Big Data pumps up Teradata in Q1

The Petabyte Club

Boost IT visibility and business value

There may be a lot of big name server makers chasing the data warehousing and analytics market, but there is still enough business for industry pioneer Teradata to grow respectably.

In the first quarter ended March 31, Teradata reported $506m in sales, up 18 per cent, with a good balance across product revenues (up 18 per cent to $235m) and services (also up 18 per cent to $271m). Aprimo, which Teradata acquired for $550m last December, accounted for about $10m in sales in the last two months of the quarter, and Aster Data Systems, which the company bought for $263m in March, will help bolster growth in the coming quarters as well.

Aprimo created Web-based marketing management software that it sells as a service and that is being integrated into Teradata workloads. Aster Data makes a hybrid row-column database that runs on parallel server clusters, which in many cases is better suited to certain data analytics jobs than Teradata's eponymous parallel relational database. Aster also has a hybrid data warehousing-big data product called SQL-MapReduce that can chew on normal structured data in a data base as well as the unstructured data that requires techniques such as MapReduce. Aster and Teradata alike use Dell server iron as the foundation of their appliances, so that was a good fit.

In the quarter, net income fell by 3 per cent, to $65m; that worked out to 38 cents per share, down a penny from the year ago quarter.

In a conference call with Wall Street analysts today going over the financial results, Mike Koehler, president and CEO at the company, said that new customer wins for Teradata were the highest recorded in the past decade. In fact, Koehler said that the Americas region set an all-time record for new customer wins, thanks to deals in the healthcare, retail, and travel industries. Financial services companies in Europe, the Middle East, and Africa helped pump up sales to new customers in the quarter as well, and existing big clients such as Wal-Mart, Best Buy, the US Postal Service, and the US Navy were all expanding their use of Teradata gear.

Koehler said that one new customer during the quarter bought a data warehouse weighing in at more than 1 PB, and that there were now 13 members of the "Petabyte Club" who were Teradata customers. "The number of companies with petabytes of data will continue to grow," Koehler said, with the amount of data that companies are wrestling with expected to explode over the next five years. Depending on who you ask and how you carve up the data, it is anywhere from a factor of 20X to 44X growth in the "digital universe" between now and 2020, according to the market stats cited by Koehler.

Teradata's sales in the Americas region rose by 22 per cent, to $307m, in the quarter. Sales in EMEA were up 18 per cent to $125m, while sales in Asia/Pacific-Japan were only up 4 per cent to $74m. Koehler said that the earthquake and tsunami in Japan, which hit on March 11, had no appreciable effect on the quarter, but that it was too early to tell what might happen in Japan in future quarters.

While sales were up nicely in the first quarter, Teradata's profits were under pressure, in part because of the acquisitions but also, according to Steve Scheppmann, Teradata's CFO, because margins are lower at this time on its flash-based Extreme Data Appliances, which launched last October. Scheppmann did not elaborate on why the margins are lower, but clearly flash storage is still expensive relative to disk and Teradata is not getting enough volumes to get better pricing. The company is anticipating a large extreme appliance order in the second quarter.

Koehler confirmed on the call that about 10 per cent of Teradata's revenue came from its appliances, which are various prepackaged products using different hardware and software and tuned to specific jobs and performance levels. The average price for these appliances is about $500,000, and revenues for these devices are growing in "the low teens," Koehler said.

Looking ahead, Teradata is being cautiously optimistic, and Koehler said that in the second half of the year, which the company admittedly has poor visibility into, he expected for product revenues to grow "in the double digits". Overall, Teradata expects sales to grow by 14 to 16 per cent, which works out to somewhere between $2.21bn and $2.25bn. (Last year, Teradata grew sales by 13 per cent, to $1.94bn, and net income by 18.5 per cent, to $301m.) The data analytics vendor expects for earnings per share to come in between $1.76 to $1.86 for all of 2011, up a bit from prior guidance and on par with the $1.77 per share it did in 2010.

Because its net income was down a bit, Teradata took a 1.2 per cent haircut on its shares today, falling to $53.38 as El Reg went to press. That gives Teradata an $8.97bn market capitalization, and that means today at least it is a bit cheaper for Oracle, Hewlett-Packard, and IBM to contemplate acquiring Teradata. But still probably too expensive for any of them to do the deal nonetheless. The best thing HP can hope for is that Teradata messes up a quarter to knock down the shares but not enough to do damage to the Teradata business. I wouldn't count on that too much, Leo.

Teradata is probably not going on the acquisition warpath any time soon. Scheppmann said in the call that as of the end of April, Teradata had approximately $600m in cash after paying for Aprimo and Aster Data and paying off some of the credit lines it used to do the deals. Of that cash, $500m is sitting outside the United States and out of reach of the IRS and its tax hatchet but also pretty much useless to buy anything unless it is done through an overseas entity for an overseas entity. The company has about $300m in debt, and $161m in stock buyback authorizations from its board, and Scheppmann said the plan was to do some buy backs in 2011. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story


Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.