Teradata Corp. (NYSE:TDC) Files An 8-K Reports 2016 Third Quarter Results

Teradata Corp. (NYSE:TDC) reported revenue of $552 million for the quarter ended September 30, 2016, versus $606 million in the third quarter of 2015. Revenue in the third quarter of 2015 included $38 million of revenue from the Marketing Applications business that Teradata sold on July1, 2016. Excluding the Marketing Applications business, Teradata’s revenue decreased 3 percent from the prior year period. There was no currency impact on the overall third quarter revenue comparison.

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Gross margin was 53.3 percent, as reported under U.S. Generally Accepted Accounting Principles (GAAP), versus 50.7 percent reported in the third quarter of 2015. On a non-GAAP basis, excluding stock-based compensation expense, special items and the Marketing Applications business as described in footnote #1, gross margin was 54.0 percent, versus 53.0 percent in the third quarter of 2015. The increase in gross margin for the quarter resulted primarily from favorable product and deal mix.

Teradata reported GAAP net income of $49 million in the third quarter, or $0.37 per diluted share, which compared to $78 million, or $0.55 per share, in the third quarter of 2015. Stock-based compensation expense, special items and the Marketing Applications business reduced Teradata’s third quarter net income by $42 million, or $0.32 per diluted share. Excluding stock-based compensation expense, special items and the Marketing Applications business, non-GAAP net income in the third quarter of 2016 was $91 million, or $0.69 per diluted share. Non-GAAP net income was $85 million or $0.60 per diluted share in the third quarter of 2015.

“In the third quarter, the Teradata team delivered revenue in line with our guidance and better than expected earnings per share while reshaping our business to deliver greater value to our customers and shareholders,” said Victor Lund, president and CEO, Teradata Corporation. “We advanced our business analytic solutions, ecosystem architecture consulting and our hybrid cloud offerings with industry-first initiatives like Teradata Everywhere and Borderless Analytics, which exemplify the new Teradata.  We are accelerating execution of our strategy to better serve our customers and create new opportunities for our company.”

Operating Income
Operating income was $89 million in the third quarter of 2016 compared to $77 million operating income in the third quarter of 2015. On a non-GAAP basis, excluding stock-based compensation expense, special items and the Marketing Applications business, operating income was $122 million in the third quarter of 2016, versus $117 million in the third quarter of 2015. The year-over-year increase in non-GAAP operating income was primarily due to the company’s cost management initiatives.
Cash Flow
During the third quarter 2016, Teradata generated $45 million of cash from operating activities, compared to $68 million in the prior year period. The decrease in cash generation was largely due to the unfavorable year-over-year change in working capital.
Teradata generated $12 million of free cash flow (cash from operating activities less capital expenditures and additions to capitalized software) in the third quarter of 2016, compared to $33 million in the same period in 2015.
Year-to-date Teradata generated $309 million of free cash flow in 2016, compared to $276 million in the same period in 2015.
Balance Sheet
Teradata ended the third quarter 2016 with $988 million in cash, which was substantially all held outside the United States. During the quarter, the company used $18 million of domestic cash to repurchase shares.
As of September 30, 2016, Teradata had total debt of approximately $578 million, all of which was outstanding under a term loan. Teradata had no borrowings under its $400 million revolving credit facility as of September 30, 2016.
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