Good afternoon. My name is Charlie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradata Second Quarter 20 21 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question
20.
Thank you. I would like to hand the conference over to your host today, Christopher Lee, Senior Vice President of Investor Relations and Corporate Development. Thank you. Please go ahead.
Good afternoon, and welcome to Teradata's 2021 Second Quarter 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. Our discussion today includes forecasts and other information that are considered forward looking statements. Quarter. 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, including 2019. Our most recent 10 ks and in the Form 10 Q for the quarter ended June 30, 2021, that is expected to be filed with the SEC 20 to update our forward looking statements. On today's call, we will be discussing certain non GAAP financial measures, which exclude such items 20 20.5% of our
total stock based compensation expense
and other special items described in our earnings release. We will also discuss other non GAAP items Teradata's results on a non GAAP basis, unless indicated otherwise. A reconciliation of non GAAP to GAAP measures 20.2. This is included in our earnings release, which is accessible on the Investor Relations page of our website at investor. Teradata.com.
Additional commentary on key metrics and segment 20. Trends can be found in the earnings discussion document on our Investor Relations webpage 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.
Good afternoon, everyone. Thanks for joining us today. I'm pleased to report Teradata delivered a solid second quarter. Our worldwide Sales and operational execution as well as our continued cost discipline resulted in year over year growth and outperformance in key financial and metrics, including 157 percent growth in public cloud ARR, as well as growth in recurring revenue, non GAAP EPS and free cash flow. We will maintain our executional focus and with this ongoing attention, 20.
I am also pleased to report our cloud business continues its upward growth trajectory. 20. Our large enterprise scale customers are accelerating their digital transformation agendas to address the ongoing challenges of the global macro environment. 20. Organizations need data and analytics to provide the business insights that will help them manage through these changing environments.
They need access to all relevant data as we address new customer buying behaviors and remote work models stemming from the pandemic, as well as ever increasing volumes of data coming from AI, machine learning, 5 gs and IoT. Teradata has proven that we can help customers get real insights from their data Regardless of where it resides, whether in public cloud or in on prem environments, we are competing and winning in a large and growing market. 20. There is not a day that goes by with less data than the previous one. The technologies we deploy help customers get the most value from their data environment at enterprise scale and with outstanding price performance, giving us an advantage in this hypergrowthenterprise market.
Our purpose to transform how businesses work and people live through the power of data, guide the alignment of our entire team 20. Strategies through our ability to seamlessly support multiple cloud environments, on prem or a hybrid combination. We have a 40 plus each of the leading cloud service providers. A robust growth in the cloud is coming from both new customers and existing 20. Since June of 2020, we've experienced more than 50% growth in cloud customers and we are adding new logos in each of our three geographic regions.
While starting numbers are small, the trend is clear as companies realize We received tangible business results from Vantage in the cloud, just as they do with our on prem environments. They continue to expand the Teradata cloud environment. 20. Our top 10 customers in terms of cloud ARR at the end of June last year grew significantly year on year And these types of ongoing success and ease of scalability are help driving growth. We further saw broad based Our customers realize the enterprise scale and price performance of Vantage.
Let's look at a few examples of our wins from the quarter. 1 of the world's largest automakers based in Europe is a new cloud customer. It chose Teradata to help optimize production as part of strategic cloud plan. Vantage on AWS will manage significant volumes of IoT data captured from robots on the plant and a long standing Teradata customer is migrating to Vantage on Google Cloud as part of its public cloud transformation strategy. This customer was an early cloud adopter with Vantage on AWS and considered adding a big query environment.
However, our multi capability demonstrates that Vantage in the cloud will be the best in helping this institution comply with governmental regulations to Realizing the value of Teradata Vantage as the fastest, lowest risk and most cost effective path to a modern cloud deployment, We are taking this financial use case forward to other institutions facing the same compliance mandate. 20. Kobi Steel, a major manufacturer in Japan, is another one of our new cloud accounts. It selected Vantage on AWS 20. To improve analytics and its research division, gaining greater understanding of the properties produced and its manufacturing processes.
20. As this industrial giant proceeds with digital transformation for all aspects of its business, it plans to add IoT data at the machine and factory 20. Banco Etaou, the largest financial institution in Latin America, is migrating its on prem Teradata environment advantage on AWS. Vantage supports most of the bank's major applications, including cost, purchasing and regulatory reporting. Here we are positioned as a key partner for the bank well into the future, establishing Vantage as the customer's preferred cloud data warehouse platform and paving the way to deliver increased business value through new use cases.
20. Consumption based pricing was really important to this customer, enabling it to pay for exactly what it needs and uses. Many of our large customers now operate in a hybrid cloud environment of connected on prem and cloud ecosystems. Customers also We'll continue to have substantial data environments on prem. This portion of our business remains healthy.
The enterprise 20. The customers we serve realize that to win in this new era, they must leverage all of the data possible all of the time, irrespective of deployment option and often in blended environments. I'd like to share 1 hybrid and 1 on prem win. A large U. S.-based healthcare This customer chose Vantage on Azure as its first step towards implementing a hybrid cloud strategy, leveraging a flexible and transparent consumption pricing model along with the inherent advantages provided by a cloud infrastructure provisioning.
A Middle Eastern tax authority joined the ranks of Teradata customers in Q2 delighting Vantage on prem to help it develop analytical use cases, including risk mitigation, fraud prevention, 20. Working in concert with a local SI, we replaced Oracle and beat 20. Tangible outcomes for the agency and shown how Teradata provides the fastest and most reliable path to the cloud when this entity is ready to migrate. This sampling of wins from Q2 are great examples of the differentiated position we hold and our ability to as the customer moves through digital transformation. This is where Teradata excels and is a key reason we have significant momentum across the market.
We are continually innovating. In the quarter, we brought out enhancements to Query Grid, our patented technology that enables a data fabric across multi cloud ecosystems and multiple data platforms. Query Grid allows customers to federate queries 20. Without requiring unnecessary data movement, this functionality optimizes SLAs and costs in hybrid and multi cloud environments, Consumer Electronics is using Query Grid to enable business agility throughout its extended data ecosystem. With new functionality and enhancements Performance was improved by orders of magnitude from 10 to 15 hours to just over 3 minutes.
The performance enterprise. Our world class industry data models are another facet of our technology that helps customers get to value faster. And in the quarter, we brought out enhancements to our media and entertainment data model. These models are the backbone for modern data management and provide high value information to support customers in their vertical industry. We have also been strengthening our partnerships with leading FIs and ISVs As we grow, in the quarter, we announced a joint initiative with Deloitte to help customers easily and efficiently migrate from on prem to Vantage in the cloud.
We're collaborating with Deloitte to take the complexity out of data migration and equip organizations for a modern cloud 20. While customers are recognizing the value in our multi cloud solutions, so is the industry. In July, Teradata again garnered recognition and Gartner's new solution comparison for cloud data warehouse platforms. Gartner noted that cloud data warehouses Our central to organizations and compared a number of vendors, Teradata scored exceedingly well, receiving the highest We also remain dedicated to being a socially responsible corporate citizen. And just recently, we issued our annual environmental, social and governance report.
You can find the full report on our website, but I'd like to share a couple of 20. Our report notes are pledged to the UN Global Compact Principles of Ethical Behavior and Human Rights, the careful monitoring and reduction of greenhouse gas emissions and specifically the reduction of total Scope 1 and Scope 2 emissions of about 40% since 2018. 20. Our strength lies in our people, and our report notes the various actions we took in support of diversity, equity and 20. Inclusion to ensure an inclusive workplace and to reinforce our commitment to creating a culture of belonging.
20. The company participated in the Corporate Equality Index of the Human Rights Campaign Foundation, demonstrating allyship to our 20. The company scored 90 out of 100 and we are using the inputs and learning how to better support The solid performance in the quarter came up from across the organization, reflecting our focus and operational rigor. In our go to market organization, our transformation is accelerating. We have added seasoned sales transformation is accelerating.
We have added seasoned sales talent in our regions and have further strengthened our customer success and renewals organization. Complementing our go to market efforts and to accelerate our momentum, we have added highly experienced cloud leadership and talent dedicated to driving growth across the leading cloud providers. I am particularly pleased to welcome Claire Bramley as our new 20. Claire joined us in mid June from HP, and she has already proven to be a great addition to the management team. Claire's 20.
Extensive senior leadership experience in corporate finance and accounting, as well as her deep knowledge of the technology industry is a 20. Perfect fit for us. Claire's appointment continues our commitment to building the strongest team possible to execute our strategy and accelerate profitable growth. And I know she is looking forward to spending time with all of you. As I turn the call over to Claire, I want to reiterate that we are committed to capitalizing upon our differentiated position as the connected multi cloud data platform for enterprise analytics.
20. We remain relentlessly dedicated to meet and exceed customers' expectations and achieve outstanding business outcomes from the data. Our capabilities across multi cloud, on prem and hybrid are what customers need today and into the foreseeable future. And we will continue to innovate to address tomorrow's needs as well. We have an incredibly talented team who keeps the customer at the center These are the healthy fundamentals of our company, ones that we believe will deliver significant shareholder value.
Claire, over to you for a more in-depth look at our financial results and our 2021 outlook.
Thank you, Steve, and good afternoon, everyone. I am excited to join you all today for the first time. I was drawn to this incredible company because that helps people thrive. I am truly honored to be part of this very talented and motivated leadership team as we look to take advantage of the huge opportunities ahead of us. In the 2nd fiscal quarter, Teradata delivered solid financial and operating results.
Here are some of the highlights. Our sales and product teams executed well, delivering in line with our outlook and growing public cloud ARR by 157 percent year over year and growing recurring revenue by 16% year over year as reported. Our operational execution was very efficient across the board, driving an operating margin of 23.8 percent and non GAAP EPS of $0.74 which is above the previous outlook. Finally, our cash collections were strong, enabling us to generate $219,000,000 in free cash flow. These results demonstrate that Teradata combines strong financial fundamentals and operational discipline.
Together with our market leading technology, these qualities differentiate Teradata in the market and give us a robust base to continue to grow from. With regards to ARR, as Steve highlighted, customers are adding mission critical workloads These digital transformation activities resulted in total ARR growing by 9% year over year as reported and by 7% year over year in constant currency. Total ARR grew by $22,000,000 sequentially. We achieved growth in both public cloud and subscription ARR across all three geographical regions year over year and sequentially. Public cloud ARR grew by $15,000,000 sequentially, of which more than half resulted from customers migrating to Vantage in the cloud from on premises perpetual and subscription licenses.
We also continue to experience healthy expansion rates in the cloud, maintaining the positive trends that we have seen over the last several quarters. To top things off, we added several new name brand customers in the quarter that provide us with future expansion opportunity. We saw strong growth in subscription ARR driving a 20% increase year over year and approximately a 5% increase sequentially. We grew in all three regions from both existing and new enterprise customers. These customers are choosing Teradata for the combination of best price and performance at scale in hybrid environment.
Now turning to revenue. Total revenue was $491,000,000 a 7 percent increase year over year and 4% in constant currency, driven by strength in all three revenue components. We continue to build on our higher base of recurring revenues, growing 16% year over year and 13% in constant currency. We also benefited in the quarter from the timing of revenue recognition of certain on premises customers expanding or renewing their contract with us. Similar to last quarter, the economic structure of these arrangements resulted in the upfront recognition of $22,000,000 in recurring revenue in the 2nd quarter.
We expect this to recur annually in the same quarter and the next three quarters by approximately $7,000,000 per quarter. I plan to cover this again when I update you on outlook. Both perpetual and consulting revenues performed slightly better than we expected due to demand. We continue to perfectly manage perpetual revenue down given our shift from a perpetual to a subscription model. We also continue to gradually manage a decline in consulting revenue given our strategic shift to increased collaboration with in order to drive higher adoption and consumption of Teradata.
Moving to profitability. 2nd quarter's gross margin expanded to 64.8%, which was approximately 6 percentage points higher than last year's Q2, primarily for four reasons. First, we continue to shift our mix to subscription based recurring revenue, which carries a higher margin. 2nd, our continued operational execution drove sustainable efficiencies in both subscription and cloud recurring revenue gross margin. 3rd, the margin benefit associated with the upfront recurring revenue recognition.
And 4th, rate and mix improvement impacting perpetual and consulting margins. 2nd quarter's operating margin expanded 20 3.8 percent, significantly ahead of what we anticipated, driven by the combination of benefits flowing through gross margin and a lower cost structure as a result of last year's cost actions and continued cost discipline. Total operating expenses were down 2% year over year and flat sequentially. Consistent with what we said previously, we are investing savings back into the business and we'll continue to expand our cloud investments into the second half of the year. I'll comment further on this in a few moments.
2nd quarter earnings per share of $0.74 exceeded our outlook range of $0.47 to $0.49 by $0.26 at the midpoint. Of the $0.26 $0.18 flow through to full year EPS. The remaining $0.08 only benefits the 2nd quarter. The 0.08 20. Dollars includes $0.03 from additional upfront recurring revenue, dollars 0.02 from currency, dollars 0.02 resulted in free cash flow of $219,000,000 2nd quarter's DSO was 55 days, which was 12 days better than last quarter and 13 days better than last year.
While we look to maintain our collection efficiency, We view 55 days as exceptional and generally not sustainable. We continue to take advantage of our 1,000 shares of $36,000,000 in total. For the first half of the fiscal year, we 20. We spent $121,000,000 on share repurchases or a return of 37% of year to date free cash flow to shareholders. For the full year, we anticipate returning approximately 50% of free cash flow to shareholders via share repurchases, while continuing to make investments in the company to support our strategy for profitable growth and cloud acceleration.
Looking to the second half of the fiscal year, we expect total ARR growth to peak in the 4th quarter, in line with historical seasonality. We anticipate tougher public cloud ARR comparisons in the second half, resulting from Teradata's cloud first focus that accelerated under Steve's leadership in July of 2020. We could see more upfront recurring revenue. Although difficult to predict, we have included our best current view for this activity in our raised fiscal 2021 EPS outlook. As noted previously, This activity may impact revenue linearity in the second half of fiscal twenty twenty one and in fiscal 2022.
As I mentioned earlier, we are continuing our plans to increase spending in cloud that supports R and D and go to market activities. These incremental investments are anticipated to have a $0.02 to 0 point 0 $3 impact on EPS in quarter in the second half. Free cash flow generation in the second half is expected to be positive, but not as strong as the first With that, let me take you through our outlook. The outlook for the Q3 of fiscal 2021 Public cloud ARR is expected to grow at least 90% year over year or by at least $15,000,000 sequentially. Non GAAP earnings per diluted share to be in the range of $0.30 to $0.34 Of the fiscal second quarter operational 20.
We anticipate the tax rate to be between 17% 18% and the weighted average shares outstanding to between $113,000,000 $114,000,000 For the year, we are reaffirming our fiscal 2021 outlook for public cloud and total ARR growth year over year. Public cloud ARR growth is expected to be at 100% and total ARR growth is expected to be in the mid to high single digit percentage range. We are raising several elements of our fiscal 2021 outlook. Total recurring revenue is now expected to grow in the high single to low double digit percentage range year over year. Total revenue is now anticipated to grow in the low to mid single digit percentage range year over year.
Non GAAP earnings per diluted share is expected to be in the range of $1.92 to 1 $0.96 We anticipate the tax rate to be approximately 23% and the weighted average shares outstanding to be between 113,000,000 114,000,000. Free cash flow for the year is now expected to be at least $400,000,000 I am very encouraged by the strength of Teradata's fundamentals and see real opportunity to build on these in the future. Our operational execution and disciplined investing enabled Teradata to deliver innovation to our customers, expand adoption and consumption in the modern marketplace and drive profitable growth. It truly is an exciting time to be at Teradata today. I look forward to speaking with you about how we will execute our future strategy and continue to drive increased shareholder value at our Investor Day on September 9.
And with that, let's please open the call for questions. Thank you.
Our first question comes from Tyler Reddick of Citi. Your line is open. Please go ahead.
20. Hey, good afternoon, everybody. Thanks for taking my question. I wanted to just ask you generally how you feel about second half pipeline. I know as you mentioned in the script, you did have a really nice second half last year.
But given Some of the what looks like kind of new customer momentum and some of the migrations you referenced, could you just kind Compare and contrast maybe the cloud pipeline that you see in the second half this year relative to last year and just how we should be thinking
20. Hey, Tyler. Good to talk to you. This is Steve. We're clearly seeing really good momentum in the marketplace.
20. And even though the motion is new, actually seeing new customer logo wins is something that's very 20. We see very positive. We do see a good pipeline. We know that 20.
Seasonally, our 4th quarter is our highest quarter from a sales perspective, and we expect similar from 20. I think another great thing that we're seeing is expansion of our existing customers in the cloud. 20. If you think about when we pivoted towards a cloud focus around the middle of last We had some really good product announcements that helped us build a really good Q3 and Q4. 20.
So, our 157 percent so far in Q2, we still are very confident on our 20. Full year outlook of 100% year on year growth for cloud.
20. Great. And if I could just ask a follow-up maybe for Claire. I think the 3rd quarter guidance implies 20. Cloud ARR growth dipping below 100, which would be a pretty significant deceleration from the Q2 yet.
It Seems like you'd expect that to kind of bounce back higher in Q4. And I'm just wondering if you could talk through that dynamic. Is it simply related to A difficult compare from last year. Are you expecting the year to be more back end loaded?
20. Good afternoon, Tyler. Yes, as Steve just said, the 4th quarter does tend to be our biggest quarter, especially With regards to cloud ARR growth, and that's in line with our historical seasonality. So that is what we've reflected
20. And so our deals can be lumpy because they're large. So but again, we're
20. Thank you.
Thanks, Tayo.
Our next question comes from Wamsi Moham of Bank of America. Your line is open. Please go ahead.
20. Yes, thank you. Claire, congrats on the new role and look forward to working with you. 20. Can you maybe bridge the 3Q EPS guide quarter on quarter?
How do we go from $0.74 to $0.30 something Next quarter and then $0.20 or so in the Q4 when typically you have the stronger seasonality. If I caught it right, 20. You attributed a few pennies of impact from incremental investments, but ex
Looking forward to working with you as well. First of all, I'd just like to say we're very pleased with the increased full year guide that we gave on EPS. So we've increased our EPS guide by $0.30 of which $0.12 is in the second half. To your point, we are seeing linearity between H1 and H2. 22.
First of all, we are increasing our investments, particularly in R and D and go to market operations, to accelerate our growth momentum in the cloud, But also, we are seeing the impact of the upfront revenue that we saw in H1 and the pull forward that has an impact in H2 also.
20. Okay. So it's really the margin flow through from the pull forward revenue, but You also mentioned that there is some impact, some assumption, your best guess of how much more that there could be in the second half. So there is some 20. Consideration of that, that's baked into the guidance to clarify.
That's correct. There's a modest amount that we factored into H2 at this time.
20. Okay, great. And Steve, if I could, just follow-up on the public cloud ARR. I think last quarter, you You guided to 15,000,000 to 20,000,000 you came in at the low end of that at 15,000,000 in the quarter, you're guiding for another 15,000,000 at least 15,000,000 sequential 20. Now you've had a little bit longer period to address more customers and use cases.
So why shouldn't this be accelerating at a faster pace. I understand the growth is very solid and well above your full year target. But conceptually, are there anything that you can point to within customer conversations or hesitancy or anything of that sort that would help explain some of the deceleration? Thank you.
20. Yes, Wamsi, I think I pointed to some of it. Again, our business can be lumpy due to the large contracts that we execute. 20. We certainly we always want to set guidance that we are comfortable with that we know that we don't want to disappoint our investors.
20. We do expect a very strong 4th quarter. Again, to the point from earlier, As we go through the year, we have more difficult compares. In terms of the shape of the cloud business, 20. We are pretty much in line with the marketplace in terms of the distribution of our cloud customers.
20. We started obviously earlier with AWS and our GCP release was in Q3 from last Across each of the CSPs, I think the CSPs are also starting to see the fact that 20. When they've deployed Teradata in their ecosystem, there is no con impact in terms of their 20. Sales of 1st party services, which because we are well integrated into those environments now, it's given some momentum and focus 20. Our customer set from a year on year perspective and the cohorts of customers 20 percent year on year growth for the full year.
It will be focused in the Q4 from an achievement perspective, 20. But we're really bullish on our cloud business. Thanks for the question, Lindsey.
Thanks, Steve.
Our next question comes from Katy Huberty of Morgan Stanley.
20.
I want to 20. Start by asking Steve a question. Just looking at the ARR metrics year to date relative to where you exited 20. 2020. Total ARR is flat, up about $1,000,000 Cloud ARR is up $33,000,000 So that would imply that There's some churn in your on prem business.
Can you just talk about what that looks like? Is that maintenance contracts running off? Is that 20. Subscription churn that is not being offset. Just want to understand the dynamics there.
And also, would you expect this dynamic to normalize by the end of the year, just given some of the lumpiness that you're talking about.
20. Yes, Katie, thanks for the question. I think there's a number of different dynamics that are happening within the business. 20. One is the conversion, as you said, between the different lines inside the business.
And 20. If we convert cloud business to if we convert subscription business to cloud ARR, there is clearly that's net neutral. However, we do see expansion and growth when we execute that conversion, which is positive for us. 20. Every quarter, we experience and anticipate some amount of churn and the activity this past quarter It was not really different from prior quarters nor are we forecasting anything significantly different from a churn perspective on a year on year basis.
20. Okay. Thank you. And Claire, I mentioned we'll hear more about this at the Analyst Day. But if we look at past 20.
Subscription transitions. Typically, a company exits with free cash flow that's 1.5 to 2 times What the free cash flow of the business was before that transition? So for Teradata, that would mean you started at $300,000,000 you could end up in the 4.50
20. Good afternoon, Katie, and thank you for the warm welcome. You're absolutely right. We will be sharing more information with you on our long term plan and free cash flow generation and capital allocation strategy at our Investor Day in September. 20.
One thing I would say is we are pleased with the cash flow generation that we saw in Q2, but also the fact that we were able to increase our full year guide to at least $400,000,000
And Katie, I think you're absolutely right. You've seen the declines in terms of our perpetual business. 20. To use the term, we've kind of swallowed the fish now from that conversion. And we 20.
The fundamentals of the company are well positioned to propel us forward.
Great. Thank you.
Our next question comes from Derrick Wood of Cowen. Your line 20 is open. Please go ahead.
Great, thanks. This is actually Nick Altman on for Derek. Thanks for taking our questions. 20. Maybe to start, there was a report that you guys were working with IDM in outsourcing some of your on premise support.
20. So maybe can you just confirm whether or not that's true? And maybe just touch on what drove you to make that change and what kind of savings you guys expect there?
20. Hey there, good to talk with you. We are as we look at our business operations. We always put the customer at the center of the decisions that we make, and we are always looking to provide the best experience for Teradata's customers around things like on premise support and execution of that capability. 20.
We've for many years outsourced elements of our hardware support business to reliable third party companies. 20. We don't really get into the details of their names or the details of those agreements, but they're just a normal part of 20. How we ensure that we deliver the best possible service to Teradata customers, while also enabling us to strategically focus on 20. And invest in our business as we move forward.
So clearly, we do expect that to It will be a win win for both our customers and Teradata in terms of execution and
20. Got it. Got it. That's helpful. And then, you guys launched consumption based pricing last I guess, what are you guys seeing from your installed base there just in terms of the initial commitment versus the actual usage relative to your expectations?
20. Yes, it's early days still. Our consumption based pricing clearly has been met with great interest inside the market. 20. A good percentage of our sales engagement opportunities have included at least a request for consumption based pricing.
20. The really interesting thing because our customers know their environment is a very stable business that they tend to execute on 20. Teradata, they see a real value in terms of our blended pricing program where they commit a fixed 20. With bursts of consumption on top and many are choosing that option that reduces our volatility From a consumption perspective, but we're just really happy to be able to give customers that choice in terms of 20. How they interact and engage with Teradata, but it's been pretty successful.
We'll continue to refine and improve our 20. Pricing models as we move forward. Again, I would just point you to the general growth that we're seeing in our cloud ARR. And as I mentioned a little bit earlier to one of the other questions, the cohort growth of our existing customers when they're operating in the crowd cloud where 20. A lot of that consumption based pricing is active, has been very strong.
20.
Got it. Thanks, guys.
Thank you.
Our next question comes from Matt Hedberg of RBC Capital Markets. Your line is open. Please go ahead.
For my congrats as well on your new role and looking forward to working with you. 20. Steve, I think what stood out to me is that the success is not just in the base, but it's 20. Net new customers, new to franchise. That said, I'm wondering, could you talk and obviously, you've had a lot of On the cloud side, could you talk though about just how you think about operating in a hybrid environment, right?
Because 20. Clearly, we've sort of one foot on both sides at this point, but your success in the cloud is interesting. And obviously, I think That's getting all the attention, but the hybrid approach, just talk about how well positioned you're there you're sitting there relative to competition. 20.
Yes, clearly we see the ability that we have from a hybrid perspective as real differentiation 20. When we compare to cloud native or born in the cloud solutions and indeed what we see in our customer base is 20. They are being very judicious about how they utilize and place their data from both a performance and cost 22. So they really customers really want that optionality between cloud and on prem. They also want to try and avoid that 20.
Hyperscaler cloud vendor lock in. A lot of the enterprises we work with are seeing that for many of their use cases, 20. They have the kind of economies of scale that make an on prem solution very attractive. So it was great in the prepared remarks when I referred 20. Our tax authority in the Middle East selecting us over more traditional competition that really demonstrates the fact that we can win on prem, We can give a vision of hybrid cloud to move forward and the customers can realize value quickly whilst Optimizing their existing environments and I think it's a core strength for Teradata as we move forward, especially as 20.
Financial operations of data management and data in the cloud becomes more important for our customers.
20. That makes a ton of sense. And then I guess, obviously, you're investing a bit more now in front of the opportunity given the success on the cloud side. 20. How do you think about the go to market focus?
Are you bringing in a new set of reps with a little bit more or different skill sets than maybe previously? Just 20. How do you sort of continue to leverage the products that have obviously had a lot of investments with continuing to kind of think about the go to market effort?
20. Yes. I think just a couple of things. We announced that we brought on a new go to market leader, Todd Sione, at the start of this year. We brought in a new leader of our Americas business in March of this year, 20.
And they are ramping up really well. They've got a lot of experience in cloud based selling, and they're bringing and up leveling a lot of 20. I think the other thing is we're making sure that we have the right incentive Plans in place for our sellers to make sure that they're motivated towards selling our capabilities in the cloud. 20. And I think one of the investments that we're making in the second half of the year is a real ramp up of that, if I can use the term, hunter capability to go after new logos.
Again, that is a different Teradata strategy than what has been in place previously. 20. And it was really great to see in the quarter new logo wins in each of the 3 regions, even though that muscle is
20 20
20. Our next question comes from Pat Walravens of JPM. Your line is open. Please go ahead.
20. Great. Thank you. Let me add my congratulations. So Steve, it seems like a lot of things are going right.
20. You've built out the team nicely. What are your top 2 or 3 sort of strategic imperatives for the next 12 months? 20. Yes, I think it's a great question, Pam.
Thanks for asking it. I think what you're going to see in terms of our execution perspective 20. A number of investments were related to our go to market organization and the build to continue and build that go to market organization. 20. The focus on new and additional headcount from new logo hunting, incremental investments in terms of our cloud focused headcount from a go to market perspective.
We're making a lot of investments in terms of enablement 20. To really help the transition of the sales force to sell our complete portfolio of more modern cloud based solutions Because with that comes the ability to execute on expansion. Also inside our go to market motion in terms of investment, 20. We are really doubling down on our customer success investment, leveraging our heritage From an industry data model perspective to really take new use cases through our customer success motion to Our customer base from an R and D perspective, we're really excited about the investments that we're making from an R and D perspective in terms of development of the product. 20.
We'll continue to improve the tight integration with the first party services of the cloud service providers. 20. We're also focused on improving our data management capabilities and data governance capabilities. And 20. Finally, I'd give a highlight and a point from our technology around Query Grid.
We believe that this possessions 20. Teradata uniquely. We can have a Teradata instance in AWS, querying native 20. Object Store data in AWS without that data being in Teradata and combine it with quick results from Teradata
20. In Azure or on
prem, again, either in either environment, querying native object store data, 20. Combining the results of those queries together to provide business insights that nobody else can provide in the industry. And so our entire focus from a query fabric, a data fabric perspective gives us a unique ability to work with our customers, 20. And it's great to see our customers getting as excited about that capability as we are. That's great.
Thanks very much.
20.
There are no further questions at this time. Steve MacMillan, I turn the call back over to you.
20. Thank you very much, Charlie, and thanks to everyone for joining us today. We are really proud of the progress that we've made. 20. And our differentiated multi cloud data platform is making a difference for customers right now.
We're going to continue to drive clear 20. We hope that you all join us on September 9 for our Investor Day. We're really looking forward to sharing more information on our strategy, our directions and our long term growth plans. 20. With the pandemic ongoing, meeting is going to be conducted virtually.
I hope you're all keeping safe. We're going to make sure that we have The opportunity to have live Q and A with a selection of our leadership team and our new leadership team here in Teradata. 20. Have a great day. Thank you.
This concludes today's conference call. You may now disconnect.