Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradata Second Quarter 2018 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 Thank you.
Mr. Greg Swearingen, Vice President of Investor Relations. You may begin your conference.
Good afternoon, and thanks for joining us for 2018 second quarter earnings call. Vic Lund, Teradata's CEO will lead our call today. Oliver Ratzesberger, our Chief Operating Officer who is joining the call from Europe will then provide an update on our strategy and customer activity. Since CFO, Mark Culhane will discuss our financial results and guidance. Our discussion today includes forecasts and other information that are considered forward looking statements.
To a number of risks and uncertainties that could cause actual results to differ materially. These risk factors are described in Teradata's 10 K, 10Q, and other filings with the SEC. On today's call, we will be discussing certain non GAAP financial information, which excludes such items as stock based compensation expense, and other special items described in our earnings release, including acquisition reorganization and transformation related costs. Asset impairment and capitalized software development costs. We will also discuss other non GAAP items such as free cash flow and constant currency revenue comparison A reconciliation of our GAAP results to our non GAAP results and other information concerning these measures is included in our earnings release.
And on the investor page of teradata.com. A replay of this conference call will be available later today on our website. Paradata assumes no obligation to update or revise the information provided during this conference call, whether as a result of new information, for future results. And now I will turn the call over to Vic.
Good afternoon, everyone. First, I'd like to express my thanks to the entire Teradata for another outstanding quarter. Our results this quarter again demonstrate that our strategy is working and is being well received by our customers. We saw year over year revenue growth from both regions and a continued increase in our pipeline. As noted in our earnings release, we are adjusting our guidance Mark will provide greater detail, but I want to highlight the adjustments were driven by 3 factors.
First, as we have previously stated, customers are moving to subscription license faster than anticipated. In fact in the first half of twenty eighteen, roughly two thirds of our new business transactions are on subscription and we continue to see subscriptions trend above our previous guidance. The accelerating conversion from one time perpetual license to subscription revenues is great news for us as it reflects our customer's acceptance of our new flexible pricing and deployment option. And sets us on course for a more dependable and predictable revenue stream. 2nd is the strengthening U.
S. Dollar, and I know you've already heard about this from others. This has a double impact on us, Howard. Our revenues when converted to U. S.
Dollars are reduced. But since our products are primarily produced in the US, we don't get a corresponding reduction in our cost of this fall. My perspective on this is straightforward. Don't panic when the dollar strengthens and don't celebrate when it moves in your favor. 3rd, our perpetual upfront revenue is weighted towards lower margin hardware as customers are primarily purchasing our software on subscription.
While the impact of these hardware sales is positive on revenue, it reduces margin rate because as we all know, hardware margins are lower than software. As I mentioned earlier, you will hear more specifics from Mark, but I wanted to give you my perspective that the changes in guidance primarily reflect the accelerating shift to subscription as well as FX impact. As Oliver has fully stepped into the COO role, I am now spending on the execution of our strategy. In the last quarter. Everywhere I went, I found strong enthusiasm and support from both customers and our Teradata team.
It is very gratifying and encouraging to see the positive reaction Customers are naturally at very different stages in their own analytic journey, rather they are starting to rationalize their analytic ecosystem. Adopting elements of our Teradata Everywhere, or beginning to consider our Teradata analytic platform. The overwhelming message from the large global enterprise that comprise our customer set is that Teradata remains a trusted advisor. Delivering tangible business results and value. In the end, our transactions demonstrate that our customer are giving us the opportunity to In China, a large financial institution is deploying our Unity offering, which automates tasks and enables multiple systems to work together.
This allows the customer to scale their analytic environment while at the same time better supporting their backup needs. In Japan, I met with an online content provider that is expanding its Teradata platform to accommodate new analytics solutions. That they are developing in conjunction with our consulting team. This is a good example of our consulting weedy for more consumption of caradata software. And in Europe, a large telco is expanding its Teradata environment throughout its global operations as Teradata Everywhere affords it better control of its cough by reducing the number of systems in support as it moves more data to the Teradata platform.
The key to our strategy is that it allows our customers to move forward on their own timeline and knowing our solutions will deliver solid business benefits that perform at scale. The other key attribute to all these examples is that they demonstrate we are expanding our role as a trusted advisor. We are involved with our customers on an ongoing basis to help them drive better business outcomes based on the effective use and over time a more predictable business model or Teradata. With that, I'll turn the call over to Oliver who will provide an update on our strategy, our differentiation and some additional new use cases.
Thanks Vic, and good afternoon, everyone. It is my pleasure to provide an update on the great progress we are making in our strategic transformation. On today's call, I will emphasize 3 key takeaways. 1st, our strategy is on point and addressing market needs. As enterprises around the world take on digital transformation 2nd, our strategy is resonating with our customers.
I will share some new customer use cases that are propelling increased adoption of our Teradata Everywhere strategic offering, including our Teradata analytics platform and embedded cloud as a service offering. And third, we have real world prove of Teradata's differentiated value. These three takeaways confirmed by we at Teradata very confident in our strategy and direction and our Q2 revenue growth both in our Americas and International regions validates our momentum. As digital transformation continues, companies worldwide are applying digital capabilities throughout their organizations to improve efficiency, enhance customer value, build new business models, and drive growth. The large global enterprises we serve recognize that analytics is mission critical to address the digital transformation and is key to competitive advantage.
Our strategy of helping customers achieve high impact business outcomes to enterprise analytics at scale directly addresses this market needs. We are meeting the needs of our customers and driving increased consumption of our software through our Teradata Everywhere strategic offering. Our 4 key tenets of Teradata Everywhere helped customers leverage analytics to analyze anything, deploy anywhere, buy any wave and move any time. With our flexible deployment and pricing options and powerful technology, our extensive Teradata Everywhere strategy remains unmatched in the industry. No other company provides the breadth of analytics leadership.
Another indication of our momentum with Teradata Everywhere is that we are in increasingly seeing customers move Teradata to the cloud as they realize that Teradata offers the fastest path to secure scalable analytics in the cloud. In the quarter, 2 of our top 500 customers make decisions to move to Teradata on Azure in the public clouds. 1, and Multinational Consumer Packaged Goods or CPG manufacturer will perform at analytics on its global consumer data to improve direct to customer communications and support extreme personalization of messaging and offers. And the large government agency is moving to the cloud and running its operations as a service in the cloud. A key advancements to Teradata Everywhere is our new Teradata analytics platform.
This strategic product is differentiated from competitive offers by providing an agile and enterprise ready infrastructure that combines multiple data types for connected and trusted analytics and enables companies to operationalize analytics at scale. With the flexibility for both business analysts and data scientists to leverage multiple tools, languages, and workbenches of their choice. Asset Analytics is an example of a new class of business problem as we are addressing with the Teradata analytics platform. Simply put, asset analytics helps companies predict failures before they occur, avoid service disruption and ensure high asset utilization by leveraging diverse and new data types, such as from IoT sensors, geolocation, or weather data. This new use case brings new insights including emerging themes such as connected factories and digital twins.
Which in turn drives new analytic workloads. We have a number of customers already leveraging the Teradata analytics platform. One of the world's leading telcos is enhancing customer journey analytics and is testing use cases to improve subscriber retention and expansion. Driving line additions to existing customers, thereby adding to top line growth. Another large telcos improved its new customer acquisition model, which is expected to translate into several 1,000,000 of dollars added to their top line.
This customer can now score more than 250,000,000 customer records in under 25 minutes at 10x advance over its previous ability and can increase its scoring accuracy by generating models based on a much greater volume of data. And multinational manufacturers evaluating our new 4 d analytics capabilities to optimize their training and supply chain processes through faster period performance and overall improved system resource availability. In fact, this customer saw dramatic reductions of up to 99% in Curidion System Resources allowing them to process 100 times more sensor data and informed us that these results were outstanding. These examples illustrate that Turner Everywhere is ideally suited to address today's market dynamics. Is being well received by our customers and how our Teradata analytics platform is helping customers generate business outcomes in a dramatically simplified analytics.
This is the new Teradata in action. At our upcoming annual user group conference, Teradata analytics universe, attendees will see more of the new Teradata and the power of Teradata Everywhere, including the Teradata analytics platform. We have created an outstanding next generation analytics conference and are bringing together the smartest minds in data analytics to explore, collaborate, and learn how to solve the toughest global business challenges for better business outcomes. Third analytics universe will be held in October in Las Vegas and will showcase our strong momentum this year as our strategy continues to resonate with our The innovative solutions and value we provide for our customers is impacting the industry and is being noticed and recognized. It is very gratifying to receive industry acknowledgement of our differentiated value.
Teradata was one of only a handful of cloud based outlets providers that were recently recognized by Gartner as a customer choice winner. For the best data management solutions for analytics of 2018. Based on 200 plus customer reviews of real world users, We were also named as one of the 2018 top 100 tech leaders by Thomson Reuters, identified as an industry leader with the right mix of big ideas into where we thought to achieve them into the future. One that is poised to thrive. As these recognitions and customer use cases demonstrate, our strategy is on point as we meet and even define market needs in the industry.
I can assure you that we are on a mission to thrive. We remain steadfast in our conviction that we have the right strategy, the market leading technology, and most skilled consultants for enterprise and cloud based data analytics solutions. Now let's hear from Mark on the details.
Thanks, Oliver, and good afternoon, everyone. Our strong momentum continued this past quarter and I'm pleased to once again report better than a expected quarterly results. Not only in terms of revenue, non GAAP EPS and free cash flow but even more importantly, 2 thirds of our new and add on bookings were subscription based, exceeding the revised tations given on our last earnings call of 50% to 60% of our bookings mix for the full year to be subscription based. Since we are seeing for our bookings mix to be 65 In terms of our reported results, total Q2 revenue was 544000000 which was above our guidance range which includes revenue from subscription based transactions, perpetual license related maintenance and upgrade rights was $312,000,000 in Q2, a year over year increase of 11%, 10% in constant currency. Perpetual software license and hardware revenue, which is revenue from on premise perpetual transactions, was 97,000,000 We had a governmental due to their year end budgetary opportunity, which resulted in a perpetual revenue higher than our expectations and drove revenue total revenue ahead of our expectation.
We continue to expect that perpetual revenue will decline year over year in the second half of the year as our bookings mix shifts more towards subscription based transactions. If customers are choosing to buy upfront on a perpetual license, it is predominantly hardware related. And consulting revenue, which was $135,000,000 in Q2, decreased 4% from Q2 2017. As we have shifted our strategy to focus on the top 500 analytical opportunities, as well as business consulting, we are doing less lower margin implementation related services. ARR growth was $26,000,000 in Q2, excluding the negative currency movement during the quarter.
After negative FX, ARR increased 7% year over year. Within total ARR, subscription based ARR increased approximately 150% year over year. As our bookings mix continues to shift to subscription, we see our subscription related ARR growing. While perpetual license related maintenance and upgrade rights declining. Our backlog was approximately 1,800,000,000.
An increase of approximately 5 17 and more than 55% from the end of Q2 2017. Before I continue to highlight our Q2 operating results, I want to make it clear that My comments today reflect Teradata's results on a non GAAP basis, which excludes items such as stock based compensation expense, and other special items identified in our earnings release. Higher than both our guidance range of $0.17 to $0.19 and the $0.22 reported in Q2 2017. Upside to EPS was driven by Gross margin of our recurring revenue was 74% versus 77.2% in the second quarter of 2017. As expected, the lower margin having more subscription based revenue, which carries rate rates.
We continue to expect our recurring revenue margin to be in the low 70s range in the second half of twenty eighteen. Gross margin of our perpetual software license and hardware revenue was 30.9% as compared to Q2 20 seventeen's 50.5%. As expected, the lower margin was due to this revenue mix becoming predominantly hardware related as more of we expect perpetual revenue margins to improve in both Q3 and Q4. From current Q2 twenty eighteen levels and be in the low 40s range for the full year given the current profile of and gross margins of our consulting revenue improved to 3.7% compared to 2.1% in Q2 2017. We expect margins to continue to improve in the second half of the year as there is a clear seasonal trend to the profitability of this business.
The margin profile of this business is an area to improve meaningfully from to slightly better for the full year. Versus 51.9% in the second quarter of 2017. We expect gross margins in the second half to improve from the Q2 2018 level and be approximately 50% for the full year. Turning to operating expenses. Selling, general, and administrative expense was $149,000,000 in Q2.
Increasing 3000000 dollars or 2% from the second quarter of 2017. We expect SG and A expenses to increase second half versus first half with Q3 2018 flat with Q2 2018 and Q4 2018 increased because of our sales and marketing at activities related to Teradata analytics Universe, our annual user group conference in October. Research and development expense was $72,000,000, the same as in the second quarter of 2017. We expect slight increases in Q3 and Q4 2018 as compared to Q2 2018 level. Total expenses increased $3,000,000 3% versus 9.4% in Q2 2017.
We expect operating margin to improve from this level in the second half Teradata's non GAAP tax rate of 22 percent for the second quarter was lower than the 37.8 percent in Q2 2017, as expected, largely due to recently enacted U. S. Tax reform. We continue to expect depending upon pretax income levels and the effect of quarterly non GAAP discrete tax items. Turning to cash flow.
Net cash flow provided by operating activities was $106,000,000 in Q2 2018. Compared to $61,000,000 better than expected and higher than in the prior year period driven in part by receipt of a customer payment on the multi year partially offset by the timing purchasing options, which results in the company collecting less cash upfront as customers pay over time. Capital expenditures were $32,000,000 in Q2, more than doubling the $14,000,000 of capital expenditures in Q2 2017. The increase in CapEx was primarily driven by the increased mix of transactions moving to subscription. Additions to Cast Belize software were $2,000,000 in the second quarter of both years.
As a result, free cash flow 2nd quarter was $72,000,000 versus $45,000,000 in the second quarter of 2017. We are 75,000,000 to 200,000,000, with Q3 free cash flow expected to be negative and Q4 free cash flow expected to be slightly positive. Turning to our balance sheet, we had $882,000,000 of cash as of June 30, 2018. During the first half of twenty eighteen, we repatriated $525,000,000, mostly to buy back shares and pay down our term loan. We expect to We plan to use During the second quarter, we bought 81,000,000 of Teradata stock or approximately 2,100,000 shares.
Year to date, we have bought approximately 4,100,000 shares We currently have $379,000,000 of share repurchase authorization remaining and will be opportunistic in repurchasing 18, which was $71,000,000 higher than on December 31, 2017 due to increasing subscription based transactions and the seasonality of maintenance billings. Now turning to guidance. As I have previously mentioned, we are experiencing increased movement to subscription based transactions. Which we now expect a significant increase from our original expectation call guidance, which was 50% to 60% in 2018. In addition, as you are all aware, we have seen significant negative foreign currency movements, and we now expect 1 to 1.5.
Less revenue in 2018 than we estimated 90 days ago. Because of these two factors, our 2018 full year and 3rd quarter reported revenue, margins, operating profit, EPS, and free cash flow are expected to Therefore, we now expect total revenue in 2018 to be approximately $2,130,000,000 to 2.15000000000 with Q3 revenue expected to be $530,000,000 to $540,000,000 As a result of these new assumptions and the lower perpetual revenue margins due to the mix of perpetual revenue expected to be predominantly hardware related, we are now estimating our 2018 full year non GAAP EPS to be approximately 1.20 to $1.24. This is based on full year weighted average shares outstanding of approximately 123,000,000. And Q3 non GAAP EPS is now expected to be $0.30 to $0.32 range based on 100 and 22,000,000 weighted average shares outstanding in Q3. During the quarter, we announced the closure of our Dayton location and move our corporate headquarters to San Diego.
Our current estimate of this closure is approximately $35,000,000 to $45,000,000 of expense, the majority of which will be in 2019 versus 2018 cash flow. As we proceed. Effective tax rate to be approximately 20%. We also expect our Q3 effective 20%. Now, I'd like to provide you with an update on our full year expectations for the following key metrics.
In terms of ARR, after adjustment for 2% negative currency movement we expect approximately 10% growth in 2018. Keep in mind, the currency impact is on over $1,200,000,000 of ARR Adjusted for negative currency movement and after the Q2 government transaction that went perpetual versus our prior While we expect our bookings mix there is not a significant contribution to 2018 recurring revenue growth given the limited month left in 2018 to amortize revenue. A faster move to subscription will positively impact 2019. And as subscription based transactions. As we have said during the course of the year, to the extent this mix percentage increases beyond our current expectations, our current financial our current year financial results could be negatively impacted.
In closing, we had demonstrating that our strategy is And with that, operator, we are ready
Please limit yourself to one question. And your first question comes from the line of Wamsi Mohan from Bank of America.
Can you address what assumptions you're making specifically in the second half for the lower guide? It looks like FX is a net maybe $15,000,000 or so heard in the back half. And your overachievement in 2Q, and I know it's driven by this unique deal from the government. When you put that together with the slightly right for 3Q, it implies that 4Q revenue is quite a bit sharply lower. Organic by maybe $30,000,000 or so.
How much of that would you attribute Mark to the shift to subscription versus changes in demand?
Well, so thanks, Wamsi. There's no shift in demand here or reduction in demand. It is all due to the movement to subscription. We are expecting in the back half of the year, a significant decline in our perpetual revenue year over year. That is the biggest impact why total year revenue is down from what we thought 90 days ago, given the significant move upward to subscription given our customers, strong interest in our strategy.
Okay. Thank you. And if I could, Oliver, you mentioned customers, Azure, but we've also heard of other moves to you give us some sense, for example, the customers going to tear data on AWS, give us some sense of and what sort of applications are being run there?
Yes, thank you, Wamsi. In general, we are seeing our Teradata Everywhere strategy being adopted by a lot of customers. And that includes the public cloud, what we see with our customers is simply there, the ability to choose the form of employment and derisk their decisions in terms of what type of cloud or hybrid cloud deployment, they can go to. These are, in part, existing applications that are moving into the public clouds in part. These are entire new use cases where customers are testing new, new use cases against new types of data.
And we're seeing this both on AWS as well as on Azure and the two callouts that we have in today's call were significant customers that went to Azure Public Cloud.
Thank you.
And your next question comes from the line of Katy Huberty from Morgan Stanley.
Thank you. Good afternoon. Two questions from my end. The first is given the expected move to subscriptions, which is great to see. Could we now have a set up for free cash flow to actually stabilize in 2019?
I think we've talked about when we get to about three quarters of bookings from subscriptions, that could potentially happen. Just curious whether you think that that's a possibility next year? And then secondly, hardware lumpiness is a bit of a distraction to the to subscription. And so just a bigger picture question, is it necessary that data delivers it's software unbranded where or could we see the company move towards a software only model over the long term some other hardware companies have done successfully in the recent past? Thank you.
Sure, Katie. This is Mark. I'll take the first one and then I'll have Oliver, talk a bit about the second one. So yes, the faster move to subscription given the customer's interest in strong interest in our strategy is clearly moving that. And yes, it is possible that free cash flow stabilizes come out of this year and grows into next year.
We'll see where we end up through the full year, but that's definitely a possibility.
On the second part of that, Katie, regarding hardware versus software, the first part And I think we discussed that last time already around a big important part of our Teradata Everywhere strategy is the separation of software hardware and, the fact that we offer customer choice for them to deploy in the way they feel most relevant or that is most appropriate to their business model. We see this actually as a unique differentiator and a big plus of our strategy because customers are telling us that this really gives them increased flexibility end. And having a hardware option available for that is something that many of the top 500 customers that we're targeting are really valuing as an option. This is not to say that the other options aren't as important, but, that portfolio of options in Teradata Everywhere, the deploy everywhere, it moves any time, portions of that strategy are absolutely critical and it gives our customers the choice to pick between their own data centers, their own hardware, the public cloud, specialized cloud. And so, for the foreseeable future, we see this as part of our strategy.
Of course, our focus has shifted to software and that's what we're driving. But ultimately giving our customers the choice of picking where they want to deploy we believe is a big, big part of our hybrid cloud strategy.
Your next question comes from the line of Brad Reback from Stifel. Your line is open.
Great. Thanks very much. From a higher level perspective, Vic or Oliver, if you think about gross profit per query, to Teradata, how does it look when someone deploys in Azure or AWS versus previously on prem? Thanks.
So just to understand your question better, you would like to understand if the profit per query a customer runs is different in the public cloud compared to on prem deployments? Exactly.
Running for less?
So the first thing is we obviously, we don't necessarily calculate profit by query or queries. This is why TCOR is an important metric for us to normalize deployments between different, different options, deployment options within our Teradata Everywhere strategy. In general, what we are seeing is that, the performance is similar across these different platforms. And the, the profit potential or the profit that we're seeing from software is similar across this, this, deployment options. But other than that, I can't really go into cost per query or profit per query because that's highly highly dependent on a customer's workload.
In general, what we're seeing, the top 500s are demanding very, very high query workloads, you know, from us, we do tens of 1,000,000 of queries a day of 1,000,000,000 of queries a month on these platforms. We know that we can, deliver these at fractions of pennies at all deployment options that we have. And that's really a core part of our Teradata Everywhere strategy. So, for us, we believe that the choice of deployment ultimately derisks our customers decisions in for us from a business model we like the deployment of every single one of these deployment options.
Great. Thanks very much.
Your next question comes from the line of Raimo Lenschow from Barclays.
Hey, thanks. Hey, Oliver, if people go to subscription, can you kind of handle, or kind of help to drive the software only to subscription, or is it a customer choice? I'm just trying to understand, like, the comments earlier around hardware sport more perpetual. I'm just wondering, I mean, if you read it's almost good for you because you just get on with it. Like you help me is like is there a dynamic that you can influence or is it just full customer choice here?
And I have one quick follow-up.
Yeah. Raimo. Great question. We absolutely are influencing this through, multiple ways. First of all, the complete Teradata Everywhere portfolio, including the move anytime, our customers can only get if they're on subscription.
That was the first step that we introduced last year. As we are deploying new, new capabilities. We are offering them on the subscription based model. So incenting customers to really go for the subscription choice. We've also told you earlier this year that for the first time in the history of Teradata, we've incented go to market and sales, to sell subscription over perpetual.
And in part, what you're seeing is all these factors are coming together. That's why the percentage of our subscription mix is increasing rapidly as these incentives are coming together. And our goal is up to sell subscription to every new customer in the future. Having said so, we also understand that there are certain customers like government agencies and others that flexible with our customer base to make sure that in the top 500 for those customers that we target on that we have the best possible solution flexibility as they did.
Okay. And then quick question, a follow-up from Mark. Mark, the I get your, the higher percentage of subscription in the bookings, but obviously, we only see that in the recurring revenue line. But there's other moving parts in there, obviously, as well.
At what point do
you think that Furo subscription is getting big enough to kind of start moving in needle? Is that already like towards the back half of the year or is that more 2019?
Yeah, we haven't, broken that out. We'll take a look at that. It's not the back half of this year. It'll be in we'll evaluate it in 2019 and see where we see that heading as we update our 3 year model in our analyst day later this year. But it's clearly growing fast and faster at with the traditional perpetual license related maintenance upgrade rates declining because we're focused largely on our installed base.
Yes. Okay, perfect. Thank you. That would be nice to see you. Thank you.
Your next question comes from the line of Derrick Wood from Cowen and Company. Your line is open.
Great, thanks. We saw the strongest growth in the Eric has been over 4 years, I think. And obviously, the professional deal probably helped it, but it's really converged, and caught up with international growth and now it's potentially outpacing. Just wondering if you could flush that out. Is it demand?
Is it sales productivity? Is it charity of the model, and then compare that to what you're seeing internationally. And then I have a quick follow-up.
This is Vic. We are seeing strengthening in the U. S. And I think part of that was driven around We had more when we came in disruption in our field teams in the Americas than we had internationally. At the time, we we made the change and strategy.
I think that was part of it. It's starting to come around, a little better. I think that's, that's probably the primarily primary driving thing behind it. But we are starting to see a lot more, interest, globally. And particularly in the last 6 months, I would say the interest in the U.
S. The engagement we're getting is at a higher level in the organization. And I think that's starting to pay off as well.
And just one comment as well, Derek, this is Mark. The perpetual transaction that we referenced was an international transaction, not an American transaction.
Okay. And then Mark, obviously there's a big perpetual, and you said 66% of bookings was ratable and perpetuals in that bookings number. So that suggests you had a pretty, pretty strong overall bookings number. You also called out 55% growth in backlog.
Is there
a way to quantify like what growth was on a perpetual equivalent or an ACV basis or at least give us some directional color?
Yes, we don't, I mean, we don't calculate things based on perpetual equivalent sort of any longer, but we clearly had an extremely robust subscription, bookings quarter And as I've said, I expect over the back half of the year, our perpetual bookings to decline significantly. Year over year given what we see in the forecast across Q3, Q4 on a subscription basis.
Okay. That's helpful. Thanks.
Your next question comes from the line of Jesse Halsing from Goldman Sachs. Your line is open.
Hey guys, thanks for taking my question. I have 2, the first one is just a housekeeping question. Mark, I think you said ARR growth increased 7% in constant currency. But what was that? What was the absolute dollar number?
Was it one 226 or something like that? Because I think you added $26,000,000 quarter over quarter.
Yes, we said it was 7% after FX year over year. And the total number is a bit over $1,200,000,000 that I made in the comments on AR.
Got you. And then a question for, for, for Oliver, I guess if you look at the customers started to move to the cloud, you called out the Azure customer, but there's some other releases around customers that have looked at cloud options. Are are these 4 existing Teradata workloads that are migrating? So, you know, just moving moving to a different set of infrastructure essentially, or are you starting to see traction with newer use cases in these early cloud customers? Thank you.
Yeah, it's, it's, Jesse, thanks. It's really a mix of both that we're seeing there. Yes, there's obviously existing use cases, moving to the cloud and customers, like the flexibility that they're getting with this, but it's also new, new use cases. And we, we, we, we gave some examples of of the advanced analytical functions that are being started to be utilized by these customers. And, especially when we look at sensor data and new types of data forms that in part originate in the cloud for some of our customers.
Moving Teradata to the cloud or instantiating it into the cloud is a choice that we're seeing customers are making and is clearly also a validation of what we have seen early on when we announce Teradata analytics platform on top of, Teradata Everywhere and the interest we are getting from a lot of customers around the world that tell us that their existing infrastructure, their existing systems have gotten too complicated, too many different moving parts, too many systems, too much technology that's hard to integrate and that they're really looking for a single platform like material analytics platform. And, and so, as we have rolled out new, capabilities towards that new analytical functions, new integrations, customers are adopting that and some of those use cases are absolutely in the public cloud in addition to other period everywhere, deployment choices.
Thanks, Oliver. That's super helpful. And one quick clarification question, Mark. The 7% was at constant currency. What was the reported growth rate of ARR?
Yes, you're right. It was 7% in constant currency, a bit higher in reported.
Thank you.
Your next question comes from the line of Srini Nandry from Summit Insights Group. Your line is open.
Alright. Thank you for taking my question. Oliver, a big picture question for you, if I may. Can you please talk about the contribution in general and how do your concrete compete with you? And what do they use to talk about you guys?
Well, yes, competition is a topic for us. Competition has always been a topic for us, territories in the market. Having said, though, a couple of things here. First of all, our go to market and our strategy are fairly uniquely positioned compared to our competition. The parity that everywhere strategy is unique, compared to, the competition that we are seeing out there, the choice of multiple public cloud, options, the private cloud options the, running on their own hardware running on our hardware stack is unique in the industry for analytics.
Our target of top 500, the largest enterprises in the world and the fact that they run billions of analytical queries every month on these platforms further differentiates us, and there's currently no other platform out there that can match us at that scale. Having said so, yes, there's competition out there. Small use cases, departmental use cases, low concurrency, simple queries have always been the hallmark of some of the competitors and are often, advertised as big wins in in reality it comes to a complex workload through a high concurrency to the billions of queries that need to be run. And especially now as we're extending into the Teradata analytics platform with new advanced machine learning, deep learning, models built straight into that platform. We know we are further differentiating us from the competition out there in the field.
And so, we're watching competition very closely we are, you know, we are seeing, obviously, various startups and companies out there trying very hard, to, to win business out there. But overall, we are seeing a very strong interest for Teradata. And, and as I said earlier, one of the big things that that we see with customers is over the last couple of years, the complexities of infrastructures have really grown has made it very difficult for many companies to operate their systems at scale in part because they've brought in so many different solutions and have tried so many departmental solutions that they are facing, a lot of silos. And in part, what you're seeing is customers realizing that they need to come solidate some of that technology silos that they have out there. And Teradata is the unique platform out there at scale that can do that.
Thank you.
We have enough time for one more caller. Your last question comes from the line of Phil Winslow from Wells Fargo. Your line is open.
Hey guys, thanks for taking my question. Obviously, you called out some pretty sizable wins here, both in the cloud and on premise. Mean, are we starting to see more of sort of what we used to talk about for suites coming through your business again? And I guess maybe I'll just call them cloud sweeps now, sweeping the data center into the cloud. But how do you kind of think about just sort of like size of the transaction?
Are you seeing that sort of that floor sweep impacting this or are there other dynamics also happening there?
So, interesting that you called in cloud sweeps. First of all, we now we don't believe that it's a floor sweep or cloud sweep. A dynamic that we're seeing here. What we are seeing is there's pent up demand from our customers for integrated scale platforms that make it easier for them to operate and answer the business questions that they, they run every, every day. In particular, operating the results of their data scientists, integrating them into what they're doing with the business.
And that requires the latest technologies that requires the latest versions. And we have made a lot of improvements over the last 2 years in our overall technology stack of Teradata Everywhere. And it's really driving, a lot of customers to look at how do we get to the forefront of, of that technology because they want to adopt all of these capabilities up here to everywhere because it's ultimately de risking their platform. This and that has started to drive the demand and the increase of customer interest for Teradata Everywhere as technology stack through the analytics platform that we have, had several customers already deployed and have some phenomenal results that they're seeing out there. And so this is starting to make, to create demand and it leads to, yes, of course, some floors we've cloud suite says this, but it's ultimately that that the the the wish of our customers to be at the forefront of these technologies and the ability to leverage the elasticity flexibility, of the Toyota Everywhere platform, and our analytical capabilities.
Yeah, if you want to use cloud suite when you're marketing, I won't start to rolling.
All right, everyone. Thank you so much for joining our call today. I've, we're excited about where we're going, getting nice traction across big customers. And I think our strategy and our customer base are well aligned. Thank you for your interest and we look forward to answering your questions 90 days from now.
This concludes today's conference call. You may now disconnect