The News: Teradata highlighted the company’s cloud-first transformation and ongoing strategic initiatives to deliver sustainable growth and value creation at its recent Investor Day event. Teradata President and CEO Steve McMillan touted Teradata’s continuous focus on “delivering on its commitments this year, including building recurring revenue streams into sustainable and profitable revenue and free cash flow.” Teradata is positioned to achieve over $1 billion in Cloud ARR (Annual Recurring Revenue) and approximately $550 million in free cash flow in fiscal 2025 and deliver significant long-term value to the company’s shareholders. Read the Teradata Press Release here.
Teradata Reimagines Strategy to Deliver Sustainable Growth and Value Creation
Analyst Take: At its recent virtual Investor Day and Influencer Summit events, Teradata unveiled its reimagined and ambitious strategy to attain specific ARR and free cash flow objectives by fiscal 2025. Teradata President and CEO Steve McMillan espoused Teradata is now positioned to attain over $1 billion in Cloud ARR and approximately $550 million in free cash flow in fiscal 2025.
To push the Teradata Reimagined vision presented at both events, the Teradata leadership team promoted its three foundational cornerstones for long-term growth and value creation:
- Well-positioned to win. Teradata sees its total addressable market (TAM) growing swiftly in the cloud supported by patented technology and differentiated hybrid, multi-cloud capabilities.
- Strong position in the enterprise market. Teradata is expanding focus on the global 10K companies across seven key verticals.
- 7,000 global workforce and veteran-laden management team. Teradata’s leadership and employees have extensive knowledge and deep expertise across the connected multi-cloud data platform segment.
I view Teradata’s strategic vision refreshing since the company is amply demonstrating the willingness to practice what it is preaching by using its cloud-first data platform portfolio to set and meet specific fiscal 2025 goals. Key additional details for Teradata’s financial targets through fiscal 2025 include:
- More than $1 billion in Cloud ARR, representing over 50% in total ARR in fiscal 2025 and approximately $550 million free cash flow in fiscal 2025.
- Implementing a returns-based capital return program of at least 50% of free cash flow annually through fiscal 2025.
For fiscal 2022, Teradata’s preliminary estimates anticipate at least 70% growth in Cloud ARR and free cash flow of approximately $400 million, enabling digital ecosystem players and investors to use mileposts in measuring Teradata’s progress in fulfilling the fiscal 2025 objectives.
Teradata also shared the reaffirmation of its 2021 financial outlook including the expectation that public cloud ARR will increase by at least 100% year-over-year, total ARR is expected to grow at a mid-to-high single percentage year-over-year and recurring revenue is expected to grow at a high-single to low double-digit percentage year-over-year. Taken together I see Teradata as sharing the fiscal mileposts needed to engender confidence in its ability to meet the ambitious fiscal 2015 goals.
Teradata’s Bring Tour Own Model Augments Reimagined Strategy
Augmenting Teradata’s sustainable growth and value creation strategy is that the company’s Vantage platform can now operationalize externally developed predictive models, also understood as bring your own model (BYOM) or model sharing. The new capability can further support Teradata’s strategic analytics framework that enables data-powered enterprises a stepwise solution for deploying analytical models at scale. I expect that organization decision makers can anticipate an improved in developing analytical models through increased model operationalization, expanded analytical use cases, and a streamlined approach to attaining data-driven business outcomes.
I see Teradata directly addressing the high-priority challenge that many businesses have in realizing returns from artificial intelligence (AI) and machine learning (ML) projects due to inherently inefficient data processes. To meet this challenge, Teradata developed a strategic analytics framework: Analytics 1-2-3. Analytics 1-2-3 establishes a roadmap for businesses to create more efficient and easily deployed processes that assure AI/ML projects deliver business value and improved outcomes.
BYOM boosts this framework by enabling support for a wider group of models and analytical algorithms to be available for deployment at scale. As such, models typically created on small systems with limited data sets can now be operationalized and scaled to the level required to score the various models swiftly, securely, and consistently all within the Vantage platform.
By using the new functionality, Analytics 1-2-3 provides Teradata customers with a simple way to create and operationalize any number of models on any data volume in real time. Such benefits include:
- BYOM ensures customers can retain their investments in model development technologies without any risk or functionality loss when deployed in Vantage. This benefit is realized by importing externally created predictive models by open-source packages or third-party solutions into Vantage, and then allowing the scoring of these models in parallel, using all the data Vantage can ingest.
- As part of BYOM, Teradata data scientists can use any of their preferred open-source tools, such as R, Python, Apache Spark, SAS, KNIME, and more, to be implemented in parallel alongside native Vantage analytic functions, enabling the operationalization of insights without needing to sample data or develop data silos outside of Vantage.
Key Takeaways on Teradata’s Reimagined Sustainable Growth and Value Creation Strategy
I anticipate that Teradata’s reimagined sustainable growth and value creation strategy can advance Teradata to capture more mindshare and influence in accelerating the adoption of its Vantage multi-cloud data platform across the enterprise analytics ecosystem. By synthesizing analytics, data lakes, and data warehouses, Teradata Vantage can now enable enterprises to reduce silos and improve costs for all their data query requirements across any cloud environment including multi and hybrid.
I see Teradata as better positioned at this point to counter the cloud data platform and enterprise analytics portfolio development and marketing moves of key rivals Oracle, IBM, Microsoft, AWS, Snowflake, and SAP as well as open source alternatives. Teradata’s reimagined strategy is properly emphasizing cloud ARR and cash flow metrics to measure the company’s progress and success through fiscal 2025. I believe this will provide Teradata’s customers and partners more confidence in using the Vantage platform to flexibly meet their massive and mixed data workloads today and over the long term.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.