Teradata Beats Q4 Earnings Expectations & FY2022 Outlook; Shares Up 7%

Teradata Corp. (NYSE: TDC) shares jumped almost 7% during the extended trading session on February 7, after the company significantly beat earnings expectations for the fourth quarter and also raised its FY2021 guidance well above the analyst expectations.

The earnings outperformance was driven by 90% growth in public cloud annual recurring revenue (ARR) as well as robust growth in new cloud customers.

Teradata Corporation is an American software company that provides database and analytics-related software, products, and services.

Q4 Numbers

Markedly, adjusted earnings of $0.57 per share grew 50% year-over-year and beat analysts’ expectations of $0.27 per share. The company reported earnings of $0.38 per share for the prior-year period.

However, revenues declined 4% year-over-year to $475 million and modestly lagged consensus estimates of $477.46 million. Notably, public cloud ARR increased 91% to $202 million, while recurring revenue increased 5% to $364 million.

Upbeat FY2022 Outlook & Share Repurchase Program Worth $250M

Based on robust Q4 results, management issued the financial guidance for FY2022. Further, the company stated its intentions to enter into an accelerated share repurchase program worth $250 million in the first quarter of FY2022.

For FY2022, the company forecasts adjusted earnings in the range of $1.82 to $1.92 per share, while the consensus estimate is pegged at $1.77 per share. Revenues are forecast to grow in the flat-to-low-single-digit percentage year-over-year, with total ARR expected to grow in the mid-to-high-single-digits.

For the fiscal first quarter, adjusted earnings are likely to range between $0.63 and $0.67 per share, higher than the consensus estimate pegged at $0.51 per share.

CEO Comments

Teradata CEO, Steve McMillan, commented, “The strength of our performance in 2021 is matched by our conviction to continue accelerating in 2022. We look forward to delivering ongoing innovation for our customers, maintaining our ethos of strong corporate citizenship, and driving profitable growth and long-term value creation for our shareholders.”

Wall Street’s Take

Following the upbeat Q4 earnings, Morgan Stanley analyst Katy Huberty increased the price target on the stock to $57 (41.5% upside potential) from $56 and reiterated a Buy rating.

Consensus among analysts is a Moderate Buy based on 4 Buys and 1 Hold and 2 Sells. At the time of writing, the average Teradata stock price projection was $52.83, which implies 31.16% upside potential to current levels.

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