11/06/14

  • Revenue of $667 million, up 1 percent in constant currency(1)
  • GAAP EPS $0.60, non-GAAP EPS $0.71(2)
  • Year-to-date Cash from Operations increased 30 percent versus prior year period

ATLANTA, Georgia (November 6, 2014) - Teradata Corp. (NYSE: TDC) reported revenue of $667 million for the quarter ended September 30, 2014, versus $666 million reported in the third quarter of 2013. Revenue in the third quarter increased 1 percent when compared in constant currency.(1)

Gross margin in the third quarter was 52.5 percent, as reported under U.S. Generally Accepted Accounting Principles (GAAP), versus 53.8 percent in the third quarter of 2013. On a non-GAAP basis, excluding stock-based compensation expense and the other special items described in footnote #2, gross margin was 53.8 percent, versus 55.0 percent in the third quarter of 2013.(2)

Teradata reported third quarter net income of $94 million, or $0.60 per diluted share, which compared to net income of $98 million, or $0.59 per diluted share, in the third quarter of 2013. Stock-based compensation expense and other special items reduced Teradata's third quarter net income by $17 million (or 11 cents of EPS) as reported under GAAP.(2) Excluding stock-based compensation expense and the other special items detailed in footnote #2, non-GAAP net income in the third quarter of 2014 was $111 million, or $0.71 per diluted share, versus $116 million, or $0.70 per diluted share, in the third quarter of 2013.(2)

"We continue to experience excellent revenue growth with our Big Data analytics solutions which include Aster, Big Data appliances, Hadoop and related software tools and services," said Mike Koehler, president and chief executive officer, Teradata Corporation. "Data Warehouse new customer wins in the quarter and year-to-date are at near record levels, and we are seeing strong market adoption of our Unified Data Architecture. Our increased investments in Big Data analytics and Integrated Marketing Cloud solutions will help drive further revenue growth longer term."


Segment Revenue Performance

(in millions)

Operating Income

Third quarter operating income of $123 million decreased from $132 million reported in the third quarter of 2013. On a non-GAAP basis, operating income was $150 million versus $158 million in the third quarter of 2013.(2) The difference was primarily due to lower product margins due to increased amortization of previously capitalized software development costs, product and deal mix and increased research and development expense.

CashFlow

During the third quarter of 2014, Teradata generated $102 million of cash from operating activities, a 59 percent increase compared to $64 million in the prior-year period. Teradata generated $66 million of free cash flow (cash from operating activities less capital expenditures and additions to capitalized software)(3) in the third quarter of 2014, compared to $29 million in the same period in 2013.

Year to date, Teradata generated $583 million of cash from operating activities, a 30 percent increase compared to $447 million in the prior-year period. Teradata generated $489 million of free cash flow(3) in the first nine months of 2014, a 41 percent increase from $347 million generated in the same period in 2013.

BalanceSheet

Teradata ended the quarter with $848 million in cash, down $86 million from the cash balance at June 30, 2014. During the quarter Teradata purchased approximately 2.4 million shares of its stock worth approximately $102 million. Year to date, through September 30, Teradata purchased 6.9 million shares, worth approximately $293 million.

As of September 30, 2014, Teradata had total debt of $255 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.

2014 Outlook

Teradata continues to expect full-year 2014 constant currency revenue growth to be at the low end of its original 3-7 percent guidance range. However, based on currency rates at the end of October 2014, currency translation is now expected to have a 1 percentage point headwind on Teradata's full-year revenue comparison.(1)

Teradata continues to expect 2014 non-GAAP earnings per share (which excludes stock-based compensation expense and other special items) to be at the low end of the $2.85-$3.00 range.(2)

2014 Third Quarter Earnings Conference Call

A conference call is scheduled today at 8:30 a.m. (ET) to discuss the company's third quarter 2014 results. Access to the conference call, as well as a replay of the call, is available on Teradata's website at investor.teradata.com.

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


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 website at  investor.teradata.com, which is used to determine revenue on a constant currency (CC) basis.

(in millions)

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 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 2014 third quarter GAAP operating income results as reported in this release included $11 million of stock-based compensation expense; $12 million of amortization of acquisition-related intangible assets; and $4 million of acquisition, integration and reorganization expenses.

Teradata's year-to-date 2013 GAAP net income included a $4 million income tax benefit related to the 2012 U.S. Research & Development tax credit. This benefit was included in Teradata's non-GAAP results in the fourth quarter of 2012, since the benefit related to the 2012 tax reporting period. However, Teradata could not include the tax benefit in its GAAP results in the fourth quarter of 2012 due to the American Taxpayer Relief Act of 2012 not being enacted until January 2013. As a result, the $4 million tax benefit was included in Teradata's 2013 GAAP net income, but was excluded from the company's non-GAAP net income. In addition to the tax item above, Teradata's year-to-date 2014 GAAP net income also included $6 million impairment of an equity investment.

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.


Teradata's reconciliation of GAAP to non-GAAP results included in this release:

(in millions, except per share data)

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, 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)

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 analytics business, including the increased pressure on price/performance for data analytics 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, security 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 and secure 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.

AboutTeradata

Teradata (NYSE: TDC) helps companies get more value from data than any other company. Teradata's leading portfolio of big data analytic solutions, integrated marketing applications, and services can help organizations gain a sustainable competitive advantage with data. Visit teradata.com.

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INVESTOR CONTACT:

Gregg Swearingen Teradata

(937) 242-4600

gregg.swearingen@teradata.com


MEDIACONTACT:

Mike O'Sullivan Teradata

(937) 242-4786

mike.osullivan@teradata.com

Schedule A

TERADATACORPORATION

CONDENSEDCONSOLIDATEDSTATEMENTSOFINCOME

(inmillions,exceptpershareamounts- unaudited)

Schedule B

TERADATA  CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(inmillions- unaudited)

Schedule C

TERADATACORPORATION

CONDENSEDCONSOLIDATEDSTATEMENTSOFCASHFLOWS

(in millions - unaudited)

Schedule D

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(inmillions- unaudited)

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