Teradata's stock tumbles on flat revenue and soft guidance

Teradata’s stock tumbles on flat revenue and soft guidance

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Teradata Corp. beat analysts’ forecasts on earnings and revenue as it delivered its fiscal 2023 fourth-quarter results today, but its guidance for the coming quarter fell short of expectations, and its stock fell more than 14% late trading.

The company reported earnings before certain costs such as stock compensation of 56 cents per share, surpassing the Street’s call for earnings of 51 cents. Revenue for the period rose 1%, to $457 million, above the Street’s forecast of $456.3 million.

All told, the company delivered a net income of $89 million for the quarter, up from a profit of $69 million in the same period one year earlier. The company also reported full year revenue of $1.833 billion, up 2% from the prior year.

President and Chief Executive Steve McMillan (pictured) pointed to the company’s growing cloud revenue, measured in annual recurring revenue, as a promising sign going forward. “Teradata ended 2023 with $528 million of cloud ARR, delivering ten-fold growth in less than four years,” he said. “Companies everywhere are experimenting with AI to innovate their business and we are excited to be at the center of the AI era. Trusted data is required for this type of breakthrough innovation and data and analytics are what we believe Teradata does best.”

Teradata was one of the earliest data analytics companies to emerge and is credited with helping to invent the entire concept of “big data.” The company sells database and related software and services, with its flagship product being the Vantage data analytics platform for business intelligence. Using the platform, workers can process data using a range of analytics engines such as Spark and TensorFlow.

Like many companies, Teradata has been pushing to move its Vantage platform and related offerings to the cloud, partnering with the likes of Google Cloud, Amazon Web Services Inc. and Microsoft Corp. to make that happen.

The company’s cloud shift is still a work in progress, but it does appear to be paying off, as its public cloud annual recurring revenue rose 48% from a year earlier, to $528 million. That compares with a total ARR increase of just 6%, to $1.482 billion at the end of the quarter.

These days, Teradata is pitching its platform as a way for companies to create the right “data culture” in order to help them get the most out of their new artificial intelligence initiatives. McMillan outlined the company’s plans for AI during an interview on theCUBE, SiliconANGLE’s mobile livestreaming studio, in October, saying that less than 25% of enterprises currently have the correct data culture, capabilities and structures in place to ensure ethical and responsible data use for AI. Teradata believes it can aid these companies in navigating these challenges and help them ensure the data reliability they require for successful AI operations.

“I don’t think there’s a board in the world that isn’t challenging a leadership team about what are you doing with Gen AI? What you’re doing with ChatGPT,” McMillan said. “And that real interest in that technology is driving a lot of the conversations that we’re seeing here over the course of the last few days.”

The problem for investors is that Teradata’s AI plans, just like its cloud shift, are a work in progress and unlikely to boost the company’s bottom line anytime soon. Looking to the current quarter, Teradata is forecasting earnings of between 53 and 57 cents per share, well below Wall Street’s consensus estimate of 74 cents per share.

Teradata didn’t provide a revenue forecast for the current quarter, but for fiscal 2024 as a whole it is forecasting sales to grow by just 1%. Public cloud ARR is likely to rise by between 35% and 41%, the company said, while its overall ARR is expected to increase by between 45% and 8%.

Here’s McMillan’s full interview from last October:

Photo: SiliconANGLE

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