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Teradata Reports Third Quarter Results

-- Revenue increased 10 percent in constant currency(1)

-- Product gross margin increased 350 basis points

-- Non-GAAP operating margin increased 200 basis points

-- GAAP EPS of $0.60, an 18 percent increase from the prior-year period

-- Non-GAAP EPS of $0.69, versus $0.59 in the third quarter of 2011(2)

-- Year-to-date cash from operating activities increased $64 million from prior-year period

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ATLANTA, Nov. 1, 2012 /PRNewswire/ -- Teradata Corporation (NYSE: TDC) today reported revenue of $647 million for the quarter ended September 30, 2012, an increase of 7 percent from $602 million in the third quarter of 2011.  In constant currency, revenue increased 10 percent from the third quarter of 2011, in line with management's expectations.(1)

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Gross margin of 55.8 percent, as reported under U.S. Generally Accepted Accounting Principles (GAAP), improved 130 basis points from the third quarter of 2011. On a non-GAAP basis, excluding the special items and stock-based compensation expense described in footnote #2,(2) gross margin was 56.9 percent, a 150 basis point improvement from 55.4 percent in the third quarter of 2011. The increase in gross margin was driven by leverage from revenue growth as well as a favorable product revenue mix.  

Stock-based compensation expense and special items had a $15 million negative impact on Teradata's third quarter 2012 net income as reported under GAAP.(2) 

Teradata reported GAAP net income of $104 million, or $0.60 per diluted share, which compared to GAAP net income of $87 million, or $0.51 per diluted share, in the third quarter of 2011. Excluding stock-based compensation expense and the special items detailed in footnote #2,(2) non-GAAP net income in the third quarter of 2012 was $119 million, or $0.69 per diluted share, versus $101 million, or $0.59 per diluted share in the third quarter of 2011.(2) 

"In Q3, Teradata continued to deliver solutions that create value for our customers and solid financial results for Teradata, given the macro-economic environment," said Mike Koehler, president and chief executive officer of Teradata Corporation.  "Teradata's competitive position has never been stronger, and we are well positioned with our market-leading technology and solutions in three growing and strategic markets - data warehousing, big data analytics and integrated marketing management."

Regional Revenue Performance

(in millions)


For the Three Months Ended September 30

By segment/region

2012


2011


% Chg. as

Reported


% Chg. in

Constant

Currency(1)

   Americas region

$384


$375


2%


3%

   EMEA region

156


133


17%


28%

   APJ region

107


94


14%


16%

Total revenue

$647


$602


7%


10%










For the Nine Months Ended September 30

By segment/region

2012


2011


% Chg. as

Reported


% Chg. in

Constant

Currency(1)

   Americas region

$1,170


$1,021


15%


15%

   EMEA region

460


403


14%


23%

   APJ region

295


265


11%


12%

Total revenue

$1,925


$1,689


14%


17%

















Operating Income

Third-quarter operating income of $143 million increased from $122 million reported in the third quarter of 2011. On a non-GAAP basis, operating income of $166 million increased 16 percent from the third quarter of 2011.(2) Higher revenue as well as favorable product revenue mix more than offset the increased investment in selling expense.

Cash Flow

Teradata generated $107 million of cash from operating activities, compared to $102 million in the prior-year period. Teradata generated $67 million of free cash flow (cash from operating activities less capital expenditures and additions to capitalized software)(3) in the third quarter of 2012, versus $75 million in the same period in 2011. The decline in free cash flow was due to increased investments in property and equipment, and capitalized software development expenses.

Year-to-date, Teradata generated $451 million of cash from operating activities, a $64 million increase from $387 million generated in the first nine months of 2011. Teradata generated $342 million of free cash flow(3) in the first nine months of 2012, a $42 million increase from the same period in 2011.

 


For the Periods Ended September 30


(in millions)






Three Months


Nine Months


2012


2011


2012


2011

Net Income (GAAP)

$104


$87


$307


$255









Cash provided by operating activities  (GAAP)       

$107


$102


$451


$387

   Less capital expenditures for:








      Expenditures for property and equipment

(18)


(9)


(49)


(31)

      Additions to capitalized software

(22)


(18)


(60)


(56)

           Total capital expenditures

(40)


(27)


(109)


(87)

Free Cash Flow (non-GAAP measure)(3)

$67


$75


$342


$300

 

Balance Sheet

Teradata ended the third quarter of 2012 with $909 million in cash, an $88 million increase from June 30, 2012.

As of September 30, 2012, Teradata had total debt of $292 million outstanding under a term loan. Additionally, Teradata has $300 million available through a pre-arranged credit facility; however, no funds were drawn from the credit facility.

2012 Outlook

Teradata now expects full-year 2012 revenue growth, on a reported basis, to be at the low end of its previous guidance range of 12-14 percent.  On a constant currency basis, Teradata expects revenue growth to be at the low end of its prior guidance range of 14-16 percent. 

Teradata expects full-year 2012 GAAP earnings per share to be in the middle to the higher end of its previous range of $2.34 to $2.44. Excluding stock-based compensation expense and special items, non-GAAP EPS for 2012 is expected to be in the middle to the higher end of its prior guidance range of $2.72 to $2.82.(2)     

2012 Third-Quarter Earnings Conference Call

A conference call is scheduled today at 8:30 a.m. (ET) to discuss the company's third-quarter 2012 results. Access to the conference call, as well as a replay of the call, is available on Teradata's web site at www.teradata.com/investor.   

Supplemental financial information regarding Teradata's operating results is also available on the Investor Relations page of Teradata's web site.


About Teradata

Teradata Corporation (NYSE: TDC) is the world's leading analytic data solutions company, focused on integrated data warehousing, big data analytics, and business applications. Teradata's innovative products and services deliver data integration and business insight to empower organizations to make the best decisions possible for competitive advantage. Visit teradata.com for details.

# # #

Teradata is a trademark or registered trademark of Teradata Corporation in the United States and other countries.

 


 

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 on the Investor Relations page of the company's web site at www.teradata.com/investor, which is used to determine revenue on a constant currency basis.


For the Three Months Ended

September 30


 For the Nine Months Ended
September 30


(in millions)


(in millions)

Revenue

2012


2011


% Chg

As

Rpt'd


%

Chg CC


2012


2011


% Chg

As

Rpt'd


%

Chg

CC

















 Products (software/hardware)

$306


$287


7%


9%


$935


$791


18%


21%

















 Consulting services

194


176


10%


13%


552


498


11%


14%

 Maintenance services

147


139


6%


9%


438


400


10%


12%

       Total services

341


315


8%


12%


990


898


10%


13%

Total revenue

$647


$602


7%


10%


$1,925


$1,689


14%


17%


















For the Three Months Ended

September 30


 For the Nine Months Ended
September 30


(in millions)


(in millions)

By segment/region

2012


2011


% Chg

As Rpt'd


%

Chg CC


2012


2011


% Chg

As

Rpt'd


%

Chg

CC

   Americas region

$384


$375


2%


3%


$1,170


$1,021


15%


15%

   EMEA region

156


133


17%


28%


460


403


14%


23%

   APJ region

107


94


14%


16%


295


265


11%


12%

Total revenue

$647


$602


7%


10%


$1,925


$1,689


14%


17%



































2.     Teradata reports its results in accordance with Generally Accepted Accounting Principles in the United States, or GAAP.  However, as described below, the company believes that certain non-GAAP measures (such as non-GAAP gross margin, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted share, or EPS, which exclude certain items as well as free cash flow) are useful for investors. Our non-GAAP measures are not meant to be considered in isolation or 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. 

Special items included in Teradata's third quarter GAAP operating income results as reported in this release included $11 million of amortization of acquisition-related intangible assets; $2 million of acquisition transaction and integration expenses; and $10 million of stock-based compensation expense.

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 items. Our management regularly uses supplemental non-GAAP financial measures, such as gross margin, operating income, net income and EPS, excluding certain items internally, to understand, manage and evaluate our business and support operating decisions. 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 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. 

 

(a) Gross Margin Reconciliation of GAAP to Non-GAAP Measures












For the Three Months

Ended September 30

(in millions)


For the Nine Months

Ended September 30

(in millions)





% chg





% chg

2012

2011


2012

2011


Gross Margin (GAAP)

$361


$328

10%


$1,081


$919

18%

  % of Revenue (GAAP)

55.8%


54.5%



56.2%


54.4%












  Excluding:










   Stock-based compensation expense

1


1



3


3


   Purchase accounting adjustments

-


3



2


15


   Amortization of acquisition-related intangible assets

7


4



16


11


   Transaction, integration and reorganization related costs

-


-



1


2


  Adjusted Gross Margin (non-GAAP)

$369


$336

10%


$1,103


$950

16%

    % of Revenue (non-GAAP)

56.9%


55.4%



57.2%


55.7%






















(b) Operating Income Reconciliation of GAAP to Non-GAAP Measures











For the Three Months

 Ended September 30

(in millions)


For the Nine Months

 Ended September 30

(in millions)





% chg





% chg

2012

2011


2012

2011


Operating Income (GAAP)

$143


$122

17%


$430


$323

33%

  % of Revenue (GAAP)

22.1%


20.3%



22.3%


19.1%












  Excluding:










   Stock-based compensation expense

10


8



31


25


   Purchase accounting adjustments

-


3



2


15


   Amortization of acquisition-related intangible assets

11


6



26


18


   Transaction, integration and reorganization related costs

2


4



12


21


  Adjusted Operating Income (non-GAAP)

$166


$143

16%


$501


$402

25%

    % of Revenue (non-GAAP)

25.6%


23.6%



26.0%


23.6%






















(c) Net Income Reconciliation of GAAP to Non-GAAP Measures














For the Three Months

 Ended September 30

(in millions)


For the Nine Months

 Ended September 30

(in millions)





% chg





% chg

2012

2011


2012

2011


Net Income (GAAP)

$104


$87

20%


$307


$255

20%

  % of Revenue (GAAP)

16.1%


14.5%



15.9%


15.1%












  Excluding:










   Gain from equity investments

-


-



-


(22)


   Stock-based compensation expense

6


5



19


16


   Purchase accounting adjustments

-


2



1


10


   Amortization of acquisition-related intangible assets

7


5



17


12


   Transaction, integration and reorganization related costs

2


2



10


15


  Adjusted Net Income (non-GAAP)

$119


$101

18%


$354


$286

24%

    % of Revenue (non-GAAP)

18.4%


16.7%



18.3%


16.8%













 

(d) Earnings Per Share Reconciliation of GAAP to Non-GAAP Measures






For the periods ended September 30




Three Months


Nine Months


2012


2012


2011


2012


2011


Guidance











Diluted Earnings Per Share (GAAP)

$0.60


$0.51


$1.78


$1.48


$2.34 - $2.44

  Excluding:










   Gain from equity investments

-


-


-


($0.13)



   Stock-based compensation expense

$0.04


$0.03


$0.11


$0.09


$0.16

   Purchase accounting adjustments

-


$0.01


$0.01


$0.06


$0.01

   Amortization of acquisition-related intangible assets

$0.04


$0.03


$0.10


$0.07


$0.14

   Transaction, integration and reorganization related costs

$0.01


$0.01


$0.06


$0.09


$0.07

Adjusted Diluted Earnings Per Share (Non-GAAP)

$0.69


$0.59


$2.06


$1.66


$2.72 - $2.82


















3.     As described above, the company believes that free cash flow is a useful non-GAAP measure for investors.  Teradata defines free cash flow as cash provided/used by operating activities less capital expenditures for property and equipment, and additions to capitalized software.  Free cash flow does not have a uniform definition under GAAP and therefore, Teradata's definition may differ from other companies' definitions of this measure.  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 for, among other things, investment in the company's existing businesses, strategic acquisitions, strengthening the company's balance sheet, repurchase of the company's stock and repayment of the company's debt obligations, if any.  Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other nondiscretionary expenditures that are not deducted from the measure. This non-GAAP measure is not meant to be considered in isolation or as a substitute 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.

Note to Investors

This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance, within the meaning of Section 21E of the Securities and Exchange Act of 1934.  Forward-looking statements include projections of revenue, profit growth and other financial items, future economic performance and statements concerning analysts' earnings estimates, among other things. These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties that could cause Teradata's actual results to differ materially. In addition to the factors discussed in this release, other risks and uncertainties could affect our future results, and could cause actual results to differ materially from those expressed in such forward-looking statements.  Such factors include those relating to: the global economic environment in general or on the ability of our suppliers to meet their commitments to us, or the timing of purchases by our current and potential customers, and other general economic and business conditions; the rapidly changing and intensely competitive nature of the information technology industry and the data warehousing business, including the increased pressure on price/performance for data warehousing solutions; fluctuations in our operating results, unanticipated delays or accelerations in our sales cycles and the difficulty of accurately estimating revenues; risks inherent in operating in foreign countries, including the impact of economic, political, legal, regulatory, compliance, cultural, foreign currency fluctuations and other conditions abroad; the timely and successful development, production or acquisition and market acceptance of new and existing products and services, including our ability to accelerate market acceptance of new products and services as well as the reliability, quality and operability of new products because of the difficulty and complexity associated with their testing and production; tax rates; turnover of workforce and the ability to attract and retain skilled employees; availability and successful exploitation of new acquisition and alliance opportunities; our ability to execute integration plans for newly acquired entities, including the possibility that expected synergies and operating efficiencies may not be achieved, that such integration efforts may be more difficult, time-consuming or costly than expected, and that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transaction; recurring revenue may decline or fail to be renewed; changes in Generally Accepted Accounting Principles (GAAP) and the resulting impact, if any, on the company's accounting policies; continued efforts to establish and maintain best-in-class internal information technology and control systems; and other factors described from time-to-time in the company's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 10-K and subsequent quarterly reports on Forms 10-Q, as well as the company's annual reports to stockholders.  The company 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.

 













Schedule A








































TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(in millions, except per share amounts)
















For the Period Ended September 30



Three Months


Nine Months



2012


2011


% Chg


2012


2011


% Chg

Revenue


























Products


$        306


$        287


7%


$        935


$        791


18%

Services


341


315


8%


990


898


10%














Total revenue


647


602


7%


1,925


1,689


14%














Product gross margin


211


188




638


520



% of Revenue


69.0%


65.5%




68.2%


65.7%



Services gross margin


150


140




443


399



% of Revenue


44.0%


44.4%




44.7%


44.4%
















Total gross margin


361


328




1,081


919



% of Revenue


55.8%


54.5%




56.2%


54.4%
















Selling, general and administrative expenses


174


163




518


478



Research and development expenses


44


43




133


118
















Income from operations


143


122




430


323



% of Revenue


22.1%


20.3%




22.3%


19.1%
















Other (expense) income, net


-


(1)




(1)


25
















Income before income taxes


143


121




429


348



% of Revenue


22.1%


20.1%




22.3%


20.6%
















Income tax expense


39


34




122


93



% Tax rate


27.3%


28.1%




28.4%


26.7%
















Net income


$        104


$          87




$        307


$        255



% of Revenue


16.1%


14.5%




15.9%


15.1%
















Net income per common share













Basic


$       0.62


$       0.52




$       1.82


$       1.52



Diluted


$       0.60


$       0.51




$       1.78


$       1.48
















Weighted average common

 shares outstanding













Basic


168.8


167.9




168.4


168.3



Diluted


172.4


171.7




172.1


172.1
















 

 







Schedule B






















TERADATA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in millions)

















 September 30,


 June 30,


 December 31,



2012


2012


2011

Assets














Current assets







Cash and cash equivalents


$                909


$                  821


$                  772

Accounts receivable, net


524


505


494

Inventories


41


35


61

Other current assets


79


79


85








Total current assets


1,553


1,440


1,412








Property and equipment, net


143


134


120

Capitalized software, net


162


152


140

Goodwill


933


925


742

Acquired intangible assets


193


200


163

Deferred income taxes


34


33


28

Other assets


33


31


11








Total assets


$             3,051


$               2,915


$               2,616








Liabilities and stockholders' equity














Current liabilities







Accounts payable


$                107


$                  100


$                    97

Payroll and benefits liabilities


136


121


169

Deferred revenue


352


410


339

Other current liabilities


99


88


90








Total current liabilities


694


719


695








Long-term debt


278


282


290

Pension and other postemployment plan liabilities


80


76


77

Long-term deferred revenue


30


24


24

Other liabilities


91


79


36








Total liabilities


1,173


1,180


1,122








Stockholders' equity







Preferred stock


-


-


-

Common stock


2


2


2

Paid-in capital


875


844


765

Treasury Stock


(565)


(562)


(526)

Retained earnings


1,544


1,440


1,237

Accumulated other comprehensive income


22


11


16








Total stockholders' equity


1,878


1,735


1,494








Total liabilities and stockholders' equity


$             3,051


$               2,915


$               2,616








 









Schedule C
































TERADATA CORPORATION


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)


(in millions)














For the Period Ended September 30




Three Months


Nine Months




2012


2011


2012


2011


Operating activities










Net income


$                      104


$                        87


$                      307


$                      255












Adjustments to reconcile net income to net cash provided










  by operating activities:










Depreciation and amortization


32


25


93


74


Stock-based compensation expense


10


8


31


25


Excess tax benefit from stock-based compensation


(9)


(1)


(33)


(10)


Deferred income taxes


6


20


28


31


Gain on investments


-


-


-


(28)


Changes in assets and liabilities:










Receivables


(19)


(25)


(20)


(12)


Inventories


(5)


(5)


21


-


Current payables and accrued expenses


45


30


23


-


Deferred revenue


(53)


(38)


19


57


Other assets and liabilities


(4)


1


(18)


(5)












Net cash provided by operating activities


107


102


451


387












Investing activities










Expenditures for property and equipment


(18)


(9)


(49)


(31)


Additions to capitalized software


(22)


(18)


(60)


(56)


Business acquisitions and other investing activities, net


(1)


(3)


(239)


(722)












Net cash used in investing activities


(41)


(30)


(348)


(809)












Financing activities










Repurchases of common stock


(2)


(57)


(39)


(95)


Proceeds from long-term borrowings


-


-


-


600


Repayments of long-term borrowings


(4)


-


(8)


(300)


Excess tax benefit from stock-based compensation


9


1


33


10


Other financing activities, net


12


3


48


19












Net cash provided by (used in) financing activities


15


(53)


34


234












Effect of exchange rate changes on cash and cash equivalents


7


(10)


-


(4)












Increase (Decrease) in cash and cash equivalents


88


9


137


(192)


Cash and cash equivalents at beginning of period


821


682


772


883












Cash and cash equivalents at end of period


$                      909


$                      691


$                      909


$                      691












 

















Schedule D
























































TERADATA CORPORATION


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


(in millions)






















For the Period Ended September 30




Three Months


Nine Months




2012


2011


% Change

As Reported


% Change

Constant

Currency


2012


2011


% Change

As Reported


% Change

Constant

Currency


Segment Revenue




































Americas


$    384


$    375


2%


3%


$ 1,170


$ 1,021


15%


15%


EMEA


156


133


17%


28%


460


403


14%


23%


APJ


107


94


14%


16%


295


265


11%


12%




















Total revenue


647


602


7%


10%


1,925


1,689


14%


17%




















Segment gross margin




































Americas


229


223






703


592






% of Revenue


59.6%


59.5%






60.1%


58.0%






EMEA


81


62






240


208






% of Revenue


51.9%


46.6%






52.2%


51.6%






APJ


51


43






138


119






% of Revenue


47.7%


45.7%






46.8%


44.9%
























Total gross margin


361


328






1,081


919






% of Revenue


55.8%


54.5%






56.2%


54.4%
























Selling, general and administrative expenses


174


163






518


478






Research and development expenses


44


43






133


118
























Income from operations


$    143


$    122






$    430


$    323






% of Revenue


22.1%


20.3%






22.3%


19.1%






 

SOURCE Teradata Corporation



RELATED LINKS
http://www.teradata.com

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