- Public cloud ARR of $454 million, an increase of 63% as
reported and 61% in constant currency from the prior year
period(1)
- Total ARR of $1.524 billion, an increase of 11% as reported and
9% in constant currency from the prior year period(1)
- Third quarter recurring revenue of $360 million, an increase of
9% as reported and 10% in constant currency from the prior year
period(1)
- Third quarter total revenue of $438 million, an increase of 5%
as reported and 6% in constant currency from the prior year
period(1)
- Third quarter GAAP diluted earnings per share of $0.12
- Third quarter Non-GAAP diluted earnings per share of
$0.42(2)
- Third quarter cash from operations of $41 million and free cash
flow of $36 million(3)
- Third quarter share repurchases of $141 million, resulting in a
year-to-date return of free cash flow of 161%
Teradata (NYSE: TDC) today announced its third quarter 2023
financial results.
“Our best-in-class cloud analytics and data platform for AI
delivers harmonized data, trusted AI, and faster innovation for
better decision-making,” said Steve McMillan, President and Chief
Executive Officer of Teradata. “We are pleased with our financial
results, execution across the organization, and with the
innovations we’ve been able to deliver.”
“I am pleased by the company’s consistent execution, resulting
in a solid set of financial results that were led by 63% growth in
Cloud ARR and 10% growth in recurring revenue,” said Claire
Bramley, Chief Financial Officer of Teradata. “With over $140
million of shares repurchased in the quarter, we remain steadfastly
focused on capital allocation as a driver of sustained shareholder
value.”
Third Quarter 2023 Financial Highlights Compared to Third
Quarter 2022
- Public cloud ARR increased to $454 million from $279 million,
an increase of 63% as reported and 61% in constant currency(1)
- Total ARR increased to $1.524 billion from $1.374 billion, an
increase of 11% as reported and 9% in constant currency(1)
- Recurring revenue was $360 million versus $331 million, an
increase of 9% as reported and 10% in constant currency(1)
- Total revenue was $438 million versus $417 million, an increase
of 5% as reported and 6% in constant currency(1)
- Recurring revenue was 82% of total revenue in the third
quarter, up from 79% in the prior year period
- GAAP gross margin was 59.1% versus 62.1%
- Non-GAAP gross margin was 60.3% versus 62.6%(2)
- GAAP operating income was $27 million versus $25 million
- Non-GAAP operating income was $63 million versus $54
million(2)
- GAAP diluted EPS was $0.12 versus $0.08 per share
- Non-GAAP diluted EPS was $0.42 versus $0.31(2)
- Cash flow from operations was $41 million compared to $34
million
- Free cash flow was $36 million compared to $31 million(3)
Outlook
For the fourth quarter of 2023:
- GAAP diluted EPS is expected to be in the range of ($0.10) to
($0.06)
- Non-GAAP diluted EPS is expected to be in the range of $0.50 to
$0.54(2)
Teradata updates the following outlook for full year 2023:
- GAAP diluted EPS is now expected be in the range of $0.59 to
$0.63 versus the range of $0.74 to $0.86 previously provided
- Non-GAAP diluted EPS is now expected to be in the range of
$2.01 to $2.05 versus the range of $1.92 to $2.04 previously
provided(2)
For the full year 2023, Teradata re-affirms the following
outlook elements:
- Public cloud ARR growth of 53% to 57% year-over-year
- Total ARR growth of 6% to 8% year-over-year
- Recurring revenue growth of 4% to 7% year-over-year
- Total revenue growth of 1% to 4% year-over-year
- Cash flow from operations of $340 million to $380 million
- Free cash flow of $320 million to $360 million(3)
Earnings Conference Call
A conference call is scheduled for today at 2:00 p.m. PT to
discuss the Company’s third quarter 2023 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
September 30
2023
2022
% Change as Reported
% Change in CC
Recurring revenue
$
360
$
331
9
%
10
%
Perpetual software licenses, hardware and
other
7
14
(50
%)
(50
%)
Consulting services
71
72
(1
%)
(1
%)
Total revenue
$
438
$
417
5
%
6
%
Americas
$
264
$
242
9
%
11
%
EMEA
113
105
8
%
3
%
APJ
61
70
(13
%)
(8
%)
Total revenue
$
438
$
417
5
%
6
%
Revenue
(in millions)
For the Nine Months ended
September 30
2023
2022
% Change as Reported
% Change in CC
Recurring revenue
$
1,120
$
1,062
5
%
8
%
Perpetual software licenses, hardware and
other
33
48
(31
%)
(27
%)
Consulting services
223
233
(4
%)
(1
%)
Total revenue
$
1,376
$
1,343
2
%
5
%
Americas
$
824
$
781
6
%
7
%
EMEA
348
337
3
%
5
%
APJ
204
225
(9
%)
(4
%)
Total revenue
$
1,376
$
1,343
2
%
5
%
As of September 30
2023
2022
% Change as Reported
% Change in CC
Annual recurring revenue*
$
1,524
$
1,374
11
%
9
%
Public cloud ARR**
$
454
$
279
63
%
61
%
The impact of currency on ARR is
determined by calculating the prior period ending ARR using the
current period end currency rates.
* Total 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:
2023
2022
% Chg.
2023
2022
% Chg.
GAAP Gross Profit
$
259
$
259
-
$
837
$
818
2
%
% of Revenue
59.1
%
62.1
%
60.8
%
60.9
%
Excluding:
Stock-based compensation expense
4
3
12
12
Reorganization and transformation cost
1
(1
)
1
6
Non-GAAP Gross Profit
$
264
$
261
1
%
$
850
$
836
2
%
% of Revenue
60.3
%
62.6
%
61.8
%
62.2
%
Operating Income
GAAP Operating Income
$
27
$
25
8
%
$
139
$
107
30
%
% of Revenue
6.2
%
6.0
%
10.1
%
8.0
%
Excluding:
Stock-based compensation expense
33
27
96
90
Reorganization and transformation cost
3
2
8
27
Non-GAAP Operating Income
$
63
$
54
17
%
$
243
$
224
8
%
% of Revenue
14.4
%
12.9
%
17.7
%
16.7
%
Net Income
GAAP Net Income
$
12
$
8
50
%
$
69
$
40
73
%
% of Revenue
2.7
%
1.9
%
5.0
%
3.0
%
Excluding:
Stock-based compensation expense
33
27
96
90
Reorganization and transformation cost
3
2
8
27
Income tax adjustments(i)
(5
)
(5
)
(18
)
(19
)
Non-GAAP Net Income
$
43
$
32
34
%
$
155
$
138
12
%
% of Revenue
9.8
%
7.7
%
11.3
%
10.3
%
For the Three Months
ended September 30
For the Nine Months
ended September 30
2023 Outlook
Earnings Per Share:
2023
2022
2023
2022
2023 Q4
Guidance
2023 FY
Guidance
GAAP Earnings / (Loss) Per Share
$
0.12
$
0.08
$
0.67
$
0.38
($0.10 - $0.06)
$0.59 - $0.63
Excluding:
Stock-based compensation expense
0.32
0.26
0.93
0.85
0.32
1.25
Reorganization and transformation cost
0.03
0.02
0.08
0.25
0.18
0.24
Argentina Foreign Exchange Actions
-
-
-
-
0.12
0.12
Income tax adjustments(i)
(0.05
)
(0.05
)
(0.17
)
(0.18
)
(0.02
)
(0.19
)
Non-GAAP Diluted Earnings Per Share
$
0.42
$
0.31
$
1.51
$
1.30
$0.50 - $0.54
$2.01 - $2.05
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, 2023 was 12.2% and September 30, 2022 was 17.9%. For
the nine months ended the non-GAAP effective tax rate was 22.1% for
2023 and 24.2% for 2022.
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
2023
2022
2023
2022
2023
Cash provided by operating activities
(GAAP)
$
41
$
34
$
199
$
290
$340 to $380
Less capital expenditures
(5
)
(3
)
(12
)
(7
)
(~20)
Free Cash Flow (non-GAAP measure)
$
36
$
31
$
187
$
283
$320 to $360
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 2023 fourth 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, or the timing of purchases by our current and
potential customers; the rapidly changing and intensely competitive
nature of the information technology industry and the data
analytics business; fluctuations in our operating, capital
allocation, and cash flow results; our ability to execute and
realize the anticipated benefits of our business transformation
program or other 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 the ongoing and uncertain impact of the COVID-19 pandemic on
our business, financial condition and operating results and on our
customers and suppliers; 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; 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 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
better information. We offer the most complete cloud analytics and
data platform, including for AI. By delivering harmonized data and
trusted AI/ML, 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
2023
2022
% Chg
2023
2022
% Chg
Revenue
Recurring
$
360
$
331
9
%
$
1,120
$
1,062
5
%
Perpetual software licenses, hardware and other
7
14
(50
%)
33
48
(31
%)
Consulting services
71
72
(1
%)
223
233
(4
%)
Total revenue
438
417
5
%
1,376
1,343
2
%
Gross profit
Recurring
255
239
810
769
% of Revenue
70.8
%
72.2
%
72.3
%
72.4
%
Perpetual software licenses, hardware and other
-
4
3
14
% of Revenue
0.0
%
28.6
%
9.1
%
29.2
%
Consulting services
4
16
24
35
% of Revenue
5.6
%
22.2
%
10.8
%
15.0
%
Total gross profit
259
259
837
818
% of Revenue
59.1
%
62.1
%
60.8
%
60.9
%
Selling, general and administrative expenses
156
155
476
475
Research and development expenses
76
79
222
236
Income from
operations
27
25
139
107
% of Revenue
6.2
%
6.0
%
10.1
%
8.0
%
Other
expense, net
(14
)
(15
)
(44
)
(42
)
Income before
income taxes
13
10
95
65
% of Revenue
3.0
%
2.4
%
6.9
%
4.8
%
Income tax expense
1
2
26
25
% Tax rate
7.7
%
20.0
%
27.4
%
38.5
%
Net income
$
12
$
8
$
69
$
40
% of Revenue
2.7
%
1.9
%
5.0
%
3.0
%
Net income per common
share Basic
$
0.12
$
0.08
$
0.69
$
0.39
Diluted
$
0.12
$
0.08
$
0.67
$
0.38
Weighted average common shares outstanding
Basic
99.2
102.7
100.5
103.7
Diluted
102.0
104.7
102.8
106.4
Schedule B
TERADATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions - unaudited)
September 30,
December 31,
September 30,
2023
2022
2022
Assets
Current assets
Cash and cash equivalents
$
348
$
569
$
506
Accounts receivable, net
286
364
253
Inventories
8
8
13
Other current assets
96
87
83
Total
current assets
738
1,028
855
Property and equipment, net
249
244
234
Right of use assets - operating lease, net
10
13
15
Goodwill
396
390
385
Capitalized contract costs, net
72
92
88
Deferred income taxes
200
213
192
Other assets
75
42
49
Total
assets
$
1,740
$
2,022
$
1,818
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt
$
12
$
-
$
-
Current portion of finance lease liability
69
67
66
Current portion of operating lease liability
6
8
8
Accounts payable
106
94
79
Payroll and benefits liabilities
120
137
110
Deferred revenue
477
589
462
Other current liabilities
95
112
78
Total
current liabilities
885
1,007
803
Long-term debt
486
498
498
Finance lease liability
70
54
45
Operating lease liability
7
10
11
Pension and other postemployment plan liabilities
91
101
127
Long-term deferred revenue
16
8
14
Deferred tax liabilities
6
7
6
Other liabilities
57
79
79
Total
liabilities
1,618
1,764
1,583
Stockholders' equity
Common stock
1
1
1
Paid-in capital
2,044
1,941
1,908
Accumulated deficit
(1,797
)
(1,565
)
(1,519
)
Accumulated other comprehensive loss
(126
)
(119
)
(155
)
Total
stockholders' equity
122
258
235
Total
liabilities and stockholders' equity
$
1,740
$
2,022
$
1,818
Schedule C
TERADATA CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions -
unaudited)
For the Period Ended September
30
Three
Months
Nine
Months
2023
2022
2023
2022
Operating activities Net income
$
12
$
8
$
69
$
40
Adjustments to reconcile net
income to net cash provided by
operating activities: Depreciation and
amortization
27
28
86
101
Stock-based compensation expense
33
27
96
90
Deferred income taxes
(1
)
(9
)
1
(7
)
Changes in assets and liabilities:
Receivables
(21
)
13
78
83
Inventories
1
4
-
13
Current payables and accrued expenses
21
4
(9
)
(22
)
Deferred revenue
(40
)
(65
)
(104
)
(103
)
Other assets and liabilities
9
24
(18
)
95
Net cash provided by
operating activities
41
34
199
290
Investing activities
Expenditures for property and equipment
(5
)
(3
)
(11
)
(6
)
Additions to capitalized software
-
-
(1
)
(1
)
Other investing activities
(16
)
-
(16
)
-
Net cash used in investing activities
(21
)
(3
)
(28
)
(7
)
Financing activities
Repurchases of common stock
(147
)
(29
)
(301
)
(346
)
Proceeds from long-term borrowings
-
-
-
500
Repayments of long-term borrowings
-
-
-
(413
)
Payments of finance leases
(21
)
(22
)
(62
)
(67
)
Other financing activities, net
7
5
6
6
Net cash used
in financing activities
(161
)
(46
)
(357
)
(320
)
Effect of exchange rate
changes on cash and cash equivalents
(16
)
(24
)
(36
)
(49
)
Decrease in
cash, cash equivalents and restricted cash
(157
)
(39
)
(222
)
(86
)
Cash, cash equivalents and restricted cash at beginning of
period
506
548
571
595
Cash,
cash equivalents and restricted cash at end of period
$
349
$
509
$
349
$
509
Supplemental cash flow
disclosure: Non-cash investing
and financing activities:
Assets acquired by finance leases
$
21
$
13
$
80
$
47
Assets acquired by operating leases
$
2
$
2
$
6
$
3
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
2023
2022
% Change As Reported
% Change Constant Currency
(2)
2023
2022
% Change As Reported
% Change Constant Currency
(2)
Segment Revenue Americas
$
264
$
242
9
%
11
%
$
824
$
781
6
%
7
%
EMEA
113
105
8
%
3
%
348
337
3
%
5
%
APJ
61
70
(13
%)
(8
%)
204
225
(9
%)
(4
%)
Total
segment revenue
438
417
5
%
6
%
1,376
1,343
2
%
5
%
Segment gross
profit Americas
164
151
521
493
% of Revenue
62.1
%
62.4
%
63.2
%
63.1
%
EMEA
67
66
214
207
% of Revenue
59.3
%
62.9
%
61.5
%
61.4
%
APJ
33
44
115
136
% of Revenue
54.1
%
62.9
%
56.4
%
60.4
%
Total segment gross profit
264
261
850
836
% of Revenue
60.3
%
62.6
%
61.8
%
62.2
%
Reconciling items(1)
(5
)
(2
)
(13
)
(18
)
Total gross profit
$
259
$
259
$
837
$
818
% of Revenue
59.1
%
62.1
%
60.8
%
60.9
%
(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/20231102085358/en/
INVESTOR CONTACT Christopher T. Lee
christopher.lee@teradata.com MEDIA CONTACT Jennifer Donahue
jennifer.donahue@teradata.com
Teradata (NYSE:TDC)
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