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    Teradata Reports First Quarter 2024 Financial Results

    5/6/24 4:05:00 PM ET
    $TDC
    Computer Software: Prepackaged Software
    Technology
    Get the next $TDC alert in real time by email
    • First quarter public cloud ARR of $525 million, an increase of 35% as reported and 36% in constant currency from the prior year period(1)
    • Cloud net expansion rate of 123%
    • GAAP diluted EPS was $0.20 versus $0.39 per share
    • Non-GAAP diluted EPS was $0.57 versus $0.61 per share(2)
    • First quarter share repurchases of $124 million

    Teradata (NYSE: TDC) today announced its first quarter 2024 financial results.

    "Teradata grew public cloud ARR 36% year over year in constant currency. Teradata's technology is fundamental to driving complex analytics at scale, and is differentiated today as businesses everywhere are exploring how to leverage AI to be more productive and innovative," said Steve McMillan, President and CEO, Teradata. "We are focused on, and confident in, our ability to improve execution across the business, and we are moving forward with urgency and discipline to achieve our long-term profitable growth targets."

    "While quarter-over-quarter cloud ARR growth was slightly below expectations, we are pleased with our sustained strong cloud net expansion rate of 123%," said Claire Bramley, Chief Financial Officer, Teradata. "We are dedicated to improving our overall growth trajectory and will continue to invest in areas to support our long-term objectives. We are also highly focused on delivering profitability, growing free cash flow, and maintaining on-going value to shareholders.

    First Quarter 2024 Financial Highlights Compared to First Quarter 2023

    • Public cloud ARR increased to $525 million from $388 million, an increase of 35% as reported and 36% in constant currency(1)
    • Total ARR decreased to $1.480 billion from $1.506 billion, a decrease of 2% as reported and 1% in constant currency(1)
    • Recurring revenue was $388 million versus $389 million, flat as reported and 1% increase in constant currency(1)
    • Total revenue was $465 million versus $476 million, a decrease of 2% as reported and 1% in constant currency(1)
    • Recurring revenue was 83% of total revenue versus 82%
    • GAAP gross margin was 61.1% versus 63.4%
    • Non-GAAP gross margin was 62.2% versus 64.3%(2)
    • GAAP operating income was $48 million versus $79 million
    • Non-GAAP operating income was $89 million versus $108 million(2)
    • GAAP diluted EPS was $0.20 versus $0.39 per share
    • Non-GAAP diluted EPS was $0.57 versus $0.61 per share(2)
    • Cash flow from operations was $27 million compared to $109 million
    • Free cash flow was $21 million compared to $105 million(3)

    Outlook

    For the second quarter of 2024:

    • GAAP diluted EPS is expected to be in the range of $0.17 to $0.21 per share
    • Non-GAAP diluted EPS is expected to be in the range of $0.46 to $0.50 per share(2)

    For the full-year 2024, Teradata updates the following range:

    • GAAP diluted EPS is expected to be in the range of $1.00 to $1.16 per share

    For the full-year 2024, Teradata retains the following ranges:

    • Total ARR growth of 4% to 8% year-over-year, in constant currency(4)
    • Recurring revenue growth of 1% to 3% year-over-year, in constant currency(4)
    • Total revenue growth of 0% to 2% year-over-year, in constant currency(4)
    • Public cloud ARR growth of 35% to 41% year-over-year, in constant currency(4)
    • Cash flow from operations of $360 million to $400 million
    • Free cash flow of $340 million to $380 million(3)
    • Non-GAAP diluted EPS is expected to be in the range of $2.15 to $2.31 per share(2)

    Earnings Conference Call

    A conference call is scheduled for today at 2:00 p.m. PT to discuss the Company's first quarter 2024 results and provide a business and financial update. Access to the conference call, as well as a replay of the conference call, is available on Teradata's website at investor.teradata.com.

    Supplemental Financial Information

    Additional information regarding Teradata's operating results is provided below as well as on Teradata's website at investor.teradata.com.

    1.

    The impact of currency is determined by calculating the prior-period results using the current-year monthly average currency rates. See the foreign currency fluctuation schedule, which is used to determine revenue on a constant currency ("CC") basis, on the Investor Relations page of the Company's website at investor.teradata.com.

    Revenue

     

    (in millions)

     

     

    For the Three Months ended March 31

    2024

    2023

    % Change as

    Reported

    % Change in CC

    Recurring revenue

    $

    388

     

    $

    389

     

    0

    %

     

    1

    %

    Perpetual software licenses, hardware and other

     

    8

     

     

    13

     

    (38

    %)

     

    (40

    %)

    Consulting services

     

    69

     

     

    74

     

    (7

    %)

     

    (2

    %)

    Total revenue

    $

    465

     

    $

    476

     

    (2

    %)

     

    (1

    %)

     

     

     

     

     

     

     

     

    Americas

    $

    277

     

    $

    292

     

    (5

    %)

     

    (3

    %)

    EMEA

     

    125

     

     

    117

     

    7

    %

     

    6

    %

    APJ

     

    63

     

     

    67

     

    (6

    %)

     

    0

    %

    Total revenue

    $

    465

     

    $

    476

     

    (2

    %)

     

    (1

    %)

     

    As of March 31

     

    2024

     

    2023

     

    % Change as

    Reported

     

    % Change in CC

    Annual recurring revenue*

    $

    1,480

     

    $

    1,506

     

    (2

    %)

     

    (1

    %)

    Public cloud ARR**

    $

    525

     

    $

    388

     

    35

    %

     

    36

    %

     

    The impact of currency on ARR is determined by calculating the prior period ending ARR using the current period end currency rates.

    *

    Annual recurring revenue ("ARR") is defined as the annual value at a point in time of all recurring contracts, including subscription, cloud, software upgrade rights, and maintenance. Total ARR does not include managed services and third-party software. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q.

    **

    Public cloud ARR is defined as the annual value at a point in time of all contracts related to public cloud implementations of Teradata VantageCloud and does not include ARR related to private or managed cloud implementations. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q.

    2.

     

    Teradata reports its results in accordance with GAAP. However, as described below, the Company believes that certain non-GAAP measures such as free cash flow, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, and non-GAAP diluted earnings per share, all of which exclude certain items, and which may be reported on a constant currency basis, are useful for investors. Our non-GAAP measures are not meant to be considered in isolation to, as substitutes for, or superior to, results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Each of our non-GAAP measures do not have a uniform definition under GAAP and therefore, Teradata's definition may differ from other companies' definitions of these measures.

     

     

     

     

     

    The following tables reconcile Teradata's actual and projected results and EPS under GAAP to the Company's actual and projected non-GAAP results and EPS for the periods presented, which exclude certain specified items. Our management internally uses supplemental non-GAAP financial measures, such as gross profit, operating income, net income, and EPS, excluding certain items, to understand, manage and evaluate our business and support operating decisions on a regular basis. The Company believes such non-GAAP financial measures (1) provide useful information to investors regarding the underlying business trends and performance of the Company's ongoing operations, (2) are useful for period-over-period comparisons of such operations and results, that may be more easily compared to peer companies and allow investors a view of the Company's operating results excluding stock-based compensation expense and special items, (3) provide useful information to management and investors regarding present and future business trends, and (4) provide consistency and comparability with past reports and projections of future results.

    For the Three Months

    (in millions, except per share data)

    ended March 31

    Gross Profit:

    2024

    2023

    % Chg.

    GAAP Gross Profit

    $

    284

     

    $

    302

     

    (6

    %)

    % of Revenue

     

    61.1

    %

     

    63.4

    %

     

    Excluding:

     

    Stock-based compensation expense

     

    4

     

     

    4

     

    Reorganization and transformation cost

     

    1

     

     

    -

     

    Non-GAAP Gross Profit

    $

    289

     

    $

    306

     

    (6

    %)

    % of Revenue

     

    62.2

    %

     

    64.3

    %

     

    Operating Income

     

     

     

     

     

     

    GAAP Operating Income

    $

    48

     

    $

    79

     

    (39

    %)

    % of Revenue

     

    10.3

    %

     

    16.6

    %

     

    Excluding:

     

    Stock-based compensation expense

     

    34

     

     

    28

     

    Reorganization and transformation cost

     

    7

     

     

    1

     

    Non-GAAP Operating Income

    $

    89

     

    $

    108

     

    (18

    %)

    % of Revenue

     

    19.1

    %

     

    22.7

    %

     

     

     

     

     

     

     

    Net Income

     

     

     

     

     

     

    GAAP Net Income

    $

    20

     

    $

    40

     

    (50

    %)

    % of Revenue

     

    4.3

    %

     

    8.4

    %

     

    Excluding:

     

    Stock-based compensation expense

     

    34

     

     

    28

     

    Reorganization and transformation cost

     

     

    7

     

     

     

    1

     

     

     

    Argentina Blue Chip Swap

     

     

    2

     

     

     

    -

     

     

     

    Income tax adjustments(i)

     

    (6

    )

     

    (6

    )

    Non-GAAP Net Income

     

    $

    57

     

     

    $

    63

     

     

    (10

    %)

    % of Revenue

     

    12.3

    %

     

    13.2

    %

    For the Three Months

    ended March 31

    2024 Outlook

    Earnings Per Share:

    2024

     

    2023

     

     

    Q2

     

    FY

    GAAP Earnings Per Share

    $

    0.20

     

     

    $

    0.39

     

     

     

    $0.17 - $0.21

     

    $1.00 - $1.16

     

    Excluding:

     

     

     

     

     

    Stock-based compensation expense

     

    0.34

     

     

    0.27

     

     

    0.33

     

     

    1.32

     

    Reorganization and transformation cost

     

    0.07

     

     

    0.01

     

     

    0.02

     

     

    0.15

     

    Argentina Blue Chip Swap

     

    0.02

     

     

     

    -

     

     

     

    -

     

     

    0.02

     

    Income tax adjustments(i)

     

    (0.06

    )

     

     

    (0.06

    )

     

     

    (0.06

    )

     

    (0.34

    )

    Non-GAAP Diluted Earnings Per Share

    $

    0.57

     

    $

    0.61

     

     

    $0.46 - $0.50

     

    $2.15 - $2.31

     

    Represents the income tax effect of the pre-tax adjustments to reconcile GAAP to Non-GAAP income based on the applicable jurisdictional statutory tax rate of the underlying item. Including the income tax effect assists investors in understanding the tax provision associated with those adjustments and the effective tax rate related to the underlying business and performance of the Company's ongoing operations. As a result of these adjustments, the Company's non-GAAP effective tax rate for the three months ended March 31, 2024, was 24.0% and March 31, 2023, was 27.6%.

    3.

     

    As described below, the Company believes that free cash flow is a useful non-GAAP measure for investors. Free cash flow does not have a uniform definition under GAAP in the United States and therefore, Teradata's definition may differ from other companies' definitions of this measure. Teradata defines free cash flow as cash provided by/used in operating activities, less capital expenditures for property and equipment and additions to capitalized software. Teradata's management uses free cash flow to assess the financial performance of the Company and believes it is useful for investors because it relates the operating cash flow of the Company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures which can be used for among other things, investments in the Company's existing businesses, strategic acquisitions, strengthening the Company's balance sheet, repurchase of Company stock and repay the Company's debt obligations. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other non-discretionary expenditures that are not deducted from the measure. This non-GAAP measure should not be considered as a substitute for, or superior to, cash flows from operating activities under GAAP.

    (in millions)

    For the Three Months

     

     

     

     

    ended March 31

     

     

    Outlook

    2024

    2023

     

     

    2024

     

     

     

     

    Cash provided by operating activities (GAAP)

    $

    27

     

    $

    109

     

     

     

    $360 to $400

    Less total capital expenditures

     

    (6

    )

     

    (4

    )

     

     

    (~20)

    Free Cash Flow (non-GAAP measure)

    $

    21

     

    $

    105

     

     

     

    $340 to $380

    4.

     

    We are providing an outlook for the 2024 growth rates for public cloud ARR, total ARR, recurring revenue, and total revenue in constant currency to provide better visibility into the underlying growth of the business. Teradata calculates public cloud ARR and total ARR in constant currency by calculating the prior period ending public cloud ARR or total ARR, as applicable, using the current period end currency rates. It is impractical to provide a schedule on currency period end rates at a future point in time. Teradata calculates recurring revenue and total revenue in constant currency by using the prior-period results with the current-year monthly average currency rates. See the foreign currency fluctuation schedule on the Investor Relations page of the Company's website at investor.teradata.com to calculate the anticipated impact of currency on the revenue outlook.

    Note to Investors

    This release contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements generally relate to opinions, beliefs, and projections of expected future financial and operating performance, business trends, liquidity, and market conditions, among other things. These forward-looking statements are based upon current expectations and assumptions and often can be identified by words such as "expect," "strive," "looking ahead," "outlook," "guidance," "forecast," "anticipate," "continue," "plan," "estimate," "believe," "will," "would," "likely," "intend," "potential," or similar expressions. Forward-looking statements in this release include our 2024 second quarter and full year financial guidance. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially, including those relating to: the global economic environment and business conditions in general, including inflation and/or recessionary conditions; the ability of our suppliers to meet their commitments to us; the timing of purchases, migrations, or expansions by our current and potential customers; the rapidly changing and intensely competitive nature of the information technology industry, the data analytics business, and artificial intelligence capabilities; fluctuations in our operating, capital allocation, and cash flow results; our ability to execute and realize the anticipated benefits of our refreshed brand, business transformation program or restructuring and cost saving initiatives; risks inherent in operating in foreign countries, including sanctions, foreign currency fluctuations, and/or acts of war; risks associated with data privacy, cyberattacks and maintaining secure and effective products for our customers, as well as, internal information technology and control systems; the timely and successful development, production or acquisition, availability and/or market acceptance of new and existing products, product features and services, including for artificial intelligence; tax rates; turnover of our workforce and the ability to attract and retain skilled employees; protecting our intellectual property; availability and successful execution of new alliance and acquisition opportunities; subscription arrangements that may be cancelled or fail to be renewed; the impact on our business and financial reporting from the implementation of a new ERP system and changes in accounting rules; and other factors described from time to time in Teradata's filings with the U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K, and subsequent quarterly reports on Forms 10-Q or current reports on Forms 8-K, as well as Teradata's annual report to stockholders. Teradata does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

    About Teradata

    At Teradata, we believe that people thrive when empowered with trusted information. We offer the most complete cloud analytics and data platform for AI. By delivering harmonized data and trusted AI, we enable more confident decision-making, unlock faster innovation, and drive the impactful business results organizations need most. See how at Teradata.com.

    The Teradata logo is a trademark, and Teradata is a registered trademark of Teradata Corporation and/or its affiliates in the U.S. and worldwide.

    Schedule A

     
    TERADATA CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (in millions, except per share amounts - unaudited)
     
    For the Period Ended March 31
    Three Months

    2024

    2023

    % Chg

    Revenue
     
    Recurring

    $

    388

     

    $

    389

     

    (0

    %)

    Perpetual software licenses, hardware and other

     

    8

     

     

    13

     

    (38

    %)

    Consulting services

     

    69

     

     

    74

     

    (7

    %)

     
    Total revenue

     

    465

     

     

    476

     

    (2

    %)

     
    Gross profit
     
    Recurring

     

    276

     

     

    291

     

    % of Revenue

     

    71.1

    %

     

    74.8

    %

    Perpetual software licenses, hardware and other

     

    -

     

     

    2

     

    % of Revenue

     

    0.0

    %

     

    15.4

    %

    Consulting services

     

    8

     

     

    9

     

    % of Revenue

     

    11.6

    %

     

    12.2

    %

     
    Total gross profit

     

    284

     

     

    302

     

    % of Revenue

     

    61.1

    %

     

    63.4

    %

     
    Selling, general and administrative expenses

     

    161

     

     

    153

     

    Research and development expenses

     

    75

     

     

    70

     

     
    Income from operations

     

    48

     

     

    79

     

    % of Revenue

     

    10.3

    %

     

    16.6

    %

     
    Other expense, net

     

    (16

    )

     

    (21

    )

     
    Income before income taxes

     

    32

     

     

    58

     

    % of Revenue

     

    6.9

    %

     

    12.2

    %

     
    Income tax expense

     

    12

     

     

    18

     

    % Tax rate

     

    37.5

    %

     

    31.0

    %

     
    Net income

    $

    20

     

    $

    40

     

    % of Revenue

     

    4.3

    %

     

    8.4

    %

     
    Net income per common share
    Basic

    $

    0.21

     

    $

    0.39

     

    Diluted

    $

    0.20

     

    $

    0.39

     

     
    Weighted average common shares outstanding
    Basic

     

    97.4

     

     

    101.4

     

    Diluted

     

    100.1

     

     

    103.8

     

    Schedule B

     
    TERADATA CORPORATION
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (in millions - unaudited)
     
     
    March 31,

    December 31,

    March 31,

    2024

    2023

    2023

    Assets
     
    Current assets
    Cash and cash equivalents

    $

    337

     

    $

    486

     

    $

    551

     

    Accounts receivable, net

     

    311

     

     

    286

     

     

    341

     

    Inventories

     

    16

     

     

    13

     

     

    7

     

    Other current assets

     

    105

     

     

    84

     

     

    107

     

     
    Total current assets

     

    769

     

     

    869

     

     

    1,006

     

     
    Property and equipment, net

     

    227

     

     

    239

     

     

    252

     

    Right of use assets - operating lease, net

     

    7

     

     

    9

     

     

    11

     

    Goodwill

     

    396

     

     

    398

     

     

    391

     

    Capitalized contract costs, net

     

    59

     

     

    68

     

     

    84

     

    Deferred income taxes

     

    204

     

     

    221

     

     

    204

     

    Other assets

     

    83

     

     

    69

     

     

    38

     

     
    Total assets

    $

    1,745

     

    $

    1,873

     

    $

    1,986

     

     
    Liabilities and stockholders' equity
     
    Current liabilities
    Current portion of long-term debt

    $

    25

     

    $

    19

     

    $

    -

     

    Current portion of finance lease liability

     

    64

     

     

    66

     

     

    70

     

    Current portion of operating lease liability

     

    5

     

     

    6

     

     

    8

     

    Accounts payable

     

    119

     

     

    100

     

     

    92

     

    Payroll and benefits liabilities

     

    92

     

     

    130

     

     

    95

     

    Deferred revenue

     

    573

     

     

    570

     

     

    634

     

    Other current liabilities

     

    105

     

     

    105

     

     

    100

     

     
    Total current liabilities

     

    983

     

     

    996

     

     

    999

     

     
    Long-term debt

     

    474

     

     

    480

     

     

    498

     

    Finance lease liability

     

    57

     

     

    63

     

     

    62

     

    Operating lease liability

     

    4

     

     

    6

     

     

    8

     

    Pension and other postemployment plan liabilities

     

    94

     

     

    102

     

     

    96

     

    Long-term deferred revenue

     

    13

     

     

    22

     

     

    4

     

    Deferred tax liabilities

     

    8

     

     

    8

     

     

    7

     

    Other liabilities

     

    58

     

     

    61

     

     

    82

     

     
    Total liabilities

     

    1,691

     

     

    1,738

     

     

    1,756

     

     
    Stockholders' equity
    Common stock

     

    1

     

     

    1

     

     

    1

     

    Paid-in capital

     

    2,103

     

     

    2,074

     

     

    1,962

     

    Accumulated deficit

     

    (1,918

    )

     

    (1,811

    )

     

    (1,613

    )

    Accumulated other comprehensive loss

     

    (132

    )

     

    (129

    )

     

    (120

    )

     
    Total stockholders' equity

     

    54

     

     

    135

     

     

    230

     

     
    Total liabilities and stockholders' equity

    $

    1,745

     

    $

    1,873

     

    $

    1,986

     

    Schedule C

    TERADATA CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (in millions - unaudited)
     
    For the Period Ended March 31
    Three Months

    2024

    2023

    Operating activities
    Net income

    $

    20

     

    $

    40

     

     
    Adjustments to reconcile net income to net cash provided
    by operating activities:
    Depreciation and amortization

     

    27

     

     

    28

     

    Stock-based compensation expense

     

    34

     

     

    28

     

    Deferred income taxes

     

    12

     

     

    7

     

    Loss on Blue Chip Swap

     

    2

     

     

    -

     

    Changes in assets and liabilities:
    Receivables

     

    (25

    )

     

    23

     

    Inventories

     

    (3

    )

     

    1

     

    Current payables and accrued expenses

     

    (30

    )

     

    (41

    )

    Deferred revenue

     

    (6

    )

     

    41

     

    Other assets and liabilities

     

    (4

    )

     

    (18

    )

     
    Net cash provided by operating activities

     

    27

     

     

    109

     

     
    Investing activities
    Expenditures for property and equipment

     

    (6

    )

     

    (4

    )

    Business acquisitions and other investing activities, including loss on Blue Chip Swap

     

    (2

    )

     

    -

     

    Net cash used in investing activities

     

    (8

    )

     

    (4

    )

     
    Financing activities
    Repurchases of common stock

     

    (124

    )

     

    (84

    )

    Payments of finance leases

     

    (20

    )

     

    (20

    )

    Other financing activities, net

     

    (6

    )

     

    (7

    )

     
    Net cash used in financing activities

     

    (150

    )

     

    (111

    )

     
    Effect of exchange rate changes on cash and cash equivalents

     

    (17

    )

     

    (10

    )

     
    Decrease in cash, cash equivalents and restricted cash

     

    (148

    )

     

    (16

    )

    Cash, cash equivalents and restricted cash at beginning of period

     

    486

     

     

    571

     

     
    Cash, cash equivalents and restricted cash at end of period

    $

    338

     

    $

    555

     

     
    Supplemental cash flow disclosure:
    Non-cash investing and financing activities:
    Assets acquired by finance leases

    $

    11

     

    $

    30

     

    Assets acquired by operating leases

    $

    -

     

    $

    1

     

    Schedule D

    TERADATA CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (in millions - unaudited)
     
    For the Three Months Ended March 31

    2024

     

    2023

     

    % Change

    As Reported

     

    % Change

    Constant

    Currency (2)

    Segment Revenue
     
    Americas

    $

    277

     

    $

    292

     

    (5

    %)

    (3

    %)

    EMEA

     

    125

     

     

    117

     

    7

    %

    6

    %

    APJ

     

    63

     

     

    67

     

    (6

    %)

    0

    %

     
     
    Total segment revenue

     

    465

     

     

    476

     

    (2

    %)

    (1

    %)

     
    Segment gross profit
     
    Americas

     

    177

     

     

    193

     

    % of Revenue

     

    63.9

    %

     

    66.1

    %

    EMEA

     

    79

     

     

    74

     

    % of Revenue

     

    63.2

    %

     

    63.2

    %

    APJ

     

    33

     

     

    39

     

    % of Revenue

     

    52.4

    %

     

    58.2

    %

     
    Total segment gross profit

     

    289

     

     

    306

     

    % of Revenue

     

    62.2

    %

     

    64.3

    %

     
    Reconciling items(1)

     

    (5

    )

     

    (4

    )

     
    Total gross profit

    $

    284

     

    $

    302

     

    % of Revenue

     

    61.1

    %

     

    63.4

    %

    (1)

    Reconciling items include stock-based compensation, amortization of acquisition-related intangible assets and acquisition, integration and reorganization-related items.

    (2)

    The impact of currency is determined by calculating the prior period results using the current-year monthly average currency rates.

     

    View source version on businesswire.com: https://www.businesswire.com/news/home/20240503813451/en/

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