Good afternoon. My name is Matt, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Teradata third quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. Thank you. I would now like to hand the conference over to your host today, Christopher Lee, Senior Vice President of Investor Relations and Corporate Development. You may begin your conference. Good afternoon, and welcome to Teradata's 2023 third 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 and outlook. Our discussion today includes forecasts and other information that are considered forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risks and uncertainties that could cause actual results to differ materially. These risk factors are described in today's earnings release and in our SEC filings, including our most recent Form 10-K and in the Form 10-Q for the quarter ended September 30, 2023, that is expected to be filed with the SEC within the next few days. These forward-looking statements are made as of today, and we undertake no duty or obligation to update them. On today's call, we will be discussing certain non-GAAP financial measures, which exclude such items as stock-based compensation expense and other special items described in our earnings release. We will also discuss other non-GAAP items such as free cash flow and constant currency revenue comparisons. Unless stated otherwise, all numbers and results discussed on today's call are on a non-GAAP basis. A reconciliation of non-GAAP to GAAP measures is included in our earnings release, which is accessible on the Investor Relations page of our website at investor.teradata.com. A replay of this conference call will be available later today on our website. And now, I will turn the call over to Steve. Thanks, Chris, and hi, everyone. Thanks for joining us today. Teradata delivered another solid quarter in Q3. We continue to steadily advance in our transformation as a leading cloud, analytics, and data platform. I'm pleased with our market momentum and the team's consistent execution, and I'm grateful for the trust placed in us by our customers and partners. In the quarter, total ARR grew 11% year-over-year. Sequential total ARR dollar growth was $14 million in constant currency, with positive contributions from both cloud and on-prem subscriptions. Customer demand increased as enterprises continued to utilize our modern platform in helping them drive business-critical insights. We grew cloud ARR 63% year-over-year against a very strong Q3 last year. We grew cloud ARR in all regions through a balance of migrations and expansions. Cloud ARR is now 30% of total ARR, up 10 percentage points year-over-year. Our cloud net expansion rate was 123%. We are seeing continued strong interest and pipeline growth in VantageCloud Lake. With execution across the organization, our continued market momentum, and disciplined cost management, we delivered non-GAAP earnings per share of $0.42, which grew 38% year-over-year. I am proud of the team's performance, and I'm very pleased with our innovations that position Teradata to lead in AI, and particularly trusted AI. I'll start there. At Teradata, we believe people thrive when empowered with better information. Our analytics perform with speed to deliver better insights that drive more confident decisions. While interest in AI is accelerating, a key to AI success is being able to trust in the data, which is what Teradata has always provided. We strongly believe that our best-in-class cloud analytics and data platform delivers harmonized data, trusted AI, and faster innovation for better decision-making. This conviction guided us in our recent acquisition of Stemma, which adds AI-enhanced data search and exploration, designed to bring greater value to our analytics by making data easier to find, use, and trust. We expect that these capabilities will help Teradata deliver an enhanced user experience and advance our roadmap in data lineage, governance, and compliance, with semantic mapping to help users understand the context behind the data. Our industry-recognized strength in analytics and complex data management is driving our momentum, and we are seeing high interest in our AI, ML, and advanced analytics capabilities. Enterprises everywhere are investing in AI, and particularly generative or GenAI, which will create massive enterprise value. As companies look to benefit from GenAI, we are seeing them explore use cases that are well aligned to our core value proposition and that we are already addressing today. These include improved business performance with democratized insights from across the organization. Knowledge workers can more quickly sift through mountains of data and make better decisions by asking questions in plain language without the need to code. Hyper contextualized customer experiences as organizations use analytics to better anticipate customer needs, develop more relevant recommendation engines, and create more authentic interactions to improve engagement and loyalty. And also delivering faster product innovation, as technology teams can automatically generate code, thereby accelerating innovation and reducing operational expenses. In collaboration with IDC, we recently conducted a survey of enterprise executives that validates the opportunity with AI. This survey revealed that more than half of the 900 respondents feel a high or significant pressure to integrate GenAI within their organizations in the next six to 12 months. However, only 30% feel adequately prepared to leverage GenAI today, indicating a significant gap that needs to be bridged. With years of expertise in the AI domain as the trusted data platform for the world's largest and most complex organizations, Teradata stands as a go-to platform for AI enablement, which we believe provides one of the most cost-effective solutions, proven performance and flexibility to innovate faster, enriches customer experiences, and delivers greater value. Our technologies are designed to not only facilitate the AI journey, but also accelerate the realization of value. We are in an outstanding position to help enterprises maximize their AI opportunity. From our cloud-native VantageCloud Lake, with its exceptional data management capability and workload efficiency, to ClearScape Analytics, our robust analytics capabilities in VantageCloud, which make it easy for businesses to put more AI models into production faster and to rapidly scale the usage of those models across an organization. At the beginning of Q3, we announced Teradata VantageCloud Lake on Microsoft Azure. As I mentioned on our last call, our cloud-native architecture is now available on both AWS and Azure globally, and offers the enterprise scale our customers need, including end-to-end support for AI and ML. We are already helping customers deploy trusted AI solutions intended to drive business outcomes. An exciting announcement in the quarter was our introduction of Teradata Ask. AI, our new Gen AI capability for VantageCloud Lake. This GenAI interface is designed to allow anyone with approved access to ask natural language questions and receive instant responses from VantageCloud Lake. By reducing the need for complex coding and querying, Teradata Ask.AI can dramatically increase productivity, speed, and efficiency for both technical and now non-technical users as well. We announced new ModelOps capabilities in ClearScape Analytics, which also helps accelerate AI initiatives. These no-code capabilities enable customers to quickly scale AI and advanced analytics with enterprise governance, including bring your own model, now with no-code capabilities, allowing our users to deploy their own machine learning models without writing any code, thereby simplifying their deployment. Advanced model governance capabilities and robust explainability controls to ensure trusted AI and automatic monitoring of model performance and data drift with zero configuration alerts. Additionally, we recently introduced powerful API integration between OpenAI and Azure OpenAI. With these LLM capabilities in ClearScape Analytics, customers with large volumes of text data, such as product reviews, transcripts from call centers, or medical interactions, are enabled to transform that data into analytic outcomes. This can lead to improving the customer experience, reducing churn and risk, or preventing fraud, to name a few. These new integrations highlight our commitment to help customers unlock future value from their data by leveraging their full analytic ecosystem, including Gen AI and large language models. We showcased these innovations this quarter as we executed a series of customer and partner events in all regions. I was extremely pleased with the input from customers as they shared how they are running their business on Teradata. Along with the customer presentations and conversations at our events, it was also great to meet and speak with many prospective customers. Each event had a strong mix of prospective accounts, demonstrating Teradata's increasing market traction and interest. We also had hundreds of alliance partners join us and sponsor, from Accenture to Microsoft, AWS, Dell, and more. Attendees said they were energized by how trusted AI and harmonized data can accelerate business value and power innovation throughout their organizations. During this global event series, we met with a number of external analysts. It is great that the broader community is seeing Teradata as increasingly relevant and well-positioned versus the competition. Many analysts noted that customers are telling them our platform and innovation roadmap are differentiated and supports their needs.... whether cloud, multi-cloud, or hybrid. I was also pleased to receive the positive feedback on the transformation of our brand. Our marketing organization leaned in and introduced our modern, customer-centric, and innovative brand that represents the trusted value we bring to the world's leading organizations. We are going to keep up the pace to ensure that our differentiated position is clear to the market. As I stated, we had very good growth in the quarter. Let's look at a few customer examples. A multinational manufacturing company based in Europe is a new VantageCloud customer. This customer spoke at our London Possible event and shared that it selected Teradata Analytics to improve decision-making through AI, as it works to offer more safe and sustainable products every day. It has invested with us to implement innovative AI projects that accelerate time to value for its customers. A world-leading banking group has renewed its confidence in Teradata with its first step to the public cloud, adding VantageCloud Lake on AWS for its retail banks for sales monitoring, customer segmentation, risk management, and financial reporting. This customer also added VantageCloud Enterprise on AWS for finance and risk regulatory purposes. This win was in partnership with Accenture. We gained a new logo at a government regulator in India to support its compliance reporting with requirements. This is our first converged infrastructure customer win in Asia Pacific through our strategic partnership with Dell. Our track record of reliability, performance, and competitive pricing led to this win. And a leading global financial services group based in Japan is using Vantage and ClearScape Analytics to execute large-scale AI models. This long-term customer's data science team relies upon ClearScape Analytics functionality for its many applications running on our platform. Along with bringing tangible business value to our customers, our partner first momentum accelerated across our partner ecosystem in the quarter. A spotlight of our strong collaboration was educating hundreds of Accenture employees on our joint offerings to help our mutual customers exploit AI. In parallel with our global motions, we have grown our partner ecosystem by 20% year to date, adding new vertical ISVs and regional SIs aligned to Teradata's industry use cases. We are aligning our investment envelope to our strategic initiatives and continuing our progress as a cloud-first, profitable growth company. We will continue to take actions, like winding down our direct operations in China, that will accelerate our growth trajectory and advance our innovation engine. We're on track to achieve our 2023 outlook. We're looking ahead to 2024 with optimism and are firmly on track to achieve our target of more than $1 billion of cloud ARR by the end of 2025. Now, I will pass the call to Claire. Thank you, and good afternoon, everyone. I would like to reinforce Steve's comments on our continued momentum and consistent execution that ensured we delivered another quarter of solid results. A notable highlight in the quarter was our cloud net expansion rate of 123%, a sequential increase of 200 basis points. We have sustained and increased our cloud momentum as a result of greater market awareness and customer demand. Migrations and expansions have equally contributed to the reported $14 million of sequential cloud ARR growth, slightly ahead of our expectations, resulting in an increase of 63% year-over-year. Another highlight was the repurchase of approximately $141 million of stock, resulting in a year-to-date return of free cash flow of 161%. We took advantage of our strong balance sheet and cash flow generation to repurchase 2.9 million shares. We believe this was a prudent allocation of capital and exceeds our commitment to return at least 75% of free cash flow to shareholders in 2023. As we enter our seasonally strongest quarter, we remain on track to achieve the outlook ranges we previously provided for 2023. This is despite incremental, unplanned currency headwinds we now anticipate in the fourth quarter. I will cover more on our annual outlook shortly. We remain steadfast on executing against our cloud-first, profitable growth strategy with the goal of continuously increasing shareholder value. Let me now share more details on our financial results, starting with revenue. Third quarter recurring revenue was $360 million, 9% growth year-over-year as reported, and 10% growth year-over-year in constant currency. Year-over-year, recurring revenue growth was led by a strong increase in cloud revenue. Continued go-to-market execution resulted in all three regions experiencing strong cloud revenue growth year-over-year. Recurring revenue, as a percentage of total revenue, was 82%. There was no year-over-year impact from upfront recurring revenue this quarter, as the quarterly net impact was a negative $11 million, in line with our expectations and consistent with the amount in the same period last year. We anticipate the amount of upfront recurring revenue in the fourth quarter to be a smaller net negative number than this quarter. Third quarter total revenue was $438 million, 5% growth year-over-year as reported, and 6% growth year-over-year in constant currency. The year-over-year change is primarily due to cloud revenue, which continues to become a more impactful driver of our revenue growth. Moving to profitability and free cash flow. Teradata's reported third quarter total gross margin dollars were $264 million. The slight year-over-year increase was primarily due to the higher amount of cloud and subscription gross margin dollars that were generated by both greater volume and rate expansion. Operating profit was $63 million, and operating margin was 14.4%. Revenue leverage and continued cost discipline contributed to operating margin expansion of approximately 150 basis points year-over-year. As we maintain cost discipline, we also continue to invest in the business, deploying capital on projects that generate attractive returns and drive future growth. These activities resulted in non-GAAP diluted earnings per share of $0. 42, the midpoint of our outlook range. The $0. 42 include a benefit of $0.0 2 from a lower tax rate in the quarter versus our prior outlook, offsetting currency and other income and expense headwinds in the quarter. The lower tax rate resulted from favorable true-ups to our tax provisions and a change in assumptions, both of which will reduce the full year tax rate to 23%. We generated $36 million of free cash flow this quarter, which was in line with both our expectations and our historical cash flow linearity. We are still on track to land within our 2023 free cash flow outlook, given our anticipated fourth quarter sales bookings. Moving to our 2023 full year outlook. We are raising our non-GAAP earnings per diluted share. The new annual outlook range is $2.01-$2.05. This raises the midpoint by $0.05 versus the $1.98 that was the midpoint of our previous outlook. The $0.05 benefit is from a change in our tax rate assumption, all of which dropped to the bottom line. In preparation for 2024, we have taken various actions to continue optimizing our cost structure. This ensures we have the ability to invest in areas of the business that have a higher growth profile without increasing our overall budgeted costs. This impacts our GAAP earnings per share. The new annual outlook range for GAAP earnings per diluted share is $0.59-$0.63. This range accounts for the cost reduction measures, as well as foreign currency exchange actions related to Argentina that were taken during the fourth quarter. We know that our fourth quarter is seasonally our highest sales quarter. Given our progress to date in the quarter and the current pipeline, we are confident that total and cloud ARR dollar growth will increase sequentially and will be within our annual outlook ranges. The continued strength of the U.S. dollar has resulted in incremental currency headwinds in the fourth quarter of approximately 150 basis points to ARR and 200 basis points to revenue versus our prior currency forecast provided last quarter. Despite these unplanned currency headwinds, our forecast indicates we will land within our 2023 outlook ranges for ARR, revenue, and free cash flow. Our complete 2023 outlook can be found in our third quarter earnings press release and presentation. These materials, along with the foreign currency schedule, can be found on our investor relations website. Before we open up the call for questions, here are some modeling considerations for the rest of the year. For the fourth quarter of 2023, we anticipate non-GAAP earnings per diluted share to be in the range of $0.50-$0.54. We project the non-GAAP tax rate to be approximately 26% in the fourth quarter and approximately 23% for the full year. We forecast the weighted average diluted shares outstanding to be approximately 101 million shares in the fourth quarter and approximately 102.5 million shares for the full year. In summary, we are on track to achieve our 2023 outlook. Beyond 2023, we continue to remain on track and confident on the path to achieve our financial goals for 2025. We plan to provide our 2024 outlook during our fourth quarter earnings call. Thank you very much for your time today. Let's please open the call for questions. At this time, I would like to remind everyone, in order to ask a question, press star and the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. In the interest of giving everyone an opportunity, we appreciate that you limit yourself to one question and one follow-up. Your first question comes from the line of Howard Ma. Your line is now open. Great, thank you. It's great to see the consistent execution throughout the year and, as well as the cloud and our acceleration and the, and the Q3 cloud outperformance, which lowers, I believe, the, the hurdle in, in Q4. But given that Q4 is your... It's still your biggest quarter, so it's certainly no walk in the park. I was hoping, I guess, either for Steve or for Claire, I was hoping you could give us an inside look into planned migrations in Q4 and perhaps 2024 as well. And, I guess I have a few interrelated questions. Typically, how far in advance do these migration conversations typically begin? And what is the risk of any falling through and, ... and as you look ahead, are you, you know, expecting any increase in the size of these planned migrations? Thank you. Hey, Howard, quite a lot to unpack there, but thank you so much for the question. Yeah, it was a great quarter in Q3. Good execution across the entire business, and a really good balance of migration and expansion activity in Q3. We expect that to continue in terms of that balance between migration and expansion activities in Q4. And to your point, we have very good line of sight into execution for Q4, and a pipeline of deals that supports that 2023 outlook, driven by both migrations and expansions. As you can imagine, the migrations tend to be larger deals within the pipeline, and we've got a number of seven-figure and eight-figure deals in the Q4 pipeline. We do have good visibility and visibility over time into those deals. What we do when we construct those deals for our customers is make it commercially compelling, so that that migration to the cloud, even though at that point of migration they usually expand their overall business with Teradata, it's actually a commercially compelling value proposition to move to the cloud. So we've got great insight into that. We're confident in the guidance that we've given for Q4 and confident in the continued execution of the team. Thank you for your question. The next question is from the line of Erik Woodring with Morgan Stanley. Your line is now open. Awesome. Thank you very much for taking my question, and congrats on the really consistent work you guys have been putting up this year. I'm not sure if this is a question for Steve or Claire, so I'll just kind of pose it to both of you guys. You know, we're seeing really strong performance in the cloud net expansion rate. Just maybe, can you help us think about where that metric could go over time? Meaning, you know, are we at a peak here at 123%? Could you see this go to 125%? Could it go to 115%? You know, what factors would you expect to be the primary driver of your NRR really hitting each of those extremes? Just would love to get some context on how you think about 123 versus where that could actually go. And then I have a follow-up. Thank you. Yeah, Erik, I'll start by talking about expansions in general, and then maybe Claire can talk a little about it in terms of from a modeling perspective and how to look at it over the long term. Clearly, we're really happy with the expansions that we're driving just now, kind of up there in the best-in-class for SaaS businesses overall in terms of our cloud business. It's the reason that we like taking that on-prem business to the cloud, because once we get our customers in the cloud, we start to see that growth rate. We're seeing that growth in terms of those expansions coming from increased data, but also increased workloads and increased use cases that are executing on the Teradata platform once it moves to the cloud. Things like our integration with cloud native services. One I mentioned in the conference call was with the Azure OpenAI as a great example of a generative AI integration. We're starting to see that as a catalyst in the marketplace. So happy with the expansions. I'll let Claire talk to longer-term guidance. Yeah, absolutely. So, so we are happy with the 123 net expansion rate. What I would say, Erik, is, we are still modeling approximately 120%. So we're not modeling, we don't need to be higher than the approximately 120% to, for us to exceed the $1 billion of cloud in 2025, for example. So at this point, the 120 and around that mark is what we've continued to model, and continued to plan for 2024 and 2025. And that absolutely keeps us on track for our long-term goals and the $1 billion in 2025. Okay. That's very, very clear. Thank you. And then, maybe my follow-up for you, Claire, bit of a nitpicky question, but we just want to make sure I'm thinking about this right. You know, you kept most of your guidance ranges unchanged, except for EPS, but you did talk to a more significant FX headwind. And so should we think about, you know, for the full year, would you characterize, after 3Q, your performance as outperforming and therefore, you know, still possible to hit the midpoint of that guide, or with the new FX headwind for 4Q, you know, should we be thinking about full year results towards the lower end of the guide? Just want to kind of parse that out, and that's it for me. Thank you so much. Yeah. Thanks, Eric. So, as you said, and as I said in my prepared remarks, we plan to be within the previously guided ranges for both recorded and constant currency. So that means we're absorbing those incremental unplanned currency headwinds of approximately 150-200 basis points across ARR and total revenue. What that means is, I would anticipate to be around the midpoint in a constant currency standpoint of our ranges and between the mid and towards the lower end in on a reported basis, just because of those incremental quarter-over-quarter headwinds that we're seeing from a, from a currency standpoint. Thank you for your question. The next question is from the line of Wamsi Mohan with Bank of America. Your line is now open. Yes, thank you so much. Steve, I was curious if you're seeing more use cases for GenAI in cloud or on-prem, and how would you compare the relative adoption across those for Teradata? I have a follow-up. Hey, Wamsi. Yeah, we're super excited about the GenAI opportunity. I spoke a little bit about that in the prepared remarks. We are already seeing our existing customers utilize and deploy large language models, GenAI, AI, advanced analytic solutions sitting on top of the Teradata enterprise warehouse. One of the things that I spoke about in the call is, you know, we are the trusted custodians of some of the most valuable data in the world, and utilizing that data to give trusted results to these GenAI systems and large language models is part of the core value proposition that Teradata brings to the table. So you can actually execute, and our customers are actually executing some of these models sitting right on top of the platform without moving data into other ecosystems. They are utilizing their trusted enterprise data to get trusted results, to improve their interactions with customers or improve their supply chain. In terms of monetary impact, I think it's something that we'll continue to monitor in terms of how it's driving overall expansion activities for us, but we're very bullish on it. And clearly thinking about Teradata, not as, you know, a monolithic software architecture, but an open platform where we can integrate in some of these advanced services, is gonna drive workload as we move into the future. Okay, thanks, Steve. And if I could one for Claire. Where, where are you focusing on for the cost takeout that you called out, and what does that mean for the OpEx profile in terms of SG&A and R&D? R&D has been ticking up sequentially through the year. And do you still expect to repurchase shares in 4Q as you already exceeded your stated target for the year? Thank you. Sure. Yeah, so let me just take the question on the cost action. So what we're trying to do here is look at areas where we can reinvest to be able to get a higher return on investment and really focus on the best return and driver of profitable growth. So we're not anticipating our total cost structure to come down because we're reducing in some areas and then reinvesting in other areas. We think that's gonna set us up well. But the fact that we are making those actions now mean that in 2024 we will also be able to get some revenue leverage as we move forward as well. So that's where what we're doing from a cost action standpoint. With regards to your second question, which has... Which I didn't write down, so maybe you can remind me, Wamsi, what your second question was, sorry. Claire, on just on buybacks, just given that you already exceeded the year's 75%. Yeah, absolutely. Thank you. Yeah. No, so with regards to share repurchases, we are, we are not planning to be as active in Q4 in the market, as we were in Q3. Obviously, we are, you know, with the, share repurchases of $141 million in Q3, that was a big quarter for us, but... And it was very opportunistic, given where our price, price was during the quarter. Q4, we'll continue to be opportunistic, but we're definitely not anticipating the same level of share repurchasing in Q4, but we will maintain the kind of opportunistic approach, depending on where our, share price is. We do really believe that this is, is a good, use of our capital, and a good, good value and return to shareholders. Okay, thank you so much. Thank you for your question. Next question is from the line of Chirag Ved with Evercore ISI. Your line is now open. Hi, thanks for taking the question, and congratulations on the quarter. So NetSuite cloud ARR was strong, and with these results in mind, when you speak with your customers and prospective customers, are you getting the impression that, you know, customers today are more willing to modernize their data estates and migrate to cloud now versus perhaps six months or a year ago? Or do you still see some of the broader hesitation that's perhaps existed in the market for the better part of the past year that could be pushing timelines out to 2024? So, I'll take that. What we're seeing from a customer perspective is just increased confidence in the Teradata technology platform and the ability for us to take the most complex workloads in the world to the cloud in a very successful way. Teradata gives them a path to execute and a path to migrate to cloud that no other technology can provide to them. So, we continue to see that strength and demand and strength in the pipeline. I mentioned it in answer to the first question that we got in terms of, you know, we see that pipeline continuing into Q4 for us to execute again. In terms of customer interest from a cloud perspective, we still see that as one of the top buying or investment points that customers are making. I was talking to one of the large banks, a couple of weeks ago, and they look at utilizing cloud technologies as an absolute essential capability in order for them to take advantage of all of the research and development organizations like Teradata and Microsoft execute from providing these services in the cloud, so that they can have a differentiating capability into the future. As well as we, from a Teradata perspective, put together a compelling commercial proposition so that they are motivated to move to the cloud with us... and that enables us to get them to a point where we can expand with them in the cloud as we take advantage of these services available in that modern environment. Thank you for your question. The next question is from the line of Chad Bennett with Craig-Hallum. Your line is now open. Great, thanks for taking my questions. So maybe Steve or Claire, just in terms of VantageCloud Lake and ClearScape, you know, now that we're, I think, close to annualizing or a year into market with these, and I understand you're on AWS, and recently just came on Azure at the beginning of this quarter. But just how should we think about the contribution of those two products or platforms to whether it's fourth quarter cloud bookings or ARR or maybe, you know, a better indication is in the next year? Are you expecting those to be material to the cloud ARR growth at some point in the next, you know, three to four quarters? Hey, Chad, it's Steve. Thanks very much for the question. I think a couple of points. I think we've said it in the past, that we during 2023, most of our cloud business has been driven on VantageCloud Enterprise. We're seeing that, as you pointed out, acceleration of interest and deployment of new workloads on VantageCloud Lake. Those workloads tend to be smaller and grow rapidly over time. So we would expect VantageCloud Lake to become more and more important from a revenue and ARR perspective as we move through 2024. What I would say is, you know, when we did our marketing event, Possible, in Orlando, we had a major customer stand up on stage and talk about going live and moving their on-prem system directly to VantageCloud Lake. So I think the traction that we're getting in the marketplace is super exciting, both in terms of, you know, helping with that migration opportunity, but also helping with expansion. As I said, that will become more and more relevant as we move into 2024. Got it. And then maybe one quick follow-up, just on, you know, a couple of the hyperscalers in, in their announcements recently, quarterly announcements. While they, they still mention kind of the headwinds from cloud customers asking for more workload optimizations in the cloud, you know, I, I think a couple of them were able to stabilize their year-over-year growth or increase their year-over-year growth because they are starting to see a data usage around AI and LLMs, actually, you know, in the last three months or in, in the quarter. I know you've talked about it in this call more than I've heard, and, and I think the majority of your customers are on fixed contracts. But if we think about kind of the workload or data usage coming from AI or LLMs, is that something that you can tangibly see, you know, in your base? I don't know if it'd necessarily help you from a net expansion standpoint now, but maybe upon renewal or someone getting to their caps quicker on a fixed contract, is there any early indications of that? Thanks. Yeah, thanks, Chad. So I think you made some great points there. One is, you know, cloud optimization is not a trend or an impact to our business that we tend to see, given the mission-critical nature of the workloads that we execute, and both to your point, the fixed capacity nature of the contracts we have. However, all of those contracts can have the ability to have expansion and consumption ability added to them. And indeed, especially in the cloud, when we think about our net expansion rate, those expansion rates happen continuously. So, Yeah ... we're very much moving away from that, you know, enterprise software sales motion where, you know, the only time you do that expansion is at the point of renewal, and we're continuously adding workloads and growing our customers as we move through the year. And I think that's some great capabilities that are enabled by our VantageCloud Lake product to the earlier points. But also, these GenAI and AI use cases are going to drive that increase in utilization, the increase in the requirement for data. But not only that, Chad, I think a really important point is that those GenAI use cases, if they are not controlled from a cost perspective, can become prohibitively expensive if they aren't run in an environment like Teradata, where we have fantastic financial governance. And so when we think about ethical and trusted AI, we think about it in terms of the outputs that are generated from those AI solutions, but we also think about it in terms of enabling our customers to trust those AI models to operate within a financial, financially governed environment. And we'll continue to see some strength from that perspective. So I think it's going to be ongoing expansions that we see, across the year as we move forward. Great color. Thanks. Nice job on the quarter. Thank you for your question. The next question is from the line of Raimo Lenschow with Barclays. Your line is now open. Thank you, and congrats from me as well. Another great, solid quarter. Two questions. One on actually staying on AI. Steve, if you think about AI, like, how do you see yourself in this kind of new world? Because you obviously, clearly have the right data. You have the trusted data, as you said. But, ... you kind of also then the guide that people use to work the LLMs on, and what does it mean in terms of margins, gross margin degradation, et cetera. Also in light of that, like, will people take your data, put it into a vector database, or do they get fed directly into the large language model? There's a lot of questions, obviously, at the moment because the market is evolving so quickly, but maybe you can help us there. And then one for Claire. For cash flow for the year, I liked your comments about the confidence. Can you talk a little bit about, or remind us about the drivers for Q4? Because obviously it's a big hurdle for the fourth quarter. Thank you. Thanks, Raimo. Yeah, so these large language models, generative AI models, we are developing native integrations inside the platform, so you don't have to move data out. You can actually utilize a, an API to both OpenAI and also Azure OpenAI. Just as an example of some implementations of large language models, and you can do that in a governed environment. Now, we and Teradata invested in analytic capabilities super early. I think you were there for some of that journey with us back in 2011, when we bought Aster. We've made significant investments, and why we launched ClearScape Analytics last year, was because we put all of those capabilities in database to operate at tremendous scale. So our customers can not only utilize that ClearScape Analytics capabilities, which I think we've got five times more. One of the analysts told us we had five times more analytic capabilities than our nearest competitor. You can utilize those in conjunction with these large language models to develop some very complex and very differentiating use cases in terms of deployment, and you can do that all natively within Teradata, utilizing the links to these large language models, and the most advanced large language models that the CSPs actually provide. So we're, we're super excited about that. We think it's a great use, future use case for us. And then Claire, free cash flow. Yeah, so I'll take the question on free cash flow. So we are confident in landing within our free cash flow range of $320 million-$360 million. We're currently on track of where we anticipate to be and have good line of sight. The big drivers that are giving us that confidence is we anticipate greater income in Q4 2023 versus the prior year, and also a lower DSO. We had a very high DSO last year of 74 days, Raimo, as you probably remember, which was a bit of an anomaly. And the other thing I think that gives me confidence at this point in the quarter is that the October collections are actually have performed better on a year-over-year basis. So that gives us good confidence for what we need to do to deliver the quarter and the full year free cash flow range. Thank you for your question. The next question is from the line of Nehal Chokshi with Northland Capital Markets. Your line is now open. Yeah, great. Thanks for the question, and congrats on the solid, solid results here. Steve, you talked a couple of times in your prepared remarks about an improving brand among both existing customers and new customers. But specifically to help quantify the new customer opportunity here, maybe you could characterize what% of the pipeline do these prospective customers represent today versus, say, a year ago? Hey, Nehal, thanks for the question. Yeah, we're continuing to see great traction from a brand perspective, recognition that the Teradata technology is a great technology to deploy with on the cloud. You know, things like our Ask.Ai interface, which really improves the ease of use for the Teradata system, start to unlock new users, new use cases. So that, that's super exciting to see. Our work with Accenture and the partners is starting to drive our ability to, you know, really put together some great solutions. We launched an Accenture use case for the retail industry, and these things are kind of building up to so that we have the absolutely right capabilities to win new logos. We've seen traction for new logos in both on-prem and in the cloud in Q3. We're continuing to see that grow. From a materiality perspective, these deals are smaller in size. We've always kind of characterized them as being smaller in size, start small and grow quickly, and we see that pattern continuing. We're not overly dependent on new logos for execution to get to our Q4 number. We've got the pipeline and visibility to the pipeline for execution for Q4. And certainly, it's our objective to continue to grow new logos as we go through 2024, so that it becomes more and more meaningful in terms of the overall results of the company. Thank you for your question. The next question is from the line of Matt Hedberg with RBC Capital Markets. Your line is now open. Great, thanks for taking my questions. Steve, for you, maybe just, you know, stepping back a little bit, you know, you've talked a lot about your Lake strategy and obviously from a warehouse perspective as well. Can you talk about sort of, you know, fast forward several years, you know, how do you kind of see the whole debate on warehouse versus Lake shaking out in a kind of, you know, over the medium to kind of longer term? Hey, Matt, we love that question because our technology set is gonna enable us to deploy, you know, the best enterprise data warehouse, the best lake and the best lake house solution for our customers. So we see that as a convergence over time. So, super exciting to see that manifested in the marketplace. We're also really interested in seeing how open table format is going to continue to enable that. So I think it's an awesome time in the marketplace, and as we look out in the future, I think a lot of convergence between those deployment options. So Matt, thank you. Thanks very much for the question. Sure. And then maybe, Claire, for you, could you just, you know, and on the call, you, you addressed this, but maybe just a little bit more color on kind of the impact of upfront recurring revenue on your revenue outlook targets for 2023. Yeah, absolutely. So, in the quarter, from a year-over-year standpoint, it was flat with last year with a net negative of $11 million. And that is actually, if you think about where we were quarter-over-quarter, that's an $8 million incremental net negative quarter-over-quarter. So you can see that kind of in our growth rates and the impact as you look at it quarter-over-quarter. As we think about Q4 and the rest of the year, I'm expecting it still to be a net negative impact in Q4, Matt, but slightly less than what we saw. Slightly less than the $11 million in Q3, which would mean that the full year is still a positive, but a lower positive than we saw in fiscal 2022. Thank you for your question. The next question is from the line of Derrick Wood with TD Cowen. Your line is now open. Great, thanks. Maybe Steve, just would be helpful to get an update on your newer partner efforts, how those are tracking, where you see kind of new channels developing through, you know, over the next 12-18 months, whether it's SIs or hyperscalers or anything to call out. Yeah, thanks, Derrick. I think I'm really happy with how our partner ecosystem is continuing to develop. I mentioned in my prepared remarks that, you know, we saw great growth in that partner ecosystem, both from, you know, a consulting, an SI partner, but also from an ISV perspective. But also regional partners are starting to come into play as well. And then it's great that our strategic partnerships with the likes of Dell are starting to drive business for us as well. New logo business is being driven from an on-prem perspective that enables us to offer a true hybrid cloud capability. We had lots of partners join us at our Teradata Possible events during Q3. Some great attendance and great interest in terms of the solutions that are being deployed on top of the Teradata system. And all of those partners are clearly interested in, you know, utilizing that wealth of data, which is in the Teradata ecosystem, to fuel all of these new analytics use cases and AI use cases as we move forward. So I think we're very, very happy with that and how the partner ecosystem continues to evolve. Great, thanks. And either for Steve or Claire, just was hoping to touch on the, kind of performance by geos. I know there's different dynamics with cloud and on-prem and migration shifting, but Americas up 11%, EMEA up 3%, APAC down 8%. How would you just kind of characterize the, the puts and takes across the major geos this quarter? Yeah. So, I'll start, and then I'll let Steve come in if he has anything to add at the end. So to your point, we saw in constant currency strong growth in the Americas of 11% in the quarter. EMEA is also doing well. We're seeing good traction in EMEA, both especially in the cloud area, and we saw a 3% growth in constant currency in the quarter. APJ did decline. As we've mentioned before, we have been winding down our operations in China, and so actually all of that negative growth impact is being driven by China. If you look at it without China, they were actually flat in constant currency in the quarter. So we're seeing a little bit less traction from a cloud standpoint in some Asia countries, but areas like Australia and some of those countries are also doing particularly well. So we are very pleased with the mix that we've got across all of the three regions. However, we are seeing an APJ that impacts from China in the quarter and in fiscal 2023. It's not material for the total company. It just shows up when we look at the APJ results. I don't know, Steve, if you just want to add anything else in terms of overall regional trends? Yeah, I think good, consistent execution across all of the geographies and across all industries. Just adding on to that point from a China perspective, we've taken all of the actions there. It's factored in all of our guidance. So, you know, we've taken those difficult decisions and enabled us to focus on those strategic cloud-based revenue streams in, in those markets as we move forward. We've got a great leadership team in place from an international perspective, and we're seeing really good execution across both the Americas and, and international from an execution perspective. Thank you for your question. The next question is from the line of Tyler Radke with Citi. Your line is now open. Yeah, thanks for taking the question. For Claire or Steve, just starting off on the ARR performance in the quarter, I guess the sequential growth of $1 million quarter- over- quarter, how much was incremental currency a headwind to the reported number, relative to your last guidance? And then secondly, it did look like a pretty steep decline in maintenance and software upgrade rights as well as subscription did tick down. So is it fair to say that the bulk of the cloud sequential growth came from migrations from those ARR basis? Thanks. Yeah, Tyler, thanks so much for your question. So to your point, from a quarter-over-quarter standpoint, we did actually see a $13 million negative impact from currency. So to your point, it looks like we only grew total ARR by $1, but that was actually $14 million in terms of constant currency and some of that headwind because ARR is down from a currency standpoint at the end of the quarter, you know, kind of the ending rate. We did see a sequential impact on currency, and that's what we're seeing as we go into Q4 as well. We're actually pleased with the mix, as Steve mentioned earlier, with the mix between migrations and expansions. It was in line with what we expected in the quarter. To your point, we are seeing software upgrade rights and maintenance decline, but that's in line with what we're expecting, and we see some of that, a lot of that being either conversions to a subscription or conversions straight into the cloud. So we didn't get any surprises in Q3, and we're happy with how it looks for Q4, but we are seeing those currency headwinds at the end of Q3 and moving into Q4 from an ARR standpoint. Okay, super clear. It sounds like, you know, you're expressing a lot of confidence in 2025 targets, which is great to see. I guess just how should we think about kind of the linearity or, you know, the path to 2025 from 2023? Is it... Should it kind of follow a straight line path in terms of cloud growth and, you know, free cash flow or anything to call out just in terms of, you know, incremental on 2024 versus 2025? So, yeah, Tyler, we do have good confidence in the goals that we previously laid out for 2025. And we're not in a position to give guidance for 2024 at this point, but by definition, we will see growth as we go from 2023 to 2024 to 2025. So yes, we can model in growth naturally in 2024, but we're not giving guidance at this point, and I'll come back to you next quarter with obviously all of the details on that. But I think I'd just reiterate by saying good confidence in the goals tat we set for 2025. Thank you for your question. There are no further questions at this time. I will now turn the call back over to Steve McMillan for his final remarks. Thank you, and thanks, everyone, for joining us today. We are really pleased with our ongoing momentum and our cloud growth. We remain committed to our strategy and are confident in driving that differentiated value for our customers and a return to our shareholders. We look forward to speaking again after Q4 and hope you all have a great year-end. Thank you very much. This concludes today's conference call. You may now disconnect your line.