Teradata Corporation reports 96.2% CAPEX growth in 2018 and almost no change in Revenue of 2,164
02/07/2019 • About Teradata Corporation (
$TDC) • By InTwits
Teradata Corporation reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is quite volatile: 8.0% in 2018, 9.6% in 2017, 15.5% in 2016, -1.0% in 2015, 24.6% in 2014
- Teradata Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 2.5%. Average EBITDA Margin for the same period was 11.6%. In 2018 SBC/Revenue was even higher: 3.0%
- Teradata Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $153m in 2018, $78m in 2017, $53m in 2016, $52m in 2015, $54m in 2014
- In the last 5 years the company invested considerably less than D&A: $390m vs. $735m
- The company has potentially unprofitable business model: ROIC is 3.7%
- It operates with medium-size leverage: Net Debt/EBITDA is -1.3x while industry average is -0.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue showed almost no change in 2018. Revenue growth showed slowdown in 18Q4 - it was -6.1% YoY. During 2014-2018 Revenue growth bottomed in 2016 at -8.2% and was accelerating since that time. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.61 pp from 15.6% to 15.0% in FY2018.
Gross Margin showed almost no change in 2018. Gross Margin followed a declining trend at -1.6 pp per annum in the last 5 years. SG&A as a % of Revenue increased slightly on 0.58 pp from 30.2% to 30.8% in 2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. SBC as a % of Revenue stuck to a growing trend at 0.35 pp per annum in 2014-2018.
Net Income margin increased on 4.5 pp from -3.1% to 1.4% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 7.1% in 2018. The company showed CAPEX/Revenue growth of 5.0 pp from 2.1% in 2015 to 7.1% in 2018. It's average CAPEX/Revenue for the last three years was 4.3%. Teradata Corporation invested a large share of EBITDA (88.4%) to CAPEX. CAPEX as a % of Revenue pursued a growing trend in the last 5 years.
Accounts receivable as a % of Revenue increased slightly on 1.5 pp from 25.7% to 27.2% in 2018. Inventories as a % of Revenue showed almost no change at 1.3% in 2018. Accounts payable as a % of Revenue increased on 5.9 pp from 6.5% to 12.4% in 2018.
Teradata Corporation has spent
$3m on M&A in 2018 which accounts for 0.14% of revenue.
Return on investment
The company operates at low ROIC (3.7%) and ROE (5.2%). ROIC decreased slightly on 0.95 pp from 4.6% to 3.7% in 2018. ROE surged on 13.3 pp from -8.2% to 5.2% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.3x and Debt / EBITDA is 2.9x. Debt dropped on 36.1% while cash dropped on 34.3%.
Teradata Corporation has questionable short term financial stability: Interest coverage ratio (ICR) is only 2.0x. Teradata Corporation has no short term refinancing risk: cash is higher than short term debt (3,763.2%).
Average interest expence charged on company's debt was 4.4% in 2018.
Valuation and dividends
The company's trades at EV/EBITDA 30.2x and P/E 181.2x.
Management team
Teradata Corporation's CEO is Oliver Ratzesberger. Oliver Ratzesberger is a founder and has 0 years tenure with the company. CEO total compensation was
$8,767,078 in 2018 which included
$800,000 salary.
1.5% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 10,152 employees. The number of employees decreased on 4.4%. Average revenue per employee in 2018 was
$213,160 and it increased on 4.9%.
Financial and operational results
FY ended 12/31/2018
Teradata Corporation ($TDC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 2,732 | 2,530 | 2,322 | 2,156 | 2,164 | 0.4% |
| Gross Profit | 1,479 | 1,276 | 1,188 | 1,024 | 1,026 | 0.2% |
| SG&A | 770 | 765 | 664 | 651 | 666 | 2.3% |
| EBITDA | 672 | -25 | 360 | 206 | 173 | -16.0% |
| EBIT | 503 | -195 | 232 | 68 | 43 | -36.8% |
| Interest expence | 3 | 9 | 12 | 15 | 22 | 46.7% |
| Tax | 127 | 70 | 96 | 125 | -3 | -102.4% |
| Net Income | 367 | -214 | 125 | -67 | 30 | |
| Stock Based Compensation | 48 | 54 | 62 | 68 | 65 | -4.4% |
Balance Sheet
|
|---|
| Cash | 834 | 839 | 974 | 1,089 | 715 | -34.3% |
| Accounts Receivable | 619 | 580 | 548 | 554 | 588 | 6.1% |
| Inventory | 38 | 49 | 34 | 30 | 28 | -6.7% |
| Accounts Payable | 126 | 96 | 103 | 74 | 141 | 90.5% |
| Short Term Debt | 273 | 210 | 30 | 300 | 19 | -93.7% |
| Long Term Debt | 195 | 567 | 538 | 478 | 478 | 0.0% |
Cash flow
|
|---|
| Capex | 54 | 52 | 53 | 78 | 153 | 96.2% |
| Acquisitions | 69 | 17 | 16 | 21 | 3 | -85.7% |
Ratios
|
|---|
| Revenue growth | 1.5% | -7.4% | -8.2% | -7.1% | 0.4% | |
| EBITDA growth | -1.0% | -103.7% | -1,540.0% | -42.8% | -16.0% | |
|
|---|
| Gross Margin | 54.1% | 50.4% | 51.2% | 47.5% | 47.4% | -0.1% |
| EBITDA Margin | 24.6% | -1.0% | 15.5% | 9.6% | 8.0% | -1.6% |
| EBIT Margin | 18.4% | -7.7% | 10.0% | 3.2% | 2.0% | -1.2% |
| SG&A, % of revenue | 28.2% | 30.2% | 28.6% | 30.2% | 30.8% | 0.6% |
| SBC, % of revenue | 1.8% | 2.1% | 2.7% | 3.2% | 3.0% | -0.2% |
| Net Income Margin | 13.4% | -8.5% | 5.4% | -3.1% | 1.4% | 4.5% |
| CAPEX, % of revenue | 2.0% | 2.1% | 2.3% | 3.6% | 7.1% | 3.5% |
|
|---|
| ROIC | 22.5% | -10.0% | 14.6% | 4.6% | 3.7% | -1.0% |
| ROE | 20.6% | -16.7% | 13.7% | -8.2% | 5.2% | 13.3% |
| Net Debt/EBITDA | -0.5x | | -1.1x | -1.5x | -1.3x | 0.2x |
| Interest expence / Average debt | 0.6% | 1.4% | 1.8% | 2.2% | 4.4% | 2.2% |
People
|
|---|
| Insider ownership | 1.5% | 1.5% | 1.5% | 1.5% | 1.5% | 0.0% |
| Employees | 11,500 | 10,093 | 10,093 | 10,615 | 10,152 | -4.4% |
| Revenue/Employee, th. $ | 238 | 251 | 230 | 203 | 213 | 4.9% |
Teradata Corporation ($TDC) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 506 | 544 | 526 | 588 | | 3.1% | 6.0% | 0.0% | -6.1% |
| EBITDA | 30 | 40 | 45 | 58 | | -16.7% | 21.2% | 7.1% | -38.9% |
| Net Income | -7 | 4 | 18 | 15 | | | | 38.5% | |
Balance Sheet
|
|---|
| Cash | 939 | 882 | 768 | 715 | | -19.3% | -18.7% | -25.1% | -34.3% |
| Short Term Debt | 68 | 6 | 13 | 19 | | 78.9% | -86.7% | -94.4% | -93.7% |
| Long Term Debt | 456 | 491 | 484 | 478 | | -12.8% | -3.3% | -1.8% | 0.0% |
Ratios
|
|---|
| Gross Margin | 44.1% | 46.0% | 50.2% | 49.1% | | -1.8% | -1.2% | 2.7% | 0.1% |
| EBITDA Margin | 5.9% | 7.4% | 8.6% | 9.9% | | -1.4% | 0.9% | 0.6% | -5.3% |
| Net Income Margin | -1.4% | 0.7% | 3.4% | 2.6% | | -1.0% | 1.5% | 1.0% | 14.4% |
Peers in IT Consulting & Other Services
Below you can find Teradata Corporation benchmarking vs. other companies in IT Consulting & Other Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Gopher Protocol Inc ($GOPH) | | -25.0% | 83.3% | 5,471.1% | 461.0% |
| CLPS Incorporation ($CLPS) | | | | 8.1% | 56.0% |
| EPAM Systems, Inc. ($EPAM) | | 25.2% | 26.9% | 25.0% | 27.1% |
| Gartner, Inc. ($IT) | | 7.0% | 13.0% | 35.5% | 20.1% |
| Computer Task Group, Incorporated ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
| |
|---|
| Median (35 companies) | | 3.5% | 8.3% | 4.0% | 3.9% |
|---|
| Teradata Corporation ($TDC) | | -7.4% | -8.2% | -7.1% | 0.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inpixon ($INPX) | 29.8% | 28.9% | 28.1% | 68.7% | 71.4% |
| Gartner, Inc. ($IT) | 60.5% | 61.2% | 61.3% | 60.1% | 63.1% |
| InterXion Holding N.V. ($INXN) | 59.2% | 60.8% | 61.5% | 61.1% | 60.9% |
| LiveRamp Holdings, Inc. ($RAMP) | 25.1% | 38.6% | 42.5% | 45.7% | 56.2% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (37 companies) | 25.8% | 30.9% | 28.1% | 27.7% | 28.9% |
|---|
| Teradata Corporation ($TDC) | 54.1% | 50.4% | 51.2% | 47.5% | 47.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 41.3% | 44.9% | 43.3% | 42.2% | 42.8% |
| Switch, Inc. ($SWCH) | | 50.7% | 37.0% | 28.5% | 39.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 20.4% | 19.9% | 19.8% | 19.7% | 20.5% |
| Taoping Inc. ($TAOP) | -54.0% | -237.5% | -117.7% | 13.2% | 18.7% |
| DXC Technology Company ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (36 companies) | 4.8% | 3.5% | 6.7% | 6.3% | 7.2% |
|---|
| Teradata Corporation ($TDC) | 24.6% | -1.0% | 15.5% | 9.6% | 8.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 62.5% | 48.1% | 57.4% | 50.5% | 78.3% |
| Switch, Inc. ($SWCH) | | 71.5% | 90.2% | 106.4% | 67.9% |
| Taoping Inc. ($TAOP) | 1.4% | 29.2% | 34.0% | 20.8% | 8.7% |
| ServiceSource International, Inc. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| Amdocs Limited ($DOX) | 3.1% | 3.3% | 3.5% | 3.4% | 5.8% |
| |
|---|
| Median (35 companies) | 0.9% | 0.8% | 1.1% | 1.2% | 1.5% |
|---|
| Teradata Corporation ($TDC) | 2.0% | 2.1% | 2.3% | 3.6% | 7.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Accenture plc ($ACN) | 80.5% | 81.0% | 81.3% | 61.7% | 66.1% |
| The Hackett Group, Inc. ($HCKT) | 11.2% | 19.5% | 31.7% | 23.8% | 24.6% |
| Cognizant Technology Solutions Corporation ($CTSH) | 24.7% | 22.0% | 21.3% | 21.9% | 23.8% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 25.3% | 26.5% | 23.1% | 22.6% | 22.5% |
| EPAM Systems, Inc. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| |
|---|
| Median (44 companies) | 6.2% | 6.9% | 7.3% | 5.6% | 6.9% |
|---|
| Teradata Corporation ($TDC) | 22.5% | -10.0% | 14.6% | 4.6% | 3.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Infinite Group Inc ($IMCI) | | | 169.6x | | 10.5x |
| InterXion Holding N.V. ($INXN) | 3.3x | 2.9x | 3.4x | 3.8x | 4.6x |
| Gartner, Inc. ($IT) | 0.1x | 1.3x | 0.6x | 11.7x | 4.1x |
| Switch, Inc. ($SWCH) | | 2.2x | 4.0x | 3.2x | 3.3x |
| Presidio, Inc. ($PSDO) | 0.0x | | 5.6x | 3.6x | 3.1x |
| |
|---|
| Median (28 companies) | -0.2x | -0.3x | 0.4x | 0.8x | 1.0x |
|---|
| Teradata Corporation ($TDC) | -0.5x | | -1.1x | -1.5x | -1.3x |
