Teradata: Public cloud sales soar from low base, majority of business still on-prem

Perpetual software and hardware licenses dive in Q4, consultancy withers on vine

Teradata is still working to shake off its image as an on-premises data warehouse provider by highlighting annual recurring revenue in public cloud of $202m for calendar 2021, nearly doubling from $106m in the prior year.

However, the 91 per cent year-on-year increase came in 9 points lower than 100 per cent growth the company had forecast at an investors’ day last in September, and it remains a small part of overall sales.

For Q4 2021, total revenue for the biz was down 3 per cent on the same period a year earlier to $475m. Total recurring revenue was $364m, perpetual software licenses and hardware was down 44 per cent to $19m, and consulting services fell 17 per cent to $92m.

Operating income was $50m versus $13m in the final quarter of 2020.

Teradata also posted full-year numbers, signalling total revenue was up four per cent to $1.9bn, while operating income was $231m versus $16m in the previous year.

The data warehouse biz is still trying to rid the world of the perception that it is an on-prem business in the wake of pressure from investors who flocked to Snowflake’s vision of the cloud-native data warehouse with its spectacular IPO in late 2020.

Cloud still accounts for less than 11 per cent of its total revenue, indicating it has some way to go, although winning in the public cloud has contributed to the lion’s share of its growth of late.

CEO Steve McMillan said on a conference call with analysts that it was winning the migration battle and managing to avoid leaking customers to cloud rivals. UK-based NatWest Group was an example of a customer migrating its on-prem data center to Teradata’s Vantage cloud platform on AWS.

The results reflect another shift in Teradata’s thinking. It is happy to see its once-lucrative on-prem consultancy business wither on the vine for the sake of luring the big consultancies to get in on the cloud migrations.

The year-over-year revenue decline was largely down to “the strategic shift in the consulting business,” said CFO Claire Bramley.

Meanwhile, McMillan said Teradata was “seeing fantastic traction with partners, especially as we strategically realign the company.” Partnerships with Accenture and Deloitte were testimony to that move, he said.

He also underscored a shift in Teradata’s main USP: whereas once it boasted using query optimization and concurrency to get more bang from its highly engineered on-prem appliances, Teradata now uses the same argument to pitch for customers wanting efficiency in a cloud data warehouse.

Rival cloud system Snowflake has given customers nasty shocks with its highly scalable distributed system, some have argued.

“Our scale of enterprise concurrency is designed so that customers can have a single connected data environment with the lowest total cost of ownership in the market,” McMillan said, repeating a point he made to The Register last year.

But Teradata has had to abandon the idea that if you want to do enterprise analytics, you’re best off getting data onto one of its databases first. Instead, it is now talking of a “query fabric.”

“Creating a query fabric that sits on top of your data fabric, so that you can get the best out of your data no matter where it is,” McMillan said.

The move includes querying data held in rival data warehouses, including Google’s. “We expanded our native QueryGrid connector to Google BigQuery, allowing customers to combine data in Vantage with data in BigQuery. With QueryGrid, our 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,” McMillan said.

The move follows the partnership with Starburst Data, announced in late 2020, to integrate a new Presto connector in the Vantage analytics platform. ®

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