Teradata Corp /De/ Q2 FY2020 Earnings Call

Good afternoon. My name is Stacy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Teradata Q2 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. Thank you. Nabil Elsheshai, Corporate Development and Investor Relations. You may begin your conference.

Good afternoon, and welcome to Teradata’s 2020 second quarter earnings call. Steve McMillan, Teradata’s President and Chief Executive Officer, will lead our call today; followed by Mark Culhane, Teradata’s CFO, who will discuss our financial results. Our discussion today includes forecasts and other information that are considered forward-looking statements. These statements reflect our current outlook and 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, Teradata’s most recent 10-K filed with the SEC and in the Form 10-Q for the quarter ended June 30, 2020, expected to be filed with the SEC in the next few days. We undertake no duty or obligation to update our forward-looking statements. On today’s call, we will be discussing certain non-GAAP financial measures, which exclude such items such 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 and constant currency revenue comparisons. 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, Nabil, and good afternoon, everyone. I’m truly honored as well as incredibly excited to join Teradata as CEO and lead this great organization that is rich with opportunities. I’ve joined at quite a unique time in history when this pandemic has caused companies to rethink and rework their business models. The crisis has made one thing very clear, the essential role Teradata plays in our customer success. Organizations need data to help them manage through these tumultuous times, as companies address rapidly changing market situations and customer needs, reengineer supply chains to source critical supplies, or pivot to remotely support all operations. We realize the need to leverage data as an important asset to make better informed business decisions. Leveraging all of the relevant data possible helps organizations have the agility they need to weather through the disruptions of today’s uncertainties. Companies of the size and reach of our customers need access to data at the scale only Teradata can address with the reliability, security, and dependability we deliver. Data and analytics are foundational elements to digital transformation, a transformation which will be accelerated for many by the pandemic. Organizations need to rapidly adapt to this changing landscape and to transform themselves to be leaders in the new economy. To accomplish the transformation, they need analytic insights leveraging data from all relevant sources. Teradata’s ability to deliver these enabling capabilities in both hybrid and multi-cloud is unique and presents us with a tremendous opportunity. With such market backdrop, it gives me great pleasure to open my first earnings call as CEO, delivering news of strong results in Q2. The organization executed extremely well in the quarter, despite the uncertainties caused by COVID-19. In Q2, we exceeded our expectations and Street guidance for our key metrics. With strong sales execution and good cost discipline, we generated robust ARR growth, significant free cash flow, strong recurring revenue growth, and solid earnings per share. Mark will cover our financial results in greater detail as usual. And today, I will speak to three areas important for Teradata’s success. First, our ongoing technology innovation; second, a resilient execution during these unprecedented times; and third, our continued customer success. I want to start with our technology innovations, particularly in the cloud. As I’ve spent time learning about the company, I was pleased to see the robust body of work from our products organization as we develop and engineer new data and analytics technologies for both hybrid and multi-cloud environments. We are pleased that Vantage with Native Object Store, or NOS, has become generally available in the cloud on AWS and Azure, and we will be delivering Vantage on GCP very soon as well. With NOS, analytic models can take advantage of exponentially greater amounts of data stored in public cloud environments, massively improving the scope and accuracy of the resulting insights. NOS support also reduces the friction in using data in a cloud object store with data already in Vantage. This new release in Vantage continues our focus on driving innovation in our software, so that customers can apply analytic insights to data wherever it resides in an on-premise appliance, external data store, or cloud storage environment. Because Vantage software is consistent from one environment to the next, risks are reduced and the processes greatly simplified, bringing faster time to value with the scale, security, availability, and analytics performance customers rely on from Teradata. Vantage with NOS support was developed with direct input from our customers and partners about the real-world use cases. One early access customer leveraged Vantage and IoT sensor data stored in AWS to perform predictive maintenance on more than 650,000 pieces of equipment, keeping the fleet running, driving more consistent and predictable operations for them, and increasing customer satisfaction. We’re also bringing a 30-day trial of Vantage in the cloud, so customers can directly access and experience the power of Vantage and test out advanced analytics on our leading platform in the cloud. Starting in Q2, this global program is available by invitation and brings faster evaluations, as well as reduced time to value for our customers. The trial offers end-to-end database analytics and NOS support and includes access to preloaded datasets, so customers can easily explore various business outcomes from advanced analytics. The trial also showcases our completely modernized UX for Vantage, which makes it easier for business users to take advantage of our platform. While I’m still evaluating the business, I’m pleased to see the strength of innovation at Teradata. However, we can improve our execution in this arena and accelerate our cloud efforts and momentum. Turning to our execution during the COVID-19 crisis, the Teradata team demonstrated great resiliency, pivoting quickly and smoothly to remote work environments. We’re focused on supporting our employees through the challenges posed by the pandemic, as well as being there to support our customers regardless of physical constraints. To further support our customers during the pandemic, we enabled customers to extend their knowledge of how to leverage data and its impact by offering our training for free. In a great showing of the demand for Teradata expertise, we saw more than 14,000 people take advantage of this learning opportunity. Further, we reimagined all of our events into 100% virtual experiences, and our teams collaborated remotely with hundreds of customers and prospective customers, explaining how companies can leverage Teradata to get the insights they need. Last quarter, we talked about developing virtual executive briefing centers to advance our sales motions while the world needed to work remotely. We’ve had tremendous response from customers, as well as superior contributions from Teradata employees to these high-quality virtual interactions. Our virtual engagements have developed into opportunities for us. As we move through Q3, our virtual engagements continue and our offices remain closed. Our goal is the safety of our employees globally in the face of this highly dynamic situation. We plan to reopen offices only when we believe there will be safe environments for our employees and guests. In the meantime, we will continue to operate remotely. I’m pleased with how our teams have demonstrated their ability to adapt and keep advancing the business. Our strong relationships with our stable customer base, combined with a deeply rooted dedication to delivering business value for our customers, are serving us well during these uncertain times. As we continue to support our customers in their digital transformation, we are modernizing our go-to-market motions. In Q2, we continued the rollout of our Customer Success Program, where our teams are working to ensure our customers are maximizing the business value from their investment in Teradata technology. Our Customer Success Program also focuses on increasing customer satisfaction. We are seeing very positive responses from customers with this program and believe it will drive significant expansion opportunities over time. The work on building our modern sales capabilities remains underway as we enter Q3. Simultaneously, our marketing programs are pivoting to focus on customer use cases and deeper digital experiences. We are assertively taking back the narrative on Teradata’s capabilities in the cloud, with an integrated campaign addressing the misperceptions that others have proliferated. It’s great to see us on the offensive. Just one example is an outstanding webinar we recently held with independent analyst, William McKnight, and Brinker International, one of the world’s leading casual dining restaurant companies with brands Chili’s and Maggiano’s Little Italy. This webinar centers on Brinker’s journey to the cloud with Teradata and why Brinker chose Vantage on AWS to drive advanced analytics, machine learning, and data science across its organization. With Vantage delivered as a service in the cloud, Brinker can now apply advanced analytics and predictive modeling to its business to improve demand and traffic forecasting, team member management, recommendation engines for customers, and more. You’re welcome to listen to this great example of how our customers migrate to the cloud. It’s available from our website. So we are advancing on many fronts, all to support and grow our customer base. We have a broad number of wins in the quarter, and I’d like to walk through a small sample of our recent cloud wins. Vodafone extended its strategic partnership with Teradata with a new multi-year, multimillion-dollar commitment, utilizing Vantage to improve network intelligence, digital customer experience, IoT, and finance. We look forward to continuing to work with Vodafone to help drive its vision for the telco of the future. A major U.S. supermarket chain is migrating to Vantage on AWS, and here, we won over cloud-only vendors. This is the first step in growing Teradata’s value proposition and expanding into new use cases, including expanded store information, trade loss prevention, HR, analytics, and more. A European energy company migrated to the cloud with Vantage on AWS. Here, we won against competition from cloud-only providers. Based on our unmatched capabilities and scale and the flexibility in our pay-for-what-you-use consumption model, the customer has an extensive set of use cases, including expanding its 360-degree view of its 11 million B2C customers, improving the customer journey, and defining customer segments based on advanced analytics. One of the world’s largest gaming and hospitality companies selected Vantage on Azure versus a cloud-only technology. The firm utilizes Teradata to drive its loyalty rewards program, and $9 out of every $10 of revenue flows through applications run on Vantage. As the company continues to modernize and transform its business, it is working with Teradata to simplify the way stakeholders analyze data to make better and more timely decisions across the entire enterprise with a consistent data set. Teradata will be collaborating with global integrator, Cognizant, on this project. Our leading U.S. wholesaler is migrating two on-prem systems to Vantage on AWS. Despite competition from cloud-only providers, Teradata’s new consumption model won the deal. The customer is beginning a multi-phase deployment that will ultimately replace redundant data marts running on other databases throughout its ecosystem. A large Canadian retailer is migrating key applications to the cloud as part of its cloud-first mandate. Teradata and Microsoft work together to provide a compelling offer that involves replicating data on a near real-time basis from the customers’ on-prem system to Vantage on Azure. This allows it to seamlessly transition key business reporting initiatives in the case of a disaster with minimal disruption. This customer has a long history of working with Teradata and knew that with the volume of crews processed daily, it couldn’t seriously consider a cloud-only solution that cannot scale to meet its price performance requirements. We will continue to work to accelerate our cloud efforts and drive high-quality wins, fostering lasting relationships based on business value in our differentiated technology and services. Before I pass the call to Mark, I would like to take a little time to talk to you about why I joined Teradata, what I see as our opportunity, and how I see our business. Teradata’s market position and opportunity are tremendous. As I previously stated, data and analytics are the foundation of a company’s digital future, and Teradata provides the best technology in the world to enable companies to leverage the data, apply analytics to solve mission-critical problems, and compete in the market. This is why companies build their future on Teradata, and the incredibly knowledgeable people we have bring truly unmatched expertise to help companies get great value out of the data. I’ve only been at Teradata for two months, so now is not the time for new strategy statements. But rest assured, we are tirelessly working on driving our cloud transformation and improving financial returns. A primary focus of mine is to create the strategic context and operating plans for the company, which we will share in the coming quarters. For now, I want to address a few foundational elements crucial to our future. We will win in the cloud and we’ll continue to offer choice in cloud deployment options to meet our customers’ needs. That part of the strategy will not change, and I will make sure we are focused on accelerating our move to the cloud. In addition, I believe great technology companies focus on platforms and not products, and there’s a huge opportunity as we transform Teradata to be the leading analytics platform for a hybrid and multi-cloud world. We will continue to leverage our differentiated expertise in consulting and services to enable our customers and our partners to achieve the best analytic outcomes. And finally, we will aim to grow profitability with a balanced focus on growth and returns, optimizing and streamlining our operations where needed without impacting our customers. We will operate with a sense of urgency and productive paranoia as we move Teradata into the future. As we grow, our ethos will continue to be one that values inclusion and diversity. Our entire leadership team recently stood together and pledged to all employees to take a set of actions ensuring that Teradata cultivates a workplace where equality, inclusion, diversity, and openness are a company-wide priority. To align with our deep commitment to social responsibility, we have begun holding dialogues on some of the challenges facing the world today, as open conversation and knowledge are key to driving change. While we have more work to do and it will take time to get to where we should be, we are starting from a strong foundation. We have the technology built for a hybrid and multi-cloud world. We have outstanding people and a very strong customer base. We have a vibrant and strong culture. The passion I see to help customers get the greatest value from their data assets is absolutely energizing. I’m confident that I made the right decision in joining Teradata. With the ongoing pandemic, the second half remains uncertain for many organizations, and no one knows when everything will return to a more normal predictable environment. Despite uncertainties, we are listening to the market and our customers. We are committed to responding with speed and agility and ensuring we are providing value for our customers, supporting our people and delivering on our expectations. I look forward to providing updates as we progress. With that, I’ll pass the call to Mark.

Thank you, Steve. I would like to publicly welcome you to Teradata. As Steve said, we had a very solid quarter with healthy results in all three regions. I’m very proud of the way the organization has come together and executed. We generated robust ARR growth, strong free cash flow growth, healthy recurring revenue growth, and solid EPS enabled by actions we took to manage expenses given the uncertain environment. We mentioned on our last call some of the actions we took in Q1 in support of our customers, including temporary free capacity or extended payment terms, and these actions helped move transactions forward this quarter, but more importantly, it helped us to deepen our relationships with our customers. Before I continue to highlight a few key elements of our Q2 operating results, I want to make it clear that unless otherwise stated, my comments today reflect Teradata’s results on a non-GAAP basis, which excludes items such as stock-based compensation expense and other special items identified in our earnings release. Additionally, commentary on key segment trends can be found in the earnings discussion document on the IR website at investor.teradata.com. We generated $52 million in incremental ARR this quarter, $39 million in constant currency. This resulted in $358 million in recurring revenue, growing 6% reported and 8% in constant currency and was well above our guidance range. As we said last quarter, we wanted to remain conservative in our outlook, given the overall uncertainty. But as you can see, we had a very strong quarter. Consulting revenue declined 26%, 24% in constant currency. This is an area that has seen more headwinds from COVID-19, as some customers continue to manage discretionary spending. We believe consulting will continue to see headwinds in the second half, given the ongoing uncertainty due to various levels of outbreaks and continued remote work mandates. Moving on to gross margins. Recurring revenue gross margins were 69.8%, up 230 basis points sequentially, but down 120 basis points year-over-year, as the mix of recurring revenue that includes hardware and lower-margin cloud revenue created a near-term headwind. Over time, we expect recurring revenue gross margins to expand as we see less mix headwinds and expect to see significant gross margin expansion in our cloud offering over the next 18 to 24 months. Consulting revenue gross margin was 15.9%, as improved utilization and better price realization helped drive significant movement versus last year. Some of this performance was due to catch-up of projects impacted at the end of Q1 and will normalize in the second half. We are still expecting consulting revenue margins to be in the low double digits for the year. Total gross margins came in at 58.9%, up 620 basis points year-over-year. The improvement was driven primarily by revenue mix shift to higher-margin recurring revenues and away from perpetual and consulting revenues. Total operating expenses were up 2% year-over-year. The primary driver of this increase was amortization from capitalized sales compensation as required under ASC 606. We continue to reallocate spend towards our cloud initiative, as well as our expanded go-to-market efforts with partners and customer success. To fund these efforts, as well as manage expenses given the uncertain environment, we took several actions to manage operating expenses, including limiting travel and entertainment, moving marketing events to virtual, and limiting other discretionary spend. Additionally, we also converted a portion of our annual performance cash-based incentive compensation to share-based performance grants that potentially help non-GAAP operating margin and EPS in 2020 between 50 and 100 basis points and $0.05 to $0.10 of EPS, which we believe will have no significant share dilution impact in 2021 when the final annual performance incentive achievement is determined. For the full year, we will continue to look for areas to optimize our cost structure, while investing in our key strategic initiatives in cloud and transforming our go-to-market organization to support our recurring revenue model and expand our opportunities in the market. As a result of the cost actions we have taken in the first half, we now expect full-year operating expenses to be roughly flat to down year-over-year. We have an exceptionally strong free cash flow quarter, driven by excellent execution from our collection organization. As we mentioned last quarter, we had roughly $30 million in collections that slipped from Q1, but were collected in April. This, combined with the overall strong quarter, resulted in free cash flow for the quarter of $115 million, bringing free cash flow for the first half to $113 million. As we said last quarter, we are confident that 2019 was the bottom for free cash flow during our transition. We have already exceeded that number as of the first half of 2020. In addition, we expect incremental free cash flow for the second half to be positive as well. Our financial position remains very strong, and we ended the quarter with $494 million in cash. After the initial shock in late March and early April to our customer base, we saw conditions stabilize and then customer engagement return to very healthy levels. As a result, linearity in the second quarter was better than our expectations for Q2. So far, customer engagement trends have remained healthy at the start of Q3. We will continue to support our customers in these unprecedented times and believe our long-term relationships and rock-solid technology are advantages that will allow us to continue to expand our existing customer relationships. While our customer base isn’t immune, we serve the largest, most stable companies in the world. As a reminder, less than 12% of our revenue comes from industries hardest hit by the economic changes brought on by COVID-19. We came into the year and set up for a strong year and remain cautiously optimistic based on the pipeline we see for the second half. However, with continued disruption of daily life and uncertain business conditions, we believe it’s prudent to remain conservative. Consistent with last quarter, we will only be providing guidance for Q3. For Q3, we expect recurring revenue in the range of $359 million to $361 million and non-GAAP EPS between the range of $0.28 and $0.31. In addition, we continue to expect our full-year tax rate to be approximately 23% and our full-year share count of approximately 111 million shares. Finally, out of an abundance of caution, our share buyback program will remain suspended until further notice. And with that, operator, could you please open the call for the questions?

Operator Instructions. Your first question comes from Katy Huberty, Morgan Stanley.

Thank you. Good afternoon, and congratulations on the quarter. Steve, welcome to the team. We really look forward to working with you. I wanted to first ask you a question. And that is, it sounds like cloud, in your mind, is the biggest opportunity for Teradata. So can you provide a little more detail around what it is you’re asking the team to go do around cloud? Is it entirely engineering? What features need to be added to the product? What needs to be done around go-to-market? And then how should we think about the timeline for Teradata to become incredibly competitive against a growing field in the cloud space, in particular?

Hey, Katy, thank you very much for the question, and thank you for the congratulations. I’ll accept the congratulations on behalf of the entire Teradata team. As you know, I was just appointed as CEO at the beginning of June. You’re absolutely right; we see cloud as the substantial opportunity in the marketplace. If you reflect on the IDC numbers, we see cloud growing at just under 38% and we see on-premise workloads growing around 4%. So there is a fantastic opportunity there. The team has made some good progress in the cloud already, and you can see that from some of the wins. But the insights and the focus on cloud really does touch every single part of the company. From a product perspective, you saw some of the innovations that were delivered in Q2 from native object store, as an example, the trials capability and updated UX, which is much more closed way in terms of how it operates. But we also see the changes impacting our go-to-market motion. So looking at things like customer success, how can we work with customers that are using our products in the cloud to ensure that they are getting incremental usage. The product development focus will continue. I’m currently reviewing all of our spend from a product development perspective and ensuring that we are prioritizing the cloud and cloud development as part of our spend envelope from a product development angle. We really do feel that we are currently competitive in the cloud. But as we move forward, that we will be able to increase that overall level of competition and competitive ability by introducing new features and functions. The one thing I think that we do have to address from a Teradata perspective is, we’re not seen as a modern and relevant cloud player. And the focus from the marketing organization is really to change perceptions in the marketplace. You heard from the strength of the wins that we were having in clouds, and clearly, we can win well. We’ve launched a recent campaign called Mythbusters, which aims to really reeducate the marketplace in terms of the misperceptions that may have been put around about Teradata and our ability to execute from a cloud perspective. So I think there’s no just one aspect to focus on cloud; it’s a total organizational transformation. I would be remiss as well if I didn’t say, it also has to do with a cultural transformation of the company in terms of acting with agility, really being conscious of speed and time to market and delivering incredibly well. So it’s great to see the product development team coming out on time and against the commitments that they made for delivery of new features and functions.

No, that’s great. Mark, can I just ask one follow-up, and it’s about guidance for the September quarter. If I remember back when you guided the June quarter, you essentially said that it assumed very little in the way of new business in the remaining two months in May and June. Is that the same way that you approach September guidance? Or how would you characterize it as it relates to the degree of conservatism?

Sure. Yes, we’re taking a conservative approach. The bottom end of our guidance is very similar. On that front, clearly, with the benefit in Q2 of – as we said, in Q1, there were deals that didn’t happen with all the shelter-in-place scrambling gone around the last two weeks of March on both trying to get renewals done, as well as some of the new and add-on stuff. So that clearly benefited Q2. We didn’t have that same phenomenon experienced at the end of June. So it’s – yes, we’re taking – look, we’re taking a conservative view towards going forward.

Great. Thank you.

And your next question comes from Phil Winslow, Wells Fargo.

Thank you for taking my question. First, congratulations on your new role, Steve. We’re excited to work with you and the team. I’d like to follow up on the previous question regarding the balance of new versus existing business in the quarter. Can you share some insights on how customer conversations are progressing? Are customers expanding in any specific areas, or have most discussions been centered on maintaining existing relationships?

Okay. Thank you so much for the question. You had cranked up a little bit, but I think the essence of the question is around, are we seeing expansion? Are we seeing new use cases? How are we doing in terms of our existing customer base and attracting new customers? Expansion is a key driver for us. One of the really interesting things that I found out during my initial time is that our customers only came to use about 20% of the features and capabilities of the product. As they expand the use of those capabilities, it really gives us the opportunity to deliver new use cases for the customer and drive Teradata on a growth trajectory while saving their existing customer base. Obviously, our focus on our customer success function really looks to drive that. The other thing I would say, that’s been a real eye-opener for me is the expertise and innovation of our people in terms of how they utilize Teradata to drive new and innovative use cases for our customers. You’ve heard about some of that in the prepared remarks in terms of working with companies around IoT, working with companies with predictive maintenance. But some of the fantastic innovations are also incredibly relevant to what we do today. As an example, we developed a dashboard, which allows us to process information from external data sources for a company and internal data sources. They can provide executive management and save the company, an idea of when we should reopen offices, stores, or their overall business in terms of this COVID-19 environment. It’s incredibly exciting to see some of those existing use cases. It’s really nice to see that happening in the cloud. But I want to stress that we are truly a hybrid and multi-cloud player. So we see those use cases being deployed both on-premise and in the cloud. I think the opportunity is there to continue to expand the customer base, and we’re seeing some really nice wins and some really nice growth in our cloud business.

Okay, thanks. And I guess I’m wondering what you’re hearing in terms of events recently, given the backdrop. And you mentioned a little bit about GCP and its impact. I’m just wondering how the overall market landscape has changed now just given the backdrop?

Yes. We’re really excited that in the third quarter, we’ll be announcing Vantage on GCP. We really believe, given the success that the Google Cloud Platform is having in the marketplace, that this will expand and open up a whole new set of customers for us. We’ve already got some pilots going on with our existing customer base in terms of utilizing Vantage on Google Cloud Platform that are really driving some interest in use cases. What we’re finding is that winning in the cloud is very much about helping customers reduce their risk in that transformation. And Teradata has the scale and performance to provide security and reliability that make it a safe choice for customers moving from an on-premise environment to the cloud. Our Native Object Store technology that we launched will enable us to access exponentially larger amounts of data in the cloud and really open up brand-new use cases for our customers and how we deploy.

Thank you.

And your next question comes from Barclays.

Hey, thank you for taking my question and welcome to the team, Steve. I wanted to ask you first, you said you had a win based on the consumption pricing model in the cloud. I was hoping you could kind of expand on what the consumption pricing model is for Teradata and how it’s different from cloud vendors?

Thank you for the welcome and the question. Our consumption pricing model allows customers to only pay for what they actually use, which aligns with typical cloud-based delivery models. What sets us apart is that Teradata enables you to take advantage of these capabilities with high performance and scalability. This means that not only do you pay for what you use, but you also benefit from what we consider a more cost-effective structure when using Teradata technologies compared to other cloud providers. This consumption-based pricing is something that gives us the flexibility to deploy in a real hybrid and multi-cloud environment in a consistent way. It gives consistency for our customers as we deploy workloads across lots of different environments. So I think that’s really the differentiation in Teradata; it comes about when we combine that consumption-based pricing model with all of the benefits of Teradata in terms of low-cost for processing and scaling that across both on-premise and public cloud environments. Hopefully, that answered the question for you.

Thank you. And just a quick question on recurring revenue growth of 19% in EMEA. It seems like an extremely strong number. I was hoping to get a little bit more color on what drove the strength there.

Yes. It was a strong quarter. Clearly had some things that came out of Q1 that didn’t close early, which helped from a linearity perspective, and they’ve shifted very well from perpetual to subscription, helping much more than they did across 2019 and 2018. That’s a big piece of it. The U.S. was the first to make the shift. Now we’re seeing a really good shift in both our other regions in both APJ and EMEA.

Hey, Mark, I think it was a fantastic quarter, and one of the key reasons for growth in EMEA. They executed well across lots of different countries and lots of deal sizes. I’d like to point everybody to the fantastic win at Vodafone, which was referenced in the prepared remarks, that really drove fantastic results. It’s core to Vodafone's strategy in terms of how they are running and managing their network and how they want to be a telco and service provider in the future.

All right. Thank you, both.

There are no further questions at this time. I would now like to turn the call over to Steve McMillan for final comments.

Thank you so much. I’d just like to iterate again that it’s an absolute pleasure for me to have joined Teradata as the CEO. I’d like to thank publicly the Teradata team for their execution and resilience that they’ve shown through the pandemic and the focus that they’ve had in terms of delivering to our customers. The pandemic is a challenging time for all of us, and we very much think that we’re going to have some success as we move forward through the second half of the year. It’s clear that Teradata is essential in helping the largest organizations in the world leverage data to get the answers they need. In our execution, we really do expect that to continue, and we’re going to move forward with a balanced view of growth and returns whilst keeping our customers at the center of all that we do. So thank you very much and thank you for listening in to this earnings call.

Thank you for joining today’s conference call. You may now disconnect.