Shares of Teradata Corporation (TDC - Free Report) plunged almost 6.2% to close at $35 on Feb 9, following dismal fourth-quarter 2017 results. Adjusted earnings of 58 cents per share declined 17.1% year over year. However, the figure beat the Zacks Consensus Estimate of 50 cents.
Total revenues of $626 million beat the Zacks Consensus Estimate of $610 million. However, the figure was flat on a year-over-year basis. Revenues were adversely impacted by the company’s ongoing business transformation.
Products and Cloud revenues decreased 7.3% year over year to $243 million. Services revenues increased 5.2% on a year-over-year basis to $383 million.
Revenues from Americas Data and Analytics decreased 8.1% year over year (8% at constant currency), while that from International Data and Analytics increased 14% (8% at constant currency) from the year-ago quarter.
Moreover, recurring revenues increased 7% on a constant currency (cc) basis. Consulting services also rose 2% at cc. However, perpetual software licenses and hardware revenues declined 17% at cc.
Operating Details
Non-GAAP gross margin contracted 190 basis points (bps) from the year-ago quarter to 51.8%. Total product & cloud gross margin contracted 160 bps, which was partially offset by 20 bps expansion in services gross margin.
As a percentage of revenues, selling, general & administrative (SG&A) expenses increased 190 bps to 27.3%. Moreover, research & development (R&D) expenses jumped 290 bps from the year-ago quarter to 12.1%.
Non-GAAP operating margin contracted 640 bps on a year-over-year basis to 14.5%, primarily due to lower revenues, shrinking gross margin and higher operating expenses to support the company’s strategic initiatives.
Balance Sheet & Share Repurchase
As of Dec 31, 2017, Teradata had cash and cash equivalents of $1.089 billion, compared with $1.025 billion as of Sep 30, 2017. The company exited the quarter with total debt (including current portion) of $538 million compared with $546 million at the end of the previous quarter.
On Feb 5, 2018, Teradata's board of directors authorized an additional $310 million to repurchase shares. The company has approximately $500 million authorized for share repurchases.
Guidance
For 2018, Teradata expects revenues between $2.15 billion and $2.20 billion. The Zacks Consensus Estimate for revenues is currently pegged at $2.18 billion. Non-GAAP earnings are projected between 67 cents and 77 cents. The Zacks Consensus Estimate for earnings is currently pegged at $1.39.
For first-quarter of 2018, revenues are projected in the range of $490-$500 million. The Zacks Consensus Estimate for revenues is currently pegged at $499.2 million. Non-GAAP earnings are estimated between 13 cents and 16 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 27 cents.
Zacks Rank & Stocks to Consider
Teradata carries a Zacks Rank #4 (Sell).
A few better-ranked stocks in the broader technology sector are Micron Technology (MU - Free Report) , Super Micro Computer (SMCI - Free Report) and Seagate (STX - Free Report) . While Micron and Super Micro sport a Zacks Rank #1 (Strong Buy), Seagate has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Micron, Super Micro and Seagate is projected at 10%, 14% and 15.6%, respectively.
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Shares of Teradata Corporation (TDC - Free Report) plunged almost 6.2% to close at $35 on Feb 9, following dismal fourth-quarter 2017 results. Adjusted earnings of 58 cents per share declined 17.1% year over year. However, the figure beat the Zacks Consensus Estimate of 50 cents.
Total revenues of $626 million beat the Zacks Consensus Estimate of $610 million. However, the figure was flat on a year-over-year basis. Revenues were adversely impacted by the company’s ongoing business transformation.
Products and Cloud revenues decreased 7.3% year over year to $243 million. Services revenues increased 5.2% on a year-over-year basis to $383 million.
Revenues from Americas Data and Analytics decreased 8.1% year over year (8% at constant currency), while that from International Data and Analytics increased 14% (8% at constant currency) from the year-ago quarter.
Moreover, recurring revenues increased 7% on a constant currency (cc) basis. Consulting services also rose 2% at cc. However, perpetual software licenses and hardware revenues declined 17% at cc.
Operating Details
Non-GAAP gross margin contracted 190 basis points (bps) from the year-ago quarter to 51.8%. Total product & cloud gross margin contracted 160 bps, which was partially offset by 20 bps expansion in services gross margin.
As a percentage of revenues, selling, general & administrative (SG&A) expenses increased 190 bps to 27.3%. Moreover, research & development (R&D) expenses jumped 290 bps from the year-ago quarter to 12.1%.
Non-GAAP operating margin contracted 640 bps on a year-over-year basis to 14.5%, primarily due to lower revenues, shrinking gross margin and higher operating expenses to support the company’s strategic initiatives.
Balance Sheet & Share Repurchase
As of Dec 31, 2017, Teradata had cash and cash equivalents of $1.089 billion, compared with $1.025 billion as of Sep 30, 2017. The company exited the quarter with total debt (including current portion) of $538 million compared with $546 million at the end of the previous quarter.
On Feb 5, 2018, Teradata's board of directors authorized an additional $310 million to repurchase shares. The company has approximately $500 million authorized for share repurchases.
Guidance
For 2018, Teradata expects revenues between $2.15 billion and $2.20 billion. The Zacks Consensus Estimate for revenues is currently pegged at $2.18 billion. Non-GAAP earnings are projected between 67 cents and 77 cents. The Zacks Consensus Estimate for earnings is currently pegged at $1.39.
For first-quarter of 2018, revenues are projected in the range of $490-$500 million. The Zacks Consensus Estimate for revenues is currently pegged at $499.2 million. Non-GAAP earnings are estimated between 13 cents and 16 cents per share. The Zacks Consensus Estimate for earnings is currently pegged at 27 cents.
Zacks Rank & Stocks to Consider
Teradata carries a Zacks Rank #4 (Sell).
A few better-ranked stocks in the broader technology sector are Micron Technology (MU - Free Report) , Super Micro Computer (SMCI - Free Report) and Seagate (STX - Free Report) . While Micron and Super Micro sport a Zacks Rank #1 (Strong Buy), Seagate has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Micron, Super Micro and Seagate is projected at 10%, 14% and 15.6%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
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 >>
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