Exhibit 99.1
image0a11.jpg
NEWS RELEASE


Teradata Reports Better Than Expected 2017 Results

Better than expected fourth quarter revenue of $626 million, full-year revenue was $2.156 billion(1) 
GAAP EPS for the fourth quarter included a $126 million net charge related to U.S. tax reform
Fourth quarter and full-year non-GAAP EPS(2) and cash flow(3) exceeded expectations
Teradata Board increases authorization for share repurchases $310 million to $500 million

ATLANTA - February 8, 2018 -- Teradata Corp. (NYSE: TDC) reported revenue of $626 million for the quarter ended December 31, 2017, the same as the $626 million reported in the fourth quarter of 2016. Full-year 2017 revenue was $2.156 billion, which exceeded the company’s guidance range.
Due to the recent enactment of The Tax Cuts and Jobs Act of 2017 (Tax Reform Act), Teradata reported a net loss under U.S. Generally Accepted Accounting Principles (GAAP) of $(74) million in the fourth quarter, or $(0.61) per share, which compared to net income of $58 million, or $0.44 per diluted share, in the fourth quarter of 2016. For the full-year, including the impact of the charge related to the Tax Reform Act, Teradata reported a net loss of $(67) million, or $(0.53) per share, which compared to $125 million, or $0.95 per diluted share in 2016.
Non-GAAP net income in the fourth quarter of 2017, excluding the tax-related charge, stock-based compensation expense, and the special items described in footnote #2, was $72 million, or $0.58 per diluted share. Fourth quarter 2016 non-GAAP net income was $92 million, or $0.70 per diluted share, which also excluded stock-based compensation expense, and special items.(2) Full-year 2017 non-GAAP net income was $173 million, or $1.35 per diluted share, compared to $338 million, or $2.57 per diluted share in 2016.(2) The decline in 2017 non-GAAP earnings per share for the fourth quarter and full-year was largely due to increased investments related to the company’s transformation initiatives as well as revenue from subscription-based transactions being recognized over time, versus upfront as was largely the case for Teradata’s transactions in 2016.
In addition, customers continued their preference for Teradata’s subscription and cloud offerings in the fourth quarter. During the full-year 2017, $255 million of equivalent value transactions occurred via Teradata’s subscription and cloud offerings, more than the high-end of the company’s expectations when it began the year.  
" We are pleased to have delivered a strong fourth quarter, exceeding our guidance for revenue, EPS, and cash flow, while also driving increased utilization of our cloud offerings and subscription licenses,” said Vic Lund, President and Chief Executive Officer, Teradata. “Our success is grounded in the unrivaled combination of our outstanding technology and consulting, our skilled and talented people, and our





winning strategy. I am very proud of the Teradata team for their terrific performance in the fourth quarter and look forward to a great year in 2018.”
Gross Margin
For fourth quarter 2017, gross margin was 48.9 percent, versus 50.3 percent for the fourth quarter 2016 and for the full-year, gross margin was 47.4 percent, versus 51.2 percent reported in 2016.
On a non-GAAP basis, excluding stock-based compensation expense and special items, gross margin for the fourth quarter 2017 was 51.8 percent, versus 53.7 percent in the fourth quarter of 2016.(2) For the full-year 2017, non-GAAP gross margin was 51.5 percent, versus 55.1 percent in 2016.(2) The decrease in non-GAAP gross margin for the quarter and full-year resulted from a higher mix of services revenue and lower services margin due to investments related to Teradata’s transformation.
Operating Income
Operating income was $59 million in the fourth quarter of 2017 compared to $98 million of operating income in the fourth quarter of 2016. Full-year GAAP operating income was $64 million in 2017, versus $232 million in 2016.
On a non-GAAP basis, excluding stock-based compensation expense and special items, operating income was $91 million in the fourth quarter of 2017, versus $131 million in the fourth quarter of 2016.(2) Full-year 2017 non-GAAP operating income was $246 million, versus $474 million in 2016.(2) The year-over-year decrease in non-GAAP operating income was due to investments related to Teradata’s transformation, and a higher mix of subscription-based transactions.
Income Taxes
The enactment of the Tax Reform Act resulted in a net tax charge of $126 million in the fourth quarter for GAAP reporting purposes. This charge is comprised of $145 million in tax expense related to the mandatory deemed repatriation of certain foreign earnings and profits, which the company intends to pay over an eight-year period beginning in 2018, offset by $19 million of tax benefit, a majority of which related to the re-measurement of net deferred tax liabilities arising from the new lower 21 percent corporate tax rate enacted in the legislation. As a result, Teradata’s reported GAAP tax rate, which includes the tax charge, was 229.8 percent for the fourth quarter and 215.5 percent for the full-year. Excluding this tax charge, Teradata’s non-GAAP tax rate was 19.1 percent in the fourth quarter 2017 versus 24.0 percent in the fourth quarter of 2016,(2) and the full-year 2017 non-GAAP tax rate was 27.9 percent as compared to 26.0 percent in 2016.(2) The increase in the non-GAAP effective tax rate was a result of the mix of foreign versus domestic taxable earnings and the resulting rate impact of discrete tax items period-over-period.
Teradata continues to analyze the effects of the Tax Reform Act on its future income tax rate, but currently estimates that its 2018 tax rate to be approximately 20 percent.
Cash Flow
Teradata generated $23 million of cash from operating activities in the fourth quarter of 2017, compared to $52 million in the same period in 2016. For the full-year 2017, Teradata generated $324 million of cash from operating activities, compared to $446 million in 2016.





In the fourth quarter of 2017, Teradata generated $2 million of free cash flow (cash from operating activities less capital expenditures and additions to capitalized software), compared to $20 million in the fourth quarter of 2016.(3) For the full-year 2017, free cash flow was $237 million, compared to $328 million in 2016(3). The year-over-year decrease in cash from operating activities and free cash flow was mainly due to the company’s transition to subscription-based purchasing options as well as investments to support the company’s transformation.
Balance Sheet
Teradata ended the fourth quarter 2017 with $1.089 billion in cash, which was largely held outside the United States. During 2017, Teradata used $351 million of cash to repurchase approximately 11.5 million shares.
As of December 31, 2017, Teradata had total debt of approximately $780 million, consisting of $540 million outstanding under a term loan and $240 million in borrowings under its $400 million revolving credit facility.
Teradata plans to repatriate a majority of its offshore cash as a result of the enactment of Tax Reform Act. The company intends to use repatriated funds to pay down its revolving credit facility, repurchase shares and retain the remainder for general corporate purposes.
On February 5, 2018, Teradata's Board of Directors authorized an additional $310 million to be utilized to repurchase Teradata common stock under its open market share repurchase program. Teradata now has a total of approximately $500 million authorized for share repurchases under this share repurchase program. The stock is anticipated to be repurchased periodically on an ongoing basis in open market transactions at management’s discretion, in accordance with applicable securities rules regarding issuer repurchases. The increased share repurchase authorization is effective immediately and the program now expires on February 5, 2021.
Guidance
Revenue in 2018 is expected to be approximately $2.15 billion to $2.20 billion, but will be highly influenced by the extent and pace Teradata’s customers shift to subscription-based purchasing options. Revenue in the first quarter of 2018 is expected to be in the $490 million to $500 million range.
Full-year 2018 GAAP earnings per share is expected to be $0.67 to $0.77. On a non-GAAP basis, which excludes stock-based compensation expense and other special items, earnings per share is expected to be in the $1.50 to $1.60 range(2).
GAAP loss per share in the first quarter of 2018 is expected to be in the $(0.08) to $(0.05) range. Non-GAAP earnings per share in the first quarter is expected to be in the $0.13 to $0.16 range(2).
Earnings Conference Call
A conference call is scheduled today at 8:30 a.m. (ET) to discuss the company’s fourth quarter and full-year 2017 results. Access to the conference call, as well as a replay of the call, is available on Teradata’s website at investor.teradata.com.





Supplemental Financial Information
Additional information regarding Teradata’s operating results is provided below as well as on the Investor Relations page of Teradata’s website.
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 fluctuation schedule on the Investor Relations page of the company’s web site at investor.teradata.com, which is used to determine revenue on a constant currency (“CC”) basis.
Revenue Performance
(in millions)
 
 
For the Three Months Ended December 31
 
 
2017
 
2016
 
% Change as Reported
 
% Change in Constant Currency
Data and Analytics
 
 
 
 
 
 
 
 
  Americas
 
$365
 
$397
 
(8
)%
 
(8
)%
  International
 
261

 
229

 
14
 %
 
8
 %
Total Data and Analytics
 
$626
 
$626
 
0
 %
 
(2
)%
Marketing Applications
 

 

 
NA

 
NA

Total Revenue
 
$626
 
$626
 
0
 %
 
(2
)%
 
 
 
 
 
For the Twelve Months Ended December 31
 
 
2017
 
2016
 
% Change as Reported
 
% Change in Constant Currency
Data and Analytics
 
 
 
 
 
 
 
 
  Americas
 
$1,195
 
$1,334
 
(10
)%
 
(11
)%
  International
 
961

 
919

 
5
 %
 
5
 %
Total Data and Analytics
 
$2,156
 
$2,253
 
(4
)%
 
(4
)%
Marketing Application
 

 
69

 
(100
)%
 
(100
)%
Total Revenue
 
$2,156
 
$2,322
 
(7
)%
 
(7
)%
 
 
 
 
 
 
 
 
 

2.
Teradata report its results in accordance with GAAP. However, as described below, the company believes that certain non-GAAP measures (such as non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, and non-GAAP earnings per diluted share, or EPS, all of which exclude certain items, sold businesses, (as well as free cash flow) are useful for investors. Our non-GAAP measures are not meant to be considered in isolation or as substitutes for, or superior to, results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.
 
The following tables reconcile Teradata’s actual and projected results and EPS under GAAP to the company’s actual and projected non-GAAP results and EPS for the periods presented, which exclude certain specified items. Our management internally uses supplemental non-GAAP financial measures, such as gross profit, operating income, net income and EPS, excluding certain items, to understand, manage and evaluate our business and support operating decisions on a regular basis. The company believes such non-GAAP financial measures (1) provide useful information to investors regarding the underlying business trends and performance of the company’s ongoing operations, (2) are useful for period-over-period comparisons of such operations and results, that may be more easily compared to peer companies and allow investors a view of the company’s operating results excluding the tax expense charge related to U.S. tax reform, stock-based compensation expense, special items and transactions such as sold businesses, including the Marketing Applications business which was sold on July 1, 2016, (3) provide useful information to management and investors regarding present and future business trends, and (4) provide consistency and comparability with past reports and projections of future results.






Teradata’s reconciliation of GAAP to non-GAAP results included in this release.

(in millions, except per share data)
 
 
For the Three Months
 
 
 
For the Twelve Months
 
 
Ended December 31
Ended December 31
Gross Margin:
 
2017
 
2016
 
%Chg
as Rpt’d
 
2017
 
2016
 
%Chg as Rpt’d
 GAAP Gross Profit
 
$306
 
$315
 
(3
)%
 
$1,022
 
$1,188
 
(14
)%
   % of Revenue
 
48.9
 %
 
50.3
%
 
 
 
47.4
 %
 
51.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Excluding:
 
 
 
 
 
 
 
 
 
 
 
 
  Stock-based compensation expense
 
3

 
3

 
 
 
13

 
14

 
 
  Amortization of acquisition-related
     intangible assets
 

 

 
 
 

 
2

 
 
  Acquisition, integration and reorganization
    related costs
 
1

 
3

 
 
 
7

 
9

 
 
  Capitalized Software ASC 985-20
 
14

 
15

 
 
 
68

 
62

 
 
  Marketing Application gross profit
 

 

 
 
 

 
(34
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Non-GAAP Gross Profit*
 
$324
 
$336
 
(4
)%
 
$1,110
 
$1,241
 
(11
)%
   % of Revenue
 
51.8
 %
 
53.7
%
 
 
 
51.5
 %
 
55.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income:
 
 
 
 
 
 
 
 
 
 
 
 
 GAAP Operating Income
 
$59
 
$98
 
(40
)%
 
$64
 
$232
 
(72
)%
   % of Revenue
 
9.4
 %
 
15.7
%
 
 
 
3.0
 %
 
10.0
%
 
 
  Excluding:
 
 
 
 
 
 
 
 
 
 
 
 
  Stock-based compensation expense
 
17

 
12

 
 
 
68

 
61

 
 
  Amortization of acquisition-related
     intangible assets
 
3

 
1

 
 
 
8

 
9

 
 
  Acquisition, integration and reorganization
    related costs
 
(2
)
 
15

 
 
 
38

 
71

 
 
  Impairment of goodwill and other assets
 

 

 
 
 

 
80

 
 
  Capitalized Software ASC 985-20
 
14

 
5

 
 
 
68

 
3

 
 
  Marketing Applications operating loss *
 

 

 
 
 

 
18

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Non-GAAP Operating Income
 
$91
 
$131
 
(31
)%
 
$246
 
$474
 
(48
)%
   % of Revenue
 
14.5
 %
 
20.9
%
 
 
 
11.4
 %
 
21.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (Loss)/Income:
 
 
 
 
 
 
 
 
 
 
 
 
 GAAP Net (Loss)/Income
 
$(74)
 
$58
 
(228
)%
 
$(67)
 
$125
 
(154
)%
   % of Revenue
 
(11.8
)%
 
9.3
%
 
 
 
(3.1
)%
 
5.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Excluding:
 
 
 
 
 
 
 
 
 
 
 
 
  Stock-based compensation expense
 
17

 
12

 
 
 
68

 
61

 
 
  Amortization of acquisition-related
     intangible assets
 
3

 
1

 
 
 
8

 
9

 
 
  Acquisition, integration and reorganization
    related costs
 
(2
)
 
12

 
 
 
38

 
65

 
 
  Impairment of goodwill and other assets
 

 

 
 
 

 
80

 
 
  Capitalized Software ASC 985-20
 
14

 
5

 
 
 
68

 
3

 
 
  Marketing Applications net loss *
 

 

 
 
 

 
18

 
 
Income tax adjustments**
 
114

 
4

 
 
 
58

 
(23
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Non-GAAP Net Income
 
$72
 
$92
 
(22
)%
 
$173
 
$338
 
(49
)%
   % of Revenue
 
11.5
 %
 
14.7
%
 
 
 
8.0
 %
 
15.0
%
 
 






 
 
Three Months Ended December 31
 
Twelve Months Ended December 31
 
Full-Year
 
Full-Year
Earnings Per Share:
 
2017
 
2016
 
2017
 
2016
 
2018 Q1 Guidance
 
2018 FY Guidance
 GAAP Earnings/(Loss) Per Share
 
$(0.61)
 
$0.44
 
$(0.53)
 
$0.95
 
$(0.08) - $(0.05)

 
$0.67 - $0.77

 
 
 
 
 
 
 
 
 
 
 
 
 
  Excluding:
 
 
 
 
 
 
 
 
 
 
 
 
  Stock-based compensation expense
 
0.14

 
0.09

 
0.54

 
0.46

 
0.13

 
0.59

  Amortization of acquisition-related
     intangible assets
 
0.02

 
0.01

 
0.06

 
0.07

 
0.01

 
0.05

  Acquisition, integration and reorganization
    related costs
 
(0.02
)
 
0.09

 
0.30

 
0.49

 

 
0.01

  Impairment of goodwill and other assets
 

 

 

 
0.61

 

 

  Capitalized Software ASC 985-20
 
0.12

 
0.04

 
0.54

 
0.02

 
0.12

 
0.39

  Marketing Applications loss per share *
 

 

 

 
0.14

 

 

  Income tax adjustments**
 
0.94

 
0.03

 
0.46

 
(0.17
)
 
(0.05
)
 
(0.21
)
   Impact of dilution***
 
(0.01
)
 

 
(0.02
)
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 Non-GAAP Diluted Earnings Per Share
 
$0.58
 
$0.70
 
$1.35
 
$2.57
 
$0.13 - $0.16

 
$1.50 - $1.60



*Represents the results of operations of Teradata’s Marketing Applications business, which is an adjustment to arrive at non-GAAP results due to sale of this business on July 1, 2016.

** Represents the income tax effect of the pre-tax adjustments to reconcile GAAP to Non-GAAP income based on the applicable jurisdictional statutory tax rate of the underlying item. Included in the income tax adjustments for fourth quarter of 2017 is an adjustment for $126 million for the enactment of The Tax Cuts and Jobs Act of 2017. Including the income tax effect assists investors in understanding the tax provision associated with those adjustments and the effective tax rate related to the underlying business and performance of the company’s ongoing operations. As a result of these adjustments, the company’s non-GAAP effective tax rate for the fourth quarter of 2017 was 19.1% and 24.0% in the fourth quarter of 2016.
    
*** Represents the impact to earnings per share as a result of moving from basic to diluted shares.

3.
As described below, the company believes that free cash flow is a useful non-GAAP measure for investors. 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 and 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 the company’s 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. This non-GAAP measure is not meant to be considered in isolation, as a substitute for, or superior to, results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.


 
 
For the Three Months Ended December 31
 (in millions)
 
For the Twelve Months Ended December 31
(in millions)
 
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
Cash provided by operating activities (GAAP)
 
$23
 
$52
 
$324
 
$446
   Less capital expenditures for:
 
 
 
 
 
 
 
 
      Expenditures for property and equipment
 
(19
)
 
(21
)
 
(78
)
 
(53
)
      Additions to capitalized software
 
(2
)
 
(11
)
 
(9
)
 
(65
)
           Total capital expenditures
 
(21
)
 
(32
)
 
(87
)
 
(118
)
Free Cash Flow (non-GAAP measure)
 
$2
 
$20
 
$237
 
$328








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 upon 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 global economic environment 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 analytics business, including the increased pressure on price/performance for data analytics solutions and changes in customer’s buying patterns; fluctuations in our operating results, unanticipated delays or accelerations in our sales cycles and the difficulty of accurately estimating revenues, particularly the pace and extent to which customers shift from perpetual licenses to subscription-based licenses; failure to realize the anticipated benefits of our business transformation program, divestitures, senior management changes, or other restructuring and cost saving initiatives; risks inherent in operating in foreign countries, including the impact of economic, political, legal, regulatory, compliance, cultural, foreign currency fluctuations and other conditions abroad (including Brexit); the timely and successful 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 as well as the reliability, quality, security and operability of new products because of the difficulty and complexity associated with their testing and production; tax rates and the impact of recent tax reform legislation; turnover of workforce and the ability to attract and retain skilled employees; availability and successful exploitation of new acquisition and alliance opportunities; our ability to execute integration plans for newly acquired entities, including the possibility that expected synergies and operating efficiencies may not be achieved, that such integration efforts may be more difficult, time-consuming or costly than expected, and that operating costs, customer loss and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) may be greater than expected following the transaction; recurring revenue may decline or fail to be renewed; changes in Generally Accepted Accounting Principles (GAAP) and the resulting impact, if any, on the company’s accounting policies; impact on our business and financial reporting from changes in accounting rules, including Topic ASC 606; continued efforts to establish and maintain best-in-class and secure 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, including its annual report on Form 10-K and subsequent quarterly reports on Forms 10-Q, as well as 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.


About Teradata
Teradata empowers companies to achieve high-impact business outcomes. Our focus on business solutions for analytics, coupled with our industry leading technology and architecture expertise, can unleash the potential of great companies. Visit teradata.com.
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Teradata and the Teradata logo are trademarks or registered trademarks of Teradata Corporation and/or its affiliates in the U.S. and worldwide.


INVESTOR CONTACT:
Gregg Swearingen
Teradata
(937) 242-4600
gregg.swearingen@teradata.com


MEDIA CONTACT:
Benjamin Hendricks
Teradata
(919) 522-2978
ben.hendricks@teradata.com







SCHEDULE A

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(in millions, except per share amounts - unaudited)
 
 
For the Period Ended December 31
 
 
Three Months
 
Twelve Months
 
 
2017
 
2016
 
% Chg
 
2017
 
2016
 
% Chg
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
Products and cloud
 
$
243

 
$
262

 
(7
)%
 
$
747

 
$
923

 
(19
)%
Services
 
383

 
364

 
5
 %
 
1,409

 
1,399

 
1
 %
Total revenue
 
626

 
626

 
0
 %
 
2,156

 
2,322

 
(7
)%
Product and cloud gross profit
 
134

 
144

 
 
 
422

 
540

 
 
% of Revenue
 
55.1
 %
 
55.0
%
 
 
 
56.5
 %
 
58.5
%
 
 
Services gross profit
 
172

 
171

 
 
 
600

 
648

 
 
% of Revenue
 
44.9
 %
 
47.0
%
 
 
 
42.6
 %
 
46.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total gross profit
 
306

 
315

 
 
 
1,022

 
1,188

 
 
% of Revenue
 
48.9
 %
 
50.3
%
 
 
 
47.4
 %
 
51.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative expenses
 
171

 
159

 
 
 
652

 
664

 
 
Research and development expenses
 
76

 
58

 
 
 
306

 
212

 
 
Impairment of goodwill and other assets
 

 

 
 
 

 
80

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
 
59

 
98

 
 
 
64

 
232

 
 
% of Revenue
 
9.4
 %
 
15.7
%
 
 
 
3.0
 %
 
10.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other expense, net
 
(2
)
 
(7
)
 
 
 
(6
)
 
(11
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
57

 
91

 
 
 
58

 
221

 
 
% of Revenue
 
9.1
 %
 
14.5
%
 
 
 
2.7
 %
 
9.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
131

 
33

 
 
 
125

 
96

 
 
% Tax rate
 
229.8
 %
 
36.3
%
 
 
 
215.5
 %
 
43.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
$
(74
)
 
$
58

 
 
 
$
(67
)
 
$
125

 
 
% of Revenue
 
(11.8
)%
 
9.3
%
 
 
 
(3.1
)%
 
5.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income per common share
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.61
)
 
$
0.45

 
 
 
$
(0.53
)
 
$
0.96

 
 
Diluted
 
$
(0.61
)
 
$
0.44

 
 
 
$
(0.53
)
 
$
0.95

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
Basic
 
121.1

 
130.1

 
 
 
125.8

 
129.7

 
 
Diluted
 
121.1

 
132.0

 
 
 
125.8

 
131.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 






SCHEDULE B

TERADATA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions - unaudited)

 
 
December 31, 2017
 
September 30, 2017
 
December 31, 2016
Assets
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,089

 
$
1,025

 
$
974

Accounts receivable, net
 
554

 
366

 
548

Inventories
 
30

 
45

 
34

Other current assets
 
77

 
72

 
65

Total current assets
 
1,750

 
1,508

 
1,621

Property and equipment, net
 
162

 
159

 
138

Capitalized software, net
 
121

 
136

 
187

Goodwill
 
399

 
398

 
390

Acquired intangible assets, net
 
23

 
23

 
11

Deferred income taxes
 
57

 
53

 
49

Other assets
 
44

 
30

 
17

Total assets
 
$
2,556

 
$
2,307

 
$
2,413

 
 
 
 
 
 
 
Liabilities and stockholders' equity
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
Current portion of long-term debt
 
$
60

 
$
53

 
$
30

Short-term borrowings
 
240

 
180

 

Accounts payable
 
74

 
106

 
103

Payroll and benefits liabilities
 
173

 
139

 
139

Deferred revenue
 
414

 
364

 
369

Other current liabilities
 
102

 
94

 
88

Total current liabilities
 
1,063

 
936

 
729

Long-term debt
 
478

 
493

 
538

Pension and other postemployment plan liabilities
 
109

 
107

 
96

Long-term deferred revenue
 
85

 
17

 
14

Deferred tax liabilities
 
4

 
12

 
33

Other liabilities
 
149

 
23

 
32

Total liabilities
 
1,888

 
1,588

 
1,442

Stockholders' equity
 
 
 
 
 
 
Common stock
 
1

 
1

 
1

Paid-in capital
 
1,321

 
1,292

 
1,220

Accumulated deficit
 
(580
)
 
(505
)
 
(161
)
Accumulated other comprehensive loss
 
(74
)
 
(69
)
 
(89
)
Total stockholders' equity
 
668

 
719

 
971

Total liabilities and stockholders' equity
 
$
2,556

 
$
2,307

 
$
2,413







SCHEDULE C

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions - unaudited)

 
 
For the Period Ended December 31
 
 
Three Months
 
Twelve Months
 
 
2017
 
2016
 
2017
 
2016
Operating activities
 
 
 
 
 
 
 
 
Net (loss) income
 
$
(74
)
 
$
58

 
$
(67
)
 
$
125

Adjustments to reconcile net income to net cash provided
 
 
 
 
 
 
 
 
  by operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
35

 
31

 
138

 
128

Stock-based compensation expense
 
17

 
13

 
68

 
62

Deferred income taxes
 
(12
)
 
6

 
(34
)
 
(3
)
Gain on investments
 

 
(2
)
 

 
(2
)
Impairment of goodwill, acquired intangibles and other assets
 

 

 

 
80

Changes in assets and liabilities:
 
 
 
 
 
 
 
 
Receivables
 
(188
)
 
(122
)
 
(6
)
 
40

Inventories
 
14

 
10

 
3

 
14

Current payables and accrued expenses
 
12

 
25

 
12

 
11

Deferred revenue
 
117

 
8

 
115

 
1

Other assets and liabilities
 
102

 
25

 
95

 
(10
)
Net cash provided by operating activities
 
23

 
52

 
324

 
446

Investing activities
 
 
 
 
 
 
 
 
Expenditures for property and equipment
 
(19
)
 
(21
)
 
(78
)
 
(53
)
Proceeds from sale of property and equipment
 

 

 

 
5

Additions to capitalized software
 
(2
)
 
(11
)
 
(9
)
 
(65
)
Proceeds from disposition of investments
 

 
2

 

 
2

Proceeds from sale of business
 

 

 

 
92

Business acquisitions and other investing activities
 
(3
)
 

 
(21
)
 
(16
)
Net cash used in investing activities
 
(24
)
 
(30
)
 
(108
)
 
(35
)
Financing activities
 
 
 
 
 
 
 
 
Repurchases of common stock
 

 
(13
)
 
(351
)
 
(82
)
Repayments of long-term borrowings
 
(7
)
 
(8
)
 
(30
)
 
(30
)
Proceeds from credit facility borrowings
 
240

 

 
420

 

Repayment of credit facility borrowings
 
(180
)
 

 
(180
)
 
(180
)
Other financing activities, net
 
12

 
2

 
32

 
30

Net cash provided by (used in) financing activities
 
65

 
(19
)
 
(109
)
 
(262
)
Effect of exchange rate changes on cash and cash equivalents
 

 
(17
)
 
8

 
(14
)
Increase (decrease) in cash and cash equivalents
 
64

 
(14
)
 
115

 
135

Cash and cash equivalents at beginning of period
 
1,025

 
988

 
974

 
839

Cash and cash equivalents at end of period
 
$
1,089

 
$
974

 
$
1,089

 
$
974







SCHEDULE D

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions - unaudited)
 
 
For the Three Months Ended December 31
 
For the Twelve Months Ended December 31
 
 
2017
 
2016
 
% Change As Reported
 
% Change Constant Currency(2)
 
2017
 
2016
 
% Change As Reported
 
% Change Constant Currency(2)
 
Segment Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
Americas Data and Analytics
 
$
365

 
$
397

 
(8)%
 
(8)%
 
$
1,195

 
$
1,334

 
(10)%
 
(11)%
 
International Data and Analytics
 
261

 
229

 
14%
 
8%
 
961

 
919

 
5%
 
5%
 
Total Data and Analytics
 
626

 
626

 
0%
 
(2)%
 
2,156

 
2,253

 
(4)%
 
(4)%
 
Marketing Applications
 

 

 
NA
 
NA
 

 
69

 
(100)%
 
(100)%
 
Total revenue
 
626

 
626

 
0%
 
(2)%
 
2,156

 
2,322

 
(7)%
 
(7)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment gross profit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Americas Data and Analytics
 
194

 
232

 
 
 
 
 
676

 
796

 
 
 
 
 
% of Revenue
 
53.2
%
 
58.4
%
 
 
 
 
 
56.6
%
 
59.7
%
 
 
 
 
 
International
 
130

 
104

 
 
 
 
 
434

 
445

 
 
 
 
 
% of Revenue
 
49.8
%
 
45.4
%
 
 
 
 
 
45.2
%
 
48.4
%
 
 
 
 
 
Total Data and Analytics gross profit
 
324

 
336

 
 
 
 
 
1,110

 
1,241

 
 
 
 
 
% of Revenue
 
51.8
%
 
53.7
%
 
 
 
 
 
51.5
%
 
55.1
%
 
 
 
 
 
Marketing Applications
 

 

 
 
 
 
 

 
34

 
 
 
 
 
% of Revenue
 
NA

 
NA

 
 
 
 
 
NA

 
49.3
%
 
 
 
 
 
Total segment gross profit
 
324

 
336

 
 
 
 
 
1,110

 
1,275

 
 
 
 
 
% of Revenue
 
51.8
%
 
53.7
%
 
 
 
 
 
51.5
%
 
54.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciling items(1)
 
(18
)
 
(21
)
 
 
 
 
 
(88
)
 
(87
)
 
 
 
 
 
Total gross profit
 
$
306

 
$
315

 
 
 
 
 
$
1,022

 
$
1,188

 
 
 
 
 
% of Revenue
 
48.9
%
 
50.3
%
 
 
 
 
 
47.4
%
 
51.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)  Reconciling items include stock-based compensation, amortization of acquisition-related intangible assets and acquisition, integration and reorganization-related items.
(2) The impact of currency is determined by calculating the prior period results using the current-year monthly average currency rates.

  








SCHEDULE E

TERADATA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions - unaudited)
 
 
For the Three Months Ended December 31
 
For the Twelve Months Ended December 31
 
 
2017
 
2016
 
% Change As Reported
 
% Change Constant Currency*
 
2017
 
2016
 
% Change As Reported
 
% Change Constant Currency*
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurring Revenue
 
$
271

 
$
250

 
8%
 
7%
 
$
1,047

 
$
978

 
7%
 
7%
 
% of total revenue
 
43
%
 
40
%
 
 
 
 
 
49
%
 
42
%
 
 
 
 
 
Perpetual software licenses and hardware
 
158

 
189

 
(16)%
 
(17)%
 
429

 
600

 
(29)%
 
(28)%
 
Consulting services
 
197

 
187

 
5%
 
2%
 
680

 
675

 
1%
 
0%
 
Marketing Applications
 

 

 
NA
 
NA
 

 
69

 
(100)%
 
(100)%
 
Total revenue
 
626

 
626

 
0%
 
(2)%
 
2,156

 
2,322

 
(7)%
 
(7)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Product and cloud
 
$
243

 
$
262

 
(7)%
 
(8)%
 
$
747

 
$
884

 
(15)%
 
(15)%
 
Services
 
383

 
364

 
5%
 
3%
 
1,409

 
1,369

 
3%
 
3%
 
Total Data and Analytics
 
626

 
626

 
0%
 
(2)%
 
2,156

 
2,253

 
(4)%
 
(4)%
 
 
 


 


 
 
 
 
 


 


 
 
 
 
 
Marketing Applications
 

 

 
NA
 
NA
 

 
69

 
(100)%
 
(100)%
 
Total revenue
 
$
626

 
$
626

 
0%
 
(2)%
 
$
2,156

 
$
2,322

 
(7)%
 
(7)%
 
 
 


 


 
 
 
 
 


 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
*The impact of currency is determined by calculating the prior period results using the current-year monthly average currency rates.

  



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