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Teradata (TDC) Q1 Earnings and Revenues Surpass Estimates
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Teradata Corporation (TDC - Free Report) reported adjusted earnings of 19 cents per share, which declined 32% year over year. However, the figure beat the Zacks Consensus Estimate by 2 cents.
Total revenues of $506 million beat the Zacks Consensus Estimate of $496 million and increased 3% from the year-ago quarter.
The company changed its reporting segments to Recurring (comprising revenues from subscription-based transactions and services and perpetual license related software upgrade rights and maintenance), Perpetual software licenses and hardware (which include revenues from on-premise perpetual transactions) and Consulting services.
Recurring revenues increased 11% year over year to $302 million, backed by a rise in subscription-based transactions. Perpetual software license and hardware revenues declined 23% from the year-ago quarter to $69 million due to the company’s ongoing transition to a subscription-based business model. Consulting services revenues improved 5% to $135 million, driven by growth in overseas market.
Revenues from Americas Data and Analytics decreased 1% year over year (1% at constant currency) to $264 million, while that from International Data and Analytics increased 8% (down 1% at constant currency) from the year-ago quarter to $242 million.
Operating Details
Non-GAAP gross margin contracted 270 basis points (bps) from the year-ago quarter to 48.4%.
Gross margin for Recurring contracted 480 bps to 73.2% due to lower margins from subscription-based revenues. Perpetual software license and hardware margins declined 830 bps to 40.6% due to lower margins of hardware. Consulting services gross margin of negative 3% improved 170 bps on a year-over-year basis.
Research & development (R&D) expenses of $68 million increased 5% from year-ago quarter due to investments in cloud offerings and Teradata Analytics Platform. Selling, general & administrative (SG&A) expenses of $142 million rose 12% year over year due to the company’s initiatives.
As a result, non-GAAP operating margin contracted 510 bps on a year-over-year basis to 6.9%.
Teradata Corporation Price, Consensus and EPS Surprise
As of Mar 31, 2018, Teradata had cash and cash equivalents of $939 million compared with $1.089 billion as of Dec 31, 2017. The company exited the quarter with total debt (including current portion) of $524 million compared with $538 million at the end of the previous quarter.
Teradata generated $184 million of cash from operating activities and $156 million of free cash flow in the quarter.
The company repurchased $76 million of shares in the first quarter.
Guidance
For 2018, Teradata expects revenues in the range of $2.15-$2.18 billion, compared with the earlier guidance of $2.15-$2.20 billion. Non-GAAP earnings per share are projected to be between $1.4 and $1.46 compared with the earlier projection of 67 to 77 cents.
Management expects recurring revenue margins to be in the low 70s for the rest of 2018. As the company anticipates Perpetual software license and hardware revenues to be predominantly from hardware, full year margins are expected to be lower than the first quarter.
For second-quarter 2018, revenues are projected in the range of $520-$530 million. Non-GAAP earnings are estimated between 17 cents and 19 cents per share.
The company anticipates a sequential decline in gross margin in the second quarter.
Zacks Rank and Stocks to Consider
Teradata currently carries a Zacks Rank #3 (Hold).
Long-term earnings growth rate for Lam Research, Micron and Western Digital is projected to be 17.7%, 10% and 19%, respectively.
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Teradata (TDC) Q1 Earnings and Revenues Surpass Estimates
Teradata Corporation (TDC - Free Report) reported adjusted earnings of 19 cents per share, which declined 32% year over year. However, the figure beat the Zacks Consensus Estimate by 2 cents.
Total revenues of $506 million beat the Zacks Consensus Estimate of $496 million and increased 3% from the year-ago quarter.
The company changed its reporting segments to Recurring (comprising revenues from subscription-based transactions and services and perpetual license related software upgrade rights and maintenance), Perpetual software licenses and hardware (which include revenues from on-premise perpetual transactions) and Consulting services.
Recurring revenues increased 11% year over year to $302 million, backed by a rise in subscription-based transactions. Perpetual software license and hardware revenues declined 23% from the year-ago quarter to $69 million due to the company’s ongoing transition to a subscription-based business model. Consulting services revenues improved 5% to $135 million, driven by growth in overseas market.
Revenues from Americas Data and Analytics decreased 1% year over year (1% at constant currency) to $264 million, while that from International Data and Analytics increased 8% (down 1% at constant currency) from the year-ago quarter to $242 million.
Operating Details
Non-GAAP gross margin contracted 270 basis points (bps) from the year-ago quarter to 48.4%.
Gross margin for Recurring contracted 480 bps to 73.2% due to lower margins from subscription-based revenues. Perpetual software license and hardware margins declined 830 bps to 40.6% due to lower margins of hardware. Consulting services gross margin of negative 3% improved 170 bps on a year-over-year basis.
Research & development (R&D) expenses of $68 million increased 5% from year-ago quarter due to investments in cloud offerings and Teradata Analytics Platform. Selling, general & administrative (SG&A) expenses of $142 million rose 12% year over year due to the company’s initiatives.
As a result, non-GAAP operating margin contracted 510 bps on a year-over-year basis to 6.9%.
Teradata Corporation Price, Consensus and EPS Surprise
Teradata Corporation Price, Consensus and EPS Surprise | Teradata Corporation Quote
Balance Sheet & Other Details
As of Mar 31, 2018, Teradata had cash and cash equivalents of $939 million compared with $1.089 billion as of Dec 31, 2017. The company exited the quarter with total debt (including current portion) of $524 million compared with $538 million at the end of the previous quarter.
Teradata generated $184 million of cash from operating activities and $156 million of free cash flow in the quarter.
The company repurchased $76 million of shares in the first quarter.
Guidance
For 2018, Teradata expects revenues in the range of $2.15-$2.18 billion, compared with the earlier guidance of $2.15-$2.20 billion. Non-GAAP earnings per share are projected to be between $1.4 and $1.46 compared with the earlier projection of 67 to 77 cents.
Management expects recurring revenue margins to be in the low 70s for the rest of 2018. As the company anticipates Perpetual software license and hardware revenues to be predominantly from hardware, full year margins are expected to be lower than the first quarter.
For second-quarter 2018, revenues are projected in the range of $520-$530 million. Non-GAAP earnings are estimated between 17 cents and 19 cents per share.
The company anticipates a sequential decline in gross margin in the second quarter.
Zacks Rank and Stocks to Consider
Teradata currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Lam Research Corporation (LRCX - Free Report) , Micron Technology (MU - Free Report) and Western Digital (WDC - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Long-term earnings growth rate for Lam Research, Micron and Western Digital is projected to be 17.7%, 10% and 19%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>