Breaking Down Teradata Corporation (TDC) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and looking for a clear picture of a company's financial stability? What if you could quickly assess a company's revenue trends, profitability, and debt management to make informed decisions? Let's dive into Teradata Corporation (TDC) and explore its financial performance in 2024, where the company's total revenue reached $1.750 billion, with recurring revenue accounting for $1.479 billion, or 85% of the total. Was Teradata able to maintain a healthy balance sheet, managing $480.0 million in debt against $420.0 million in cash? How did key metrics like earnings per share and cash flow perform, and what do they suggest about Teradata's financial future? Read on to discover key insights into Teradata's financial health and what it means for investors.

Teradata Corporation (TDC) Revenue Analysis

Teradata Corporation's revenue streams are composed of various elements, reflecting its position in data analytics and related services. A detailed look into these streams provides insights into the company's financial health and strategic direction.

Teradata's revenue is primarily derived from:

• Subscription revenues: These include cloud subscriptions, software subscriptions, and support subscriptions.
• Perpetual software licenses, hardware and maintenance: Although declining, these contribute to the overall revenue.
• Consulting and related services: Services related to installing, maintaining, and optimizing the Teradata platform.

For the fiscal year 2024, Teradata reported a revenue of $1.791 billion, which represents a 2% decrease compared to the $1.827 billion reported in the previous year. However, public cloud ARR (Annual Recurring Revenue) increased 35% year-over-year, reaching $673 million. Total ARR was $1.484 billion, up 6% year-over-year. The company's revenue mix is shifting towards recurring revenue streams like cloud and software subscriptions.

A breakdown of Teradata's revenue by segment and geography provides additional context:

In terms of business segments, Teradata's revenue can be categorized as follows:

• Americas: This region remains a significant contributor to Teradata's revenue.
• Europe, Middle East, and Africa (EMEA): EMEA is another key region for Teradata.
• Asia Pacific and Japan (APJ): The APJ region is also an important market.

Analyzing the year-over-year revenue growth rate, Teradata faces challenges in achieving consistent growth across all segments. The company's strategic focus on transitioning to cloud-based solutions is aimed at driving future revenue growth and improving overall profitability.

Here's a table summarizing Teradata's financial performance metrics based on the latest available data:

Significant changes in revenue streams include the increasing importance of cloud-based subscriptions and the declining contribution of perpetual software licenses. This shift reflects the broader trend in the software industry towards cloud computing and subscription-based business models. For additional insights into Teradata's strategic objectives, see Mission Statement, Vision, & Core Values of Teradata Corporation (TDC).

Teradata Corporation (TDC) Profitability Metrics

Analyzing Teradata Corporation's (TDC) financial health requires a close examination of its profitability metrics, which provide insights into the company's ability to generate earnings relative to its revenue, assets, and equity. Key metrics include gross profit, operating profit, and net profit margins. These figures, when tracked over time and compared against industry benchmarks, can reveal important trends and efficiencies in Teradata's operational performance.

Here's a breakdown of Teradata's profitability, based on the latest available financial data:

• Gross Profit: Gross profit is the revenue remaining after deducting the cost of goods sold (COGS). It indicates how efficiently a company manages its production costs.
• Operating Profit: Operating profit, also known as earnings before interest and taxes (EBIT), is calculated by subtracting operating expenses from gross profit. This metric reflects the profitability of a company's core operations, excluding financial leverage and tax considerations.
• Net Profit: Net profit is the income that remains after all expenses, including interest, taxes, and preferred stock dividends, have been deducted from total revenue. It represents the actual profit available to shareholders.

To better understand Teradata's profitability, consider the following key performance indicators:

• Gross Profit Margin: This ratio is calculated by dividing gross profit by total revenue. It shows the percentage of revenue that exceeds the cost of goods sold.
• Operating Profit Margin: This ratio is calculated by dividing operating profit by total revenue. It indicates the percentage of revenue remaining after covering operating expenses.
• Net Profit Margin: Calculated by dividing net profit by total revenue, this ratio indicates how much net income a company generates for every dollar of revenue.

Analyzing these margins over several periods can reveal trends in Teradata's profitability. For example, an increasing gross profit margin might indicate improved cost management or pricing strategies, while a declining net profit margin could signal rising operating expenses or increased tax burdens. Comparing Teradata's profitability ratios with industry averages provides context. If Teradata's margins are consistently higher than its peers, it may indicate a competitive advantage. Conversely, lower margins might suggest areas for improvement.

Operational efficiency is critical to profitability. Effective cost management and optimized gross margin trends can significantly impact the bottom line. Teradata's ability to control costs, streamline operations, and improve its gross margin directly affects its overall financial health. Investors should monitor these trends closely to assess the company's long-term viability and potential for growth.

Below is a hypothetical table illustrating how Teradata's profitability metrics might look over a three-year period. Please note that the data is purely for illustrative purposes and should not be considered actual financial data.

For more in-depth analysis, you can also check: Breaking Down Teradata Corporation (TDC) Financial Health: Key Insights for Investors

Teradata Corporation (TDC) Debt vs. Equity Structure

Understanding Teradata Corporation's (TDC) financial health involves analyzing its debt and equity structure. This provides insights into how the company finances its operations and growth. Let’s delve into the specifics of Teradata's debt levels, its debt-to-equity ratio, and how it manages its financing strategies.

Teradata's approach to balancing debt and equity is crucial for maintaining financial stability and supporting its strategic initiatives. Here’s a detailed look:

Overview of Teradata's Debt Levels

Teradata's debt portfolio includes both long-term and short-term obligations, reflecting its financing strategies and operational needs. As of December 31, 2024, Teradata's financial reports indicate:

• Long-term debt: $496 million
• Short-term debt: $4 million

These figures are essential for investors to gauge Teradata’s leverage and its ability to meet its financial commitments.

Debt-to-Equity Ratio and Industry Comparison

The debt-to-equity ratio is a critical metric for evaluating a company's financial leverage. Teradata's debt-to-equity ratio can provide insights into its risk profile compared to industry standards. As of 2024, Teradata's debt-to-equity ratio is approximately 0.74. This ratio is calculated by dividing the total liabilities by the total equity. A ratio of 0.74 suggests that Teradata uses a moderate amount of debt relative to equity. When compared to the software and IT services industry, this ratio is within a reasonable range, indicating a balanced approach to financial leverage.

Recent Debt Issuances, Credit Ratings, or Refinancing Activity

Recent activities in debt management can significantly impact Teradata’s financial position. Recent activities include:

• In February 2024, Teradata issued $500 million in senior unsecured notes due in 2029, with an interest rate of 5.00%.
• The proceeds were used to refinance existing debt and for general corporate purposes.
• Credit ratings agencies, such as Moody's and Standard & Poor's, have assigned Teradata a credit rating of Ba1 and BB+, respectively, indicating a stable outlook.

Balancing Debt Financing and Equity Funding

Teradata strategically balances debt financing and equity funding to optimize its capital structure. Here’s how they do it:

• Debt Financing: Teradata uses debt to fund specific projects, refinance existing obligations, and manage its capital structure efficiently.
• Equity Funding: The company also relies on equity funding through retained earnings and stock issuances to maintain a healthy balance and reduce financial risk.

The following table summarizes key financial data related to Teradata's debt and equity structure:

Understanding Teradata's debt and equity structure is essential for investors. The company’s strategic approach to balancing debt and equity ensures financial stability and supports its long-term growth objectives. For more insights into Teradata's strategic vision, explore Mission Statement, Vision, & Core Values of Teradata Corporation (TDC).

Teradata Corporation (TDC) Liquidity and Solvency

Here's an analysis of Teradata Corporation's liquidity, focusing on key financial ratios and cash flow trends. In 2024, Teradata faced a mixed financial landscape, with notable strengths and areas of concern that are crucial for investors to understand. Breaking Down Teradata Corporation (TDC) Financial Health: Key Insights for Investors

Assessing Teradata Corporation's Liquidity

Liquidity ratios provide insights into a company's ability to meet its short-term obligations. Here's how Teradata's liquidity positions look:

• Current Ratio: Teradata's current ratio for the quarter that ended in December 2024 was 0.81. A current ratio of less than 1 may indicate potential difficulties in meeting short-term obligations.
• Quick Ratio: The quick ratio, which excludes inventories from current assets, was 0.79 as of December 2024. This suggests that Teradata might face challenges in covering immediate liabilities with its most liquid assets.

These ratios suggest that Teradata may have some difficulty meeting its current obligations. However, a low ratio isn't always a critical problem, especially if the company has strong long-term prospects and can borrow against those prospects.

Working Capital Trends

Analyzing working capital trends helps to understand the efficiency of a company's short-term operations. Teradata's net current asset value, which is a measure of working capital, was -$822 million as of December 2024. This indicates a working capital deficit, meaning that its current liabilities exceed its current assets.

Cash Flow Statements Overview

Cash flow statements provide a picture of how cash moves in and out of a company, categorized into operating, investing, and financing activities.

• Operating Activities: In 2024, Teradata's cash from operating activities was $303 million, a decrease from $375 million in 2023.
• Investing Activities: Details on cash flow from investing activities weren't found in the search results.
• Financing Activities: Teradata used approximately $215 million for repurchases of company common stock during 2024.
• Free Cash Flow: Teradata's free cash flow for the 2024 fiscal year was $277 million. For 2025, Teradata projects free cash flow between $250 million and $280 million.

Potential Liquidity Concerns and Strengths

While Teradata's liquidity ratios and working capital position raise concerns, there are also underlying strengths:

• Strengths: Teradata's management highlighted that in 2024, they took decisive actions to improve execution. The company's recurring revenue remains strong, accounting for 85% of total revenue in 2024, amounting to $1.479 billion.
• Concerns: The company's current ratio of 0.81 indicates potential difficulty in meeting its current obligations.

Here is a table summarizing key liquidity ratios for Teradata:

In conclusion, Teradata's liquidity position in 2024 presents a mixed picture. While the company has strong recurring revenues and has taken actions to improve execution, its liquidity ratios and working capital deficit indicate potential challenges in meeting short-term obligations. Investors should monitor these trends closely, especially the company's ability to generate free cash flow and manage its working capital effectively. The company ended 2024 with $420 million in cash and cash equivalents.

Teradata Corporation (TDC) Valuation Analysis

Assessing whether Teradata Corporation (TDC) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment.

Here's a breakdown of essential valuation metrics:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of Teradata's earnings.
• Price-to-Book (P/B) Ratio: The P/B ratio compares Teradata's market capitalization to its book value of equity, offering insights into whether the stock is trading at a premium or discount to its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio assesses Teradata's total value (including debt) relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA), providing a more comprehensive valuation measure than P/E alone.

Analyzing these ratios in isolation is not enough. It’s important to compare them against industry averages and Teradata's historical values to get a sense of relative valuation. For instance, a high P/E ratio might suggest overvaluation unless justified by high growth expectations.

Stock price trends provide a visual representation of market sentiment. Examining Teradata's stock performance over the last 12 months (or longer) can reveal important patterns. For example:

• Uptrend: A consistent upward trajectory might indicate growing investor confidence.
• Downtrend: A sustained decline could signal concerns about the company's prospects.
• Volatility: Significant price swings might reflect uncertainty or speculative trading.

While Teradata does not currently offer a dividend yield, it's still important to consider how the company uses its earnings and cash flow. Share buybacks, for example, can be a way of returning value to shareholders. For insight into the company's strategic direction, explore: Mission Statement, Vision, & Core Values of Teradata Corporation (TDC).

What do financial analysts think about Teradata's stock? Their consensus ratings—typically categorized as 'buy,' 'hold,' or 'sell'—reflect their overall outlook. These ratings are usually accompanied by price targets, which represent analysts' expectations for the stock's future value. Here is a general overview of what these ratings typically mean:

• Buy: Analysts believe the stock is undervalued and has the potential to rise in price.
• Hold: Analysts think the stock is fairly valued and expect it to perform in line with the market.
• Sell: Analysts consider the stock overvalued and anticipate a decline in price.

Keep in mind that analyst opinions are not guarantees. They are based on research and models that can be influenced by various factors. However, tracking consensus ratings can provide a valuable gauge of market sentiment.

Teradata Corporation (TDC) Risk Factors

Teradata Corporation (TDC) faces a variety of risks that could significantly impact its financial health. These risks span internal operational challenges and external market dynamics. Understanding these factors is crucial for investors assessing the company's stability and future prospects. Exploring Teradata Corporation (TDC) Investor Profile: Who’s Buying and Why?

Here's an overview of key risks:

• Industry Competition: The data analytics and cloud services market is intensely competitive. Teradata competes with large, established companies like Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform, and IBM, as well as numerous smaller, specialized firms. This competition can pressure pricing, reduce market share, and require significant investments in research and development to stay competitive.
• Technological Changes: The rapid pace of technological change in the data analytics field poses a significant risk. Teradata must continually innovate and adapt to new technologies, such as artificial intelligence (AI) and machine learning (ML), to remain relevant. Failure to do so could render its products and services obsolete.
• Economic Conditions: Economic downturns can reduce enterprise spending on data analytics solutions, impacting Teradata's revenue. Businesses may delay or cancel projects, switch to lower-cost alternatives, or face financial difficulties that affect their ability to pay for Teradata's services.
• Regulatory and Compliance Risks: Teradata operates in a global environment with varying and evolving regulatory requirements, including data privacy, security, and compliance laws. Compliance with regulations such as GDPR (General Data Protection Regulation) and CCPA (California Consumer Privacy Act) can be costly and complex. Failure to comply can result in substantial fines and reputational damage.

Operational, financial, and strategic risks are often highlighted in Teradata's earnings reports and filings. These include:

• Transition to Cloud-Based Services: Teradata is transitioning from traditional on-premises data warehousing to cloud-based solutions. This transition involves risks such as cannibalization of existing revenue streams, challenges in migrating customers to the cloud, and the need to develop new cloud-native products and services.
• Data Security and Privacy: As a data analytics provider, Teradata handles large volumes of sensitive data. Data breaches, cyberattacks, or failures to protect customer data can result in significant financial losses, legal liabilities, and reputational harm.
• Financial Performance: Fluctuations in revenue, profitability, and cash flow can impact Teradata's ability to invest in growth initiatives, return capital to shareholders, and meet its financial obligations. Factors such as sales cycles, contract renewals, and customer attrition can influence financial performance.
• Strategic Execution: Teradata's success depends on its ability to execute its strategic plans effectively. This includes product development, sales and marketing, partnerships, and acquisitions. Failure to execute these strategies can hinder growth and erode shareholder value.

Mitigation strategies and plans that Teradata may employ to address these risks include:

• Investment in Innovation: Teradata invests in research and development to develop innovative products and services that meet evolving customer needs. This includes cloud-native solutions, AI-powered analytics, and industry-specific applications.
• Strengthening Cybersecurity: Teradata implements robust cybersecurity measures to protect customer data and prevent data breaches. This includes encryption, access controls, security monitoring, and incident response plans.
• Diversifying Revenue Streams: Teradata diversifies its revenue streams by offering a range of products and services, including cloud-based solutions, software licenses, consulting services, and support. This reduces reliance on any single product or market.
• Strategic Partnerships: Teradata forms strategic partnerships with other technology companies, such as cloud providers and software vendors, to expand its reach and enhance its offerings. These partnerships can provide access to new markets, technologies, and customers.
• Compliance Programs: Teradata establishes compliance programs to ensure adherence to regulatory requirements, such as data privacy laws and industry standards. This includes policies, procedures, training, and audits.

Below is a table summarizing key risk categories and potential mitigation strategies:

Teradata Corporation (TDC) Growth Opportunities

Teradata Corporation's future growth prospects are tied to several key factors, including product innovation, strategic market expansions, acquisitions, and its competitive positioning. The company's focus on providing cloud-based data analytics and hybrid multi-cloud offerings is central to its growth strategy.

Key growth drivers for Teradata include:

• Product Innovations: Teradata is investing in its Teradata Vantage platform, enhancing its analytics capabilities and expanding its integration with various cloud ecosystems.
• Market Expansions: Focusing on expanding its presence in key geographic regions and industries, particularly those undergoing digital transformation.
• Strategic Partnerships: Collaborations with other technology providers to enhance its offerings and reach new customers.

Revenue growth projections and earnings estimates for Teradata are influenced by its ability to capture a larger share of the data analytics market. According to the Teradata's 2024 report, the company anticipates continued growth in recurring revenue streams, driven by increased adoption of its cloud-based services. Actual future revenue and earnings may vary depending on market conditions and the company's execution of its strategic initiatives.

Strategic initiatives and partnerships that may drive future growth:

• Cloud-First Strategy: Teradata's transition to a cloud-first approach is expected to drive significant growth. By offering flexible deployment options, including public, private, and hybrid cloud environments, Teradata aims to attract a broader range of customers.
• Partnerships and Alliances: Forming strategic alliances with major cloud providers and technology companies to expand its market reach and enhance its solution offerings.

Teradata's competitive advantages that position the company for growth:

• Scalability and Performance: Teradata's platform is known for its ability to handle large volumes of data and complex analytical workloads, providing a competitive edge in the enterprise data analytics market.
• Industry-Specific Solutions: The company offers tailored solutions for various industries, enhancing its ability to meet specific customer needs and differentiate itself from competitors.

A SWOT analysis provides insights into Teradata's Strengths, Weaknesses, Opportunities, and Threats:

Explore more about Teradata Corporation and its investors: Exploring Teradata Corporation (TDC) Investor Profile: Who’s Buying and Why?