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TERADATA CORP Reports Operating Results (10-Q)

November 02, 2012 | About:
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TERADATA CORP (TDC) filed Quarterly Report for the period ended 2012-09-30.

Teradata Corporation has a market cap of $11.41 billion; its shares were traded at around $62.69 with a P/E ratio of 27.3 and P/S ratio of 4.8. Teradata Corporation had an annual average earning growth of 12% over the past 5 years.

Highlight of Business Operations:

Teradata revenue increased 7% in the third quarter of 2012 compared to the third quarter of 2011. The revenue increase is net of a 3% adverse impact from foreign currency fluctuations. Product revenue increased 7% in the third quarter of 2012 from the prior-year period, led by growth in the EMEA and APJ regions. Service revenue in the third quarter of 2012 increased 8% from the prior-year period, with an underlying 10% increase in consulting services revenue, and 6% increase in maintenance services revenue, as compared to the prior-year period.

Gross margin for the third quarter of 2012 was 55.8% compared to 54.5% in the third quarter of 2011. Product gross margin increased to 69.0% in the third quarter of 2012, compared to 65.5% in the prior-year period. The increase in product margin was largely a result of an improved product revenue mix, particularly in the EMEA region, when compared to the prior period. Product gross margin in the third quarter of 2012 also included $4 million of costs from amortization of acquired intangible assets, as compared to $6 million of combined purchase accounting adjustments and amortization of acquired intangible assets in the third quarter of 2011. Service gross margin decreased to 44.0% in the third quarter of 2012 compared to 44.4% in the prior-year period. The decrease in services margins was driven by lower consulting margins versus the prior-year period, offset in part by increased maintenance margins.

Total operating expenses, characterized as SG&A and Research and Development (R&D) expenses, were $218 million in the third quarter of 2012 compared to $206 million in the third quarter of 2011. The $11 million increase in SG&A expenses was driven by higher selling expense, due primarily to our strategic initiative to add sales headcount. The $1 million increase in R&D expenses was driven by higher engineering headcount expenses, which was offset in part by $3 million more in capitalization of software development expenses.

Teradata revenue increased 14% in the first nine months of 2012 compared to the first nine months of 2011. The revenue increase is net of a 3% adverse impact from foreign currency fluctuations. Product revenue increased 18% in the first three quarters of 2012 from the prior-year period, led by growth in the Americas and APJ regions. Service revenue in the first three quarters of 2012 increased 10% from the prior-year period, with an underlying 11% increase in consulting revenue, and 10% increase in maintenance revenue, as compared to the prior-year period.

Gross margin for the nine months ended September 30, 2012 was 56.2% compared to 54.4% for the nine months ended September 30, 2011. Product gross margin increased to 68.2% in the first three quarters of 2012, compared to 65.7% in the prior-year period. The increase in product margin was driven by improved product revenue mix, primarily in the Americas region, as compared to the prior period. Product gross margin in the first nine months of 2012 also included $12 million of amortization costs from acquired intangible assets, as compared to $24 million of combined purchase accounting adjustments and amortization of acquired intangible assets in the first nine months of 2011. The decrease in acquisition-related costs was offset in part by $5 million of additional amortization of capitalized internal software development costs in the first three quarters of 2012. Service gross margin increased to 44.7% in the first three quarters of 2012 compared to 44.4% in the prior-year period. The increase in services margins was driven by improved maintenance services margins in all three regions, offset somewhat by lower consulting services margins.

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