On August 5, 2024, Teradata Corp (TDC, Financial) released its 8-K filing for the second quarter of 2024. Teradata Corp provides analytic data products and related services, specializing in data warehousing, asset optimization, fraud prevention, product innovation, and risk mitigation. The company operates primarily in the United States.
Performance Overview
Teradata Corp (TDC, Financial) reported a GAAP diluted EPS of $0.38, significantly surpassing the analyst estimate of $0.22. The company's revenue for the quarter was $436 million, slightly above the estimated $432.47 million. This performance highlights Teradata's robust growth in its cloud segment and improved operational efficiency.
Key Financial Achievements
Teradata's public cloud ARR increased by 31% year-over-year to $542 million, demonstrating the company's successful transition to cloud-based solutions. The cloud net expansion rate stood at an impressive 123%. Additionally, the GAAP operating margin improved by 800 basis points to 15.1%, while the non-GAAP operating margin increased by 640 basis points to 22.0%.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Public Cloud ARR | $542 million | $414 million | 31% |
| Total ARR | $1.465 billion | $1.523 billion | -4% |
| Recurring Revenue | $368 million | $371 million | -1% |
| Total Revenue | $436 million | $462 million | -6% |
| GAAP Gross Margin | 60.8% | 59.7% | 1.1% |
| Non-GAAP Gross Margin | 62.2% | 60.6% | 1.6% |
| GAAP Operating Income | $66 million | $33 million | 100% |
| Non-GAAP Operating Income | $96 million | $72 million | 33% |
| GAAP Diluted EPS | $0.38 | $0.17 | 124% |
| Non-GAAP Diluted EPS | $0.64 | $0.48 | 33% |
Challenges and Strategic Actions
Despite the strong performance in cloud ARR, Teradata's total ARR decreased by 4% year-over-year to $1.465 billion. The company also reported a 6% decline in total revenue. To address these challenges, Teradata has initiated global restructuring and cost reduction actions, including a reduction of approximately 9% to 10% of its global workforce. These measures are expected to reduce operating expenses by $75M to $80M annually and improve non-GAAP operating profit by $15M to $20M in 2024.
Commentary
“Teradata delivered another quarter of strong growth in Cloud ARR, increasing 32% in constant currency, and we maintained our robust 123% net expansion rate in the cloud,” said Steve McMillan, President and Chief Executive Officer, Teradata. “We are taking decisive action across the business to improve our execution and efficiency to reaccelerate profitable growth. The underlying fundamentals of our business are strong. In a world where analytics and AI underpin a company’s success, our hybrid cloud platform and foundation of trusted data and analytics are what they need to consistently deliver value to their business.”
Financial Metrics and Analysis
Key financial metrics such as GAAP and non-GAAP gross margins, operating income, and EPS indicate Teradata's improved profitability and operational efficiency. The company's focus on cloud solutions is evident from the significant growth in public cloud ARR, which is crucial for sustaining long-term growth in the competitive software industry.
Teradata's restructuring efforts and cost reduction initiatives are strategic moves to optimize operations and drive efficiencies. These actions are expected to enhance the company's financial performance and position it for future growth.
For more detailed financial information, please refer to Teradata Corp's 8-K filing.
Explore the complete 8-K earnings release (here) from Teradata Corp for further details.
