Presents Long-Term Financial Growth Targets,
Including More Than $1 Billion in Cloud Annual Recurring Revenue
(ARR) and Approximately $550 Million in Free Cash Flow in Fiscal
2025
Reaffirms Fiscal 2021 Financial Outlook
Teradata (NYSE: TDC) highlighted the Company’s successful
cloud-first transformation and ongoing strategic initiatives to
deliver sustainable growth and value creation at its Investor Day
held virtually today.
“Over the course of the last year, we have embarked on a journey
to cloud-first and today, we are a new, reimagined Teradata – a
profitable growth company with the right strategy, technology and
team to win in a large and growing market,” said Steve McMillan,
Teradata President and CEO. “We have long been trusted by our
customers but what sets Teradata apart is our unique ability to
provide a true hybrid, multi-cloud solution, delivering the best
price performance at scale in the industry.”
McMillan continued, “This year we continuously focused on
delivering on our commitments, including building our recurring
revenue streams into sustainable and profitable revenue and free
cash flow. All of which positions us to achieve over $1 billion in
Cloud ARR(1) and approximately $550 million in free cash flow(2) in
fiscal 2025 and deliver significant long-term value to our
shareholders.”
A Reimagined Teradata At the Investor Day event,
Teradata’s new leadership team outlined its three foundational
cornerstones for long-term growth and value creation:
- Well-positioned to win in a large and rapidly growing
market in the cloud supported by patented technology and
differentiated hybrid, multi-cloud capabilities;
- Strong position in the enterprise market, with expanded
focus on the global 10,000 companies across seven key verticals;
and
- Industry-leading management team and more than 7,000
global workforce with rich knowledge and deep expertise.
Continued Strong Financial Performance Through Fiscal 2025
and Beyond Teradata today provided financial targets through
fiscal 2025, including:
- More than $1 billion in Cloud ARR, representing over 50% in
total ARR in fiscal 2025(1);
- Approximately $550 million free cash flow in fiscal
2025(2);
- Low 20% non-GAAP operating margin in fiscal 2025(3); and
- Implementing a returns-based capital return program of at least
50% of free cash flow annually through fiscal 2025(2).
For fiscal 2022, the company preliminarily estimates:
- At least 70% growth in Cloud ARR year-over-year(1);
- Non-GAAP diluted net earnings per share in the range of $1.60
to $1.70(3); and
- Free cash flow of approximately $400 million(2).
Non-GAAP diluted net earnings per share in fiscal 2022 is
expected to be impacted primarily by upfront recurring revenue
recognized in fiscal 2021.
Reaffirmation of 2021 Financial Outlook Teradata also
today reaffirmed its outlook for fiscal 2021, which was previously
provided in its second-quarter 2021 financial results press release
issued on August 5, 2021:
- Public cloud ARR is expected to increase by at least 100%
year-over-year(1);
- Total ARR is expected to grow at a mid-to-high-single-digit
percentage year-over-year(1);
- Recurring revenue is expected to grow at a high-single-digit to
low-double-digit percentage year-over-year;
- Total revenue is expected to grow at a low-single-digit to
mid-single-digit percentage year-over-year;
- GAAP earnings per diluted share is expected to be in the range
of $0.78 to $0.82;
- Non-GAAP earnings per diluted share, excluding stock-based
compensation expense, reorganization-related expenses, and other
special items, is expected to be in the range of $1.92 to
$1.96(3);
- Cash flow from operations is expected to be at least $440
million; and
- Free cash flow is expected to be at least $400 million(2).
Webcast Replay and Supplemental Material To access the
replay of today’s virtual Investor Day event and presentation
materials, visit the investor relations page of Teradata’s website
at http://investor.teradata.com.
1. 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.
Cloud ARR represents public cloud ARR, which 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. Free cash flow is a non-GAAP measure. 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.
The following table reconciles Teradata’s projected cash
provided by operating activities under GAAP to projected free cash
flow for fiscal 2021.
(in millions)
2021E
Cash provided by operating activities
(GAAP)
≥$440
Less capital
expenditures for:
Expenditures for property and
equipment
(≥35)
Additions to capitalized software
(≥5)
Total capital expenditures
(≥40)
Free Cash Flow (non-GAAP measure)
≥$400
For estimates of free cash flow for fiscal 2022 and fiscal 2025,
Teradata is not providing a reconciliation to the most comparable
GAAP measure (cash provided by operating activities estimate) as
non-GAAP adjustments relate to events that have not yet occurred
and would be unreasonably burdensome to forecast.
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 earnings per diluted share, or
EPS, and non-GAAP operating margin, 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 projected EPS under
GAAP to the Company’s projected non-GAAP EPS for fiscal 2021, which
exclude certain specified items. Our management internally uses
supplemental non-GAAP financial measures, such as gross profit,
operating income, operating margin, 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.
Earnings Per Share:
2021 FY
Guidance
GAAP Earnings
$0.78 - $0.82
Excluding:
Stock-based compensation expense
0.95
Amortization of acquisition-related
intangible assets
0.03
Acquisition, integration, reorganization
related, and other costs
0.42
Income tax adjustments (*)
(0.26)
Non-GAAP Diluted Earnings Per Share
$1.92 - $1.96
* 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.
For non-GAAP Diluted Earnings Per Share preliminary estimate for
fiscal 2022, Teradata is not providing a reconciliation to the most
comparable GAAP measure (GAAP Diluted Earnings Per Share
preliminary estimate for fiscal 2022) as non-GAAP adjustments
relate to events that have not yet occurred and would be
unreasonably burdensome to forecast. In addition, for the non-GAAP
operating margin target for fiscal 2025, Teradata is not providing
a reconciliation to the most comparable GAAP measure (GAAP
operating margin target for fiscal 2025) as non-GAAP adjustments
relate to events that have not yet occurred and would be
unreasonably burdensome to forecast.
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. The forward-looking
statements included in this release are made as of September 9,
2021, and 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20210909006102/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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