Teradata (TDC, Financial), a US-based enterprise data warehouse and analytics company, is transitioning its business from upfront license sales to a subscription-based model. As we have learned from other investments in software companies, revenue trends are generally sluggish in the first years of this transition but can improve as the annuity-like subscription revenues ultimately mount. Last year was challenging for Teradata’s cash flow as clients transi-tioned (and revenues dropped) faster than expected. We believe that Teradata will be able to complete the transition to the subscription model and generate potentially better free cash flow in the future.
From First Eagle Global Value Team's fourth-quarter 2019 commentary.
