Teradata Corporation

Good afternoon. My name is Victoria and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradata 2025 fourth quarter and full year earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by the number two. Thank you. I would now like to hand the conference over to your host today, Chad Bennett, Senior Vice President of Investor Relations and Corporate Development. You may now begin your conference.

Good afternoon and welcome to Teradata's fourth quarter and full year 2025 earnings call. Steve McMillan, Teradata's President and Chief Executive Officer, will lead our call today, followed by John Ederer, Teradata's Chief Financial Officer, who will discuss our financial results and outlook. Our discussion today includes forecasts and other information that are considered forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risks and uncertainties that could cause actual results to differ materially. These risk factors are described in today's earnings release and in our SEC filings. Please note that Teradata intends to file the Form 10-K for the year ended December 31, 2025, later this month. These forward-looking statements are made as of today and we undertake no duty or obligation to update them. On today's call, we will be discussing certain non-GAAP financial measures which exclude such items as stock-based compensation expense and other special items described in our earnings release. We will also discuss other non-GAAP items such as free cash flow and constant currency comparisons. Unless stated otherwise, All numbers and results discussed on today's call are on a non-GAAP basis. A reconciliation of non-GAAP to GAAP measures is included in our earnings release, which is accessible on the investor relations page of our website at investor.teradata.com. A replay of this conference call will be available later today on our website. And now I will turn the call over to Steve.

Hi, everyone, and thanks for joining us. I'm pleased to report another set of strong results for Teradata. In the fourth quarter, we again exceeded expectations for total revenue, recurring revenue, and free cash flow. Our strong earnings per share and continued total ARR growth reflect the actions we took to improve our operating model. 2025 was a year of revitalized execution. We stabilized the business, meaningfully improved retention, and saw customers choosing to expand their use of Teradata with a mix of both traditional and new types of workloads. Engagement with customers remained strong and the business operated well. We believe we are solidly positioned to continue on a profitable growth path in 2026 with healthy free cash flow generation to deliver value to our shareholders. As we look ahead, We believe enterprises of the future will be shaped by those who harness agentic AI systems that reason, act, and adapt autonomously 24-7. We remain focused on helping organizations activate the intelligence in their enterprise, ensuring AI agents have the enterprise context they need and can act on it in milliseconds to address continuous decision-making at enterprise scale. This requires a new system of intelligence, one that unifies data, analytics, enterprise context, governance, and AI agents. We believe Teradata is uniquely suited to provide all of this with our autonomous AI and knowledge platform. As we stated throughout 2025, we saw a resurgence of interest in our hybrid model. We're seeing customers want to leverage both on-prem and cloud deployment options to meet their diverse business needs, driven by data sovereignty and increased regulatory environments around the globe. Our platform is designed to give customers the opportunity to run agentic AI at scale wherever that data resides in their business. And we are seeing customers effectively operating across both. Over decades, we have fine-tuned our platform to address massive scale with performance, foundational factors for implementing autonomous AI. Throughout 2025, we saw customer engagement across all regions and industries shift towards AI and elastic compute as they explored AI uses and looked to reinvent their Teradata platform for autonomous knowledge capability. Our forward deployed engineers and AI services consultants executed more than 150 engagements with customers, helping them operationalize AI to address high-value use cases. In 2025, we launched a broad set of innovations as we built foundational capabilities to help customers bring AI into real-world use cases that can drive a tangible business value. First, our enterprise vector store COST effectively combines structured and unstructured data with the speed needed to deliver information to agents in real time. We enhanced our model ops capabilities, designed to enable models to run directly inside the Teradata ecosystem, gaining efficiency. An exciting announcement was our MCP server. It connects AI systems with interactive access to the enterprise data, context, and predictive AI capabilities necessary to provide meaningful outcomes. We believe that the MCP server and the agentic AI solutions that utilize it will increase usage of our platform. To further speed AI adoption, we launched Teradata Agent Builder and introduced pre-built agents. This broad set of capabilities enables us to deliver autonomous customer intelligence, a set of software and services that embed Teradata agents to help improve the customer experience. We also launched Teradata AI Factory, an exciting announcement that brought AI and machine learning capabilities to on-premise environments. It was designed for organizations in regulated industries or with data sovereignty requirements or that want to manage and contain their AI infrastructure costs. And to help organizations transform their AI pilots into production-ready solutions, we introduced new AI services. This impressive set of innovations laid a very solid foundation for 2026. And we also have a fantastic set of technology announcements planned throughout this year. We believe these announcements will strengthen our portfolio in order to help our customers get AI agents into action and operationalize autonomous AI. we have kicked off a strong start to the year with our recently released Enterprise Agent Stack. This comprehensive toolkit is designed to help enterprises rapidly transition from pilot AI projects to production-level autonomous agents across diverse environments. Our Agent Stack integrates tools for building, deploying, and managing AI agents with security, governance, and enterprise data utilization. We believe we're delivering capabilities that set Teradata apart from the competition and we're delivering them across cloud and on-premises environments, supporting the hybrid goals of our customers. As an AI and knowledge platform company, we are the core of a broad system of intelligence that will enable autonomous actions. To ensure customer choice, we maintain our commitment to building and executing partnerships that strengthen our connected ecosystem and extend our capabilities. For example, our new partnership with unstructured.io brings automated ingestion and conversion of unstructured content, meaning documents, PDFs, and images, into analysis-ready structured data. This supports our vision of an end-to-end AI ecosystem helping our customers turn their intelligence and their enterprise into business outcomes. We have multiple proof of concepts underway in all regions and across all industries. We also just announced the availability of our enterprise-grade data analyst AI agent on Google Cloud Marketplace, giving organizations a secure way to run real-time analytics and agentic AI directly within their cloud environment. This pre-built agent reduces the cost and complexity of moving data and provides a scalable foundation for future multi-agent scenarios on Google Cloud. Now, let me take you through a handful of examples of the ways organizations are leveraging our AI and data analytics capabilities, many of which represent the early stages of our customers' long-term AI initiatives. A large US telco added a cloud instance to its Teradata estate and now runs a hybrid Teradata environment. It's running specific financial compliance workloads on Google Cloud with its other workloads on-prem. This customer is also looking to use our OpenTable format to seamlessly share data across its ecosystem. A top U.S. airline modernized a high-impact pricing application by migrating it to our elastic compute platform. This unlocked greater scalability and agility for a program that drives significant annual revenue for the customer. A major U.K. bank selected Teradata to move its real-time customer experience platform to the cloud, reinforcing our strength in the highly regulated financial services sector. Using our AI-powered marketing applications, the bank expects to speed up campaign launches and simplify operations to drive a competitive advantage in today's digital first banking market. We're supporting a high-tech manufacturer in EMEA on a strategic AI initiative, helping embed advanced AI and analytics into complex manufacturing models. In doing so, we're enabling automated workflows that drive real-time AI-driven production decisions, improving yield, lowering costs, and accelerating innovation. These examples from across numerous industries are representative of the team's strong momentum in 2025. And with our continued focus on helping customers get the most out of their AI initiatives, we intend to keep up the momentum in 2026. As I pass the call to John, I'll summarize that we are entering 2026 on solid footing, following our strong close to 2025. We believe we have capabilities no competitor offers and a cohesive open platform. And our differentiation is resonating with customers, partners, and industry analysts. We remain on our clear profitable growth path, driving operating leverage, free cash flow growth, and delivering lasting value to our shareholders. Over to you, John, to walk us through the details.