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Teradata (TDC - Free Report) reported second-quarter 2023 non-GAAP earnings of 48 cents per share, beating the Zacks Consensus Estimate by 6.7%. Further, the bottom line increased 45.4% from the year-ago quarter’s figure.
Revenues of $462 million surpassed the Zacks Consensus Estimate of $443.8 million. The figure increased 7% year over year on a reported basis and 10% on a constant-currency (cc) basis.
The increase in the top line was attributed to increasing recurring, perpetual and consulting revenues. Also, strong momentum across the Americas and Europe, the Middle East & Africa (EMEA) was a plus.
Total annual recurring revenues (ARR) at the second quarter’s end increased 10% year over year to $1.523 billion. The figure increased by 9% on a cc basis.
Public cloud ARR surged 77% on a reported basis and 76% at cc year over year to $414 million.
Solid customer demand for Teradata VantageCloud was a positive.
Teradata Corporation Price, Consensus and EPS Surprise
Recurring revenues (accounting for 80% of revenues) increased 8% year over year on a reported basis (increased 10% at cc) to $371 million, which surpassed the Zacks Consensus Estimate of $363 million.
Perpetual software license and hardware revenues (3% of revenues) were up 63% year over year (up 61% at cc) to $13 million, which came ahead of the Zacks Consensus Estimate of $7.47 million. . Consulting services’ revenues (17% of revenues) increased 1% from the year-ago level (increased 5% at cc) to $78 million, which beat the Zacks Consensus Estimate of $74 million. . Revenues from the Americas increased 8% year over year on a reported basis (increased 10% at cc) to $268 million. EMEA revenues rose 15% from the year-ago figure (up 15% at cc) to $118 million. Revenues from the APJ region were down 3% from the year-ago level (up 2% at cc) to $76 million.
Operating Details
The gross margin on a non-GAAP basis was 60.6%, contracting 60 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses increased 2.4% year over year to $167 million. Research & development (R&D) expenses were $76 million, decreasing 6.2% from the year-ago quarter. As a percentage of revenues, SG&A contracted 180 bps year over year to 36.1%, whereas R&D contracted 240 bps to 16.4%.
The non-GAAP operating margin was 15.6%, up 280 bps from the year-ago quarter’s level.
Balance Sheet
As of Jun 30, 2023, Teradata had cash and cash equivalents of $504 million compared with $551 million as of Mar 31, 2023.
Long-term debt at the end of the reported quarter was $492 million compared with $498 million at the end of the previous quarter.
In the second quarter, Teradata generated $49 million in cash from operating activities compared with the previous quarter’s $109 million.
Further, the company generated a free cash flow of $46 million in the reported quarter.
Guidance
For third-quarter 2023, non-GAAP earnings are expected to be between 40 and 44 cents per share. The Zacks Consensus Estimate for earnings is pegged at 39 cents per share.
For 2023, the company kept its guidance for non-GAAP earnings at $1.92-$2.04. The Zacks Consensus Estimate for earnings is pegged at $1.96 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 the 2022 level.
Teradata expects recurring revenues to increase 4-7% year over year.
TDC projects total revenues to be up 1-4% from the year-ago reported figure. The consensus mark for 2023 revenues stands at $1.84 billion.
Zacks Rank & Stocks to Consider
Currently, Teradata carries a Zacks Rank #3 (Hold).
CACI is set to report its fourth-quarter fiscal 2023 results on Aug 9. The Zacks Consensus Estimate for CACI’s earnings is pegged at $4.85 per share, implying growth of 6.83% from the year-ago quarter’s reported figure. CACI shares have gained 18.9% in the year-to-date period.
BILL Holdings is set to report its fourth-quarter fiscal 2023 results on Aug 17. The Zacks Consensus Estimate for BILL’s earnings is pegged at 41 cents per share. BILL shares have gained 3% in the year-to-date period.
NetEase is scheduled to report second-quarter 2023 results on Aug 24. The Zacks Consensus Estimate for NTES’ earnings is pegged at $1.33 per share, suggesting an increase of 9.02% from the prior-year quarter’s reported figure. NTES shares have gained 49% in the year-to-date period.
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Teradata (TDC) Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Teradata (TDC - Free Report) reported second-quarter 2023 non-GAAP earnings of 48 cents per share, beating the Zacks Consensus Estimate by 6.7%. Further, the bottom line increased 45.4% from the year-ago quarter’s figure.
Revenues of $462 million surpassed the Zacks Consensus Estimate of $443.8 million. The figure increased 7% year over year on a reported basis and 10% on a constant-currency (cc) basis.
The increase in the top line was attributed to increasing recurring, perpetual and consulting revenues. Also, strong momentum across the Americas and Europe, the Middle East & Africa (EMEA) was a plus.
Total annual recurring revenues (ARR) at the second quarter’s end increased 10% year over year to $1.523 billion. The figure increased by 9% on a cc basis.
Public cloud ARR surged 77% on a reported basis and 76% at cc year over year to $414 million.
Solid customer demand for Teradata VantageCloud was a positive.
Teradata Corporation Price, Consensus and EPS Surprise
Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote
Top Line in Detail
Recurring revenues (accounting for 80% of revenues) increased 8% year over year on a reported basis (increased 10% at cc) to $371 million, which surpassed the Zacks Consensus Estimate of $363 million.
Perpetual software license and hardware revenues (3% of revenues) were up 63% year over year (up 61% at cc) to $13 million, which came ahead of the Zacks Consensus Estimate of $7.47 million.
.
Consulting services’ revenues (17% of revenues) increased 1% from the year-ago level (increased 5% at cc) to $78 million, which beat the Zacks Consensus Estimate of $74 million.
.
Revenues from the Americas increased 8% year over year on a reported basis (increased 10% at cc) to $268 million. EMEA revenues rose 15% from the year-ago figure (up 15% at cc) to $118 million. Revenues from the APJ region were down 3% from the year-ago level (up 2% at cc) to $76 million.
Operating Details
The gross margin on a non-GAAP basis was 60.6%, contracting 60 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses increased 2.4% year over year to $167 million. Research & development (R&D) expenses were $76 million, decreasing 6.2% from the year-ago quarter. As a percentage of revenues, SG&A contracted 180 bps year over year to 36.1%, whereas R&D contracted 240 bps to 16.4%.
The non-GAAP operating margin was 15.6%, up 280 bps from the year-ago quarter’s level.
Balance Sheet
As of Jun 30, 2023, Teradata had cash and cash equivalents of $504 million compared with $551 million as of Mar 31, 2023.
Long-term debt at the end of the reported quarter was $492 million compared with $498 million at the end of the previous quarter.
In the second quarter, Teradata generated $49 million in cash from operating activities compared with the previous quarter’s $109 million.
Further, the company generated a free cash flow of $46 million in the reported quarter.
Guidance
For third-quarter 2023, non-GAAP earnings are expected to be between 40 and 44 cents per share. The Zacks Consensus Estimate for earnings is pegged at 39 cents per share.
For 2023, the company kept its guidance for non-GAAP earnings at $1.92-$2.04. The Zacks Consensus Estimate for earnings is pegged at $1.96 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 the 2022 level.
Teradata expects recurring revenues to increase 4-7% year over year.
TDC projects total revenues to be up 1-4% from the year-ago reported figure. The consensus mark for 2023 revenues stands at $1.84 billion.
Zacks Rank & Stocks to Consider
Currently, Teradata carries a Zacks Rank #3 (Hold).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like CACI International (CACI - Free Report) and BILL Holdings, Inc. (BILL - Free Report) , each carrying a Zacks Rank #2 (Buy) and NetEase (NTES - Free Report) , which carries a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CACI is set to report its fourth-quarter fiscal 2023 results on Aug 9. The Zacks Consensus Estimate for CACI’s earnings is pegged at $4.85 per share, implying growth of 6.83% from the year-ago quarter’s reported figure. CACI shares have gained 18.9% in the year-to-date period.
BILL Holdings is set to report its fourth-quarter fiscal 2023 results on Aug 17. The Zacks Consensus Estimate for BILL’s earnings is pegged at 41 cents per share. BILL shares have gained 3% in the year-to-date period.
NetEase is scheduled to report second-quarter 2023 results on Aug 24. The Zacks Consensus Estimate for NTES’ earnings is pegged at $1.33 per share, suggesting an increase of 9.02% from the prior-year quarter’s reported figure. NTES shares have gained 49% in the year-to-date period.