Teradata Reports First Quarter 2024 Financial Results
Teradata (NYSE: TDC) today announced its first quarter 2024 financial results. "Teradata grew public cloud ARR 36% year over year in constant currency. Teradata’s technology is fundamental to drivin...
- First quarter public cloud ARR of $525 million, an increase of 35% as reported and 36% in constant currency from the prior year period(1)
- Cloud net expansion rate of 123%
- GAAP diluted EPS was $0.20 versus $0.39 per share
- Non-GAAP diluted EPS was $0.57 versus $0.61 per share(2)
- First quarter share repurchases of $124 million
SAN DIEGO: Teradata (NYSE: TDC) today announced its first quarter 2024 financial results.
"Teradata grew public cloud ARR 36% year over year in constant currency. Teradata’s technology is fundamental to driving complex analytics at scale, and is differentiated today as businesses everywhere are exploring how to leverage AI to be more productive and innovative,” said Steve McMillan, President and CEO, Teradata. “We are focused on, and confident in, our ability to improve execution across the business, and we are moving forward with urgency and discipline to achieve our long-term profitable growth targets.”
“While quarter-over-quarter cloud ARR growth was slightly below expectations, we are pleased with our sustained strong cloud net expansion rate of 123%,” said Claire Bramley, Chief Financial Officer, Teradata. “We are dedicated to improving our overall growth trajectory and will continue to invest in areas to support our long-term objectives. We are also highly focused on delivering profitability, growing free cash flow, and maintaining on-going value to shareholders.
First Quarter 2024 Financial Highlights Compared to First Quarter 2023
- Public cloud ARR increased to $525 million from $388 million, an increase of 35% as reported and 36% in constant currency(1)
- Total ARR decreased to $1.480 billion from $1.506 billion, a decrease of 2% as reported and 1% in constant currency(1)
- Recurring revenue was $388 million versus $389 million, flat as reported and 1% increase in constant currency(1)
- Total revenue was $465 million versus $476 million, a decrease of 2% as reported and 1% in constant currency(1)
- Recurring revenue was 83% of total revenue versus 82%
- GAAP gross margin was 61.1% versus 63.4%
- Non-GAAP gross margin was 62.2% versus 64.3%(2)
- GAAP operating income was $48 million versus $79 million
- Non-GAAP operating income was $89 million versus $108 million(2)
- GAAP diluted EPS was $0.20 versus $0.39 per share
- Non-GAAP diluted EPS was $0.57 versus $0.61 per share(2)
- Cash flow from operations was $27 million compared to $109 million
- Free cash flow was $21 million compared to $105 million(3)
Outlook
For the second quarter of 2024:
- GAAP diluted EPS is expected to be in the range of $0.17 to $0.21 per share
- Non-GAAP diluted EPS is expected to be in the range of $0.46 to $0.50 per share(2)
For the full-year 2024, Teradata updates the following range:
- GAAP diluted EPS is expected to be in the range of $1.00 to $1.16 per share
For the full-year 2024, Teradata retains the following ranges:
- Total ARR growth of 4% to 8% year-over-year, in constant currency(4)
- Recurring revenue growth of 1% to 3% year-over-year, in constant currency(4)
- Total revenue growth of 0% to 2% year-over-year, in constant currency(4)
- Public cloud ARR growth of 35% to 41% year-over-year, in constant currency(4)
- Cash flow from operations of $360 million to $400 million
- Free cash flow of $340 million to $380 million(3)
- Non-GAAP diluted EPS is expected to be in the range of $2.15 to $2.31 per share(2)
Earnings Conference Call
A conference call is scheduled for today at 2:00 p.m. PT to discuss the Company’s first quarter 2024 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 March 31 | ||||||||||
2024 | 2023 | % Change as | % Change in CC | ||||||||
Recurring revenue | $ | 388 |
| $ | 389 |
| 0 | % |
| 1 | % |
Perpetual software licenses, hardware and other |
| 8 |
|
| 13 |
| (38 | %) |
| (40 | %) |
Consulting services |
| 69 |
|
| 74 |
| (7 | %) |
| (2 | %) |
Total revenue | $ | 465 |
| $ | 476 |
| (2 | %) |
| (1 | %) |
|
|
|
|
|
|
|
| ||||
Americas | $ | 277 |
| $ | 292 |
| (5 | %) |
| (3 | %) |
EMEA |
| 125 |
|
| 117 |
| 7 | % |
| 6 | % |
APJ |
| 63 |
|
| 67 |
| (6 | %) |
| 0 | % |
Total revenue | $ | 465 |
| $ | 476 |
| (2 | %) |
| (1 | %) |
| As of March 31 | ||||||||||
| 2024 |
| 2023 |
| % Change as |
| % Change in CC | ||||
Annual recurring revenue* | $ | 1,480 |
| $ | 1,506 |
| (2 | %) |
| (1 | %) |
Public cloud ARR** | $ | 525 |
| $ | 388 |
| 35 | % |
| 36 | % |
| The impact of currency on ARR is determined by calculating the prior period ending ARR using the current period end currency rates. | |
* | 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 | |||||||||||
(in millions, except per share data) | ended March 31 | ||||||||||
Gross Profit: | 2024 | 2023 | % Chg. | ||||||||
GAAP Gross Profit | $ | 284 |
| $ | 302 |
| (6 | %) | |||
% of Revenue |
| 61.1 | % |
| 63.4 | % | |||||
| |||||||||||
Excluding: |
| ||||||||||
Stock-based compensation expense |
| 4 |
|
| 4 |
| |||||
Reorganization and transformation cost |
| 1 |
|
| - |
| |||||
Non-GAAP Gross Profit | $ | 289 |
| $ | 306 |
| (6 | %) | |||
% of Revenue |
| 62.2 | % |
| 64.3 | % | |||||
Operating Income |
|
|
|
|
|
| |||||
GAAP Operating Income | $ | 48 |
| $ | 79 |
| (39 | %) | |||
% of Revenue |
| 10.3 | % |
| 16.6 | % | |||||
| |||||||||||
Excluding: |
| ||||||||||
Stock-based compensation expense |
| 34 |
|
| 28 |
| |||||
Reorganization and transformation cost |
| 7 |
|
| 1 |
| |||||
Non-GAAP Operating Income | $ | 89 |
| $ | 108 |
| (18 | %) | |||
% of Revenue |
| 19.1 | % |
| 22.7 | % | |||||
|
|
|
|
|
|
| |||||
Net Income |
|
|
|
|
|
| |||||
GAAP Net Income | $ | 20 |
| $ | 40 |
| (50 | %) | |||
% of Revenue |
| 4.3 | % |
| 8.4 | % | |||||
| |||||||||||
Excluding: |
| ||||||||||
Stock-based compensation expense |
| 34 |
|
| 28 |
| |||||
Reorganization and transformation cost |
|
| 7 |
|
|
| 1 |
|
|
| |
Argentina Blue Chip Swap |
|
| 2 |
|
|
| - |
|
|
| |
Income tax adjustments(i) |
| (6 | ) |
| (6 | ) | |||||
Non-GAAP Net Income |
| $ | 57 |
|
| $ | 63 |
|
| (10 | %) |
% of Revenue |
| 12.3 | % |
| 13.2 | % | |||||
For the Three Months | 2024 Outlook | |||||||||||||
Earnings Per Share: | 2024 |
| 2023 |
|
| Q2 |
| FY | ||||||
GAAP Earnings Per Share | $ | 0.20 |
|
| $ | 0.39 |
|
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