teradata 2018 analyst day · strategic imperatives. relentlessly focus on consumption. pivot...

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Teradata 2018 Analyst Day

December 12, 2018

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Safe-Harbor Statement Statements in this presentation and remarks and responses made

in connection with this presentation include forward-looking statements that are based on current expectations and assumptions. These forward-looking statements include statements with respect to Teradata’s future plans, expectations, beliefs, prospects and intentions and are subject to a number of risks and uncertainties that could affect our future results and could cause actual results to differ materially from those expressed in such statements.

A detailed discussion of these risks and uncertainties is contained in Teradata’s U.S. Securities and Exchange Commission (SEC) filings, including the company’s most recent reports on Form 10-K and Form 10-Q, particularly under the heading “Risk Factors.” Copies of these filings are available online from the SEC or the company’s investor page at: http://investor.teradata.com/financial-performance/sec-filings.

All information set forth in this presentation and related commentary is current as of December 12, 2018. Teradata undertakes no duty to update any statement in light of new information or future events.

Certain non-GAAP financial information regarding operating results is included with this presentation and may be discussed during the remarks and responses made in connection with this presentation to supplement Teradata’s consolidated financial statements presented on a GAAP basis. Reconciliations of the differences between GAAP and non-GAAP financial measures are available on our investor page at http://investor.teradata.com/financial-performance/historical-non-gaap-measures.

We believe that certain non-GAAP financial information (such as Teradata’s results excluding, among other things, stock compensation expense and other special items, revenue on a constant currency basis, and free cash flow) is helpful in understanding our past financial performance and future results. We believe that providing these non-GAAP measures in addition to the related GAAP measures provides investors with greater transparency to the information used by management in its financial and operational decision-making and allows investors to see our results as management does.

This non-GAAP financial information is not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with Teradata’s consolidated financial statements prepared in accordance with GAAP.

Non-GAAP Financial Disclosures

http://investor.teradata.com/financial-performance/sec-filings/default.aspx

http://investor.teradata.com/financial-performance/historical-non-gaap-measures

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Agenda• CEO Overview Vic Lund, President & CEO

• Strategy Update Oliver Ratzesberger, COO

• Teradata Vantage Reema Poddar, EVP, Product & Technology

• Customers’ Experience Stephen Brobst, CTO

- Break -

• Financial Roadmap Mark Culhane, EVP & CFO

• Recap & Summary Vic Lund, President &CEO

• Q & A

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CEO OverviewVic LundPresident & Chief Executive Officer

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Strategy UpdateOliver RatzesbergerChief Operating Officer

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RECENT CONVERSATION

Large US Healthcare company 5000 data silos1000 headcount Billions in annual spend

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THE CURRENT LANDSCAPE

The reality is our customers are spending Billions in technology, people and infrastructure.

of enterprise decision-makers say analytics technology is too complex

Say employees don’t have access to the data they need to be efficient at their job.

74%

79%

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THE SOLUTION

Leverage 100% of the data to uncover real-time intelligence, at scale. We enable companies to rise above the complexity, cost and inadequacy of today’s analytics landscape, finding answers to the toughest challenges.

We call thisPervasive Data Intelligence.And it’s the new standard for our industry.

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OUR STRATEGIC FOCUS:

Rise above the complexity, cost and inadequacy of today’s analytics landscape to deliver Pervasive Data Intelligence to our top opportunities.

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WHERE WE PLAY: THE TARGET

Our top opportunities aremegadata companies.

The world’s most demanding large-scale users of data, leveraging data as a secret weapon for their business

They demand tightly integrated solutions that can accommodate massive scale and speed

And deployed across secure, hybrid-cloudarchitectures

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WHERE WE PLAY: THE TARGET

Our top opportunities aremegadata companies.

©2018 Teradata

This represents a 10X opportunity, $20B TAM for Teradata within our customer base.

12TERADATA CONFIDENTIAL

Which is why our growth will come from aggressively growing wallet share and market share with megadata companies

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Business Leaders & Analysts IT Leaders and Developers

Seamless Connections to Internal Ecosystem

Network of Experts for All Service Needs

Robust Enterprise Security

QA & Sandbox tools to Accelerate Modeling

Automated Data Ingestion & Integration

Business Outcomes (e.g. Customer Analytics)

Winning User Experience (UX)

Easy-to-Use Platform that “Just Works”

Frequent Updates with New Analytic Functionality

Wide Ecosystem of ‘Best-in-Breed’ Apps

Shift to more as-a-service offering

14 ©2018 Teradata

Megadata companies face unique challenges of cost and complexity.

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Megadata companies face unique challenges of cost and complexity.

Considerable expense to maintain and manage the complexity

Siloed, conflicting and duplicative solutions

Lack of operational analytic focus

The need to deploy across heterogeneous environments

Intensifying pressure for results

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Teradata Vantage not only solves these problems, it resets the bar for the entire industry.Connective tissue for ecosystem simplificationTakes risk out of decisionsDelivers massive scale and integration

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TERADATAVANTAGE

THE PLATFORM FORPERVASIVE DATA INTELLIGENCE

FUNCTIONS & ENGINES

TOOLS & LANGUAGES

INTEGRATED DATASETS

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TeradataEverywhere

TeradataVantage

CUSTOMER NEEDS

CHOICE SIMPLICITY CONSUMPTION

Teradata reduces risk and increases choice

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Teradata strategyHOW WE WIN: STRATEGIC IMPERATIVES

Relentlessly focus on consumption

Pivot towards as-a-service

Transform our go-to-market & brand

Radically simplify

Deliver operational excellence

Focus entire company on ARR growth

Focus on customer user experience, easy to consume

Shift from consulting first to as-a-service first

Improve efficiency and execution across the organization

Reposition Teradata in our customers

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OUR MISSION:

We transform how businesses work and people live through the power of data.

We dig deep and aim high.

We raise up our customers and our world.

We rise as one.

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Teradata VantageReema PoddarEVP, Product & Technology

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Teradata is the hybrid cloud analytics software provider that leverages 100% of the data to uncover real-time intelligence at scale

We enable companies to rise above the complexity, cost and inadequacy of today’s analytics landscape…powering pervasive data intelligence

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NEWVantage is the single platform for pervasive data intelligence

Key Takeaways

DIFFERENTIATINGConsumption of Vantage is driven through new analytic use cases that the competition cannot support

POWERFULVantage is built on a scalable software core with decades of innovation

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Teradata Vantage

THE PLATFORM FOR PERVASIVE DATA INTELLIGENCE

FUNCTIONS & ENGINES

TOOLS &LANGUAGES

INTEGRATEDDATASETS

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Vantage is built on a high performance, scalable software core with decades of innovation

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Teradata Infrastructure

Teradata Cloud

AWS &Azure

Commodity Infrastructure

Teradata Everywhere

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Teradata Vantage

Prescriptive

Sentient

AnalyticLanguages

AnalyticData Types

Predictive

AdvancedIndexing

AdaptiveOptimizerDescriptive

Mission CriticalAvailability

QueryPerformance

LinearScalabilityReporting

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Teradata VantageEnd-To-End Analytic Process

Discover data

Access data

Prepare data

Create models

Socialize results

Deploy models

Monitor models

Analytics workflow

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VANTAGE

Teradata Vantage Simplifies the Ecosystem

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Limited number of

users

Introduce new silos into the

enterprise

Can’t handle query

complexity

“Good Enough” Is Not Good Enough

Cloud-Only Competitors

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Scales to thousands of

usersAccess data

anywhereProven to handle

the most complex queries

Teradata Vantage

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Industry Feedback

The grand plan calls for placing Teradata Vantage at the center of customers’ analytics strategies…

– Alex Woodie, Datanami

Teradata has not only made itself relevant again; it has reinvented itself and is helping companies push the boundaries of innovation.– Merv Adrian, Gartner

Teradata Vantage represents a forward-looking approach for reducing complexities of analytics.

– John O’Brien, Radiant Advisors

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NEWVantage is the single platform for pervasive data intelligence

DIFFERENTIATINGConsumption of Vantage is driven through new analytic use cases that the competition cannot support

POWERFULVantage is built on a scalable software core with decades of innovation

Summary

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Customer ExperiencesWith Teradata VantageStephen BrobstChief Technology Officer

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Predictive AnalyticsUnderstanding the future

Descriptive AnalyticsInsight into the past

Three Phases of Analytics

Prescriptive Analytics Advise on possible outcomes

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Teradata Vantage Platform

AnalyticLanguages

High Speed FabricS3 DataStorage

Cross-Engine Analytic Orchestration

SQL

Analytic Tools

Analytic Engines

Data SourcesTeradata

Data Store

QueryGrid(Data Store Access)

Que

ryG

rid(E

ngin

e A

cces

s)

AppCenter

NewSQLEngine

SparkEngine*

TensorFlowEngine*

Custom Engine*

Machine LearningEngine

GraphEngine

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.

Advanced Technology without the Risk

Customers love the Teradata Vantage platform strategy:

Customers love the Teradata Everywhere strategy:

100% portability of software functionality.

100% portability of software licenses.

Most customers are deploying a hybrid of

cloud and on-premises.

Embracing the best of commercial and

open source technologies.

Extensible to not-yet-invented engines using

service-based architecture.

Minimize duplication and movement of data. Effective bridge between IT & Data Scientists.

More than justa SQL database.

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Teradata Vantage First Release: Use Cases

Prediction Segmentation Understanding Causality

$

Context Networking Hypothesis testing

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IoT Analytics: Major Manufacturer

Multi-equipment sensor and performance data.

Log Parsers

Generalized Linear Model

Weibull analysis

Naive Bayes

Detect parts failure.

Need to understand equipment usage and behavior to prevent down time or unplanned outages across many support groups.

Isolated key indicators of performance bottlenecksthat helped remove soonto be defective equipmentfrom circulation forproactive maintenance.

Sensor data continuously ingested and analyzed for pattern changes and performance triggers.

CHALLENGE SOLUTION ANALYTICS ANSWER

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CHALLENGE SOLUTION ANALYTICS ANSWER

Multi-Channel Account Closure Detection: Global Bank

Multi-Channel data consolidation of events of interest.

Sessionize

nPath

Dynamic Time Warping Analysis

Reduce account closure incidence

Customer account closure and its impact onsatisfaction requiresconstant model tweaking.

Highly manual.

Developed a constantlyevolving toolkit to detectnew closure patterns.

New closure event patterns detected the following day.

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Multi-National Leader in the Digital Economy

Teradata Vantage with IntelliCloud and Hadoop

on top of Amazon S3 leveraging Teradata’s

Unified Data Architecture (UDA) framework using hybrid cloud and driving

30% YOY growth in TCore.

Use cases that are driving their double-digit growth rate:

Increase adoption of shipping and fulfillment services.

Focus on user experience (UX) to drive engagement and loyalty.

Focus on net promoter score (NPS) for continuous improvement.

Grow new categories still under-indexed in the marketplace.

Grow percent sales volume coming from large merchants, brands, and branded retailers.

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Lots of Other Examples…

24xSpeed up when using

Teradata Vantage capability for in-database propensity to buy scoring

on behalf of North American on-line retailer.


Teradata Vantage capability for in-database churn prediction scoring

on behalf of multi-national

logistics company.


Teradata Vantage capability for in-

database demand prediction on behalf of

North American multi-channel retailer.

These kinds of performance speed-ups allow customers to engage in advanced analyticsin a way that they could not have done without Teradata–driving value

to their bottom line and driving Tcore growth for Teradata.

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Key Takeaways

Teradata delivers a choice of the best commercial and open source analytics tools integrated with the Teradata Vantage Platform.

Teradata has evolvedfrom a Database to an Analytics Platform provider.

We enhance the data scientist user experience with a choice of industry favorite analytic tools.

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Financial Roadmap

Mark CulhaneEVP & Chief Financial Officer

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Teradata Strategy







Radicallysimplify

Pivot towardsas-a-service


Deliveroperationalexcellence

HOW WE WIN: STRATEGIC IMPERATIVES

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Radicallysimplify




Teradata StrategyHOW WE WIN: STRATEGIC IMPERATIVES

Increase

ARR&

RecurringRevenue

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• Continued shift to subscription-based transactions with goal of no perpetual deals

• Vantage expands our market opportunity, enabling increased wallet share

• Vantage only available via subscription

• Vantage is much more than a data warehouse, will price for increased value

• Sales compensation change to incentivize ARR growth beginning 1/1/2019

Drivers of ARR & Recurring Revenue Growth

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9% cc

~15% cc

ARR Growth Rate Acceleration

“Go-to-Market”incentivized to increase ARR(Jan 1, 2019)

2017 2021 TARGET2018 (E)

~11% cc

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Relentlessly focus on consumption.






Radicallysimplify





ARR&

Gross Margin

Increase

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• Vantage simplifies customers’ ecosystems and increases wallet share

• Radically simplified product offering designed to drive increased consumption

• Subscription makes it easier to buy and increase consumption

• Reduced number of platforms drives lower supply chain and support costs

• Simplified pricing will drive higher gross margins

Drivers to Simplify the Business

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Simplification Drives a Healthier BusinessRECURRING GROSS MARGIN* TOTAL GROSS MARGIN*

2018 (E) 2021 TARGET

Low 70’s%

~75%

* Non-GAAP

~50%

~65%

2018 (E) 2021 TARGET

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Radicallysimplify





Increase

Gross Margin

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• Autonomous platform, increased automation and less human labor improves margins

• Focus on megadata customers reduces costs / resources outside of target market

• Focus on higher value / margin service offerings…de-emphasize lower value / margin services

• In the future, key focus will be to provide service offerings related to Vantage

• Leverage consulting partner ecosystem

Drivers of Improved Gross Margins

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As-A-Service Drives a Healthier BusinessCONSULTING GROSS MARGIN* TOTAL GROSS MARGIN*

2018 (E) 2021 TARGET

~10%

~20%

* Non-GAAP

~50%

~65%

2018 (E) 2021 TARGET

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Radicallysimplify





Revenue&

OperatingMargin

Increase

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• Aligning “Go-to-Market” to focus on megadata companies

• Utilize “inside sales” for accounts outside target market to lower sales costs

• Rationalizing geographic footprint

• Simplification and standardization designed to reduce sales support needs / costs

• New brand positioning for pervasive data intelligence broadens market opportunity

Transform our Go-To-Market Strategy

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Radicallysimplify





Increase

Margins,EPS &FCF

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Drivers of Operating Efficiencies

• Investments to modernize and automate processes with best-in-breed technologies

• Simplify and standardize our pricing strategy and execution

• Company-wide simplification / process improvements

• Outsourced back office functions

• Consulting and recurring revenue gross margin improvement

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Operating Margin* Improvement

* Non-GAAP

12%~10%

20%-25%

2017 2018 (E)* 2021 TARGET

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EPS* expected to More than Double By 2021RECURRING

REVENUE ($B)OPERATING

MARGIN*EPS*

2017 2021 TARGET 2017 2021 TARGET 2017 2021 TARGET

$1.112% $1.35

* Non-GAAP

62Free cash flow = net cash provided by operating activities less capital expenditures for property and equipment, and additions to capitalized software. Free cash flow margin = Free cash flow / Revenue

Free Cash Flow Margin* Improvement

11%

20%-25%

* Non-GAAP

2017 2021 TARGET2018 (E)*

8%-9%

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Drivers of Our Success• Vantage enables increased wallet share of megadata customers, a significant growth

opportunity

• Subscription makes it easier to buy and increase consumption

• Realigning consulting business to focus on Vantage and megadata customers drives increased consumption, as well as higher consulting gross margin dollars

• Transforming our “Go-to-Market” team streamlines how we penetrate our market opportunity

• We don’t believe we have significant renewal risk

• Long runway of increasing ARR growth

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Targeted Key Metrics1. 100% Subscription Bookings Mix

2. ~15% ARR Growth

3. ~14% Recurring Revenue Growth

4. ~75% Recurring Revenue Gross Margin*

5. ~20% Consulting Gross Margin*

6. ~65% Gross Margin*

7. Operating Margin* 20% - 25%

8. EPS* expected to more than double from 2017

9. Free Cash Flow* equals 20% - 25% of Revenue

2021 FINANCIAL TARGETS

* Non-GAAP

teradata 2018 analyst day · strategic imperatives. relentlessly focus on consumption. pivot...

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