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- Fourth-quarter revenue grew 10 percent, up 10 percent in constant currency (1)
- 2010 full-year revenue grew 13 percent, up 12 percent in constant currency (1)
- Fourth-quarter GAAP EPS of $0.50, non-GAAP EPS of $ 0.53 (2)
- 2010 full-year GAAP EPS of $1.77, versus $1.46 in 2009
- 2010 full-year non-GAAP EPS of $1.86 versus $1.56 in 2009 (2)
- Fourth-quarter cash from operations of $148 million, versus $91 million in 2009
Teradata Corporation (NYSE: TDC) today reported revenue of $548 million for the quarter ended December 31, 2010, an increase of 10 percent from $496 million in 2009. For the full-year 2010, revenue was $1.936 billion, a 13 percent increase from $1.709 billion in 2009. The full-year revenue comparison included 1 percentage point of benefit from currency translation.(1)
Gross margin in the fourth quarter of 55.7 percent was down slightly from the 56.0 percent reported in the fourth quarter of 2009. The gross margin decline from the strong prioryear period resulted from the Americas and Asia Pacific Japan regions seeing a less favorable deal mix as compared to the prior-year period. Gross margin for full year 2010 was 56.2 percent, a meaningful increase from 54.9 percent in 2009. The increase in gross margin for the full year was driven primarily by improvements in product gross margin.
Teradata reported fourth-quarter net income under Generally Accepted Accounting Principles (GAAP) of $85 million, or $0.50 per diluted share, which compared to GAAP net income of $84 million, or $0.48 per diluted share, in the fourth quarter of 2009. For the full year 2010, Teradata reported GAAP net income of $301 million, or $1.77 per diluted share, which compared to GAAP net income of $254 million or $1.46 per diluted share, for the full year 2009.
Excluding stock-based compensation expense, non-GAAP EPS was $0.53 in the fourth quarter of 2010, versus $0.50 in the fourth quarter of 2009.(2) Excluding stock-based compensation expense for both full-year periods, as well as an impairment charge in the third quarter of 2009, non-GAAP earnings for full-year 2010 were $1.86 per diluted share, compared to $1.56 per diluted share in 2009.(2)
"Teradata had an excellent year in 2010, generating record financial results and adding the highest number of new customers since 2002. We continued to increase investments to advance our technology, services, solutions, partnerships and market coverage," said Mike Koehler, president and chief executive officer of Teradata Corporation.
"These are exciting times for Teradata and our customers. We are positioned better than ever to help more customers manage and extract value from the accelerating explosion of data and new data types, and help them gain competitive advantage in their respective markets."
Regional Operating Segment Results
Teradata reports its results in three regional operating segments.
Americas
Teradata generated $341 million of revenue in its Americas region in the fourth quarter of 2010, up 14 percent from $300 million in the fourth quarter of 2009. Currency translation benefited revenue growth in the Americas by 1 percentage point in the fourth quarter. (1) For the full year, revenue in the Americas region increased 19 percent to $1.166 billion in 2010, up from $981 million in 2009. The full-year revenue comparison in the Americas region also benefited by 1 percentage point from currency translation.
Gross margin in the Americas region in the fourth quarter of 2010 was 60.1 percent, down from 60.7 percent achieved in the fourth quarter of 2009. The gross margin decline from the strong prior-year period resulted from a less favorable deal mix as compared to the fourth quarter of 2009. Gross margin in the Americas region for full year 2010 was 60.2 percent, compared to 58.1 percent in 2009. The increase was due to improved product margin.
Europe, Middle East and Africa (EMEA)
Revenue in Teradata's EMEA region in the fourth quarter of 2010 was $119 million, up 12 percent from $106 million generated in the fourth quarter of 2009. Currency translation negatively impacted the revenue comparison in the EMEA region by 7 percentage points. (1) For the full year 2010, revenue in the EMEA region increased 3 percent to $442 million. However, the full-year revenue comparison was negatively impacted by 3 percentage points from currency translation.(1)
Gross margin in the EMEA region in the fourth quarter of 2010 was 52.1 percent compared to 51.9 percent reported in the fourth quarter of 2009. For the full year 2010, gross margin of 52.5 percent was down from 53.5 percent in 2009, due to a less favorable mix of product revenue versus services revenue, as well as a somewhat lower services margin, which was offset in part by higher product margin.
Asia Pacific / Japan (APJ)
Teradata generated $88 million of revenue in its APJ region in the fourth quarter of 2010, a 2 percent decrease from $90 million in the fourth quarter of 2009. The revenue comparison in the APJ region was benefited by 7 percentage points from currency translation. (1) For the full year 2010, revenue in the APJ region grew 10 percent to $328 million. Currency translation provided 8 percentage points of benefit in the full-year revenue comparison. (1)
Gross margin in the APJ region in the fourth quarter of 2010 was 43.2 percent, compared to 45.6 percent in the fourth quarter of 2009. Gross margin declined in the quarter due to lower consulting and product margins, offset in part by higher maintenance margin, as compared to the prior-year period. Gross margin in the APJ region for full year 2010 increased to 47.0 percent from 46.3 percent in 2009, due to a more favorable mix of product revenue versus services revenue.
Operating Income
Fourth-quarter operating income of $117 million improved from $106 million reported in the fourth quarter of 2009. In the quarter, higher revenue more than offset increased investment in selling, general and administrative expense as well as research and development expense.
Full-year operating income was $415 million in 2010, versus $338 million in 2009. For the full year, higher revenue and favorable gross margin more than offset the increased investment in selling, general and administrative expense and research and development expense.
Other Items
The effective income tax rate in the fourth quarter of 2010 was 27 percent, which compared to a 21 percent tax rate in the prior year period. The effective income tax rate for the full year 2010 was 27 percent, versus the 2009 tax rate of 24 percent. The higher rate, for both the fourth quarter and the full year, was due to a higher portion of Teradata's pre-tax income generated in the United States in 2010 as compared to 2009.
Cash Flow
During the fourth quarter of 2010, Teradata generated $148 million of cash from operating activities, compared to $91 million in the prior-year period. Capital expenditures in the fourth quarter totaled $21 million compared to $27 million in the fourth quarter of 2009. Teradata generated $127 million of free cash flow(cash from operations less capital expenditures and additions to capitalized software) (3) in the fourth quarter of 2010, versus $64 million in the same period in 2009, a 98 percent increase.
For the full year, cash from operating activities was $413 million, versus $455 million generated in 2009. Teradata's free cash flow for the full year was $330 million, versus $367 million generated in 2009.(3) The year-over-year decline in cash from operations and free cash flow reflects Teradata's successful reduction of its accounts receivable balance in 2009. Teradata's accounts receivable balance increased in 2010 due to higher revenue volumes.
Balance Sheet
Teradata ended 2010 with $883 million in cash and short-term investments, a $142 million increase from September 30, 2010, and a $222 million increase from December 31, 2009. During 2010, the company repurchased 3 million shares for approximately $88 million. In 2009, the company repurchased 7 million shares for approximately $174 million.
As of December 31, 2010, Teradata had $300 million available through a pre-arranged credit facility, however no funds were drawn from the credit facility. On January 21, 2011, Teradata completed its acquisition of Aprimo, funding the purchase price by borrowing $300 million from the existing credit facility and using approximately $225 million of cash.
2011 Outlook
In 2011, Teradata expects revenue to increase approximately 12 to 14 percent from the revenue it generated in 2010. Reflected in the company's 2011 revenue guidance is the loss of approximately 1 percentage point of revenue growth due to the required adjustment of Aprimo's deferred revenue which will negatively impact the revenue recognized from the Aprimo business in 2011. Teradata anticipates that currency fluctuations will benefit the year-over-year revenue comparison by approximately 2 percentage points, based on currency rates on January 31, 2011.
GAAP earnings per share in 2011 is expected to be in the $1.80 to $1.90 range. Excluding items associated with the Aprimo acquisition (which include the estimated purchase accounting adjustments, the amortization of acquisition-related intangible assets, and transaction and integration costs) as well as stock-based compensation expense, non-GAAP EPS for 2011 is expected to be in the $2.10 to $2.20 range.
2010 Fourth-Quarter Earnings Conference Call
A conference call is scheduled today at 8:30 a.m. (EST) to discuss the company's fourthquarter and full-year 2010 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.
- Fourth-quarter revenue grew 10 percent, up 10 percent in constant currency (1)
- 2010 full-year revenue grew 13 percent, up 12 percent in constant currency (1)
- Fourth-quarter GAAP EPS of $0.50, non-GAAP EPS of $ 0.53 (2)
- 2010 full-year GAAP EPS of $1.77, versus $1.46 in 2009
- 2010 full-year non-GAAP EPS of $1.86 versus $1.56 in 2009 (2)
- Fourth-quarter cash from operations of $148 million, versus $91 million in 2009
Teradata Corporation (NYSE: TDC) today reported revenue of $548 million for the quarter ended December 31, 2010, an increase of 10 percent from $496 million in 2009. For the full-year 2010, revenue was $1.936 billion, a 13 percent increase from $1.709 billion in 2009. The full-year revenue comparison included 1 percentage point of benefit from currency translation.(1)
Gross margin in the fourth quarter of 55.7 percent was down slightly from the 56.0 percent reported in the fourth quarter of 2009. The gross margin decline from the strong prioryear period resulted from the Americas and Asia Pacific Japan regions seeing a less favorable deal mix as compared to the prior-year period. Gross margin for full year 2010 was 56.2 percent, a meaningful increase from 54.9 percent in 2009. The increase in gross margin for the full year was driven primarily by improvements in product gross margin.
Teradata reported fourth-quarter net income under Generally Accepted Accounting Principles (GAAP) of $85 million, or $0.50 per diluted share, which compared to GAAP net income of $84 million, or $0.48 per diluted share, in the fourth quarter of 2009. For the full year 2010, Teradata reported GAAP net income of $301 million, or $1.77 per diluted share, which compared to GAAP net income of $254 million or $1.46 per diluted share, for the full year 2009.
Excluding stock-based compensation expense, non-GAAP EPS was $0.53 in the fourth quarter of 2010, versus $0.50 in the fourth quarter of 2009.(2) Excluding stock-based compensation expense for both full-year periods, as well as an impairment charge in the third quarter of 2009, non-GAAP earnings for full-year 2010 were $1.86 per diluted share, compared to $1.56 per diluted share in 2009.(2)
"Teradata had an excellent year in 2010, generating record financial results and adding the highest number of new customers since 2002. We continued to increase investments to advance our technology, services, solutions, partnerships and market coverage," said Mike Koehler, president and chief executive officer of Teradata Corporation.
"These are exciting times for Teradata and our customers. We are positioned better than ever to help more customers manage and extract value from the accelerating explosion of data and new data types, and help them gain competitive advantage in their respective markets."
Regional Operating Segment Results
Teradata reports its results in three regional operating segments.
Americas
Teradata generated $341 million of revenue in its Americas region in the fourth quarter of 2010, up 14 percent from $300 million in the fourth quarter of 2009. Currency translation benefited revenue growth in the Americas by 1 percentage point in the fourth quarter. (1) For the full year, revenue in the Americas region increased 19 percent to $1.166 billion in 2010, up from $981 million in 2009. The full-year revenue comparison in the Americas region also benefited by 1 percentage point from currency translation.
Gross margin in the Americas region in the fourth quarter of 2010 was 60.1 percent, down from 60.7 percent achieved in the fourth quarter of 2009. The gross margin decline from the strong prior-year period resulted from a less favorable deal mix as compared to the fourth quarter of 2009. Gross margin in the Americas region for full year 2010 was 60.2 percent, compared to 58.1 percent in 2009. The increase was due to improved product margin.
Europe, Middle East and Africa (EMEA)
Revenue in Teradata's EMEA region in the fourth quarter of 2010 was $119 million, up 12 percent from $106 million generated in the fourth quarter of 2009. Currency translation negatively impacted the revenue comparison in the EMEA region by 7 percentage points. (1) For the full year 2010, revenue in the EMEA region increased 3 percent to $442 million. However, the full-year revenue comparison was negatively impacted by 3 percentage points from currency translation.(1)
Gross margin in the EMEA region in the fourth quarter of 2010 was 52.1 percent compared to 51.9 percent reported in the fourth quarter of 2009. For the full year 2010, gross margin of 52.5 percent was down from 53.5 percent in 2009, due to a less favorable mix of product revenue versus services revenue, as well as a somewhat lower services margin, which was offset in part by higher product margin.
Asia Pacific / Japan (APJ)
Teradata generated $88 million of revenue in its APJ region in the fourth quarter of 2010, a 2 percent decrease from $90 million in the fourth quarter of 2009. The revenue comparison in the APJ region was benefited by 7 percentage points from currency translation. (1) For the full year 2010, revenue in the APJ region grew 10 percent to $328 million. Currency translation provided 8 percentage points of benefit in the full-year revenue comparison. (1)
Gross margin in the APJ region in the fourth quarter of 2010 was 43.2 percent, compared to 45.6 percent in the fourth quarter of 2009. Gross margin declined in the quarter due to lower consulting and product margins, offset in part by higher maintenance margin, as compared to the prior-year period. Gross margin in the APJ region for full year 2010 increased to 47.0 percent from 46.3 percent in 2009, due to a more favorable mix of product revenue versus services revenue.
Operating Income
Fourth-quarter operating income of $117 million improved from $106 million reported in the fourth quarter of 2009. In the quarter, higher revenue more than offset increased investment in selling, general and administrative expense as well as research and development expense.
Full-year operating income was $415 million in 2010, versus $338 million in 2009. For the full year, higher revenue and favorable gross margin more than offset the increased investment in selling, general and administrative expense and research and development expense.
Other Items
The effective income tax rate in the fourth quarter of 2010 was 27 percent, which compared to a 21 percent tax rate in the prior year period. The effective income tax rate for the full year 2010 was 27 percent, versus the 2009 tax rate of 24 percent. The higher rate, for both the fourth quarter and the full year, was due to a higher portion of Teradata's pre-tax income generated in the United States in 2010 as compared to 2009.
Cash Flow
During the fourth quarter of 2010, Teradata generated $148 million of cash from operating activities, compared to $91 million in the prior-year period. Capital expenditures in the fourth quarter totaled $21 million compared to $27 million in the fourth quarter of 2009. Teradata generated $127 million of free cash flow(cash from operations less capital expenditures and additions to capitalized software) (3) in the fourth quarter of 2010, versus $64 million in the same period in 2009, a 98 percent increase.
For the full year, cash from operating activities was $413 million, versus $455 million generated in 2009. Teradata's free cash flow for the full year was $330 million, versus $367 million generated in 2009.(3) The year-over-year decline in cash from operations and free cash flow reflects Teradata's successful reduction of its accounts receivable balance in 2009. Teradata's accounts receivable balance increased in 2010 due to higher revenue volumes.
Balance Sheet
Teradata ended 2010 with $883 million in cash and short-term investments, a $142 million increase from September 30, 2010, and a $222 million increase from December 31, 2009. During 2010, the company repurchased 3 million shares for approximately $88 million. In 2009, the company repurchased 7 million shares for approximately $174 million.
As of December 31, 2010, Teradata had $300 million available through a pre-arranged credit facility, however no funds were drawn from the credit facility. On January 21, 2011, Teradata completed its acquisition of Aprimo, funding the purchase price by borrowing $300 million from the existing credit facility and using approximately $225 million of cash.
2011 Outlook
In 2011, Teradata expects revenue to increase approximately 12 to 14 percent from the revenue it generated in 2010. Reflected in the company's 2011 revenue guidance is the loss of approximately 1 percentage point of revenue growth due to the required adjustment of Aprimo's deferred revenue which will negatively impact the revenue recognized from the Aprimo business in 2011. Teradata anticipates that currency fluctuations will benefit the year-over-year revenue comparison by approximately 2 percentage points, based on currency rates on January 31, 2011.
GAAP earnings per share in 2011 is expected to be in the $1.80 to $1.90 range. Excluding items associated with the Aprimo acquisition (which include the estimated purchase accounting adjustments, the amortization of acquisition-related intangible assets, and transaction and integration costs) as well as stock-based compensation expense, non-GAAP EPS for 2011 is expected to be in the $2.10 to $2.20 range.
2010 Fourth-Quarter Earnings Conference Call
A conference call is scheduled today at 8:30 a.m. (EST) to discuss the company's fourthquarter and full-year 2010 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.
