Financial Data and Key Metrics Changes - Total ARR for Q2 2025 was $1,490,000,000, representing a 2% year-over-year increase as reported [6] - Total revenue was $408,000,000, down 6% year-over-year as reported and 7% in constant currency [24] - Non-GAAP diluted earnings per share was $0.47, exceeding the top end of the outlook range [26] - Free cash flow generated in the quarter was $39,000,000, flat year-over-year [27] Business Line Data and Key Metrics Changes - Cloud ARR grew 17% reported and 15% in constant currency, with a net expansion rate of 112% [23] - Services revenue was $51,000,000, down 19% year-over-year as reported and 20% in constant currency [25] - Recurring revenue as a percentage of total revenue increased to 87%, up from 84% in Q2 last year [25] Market Data and Key Metrics Changes - The company experienced better deal execution in Q2, with some deals closing earlier than expected [7] - The cloud segment showed solid growth, with a 15% constant currency growth rate aligning with full-year guidance of 14% to 18% [8] Company Strategy and Development Direction - The company is focusing on integrating its marketing function into go-to-market and product organizations to enhance operational efficiency [10] - New executive leadership has been brought on to support strategic execution and drive long-term returns for investors [8] - The company is positioning itself to leverage AI as a value driver, emphasizing the importance of strong data management capabilities [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year targets due to improved execution and retention rates [6][22] - The company anticipates a modest sequential decline in total ARR from Q2 to Q3 but reaffirms its full-year guidance for total ARR and cloud ARR [29] - Management noted that the interest in AI and GenAI is driving growth across the industry, with a focus on hybrid deployment options [11] Other Important Information - The company announced new partnerships, including one with Fivetran to simplify data integration for AI insights [21] - The introduction of the Teradata AI factory aims to bring AI and machine learning capabilities on-premises, enhancing customer control over AI deployments [12] Q&A Session Summary Question: What does the company see as the opportunity for greater operating leverage and free cash flow? - Management indicated that optimizing costs and returning to growth are key drivers for future free cash flow growth [36][38] Question: What is the outlook for demand and client engagement moving forward? - Management highlighted solid execution and the importance of AI workloads in driving future growth [41][43] Question: What factors contributed to the outperformance in ARR for Q2? - The outperformance was attributed to better deal execution and customer demand for the Teradata platform [46][48] Question: How does the company view the impact of recent R&D tax changes? - Management acknowledged potential positive impacts on cash flow from the recent R&D tax changes [78] Question: How is the company monitoring success in AI initiatives? - Success is defined through partnerships, proof of concept engagements, and the opportunity pipeline influenced by AI workloads [73][75]

Financial Data and Key Metrics Changes - The company reported a strong net interest income (NII) growth of 3.3% sequentially, driven by a net interest margin (NIM) expansion of five basis points to 2.95% [6][12][15] - Earnings per share (EPS) for the second quarter was $0.92, reflecting a $0.15 or 19% improvement over Q1 [12] - The company executed $200 million in stock buybacks during the quarter, returning a total of $385 million to shareholders [14][26] Business Line Data and Key Metrics Changes - The Private Bank experienced its strongest loan growth quarter, adding $1.2 billion in loans, contributing $0.06 to EPS, up from $0.04 in the prior quarter [14][27] - Fees increased by 10% linked quarter, with wealth and card fees reaching record levels [13][15] - The card business also delivered a record quarter driven by seasonal improvements in purchase volumes [18] Market Data and Key Metrics Changes - The company noted a favorable credit trend with net charge-offs decreasing to 48 basis points from 51 basis points in the prior quarter [22][23] - Non-accrual loans decreased by 4% linked quarter, indicating improving credit quality [23] - Average deposits were up 1%, driven by increases in lower-cost categories across consumer and the private bank [21] Company Strategy and Development Direction - The company is focused on a multi-year initiative called "Reimagining the Bank," aimed at redesigning customer service and operational efficiency through new technologies like AI [9][10][27] - The strategic emphasis includes building a transformed consumer bank, a well-positioned commercial bank, and a premier private bank and wealth franchise [26] - The company remains on track to achieve over 5% accretion to its bottom line and a return on equity (ROE) of over 20% in 2025 [9][28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about economic conditions and market trends, anticipating a favorable environment for loan demand and deal activity in the second half of the year [10][11] - The company is comfortable with its full-year guidance for 2025, expecting continued momentum in its strategic initiatives [11][30] - Management highlighted the importance of maintaining a fortress balance sheet to navigate economic cycles and capitalize on opportunities [81] Other Important Information - The company is experiencing strong growth in its private banking segment, with a significant increase in assets under management (AUM) [27][28] - The company is also seeing a positive trend in its capital markets business, with a strong pipeline of deals expected to close in the upcoming quarters [7][10] Q&A Session Summary Question: Loan growth dynamics in the private bank - Management noted that all three business segments (commercial, consumer, private bank) experienced net loan growth, with a constructive outlook for the second half of the year [36][38] Question: NIM expectations in a dovish Fed environment - Management discussed strategies to lock in higher net interest margins, including opportunistic hedging to protect against downside risks [56][59] Question: Strategy for deposits and growth outlook - Management emphasized the importance of low-cost deposit trends and the ability to grow deposits to support loan growth while optimizing the mix [67][69] Question: Capital requirements and rating agency perspectives - Management indicated that while regional banks have built capital conservatively, there is potential for capital requirements to adjust as profitability improves [78][80] Question: Details on the "Reimagining the Bank" initiative - Management explained that this initiative aims to leverage new technologies to enhance customer service and operational efficiency, with a focus on long-term growth [85][89]

Financial Data and Key Metrics Changes - The company reported strong financial results for the second quarter, with net interest income (NII) growth of 3.3% sequentially, driven by a net interest margin (NIM) expansion of five basis points [4][9] - Earnings per share (EPS) for the quarter was $0.92, reflecting a $0.15 or 19% improvement over the previous quarter [9] - Operating leverage improved by 500 basis points, with expenses broadly flat [4][9] Business Line Data and Key Metrics Changes - The Private Bank experienced strong loan growth, adding $1.2 billion in loans, contributing $0.06 to EPS, up from $0.04 in the prior quarter [11][25] - Wealth and card fees increased significantly, with record levels achieved in the quarter [10][13] - Mortgage revenue growth was attributed to an improvement in mortgage servicing rights (MSR) valuation and seasonal production increases [10][14] Market Data and Key Metrics Changes - The company noted a favorable credit trend, with net charge-offs decreasing to 48 basis points from 51 basis points in the prior quarter [18] - Non-accrual loans decreased by 4% linked quarter, indicating improving credit quality [19] - The company maintained a strong capital position with a CET1 ratio of 10.6% and executed $200 million in stock buybacks during the quarter [11][22] Company Strategy and Development Direction - The company is focused on a multi-year initiative called "Reimagining the Bank," aimed at redesigning customer service and operational efficiency through new technologies like AI [6][23] - The strategic focus includes transforming the consumer bank, enhancing the commercial bank's positioning, and building a premier private bank and wealth franchise [22] - The company remains on track to achieve over 5% accretion to its bottom line and a return on equity (ROE) of over 20% in 2025 [6][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about economic conditions and market trends, anticipating favorable conditions for the second half of the year despite uncertainties around tariffs [7][8] - The company expects to maintain its full-year guidance for 2025, with a clear path to achieving its ROTCE target of 16% to 18% [27] - Management highlighted the importance of executing on strategic initiatives and controlling factors within their influence [8][22] Other Important Information - The company reported a strong pipeline for capital markets, expecting to record over $30 million in fees from delayed M&A deals in July [5][13] - The company is focused on optimizing its deposit funding, with a notable increase in non-interest-bearing deposits [17][66] - The allowance for credit losses was slightly down to 1.59%, reflecting an improving portfolio mix [20] Q&A Session Summary Question: Loan growth in the quarter - Management noted that all three business segments (commercial, consumer, private bank) experienced net loan growth, with a constructive outlook for the second half of the year [34][35] Question: NIM expectations in a dovish Fed environment - Management indicated confidence in maintaining NIM expectations, with hedging strategies in place to protect against downside risks [54][56] Question: Strategy for the second half of the year - Management emphasized a focus on both growth and optimizing the deposit mix, with strong performance in low-cost deposits [64][66] Question: Capital strategy and rating agency considerations - Management discussed the importance of maintaining a conservative capital structure while being optimistic about future capital requirements [78][81] Question: Reimagining the Bank initiative - Management explained that this initiative aims to leverage new technologies and improve operational efficiency, with a dedicated team leading the effort [84][86]