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Data warehouse sales soar in Q1 for Teradata

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If you were wondering if all this yammering about big data is real, data warehousing pioneer Teradata has just turned in the best first quarter in its history and the best quarter for product growth that the company has ever had. So at least as far as Teradata is concerned, big data is big business.

With the Petadata not really being useful and the Exadata name already taken by Oracle, maybe it is time for the company to start thinking about Zettadata or even Yottadata. And, El Reg needs to point out yet again, NCR looks particularly foolish for spinning out Teradata in October 2007.

In the first quarter ended in March, sales of hardware and software for its flagship Enterprise Data Warehouse parallel clusters and offshoot data appliances for doing smaller and specific data munching and crunching tasks rose by 31 per cent, to $308m. Consulting services were up 14 per cent, to $165m; and maintenance services rose by a more modest 11 per cent, to $140m. Add it all up and Teradata raked in $613m against a very good first quarter last year, which was itself a bumper Q1 after a similar record was broken in 2010's first quarter.

Net income rose by 40 per cent, to $91m, cash flow was almost doubled to $192m, and the company was sitting on a $978m pile of greenbacks and only $300m in debts. All of this means that means Wall Street is going to go ga-ga in a very un-lady-like fashion.

Teradata's stock was up 5.3 per cent to $76 a share in early trading as El Reg went to press, giving the company a $12.2bn market capitalization and basically putting it out of reach of an acquisition by anyone other than Apple, Google, or Microsoft. That is unless and until it royally screws up its business. And thus far, Teradata has done just the opposite, adding columnar database specialist Aster Data and marketing management software maker Aprimo to build up its core technology and application software stack for a combined $813m. Just this week, Teradata added further to its roster of software by snapping up direct messaging giant eCircle for an undisclosed sum.

Mike Koehler, Teradata's president and CEO, said in a conference call with Wall Street analysts that sales were up in all three geographic regions at constant currency, but as usual, the Americas region was the engine, with sales of $388m (up 26 per cent as reported), followed by EMEA with $136m (up 9 per cent) and Asia-Pacific/Japan with $89m (up 20 per cent). Teradata is on track to add 45 new sales territories globally this year, said Koehler, which will add to costs but also boost revenues and lay the foundation for future hardware, software, and maintenance growth down the line.

Sales of the flagship 6000 series EDW products, which run Teradata's eponymous shared-nothing parallel database on clusters of rebadged Dell servers, drove the product revenue growth in the quarter, said Koehler, putting to rest any idea that the data warehouse was not relevant in a Hadoop-obsessed world. Like other data warehouse suppliers, Teradata has long since added flash storage and automatic data tiering to its warehouses, and you might be thinking with the performance boost of SSDs and the shortages of disk drives in the past year, more companies would be opting for SSDs. Yes and no, said Koehler. Existing EDW customers are tending to stick with disks as they build out their machines, and only about half of new EDW customers are putting in SSDs.

The 2000 series appliances, entry level machines aimed at smaller shops, saw growth, too, but because they grew more slowly than the high-end EDWs, revenue for the 2000 series was on the low end of the 10 to 15 per cent of total revenue target that Teradata has set for these machines. The Aster Data column data store and its hybrid MapReduce-SQL chewing methods are not yet showing significant revenues, but Teradata is performing some early tire-kicking and exploring use cases with customers.

As for the 1000 series Extreme Data Appliance, which has a much higher ratio of disk to CPU and a much lower price, Koehler reminded Wall Street that this machine is tuned for a small subset of end users at the company who need to chew through a lot of raw data instead of the large number of users who need access to consolidated and refined data that resides in an EDW. And thus, it has a more limited market and revenue stream – albeit still an important one.

The important thing for Teradata is the fact that the vast majority of its EDW machines are used by marketing organizations, and Aprimo and eCircle are all about marketing as well. Koehler said on the call it is interesting to contemplate a time when the CMO, running big data and analytics, will spend more money on IT than the CIO, running the back-end systems for the company.

Looking ahead, the comparison to Q2 2011 is going to be a tough one, Teradata warned, since business was so good last year. Teradata did not give out guidance for the second quarter, but in the wake of its acquisition yesterday of eCircle, it is raising revenue guidance for all of 2012 by two points to somewhere between 12 and 14 per cent. The company also raised its non-GAAP earnings estimates for the year by 4 cents to somewhere between $2.60 and $2.70 per share, with one penny of that increase coming from the acquisition of eCircle, once it is completed sometime in the second quarter. ®

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