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Why Teradata Corporation Stock Popped Today

By Steve Symington – Feb 9, 2017 at 1:07PM

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The data warehouse solutions company jumped after a strong quarterly report.

What happened

Shares of Teradata Corporation (TDC -0.38%) were up 9.6% as of 12:15 p.m. EST Thursday after the data warehouse platform, software, and services specialist announced stronger-than-expected fourth-quarter 2016 earnings.

So what

Quarterly revenue declined 13% year over year (12% at constant currency), to $626 million. That translated to adjusted net income of $89 million, or $0.67 per diluted share, down from $101 million, or $0.75 per share in last year's fourth quarter. To be fair, Teradata's fourth-quarter of 2015 also included $39 million of revenue from its marketing applications business, which was sold on July 1, 2016.

Analysts, on average, expected Teradata to report slightly higher revenue of $628.4 million but lower adjusted earnings of $0.60 per share.

Teradata logo

Image source: Teradata.

Now what

As CEO Victor Lund said:

Entering 2017, the Teradata team continues its steady execution on our strategic initiatives. Our customers tell us that Teradata is becoming more responsive to their wants and needs while helping them gain business value from their analytics. This indicates we are effectively calibrating our customer engagements -- providing more choices, more innovation, more expertise, and more reasons to rely on us. While we have work ahead of us, I have confidence that we are on the right track as the global demand for big data analytics solutions and services continues to rise.

Teradata also noted that because it is now offering subscription license programs for its core analytic offerings as part of its ongoing business transformation, which was originally outlined a little over a year ago, "it is difficult to estimate how much full-year 2017 reported revenue could be impacted by the change." As such, it isn't providing full-year 2017 guidance until it has more clarity.

In the meantime, Teradata anticipates first-quarter 2017 revenue to be roughly $500 million, which should result in adjusted earnings per share of $0.25 to $0.30. Analysts' consensus estimates called for Q1 earnings well within that range, at $0.32 per share, on lower revenue of $486.5 million.

All things considered, this was a solid quarter for Teradata as it continues to implement transformation. Given Teradata's relative bottom-line outperformance in Q4 and strong guidance, it's no surprise to see shares trading higher today.

Steve Symington has no position in any stocks mentioned. The Motley Fool recommends Teradata. The Motley Fool has a disclosure policy.

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