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Teradata (TDC) Q2 Earnings Match Estimates, Revenues Down Y/Y
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Teradata (TDC - Free Report) reported second-quarter 2019 adjusted earnings of 29 cents per share, which increased 11.5% year over year and was in line with the Zacks Consensus Estimate.
However, revenues of $478 million lagged the Zacks Consensus Estimate of $483 million and declined 12.1% year over year. At constant currency (cc), revenues declined 10%.
Top-Line Details
Recurring revenues (70.7% of revenues) increased 8.3% year over year (up 11% at cc) to $338 million. The segment includes revenues from subscription-based transaction, and perpetual license-related maintenance and upgrade rights.
Subscription-based transactions comprised 90% of bookings in the reported quarter.
Perpetual software license and hardware revenues (6.1% of revenues) plunged 70.1% from the year-ago quarter (down 69% at cc) to $29 million.
Consulting services revenues (23.2% of revenues) declined 17.8% from the year-ago quarter (down 15% at cc) to $111 million. Revenues from Americas decreased 6.3% year over year (down 5% at cc) to $269 million.
Teradata Corporation Price, Consensus and EPS Surprise
Europe, Middle East & Africa (EMEA) revenues declined 3.9% from the year-ago quarter (flat at cc) to $122 million.
Revenues from Asia-Pacific (APAC) declined 33.1% from the year-ago quarter (down 29% at cc) to $87 million.
Total Annual Recurring Revenues (ARR) at the end of the quarter increased 11.5% year over year (up 12% at cc).
Operating Details
Non-GAAP gross margin expanded 380 basis points (bps) year over year to 52.7%. Americas and EMEA gross margin expanded 510 bps and 420 bps, respectively.
Gross margin for recurring revenues contracted 350 bps to 68.3% due to lower margins from subscription-based revenues.
Perpetual software license and hardware margins declined from 24.7% in the year-ago quarter to 10.3%.
Consulting services operating income was $2 million, flat year over year.
Non-GAAP operating margin expanded 240 bps on a year-over-year basis to 10.7%.
Balance Sheet & Other Details
As of Jun 30, 2019, Teradata had cash and cash equivalents of $635 million compared with $723 million as of Mar 31, 2019. The company exited the quarter with total debt (including current portion) of $580 million.
In the second quarter, Teradata generated $55 million of cash from operating activities compared with $49 million in the previous quarter. Free cash flow was $42 million compared with $33 million in the previous quarter
Moreover, Teradata repurchased around 3.1 million shares worth approximately $117 million. The company’s board of directors increased the authorization for share repurchases by $500 million to $620 million.
Guidance
For 2019, Teradata expects ARR to increase 11-12% and recurring revenues to grow 10-11%.
The company expects a perpetual year-over-year revenue decline at the high end of its previously provided range of $150-$200 million.
Teradata expects 2019 consulting revenues to decline 20% year over year.
Non-GAAP earnings are still projected between $1.45 and $1.55 per share.
For third-quarter 2019, recurring revenues are expected between $340 million and $344 million.
Non-GAAP earnings are expected between 38 cents and 42 cents per share.
Zacks Rank and Stocks to Consider
Teradata currently carries a Zacks Rank #3 (Hold).
While Digital Turbine is set to release quarterly results on Aug 5, both CACI International and Cisco Systems are scheduled to report on Aug 14.
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Teradata (TDC) Q2 Earnings Match Estimates, Revenues Down Y/Y
Teradata (TDC - Free Report) reported second-quarter 2019 adjusted earnings of 29 cents per share, which increased 11.5% year over year and was in line with the Zacks Consensus Estimate.
However, revenues of $478 million lagged the Zacks Consensus Estimate of $483 million and declined 12.1% year over year. At constant currency (cc), revenues declined 10%.
Top-Line Details
Recurring revenues (70.7% of revenues) increased 8.3% year over year (up 11% at cc) to $338 million. The segment includes revenues from subscription-based transaction, and perpetual license-related maintenance and upgrade rights.
Subscription-based transactions comprised 90% of bookings in the reported quarter.
Perpetual software license and hardware revenues (6.1% of revenues) plunged 70.1% from the year-ago quarter (down 69% at cc) to $29 million.
Consulting services revenues (23.2% of revenues) declined 17.8% from the year-ago quarter (down 15% at cc) to $111 million.
Revenues from Americas decreased 6.3% year over year (down 5% at cc) to $269 million.
Teradata Corporation Price, Consensus and EPS Surprise
Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote
Europe, Middle East & Africa (EMEA) revenues declined 3.9% from the year-ago quarter (flat at cc) to $122 million.
Revenues from Asia-Pacific (APAC) declined 33.1% from the year-ago quarter (down 29% at cc) to $87 million.
Total Annual Recurring Revenues (ARR) at the end of the quarter increased 11.5% year over year (up 12% at cc).
Operating Details
Non-GAAP gross margin expanded 380 basis points (bps) year over year to 52.7%. Americas and EMEA gross margin expanded 510 bps and 420 bps, respectively.
Gross margin for recurring revenues contracted 350 bps to 68.3% due to lower margins from subscription-based revenues.
Perpetual software license and hardware margins declined from 24.7% in the year-ago quarter to 10.3%.
Consulting services operating income was $2 million, flat year over year.
Non-GAAP operating margin expanded 240 bps on a year-over-year basis to 10.7%.
Balance Sheet & Other Details
As of Jun 30, 2019, Teradata had cash and cash equivalents of $635 million compared with $723 million as of Mar 31, 2019. The company exited the quarter with total debt (including current portion) of $580 million.
In the second quarter, Teradata generated $55 million of cash from operating activities compared with $49 million in the previous quarter. Free cash flow was $42 million compared with $33 million in the previous quarter
Moreover, Teradata repurchased around 3.1 million shares worth approximately $117 million. The company’s board of directors increased the authorization for share repurchases by $500 million to $620 million.
Guidance
For 2019, Teradata expects ARR to increase 11-12% and recurring revenues to grow 10-11%.
The company expects a perpetual year-over-year revenue decline at the high end of its previously provided range of $150-$200 million.
Teradata expects 2019 consulting revenues to decline 20% year over year.
Non-GAAP earnings are still projected between $1.45 and $1.55 per share.
For third-quarter 2019, recurring revenues are expected between $340 million and $344 million.
Non-GAAP earnings are expected between 38 cents and 42 cents per share.
Zacks Rank and Stocks to Consider
Teradata currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector include Digital Turbine (APPS - Free Report) , CACI International (CACI - Free Report) and Cisco Systems (CSCO - Free Report) . All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While Digital Turbine is set to release quarterly results on Aug 5, both CACI International and Cisco Systems are scheduled to report on Aug 14.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.
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