Big Data • Big Analytics • Big Insight

May 8, 2014

Teradata Reports First Quarter Results

ATLANTA, Ga., May 8 — Teradata Corp. reported revenue of $628 million for the quarter ended March 31, 2014, an increase of 7 percent from $587 million in the first quarter of 2013. Revenue in the first quarter increased 8 percent when compared in constant currency.

Gross margin was 53.0 percent, as reported under U.S. Generally Accepted Accounting Principles (GAAP), versus 52.0 percent in the first 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 54.9 percent, an increase from 53.3 percent in the first quarter of 2013.

Teradata reported first quarter net income of $59 million, or $0.37 per diluted share, which compared to net income of $59 million, or $0.35 per diluted share, in the first quarter of 2013. Stock-based compensation expense and other special items reduced Teradata’s first quarter net income by $28 million (or 17 cents of EPS) as reported under GAAP. Excluding stock-based compensation expense and the other special items detailed in footnote #2, non-GAAP net income in the first quarter of 2014 was $87 million, or $0.54 per diluted share, versus $73 million, or $0.43 per diluted share, in the first quarter of 2013.

“Teradata had a good first quarter with 7 percent revenue growth and 26 percent non-GAAP EPS growth; and set records for first quarter new customer wins and free cash flow,” said Mike Koehler, president and chief executive officer, Teradata Corporation.

“Teradata is leading the way as companies begin to build out their analytical data environments leveraging multiple workload-specific platforms.  This is the focus of our Unified Data Architecture value proposition.  Looking ahead, we will continue to increase our investments in Integrated Data Warehousing, Big Data Analytics, and Integrated Marketing Cloud, along with our Unified Data Architecture and services to help customers with the adoption of the evolving analytical ecosystem.”

Operating Income

First quarter operating income of $89 million increased from $76 million reported in the first quarter of 2013. On a non-GAAP basis, operating income was $125 million versus $104 million in the first quarter of 2013. The increase was primarily due to higher revenue and favorable revenue mix which generated higher product gross margin.

Cash Flow

During the first quarter of 2014, Teradata generated $343 million of cash from operating activities, which compared to $243 millionin the prior-year period. The increase was primarily driven by net changes in the components of working capital. Teradata generated $310 million of free cash flow (cash from operating activities less capital expenditures and additions to capitalized software) in the first quarter of 2014, versus $216 million in the same period in 2013.

Balance Sheet and Share Repurchase Program

Teradata ended the quarter with $922 million in cash, a $227 million increase from December 31, 2013. The increase in cash in the first quarter was partially offset by Teradata’s purchase of 2.0 million shares of its stock for approximately $86 million during the quarter.

On May 5, 2014, Teradata’s Board of Directors authorized an additional $300 million to be utilized to repurchase Teradata common stock under its open market share repurchase program. Teradata now has a total of approximately $550 millionauthorized for share repurchases under its share repurchase program. The stock is anticipated to be repurchased periodically on an ongoing basis in open market transactions at management’s discretion, in accordance with applicable securities rules regarding issuer repurchase. The increased share repurchase authorization is effective immediately and the program, which was extended three years, now expires on May 8, 2017.

As of March 31, 2014, Teradata had total debt of $270 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 now expects full-year 2014 revenue to grow at the lower end of its previous 3-7 percent guidance range. Based on currency rates at the end of April 2014, currency translation is not expected to have a meaningful impact on full-year revenue comparison. Teradata also expects 2014 non-GAAP earnings per share (which excludes stock-based compensation expense and other special items) to be at the lower end of the $2.85-$3.00 range.