Teradata Corporation (NYSE:TDC) Q2 2023 Earnings Call Transcript

Operator: Thank you. The next question will be from the line of Raimo Lenschow with Barclays. Your line is now open.

Raimo Lenschow: Hey, thank you. Congrats from me as well. Well done. Two questions, one for Steve, one for Claire. On the first one on for Steve, like on Vantage as you see momentum building there, what’s the nature of the projects done there? Is that like existing customers moving over their on-premise deployment to you, or do you see an expansion of workloads as well? That’s my first question.

Steve McMillan: Yes, I think the primary driver for growth was expansions actually from a cloud perspective, Raimo. But clearly our migration activities is something that we’re very happy with. Our customers are seeing that the only way that they can move those large mission critical workloads into the cloud and operate them with a level of price performance that they’ve come to expect from their on-prem systems and do that migration at the lowest possible risk, is something that’s been very attractive for those customers, is they want to modernize their data environment and take advantage of modern CSP native services. And because of the way that we’ve re-architected the Teradata VantageCloud platform, that level of integration with cloud native services gives our customers the ability to utilize, modern services AI type services better than some of our competition. So we see both driving our overall cloud growth, but very proud of the expansion activity for Q2.

Raimo Lenschow: Okay. Perfect. Well done. Yes, that’s really interesting. And then Claire, like if you look at cash flow, so cash flow was the one number this quarter that we somehow all mismodeled a little bit, is there anything in terms of the second half that we need to be aware of in terms of timing as well, or was it just, just the tax, a little bit of extra timing? So Q3, Q4 is just normal then?

Claire Bramley: Yes, good question, Raimo. So what I would say is, to your point, our linearity this year on our cash flow within the year is slightly different than last year. The main drivers of that was the cash tax payments, which was fully included into our full year guide and firm seasonality and timing of billings. Just want to reiterate, we have full confidence in our full year number, so high confidence in the outlook that we’ve given for the full year. So no impact there. And to your point, as you model through for the years the, rest of the year, I would say Q3 you can assume a similar number for free cash flow versus Q3 of last year. And then Q4 will be the remainder of the number to get to the full year guide.

Operator: Thank you. The next question will be from the line of Wamsi Mohan with Bank of America. Your line is now open.

Ruplu Bhattacharya: Hi, thank you for taking my questions. It’s Ruplu filling in for Wamsi today. I have two questions and I guess both for Claire. Claire, public cloud ARR against all a very strong quarter with 77% growth, slightly lower than the 89% growth you had in the first quarter. So can you help us parse what drove the growth in the quarter? Can you help us rank order the contribution from migrations versus expansions versus new logo growth? And when we look at the second half of the year, looks like year-on-year compares are tougher for 3Q versus 4Q. So should we expect year-on-year growth to accelerate going from 3Q to 4Q and how should we think about sequential revenue growth going from 2Q to 3Q and then 3Q to 4Q?