Teradata (TDC) Q2 2022 earnings summary

Executive summary

• Q2 revenue was $430M, down 12% YoY reported and 8% in constant currency (CC); recurring revenue was $345M, down 8% reported and 5% CC.

• Public cloud ARR reached $234M, up 68% YoY reported and 75% CC; total ARR was $1.390B, down 3% reported and up 1% CC.

• 1H'22 non-GAAP diluted EPS of $0.99 and free cash flow (FCF) of $252M each exceeded 60% of the FY22 target.

Financial highlights

• Q2 GAAP diluted EPS was $(0.04), vs. $0.39 YoY; non-GAAP diluted EPS was $0.33, vs. $0.74.

• Q2 cash from operations was $105M vs. $225M YoY; FCF was $102M vs. $219M.

• 1H'22 revenue was $926M vs. $982M YoY; non-GAAP diluted EPS was $0.99 vs. $1.43.

• Recurring revenue was 80% of Q2 revenue, up from 77% in Q2'21.

Outlook and guidance

• FY22 public cloud ARR growth outlook: ~80% YoY, reported and CC; non-GAAP diluted EPS $1.55–$1.65; FCF ~ $400M.

• Q3'22 outlook: total ARR down low-to-mid-single digits reported; CC range from low-single-digit growth to low-single-digit decline.

• Q3 recurring revenue outlook: down low-to-mid-single digits reported and flat to low-single-digit growth CC; total revenue down mid-to-high-single digits reported and low-single digits CC.

• Q3 non-GAAP diluted EPS guidance is $0.27–$0.31; GAAP diluted EPS guidance is $0.01–$0.05.

• Revised FY22 outlook includes Russia cessation impacts of $55M to total ARR, $60M to revenue and $0.29 to non-GAAP EPS, plus a 3.75%–4.25% FX headwind.