Teradata Reports 2015 Second Quarter Results
ATLANTA, Ga., Aug. 6 -- Teradata Corp. reported revenue of $623 million for the quarter ended June 30, 2015, versus $676 million reported in the second quarter of 2014. Revenue in the second quarter decreased 8 percent, and 2 percent when compared in constant currency.
Gross margin in the second quarter was 52.5 percent, as reported under U.S. Generally Accepted Accounting Principles (GAAP), versus 54.9 percent in the second quarter of 2014. On a non-GAAP basis, excluding stock-based compensation expense and the other special items described in footnote #2, gross margin was 54.3 percent, down from 56.1 percent in the second quarter of 2014 due to lower revenue volume, revenue mix and foreign exchange currency impact.
Teradata reported a GAAP net loss of $(265) million in the second quarter, or $(1.87) per share, which compared to net income of $96 million, or $0.60 per diluted share, in the second quarter of 2014. Stock-based compensation expense and other special items (including a $340 million goodwill impairment charge) reduced Teradata's second quarter net income by $341 million (or $2.40 cents of EPS). Excluding stock-based compensation expense and the other special items detailed in footnote #2, non-GAAP net income in the second quarter of 2015 was $76 million, or $0.53 per diluted share, versus $114 million, or $0.72 per diluted share, in the second quarter of 2014.
"We believe Teradata is positioned for constant currency growth in the second half of 2015. The integrated business units we created earlier this year – the Data and Analytics and Marketing Applications Divisions – are showing progress. With better aligned and focused end-to-end resources, we are rapidly advancing our growth initiatives and improving operating efficiencies," said Mike Koehler, chief executive officer, Teradata Corporation.
"We remain confident in our industry-leading solutions and competitive positions in the markets we serve, and have a number of actions in progress to better position Teradata in 2016 and beyond. As always, we will continue to evaluate new initiatives that can benefit our business and enhance shareholder value."
Operating Income
Due to the goodwill impairment charge, Teradata reported a $(262) million GAAP operating loss in the second quarter of 2015, which compared to $133 million of operating income in the second quarter of 2014. On a non-GAAP basis, operating income was $107 million versus $159 million in the prior-year period. The year-over-year decline in non-GAAP operating income was due to lower revenue, decreased gross margin rate, the impact of currency fluctuations, as well as higher expenses resulting from investments the company is making for future revenue growth.
Cash Flow
During the second quarter of 2015, Teradata generated $80 million of cash from operating activities compared to $138 million in the prior-year period. Teradata generated $53 million of free cash flow (cash from operating activities less capital expenditures and additions to capitalized software) in the second quarter of 2015, compared to $113 million in the same period in 2014. The year-over-year decline was primarily due to lower net income and the timing of payables.
Balance Sheet
As of June 30, 2015, Teradata had $921 million of cash and total debt of $600 million. Additionally, Teradata has $400 million available on an unused revolving credit facility.
During the quarter ended June 30, 2015, Teradata incurred a $340 million non-cash impairment charge related to goodwill associated with Teradata's Marketing Applications business. The impairment was determined after further review and analysis following the recent creation of the separate Marketing Applications business unit.
2015 Full-year Outlook
As a result of the second quarter results and an updated outlook for the rest of the year, which now assumes continued deferrals of, and longer sales cycles for, large transactions, Teradata is lowering its full-year revenue guidance for 2015. Full-year 2015 revenue is now expected to be approximately down 3 - 6 percent on a reported basis, up 0 - 3 percent on a constant currency basis, as compared to the prior year. Due to the goodwill impairment charge, Teradata now expects a $(0.62) - $(0.32) GAAP loss per share for full-year 2015. Non-GAAP earnings per share (which excludes stock-based compensation expense, goodwill impairment and other special items) for the full-year is now expected to be in the approximate range of $2.20-$2.50.
About Teradata
Teradata offers a leading portfolio of big data analytic solutions, integrated marketing applications, and services that help organizations gain a sustainable competitive advantage with data. Visit teradata.com.
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Source: Teradata
