A：Terra's third quarter performance highlights include beating revenue and recurring revenue guidance ranges, delivering non GAAP earnings per share of 72 cents soundly ahead of outlook, and generating free cash flow ahead of expectations. They also achieved a second consecutive quarter of total AR growth, ahead of initial targets, and expect this growth to continue. Additionally, they foresee meaningful free cash flow growth due to the return to positive AR growth and cost savings.

A：Terra's business is evolving from a classic EDW to an autonomous AI and knowledge platform. Their strategy in the AI space involves providing the enterprise context required for AI solutions and enabling organizations to effectively deploy AI across hybrid on-premise and cloud environments. They are focusing on delivering AI agents that can operate at scale and handle high volumes of transactions and complex queries, which is crucial for industries looking to leverage AI for business needs.

A：The Teradata platform is uniquely built to handle a variety of workloads, including those increased by 24/7 query potential of AI, which can result in up to a 25x increase in workloads and a 100x increase in compute resources compared to previous modern analytic workloads. The platform is designed with a massively parallel architecture, patented workload management, and query optimization to deliver high performance and predictable costs for the most complex AI workloads.

A：Recent innovations by Teradata to support AI include Enterprise Vector Score, which allows the inclusion of unstructured data in integrated knowledge foundations, and enhanced Clarity Skate analytics with unified Model AI capabilities. Additionally, they announced the MCP server for faster context delivery, and are in private preview of the Teradata AI-taking Builder, which supports the development and deployment of intelligent agents. They also introduced autonomous customer intelligence as a software and services offering that leverages Teradata's contextual knowledge across the customer experience journey. Furthermore, they offer new AI services aimed at embedding AI at enterprise scale, utilizing a sprint-based use case driven approach and a combination of consulting and technology expertise.

A：The US healthcare provider is further scaling its Teradata cloud deployment running on Microsoft Azure, building on earlier momentum and enhancing its operational excellence and complex data handling across the entire system.

A：The financial services company has gained enhanced security, uninterrupted operations through disaster recovery systems, monthly innovation testing, and strict data sovereignty support from its partnership with Teradata.

A：At the 'Possible' event, Vodafone 3 was recognized for AI-supported fraud detection, strengthening customer trust and operational resilience. Uido Qatar won for its advanced analytical capabilities and AI-driven customer engagement strategy. Credi was recognized for its use of AI in transforming credit risk management and supporting sustainability initiatives, and for developing an Ei agent under Brazilian banking regulations.

A：Teradata is launching an online agent builder experience to help accelerate the development and deployment of autonomous, contextually intelligent AI agents. It will be available from their website in the coming weeks.

A：Teradata sees itself as the trusted data foundation that allows other AI innovations to flourish, partnering across all layers of the ecosystem to create a trusted interoperable foundation for AI and provide governance for safe experimentation.

A：The subject of the fireside chat was the combination of Teradata's enterprise-grade analytics with ServiceNow's workflow engine to enable autonomous operations at scale. The expected benefits include seamless integration, governance, and automation to deliver intelligence and automation at an enterprise scale.

A：Teradata integrates business context into its AI solutions by turning decades of decision analysis experience into domain and industry knowledge models, ensuring that AI decisions are relevant and reliable with the help of metadata, business logic, and domain expertise.

A：For the third quarter, Teradata had total ARR growth ahead of expectations with a second consecutive quarter of positive growth, exceeded top-end guidance for total revenue and recurring revenue, improved gross margin, delivered significant upside on non-GAAP earnings per share, and increased free cash flow year over year. Total ARR grew 1% as reported and flat in constant currency, driven by better retention and expansions.

A：The company is experiencing a transition in its services business, moving from migration projects to delivering AI services, which is expected to improve performance next year.

A：The total gross margin for the third quarter was 62.3%, which was up 70 basis points year over year, and on a sequential basis, it was up 490 basis points driven by improvements on both recurring and services.

A：For the fourth quarter, the expected range for recurring revenue is -1% to -3% year over year, on a constant currency basis, total revenue is expected to be in the range of -2% to -4% year over year, and non GAAP diluted earnings per share are expected to be in the range of 53 cents to 57 cents.

A：The guidance for fiscal 2025 is reiterated with confidence in the total ARR target and a maintained range for Cloud ARR growth, despite uncertainty from a handful of deals where customers are assessing deployment options.

A：The updated range for free cash flow is $260 million to $280 million, and the new non GAAP earnings per share guidance is a range of $2.38 to $2.42, reflecting strong performance in Q3 based on foreign exchange rates.

A：To drive shareholder value, the actions taken include returning total ARR growth to positive territory, focusing on cost efficiencies, driving consistency in the business, and stabilizing free cash flow, all of which are expected to contribute to profitable growth and higher free cash flow.

A：The confidence in achieving meaningful free cash flow growth stems from the company's focus on key drivers such as Total Arr returning to growth territory and the positive impact of cost actions taken in the last year and the current year. These factors are expected to continue improving the free cash flow next year.

A：The integration of AI has led to an increase in the influence of AI within the pipeline. Specific areas contributing to this include agent offerings, MP server, and capabilities like the enterprise vector store, as well as model ops with language model integration. These innovations are expected to help customers deploy generative AI workloads and are considered a major contribution to moving the needle in AI discussions.

A：Teradata is positioned as a provider that integrates multiple AI capabilities into a holistic solution. The company's approach is to support AI workloads effectively, with an 'always on' AI agent that can execute complex queries efficiently. The Teradata platform is built for these workloads, offering a unique advantage in query execution and workload management.

A：The philosophy on guidance is to 'call it as we see it,' meaning that the guidance is based on the forecast and a review of various KPIs, including pipeline, expenses, revenue model, and other metrics. For Q4, the focus is on a deal-by-deal basis to provide granularity in the forecast and resulting guidance.

A：Teradata's strategy to compete with platforms like Databricks and Snowflake is based on its patented capabilities that allow the execution of AI workloads effectively and efficiently, both on-prem and in the cloud. This hybrid environment is a differentiator for Teradata, which also benefits from partnerships, like the one with Nvidia, for future on-prem capabilities. Teradata's focus is on delivering a superior query engine to execute AI workloads and provide enterprise context, leveraging its extensive experience across various industries.

A：The company has made progress in improving the sales growth margin to positive, with expectations that the use of AI within the sales motion will continue to drive better margins. The team is anticipated to leverage FDE (Favorable Dollar Environment) and AI to enhance efficiency and potentially improve margins. Additionally, there is a view to further leverage AI within the company to drive better outcomes.

A：The measures to rightsize the organization include aligning the cost structure with the anticipated revenue and focusing on cost management in line with the current revenue stream.

A：The company is focusing on internal AI initiatives that touch all parts of the business from cost of revenue through the operating lines. Presentations at the recent conference specifically discussed these internal efforts, which are recommended for more detailed information.

A：The company observes a strong customer appetite for deploying real AI solutions. They are capitalizing on this by launching the customer intelligence framework and providing consulting expertise to implement AI solutions. The company's most recent press release highlights these AI services and their potential to enable customers in the market, with a strong emphasis on partnership delivery.

A：The cloud on-prem business is expected to follow a stabilizing trajectory with an improving rate of change. On-prem growth is attributed to retention and expansion of on-prem environments, while cloud growth is expected to continue as per the company's observations.

A：The company views itself well-positioned to take advantage of growth opportunities in the hybrid environment where some customers have data sovereignty requirements or data gravity on-prem. This strategy also supports growth in the cloud as successful expansion rates in the cloud are anticipated to continue.

A：The focus on AI services within the consulting realm is not expected to stabilize but rather continue shifting towards a partner ecosystem. The company operates with an Arr growth focus and recognizes the importance of a strong consulting and services capability to support their technology value proposition. As such, the transition to AI services is viewed as a competitive differentiator, with the aim to increase relevance in the marketplace and support both existing and new customers with AI solutions. The company has a go-to-market model that supports a forward-deployed engineering approach, ensuring that proof of concepts (POCs) are successfully implemented by both their consulting and services teams and their partners.

A：The dynamic in customer deployment options assessments is not related to the upcoming hardware refresh but is influenced by the current technology that enables choices in workload deployment. The AI factory available in the current technology stack gives customers the choice of where to run their workloads, either in the cloud or on-prem. The hybrid environment offered by the company gives customers the choice of deployment, which aligns with their requirements and the technology capabilities provided.

A：Queue 0 technology is used to combine various data stores, ensuring that data from any location within the ecosystem can be governed, reliable, and combined, whether it originates from a data lake or an enterprise data warehouse. This allows for integration into a language model and a trusted environment.

A：AI solutions must be trustworthy and ethical because they need to be able to be tracked back through the process, which is where the Teradata platform excels by combining different data sources to run efficiently and effectively.

A：The variability in recurring revenue growth assumptions between Q3 and Q4 could be due to the mix of upfront revenue from premise subscriptions, which can affect the expected linearity if there's more upfront revenue in any given quarter.

A：The net expansion rate has seen some consolidation, with approximately 50% of it coming from migration activity and the remainder from expansions with existing customers. This is expected to continue into Q4, with the net expansion rate stabilizing and closely following the overall cloud ARR growth.

A：There has been a focus on operational efficiency, effectiveness, and productivity measures, with full year impacts expected to boost free cash flow in 2026. The government shutdown is not expected to impact revenues, but it does not directly influence the Opex trajectory.

A：Free cash flow margin is anticipated to be stable, with operating leverage being a key factor. The company has managed to maintain a comparable operating margin despite revenue headwinds, and operational efficiency from cost efficiency measures will continue to benefit the company next year. While a specific number for the free cash flow margin is not provided, the actions taken by the company are believed to set a strong foundation for the future.