- Recurring revenue increased 10 percent,
13 percent in constant currency(1), from the first quarter of
2018
- Annual Recurring Revenue (ARR)
increased 9 percent, 12 percent in constant currency(1),
year-over-year
- First-quarter earnings per share (EPS)
exceeded company guidance
- Teradata maintains its full-year
guidance for 2019
Teradata Corp. (NYSE: TDC) continues its successful
transformation to a subscription-based business with
subscription-based transactions comprising 72 percent of the
company’s bookings mix in the first quarter. Recurring revenue
increased 10 percent, 13 percent in constant currency(1), from the
first quarter of 2018. ARR increased 9 percent, 12 percent in
constant currency(1), from the first quarter of 2018. As the
company shifts to a recurring revenue model and focuses its
consulting business on higher-margin engagements within its
targeted “megadata” customer base, perpetual revenue and consulting
revenue declined versus prior year as expected. Total first-quarter
revenue was $468 million, compared to 2018 first-quarter total
revenue of $506 million. Currency translation had a 4 percent
negative impact on the first-quarter total revenue comparison.
Teradata reported 2019 first-quarter net loss of $(10) million
under U.S. Generally Accepted Accounting Principles (GAAP), or
$(0.09) per share, which compared to a net loss of $(7) million, or
$(0.06) per share, in the first quarter of 2018. Non-GAAP 2019
first-quarter net income, which excludes stock-based compensation
expense and other special items, was $26 million, or $0.22 per
diluted share, as compared to $23 million, or $0.19 per diluted
share in the first quarter of 2018(2).
“In the first quarter, Teradata continued its strong momentum,
backed by increasing demand for Teradata Vantage™, our
game-changing platform that is helping the world’s leading
enterprises get the answers they need for their toughest analytic
challenges,” said Oliver Ratzesberger, President and CEO, Teradata.
“I am extremely proud of our people as they accelerate the pace of
transformation at Teradata and remain committed to delivering
long-term value to our customers and shareholders.”
Gross Margin
2019 first-quarter gross margin reported under GAAP was 47.9
percent versus 44.1 percent for the first quarter of 2018. On a
non-GAAP basis, excluding stock-based compensation expense and
other special items, 2019 first-quarter gross margin was 51.5
percent, versus 48.4 percent in the prior-year period(2). Gross
margin was higher year over year due to a higher mix of recurring
revenue as part of total revenue.
Operating Income
2019 first-quarter operating loss reported under GAAP was $(5)
million which compares to $(4) million in the first quarter of
2018. On a non-GAAP basis, excluding stock-based compensation
expense and other special items, 2019 first-quarter operating
income was $41 million versus $35 million in the first quarter of
2018(2). The increase in non-GAAP operating income was due to
higher gross margins and lower operating expenses compared to the
prior-year period.
Income Taxes
Teradata’s 2019 first-quarter tax rate under GAAP was 0.0
percent compared to 12.5 percent in the first quarter of 2018.
Excluding special items, Teradata’s non-GAAP 2019 first-quarter tax
rate was 27.8 percent versus 25.8 percent in the first quarter of
2018(2).
Cash Flow
During the first quarter of 2019, Teradata generated $49 million
of cash from operating activities compared to $184 million in the
same period of 2018. During the quarter, Teradata used $16 million
for capital expenditures and additions to capitalized software
development costs, versus using $28 million in the first quarter of
2018. Teradata’s 2019 first-quarter free cash flow was $33 million,
compared to $156 million in the first quarter of 2018(3). The
company used approximately $29 million of cash in the first quarter
of 2019 related to reorganizing and restructuring its operations
and go-to-market functions to align to its strategy, reducing free
cash flow.
Balance Sheet
Teradata ended the first quarter 2019 with $723 million in cash.
During the first quarter of 2019, Teradata repurchased 1.2 million
shares of the Company’s common stock for approximately $58 million.
At the end of the first quarter, Teradata had approximately $230
million of Board authorization remaining for share repurchases.
As of March 31, 2019, the Company had total debt of $559
million, including $59 million of outstanding finance lease
obligations. There were no funds drawn on the company’s $400
million revolving credit facility as of March 31, 2019.
Guidance
For the full-year 2019, Teradata continues to expect 70 percent
or more of its bookings mix to be subscription-based, ARR to
increase in the range of 11 percent to 12 percent, and recurring
revenue to increase approximately 10 percent to 11 percent.
2019 perpetual revenue is expected to decline at the high end of
its prior guidance range of $150 million to $200 million versus
2018 due to the faster than anticipated transition to
subscription-based transactions.
The realignment of the company’s consulting business to focus on
higher-margin consulting services within its target market of
“megadata” customers is progressing. Teradata now expects 2019
consulting revenue to decline at the high end of its prior guidance
range of 15 percent to 20 percent versus 2018.
Teradata expects 2019 full-year GAAP earnings per share to be in
the $0.43 to $0.53 range. On a non-GAAP basis, which excludes
stock-based compensation expense and other special items, earnings
per share is still expected to be in the $1.45 to $1.55
range(2).
Recurring revenue in the second quarter of 2019 is expected to
be in the $336 million to $340 million range.
GAAP earnings per share in the second quarter of 2019 is
expected to be in the $0.01 to $0.03 range. Non-GAAP earnings per
share, excluding stock-based compensation expense and other special
items, in the second quarter is expected to be in the $0.28 to
$0.30 range(2).
Earnings Conference Call
A conference call is scheduled today at 2:00 p.m. PT to discuss
the Company’s 2019 first-quarter results. 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 (except for currency impact on ARR which is
calculated using month-end rates). See the foreign currency
fluctuation schedule on the Investor Relations page of the
Company’s web site at investor.teradata.com, which is used to
determine revenue on a constant currency (“CC”) basis.
Revenue (in
millions)
For the Three Months ended March 31 2019
2018
% Change asReported
% Change inConstant
Currency
Recurring revenue $ 331 $ 302 10 % 13 % Perpetual software licenses
and hardware 31 69 (55 %) (54 %) Consulting services 106
135 (21 %) (17 %)
Total revenue $ 468
$ 506 (8 %) (4 %)
Americas $ 269 $ 264 2 % 3 % EMEA 113 149 (24 %) (19 %) APAC
86 93 (8 %) (3 %)
Total revenue $ 468
$ 506 (8 %) (4 %)
As of March 31 2019 2018
% Change asReported
% Change inConstant
Currency
Annual recurring revenue (ARR)* $ 1,319
$ 1,206 9 % 12 %
* Annual recurring revenue is defined as the
annual value at a point in time of all recurring contracts,
including subscription, software upgrade rights, maintenance and
managed services. 2. Teradata reports its
results in accordance with GAAP. However, as described below, the
Company believes that certain non-GAAP measures such as non-GAAP
gross profit, non-GAAP operating income, non-GAAP net income, and
non-GAAP earnings per diluted share, or EPS, all of which exclude
certain items (as well as free cash flow) are useful for investors.
Our non-GAAP measures are not meant to be considered in isolation
or 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. 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.
Teradata’s reconciliation of GAAP to non-GAAP results
included in this release.
For the Three Months (in millions,
except per share data)
ended March 31 Gross
Profit: 2019 2018 % Chg.
GAAP Gross Profit $ 224 $ 223 0 % % of Revenue 47.9 % 44.1 %
Excluding: Stock-based compensation expense 3 4 Acquisition,
integration, reorganization related, and other costs 3 3
Amortization of capitalized software 11 15
Non-GAAP Gross Profit $ 241 $ 245 (2 %) % of
Revenue 51.5 % 48.4 %
Operating (Loss) / Income
GAAP Operating Loss $ (5 ) $ (4 ) (25 %) % of Revenue (1.1 %) (0.8
%) Excluding: Stock-based compensation expense 15 19
Amortization of acquisition-related intangible assets 2 2
Acquisition, integration, reorganization related, and other costs
18 3 Amortization of capitalized software 11
15 Non-GAAP Operating Income $ 41 $ 35 17 % %
of Revenue 8.8 % 6.9 %
Net (Loss) / Income GAAP Net
Loss $ (10 ) $ (7 ) (43 %) % of Revenue (2.1 %) (1.4 %)
Excluding: Stock-based compensation expense 15 19 Amortization of
acquisition-related intangible assets 2 2 Acquisition, integration,
reorganization related, and other costs 18 3 Amortization of
capitalized software 11 15 Income tax adjustments* (10 )
(9 ) Non-GAAP Net Income $ 26 $ 23 13 % % of
Revenue 5.6 % 4.5 %
For the Three Months ended
March 31 Earnings Per Share: 2019
2018
2019 Q2Guidance
2019 FYGuidance
GAAP (Loss) Per Share $ (0.09 ) $ (0.06 ) $ 0.01 - $0.03 $ 0.43 -
$0.53
Excluding:
Stock-based compensation expense 0.13 0.16 0.18 0.68 Amortization
of acquisition-related intangible assets 0.02 0.02 0.01 0.04
Acquisition, integration, reorganization related, and other costs
0.15 0.02 0.08 0.28 Amortization of capitalized software 0.09 0.12
0.08 0.28 Income tax adjustments* (0.09 ) (0.07 ) (0.08 ) (0.26 )
Impact of dilution** 0.01 - -
- Non-GAAP Diluted Earnings Per Share $ 0.22
$ 0.19 $ 0.28 – $0.30 $ 1.45 – $1.55
*
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 in
addition to the tax impact for U.S. tax reform. 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 first quarter of 2019
was 27.8% and 25.8% in the first quarter of 2018.
**
Represents the impact to earnings per share as a result of moving
from basic to diluted shares. 3. As described
below, the Company believes that free cash flow is a useful
non-GAAP measure for investors. Teradata defines free cash flow as
cash provided/used by operating activities less capital
expenditures for property and equipment, and additions to
capitalized software. Free cash flow does not have a uniform
definition under GAAP and therefore, Teradata’s definition may
differ from other companies’ definitions of this measure.
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 for, among other things,
investment in the Company’s existing businesses, strategic
acquisitions, strengthening the Company’s balance sheet, repurchase
of the Company’s stock and repayment of the Company’s debt
obligations, if any. Free cash flow does not represent the residual
cash flow available for discretionary expenditures since there may
be other nondiscretionary expenditures that are not deducted from
the measure. This non-GAAP measure is not meant to be considered in
isolation, as a substitute 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. (in millions)
For the Three Months ended March 31
2019 2018 Cash provided by
operating activities (GAAP) $ 49 $ 184
Less capital
expenditures for:
Expenditures for property and equipment (15 ) (26 ) Additions to
capitalized software (1 ) (2 ) Total capital
expenditures (16 ) (28 ) Free Cash Flow (non-GAAP
measure) $ 33 $ 156
Teradata used $29 million of cash in the first quarter of 2019
related to reorganizing and restructuring its operations and its
go-to-market functions to align to its strategy.
Note to Investors
This news 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, and market conditions, among other
things. These forward-looking statements are based upon current
expectations and assumptions and involve risks and uncertainties
that could cause actual results to differ materially, including the
factors discussed in this release and those relating to: the global
economic environment and business conditions in general or on 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 results, including as a result of the
pace and extent to which customers shift from perpetual to
subscription-based licenses; our ability to realize the anticipated
benefits of our business transformation program or other
restructuring and cost saving initiatives; risks inherent in
operating in foreign countries, including foreign currency
fluctuations; risks associated with data privacy, cyberattacks and
maintaining secure and effective internal information technology
and control systems; the timely and successful development,
production or acquisition and market acceptance of new and existing
products and services; tax rates; turnover of workforce and the
ability to attract and retain skilled employees; protecting our
intellectual property; availability and successful exploitation of
new alliance and acquisition opportunities; recurring revenue may
decline 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 annual
report on Form 10-K and subsequent quarterly reports on Forms 10-Q,
as well as the Company’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 transforms how businesses work and people live through
the power of data. Teradata leverages all of the data, all of the
time, so you can analyze anything, deploy anywhere, and deliver
analytics that matter. We call this pervasive data intelligence.
And it’s the answer to the complexity, cost, and inadequacy of
today’s approach to analytics. Get the answer at teradata.com.
Teradata and the Teradata logo are trademarks
or registered trademarks of Teradata Corporation and/or its
affiliates in the U.S. and worldwide.
Schedule A
TERADATA CORPORATION CONDENSED
CONSOLIDATED STATEMENTS OF LOSS (in millions, except per
share amounts - unaudited) For the Period Ended March
31 Three Months 2019 2018 % Chg
Revenue Recurring $ 331 $ 302 10 % Perpetual software
licenses and hardware 31 69 (55 %) Consulting services 106
135 (21 %)
Total revenue 468 506
(8 %)
Gross profit Recurring 225 212 % of
Revenue 68.0 % 70.2 % Perpetual software licenses and hardware 6 21
% of Revenue 19.4 % 30.4 % Consulting services (7 ) (10 ) % of
Revenue (6.6 %) (7.4 %)
Total gross
profit 224 223 % of Revenue 47.9 % 44.1 % Selling,
general and administrative expenses 151 152 Research and
development expenses 78 75
Loss from operations (5 ) (4 ) % of Revenue (1.1 %) (0.8 %)
Other expense, net (5 ) (4 )
Loss
before income taxes (10 ) (8 ) % of Revenue (2.1 %) (1.6 %)
Income tax benefit - (1 ) % Tax rate -
12.5 %
Net loss $ (10 ) $ (7 ) % of Revenue (2.1 %)
(1.4 %)
Net loss per common share Basic $ (0.09 ) $
(0.06 ) Diluted $ (0.09 ) $ (0.06 )
Weighted average
common shares outstanding Basic 117.1 121.4 Diluted 117.1 121.4
Schedule B
TERADATA
CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in
millions - unaudited) March 31, December 31,
March 31, 2019 2018 2018
Assets
Current assets Cash and cash equivalents $ 723 $ 715 $ 939
Accounts receivable, net 445 588 451 Inventories 52 28 43 Other
current assets 82 97 97
Total current assets 1,302 1,428 1,530
Property and equipment, net 303 295 172 Capitalized software, net
60 72 107 Right of use assets - operating lease, net 60 - -
Goodwill 396 395 401 Acquired intangible assets, net 14 16 21
Deferred income taxes 66 67 58 Other assets 85
87 66
Total assets $ 2,286
$ 2,360 $ 2,355
Liabilities and
stockholders' equity
Current liabilities Current portion of long-term debt $ 25 $
19 $ 68 Current portion of finance lease liability 21 17 - Current
portion of operating lease liability 17 - - Accounts payable 99 141
110 Payroll and benefits liabilities 103 224 110 Deferred revenue
569 490 532 Other current liabilities 80 118
93
Total current liabilities 914
1,009 913 Long-term debt 472 478 456 Finance lease liability
38 30 - Operating lease liability 48 - - Pension and other
postemployment plan liabilities 104 113 111 Long-term deferred
revenue 100 105 72 Deferred tax liabilities 4 3 9 Other liabilities
139 127 150
Total liabilities 1,819 1,865
1,711 Stockholders' equity Common stock 1 1 1
Paid-in capital 1,466 1,418 1,350 Accumulated deficit (891 ) (823 )
(637 ) Accumulated other comprehensive loss (109 )
(101 ) (70 )
Total stockholders' equity
467 495 644
Total
liabilities and stockholders' equity $ 2,286 $ 2,360
$ 2,355
Schedule C
TERADATA
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (in millions - unaudited) For the Period
Ended March 31 Three Months 2019 2018
Operating activities Net loss $ (10 ) $ (7 )
Adjustments to reconcile net loss to net cash provided by operating
activities: Depreciation and amortization 37 34 Stock-based
compensation expense 15 19 Deferred income taxes 2 (5 ) Changes in
assets and liabilities: Receivables 143 83 Inventories (24 ) (13 )
Current payables and accrued expenses (171 ) (27 ) Deferred revenue
74 124 Other assets and liabilities (17 ) (24 )
Net cash provided by operating activities 49 184
Investing activities Expenditures for property and
equipment (15 ) (26 ) Additions to capitalized software (1 )
(2 )
Net cash used in investing activities (16
) (28 )
Financing activities Repurchases of common
stock (56 ) (60 ) Repayments of long-term borrowings - (15 )
Repayments of credit facility borrowings - (240 ) Payments of
finance leases (3 ) - Other financing activities, net 33
10
Net cash used in financing
activities (26 ) (305 ) Effect of exchange rate changes
on cash and cash equivalents 1 -
Increase (decrease) in cash, cash equivalents and restricted
cash 8 (149 )
Cash, cash equivalents and restricted cash at
beginning of period 716 1,089
Cash, cash equivalents and restricted cash at end of
period $ 724 $ 940
Supplemental cash
flow disclosure: Non-cash investing and financing
activities: Assets acquired by finance leases $ 15 $ - Assets
acquired by operating leases $ 3 $ -
Schedule D
TERADATA
CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in millions - unaudited) For the
Three Months Ended March 31 2019
2018
%
ChangeAsReported
%
ChangeConstantCurrency (2)
Segment Revenue Americas $ 269 $ 264 2 % 3 % EMEA 113
149 (24 %) (19 %) APAC 86 93 (8 %) (3
%)
Total segment revenue 468 506 (8 %) (4 %)
Segment gross profit Americas 157 147 % of
Revenue 58.4 % 55.7 % EMEA 50 63 % of Revenue 44.2 % 42.3 % APAC 34
35 % of Revenue 39.5 % 37.6 %
Total segment
gross profit 241 245 % of Revenue 51.5 % 48.4 %
Reconciling items(1) (17 ) (22 )
Total
gross profit $ 224 $ 223 % of Revenue 47.9 % 44.1 %
(1)
Reconciling items include stock-based
compensation, capitalized software, 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/20190502005866/en/
INVESTOR CONTACTGregg Swearingen937-242-4600
officegregg.swearingen@teradata.com
MEDIA CONTACTJennifer Donahue858-485-3029
officejennifer.donahue@teradata.com
Teradata (NYSE:TDC)
Historical Stock Chart
From Apr 2024 to May 2024
Teradata (NYSE:TDC)
Historical Stock Chart
From May 2023 to May 2024