Teradata Reports Mixed Q3 2024 Results with Slight Revenue Growth and Improved Profitability

Teradata Corporation reported its financial results for the third quarter and the nine months ended September 30, 2024, highlighting a mixed performance in revenue and profitability compared to the previous fiscal period. Total revenue for Q3 2024 was $440 million, a slight increase of $2 million from Q3 2023, while total revenue for the nine months decreased by $35 million, or 3%, to $1,341 million. The recurring revenue for Q3 rose by 3%, driven by strong growth in Public Cloud revenue, which increased by 26% year-over-year to $570 million. However, consulting services revenue fell by 14% in Q3 2024, reflecting a strategic shift towards higher-margin engagements.

Gross profit for Q3 2024 was $266 million, maintaining a gross margin of 60.5%, up from 59.1% in the prior year, primarily due to improved margins in Public Cloud services. Operating income for the quarter was $56 million, significantly higher than the $27 million reported in Q3 2023. Net income for Q3 2024 reached $32 million, compared to $12 million in the same quarter of the previous year, resulting in earnings per share of $0.33, up from $0.12.

For the nine months ended September 30, 2024, net income was $89 million, an increase from $69 million in the same period in 2023. However, cash provided by operating activities decreased to $147 million from $199 million year-over-year. The company repurchased approximately 4.9 million shares of common stock for $186 million during the nine months, compared to $301 million in the same period of 2023.

Strategically, Teradata announced a global restructuring initiative on August 5, 2024, aimed at optimizing operations and reducing non-revenue generating expenses, with expected charges between $20 to $25 million. The company has also realigned its sales function into two segments: Product Sales and Consulting Services.

In terms of market conditions, Teradata noted challenges such as elongated deal closing cycles and delayed cloud migration activities, which are anticipated to impact Public Cloud ARR growth in 2024. The company continues to focus on expanding its product offerings, including the Teradata Vantage platform, and enhancing customer engagement through cloud migration and AI capabilities.

As of September 30, 2024, Teradata held $348 million in cash and cash equivalents, down from $349 million at the end of the previous year, and had no outstanding borrowings under its $400 million Revolving Facility. The company remains committed to maintaining sufficient liquidity for its operational needs.