(Source: Business Wire)
Teradata Corporation (NYSE: TDC), the world's largest company solely focused on data warehousing and enterprise analytics, today reported revenue of $421 million for the quarter ended June 30, 2009, a decrease of 7 percent from $455 million in the second quarter of 2008. Revenue decreased 2 percent from the second quarter of 2008, when adjusted for 5 percentage points of negative impact from currency fluctuation.(1)
Gross margin in the second quarter was 55.3 percent, versus 54.7 percent in the second quarter of 2008. Product gross margin declined due to lower volume and foreign currency translation, while service gross margin increased due to higher professional services margin, as Teradata effectively managed expenses while increasing the productivity of the company's professional services resources.
Selling, general and administrative expenses were down $10 million from the second quarter of 2008, while research and development expenses increased $2 million from the prior-year period.
Teradata reported second-quarter net income of $62 million, or $0.36 per diluted share, compared to net income of $69 million, or $0.38 per diluted share, in the second quarter of 2008.
"Teradata delivered another good quarter, and for the first half of 2009, revenues were up 1 percent in constant currency, and earnings per share were the same as prior year. This was a solid start, considering the economic environment. These results also included increased investments in R&D, market coverage and strategic partnerships, which are key to our future. The entire organization executed well, delivering significant customer wins and expansions, improving gross margins and managing costs," said Mike Koehler, president and chief executive officer of Teradata Corporation.
"In the second quarter, we announced our expanded partnership with SAP and released Teradata 13, a very significant database release in terms of performance boost, new features and functionalities. In addition, we released data warehouse firsts such as storage virtualization and automated multi-temperature data management.
"We continue to advance our technology lead in data warehousing across all of our platforms. We have a strong business model, and we are focused on bringing value to our customers today and for years to come."
Regional Operating Segment Results
Teradata reports its results in three regional operating segments.
Americas
Teradata generated $229 million of revenue in its Americas region in the second quarter of 2009, down 3 percent from $236 million in the second quarter of 2008. Revenue declined 1percent, when adjusted for 2 percentage points of negative impact from currency translation.(1)
Gross margin in the Americas region in the quarter was 58.1 percent, compared to 57.6 percent in the second quarter of 2008. Gross margin in the quarter was higher due to improved professional services gross margin, which benefited from higher utilization rates, lower outside contractor expense and overall cost management.
Europe, Middle East and Africa (EMEA)
Revenue in Teradata's EMEA region in the second quarter of 2009 was $118 million, down 8 percent from $128 million generated in the second quarter of 2008. Revenue increased 6 percent when adjusted for currency translation, which negatively impacted the revenue comparison in the EMEA region by 14 percentage points.(1)
Gross margin in the EMEA region was 54.2 percent, versus 53.1 percent in the second quarter of 2008. Gross margin in EMEA improved in the second quarter of 2009 due to improved professional services margin, which offset the effects of foreign currency translation and an adverse mix of hardware content and third-party products.
Asia Pacific / Japan (APJ)
Teradata generated $74 million of revenue in its APJ region in the quarter, a 19 percent decrease from $91 million in the second quarter of 2008. The revenue decline in the APJ region was 17 percent, when adjusted for 2 percentage points of negative impact from currency translation.(1)
Gross margin in the APJ region in the quarter was 48.6 percent, compared to 49.5 percent in the second quarter of 2008. Gross margin in the APJ region was lower due to the impact of lower product volume and the resulting adverse mix of product versus services revenues, which was somewhat offset by improved professional services margin.
Operating Income
Second-quarter operating income of $84 million was down from $92 million reported in the second quarter of 2008, as gross margin improvement, lower selling, general and administrative expense and the impact of currency translation were offset by lower revenue and volume, higher research and development expense and incremental investment in new sales territories.
Other Items
"Other Income" declined $2 million from the second quarter of 2008 as interest income was offset by normal recurring fees associated with the company's operational financing activities. The lower interest rate environment negatively impacted interest income, despite Teradata having $271 million more in cash and short-term investments than at the end of the second quarter of 2008.
The effective income tax rate in the second quarter of 2009 was 26.2 percent, versus 26.6 percent in the prior-year period.
Cash Flow
During the second quarter of 2009, Teradata generated $103 million of cash from operating activities, compared to $85 million in the prior-year period. Capital expenditures in the second quarter of 2009 were $20 million, compared to $23 million in the second quarter of 2008. Teradata generated $83 million of free cash flow (cash from operations less capital expenditures and additions to capitalized software)(2) in the second quarter of 2009, versus generating $62 million in the same period in 2008.
During the first six months of 2009, Teradata generated $268 million of cash from operating activities, compared to $228 million in the prior-year period. Capital expenditures in the first half of 2009 were $40 million, compared to $43 million in the same period in 2008. During the first two quarters of 2009, Teradata generated $228 million of free cash flow, versus $185 million in the same period in 2008.
For the periods ended June 30 (in millions) Three Months Six Months 2009 2008 2009 2008 Net Income (GAAP) $ 62 $ 69 $ 107 $ 111 Cash provided by operating activities (GAAP) $ 103 $ 85 $ 268 $ 228 Less capital expenditures for: Expenditures for property and equipment (4 ) (7 ) (13 ) (11 ) Additions to capitalized software (16 ) (16 ) ( 27 ) (32 ) Total capital expenditures (20 ) (23 ) (40 ) (43 ) Free Cash Flow (non-GAAP measure) (2) $ 83 $ 62 $ 228 $ 185 Free Cash Flow as a percentage of Net Income((2)) 134 % 90 % 213 % 167 % -------------------------------------------------------------------------------
Balance Sheet
Teradata ended the second quarter of 2009 with $638 million in cash, a $67 million increase from March 31, 2009. In addition, the company used approximately $30 million of cash to repurchase approximately 1.4 million shares during the second quarter of 2009. During the first six months of 2009, the company used approximately $50 million to repurchase approximately 2.7 million shares.
Guidance
Although the global economic environment continues to impact capital expenditures by companies, and limits visibility into demand for the foreseeable future, Teradata expects earnings per share to be in the $1.22 to $1.28 range for the full year 2009. For the full year, the company continues to expect selling, general and administrative expenses to be flat to down from 2008. Within this previously discussed expectation, the company expects higher selling expense, as well as higher research and development expense and amortization of capitalized software in the second half of the year, compared to these items in the first half of the year.
2009 Second-Quarter Earnings Conference Call
A conference call is scheduled today at 8:30 a.m. (EDT) to discuss the company's second-quarter 2009 results. Access to the conference call, as well as a replay of the call, is available on Teradata's web site at www.teradata.com/investor.
Supplemental financial information regarding Teradata's operating results is also available on the Investor Relations page of Teradata's web site.
About Teradata
Teradata Corporation (NYSE: TDC) is the world's largest company solely focused on raising intelligence through data warehousing, data warehouse appliances, consulting services and enterprise analytics. Teradata is in more than 60 countries and on the web at www.teradata.com.
Teradata is a trademark or registered trademark of Teradata Corporation in the United States and other countries.
1. The impact of currency is determined by calculating the prior period results using the current-year monthly average currency rates. See the foreign currency schedule on the investor page of the company's web site www.teradata.com/investor.
For the Periods Ended June 30 $ millions Three Months Six Months Revenue 2009 2008 % ChangeAsReported %ChangeConstantCurrency 2009 2008 %ChangeAsReported %ChangeConstantCurrency Products (hardware/software) $ 185 $ 221 (16 )% (12 )% $ 342 $ 386 (11 )% (6 )% Professional and installation-related services 127 126 1 % 7 % 233 $ 233 - % 7 % Maintenance services 109 108 1 % 6 % 213 211 1 % 6 % Total services 236 234 1 % 6 % 446 444 - % 6 % Total revenue $ 421 $ 455 (7 )% (2 )% $ 788 $ 830 (5 )% 1 % Revenue -- by segment Americas $ 229 $ 236 (3 )% (1 )% $ 434 $ 446 (3 )% (1 )% EMEA 118 128 (8 )% 6 % 215 231 (7 )% 9 % APJ 74 91 (19 )% (17 )% 139 153 (9 )% (6 )% Total revenue $ 421 $ 455 (7 )% (2 )% $ 788 $ 830 (5 )% 1 % -------------------------------------------------------------------------------
2. Teradata defines free cash flow as cash provided/used by operating activities less capital expenditures for property and equipment, and additions to capitalized software. Free cash flow does not have a uniform definition under GAAP; therefore Teradata's definition may differ from other companies' definitions of this measure. Teradata's management uses free cash flow to assess the financial performance of the company, and believes it is useful for investors because it relates the operating cash flow of the company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures for -- among other things -- investment in the company's existing businesses; strategic acquisitions; strengthening the company's balance sheet; repurchase of company stock; and repayment of the company's debt obligations, if any. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other nondiscretionary expenditures that are not deducted from the measure.
Note to Investors
This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance, within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements include projections of revenue, profit growth and other financial items, future economic performance and statements concerning analysts' earnings estimates, among other things. These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties that could cause Teradata's actual results to differ materially.
In addition to the factors discussed in this release, other risks and uncertainties could affect our future results, and could cause actual results to differ materially from those expressed in such forward-looking statements. Such factors include those relating to: the current global economic downturn and its impact on the markets in general or on the ability of our suppliers to meet their commitments to us, or the timing of purchases by our current and potential customers, and other general economic and business conditions; the rapidly changing and intensely competitive nature of the information technology industry and the data enterprise warehousing business, including the increased pressure on price/performance for data warehousing solutions; fluctuations in our operating results, unanticipated delays or accelerations in our sales cycles and the difficulty of accurately estimating revenues; risks inherent in operating in foreign countries, including the impact of economic, political, legal, regulatory, compliance, cultural, foreign currency fluctuations and other conditions abroad; the timely development, production or acquisition and market acceptance of new and existing products and services, including our ability to accelerate market acceptance of new products and services; tax rates; turnover of workforce and the ability to attract and retain skilled employees; availability and successful exploitation of new acquisition and alliance opportunities; changes in Generally Accepted Accounting Principles (GAAP) and the resulting impact, if any, on the company's accounting policies; continued efforts to establish and maintain best-in-class internal information technology and control systems; and other factors described from time to time in the company's filings with the U.S. Securities and Exchange Commission and the company's annual reports to stockholders The company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Schedule A TERADATA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in millions, except per share amounts) For the Periods Ended June 30 Three Months Six Months 2009 2008 % Chg 2009 2008 % Chg Revenue Products $ 185 $ 221 -16 % $ 342 $ 386 -11 % Services 236 234 1 % 446 444 0 % Total revenue 421 455 -7 % 788 830 -5 % Product gross margin 119 146 222 251 % of Revenue 64.3 % 66.1 % 64.9 % 65.0 % Services gross margin 114 103 211 192 % of Revenue 48.3 % 44.0 % 47.3 % 43.2 % Total gross margin 233 249 433 443 % of Revenue 55.3 % 54.7 % 54.9 % 53.4 % Selling, general and administrative expenses 122 132 232 248 Research and development expenses 27 25 57 50 Income from operations 84 92 144 145 % of Revenue 20.0 % 20.2 % 18.3 % 17.5 % Interest and Other Income, net - 2 - 5 Income before income taxes 84 94 144 150 % of Revenue 20.0 % 20.7 % 18.3 % 18.1 % Income tax expense 22 25 37 39 % Tax rate 26.2 % 26.6 % 25.7 % 26.0 % Net income $ 62 $ 69 $ 107 $ 111 % of Revenue 14.7 % 15.2 % 13.6 % 13.4 % Net income per common share Basic $ 0.36 $ 0.38 $ 0.62 $ 0.62 Diluted $ 0.36 $ 0.38 $ 0.61 $ 0.61 Weighted average common shares outstanding Basic 172.3 179.3 172.8 179.9 Diluted 173.9 181.2 174.1 181.8 -------------------------------------------------------------------------------
Schedule B TERADATA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in millions) June 30, March 31, December 31, June 30, 2009 2009 2008 2008 Assets Current assets Cash and cash equivalents $ 638 $ 506 $ 402 $ 317 Short term investments - 65 40 50 Accounts receivable, net 342 359 451 445 Inventories 45 52 44 42 Other current assets 73 67 78 55 Total current assets 1,098 1,049 1,015 909 Property and equipment, net 91 91 88 94 Capitalized software, net 93 84 80 74 Goodwill 108 108 110 106 Deferred income taxes 92 100 109 130 Other assets 22 27 28 39 Total assets $ 1,504 $ 1,459 $ 1,430 $ 1,352 Liabilities and stockholders' equity Current liabilities Accounts payable $ 81 $ 80 $ 99 $ 94 Payroll and benefits liabilities 80 68 83 84 Deferred revenue 302 321 255 283 Other current liabilities 76 68 103 101 Total current liabilities 539 537 540 562 Pension and other postemployment plan liabilities 80 79 83 92 Other liabilities 27 30 30 7 Total liabilities 646 646 653 661 Stockholders' equity Preferred stock: par value $0.01 pershare, 100.0 shares authorized,no shares issued and outstanding - - - - Common stock: par value $0.01 pershare, 500.0 shares authorized,181.3,180.9, 180.5 and 179.8shares issued at June 30, 2009,March 31, 2009, December 31,2008 and June 30, 2008, respectively 2 2 2 2 Paid-in capital 592 580 572 537 Treasury Stock (188 ) (158 ) (137 ) (34 ) Retained earnings 437 374 329 190 Accumulated other comprehensive income 15 15 11 (4 ) Total stockholders' equity 858 813 777 691 Total liabilities and stockholders' equity $ 1,504 $ 1,459 $ 1,430 $ 1,352 -------------------------------------------------------------------------------
Schedule C TERADATA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in millions) For the Periods Ended June 30 Three Months Six Months 2009 2008 2009 2008 Operating activities Net income $ 62 $ 69 $ 107 $ 111 Adjustments to reconcile net income tonet cash provided by operating activities: Depreciation and amortization 13 16 27 33 Stock-based compensation expense 6 5 11 10 Excess tax benefit from stock-based compensation (1 ) - (1 ) (1 ) Deferred income taxes 8 10 16 16 Changes in assets and liabilities: Receivables 17 (26 ) 105 76 Inventories 7 6 - 9 Current payables and accrued expenses 15 21 (33 ) (38 ) Deferred revenue (24 ) (16 ) 42 43 Other assets and liabilities - - (6 ) (31 ) Net cash provided by operating activities 103 85 268 228 Investing activities Proceeds from sales and maturities of short-term investments 65 - 65 - Purchase of short-term investments - (50 ) (25 ) (50 ) Expenditures for property and equipment (4 ) (7 ) (13 ) (11 ) Additions to capitalized software (16 ) (16 ) (27 ) (32 ) Purchased software license - (2 ) - (2 ) Other investing activities and business acquisitions, net 2 - 6 (22 ) Net cash used in investing activities 47 (75 ) 6 (117 ) Financing activities Repurchase of common stock (30 ) (34 ) (50 ) (72 ) Excess tax benefit from stock-based compensation 1 - 1 1 Other financing activities, net 5 3 8 4 Net cash used in financing activities (24 ) (31 ) (41 ) (67 ) Effect of exchange rate changes on cash and cash equivalents 6 (1 ) 3 3 Increase in cash and cash equivalents 132 (22 ) 236 47 Cash and cash equivalents at beginning of period 506 339 402 270 Cash and cash equivalents at end of period $ 638 $ 317 $ 638 $ 317 -------------------------------------------------------------------------------
Schedule D TERADATA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in millions, except per share amounts) For the Periods Ended June 30 Three Months Six Months 2009 2008 % Change AsReported % ChangeConstantCurrency 2009 2008 % ChangeAs Reported % ChangeConstantCurrency Revenue Americas $ 229 $ 236 -3 % -1 % $ 434 $ 446 -3 % -1 % EMEA 118 128 -8 % 6 % 215 231 -7 % 9 % APJ 74 91 -19 % -17 % 139 153 -9 % -6 % Total revenue 421 455 -7 % -2 % 788 830 -5 % 1 % Segment gross margin Americas 133 136 250 250 % of Revenue 58.1 % 57.6 % 57.6 % 56.1 % EMEA 64 68 117 120 % of Revenue 54.2 % 53.1 % 54.4 % 51.9 % APJ 36 45 66 73 % of Revenue 48.6 % 49.5 % 47.5 % 47.7 % Total gross margin 233 249 433 443 % of Revenue 55.3 % 54.7 % 54.9 % 53.4 % Selling, general and administrative expenses 122 132 232 248 Research and development expenses 27 25 57 50 Income from operations $ 84 $ 92 $ 144 $ 145 % of Revenue 20.0 % 20.2 % 18.3 % 17.5 % -------------------------------------------------------------------------------
A service of YellowBrix, Inc.
