- Public cloud ARR of $414 million, an increase of 77% as
reported and 76% in constant currency from the prior year
period(1)
- Total ARR of $1.523 billion, an increase of 10% as reported and
9% in constant currency from the prior year period(1)
- Second quarter total revenue of $462 million, an increase of 7%
as reported and 10% in constant currency from the prior year
period(1)
- Second quarter recurring revenue of $371 million, an increase
of 8% as reported and 10% in constant currency from the prior year
period(1)
- Second quarter GAAP diluted earnings per share of $0.17
- Second quarter Non-GAAP diluted earnings per share of
$0.48(2)
- Second quarter cash from operations of $49 million and free
cash flow of $46 million(3)
Teradata (NYSE: TDC) today announced its second quarter 2023
financial results.
“Our broad-based momentum across the business generated strong
financial results, including 77% Cloud ARR growth, 10% increase in
Total ARR growth and EPS that exceeded our guidance,” said Steve
McMillan, President and CEO, Teradata. “We are pleased with the
strong adoption and growth of Teradata VantageCloud, as customers
see that our complete cloud analytics and data platform is
differentiated and generates value in this new world of AI.”
Second Quarter 2023 Financial Highlights Compared to Second
Quarter 2022
- Public cloud ARR increased to $414 million from $234 million,
an increase of 77% as reported and 76% in constant currency(1)
- Total ARR increased to $1.523 billion from $1.390 billion, an
increase of 10% as reported and 9% in constant currency(1)
- Total revenue was $462 million versus $430 million, an increase
of 7% as reported and 10% in constant currency(1)
- Recurring revenue was $371 million versus $345 million, an
increase of 8% as reported and 10% in constant currency(1)
- Recurring revenue was 80% of total revenue in the second
quarter, flat from the prior year period
- GAAP gross margin was 59.7% versus 60.0%
- Non-GAAP gross margin was 60.6% versus 61.2%(2)
- GAAP operating income was $33 million versus $14 million
- Non-GAAP operating income was $72 million versus $55
million(2)
- GAAP diluted EPS was $0.17 versus ($0.04) per share
- Non-GAAP diluted EPS was $0.48 versus $0.33(2)
- Cash flow from operations was $49 million compared to $105
million
- Free cash flow was $46 million compared to $102 million(3)
Outlook
For the third quarter of 2023:
- GAAP diluted EPS is expected to be in the range of $0.10 to
$0.14
- Non-GAAP diluted EPS is expected to be in the range of $0.40 to
$0.44(2)
Teradata updates the following outlook for full year 2023:
- GAAP diluted EPS is increased to now be in the range of $0.74
to $0.86 versus the range of $0.65 to $0.77 previously
provided
For the full year 2023, Teradata re-affirms the following
outlook elements:
- Public cloud ARR is expected to increase in the range of 53% to
57% year-over-year
- Total ARR is expected to increase in the range of 6% to 8%
year-over-year
- Recurring revenue is expected to increase in the range of 4% to
7% year-over-year
- Total revenue is expected to increase in the range of 1% to 4%
year-over-year
- Non-GAAP diluted EPS is expected to be in the range of $1.92 to
$2.04(2)
- Cash flow from operations is expected to be in the range of
$340 million to $380 million
- Free cash flow is expected to be in the range 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 second 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
June 30
2023
2022
% Change as Reported
% Change in CC
Recurring revenue
$371
$345
8%
10%
Perpetual software licenses, hardware and
other
13
8
63%
61%
Consulting services
78
77
1%
5%
Total revenue
$462
$430
7%
10%
Americas
$268
$249
8%
10%
EMEA
118
103
15%
15%
APJ
76
78
(3%)
2%
Total revenue
$462
$430
7%
10%
Revenue
(in millions)
For the Six Months ended June
30
2023
2022
% Change as Reported
% Change in CC
Recurring revenue
$760
$731
4%
7%
Perpetual software licenses, hardware and
other
26
34
(24%)
(18%)
Consulting services
152
161
(6%)
0%
Total revenue
$938
$926
1%
5%
Americas
$560
$539
4%
6%
EMEA
235
232
1%
7%
APJ
143
155
(8%)
(1%)
Total revenue
$938
$926
1%
5%
As of June 30
2023
2022
% Change as Reported
% Change in CC
Annual recurring revenue*
$1,523
$1,390
10%
9%
Public cloud ARR**
$414
$234
77%
76%
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.
(in millions, except per share data)
For the Three Months
ended June 30
For the Six Months
ended June 30
Gross Profit:
2023
2022
% Chg.
2023
2022
% Chg.
GAAP Gross Profit
$276
$258
7%
$578
$559
3%
% of Revenue
59.7%
60.0%
61.6%
60.4%
Excluding:
Stock-based compensation expense
4
4
8
9
Reorganization and transformation cost
-
1
-
7
Non-GAAP Gross Profit
$280
$263
6%
$586
$575
2%
% of Revenue
60.6%
61.2%
62.5%
62.1%
Operating Income
GAAP Operating Income
$33
$14
136%
$112
$82
37%
% of Revenue
7.1%
3.3%
11.9%
8.9%
Excluding:
Stock-based compensation expense
35
32
63
63
Reorganization and transformation cost
4
9
5
25
Non-GAAP Operating Income
$72
$55
31%
$180
$170
6%
% of Revenue
15.6%
12.8%
19.2%
18.4%
Net Income
GAAP Net Income
$17
($4)
-
$57
$32
78%
% of Revenue
3.7%
(0.9%)
6.1%
3.5%
Excluding:
Stock-based compensation expense
35
32
63
63
Reorganization and transformation cost
4
9
5
25
Income tax adjustments(i)
(7)
(2)
(13)
(14)
Non-GAAP Net Income
$49
$35
40%
$112
$106
6%
% of Revenue
10.6%
8.1%
11.9%
11.4%
For the Three Months
ended June 30
For the Six Months
ended June 30
2023 Outlook
Earnings Per Share:
2023
2022
2023
2022
2023 Q3
Guidance
2023 FY
Guidance
GAAP Earnings Per Share
$0.17
($0.04)
$0.55
$0.30
$0.10 - $0.14
$0.74 - $0.86
Excluding:
Stock-based compensation expense
0.34
0.30
0.61
0.59
0.32
1.26
Reorganization and transformation cost
0.04
0.09
0.05
0.23
0.03
0.18
Income tax adjustments(i)
(0.07)
(0.02)
(0.13)
(0.13)
(0.05)
(0.26)
Non-GAAP Diluted Earnings Per Share
$0.48
$0.33
$1.08
$0.99
$0.40 - $0.44
$1.92 - $2.04
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 June 30, 2023 was 22.2% and June 30, 2022
was 14.6%. For the six months ended the non-GAAP effective tax rate
was 25.3% for 2023 and 25.9% 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
ended June 30
For the Six Months
ended June 30
Outlook
2023
2022
2023
2022
2023
Cash provided by operating activities
(GAAP)
$49
$105
$158
$256
$340 to $380
Less capital expenditures
(3)
(3)
(7)
(4)
(~20)
Free Cash Flow (non-GAAP measure)
$46
$102
$151
$252
$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 third 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
Teradata is the connected multi-cloud data platform for
enterprise analytics company. Our enterprise analytics solve
business challenges from start to scale. Only Teradata gives you
the flexibility to handle the massive and mixed data workloads of
the future, today. Learn more 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 June
30
Three Months
Six Months
2023
2022
% Chg
2023
2022
% Chg
Revenue Recurring
$
371
$
345
8%
$
760
$
731
4%
Perpetual software licenses, hardware and other
13
8
63%
26
34
(24%)
Consulting services
78
77
1%
152
161
(6%)
Total revenue
462
430
7%
938
926
1%
Gross profit Recurring
264
249
555
530
% of Revenue
71.2
%
72.2
%
73.0
%
72.5
%
Perpetual software licenses, hardware and other
1
2
3
10
% of Revenue
7.7
%
25.0
%
11.5
%
29.4
%
Consulting services
11
7
20
19
% of Revenue
14.1
%
9.1
%
13.2
%
11.8
%
Total gross profit
276
258
578
559
% of Revenue
59.7
%
60.0
%
61.6
%
60.4
%
Selling, general and administrative expenses
167
163
320
320
Research and development expenses
76
81
146
157
Income from operations
33
14
112
82
% of Revenue
7.1
%
3.3
%
11.9
%
8.9
%
Other expense, net
(9
)
(14
)
(30
)
(27
)
Income before income taxes
24
-
82
55
% of Revenue
5.2
%
-
8.7
%
5.9
%
Income tax expense
7
4
25
23
% Tax rate
29.2
%
972.0
%
30.5
%
41.8
%
Net income (loss)
$
17
$
(4
)
$
57
$
32
% of Revenue
3.7
%
(0.9
%)
6.1
%
3.5
%
Net income (loss) per common share Basic
$
0.17
$
(0.04
)
$
0.56
$
0.31
Diluted
$
0.17
$
(0.04
)
$
0.55
$
0.30
Weighted average common shares outstanding Basic
101.0
103.5
101.2
104.2
Diluted
102.9
103.5
103.3
107.1
Schedule B
TERADATA CORPORATION CONDENSED CONSOLIDATED
BALANCE SHEETS (in millions - unaudited)
June 30,
December 31,
June 30,
2023
2022
2022
Assets Current assets
Cash and cash equivalents
$
504
$
569
$
545
Accounts receivable, net
265
364
266
Inventories
9
8
17
Other current assets
102
87
93
Total current assets
880
1,028
921
Property and equipment, net
250
244
249
Right of use assets - operating lease, net
11
13
17
Goodwill
390
390
390
Capitalized contract costs, net
76
92
95
Deferred income taxes
205
213
194
Other assets
57
42
29
Total assets
$
1,869
$
2,022
$
1,895
Liabilities and stockholders'
equity Current liabilities Current portion of
long-term debt
$
6
$
-
$
-
Current portion of finance lease liability
70
67
70
Current portion of operating lease liability
7
8
8
Accounts payable
113
94
83
Payroll and benefits liabilities
100
137
108
Deferred revenue
526
589
530
Other current liabilities
88
112
79
Total current liabilities
910
1,007
878
Long-term debt
492
498
497
Finance lease liability
70
54
48
Operating lease liability
8
10
13
Pension and other postemployment plan liabilities
96
101
129
Long-term deferred revenue
7
8
11
Deferred tax liabilities
6
7
7
Other liabilities
62
79
90
Total liabilities
1,651
1,764
1,673
Stockholders' equity Common stock
1
1
1
Paid-in capital
2,002
1,941
1,874
Accumulated deficit
(1,668
)
(1,565
)
(1,496
)
Accumulated other comprehensive loss
(117
)
(119
)
(157
)
Total stockholders' equity
218
258
222
Total liabilities and stockholders' equity
$
1,869
$
2,022
$
1,895
Schedule C TERADATA CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions -
unaudited)
For the Period Ended June
30
Three Months
Six Months
2023
2022
2023
2022
Operating activities Net income (loss)
$
17
$
(4
)
$
57
$
32
Adjustments to reconcile net income (loss) to net cash
provided by operating activities: Depreciation and amortization
31
33
59
73
Stock-based compensation expense
35
32
63
63
Deferred income taxes
(5
)
(6
)
2
2
Changes in assets and liabilities: Receivables
76
64
99
70
Inventories
(2
)
(1
)
(1
)
9
Current payables and accrued expenses
11
23
(30
)
(26
)
Deferred revenue
(105
)
(58
)
(64
)
(38
)
Other assets and liabilities
(9
)
22
(27
)
71
Net cash provided by operating activities
49
105
158
256
Investing activities Expenditures for property and
equipment
(2
)
(2
)
(6
)
(3
)
Additions to capitalized software
(1
)
(1
)
(1
)
(1
)
Net cash used in investing activities
(3
)
(3
)
(7
)
(4
)
Financing activities Repurchases of common stock
(70
)
(17
)
(154
)
(317
)
Proceeds from long-term borrowings
-
500
-
500
Repayments of long-term borrowings
-
(400
)
-
(413
)
Payments of finance leases
(21
)
(23
)
(41
)
(45
)
Other financing activities, net
6
(3
)
(1
)
1
Net cash (used in) provided by financing activities
(85
)
57
(196
)
(274
)
Effect of exchange rate changes on cash and cash equivalents
(10
)
(19
)
(20
)
(25
)
(Decrease) increase in cash, cash equivalents and
restricted cash
(49
)
140
(65
)
(47
)
Cash, cash equivalents and restricted cash at beginning of
period
555
408
571
595
Cash, cash equivalents and restricted cash at end of
period
$
506
$
548
$
506
$
548
Supplemental cash flow disclosure: Non-cash
investing and financing activities: Assets acquired by finance
leases
$
29
$
10
$
59
$
34
Assets acquired by operating leases
$
3
$
-
$
4
$
1
Schedule D TERADATA CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in millions -
unaudited) For the Three Months Ended June 30
For the Six Months Ended June 30
2023
2022
% Change As Reported
% Change Constant Currency
(2)
2023
2022
% Change As Reported
% Change Constant Currency
(2)
Segment Revenue Americas
$
268
$
249
8%
10%
$
560
$
539
4%
6%
EMEA
118
103
15%
15%
235
232
1%
7%
APJ
76
78
(3%)
2%
143
155
(8%)
(1%)
Total segment revenue
462
430
7%
10%
938
926
1%
5%
Segment gross profit Americas
164
153
357
342
% of Revenue
61.2
%
61.4
%
63.8
%
63.5
%
EMEA
73
63
147
141
% of Revenue
61.9
%
61.2
%
62.6
%
60.8
%
APJ
43
47
82
92
% of Revenue
56.6
%
60.3
%
57.3
%
59.4
%
Total segment gross profit
280
263
586
575
% of Revenue
60.6
%
61.2
%
62.5
%
62.1
%
Reconciling items(1)
(4
)
(5
)
(8
)
(16
)
Total gross profit
$
276
$
258
$
578
$
559
% of Revenue
59.7
%
60.0
%
61.6
%
60.4
%
(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/20230803620201/en/
INVESTOR CONTACT Christopher T. Lee 858-485-2523 office
christopher.lee@teradata.com
MEDIA CONTACT Jennifer Donahue 858-485-3029 office
jennifer.donahue@teradata.com
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