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Teradata Reports Fourth-Quarter and Full-Year 2021 Financial Results

February 7, 2022 4:05 PM

SAN DIEGO--(BUSINESS WIRE)-- Teradata (NYSE: TDC) today announced its fourth-quarter and full-year 2021 financial results.

“2021 was an impressive year for Teradata. We delivered strong results, driving more than 90% growth in public cloud ARR and significantly growing new cloud customers. I am proud of our team’s steadfast focus on execution and operational excellence that enabled us to meet or beat every element of our annual outlook,” said Steve McMillan, President and CEO, Teradata. “The strength of our performance in 2021 is matched by our conviction to continue accelerating in 2022. We look forward to delivering ongoing innovation for our customers, maintaining our ethos of strong corporate citizenship, and driving profitable growth and long-term value creation for our shareholders.”

“Teradata is raising its 2022 outlook for public cloud ARR and EPS, as well as increasing the return of capital to shareholders,” said Claire Bramley, Chief Financial Officer, Teradata. “We continue to demonstrate our commitment to deliver shareholder value through disciplined capital allocation, including our intention to enter into a $250 million accelerated share repurchase program in the first quarter, enabled by our strong balance sheet and projections of cash flow generation.”

Fourth-Quarter 2021 Financial Highlights Compared to Fourth-Quarter 2020

Full-Year 2021 Financial Highlights Compared to Full Year 2020

Outlook

For the full year 2022:

For the first quarter of 2022:

Earnings Conference Call

A conference call is scheduled for today at 2:00 p.m. PT to discuss the Company’s fourth-quarter and full-year 2021 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 December 31

2021

2020

% Change as
Reported

% Change in
CC

Recurring revenue

$

364

$

346

5

%

6

%

Perpetual software licenses and hardware

19

34

(44

%)

(43

%)

Consulting services

92

111

(17

%)

(16

%)

Total revenue

$

475

$

491

(3

%)

(2

%)

Americas

$

258

$

261

(1

%)

(1

%)

EMEA

135

134

1

%

3

%

APJ

82

96

(15

%)

(13

%)

Total revenue

$

475

$

491

(3

%)

(2

%)

For the Twelve Months ended December 31

2021

2020

% Change as
Reported

% Change in
CC

Recurring revenue

$

1,464

$

1,309

12

%

11

%

Perpetual software licenses and hardware

77

107

(28

%)

(28

%)

Consulting services

376

420

(10

%)

(12

%)

Total revenue

$

1,917

$

1,836

4

%

3

%

Americas

$

1,044

$

1,025

2

%

2

%

EMEA

543

485

12

%

9

%

APJ

330

326

1

%

(2

%)

Total revenue

$

1,917

$

1,836

4

%

3

%

As of December 31

2021

2020

% Change as
Reported

% Change in
CC

Annual recurring revenue*

$

1,492

$

1,425

5

%

7

%

Public cloud ARR**

$

202

$

106

91

%

92

%

*

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. 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 Vantage 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 non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted share, or EPS, all of which exclude certain items (as well as free cash flow), 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

For the
Twelve Months

(in millions, except per share data)

ended December 31

ended December 31

Gross Profit:

2021

2020

% Chg.

2021

2020

% Chg.

GAAP Gross Profit

$

294

$

284

$

1,186

$

1,019

% of Revenue

61.9

%

57.8

%

61.9

%

55.5

%

Excluding:

Stock-based compensation expense

6

3

18

16

Acquisition, integration, reorganization related, and other costs

-

(2

)

11

14

Amortization of capitalized software

-

6

-

23

Non-GAAP Gross Profit

$

300

$

291

3

%

$

1,215

$

1,072

13

%

% of Revenue

63.2

%

59.3

%

63.4

%

58.4

%

Operating Income

GAAP Operating Income

$

50

$

13

$

231

$

16

% of Revenue

10.5

%

2.6

%

12.1

%

0.9

%

Excluding:

Stock-based compensation expense

33

22

112

101

Amortization of acquisition-related intangible assets

1

1

4

4

Acquisition, integration, reorganization related, and other costs

6

25

46

86

Amortization of capitalized software

-

6

-

23

Non-GAAP Operating Income

$

90

$

67

34

%

$

393

$

230

71

%

% of Revenue

18.9

%

13.6

%

20.5

%

12.5

%

Net Income

GAAP Net Income

$

33

$

5

$

147

$

129

% of Revenue

6.9

%

1.0

%

7.7

%

7.0

%

Excluding:

Stock-based compensation expense

33

22

112

101

Amortization of acquisition-related intangible assets

1

1

4

4

Acquisition, integration, reorganization related, and other costs

5

25

45

86

Amortization of capitalized software

-

6

-

23

IP restructuring tax benefit(i)

-

(1

)

-

(157

)

Tax contingency adjustment(ii)

-

1

-

-

CARES Act NOL carryback(iii)

-

(9

)

(2

)

(9

)

Income tax adjustments(iv)

(8

)

(8

)

(32

)

(31

)

Non-GAAP Net Income

$

64

$

42

52

%

$

274

$

146

88

%

% of Revenue

13.5

%

8.6

%

14.3

%

8.0

%

For the Three Months
ended December 31

For the Twelve Months
ended December 31

Earnings Per Share:

2021

2020

2021

2020

2022 Q1
Outlook

2022 FY
Outlook

GAAP Earnings Per Share

$0.29

$0.04

$1.30

$1.16

$0.35 - $0.39

$0.75 - $0.85

Excluding:

Stock-based compensation expense

0.29

0.20

0.99

0.91

0.27

1.15

Amortization of acquisition-related intangible assets

0.01

0.01

0.04

0.04

0.01

0.01

Acquisition, integration, reorganization related, and other costs

0.05

0.23

0.40

0.77

0.05

0.10

Amortization of capitalized software

-

0.05

-

0.20

-

-

IP restructuring tax benefit(i)

-

(0.01

)

-

(1.41

)

-

-

Tax contingency adjustment(ii)

-

0.01

-

-

-

-

CARES Act NOL carryback net benefit(iii)

-

(0.08

)

(0.02

)

(0.08

)

-

-

Income tax adjustments(iv)

(0.07

)

(0.07

)

(0.28

)

(0.28

)

(0.05

)

(0.19

)

Non-GAAP Diluted Earnings Per Share

$0.57

$0.38

$2.43

$1.31

$0.63 - $0.67

$1.82- $1.92

i.

The Company’s GAAP effective tax rate for the twelve months ended December 31, 2020, includes $156 million of discrete tax benefit related to an intra-entity asset transfer of certain of its intellectual property to one of its Irish subsidiaries, which occurred on January 1, 2020. The one-time tax benefit for this intra-entity asset transfer of $157 million was recorded as a deferred tax asset for GAAP reporting purposes in the first quarter of 2020 but was excluded from Non-GAAP results. This was offset by $1 million of tax expense related to withholding taxes associated with the same intra-entity transfer recorded in the second quarter of 2020.

ii.

The Company’s full-year 2020 GAAP marginal effective tax rate included $3 million of tax expense related to tax contingencies pursuant to FIN 48. For GAAP purposes, this is a component of the marginal rate and is recognized as tax benefit or expense based on the Company’s reported GAAP pre-tax income or loss for the quarter. To more accurately reflect the impact of the expense on a quarterly basis for non-GAAP purposes, the $3 million of tax expense was recognized ratably each quarter in 2020 instead of being included in the marginal effective rate.

iii.

The Company’s GAAP effective tax rate for the three and twelve months ended December 31, 2020, includes a net $9 million income tax benefit resulting from the CARES Act of 2020, which allows US corporations a one-time opportunity to claim income tax refunds by allowing a 5-year net operating loss (“NOL”) carryback for taxable losses incurred in the tax year 2020. In addition, the Company recorded a $2 million discrete tax benefit in the third quarter of 2021 for GAAP purposes resulting from a provision to return true up to the Company’s net operating loss upon completion of its 2020 US federal income tax return and its NOL carryback claim afforded by the CARES Act of 2020. Teradata filed a carry back of its 2020 NOL to claim a refund for taxes it paid in 2015, which created a one-time income tax benefit for GAAP reporting purposes for the difference between the 2015 federal statutory tax rate of 35% and the current federal statutory rate of 21%.

iv.

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 December 31, 2021 was 21% and December 31, 2020 was 26.3%. For the twelve months ended December 31, the Company’s non-GAAP effective tax rate was 22.4% for 2021 and 23.2% for 2020.

3.

As described below, the Company believes that free cash flow is a useful non-GAAP measure for investors. 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. 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 to, 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.

(in millions)

For the Three Months

For the Twelve Months

ended December 31

ended December 31

Outlook

2021

2020

2021

2020

2022

Cash provided by operating activities (GAAP)

$

95

$

56

$

463

$

267

~$430

Less capital expenditures for:

Expenditures for property and equipment

(9

)

(10

)

(28

)

(44

)

(~28)

Additions to capitalized software

(1

)

(1

)

(3

)

(7

)

(~2)

Total capital expenditures

(10

)

(11

)

(31

)

(51

)

(~30)

Free Cash Flow (non-GAAP measure)

$

85

$

45

$

432

$

216

~$400

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 2022 first quarter and full year financial guidance and share repurchase plans. 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 or on 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 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 foreign currency fluctuations; 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 December 31

Three Months

Twelve Months

2021

2020

% Chg

2021

2020

% Chg

Revenue
Recurring

$

364

$

346

5

%

$

1,464

$

1,309

12

%

Perpetual software licenses, hardware and other

19

34

(44

%)

77

107

(28

%)

Consulting services

92

111

(17

%)

376

420

(10

%)

Total revenue

475

491

(3

%)

1,917

1,836

4

%

Gross profit
Recurring

271

253

1,099

938

% of Revenue

74.5

%

73.1

%

75.1

%

71.7

%

Perpetual software licenses, hardware and other

9

16

34

43

% of Revenue

47.4

%

47.1

%

44.2

%

40.2

%

Consulting services

14

15

53

38

% of Revenue

15.2

%

13.5

%

14.1

%

9.0

%

Total gross profit

294

284

1,186

1,019

% of Revenue

61.9

%

57.8

%

61.9

%

55.5

%

Selling, general and administrative expenses

170

183

646

669

Research and development expenses

74

88

309

334

Income from operations

50

13

231

16

% of Revenue

10.5

%

2.6

%

12.1

%

0.9

%

Other expense, net

(8

)

(10

)

(39

)

(40

)

Income (loss) before income taxes

42

3

192

(24

)

% of Revenue

8.8

%

0.6

%

10.0

%

(1.3

%)

Income tax expense (benefit)

9

(2

)

45

(153

)

% Tax rate

21.4

%

(66.7

%)

23.4

%

637.5

%

Net income

$

33

$

5

$

147

$

129

% of Revenue

6.9

%

1.0

%

7.7

%

7.0

%

Net income per common share
Basic

$

0.31

$

0.05

$

1.35

$

1.18

Diluted

$

0.29

$

0.04

$

1.30

$

1.16

Weighted average common shares outstanding
Basic

107.7

109.1

108.6

109.3

Diluted

112.2

112.0

112.9

111.6

Schedule B

TERADATA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions - unaudited)

December 31,

September 30,

December 31,

2021

2021

2020

Assets
Current assets
Cash and cash equivalents

$

592

$

613

$

529

Accounts receivable, net

336

290

331

Inventories

26

17

29

Other current assets

152

144

155

Total current assets

1,106

1,064

1,044

Property and equipment, net

288

300

339

Right of use assets - operating lease, net

26

29

38

Goodwill

396

397

401

Capitalized contract costs, net

111

99

98

Deferred income taxes

202

205

222

Other assets

40

40

51

Total assets

$

2,169

$

2,134

$

2,193

Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt

$

88

$

75

$

44

Current portion of finance lease liability

77

81

75

Current portion of operating lease liability

12

13

15

Accounts payable

67

104

50

Payroll and benefits liabilities

148

137

170

Deferred revenue

552

464

499

Other current liabilities

89

81

99

Total current liabilities

1,033

955

952

Long-term debt

324

349

411

Finance lease liability

53

58

70

Operating lease liability

18

20

28

Pension and other postemployment plan liabilities

138

141

152

Long-term deferred revenue

27

28

38

Deferred tax liabilities

7

8

6

Other liabilities

109

118

136

Total liabilities

1,709

1,677

1,793

Stockholders' equity
Common stock

1

1

1

Paid-in capital

1,808

1,776

1,656

Accumulated deficit

(1,211

)

(1,179

)

(1,114

)

Accumulated other comprehensive loss

(138

)

(141

)

(143

)

Total stockholders' equity

460

457

400

Total liabilities and stockholders' equity

$

2,169

$

2,134

$

2,193

Schedule C

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions - unaudited)

For the Period Ended December 31

Three Months

Twelve Months

2021

2020

2021

2020

Operating activities
Net income

$

33

$

5

$

147

$

129

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

36

46

149

172

Stock-based compensation expense

33

22

112

101

Deferred income taxes

4

34

14

(118

)

Changes in assets and liabilities:
Receivables

(46

)

(10

)

(5

)

67

Inventories

(9

)

(15

)

3

2

Current payables and accrued expenses

(28

)

24

17

-

Deferred revenue

87

17

42

4

Other assets and liabilities

(15

)

(67

)

(16

)

(90

)

Net cash provided by operating activities

95

56

463

267

Investing activities
Expenditures for property and equipment

(9

)

(10

)

(28

)

(44

)

Additions to capitalized software

(1

)

(1

)

(3

)

(7

)

Net cash used in investing activities

(10

)

(11

)

(31

)

(51

)

Financing activities
Repurchases of common stock

(68

)

(25

)

(244

)

(100

)

Repayments of long-term borrowings

(12

)

(6

)

(44

)

(25

)

Payments of finance leases

(24

)

(27

)

(92

)

(70

)

Other financing activities, net

-

2

24

9

Net cash used in financing activities

(104

)

(56

)

(356

)

(186

)

Effect of exchange rate changes on cash and cash equivalents

(3

)

10

(14

)

7

(Decrease) increase in cash, cash equivalents and restricted cash

(22

)

(1

)

62

37

Cash, cash equivalents and restricted cash at beginning of period

617

534

533

496

Cash, cash equivalents and restricted cash at end of period

$

595

$

533

$

595

$

533

Supplemental cash flow disclosure:
Non-cash investing and financing activities:
Assets acquired by finance leases

$

14

$

27

$

76

$

85

Assets acquired by operating leases

$

-

$

2

$

9

$

8

Schedule D

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions - unaudited)

For the Three Months Ended December 31

For the Twelve Months Ended December 31

2021

2020

% Change
As
Reported

% Change
Constant
Currency (2)

2021

2020

% Change
As
Reported

% Change
Constant
Currency (2)

Segment Revenue
Americas

$

258

$

261

(1

%)

(1

%)

$

1,044

$

1,025

2

%

2

%

EMEA

135

134

1

%

3

%

543

485

12

%

9

%

APJ

82

96

(15

%)

(13

%)

330

326

1

%

(2

%)

Total segment revenue

475

491

(3

%)

(2

%)

1,917

1,836

4

%

3

%

Segment gross profit
Americas

166

161

690

631

% of Revenue

64.3

%

61.7

%

66.1

%

61.6

%

EMEA

88

76

337

273

% of Revenue

65.2

%

56.7

%

62.1

%

56.3

%

APJ

46

54

188

168

% of Revenue

56.1

%

56.3

%

57.0

%

51.5

%

Total segment gross profit

300

291

1,215

1,072

% of Revenue

63.2

%

59.3

%

63.4

%

58.4

%

Reconciling items(1)

(6

)

(7

)

(29

)

(53

)

Total gross profit

$

294

$

284

$

1,186

$

1,019

% of Revenue

61.9

%

57.8

%

61.9

%

55.5

%

(1)

Reconciling items include stock-based compensation, capitalized software, 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.

INVESTOR CONTACT

Christopher T. Lee

858-485-2523 office

[email protected]



MEDIA CONTACT

Jennifer Donahue

858-485-3029 office

[email protected]

Source: Teradata

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