What happened
Teradata (TDC +2.11%) stock surged in morning trading today, up 24.2% as of 10:50 a.m. ET, after the data management specialist reported fourth-quarter 2021 earnings last night -- and beat analyst predictions with a stick.
Heading into last night's report, analysts had forecast that Teradata would earn an adjusted profit of $0.27 per share on sales of $478.6 million. In fact, the company earned more than twice the predicted profit -- $0.57 per share -- and needed sales of only $475 million to do it.
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So what
Granted, one way of looking at the numbers is that Teradata missed on sales, pulling in about 1% less revenue than predicted. But investors seem fine with that today, given that the company nearly doubled its "public cloud" annual recurring revenue and grew the portion of its total revenue that is recurring by 7 full percentage points to 77%.
Also, when calculated according to generally accepted accounting principles (GAAP), Teradata's profits weren't quite as strong as the headline pro forma profit number. GAAP profits for the quarter were only $0.29 per share -- not $0.57. But even there, the GAAP number was well ahead of Teradata's own forecast for a small quarterly loss (the company had promised a loss of $0.01 to $0.05 per share). And its pro forma number was roughly twice its predicted pro forma profit of $0.25 to $0.29 for the quarter.
For the year, Teradata grew its sales 4% to $1.9 billion (but with 12% growth in recurring revenue), added 640 basis points to its gross margin (now 61.9%), and reported $1.30 per share -- GAAP -- on the bottom line.
Now what
Continuing the good news, CEO Steve McMillan predicted that "the strength of our performance in 2021 is matched by our conviction to continue accelerating in 2022." Heading into a new fiscal year, Teradata says revenue will again grow in the "flat-to-low-single-digit percentage" range in 2022, with public cloud revenue growing 80% and recurring revenue growing in the "low-to-mid-single" digits.
GAAP profits are predicted to range from $0.75 to $0.85 -- much weaker than in 2021. But after the huge 2021 beat, investors today seem willing to accept this more muted forecast for 2022.
