) reported earnings of 84 cents per share in the fourth quarter
of fiscal 2013, which beat the Zacks Consensus Estimate by a
nickel. Earnings per share increased 15.1% from the year-ago
Excluding stock-based compensation, amortization of acquisition
related intangible assets, transaction and integration &
reorganization related costs and net loss on equity investments,
earnings were 88 cents per share, up 11.4% on a year-over-year
Revenues increased a modest 3.9% from the year-ago quarter to
$769.0 million, which beat the Zacks Consensus Estimate of $743.0
Services revenues increased 5.0% from the year-ago quarter to
$397.0 million, driven by strong maintenance revenues (up 11.7%
year over year) in the quarter. Consulting revenues remained
almost flat with the year-ago quarter.
Region-wise, America's revenues increased 3.3% year over year to
$464.0 million. America comprised 60.3% of revenues in the fourth
quarter. International accounted for 39.7% of revenues and
increased 4.8% from the year-ago quarter to $305.0 million.
Gross margin (including stock-based compensation expense but
excluding other one-time items) expanded 70 basis points (bps)
from the year-ago quarter to 57.1%, primarily due to favorable
Product gross margin increased 40 bps from the year-ago quarter,
while services gross margin improved 110 bps in the last quarter.
Selling, general and administrative expense (SG&A) as a
percentage of revenues increased 30 bps on a year-over-year basis
to 23.8%. Research and development (R&D) expense decreased 30
bps from the year-ago quarter to 5.6%.
Operating margin (including stock-based compensation expense but
excluding other one-time items) expanded 310 bps from the
year-ago quarter due to higher gross margin base and
lower-than-expected growth in SG&A expense.
Net income margin (including stock-based compensation expense but
excluding other one-time items) was 17.8% compared with 16.9% in
the year-ago quarter.
Teradata exited the quarter with $695.0 million in cash versus
$862.0 million in the previous quarter. As of Dec 31, 2013,
Teradata had total long-term debt of $248.0 million compared with
$255.0 million as of Sep 30, 2013.
Teradata generated cash flow from operations of $63.0 million in
the quarter compared with $64.0 million in the previous quarter.
Free cash flow generated in the quarter was $25.0 million
compared with $29.0 million in the previous quarter.
For full-year 2014, Teradata expects revenues to grow 3.0% to
7.0% on a year-over-year basis. Earnings are expected to be in
the range of $2.85 to $3.00 per share, which is much higher than
the Zacks Consensus Estimate of $2.79.
We believe new customer wins and strengthening relationships with
large vendors will be the primary revenue drivers, going forward.
We also believe Teradata will continue to benefit from its
international expansion, improved traction from sales force
expansion, new products and alliances, market share gains and a
growing database analytics market.
However, increased investment in sales, a sluggish spending
environment in the domestic market and increasing competition
) are resulting in continued pricing pressure that will likely
limit margin expansion, going forward.
Currently, Teradata has a Zacks Rank #4 (Sell).
EMC CORP -MASS (EMC): Free Stock Analysis
FUSION-IO INC (FIO): Free Stock Analysis
NETAPP INC (NTAP): Free Stock Analysis Report
TERADATA CORP (TDC): Free Stock Analysis
To read this article on Zacks.com click here.