TDC Teradata Corporation

• 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/

INVESTOR CONTACT Mike DiLoreti mike.diloreti@teradata.com

MEDIA CONTACT Jennifer Donahue jennifer.donahue@teradata.com