What’s next for Teradata Corporation? Today’s financial results follow on the heels of last week’s annual customer and partner event, tagged ‘The Edge of Next’, but the data analytics vendor has been struggling of late, as the analytics and AI markets start to accelerate and it transitions from a largely perpetual software licence to a subscription revenue model.
Q2 revenue was $513 million, just short of the predicted $513.35 million, but earnings ‘plunged’ 80% year-over-year, and total revenue expectations for the year were forecast to fall between 8-10%. Released this morning, the Q3 numbers paint a much more positive picture:
-product recurring revenue grew 14% from the third quarter 2016;
-product annual recurring revenue (ARR) was up 23% year over year;
-sales funnel increases were driven by customer adoption of new purchasing and deployment options; and,
-the projected revenue shortfall for the year was reduced by almost half, to 5%.
“We reported better than expected revenue and earnings per share as we are seeing strong adoption of our new purchasing and deployment options available with Teradata Everywhere,” said Teradata President and CEO Vic Lund, in a prepared statement. “I am pleased that Teradata has turned the corner and is well positioned to deliver in the fourth quarter and build good momentum going into 2018.”
TDC has approximately 1,500 customers globally, but the top 500 are the cream of the crop, accounting for close to 40% of the analytics market, according to company officials. They include 18 of the top 20 global commercial and savings banks, 19 of the top 20 telecommunications companies, the top six airlines, 11 of the top 20 healthcare companies, 15 of the top 20 global retailers, 14 of the top 20 travel/transportation companies, and 13 of the top 20 manufacturing companies, and collectively offer tremendous opportunities for substantial growth ,without considering every other potential public and private sector organization that will need a helping hand to successfully ride the analytics bandwagon.
No matter how you fold, spindle or mutilate the numbers, the analytics market is huge, and growing huger [of course ‘huger’ is a word, I just used it!]:
-the BDA software market (big data and analytics), which in 2016 reached $49.1 billion worldwide, is expected to grow at a five-year Compound Annual Growth Rate of 10.6%;
-the embedded analytics market is expected to grow from $26.77 billion in 2017 to $ 51.78 billion by 2022, at a CAGR of 14.1%;
-the risk analytics market is expected to grow from $17.60 billion in 2017 to $35.92 billion by 2022, at a CAGR of 15.3%
-the customer journey analytics market is expected to grow from $4.76 billion in 2017 to $12.22 billion by 2022, at a CAGR of 20.8%;
;-the predictive analytics market size is expected to grow from $4.56 billion in 2017 to $12.41 billion by 2022, at a CAGR of 22.1%;
-the vehicle analytics market is expected to grow from $1.124 billion in 2017 to $3.637 million by 2022, at a CAGR of 26.5%;
-the security analytics market is expected to grow to $15 billion at 27% CAGR between 2017 and 2023; and the fastest growing segment,
-the IoT analytics market is expected to grow from $7.19 billion in 2017 to $27.78 billion by 2022, at a CAGR of 31.0%.
Embracing a data-driven, analytics-fueled business model is not easy, said Teradata’s Oliver Ratzesberger, EVP, and Chief Product Officer. For most organizations, it’s about “change at scale… and that’s something that they’re struggling with.” There are a lot of tools available, but when you put them into production, that’s when they really struggle, he added.
Teradata CTO Stephen Brobst argued that accessibility to the technology is not the issue. “The real issue is do you have the skillsets to do something with it?”
The market has changed dramatically over the last 5 years, with a growing focus on ROI. Rather than using BDA to shrink, they’re growing, investing more, said Rick Farnell, SVP, Think Big Analytics, a Teradata Company.”It is an offensive game, not a defensive game.”
A big part of the investments are going into analytics as a service, said John Dinning, Chief Business Officer, Teradata. “85% of customers tell us they want to consume at least some of their services as a service… and 90% tell us want hybrid” [in the cloud, on-prem or a combination].
“The analytics market is ripe for disruption,” said Ratzesberger, with too many tools, platforms and solutions. There are no guarantees that Teradata will emerge from its chrysalis and become the disruptor, but after the company’s latest financial results, combined with BDA growing anywhere from 10-31% per year for the foreseeable future, I’d say the odds look good.
DISCLAIMER: Teradata looked after airfare and hotel (and as of Wednesday I’m now a shareholder).