- Public cloud ARR increased by $79 million, or 176% from the
prior year period, exceeding the outlook of at least 165%
year-over-year(1)
- First-quarter recurring revenue of $372 million, an increase of
20% from the prior year period
- Cash from operations of $110 million, an increase of $100
million from the prior year period
- Free cash flow of $105 million, an increase of $107 million
from the prior year period(2)
- First-quarter GAAP earnings per diluted share of $0.47 above
the previously provided outlook range of $0.11 to $0.13
- First-quarter non-GAAP earnings per diluted share of $0.69
above the previously provided outlook range of $0.38 to
$0.40(3)
Teradata (NYSE: TDC) today announced its first-quarter 2021
financial results.
“Teradata had a strong start to the year exceeding expectations
across key metrics with significant growth in public cloud ARR,
profitability, and free cash flow. Our relentless focus on
profitable growth, coupled with the strength of Vantage, is driving
our performance and positioning Teradata to win over the
long-term,” said Steve McMillan, President and CEO, Teradata. “The
momentum for our connected, multi-cloud data platform for
enterprise analytics continues to grow, demonstrating that our
pivot to the cloud is the right strategy for Teradata.”
Realignment of ARR and revenue starting at the beginning of
fiscal 2021
As disclosed in Q4 2020, Teradata realigned its ARR and
recurring revenue disclosures at the beginning of fiscal 2021. The
realignment removes managed services and third-party software from
subscription-based ARR and recurring revenue. Managed services
revenue is included in “consulting services revenue” and
third-party software is included in “perpetual software licenses,
hardware and other revenue.” This realignment does not change
previously reported total revenue or total gross profit.
Tables that show the impact of this realignment to ARR, total
revenue and gross profits for each quarter of 2020 and the full
year are included in the Q4/FY 2020 Earnings Discussion document,
which is available on the Investor Relations page of Teradata’s
website at investor.teradata.com. Please also see the Q1 2021
supplemental financial schedules for a trended view of realigned
revenue, which is also available on the Investor Relations page of
Teradata’s website.
First-Quarter 2021 Financial Highlights compared to First
Quarter 2020
- Public cloud ARR increased 176% as reported (170% in constant
currency(1)) to $124 million from $45 million. On a sequential
basis, public cloud ARR increased by $18 million, or 17% as
reported and 18% in constant currency(1)
- Total ARR increased 12% as reported (9% in constant
currency(1)) to $1.404 billion from $1.254 billion. On a sequential
basis, total ARR decreased by $21 million, or 1% and was flat in
constant currency(1) due to very strong FX headwinds
- Total revenue was $491 million versus $434 million, an increase
of 13% as reported and 10% in constant currency(1)
- Recurring revenue was $372 million versus $311 million, an
increase of 20% as reported and 17% in constant currency(1)
- GAAP gross margin was 62.5% versus 51.8%
- Non-GAAP gross margin was 64.2% versus 54.1%(3)
- GAAP operating income was $81 million versus an operating loss
of $6 million
- Non-GAAP operating income was $115 million versus $32
million(3)
- GAAP earnings per diluted share was $0.47 versus $1.51 per
share
- Non-GAAP earnings per diluted share was $0.69 versus
$0.27(3)
- Cash flow from operations was $110 million compared to $10
million
- Free cash flow was $105 million compared to negative $2
million(2)
Outlook
Affirming the following outlook for the full year 2021:
- Public cloud ARR is expected to increase by at least 100%
year-over-year
- Total ARR is expected to grow at a mid- to high-single-digit
percentage year-over-year
- Recurring revenue is expected to grow at a mid- to high-single
digit percentage year-over-year
- Total revenue is expected to grow at a low-single-digit
percentage year-over-year
Raising the following outlook for the full year 2021:
- GAAP earnings per diluted share is now expected to be in the
range of $0.58 to $0.64, up from our prior outlook range of $0.43
to $0.51
- Non-GAAP earnings per diluted share, excluding stock-based
compensation expense, reorganization-related expenses, and other
special items, is now expected to be in the range of $1.61 to
$1.67(3), up from our prior outlook of $1.50 to $1.58
- Cash flow from operations is now expected to be in the range of
$320 million to $350 million, up from our prior outlook of at least
$295 million
- Free cash flow is now expected to be in the range of $275
million to $300 million(2), up from our prior outlook of at least
$250 million
For the second quarter of 2021:
- Public cloud ARR is expected to increase by at least 155%
year-over-year, or by $15 million to $20 million sequentially
- GAAP diluted EPS is expected to be in the range of $0.17 to
$0.19
- Non-GAAP diluted EPS, excluding stock-based compensation
expense, reorganization-related expenses, and other special items,
is expected to be in the range of $0.47 to $0.49(3)
Earnings Conference Call
A conference call is scheduled today at 2:00 p.m. PT to discuss
the Company’s first-quarter 2021 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 the Investor
Relations page of Teradata’s website at investor.teradata.com.
Supplemental Financial Information
Additional information regarding Teradata’s operating results is
provided below as well as on the Investor Relations page of
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
2021
2020
% Change as Reported
% Change in CC
Recurring revenue
$372
$311
20%
17%
Perpetual software licenses, hardware and
other
23
23
0%
-2%
Consulting services
96
100
-4%
-8%
Total revenue
$491
$434
13%
10%
Americas
$263
$244
8%
8%
EMEA
147
118
25%
17%
APJ
81
72
13%
4%
Total revenue
$491
$434
13%
10%
As of March 31
2021
2020
% Change as Reported
% Change in CC
Annual recurring revenue*
$1,404
$1,254
12%
9%
Public cloud ARR**
$124
$45
176%
170%
*
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. ARR does not include managed services and third-party
software.
**
Public cloud ARR is defined as the annual
value at a point in time of all contracts related to public cloud
implementations of Teradata Vantage and does not include ARR
related to private or managed cloud implementations.
2.
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 by / used in
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 to, 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
2021
2020
2021 FY Outlook
Cash provided by operating activities
(GAAP)
$110
$10
$320 - $350
Less capital expenditures for:
Expenditures for property and
equipment
(4)
(10)
(40) – (45)
Additions to capitalized software
(1)
(2)
(5)
Total capital expenditures
(5)
(12)
(45) – (50)
Free Cash Flow (non-GAAP measure)
$105
$(2)
$275 - $300
3.
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 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.
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:
2021
2020
% Chg.
GAAP Gross Profit
$
307
$
225
36
%
% of Revenue
62.5
%
51.8
%
Excluding:
Stock-based compensation expense
3
4
Acquisition, integration, reorganization
related, and other costs
5
-
Amortization of capitalized software
-
6
Non-GAAP Gross Profit
$
315
$
235
34
%
% of Revenue
64.2
%
54.1
%
Operating Income
GAAP Operating Income / (Loss)
$
81
$
(6
)
% of Revenue
16.5
%
(1.4
)%
Excluding:
Stock-based compensation expense
21
21
Amortization of acquisition-related
intangible assets
1
1
Acquisition, integration, reorganization
related, and other costs
12
10
Amortization of capitalized software
-
6
Non-GAAP Operating Income
$
115
$
32
259
%
% of Revenue
23.4
%
7.4
%
Net Income
GAAP Net Income
$
53
$
168
(68
%)
% of Revenue
10.8
%
38.7
%
Excluding:
Stock-based compensation expense
21
21
Amortization of acquisition-related
intangible assets
1
1
Acquisition, integration, reorganization
related, and other costs
12
10
Amortization of capitalized software
-
6
IP restructuring tax expense
(benefit)(i)
-
(157
)
Tax contingency adjustment(ii)
-
(18
)
Income tax adjustments(iii)
(9
)
(1
)
Non-GAAP Net Income
$
78
$
30
160
%
% of Revenue
15.9
%
6.9
%
For the Three Months
ended March 31
Earnings Per Share:
2021
2020
2021 Q2
Outlook
2021 FY
Outlook
GAAP Earnings / Per Share
$0.47
$1.51
$0.17 - $0.19
$0.58 - $0.64
Excluding:
Stock-based compensation expense
0.19
0.19
0.25
0.93
Amortization of acquisition-related
intangible assets
0.01
0.01
0.01
0.03
Acquisition, integration, reorganization
related, and other costs
0.10
0.09
0.10
0.31
Amortization of capitalized software
-
0.05
-
-
IP restructuring tax benefit(i)
-
(1.41)
-
-
Tax contingency adjustment(ii)
-
(0.16)
-
-
Income tax adjustments(iii)
(0.08)
(0.01)
(0.06)
(0.24)
Non-GAAP Diluted Earnings Per Share
$0.69
$0.27
$0.47 - $0.49
$1.61 - $1.67
- The Company’s GAAP effective tax rate for the three months
ended March 31, 2020 includes $157 million of discrete tax benefit
related to an intra-entity asset transfer of certain of its
intellectual property to one of its Irish subsidiaries, which
occurred on January 1, 2020. The one-time tax benefit for this
intra-entity asset transfer of $157 million was recorded as a
deferred tax asset for GAAP reporting purposes in the first quarter
of 2020 but was excluded from non-GAAP results.
- The Company’s forecasted full-year 2020 GAAP marginal effective
tax rate included $3 million of tax expense related to tax
contingencies pursuant to FIN 48. For GAAP purposes, this is a
component of the marginal rate and is recognized as tax benefit or
expense based on the Company’s reported GAAP pre-tax income or loss
for the quarter. To more accurately reflect the impact of the
expense on a quarterly basis for non-GAAP purposes, the $3 million
of tax expense was recognized ratably each quarter instead of being
included in the marginal effective rate.
- 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, 2021 was 26.4% and March 31, 2020 was 25.0%.
In addition, GAAP to non-GAAP reconciliation of prior 2021 FY
outlook non-GAAP diluted earnings per share is included in the
Company’s Q4/FY 2020 Earnings Release dated February 4, 2021, which
is available on the Investor Relations page of Teradata’s website
at investor.teradata.com.
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, 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; 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 the ongoing and uncertain
impact of the COVID-19 pandemic on our business, financial
condition and operating results, including the impact of the
COVID-19 pandemic on our customers and suppliers; 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,
availability and/or market acceptance of new and existing products,
product features and services; tax rates; turnover of workforce and
the ability to attract and retain skilled employees; protecting our
intellectual property; the availability and successful exploitation
of new alliance and acquisition opportunities; subscription
arrangements 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 annual report on Form 10-K for the year ended December 31, 2020
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 is the connected multi-cloud data platform for
enterprise analytics, solving data challenges from start to scale.
We help businesses unlock value by turning data into their greatest
asset. 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
2021
2020
% Chg Revenue Recurring
$
372
$
311
20
%
Perpetual software licenses, hardware and other
23
23
0
%
Consulting services
96
100
(4
%)
Total revenue
491
434
13
%
Gross profit Recurring
282
218
% of Revenue
75.8
%
70.1
%
Perpetual software licenses, hardware and other
12
8
% of Revenue
52.2
%
34.8
%
Consulting services
13
(1
)
% of Revenue
13.5
%
(1.0
%)
Total gross profit
307
225
% of Revenue
62.5
%
51.8
%
Selling, general and administrative expenses
149
158
Research and development expenses
77
73
Income (loss) from operations
81
(6
)
% of Revenue
16.5
%
(1.4
%)
Other expense, net
(9
)
(8
)
Income (loss) before income taxes
72
(14
)
% of Revenue
14.7
%
(3.2
%)
Income tax expense (benefit)
19
(182
)
% Tax rate
26.4
%
1,300.0
%
Net income
$
53
$
168
% of Revenue
10.8
%
38.7
%
Net income per common share Basic
$
0.49
$
1.52
Diluted
$
0.47
$
1.51
Weighted average common shares outstanding Basic
108.7
110.3
Diluted
112.8
111.3
Schedule B
TERADATA CORPORATION CONDENSED CONSOLIDATED BALANCE
SHEETS (in millions - unaudited)
March 31,
December 31,
March 31,
2021
2020
2020
Assets Current assets Cash and
cash equivalents
$
538
$
529
$
394
Accounts receivable, net
367
331
448
Inventories
16
29
28
Other current assets
154
155
104
Total current assets
1,075
1,044
974
Property and equipment, net
344
339
334
Right of use assets - operating lease, net
34
38
49
Goodwill
399
401
394
Capitalized contract costs, net
99
98
87
Deferred income taxes
209
222
253
Other assets
43
51
60
Total assets
$
2,203
$
2,193
$
2,151
Liabilities and stockholders'
equity Current liabilities Current portion of long-term
debt
$
50
$
44
$
25
Current portion of finance lease liability
92
75
60
Current portion of operating lease liability
14
15
17
Accounts payable
55
50
96
Payroll and benefits liabilities
106
170
86
Deferred revenue
557
499
555
Other current liabilities
81
99
67
Total current liabilities
955
952
906
Long-term debt
399
411
448
Finance lease liability
84
70
75
Operating lease liability
26
28
37
Pension and other postemployment plan liabilities
143
152
133
Long-term deferred revenue
43
38
44
Deferred tax liabilities
7
6
6
Other liabilities
129
136
153
Total liabilities
1,786
1,793
1,802
Stockholders' equity Common stock
1
1
1
Paid-in capital
1,708
1,656
1,567
Accumulated deficit
(1,146
)
(1,114
)
(1,050
)
Accumulated other comprehensive loss
(146
)
(143
)
(169
)
Total stockholders' equity
417
400
349
Total liabilities and stockholders' equity
$
2,203
$
2,193
$
2,151
Schedule C
TERADATA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (in millions - unaudited)
For the Period Ended March
31
Three Months
2021
2020
Operating activities Net income
$
53
$
168
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
39
42
Stock-based compensation expense
21
21
Deferred income taxes
10
(149
)
Changes in assets and liabilities: Receivables
(36
)
(50
)
Inventories
13
3
Current payables and accrued expenses
(44
)
(43
)
Deferred revenue
63
66
Other assets and liabilities
(9
)
(48
)
Net cash provided by operating activities
110
10
Investing activities Expenditures for property and equipment
(4
)
(10
)
Additions to capitalized software
(1
)
(2
)
Net cash used in investing activities
(5
)
(12
)
Financing activities Repurchases of common stock
(83
)
(73
)
Repayments of long-term borrowings
(6
)
(6
)
Payments of finance leases
(15
)
(9
)
Other financing activities, net
13
-
Net cash used in financing activities
(91
)
(88
)
Effect of exchange rate changes on cash and cash equivalents
(5
)
(10
)
Increase (decrease) in cash, cash equivalents and restricted
cash
9
(100
)
Cash, cash equivalents and restricted cash at beginning of
period
533
496
Cash, cash equivalents and restricted cash at end of period
$
542
$
396
Supplemental cash flow disclosure: Non-cash investing and
financing activities: Assets acquired by finance leases
$
45
$
15
Assets acquired by operating leases
$
2
$
3
Schedule D
TERADATA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in millions - unaudited)
For the Three Months Ended
March 31
2021
2020
% Change As Reported
% Change Constant Currency
(2)
Segment Revenue Americas
$
263
$
244
8
%
8
%
EMEA
147
118
25
%
17
%
APJ
81
72
13
%
4
%
Total segment revenue
491
434
13
%
10
%
Segment gross profit Americas
182
144
% of Revenue
69.2
%
59.0
%
EMEA
88
61
% of Revenue
59.9
%
51.7
%
APJ
45
30
% of Revenue
55.6
%
41.7
%
Total segment gross profit
315
235
% of Revenue
64.2
%
54.1
%
Reconciling items(1)
(8
)
(10
)
Total gross profit
$
307
$
225
% of Revenue
62.5
%
51.8
%
(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/20210506006126/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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