• Public cloud ARR of $357 million, an increase of 77% as reported and 81% in constant currency from the prior-year period⁽¹⁾
• Fourth quarter recurring revenue of $357 million, a decrease of 2% as reported and an increase of 3% in constant currency from the prior-year period⁽¹⁾
• Recurring revenue was 79% of total revenue in the fourth quarter, up from 77% in the prior-year period
• Fourth quarter GAAP earnings per share of ($0.07)
• Fourth quarter Non-GAAP diluted earnings per share of $0.35⁽²⁾
• Fourth quarter cash from operations of $129 million and free cash flow of $120 million ⁽³⁾
• Increases return of free cash flow target to 75%, up from 50%

Teradata (NYSE: TDC) today announced its fourth quarter and full-year 2022 financial results.

“Teradata had a strong 2022, including achieving our largest quarter of cloud growth ever, and meeting or beating every element of our annual outlook,” said Steve McMillan, President and CEO, Teradata. “It was only in the middle of 2020 that we set our sights on our cloud-first future. In that short amount of time, and despite challenging macroeconomic factors, Teradata delivered more than a six-fold growth in cloud ARR. It’s clear that our strategic transformation is right for the market, and the proof is in both our financial results and the continued recognition of Teradata as a leader in cloud data and analytics.”

“Teradata’s increase of its return of free cash flow target to 75% from 50% demonstrates our conviction in the durability of our free cash flow and commitment to deliver ongoing shareholder value,” said Claire Bramley, Chief Financial Officer, Teradata. “We are energized to continue our momentum into 2023, accelerating our growth forecasts for ARR, revenue, and earnings per share. We remain on-track to achieve over one billion dollars of cloud ARR in 2025 while driving future margin expansion and free cash flow growth.”

Fourth Quarter 2022 Financial Highlights Compared to Fourth Quarter 2021

• Public cloud ARR increased to $357 million from $202 million, an increase of 77% as reported and 81% in constant currency⁽¹⁾
• Total ARR decreased to $1.482 billion from $1.492 billion, a decrease of 1% as reported and an increase of 2% in constant currency⁽¹⁾
• Total revenue was $452 million versus $475 million, a decrease of 5% as reported and flat in constant currency⁽¹⁾
• Recurring revenue was $357 million versus $364 million, a decrease of 2% as reported and an increase of 3% in constant currency⁽¹⁾
• Recurring revenue was 79% of total revenue in the fourth quarter, up from 77% in the prior-year period
• GAAP gross margin was 58.2% versus 61.9%
• Non-GAAP gross margin was 59.5% versus 63.2%⁽²⁾
• GAAP operating income was $11 million versus $50 million
• Non-GAAP operating income was $62 million versus $90 million⁽²⁾
• GAAP earnings per share (“EPS") was ($0.07) versus $0.29
• Non-GAAP diluted EPS was $0.35 versus $0.57⁽²⁾
• Cash flow from operations was $129 million versus $95 million
• Free cash flow was $120 million versus $85 million⁽³⁾

Full-Year 2022 Financial Highlights Compared to Full-Year 2021

• Total revenue was $1.795 billion versus $1.917 billion, a decrease of 6% as reported and 2% in constant currency⁽¹⁾
• Recurring revenue was $1.419 billion versus $1.464 billion, a decrease of 3% as reported and an increase of 1% in constant currency⁽¹⁾
• GAAP gross margin was 60.2% versus 61.9%
• Non-GAAP gross margin was 61.6% versus 63.4%⁽²⁾
• GAAP operating income was $118 million versus $231 million
• Non-GAAP operating income was $286 million versus $393 million⁽²⁾
• GAAP diluted EPS was $0.31 versus $1.30
• Non-GAAP diluted EPS was $1.64 versus $2.43⁽²⁾
• Cash flow from operations was $419 million versus $463 million
• Free cash flow was $403 million versus $432 million⁽³⁾

Outlook

For the full-year 2023:

• Public cloud ARR is expected to increase in the range of 53% to 57% year-over-year
• Total ARR is expected to increase in the range of 6% to 8% year-over-year
• Recurring revenue is expected to increase in the range of 4% to 7% year-over-year
• Total revenue is expected to increase in the range of 1% to 4% year-over-year
• GAAP diluted EPS is expected to be in the range of $0.63 to $0.79
• Non-GAAP diluted EPS is expected to be in the range of $1.90 to $2.06⁽²⁾
• Cash flow from operations is expected to be in the range $345 million to $385 million
• Free cash flow is expected to be in the range of $320 million to $360 million⁽³⁾

For the first quarter of 2023:

• GAAP diluted EPS is expected to be in the range of $0.32 to $0.36
• Non-GAAP diluted EPS is expected to be in the range of $0.60 to $0.64⁽²⁾

Earnings Conference Call

A conference call is scheduled for today at 5:00 a.m. PT to discuss the Company’s fourth-quarter and full-year 2022 results, and provide a business and financial update, including its 2023 financial outlook. Access to the conference call, as well as a replay of the conference 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 Teradata’s website at investor.teradata.com.

* Total annual recurring revenue (“ARR”) is defined as the annual value at a point in time of all recurring contracts, including subscription, cloud, software upgrade rights, and maintenance. Total ARR does not include managed services and third-party software. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q.

** Public cloud ARR is defined as the annual value at a point in time of all contracts related to public cloud implementations of Teradata VantageCloud and does not include ARR related to private or managed cloud implementations. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q.

Note to Investors

This release contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements generally relate to opinions, beliefs, and projections of expected future financial and operating performance, business trends, liquidity, and market conditions, among other things. These forward-looking statements are based upon current expectations and assumptions and often can be identified by words such as “expect,” “strive,” “looking ahead,” “outlook,” “guidance,” “forecast,” “anticipate,” “continue,” “plan,” “estimate,” “believe,” “will,” “would,” “likely,” “intend,” “potential,” or similar expressions. Forward-looking statements in this release include our 2023 first quarter and full year financial guidance. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially, including those relating to: the global economic environment and business conditions in general, including inflation and/or recessionary conditions, the ability of our suppliers to meet their commitments to us, or the timing of purchases by our current and potential customers; the rapidly changing and intensely competitive nature of the information technology industry and the data analytics business; fluctuations in our operating, capital allocation, and cash flow results; our ability to execute and realize the anticipated benefits of our business transformation program or other restructuring and cost saving initiatives; risks inherent in operating in foreign countries, including sanctions, foreign currency fluctuations, and/or acts of war; risks associated with the ongoing and uncertain impact of the COVID-19 pandemic on our business, financial condition and operating results and on our customers and suppliers; risks associated with data privacy, cyberattacks and maintaining secure and effective products for our customers, as well as, internal information technology and control systems; the timely and successful development, production or acquisition, availability and/or market acceptance of new and existing products, product features and services; tax rates; turnover of our workforce and the ability to attract and retain skilled employees; protecting our intellectual property; availability and successful execution of new alliance and acquisition opportunities; subscription arrangements that may be cancelled or fail to be renewed; the impact on our business and financial reporting from changes in accounting rules; and other factors described from time to time in Teradata’s filings with the U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K, and subsequent quarterly reports on Forms 10-Q or current reports on Forms 8-K, as well as Teradata’s annual report to stockholders. Teradata 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, except as required by law.

About Teradata

Teradata is the connected multi-cloud data platform for enterprise analytics company. Our enterprise analytics solve business challenges from start to scale. Only Teradata gives you the flexibility to handle the massive and mixed data workloads of the future, today. Learn more at Teradata.com.

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