Teradata Corporation (TDC - Free Report) reported adjusted earnings of 49 cents per share, which declined 15.5% year over year. However, the figure beat the Zacks Consensus Estimate of 44 cents.
Total revenues of $588 million beat the Zacks Consensus Estimate of $566 million but declined 6.1% year over year (down 4% at constant currency).
The ongoing transition to subscription-based model dragged down revenues.
Recurring revenues increased 9.7% year over year (13% at constant currency) to $328 million. The segment includes revenues from subscription-based transaction and perpetual license related maintenance and upgrade rights.
Perpetual software license and hardware revenues decreased 38.6% from the year-ago quarter to $97 million due to the company’s ongoing transition to a subscription-based business model. Teradata stated that the majority of its perpetual revenues are now hardware related.
Consulting services revenues declined 3.6% from the year-ago quarter to $163 million. The company introduced analytics platform, Teradata Vantage in the reported quarter. Management stated that the new software is gaining significant traction among customers, which is a positive. Notably, more than 100 customers have adopted Vantage, which drove ARR in the reported quarter.
Notably, Teradata expects consulting services revenues to decline in the near term as the company realigns its focus and resources to the new software.
Total ARR at the end of the quarter increased $68 million year over year in the reported quarter. Subscription-based ARR increased more than 130% year over year.
The company witnessed robust growth in annual recurring revenues (ARR) and increasing adoption of the company’s subscription-based model. Notably, 87% of the bookings were subscription based in the reported quarter.
Revenues from Americas decreased 18.4% year over year (18% at constant currency) to $298 million due to rapid transitioning to subscription-based business model while that from International increased 11.1% (16% at constant currency) to $290 million.
Moreover, Teradata exited the quarter with a backlog of $2.5 billion, an increase of 51% year over year, which is a positive.
Teradata Corporation Price, Consensus and EPS Surprise