Q4 2021 Teradata Corp Earnings Call

$2 million growing more than 90% year over year.

We grew total reported revenue in all regions and in 2021, we achieved total revenue growth for the first time in three years.

Our disciplined focus resulted in healthy GAAP and non-GAAP profitability with $2 43.

non-GAAP earnings per share and free cash flow of more than $430 million.

We are delivering on our commitments and our transformation is on track $20 21 was proof of our momentum.

A clear emphasis on cloud paid off.

Look at our cloud momentum.

In Q4, we delivered our largest quarter ever of cloud <unk> growth at $54 million more than doubling.

We achieved in the prior year Q4.

For the full year of 2021, we delivered nearly 70% growth in new cloud customers compared to 2020.

Of course, everyone is a testament to our competitive strength in the large and growing data and analytics market.

Sailors compete well and focus on the tremendous value that our customers can achieve from using data to manage and transform their businesses.

Here's a handful of customer successes from the quarter that show the breadth over wins.

<unk> West group.

Prominent bank based in the U K is migrating as on Prem data center to vantage on AWS.

Terry data has provided data and analytic services to Natwest for many years before it's moved to the cloud the customer initially considered another platform.

One further evaluation determined Terry data offered the lowest risk lowest cost and fastest migration path accelerating its advanced analytics journey and their ability to adult pervasive data science at scale quickly and efficiently.

A fortune 500 U S insurance company migrated to vantage on AWS as it modernizes its data estate the customer utilizes vantage to interact in real time with its insurers in areas like claims data as well.

Long term goal is to develop a more personalised touch with its customers and it will leverage AWS services like Sage maker with vantage to extended analytics capabilities primary drivers for this win where the simplicity of migrating vantage to the cloud and our consumption pricing mode.

<unk>, which will facilitate the ability to charge back to the business and result in a more cost optimized environment.

California, Spain, one of the world's largest telecommunications companies is migrating its on Prem data analytics ecosystem to vantage on Google cloud.

The customer's primary decision factor with Teradata is the ability to offer the fastest and lowest risk path to the acquired.

The customer intends to take advantage of the advanced analytics capability frontage offers including integration with Google Cloud AI applications, such as voice recognition for KOL centers to speed is digital transformation journey Teradata is working with any country Si partners on this migration.

A large healthcare services company in Asia.

Initiating a data driven order to cash excellence initiative with vantage on Azure.

New carrier data customer will utilize vantage to integrate data from ERP system with data for many stand alone on Prem systems to improve its capabilities.

CPG Telecom one of Australia's largest telco providers is migrating its on Prem data center to vantage on AWS.

Customer is migrating to the cloud as it plans for the consolidation of multiple data warehouses. These following our merger and will leverage vantage on AWS initially for financial reporting with plans to add more analytical use cases business functions and users going forward TPG chose vantage.

Over snowflake and redshift.

Our U S. Fortune 500 logistics leader is migrating to vantage on Azure the customer will utilize query grid in a hybrid environment to access and connect on Prem data and its new vantage on Azure instance, supporting both legal and international customer service.

Yes.

In addition to our cloud wins, we continue to expand as well as attract new on Prem customers, a major automotive manufacturer in China, and our new Teradata account select advantage on Prem as its analytics platform for diagnostics trouble code tracking to manage component.

Failures, we work jointly with our local reseller partner on less competitive win.

Our success with both new and existing customers was the result of every element of the organization doing their part in contributing to our positioning as the connected multi cloud data platform for enterprise analytics.

A critical factor in our growth and success with customers is continually advancing our market, leading technology and our R&D teams stayed on pack and de Levered summit standing innovations in the quarter.

At the end of 2021, our innovation labs run a powerful test of our emerging cloud technology, which showcased very impressive skill capabilities in line with the data and analytics demands of today and tomorrow.

And in this test of more than 1000 nodes running on AWS over 1000 users submitted thousands of concurrent <unk>.

The test was the largest carrier data system ever in fact twice the size of our largest on prem customer today proving carry data is unparalleled enterprise scale in the cloud.

This next generation cloud native architecture brings the best of tariff data with our tremendous scale and <unk>.

Specific to the cloud.

This test demonstrates the largest enterprises can be constant that west carrier data that can not only their current workloads into the cloud at scale, but as their data and analytics grow which we all know it will carry data can scale right along with them.

Why is this important.

<unk> system, requiring no duplication of data drives down the total cost of ownership and provides the ability to get to outcomes quickly without moving data around which support the competition requires or scale of enterprise and currency is designed so that customers can have a single.

Connected data environment with the lowest total cost of ownership in the market.

In today's hyper competitive markets speed of decisions can make or break our company with the scale and analytic power our customer can bring screaming Iot data and vast amounts of customer journey quite extreme data and combine these data elements with enterprise signings.

Actual data for rapid decisions, our customers can then outcompete and their industry truly market redefining, we look forward to bringing this highly differentiated next generation cloud maintenance technology to the market.

But their years of experience, we understand what industries need to drive business outcomes and now we've updated our manufacturing data model to include capturing environmental data and spatial referencing an example of how our data model helps customers get to value faster as a new logo win at a European.

Auto manufacturer that customer has a data strategy to address digital transformation and it needed to connect segregated data silos and prepare for massive scaling of use cases for connected car and Iot data.

They realized that data needs to be integrated and organized properly to get optimal business outcomes and our manufacturing data model was a key factor and its decision to choose Teradata tier we won against both cloud native and legacy vendors.

In 2022, our investment in cloud is planned to be more than 80% of our overall R&D budget and we will keep the pace on driving innovation that our customers need to get the business outcomes. They require.

We also kept high energy around partnerships and an area. We are continuously strengthening I'll share a few recent ones.

We just announced a global partnership with Microsoft to integrate vantage with Azure strengthening our already strong business with Microsoft.

S partnership agreement reflects both companies' commitment to help customers successfully execute their cloud strategies and modernize their data analytics workloads with security reliability and elasticity at enterprise scale <unk>.

Customers have seen double digit improvements in migration speeds, when modernizing and required with vantage on azure.

We also deepened our technology integration with Google cloud integrating vantage with Tucows acquired data catalog, helping users simplified data discovery and facilitate a exploration. So they can reduce their time to analytics, we expanded our native query grid connect.

Google Big query, allowing customers to combine data and vantage with data and big query with Cree regret or intelligent data fabric that connects data across multi cloud ecosystems. We ship the query engine to the data so customers can use data not move it.

Additionally, we strengthened our capability to deploy AI applications. We have introduced a set of analytics integration components for data IQ Best integration is designed to drive greater agility for analytics and machine learning initiatives.

<unk> tend to value for joint Terry data data Iq customers.

Along with customer and partner momentum the market is taking note of our capabilities.

Terry data to clear cloud leadership positioning in two recent Gartner studies first.

<unk> was ranked the highest in categories and gardeners critical capabilities for cloud database management systems for analytical use cases.

You may hear a lot about various quite startup, let's be clear on how tariff data staked out and the application scenarios that Gartner has described as the most important.

Carrier data is number one in cloud data warehouse.

Number one in cloud logical data warehouse number one in cloud data lakes and number one in cloud operational intelligence.

We'll be glad to walk you through where our competitors poles and the line behind us.

And the second report Terry data was again named the leader in the 2021 Gartner Magic Quadrant for cloud database management systems, Gartner noted that our years of experience possession, Terry data to deliver on modern data fabric requirements and that our hybrid multi cloud approach.

These customers wherever they are on their cloud journey.

Starting a further notes our operational reliability high throughput price predictability and financial governance.

That's third party recognition spotlights, our ability to meet the data analytic needs for both today and tomorrow of the worlds largest and most demanding customers.

Obviously pleased that our differentiation is validated we know the unparalleled capabilities of our cloud technology and our ability to de lever the business outcomes customers need far Shane recent noisy market entrants and these reports back that up.

Given our bias for customer obsession.

Also great to receive recognition of the highest customer satisfaction among data warehouse vendors by the European based analyst firm the information difference.

As we continue our transformation, we continuously look at opportunities to optimize our execution and accelerate.

And I'm pleased to share a couple of key executive announcements.

We recently created a new integrated global customer services organization designed to drive optimal customer experiences maximize customer value and achieve greater synergies to accelerate growth, especially in the cloud.

Combined new groups is all about customer obsession and de levering the capabilities of a modern cloud company.

We will work to exceed customer expectations every step of the way the organization combines our prior customer success and customer support and services functions and tightly integrated team to maximize impact and value across all customer support areas, we appointed Mike Hutchinson.

As chief customer officer to lead this new team.

Mike brings a long history of dedication to customer service and driving outstanding customer experiences.

We also added an expanding new CMO, we have felt far reaching brand and have brought and Jacqueline woods and accomplished transformational marketing leader to modernize the brand and make it even more relevant and known to our target market.

Looking ahead, we will continue to sharpen our expertise as a cloud leader and expand our marketing with partners as we continue deepening relationships with customers, adding new logos and accelerating growth.

Before I turn it over to Claire I would like to touch on corporate citizenship part of the very fiber of Teradata and a core tenet of how we do business.

Our commitment to environmental stewardship is one arena, where we are stepping up our ambition is to have a target of net zero carbon emissions and last year, we increased our targets on reducing greenhouse gas emissions by over 100%.

It was great to again be included in the Dow Jones sustainability indices for both the World and North America and fight the 12th consecutive year for the North America Index charity to scored in the 90 percentile of companies and the global software industry.

Our commitment to inclusion is second to none we truly believe you get the best outcomes from diverse perspectives and we were really pleased that Teradata has just and the designation as a best place to work for LGBTQ plus employees in the corporate equality index of the human <unk>.

Foundation, scoring a perfect 100 out of 100.

Our purpose is to transform how businesses work and people live through the power of data and a recent example of our purpose in action our talented data scientists supported the northwestern University Transportation Center and developing an interactive dashboard of COVID-19 vaccine distribution.

Across the U S. The center needed a platform to ingest real pain data, our queries and statistical summaries of vessels Badal transportation issue and Terry data met this challenge with our technology and our expertise.

We have been committed to ESG for many years and we will continue to strengthen our efforts.

We actively engage with our people in support of our culture could be bring their genuine authentic sales to work.

We believe it's our responsibility to be a good steward of the environment promote day NII and anti racism.

A positive force in the communities, where we live and work and that ethically and everything we do.

Being a responsible corporate citizen is a crucial part of our resource. It's the right thing to do for the world and it makes teradata, a place where people really want to work.

I am incredibly proud of our team for transforming carrier data into the cloud leader it is expanding our customer base and driving profitable growth.

To get to where we are every part of the organization contributed and despite the seemingly endless our people from the pandemic are people kept their focus and executed well.

We are carrying our momentum into fiscal 2022.

We're increasing our outlook for <unk> growth to approximately 80% up from the preliminary estimate of at least 70%, which we provided at our Investor day in September 2021.

And we are also raising our EPS outlook, given our ability to deliver profitable growth.

We are increasing our return of capital to shareholders for 2022, given our strong balance sheet and projections of cash generation.

As we look forward to 2022, our strategy is exactly what is needed by the world's leading enterprises, our target market is large and growing our data analytics technology.

Unmatched for delivering the best business outcomes from start to enterprise scale, and we will remain customer obsessed as we acquire new logos and expand our customers.

<unk> future is bright.

Now I'll turn the call to clear.

Thank you, Steve and good afternoon, everyone.

I'm very pleased with our strong finish to 2021.

Teradata delivered on what we said we would do executing upon our strategy to deliver profitable growth and increase shareholder value.

Some fourth quarter highlights included.

Public cloud era priced above market at 91% versus prior year and 92% in constant currency.

Recurring revenue of $364 million, which is a greater 5% versus prior year and 6% in constant currency.

non-GAAP earnings per share of <unk> 57.

Greg of 19 versus prior year and above the midpoint of our previous outlook.

And free cash flow of $85 million.

Dosing in full year free cash flow of $432 million.

<unk>.

As Steve mentioned these highlights contributed to 2021 without meeting or exceeding all elements of the annual outlook we provided.

Our actions continue to demonstrate the power of data is delivering value to shareholders.

Mining operational execution and financial fundamentals that result in quality revenue growth.

Increasing GAAP and non-GAAP profitability and durable streams of free cash flow.

Let's dig into the results starting with IRR.

Public had IRR with $210 million and $96 million increase from the prior year and $54 million increase from the prior quarter.

More than half of the cloud AOR growth in the fourth quarter came from customers migrating to vantage in the cloud.

<unk> the positive migration pattern seen throughout the year.

Customers continue to choose on page four that journeys to the cloud.

Tara Davies enterprise reliability and price performance clearly highlighted by industry analysts as well as supported by a net cloud customer growth rate that has accelerated each quarter throughout 2021.

In addition to record cloud migration activity.

Cloud net expansion rate continued to be robust and <unk> of 130%.

We added more peso new customer logos in the fourth quarter in both cloud and on premises than any other quarter in several years.

<unk> the positive upward trend seen since the beginning of 2021.

Tasteful new customers grew in the double digits across all three regions and then the energy financial services government and health care industry to name a few key vehicles.

While our company strategy is cloud fast new on premises <unk>, demonstrating the significant value we provide to many customers in hybrid environment.

Can create future opportunities for cloud migration and expansion.

Casual era with one $490 billion at the end of 2021.

Representing annual deposit growth of 5% and 7% in constant currency in line with our annual outlook.

Okay.

<unk> is comprised of $202 million in.

In public cloud era eight.

$898 million of subscription.

This is an 8% increase from last year's restated amount of $829 million.

Our on premises subscription business continues to grow ahead of market growth rate.

Demonstrating that existing and new customers use para data for its recognized combination of unparalleled technology at scale.

And the best price performance in the industry.

We also saw a $319 million.

<unk> to maintenance and software upgrade rights, which is a decrease of 20% year over year and in line with our strategy as we continue to convert customers to on premise subscription and to the cloud.

Our results were primarily driven by increasing partner involvement on existing customer migration and new accounts and deeper participation by cloud, especially on a campaign.

We are encouraged by the operational discipline and rigor demonstrated and we intend to continue this momentum into 2020 days to drive even more migration expansion and new logo acquisition.

Turning to revenue.

This solid execution contributed to a glaring subscription based recurring revenues.

In the fourth quarter recurring revenue grew 5% versus prior year and 6% in constant currency driven by primarily by a higher mix.

Recurring revenue was 77% as a percentage of title revenues.

In the fourth quarter, the net impact from upfront Mackenzie revenue arrangements with approximately a net negative $6 million in line with our expectations.

This negative amount in future revenue pulled into the first three quarters of the year, partially offset by upfront recurring revenues recognized in the fourth quarter.

Related to the video or expansion of alternative sales with existing customers.

For the full year reported recurring revenue growth of 12% year over year and 11% in constant currency.

Aligned with our annual outlook.

That was approximately two 5% of positive impact from the net positive $30 million of upfront revenue in 2021.

Both petrol and consulting revenue were lower year over year, given the strategic shift to a higher margin prescription model and greater collaboration with partners that drive higher adoption and consumption of Teradata.

Fourth quarter total revenue was $475 million.

That's the way you present declined year over year, and a 2% decline in constant currency.

The year over year decline is primarily due to the strategic shift in our consulting business.

In 2021 title revenue growth year, I began with a 4% and 3% in constant currency in line with our annual outlook.

That was approximately 1% of net positive impact from upfront revenue in 2021.

Moving to profitability, we had a strong year of profit generation and fourth quarter was no different.

We reported $300 million in gross profit a fourth quarter gross margin of 63, 2%.

The primary drivers of our healthy gross profit dollar generation continues to be a higher mix of recurring revenue as well as improved margins versus the prior year.

This was partially offset by the modest negative impact about 40 basis points from upfront revenue arrangements pulled forward from the fourth quarter into the first three quarters of 2021.

Fourth quarter operating profit was $90 million on operating margin of 18, 9%.

Operating profit was driven by the combination of a lower cost structure from <unk> <unk>.

Continued cost discipline during 2021, and lower variable compensation, partially offset by investments in go to market and R&D.

Operating expenses were flat sequentially and down 6% year over year.

Fourth quarter earnings per share of 57 beat our outlook by <unk> at.

At the midpoint.

Of the 30 <unk>.

Approximately 17%.

Like to activity that benefited the quarter.

Approximately 8% primarily relate annual variable compensation adjustments and differences between planned and actual tax rate.

The remaining five deliver a recurring benefit to our profitability due to structural improvement.

A strengthening business model gives us the opportunity to continue reinvesting in our business.

I will share more details regarding the go to market and R&D investments we are planning for this year.

Later in my remarks.

Turning to free cash flow and capital allocation.

We had a strong generation of free cash flow in 2021, or 400 and packaging million dollars above our outlook of at least $400 million.

In the fourth quarter free cash flow was $85 million driven.

Driven by strong profitability.

As expected the increase in days sales outstanding was primarily driven by growth in deferred revenue that.

That was also a decrease in days payable outstanding debt was primarily driven by timing.

We continue to take advantage of our strong balance sheet.

I am back stock to offset dilution.

For the full year, we repurchased five 8 million shares or approximately $244 million in title.

This equates to a return to shareholders, a 56% of 2021 free cash flow.

Systems with our commitment of returning at least 50%.

As I shared with you at our Investor Day This past September .

A disciplined approach to capital allocation investing in our business to drive innovation and scale and returning capital to shareholders.

We are able to do so because we are growing revenues, increasing profitability and generating module will free cash flow.

Given our projections for healthy cash generation, along with our strong balance sheet, we plan to meaningfully exceed our capital return target in 2022.

To date in fiscal 2022, we have already purchased $50 million of sheds.

And today, we intend to enter into a $250 million accelerated share repurchase program that we plan to enter into in the first quarter of the year.

The ASR is a demonstration of our confidence in and commitment to our strategic roadmap.

With the actions I, just described and based on our current 2022 free cash flow outlook of approximately $400 million.

We are expecting to be well north of our annual target of returning at least 50% of free cash flow.

Additionally, we still have flexibility to buy back shares when we see opportunities to retire shares.

Traffic levels.

I'd like to make some comments to set context for the 2022 outlet.

Guarding upfront with having revenues and the impact on EPS.

Modeling and less positive impact in 2020 case than the approximate <unk> <unk> benefit received in 2021.

Anticipate sustained quarterly shape of net upfront recurring revenue as we experienced in 2021.

Regarding gross margin we expect.

Following business activities to drive an approximate 200 basis points decline again.

First a lower recurring revenue gross margin coming from a higher mix of cloud revenue forecast in 2022 at a gross margin rate similar to 2021.

In addition, we forecast less of a positive impact from upfront repairing revenue.

Second we are investing in activities that continue to drive increased adoption and consumption of vantage and creating greater efficiencies with cloud service providers offset by enhancements to our consumption pricing model.

Lastly, makes assumptions related to our consulting and perpetual businesses.

Data from what we shared at Investor Day.

In line with our continued strategic focus on higher value at.

We forecast a low double digit decline year over year in 2022 consulting revenue and expect to maintain the 17% margin rate we achieved in 2021.

Aligned with our strategy perpetual revenue continues to decline and we anticipate lower margin rates compared to 2021.

Moving to investment impacting operating margin.

As we shared at Investor Day, we are accelerating innovation we.

We are increasing our planned cloud R&D spend to be more than 80% of the title R&D budget passes over 70% last year.

We expect our investments will extend our differentiation in areas such as intelligent multi cloud clearly fabric.

In database analytics and the most open and connected platform at enterprise scale.

We are also accelerating okay to market investments in our cloud and customer success teams to drive price and lifetime value with me and existing customers.

Overall, we expect these investments to be an approximate <unk> <unk> impact on 2022 earnings per share.

Regarding outlook philosophy, beginning in 2020 came the outlook for cloud era.

Provided annually.

This better aligns with how we manage the business is more closely aligned with the company long term value creation.

And avoid the quarterly volatility due to the Lumpiness created by the timing of the purchasing decisions of our large enterprise customers.

We will continue to report out on cloud <unk> each quarter.

Provide data and commentary that clearly demonstrates progress towards our annual outlook goes.

Our outlet practices for the other metrics we share remains the same.

With that let me provide you with the linearity, we anticipate for 2022.

We expect cloud entitled AOR growth to accelerate sequentially throughout the year.

In total revenue and recurring revenue to generally follow historical linearity patterns.

Now for an update on our 2022 annual outlook.

Public cloud era is anticipated to grow approximately 80% year over year from the ending 2021 balance of $210 million.

This is a higher growth rate than the estimate of at least 70% growth year over year provided at Investor day.

Casual Ara is projected to grow in the mid to high single digit percentage by each year I began.

Total recurring revenue is expected to grow in the low to mid single digit percentage range, but I think 2021.

Total revenue is anticipated to be flat to low single digit percentage growth year over year.

non-GAAP earnings per diluted share is projected to be in the range of $1 <unk> to $1 92.

It is a raise from the range of $1 60.

Two $1 17 provided at Investor day.

And free cash flow is expected to be approximately $400 million.

For the first quarter of 2020, we anticipate non-GAAP earnings per diluted share to be in the range of 63 67.

We project, our non-GAAP tax rate to be approximately 28% in the first quarter and between 23 and 24% for the full year.

We also forecast the weighted average shares outstanding to be approximately 109 million shares in the fourth quarter and for the full year.

I'd like to conclude by restating that we are excited about what we achieved in 2021.

We reaffirm our long term targets and we have great conviction that we're on the path to achieve the profitable growth trajectory and shareholder value creation.

Lines at our Investor day.

With that operator, we are ready to take questions. Thank you.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

We'll pause for just a moment to compile the Q&A rustin.

In the interest of giving everyone an opportunity. We appreciate that you limit yourself to one question.

The first question is from the line of <unk> Mohan with Bank of America. You May proceed.

Yes. Thank you Steve Your guide for 'twenty, two public cloud IRR puts you back on track actually slightly ahead of your analyst day targets.

What is giving you this confidence and how much impact business garko ranking in cloud dbms for analytical use cases, having on purchasing decisions.

Claire.

I know youre, not providing quarterly guidance here, but.

Should we think that we should see the incremental cloud IRR in each quarter in 2020 to be greater than the Incrementals achieved in 2021. Thank you so much.

Hey, Onesie. Thank you for the question we are absolutely confident in the guidance that we've given for FY 'twenty. Two one is the our fantastic results in Q4, both in terms of the growth of number of customers, but also our quality or our growth will be double what we did in the prior Q4.

It's just a testimony that we've got the right strategy that we've got the number one technology in the world. Thanks for mentioning that Gartner report and then we are growing our overall customers in the ER or in the cloud I think that Gartner report I'll use the voice of Gartner here anybody that has put out an RFP for a cloud data.

Platform should have teradata as a response to that RFP.

That RFP and so we are extremely confident that that is going to have a positive impact for us in the market and help to continue to grow our business.

We're delighted to up the guidance that we provided the aim against some of our key metrics.

Hi, guys when they get off the name and as Steve said, we are very excited about that raised guide with regards to our cloud era and on track to be delivering how long term targets as we laid out at Investor day with regards to the quarterly seasonality I'd just reiterate the comment that.

I made in my prepared remarks in the sense that we anticipate to see an acceleration as we continue to.

To make the most of that momentum and continue throughout 2022.

Thanks, so much.

Thank you Mr Mohan.

The next question is from the line of Chad Bennett with Craig Hallum. You May proceed.

Great. Thanks for taking my questions kudos on the quarter cloud <unk> was.

Was phenomenal and.

Free cash flow in generation and returning to shareholders was great also so a couple of questions for me first one for Steve just want to elaborate or drill down into how.

You talked about I think.

Around kind of a test case in single system, no duplication of data without moving data around pricing and currency everything around would you'd mentioned before around query grid and workload management and <unk> and you guys as unique data models.

I just wanted to kind of get your sense kind of awareness of that out in the market today, maybe versus two to three quarters ago.

In our checks with kind of your competitors I would say.

It's a very different value proposition I mean.

Lot of the kind of value.

<unk> now is bringing everything into the data cloud so to speak.

Having a data marketplace to pull data around and move data around and effectively in my words keep that meter running and growing.

By moving data around just kind of a long winded question, but kind of where do you think we are in the awareness of <unk>.

Kind of query optimization and workload optimization in your real ROI pitch.

Hey, Chad. Thank you very much for the question I think.

Gardner made some interesting points one of the reasons that terra data with <unk>.

Leader from a strategic vision perspective, and that Gartner report was because of our point of view.

In terms of creating data fabrics and state organizations, but more importantly, creating a query fabric that said some toll previewed data fabric. So you can get the best out of your data no matter, where it is and then when you combine that with the power of the test that we just executed.

Nodes running in AWS.

More than twice the size of our largest on prem customer and you know that we have the biggest customers in the world running on a terabyte of systems on Prem.

It's just a fantastic result awareness and our customer base and the marketplace. We are growing that awareness every single day. Our sales teams are really really excited about not only what the product can do today and how we can deliver for customers today, but also the fact that these new <unk>.

Acknowledges and her approach.

<unk> opens up the target addressable market for us as we can process more data and get better outcomes for our customers. So we're really excited about the opportunity ahead.

Got it maybe one quick follow up if I could for clear or Steve just on the increase in the public cloud.

Guide for the year, I guess, just kind of give us a sense of.

What's driving that.

Think about the box to the business as it accelerated migrations just in terms of confidence in vantage of being the kind of cloud solution for your base is it net expansion acceleration.

Or is it just kind of the new logo bucket incrementally, adding more is there any color there on what drove that upside then I'll hop off thanks.

Thanks, Chad I would say all of the above we are.

Exiting 2021 with strong momentum as you can see and and we are very confident about the migration and the pipeline that we see as we look forward to 2022, we still have a very robust expansion rate that we expect to continue above 130% and as that new logo acquisition.

<unk> ramp up.

<unk> also excited about the opportunities that that they will bring so I would say lots of momentum and that gives us increased confidence for that cloud guidance for 2022 and beyond.

Yeah.

Thank you Lee we can meet their dynamic and data platform.

Yes.

The next question is from the line of Tyler Radke Citi. You May proceed.

Hey, good afternoon, everybody. Thanks for taking my question.

Clearly really strong sequential growth in public cloud.

I think earlier in the year you talked about.

The guidance of over 100% you came in just below that.

As we think about the performance is the right way to think about that delta being that some deals slipped into 2022.

Just help US bridge kind of the original guide versus what you reported and then if I could sneak a follow up for Claire just to understand your comments on seasonality and accelerating <unk> growth should we expect <unk> growth to accelerate on a constant currency basis compared to the 7% that.

You reported here in Q4 or just help us understand.

The starting point.

For your acceleration comments. Thank you.

Hey, Thanks, Tyler so just with respect to two.

2022 guidance for cloud they are really pleased with Q4 $54 million more than double what we achieved in the prior Q4.

Fantastic execution, there from the team.

We are confident in the long term targets that we set out at the analyst Investor day in terms of again to over $1 billion by FY 2025.

The reason that we up our quality or our growth percentage for next year is because we are really confident in the business, we're seeing fantastic traction within our customer base and in new logo acquisition, so exciting time <unk> data.

Yes, and just in terms of quarterly seasonality that tide I guess, what we're anticipating.

They are similar seasonality that we saw in 2021, but with an acceleration as we move forward into 2020 came.

Thank you.

Thank you Mr Recchi.

Again, please limit yourself to one question.

The next question is from the line of Erik Woodring with Morgan Stanley You May proceed.

Hey, good evening guys congrats on the quarter.

Your guidance for.

Total recurring revenue would imply that non cloud IRR declines again next year. So just curious any incremental color you can share.

The underlying moving pieces is that all software maintenance of sulfur rates more than offsetting subscription growth is there any deviation in subscription growth that we should be thinking about for the year. Thanks.

With regards to non cat as a high I think that no. Thank you for joining us today gets a lot because you guys already.

So with regards to non cloud era, we are seeing the impact.

Of migration, because we continue to migrate to the cloud, but with Toyo quietly OSA do you see the declines as kind of the strategy and the software software upgrades and maintenance.

Thank you Mr <unk>.

The next question is from the line of Derrick Wood with Cowen and company you May proceed.

Great.

Thanks for taking my question nice job on a solid Q4.

Where are you you had mentioned that a big driver of the on Prem to cloud migration strength was coming from more partner involvement.

So I guess the.

For one of you guys either one of you guys, but can you just talk about.

Who are some of the more strategic partners that you're working with including both <unk> and Hyperscale or and I know you guys recently announced a new go to market agreement with AWS.

Anything to highlight there in terms of early traction.

Thank you.

Hey, Derek Thanks for the question.

Yes, a couple of points, we're seeing fantastic traction with our partners, especially as we strategically realigning the company so they're working with their size as a key part of our go to market motion. The recent partnership that we formalized with Accenture is a key testimony to that but also the work we're doing with Deloitte and no more.

Recently with the likes of Kendall as well as some of the large and DNS eyes are all governors.

An opportunity aperture of this increase in every single day I.

Really excited by the most recent partnership we announced with Microsoft.

Softer interested in working with Teradata, because they know that we've got millions of EPC use petabytes of data that's on Prem and all of the cloud Hyperscale is want to work with us to migrate that data and to their clouds and get those workloads to start to expand with Terra data and we've got the right technology and the right strategy.

Enable our customers our joint customers to do that so that is really part of our strategy to continue to.

Execute and expand our go to market motion as we move forward to a really good opportunity for us.

Thank you.

Thank you Mr Wood.

The next question is from the line of Matt Hedberg with RBC capital markets. You May proceed.

Hey, guys. Thanks for taking my question.

I guess for either of you I think Steve you May have mentioned, 70% growth in new cloud customers.

Versus 2020, which is great to hear I'm wondering.

Is that a number of cloud customers continues to grow is that a kpis.

That we might we might start to see maybe on a quarterly or annual basis, where we see the actual number of customers because obviously I think historically there wasn't a huge focus on new customers, but.

Clearly it seems like there's been a lot of success on that.

<unk> 2000 <unk>.

Yes, thanks for the question.

It's certainly a key metric in terms of how do we execute and as we add more and more customers and it was the number of customers.

I was referring to they are then we have the opportunity to continuously add more and more value to those customers and expand our used cases in the cloud. So it is a key metric is something that we tried very very closely in terms of operational execution is something thats very important to our new logo motion I think we've talked about that before it really.

Kicked off in the second half of last year delighted to see some of the progress with that adding new logos, both and in the cloud and on Prem you see in that motion getting up to double digits I think as we look at the level of disclosure that we have we started introducing some new metrics in terms of our net.

Expansion rate at our analyst Investor day, and we're continually evaluating how we can give more insight into our execution as we move forward, but thanks for the question. Thanks, Mike.

Okay.

Thank you Mr Hedberg.

The next question is from the line of Raimo <unk> with Barclays. You May proceed.

Hey, Congrats from me as well.

Going back to the Gartner report you talked quite a bit about Steve.

It seemed to be like what are you doing in terms of closing that information with customers. Because you clearly like <unk> Theta is number one oracle number to ibm's free in a lot of them in S&P and then the cloud guys much much lower today seems to be a disconnect between what.

<unk>.

How good your ASO product versus kind of where customers are buying at the moment. If I look at the numbers like can you talk a little bit of what you can do Darren good afternoon initiatives. Thank you.

Thanks, Thanks, Raimo, it's a great question and something that we're continuously focused on.

Enabling our sales teams on a global basis to take our cloud message and acquired value proposition to our customers ensuring that our customers know that we are the fastest lease dressed lease cost path to the cloud is incredibly important.

Spoke in my prepared remarks about recruiting recruiting a new chief marketing officer, Jacqueline Woodson, we're incredibly excited to have Jackson on the team. She is a transformational marketing leader that we know will make a difference in terms of how we get our value proposition to the marketplace, but to your point, we plan from an execution capability in a day.

To date basis to get our customer success teams and their sales teams to utilize that Gartner report, where just from a data warehouse perspective, as you said para data number one data Brexit number 10, and snowflakes number 11 from.

From a data weight perspective, Terry data number one in data Brexit number five and Snowflake pendant number 12, those are the kind of key facts that we need to get out into the marketplace and that's exactly what we're going to do I think the future is really bright for Terry data as we do that.

Okay. Thank you.

Thank you Mr lifestyle.

The next question is from the line of Pat Brown Walgreens with JMP Securities You May proceed.

Oh, great. Thank you and let me add my congratulations.

While you've been talking I've had.

And investors say, hey, wait a minute sometimes the hyperscale as are their partners and then I thought I heard them list the hyperscale.

Competitors in some of these deals too so I thought it might be a good opportunity for you to drill down on that a little bit and help people understand.

Hey, Thanks very much for the question I think koa petition is it just the nature of the industry.

What the hyperscale or as they're interested then at the end of the day is getting work loads and usage and data and compute resources and to their clouds and they see pair of data has been a fantastic partner with to enable them to achieve that the Microsoft partnership that we just announced in terms of joint sales and joint marketing activities.

Building on the AWS strategic collaboration agreement that we have ensures that that level of call protection is directed to the best possible results for our customers and so the hyperscale or as an para data.

<unk> believe that better together.

We'll answer for our customers, but not only that we are truly agnostic when it comes to a client perspective, we create that intelligent multi cloud fabric, which enables query execution across all clouds and back into on Prem few other providers, especially cloud native solutions can provide that we are.

The best solution for that multi cloud data platform for enterprise analytics, and Thats, where we really sharing from a differentiation perspective.

Okay. Thank you.

Thanks Pat.

Thank you Mr loan arenas.

Next question is from the line of Phil Winslow with Credit Suisse. You May proceed.

Hey, Thanks for taking my question.

Just wanted to focus on on net new <unk>, if I if I take your analyst day guidance of 70% growth off of a 100 versus what you just reported 91% growth in 80% video.

Growth outside it gets me there called $364 million versus the analyst day guidance of 360.

For Claudia are but if I think of it from a net new perspective, you're obviously guiding to a step up in your expectations for 2022 versus the analyst day, what's giving you the conviction in that acceleration.

The acceleration of the shift from the on premise based in the cloud or is it some of the net new logos that you talked about having success and in Q4, starting to show up even more so in 'twenty two.

Okay.

Okay, and then I'll, let Steve and John panels dates I think so yes, I mean to your client we are on track to deliver what we laid out at our Investor day.

Very excited about that and as I mentioned in my prepared remarks, we are reaffirming our long term guide as well with regards to 2025 and getting to $1 billion, we're definitely seeing the momentum as we talked about <unk>.

7% growth in new cloud customers and the double digit new logos that were really strong momentum that we are maintaining our strong expansion and migration activity. So all of that giving us a lot of momentum as we move into <unk>.

Yes, I think yes.

<unk> been great.

Great momentum in execution that new logo engine.

We're seeing new on Prem, new logos, which as we said at analyst Investor Day, we hadn't actually factored that into the overall long term model for the business.

As we win those new logos on Prem it gives us the opportunity to migrate them to the cloud in the future so lots of opportunity for execution for us as we move forward.

Yeah.

Great. Thanks, so much.

Okay.

Thank you Mr. Winslow.

There are no further questions at this time I will now turn the call back over to Steve Macmillan for his final remarks.

Thanks, everyone for joining the call today, we are entering 2022 with momentum and commitment to accelerate we are looking forward to updating you at the end of next quarter have a great rest of your day. Thank you very much.

That concludes today's call. Thank you and have a great day.

Yeah.

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