Hi, good morning, everyone. Welcome to day two of BofA's Global Technology Conference. I'm Wamsi Mohan, I cover IT hardware and also software companies. Welcome to our session here with Teradata. We're delighted to welcome Claire Bramley, Chief Financial Officer of Teradata. Claire's been in this role since 2021, some pretty tough years as demand back off for, as a Chief Financial Officer. Claire, welcome. Thank you for joining us here today. Thank you, Wamsi. Pleasure to be here. Maybe to kick it off, you reported a very good Q1, and there were some really, I think, stand out things within Q2, which I'd love for you to unpack a little. You announced one of the largest AWS Marketplace in AWS's history, which is quite amazing. What drove this deal, and what caused that customer to choose Teradata? Yeah. As you said, we were very happy with Q1. Seasonally for Teradata is not necessarily always our biggest quarter when it comes to growth, both from a cloud perspective and total ARR. To see really strong cloud ARR growth, we were 89% year-over-year in Q1, and but also total ARR was great to see. As you said, we did see some different dynamics in Q1 than we've seen in the last couple of years. Some of them were linked to the fact that we had this big deal. It was an 8-figure ARR deal, which was a nine-figure TCV deal in the healthcare space. The reason that we were really excited about that deal was it was a kind of a long-term commitment. It was in the, you know, in the pipeline, for a while, and just kind of showing existing customers, committing to us, not just in terms of migrations. What was exciting about that deal was that it was an expansion deal with existing customers. Showing that it's not just kind of moving from on-premise to the cloud, but our customers also making very large commitments with us, with regards to expansion. That was very exciting. The fact that Q1, for example, we had, our growth, more than 50% of our growth in Q1 did come from expansion. We were obviously helped by that large deal, but also other expansions as well. That's one of the, first times we've seen more than 50% of our growth coming from expansion. In the past, we've been seeing more come from migrations of existing customers. That was very exciting. As you said, it was one of the largest deals to be done on AWS Marketplace, and we did that with a partner as well. I think all of those are really good indications of the foundations we've been putting in place in the last two to three years. We've dramatically changed our strategy. We've heavily invested in relationships with partners rather than just direct. We're looking at really building those relationships with existing customers through investing in customer success. All of these things that we've been working on, and when you start to see some of those results coming through, shows that we're seeing the results even in the current macroeconomic environment, which is still pretty volatile. Would you say that how long was this deal in your pipeline? I mean, it's a tremendously large deal, but your cloud product, you know, is not that old. To make a decision to do something in the cloud, you know, how long does it take this customer to sort of really evaluate and get there? Yeah. I mean, we have fairly long deal cycles, especially with these such big deals. I mean, we can have a big range. A deal can take up to a year sometimes, but sometimes it can be done in a matter of, you know, 30 days sort of thing. It does very much depend on where the customer is, you know, the discussions that we've been having. This one, it was a longer deal cycle for sure. You know, it was about getting the right, you know, mix between migrations, expansions, what are the workloads that they want to be focused on, and really focusing on the value add, in, you know, with the customer. I would say it was on the longer side of the deal side. This is a big investment, it goes through lots of reviews and approvals, especially in the current environment. Yeah, and but again, the fact that they were willing to make that commitment in the current environment, I think says a lot to their confidence in our cloud product, and the opportunities that we have, moving forward. When you think about the infrastructure that this existing customer had, are they moving everything now to the cloud, or is it part of their workloads that they're moving to the cloud? It will be so because this was expansion, mainly this deal, it was a combination of migration and expansion. They haven't necessarily moved everything, but they've migrated some existing workloads, but they want to have that kind of scalability, that flexibility, really get the benefit out of our ClearScape Analytics product, which is embedded in our cloud software. Some workloads were moving, but the rest was actually new workloads, new analytical capabilities, which is why it was an expansion deal. They still have that customer specifically still has existing on-premise workloads with us, which potentially over time, can either be migrated or, you know, we do really truly believe in that customers will keep a hybrid approach. They will choose the workloads that potentially are stable, that, you know, may be a little bit less complex in terms of analytical capabilities needed, will remain on premise, even in the medium, longer term. Then those that, you kind of need a little bit more, either the scalability, either the, I would say the more advanced complex analytics, which you can get from our cloud ClearScape Analytics. They're the workloads that tend to be moving to the cloud, but it varies customer by customer. Some customers have a strategy that they want to move everything to the cloud, but a lot of the very large enterprise customers, which this was in the healthcare space, tend to want to have a hybrid approach. They foresee that happening for several years to come. Yeah. Yeah. No, that's, really a testament to how far you guys have come in, making progress on the cloud side. The other point I wanted to hit about the quarter was ARR growth. It was not just in public cloud, but also in total ARR. Just kind of want to understand, how do you view the sustainability of this? Because in the past, I think people have worried about the fact that although you had cloud ARR growth, your total ARR was not growing. You focused on expansions as well. If you could just bring those things together. Yeah, absolutely. We see the possibility of expansions both on-premise and in the cloud, and we're seeing that across the board. That clearly helped us in terms of total ARR growth. Yeah, we were very excited to see that. We do see it as sustainable. We have a 23 outlook that does grow total ARR, which is very similar actually, in terms of percentage-wise to what we saw in Q1. Although we are normally very kind of back-end loaded from a growth standpoint, it was nice to see our linearity improve a little bit this year, and have more growth coming in the first half of the year than we saw, for example, last year. Yes, I would say in terms of total ARR growth and its sustainability, we do anticipate that in 23 and beyond. We are very confident with the dynamics that we're seeing with our customers, that whether it's in the cloud or on-premise, that there's a lot of the things that are coming out with regards to AI, ML, and, you know, we've got some big use cases already that where we're taking advantage of that. We're very confident that it's not just a migration play, that it is an expansion play, and that we'll continue to see strong expansions both in the cloud, but also on-prem. We're also continuing to see some on-prem expansions, too, which I think says a lot, again, for that hybrid opportunity and that total ARR growth opportunity. I don't anticipate it just coming from cloud, although clearly cloud is going to grow much faster, than on-prem. From your seat as Chief Financial Officer, I'd love to understand your perspective on AI, both sort of how you're leveraging AI within your own organization and what you've already looked at and from a productivity standpoint, and then secondarily, like from a Teradata and product standpoint, how do you view AI? Yeah, I'm going to take the, the latter part of your question, at the functional view. We're already seeing some great uses, some great use cases. We talked about in earnings, there's a retailer out there using kind of generative AI and using Teradata to provide the data and analytics, to then be able to inform customers of potential choices that they can make. The example that we talked about in earnings, and it's a very interesting example, is a retailer, where you effectively have a shopping cart that talks to you and provides you suggestions, and it brings in huge amounts of data. It can be, you know, obviously your historical data, where you're living, you know, what the weather is, what's available in stock, and they can use all of that data that comes together, and then provide suggestions to the shopper as they're going around the store with the shopping cart. That's something that already is happening, and companies are using Teradata for that type of analysis. I think what's really interesting for us, and we see this whole focus on AI and generative AI as a kind of a TAM expander for us, because ultimately, you need good data and good analytics for the outputs to be helpful, to really add value. For generative AI to be able to be making really, I would say, intelligent, informed, and helpful value-add suggestions and proposals, you need to have the right data and analytics platform to be able to inform that and drive that. I feel that Teradata is really well positioned to be able to do that with our capabilities that we've already got embedded in our software. It's not like we need to develop the product, and we will always continue to develop the product, but that is already available today. I'll be honest, I think there's a lot of capabilities within the product, which some of our customers may not necessarily be getting the full benefit from. As AI becomes an area that they want to invest in, want to experiment in, they'll find that they can use the Teradata capabilities that already exist today to help them do that. I think it's very exciting from a Teradata possibility standpoint. I'm very excited about that. I think, yeah, we'll see more and more of these example use cases of how companies are using the Teradata software to be able to, you know, do generative AI or just continue to expand the AI and ML capabilities. Where within the tech stack is that? How do you think about the tech stack for that for generative AI? When you talk about leveraging all the data, I can understand sort of the architecturally, like you are kind of providing the foundation of all the data and plus the historical data, the purchasing patterns or whether all these things. All that's part of Teradata, but now you have a top layer of generative AI that is querying the database and then coming back and sort of synthesizing all those results? Yeah, exactly. I mean, we're not going to be coming up with our own, necessarily, our own, you know, generative AI language or solution. I think the fact that, the fact that we have the push-down query, the capabilities at Teradata, where we can use any data where it is, makes a big difference. You know, that's why I think our customers can quickly get the benefit from that because they don't have to copy and paste the data to be able to use it, to be able to add it into that stack. We can use the data where it is, bring it up, provide the analytical capabilities, and then they will probably, you know, choose to use what generative AI kind of language models that they want to use moving forward. We're not gonna try and be at every point in the game, but partnering with those, with our customers and other partners to be able to just ensure, though, that the quality of the data and the access to all of the data available, we can provide that, you know, with our existing capabilities. That's pretty exciting. Yeah, no, it is. And it's also interesting because you also have the ability to then say, you know, as these various SKUs that are being purchased by folks, you have the backend capability to go back and talk to the supply chain and say. Exactly. Yeah, there is this product that needs to be replenished, and, you know, this is moving faster than something else. Exactly. Yeah. Sure. I mean, exactly. Not only being able to make sure linked to the existing stock, you know, what's in stock, but being able to say, well, you're seeing trends happening in terms of best buying in certain areas. You need to then feed that back into supply chain to ensure that you have kind of this just-in-time availability of products. There's so many different use cases. Yes. which is why we think that this is definitely an opportunity for us as more and more companies focus on how can they use it, how can it bring value to them. Yes. I think every company is. You mentioned, you know, asked, you know, what do I see as the kind of functional opportunities? It's interesting, we've just been through a piece of work actually, where we're trying to come up with, you know, what is our point of view? What are the different use cases? I've got pages of ideas, sort of thing, of what we can do. I think what we will be doing and what every company out there doing, though, is truly identifying those value-add cases. I mean, you can use generative AI or AI to, on so many different areas, but I think what I would be planning to do is I want to invest in the areas that truly add value, whether it's efficiency, whether it's, you know, business insights in terms of predictive analytics. Where can we really add huge amounts of value that makes it worthwhile investing? The great thing is we can use our own product as well. I'm already using, from a finance standpoint, you know, the VantageCloud software that we have. I use that to close all my books. I use that for my forecasting and analytics. What I need to decide is, you know, how important is it to use the generative AI capabilities and the ClearScape Analytics capabilities, where can I get that true benefit from? I think, you know, predictive analytics and forecasting, I think, is gonna be a really interesting one. Yeah, at the moment, we have a long list of ideas, we'll be working through those. It's an exciting time, I have to say. Being in the data and analytics market and being a Chief Financial Officer, and I have the advantage of also being responsible for IT as well, and security. There's so many use cases that we have come up with in those functional areas that I think are gonna add a huge amount of value to us as a function, but also then be able to use that to benefit Teradata, and also use cases for our customers. I have a lot of peer-to-peer discussions with some of our customers, and it's exciting to hear what their plans are and for us to kind of show what we're doing with our product. Yeah. I'm doing more and more of that actually right now, which is really beginning to kind of say, "Well, this is how I use the Teradata analytics capabilities. How are you using it within your function? You know, can we share and leverage best practice, you know, in terms of really pushing the boundaries and getting the maximum use out of it?" That's something that we're gonna do more and more, just really try and make sure people are getting the true value from the software. Okay. That's great. Claire, your net expansion rates, and you touched on expansions, were very strong, actually, improved, when you look versus fourth quarter. What is it that's creating this change in sort of the better-than-maybe-what-people-expected expansions? I think it just comes down to the fact that we are spending more and more time either preparing solutions for customers, as we're at the table. I think historically, unfortunately, Teradata, if you go back kind of five years plus, historically, we weren't necessarily as proactive as we could have been or should have been in terms of working with our customers on the true value that you can get from the software, even from an on-premise standpoint. There was a lot of, I would say, uncapped value at times. We've really tried to make an effort to be able to say, "Let's be at the table. Let's bring ideas and solutions." I was just using a few examples of things that I'm doing at the Chief Financial Officer level. If you've got a whole customer success team, a whole go-to-market team, you know, that are with our customers and showing them, "These are the capabilities that we have, this is where you could get better use out of it, and here's also some more and more examples of where we've done this successfully with your, you know, with other customers in your industry, or in your area." We're really kind of focusing on that vertical expertise, which I think is really important, really focused on kind of customer success and just bringing solutions and ideas to the table. I think that's just had a huge impact, to many of our customers and is helping us, show the value. It makes it easy for the customers to say, "Actually, yes, I would like to do that. Show me how to do it, and let's go." They're willing to kind of make some investments to do that. I think just more and more of that. Also, the product's been developing. Sure. I mean, we've been investing heavily in R&D over the last three years in the cloud space, specifically. You know, for those that are familiar with the story, remember we used to spend about 70% of our R&D on on-premise and 30% on cloud. We've shifted that completely, where we're spending, you know, slightly more than 80% now on cloud R&D. I think we're seeing the benefits of that. We obviously got the new VantageCloud Lake product launch that went into general availability at the beginning of this year on AWS. In addition to that, all that we just keep adding and adding functionality into our software, showing customers what that is, how they can use it, how it brings value to their business, whether it's running their day-to-day operations, whether it's supply chain management, to your point, whether even disaster recovery. There's so many different use cases, and making our customers aware of that and showing them how they can easily adopt it, implement it and benefit from it, is helping us clearly, which is why we're seeing such strong expansion rates. We believe that they're sustainable moving forward, which is good. Are you seeing this as very broad-based? It's not like a few very large kind of expansions that are driving it, but it's a more sort of a lot of customers that are in the cloud. You are seeing this much more broad-based? Yeah, absolutely. We track, as you can imagine, we track all of the customers that are in the cloud, and we see on average, really good, strong expansions across the board. It's not just a case of one or two big customers that have big expansions that bring up our expansion numbers. We see it consistently and, you know, in a consistent way, across all of the customers that go to the cloud. That's why we've pushed the migration to the cloud so hard. That's why Steve McMillan, our Chief Executive Officer, knew that this was a big growth, total growth opportunity for us. Because you are restricted when you're in on-premise. You don't have that capacity, extra capacity to be able to add workloads, add different types of analytics, add users, add data, because you're constrained. We knew that. We knew that this kind of releases that kind of constraint, and means that we can do more and more with existing customers. We're seeing that across the board, very broadly, which is, which is great. Yeah. No, that's clearly amazing. There's a lot of concern around the macro slowdown. What have you seen within sales cycles and just, you know, how much time people are evaluating products, and what's happened to your pipeline conversion rates? Yeah. Interestingly, we're not losing customers. To your point, we track very closely every single deal through the entire pipeline. The interesting thing is we're not losing deals, but some of the deal cycles can be elongated in some cases. We haven't seen any major impacts so far from the macro. Definitely more scrutiny. I mean, definitely more scrutiny, more levels of approval, et cetera. We picked up on that very early, actually, and the sales team have got very good in the last year or so of being able to ensure we truly understand what is the cycle that it needs to go through. Do we understand who are all of the, you know, the people that need to approve this deal? If it doesn't need Chief Financial Officer, Chief Executive Officer approval, kind of just double checking, because quite often big cloud deals do these days. So we've become, I think, much more informed, much more proactive in terms of understanding that, so that when we're doing our own forecasting, we can be a lot more predictable. It's still lumpy. I mean, they're big deals. A deal can move from one week to the next, one month to the next very easily. Just need an important signature to be on vacation, and suddenly. You know, there's an extra week added sort of thing. I mean, our deal cycles tend to be on the longer side. Interestingly, from a macro standpoint, we're just seeing a little bit more scrutiny, and, you know, additional approvals and things like that, but not a significant impact. We're watching it very closely. It's one of the reasons we had a very strong Q1, and kind of just having that additional conservatism on the macro was one of the reasons why we didn't raise our full-year guide. We reaffirmed our full-year guide for 2023, which I still feel very happy with the, you know, 55% midpoint growth on cloud ARR. A few people were kind of saying, "You know, you've had such a strong Q1, should you be raising?" I think it's important to keep an element of conservatism into those outlook numbers that we're giving to accommodate, you know, the macro environment. Any change from a competitive dynamic standpoint? Are you either, like, anything that's sort of like that we can track from a win rate perspective or that you track from a win rate perspective? Yeah. One of the big ones that we track very closely is kind of the, yeah, to your point, win back. Customers that kind of boomerang back to Teradata. I think that has definitely been an interesting dynamic over the last, you know, 12 months, I would say. Because what we're finding is because of the macro and because of the extra scrutiny around costs and, you know, and people talk about kind of cloud cost optimization, I think because people are being pulled back, they're taking another look at, you know, how their migrations to the cloud are going, how much it's costing them, you know, how much is the cloud consumption? You know, how much that's costing them on a month-to-month, quarter-to-quarter basis. What we found with our customers is that they prefer to have like, almost fixed costs or so that it's predictable for them. We offer consumption pricing. We offer fixed pricing or hybrid. Most customers, to give them flexibility, but also predictability, tend to take the hybrid pricing option. The majority of their usage would be fixed price, so they know how much it's gonna cost, even in the cloud. No surprises, but they have that flexibility to be able to move to consumption pricing if they want to, you know, use more or do more than they originally anticipated. That's what a lot of our customers are doing. I think that, you know, when they see that that's an option and they see that we can maintain, you know, really show them that the migration with Teradata is not too expensive, it's not high risk. Also the cost per query at Teradata, on average, is significantly lower than all of our competitors. I think the more we educate customers and new customers of those benefits, we also show them alternatives maybe to existing migrations that they're doing. We're seeing some come back, you know, and say, "Actually, you know, can you show me what you can do? Can you show me?" You know, where maybe previously, a couple of years ago, they've made the decision to go to a competitor. I'm, you know, in terms of getting those boomerang customers back, getting people to take another look at alternatives. A lot of customers will have more than one. You know, you use more than one software. Even if it's not existing workloads, if they're planning new workloads, you know, from expansion purposes, they'll come and bring us to the table. We're seeing more and more of that, of customers wanting to bring us back to the table or, you know, us to give them examples of what we're capable of doing. I think that's also a benefit. That's being reinforced. What's really important is this partner approach. I think, what's being reinforced is the partners are talking about great experiences and great migrations with Teradata, reinforcing that we know that Teradata can be successful here, when it's large, when it's complicated, and that we can keep control of risk, keep control of cost. I think when you've got external partners also, being your kind of supporters and recommending Teradata, we're seeing more and more of that as well, which makes a big difference. Yeah, for sure. When you think about the, new logo. Yeah. You know, upsell, there's been, I think you've called it out, that you have seen both on on-prem and in cloud, still not a significant contributor. Is there anything that Teradata can do to change sort of the rate and pace of that, especially given that you do have some minimum thresholds on spend? Maybe, you know, why do we have that? Why isn't that gone to maybe accelerate, like, the growth at new logos? Yeah. We, I mean, the current macroeconomic environment is not the ideal situation to be able- Sure T o get new logos. But to your point, we continue to refine our approach. We know that this is an important opportunity for us. They do start very small. We are seeing good new logo traction on-premise and in the cloud, but they do start very small, you know, we have a kind of land and expand approach. With our new Cloud Lake product, is helping us in terms of that minimum workload, that minimum cost, so we can go into much smaller areas now, in terms of, you know, departmental workloads, experimental workloads, ad hoc workloads. Our new Cloud Lake product is helping us in the sense that there's not really a minimum. The minimum amount is very small. You know, bearing in mind that our customer market is the global 10,000, you know, our minimum amount now is nothing for. Right T hose kind of customers sort of thing. That, I don't think that is an issue. Okay O r is a constraint anymore. I think the biggest constraint we've got right now is the macro and just, you know, bringing in somebody that new, that they don't have an existing relationship with in the current environment. We're continuing to do that. We're continuing to make some traction. I think, again, the partnership development that we've had will make a big difference in that as well, because if we don't have the existing relationship, then the partners can potentially have that relationship as well. Whether it's an Accenture or Deloitte, some of the big, you know, global system integrators. On-prem, to your point, we've just done a recent partnership deal with Dell. So that's another opportunity. Again, like they have existing customers that we don't have and vice versa. That's another opportunity to have new logos on-premise, for example. We see that as an opportunity for total growth because they're new logos. They could expand on-prem, but they could also then migrate and then expand in the cloud as well. Sure. I think as it doesn't matter whether it's on-prem or cloud, if you're bringing in new logos, bringing in new workloads, it's always a value add to the company's total growth, which is what our strategy is. As you know, it's like total profitable growth. Sure. It's not growth at all cost. It's really important that it's profitable, that it's generating strong free cash flow. That's kind of our mantra, and we've got lots of opportunities with partners, but also with our new logo team of being able to continue to accelerate that over time. We're almost out of time, but I do want to ask you, like maybe to talk about two quick things. Yeah. One, on free cash, longer-term confidence on getting to north of $500 million. Secondarily, maybe just I want to give you the opportunity to talk to investors about why Teradata is a good investment at this point in time. Yeah, absolutely. Just in terms of free cash flow, we're already generating strong free cash flow. I think with the opportunity that we have for total growth, the opportunity that we have for operating margin expansion and continued efficiency across our working capital, I'm very confident in our ability to be able to continue to grow our free cash flow over time, out to 2025 and beyond. I think we've shown that, you know, the strength of our free cash flow generation over the last couple of years has been good, and I'm very confident in us being able to grow that over the next two to three- years. What, with regards to investors and the key things to take away, we are growing at the total and cloud level. We've got very strong growth. Like I said, 55% is our midpoint for our outlook for cloud. Mid-single digits in terms of, you know, total recurring revenue growth. 82% of our revenue is recurring revenue, so from a stability standpoint, that's good. Strong profitability that we continue to deliver in terms of profitable growth, strong free cash flow, and we're undervalued. I mean, if you look at our valuation and our multiples today, they are still very low. I think it is a great opportunity. We had a lot of exogenous headwinds last year that kind of pulled, unfortunately, what meant that we weren't able to grow total revenue in 2022. I think we're through that now, and we have good confidence in our outlook, which shows strong, profitable growth for 2023 and beyond. Excellent. Well, thank you. Unfortunately, we're out of time. Yeah. Thank you so much, Claire. No, thank you. We appreciate the time. Thank you. Thank you.