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Teradata (TDC - Free Report) reported third-quarter 2023 non-GAAP earnings of 42 cents per share, which beat the Zacks Consensus Estimate by 2.44%. The bottom line increased 35.5% year over year.
Revenues of $438 million surpassed the Zacks Consensus Estimate of $432 million. The figure increased 5% year over year on a reported basis and 6% on a constant-currency (cc) basis.
The upside can be attributed to growth in recurring revenue, with a robust surge in cloud revenues leading the way. Also, strong momentum across the Americas and Europe, the Middle East & Africa (EMEA) was a plus.
Total annual recurring revenues (“ARR”) at the third quarter’s end increased 11% year over year to $1.524 billion. The figure increased by 9% at cc.
Public cloud ARR surged 63% on a reported basis and 61% at cc year over year to $454 million.
Teradata Corporation Price, Consensus and EPS Surprise
Solid customer demand for Teradata Vantage Cloud was a positive. The cloud net expansion rate was 123%.
Top Line in Detail
Recurring revenues (contributing 82.2% to revenues) increased 9% year over year on a reported basis (increased 10% at cc) to $360 million, surpassing the Zacks Consensus Estimate of $353 million.
Perpetual software license and hardware revenues (1.6% of revenues) were down 50% year over year (down 50% at cc) to $7 million, missing the Zacks Consensus Estimate of $9.10 million.
Consulting services’ revenues (16.2% of revenues) dropped 1% year over year (up 6% at cc) to $71 million, beating the Zacks Consensus Estimate of $70 million.
Revenues from the Americas increased 9% year over year on a reported basis (increased 11% at cc) to $264 million. EMEA revenues rose 8% year over year (up 3% at cc) to $113 million.
Revenues from the APJ region were down 13% year over year (down 8% at cc) to $61 million.
Operating Details
The gross margin on a non-GAAP basis was 60.3%, contracting 230 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses increased 0.6% year over year to $156 million.
Research & development (R&D) expenses were $76 million, declining 3.8% year over year. As a percentage of revenues, SG&A contracted 160 bps year over year to 35.6%, whereas R&D contracted 160 bps to 17.4%.
The non-GAAP operating margin was 14.4%, up 140 bps year over year.
Balance Sheet
As of Sep 30, 2023, Teradata had cash and cash equivalents of $348 million compared with $504 million as of Jun 30, 2023.
Long-term debt Sep 30, 2023 was $486 million compared with $492 million as of Jun 30, 2023.
In the third quarter, Teradata generated $41 million in cash from operating activities compared with the previous quarter’s $49 million.
The company generated a free cash flow of $36 million in the reported quarter.
Share repurchases in the third quarter amounted to $141 million.
Guidance
For fourth-quarter 2023, non-GAAP earnings are expected to be between 50 and 54 cents per share. The Zacks Consensus Estimate for earnings is pegged at 47 cents.
For 2023, the company kept its guidance for non-GAAP earnings at $2.01-$2.05. The Zacks Consensus Estimate for earnings is pegged at $1.96.
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 is pegged at $1.83 billion.
Zacks Rank & Stocks to Consider
Currently, Teradata has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Asure Software (ASUR - Free Report) , Adobe (ADBE - Free Report) and Arista Networks (ANET - Free Report) . Asure Software sports a Zacks Rank #1 (Strong Buy), while Adobe and Arista Networks carry a Zacks Rank #2 (Buy) each.
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Teradata (TDC) Q3 Earnings Beat Estimates, Revenues Rise Y/Y
Teradata (TDC - Free Report) reported third-quarter 2023 non-GAAP earnings of 42 cents per share, which beat the Zacks Consensus Estimate by 2.44%. The bottom line increased 35.5% year over year.
Revenues of $438 million surpassed the Zacks Consensus Estimate of $432 million. The figure increased 5% year over year on a reported basis and 6% on a constant-currency (cc) basis.
The upside can be attributed to growth in recurring revenue, with a robust surge in cloud revenues leading the way. Also, strong momentum across the Americas and Europe, the Middle East & Africa (EMEA) was a plus.
Total annual recurring revenues (“ARR”) at the third quarter’s end increased 11% year over year to $1.524 billion. The figure increased by 9% at cc.
Public cloud ARR surged 63% on a reported basis and 61% at cc year over year to $454 million.
Teradata Corporation Price, Consensus and EPS Surprise
Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote
Solid customer demand for Teradata Vantage Cloud was a positive. The cloud net expansion rate was 123%.
Top Line in Detail
Recurring revenues (contributing 82.2% to revenues) increased 9% year over year on a reported basis (increased 10% at cc) to $360 million, surpassing the Zacks Consensus Estimate of $353 million.
Perpetual software license and hardware revenues (1.6% of revenues) were down 50% year over year (down 50% at cc) to $7 million, missing the Zacks Consensus Estimate of $9.10 million.
Consulting services’ revenues (16.2% of revenues) dropped 1% year over year (up 6% at cc) to $71 million, beating the Zacks Consensus Estimate of $70 million.
Revenues from the Americas increased 9% year over year on a reported basis (increased 11% at cc) to $264 million. EMEA revenues rose 8% year over year (up 3% at cc) to $113 million.
Revenues from the APJ region were down 13% year over year (down 8% at cc) to $61 million.
Operating Details
The gross margin on a non-GAAP basis was 60.3%, contracting 230 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses increased 0.6% year over year to $156 million.
Research & development (R&D) expenses were $76 million, declining 3.8% year over year. As a percentage of revenues, SG&A contracted 160 bps year over year to 35.6%, whereas R&D contracted 160 bps to 17.4%.
The non-GAAP operating margin was 14.4%, up 140 bps year over year.
Balance Sheet
As of Sep 30, 2023, Teradata had cash and cash equivalents of $348 million compared with $504 million as of Jun 30, 2023.
Long-term debt Sep 30, 2023 was $486 million compared with $492 million as of Jun 30, 2023.
In the third quarter, Teradata generated $41 million in cash from operating activities compared with the previous quarter’s $49 million.
The company generated a free cash flow of $36 million in the reported quarter.
Share repurchases in the third quarter amounted to $141 million.
Guidance
For fourth-quarter 2023, non-GAAP earnings are expected to be between 50 and 54 cents per share. The Zacks Consensus Estimate for earnings is pegged at 47 cents.
For 2023, the company kept its guidance for non-GAAP earnings at $2.01-$2.05. The Zacks Consensus Estimate for earnings is pegged at $1.96.
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 is pegged at $1.83 billion.
Zacks Rank & Stocks to Consider
Currently, Teradata has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Asure Software (ASUR - Free Report) , Adobe (ADBE - Free Report) and Arista Networks (ANET - Free Report) . Asure Software sports a Zacks Rank #1 (Strong Buy), while Adobe and Arista Networks carry a Zacks Rank #2 (Buy) each.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Asure Software shares have lost 9.1% in the year-to-date period. The long-term earnings growth rate for ASUR is currently projected at 27%.
Adobe shares have gained 67.5% in the year-to-date period. The long-term earnings growth rate for ADBE is currently projected at 13.54%.
Arista Networks shares have increased 74.1% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 20.40%.