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Teradata Reports First Quarter 2022 Financial Results

  • Public cloud ARR of $209 million, an increase of 69% as reported and 70% in constant currency from the prior year period(1)
  • First quarter total revenue of $496 million, an increase of 1% as reported and 4% in constant currency(1)
  • First quarter recurring revenue of $386 million, an increase of 4% as reported and 6% in constant currency from the prior year period(1)
  • First quarter GAAP earnings per diluted share of $0.33
  • First quarter Non-GAAP earnings per diluted share of $0.65(2)
  • First quarter cash from operations of $151 million and free cash flow of $150 million (3)

Teradata (NYSE: TDC) today announced its first quarter 2022 financial results.

“We are off to a solid start in 2022, with another quarter of strong profitable growth and free cash flow generation,” said Steve McMillan, President and CEO, Teradata. “Our outlook for Cloud ARR growth is on track and customers are expanding their Teradata cloud environments as they recognize the value of our market-leading enterprise price performance. Companies are increasingly relying on data and analytics, and placing their trust in Teradata to help them turn data into the best business outcomes.”

First Quarter 2022 Financial Highlights Compared to First Quarter 2021

  • Public cloud ARR increased to $209 million from $124 million, an increase of 69% as reported and 70% in constant currency(1)
  • Total ARR increased to $1.427 billion from $1.404 billion, an increase of 2% as reported and 3% in constant currency(1)
  • Total revenue was $496 million versus $491 million, an increase of 1% as reported and 4% in constant currency(1)
  • Recurring revenue was $386 million versus $372 million, an increase of 4% as reported and 6% in constant currency(1)
  • Recurring revenue was 78% of total revenue in the first quarter, up from 76% the prior year period
  • GAAP gross margin was 60.7% versus 62.5%
  • Non-GAAP gross margin was 62.9% versus 64.2%(2)
  • GAAP operating income was $68 million versus $81 million
  • Non-GAAP operating income was $115 million, flat versus last year(2)
  • GAAP diluted EPS was $0.33 versus $0.47 per share
  • Non-GAAP diluted EPS was $0.65 versus $0.69(2)
  • Cash flow from operations was $151 million compared to $110 million
  • Free cash flow was $150 million compared to $105 million(3)

Outlook

For the full year 2022, Teradata affirms the following outlook elements:

  • Public cloud ARR is expected to increase by approximately 80% year-over-year, as reported and in constant currency.(1)
  • Cash flow from operations is expected to be approximately $425 million.
  • Free cash flow is expected to be approximately $400 million.(3)

For the full year 2022, Teradata revises the following outlook elements in light of ceasing operations in Russia and foreign currency headwinds. Excluding these, Teradata would be in-line with the 2022 outlook provided on last quarter’s earnings call.

Ceasing operations in Russia is expected to have a negative impact to total ARR of $55 million, total revenue of $60 million, and non-GAAP diluted EPS of $0.29. The revised elements below also include the negative impact from an expected 3.5% to 4.0% foreign currency headwind. As such, it is useful to provide an outlook in constant currency in fiscal 2022:

  • Total ARR is now projected to decline in the low-single-digit percentage range year-over-year as reported. On a constant currency basis, total ARR is anticipated to grow in the low-single-digit percentage range.(1)
  • Total recurring revenue is now anticipated to decline in the low-to-mid-single-digit percentage range year-over-year as reported. On a constant currency basis, total recurring revenue is projected to be flat to grow in the low-single-digit percentage range.(1)
  • Total revenue is now expected to decline in the mid-to-high-single-digit percentage range year-over-year as reported. On a constant currency basis, total revenue is anticipated to decline in the low-single-digit percentage range.(1)
  • GAAP diluted EPS is now expected to be in the range of $0.45 to $0.55 versus the range of $0.75 to $0.85 previously provided.
  • Non-GAAP diluted EPS is now expected to be in the range of $1.55 to $1.65 versus the range of $1.82 to $1.92 previously provided.(2)

For the second quarter of 2022:

  • GAAP diluted EPS is expected to be in the range of ($0.01) to $0.03.
  • Non-GAAP diluted EPS is expected to be in the range of $0.26 to $0.30.(2)

Earnings Conference Call

A conference call is scheduled for today at 2:00 p.m. PT to discuss the Company’s first quarter 2022 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

2022

 

2021

 

% Change as

Reported

 

% Change in CC

Recurring revenue

$386

 

$372

 

4%

 

6%

Perpetual software licenses and hardware

26

 

23

 

13%

 

17%

Consulting services

84

 

96

 

(13%)

 

(9%)

Total revenue

$496

 

$491

 

1%

 

4%

 

 

 

 

 

 

 

 

Americas

$290

 

$263

 

10%

 

11%

EMEA

129

 

147

 

(12%)

 

(6%)

APJ

77

 

81

 

(5%)

 

0%

Total revenue

$496

 

$491

 

1%

 

4%

 

 

 

 

 

 

 

 

 

As of March 31

 

2022

 

2021

 

% Change as

Reported

 

% Change in CC

Annual recurring revenue*

$1,427

 

$1,404

 

2%

 

3%

Public cloud ARR**

$209

 

$124

 

69%

 

70%

* 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. 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 Vantage 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 earnings per diluted share, or EPS, 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:

2022

2021

% Chg.

GAAP Gross Profit

$301

$307

% of Revenue

60.7%

62.5%

 

Excluding:

 

Stock-based compensation expense

5

3

Reorganization and transformation cost and cost associated with ceasing operations in Russia

6

5

Non-GAAP Gross Profit

$312

$315

-1%

% of Revenue

62.9%

64.2%

 

Operating Income

 

 

 

 

 

 

 

GAAP Operating Income

$68

$81

 

% of Revenue

13.7%

16.5%

 

Excluding:

 

Stock-based compensation expense

31

21

Amortization of acquisition-related intangible assets

1

1

Reorganization and transformation cost and cost associated with ceasing operations in Russia

15

12

Non-GAAP Operating Income

$115

$115

0%

% of Revenue

23.2%

23.4%

 

Net Income

 

 

 

 

 

 

 

GAAP Net Income

$36

$53

 

% of Revenue

7.3%

10.8%

 

Excluding:

 

Stock-based compensation expense

31

21

Amortization of acquisition-related intangible assets

1

1

Reorganization and transformation cost and cost associated with ceasing operations in Russia

15

 

12

Income tax adjustments(i)

 

(12)

 

(9)

 

 

 

Non-GAAP Net Income

$71

$78

-9%

% of Revenue

 

14.3%

 

15.9%

 

 

 

For the Three Months

ended March 31

2022 Outlook

Earnings Per Share:

2022

 

2021

 

 

Q2

 

FY

 

GAAP Earnings Per Share

$0.33

 

$0.47

 

 

($0.01) - $0.03

 

$0.45 - $0.55

 

 

Excluding:

 

 

 

 

 

 

Stock-based compensation expense

0.28

0.19

 

0.29

 

1.15

 

Amortization of acquisition-related intangible assets

0.01

0.01

 

0.01

 

0.02

 

Reorganization and transformation cost and cost associated with ceasing operations in Russia

0.14

0.10

 

0.01

 

0.16

 

Income tax adjustments(i)

(0.11)

 

(0.08)

 

 

(0.04)

 

(0.23)

 

Non-GAAP Diluted Earnings Per Share

$0.65

$0.69

 

$0.26 - $0.30

 

$1.55- $1.65

 

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 March 31, 2022 was 30.4% and March 31, 2021 was 26.4%.

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 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

 

 

Outlook

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

 

Cash provided by operating activities (GAAP)

$

151

 

$

110

 

 

 

~$425

Less capital expenditures for:

 

 

 

 

 

Expenditures for property and equipment

 

(1

)

 

(4

)

 

 

(~23)

Additions to capitalized software

 

-

 

 

(1

)

 

 

(~2)

Total capital expenditures

 

(1

)

 

(5

)

 

 

(~25)

Free Cash Flow (non-GAAP measure)

$

150

 

$

105

 

 

 

~$400

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 2022 second 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 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 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 March 31
Three Months

 

2022

 

 

 

2021

 

 

% Chg

Revenue
 
Recurring

$

386

 

$

372

 

4

%

Perpetual software licenses, hardware and other

 

26

 

 

23

 

13

%

Consulting services

 

84

 

 

96

 

(13

%)

 
Total revenue

 

496

 

 

491

 

1

%

 
Gross profit
 
Recurring

 

281

 

 

282

 

% of Revenue

 

72.8

%

 

75.8

%

Perpetual software licenses, hardware and other

 

8

 

 

12

 

% of Revenue

 

30.8

%

 

52.2

%

Consulting services

 

12

 

 

13

 

% of Revenue

 

14.3

%

 

13.5

%

 
Total gross profit

 

301

 

 

307

 

% of Revenue

 

60.7

%

 

62.5

%

 
Selling, general and administrative expenses

 

157

 

 

149

 

Research and development expenses

 

76

 

 

77

 

 
Income from operations

 

68

 

 

81

 

% of Revenue

 

13.7

%

 

16.5

%

 
Other expense, net

 

(13

)

 

(9

)

 
Income before income taxes

 

55

 

 

72

 

% of Revenue

 

11.1

%

 

14.7

%

 
Income tax expense

 

19

 

 

19

 

% Tax rate

 

34.5

%

 

26.4

%

 
Net income

$

36

 

$

53

 

% of Revenue

 

7.3

%

 

10.8

%

 
Net income per common share
Basic

$

0.34

 

$

0.49

 

Diluted

$

0.33

 

$

0.47

 

 
Weighted average common shares outstanding
Basic

 

105.0

 

 

108.7

 

Diluted

 

108.6

 

 

112.8

 

 
Schedule B
 
 
 
TERADATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions - unaudited)
 
 
March 31, December 31, March 31,

 

2022

 

 

 

2021

 

 

 

2021

 

Assets
 
Current assets
Cash and cash equivalents

$

404

 

$

592

 

$

538

 

Accounts receivable, net

 

330

 

 

336

 

 

367

 

Inventories

 

16

 

 

26

 

 

16

 

Other current assets

 

113

 

 

152

 

 

154

 

 
Total current assets

 

863

 

 

1,106

 

 

1,075

 

 
Property and equipment, net

 

274

 

 

288

 

 

344

 

Right of use assets - operating lease, net

 

22

 

 

26

 

 

34

 

Goodwill

 

395

 

 

396

 

 

399

 

Capitalized contract costs, net

 

109

 

 

111

 

 

99

 

Deferred income taxes

 

200

 

 

202

 

 

209

 

Other assets

 

32

 

 

40

 

 

43

 

 
Total assets

$

1,895

 

$

2,169

 

$

2,203

 

 
Liabilities and stockholders' equity
 
Current liabilities
Current portion of long-term debt

$

75

 

$

88

 

$

50

 

Current portion of finance lease liability

 

76

 

 

77

 

 

92

 

Current portion of operating lease liability

 

11

 

 

12

 

 

14

 

Accounts payable

 

78

 

 

67

 

 

55

 

Payroll and benefits liabilities

 

91

 

 

148

 

 

106

 

Deferred revenue

 

580

 

 

552

 

 

557

 

Other current liabilities

 

82

 

 

89

 

 

81

 

 
Total current liabilities

 

993

 

 

1,033

 

 

955

 

 
Long-term debt

 

324

 

 

324

 

 

399

 

Finance lease liability

 

56

 

 

53

 

 

84

 

Operating lease liability

 

15

 

 

18

 

 

26

 

Pension and other postemployment plan liabilities

 

133

 

 

138

 

 

143

 

Long-term deferred revenue

 

19

 

 

27

 

 

43

 

Deferred tax liabilities

 

16

 

 

7

 

 

7

 

Other liabilities

 

102

 

 

109

 

 

129

 

 
Total liabilities

 

1,658

 

 

1,709

 

 

1,786

 

 
Stockholders' equity
Common stock

 

1

 

 

1

 

 

1

 

Paid-in capital

 

1,792

 

 

1,808

 

 

1,708

 

Accumulated deficit

 

(1,425

)

 

(1,211

)

 

(1,146

)

Accumulated other comprehensive loss

 

(131

)

 

(138

)

 

(146

)

 
Total stockholders' equity

 

237

 

 

460

 

 

417

 

 
Total liabilities and stockholders' equity

$

1,895

 

$

2,169

 

$

2,203

 

Schedule C
 
 
 
TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions - unaudited)
 
For the Period Ended March 31
Three Months

 

2022

 

 

2021

 

Operating activities
Net income

$

36

 

$

53

 

 
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization

 

40

 

 

39

 

Stock-based compensation expense

 

31

 

 

21

 

Deferred income taxes

 

8

 

 

10

 

Changes in assets and liabilities:
Receivables

 

6

 

 

(36

)

Inventories

 

10

 

 

13

 

Current payables and accrued expenses

 

(49

)

 

(44

)

Deferred revenue

 

20

 

 

63

 

Other assets and liabilities

 

49

 

 

(9

)

 
Net cash provided by operating activities

 

151

 

 

110

 

 
Investing activities
Expenditures for property and equipment

 

(1

)

 

(4

)

Additions to capitalized software

 

-

 

 

(1

)

 
Net cash used in investing activities

 

(1

)

 

(5

)

 
Financing activities
Repurchases of common stock

 

(300

)

 

(83

)

Repayments of long-term borrowings

 

(13

)

 

(6

)

Payments of finance leases

 

(22

)

 

(15

)

Other financing activities, net

 

4

 

 

13

 

 
Net cash used in financing activities

 

(331

)

 

(91

)

 
Effect of exchange rate changes on cash and cash equivalents

 

(6

)

 

(5

)

 
(Decrease) increase in cash, cash equivalents and restricted cash

 

(187

)

 

9

 

Cash, cash equivalents and restricted cash at beginning of period

 

595

 

 

533

 

 
Cash, cash equivalents and restricted cash at end of period

$

408

 

$

542

 

 
Supplemental cash flow disclosure:
Non-cash investing and financing activities:
Assets acquired by finance leases

$

24

 

$

45

 

Assets acquired by operating leases

$

1

 

$

2

 

 
Schedule D
 
 
 
TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions - unaudited)
 
For the Three Months Ended March 31

 

2022

 

 

2021

 

% Change

As

Reported
% Change

Constant

Currency (2)
Segment Revenue
 
Americas

$

290

 

$

263

 

10

%

11

%

EMEA

 

129

 

 

147

 

(12

%)

(6

%)

APJ

 

77

 

 

81

 

(5

%)

0

%

 
 
Total segment revenue

 

496

 

 

491

 

1

%

4

%

 
Segment gross profit
 
Americas

 

189

 

 

182

 

% of Revenue

 

65.2

%

 

69.2

%

EMEA

 

78

 

 

88

 

% of Revenue

 

60.5

%

 

59.9

%

APJ

 

45

 

 

45

 

% of Revenue

 

58.4

%

 

55.6

%

 
Total segment gross profit

 

312

 

 

315

 

% of Revenue

 

62.9

%

 

64.2

%

 
Reconciling items(1)

 

(11

)

 

(8

)

 
Total gross profit

$

301

 

$

307

 

% of Revenue

 

60.7

%

 

62.5

%

 
 

(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.

 

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