Teradata (NYSE:TDC) Reports Q1 In Line With Expectations
Data and analytics software provider Teradata (NYSE:TDC) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 2.3% year on year to $465 million. It made a non-GAAP profit of $0.57 per share, down from its profit of $0.61 per share in the same quarter last year.
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Teradata (TDC) Q1 CY2024 Highlights:
- Revenue: $465 million vs analyst estimates of $463.9 million (small beat)
- ARR: $1,480 million vs analyst estimates of $1,504 million (1.6% miss)
- EPS (non-GAAP): $0.57 vs analyst estimates of $0.55 (3% beat)
- Maintained full year guidance for ARR growth, revenue growth, and EPS (non-GAAP)
- Gross Margin (GAAP): 61.1%, down from 63.4% in the same quarter last year
- Free Cash Flow of $21 million, down 87.5% from the previous quarter
- Annual Recurring Revenue: $1.48 billion at quarter end, down 1.7% year on year
- Market Capitalization: $3.64 billion
"Teradata grew public cloud ARR 36% year over year in constant currency. Teradata’s technology is fundamental to driving complex analytics at scale, and is differentiated today as businesses everywhere are exploring how to leverage AI to be more productive and innovative,” said Steve McMillan, President and CEO, Teradata.
Part of point-of-sale and ATM company NCR from 1991 to 2007, Teradata (NYSE:TDC) offers a software-as-service platform that helps organizations manage their data across multiple storages and analyze it.
Data Infrastructure
Generating insights from system level data is an increasing priority for most businesses, but to do so requires connecting and analyzing piles of data stored and siloed in separate databases. This is the demand driver for cloud based data infrastructure software providers, who can more readily integrate, distribute and process information vs. legacy on-premise software providers.
Sales Growth
As you can see below, Teradata's revenue has declined over the last three years, shrinking from $491 million in Q1 2021 to $465 million this quarter.
Teradata's revenue was down again this quarter, falling 2.3% year on year.
Looking ahead, analysts covering the company were expecting sales to grow 1.5% over the next 12 months before the earnings results announcement.
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Cash Is King
If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Teradata's free cash flow came in at $21 million in Q1, down 80% year on year.
Teradata has generated $271 million in free cash flow over the last 12 months, a decent 14.9% of revenue. This FCF margin stems from its asset-lite business model and gives it a decent amount of cash to reinvest in its business.
Key Takeaways from Teradata's Q1 Results
Teradata's billings unfortunately missed analysts' expectations and its ARR (annual recurring revenue) also missed Wall Street's estimates. The company did try to assuage the market by maintaining full year guidance for ARR and revenue growth as well as EPS. Overall, this was a mediocre quarter for Teradata due to the underperformance of key topline metrics. The company is down 3.3% on the results and currently trades at $36.7 per share.
Teradata may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
