Good afternoon. My name is Tia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradata Fourth Quarter 2021 and Full Year 2021 Earnings 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. [Operator Instructions] Thank you. I would like to hand over the conference to your host today, Christopher Lee, Senior Vice President of Investor Relations and Corporate Development. You may begin your conference.

Good afternoon, and welcome to Teradata's fourth quarter and full year 2021 earnings call. Steve McMillan, Teradata's President and Chief Executive Officer, will lead our call today; followed by Claire Bramley, Teradata's Chief Financial Officer, who will discuss our financial results and outlook. Our discussion today includes forecasts 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 differ materially. These risk factors are described in today's earnings release and in our SEC filings. Please note that Teradata intends to file the Form 10-K for the year ended December 31, 2021 later this month. These forward-looking statements are made as of today and we undertake no duty or obligation to update our forward-looking statements. On today's call, we will be discussing certain non-GAAP financial measures, which exclude such items as stock-based compensation expense and other special items described in our earnings release. We will also discuss other non-GAAP items such as free cash flow and constant currency revenue comparisons. A reconciliation of non-GAAP to GAAP measures is included in our earnings release, which is accessible on the Investor Relations page of our website at investor.teradata.com. A replay of this conference call will be available later today on our website. And now, I will turn the call over to Steve.

Thanks, Chris. Good afternoon, everyone. Thanks for joining us. I'm pleased to start by sharing our strong results demonstrating Teradata is successfully executing our strategy, significantly growing our cloud customers and driving profitable growth. Our efforts are reflected in our results. Teradata closed out 2021 on a strong note meeting or beating all of the 2021 financial outlook elements we provided. We finished the year with our public cloud ARR business at $202 million growing more than 90% year-over-year,. We grew total reported revenue in all regions and in 2021 we achieve total revenue growth for the first time in three years. Our disciplined focus resulted in healthy GAAP and non-GAAP profitability with $2.43 of non-GAAP earnings per share, and free cash flow of more than $430 million. We are delivering on our commitments and our transformation is on track. 2021 was proof of our momentum or clear emphasis on cloud paid off. Let's look at our cloud momentum. In Q4, we delivered our largest quarter ever of cloud ARR growth at $54 million, more than doubling what we achieved in the prior year Q4. For the full year of 2021, we delivered nearly 70% growth in new cloud customers compared to 2020. Of course, everyone is a testament to our competitive strength and the large and growing data and analytics market. Our sellers compete well and focus on the tremendous value that our customers can achieve from using data to manage and transform their businesses, use a handful of customer successes from the quarter that show the breadth of our wins. NatWest Group, a prominent bank based in the U.K. is migrating its on-prem data center to Vantage on AWS. Teradata has provided data and analytic services to NatWest for many years, before it's moved to the cloud, the…

Thank you, Steve, and good afternoon everyone. I'm very pleased with our strong finish to 2021. Teradata delivers on what we said we would do, executing upon our strategy to deliver profitable growth and increased shareholder value. Some fourth quarter highlights include public cloud ARR growth above market at 91% versus prior year and 92% in constant currency, recurring revenue of $364 million, which is a greater 5% versus prior year and 6% in constant currency. Non-GAAP earnings per share of $0.57, growth of $0.19 versus prior year and $0.30 above the midpoint of our previous outlook and free cash flow of $85 million, resulting in full year free cash flow of $432 million. As Steve mentioned, these highlights contributed to 2021 results meeting or exceeding all elements of the annual outlook we provided. Our actions continue to demonstrate that Teradata is delivering value to shareholders, combining operational execution and financial fundamentals that results in quality revenue growth, increasing GAAP and non-GAAP profitability and durable streams of free cash flow. Let's get into the results starting with ARR. Public cloud ARR was $202 million, $96 million increase from the prior year and a $54 million increase from the prior quarter. More than half of the cloud ARR growth in the fourth quarter came from customers migrating to Vantage in the cloud continuing the positive migration patterns seen throughout the year. Customers continue to choose Vantage for their journeys to the cloud. Teradata’s enterprise reliability and price performance are clearly highlighted by industry analysts, as well as supported by a net cloud customer growth rate that has accelerated each quarter throughout 2021. In addition to record cloud migration activities, our cloud net expansion rates continue to be robust, and in excess of 130%. We added more total new customer logos in…

[Operator Instructions] The first question is from the line of Wamsi Mohan with Bank of America. You may proceed.

Steve, your guide for 2022 public cloud ARR puts you back on track actually slightly ahead of your Analyst Day targets. What is giving you this confidence? And how much impact is this Gartner ranking and cloud DBMS for analytical use cases having on purchasing decisions? And if I could, Claire, I know you're not providing quarterly guidance here. But should we think that we should see the incremental cloud ARR in each quarter in 2022, to be greater than the incremental achieved in 2021? Thank you so much.

Hey, Wamsi, thank you for the question. We are absolutely confident and the guidance that we've given for FY '22. Wamsi our fantastic results in Q4, both in terms of the growth of number of customers, but also our cloud ARR growth be in double what we did in the prior Q4. It's just a testimony that we've got the right strategy, that we've got the number one technology in the world, thanks for mentioning the Gartner report. And that we're growing our overall customers in the ARR and the cloud. I think you know that Gartner report, I'll use the voice of Gartner here. Anybody that has put out an RFP for a cloud data platform should have Teradata's response to that RFP. And so we're extremely confident that that is going to have a positive impact for us in the market and help to continue to grow your business. So we were delighted to up the guidance that we provided to aim against some of our key metrics.

I guess Wamsi, good afternoon. And as Steve said, we are very excited about that raised guide with regards to our cloud ARR and on track to be delivering how long-term targets, as we laid out at Investor Day. With regards to the quarterly seasonality, just to kind of reiterate the comments that I made in my prepared remarks in the sense that we anticipate to see an acceleration as we continue to make the most of that momentum and continue throughout 2022.

The next question is from the line of Chad Bennett with Craig-Hallum. You may proceed.

Kudos on the quarter. Cloud ARR was phenomenal and free cash flow and generation and return to shareholders was great also. So a couple questions for me. First one for Steve, just want to elaborate or drill down into how you talked about I think, around kind of the test casing in single system, no duplication of data without moving data around in enterprise concurrency everything around what you've mentioned before around QueryGrid and workload management and your guide says unique data models. I just want to kind of get your sense, kind of awareness of that out in the market today, maybe versus, two to three quarters ago and in our checks with kind of your competitors, I would say, it's a very different value proposition. I mean, a lot of the kind of value, they expound on now is, bringing everything into their data cloud, so to speak and having a data marketplace to pull data around and move data around effectively, in my words, keep that meter running and growing, by moving data around. Just kind of a long-winded question, but kind of where do you think we are in the awareness of kind of query optimization and workload optimization in your real ROI pitch?

Hey, Chad, thank you very much for the question. I think Gartner made some interesting points. One of the reasons that Teradata was a leader from a strategic vision perspective, and that Gartner report was because of our point of view, in terms of creating data fabrics and [indiscernible] organizations. But more importantly, creating a query fabric that sits on top of your data fabric, so that you can get the best out of your data no matter where it is. And then you combine that with the power of the tests that we just executed 1000 nodes running in AWS more than twice the size of our largest on-prem customer. And that we have the biggest customers in the world running on Teradata systems on-prem. It's just a fantastic result. Awareness and our customer base in the marketplace, we're growing that awareness every single day. Our sales teams are really, really excited about not only what the product can do today, and how we can deliver for customers today, but also the fact that these new technologies and our approach effectively opens up the target addressable market for us, as we can process more data and get better outcomes for our customers. So we're really excited about the opportunity ahead.

Got it. Maybe one quick follow up if I could, for Claire or Steve. Just on the increase in the public cloud ARR guide for the year. I guess, just kind of give us a sense of what's driving that, if you think about the bucks to the business, is it accelerated migrations just in terms of confidence in Vantage of being the kind of cloud solution for your base? Is it net expansion acceleration or is it just kind of the new logo bucket incrementally adding more? Is there any color there? And what drove that upset? Then I'll hop off, thanks.

Thanks, Chad. Yes, I would say all of the above, we are exiting 2021 with strong momentum, as you can see. And we are very confident about the migrations and the pipeline that we see, as we look forward to 2022. We still have a very robust expansion rate that we expect to continue above 130%. And as that new logo, acquisition team ramp up, we've also excited about the opportunities that that they will bring. So I would say, lots of momentum. And that gives us that increased confidence for the cloud AI guide for 2022 and beyond.

The next question is from the line of Tyler Radke with Citi. You may proceed.

Clearly, really strong sequential growth in public cloud ARR. I think earlier in the year, you talked about guidance of over 100%, you came in just below that. As we think about the performance, is the right way to think about that delta being that some deals slipped into 2022. Just help us bridge kind of the original guide versus what you reported. And then if I could sneak a follow up in for Claire, just to understand your comments on seasonality in accelerating ARR growth? Should we expect ARR growth to accelerate on a constant currency basis compared to the 7% that you reported during Q4 or just help us understand kind of the starting point, for your acceleration comments? Thank you.

Hey, thanks, Tyler. So just with respect to 2022 guidance for cloud ARR, really pleased with Q4 $54 million more than double in what we achieved in the prior Q4, fantastic execution there from the team. We are confident in the long-term targets that we set out at the analyst Investor Day in terms of getting to over a billion dollars by FY 2025. The reason that we upped our cloud ARR growth percentage for next year is because we are really confident in the business. We're seeing fantastic traction within our customer base and in new logo acquisition. So exciting time for Teradata.

Yes. Just in terms of the quarterly seasonality that Tyler yet. What we're anticipating the similar seasonality that we saw in 2021, but with an acceleration as we move forward into 2022.

[Operator Instructions] The next question is from the line of Erik Woodring with Morgan Stanley. You may proceed.

Congrats on the quarter. Your guidance for total recurring revenue would imply that non-cloud ARR declines again next year. So just curious any incremental color you can share on the underlying moving pieces is that in all software maintenance of software rights more than offsetting subscription growth? Is there any deviation in subscription growth that we should be thinking about for the year? Thanks.

With regards to non-cloud ARR, Erik, I think that. Thanks for joining us today. Good to work with you going forward. So, with regards to non-cloud ARR, we are seeing the impact of migration because we continue to migrate over to the cloud. But to your point, we also do see the declines as per the strategy and the software and upgrade maintenance.

The next question is from the line of Derrick Wood with Cowen & Company. You may proceed.

Nice job on a solid Q4. Claire you had mentioned that a big driver of the on-prem to cloud migration strength was coming from more partner involvement. So I guess, for one of you guys -- either one of you guys, but can you just talk about who are some of the more strategic partners that you're working with, including both SIs and hyperscalers? And I know you guys recently announced a new go-to-market agreement with AWS, anything to highlight there in terms of early traction? Thank you.

Hey, Derrick, thanks for the question. Yes, a couple of points. We're seeing fantastic traction with our partners, especially as we strategically realign the company. So they're working with their size is a key part of our go-to-market motion. The recent partnership that we formalized with Accenture is a key testimony to that, but also the work we're doing with Deloitte. And now more recently, with the likes of Kindle, as well as some of the large n-D and SIs are all given us an opportunity aperture that's increasing every single day, really excited by the most recent partnership, we announced with Microsoft. Microsoft are interested in working with Teradata because, they know that we [audio gap] and all of the cloud hyperscalers want to work with us to migrate that data into their clouds and get those workloads to start to expand with Teradata. And we put the right technology in the right strategy to enable our customers or joint customers to do that. So that is really part of our strategy to continue to execute and expand our go-to-market motion as we move forward. So a really good opportunity for us.

The next question is from the line of Matt Hedberg with RBC Capital Markets. You may proceed.

I guess for either of you. I think, Steve, you mentioned 70% growth in new cloud customers, versus 2020, which is great to hear. I'm wondering, is that cohort, is that number of cloud customers continues to grow, is that a KPI that we might start to see maybe on a quarterly or annual basis where we see the actual number of customers because obviously, I think historically there wasn't a huge focus on new customers. But it clearly seems like there's been a lot of success in that in 2020.

Yes, thanks for the question. It's certainly a key metric in terms of how we execute. And as we add more and more customers and it was the number of customers that I was referring to there. Then we have the opportunity to continuously add more and more value to those customers and expand their used cases in the cloud. So it is a key metric is something that we try care very, very closely in terms of operational execution, something that's very important to us. Our new logo motion, I think, we've talked about that before, it really kicked off in the second half of last year, delighted to see some of the progress with that. Added new logos, both in the cloud and on-prem to see in that motion getting up to double digits. I think, as we look at the level of disclosures that we have, we started introducing some new metrics in terms of our net expansion rate at our analyst Investor Day, and we're continually evaluating how we can give more insight into our execution as we move forward. But thanks for the question. Thanks Matt.

The next question is from the line Raimo Lenschow with Barclays. You may proceed.

Congrats from me as well. Going back to the Gartner report, you talked quite a bit about Steve. There seem to be like, what are you doing in terms of closing that information gap with customers because you clearly like Teradata is number one, Oracle number two, IBM three, and a lot of them and SAP, and then the cloud guys much, much lower. So there seems to be a disconnect between what -- how good you are as a product versus kind of where customers are buying at the moment, if I look at the numbers. Can you talk a little bit of what you can do there and [indiscernible]? Thank you.

Thanks, Raimo. It’s a great question and something that we're continuously focused on enabling our sales teams on a global basis to take our cloud message and their cloud value proposition to our customers, ensuring that our customers know that we are the fastest least risked, least cost path for the cloud, is incredibly important. I spoke in my prepared remarks about recruiting a new Chief Marketing Officer, Jacqueline Woods. We're incredibly excited to have Jacqueline on the team. She's a transformational marketing leader that we know will make a difference in terms of how we get our value proposition to the marketplace. But to your point, we plan from an execution capability on a day-to-day basis to get our customer success teams and our sales teams to utilize that Gartner report where -- just from a data warehouse perspective, as you said, Teradata number one, Databricks is number 10, and Snowflakes number 11. From a data lake perspective, Teradata number one and Databricks is at number five and Snowflake down at number 12. Those are the kind of key facts that we need to get out into the marketplace. And that's exactly what we're going to do. I think the future is really bright for Teradata as we do that.

The next question is from the line of Pat Walravens with JMP Securities. You may proceed.

And let me add my congratulations. So Steve, while you've been talking, I've had an investor say, hey, wait a minute, sometimes the hyperscalers are their partners. And then I thought I heard them list the hyperscalers as competitors in some of these deals, too. So I thought it might be a good opportunity for you to drill down on that a little bit and help people understand.

Hey, Pat, thanks very much for the question. I think competition is just the nature of the IT industry. What the hyperscalers are interested in at the end of the day, is getting workloads and usage and data and compute resources into their clouds. And they see Teradata has been a fantastic partner to enable them to achieve that. The Microsoft partnership that we just announced in terms of joint sales and joint marketing activities. Building on the AWS strategic collaboration agreement that we have ensures that level of competition is directed to the best possible results for our customers. And so the hyperscalers and Teradata, we both believe that better together is the real answer for customers. But not only that, we are truly agnostic when it comes to our cloud perspective. We create that intelligent multi-cloud fabric, which enables query execution across all clouds and back into on-prem. Few other providers, especially cloud native solutions can provide that. We are the best solution for that multi-cloud data platform for enterprise analytics. And that's where we really shine from a differentiation perspective.

The next question is from the line of Phil Winslow with Credit Suisse.

Just wanted to focus on net new ARR. If I take your Analyst Day guidance of 70% growth up of a 100 versus what you just reported 91% growth and 80% growth up that it gets me to call 364 million versus the Analyst Day guidance of 360 for cloud ARR. But if I take it from a net new perspective, you're obviously got into a step up in your expectations for 2022 versus the Analyst Day. What's giving you the conviction in that? Is it the acceleration of the shift from the on-premise base of the cloud? Or is it some of the net new logos that you talked about having success in Q4 starting to show up even more so on 2022? Thanks.

I will go and then I'll let Steve jump in also. So thanks. So yes, I mean, to your point, we are on track to deliver what we laid out at our Investor Day. So we are very excited about that. And as I mentioned in my prepared remarks, we are reaffirming our long-term guide as well with regards to 2025 and getting to $1 billion. We are definitely seeing the momentum as we talked about in terms of the 70% growth in new cloud customers and the double-digit new logos, really strong momentum there. And we are maintaining our strong expansion and migration activities. So all of that giving us a lot of momentum as we move into 2022.

I think we are seeing great momentum and execution, that new logo engine, we're seeing new on-prem, new logos, which as we said at the analyst Investor Day. We hadn't actually factored that into the overall long-term model for the business that as we win those new logos on-prem, it gives us the opportunity to migrate them to the cloud in the future. So lots of opportunity for execution for us as we move forward.

There are no further questions at this time. I will now turn the call back over to Steve McMillan for his final remarks.

Thanks everyone for joining the call today. We are entering 2022 with momentum and commitment to accelerate. We are looking forward to update you at the end of next quarter. Have a great rest of your day. Thank you very much.

That concludes today's call. Thank you and have a great day.