Teradata Corporation Net Income surged on 745% and EBITDA Margin increased slightly on 1.5 pp from 10.4% to 11.9%
02/04/2021 • About Teradata Corporation (
$TDC) • By InTwits
Teradata Corporation reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Teradata Corporation is a company in decline: 2020 revenue growth was -3.3%, 5 years revenue CAGR was -6.2%
- Teradata Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's in pair with industry average of 3.5%
- CAPEX is quite volatile: $44m in 2020, $54m in 2019, $153m in 2018, $78m in 2017, $53m in 2016
- The company has potentially unprofitable business model: ROIC is 2.2%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.5x while industry average is 0.6x
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 decreased on 3.3%. Annual revenue decline showed slowdown in 20Q4 - revenue decreased slightly on 0.61%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased slightly on 1.5 pp from 10.4% to 11.9% in 2020. During 2016-2020 EBITDA Margin bottomed in 2018 at 8.0% and was growing since that time.
Gross Margin increased on 5.2 pp from 50.3% to 55.5% in 2020. During 2016-2020 Gross Margin bottomed in 2018 at 47.4% and was growing since that time. SG&A as a % of Revenue increased on 3.9 pp from 32.5% to 36.4% in 2020. SG&A as a % of Revenue grew at 1.8 pp per annum in the last 5 years.
Net Income margin increased on 8.1 pp from -1.1% to 7.0% in 2020.
Investments (CAPEX, working capital and M&A)
Teradata Corporation's CAPEX/Revenue was 2.4% in 2020. Teradata Corporation's CAPEX/Revenue decreased slightly on 1.2 pp from 3.6% in 2017 to 2.4% in 2020. For the last three years the average CAPEX/Revenue was 4.1%. During 2016-2020 CAPEX as a % of Revenue topped in 2018 at 7.1% and was declining since that time.
Return on investment
The company operates at good ROE (39.0%) while ROIC is low (2.2%). ROIC increased slightly on 0.80 pp from 1.4% to 2.2% in 2020. ROE jumped on 44.3 pp from -5.3% to 39.0% in 2020. During 2016-2020 ROIC bottomed in 2019 at 1.4%.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.5x and Debt / EBITDA is 2.9x. Net Debt / EBITDA dropped on 0.4x from 0.9x to 0.5x in 2020. Debt decreased on 3.6% while cash increased on 7.1%.
Teradata Corporation has no short term refinancing risk: cash is higher than short term debt (394.8%).
Valuation and dividends
The company's trades at EV/EBITDA 23.9x and P/E 39.5x.
Management team
Teradata Corporation's CEO is Stephen Mcmillan "Steve". Stephen Mcmillan "Steve" has 9 months tenure with the company. The company's CFO Mark A Culhane has spent 2 years with the company.
Financial and operational results
FY ended 12/31/2020
Teradata Corporation ($TDC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 2,322 | 2,156 | 2,164 | 1,899 | 1,836 | -3.3% |
| Gross Profit | 1,188 | 1,024 | 1,026 | 955 | 1,019 | 6.7% |
| SG&A | 664 | 651 | 666 | 618 | 669 | 8.3% |
| EBITDA | 360 | 206 | 173 | 197 | 218 | 10.7% |
| EBIT | 232 | 68 | 43 | | | |
| Interest expence | 12 | 15 | 22 | | | |
| Tax | 96 | 125 | -3 | | | |
| Net Income | 125 | -67 | 30 | -20 | 129 | |
| Stock Based Compensation | 62 | 68 | 65 | | | |
Balance Sheet
|
|---|
| Cash | 974 | 1,089 | 715 | 494 | 529 | 7.1% |
| Accounts Receivable | 548 | 554 | 588 | | | |
| Inventory | 34 | 30 | 28 | | | |
| Accounts Payable | 103 | 74 | 141 | | | |
| Short Term Debt | 30 | 300 | 19 | 100 | 134 | 34.0% |
| Long Term Debt | 538 | 478 | 478 | 567 | 509 | -10.2% |
Cash flow
|
|---|
| Capex | 53 | 78 | 153 | 54 | 44 | -18.5% |
| Acquisitions | 16 | 21 | 3 | | | |
Ratios
|
|---|
| Revenue growth | -8.2% | -7.1% | 0.4% | -12.2% | -3.3% | |
| EBITDA growth | -1,540.0% | -42.8% | -16.0% | 13.9% | 10.7% | |
|
|---|
| Gross Margin | 51.2% | 47.5% | 47.4% | 50.3% | 55.5% | 5.2% |
| EBITDA Margin | 15.5% | 9.6% | 8.0% | 10.4% | 11.9% | 1.5% |
| EBIT Margin | 10.0% | 3.2% | 2.0% | | |
| SG&A, % of revenue | 28.6% | 30.2% | 30.8% | 32.5% | 36.4% | 3.9% |
| SBC, % of revenue | 2.7% | 3.2% | 3.0% | | |
| Net Income Margin | 5.4% | -3.1% | 1.4% | -1.1% | 7.0% | 8.1% |
| CAPEX, % of revenue | 2.3% | 3.6% | 7.1% | 2.8% | 2.4% | -0.4% |
|
|---|
| ROIC | 14.6% | 4.6% | 3.7% | 1.4% | 2.2% | 0.8% |
| ROE | 13.7% | -8.2% | 5.2% | -5.3% | 39.0% | 44.3% |
| Net Debt/EBITDA | -1.1x | -1.5x | -1.3x | 0.9x | 0.5x | -0.4x |
| Interest expence / Average debt | 2.1% | 2.2% | 3.5% | | | |
People
|
|---|
| Insider ownership | 1.5% | 1.5% | 1.5% | | | |
| Employees | 10,093 | 10,615 | 10,152 | | | |
| Revenue/Employee, th. $ | 230 | 203 | 213 | | | |
Teradata Corporation ($TDC) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 434 | 457 | 454 | 491 | | -7.3% | -4.4% | -1.1% | -0.6% |
| EBITDA | 36 | 51 | 42 | 59 | | 12.5% | -5.6% | -17.6% | 84.4% |
| Net Income | 168 | -43 | -1 | 5 | | - | - | -110.0% | - |
Balance Sheet
|
|---|
| Cash | 394 | 494 | 533 | 529 | | -45.5% | -22.2% | 0.9% | 7.1% |
| Short Term Debt | 102 | 118 | 130 | 134 | | 61.9% | 53.2% | 51.2% | 34.0% |
| Long Term Debt | 560 | 544 | 523 | 509 | | 0.4% | -3.5% | -7.8% | -10.2% |
Ratios
|
|---|
| Gross Margin | 51.8% | 56.0% | 55.9% | 57.8% | | 4.0% | 6.6% | 2.1% | 7.6% |
| EBITDA Margin | 8.3% | 11.2% | 9.3% | 12.0% | | 1.5% | -0.1% | -1.9% | 5.5% |
| Net Income Margin | 38.7% | -9.4% | -0.2% | 1.0% | | 40.8% | -9.2% | -2.4% | 4.9% |
Peers in IT Consulting & Other Services
Below we provide Teradata Corporation benchmarking against other companies in IT Consulting & Other Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| CLPS Incorporation ($CLPS) | - | 8.1% | 56.0% | 32.7% | 37.7% |
| Endava plc ($DAVA) | - | 38.1% | 36.5% | 32.3% | 21.9% |
| EPAM Systems, Inc. ($EPAM) | - | 25.0% | 27.1% | 24.5% | 15.9% |
| Switch, Inc. ($SWCH) | - | 18.8% | 7.3% | 13.9% | 10.7% |
| Perficient, Inc. ($PRFT) | - | -0.4% | 2.7% | 13.5% | 8.2% |
| |
|---|
| Median (14 companies) | 8.3% | 4.8% | 4.3% | 7.6% | 2.3% |
|---|
| Teradata Corporation ($TDC) | - | -7.1% | 0.4% | -12.2% | -3.3% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Gartner, Inc. ($IT) | 61.3% | 60.1% | 63.1% | 63.5% | 67.2% |
| Switch, Inc. ($SWCH) | 47.0% | 47.6% | 44.7% | 47.5% | 45.4% |
| Perficient, Inc. ($PRFT) | 31.1% | 33.3% | 35.8% | 37.4% | 37.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 39.9% | 38.2% | 39.0% | 36.6% | 35.9% |
| EPAM Systems, Inc. ($EPAM) | 36.5% | 36.5% | 35.6% | 35.1% | 34.9% |
| |
|---|
| Median (14 companies) | 28.8% | 28.8% | 29.4% | 35.1% | 32.7% |
|---|
| Teradata Corporation ($TDC) | 51.2% | 47.5% | 47.4% | 50.3% | 55.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 37.0% | 28.5% | 39.8% | 44.1% | 47.8% |
| Amdocs Limited ($DOX) | 18.7% | 18.9% | 16.1% | 19.0% | 21.2% |
| Gartner, Inc. ($IT) | 15.0% | 7.1% | 13.0% | 16.2% | 19.8% |
| EPAM Systems, Inc. ($EPAM) | 13.5% | 13.9% | 15.3% | 17.9% | 19.4% |
| Accenture plc ($ACN) | 15.9% | 14.8% | 16.3% | 16.7% | 18.7% |
| |
|---|
| Median (14 companies) | 6.7% | 6.9% | 7.2% | 14.6% | 13.5% |
|---|
| Teradata Corporation ($TDC) | 15.5% | 9.6% | 8.0% | 10.4% | 11.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 90.2% | 106.4% | 67.9% | 66.6% | 67.8% |
| Amdocs Limited ($DOX) | 3.5% | 3.4% | 5.8% | 3.1% | 4.9% |
| ServiceSource International, Inc. ($SREV) | 10.4% | 7.2% | 6.5% | 4.7% | 4.0% |
| Endava plc ($DAVA) | 2.4% | 4.1% | 2.5% | 2.6% | 2.8% |
| EPAM Systems, Inc. ($EPAM) | 2.5% | 2.1% | 2.0% | 4.3% | 2.6% |
| |
|---|
| Median (14 companies) | 1.1% | 1.4% | 1.5% | 2.0% | 1.7% |
|---|
| Teradata Corporation ($TDC) | 2.3% | 3.6% | 7.1% | 2.8% | 2.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Accenture plc ($ACN) | 81.3% | 61.7% | 66.1% | 62.1% | 40.7% |
| EPAM Systems, Inc. ($EPAM) | 18.2% | 18.9% | 21.2% | 20.2% | 19.4% |
| Cognizant Technology Solutions Corporation ($CTSH) | 21.3% | 21.9% | 23.8% | 20.4% | 17.5% |
| Amdocs Limited ($DOX) | 13.0% | 14.4% | 11.9% | 15.9% | 14.5% |
| Gartner, Inc. ($IT) | 41.0% | -0.2% | 6.9% | 10.8% | 12.7% |
| |
|---|
| Median (14 companies) | 7.3% | 6.4% | 7.0% | 11.0% | 9.6% |
|---|
| Teradata Corporation ($TDC) | 14.6% | 4.6% | 3.7% | 1.4% | 2.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Switch, Inc. ($SWCH) | 4.0x | 3.2x | 3.3x | 4.0x | 4.0x |
| Gartner, Inc. ($IT) | 0.6x | 11.7x | 4.1x | 4.1x | 2.6x |
| Perficient, Inc. ($PRFT) | 0.4x | 1.0x | 1.3x | 1.0x | 1.5x |
| ServiceSource International, Inc. ($SREV) | 156.0x | - | -35.5x | 2.9x | 0.6x |
| Amdocs Limited ($DOX) | -0.8x | -0.9x | -0.7x | -0.6x | 0.1x |
| |
|---|
| Median (12 companies) | 0.3x | 0.6x | 0.8x | -0.4x | -0.4x |
|---|
| Teradata Corporation ($TDC) | -1.1x | -1.5x | -1.3x | 0.9x | 0.5x |
