Teradata Stock: Cloud Analytics Company Has a Bullish Outlook

Teradata Corporation to Repurchase $250 Million Worth of Shares

The so-called January Effect forgot to visit tech stocks. In fact, January was the worst month for the tech-heavy Nasdaq since 2008. That uncertainty has followed investors into earnings season, with some big-name tech stocks selling off. This has led the Nasdaq into one of its most tumultuous stretches ever.

It hasn’t been all bad news, though, especially for overlooked Teradata Corporation (NYSE:TDC).

Admittedly, Teradata stock took a hit in January, falling by 5.7% that month. It was disappointing, but it was better than the Nasdaq’s 12.5% correction.

It’s been a different story in February. Despite facing the same headwinds as other stocks (i.e., higher interest rates, soaring inflation, microchip shortages, and the COVID-19 pandemic), TDC stock has been ripping higher since a recently announced fourth-quarter earnings beat.

Teradata stock’s current outlook is bright.

During the fourth quarter of 2021, Teradata Corporation significantly grew the number of its new cloud customers. And thanks to the strength of the company’s performance in 2021 and outlook for 2022, it initiated a $250.0-million accelerated share-repurchase program in the first quarter.

Despite a recent one-day gain of 27%, Teradata stock still has room to rise.

Chart courtesy of StockCharts.com

About TDC Stock

Teradata Corporation is a cloud analytics software provider that offers a connected multicloud data platform for enterprise analytics. The company essentially helps businesses mine, analyze, and harness valuable data to make more informed decisions. (Source: “Who We Are,” Teradata Corporation, last accessed February 8, 2022.)

The company’s “Teradata Vantage” platform allows its customers to integrate and simplify their multicloud data and analytic ecosystems, streamline access and management of their data, and use analytics to derive business value from that data.

Teradata Vantage is designed to run in on-premise, private cloud, and public cloud environments.

Teradata Corporation serves various types of customers, including:

• 19 of the top 20 telecommunications companies
• 18 of the top 20 global commercial and savings banks
• 16 of the top 20 travel companies
• 15 of the top 20 manufacturing companies
• 13 of the top 20 health-care companies
• 10 of the top 15 pharma companies
• Eight of the top 10 U.S. retailers
• Leading media, entertainment, natural resources, and government clients

Teradata Corporation’s customers include American Airlines Group (NASDAQ:AAL), Apple Inc (NASDAQ:AAPL), Coca-Cola Co (NYSE:KO), Merk & Co., Inc. (NYSE:MRK), Verizon Communications Inc. (NYSE:VZ), and Vodafone Group Plc (NASDAQ:VOD). (Source: “Cloud Momentum at Teradata Picks Up in Second-Half 2021,” Teradata Corporation, February 8, 2022.)

Teradata Corporation Reports Q4 Earnings Beat & Raises Guidance

For the fourth quarter of 2021, Teradata announced that its total revenue fell by three percent year-over-year and increased by 3.3% sequentially to $475.0 million. (Source: “Teradata Reports Fourth-Quarter and Full-Year 2021 Financial Results,” Teradata Corporation, February 7, 2022.)

The company’s annual recurring revenues (ARR) increased by five percent year-over-year and seven percent sequentially to $1.5 billion. Its recurring revenue accounted for 77% of the company’s total revenue in the fourth quarter, up from 70% the prior-year period

Teradata Corporation’s public cloud ARR jumped by 91% year-over-year and 92% quarter-over-quarter to $202.0 million. That growth was fueled by customers’ migration to Teradata Vantage.

Teradata reported fourth-quarter 2021 net income of $0.29 per share, which was well above the company’s forecast of a loss of $0.01 to $0.05 per share. The company’s adjusted earnings in the quarter came in at $0.57 per share, which was well above the company’s guidance of $0.25 to $0.29.

“Teradata is raising its 2022 outlook for public cloud ARR and EPS, as well as increasing the return of capital to shareholders,” said Claire Bramley, Teradata Corporation’s CFO. (Source: Ibid.)

“We continue to demonstrate our commitment to deliver shareholder value through disciplined capital allocation, including our intention to enter into a $250 million accelerated share repurchase program in the first quarter, enabled by our strong balance sheet and projections of cash flow generation.”

Business Outlook

For fiscal 2022, Teradata Corporation expects to report:

• ARR growth of a mid-to-high-single-digit percentage
• Total revenue growth of a flat-to-low-single-digit percentage
• Earnings per share (EPS) in the range of $0.75 to $0.85
• Adjusted earnings in the range of $1.82 to $1.92

For the first quarter of 2022, Teradata expects to report EPS in the range of $0.35 to $0.39 and adjusted earnings in the range of $0.63 to $0.67. (Source: Ibid.)

Analyst Take

Teradata Corporation has delivered fabulous results, including in the fourth quarter of 2021. The company also significantly grew its new cloud customer base.

On top of that, thanks to the strength of its 2021 performance, momentum in 2022, solid balance sheet, and healthy cash flow, the company announced a large program to repurchase $250.0 million worth of Teradata stock. Moreover, management raised its ARR and EPS guidance for full-year 2022.