Announcing its third quarter results that fell short of Wall Street's expectations, Teradata has decided that it's time to once again make a shift in the executive suite. Oliver Ratzesberger, who took charge in January, stepped down, with his predecessor, board member Victor Lund, once again taking the reins on an interim basis.
Overall revenue dropped 11% year over year. While subscriptions grew 11%, that didn't make up for the 78% drop in perpetual license revenue. Furthermore, consulting turned in a disappointing quarter, dropping 26% compared to the previous year.
The CEO switch was surprising given that Ratzesberger had been groomed for the position after he triggered the process for transforming the product from a hardware appliance to a software-based offering that is only now becoming cloud native. He joined Teradata back in 2012 after having been one of its biggest customers at eBay, helping push Teradata into the world of big data. From product positions, he took the helm of COO before ascending to CEO at the beginning of calendar 2019. For Teradata, it was the first time in years that a product person took charge.
After returning from the company's annual universe user conference a few weeks back, we discussed the company's journey from specialized hardware to the cloud and its attempts to make consumption of the platform more accessible with usage-based pricing. Larry Dignan reported the headlines of support for Google Cloud and release of new customer experience and self-service analytics. Over its 40 years, Teradata has positioned itself as the platform for the most complex analytic problems, and after years as a captive under NCR, the company went independent, and in recent years has struggled as the growing power of commodity hardware and emergence of cloud-based analytics services have encroached on Teradata's market.
Lund explained during the earnings call that while customers "love vision… at the end of the day they buy outcomes." He added that the product transition that Ratzesberger shepherded was largely in place and that the company now needed an executive who could execute. We're surprised that Teradata made such a disruptive move when it could have otherwise split up Ratzesberger's office and appointed a new president or COO to handle the blocking and tackling.