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Teradata TDC reported first-quarter 2025 non-GAAP earnings of 66 cents per share, which beat the Zacks Consensus Estimate by 15.79%. The bottom line increased 15.8% year over year.
Revenues of $418 million missed the Zacks Consensus Estimate by 1.71%. The figure declined 10% year over year on a reported basis and 8% on a constant-currency (cc) basis.
Total annual recurring revenues (ARR) at the end of the first quarter declined 3% year over year to $1.442 billion. The figure fell 2% at cc. Public cloud ARR increased 15% on a reported basis and 16% at cc year over year to $606 million. The growth was driven by increasing demand for its cloud solutions.
The cloud net expansion rate was 115%, reflecting ongoing customer engagement and expansion within existing accounts.
Teradata Corporation Price, Consensus and EPS Surprise
Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote
Following the results, TDC shares lost 6.06% in the pre-market trading, likely due to the decline in revenues. The company’s shares have underperformed the Zacks Computer & Technology sector year to date. TDC shares have plunged 33.6% compared with the sector’s decline of 8.1%.
TDC’s Q1 Top Line in Detail
Recurring revenues (contributing 85.6% to revenues) declined 8% year over year on a reported basis (down 6% at cc) to $358 million.
Perpetual software license and hardware revenues (2.4% of revenues) increased 25% year over year (up 26% at cc) to $10 million.
Consulting services’ revenues (12% of revenues) fell 27.5% year over year (down 26% at cc) to $50 million.
Product Sales declined 7% year over year on a reported basis (down 5% at cc) to $368 million.
TDC Operating Details
The gross margin on a non-GAAP basis was 60.3%, contracting 190 basis points (bps) year over year.
Selling, general & administrative (SG&A) expenses declined 28% year over year to $116 million. Research & development (R&D) expenses were $66 million, down 12% year over year.
As a percentage of revenues, SG&A declined 690 bps year over year to 27.8%, whereas R&D fell 160 bps year over year to 15.8%.
The non-GAAP operating margin was 21.8%, up 270 bps year over year.
TDC Balance Sheet
As of March 31, 2025, Teradata had cash and cash equivalents of $368 million compared with $420 million as of Dec. 31, 2024.
Long-term debt as of March 31, 2025, was $449 million compared with $455 million as of Dec. 31, 2024.
In the first quarter, TDC generated $8 million in cash from operating activities compared with the previous quarter’s $156 million.
The company generated a free cash flow of $7 million in the reported quarter.