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Teradata (TDC - Free Report) reported fourth-quarter 2023 non-GAAP earnings of 56 cents per share, which beat the Zacks Consensus Estimate by 9.8%. The bottom line jumped 60% year over year.
Revenues of $457 million surpassed the Zacks Consensus Estimate by 2.01%. The figure increased 1.1% year over year on a reported basis and 1% on a constant-currency (cc) basis.
Total annual recurring revenues (“ARR”) at the fourth-quarter end increased 6% year over year to $1.57 billion. The figure increased 5% at cc.
Public cloud ARR surged 48% on a reported basis and 46% at cc year over year to $528 million.
Solid customer demand for Teradata Vantage Cloud was a positive. The cloud net expansion rate was 124%.
Teradata Corporation Price, Consensus and EPS Surprise
Recurring revenues (contributing 81.4% to revenues) increased 4.2% year over year on a reported basis (increased 4% at cc) to $372 million, surpassing the Zacks Consensus Estimate by 6.29%.
Perpetual software license and hardware revenues (2.6% of revenues) were down 29.4% year over year (down 34% at cc) to $12 million, beating the Zacks Consensus Estimate by 21.75%.
Consulting services’ revenues (16% of revenues) dropped 6.4% year over year (down 4% at cc) to $73 million, beating the Zacks Consensus Estimate by 1.13%.
Revenues from the Americas increased 3.1% year over year on a reported basis (increased 5% at cc) to $372 million. EMEA revenues fell 0.8% year over year (down 4% at cc) to $127 million.
Revenues from the APJ region were down 3% year over year (down 2% at cc) to $65 million.
Operating Details
The gross margin on a non-GAAP basis was 61.9%, expanding 240 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses decreased 9.1% year over year to $159 million. Research & development (R&D) expenses were $72 million, declining 6.5% year over year.
As a percentage of revenues, SG&A contracted 390 bps year over year to 34.8%, whereas R&D contracted 130 bps to 15.8%.
The non-GAAP operating margin was 19.5%, up 580 bps year over year.
Balance Sheet
As of Dec 31, 2023, Teradata had cash and cash equivalents of $486 million compared with $348 million as of Sep 30, 2023.
Long-term debt Dec 31, 2023, was $499 million compared with $486 million as of Sep 30, 2023.
In the fourth quarter, Teradata generated $176 million in cash from operating activities compared with the previous quarter’s $41 million.
The company generated a free cash flow of $168 million in the reported quarter.
Share repurchases in 2023 amounted to $308 million.
Guidance
For first-quarter 2024, non-GAAP earnings are expected to be between 53 and 57 cents per share. The Zacks Consensus Estimate for earnings is pegged at 47 cents.
For 2024, TDC expects non-GAAP earnings between $2.15 and $2.31 per share. The Zacks Consensus Estimate for earnings is pegged at $1.96.
Public cloud ARR growth is projected between 35% and 41% on a year-over-year basis.
Total ARR is expected to exhibit growth of 4-8% from the 2023 level.
Teradata expects recurring revenues to increase 1-3% year over year.
Teradata expects total revenues to be up 0-2% from the year-ago reported figure. The consensus mark for 2023 revenues is pegged at $1.83 billion.
Moreover, cash flow from operations is expected to be between $360 million and $400 million. Free cash flow is anticipated to be in the $340-$380 million range.
Zacks Rank & Stocks to Consider
Currently, Teradata carries a Zacks Rank #4 (Sell).
Shares of Teradata have returned 12.1% on a year-to-date basis, outperforming the Zacks Computer and Technology sector’s return of 10.5%.
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Teradata (TDC) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Teradata (TDC - Free Report) reported fourth-quarter 2023 non-GAAP earnings of 56 cents per share, which beat the Zacks Consensus Estimate by 9.8%. The bottom line jumped 60% year over year.
Revenues of $457 million surpassed the Zacks Consensus Estimate by 2.01%. The figure increased 1.1% year over year on a reported basis and 1% on a constant-currency (cc) basis.
Total annual recurring revenues (“ARR”) at the fourth-quarter end increased 6% year over year to $1.57 billion. The figure increased 5% at cc.
Public cloud ARR surged 48% on a reported basis and 46% at cc year over year to $528 million.
Solid customer demand for Teradata Vantage Cloud was a positive. The cloud net expansion rate was 124%.
Teradata Corporation Price, Consensus and EPS Surprise
Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote
Top Line in Detail
Recurring revenues (contributing 81.4% to revenues) increased 4.2% year over year on a reported basis (increased 4% at cc) to $372 million, surpassing the Zacks Consensus Estimate by 6.29%.
Perpetual software license and hardware revenues (2.6% of revenues) were down 29.4% year over year (down 34% at cc) to $12 million, beating the Zacks Consensus Estimate by 21.75%.
Consulting services’ revenues (16% of revenues) dropped 6.4% year over year (down 4% at cc) to $73 million, beating the Zacks Consensus Estimate by 1.13%.
Revenues from the Americas increased 3.1% year over year on a reported basis (increased 5% at cc) to $372 million. EMEA revenues fell 0.8% year over year (down 4% at cc) to $127 million.
Revenues from the APJ region were down 3% year over year (down 2% at cc) to $65 million.
Operating Details
The gross margin on a non-GAAP basis was 61.9%, expanding 240 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses decreased 9.1% year over year to $159 million. Research & development (R&D) expenses were $72 million, declining 6.5% year over year.
As a percentage of revenues, SG&A contracted 390 bps year over year to 34.8%, whereas R&D contracted 130 bps to 15.8%.
The non-GAAP operating margin was 19.5%, up 580 bps year over year.
Balance Sheet
As of Dec 31, 2023, Teradata had cash and cash equivalents of $486 million compared with $348 million as of Sep 30, 2023.
Long-term debt Dec 31, 2023, was $499 million compared with $486 million as of Sep 30, 2023.
In the fourth quarter, Teradata generated $176 million in cash from operating activities compared with the previous quarter’s $41 million.
The company generated a free cash flow of $168 million in the reported quarter.
Share repurchases in 2023 amounted to $308 million.
Guidance
For first-quarter 2024, non-GAAP earnings are expected to be between 53 and 57 cents per share. The Zacks Consensus Estimate for earnings is pegged at 47 cents.
For 2024, TDC expects non-GAAP earnings between $2.15 and $2.31 per share. The Zacks Consensus Estimate for earnings is pegged at $1.96.
Public cloud ARR growth is projected between 35% and 41% on a year-over-year basis.
Total ARR is expected to exhibit growth of 4-8% from the 2023 level.
Teradata expects recurring revenues to increase 1-3% year over year.
Teradata expects total revenues to be up 0-2% from the year-ago reported figure. The consensus mark for 2023 revenues is pegged at $1.83 billion.
Moreover, cash flow from operations is expected to be between $360 million and $400 million. Free cash flow is anticipated to be in the $340-$380 million range.
Zacks Rank & Stocks to Consider
Currently, Teradata carries a Zacks Rank #4 (Sell).
Shares of Teradata have returned 12.1% on a year-to-date basis, outperforming the Zacks Computer and Technology sector’s return of 10.5%.
Shopify (SHOP - Free Report) , BlackLine (BL - Free Report) and CrowdStrike (CRWD - Free Report) are some better-ranked stocks that investors can consider in the broader sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify shares have gained 14.4% year to date. SHOP is set to report its fourth-quarter 2023 results on Feb 13.
BlackLine shares have declined 2.6% year to date. BL is set to report its fourth-quarter 2023 results on Feb 13.
CrowdStrike shares have jumped 25.8% year to date. CRWD is set to report its fourth-quarter fiscal 2024 results on Mar 5.