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Teradata (TDC) Q4 Earnings & Revenues Beat Estimates, Fall Y/Y
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Teradata (TDC - Free Report) reported fourth-quarter 2022 non-GAAP earnings of 35 cents per share, beating the Zacks Consensus Estimate by 12.9%. However, the bottom line decreased 38.6% from the year-ago quarter’s figure.
Revenues of $452 million surpassed the Zacks Consensus Estimate of $422.7 million. The figure decreased 5% year over year on a reported basis, while remaining flat on a constant-currency (cc) basis.
The decline in the top line was attributed to decreasing recurring, perpetual and consulting revenues.
Total annual recurring revenues (ARR) at the fourth quarter-end decreased 1% year over year to $1.48 billion. The figure increased 2% on a cc basis.
Public cloud ARR surged 77% on a reported basis and 81% at cc year over year to $357 million. Growth was driven by solid customer demand for the company’s differentiated platform.
Analog Devices, Inc. Price, Consensus and EPS Surprise
Recurring revenues (accounting for 79% of revenues) decreased 2% year over year on a reported basis (increased 3% at cc) to $357 million.
Perpetual software license and hardware revenues (4% of revenues) were down 11% year over year (down 4% at cc) to $17 million.
Consulting services’ revenues (17% of revenues) declined 15% from the year-ago level (down 7% at cc) to $78 million.
Revenues from the Americas were flat year over year on a reported basis (increased 1% at cc) at $257 million. Europe, Middle East & Africa revenues fell 5% from the year-ago figure (up 3% at cc) to $128 million. Revenues from the Asia Pacific and Japan were down 18% from the year-ago level (down 6% at cc) to $67 million.
Operating Details
The gross margin on a non-GAAP basis was 59.5%, contracting 370 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses increased 2.9% year over year to $175 million. Research & development (R&D) expenses were $77 million, increasing 4.1% from the year-ago quarter. As a percentage of revenues, SG&A expanded 290 bps year over year to 38.7%, whereas R&D expanded 140 bps to 17%.
The non-GAAP operating margin was 13.7%, contracting 520 bps from the year-ago quarter’s level.
Balance Sheet
As of Dec 31, 2022, Teradata had cash and cash equivalents of $569 million compared with $506 million as of Sept 30, 2022.
Total debt (including current portion) as of Dec 31, 2022, was $565 million compared with $564 million as of Sept 30, 2022.
In the fourth quarter, Teradata generated $129 million in cash from operating activities compared with the previous quarter’s $34 million.
Further, the company generated a free cash flow of $120 million in the reported quarter.
Guidance
For first-quarter 2023, non-GAAP earnings are expected between 60 cents and 64 cents per share. The Zacks Consensus Estimate for earnings is pegged at 62 cents per share.
For 2023, non-GAAP earnings are expected between $1.90 and $2.06 per share. The Zacks Consensus Estimate for earnings is pegged at $1.82 per share.
Public cloud ARR is projected to increase 53-57% on a year-over-year basis.
Total ARR is expected to exhibit growth of 6-8% from that reported in 2022.
Teradata expects recurring revenues to increase 4-7% year over year.
TDC projects total revenues to be up 1-4% from that reported a year ago.
Cash flow from operations is expected to be $345-$385 million, whereas the free cash flow is projected to be $320-$360 million.
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Teradata (TDC) Q4 Earnings & Revenues Beat Estimates, Fall Y/Y
Teradata (TDC - Free Report) reported fourth-quarter 2022 non-GAAP earnings of 35 cents per share, beating the Zacks Consensus Estimate by 12.9%. However, the bottom line decreased 38.6% from the year-ago quarter’s figure.
Revenues of $452 million surpassed the Zacks Consensus Estimate of $422.7 million. The figure decreased 5% year over year on a reported basis, while remaining flat on a constant-currency (cc) basis.
The decline in the top line was attributed to decreasing recurring, perpetual and consulting revenues.
Total annual recurring revenues (ARR) at the fourth quarter-end decreased 1% year over year to $1.48 billion. The figure increased 2% on a cc basis.
Public cloud ARR surged 77% on a reported basis and 81% at cc year over year to $357 million. Growth was driven by solid customer demand for the company’s differentiated platform.
Analog Devices, Inc. Price, Consensus and EPS Surprise
Analog Devices, Inc. price-consensus-eps-surprise-chart | Analog Devices, Inc. Quote
Top Line in Detail
Recurring revenues (accounting for 79% of revenues) decreased 2% year over year on a reported basis (increased 3% at cc) to $357 million.
Perpetual software license and hardware revenues (4% of revenues) were down 11% year over year (down 4% at cc) to $17 million.
Consulting services’ revenues (17% of revenues) declined 15% from the year-ago level (down 7% at cc) to $78 million.
Revenues from the Americas were flat year over year on a reported basis (increased 1% at cc) at $257 million. Europe, Middle East & Africa revenues fell 5% from the year-ago figure (up 3% at cc) to $128 million. Revenues from the Asia Pacific and Japan were down 18% from the year-ago level (down 6% at cc) to $67 million.
Operating Details
The gross margin on a non-GAAP basis was 59.5%, contracting 370 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses increased 2.9% year over year to $175 million. Research & development (R&D) expenses were $77 million, increasing 4.1% from the year-ago quarter. As a percentage of revenues, SG&A expanded 290 bps year over year to 38.7%, whereas R&D expanded 140 bps to 17%.
The non-GAAP operating margin was 13.7%, contracting 520 bps from the year-ago quarter’s level.
Balance Sheet
As of Dec 31, 2022, Teradata had cash and cash equivalents of $569 million compared with $506 million as of Sept 30, 2022.
Total debt (including current portion) as of Dec 31, 2022, was $565 million compared with $564 million as of Sept 30, 2022.
In the fourth quarter, Teradata generated $129 million in cash from operating activities compared with the previous quarter’s $34 million.
Further, the company generated a free cash flow of $120 million in the reported quarter.
Guidance
For first-quarter 2023, non-GAAP earnings are expected between 60 cents and 64 cents per share. The Zacks Consensus Estimate for earnings is pegged at 62 cents per share.
For 2023, non-GAAP earnings are expected between $1.90 and $2.06 per share. The Zacks Consensus Estimate for earnings is pegged at $1.82 per share.
Public cloud ARR is projected to increase 53-57% on a year-over-year basis.
Total ARR is expected to exhibit growth of 6-8% from that reported in 2022.
Teradata expects recurring revenues to increase 4-7% year over year.
TDC projects total revenues to be up 1-4% from that reported a year ago.
Cash flow from operations is expected to be $345-$385 million, whereas the free cash flow is projected to be $320-$360 million.
Zacks Rank & Stocks to Consider
Currently, Teradata has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer & Technology sector are Agilent Technologies (A - Free Report) , Arista Networks (ANET - Free Report) and Garmin (GRMN - Free Report) , all carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agilent has gained 8.4% in the past year. A’s long-term earnings growth rate is projected at 10%.
Arista Networks has gained 6.1% in the past year. The long-term earnings growth rate for ANET is projected at 17.5%.
Garmin has lost 24.6% in the past year. The long-term earnings growth rate for GRMN is projected at 5.6%.