EX-99.1 2 tdc03312023exhibit991.htm EX-99.1 Document
Exhibit 99.1
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INVESTOR CONTACT
Christopher T. Lee
858-485-2523 office
christopher.lee@teradata.com

MEDIA CONTACT
Jennifer Donahue
858-485-3029 office
jennifer.donahue@teradata.com
                    

Teradata Reports First Quarter 2023 Financial Results

•Public cloud ARR of $388 million, an increase of 86% as reported and 89% in constant currency from the prior year period(1)
•Total ARR of $1.506 billion, an increase of 6% as reported and 7% in constant currency from the prior year period(1)
•First quarter total revenue of $476 million, a decrease of 4% as reported and flat in constant currency(1)
•First quarter recurring revenue of $389 million, an increase of 1% as reported and 4% in constant currency from the prior year period(1)
•First quarter GAAP diluted earnings per share of $0.39
•First quarter Non-GAAP diluted earnings per share of $0.61(2)
•First quarter cash from operations of $109 million and free cash flow of $105 million(3)


SAN DIEGO – May 4, 2023 -- Teradata (NYSE: TDC) today announced its first quarter 2023 financial results.


“Teradata is off to a strong start in 2023 with sequential growth in total ARR, and we closed one of the largest deals in Teradata’s history…tangible proof points of our cloud-first strategy in action,” said Steve McMillan, President and CEO, Teradata. “Customers are expanding their cloud environments, underscoring the power of the Teradata platform, and driving demand for our differentiated analytics. We are excited for the year ahead and are on track to achieve all elements of our annual outlook.”


First Quarter 2023 Financial Highlights Compared to First Quarter 2022

•Public cloud ARR increased to $388 million from $209 million, an increase of 86% as reported and 89% in constant currency(1)
•Total ARR increased to $1.506 billion from $1.427 billion, an increase of 6% as reported and 7% in constant currency(1)
•Total revenue was $476 million versus $496 million, a decrease of 4% as reported and flat in constant currency(1)
•Recurring revenue was $389 million versus $386 million, an increase of 1% as reported and 4% in constant currency(1)
•Recurring revenue was 82% of total revenue in the first quarter, up from 78% the prior year period
•GAAP gross margin was 63.4% versus 60.7%
•Non-GAAP gross margin was 64.3% versus 62.9%(2)
•GAAP operating income was $79 million versus $68 million
•Non-GAAP operating income was $108 million versus $115 million(2)
•GAAP diluted EPS was $0.39 versus $0.33 per share


•Non-GAAP diluted EPS was $0.61 versus $0.65(2)
•Cash flow from operations was $109 million compared to $151 million
•Free cash flow was $105 million compared to $150 million(3)

Outlook
For the second quarter of 2023:
•GAAP diluted EPS is expected to be in the range of $0.14 to $0.18
•Non-GAAP diluted EPS is expected to be in the range of $0.43 to $0.47(2)

For the full year 2023, Teradata re-affirms the following outlook elements:
•Public cloud ARR is expected to increase in the range of 53% to 57% year-over-year
•Total ARR is expected to increase in the range of 6% to 8% year-over-year
•Recurring revenue is expected to increase in the range of 4% to 7% year-over-year

•Total revenue is expected to increase in the range of 1% to 4% year-over-year

•Free cash flow is expected to be in the range of $320 million to $360 million(3)

Teradata updates the following outlook for full year 2023:
•GAAP diluted EPS is narrowed to be in the range of $0.65 to $0.77 versus the range of $0.63 to $0.79 previously provided
•Non-GAAP diluted EPS is narrowed to be in the range of $1.92 to $2.04 versus the range of $1.90 to $2.06 previously provided(2)
•Cash flow from operations is now expected to be in the range $340 million to $380 million versus the range of $345 million to $385 million previously provided

Earnings Conference Call
A conference call is scheduled for today at 2:00 p.m. PT to discuss the Company’s first quarter 2023 results and provide a business and financial update. Access to the conference call, as well as a replay of the conference call, is available on Teradata’s website at investor.teradata.com.






Supplemental Financial Information
Additional information regarding Teradata’s operating results is provided below as well as on Teradata’s website at investor.teradata.com.

1.The impact of currency is determined by calculating the prior-period results using the current-year monthly average currency rates. See the foreign currency fluctuation schedule, which is used to determine revenue on a constant currency (“CC”) basis, on the Investor Relations page of the Company’s website at investor.teradata.com

Revenue
(in millions)
For the Three Months ended March 31
20232022% Change as Reported% Change in CC
Recurring revenue$389 $386 1%4%
Perpetual software licenses, hardware and other13 26 (50)%(43)%
Consulting services74 84 (12)%(5)%
  Total revenue$476 $496 (4)%—%
Americas $292 $290 1%2%
EMEA117 129 (9)%(1)%
APJ67 77 (13)%(5)%
   Total revenue$476 $496 (4)%—%

As of March 31
20232022% Change as Reported% Change in CC
Annual recurring revenue*$1,506 $1,427 6%7%
      Public cloud ARR**$388 $209 86%89%

* Total annual recurring revenue (ARR) is defined as the annual value at a point in time of all recurring contracts, including subscription, cloud, software upgrade rights and maintenance. Total ARR does not include managed services and third-party software. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q.

** Public cloud ARR is defined as the annual value at a point in time of all contracts related to public cloud implementations of Teradata VantageCloud and does not include ARR related to private or managed cloud implementations. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q.



2.Teradata reports its results in accordance with GAAP. However, as described below, the Company believes that certain non-GAAP measures such as free cash flow, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, and non-GAAP diluted earnings per share, all of which exclude certain items, and which may be reported on a constant currency basis, are useful for investors. Our non-GAAP measures are not meant to be considered in isolation to, as substitutes for, or superior to, results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Each of our non-GAAP measures do not have a uniform definition under GAAP and therefore, Teradata’s definition may differ from other companies’ definitions of these measures.

The following tables reconcile Teradata’s actual and projected results and EPS under GAAP to the Company’s actual and projected non-GAAP results and EPS for the periods presented, which exclude certain specified items. Our management internally uses supplemental non-GAAP financial measures, such as gross profit, operating income, net income, and EPS, excluding certain items, to understand, manage and evaluate our business and support operating decisions on a regular basis. The Company believes such non-GAAP financial measures (1) provide useful information to investors regarding the underlying business trends and performance of the Company’s ongoing operations, (2) are useful for period-over-period comparisons of such operations and results, that may be more easily compared to peer companies and allow investors a view of the Company’s operating results excluding stock-based compensation expense and special items, (3) provide useful information to management and investors regarding present and future business trends, and (4) provide consistency and comparability with past reports and projections of future results.

For the
Three Months
(in millions, except per share data)ended March 31
Gross Profit:20232022% Chg.
 GAAP Gross Profit$302 $301 
   % of Revenue63.4 %60.7 %
  Excluding:
 Stock-based compensation expense4 5 
Reorganization and transformation cost— 6 
 Non-GAAP Gross Profit$306 $312 (2)%
   % of Revenue64.3 %62.9 %
Operating Income
 GAAP Operating Income$79 $68 
   % of Revenue16.6 %13.7 %
 Excluding:
 Stock-based compensation expense28 31 
Reorganization and transformation cost1 16 
 Non-GAAP Operating Income$108 $115 (6)%
   % of Revenue22.7 %23.2 %
Net Income
GAAP Net Income
$40 $36 
   % of Revenue8.4 %7.3 %
  Excluding:
   Stock-based compensation expense28 31 
Reorganization and transformation cost1 16 
   Income tax adjustments (i)
(6)(12)
 Non-GAAP Net Income
$63 $71 (11)%
   % of Revenue13.2 %14.3 %



For the Three Months
ended March 312023 Outlook
Earnings Per Share:
20232022Q2FY
GAAP Earnings Per Share
$0.39 $0.33 $0.14 - $0.18$0.65 - $0.77
 Excluding:
Stock-based compensation expense0.27 0.28 0.33 1.30 
Reorganization and transformation cost0.01 0.15 0.01 0.20 
   Income tax adjustments(i)
(0.06)(0.11)(0.05)(0.23)
 Non-GAAP Diluted Earnings Per Share
$0.61 $0.65 $0.43 - $0.47$1.92 - $2.04

i.Represents the income tax effect of the pre-tax adjustments to reconcile GAAP to Non-GAAP income based on the applicable jurisdictional statutory tax rate of the underlying item. Including the income tax effect assists investors in understanding the tax provision associated with those adjustments and the effective tax rate related to the underlying business and performance of the Company’s ongoing operations. As a result of these adjustments, the Company’s non-GAAP effective tax rate for the three months ended March 31, 2023 was 27.6% and March 31, 2022 was 30.4%.


3.As described below, the Company believes that free cash flow is a useful non-GAAP measure for investors. Free cash flow does not have a uniform definition under GAAP in the United States and therefore, Teradata's definition may differ from other companies' definitions of this measure. Teradata defines free cash flow as cash provided by/used in operating activities, less capital expenditures for property and equipment and additions to capitalized software. Teradata’s management uses free cash flow to assess the financial performance of the Company and believes it is useful for investors because it relates the operating cash flow of the Company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures which can be used for among other things, investments in the Company's existing businesses, strategic acquisitions, strengthening the Company’s balance sheet, repurchase of Company stock and repay the Company’s debt obligations. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other non-discretionary expenditures that are not deducted from the measure. This non-GAAP measure should not be considered as a substitute for, or superior to, cash flows from operating activities under GAAP.



For the Three Months
(in millions)
ended March 31
Outlook
202320222023
Cash provided by operating activities (GAAP)
$109 $151 $340 to $380
Less total capital expenditures
(4)(1)(~20)
Free Cash Flow (non-GAAP measure)
$105 $150 $320 to $360


Note to Investors
This release contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements generally relate to opinions, beliefs, and projections of expected future financial and operating performance, business trends, liquidity, and market conditions, among other things. These forward-looking statements are based upon current expectations and assumptions and often can be identified by words such as “expect,” “strive,” “looking ahead,” “outlook,” “guidance,” “forecast,” “anticipate,” “continue,” “plan,” “estimate,” “believe,” “will,” “would,” “likely,” “intend,” “potential,” or similar expressions. Forward-looking statements in this release include our 2023 second quarter and full year financial guidance. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially, including those relating to: the global economic environment and business conditions in general, including inflation and/or recessionary conditions, the ability of our suppliers to meet their commitments to us, or the timing of purchases by our current and potential customers; the rapidly changing and intensely competitive nature of the information technology industry and the data analytics business; fluctuations in our operating, capital allocation, and cash flow results; our ability to execute and realize the anticipated benefits of our business transformation program or other restructuring and cost saving initiatives; risks inherent in operating in foreign countries, including sanctions, foreign currency fluctuations, and/or acts of war; risks associated with the ongoing and uncertain impact of the COVID-19 pandemic on our business, financial condition and operating results and on our customers and suppliers; risks associated with data privacy, cyberattacks and maintaining secure and effective products for our customers, as well as, internal information technology and control systems; the timely and successful development, production or acquisition, availability and/or market acceptance of new and existing products, product features and services; tax rates; turnover of our workforce and the ability to attract and retain skilled employees; protecting our intellectual property; availability and successful execution of new alliance and acquisition opportunities; subscription arrangements that may be cancelled or fail to be renewed; the impact on our business and financial reporting from changes in accounting rules; and other factors described from time to time in Teradata’s filings with the U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K, and subsequent quarterly reports on Forms 10-Q or current reports on Forms 8-K, as well as Teradata’s annual report to stockholders. Teradata does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About Teradata
    
Teradata is the connected multi-cloud data platform for enterprise analytics company. Our enterprise analytics solve business challenges from start to scale. Only Teradata gives you the flexibility to handle the massive and mixed data workloads of the future, today. Learn more at Teradata.com.

# # #
The Teradata logo is a trademark, and Teradata is a registered trademark of Teradata Corporation and/or its affiliates in the U.S. and worldwide.



SCHEDULE A

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share amounts - unaudited)
For the Period Ended March 31
Three Months
20232022% Chg
Revenue
Recurring$389 $386 1 %
Perpetual software licenses, hardware and other13 26 (50)%
Consulting services74 84 (12)%
Total revenue476 496 (4)%
Gross profit
Recurring 291 281 
% of Revenue74.8 %72.8 %
Perpetual software licenses, hardware and other2 8 
% of Revenue15.4 %30.8 %
Consulting services9 12 
% of Revenue12.2 %14.3 %
Total gross profit302 301 
% of Revenue63.4 %60.7 %
Selling, general and administrative expenses153 157 
Research and development expenses70 76 
Income from operations79 68 
% of Revenue16.6 %13.7 %
Other expense, net(21)(13)
Income before income taxes58 55 
% of Revenue12.2 %11.1 %
Income tax expense18 19 
% Tax rate31.0 %34.5 %
Net income$40 $36 
% of Revenue8.4 %7.3 %
Net income per common share
Basic $0.39 $0.34 
Diluted$0.39 $0.33 
Weighted average common shares outstanding
Basic101.4 105.0 
Diluted103.8 108.6 



SCHEDULE B

TERADATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions - unaudited)
March 31, 2023December 31, 2022March 31, 2022
Assets
Current assets
Cash and cash equivalents$551 $569 $404 
Accounts receivable, net341 364 330 
Inventories7 8 16 
Other current assets107 87 113 
Total current assets1,006 1,028 863 
Property and equipment, net252 244 274 
Right of use assets- operating lease, net11 13 22 
Goodwill391 390 395 
Capitalized contract costs, net84 92 109 
Deferred income taxes204 213 200 
Other assets38 42 32 
Total assets$1,986 $2,022 $1,895 
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt$— $— $75 
Current portion of finance lease liability70 67 76 
Current portion of operating lease liability8 8 11 
Accounts payable92 94 78 
Payroll and benefits liabilities95 137 91 
Deferred revenue634 589 580 
Other current liabilities100 112 82 
Total current liabilities999 1,007 993 
Long-term debt498 498 324 
Finance lease liability62 54 56 
Operating lease liability8 10 15 
Pension and other postemployment plan liabilities96 101 133 
Long-term deferred revenue4 8 19 
Deferred tax liabilities7 7 16 
Other liabilities82 79 102 
Total liabilities1,756 1,764 1,658 
Stockholders' equity
Common stock1 1 1 
Paid-in capital1,962 1,941 1,792 
Accumulated deficit(1,613)(1,565)(1,425)
Accumulated other comprehensive loss(120)(119)(131)
Total stockholders' equity230 258 237 
Total liabilities and stockholders' equity$1,986 $2,022 $1,895 



SCHEDULE C

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions - unaudited)
For the Period Ended March 31
Three Months
20232022
Operating activities
Net income $40 $36 
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization28 40 
Stock-based compensation expense28 31 
Deferred income taxes7 8 
Changes in assets and liabilities:
Receivables23 6 
Inventories 1 10 
Current payables and accrued expenses(41)(49)
Deferred revenue41 20 
Other assets and liabilities(18)49 
Net cash provided by operating activities109 151 
Investing activities
Expenditures for property and equipment(4)(1)
Net cash used in investing activities(4)(1)
Financing activities
Repurchases of common stock(84)(300)
Repayments of long-term borrowings— (13)
Payments of finance leases(20)(22)
Other financing activities, net(7)4 
Net cash used in financing activities(111)(331)
Effect of exchange rate changes on cash and cash equivalents(10)(6)
Decrease in cash, cash equivalents and restricted cash(16)(187)
Cash, cash equivalents and restricted cash at beginning of period571 595 
Cash, cash equivalents and restricted cash at end of period$555 $408 

Supplemental cash flow disclosure:
Non-Cash investing and financing activities:
Assets acquired by finance leases$30 $24 
Assets acquired by operating leases$1 $1 



SCHEDULE D

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions - unaudited)
For the Three Months Ended March 31
20232022% Change As Reported
%
 Change Constant Currency(2)
Segment Revenue
Americas$292 $290 1%2%
EMEA117 129 (9)%(1)%
APJ67 77 (13)%(5)%
Total segment revenue476 496 (4)%0%
Segment gross profit
Americas 193 189 
% of Revenue66.1 %65.2 %
EMEA74 78 
% of Revenue63.2 %60.5 %
APJ39 45 
% of Revenue58.2 %58.4 %
Total segment gross profit306 312 
% of Revenue64.3 %62.9 %
Reconciling items(1)
(4)(11)
Total gross profit$302 $301 
% of Revenue63.4 %60.7 %
(1) Reconciling items include stock-based compensation, amortization of acquisition-related intangible assets and acquisition, integration and reorganization-related items.
(2) The impact of currency is determined by calculating the prior period results using the current-year monthly average currency rates.