compensation expense and other special items, revenue on a constant currency basis, and free cash flow) is helpful in understanding our past financial performance and future results. We believe that providing these non-GAAP measures in addition to the related GAAP measures provides investors with greater transparency to the information used by management in its financial and operational decision-making and allows investors to see our results as management does.
This non-GAAP financial information is not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with Teradata’s consolidated financial statements prepared in accordance with GAAP.
Non-GAAP Financial Disclosures
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Agenda• CEO Overview Vic Lund, President & CEO
• Strategy Update Oliver Ratzesberger, COO
• Teradata Vantage Reema Poddar, EVP, Product & Technology
• Customers’ Experience Stephen Brobst, CTO
- Break -
• Financial Roadmap Mark Culhane, EVP & CFO
• Recap & Summary Vic Lund, President &CEO
• Q & A
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CEO OverviewVic LundPresident & Chief Executive Officer
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Strategy UpdateOliver RatzesbergerChief Operating Officer
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RECENT CONVERSATION
Large US Healthcare company 5000 data silos1000 headcount Billions in annual spend
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THE CURRENT LANDSCAPE
The reality is our customers are spending Billions in technology, people and infrastructure.
of enterprise decision-makers say analytics technology is too complex
Say employees don’t have access to the data they need to be efficient at their job.
74%
79%
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THE SOLUTION
Leverage 100% of the data to uncover real-time intelligence, at scale. We enable companies to rise above the complexity, cost and inadequacy of today’s analytics landscape, finding answers to the toughest challenges.
We call thisPervasive Data Intelligence.And it’s the new standard for our industry.
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OUR STRATEGIC FOCUS:
Rise above the complexity, cost and inadequacy of today’s analytics landscape to deliver Pervasive Data Intelligence to our top opportunities.
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WHERE WE PLAY: THE TARGET
Our top opportunities aremegadata companies.
The world’s most demanding large-scale users of data, leveraging data as a secret weapon for their business
They demand tightly integrated solutions that can accommodate massive scale and speed
And deployed across secure, hybrid-cloudarchitectures
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WHERE WE PLAY: THE TARGET
Our top opportunities aremegadata companies.
©2018 Teradata
This represents a 10X opportunity, $20B TAM for Teradata within our customer base.
12TERADATA CONFIDENTIAL
Which is why our growth will come from aggressively growing wallet share and market share with megadata companies
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Business Leaders & Analysts IT Leaders and Developers
Seamless Connections to Internal Ecosystem
Network of Experts for All Service Needs
Robust Enterprise Security
QA & Sandbox tools to Accelerate Modeling
Automated Data Ingestion & Integration
Business Outcomes (e.g. Customer Analytics)
Winning User Experience (UX)
Easy-to-Use Platform that “Just Works”
Frequent Updates with New Analytic Functionality
Wide Ecosystem of ‘Best-in-Breed’ Apps
Shift to more as-a-service offering
14 ©2018 Teradata
Megadata companies face unique challenges of cost and complexity.
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Megadata companies face unique challenges of cost and complexity.
Considerable expense to maintain and manage the complexity
Siloed, conflicting and duplicative solutions
Lack of operational analytic focus
The need to deploy across heterogeneous environments
Intensifying pressure for results
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Teradata Vantage not only solves these problems, it resets the bar for the entire industry.Connective tissue for ecosystem simplificationTakes risk out of decisionsDelivers massive scale and integration
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TERADATAVANTAGE
THE PLATFORM FORPERVASIVE DATA INTELLIGENCE
FUNCTIONS & ENGINES
TOOLS & LANGUAGES
INTEGRATED DATASETS
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TeradataEverywhere
TeradataVantage
CUSTOMER NEEDS
CHOICE SIMPLICITY CONSUMPTION
Teradata reduces risk and increases choice
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Teradata strategyHOW WE WIN: STRATEGIC IMPERATIVES
Relentlessly focus on consumption
Pivot towards as-a-service
Transform our go-to-market & brand
Radically simplify
Deliver operational excellence
Focus entire company on ARR growth
Focus on customer user experience, easy to consume
Shift from consulting first to as-a-service first
Improve efficiency and execution across the organization
Reposition Teradata in our customers
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OUR MISSION:
We transform how businesses work and people live through the power of data.
We dig deep and aim high.
We raise up our customers and our world.
We rise as one.
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Teradata VantageReema PoddarEVP, Product & Technology
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Teradata is the hybrid cloud analytics software provider that leverages 100% of the data to uncover real-time intelligence at scale
We enable companies to rise above the complexity, cost and inadequacy of today’s analytics landscape…powering pervasive data intelligence
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NEWVantage is the single platform for pervasive data intelligence
Key Takeaways
DIFFERENTIATINGConsumption of Vantage is driven through new analytic use cases that the competition cannot support
POWERFULVantage is built on a scalable software core with decades of innovation
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Teradata Vantage
THE PLATFORM FOR PERVASIVE DATA INTELLIGENCE
FUNCTIONS & ENGINES
TOOLS &LANGUAGES
INTEGRATEDDATASETS
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Vantage is built on a high performance, scalable software core with decades of innovation
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Teradata Infrastructure
Teradata Cloud
AWS &Azure
Commodity Infrastructure
Teradata Everywhere
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Teradata Vantage
Prescriptive
Sentient
AnalyticLanguages
AnalyticData Types
Predictive
AdvancedIndexing
AdaptiveOptimizerDescriptive
Mission CriticalAvailability
QueryPerformance
LinearScalabilityReporting
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Teradata VantageEnd-To-End Analytic Process
Discover data
Access data
Prepare data
Create models
Socialize results
Deploy models
Monitor models
Analytics workflow
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VANTAGE
Teradata Vantage Simplifies the Ecosystem
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Limited number of
users
Introduce new silos into the
enterprise
Can’t handle query
complexity
“Good Enough” Is Not Good Enough
Cloud-Only Competitors
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Scales to thousands of
usersAccess data
anywhereProven to handle
the most complex queries
Teradata Vantage
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Industry Feedback
The grand plan calls for placing Teradata Vantage at the center of customers’ analytics strategies…
– Alex Woodie, Datanami
Teradata has not only made itself relevant again; it has reinvented itself and is helping companies push the boundaries of innovation.– Merv Adrian, Gartner
Teradata Vantage represents a forward-looking approach for reducing complexities of analytics.
– John O’Brien, Radiant Advisors
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NEWVantage is the single platform for pervasive data intelligence
DIFFERENTIATINGConsumption of Vantage is driven through new analytic use cases that the competition cannot support
POWERFULVantage is built on a scalable software core with decades of innovation
Summary
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Customer ExperiencesWith Teradata VantageStephen BrobstChief Technology Officer
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Predictive AnalyticsUnderstanding the future
Descriptive AnalyticsInsight into the past
Three Phases of Analytics
Prescriptive Analytics Advise on possible outcomes
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Teradata Vantage Platform
AnalyticLanguages
High Speed FabricS3 DataStorage
Cross-Engine Analytic Orchestration
SQL
Analytic Tools
Analytic Engines
Data SourcesTeradata
Data Store
QueryGrid(Data Store Access)
Que
ryG
rid(E
ngin
e A
cces
s)
AppCenter
NewSQLEngine
SparkEngine*
TensorFlowEngine*
Custom Engine*
Machine LearningEngine
GraphEngine
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.
Advanced Technology without the Risk
Customers love the Teradata Vantage platform strategy:
Customers love the Teradata Everywhere strategy:
100% portability of software functionality.
100% portability of software licenses.
Most customers are deploying a hybrid of
cloud and on-premises.
Embracing the best of commercial and
open source technologies.
Extensible to not-yet-invented engines using
service-based architecture.
Minimize duplication and movement of data. Effective bridge between IT & Data Scientists.
More than justa SQL database.
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Teradata Vantage First Release: Use Cases
Prediction Segmentation Understanding Causality
$
Context Networking Hypothesis testing
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IoT Analytics: Major Manufacturer
Multi-equipment sensor and performance data.
Log Parsers
Generalized Linear Model
Weibull analysis
Naive Bayes
Detect parts failure.
Need to understand equipment usage and behavior to prevent down time or unplanned outages across many support groups.
Isolated key indicators of performance bottlenecksthat helped remove soonto be defective equipmentfrom circulation forproactive maintenance.
Sensor data continuously ingested and analyzed for pattern changes and performance triggers.
CHALLENGE SOLUTION ANALYTICS ANSWER
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CHALLENGE SOLUTION ANALYTICS ANSWER
Multi-Channel Account Closure Detection: Global Bank
Multi-Channel data consolidation of events of interest.
Sessionize
nPath
Dynamic Time Warping Analysis
Reduce account closure incidence
Customer account closure and its impact onsatisfaction requiresconstant model tweaking.
Highly manual.
Developed a constantlyevolving toolkit to detectnew closure patterns.
New closure event patterns detected the following day.
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Multi-National Leader in the Digital Economy
Teradata Vantage with IntelliCloud and Hadoop
on top of Amazon S3 leveraging Teradata’s
Unified Data Architecture (UDA) framework using hybrid cloud and driving
30% YOY growth in TCore.
Use cases that are driving their double-digit growth rate:
Increase adoption of shipping and fulfillment services.
Focus on user experience (UX) to drive engagement and loyalty.
Focus on net promoter score (NPS) for continuous improvement.
Grow new categories still under-indexed in the marketplace.
Grow percent sales volume coming from large merchants, brands, and branded retailers.
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Lots of Other Examples…
24xSpeed up when using
Teradata Vantage capability for in-database propensity to buy scoring
on behalf of North American on-line retailer.
180xSpeed up when using
Teradata Vantage capability for in-database churn prediction scoring
on behalf of multi-national
logistics company.
45xSpeed up when using
Teradata Vantage capability for in-
database demand prediction on behalf of
North American multi-channel retailer.
These kinds of performance speed-ups allow customers to engage in advanced analyticsin a way that they could not have done without Teradata–driving value
to their bottom line and driving Tcore growth for Teradata.
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Key Takeaways
Teradata delivers a choice of the best commercial and open source analytics tools integrated with the Teradata Vantage Platform.
Teradata has evolvedfrom a Database to an Analytics Platform provider.
We enhance the data scientist user experience with a choice of industry favorite analytic tools.
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Financial Roadmap
Mark CulhaneEVP & Chief Financial Officer
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Teradata Strategy
Relentlessly focus on consumption
Focus entire company on ARR growth
Focus on customer user experience, easy to consume
Shift from consulting first to as-a-service first
Reposition Teradata in our customers
Improve efficiency and execution across the organization
Radicallysimplify
Pivot towardsas-a-service
Transform our go-to-market & brand
Deliveroperationalexcellence
HOW WE WIN: STRATEGIC IMPERATIVES
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Relentlessly focus on consumption
Focus entire company on ARR growth
Focus on customer user experience, easy to consume
Shift from consulting first to as-a-service first
Reposition Teradata in our customers
Improve efficiency and execution across the organization
Radicallysimplify
Pivot towardsas-a-service
Transform our go-to-market & brand
Deliveroperationalexcellence
Teradata StrategyHOW WE WIN: STRATEGIC IMPERATIVES
Increase
ARR&
RecurringRevenue
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• Continued shift to subscription-based transactions with goal of no perpetual deals
• Vantage expands our market opportunity, enabling increased wallet share
• Vantage only available via subscription
• Vantage is much more than a data warehouse, will price for increased value
• Sales compensation change to incentivize ARR growth beginning 1/1/2019
Drivers of ARR & Recurring Revenue Growth
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9% cc
~15% cc
ARR Growth Rate Acceleration
“Go-to-Market”incentivized to increase ARR(Jan 1, 2019)
2017 2021 TARGET2018 (E)
~11% cc
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Relentlessly focus on consumption.
Focus entire company on ARR growth
Focus on customer user experience, easy to consume
Shift from consulting first to as-a-service first
Reposition Teradata in our customers
Improve efficiency and execution across the organization
Radicallysimplify
Pivot towardsas-a-service
Transform our go-to-market & brand
Deliveroperationalexcellence
Teradata StrategyHOW WE WIN: STRATEGIC IMPERATIVES
ARR&
Gross Margin
Increase
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• Vantage simplifies customers’ ecosystems and increases wallet share
• Radically simplified product offering designed to drive increased consumption
• Subscription makes it easier to buy and increase consumption
• Reduced number of platforms drives lower supply chain and support costs
• Simplified pricing will drive higher gross margins
Drivers to Simplify the Business
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Simplification Drives a Healthier BusinessRECURRING GROSS MARGIN* TOTAL GROSS MARGIN*
2018 (E) 2021 TARGET
Low 70’s%
~75%
* Non-GAAP
~50%
~65%
2018 (E) 2021 TARGET
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Relentlessly focus on consumption.
Focus entire company on ARR growth
Focus on customer user experience, easy to consume
Shift from consulting first to as-a-service first
Reposition Teradata in our customers
Improve efficiency and execution across the organization
Radicallysimplify
Pivot towardsas-a-service
Transform our go-to-market & brand
Deliveroperationalexcellence
Teradata StrategyHOW WE WIN: STRATEGIC IMPERATIVES
Increase
Gross Margin
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• Autonomous platform, increased automation and less human labor improves margins
• Focus on megadata customers reduces costs / resources outside of target market
• Focus on higher value / margin service offerings…de-emphasize lower value / margin services
• In the future, key focus will be to provide service offerings related to Vantage
• Leverage consulting partner ecosystem
Drivers of Improved Gross Margins
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As-A-Service Drives a Healthier BusinessCONSULTING GROSS MARGIN* TOTAL GROSS MARGIN*
2018 (E) 2021 TARGET
~10%
~20%
* Non-GAAP
~50%
~65%
2018 (E) 2021 TARGET
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Relentlessly focus on consumption.
Focus entire company on ARR growth
Focus on customer user experience, easy to consume
Shift from consulting first to as-a-service first
Reposition Teradata in our customers
Improve efficiency and execution across the organization
Radicallysimplify
Pivot towardsas-a-service
Transform our go-to-market & brand
Deliveroperationalexcellence
Teradata StrategyHOW WE WIN: STRATEGIC IMPERATIVES
Revenue&
OperatingMargin
Increase
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• Aligning “Go-to-Market” to focus on megadata companies
• Utilize “inside sales” for accounts outside target market to lower sales costs
• Rationalizing geographic footprint
• Simplification and standardization designed to reduce sales support needs / costs
• New brand positioning for pervasive data intelligence broadens market opportunity
Transform our Go-To-Market Strategy
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Relentlessly focus on consumption.
Focus entire company on ARR growth
Focus on customer user experience, easy to consume
Shift from consulting first to as-a-service first
Reposition Teradata in our customers
Improve efficiency and execution across the organization
Radicallysimplify
Pivot towardsas-a-service
Transform our go-to-market & brand
Deliveroperationalexcellence
Teradata StrategyHOW WE WIN: STRATEGIC IMPERATIVES
Increase
Margins,EPS &FCF
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Drivers of Operating Efficiencies
• Investments to modernize and automate processes with best-in-breed technologies
• Simplify and standardize our pricing strategy and execution
• Company-wide simplification / process improvements
• Outsourced back office functions
• Consulting and recurring revenue gross margin improvement
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Operating Margin* Improvement
* Non-GAAP
12%~10%
20%-25%
2017 2018 (E)* 2021 TARGET
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EPS* expected to More than Double By 2021RECURRING
REVENUE ($B)OPERATING
MARGIN*EPS*
2017 2021 TARGET 2017 2021 TARGET 2017 2021 TARGET
$1.112% $1.35
* Non-GAAP
62Free cash flow = net cash provided by operating activities less capital expenditures for property and equipment, and additions to capitalized software. Free cash flow margin = Free cash flow / Revenue
Free Cash Flow Margin* Improvement
11%
20%-25%
* Non-GAAP
2017 2021 TARGET2018 (E)*
8%-9%
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Drivers of Our Success• Vantage enables increased wallet share of megadata customers, a significant growth
opportunity
• Subscription makes it easier to buy and increase consumption
• Realigning consulting business to focus on Vantage and megadata customers drives increased consumption, as well as higher consulting gross margin dollars
• Transforming our “Go-to-Market” team streamlines how we penetrate our market opportunity
• We don’t believe we have significant renewal risk
• Long runway of increasing ARR growth
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Targeted Key Metrics1. 100% Subscription Bookings Mix
2. ~15% ARR Growth
3. ~14% Recurring Revenue Growth
4. ~75% Recurring Revenue Gross Margin*
5. ~20% Consulting Gross Margin*
6. ~65% Gross Margin*
7. Operating Margin* 20% - 25%
8. EPS* expected to more than double from 2017
9. Free Cash Flow* equals 20% - 25% of Revenue
2021 FINANCIAL TARGETS
* Non-GAAP
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Thank you.
©2018 Teradata
Thank you.