Teradata Corporation

Good afternoon. My name is Trevor, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradata 2026 First Quarter 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, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I'd like to hand the conference over to your host today, Chad Bennett, Senior Vice President of Investor Relations and Corporate Development. You may begin your conference, sir.

Good afternoon and welcome to Teradata's first quarter 2026 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-Q for the quarter ended March 31, 2026, within the next few days. 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, adjusted 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.

Thanks, Chad, and thanks to everyone for joining us today. I'm very pleased to report that Teradata is off to a strong start in 2026. With solid execution globally and our pivot to AI-led value, we outperformed against expectations in a number of key metrics. Recurring revenue grew 12% as reported year over year. Total revenue grew 6% as reported year over year. and non-GAAP earnings per share was $0.88, an increase of over 30% versus Q1 2025. We continue to see solid retention in the quarter, and customer interest in our hybrid capabilities grow a healthy growth rate in both total ARR and cloud ARR. We see that security-driven demand for sovereign AI is accelerating. For example, financial services and healthcare customers are increasingly concerned about shared infrastructure for AI workloads, and this is driving traction with our AI factory offer. The most demanding regulatory workloads in the world run on Teradata. These are workloads that are least susceptible to disruption. The trend we see is AI moving closer to the data, not data moving to AI. And that plays directly to our architecture. Every organization is grappling with the same challenge, putting AI to work for them and becoming truly autonomous enterprises. One thing is clear. To win with AI, organizations need to operate at speed and scale that was once unattainable. This is a core competence of Teradata. Our customers have governed data estates, with years or even decades of data in their Teradata environment, including codified industry knowledge, entity models, and business rules specific to financial services, healthcare, telecommunications, and beyond. This is their institutional memory. The analytics and reporting workflows built on top of that data have been refined over decades. The value of those workflows vastly exceeds the cost of the platform. AI multiplies the value of that institutional knowledge, and our platform is designed to execute at the speed AI requires. Our product organization is relentlessly focused on providing the strongest execution engine, reliable, high performance, and always on. Agents never sleep, and mission critical automation requires a platform that never slows down. In 2026, we are executing against an aggressive product roadmap and are already taking new innovations to customers. We are seeing market interest in our MCP server. It's an on-ramp to enterprise AI, providing semantic access to the enterprise data in context that can activate real business outcomes. It eliminates friction through a natural language interface that leverages AI agents. Together, the MCP server and our agentic framework are designed to enable querying, analysis, and management of data with full context. To address the challenge organizations face of moving from isolated pilots to production-grade agents, we're making it easy for customers to build, deploy, and manage AI agents with our agent stack announced earlier this year. This new comprehensive platform is designed to simplify the life cycle of enterprise AI agents. Our Teradata agent stack can help customers reduce the complexity of finding and integrating trusted data and applying enterprise knowledge and context. It can also aid in enforcing governance and maintaining compliance across hybrid environments. In March, We introduced new capabilities to our enterprise vector store. We added multimodal data spanning text, images, and audio from our partnership with Unstructured. And we added more agentic features powered by land chain integration. These announcements demonstrate another significant evolution in our enterprise AI infrastructure, unifying structured and unstructured data within a single governed platform. capable of supporting billions of vectors and thousands of concurrent queries from AI agents. In April, we announced the availability of our enterprise-grade Teradata Analyst Agent on Microsoft Marketplace. This brings AI-assisted conversational analytics directly into customers' existing Azure environments. We also recently participated and the Google Distributed Cloud AirGap Center launch. Our platform runs natively on GDC, enabling organizations to operationalize Google's AI capabilities and our own analytics entirely within the AirGap perimeter. No data leaks, no sovereignty is compromised. That capability is designed to be a real value for defense, intelligence, and public sector organizations that require AirGap Sovereign AI. One of our differentiating capabilities is helping customers leverage and get value out of their environments. And that's even more important as they work to get business value from their AI investment. Here's where our AI services shine. Our AI services momentum is growing as we see customers looking to take advantage of the depth of experience that our forward deployed teams have gained from the successful early AI engagements we've executed. We recently issued a press release outlining how our AI services helped a sample of customers from the travel and transportation industry. Every enterprise has data, and that data is the basis of their institutional memory. Yet few can turn that institutional memory into action compliantly across varied environments and efficiently at scale. Here, their expertise is driving successful engagements to help customers move from experimentation to production quickly. Third-party validation this quarter reinforces our leadership position. Nucleus Research ranks as a leader in the 2026 Data Science and Machine Learning Platform Technology Value Matrix. ahead of platforms that have built their reputation on data science. Our hybrid capabilities are also getting noticed. Constellation Research named us to their 2026 shortlist for hybrid and multi-cloud analytical data platforms. We were one of only three vendors selected from a field of more than three dozen, reflecting a breadth that competitors structurally cannot match. More broadly, ISG recognized us as exemplary, their highest designation across seven categories in their 2026 AI and Data Platforms Buyer's Guide. That thread reflects that we are meeting enterprises wherever they are in their AI journey. This recognition reflects something that takes decades to build, the trust of the world's largest enterprises running workloads that simply cannot fail. Now I'll walk through a few examples of the outcomes we are already helping customers achieve. One of the largest pan-European banks renewed and expanded its Teradata relationship. The goal was to address business-critical workloads like financial reporting and regulatory data model convergence, underscoring Teradata's crucial role in the bank's operations. It also launched a customer journey transformation, leveraging Teradata AI capabilities, including augmented agent workflows, enterprise LLM integration, and AI studio. This positions Teradata as its emerging enterprise AI platform. The engagement reflects how large financial institutions increasingly rely on Teradata as a long-term strategic platform for both regulated analytics and AI. A leading global retailer based in EMEA was a win back for us. selecting our platform to replace its existing on-prem platform. After evaluating competitors, the customer concluded that Teradata delivered the best price performance for its analytic workloads. This reflects the durability of our value proposition for mission-critical retail analytics at scale. A leading Latin America financial institution added our AI services to encompass its enterprise AI operations. The customer recognizes they'll now get continuous oversight, governance transparency, and lifecycle management of AI models and agentic applications in a regulated environment. The engagement positions Teradata as this bank's long-term operational partner across the full AI lifecycle. A large government agency in India committed to Teradata as it entered a new phase of digital transformation. We help unify structured and unstructured data at massive scale to deliver real-time, comprehensive profiles through its online portal. Our native object store capability was chosen to simultaneously bridge structured block storage and unstructured object storage at scale, a requirement no competing platform could meet. This example underscores our differentiated position and mission-critical, high-concurrency government and analytics environments. Market data reinforces what we're seeing and hearing directly from customers. In a third-party research survey of 1,000 senior technology and data leaders sponsored by Teradata, every single organization, 100%, is actively pursuing agentic AI, yet only 17% have deployed it beyond pilots. and 99% have already had infrastructure scaling challenges in the attempt to move from pilot to production. The barriers aren't abstract. Performance at scale, cost predictability, always-on agent demands, running new workloads along with existing production systems, and deploying across cloud, on-premises, and regulated environments. Enterprises are not facing one infrastructure problem. They are facing all of them all at once. That gap between ambition and execution is something we believe we're uniquely positioned to solve. On Thursday, we'll be announcing a significant and broad set of innovations that address these challenges, helping our customers move into the next phase of enterprise intelligence while bringing autonomous AI and knowledge to organizations globally. We invite you to join our live stream on May 7th at 10.30 a.m. Eastern Time. you can join directly from our Teradata.com website. We are confident that our new unified platform and integrated AI workspace will help enterprises rapidly move into production AI. We're quite excited about what's coming on Thursday and hope you can attend. As I pass the call to John, I'll reinforce that we are very pleased with our Q1 results. Even with the current global uncertainties, our business model is robust, Demand continues for our capabilities, and we see tremendous opportunity to create incremental value for our shareholders. We have sales momentum, customer interest, and an engaged partner ecosystem. And we have a great start to our product innovation pipeline, and more coming very soon. We remain focused on driving execution, increasing our differentiation, and delivering products and services that we customers to rapidly deploy agentic AI into production. Now, John, over to you.