TDC Q1 Earnings Beat Estimates, Revenues Fall Y/Y, Stock Down

Teradata TDC reported first-quarter 2025 non-GAAP earnings of 66 cents per share, which beat the Zacks Consensus Estimate by 15.79%. The bottom line increased 15.8% year over year.Revenues of $418 million missed the Zacks Consensus Estimate by 1.71%. The figure declined 10% year over year on a reported basis and 8% on a constant-currency (cc) basis.Total annual recurring revenues (ARR) at the end of the first quarter declined 3% year over year to $1.442 billion. The figure fell 2% at cc. Public cloud ARR increased 15% on a reported basis and 16% at cc year over year to $606 million. The growth was driven by increasing demand for its cloud solutions.The cloud net expansion rate was 115%, reflecting ongoing customer engagement and expansion within existing accounts.Teradata Corporation Price, Consensus and EPS Surprise Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation QuoteFollowing the results, TDC shares lost 6.06% in the pre-market trading, likely due to the decline in revenues. The company’s shares have underperformed the Zacks Computer & Technology sector year to date. TDC shares have plunged 33.6% compared with the sector’s decline of 8.1%.TDC’s Q1 Top Line in DetailRecurring revenues (contributing 85.6% to revenues) declined 8% year over year on a reported basis (down 6% at cc) to $358 million.Perpetual software license and hardware revenues (2.4% of revenues) increased 25% year over year (up 26% at cc) to $10 million.Consulting services’ revenues (12% of revenues) fell 27.5% year over year (down 26% at cc) to $50 million.Product Sales declined 7% year over year on a reported basis (down 5% at cc) to $368 million.TDC Operating DetailsThe gross margin on a non-GAAP basis was 60.3%, contracting 190 basis points (bps) year over year.Selling, general & administrative (SG&A) expenses declined 28% year over year to $116 million. Research & development (R&D) expenses were $66 million, down 12% year over year.As a percentage of revenues, SG&A declined 690 bps year over year to 27.8%, whereas R&D fell 160 bps year over year to 15.8%.The non-GAAP operating margin was 21.8%, up 270 bps year over year.TDC Balance SheetAs of March 31, 2025, Teradata had cash and cash equivalents of $368 million compared with $420 million as of Dec. 31, 2024.Long-term debt as of March 31, 2025, was $449 million compared with $455 million as of Dec. 31, 2024.In the first quarter, TDC generated $8 million in cash from operating activities compared with the previous quarter’s $156 million.The company generated a free cash flow of $7 million in the reported quarter.TDC Initiates Q2 GuidanceFor the second quarter of 2025, Teradata expects non-GAAP earnings per share between 37 cents and 41 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)Total revenues are likely to decline 7-9% year over year in the second quarter of 2025.For 2025, TDC expects non-GAAP earnings per share between $2.15 and $2.25. The company anticipates total revenues to be down 4-7% from the year-ago reported figure. Public cloud ARR growth is projected between 14% and 18% on a year-over-year basis.Total ARR is anticipated to be flat to grow 2% year over year.Teradata expects recurring revenues to decline 3-5% year over year at cc.Cash flow from operations is expected to be between $270 million and $300 million.The free cash flow is anticipated to be in the range of $250-$280 million. Zacks Rank & Stocks to ConsiderCurrently, Teradata has a Zacks Rank #3 (Hold). StoneCo STNE, Affirm AFRM and Broadcom AVGO are some better-ranked stocks that investors can consider in the broader sector. Each stock presently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.StoneCo shares have appreciated 66.8% year to date. STNE is set to report its first-quarter 2025 results on May 8.Affirm shares have plunged 18.2% year to date. AFRM is scheduled to report its fourth-quarter fiscal 2025 results on May 8.Broadcom shares have plunged 14.3% year to date. AVGO is scheduled to report its second-quarter fiscal year 2025 results on June 5.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Teradata Corporation (TDC): Free Stock Analysis Report Broadcom Inc. (AVGO): Free Stock Analysis Report StoneCo Ltd. (STNE): Free Stock Analysis Report Affirm Holdings, Inc. (AFRM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks