- Third quarter public cloud ARR of $570 million, an increase of
26% as reported and 24% in constant currency from the prior year
period(1)
- Cloud net expansion rate of 120%
- GAAP diluted EPS was $0.33, up 175% year-over-year
- Non-GAAP diluted EPS was $0.69, up 64% year-over-year(2)
- Cash flow from operations was $77 million, up 88%
year-over-year
- Free cash flow was $69 million, up 92% year-over-year(3)
Teradata (NYSE: TDC) today announced its third quarter
2024 financial results.
“In the third quarter, we grew our cloud business, delivered
innovations that strengthen our market position, and added new
customers and partners. We are seeing customers increasingly
leverage our hybrid capabilities as they transform and commit to
Teradata for the long term,” said Steve McMillan, President and
Chief Executive Officer, Teradata. “We firmly believe in Teradata’s
differentiated technology and future growth, and we remain focused
on accelerating growth and improving execution.”
Third Quarter 2024 Financial Highlights Compared to Third
Quarter 2023
- Public cloud ARR increased to $570 million from $454 million,
an increase of 26% as reported and 24% in constant currency(1)
- Total ARR decreased to $1.482 billion from $1.524 billion, a
decrease of 3% as reported and 4% in constant currency(1)
- Recurring revenue was $372 million versus $360 million an
increase of 3% as reported and 5% in constant currency (1)
- Total revenue was $440 million versus $438 million, flat as
reported and an increase of 2% in constant currency(1)
- Recurring revenue was 85% of total revenue versus 82%
- GAAP gross margin was 60.5% versus 59.1%
- Non-GAAP gross margin was 61.6% versus 60.3%(2)
- GAAP operating margin was 12.7% versus 6.2%
- Non-GAAP operating margin was 22.5% versus 14.4%(2)
- GAAP diluted EPS was $0.33 versus $0.12 per share
- Non-GAAP diluted EPS was $0.69 versus $0.42 per share(2)
- Cash flow from operations was $77 million compared to $41
million
- Free cash flow was $69 million compared to $36 million(3)
Outlook
For the fourth quarter of 2024:
- GAAP diluted EPS is expected to be in the range of $0.09 to
$0.13 per share
- Non-GAAP diluted EPS is expected to be in the range of $0.40 to
$0.44 per share(2)
For the full-year 2024, Teradata increases the following
ranges:
- GAAP diluted EPS is expected to be in the range of $1.02 to
$1.06 per share
- Non-GAAP diluted EPS is expected to be in the range of $2.30 to
$2.34 per share(2)
Teradata updates the following range:
- Public cloud ARR growth of 18% to 22% year-over-year, in
constant currency(4)
Teradata reaffirms the following ranges:
- Total ARR in the range of -2% to -4% year-over-year, in
constant currency(4)
- Recurring revenue in the range of flat to -2% year-over-year,
in constant currency(4)
- Total revenue in the range of -2% to -4% year-over-year, in
constant currency(4)
- Cash flow from operations of $290 million to $310 million
- Free cash flow of $270 million to $290 million(3)
Global Restructuring
Cost actions announced last quarter were initiated during the
third quarter of 2024. Teradata remains on track to reduce
operating expenses by approximately $75M to $80M on an annualized
run rate.
Segment Reporting
Additionally, on August 5, 2024, Teradata announced that it has
realigned its sales function to optimize operations. Due to this
organizational change Teradata now manages its business under two
segments, which are also Teradata’s new operating segments: (1)
Product Sales and (2) Consulting Services. Prior period segment
information has been reclassified to conform to the current period
presentation.
Earnings Conference Call
The conference call will begin at 1:30 p.m. PT on November 4,
2024. Investors and participants may attend the call by dialing
(404) 975-4839 and entering access code 205954. For investors and
participants outside the United States, see global dial-in numbers
here, and use access code 205954.
The live webcast, as well as a replay, will be available
on the Investor Relations page of the Teradata 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
September 30
2024
2023
% Change as
Reported
% Change in CC
Recurring revenue
$
372
$
360
3%
5%
Perpetual software licenses, hardware and
other
7
7
0%
2%
Consulting services
61
71
(14%)
(12%)
Total revenue
$
440
$
438
0%
2%
Product Sales
$
379
$
367
3%
5%
Consulting Services
61
71
(14%)
(12%)
Total revenue
$
440
$
438
0%
2%
Revenue
(in millions)
For the Nine Months ended
September 30
2024
2023
% Change as
Reported
% Change in CC
Recurring revenue
$
1,128
$
1,120
1%
2%
Perpetual software licenses, hardware and
other
20
33
(39%)
(39%)
Consulting services
193
223
(13%)
(10%)
Total revenue
$
1,341
$
1,376
(3%)
(1%)
Product Sales
$
1,148
$
1,153
(0%)
1%
Consulting Services
193
223
(13%)
(10%)
Total revenue
$
1,341
$
1,376
(3%)
(1%)
As of September 30
2024
2023
% Change as
Reported
% Change in CC
Annual recurring revenue*
$
1,482
$
1,524
(3%)
(4%)
Public cloud ARR**
$
570
$
454
26%
24%
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
For the
Nine Months
(in millions, except per share data)
ended September 30
ended September 30
Gross Profit:
2024
2023
% Chg.
2024
2023
% Chg.
GAAP Gross Profit
$
266
$
259
3%
$
815
$
837
(3%)
% of Revenue
60.5
%
59.1
%
60.8
%
60.8
%
Excluding:
Stock-based compensation expense
4
4
13
12
Reorganization and transformation cost
1
1
3
1
Non-GAAP Gross Profit
$
271
$
264
3%
$
831
$
850
(2%)
% of Revenue
61.6
%
60.3
%
62.0
%
61.8
%
Operating Income
GAAP Operating Income
$
56
$
27
107%
$
170
$
139
22%
% of Revenue
12.7
%
6.2
%
12.7
%
10.1
%
Excluding:
Stock-based compensation expense
29
33
92
96
Reorganization and transformation cost
14
3
22
8
Non-GAAP Operating Income
$
99
$
63
57%
$
284
$
243
17%
% of Revenue
22.5
%
14.4
%
21.2
%
17.7
%
Net Income
GAAP Net Income
$
32
$
12
167%
$
89
$
69
29%
% of Revenue
7.3
%
2.7
%
6.6
%
5.0
%
Excluding:
Stock-based compensation expense
29
33
92
96
Reorganization and transformation cost
14
3
22
8
Argentina Blue Chip Swap
-
-
2
-
Income tax adjustments(i)
(8
)
(5
)
(19
)
(18
)
Non-GAAP Net Income
$
67
$
43
56%
$
186
$
155
20%
% of Revenue
15.2
%
9.8
%
13.9
%
11.3
%
For the Three Months
ended September 30
For the Nine Months
ended September 30
2024 Outlook
Earnings Per Share:
2024
2023
2024
2023
Q4
FY
GAAP Earnings Per Share
$
0.33
$
0.12
$
0.91
$
0.67
$0.09 - $0.13
$1.02 - $1.06
Excluding:
Stock-based compensation expense
0.30
0.32
0.93
0.93
0.29
1.23
Reorganization and transformation cost
0.14
0.03
0.22
0.08
0.08
0.27
Argentina Blue Chip Swap
-
-
0.02
-
-
0.02
Income tax adjustments(i)
(0.08
)
(0.05
)
(0.19
)
(0.17
)
(0.06
)
(0.24
)
Non-GAAP Diluted Earnings Per Share
$
0.69
$
0.42
$
1.89
$
1.51
$0.40 - $0.44
$2.30 - $2.34
i.
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 September 30, 2024, was 25.6% and September
30, 2023, was 12.2%. For the nine months ended September 30, 2024,
was 25.6% and September 30, 2023, was 22.1%.
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
For the
Nine Months
ended September 30
ended September 30
Outlook
2024
2023
2024
2023
2024
Cash provided by operating activities
(GAAP)
$
77
$
41
$
147
$
199
$290 to $310
Less total capital expenditures
(8
)
(5
)
(18
)
(12
)
(~20)
Free Cash Flow (non-GAAP measure)
$
69
$
36
$
129
$
187
$270 to $290
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 fourth quarter and full year
financial. 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, including the 2024 restructuring actions; 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
September 30 Three Months Nine Months
2024
2023
% Chg
2024
2023
% Chg Revenue
Recurring
$
372
$
360
3%
$
1,128
$
1,120
1%
Perpetual software licenses, hardware and other
7
7
0%
20
33
(39%)
Consulting services
61
71
(14%)
193
223
(13%)
Total revenue
440
438
0%
1,341
1,376
(3%)
Gross profit
Recurring
261
255
795
810
% of Revenue
70.2
%
70.8
%
70.5
%
72.3
%
Perpetual software licenses, hardware and other
2
-
2
3
% of Revenue
28.6
%
0.0
%
10.0
%
9.1
%
Consulting services
3
4
18
24
% of Revenue
4.9
%
5.6
%
9.3
%
10.8
%
Total gross
profit
266
259
815
837
% of Revenue
60.5
%
59.1
%
60.8
%
60.8
%
Selling, general
and administrative expenses
137
156
429
476
Research and development expenses
73
76
216
222
Income from
operations
56
27
170
139
% of Revenue
12.7
%
6.2
%
12.7
%
10.1
%
Other expense, net
(9
)
(14
)
(36
)
(44
)
Income before
income taxes
47
13
134
95
% of Revenue
10.7
%
3.0
%
10.0
%
6.9
%
Income tax expense
15
1
45
26
% Tax rate
31.9
%
7.7
%
33.6
%
27.4
%
Net income
$
32
$
12
$
89
$
69
% of Revenue
7.3
%
2.7
%
6.6
%
5.0
%
Net income per
common share Basic
$
0.33
$
0.12
$
0.92
$
0.69
Diluted
$
0.33
$
0.12
$
0.91
$
0.67
Weighted
average common shares outstanding
Basic
96.1
99.2
96.7
100.5
Diluted
97.0
102.0
98.3
102.8
Schedule B
TERADATA CORPORATION CONDENSED CONSOLIDATED
BALANCE SHEETS (in millions - unaudited)
September 30,
December 31,
September 30,
2024
2023
2023
Assets
Current assets Cash and cash equivalents
$
348
$
486
$
348
Accounts receivable, net
247
286
286
Inventories
16
13
8
Other current assets
92
84
96
Total current assets
703
869
738
Property and equipment, net
202
239
249
Right of use assets - operating lease, net
6
9
10
Goodwill
399
398
396
Capitalized contract costs, net
49
68
72
Deferred income taxes
215
221
200
Other assets
85
69
75
Total assets
$
1,659
$
1,873
$
1,740
Liabilities and
stockholders' equity Current
liabilities Current portion of long-term debt
$
25
$
19
$
12
Current portion of finance lease liability
60
66
69
Current portion of operating lease liability
4
6
6
Accounts payable
85
100
106
Payroll and benefits liabilities
105
130
120
Deferred revenue
482
570
477
Other current liabilities
114
105
95
Total current liabilities
875
996
885
Long-term debt
461
480
486
Finance lease liability
40
63
70
Operating lease liability
3
6
7
Pension and other postemployment plan liabilities
96
102
91
Long-term deferred revenue
13
22
16
Deferred tax liabilities
8
8
6
Other liabilities
38
61
57
Total liabilities
1,534
1,738
1,618
Stockholders' equity Common stock
1
1
1
Paid-in capital
2,166
2,074
2,044
Accumulated deficit
(1,908
)
(1,811
)
(1,797
)
Accumulated other comprehensive loss
(134
)
(129
)
(126
)
Total stockholders' equity
125
135
122
Total liabilities and stockholders' equity
$
1,659
$
1,873
$
1,740
Schedule C
TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
millions - unaudited) For the
Period Ended September 30 Three Months Nine
Months
2024
2023
2024
2023
Operating activities Net income
$
32
$
12
$
89
$
69
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
25
27
78
86
Stock-based compensation expense
29
33
92
96
Deferred income taxes
(3
)
(1
)
5
1
Loss on Blue Chip Swap
-
-
3
-
Write off of right of use operating lease assets
Changes in assets and liabilities:
Receivables
1
(21
)
39
78
Inventories
6
1
(3
)
-
Current payables and accrued expenses
27
21
(37
)
(9
)
Deferred revenue
(44
)
(40
)
(97
)
(104
)
Other assets and liabilities
4
9
(22
)
(18
)
Net cash provided by operating
activities
77
41
147
199
Investing activities
Expenditures for property and equipment
(8
)
(5
)
(17
)
(11
)
Additions to capitalized software
-
-
(1
)
(1
)
Business acquisitions and other investing activities, including
loss on Blue Chip Swap
(2
)
(16
)
(5
)
(16
)
Net cash used in investing
activities
(10
)
(21
)
(23
)
(28
)
Financing activities
Repurchases of common stock
(15
)
(147
)
(186
)
(301
)
Repayments of long-term borrowings
(7
)
-
(13
)
-
Payments of finance leases
(17
)
(21
)
(54
)
(62
)
Other financing activities, net
5
7
(1
)
6
Net cash used in financing
activities
(34
)
(161
)
(254
)
(357
)
Effect of exchange rate changes on cash
and cash equivalents
14
(16
)
(8
)
(36
)
Increase (decrease) in cash, cash
equivalents and restricted cash
47
(157
)
(138
)
(222
)
Cash, cash equivalents and restricted cash at beginning of
period
301
506
486
571
Cash, cash equivalents and
restricted cash at end of period
$
348
$
349
$
348
$
349
Supplemental cash flow
disclosure: Non-cash investing and
financing activities: Assets acquired by
finance leases
$
7
$
21
$
25
$
80
Assets acquired by operating leases
$
-
$
2
$
1
$
6
Schedule D
TERADATA
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in millions - unaudited)
For the Three Months
Ended September 30 For the Nine Months Ended
September 30
2024
2023
% Change
As Reported
% Change
Constant
Currency(2)
2024
2023
% Change
As Reported
% Change
Constant
Currency(2)
Segment Revenue
Product Sales
$
379
$
367
3%
5%
$
1,148
$
1,153
(0%)
1%
Consulting Services
61
71
(14%)
(12%)
193
223
(13%)
(10%)
Total segment
revenue
440
438
0%
2%
1,341
1,376
(3%)
(1%)
Segment
gross profit
Product
Sales
265
258
805
820
% of Revenue
69.9
%
70.3
%
70.1
%
71.1
%
Consulting Services
6
6
26
30
% of Revenue
9.8
%
8.5
%
13.5
%
13.5
%
Total segment gross profit
271
264
831
850
% of Revenue
61.6
%
60.3
%
62.0
%
61.8
%
Reconciling items(1)
(5
)
(5
)
(16
)
(13
)
Total gross profit
$
266
$
259
$
815
$
837
% of Revenue
60.5
%
59.1
%
60.8
%
60.8
%
(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/20241031275383/en/
INVESTOR CONTACT Chad Bennett
chad.bennett@teradata.com
MEDIA CONTACT Jennifer Donahue
jennifer.donahue@teradata.com
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