Good morning. My name is Carol, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradata's Q4 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. At this time, I would like to turn the call over to Gregg Swearingen, Vice President of Investor Relations.

Good morning and thanks for joining us for our 2016 fourth quarter earnings call. Victor Lund, Teradata's CEO, will lead off our call this morning to provide his perspective on our transformation. Oliver Ratzesberger, EVP and Chief Product Officer, will then provide an update on our progress in R&D. Steve Scheppmann, Teradata's CFO, will discuss our Q4 and full year 2016 financial performance. 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-Ks, 10-Qs, and other filings with the SEC. On today's call, we will also be discussing certain non-GAAP financial information, which excludes such items as stock-based compensation expense, asset impairments, acquisition and reorganization cost, the Marketing Applications business which was sold on July 1, 2016, and other special items. We will also discuss 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. A replay of this conference call will be made available later today on our site. 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. And now, we'll hear from Vic.

Good morning and thank you all for joining this call and, Gregg, thank you for the introduction. I'm excited to be with all of you today. I am going to just give some highlights and then we'll go into the body of the presentation. I want to talk about though two issues. I think, in the nine months I've been at Teradata, there are two points that really stand out to me that are important to both for us as a company and to you as investors. And I think the first one relates around our customers. You've heard a bit of this before, but when I first arrived at Teradata, I found customer base that was confused about who we were, wondering if we were relevant in the future, and trying to decide if they should continue to make substantial investments with us going forward. And I'm happy to report that I have had a lot of meetings with our customers, and in every case, I mean, every case, I've found that our customers are receptive of our new strategy, they're willing to give Teradata an opportunity to present our story and, in most cases, willing to engage with us as a result of those discussions. I think it's driven around the fact that: one, we've demonstrated we are changing and that we are customer-focused; second, the fact that they know we're going to be around; and finally, they have always viewed us as a trusted advisor. We bring straight answers that give them what they're expecting. The second thing that has been really more recently marked a great turnaround for me and that is our people. When I first arrived at Teradata, I found a group of people that were loyal to the company, but demoralized, unclear on…

Thank you, Vic, and good morning, everyone. In terms of R&D, we continue our focus on driving new innovation faster for customers. Our development is anchored in our business outcome-led technology-enabled strategy. We have a great opportunity ahead of us and we're making real progress here. Our strategy is the right move for us and we're gaining recognition as we execute. An international data management firm recently reported that Teradata is the number one technology leader in big data analytics, noting that our customers have the highest degree of satisfaction with our technology, services and deployment expertise. We have made great strides in moving to an agile product development culture and we're riveted on delivering market-leading hybrid cloud software and solutions for our customers. Companies can now get the same performance from Teradata software through multiple deployment options, on-premises or in the cloud or through a hybrid cloud combination and with subscription-based purchasing options. We're seeing strong demand for this approach in our various cloud offerings and new releases of Teradata Everywhere and IntelliFlex. In Q4, we expanded the reach of our hybrid cloud technology, investing in a cloud data center in Germany to meet European customers' demand for secure, regional, agile environment. And in Q1, we announced Teradata on Microsoft Azure. We also added managed services on AWS in the quarter to help customers architect, implement, and manage cloud projects to increase IT efficiency. Customers are taking advantage of the flexibility of Teradata Everywhere, which makes the Teradata database portable no matter where and how it is deployed. Teradata Everywhere is setting new industry standards for performance and price performance on major cloud platforms and it is a key differentiator for us. In fact, our database was recently recognized by Ventana Research which gave it the Technology Innovation Award for Information Management. Our new IntelliFlex platform is also getting rave reviews by our customers and the industry, in general, as they see the value it delivers across a variety of deployment and pricing options. Since its release in Q3, the majority of the enterprise-class systems we have sold have been IntelliFlex. Throughout 2017, our focus is to deliver hybrid cloud use cases that build on top of our Teradata Everywhere strategy, continue to push price performance boundaries across all deployment options and execute as a service model and an easy-to-use model that matches how our customers wanted to buy. To do that, we're going to keep building out our R&D talent to support these initiatives, as Vic mentioned. We have added a lot of top development and engineering talent, with cloud, advanced analytics and innovation project experience and this will continue as we open a new R&D facility in Seattle and expand our Santa Clara offices. So, we have a very strong product pipeline with next-generation capabilities and we'll continue to aggressively tackle more cloud, Internet of Things and advanced analytics capabilities to help our customers drive positive business outcomes. Now, I'll turn the call to Steve. Steve?

Thanks, Oliver. It was encouraging to see our team deliver our near-term results, while further strengthening our transformational foundation for our future. Our team is embracing our strategic initiatives, executing our organizational retooling and talent initiatives, providing alternative purchasing and deployment options to better align with the evolving market and improving our go-to-market strategy. We're also pleased with our Q4 results, given the effects of customers increasingly opting for our subscription-based purchase options, which as you know has an impact on the amount of revenue that is recorded upfront versus over the term of the contract. In the fourth quarter, we had about $40 million of subscription-based revenue that was not included in our reported result, but rather will be recognized over time. Additionally, currency also moved against many companies in Q4. This currency movement negatively impacted our fourth quarter reported revenue by approximately $7 million since the time we provided our Q4 guidance. Despite these revenue headwinds, we reported revenue of $626 million, which was within our $620 million to $640 million guidance range. My comments today regarding our operating results reflect Teradata's going-forward business on a non-GAAP basis, excluding stock-based compensation expense and other special items as identified in our earnings release. EPS in the fourth quarter was $0.67 compared to $0.75 in Q4 2015. The difference was largely due to lower revenue. Our full year non-GAAP EPS was $2.56, up 12% from 2015. The year-over-year improvement was due to our transformational effort to first reduce our prior cost base so that we can reinvest or redeploy into the new Teradata. Revenue in the Americas region decreased 9% in constant currency for both the quarter and the full year as our customers continued to evaluate less capital intensive alternatives as well as our new purchasing and deployment options.…

Your first question today comes from the line of Wamsi Mohan from Bank of America Merrill Lynch. Please go ahead. Your line is open.

Hi, yes, thank you. Good morning. Vic or Steve, I understand there are a lot of moving pieces here, but maybe you could share some more color around the decision to not provide fiscal 2017 guidance. I think, Steve, you mentioned revenue decline range 5% to 10%, did you mean the accounting and subscription adoption trend will create significant volatility around this 5% to 10% revenue decline range?

Yeah, Wamsi, first of all, from annual revenue guidance for 2017, looking at – we're in early stages of our transition. As you've seen, we had $40 million revenue transitioning from perpetual to subscription, $50 million in Q1, predominantly led by the U.S., the Americas. And we made – so there's significant changes in our go-to-market offerings. We made some significant assumptions in that. And what we're seeing is more adoption in the U.S. versus international and we're just stress testing our assumptions with respect to that transition. In addition, again, since we're in the early stages of this transition, 606 gives some capabilities or ability to early adopt effective 01/01/2017. Now, that will have to do for our Q1 and so we're going through that assessment as we speak today. And you'll see when companies release their 10-Ks, and they'll update their positions or assumptions or estimates based on current accounting – future accounting pronouncements, you'll see a lot of companies giving their position. We will be giving a stronger position in the 10-K with respect to that decision. And so that will be filed late February. So given those – the dynamics that we're in right now, we felt it would be more prudent just to delay that on the 2017 revenue. But given that, as I said, we're still very consistent with the – our view as of the Analyst Day that total revenue, as the companies I've looked at one year after announcing this transition to – from perpetual to subscription, generally saw revenue decline 5% to 10% in the first full-year following that announcement. We are no different. We're anticipating revenue to decline – total revenue to decline within that, primarily driven by the product as the product transitions from that perpetual model to that term under the current rules, perpetual to that subscription under current rules that we would see a decline between 5% and 10%. So that's really the basis. My comments on the Analyst Day still hold true with where we're anticipating 2017 total revenue from that transition before any potential early adoption of 606.

And Wamsi, this is Vic. So I think it's important to standout from a business perspective. I think Steve's gone over why we are what we are in wanting to understand the numbers. I think the key thing for you all to takeaway from this call is we're seeing strength in our offering. Our customers like it. They're standing up to it. They're welcoming us. We've seen it over and over. I meant what I said. And so this isn't an issue at all about the success of our strategy. I think it's been more warmly received and better reception across the globe than we could have hoped for. I think we're right where we would hope to be and so I'm very, very excited about the strategy and how our customers receive it. From a business perspective, there's a couple other things that have gone on. I – as we worked through this, I've realized that conversion from perpetual to subscription isn't a definition of success for our strategy. It is engagement with our customers. We deal with very, very big customers and my view is that, we have a customer-centric strategy and so what we – our goal is to get our customers to buy more Teradata, right, and do that in a way that's beneficial to their business. And so whether they want to buy it perpetual or they want to buy it subscription, we don't care. We're happy to provide them whatever drives their business and that attitude in facing with our customers has opened the door in places that we weren't. I mean, I've been on customer calls in three large accounts that a year ago they were thinking about buying no more Teradata, in all three cases we did a transaction – a good transaction with each one of them. And so I'm excited about the underlying enthusiasm of the company and all that. So our whole issue with not giving guidance until we figure out a little bit more where we are is we do have some – a lot of practical stuff to work through and it's all driven by accounting treatment, not the underlying strength of our strategy. And I think, I don't want you to takeaway that we have any hesitation about the strength of our strategy. That's not what's driving, it is really 606 and I told everybody they left one six out of that given the way I look at it. But again 606 and the whole conversion of our customers and so we've got to – we just got to figure that out and – because when we give you guidance, I want us to be able to stand behind it until we make some more determinations about exactly how and what accounting rules we're going to adopt. I don't think that's prudent until it's – we just need another month.

Yeah, thanks a lot, Vic. I appreciate that color. Could you just give us maybe some sense if there was growth in the Tcore installed base in the quarter and do you see Tcore growth in 2017? Thank you.

Steve, I'm going to give the business answer and the answer is yes. But Steve can give you a little color on it.

Yeah, Wamsi, what we've seen in Q4 is in our large target customer base that the Tcore grew in Q4 at a good rate. In addition, the overall revenue in that group in Q4, again, we were declining Q1, Q2, Q3. Q4, it was flat in constant currency. So very positive trend that we saw come through in Q4. And yes, we are expecting Tcore growth in 2017 over 2016.

Thank you.

And your next question comes from Katy Huberty from Morgan Stanley. Please go ahead. Your line is open. Kathryn Lynn Huberty - Morgan Stanley & Co. LLC: Thank you. Good morning. Just to understand the shift to subscription a little bit more, how did the $40 million in the fourth quarter compare to your expectations coming into the quarter? And then just maybe a little more detail around what drives a customer to the decision point, is it at the point of upgrade and when that happens what percentage of those large customers are choosing to move in that direction? Thank you.

Yeah, from a expectation perspective in Q4, we actually, Katy, we finished slightly higher than what we were estimating, relatively the same or a little slightly higher. What's driving them is the flexibility to look at that OpEx model versus that – with that pressure on the CapEx model. So we have customers evaluating the entire OpEx model, renting everything from the hardware to the software and also evaluating acquiring the hardware, renting the software. So it just – what it does it gives them flexibility to meet their needs. As Vic said, we're not pushing either one. We're not pushing the subscription over the perpetual. We want to do and put the right offerings in front of the customer to meet their needs and by doing that gives them a lot of flexibility how they want to structure their transaction. Kathryn Lynn Huberty - Morgan Stanley & Co. LLC: Okay. Thank you.

Your next question comes from Raimo Lenschow from Barclays. Please go ahead. Your line is open.

Thanks for taking my questions, and good to see the progress. Going back to the transition that we're seeing at the moment, maybe a question for Oliver, if you like. If you think about what's going on in terms of the cloud adoption at the moment, what do you see customers' interest around like pure cloud versus kind of on-premise subscription model and that kind of leads into like – I'm trying to do a one multi-part question, Steve, if you are on-premise and you do subscription and 606 will basically reverse what you're trying to tell us today or unless I'm totally wrong on that one, so I am – are you walking us down a path and then in Q1 you have to reverse it all? Thank you.

So, this is Oliver, I'm going to take the cloud part. First of all, we're seeing very strong interest in our cloud deployment options, but what we hear most importantly and again think about that in terms of what our target customers all around the world, right. The top 500 opportunities around the world, the largest of the largest implementations, all of them are telling us that hybrid is the model that they're looking for. And they're adding cloud deployment to their existing on-prem deployments in order to do agile development, for example, right? They have new ideas of how they want to treat their data. They send something up in the cloud, they try it out and when they prove the value of that data, then they switch over to on-prem deployment. So we're seeing a very strong demand. Cloud, in general, is seeing some very nice adoption out there. Our offerings we just released are being tested and implemented by customers around the world and every single one of them is asking us how do we get into a hybrid cloud deployment? How do we connect the on-prem systems with the cloud systems? And the uniqueness that we have at Teradata is that we have a single solution with Teradata Everywhere that doesn't require our customers to recode, to rewrite their applications, their ad hoc business questions, their analysis, because unlike any other alternative out there in the market, Teradata is the exact same whether it is in the public cloud, or managed cloud or in the private cloud or on-prem deployment. And so demand for that is very strong and customers are really looking to implement that and we're working with large companies around the world right now on expanding their footprints through additional adoption with cloud.

Yeah. And, Raimo, you asked an interesting question on the on-premise subscription model. If you look at the managed cloud, it comes down to portability and how does that impact 606 based on penalties. On-premise subscription is really the key one that could – it's a term model under the old rules, it could be upfront perpetual under the new rules. However, and this is part of the business things that we're going through, if you attach hardware to that on-premise subscription, you get under the leasing rules which will give that to you ratable. If you bundle that on-premise solution, even software with a managed services arrangement, you can still get that under that term, that ratable revenue recognition. So we're going through – this is even more detailed from Wamsi's question, we're going through all those business practices to understand what is the right solutions to offer that customer. But again, under the governance that Vic laid out, we're doing this thing to drive more consumption of Teradata and do the right thing for the customer. So that is – I mean, no, Raimo, you have it entirely correct. The real wildcard on here is the on-premise subscription model and how that will be treated under the old rules and the new rules and still considering we want to do the right thing at the end of the day, drive consumption of Teradata and do the right thing for the customer.

Okay. Thank you. Very clear.

Your next question comes from Derrick Wood from Cowen & Company. Please go ahead. Your line is open. Derrick Wood - Cowen & Co. LLC: Thanks. One of the initiatives you guys laid out at the Analyst Day was to try to engage more with line of business beyond just IT to help expand budget capture. Any update on progress on this? And I guess, do you anticipate – maybe if you can go through any changes you expect in the sales force to help better tackle that in 2017?

Yeah, this is Vic. So, it's going very, very well. We have had a lot of examples, and in fact, I would say, I'm pulling numbers out of the air here, but well over half of our new engagement are driven by exactly that, our ability to come in and offer business outcomes as opposed to technology and that requires us to get to different levels in the organization. But I think we're seeing a lot of our larger customers just by their nature, they – the people that drive IT have been asked by the business people in the organization help us find solutions. And so our ability to come in and help do that has really served us well. In fact, it's getting us into new accounts, so I feel really good about that. Steve talked about one of the metrics we'll lay out for all of you as we go forward is our consulting revenue and I think that you will see that as the leading edge because we aren't building a consulting business here. I want to be clear about that. We're using consulting to help our customers with business outcomes with the end objective for that to be driving Tcore consumption over time. Now, we have to earn that right, it can't be given, but I think what we're finding is that we do earn that right, so it's going. So I think we are seeing very, very good reception on that, that's what I tried to say in my comments. I feel good about it and we will, every quarter, tell you what our consulting revenue is doing. All of our consulting is being driven by the field. Our consultants deploy against opportunities that our field people find and have identified before we show up at the customer. And so, as you see that grow, I mean, that our field teams have identified opportunities and our customers have decided those opportunities are worthwhile picking up and I think you will see that grow over the coming year. I feel good about that piece of our – I actually feel good about our whole strategy, but with that piece I think we will be able to demonstrate as this year goes on that we're getting good traction there. Derrick Wood - Cowen & Co. LLC: Can I just ask a clarification on the comp plan. I think you said earlier you're not incentivizing salespeople to sell subscription ratable versus on-prem. That's not the strategy. It's still to let the customer determine what they need.

The customer gets to determine what they need, but we do – the field actually does get more incentive payments if they sell a subscription model. But it's not a huge difference, but we do incent the field to sell subscription. The thing I keep saying, you have to come back is that our customers are really big and they have to say, we're not trying to convert a million customers that spend $60 a year over. We've got very, very big customers that have business strategies and capital allocation programs, some are on OpEx and some want CapEx. And I think it would be silly of us to try and alter that for some revenue recognition thing. What we want them to do is love Teradata and buy more Teradata and increase their consumption of Tcores and our consulting revenues. And I think we're seeing that happen. So – but we do – to answer your question, we do actually, there is a slight incentive for our field to sell subscription over perpetual. Derrick Wood - Cowen & Co. LLC: Got it. Thank you.

Thanks.

Your next question comes from Jesse Hulsing from Goldman Sachs. Please go ahead. Your line is open. Jesse Hulsing - Goldman Sachs & Co.: Yeah, thanks for taking my questions. I have a couple. First, Steve, can you clarify what you mean by $40 million of subscription revenue? Is that total contract value of subscriptions that will be recognized over more than one year? Is that an annualized contract value number or is it a conversion of some sort from subscription revenue to product revenue to try to help normalize for us?

Yeah, Jesse, it's a conversion from the subscription to the perpetual equivalent. So if you want to take it on a general sense, it's at annual subscription times a factor, we'll go to the actual contract or the actual conversion, but let's say it's times three-and-a-half in general terms. So it's that annual subscription revenue perpetual equivalent. Jesse Hulsing - Goldman Sachs & Co.: Got it. That's helpful. And then on your guidance, for the first quarter, total revenue seasonality at $500 million is quite a bit stronger than it has been for the last couple of quarters. I think it's down 20% quarter-over-quarter versus down mid-20s or more over the last few years. Can you give us a sense of why that would be if you're selling more subscription revenue?

No, I mean, it's really Jesse it's built up from our funnel with our customer by customer. And we're just seeing strong acceptance, good activity with respect to our new strategy, customers embracing it. Vic referenced three accounts coming back and recommitting to Teradata. This is the momentum. This is what we're seeing in that customer funnel, that customer backlog, so there is good activity coming into Q1. And I got to be honest, I mean, last couple of years coming into Q1 we had a slow start and when you get that start out of Q1, it makes it challenging to get the full year. So we're really keeping that momentum strong through 2016 and into 2017. And again, we're going customer by customer with respect to perpetual and a subscription model. So it's a good spot to be in coming into 2017. Jesse Hulsing - Goldman Sachs & Co.: Got it. And is it fair to say that your year started stronger this year than it has in the last couple of years?

That's a fair statement, Jesse, at least from a backlog perspective coming into the year. Jesse Hulsing - Goldman Sachs & Co.: Great. Thank you, Steve.

Your next question comes from Ed Maguire from CLSA. Please go ahead. Your line is open.

Hi. Good morning. I was wondering if you could provide at least some color on your customers' preferences for – as you're doing your architecture consulting, what is the level of appetite and interest in hosted versus public cloud solutions versus on-premise, if you can see any changes given the change in strategy. And also as you're looking into architectural decisions, to what role is your Hadoop business informing customers' decisions how deeply to continue to invest in the Teradata database?

This is Oliver. Great question. First of all, on the architectural deployment, we're seeing a strong need from customers to operate their big data analytics infrastructures in the cloud. And so with our Teradata Everywhere strategy and us releasing the exact same Teradata not only on-premises but in various cloud deployment options, we're seeing very strong interest and that is pulling us into a lot of architectural conversations with our customers where all of a sudden they say Teradata with its Teradata Everywhere is core and center to our strategy going forward. We're actually seeing a strong uptick in cloud conversations with our customers. It is actually outpacing the conversations that we're having about other technologies, like Hadoop out there. And with our overall offering of UDA and Hadoop in the ecosystem, I think, we are seeing now really as in the sweet spot, not only do we integrate with Hadoop directly in the on-premises world, we can now integrate with all these technologies that are in the cloud that are beyond even what Hadoop has to offer with new APIs, with new services that are being stood up in cloud deployment options. And with technologies like QueryGrid that we have developed over the last several years, we can connect on-premises with various cloud deployment options in a single architecture and a lot of customers are realizing that this is really unique compared to the alternatives that they are finding out there and as such we're seeing strong demand for those architectural services and that is driving demand in return for Tcore and for consumption of our technologies.

Great. Thank you.

Your next question comes from Karl Keirstead from Deutsche Bank. Please go ahead. Your line is open.

Hi. Thank you. Maybe two for Steve. Steve, I wouldn't mind stress testing your free cash flow guide for 2017 of $250 million, plus or minus $25 million. It's – the tone on the call is that maybe there's a little bit of less conviction around the prior target on the revenue side, the prior down five, down 10 for the reasons you gave. Do you have any greater conviction in free cash flow guidance of $250 million you're giving? In other words, do you feel pretty anchored in that despite some of these moving pieces or is it sort of the same level of uncertainty that you might have about that prior revenue target? Thanks. And then I've got a follow-up.

Yeah, Karl, now I actually feel a little more certainty in the free cash flow side. When I look at historically, we're 60% to 70% of our free cash flow in the Q1 and I see that holding true coming into Q1 this year. And the big wildcard in the free cash flow is we've estimated about another $50 million of buying equipment to support the subscription or the rental based models. And that's one major assumption we gave in the financial model, in those – building the financial model. And if the customer actually buys the equipment upfront, yes, it will impact our product gross margins. But from a cash perspective, they'll be paying for that upfront. That will give us a little upside on the cash. So that is a major wildcard in the free cash flow and also in the revenue model. As we see our customers evolving towards renting the equipment and if they rent the equipment that could throw us into the leasing rules on-premise with the software as long as the software is bundled with that equipment. But if they buy the equipment, yeah, we get the cash up front, we get the revenue upfront from the equipment side, but then that throws that software subscription into the new 606 rules which would actually be revenue recognized upfront. So you can see the interdependencies on it, but from a free cash flow perspective, I feel more solid on that range, given where I see 60% to 70% of our free cash flow comes in Q1 and I see that holding pretty solid.

Got it. That's super helpful. Thank you. And then just a follow-up for you, which is somewhat related. Steve, when you think about the impact on the financial statements from potentially early adoption of 606, are you just referring to the accounting impact or are you contemplating having Teradata alter its contract or billing terms in response to 606 that might also have a financial impact? Thank you.

Yeah, Karl, great question, great current debate. And I want – I go back to what Vic said at the beginning, we do not want to do anything. We want to do the right thing for the customer. We do not want to change our business practices to accommodate the revenue recognition. We don't want accounting revenue recognition to drive our business practices. Our business practices have to be the right thing for the company, our customers and our shareholders. And so when I'm looking at early adoption of 606 that would be treating our existing business practices under the new guidelines of 606 and looking to see how that impacts our revenue in 2017 and going forward. So no, we're not contemplating. The only thing we're looking at that we're currently discussing is what I said before, do you bundle the on-premise hard – or software with managed services and do a managed cloud on-premise, okay, as a service? Do you bundle equipment in the on-premise software in order to get under the leasing rules? But that's not changing our business practices, Karl, that's giving our customer actually more options.

Yeah. Helpful. Thank you so much.

Your final question today comes from Abhey Lamba from Mizuho Securities. Please go ahead. Your line is open.

Yeah. Thank you. Steve, can you give us some kind of puts and takes on how should we think about the gross margins in 2017? I know there's a lot of moving parts there, but any kind of guardrails around that. And Vic, can you talk about the top – you talked about three accounts you had conversations with, but broadly if we look at your top 50 or 100 accounts, as they're evaluating these options, are they opening up their purse strings with you guys and what type of feedback are you expecting from them?

Yeah, Abhey, good question on the gross margins, because that's a very dynamic area also. Before 606 and assuming under assumptions that most of the – all the customers rent the equipment and the change in FAS 86 which even complicates it even more, traditionally, historically, our product gross margin is around 60%, okay. We see 2017, given the qualifiers I just said, that number to be in the upper 60s on product gross margin. Now, with that being said, I see services gross margin in 2017 going down because we're making the investments Vic described in the business consulting side. So as product revenue declines, as I said, most of that 5% to 10% range of decline, it would be in product revenue. Services revenue continuing to stay higher, you're going to get a mix shift in that overall gross margin and I'm looking at that overall gross margin to be in the low-50s for 2017. But remember, below the gross margin, you got the R&D expense going up with the investments and with the removal of the FAS 86 capitalization of costs. So Abhey, that's just a little color around those margin profiles.

And I guess, so I'll respond to the second question, which is, on these big customers, are we getting – are we having a reception? The answer is absolutely yes. And I – we're early days on this, but we have had major customers – three of them that basically had made a statement to us before we started the new stuff that they weren't buying anymore Teradata. In all three cases, we did substantial transactions with them. We have other customers, another one that I've been asked, that is a good customers of ours today, we are doing an ecosystem analysis of them that could lead to big expansion. I think – in fact, I met with a CIO and he told me, are you sure that you're going to come with a true analysis of where we are and it won't all be Teradata? And I promised him that it would be in their interest and we're in there, we're starting that engagement. And finally, we have even penetrated one of our top three accounts where we weren't doing anything. I mean, this is a huge worldwide customer. The first engagement is a small one, but we were actually able to get into the door and if we can demonstrate our capabilities, then that's the opportunity we need to grow wallet share. So we're seeing it across. I think it takes a little while to get going to expand this further, it is getting our team up to speed and ready to go and that's what that week we just had where we had everybody together. I think we're getting a lot of reception. And I think that's a good segue for me to kind of summarize where we are as a business right now. I mean, as…

I thank you all for participating on our call today and, again, I just want you to know we are not being evasive here. We just want to come with a right answer to you when we talk through all these moving parts and it's nothing more or less than that and we will provide you guidance during the year – well, I should say, we will provide you metrics during the year that will allow you to determine that our strategy is succeeding as we go along and give you a basis for understanding our enthusiasm. So with that, I thank you all so much for participating in our call. We look forward to the next one and, as always, Steve and Gregg are around to take your detailed questions after you're through with this. And again, thank you so much for your support and for your interest in Teradata. Thank you.

This concludes today's conference. You may now disconnect.