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Teradata (TDC) Q4 Earnings Beat Estimates, Revenues Fall Y/Y

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Teradata (TDC - Free Report) reported fourth-quarter 2019 adjusted earnings of 22 cents per share, which beat the Zacks Consensus Estimate by 37.5%. The reported figure, however, plunged 55.1% year over year.

Revenues of $494 million also surpassed the consensus mark by 4.4%. However, the revenue figure declined 16% year over year. At constant currency (cc), revenues were down 15%.

Top-Line Details

Recurring revenues (70.9% of revenues) increased 6.7% year over year (up 7% at cc) to $350 million.

Perpetual software license and hardware revenues (6.1% of revenues) plummeted 69.1% from the year-ago quarter (down 69% at cc) to $30 million.

Consulting services revenues (23.1% of revenues) slid 30.1% from the year-ago quarter (down 30% at cc) to $114 million.
 

Teradata Corporation Price, Consensus and EPS Surprise

Teradata Corporation Price, Consensus and EPS Surprise

Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote

 

Revenues from Americas decreased 11.7% year over year (down 11% at cc) to $263 million. Europe, Middle East & Africa (EMEA) revenues declined 19.2% from the year-ago quarter (down 19% at cc) to $139 million. Revenues from Asia-Pacific (APAC) were down 22% from the year-ago quarter (down 21% at cc) to $92 million.

Total annual recurring revenues (ARR) at the end of 2019 increased 9.1% year over year (up 9% at cc).

Operating Details

Non-GAAP segment gross margin expanded 120 basis points (bps) year over year to 53.2%. While Americas gross margin expanded 380 bps, EMEA and APAC gross margin contracted 250 bps and 140 bps, respectively.

Recurring revenues gross margin shrunk 260 bps to 66% from the year-ago quarter.

Perpetual software license and hardware margin declined from the year-ago quarter’s 40.2% to 20%.

Consulting services operating income was $11 million, reflecting a slump of 56% year over year.

Non-GAAP operating margin contracted 290 bps on a year-over-year basis to 9.7%.

Balance Sheet & Other Details

As of Dec 31, 2019, Teradata had cash and cash equivalents of $494 million compared with $528 million as of Sep 30, 2019.

Total debt (including current portion), as of Dec 31, 2019 was $479 million compared with $596 million as of Sep 30.

In the fourth quarter, Teradata generated $54 million of cash from operating activities compared with the previous quarter’s $10 million. The company’s quarterly free cash flow came in at $41 million compared with the free cash outflow of $27 million witnessed in the previous quarter.

Moreover, Teradata repurchased around 2.2 million shares worth approximately $61 million.

Guidance

For 2020, Teradata expects ARR and recurring revenues to increase at least 8%.

Non-GAAP earnings are projected between $1.18 and $1.22 per share for the full year. The Zacks Consensus Estimate for 2020 earnings is currently pegged at $1.50, indicating a 52.1% jump from the figure reported in the year-ago quarter.

For first-quarter 2020, recurring revenues are expected between $353 million and $355 million.

Non-GAAP earnings are expected between 22 cents and 24 cents per share. The Zacks Consensus Estimate for the ongoing-quarter earnings is currently pegged at 30 cents, indicating 36.4% year-over-year growth.

Zacks Rank & Stocks to Consider

Currently, Teradata carries a Zacks Rank #3 (Hold).

Perion Network (PERI - Free Report) , Alteryx (AYX - Free Report) and CEVA (CEVA - Free Report) are some better-ranked stocks in the broader computer and technology sector. All three stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Perion, Alteryx and CEVA are set to report quarterly results on Feb 12, 13 and 18, respectively.



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