Teradata Corporation (TDC) Earnings Call Transcript & Summary

Welcome to the second day of the Women in Tech Summit. It's great to see everyone today. And so for this session, we're with Claire Bramley, who's the CFO of Teradata. Claire, thanks so much for joining us.

Good morning. It's pleasure to be here. Very excited.

Yes. Perfect. And Claire, maybe a good place to start would be for those in the audience that don't know Teradata and even just to give background of yourself to, maybe we start there.

Absolutely. So literally, I still have a bit of a British accent, so I'm actually from the U.K. originally. So that's where I grew up. I joined Teradata as the CFO 3 years ago, having come from HP. And I was very lucky to have great female mentors than male mentors at HP, who gave me a lot of opportunities to do different roles globally across the company and in different kind of financial function roles, so whether it's in business finance, controllership, FP&A. So kind of taken that into myself, I'd like to give back to not just the female community, but all people in terms of their development, in terms of giving people new opportunities as much they can. I know I benefited from that. So I was at HP for 14 years and in total before I came to -- into Teradata. Teradata itself as a company is on an exciting transformation journey. So it's been a whirlwind over the last 3 to 4 years, 3 years, I've been there and 4 years since our current CEO who's been there. And he came in and he much completely changed the approach. So we are data and analytics software company traditionally known for our industry-leading software and analytics capabilities on-premise. And what changed 4 years ago is that we took all of that technology and the history that we have and we created a cloud product. So for the last 4 years, we have moved to be focused on cloud first. And we just went GA in 2023 and January 2023 with our first cloud native product on AWS. And now at the end of June, with a lean a little bit will be available on all cloud service providers. So it is about data and analytics. We focus on the Global 10,000. So where there's very, very large amounts of data, we know that's where we're differentiated. And yes, we're going through this transformation. We've been making a lot of changes. So I'm looking forward to talking a little bit about that today.

Yes. Perfect. I definitely want to touch on the transformation to the cloud. But before we get there, I think a good place to begin might be everything that's going on with the macro environment, right? So you've had a lot of software companies that printed mixed results in 1Q, and I think a lot of investors out there are trying to figure exactly like what's going on. So I guess from what you guys are seeing when you speak with customers, maybe you can opine a little bit there. I know you've spoken in the past about seeing some longer sales cycles, maybe cloud ARR fell a little bit short of like your expectations. So maybe you can give the audience a little bit of insight in what Teradata do.

Yes. The last 6 to 9 months have been interesting for sure from a macro environment. I think every company that we are speaking to are looking at their landscape end-to-end and saying, how can we maximize and optimize the data that we have today, how can we leverage AI, for example, that's when we ensure that we have trusted data that we're using to be able to support our analytical capabilities and AI. And so everybody is really, I think, taking a step back and saying, what's the best way for us to structure organize this moving forward. And I think as a result, because these conversations are becoming very strategic and underpinning the core capabilities of many companies' operations, like mission-critical operations, some decisions are taking longer. They're being had at the C-suite, sometimes at the board level. And we started talking about that in December 2023, we started to seal that -- be that deal elongation cycle. Now I think the good news is, though, the pipeline is still there. The deals aren't going away. But I don't think it's a macro concern in the sense that people aren't looking to spend the money or to invest in data and analytics. But I think some of these decisions are taking a little bit longer, and we are seeing those cycle times increase, as you mentioned. So -- but we saw that as we were coming out of Q4. The good news is, I think we saw it early because we have a very, very good relationship with all of our customers. We're talking to them on a regular basis. We provide ourselves in that kind of personalization of -- and personal relationship to understand their needs. And we saw it early. We started talking about it. I remember being at a conference back in December and started talking about it then because we could start to see the trends happening. But as I said, the good news is those deals are just being pushed out slightly in terms of how long it takes to close them as opposed to going away. And the pipeline looks really strong. So it gives me a lot of confidence about the macro and the environment that we're in and potentially what the rest of 2024 and going into 2025 looks like because the pipeline is building really, really strongly. And the conversion rates are staying stable. It's just the timing of those conversions that they're taking a little bit longer.

Yes. The AI impact some of these deal decisions, right, and sales elongation, I think is really interesting. So I'm curious, maybe you can talk a little bit more about how those conversations are going? Because I think a lot of the time, we hear companies say that in order to adopt AI in the SaaS layer and application layer, you need to figure out your data state, right? And there might be some rearchitecture there. So in terms of like Teradata's role in that, could you maybe talk a little bit more about that?

Yes, absolutely. And I think this is something that we have traditionally been very good at helping large enterprises manage their data. So one of the things we talk about is data lineage. Like, do you understand where the data is coming from, what data is being used in the analytical queries that you're using and now that's very relevant for AI. We all know that you have to know and be comfortable as a company in terms of what data is being used, how it's being used to get to the AI output that you're receiving. So we have a good tradition in providing that. I think the other thing as well that's really important is the performance because you are using so much data. And so the really importance of having performance at scale. And again, that's Teradata's sweet spot because that's where we've come from on-premise, on-premise was a constrained environment. So we had to learn how to tweak about every last possible piece of performance in that constrained environment. Now once you move to the cloud, you clearly don't have that constrained environment, people really want to make sure that they have cost optimization. So being able to ensure that you have high efficiency, high performance at scale, and the cost per query is the lowest, which is in Teradata has the lowest in the industry of cost per complex query, that makes a big difference when you're using large amounts of data. I think the only other thing what I would say, when we're looking at kind of AI and Teradata as well, I think being able to access data regardless of where it is. So we are an open and connected software and we have this patented technology that -- called QueryGrid, which is able to use the data regardless of where it is. We don't actually have to move the data, you don't have to copy and paste it into a different repository. We can -- regardless of where it is, and we can do it on Open Table format with data lakes, wherever your data sits today. The way that the software works is it can reach down and use that data and do the analytical capabilities regardless of where the data is. And that makes a big difference right now. And I think a lot of companies are trying to work out. They have a lot of historical data. How can they -- potentially they haven't necessarily been using in an efficient way and how can they use that better moving forward. So that's something that, I think, sets us up well as we look forward to be able to have that fully open fully corrected software.

Yes, makes total sense. Before we get to the cloud, maybe let's touch on the on-prem base because I think you've made comments in the past talking about some on-prem erosions potentially at the start of this year, and that is from customer decisions that were made a while ago, right? Just curious, I guess, what gives you the confidence that some of that is really one-off, right? And it's, hey, these decisions were made a while ago and you might not see more of that on-prem erosion in what you're expecting.

Yes. So absolutely. So in Q1 of 2024, we did see, I would say, some outsized erosions of a couple of larger enterprises that did move off of Teradata. Now Interestingly, we've known about that for many years. They've been trying to move off of Teradata to 3 to 4 years. So clearly, you never want to lose a customer. That's never a good thing. But the good thing is that we weren't surprised. And we had been trying to work with them to keep them on Teradata. But reason that they moved is also -- it's not good news, but it's interesting. We didn't have a cloud-native software product 3, 4 years ago. As I mentioned, we started this journey 4 years ago, we launched our cloud-native product in January 2023. So these enterprises were looking for cloud-native solution, which we didn't have available and they weren't necessarily willing to wait sort of thing. So we knew that, that was coming. Unfortunately, that does kind of start 2024 off on a, I would say, on a negative front when you are losing those on-prem customers. Now, to your point about it being a kind of one-off. We have very good visibility through the analysis that we have about customer health, the information that we have. As I said, we have very good relationships with our customers. But those don't come as surprises, it's always difficult to predict exactly when they will finally be -- move on fast, but we don't get a surprise in the sense of somebody is going to be leaving us tomorrow. So it's something that we can work with them over time. And that's what gives us the confidence to say when we look out to the future and the expected retention rate, we do expect that retention rate to come back up, is a little bit lower in 2024, but we expect that to come back up in '25 and beyond and be consistent to what we've seen for the last 3 years. As previous to '24, our retention rate has been very stable. And just as a reminder -- I'm talking about the on-premise business. So in the cloud, we have industry-leading retention rates in cloud. And at the moment, our net expansion rate for the trailing 12 months is 123%, which is considered to be very strong. And we believe that's sustainable around the 120% mark is sustainable moving forward as well. So definitely seeing slightly lower retention rate on -- in the on-premise business in the current year, but given the insights and data that we've got about our customers moving forward, we are very confident that, that retention will pick up and the erosions will be lower as we look out to the future.

Perfect. Yes, let's get deeper into the VantageCloud Lake. So obviously, new offering, new architecture, right? Maybe you can touch on what was the catalyst or the tipping point that you saw within your customer conversations to make that move. And now that you've been going back to your on-prem base telling them about this new offering, maybe you can just talk about how those conversations evolved.

Yes, absolutely. So just to put into context, like I said, we weren't a cloud-first company 4 years ago. We moved to a cloud first the first time when the CEO came on board. And interestingly, we already have over $525 million in cloud ARR. So that we've come a long way, and some of that's from migrations of existing customers and some of them is from expansions with existing customers. The amount of new logos that we see have been fairly low. And the reason I put that context into place is the advantage of VantageCloud Lake is we believe that it opens the door for more new logos. The way that VantageCloud Lake works because it is cloud native, you can start small, you can use departmental workloads, smaller ad hoc experimental type workloads. Traditionally, Teradata has been known to that it's kind of a big setup cost. It's a big project and program. And so the VantageCloud Lake, not only can it -- because it's cloud-native, it can scale up and out in real time. It also is much easier to start with much smaller workloads. And so I think we see that as an opportunity with regards to new logos, for example. We see that as an opportunity to expand within existing customers because they don't have to necessarily -- if they're on-premise today, but they have maybe a marketing department that wants to do some additional queries and analytics, they can use VantageCloud Lake in addition to what they've got today to be able to set that up fairly low cost to start with, but still with the same performance and analytical capabilities. So it is opening opportunities for us both with new customers but also with existing customers. It's pretty exciting.

Yes, that's super interesting. Do you think it better positions you in an AI world? I mean you talk about some of these lighter like lower-end data analytics use cases. Are there -- is there applicability to AI that you see where that could also be a TAM expansion opportunity as well to?

Yes. I mean so yes, definitely for VantageCloud Lake. We have also just introduced a product called AI Unlimited and that is exactly that. So it's taking those capabilities, it's the same software, but we've called it AI Unlimited. It's like a server-less, self-serve software where you can use it exactly for that, for AI experimental workloads. And that's integrated, for example, into Microsoft Fabric. So that is exactly that we've created, and we've told it AI Unlimited is the same capabilities but with a view that people can do -- start small, build up, use it for AI type analysis and queries. And then we think that, that will expand over time and give us obviously expansion opportunities with further greater future. So yes, that's pretty much where AI Unlimited came from. I mean, it's the same capabilities, but it's set up in a kind of server-less, very self-serve in an efficient way.

Yes. So on AI Unlimited, just curious how you think about the trajectory, right, and adoption path? I know it's very early days right, with AI. But in terms of how those customer conversations are going and when you think it could maybe start to become a contributor to revenue? How do you think about that?

Yes. So I think -- so I'm being very -- I mean, I'm a CFO. So I've been very conservative about the assumptions that come from AI Unlimited. So -- because I think it's going to be interesting to see how it plays out. I think what -- the way I see it is that it will enable future growth. But AI Unlimited is more of just about getting more people using your software, more people getting access to what's available. More people are saying, actually, this is really good. I want to use this elsewhere and then we'll create a further, I would say, deal opportunities in the future. So I think AI Unlimited will kind of sell, not necessarily create huge amounts of growth, but giving access -- more people access to what was available, giving more people an opportunity to try and experiment with it, I think is going to help us in this kind of attraction of new logos and increase overall net new customers. Interestingly, again, though existing customers are very interested in it too. So it is also an expansion opportunity as well as a net new customer opportunity for us.

Maybe talk about the support for Open Table formats. So that was obviously something that you guys announced this past 1Q. So just curious what prompted that? And I guess how do you think about adoption of Open Table formats over the next 12, 24 months?

Yes. I think it's -- I mean it's clearly -- it's a hot topic right now. I mean, AI was the topic last year and then Open Table format seems to be the topic in the data and analytics space this year. I think it comes down to ensuring that you have -- you are giving the most flexibility to your customers. And so some of the customers are looking and interested in Open Table formats moving forward. So it's important to give your customers the full offering. And it doesn't matter to us whether it's Iceberg or Delta League, like we can offer our same analytical queries at the same performance level on Open Table format. And so I think it's important to just have that choice, have that optionality. There is some interest. I wouldn't say that a very large number of our customers are talking to us about it yet. But I think, again, it's important in terms of new customers. Is this something that's available if you're trying to track and connect to your customers, then you need to be able to show that you've got -- you can support Open Table format. So it's going to be interesting how this evolves. It definitely is a hot topic now. We're tracking it very carefully. Again, we're just making sure that we're being, I would say, conservative in our assumptions of how it plays out. But again, we'll know from existing customers very quickly, and it will be interesting to see the number of new customers that are leveraging that format.

Yes. Could you maybe talk about the potential risks with this. So on the positive side, what you mentioned is that it could be very TAM, right, expansive and similar to some of the other initiatives that Teradata has like push into like newer logos. But is there any like risk that we need to just be cognizant of where if you do move to some of these deeper native query engines. Is there any like lower-end workloads on Teradata today that you could potentially see move off Teradata to alternative?

Yes. I mean, the biggest question I get from investors is what is going to be the impact from the storage versus the compute, because that obviously is separating that completely. And we have separation of storage and compute. But the question is, do you anticipate, therefore, to see kind of erosion as a result? And I think it's too early for us to tell. But what I am expecting is, yes, potentially, you're going to see a reduction, but I think that will then be offset by the expansion opportunity of the number of queries and workloads. Because it's very efficient, it's very cost effective, but potentially you could say, well, would you really -- would your revenue come down as a result? However, I think and the conversation we have with customers is you still have the same money to spend. So I think they're still going to reinvest it like into data and analytics, but it will just be -- give them maybe more opportunity for either new queries, new users or more data. And that's where you see a lot of expansion. I mean just maybe everyone is familiar with it, but biggest expansion opportunities with existing customers over time, very -- it comes from the amount of data that's increasing and therefore, the amount of computational queries that are happening. It's new queries. So you're doing new data and analytics queries but also the number of users that are using it. So that's why we're saying about AI Unlimited, the more people you can get using it more queries that will run and the more that gets put into it. So I think there is that kind of trade-off that there is going to be potentially impact of less specific spend coming from Open Table format, but at the moment, expect it to be offset by the expansion opportunities of the data users or more queries.

Now let's talk about how this all translates to the [indiscernible]. So you reaffirmed probably cloud ARR growth of 35% to 41% in constant currency. Looking at that number, it looks like a healthy increase relative to 4Q. So I guess maybe you can just comment on what gives you confidence in that guide and what you guys are seeing in the pipeline to put further that confidence?

Yes. I mean, I think -- so traditionally, Teradata has been very back-end loaded. I mean, a lot of software companies are -- Teradata is not different, that are very back-end loaded. So Q4 is always our biggest quarter, like 50%, traditionally, 50% of our growth happens in Q4, and a lot of that happens in the last month. It's really a crazy, I would say, linearity as you look through. But that's normal for Teradata. It's always been that way. So 2024 is no different from that standpoint. So that kind of gives me a lot of comfort. I think the other thing as well is when I look at the client, we come at it many different ways. We look at weighted pipeline coverage, we look at conversion rates, we look deal by deal of when we expect all of the deals to close. And I actually have really, to your point, I reaffirmed last quarter because I have good confidence based on that data and visibility that I have -- that we have good line of sight to hit within that range. And I'm really excited, I mean 35% to 41% cloud ARR growth number is -- it's above the market. It's another very strong performance for us. And that's coming from a mix of migrations expansions and then a little bit that comes from new logos. But we always know that the new logos can then expand over time. I mentioned earlier that the expansion rate is 123%, even with small amount coming from new logos, there's an opportunity for further expansion.

Yes. So going on, we talked earlier about a lot of the transformation that's happening at Teradata. And you guys newly appointed a new CRO, Rich, who's been at Teradata, but obviously in a new role. So can you talk about some of the changes that he is thinking of implementing and how the go-to-market strategy might evolve under his leadership?

Yes, absolutely. So yes, so very excited to have a new CRO, Rich Petley. He's a fellow brit, so he's from the U.K. And he has been with Teradata, to your point for 2 years. He started in running the Europe sales team, and then he actually took over the full international business, so Europe and Asia. And now he's taking over the global sales go-to-market organization. I think some of the things he meaningfully outgrew in the areas. Again, when he was doing EMEA and the international business, his growth in those regions meaningfully outperformed, I would say, the rest of the company. So I think that's a good sign of him coming on board. And the reason why is he has been very focused on ensuring that we're leveraging partners. So something, again, traditionally Teradata weren't necessarily focused on, was leveraging partners to help us sell and we did a lot of very direct selling. And again, one of the transformations that I've talked about in the last 3 to 4 years is a much more focus on partners. And we still have, obviously, a very strong and wonderful performing direct sales force, but how can we leverage partners to help sell more. And he's done that very well in the international business. So I think that's one example of an area where I think he can bring to the global -- organization in North America to help continue to accelerate growth.

Yes. And then you mentioned in your guidance that Teradata, like many other software companies tends to be more very second half weighted in terms of bookings. Last year, you had some deals that slipped in into this year. Were there things that Rich can do from like a go-to-market perspective, you maybe tighten some of that up in the second half? Obviously, there's going to be parts the macro that are outside of your guys' control, right? But just curious if there's any initiatives that can be put into place?

Yes, absolutely. So I mean, to your point, when we saw in December that deal elongation cycle and trends happening, which resulted in a few -- a handful of cloud deals slipping from Q4 into 2024, we factored that into the guide. So the fact that we saw it early was a good thing. It means that when I came out and gave my guide for 2024, it already factored in that longer sales cycles. In terms of what Rich is doing, he's very focused on his operational governance. He's very strong in that area. So I know that he is making sure that we have really good, clear, detailed deal plans. For example, he is ensuring that we understand the full decision-making process that needs to happen in each of the deals because that's sometimes something where you get caught out. It gets held up at the CEO level, the CFO level, sometimes even the Board level. And you think you've got all the way there, the deal is done and then say, oh, hang on a minute, we need now to do a little bit more work and it takes an extra few weeks. Now the extra few weeks when you're trying to close deals at the end of the quarter, it means that it can slip out into the next quarter. So I know that he's doing a lot around that and very much kind of operational excellence and that's where he comes from. And so I think he will continue to drive that. I don't think there needs to be any huge transformations that need to happen, but just kind of tidying up those areas, I think, is something that he has continued to focus.

Perfect. Maybe let's shift gears to cash flow and the profitability line. So can you maybe talk about the cash flow guidance for this year. So I think it's roughly, let's call it, $5 million higher than what you guys did last year seems very doable. 1Q cash flow, it seems -- free cash flow seems like it came in a little bit light relative to where like it had been traveling. So I guess can you talk -- can you comment on seasonality, right, and the levers to pull that give you confidence in that outlook?

Yes. So because -- I mean, we talked about the on-prem erosions happening at the beginning of the year. Immediately, that gives you kind of a cash flow impact -- a negative cash flow impact compared to last year. There was also some onetime impacts as well. So basically, the linearity of our free cash flow is following our billings. Our biggest -- there's kind of obviously the operating income but the biggest other determinants is like the invoicing and the billings that happen. And so given the linearity we're seeing basically from a sales cycle standpoint, that is having a knock-on impact into free cash flow. However, I have really good confidence in being in that range from a free cash flow standpoint. Historically, Teradata have a history of generating very strong free cash flow. And for those that maybe not as familiar as we return -- we commit to returning a minimum 75% of it back to shareholders in the form of share repurchases. So yes, I'm very confident in terms of being able to hit within that range that we've guided. But to your point, it is following the sales cycle linearity and the growth linearity. So it is back-end loaded and actually more back-end loaded in '24 than we saw in '23.

For those same drivers contributing to the 2025 guidance, you updated that outlook for $450 million. It is like a step up from your guide in 2024. So is it the same dynamic where some of the on-prem erosion may be impacting cash flow this year, but a lot of your guidance is really tied to maybe some of the sales cycles and things that you're referring to.

Yes, exactly. So yes, so the -- we committed to being at least $450 million, to your point, in 2024, which is, again, great free cash flow generation. So very excited about that. It is a step up from where we are in 2024. And the biggest drivers, honestly, of that is growth and profitability. Because one of the things to bear in mind is as we increase our cloud business and the mix of our cloud business, because that is bearing and we talked about it a bit growing like in the 30 -- in the high 30% range compared to our on-prem business that's growing in the flat to low single digits. The more of the mix of the business that comes from cloud, the higher the total growth rate of the company. So we're going to get that natural lift, natural growth rate coming from an improved mix in 2025 and beyond as cloud becomes a bigger, bigger portion of the business. So a lot of it comes to revenue growth, a lot of it then comes -- and we continue -- when we talk about growth, we always talk about profitable growth at Teradata. So we'll get profitability from that. One of the other areas as well that we're very focused on is operating margin expansion. And there's 2 main drivers of that. So our cloud margin as we scale is expanding. So that's great. So that will help us from a gross margin standpoint as we look out to the future. And the other one is we don't plan -- as we grow the top line, we don't plan to grow the operating expenses at the same way to get the natural economies of scale for that. So we're talking about being in the low 20% range of operating margins in 2025, which is an expansion compared to where we are today. And so we've got the revenue, we've got the profitability and then there's always working capital efficiencies. So I'd say we have really good cash conversion on equal today but there is still an opportunity for DSO for our accounts receivable to improve slightly as well. So across all of those kind of multiple levers, that's what gives me the confidence to be able to get $150 million.

Yes, that was going to be my next question. So when you think about some of the operating margin improvement, is that really solely based on cloud gross margins improving? Or are there actually other operating efficiencies that aside from just scale right, that could also play into that?

Yes. So I mean there's always areas that we're focused on, so like in the -- I would say, especially the G&A space. So I think I was telling to a few people yesterday about the fact that Teradata has, for example, flexible working model. So you can choose whether you want to work remotely, you can choose whether you want to go into an office. A lot of people are voting with their feet are not going into offices, sort of thing. So I've been like aggressively reducing the real estate footprint, for example, data that we have -- and I want to have offices available, but we don't need the size of the offices that we've had before. So we've been able to dramatically reduce some of our real estate footprint, for example, and it's areas like that, that it's absolutely still an opportunity for us to continue to bring out costs. Some of that can get reinvested back into R&D, and we invested looking to sales and marketing. So -- but they definitely are operational efficiencies that we have been doing and we should continue to do which also helps us in addition to the scale.

Yes. AI is such a big topic of conversation today. I would imagine even though you guys are creating products, right, and you play it to the AI theme, there's also things that companies can do internally to leverage AI, right, to drive more operating margin efficiency, it might be too early or just totally fine. But is Teradata evaluating anything AI-related internally that help might drive some of those longer-term goals that you have?

Yes. So I mean, absolutely. So I mean you can imagine the engineering team are all using -- like seeing how they can use AI, I run IT as well. So we're making -- how can we leverage -- we've done a lot of pilots, a lot of experimentation. I think a lot of companies are doing that right now. Also looking at how can I use it from a finance standpoint, whether it's for detection, those kind of things. So there's a lot that we're experimenting with right now. I'm being, I say, cautious about having people sign up to cost reduction goals and kind of encouraging people. I think I kind of want to use the carrot versus the sticks. I want people to experiment. I want things to try, but not to have to feel like and then they have to give me -- like they have to drop all the savings to the bottom line. So I'm kind of encouraging people to say, well, you get to keep those savings and reinvest it back into your functions or into your business sort of thing. So trying to do it to encourage people to say, yes, go and experiment and any savings that you have just gives you -- you've got that money to then spend on something else as opposed to say, "Hey, I need x million dollars of savings from AI and you need to give it to me." So -- it doesn't mean I'm not pushing people to make savings, but I'm not having specific AI cost targets right now. So customer support is a classic example of a big customer support team -- I was standing with the Chief Customer Officer yesterday, we agree that's a big opportunity. I'm not going to say to him that I expect this amount from AI. And I'm like you go make savings and you decide where it best comes from but AI is clearly an opportunity in some of these areas to be able to take out costs to become more efficient.

Yes, perfect. That's super helpful. Love to pivot the conversation given that this event is really about empowering e-mails within the workplace and also promoting diversity and inclusion. You've obviously had amazing career trajectory all the way to CFO at Teradata. So for -- I'd love to hear if there's any advice that you'd give for the other females in the audience as they think about their career path and the learnings that you've had from your own? Like, what could you share there?

Yes, absolutely. And I would say the community is really important. Like I think I was -- maybe took it for granted a little bit of HP that I have this great community that would give me opportunities, that would encourage me to do things. I remember having a conversation with Cathie Lesjak, who is the CFO of HP for many years. And remember having a career conversation with her and I worked for her directly and she was like, what do you want to do? And I was kind of, I'd love to be the Head of Finance for this division and that she's like, what about CFO? And I was like -- this is a number of years ago. But you just don't -- I think as a female, you don't envision what your full potential can be. And so I would encourage and just telling yourself, oh, I can do this, this isn't enough. So that community that kind of goes -- that says, I believe in you that you can do this, that this is a job that you should apply for. I've had a couple of instances where I have not applied for jobs because I don't tick all the boxes. Like, I don't feel like I'm good enough. And people have had to say to me is like you just have to be the best person -- you don't have to be perfect, you just have to be the best person against the competition effectively. So -- and what have you got to lose. You don't get it, you don't get it, right? But if you get it, then great. To the point where I remember somebody saying to me, I said, I found this really good job, but I ticked 5 out of the 8 requirements, and they're like, okay, well, how do we go? And I didn't apply. And they're like, pick up the phone, go and apply. And in one instance, I got the job. And so I just think having that community, having that people, and that doesn't always have to be women, but just people that surround you that encourage you, that remind you to go for it to say yes, to at least try rather than just assume that you're not good enough or to -- and you don't do it intentionally. Like I don't walk around thinking I'm not good enough. I can't, I'm not capable of doing that, but you do, for some reason, we look at things and go over and up now. I'm not -- we shouldn't apply for that. And I don't know why we do that to ourselves, but we do. So make sure you've got that community and network of people around you to push you, to encourage you to make some bold moves and support you, because sometimes they told me to work out wonderfully and sometimes they don't. And so having that support around you I think is really important. And you have to kind of go till you find that community as well, which -- and I'm not the most, I would say, extrovert social person naturally. So walking into the room last night and having to go up to a group of people who you don't know that you've never met and kind of say, "Hi there, I'm Claire," it's not natural, but I force myself to do it. Because I know that I'm going to leave the room -- leave the discussion and leave the room with 3, 5, maybe even 10 people that I've never met before, but now I know their name, now I know that I can reach out to them. That's amazing, but you have to kind of almost force yourself to do it. It's not natural to many of us. So definitely use those opportunities, and I have to kind of force myself to do it intentionally now, and it really pays off. You always meet 1 or 2 people that you'll allow, that was an amazing conversation, I'm so glad, like that. So it's worth [indiscernible].

Yes. That totally resonates with me, and that was obviously the whole purpose of this. So hopefully, we can start building that community as well here, too. Claire, another question, given your leadership role now, I'm curious like, is there anything that Teradata is like doing internally in order to promote diversity and inclusion that you feel like has been very effective for others in the room that are trying to figure out what they can apply to their own company?

Yes. I mean, I think a lot of companies are doing a great job on diversity and equity. I think where companies struggle a little bit is an inclusion. And I think what Teradata do really well. We have a D&I kind of working group and it's from people all over the company, and they're continuously looking at not just the metrics of the number of female managers, the number of African-American. They're not just looking at data, actually looking at do they feel like they've included? Do they feel like they belong? And I think that's really important. And Teradata do that really well. So if there was any advice, I would say from my experience at Teradata is, don't -- yes, focus on the metrics because the metrics tell the real story but about do you really have diversity across the organization, but it doesn't tell the full story about, do people feel engaged or people feel included, do they feel that their voice is heard? And I think right from the very top from the Steve, our CEO all the way down, people are encouraged to be themselves, people are encouraged to have a voice and to speak up and to really feel included. And I'm not saying we've got it perfect. I think there's still more work we can do that focus coming from the executive team all the way down the organization. I think it's special at Teradata. And if there's one thing -- and I guarantee you ask any person that works at Teradata, what's the best thing about working at Teradata, they'll say the people. It's all about the people. It's about the community. It's like we feel like work family, and we include people. And we are -- and we have -- I mean we have more females on the C-suite that we have males, which -- I mean there's not many tech software companies that have that -- when you've actually the females in the room outnumber the males. So -- and it's great. It's a great environment, very much focused on D&I. And we've come a long way. We weren't as strong 4 or 5 years ago. So we've come a long way, but that inclusion and belonging is really important.

It's amazing to hear. Before we wrap up, I just want to see if there's any questions from the audience. Yes? Right.

This idea of an elongated deal cycle is something we've heard from several. And so the deals require more people involved, maybe it has to go to higher levels? And maybe you could argue in your case that the technology is transformative and it's great to have those senior execs involved because it will potentially grow into something bigger in terms of the client relationship. But do you think this is sort of temporary and something that's happening now because of the mind share and the competition with AI or do you think this is kind of here to stay? Maybe that's hard to comment on, but I was just curious of your thoughts because it does seem like a consistent theme.

Yes, that's a great question and something we've been talking about. I think it's here to stay for a little while. I do think a lot of companies are still working on how to best use AI, how -- what's the best end-to-end data strategy, structure to have in those companies? So I do think -- I am assuming, for example, that it will stay through [indiscernible]. So it's going to -- obviously, I'm expecting it to stay in '24 and I am expecting it to stay through to '25. Beyond that, I think it's difficult to say, would it potentially come back to more historical levels. I think we'll have to -- I think it's a bit of a wait and see, but I do -- I'm planning and modeling that, that will continue into '25 because I don't think this is going to change. It's not for just a few quarters in my mind. But it is definitely an interesting one to follow, to check. But yes, I am assuming right now that it continues all the way through to '25.

Any other questions? Claire, maybe one final one for me. It's just -- I'm sure you've had several investor conversations over the last like couple of weeks since you guys last reported. So any closing remarks that you would give based on those conversations, any topical talking points that have come up that you want to leave the audience with?

Yes. No, thanks for the opportunity. So yes, I would say, yes, we've been out on the road a lot. I think the one thing I would say is that confidence in that strong cloud ARR growth is very good. I've reaffirmed it. I'm feeling very good about it based on the pipeline and what we see from the sales team. And I think the way to think about that is how that will propel future growth. I think one of the concerns, one of the bad thesis about Teradata is very much kind of like is it left pocket, right pocket? Is it just the migration of existing customers, existing workloads. And so I would point to you the expansion rate. Expansion rate is about new workloads, new queries, a point about being 123%. The other thing I would point to is we saw a very large uplift in our pipeline of new logos. And we talked about it in the last earnings. So just to remind people, we're talking about hundreds -- over 100 of new logos in our pipeline, which is a meaningful step-up Teradata. And so I think those trends, the net expansion rate trends, the confidence that I have in the full year numbers and the new logo pipeline trend, I think are all really good indications of the opportunity for us ahead.

Well, Claire, thank you so much for your participation, and that was an amazing conversation. So I appreciate your time. Everyone, let's give Claire a round of applause.