Teradata (TDC - Free Report) reported first-quarter 2022 non-GAAP earnings of 65 cents per share, which beat the Zacks Consensus Estimate by 1.6%. Further, the figure was within the company’s guidance of 63-67 cents.
However, the bottom line decreased 5.8% year over year.
Revenues of $496 million increased 1% and 4% year over year on a reported and constant-currency (cc) basis, respectively.
Top-line growth was driven by increasing recurring and perpetual revenues. Further, the strong performance delivered by the company in the Americas region was a positive.
Total annual recurring revenues (ARR) at the first-quarter end increased 2% year over year (up 3% at cc) to $1.43 billion. Public cloud ARR surged 69% year over year on a reported basis and 70% at cc to $209 million.
We note that the company ceased its operations in Russia as a result of the ongoing Russia-Ukraine war.
Shares of Teradata have plunged 13.5% following the release of its first-quarter results, which can be primarily attributed to the weak outlook for 2022 bottom and top lines. The company anticipates 8 cents of headwind in each of the remaining quarters of this year due to its latest step in Russia.
Also, it expects unfavorable foreign currency fluctuations, which is a negative.
Top-Line Details
Recurring revenues (accounting for 78% of the total revenues) increased 4% year over year (up 6% at cc) to $386 million. This was driven primarily by a higher mix.
Perpetual software license and hardware revenues (5% of revenues) of $26 million were up 13% year over year (up 17% at cc).
Consulting services’ revenues (17% of revenues) declined 13% from the year-ago level (down 9% at cc) to $84 million.
Revenues in the Americas (AMS) (58.5% of revenues) increased 10% year over year (up 11% at cc) to $290 million.
Europe, the Middle East & Africa (EMEA) revenues (26% of revenues) fell 12% from the year-ago figure (down 6% at cc) to $129 million.
Revenues from the Asia Pacific and Japan (APJ) (15.5% of revenues) declined 5% from the year-ago level to $77 million.
Operating Details
The gross margin on a non-GAAP basis was 62.9%, contracting 130 basis points (bps) year over year.
AMS’s non-GAAP gross margin was 65.2% for the first quarter, contracting 400 bps year over year. EMEA’s gross margin expanded 60 bps year over year to 60.5%. APJ’s gross margin expanded 280 bps from the year-ago quarter to 58.4%.
Selling, general & administrative, as a percentage of revenues, expanded 140 bps year over year to 31.7%.
Research & development expenses, as a percentage of revenues, contracted 40 bps on a year-over-year basis to 15.3%.
Non-GAAP operating margin was 23.2%, contracted 20 bps from the year-ago quarter.
Balance Sheet & Other Details
As of Mar 31, 2022, Teradata had cash and cash equivalents of $404 million compared with $592 million as of Dec 31, 2021.
Total debt (including current portion) as of Mar 31, 2022, was $399 million compared with $412 million as of Dec 31, 2021.
In the first quarter, Teradata generated $151 million of cash from operating activities compared with the previous quarter’s $95 million.
The company’s quarterly free cash flow was $150 million compared with $85 million in the fourth quarter.
TDC repurchased 5.1 million shares worth $250 million in the reported quarter.
Guidance
For second-quarter 2022, non-GAAP earnings are expected between 26 cents per share and 30 cents. The Zacks Consensus Estimate for the same is pegged at 52 cents.
For 2022, non-GAAP earnings are expected between $1.55 per share and $1.65 (down from the aforementioned $1.82-$1.92). The Zacks Consensus Estimate for earnings is pegged at $1.90 per share.
Public cloud ARR is projected to increase 80% on a year-over-year basis.
Total ARR is expected to fall year over year in the low-single-digit range.
Teradata expects recurring revenues to decline in a low-single-digit to mid-single-digit range from 2021.
The company projects total revenues to fall year over year in the low to mid-single-digit range on a reported basis. Further, it is expected to grow in the low-single-digit range at CC from 2021. The consensus mark for revenues is currently pegged at $1.93 billion.
Cash flow from operations is expected to be at least $425 million, while free cash flow is projected to be no less than $400 million.
Zacks Rank & Stocks to Consider
Currently, Teradata carries a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider stocks like Jabil (JBL - Free Report) , Jack Henry & Associates (JKHY - Free Report) and Broadcom (AVGO - Free Report) . While Jabil currently sports a Zacks Rank #1 (Strong Buy), Jack Henry & Associates and Broadcom carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Jabil has gained 6.9% over a year. The long-term earnings growth rate for JBL is currently projected at 12%.
Jack Henry & Associates has gained 18.6% over a year. The long-term earnings growth rate for JKHY is currently projected at 17%.
Broadcom has gained 28.9% over a year. The long-term earnings growth rate for AVGO is currently projected at 15.6%.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Teradata (TDC - Free Report) reported first-quarter 2022 non-GAAP earnings of 65 cents per share, which beat the Zacks Consensus Estimate by 1.6%. Further, the figure was within the company’s guidance of 63-67 cents.
However, the bottom line decreased 5.8% year over year.
Revenues of $496 million increased 1% and 4% year over year on a reported and constant-currency (cc) basis, respectively.
Top-line growth was driven by increasing recurring and perpetual revenues. Further, the strong performance delivered by the company in the Americas region was a positive.
Total annual recurring revenues (ARR) at the first-quarter end increased 2% year over year (up 3% at cc) to $1.43 billion. Public cloud ARR surged 69% year over year on a reported basis and 70% at cc to $209 million.
We note that the company ceased its operations in Russia as a result of the ongoing Russia-Ukraine war.
Shares of Teradata have plunged 13.5% following the release of its first-quarter results, which can be primarily attributed to the weak outlook for 2022 bottom and top lines. The company anticipates 8 cents of headwind in each of the remaining quarters of this year due to its latest step in Russia.
Also, it expects unfavorable foreign currency fluctuations, which is a negative.
Top-Line Details
Recurring revenues (accounting for 78% of the total revenues) increased 4% year over year (up 6% at cc) to $386 million. This was driven primarily by a higher mix.
Perpetual software license and hardware revenues (5% of revenues) of $26 million were up 13% year over year (up 17% at cc).
Consulting services’ revenues (17% of revenues) declined 13% from the year-ago level (down 9% at cc) to $84 million.
Revenues in the Americas (AMS) (58.5% of revenues) increased 10% year over year (up 11% at cc) to $290 million.
Europe, the Middle East & Africa (EMEA) revenues (26% of revenues) fell 12% from the year-ago figure (down 6% at cc) to $129 million.
Revenues from the Asia Pacific and Japan (APJ) (15.5% of revenues) declined 5% from the year-ago level to $77 million.
Operating Details
The gross margin on a non-GAAP basis was 62.9%, contracting 130 basis points (bps) year over year.
AMS’s non-GAAP gross margin was 65.2% for the first quarter, contracting 400 bps year over year. EMEA’s gross margin expanded 60 bps year over year to 60.5%. APJ’s gross margin expanded 280 bps from the year-ago quarter to 58.4%.
Selling, general & administrative, as a percentage of revenues, expanded 140 bps year over year to 31.7%.
Research & development expenses, as a percentage of revenues, contracted 40 bps on a year-over-year basis to 15.3%.
Non-GAAP operating margin was 23.2%, contracted 20 bps from the year-ago quarter.
Balance Sheet & Other Details
As of Mar 31, 2022, Teradata had cash and cash equivalents of $404 million compared with $592 million as of Dec 31, 2021.
Total debt (including current portion) as of Mar 31, 2022, was $399 million compared with $412 million as of Dec 31, 2021.
In the first quarter, Teradata generated $151 million of cash from operating activities compared with the previous quarter’s $95 million.
The company’s quarterly free cash flow was $150 million compared with $85 million in the fourth quarter.
TDC repurchased 5.1 million shares worth $250 million in the reported quarter.
Guidance
For second-quarter 2022, non-GAAP earnings are expected between 26 cents per share and 30 cents. The Zacks Consensus Estimate for the same is pegged at 52 cents.
For 2022, non-GAAP earnings are expected between $1.55 per share and $1.65 (down from the aforementioned $1.82-$1.92). The Zacks Consensus Estimate for earnings is pegged at $1.90 per share.
Public cloud ARR is projected to increase 80% on a year-over-year basis.
Total ARR is expected to fall year over year in the low-single-digit range.
Teradata expects recurring revenues to decline in a low-single-digit to mid-single-digit range from 2021.
The company projects total revenues to fall year over year in the low to mid-single-digit range on a reported basis. Further, it is expected to grow in the low-single-digit range at CC from 2021. The consensus mark for revenues is currently pegged at $1.93 billion.
Cash flow from operations is expected to be at least $425 million, while free cash flow is projected to be no less than $400 million.
Zacks Rank & Stocks to Consider
Currently, Teradata carries a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider stocks like Jabil (JBL - Free Report) , Jack Henry & Associates (JKHY - Free Report) and Broadcom (AVGO - Free Report) . While Jabil currently sports a Zacks Rank #1 (Strong Buy), Jack Henry & Associates and Broadcom carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Jabil has gained 6.9% over a year. The long-term earnings growth rate for JBL is currently projected at 12%.
Jack Henry & Associates has gained 18.6% over a year. The long-term earnings growth rate for JKHY is currently projected at 17%.
Broadcom has gained 28.9% over a year. The long-term earnings growth rate for AVGO is currently projected at 15.6%.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on TDC - FREE
Get the latest research report on JBL - FREE
Get the latest research report on AVGO - FREE
Get the latest research report on JKHY - FREE