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Teradata (TDC) Q2 Earnings Beat Estimates, Revenues Fall Y/Y
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Teradata (TDC - Free Report) reported second-quarter 2024 non-GAAP earnings of 64 cents per share, which beat the Zacks Consensus Estimate by 33.33%. The bottom line increased 33.3% year over year.
Revenues of $436 million missed the Zacks Consensus Estimate by 2.59%. The figure declined 6% year over year on a reported basis and 3% on a constant-currency (cc) basis.
Total annual recurring revenues (ARR) at the second-quarter end declined 4% year over year to $1.46 billion. The figure fell 3% at cc.
Public cloud ARR rallied 31% on a reported basis and 32% at cc year over year to $542 million. The cloud net expansion rate was 123%.
Teradata Corporation Price, Consensus and EPS Surprise
Recurring revenues (contributing 84.4% to revenues) dropped 1% year over year on a reported basis (increased 2% at cc) to $368 million, surpassing the Zacks Consensus Estimate by 1.26%.
Perpetual software license and hardware revenues (1.1% of revenues) were down 62% year over year (down 58% at cc) to $5 million, missing the Zacks Consensus Estimate by 47%.
Consulting services’ revenues (14.4% of revenues) fell 19% year over year (down 15% at cc) to $63 million, missing the Zacks Consensus Estimate by 16.06%.
Revenues from the Americas declined 7% year over year on a reported basis (down 4% at cc) to $250 million. EMEA revenues inched down 2% year over year (up 2% at cc) to $116 million.
Revenues from the APJ region were down 8% year over year (down 4% at cc) to $70 million.
Operating Details
The gross margin on a non-GAAP basis was 62.2%, expanding 150 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses declined 21.6% year over year to $131 million. Research & development (R&D) expenses were $68 million, down 5.6% year over year.
As a percentage of revenues, SG&A contracted 610 bps year over year to 30%, whereas R&D was flat year over year to 15.6%.
The non-GAAP operating margin was 22%, up 640 bps year over year.
Balance Sheet
As of Jun 30, 2024, Teradata had cash and cash equivalents of $301 million compared with $337 million as of Mar 31, 2024.
Long-term debt as of Jun 30, 2024, was $467 million compared with $474 million as of Mar 31, 2024.
In the second quarter, TDC generated $43 million in cash from operating activities compared with the previous quarter’s $27 million.
The company generated a free cash flow of $39 million in the reported quarter.
Guidance
For third-quarter 2024, non-GAAP earnings are expected to be between 54 and 58 cents per share.
For 2024, TDC expects non-GAAP earnings between $2.20 and $2.26 per share.
Public cloud ARR growth is projected between 28% and 32% on a year-over-year basis.
Total ARR is expected to decline 2-4% from 2023 levels.
Teradata expects recurring revenues to remain flat at a loss of 2% year over year.
The company expects total revenues to be down 2-4% from the year-ago reported figure.
Cash flow from operations is expected to be between $290 million and $310 million. Free cash flow is anticipated to be in the $270-$290 million range.
Zacks Rank & Stocks to Consider
Currently, Teradata has a Zacks Rank #3 (Hold).
The company’s shares have underperformed the Zacks Computer & Technology sector year to date. The stock has declined 42.6% compared with the sector’s increase of 44.3%.
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Teradata (TDC) Q2 Earnings Beat Estimates, Revenues Fall Y/Y
Teradata (TDC - Free Report) reported second-quarter 2024 non-GAAP earnings of 64 cents per share, which beat the Zacks Consensus Estimate by 33.33%. The bottom line increased 33.3% year over year.
Revenues of $436 million missed the Zacks Consensus Estimate by 2.59%. The figure declined 6% year over year on a reported basis and 3% on a constant-currency (cc) basis.
Total annual recurring revenues (ARR) at the second-quarter end declined 4% year over year to $1.46 billion. The figure fell 3% at cc.
Public cloud ARR rallied 31% on a reported basis and 32% at cc year over year to $542 million. The cloud net expansion rate was 123%.
Teradata Corporation Price, Consensus and EPS Surprise
Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote
The Top Line in Detail
Recurring revenues (contributing 84.4% to revenues) dropped 1% year over year on a reported basis (increased 2% at cc) to $368 million, surpassing the Zacks Consensus Estimate by 1.26%.
Perpetual software license and hardware revenues (1.1% of revenues) were down 62% year over year (down 58% at cc) to $5 million, missing the Zacks Consensus Estimate by 47%.
Consulting services’ revenues (14.4% of revenues) fell 19% year over year (down 15% at cc) to $63 million, missing the Zacks Consensus Estimate by 16.06%.
Revenues from the Americas declined 7% year over year on a reported basis (down 4% at cc) to $250 million. EMEA revenues inched down 2% year over year (up 2% at cc) to $116 million.
Revenues from the APJ region were down 8% year over year (down 4% at cc) to $70 million.
Operating Details
The gross margin on a non-GAAP basis was 62.2%, expanding 150 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses declined 21.6% year over year to $131 million. Research & development (R&D) expenses were $68 million, down 5.6% year over year.
As a percentage of revenues, SG&A contracted 610 bps year over year to 30%, whereas R&D was flat year over year to 15.6%.
The non-GAAP operating margin was 22%, up 640 bps year over year.
Balance Sheet
As of Jun 30, 2024, Teradata had cash and cash equivalents of $301 million compared with $337 million as of Mar 31, 2024.
Long-term debt as of Jun 30, 2024, was $467 million compared with $474 million as of Mar 31, 2024.
In the second quarter, TDC generated $43 million in cash from operating activities compared with the previous quarter’s $27 million.
The company generated a free cash flow of $39 million in the reported quarter.
Guidance
For third-quarter 2024, non-GAAP earnings are expected to be between 54 and 58 cents per share.
For 2024, TDC expects non-GAAP earnings between $2.20 and $2.26 per share.
Public cloud ARR growth is projected between 28% and 32% on a year-over-year basis.
Total ARR is expected to decline 2-4% from 2023 levels.
Teradata expects recurring revenues to remain flat at a loss of 2% year over year.
The company expects total revenues to be down 2-4% from the year-ago reported figure.
Cash flow from operations is expected to be between $290 million and $310 million. Free cash flow is anticipated to be in the $270-$290 million range.
Zacks Rank & Stocks to Consider
Currently, Teradata has a Zacks Rank #3 (Hold).
The company’s shares have underperformed the Zacks Computer & Technology sector year to date. The stock has declined 42.6% compared with the sector’s increase of 44.3%.
Shopify (SHOP - Free Report) , Analog Devices (ADI - Free Report) and Digital Ocean (DOCN - Free Report) are some better-ranked stocks that investors can consider in the broader sector. DigitalOcean sports a Zacks Rank #1 (Strong Buy) at present, while Analog Devices and Shopify carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shopify’s shares have declined 31.9% year to date. SHOP is set to report its second-quarter 2024 results on Aug 7.
Analog Devices shares have increased 3.6% year to date. ADI is set to report third-quarter fiscal 2024 results on Aug 21.
DigitalOcean’s shares have moved down 25.7% year to date. DOCN is set to report second-quarter 2024 results on Aug 8.