Cover
Cover - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2023 | Apr. 28, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-33458 | |
Entity Registrant Name | TERADATA CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 75-3236470 | |
Entity Address, Address Line One | 17095 Via Del Campo | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92127 | |
City Area Code | 866 | |
Local Phone Number | 548-8348 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | TDC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 101.1 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000816761 | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue | ||
Revenue | $ 476 | $ 496 |
Cost of revenue | ||
Cost of revenue | 174 | 195 |
Gross profit | 302 | 301 |
Operating expenses | ||
Selling, general and administrative expenses | 153 | 157 |
Research and development expenses | 70 | 76 |
Total operating expenses | 223 | 233 |
Income from operations | 79 | 68 |
Other expense, net | ||
Interest expense | (7) | (6) |
Interest income | 7 | 2 |
Other expense | (21) | (9) |
Total other expense, net | (21) | (13) |
Income before income taxes | 58 | 55 |
Income tax expense | 18 | 19 |
Net income | $ 40 | $ 36 |
Net income per common share | ||
Basic (in dollars per share) | $ 0.39 | $ 0.34 |
Diluted (in dollars per share) | $ 0.39 | $ 0.33 |
Weighted average common shares outstanding | ||
Basic (in shares) | 101.4 | 105 |
Diluted (in shares) | 103.8 | 108.6 |
Total recurring | ||
Revenue | ||
Revenue | $ 389 | $ 386 |
Cost of revenue | ||
Cost of revenue | 98 | 105 |
Subscription software licenses | ||
Revenue | ||
Revenue | 104 | 93 |
Cost of revenue | ||
Cost of revenue | 6 | 7 |
Services and other | ||
Revenue | ||
Revenue | 285 | 293 |
Cost of revenue | ||
Cost of revenue | 92 | 98 |
Perpetual software licenses, hardware and other | ||
Revenue | ||
Revenue | 13 | 26 |
Cost of revenue | ||
Cost of revenue | 11 | 18 |
Consulting services | ||
Revenue | ||
Revenue | 74 | 84 |
Cost of revenue | ||
Cost of revenue | $ 65 | $ 72 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 40 | $ 36 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 3 | (1) |
Unrealized loss on cross-currency net investment hedge, before tax | (1) | 0 |
Unrealized loss on cross-currency net investment hedge, tax portion | 0 | 0 |
Total currency translation adjustments | 2 | (1) |
Derivatives: | ||
Unrealized (loss) gain on derivatives, before tax | (6) | 8 |
Unrealized (loss) gain on derivatives, tax portion | 1 | (2) |
Unrealized (loss) gain on derivatives, net of tax | (5) | 6 |
Defined benefit plans: | ||
Defined benefit plan adjustment, before tax | 2 | 3 |
Defined benefit plan adjustment, tax portion | 0 | (1) |
Defined benefit plan adjustment, net of tax | 2 | 2 |
Other comprehensive income (loss) | (1) | 7 |
Comprehensive income | $ 39 | $ 43 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 551 | $ 569 |
Accounts receivable, net | 341 | 364 |
Inventories | 7 | 8 |
Other current assets | 107 | 87 |
Total current assets | 1,006 | 1,028 |
Property and equipment, net | 252 | 244 |
Right of use assets - operating lease, net | 11 | 13 |
Goodwill | 391 | 390 |
Capitalized contract costs, net | 84 | 92 |
Deferred income taxes | 204 | 213 |
Other assets | 38 | 42 |
Total assets | 1,986 | 2,022 |
Current liabilities | ||
Current portion of long-term debt | 0 | 0 |
Current portion of finance lease liability | 70 | 67 |
Current portion of operating lease liability | 8 | 8 |
Accounts payable | 92 | 94 |
Payroll and benefits liabilities | 95 | 137 |
Deferred revenue | 634 | 589 |
Other current liabilities | 100 | 112 |
Total current liabilities | 999 | 1,007 |
Long-term debt | 498 | 498 |
Finance lease liability | 62 | 54 |
Operating lease liability | 8 | 10 |
Pension and other postemployment plan liabilities | 96 | 101 |
Long-term deferred revenue | 4 | 8 |
Deferred tax liabilities | 7 | 7 |
Other liabilities | 82 | 79 |
Total liabilities | 1,756 | 1,764 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity | ||
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively | 0 | 0 |
Common stock: par value $0.01 per share, 500.0 shares authorized, 101.8 and 101.1 shares issued at March 31, 2023 and December 31, 2022, respectively | 1 | 1 |
Paid-in capital | 1,962 | 1,941 |
Accumulated deficit | (1,613) | (1,565) |
Accumulated other comprehensive loss | (120) | (119) |
Total stockholders’ equity | 230 | 258 |
Total liabilities and stockholders’ equity | $ 1,986 | $ 2,022 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 101,800,000 | 101,100,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating activities | ||
Net income | $ 40 | $ 36 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 28 | 40 |
Stock-based compensation expense | 28 | 31 |
Deferred income taxes | 7 | 8 |
Changes in assets and liabilities: | ||
Receivables | 23 | 6 |
Inventories | 1 | 10 |
Current payables and accrued expenses | (41) | (49) |
Deferred revenue | 41 | 20 |
Other assets and liabilities | (18) | 49 |
Net cash provided by operating activities | 109 | 151 |
Investing activities | ||
Expenditures for property and equipment | (4) | (1) |
Net cash used in investing activities | (4) | (1) |
Financing activities | ||
Repurchases of common stock | (84) | (300) |
Repayments of long-term borrowings | 0 | (13) |
Payments of finance leases | (20) | (22) |
Other financing activities, net | (7) | 4 |
Net cash used in financing activities | (111) | (331) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (10) | (6) |
Decrease in cash, cash equivalents and restricted cash | (16) | (187) |
Cash, cash equivalents and restricted cash at beginning of period | 571 | 595 |
Cash, cash equivalents and restricted cash at end of period | 555 | 408 |
Supplemental cash flow disclosure: | ||
Assets acquired under operating lease | 1 | 1 |
Assets acquired under finance lease | 30 | 24 |
Reconciliation of cash, cash equivalents and restricted cash to the Condensed Consolidated Balance Sheets: | ||
Cash and cash equivalents | 551 | |
Restricted cash | 4 | |
Total cash, cash equivalents and restricted cash | $ 555 | $ 408 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss |
Shares issued, beginning balance (in shares) at Dec. 31, 2021 | 107 | ||||
Stockholders’ equity, beginning balance at Dec. 31, 2021 | $ 460 | $ 1 | $ 1,808 | $ (1,211) | $ (138) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 36 | 36 | |||
Employee stock compensation, employee stock purchase programs and option exercises, net of tax (in shares) | 3 | ||||
Employee stock compensation, employee stock purchase programs and option exercises, net of tax | 34 | 34 | |||
Repurchase of common stock, not yet settled | (50) | (50) | |||
Repurchases of common stock, retired (in shares) | (5) | ||||
Repurchases of common stock, retired | (250) | (250) | |||
Pension and postemployment benefit plans, net of tax | 2 | 2 | |||
Unrealized loss on derivatives, net of tax | 6 | 6 | |||
Currency translation adjustment | (1) | (1) | |||
Shares issued, ending balance (in shares) at Mar. 31, 2022 | 105 | ||||
Stockholders’ equity, ending balance at Mar. 31, 2022 | 237 | $ 1 | 1,792 | (1,425) | (131) |
Shares issued, beginning balance (in shares) at Dec. 31, 2022 | 101 | ||||
Stockholders’ equity, beginning balance at Dec. 31, 2022 | 258 | $ 1 | 1,941 | (1,565) | (119) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 40 | 40 | |||
Employee stock compensation, employee stock purchase programs and option exercises, net of tax (in shares) | 3 | ||||
Employee stock compensation, employee stock purchase programs and option exercises, net of tax | 21 | 21 | |||
Repurchases of common stock, retired (in shares) | (2) | ||||
Repurchases of common stock, retired | (88) | (88) | |||
Pension and postemployment benefit plans, net of tax | 2 | 2 | |||
Unrealized loss on derivatives, net of tax | (5) | (5) | |||
Currency translation adjustment | 2 | 2 | |||
Shares issued, ending balance (in shares) at Mar. 31, 2023 | 102 | ||||
Stockholders’ equity, ending balance at Mar. 31, 2023 | $ 230 | $ 1 | $ 1,962 | $ (1,613) | $ (120) |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of PresentationThese statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC") and, in accordance with those rules and regulations, do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the results of operations, financial position and cash flows of Teradata Corporation ("Teradata" or the "Company") for the interim periods presented herein. The year-end 2022 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amounts and disclosures. Actual results may vary from these estimates. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Teradata’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the "2022 Annual Report"). The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year. |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Pronouncements | New Accounting PronouncementsThe Company has assessed the Accounting Standards Updates and determined that they were not applicable or were not expected to have a material impact on the Company's financial statements. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers Disaggregation of Revenue from Contracts with Customers The following table presents a disaggregation of revenue: Three Months Ended March 31, in millions 2023 2022 Americas Recurring $ 256 $ 246 Perpetual software licenses, hardware and other 5 12 Consulting services 31 32 Total Americas 292 290 EMEA Recurring 87 89 Perpetual software licenses, hardware and other 7 11 Consulting services 23 29 Total EMEA 117 129 APJ Recurring 46 51 Perpetual software licenses, hardware and other 1 3 Consulting services 20 23 Total APJ 67 77 Total Revenue $ 476 $ 496 Rental revenue, which is included in recurring revenue in the above table, was as follows: Three Months Ended March 31, in millions 2023 2022 Rental revenue* $ 51 $ 50 *Rental revenue includes hardware maintenance. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets, and customer advances and deposits (deferred revenue or contract liabilities) on the condensed consolidated balance sheet. Accounts receivable include amounts due from customers that are unconditional. Contract assets relate to the Company’s rights to consideration for goods delivered or services completed and recognized as revenue but billing and the right to receive payment is conditional upon the completion of other performance obligations. Contract assets are included in other current assets on the balance sheet and are transferred to accounts receivable when the rights become unconditional. Deferred revenue consists of advance payments and billings in excess of revenue recognized. Deferred revenue is classified as either current or noncurrent based on the timing of when the Company expects to recognize revenue. These assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period. The following table provides information about receivables, contract assets and deferred revenue from contracts with customers: As of in millions March 31, 2023 December 31, 2022 Accounts receivable, net $ 341 $ 364 Contract assets $ 15 $ 7 Current deferred revenue $ 634 $ 589 Long-term deferred revenue $ 4 $ 8 Revenue recognized during the three months ended March 31, 2023 from amounts included in deferred revenue at the beginning of the period was $173 million . Transaction Price Allocated to Unsatisfied Obligations The following table includes estimated revenue expected to be recognized in the future related to the Company's unsatisfied (or partially satisfied) obligations at March 31, 2023: in millions Total at March 31, 2023 Year 1 Year 2 and Thereafter Remaining unsatisfied obligations $ 2,317 $ 1,302 $ 1,015 The amounts above represent the price of firm orders for which work has not been performed or goods have not been delivered and exclude unexercised contract options outside the stated contractual term that do not represent material rights to the customer. Although the Company believes that the contract value in the above table is firm, approximately $1,197 million of the amount is under contracts that are subject to customer-only general cancellation for convenience terms that the Company is contractually obligated to perform unless the customer notifies us of cancellation. The Company expects to recognize revenue of approximately $597 million in the next year from contracts that are non-cancelable. The Company believes the inclusion of this information is important to understanding the obligations that the Company is contractually required to perform and provides useful information regarding remaining obligations related to these executed contracts. The Company capitalizes sales commissions and other contract costs that are incremental direct costs of obtaining customer contracts if the expected amortization period of the asset is greater than one year. These costs are recorded in capitalized contract costs, net on the Company’s balance sheet. The capitalized amounts are calculated based on the annual recurring revenue and contract value for individual multi-term contracts. The judgments made in determining the amount of costs incurred include whether the commissions are in fact incremental and would not have occurred absent the customer contract. Costs to obtain a contract are amortized as selling, general and administrative expenses on a straight-line basis over the expected period of benefit, which is typically around four years. These costs are periodically reviewed for impairment. The following table identifies the activity relating to capitalized contract costs: in millions December 31, 2022 Capitalized Amortization March 31, 2023 Capitalized contract costs $ 92 $ 2 $ (10) $ 84 in millions December 31, 2021 Capitalized Amortization March 31, 2022 Capitalized contract costs $ 111 $ 13 $ (15) $ 109 |
Contract Costs
Contract Costs | 3 Months Ended |
Mar. 31, 2023 | |
Capitalized Contract Cost [Abstract] | |
Contract Costs | Revenue from Contracts with Customers Disaggregation of Revenue from Contracts with Customers The following table presents a disaggregation of revenue: Three Months Ended March 31, in millions 2023 2022 Americas Recurring $ 256 $ 246 Perpetual software licenses, hardware and other 5 12 Consulting services 31 32 Total Americas 292 290 EMEA Recurring 87 89 Perpetual software licenses, hardware and other 7 11 Consulting services 23 29 Total EMEA 117 129 APJ Recurring 46 51 Perpetual software licenses, hardware and other 1 3 Consulting services 20 23 Total APJ 67 77 Total Revenue $ 476 $ 496 Rental revenue, which is included in recurring revenue in the above table, was as follows: Three Months Ended March 31, in millions 2023 2022 Rental revenue* $ 51 $ 50 *Rental revenue includes hardware maintenance. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, contract assets, and customer advances and deposits (deferred revenue or contract liabilities) on the condensed consolidated balance sheet. Accounts receivable include amounts due from customers that are unconditional. Contract assets relate to the Company’s rights to consideration for goods delivered or services completed and recognized as revenue but billing and the right to receive payment is conditional upon the completion of other performance obligations. Contract assets are included in other current assets on the balance sheet and are transferred to accounts receivable when the rights become unconditional. Deferred revenue consists of advance payments and billings in excess of revenue recognized. Deferred revenue is classified as either current or noncurrent based on the timing of when the Company expects to recognize revenue. These assets and liabilities are reported on a contract-by-contract basis at the end of each reporting period. The following table provides information about receivables, contract assets and deferred revenue from contracts with customers: As of in millions March 31, 2023 December 31, 2022 Accounts receivable, net $ 341 $ 364 Contract assets $ 15 $ 7 Current deferred revenue $ 634 $ 589 Long-term deferred revenue $ 4 $ 8 Revenue recognized during the three months ended March 31, 2023 from amounts included in deferred revenue at the beginning of the period was $173 million . Transaction Price Allocated to Unsatisfied Obligations The following table includes estimated revenue expected to be recognized in the future related to the Company's unsatisfied (or partially satisfied) obligations at March 31, 2023: in millions Total at March 31, 2023 Year 1 Year 2 and Thereafter Remaining unsatisfied obligations $ 2,317 $ 1,302 $ 1,015 The amounts above represent the price of firm orders for which work has not been performed or goods have not been delivered and exclude unexercised contract options outside the stated contractual term that do not represent material rights to the customer. Although the Company believes that the contract value in the above table is firm, approximately $1,197 million of the amount is under contracts that are subject to customer-only general cancellation for convenience terms that the Company is contractually obligated to perform unless the customer notifies us of cancellation. The Company expects to recognize revenue of approximately $597 million in the next year from contracts that are non-cancelable. The Company believes the inclusion of this information is important to understanding the obligations that the Company is contractually required to perform and provides useful information regarding remaining obligations related to these executed contracts. The Company capitalizes sales commissions and other contract costs that are incremental direct costs of obtaining customer contracts if the expected amortization period of the asset is greater than one year. These costs are recorded in capitalized contract costs, net on the Company’s balance sheet. The capitalized amounts are calculated based on the annual recurring revenue and contract value for individual multi-term contracts. The judgments made in determining the amount of costs incurred include whether the commissions are in fact incremental and would not have occurred absent the customer contract. Costs to obtain a contract are amortized as selling, general and administrative expenses on a straight-line basis over the expected period of benefit, which is typically around four years. These costs are periodically reviewed for impairment. The following table identifies the activity relating to capitalized contract costs: in millions December 31, 2022 Capitalized Amortization March 31, 2023 Capitalized contract costs $ 92 $ 2 $ (10) $ 84 in millions December 31, 2021 Capitalized Amortization March 31, 2022 Capitalized contract costs $ 111 $ 13 $ (15) $ 109 |
Supplemental Financial Informat
Supplemental Financial Information | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Financial Information | Supplemental Financial Information As of In millions March 31, December 31, Inventories Finished goods $ 5 $ 5 Service parts 2 3 Total inventories $ 7 $ 8 Deferred revenue Deferred revenue, current $ 634 $ 589 Long-term deferred revenue 4 8 Total deferred revenue $ 638 $ 597 Three Months Ended March 31, In millions 2023 2022 Other expense Foreign currency losses $ 18 $ 6 Other 3 3 Total Other expense $ 21 $ 9 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax provisions for interim periods are based on estimated annual income tax rates, adjusted to reflect the effects of any significant infrequent or unusual items which are required to be discretely recognized within the current interim period. The Company expects that a majority of its foreign earnings will be repatriated back to the United States ("U.S."). As a result, the effective tax rates in the periods presented are largely based upon the forecasted pre-tax earnings mix and allocation of certain expenses in various taxing jurisdictions where the Company conducts its business. The effective tax rate is as follows: Three Months Ended March 31, In millions 2023 2022 Effective tax rate 31.0 % 34.5 % For the three months ended March 31, 2023, the Company recorded $2 million of net discrete tax benefits, a majority of which related to the excess tax benefit derived from stock-based compensation vesting. For the three months ended March 31, 2022, the Company recorded $4 million of net discrete tax benefits, a majority of which related to the excess tax benefit derived from stock-based compensation vesting. In addition, the Company’s effective tax rate increased by 9% as a result of an increase in the Company’s forecasted global intangible low-taxed income ("GILTI") tax liability as described below. The Company estimates its annual effective tax rate for 2023 to be approximately 36.0% , which takes into consideration, among other things, the forecasted earnings mix by jurisdiction and the impact of discrete tax items to be recognized in 2023. Under U.S. tax law, U.S. shareholders are subject to a tax on GILTI earned by certain foreign subsidiaries. The Company has elected to provide for the tax expense related to GILTI in the year in which the tax is incurred. Effective on January 1, 2022, the U.S. tax law changed and now requires R&D expenses to be capitalized and amortized for tax purposes under Internal Revenue Code Section 174; as a result of this law change, the Company is currently forecasting approximately $5 million of tax expense related to GILTI in our marginal effective tax rate for 2023. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities As a portion of Teradata’s operations is conducted outside the U.S. and in currencies other than the U.S. dollar, the Company is exposed to potential gains and losses from changes in foreign currency exchange rates. In an attempt to mitigate the impact of currency fluctuations, the Company uses foreign exchange forward contracts to hedge transactional exposures resulting predominantly from foreign currency denominated inter-company receivables and payables. The forward contracts are designated as fair value hedges of specified foreign currency denominated inter-company receivables and payables and generally mature in three months or less. The fair values of foreign exchange contracts are based on market spot and forward exchange rates and represent estimates of possible value that may not be realized in the future. Across its portfolio of contracts, Teradata has both long and short positions relative to the U.S. dollar. As a result, Teradata’s net exposure is less than the total contract notional amount of the Company’s foreign exchange forward contracts. Gains and losses from foreign exchange forward contracts are fully recognized each period and reported along with the offsetting gain or loss of the related hedged item, either in cost of revenues, operating expenses or in other income (expense), depending on the nature of the related hedged item. During June 2022, Teradata entered into a cross-currency swap designated as a net investment hedge, to hedge the Euro currency exposure of its net investment in certain foreign subsidiaries. This agreement is a contract to exchange fixed-rate payments in one currency for fixed-rate payments in another currency. Changes in the fair value of this swap are recorded in Accumulated Other Comprehensive Loss in the same manner as foreign currency translation adjustments. In assessing the effectiveness of this hedge, the Company used a method based on changes in spot rates to measure the impact of the foreign currency exchange rate fluctuations on both its foreign subsidiary net investment and the related swap. The cross-currency swap contract has an expiration date of June 29, 2026. At maturity of the cross-currency swap contract, the Company will deliver the notional amount of €143 million and wil l receive $150 million from the counterparty. The Company will receive monthly interest payments from the counterparty based on a fixed interest rate until maturity of the agreements. In June 2022, Teradata refinanced its long-term debt and its associated interest rate swap ("Prior Interest Rate Swap"), which were due to mature in June 2023. As a result, Teradata terminated its five-year London Interbank Offered Rate ("Libor") interest rate swap that had a $500 million initial notional amount to hedge the floating interest rate of its Libor term loan. On June 28, 2022, Teradata executed a five-year Secured Overnight Financing Rate ("SOFR") interest rate swap, to fix the interest rate on approximately 90% of the principal balance of the $500 million term loan, with an initial notional amount of $450 million. The Company uses interest rate swaps to manage interest rate risks on future interest payments caused by interest rate changes on its variable rate term loan. The notional amount of the hedge steps down according to the amortization schedule of the term loan. The notional amount of the hedge was $450 million as of March 31, 2023. The Company performed an initial effectiveness assessment on the interest rate swap and the net investment hedge foreign currency swap, and the hedges were determined to be effective. The hedges are being evaluated qualitatively on a quarterly basis for effectiveness. Changes in fair value are recorded in Accumulated Other Comprehensive Loss and periodic settlements of the swap will be recorded in interest expense along with the interest on amounts outstanding under the term loan. The following table identifies the contract notional amount of the Company’s derivative financial instruments: As of In millions March 31, December 31, Contract notional amount of foreign exchange forward contracts $ 44 $ 46 Net contract notional amount of foreign exchange forward contracts $ 13 $ 7 Contract notional amount of foreign currency exchange (net investment hedge) $ 150 $ 150 Contract notional amount of interest rate swap $ 450 $ 450 All derivatives are recognized in the condensed consolidated balance sheets at their fair value. The notional amounts represent agreed-upon amounts on which calculations of dollars to be exchanged are based and are an indication of the extent of Teradata’s involvement in such instruments. These notional amounts do not represent amounts exchanged by the parties and, therefore, are not a measure of the instruments. Refer to Note 9 for disclosures related to the fair value of all derivative assets and liabilities. The Company does not hold or issue derivative financial instruments for trading purposes, nor does it hold or issue leveraged derivative instruments. By using derivative financial instruments to hedge exposures to changes in foreign exchange and interest rates, the Company exposes itself to credit risk. The Company manages exposure to counterparty credit risk by entering into derivative financial instruments with highly rated institutions that can be expected to fully perform under the terms of the applicable contracts. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal Proceedings. In the ordinary course of business, the Company is subject to proceedings, lawsuits, governmental investigations, claims and other matters, including those that relate to the environment, health and safety, employee benefits, export compliance, intellectual property, tax matters and other regulatory compliance and general matters. It is not currently a party to any litigation, nor is it aware of any pending or threatened litigation against it that the Company believes would materially affect its business, operating results, financial condition or cash flows, other than the following. On June 19, 2018, the Company and certain of its subsidiaries filed a lawsuit (the "TD-SAP 1" suit) in the U.S. District Court for the Northern District of California against SAP SE, SAP America, Inc., and SAP Labs, LLC (collectively, "SAP"). In the TD-SAP 1 lawsuit, the Company alleged, among other things, that SAP misappropriated certain of the Company’s trade secrets within the Company’s enterprise data analytics and warehousing products and used such trade secrets to help develop, improve, introduce, and sell one or more competing products. The Company further alleged that SAP employed anticompetitive practices using its substantial market position in the enterprise resource planning applications market to pressure the Company’s customers and prospective customers to use one or more of SAP's competing products and reduce or eliminate customers' and prospective customers' use of the Company's offerings. The Company sought an injunction barring SAP’s alleged conduct, monetary damages, and other available legal and equitable relief. In July 2019, SAP filed patent infringement counterclaims against the Company based on five of SAP’s U.S. patents. On August 31, 2020, the Company filed a second lawsuit against SAP (the "TD-SAP 2" suit) in the U.S. District Court for the Northern District of California, in which the Company alleged infringement by SAP of four of the Company's U.S. patents. On February 16, 2021, SAP filed additional patent infringement counterclaims against the Company in response. On the same day, SAP also filed a lawsuit in Germany (the "TD-SAP 3" suit) for infringement of a single German patent. In November 2021, the district court dismissed the Company’s antitrust claims and most of its trade secret claims in the TD-SAP 1 suit. In December 2021, the Company appealed that decision to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. In the meantime, the Company and SAP have entered into a partial settlement agreement that has resulted in full dismissal of all claims and counterclaims in the TD-SAP 2 suit in California and the TD-SAP 3 suit in Germany as well as a stay of all claims and counterclaims remaining in the TD-SAP 1 suit pending resolution of the Company’s appeal. Currently, it is not possible to determine the likelihood of a loss or a reasonably estimated range of loss, if any, pertaining to any of SAP’s remaining patent counterclaims in the TD-SAP 1 lawsuit. Other Contingencies. The Company provides its customers with certain indemnification rights. In general, the Company agrees to indemnify the customer if a third party asserts patent or other infringement on the part of the customer for its use of the Company’s offerings. The Company has indemnification obligations under its charter and bylaws to its officers and directors, and has entered into indemnification agreements with the officers and directors of its subsidiaries. From time to time, the Company also enters into agreements in connection with its acquisition and divestiture activities that include indemnification obligations by the Company. The fair value of these indemnification obligations is typically not readily determinable due to the conditional nature of the Company’s potential obligations and the specific facts and circumstances involved with each particular agreement. As such, the Company has generally not recorded a liability in connection with these indemnification arrangements. Historically, payments made by the Company under these types of agreements have not had a material effect on the Company’s consolidated financial condition, results of operations or cash flows. Concentrations of Risk . The Company is potentially subject to concentrations of credit risk on accounts receivable and financial instruments such as hedging instruments, and cash and cash equivalents. Credit risk includes the risk of nonperformance by counterparties. The maximum potential loss may exceed the amount recognized on the balance sheet. Exposure to credit risk is managed through credit approvals, credit limits, selecting major international financial institutions (as counterparties to hedging transactions) and monitoring procedures. Teradata’s business often involves large transactions with customers, and if one or more of those customers were to default in its obligations under applicable contractual arrangements, the Company could be exposed to potentially significant losses. However, management believes that the reserves for potential losses were adequate at March 31, 2023 and December 31, 2022. The Company is also potentially subject to concentrations of supplier risk. Our hardware components are assembled exclusively by Flex Ltd. ("Flex"). Flex procures a wide variety of components used in the manufacturing process on behalf of the Company. Although many of these components are available from multiple sources, Teradata utilizes preferred supplier relationships to provide more consistent and optimal quality, cost and delivery. Typically, these preferred suppliers maintain alternative processes and/or facilities to ensure continuity of supply. Given the Company’s strategy to outsource its manufacturing activities to Flex and to source certain components from single suppliers, a disruption in production at Flex or at a supplier could impact the timing of customer shipments and/or Teradata’s operating results. In addition, a significant change in the forecasts to any of these preferred suppliers could result in purchase obligations for components that may be in excess of demand. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value measurements are established utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as significant other observable inputs, such as quoted prices in active markets for similar assets or liabilities, or quoted prices in less-active markets for identical assets; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value on a recurring basis include money market funds, interest rate swaps, foreign currency swaps and foreign currency exchange contracts. A portion of the Company’s excess cash reserves are held in money market funds which generate interest income based on the prevailing market rates. Money market funds are included in cash and cash equivalents in the Company’s balance sheet. Money market fund holdings are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. When deemed appropriate, the Company minimizes its exposure to changes in foreign currency exchange rates through the use of derivative financial instruments, specifically, foreign exchange forward contracts. Additionally, in June 2022, Teradata executed a five-year interest rate swap with a $450 million initial notional amount in order to hedge the variable interest rate on its term loan and a four-year cross-currency swap with initial notional amounts of €143 million/$150 million, as a net investment hedge to hedge the Euro currency exposure of our net investment in certain foreign subsidiaries. The fair value of these contracts and swaps are measured at the end of each interim reporting period using observable inputs other than quoted prices, specifically market spot and forward exchange rates. As such, these derivative instruments are classified within Level 2 of the valuation hierarchy. Fair value of unrealized gains for open contracts are recorded in other assets and the fair value of unrealized losses are recorded in other liabilities in the Company's balance sheet. The fair value of foreign exchange forward contract assets and liabilities at March 31, 2023 and December 31, 2022 was not material. Realized gains and losses from the Company’s fair value and net investment hedges net of corresponding gains or losses on the underlying exposures were immaterial f or the three months ended March 31, 2023 and 2022. The Company’s other assets and liabilities measured at fair value on a recurring basis and subject to fair value disclosure requirements at March 31, 2023 and December 31, 2022 were as follows: Fair Value Measurements at Reporting Date Using In millions Total Quoted Prices in Significant Significant Assets Money market funds at March 31, 2023 $ 172 $ 172 $ — $ — Money market funds at December 31, 2022 $ 211 $ 211 $ — $ — Interest rate swap at March 31, 2023 $ 7 $ — $ 7 $ — Interest rate swap at December 31, 2022 $ 13 $ — $ 13 $ — Liabilities Foreign currency swap at March 31, 2023 $ 3 $ — $ 3 $ — Foreign currency swap at December 31, 2022 $ 1 $ — $ 1 $ — |
Debt
Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt On June 28, 2022, the Company entered into a Credit Agreement that provides for (i) a five-year unsecured term loan in an aggregate principal amount of $500 million (the "Term Loan"), and (ii) a five-year unsecured revolving credit facility in an aggregate principal amount of up to $400 million, including a $50 million sublimit for the issuance of standby letters of credit and a $50 million sublimit for swingline loans (the "Revolving Facility" and, collectively with the Term Loan, the "Credit Facility"). The Credit Facility replaces the Company's prior revolving credit agreement in the maximum principal of $400 million and its prior term loan agreement in the initial principal amount of $500 million, both of which were entered into in 2018 (the "Prior Agreements"). In connection with the execution of the Credit Facility, the $400 million term loan outstanding under the Prior Agreements was repaid in full. All outstanding borrowings pursuant to the Revolving Facility are due and payable on June 28, 2027, however, the maturity date of the Revolving Facility may be extended by agreement of the parties for up to two additional one-year periods. The Term Loan is payable in quarterly installments, which commence on June 30, 2024, with 1.25% of the initial principal amount due on each of the first twelve payment dates, with all remaining principal due on June 28, 2027. Under the terms of the Credit Facility, Teradata from time to time and subject to certain conditions may increase the lending commitments under the Credit Facility in an aggregate principal amount up to an additional $450 million, to the extent that existing or new lenders agree to provide such additional commitments. The outstanding principal amount of the Credit Facility bears interest at a floating rate based upon, at Teradata’s option, a negotiated base rate or an adjusted term SOFR rate, plus in each case, a margin based on the Company's leverage ratio. As disclosed in Note 7, in June 2022, Teradata entered into an interest rate swap to hedge approximately 90% (or $450 million as of March 31, 2023) of the floating interest rate of the total $500 million Term Loan and a cross currency swap to hedge a portion of Euro currency exposure of its net investment in certain foreign subsidiaries. The Credit Facility is unsecured but is guaranteed by certain of Teradata’s material domestic subsidiaries and contains certain customary representations and warranties, default provisions, and affirmative and negative covenants, including, among others, covenants regarding the maintenance of a leverage ratio and covenants relating to financial reporting, compliance with laws, subsidiary indebtedness, liens, sale and leaseback transactions, mergers and other fundamental changes, and entry into certain restrictive agreements. Most of the covenants are subject to materiality, thresholds, and exceptions. In addition, the Credit Agreement provides that Teradata may request that the Credit Agreement be amended to establish key performance indicators with respect to certain environmental, social, and governance ("ESG") targets, pursuant to which certain positive or negative adjustments would be made to various fees and applicable margin based on Teradata’s performance against such ESG targets. As of March 31, 2023, the Company had no borrowings outstanding under the Revolving Facility, leaving $400 million in borrowing capacity available under the Revolving Facility and the Term Loan principal outstanding was $500 million . The Term Loan is recognized on the Company's balance sheet at the unpaid principal balance, net of deferred issuance costs, and is not subject to fair value measurement. The Company wa s in compliance with all covenants under the Credit Facility as of March 31, 2023. For the three months ended March 31, 2023 and March 31, 2022, the blended all-in interest rate on the Credit Facility was 4.26% and 4.23% |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the reported period. The calculation of diluted earnings per share is similar to basic earnings per share, except that the weighted average number of shares outstanding includes the dilution from potential shares resulting from stock options, restricted stock awards and other stock awards. The components of basic and diluted earnings per share are as follows: Three Months Ended In millions, except per share amounts 2023 2022 Net income attributable to common stockholders $ 40 $ 36 Weighted average outstanding shares of common stock 101.4 105.0 Dilutive effect of employee stock options, restricted stock and other stock awards 2.4 3.6 Common stock and common stock equivalents 103.8 108.6 Net income per share: Basic $ 0.39 $ 0.34 Diluted $ 0.39 $ 0.33 |
Segment and Other Supplemental
Segment and Other Supplemental Information | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Segment and Other Supplemental Information | Segment and Other Supplemental InformationTeradata manages its business under three geographic regions, which are also the Company’s operating segments: (1) Americas region (North America and Latin America); (2) EMEA region (Europe, Middle East and Africa) and (3) APJ region (Asia Pacific and Japan). For purposes of discussing results by segment, management excludes the impact of certain items, consistent with the manner by which management evaluates the performance of each segment. This format is useful to investors because it allows analysis and comparability of operating trends. It also includes the same information that is used by Teradata management to make decisions regarding the segments and to assess financial performance. The chief operating decision maker, who is the Company's President and Chief Executive Officer, evaluates the performance of the segments based on revenue and multiple profit measures, including segment gross profit. For management reporting purposes, assets are not allocated to the segments. The following table presents segment revenue and segment gross profit for the Company: Three Months Ended In millions 2023 2022 Segment revenue Americas $ 292 $ 290 EMEA 117 129 APJ 67 77 Total revenue 476 496 Segment gross profit Americas 193 189 EMEA 74 78 APJ 39 45 Total segment gross profit 306 312 Stock-based compensation costs 4 5 Acquisition, integration, reorganization and transformation-related costs — 6 Total gross profit 302 301 Selling, general and administrative expenses 153 157 Research and development expenses 70 76 Income from operations $ 79 $ 68 |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
New Accounting Pronouncements | New Accounting PronouncementsThe Company has assessed the Accounting Standards Updates and determined that they were not applicable or were not expected to have a material impact on the Company's financial statements. |
Revenue from Contract with Customer | Contract CostsThe Company capitalizes sales commissions and other contract costs that are incremental direct costs of obtaining customer contracts if the expected amortization period of the asset is greater than one year. These costs are recorded in capitalized contract costs, net on the Company’s balance sheet. The capitalized amounts are calculated based on the annual recurring revenue and contract value for individual multi-term contracts. The judgments made in determining the amount of costs incurred include whether the commissions are in fact incremental and would not have occurred absent the customer contract. Costs to obtain a contract are amortized as selling, general and administrative expenses on a straight-line basis over the expected period of benefit, which is typically around four years. These costs are periodically reviewed for impairment. |
Fair Value Measurement | Fair Value MeasurementsFair value measurements are established utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as significant other observable inputs, such as quoted prices in active markets for similar assets or liabilities, or quoted prices in less-active markets for identical assets; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | The following table presents a disaggregation of revenue: Three Months Ended March 31, in millions 2023 2022 Americas Recurring $ 256 $ 246 Perpetual software licenses, hardware and other 5 12 Consulting services 31 32 Total Americas 292 290 EMEA Recurring 87 89 Perpetual software licenses, hardware and other 7 11 Consulting services 23 29 Total EMEA 117 129 APJ Recurring 46 51 Perpetual software licenses, hardware and other 1 3 Consulting services 20 23 Total APJ 67 77 Total Revenue $ 476 $ 496 |
Schedule of Rental Revenue | Rental revenue, which is included in recurring revenue in the above table, was as follows: Three Months Ended March 31, in millions 2023 2022 Rental revenue* $ 51 $ 50 *Rental revenue includes hardware maintenance. |
Schedule of Assets and Liabilities Related to Contracts with Customers | The following table provides information about receivables, contract assets and deferred revenue from contracts with customers: As of in millions March 31, 2023 December 31, 2022 Accounts receivable, net $ 341 $ 364 Contract assets $ 15 $ 7 Current deferred revenue $ 634 $ 589 Long-term deferred revenue $ 4 $ 8 |
Schedule of Estimated Revenue Expected to be Recognized in the Future | The following table includes estimated revenue expected to be recognized in the future related to the Company's unsatisfied (or partially satisfied) obligations at March 31, 2023: in millions Total at March 31, 2023 Year 1 Year 2 and Thereafter Remaining unsatisfied obligations $ 2,317 $ 1,302 $ 1,015 |
Contract Costs (Tables)
Contract Costs (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Capitalized Contract Cost [Abstract] | |
Schedule of Activity Related to Capitalized Contract Cost | The following table identifies the activity relating to capitalized contract costs: in millions December 31, 2022 Capitalized Amortization March 31, 2023 Capitalized contract costs $ 92 $ 2 $ (10) $ 84 in millions December 31, 2021 Capitalized Amortization March 31, 2022 Capitalized contract costs $ 111 $ 13 $ (15) $ 109 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Supplemental Financial Information | As of In millions March 31, December 31, Inventories Finished goods $ 5 $ 5 Service parts 2 3 Total inventories $ 7 $ 8 Deferred revenue Deferred revenue, current $ 634 $ 589 Long-term deferred revenue 4 8 Total deferred revenue $ 638 $ 597 Three Months Ended March 31, In millions 2023 2022 Other expense Foreign currency losses $ 18 $ 6 Other 3 3 Total Other expense $ 21 $ 9 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Tax Rate | The effective tax rate is as follows: Three Months Ended March 31, In millions 2023 2022 Effective tax rate 31.0 % 34.5 % |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Financial Instruments | The following table identifies the contract notional amount of the Company’s derivative financial instruments: As of In millions March 31, December 31, Contract notional amount of foreign exchange forward contracts $ 44 $ 46 Net contract notional amount of foreign exchange forward contracts $ 13 $ 7 Contract notional amount of foreign currency exchange (net investment hedge) $ 150 $ 150 Contract notional amount of interest rate swap $ 450 $ 450 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis and Subject to Fair Value Disclosure Requirements | The Company’s other assets and liabilities measured at fair value on a recurring basis and subject to fair value disclosure requirements at March 31, 2023 and December 31, 2022 were as follows: Fair Value Measurements at Reporting Date Using In millions Total Quoted Prices in Significant Significant Assets Money market funds at March 31, 2023 $ 172 $ 172 $ — $ — Money market funds at December 31, 2022 $ 211 $ 211 $ — $ — Interest rate swap at March 31, 2023 $ 7 $ — $ 7 $ — Interest rate swap at December 31, 2022 $ 13 $ — $ 13 $ — Liabilities Foreign currency swap at March 31, 2023 $ 3 $ — $ 3 $ — Foreign currency swap at December 31, 2022 $ 1 $ — $ 1 $ — |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings Per Share [Abstract] | |
Components of Basic and Diluted Earnings Per Share | The components of basic and diluted earnings per share are as follows: Three Months Ended In millions, except per share amounts 2023 2022 Net income attributable to common stockholders $ 40 $ 36 Weighted average outstanding shares of common stock 101.4 105.0 Dilutive effect of employee stock options, restricted stock and other stock awards 2.4 3.6 Common stock and common stock equivalents 103.8 108.6 Net income per share: Basic $ 0.39 $ 0.34 Diluted $ 0.39 $ 0.33 |
Segment and Other Supplementa_2
Segment and Other Supplemental Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Reporting [Abstract] | |
Regional Segment Revenue and Gross Margin | The following table presents segment revenue and segment gross profit for the Company: Three Months Ended In millions 2023 2022 Segment revenue Americas $ 292 $ 290 EMEA 117 129 APJ 67 77 Total revenue 476 496 Segment gross profit Americas 193 189 EMEA 74 78 APJ 39 45 Total segment gross profit 306 312 Stock-based compensation costs 4 5 Acquisition, integration, reorganization and transformation-related costs — 6 Total gross profit 302 301 Selling, general and administrative expenses 153 157 Research and development expenses 70 76 Income from operations $ 79 $ 68 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue from Contracts with Customers (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 476 | $ 496 |
Americas | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 292 | 290 |
EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 117 | 129 |
APJ | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 67 | 77 |
Recurring | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 389 | 386 |
Recurring | Americas | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 256 | 246 |
Recurring | EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 87 | 89 |
Recurring | APJ | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 46 | 51 |
Perpetual software licenses, hardware and other | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 13 | 26 |
Perpetual software licenses, hardware and other | Americas | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 5 | 12 |
Perpetual software licenses, hardware and other | EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 7 | 11 |
Perpetual software licenses, hardware and other | APJ | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 1 | 3 |
Consulting services | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 74 | 84 |
Consulting services | Americas | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 31 | 32 |
Consulting services | EMEA | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 23 | 29 |
Consulting services | APJ | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 20 | $ 23 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Schedule of Operating Lease Income (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | ||
Rental revenue | $ 51 | $ 50 |
Revenue from Contracts with C_5
Revenue from Contracts with Customers - Contract Balances (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, net | $ 341 | $ 364 |
Contract assets | 15 | 7 |
Current deferred revenue | 634 | 589 |
Long-term deferred revenue | $ 4 | $ 8 |
Revenue from Contracts with C_6
Revenue from Contracts with Customers - Narrative (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Deferred revenue, revenue recognized | $ 173 |
Remaining performance obligation, amount of customer only general cancellation | 1,197 |
Remaining performance obligation, amount of non-cancelable contracts | $ 597 |
Revenue from Contracts with C_7
Revenue from Contracts with Customers - Transaction Price Allocated to the Remaining Performance Obligations (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 2,317 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 1,302 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation | $ 1,015 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, remaining performance obligation, period |
Contract Costs - Narrative (Det
Contract Costs - Narrative (Details) | Mar. 31, 2023 |
Capitalized Contract Cost [Abstract] | |
Capitalized contract cost, amortization period | 4 years |
Contract Costs - Schedule of Ac
Contract Costs - Schedule of Activity Related to Capitalized Contract Cost (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Capitalized Contract Cost, Net [Roll Forward] | ||
Capitalized contract cost, net at period start | $ 92 | $ 111 |
Capitalized | 2 | 13 |
Amortization | (10) | (15) |
Capitalized contract cost, net at period end | $ 84 | $ 109 |
Supplemental Financial Inform_3
Supplemental Financial Information - Inventories and Deferred Revenue (Detail) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Inventories | ||
Finished goods | $ 5 | $ 5 |
Service parts | 2 | 3 |
Total inventories | 7 | 8 |
Deferred revenue | ||
Current deferred revenue | 634 | 589 |
Long-term deferred revenue | 4 | 8 |
Total deferred revenue | $ 638 | $ 597 |
Supplemental Financial Inform_4
Supplemental Financial Information - Other Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Foreign currency losses | $ 18 | $ 6 |
Other | 3 | 3 |
Other expense | $ 21 | $ 9 |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Tax Rate (Detail) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate (percentage) | 31% | 34.50% |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2023 | |
Operating Loss Carryforwards [Line Items] | |||
Net discrete tax (expense) benefits | $ (2) | $ (4) | |
Effective tax rate (percentage) | 31% | 34.50% | |
Effective income tax rate reconciliation, GILTI (percentage) | 9% | ||
Scenario, Forecast | |||
Operating Loss Carryforwards [Line Items] | |||
Effective tax rate (percentage) | 36% | ||
Effective income tax rate reconciliation, GILTI amount | $ 5 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Narrative (Detail) € in Millions, $ in Millions | 1 Months Ended | |||||
Jun. 28, 2022 USD ($) | Jun. 30, 2022 EUR (€) | Jun. 30, 2018 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Jun. 30, 2022 USD ($) | |
Medium-term Notes | Credit Agreement Issued In June 2022 | Line of Credit | ||||||
Derivative | ||||||
Principal outstanding | $ 500 | |||||
Cross Currency Swap | ||||||
Derivative | ||||||
Contract notional amount of interest rate swap | € 143 | 150 | $ 150 | |||
Derivative asset | $ 150 | |||||
Interest Rate Swap | ||||||
Derivative | ||||||
Contract notional amount of interest rate swap | $ 450 | $ 500 | $ 450 | $ 450 | $ 450 | |
Term of contract | 5 years | 5 years | 5 years | |||
Percentage of principal | 90% |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Schedule of Derivative Financial Instruments (Details) € in Millions, $ in Millions | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Jun. 30, 2022 EUR (€) | Jun. 30, 2022 USD ($) | Jun. 28, 2022 USD ($) | Jun. 30, 2018 USD ($) |
Foreign Exchange Contract | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Contract notional amount of foreign exchange forward contracts | $ 44 | $ 46 | ||||
Net contract notional amount of foreign exchange forward contracts | 13 | 7 | ||||
Contract notional amount of interest rate swap | 44 | 46 | ||||
Cross Currency Swap | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Contract notional amount of foreign exchange forward contracts | 150 | 150 | € 143 | |||
Contract notional amount of interest rate swap | 150 | 150 | € 143 | |||
Interest Rate Swap | ||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||||
Contract notional amount of foreign exchange forward contracts | 450 | 450 | $ 450 | $ 450 | $ 500 | |
Contract notional amount of interest rate swap | $ 450 | $ 450 | $ 450 | $ 450 | $ 500 |
Commitment and Contingencies (D
Commitment and Contingencies (Details) - patent | 1 Months Ended | |
Aug. 31, 2020 | Jul. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Loss contingency on patents allegedly infringed upon (in patents) | 5 | |
Gain contingency on patents allegedly infringed upon (in patents) | 4 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) € in Millions, $ in Millions | 1 Months Ended | |||||
Jun. 28, 2022 USD ($) | Jun. 30, 2022 EUR (€) | Jun. 30, 2018 USD ($) | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Jun. 30, 2022 USD ($) | |
Interest Rate Swap | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Term of contract | 5 years | 5 years | 5 years | |||
Contract notional amount of interest rate swap | $ 450 | $ 500 | $ 450 | $ 450 | $ 450 | |
Cross Currency Swap | ||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||
Contract notional amount of interest rate swap | € 143 | $ 150 | $ 150 | |||
Derivative asset | $ 150 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | $ 172 | $ 211 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 172 | 211 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Cross Currency Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liability | 3 | 1 |
Cross Currency Swap | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liability | 0 | 0 |
Cross Currency Swap | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liability | 3 | 1 |
Cross Currency Swap | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative liability | 0 | 0 |
Interest Rate Swap | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | 7 | 13 |
Interest Rate Swap | Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | 0 | 0 |
Interest Rate Swap | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | 7 | 13 |
Interest Rate Swap | Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative asset | $ 0 | $ 0 |
Debt - Additional Information (
Debt - Additional Information (Detail) | Jun. 28, 2022 USD ($) renewal | Mar. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 | Jun. 30, 2018 USD ($) |
Debt Instrument | ||||||
All-in-interest rate at period end | 4.26% | 4.23% | ||||
Interest Rate Swap | ||||||
Debt Instrument | ||||||
Percentage of principal | 90% | |||||
Contract notional amount of interest rate swap | $ 450,000,000 | $ 450,000,000 | $ 450,000,000 | $ 450,000,000 | $ 500,000,000 | |
Credit Agreement Issued In June 2022 | Line of Credit | ||||||
Debt Instrument | ||||||
Number of renewals | renewal | 2 | |||||
Renewal term | 1 year | |||||
Credit Agreement Issued In June 2022 | Line of Credit | Medium-term Notes | ||||||
Debt Instrument | ||||||
Term of loan (years) | 5 years | |||||
Debt instrument, face amount | $ 500,000,000 | |||||
Term loan, payable quarterly installments (percentage) | 1.25% | |||||
Principal outstanding | 500,000,000 | |||||
Credit Agreement Issued In June 2022 | Line of Credit | Revolving Credit Facility | ||||||
Debt Instrument | ||||||
Term of loan (years) | 5 years | |||||
Credit facility maximum borrowing capacity | $ 400,000,000 | |||||
Additional borrowings available | 450,000,000 | |||||
Principal outstanding | 0 | |||||
Remaining borrowing capacity | $ 400,000,000 | |||||
Credit Agreement Issued In June 2022 | Line of Credit | Letter of Credit | ||||||
Debt Instrument | ||||||
Credit facility maximum borrowing capacity | 50,000,000 | |||||
Credit Agreement Issued In June 2022 | Line of Credit | Bridge Loan | ||||||
Debt Instrument | ||||||
Credit facility maximum borrowing capacity | 50,000,000 | |||||
Revolving Credit Facility Ending In June 2023 | Revolving Credit Facility | ||||||
Debt Instrument | ||||||
Credit facility maximum borrowing capacity | 400,000,000 | |||||
Repayment of line of credit | $ 400,000,000 | |||||
Senior Unsecured Term Loan Issued June 2018 | Senior Unsecured Term Loan | ||||||
Debt Instrument | ||||||
Debt instrument, face amount | $ 500,000,000 |
Earnings per Share - Components
Earnings per Share - Components of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Net income attributable to common stockholders | $ 40 | $ 36 |
Weighted average outstanding shares of common stock (in shares) | 101.4 | 105 |
Dilutive effect of employee stock options, restricted stock and other stock awards (in shares) | 2.4 | 3.6 |
Common stock and common stock equivalents (in shares) | 103.8 | 108.6 |
Net income per share: | ||
Basic (in dollars per share) | $ 0.39 | $ 0.34 |
Diluted (in dollars per share) | $ 0.39 | $ 0.33 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | ||
Antidilutive options to purchase that were not included in the computation of diluted earnings per share (in shares) | 0.2 | 0.1 |
Segment and Other Supplementa_3
Segment and Other Supplemental Information - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2023 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 3 |
Segment and Other Supplementa_4
Segment and Other Supplemental Information - Regional Segment Revenue and Gross Margin for Company (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Segment Reporting Information | ||
Segment revenue | $ 476 | $ 496 |
Gross profit | 302 | 301 |
Selling, general and administrative expenses | 153 | 157 |
Research and development expenses | 70 | 76 |
Income from operations | 79 | 68 |
Americas | ||
Segment Reporting Information | ||
Segment revenue | 292 | 290 |
EMEA | ||
Segment Reporting Information | ||
Segment revenue | 117 | 129 |
APJ | ||
Segment Reporting Information | ||
Segment revenue | 67 | 77 |
Operating segments | ||
Segment Reporting Information | ||
Gross profit | 306 | 312 |
Operating segments | Americas | ||
Segment Reporting Information | ||
Gross profit | 193 | 189 |
Operating segments | EMEA | ||
Segment Reporting Information | ||
Gross profit | 74 | 78 |
Operating segments | APJ | ||
Segment Reporting Information | ||
Gross profit | 39 | 45 |
Segment reconciling items | ||
Segment Reporting Information | ||
Stock-based compensation costs | 4 | 5 |
Acquisition, integration, reorganization and transformation-related costs | $ 0 | $ 6 |
Uncategorized Items - tdc-20230
Label | Element | Value |
Restricted Cash and Cash Equivalents | us-gaap_RestrictedCashAndCashEquivalents | $ 2,000,000 |