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Teradata (TDC) Q3 Earnings Report Preview: What To Look For

StockStory - Sun Nov 5, 2023

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Data and analytics software provider Teradata (NYSE:TDC) will be announcing earnings results today. Here's what investors should know.

Last quarter Teradata reported revenues of $462 million, up 7.4% year on year, beating analyst revenue expectations by 3.8%. It was a decent quarter for the company, with revenue and ARR (annual recurring revenue) surpassing Wall Street's expectations. Next quarter's non-GAAP EPS guidance was in line, and the company largely maintained its full year guidance. On the other hand, its deteriorating gross margin was a negative.

Is Teradata buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Teradata's revenue to grow 4.6% year on year to $436.4 million, improving on the 9.3% year-over-year decline in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.42 per share.

Teradata Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company missed Wall St's revenue estimates three times over the last two years.

Looking at Teradata's peers in the data and analytics software segment, some of them have already reported Q3 earnings results, giving us a hint what we can expect. Confluent delivered top-line growth of 31.9% year on year, beating analyst estimates by 2.6% and DigitalOcean reported revenues up 16.4% year on year, exceeding estimates by 2.1%. Confluent traded down 19.9% on the results, DigitalOcean was up 14.3%.

Read our full analysis of Confluent's results here and DigitalOcean's results here.

Triggered by the Federal Reserve's hawkish stance on interest rates, shares of technology companies have been facing sell-off since 2022 and while some of the data and analytics software stocks have fared somewhat better, they have not been spared, with share price declining 2.7% over the last month. Teradata is down 2.7% during the same time, and is heading into the earnings with analyst price target of $62.5, compared to share price of $44.5.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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The author has no position in any of the stocks mentioned.