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Teradata (TDC) Q4 Earnings Beat Estimates, Revenues Fall Y/Y
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Teradata (TDC - Free Report) reported fourth-quarter 2020 adjusted earnings of 38 cents per share, which beat the Zacks Consensus Estimate by 52%. Moreover, the figure increased 72.7% year over year.
Revenues of $491 million beat the consensus mark by 2.4%. However, the top line declined 0.6% year over year. At constant currency (cc), revenues were down 2%.
Total backlog at the end of the fourth quarter was $2.921 billion, up 7% year over year and 13% sequentially.
Top-Line Details
Recurring revenues (78% of revenues) grew 9.4% year over year (up 8% at cc) to $383 million.
Teradata Corporation Price, Consensus and EPS Surprise
Perpetual software license and hardware revenues (5.1% of revenues) declined 16.7% from the year-ago quarter (down 14% at cc) to $25 million.
Consulting services’ revenues (16.9% of revenues) dropped 27.2% from the year-ago quarter (down 30% at cc) to $83 million, primarily due to coronavirus-related impacts, especially on activities that are conducted on-site.
Revenues from the Americas decreased 0.8% year over year (flat at cc) to $261 million. Europe, the Middle East & Africa (“EMEA”) revenues declined 3.6% from the year-ago quarter (down 7% at cc) to $134 million. Revenues from the Asia-Pacific (“APAC”) were up 4.3% from the year-ago quarter (down 1% at cc) to $96 million.
Total annual recurring revenues (“ARR”) at the end of the fourth quarter increased 11.2% year over year (up 9% at cc) to $1.59 billion. Public cloud ARR increased 165% on a reported basis and 159% at cc to $106 million.
Operating Details
Gross margin on a non-GAAP basis expanded 600 basis points (bps) year over year to 59.3%, primarily driven by a higher mix of recurring revenues.
Americas gross margin expanded 350 bps to 61.7%. EMEA gross margin surged to 56.7% from 50.4% reported in the year-ago quarter. APAC gross margin soared to 56.3% from 43.5% reported in the year-ago quarter.
Recurring revenues’ gross margin expanded 320 bps on a year-over-year basis to 69.2%. The growth benefited from cost improvements in subscription and cloud business.
However, perpetual software license and hardware margin soared to 52% from 20% reported in the year-ago quarter.
Consulting services’ gross profit was $6 million compared with $11 million in the year-ago quarter.
Selling, general & administrative (SG&A), and research & development (R&D) expenses, as a percentage of revenues, increased 270 bps and 130 bps, respectively, on a year-over-year basis.
Non-GAAP operating margin expanded 390 bps on a year-over-year basis to 13.6%.
Balance Sheet & Other Details
As of Dec 31, 2020, Teradata had cash and cash equivalents of $529 million compared with $533 million as of Sep 30, 2020.
Total debt (including current portion) as of Dec 31, 2020, was $455 million compared with $461 million as of Sep 30, 2020. Including financial lease obligations, total debt was $600 million.
In the fourth quarter, Teradata generated $56 million of cash from operating activities compared with the previous quarter’s $71 million. Cash used in operating activities was $54 million in the year-ago quarter.
The company’s quarterly free cash flow was $45 million compared with $58 million in the previous quarter. Teradata had posted free cash outflow of $41 million in the year-ago quarter.
Guidance
For first-quarter 2021, non-GAAP earnings are expected between 38 cents and 40 cents per share. Public cloud ARR is expected to increase by at least 165% year-over-year.
For 2021, non-GAAP earnings are expected between $1.50 and $1.58 per share.
Public cloud ARR is expected to increase by at least 100% year over year. Total ARR is expected to grow at a mid- to high-single-digit percentage year over year.
Recurring revenues are expected to grow at a mid- to high-single digit percentage year over year. Total revenues are expected to grow at a low-single-digit percentage year over year.
Zacks Rank & Stocks to Consider
Teradata currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are CDW Corporation (CDW - Free Report) , Vishay Intertechnology (VSH - Free Report) and Marvell Technology (MRVL - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vishay and CDW are set to report quarterly earnings on Feb 9 and 10, respectively. Marvell is set to report the same on Mar 3.
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Teradata (TDC) Q4 Earnings Beat Estimates, Revenues Fall Y/Y
Teradata (TDC - Free Report) reported fourth-quarter 2020 adjusted earnings of 38 cents per share, which beat the Zacks Consensus Estimate by 52%. Moreover, the figure increased 72.7% year over year.
Revenues of $491 million beat the consensus mark by 2.4%. However, the top line declined 0.6% year over year. At constant currency (cc), revenues were down 2%.
Total backlog at the end of the fourth quarter was $2.921 billion, up 7% year over year and 13% sequentially.
Top-Line Details
Recurring revenues (78% of revenues) grew 9.4% year over year (up 8% at cc) to $383 million.
Teradata Corporation Price, Consensus and EPS Surprise
Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote
Perpetual software license and hardware revenues (5.1% of revenues) declined 16.7% from the year-ago quarter (down 14% at cc) to $25 million.
Consulting services’ revenues (16.9% of revenues) dropped 27.2% from the year-ago quarter (down 30% at cc) to $83 million, primarily due to coronavirus-related impacts, especially on activities that are conducted on-site.
Revenues from the Americas decreased 0.8% year over year (flat at cc) to $261 million. Europe, the Middle East & Africa (“EMEA”) revenues declined 3.6% from the year-ago quarter (down 7% at cc) to $134 million. Revenues from the Asia-Pacific (“APAC”) were up 4.3% from the year-ago quarter (down 1% at cc) to $96 million.
Total annual recurring revenues (“ARR”) at the end of the fourth quarter increased 11.2% year over year (up 9% at cc) to $1.59 billion. Public cloud ARR increased 165% on a reported basis and 159% at cc to $106 million.
Operating Details
Gross margin on a non-GAAP basis expanded 600 basis points (bps) year over year to 59.3%, primarily driven by a higher mix of recurring revenues.
Americas gross margin expanded 350 bps to 61.7%. EMEA gross margin surged to 56.7% from 50.4% reported in the year-ago quarter. APAC gross margin soared to 56.3% from 43.5% reported in the year-ago quarter.
Recurring revenues’ gross margin expanded 320 bps on a year-over-year basis to 69.2%. The growth benefited from cost improvements in subscription and cloud business.
However, perpetual software license and hardware margin soared to 52% from 20% reported in the year-ago quarter.
Consulting services’ gross profit was $6 million compared with $11 million in the year-ago quarter.
Selling, general & administrative (SG&A), and research & development (R&D) expenses, as a percentage of revenues, increased 270 bps and 130 bps, respectively, on a year-over-year basis.
Non-GAAP operating margin expanded 390 bps on a year-over-year basis to 13.6%.
Balance Sheet & Other Details
As of Dec 31, 2020, Teradata had cash and cash equivalents of $529 million compared with $533 million as of Sep 30, 2020.
Total debt (including current portion) as of Dec 31, 2020, was $455 million compared with $461 million as of Sep 30, 2020. Including financial lease obligations, total debt was $600 million.
In the fourth quarter, Teradata generated $56 million of cash from operating activities compared with the previous quarter’s $71 million. Cash used in operating activities was $54 million in the year-ago quarter.
The company’s quarterly free cash flow was $45 million compared with $58 million in the previous quarter. Teradata had posted free cash outflow of $41 million in the year-ago quarter.
Guidance
For first-quarter 2021, non-GAAP earnings are expected between 38 cents and 40 cents per share. Public cloud ARR is expected to increase by at least 165% year-over-year.
For 2021, non-GAAP earnings are expected between $1.50 and $1.58 per share.
Public cloud ARR is expected to increase by at least 100% year over year. Total ARR is expected to grow at a mid- to high-single-digit percentage year over year.
Recurring revenues are expected to grow at a mid- to high-single digit percentage year over year. Total revenues are expected to grow at a low-single-digit percentage year over year.
Zacks Rank & Stocks to Consider
Teradata currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are CDW Corporation (CDW - Free Report) , Vishay Intertechnology (VSH - Free Report) and Marvell Technology (MRVL - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vishay and CDW are set to report quarterly earnings on Feb 9 and 10, respectively. Marvell is set to report the same on Mar 3.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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