2023
Annual Report
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Fellow Shareholders,
In 2023, Teradata made significant progress in our strategy
to build the leading hybrid multi-cloud analytics and data
platform company for trusted AI.
We ended the year with $528 million of Public Cloud Annual
Recurring Revenue (ARR), and we are proud that Teradata has
delivered almost ten-fold Public Cloud ARR growth in less than
four years. Public Cloud ARR now accounts for more than 1/3
of our Total ARR—a significant cloud milestone for Teradata.
We delivered strong profitable growth and durable free
cash flow, returning 87% of free cash flow to shareholders,
a clear demonstration of our commitment to deliver ongoing
shareholder value.
At Teradata, we believe that people thrive when empowered
with trusted information. We are intently focused on helping
organizations improve business performance, enrich
customer experiences, and integrate data across their
enterprise. Our people strive every day to innovate and
deliver trusted solutions for customers’ toughest data and
analytics challenges. We believe we are well positioned to
help enterprises deliver breakthrough business insights,
particularly now as they take advantage of the promise of
artificial intelligence (AI).
Enterprises everywhere are experimenting with AI to drive
innovation. As AI uses grow, so does the need for trust in the
information. Data and analytics are at the core of Teradata and
what we believe Teradata does best. Through our open and
connected platform that is designed to deliver harmonized
data, trusted AI, and faster innovation, we work to empower
our customers to make more confident business decisions.
We are excited to play a role in this AI era that is pushing new
horizons of creativity, productivity, and value creation.
In 2023, as we grew our Public Cloud business, we also
accelerated our technology innovations that are designed to
advance our ability to provide trusted AI and keep Teradata
at the forefront of cloud analytics and data. We announced
availability of Teradata VantageCloud™ Lake, built on our
cloud-native lake architecture, on both Amazon Web Services
and Microsoft Azure, with availability on Google Cloud planned
for 2024. We introduced Teradata ask.ai, our generative AI
capability that is a natural language interface designed to allow
users to ask questions of their company’s data, without having
to write complex code. This innovation can bring the power of
analytics to non-technical roles and expand business impact.
In ClearScape Analytics™, our high-performing analytics,
we added new ModelOps capabilities that provide no-code
capabilities to help customers quickly scale AI and advanced
analytics. Further strengthening our position to be our
customers’ trusted partner as they explore AI uses, we
launched Teradata AI Unlimited, our AI and machine learning
(“ML”) engine in the cloud that delivers a self-service and
serverless experience that is designed to enable customers to
drive fast, easy and cost-effective AI innovation. Additionally,
Teradata was selected by Microsoft to have our AI Unlimited
offering be natively integrated with Microsoft Fabric, which
can help data innovators easily experiment and rapidly
deploy AI use cases. We further announced integrations with
Microsoft Azure Machine Learning and Google Vertex AI,
adding to our existing integration with Amazon SageMaker.
These integrations are designed to enable companies
to access the full value of their data, put AI models into
production, and easily scale across the organization.
We are extremely proud of these robust technology strides
that position Teradata as the complete cloud analytics
and data platform for trusted AI, and we are committed to
continuing to drive innovations that empower our customers
to make better, more confident decisions and improve their
business performance.
We are also extending our commitment to our ESG program
and responsibility to environmental stewardship. We have
committed to achieving carbon neutrality by the end of 2024
and Net Zero emissions by 2050.
We are pleased with the advancements we made in 2023 and
are confident in our future. We are relentlessly focused on
winning as the complete cloud analytics and data platform
company for trusted AI, continuing our commitment to capital
return by delivering durable free cash flow, and providing
value creation for our shareholders.
Thank you,
Steve McMillan
President and CEO
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-33458
TERADATA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
75-3236470
(I.R.S. Employer
Identification No.)
17095 Via Del Campo
San Diego, California 92127
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (866) 548-8348
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Trading Symbol
Name of Each Exchange on
which Registered:
Common Stock, $0.01 par value
TDC
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes ¨ No ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ý No ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company,"
and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ý
Non-accelerated filer ¨
Accelerated filer
¨
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. Yes ☒ No ¨
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2023, was approximately $5.4 billion.
¨
¨
At January 31, 2024, there were 97.4 million shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part III:
Portions of the registrant’s Notice of Annual Meeting of Stockholders and Proxy Statement, to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A within 120 days after registrant’s fiscal year end of December 31, 2023 are
incorporated herein by reference.
TABLE OF CONTENTS
Item
Business
1.
1A. Risk Factors
1B. Unresolved Staff Comments
1C. Cybersecurity
Properties
2.
Legal Proceedings
3.
4. Mine Safety Disclosures
Description
PART I
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
[Reserved]
5.
6.
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk
8.
9.
9A. Controls and Procedures
9B. Other Information
9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
PART III
10. Directors, Executive Officers and Corporate Governance
11. Executive Compensation
12.
13. Certain Relationships and Related Transactions, and Director Independence
14.
Principal Accounting Fees and Services
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
PART IV
15. Exhibits, Financial Statement Schedules
16.
Form 10-K Summary
Signatures
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5
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32
44
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This report contains trademarks, service marks, and registered marks of Teradata Corporation and its subsidiaries,
and other companies, as indicated.
3
PART I
FORWARD-LOOKING STATEMENTS
Forward-looking statements in our public filings or other public statements are subject to known and unknown risks,
uncertainties and other factors that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or implied by such forward-looking
statements or other public statements. These forward-looking statements were based on various facts and were
derived utilizing numerous important assumptions and other important factors, and changes in such facts,
assumptions or factors could cause actual results to differ materially from those in the forward-looking statements.
Forward-looking statements include the information concerning our expected future financial and reporting
performance, business strategy and trends, projected plans and objectives, liquidity, financial guidance, capital
allocation, including share repurchase plans, and market conditions. Statements preceded by, followed by or that
otherwise include the words "believe," "expects," "anticipates," "intend," "project," "estimate," "plan," "increase,"
"fluctuate," "strive," "looking ahead," "outlook," "guidance," "forecast," "continue," "likely," "potential," "drive,"
and similar expressions or future or conditional verbs such as "will," "should," "would," "may" and "could" are
generally forward-looking in nature and not historical facts. You should understand that the factors described under
"Risk Factors" and the following important factors could affect our future results and could cause actual results to
differ materially from those expressed in such forward-looking statements:
• Our ability to timely and effectively execute our strategy, including our initiatives to provide and enhance our
offerings for on-premises and cloud environments and market acceptance of our cloud platform and artificial
intelligence ("AI") capabilities;
• Our ability to rapidly and successfully develop and introduce new solutions that include highly advanced
technology, and the increased difficulty and complexity associated with producing new offerings with greater
capacity, delivery and performance capabilities, which may increase the likelihood of reliability, quality and
operability issues;
The rapidly changing and intensely competitive nature of the information technology ("IT") industry and the
analytic data platform business, including the ongoing consolidation activity, new and emerging technologies
and competitors, including for AI and machine learning ("ML"), and pressure on achieving continued price/
performance gains for analytic data product offerings and solutions;
Fluctuations in our operating results, timing of transactions, customer cancellations or non-renewals of
subscription arrangements or support services, unanticipated delays or accelerations in our sales cycles and the
difficulty of accurately estimating revenues;
•
•
• Risks associated with data privacy, cyberattacks and maintaining secure and effective products for our
•
customers, as well as, internal IT and control systems;
The impact of global economic fluctuations on the markets in general or on the ability of our suppliers and
customers to meet their commitments to us, or the timing of purchases by our current and potential customers,
including the potential impacts of catastrophic events, epidemics, pandemics, inflation, recessions, and/or labor
availability on global economies; and
• Risks inherent in operating in foreign countries, including the impact of foreign currency fluctuations, foreign
currency controls, economic, political, legal, regulatory, compliance, cultural, public health, and other conditions
abroad.
Other factors not identified above, including the risk factors described in the section entitled "Risk Factors"
included in this Annual Report on Form 10-K ("Annual Report"), may also cause actual results to differ materially
from those projected by our forward-looking statements. Most of these factors are difficult to anticipate and are
generally beyond our reasonable control. We undertake no obligation to release publicly any revisions to any
forward-looking statements, to report events or to report the occurrence of unanticipated events.
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Item 1. BUSINESS
Overview. At Teradata Corporation ("we," "us," "Teradata," or the "Company"), we believe that people thrive when
empowered with trusted information. We are focused on helping organizations improve business performance,
enrich customer experiences, and integrate data across the enterprise. As such, we strive to innovate and deliver
trusted solutions for their toughest data and analytics challenges. That is why we built our open and connected cloud
analytics and data platform for artificial intelligence ("AI"). With our Teradata Vantage platform, underpinned by
our extensive patented workload management optimization, we are well positioned to help enterprises solve
business problems and deliver business breakthroughs with its capabilities to provide harmonized data, trusted AI,
and faster innovation.
• Harmonized data: We strive to empower our customers to make more confident decisions with integrated
data using our cloud-native platform that is designed to be efficient, flexible, and secure.
•
•
Trusted AI: We believe that our platform provides our customers with powerful, open, and connected
analytics that perform with speed and deliver better insights.
Faster innovation: Our Teradata Vantage platform is designed to fuel our customer’s growth opportunities
with AI/ML innovation that's cost-effectively operationalized at scale.
As a result, we believe that we empower our customers - and our customers' customers - to make better, more
confident decisions, engage in faster innovation, and drive positive impact within the enterprise.
Our Complete Analytics and Data Platform
Teradata Vantage is our open and connected platform that is designed to allow organizations to leverage all their
data across an enterprise, whether in public or private clouds, in a multi-cloud environment, or on-premises, and at
the scale. Teradata Vantage comprises deployment options that are designed to address the full span of analytics and
data needs while providing optimized total cost of ownership and financial governance:
•
•
Teradata VantageCloud: Our flexible, connected, and modern cloud platform and includes Teradata
VantageCloud Lake, which is built on our cloud-native lake architecture, and Teradata VantageCloud
Enterprise for managed enterprise workloads.
Teradata VantageCore: Our on-premises data and analytics offering, which seamlessly integrates with our
cloud offerings to enable hybrid environments that many large enterprises currently demand.
Key capabilities of Teradata Vantage across all deployments are:
• ClearScape Analytics™: ClearScape Analytics provides the analytics capabilities of our Vantage platform
and is designed to be a secure, highly concurrent, and resilient analytics offering that provides robust in-
database analytics functionality across advanced calculations and data preparation to enable end-to-end AI
and machine learning ("ML") capabilities. We believe that our ClearScape Analytics capabilities provide
the analytics enterprises need to improve business performance and drive profitable growth. ClearScape
Analytics is available across all of our Vantage deployment options.
• Query Grid: Query Grid is our "data fabric" is a data integration and management layer included with our
Teradata Vantage offering. QueryGrid serves as the connective tissue in multi-cloud and between cloud,
and on-premises environments. This technology innovation is designed to reduce data silos, as it brings data
together and enables consistent data access across the ecosystem, so that users can query data regardless of
where it lies. With our data fabric, we enable analytics and data integration across public clouds for a multi-
cloud experience that large enterprises are investing in to leverage diverse capabilities across multiple
ecosystems and mitigate risk. As AI is deployed across the enterprise, our data fabric is designed to provide
our customers with the analytic capabilities to deliver trusted data, that is secure and well governed, while
controlling costs.
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Our Cloud Transformation
Across Teradata, we are executing to advance in our transformation as a leading cloud analytics and data platform.
Teradata is recognized by industry analysts as offering a cloud analytics and data platform with next-generation,
cloud-native deployment and expansive analytics capabilities. Whether their first move into the cloud or moving
from other vendors, we help companies smoothly move to the cloud, offering a fast path to cloud modernization
with our extensive cloud migration capabilities.
Our 2023 Innovations
During 2023, we delivered several innovations and executed transactions that we believe position Teradata to lead
in trusted AI, including:
•
•
•
Teradata VantageCloud Lake: We made Teradata VantageCloud Lake available on both Amazon Web
Services ("AWS") and Microsoft Azure, and expect to have it available on Google Cloud in 2024.
Stemma Technologies Acquisition: With a focus on AI-enhanced data search and exploration, we expect
this acquisition to broaden Teradata’s capacity to provide analytics value from discovery through delivery.
Stemma’s automated data catalog capabilities is expected to help Teradata deliver an enhanced user
experience and accelerate growth in AI/ML analytics, including through AI Unlimited.
Teradata ask.ai: Teradata ask.ai is our generative AI capability for VantageCloud Lake. This natural
language interface is designed to allow users to ask questions of their company’s data and receive instant
responses from VantageCloud Lake.
• ModelOps: Teradata included new ModelOps capabilities in ClearScape Analytics, which is intended to
•
•
provide no-code capabilities to enable customers to quickly scale AI and advanced analytics with enterprise
governance.
Teradata AI Unlimited: We launched Teradata AI Unlimited, our AI and ML experience in the cloud. AI
Unlimited can enable customers to drive faster, easier, and more cost-effective AI innovation. It is designed
to provide access to vast amounts of data, flexibility, and the ability to cost-effectively and securely explore,
experiment and operationalize new AI use cases, at scale. Further, we announced that Teradata AI
Unlimited will be natively integrated with Microsoft's AI-powered platform, Microsoft Fabric.
Integration with both Microsoft Azure Machine Learning ("Azure ML") and Google Vertex AI: Already
available on Amazon Sagemaker, the integrations of Teradata VantageCloud and ClearScape Analytics with
Microsoft Azure ML and Google Cloud's Vertex AI are designed to operationalize AI/ML models with the
scalability and performance of ClearScape Analytics. These integrations are designed to enable companies
to access the full value of their data, put AI models into production, and to scale those models across the
organization.
• Dataiku AI Models in ClearScape Analytics: Teradata launched new ClearScape Analytics capabilities that
are designed to allow customers the ability to import and operationalize Dataiku AI models inside the
Vantage platform. The combination of Dataiku and ClearScape Analytics is intended to empower customers
to accelerate digital transformations and deliver AI-led business value.
• Dell Technologies ("Dell") Integration: We further deepened our relationship with Dell by co-engineering
and bringing together our companies’ best-of-breed technologies, as we integrated Teradata Vantage with
Dell’s converged infrastructure. As a result, we are jointly offering private cloud solutions that are designed
to give the flexibility of the cloud with the control and security of on-premises environment.
Market Dynamics with AI Focus
Our target market focuses on organizations that are large-scale users of data. As data volumes grow exponentially
along with increasing sources of data, organizations are expected to increasingly move to cloud-based analytic and
data technologies. With companies pivoting to cloud-based environments, we believe it is essential for these
enterprises to be able to integrate ecosystems across multi-cloud and on-premises environments, simplify access to
trusted data wherever it resides, and accommodate analytics at massive scale and speed to derive significant
business value. We believe that Teradata addresses the full spectrum of analytics needs and varying cloud adoption
strategies—from cloud-only to multi-cloud to hybrid and on-premises.
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Generative AI is ushering in new frontiers of creativity, productivity, and innovation. We believe that we can help
enterprises accelerate AI value, including by:
• Managing uncontrolled data growth: AI requires volumes of high-quality data. We deliver AI capabilities
for our customers by providing a platform that is designed to integrate and harmonize data across the
organization.
• Building a flexible, open, and connected ecosystem: Teradata’s Vantage architecture is designed to provide
a flexible, open, and connected ecosystem to allow companies freedom to use their preferred tools and
technologies with public or custom large language models ("LLM") to produce generative AI.
Providing secure, trusted, and cost-effective AI: Teradata’s Vantage platform is designed to deliver a secure
environment, while controlling costs.
•
Our customers use Teradata technologies and innovations in leveraging data to solve their business challenges and
drive business outcomes, which can include, among other things:
• AI/ML,
•
•
•
•
•
•
•
digital identity management,
financial visibility,
resilient supply chains,
fraud prevention,
customer acquisition, experience and retention,
regulatory compliance, and
operational resilience.
Our Consulting Services and Third-Party Relationships
Our experienced consultants offer a broad range of services, including helping organizations establish a data and
analytics vision, enabling a modern, multi-cloud ecosystem architecture, and identifying and operationalizing
opportunities to ensure their data and analytics ecosystem investments deliver significant value. Our support and
maintenance services are designed to provide an optimal experience with Teradata and our managed services
offerings are designed to provide an enhanced experience to our customers by helping their analytic environments
operate efficiently. We also work closely with the top global systems integrators to accelerate innovation, enable
digital transformation and maximize customer value from their Teradata technologies.
Our Subscription Options
Teradata offers subscription offerings that are flexibly priced ranging from capacity-based to consumption-based
pricing. These flexible pricing options are designed to enable our customers to reduce complexity, risk, and cost and
expand their analytics and data capabilities to fit their data and budget needs.
Our Segments
For the calendar year ended December 31, 2023, we had total revenues of $1.833 billion, of which approximately
59% was derived from the Americas region (North America and Latin America) and 41% from the EMEA (Europe,
Middle East and Africa) and APJ regions (Asia Pacific and Japan). For financial information about our segments
and geographic information, see "Note 14-Segment, Other Supplemental Information and Concentrations" in the
Notes to Consolidated Financial Statements in this Annual Report.
History. Teradata was incorporated in 1979 as a Delaware corporation. Teradata became a publicly traded company
named Teradata Corporation (NYSE: TDC) on September 30, 2007.
Industry and Market Opportunity. As companies face mounting data demands, along with the need to extract
value from this data, we believe that our opportunity to grow in the multi-billion dollar data management and
analytics market will continue. Industry analysts forecast that the data management and analytics market will grow
at a double-digit rate year-over-year for the next few years and it is expected that the market opportunity will
continue to expand with the anticipated rapid and global adoption of AI. We believe that, in addition to companies
facing significant ongoing increases in data volumes and proliferation of data silos, there will also be an increasing
expectation that this data be trusted, secured, and democratized. Furthermore, the agility provided by cloud-based
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technologies can bring significant benefits, yet also creates complexity, particularly with the increased need that
data and analytics ecosystems span multiple environments. These factors all contribute to the increased complexity,
cost, and risk associated with managing data and analytic environments, as well as the rapidly emerging desire of
customers to create and deliver value from AI. This is particularly true for our target market of global enterprise
companies, and we believe that these companies require well integrated solutions that can accommodate significant
agility, scale and speed. We are focused on supporting our on-premises customers and helping new and existing
customers migrate to the cloud, upgrade from VantageCloud Enterprise to VantageCloud Lake, expand workloads
in the cloud, grow platform adoption and software utilization, and demonstrate the capabilities we have for AI.
Our Strategy. We continue to focus on our strategy of providing the most complete cloud analytics and data
platform for AI. We are continuing to execute our transformation to be "cloud-first" across all parts of our business,
as we consistently drive for profitable growth. In this regard, our strategic growth objectives are to:
•
•
•
•
•
•
•
•
•
•
further strengthen our cloud analytics and data platform, with Teradata VantageCloud Lake and ClearScape
Analytics;
help our customers create enterprise value with harmonized data, trusted AI, and faster innovation;
enable end-to-end business outcomes through a seamless user experience;
accelerate our cloud-first strategy by supporting our customers on their cloud migration journeys;
expand customer footprints by increasing consumption and onboarding new workloads in existing and new
business buying centers;
expand our product capabilities through deeper integration with cloud ecosystems;
focus on partner enablement to drive solution adoption and execution on our Vantage platform;
deepen relationships with strategic public cloud service providers, systems integrators, independent
software vendors, and resellers;
expand our go-to-market reach by onboarding new customers, making vertical investments, enhancing
customer success programs, and strengthening our partner relationships; and
deliver operational excellence through efficient cost management and execution.
AI requires significant high-quality data to create value, as such integrating and harmonizing data across the
organization is crucial. Our analytics and data offering is designed to be scalable, secure, highly concurrent and
resilient in order to help companies solve complex data challenges at scale. We provide a data management solution
that enables enterprises to support their data and analytic ecosystems, enable consistent data across business units,
and easily grow and scale. Furthermore, as demand shifts to the cloud, we provide enterprise customers with the
flexibility to address their hybrid and multi-cloud data and analytics needs, empowering operational, ad-hoc analytic
and mixed workloads, whether in the cloud or on-premises.
We believe we are differentiated by providing our analytics and data platform offering across a secure, multi-cloud
ecosystem. Our differentiated approach spans deployments in the top public cloud service provider platforms of
AWS, Microsoft Azure, and Google Cloud, as well as private cloud platform instances, on-premises, and hybrid
environments.
As customers increasingly grow their cloud-based analytic ecosystems, our strategy supports existing customers on
that journey with a fast path to migration that is enabled through a data fabric that connects all environments, as
well as data and workload migration tools and services.
We also believe that we offer a competitive and compelling total cost of ownership by building out best-in-class
capabilities that are designed to provide an easy experience for ingestion, exploration, development, consumption
and operationalization of data and analytics. With a focus on delivering an outstanding user experience and an
ability to start small and easily scale in the cloud, we are attracting new customers, migrating existing customers to
the cloud with Teradata VantageCloud, and seeing customers expand their Teradata cloud environments.
Our strategy is further supported by our commitment to be a responsible corporate citizen. We believe it is our
responsibility to make a positive impact on and support important issues, such as addressing the climate crisis and
environmental sustainability, responsible use of AI, promoting diversity, equity and inclusion, supporting
communities where we live and work, protecting data privacy, and acting ethically in everything we do.
Customers. Teradata concentrates our marketing and go-to-market efforts on companies that are seeking to
improve business performance and view data as a strategic asset in achieving that objective. We focus on business,
analytics, and technology buyers and users. Our platform differentiates Teradata in industries with high-data
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requirements, including Financial Services, Government, Healthcare and Life Sciences, Manufacturing, Retail,
Telecommunications, and Travel/Transportation. We believe that these industries provide a good fit for our analytic
solutions and services as they typically have the greatest analytic potential with large and growing data volumes, as
well as complex data management requirements, and large and varied groups of users. We currently do not have any
customer that represents 10% or more of our total revenue.
Seasonality. Historically, our new contract bookings and renewals are seasonal, in line with customer spending
patterns, with lower volume typically in the first quarter and higher volume generally in the fourth quarter of each
calendar year. Such seasonality causes our working capital cash flow requirements to vary from quarter to quarter
depending on the variability in the volume, timing of invoices and subsequent collection, and mix of platform sales.
Historically, cash provided by operating activities is higher in the first half of the year due to collections of the
higher receivable balances at December 31 driven by the higher contract bookings in the fourth quarter and receipts
from annual renewals of our maintenance support agreements. In addition, contract bookings in the third month of
each quarter have historically been significantly higher than in the first and second months, with the majority
occurring in the last quarter of our fiscal year. In addition, the size and complexity of our sales transactions have
resulted in, and we expect will continue to result in, lengthy sales cycles with multiple levels of customer approvals
which can also lead to less predictability of the timing of quarterly transactions. These factors, among others as
more fully described in Item 1A, Risk Factors, in this Annual Report, make forecasting more difficult and may
adversely affect our ability to accurately predict financial results.
We have transitioned the majority of our customers from perpetual to subscription-based purchasing options. As a
result, our revenue from sales is recurring which generally increases the predictability of our revenue and the
durability of our cash flows in the future. The majority of our customer contracts are based on a blended pricing
model which provides a fixed capacity but also offers the customer optional consumption for times when they
experience increased activity.
Sales, Marketing, Customer Services and Partners
Sales and Marketing. We primarily sell and market our solutions and services through a direct sales force. We
have more than 80% of our employees in customer-facing and/or revenue-driving roles (including sales, marketing,
consulting, customer services, and product engineering).
We support our sales force with marketing and training programs that are designed to:
•
•
•
•
grow awareness of Teradata as a hybrid multi-cloud leader, highlighting our technology leadership and
innovation, differentiation, cloud, and analytics and AI expertise;
lead customers on their migration to the cloud with the benefits of multi-cloud and hybrid cloud
capabilities, and then help them easily expand their environment when needed;
create demand for, and adoption and expanded use of, our technologies, including Teradata VantageCloud
Enterprise, Teradata VantageCloud Lake, ClearScape Analytics, and Teradata AI Unlimited, as well as
related services; and
educate and enable the sales force with the skills and knowledge to deliver our value proposition.
Our brand messaging is intended to highlight Teradata’s role as a leader in AI, analytics, and cloud data and on our
strength as a leading connected multi-cloud data platform for enterprise analytics. To support our growth objectives,
we employ a broad range of modern marketing strategies, including programs designed to inform, educate and
generate demand with customers and prospects. These strategies include our global website, digital marketing,
demos and trials of our software, webinars, conferences and events, public and media relations, social media, a
customer reference program, and targeted account-based marketing.
Customer Services. Our global customer services organization is dedicated to creating and sustaining an optimal
customer experience and working with our customers to help them achieve the best use and outcomes for the data
that they produce in our Vantage platform so they are empowered with the full potential of Teradata’s data analytics
solutions. Our global customer services organization is comprised of cloud operations, customer support, customer
experience, consulting and managed services, and customer education. Our customer services organization supports
our cloud-first strategy by facilitating a customer’s migration to the VantageCloud platform and managing the day-
to-day operations of a customer’s VantageCloud environment. This organization focuses on delivering business
value throughout the customer journey, enabling innovative use of the Vantage platform, extracting additional
efficiencies, and maximizing customer impact and satisfaction—which are designed to retain customers and drive
greater consumption of our technology.
9
Strategic Partnerships. We seek to extend our sales and marketing reach by partnering with cloud service
providers, alliance partners (including independent software vendors, open-source software distributors, and
resellers), leading global and regional systems integrators, consultants, and universities that we believe complement
our differentiated offerings. Strategic partnerships are a key element in our ability to leverage the value and expand
the scope of our data and analytics platform offering in the marketplace.
• Cloud Service Providers: Teradata has established partnerships with the top three global public cloud
service providers: AWS, Microsoft Azure, and Google Cloud. We work to continuously strengthen these
strategic partnerships so that Teradata can provide companies around the world access to Teradata
VantageCloud Enterprise and VantageCloud Lake.
• Alliance Partners: Teradata has a focus on working collaboratively with independent software vendors in
several areas, including AI/ML and large language models ("LLMs"), tools, data and application integration
solutions, data mining, analytics, business intelligence, and specific analytic and industry solutions. Our
goal is to provide choices to our customers with partner offerings that are optimized and certified to work
with the Teradata Vantage platform to deliver end-to-end analytic and data solutions and to provide
comprehensive capabilities that support the customer’s business goals and work within their analytic
ecosystem.
•
Systems Integrators and Consultants: We work with a range of systems integrators and consultants who
engage in the design, implementation, and integration of analytic solutions for our joint customers. Our
strategic partnerships with select global and regional consulting and systems integration firms provide broad
industry and technology expertise in the design of business solutions that leverage Teradata technologies to
enable enterprise analytics.
Competition. We compete in a large and growing data management and analytics market that is attractive to both
current and new competitors. There is a large number of vendors in the analytics and data market and the market
landscape of vendors is rapidly increasing with the introduction and increasing traction of cloud and AI. Participants
include AWS, Databricks, Google Cloud, Microsoft Azure, Snowflake, and more; the competitive market also
comprises traditional legacy competitors. We believe our focus on AI, hybrid and multi-cloud ecosystem
simplification, providing solutions for the most scalable and complex workloads, and providing products designed
to achieve desired business outcomes of our customers, enables us to successfully compete within our target market.
We believe that our technology innovations of the Teradata Vantage platform, including Teradata VantageCore,
Teradata VantageCloud Enterprise, Teradata VantageCloud Lake, ClearScape Analytics, and Teradata AI Unlimited
are highly differentiated, deliver scale and integration, and are positioned to provide business value to our
customers. Furthermore, we provide our customers with the opportunity to de-risk their buying decisions with the
ability to deploy across the top public clouds, private cloud and on-premises, coupled with flexibility in purchasing
and portable licensing. For more information on competition, see Item 1A, Risk Factors, in this Annual Report.
We believe that the principal competitive factors for our products and services include: data and analytics
experience; business outcome delivery; hybrid multi-cloud offerings and experience; total cost of ownership;
customer references; technology leadership; product quality; performance, scalability, availability, integrity,
security, and manageability; partner relationships; support and consulting services capabilities; management of
technologies in a complex analytical ecosystem; delivery of a platform and tools that are designed to provide AI for
our customers; and industry knowledge.
Research and Development ("R&D"). We remain focused on designing and developing our analytics and data
platform that anticipates our customers' evolving needs and supports solving their complex business challenges. Our
teams are extending Teradata technologies and innovations for the Teradata Vantage platform, including Teradata
VantageCloud Enterprise, Teradata VantageCloud Lake, ClearScape Analytics, and Teradata AI Unlimited in order
to have consistent and differentiated capabilities that meet the demands of todays’ multi-cloud and hybrid
ecosystems. We have delivered significant innovations such as VantageCloud Lake. With extensive in-database
functionality, seamless and expedited interconnectivity, and robust features for easy operationalization, ClearScape
Analytics is designed to enable companies to scale AI/ML quicker and more effectively. Aligning to the growing
AI-enabled world, we acquired Stemma Technologies to enhance data search and exploration.
With a focus on creating a truly open and connected platform, we continue to build a deep integration with cloud
data and analytic ecosystems, including advanced analytics and AI/ML tools. Furthermore, with our strong
partnerships, our R&D team is extending our platform to enable deeper integration with a broader range of solution
and service providers.
10
Our extensive and talented R&D workforce is one of our core strengths. Our R&D team is globally dispersed to take
advantage of global engineering talent. We anticipate that we will continue to have significant R&D expenditures,
which may include complementary strategic acquisitions, to help support the flow of innovative, high-quality cloud-
based data and analytic offerings.
Intellectual Property and Technology. We own 594 patents in the United States. We are also the exclusive
licensee of four additional patents in the United States and counterpart patents in foreign countries. Many of the
patents that we own are licensed to others, and we are licensed to use certain patents owned by others. While our
portfolio of patents and patent applications in aggregate is of significant value to our Company, we do not believe
that any individual patent is by itself of material importance to our business.
In addition, we own copyrights and trade secrets in our code base that comprises all of the Teradata software
offerings, including analytic data platforms and analytic applications and capabilities. Teradata’s software offerings
reflect the investment of hundreds of person-years of development work.
The source code versions of our offerings are protected as trade secrets and, in all major markets, as unpublished
copyright works. We take great efforts to protect our rights in all software offerings and related intellectual
property; however, there can be no assurance that these measures will be successful. The Company owns the
Teradata® word and logo trademarks, which are registered in the United States and in many foreign countries, as
well as other trade names, service marks, and trademarks.
Sources of Materials. Our hardware components are assembled and configured by Flex Ltd. ("Flex"). Our platform
line is designed to leverage the components from manufacturers that we believe are industry leaders. Our data
storage devices and memory components utilize industry-standard technologies but are selected and configured to
work optimally with our software and hardware platform. Flex also procures a wide variety of components used in
the assembly process on our behalf. Although many of these components are available from multiple sources,
Teradata utilizes preferred supplier relationships to better ensure more consistent quality, cost and delivery.
Typically, these preferred suppliers maintain alternative processes and/or facilities to ensure business continuity of
supply. Given our strategy to outsource product assembly activities to Flex and to source certain components from
single suppliers, a disruption in production at Flex or at a supplier, a global shortage of components, commodity,
transportation, and/or inflationary pressures could impact the timing or profitability of customer shipments. 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. Although we have not experienced issues from inflationary
challenges or otherwise, the current inflation environment could present potential supply chain uncertainty, and we
have implemented programs to mitigate these potential risks. For more information, see Item 1A, Risk Factors in
this Annual Report.
Human Capital
Teradata operates with a fully flexible work environment, empowering employees to make decisions about where
and how they can be most productive. Our global workforce is located in approximately 40 countries, and our
corporate headquarters are in San Diego, California.
Teradata’s people objectives are to attract, retain, develop, and nurture the most innovative, curious, and skilled
talent available. Along with our fully flexible work environment, we offer competitive pay and comprehensive
health and wellness benefits and programs designed to help our people thrive.
As of December 31, 2023, we had approximately 6,500 employees globally, with approximately 30% employed in
the United States and 70% across the rest of the world. Our global workforce is critical to our overall business
strategy across target markets. During fiscal 2023, our overall headcount decreased somewhat as we continue to
align and optimize our talent needs to drive our cloud-first and profitable growth strategy.
Culture and Engagement. At Teradata, we believe that people thrive when empowered with trusted information.
We have designed our culture to be the guiding force behind our ability to deliver on that purpose. We empower our
people to live our core principles: customer and market driven, agility in execution, and accountability to each other.
We strive to cultivate a trusted environment where every individual feels not only valued, but truly empowered to
thrive.
Diversity, Equity, and Inclusion. Teradata’s core strength is our people. We believe that we have built a workplace
where everyone can bring their authentic selves to work.
11
Diversity, equity, and inclusion ("DEI") is an important focus across many of our people and culture initiatives.
Examples include:
• A DEI Advisory Board, designed to support our DEI mission.
• Many resources and tools to help our employees engage within culturally- and geographically-dispersed
work teams to enable a culture of growth, learning, and collaboration.
• Our Inclusion Communities, which are networks of employees who unite based on shared characteristics,
life experiences, or common interests. These communities are designed to provide support, networking and
enhanced career and personal development. Our Inclusion Communities include Teradata Alliance of Black
Employees, Blend (a community for employees in India), Veterans, Teradata Pride, HISPA (a community
for Hispanic and Latin employees), Women of Teradata, Green Agenda, and Asian and Pacific Islander. All
our Inclusion Communities encourage membership from allies.
• Diversity in Technology Scholarship, a program for STEM-related degrees in support of the communities
where we operate and live.
• A score of 100 out of 100 in the Human Rights Campaign Corporate Equality Index ("CEI"), a
benchmarking survey and report that measures corporate policies and practices related to LGBTQ+
equality. 2023 marked our second time earning a score of 100.
Health, Safety, and Wellness. We are committed to the health, safety, and wellness of our employees and their
families. We provide flexible and inclusive programs that cater to diverse needs of well-being.
Compensation and Benefits. Our compensation and benefits reflect our commitment to fairness and inclusion. We
have robust compensation and benefit programs designed to attract and retain talent and meet the varied and
evolving needs of a global and diverse workforce. In addition to our competitive base pay, these programs (which
vary by country/region) include sales incentives, annual bonuses, stock awards, an Employee Stock Purchase Plan, a
401(k) Savings Plan with a company match, healthcare and insurance benefits, paid time off, family leave, and paid
parental leave. As an example of our commitment to DEI, we ensure that all of our benefits provide coverage for
domestic partners.
Talent Development. Teradata is committed to supporting the professional development of our employees by
providing resources and pathways for growth. Over the last several years, we have evolved our talent practices to
facilitate frequent conversations between managers and employees on performance and development. We have
launched on-demand learning resources, such as LinkedIn Learning and Country Navigator, which give employees
flexibility in when and how they learn. We also provide facilitated learning opportunities to help build specific
capabilities and skills, such as Basics of Communication, Emotional Intelligence, Influence, and Time Management.
Our executive and leadership development programs are designed to empower individuals to lead at every level.
Community Engagement. We believe that building connections between our employees, their families, and our
communities creates a more meaningful, fulfilling, and enjoyable workplace. We support local STEM education
programs to ensure emerging leaders in our communities have opportunities to explore their interests. Our Teradata
Cares program empowers our employees to make a positive difference where we live and work through
volunteerism and giving. We support our employees’ giving and volunteer efforts by providing matching donations
for employee contributions to qualified not-for-profit agencies, project grants, Annual Days of Caring, and
supporting communities where we have employee populations. To further enable employees to support the charity
of their choice, we afford every employee four days a year, during normal working hours, for volunteer efforts of
their choice.
Properties and Facilities. Our corporate headquarters is located in San Diego, California. As of December 31,
2023, we operated 44 facilities in 30 countries throughout the world. We own our San Diego complex, while all
other facilities are leased.
12
Information About Our Executive Officers. The following table and biographies sets forth information as of
February 23, 2024 regarding the individuals who are serving as our executive officers.
Name
Stephen McMillan
Hillary Ashton
Claire Bramley
Todd Cione
Kathleen Cullen-Cote
Michael Hutchinson
Margaret Treese
Jacqueline Woods
Age
53
52
46
54
59
58
57
62
Position(s)
President and Chief Executive Officer
Chief Product Officer
Chief Financial Officer
Chief Revenue Officer
Chief People Officer
Chief Customer Officer
Chief Legal Officer
Chief Marketing Officer
Stephen McMillan. Stephen McMillan is the Company’s President and Chief Executive Officer and has served in
this role since joining the Company in June 2020. Mr. McMillan has served on the Company’s Board of Directors
since June 2020. Previously, he served as the Executive Vice President of Global Services for F5 Networks, Inc., a
transnational company that specializes in application services and application delivery networking, from October
2017 when he joined F5 until May 2020. Prior to joining F5, from September 2015 until October 2017, he was
Senior Vice President, Customer Success and Managed Cloud Services at Oracle Corporation, a global software and
services company, where he was responsible for developing, overseeing, and expanding a customer success
organization focused on the company’s strategic SaaS portfolio. From May 2012 to September 2015, he served as
Senior Vice President, Managed Cloud Services at Oracle.
Hillary Ashton. Hillary Ashton is the Company’s Chief Product Officer and has served in this role since August
2020. Prior to that, Ms. Ashton served as the Executive Vice President of Teradata Products from November 2019,
when she joined the Company, until August 2020. Prior to joining Teradata, she served as Executive Vice President
and General Manager Augmented Reality, at PTC Inc., a global computer software and services company, from July
2018 until November 2019. In this role, she was responsible for all operational aspects of the Vuforia business and
its product lines, including executive leadership and vision, strategy, sales, and marketing. From 2014 to 2018, she
served as SVP of Analytics SaaS solutions at Manthan, a cloud analytics company for consumer-facing businesses.
Claire Bramley. Claire Bramley is the Company's Chief Financial Officer and has served in this role since joining
Teradata in June 2021. She served as the Global Controller for HP Inc., a multinational information technology
company, from December 2018 until June 2021. From June 2015 until December 2018, she served as HP's Regional
Head for Finance for EMEA, and from January 2013 to May 2015, she served as Vice President, Corporate
Financial Planning and Analysis at HP. Ms. Bramley also serves on the Board of Directors of Ansys, Inc.
Todd Cione. Todd Cione is the Company’s Chief Revenue Officer and has served in this role since joining
Teradata in January 2021. Mr. Cione served as the Head of U.S. Enterprise Accounts for Apple, Inc., a
multinational technology company, from the time he joined the company in July 2017 until December 2020. Prior to
joining Apple, from 2016 until 2017, he was Senior Vice President, Oracle Digital, North America Applications, at
Oracle Corporation, a global software and services company.
Kathleen Cullen-Cote. Kathleen Cullen-Cote is the Company’s Chief People Officer and has served in this role
since joining Teradata in July 2019. Prior to joining Teradata, Ms. Cullen-Cote served in human resource leadership
roles at PTC Inc., a global computer software and services company, from 2002 to June 2019, including Executive
Vice President and Chief Human Resources Officer from April 2019 to July 2019; Corporate Vice President,
Human Resources from 2012 until March 2019; Senior Vice President, Human Resources, from December 2010 to
2012; and Vice President, Human Resources, from October 2009 until December 2010.
13
Michael Hutchinson. Michael Hutchinson is the Company's Chief Customer Officer and has served in this role
since January 2022. Previously, from June 2021 when he joined the Company until December 2022, he served as
Senior Vice President World-Wide Customer Success, Consulting and Renewals. Prior to joining Teradata, Mr.
Hutchinson served as the Senior Vice President and Chief Customer Officer at Verint Systems Inc., a customer
engagement solutions provider, from August 2020 to May 2021 and as its Senior Vice President, Global
Professional Services and Support from April 2018 until August 2020. From 1990-2018, he held several positions
with Oracle Corporation , a global software and services company, most recently as the Group Vice President,
North America Customer Success from December 2015 to March 2018.
Margaret Treese. Margaret Treese is the Company’s Chief Legal Officer and has served in this role since
November 2020. Previously, from 2018 until January 2020, she served as Teradata’s Deputy General Counsel and
Secretary. From 2007 until 2018, she served as the Chief Corporate and Governance Counsel and Assistant
Secretary and was named Corporate Secretary of Teradata in 2018.
Jacqueline Woods. Jacqueline Woods is the Company's Chief Marketing Officer and has served in this role since
joining Teradata in December 2021. Previously, she served as the Global Chief Marketing and Communications
Officer for NeilsenIQ, a consumer intelligence company, from 2019 until November 2021. Prior to that, Ms. Woods
was with IBM Corporation, a global technology company, serving as the company's Chief Marketing Officer of
IBM Global Partner Ecosystem Division from 2017 until 2019 and, Chief Marketing Officer of IBM Global
Financing from 2015 until 2017. Ms. Woods also serves on the Board of Directors of Winnebago Industries, Inc.
There are no family relationships between any of the executive officers or directors of Teradata.
There are no contractual obligations regarding the election of our executive officers or directors.
Information. Teradata makes available through its website, free of charge, its Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and all amendments to such reports, as soon as
reasonably practicable after these reports are electronically filed or furnished to the U.S. Securities and Exchange
Commission ("SEC") pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"). These reports and other information are available, free of charge, at www.sec.gov. Teradata will furnish,
without charge to a security holder upon written request, the Notice of Meeting and Proxy Statement for the 2024
Annual Meeting of Stockholders. Teradata will furnish the Code of Conduct and any other exhibit at cost (the Code
of Conduct is also available through Teradata’s website at http://www.teradata.com/about-us/corporate-governance/
code-of-conduct/). Document requests are available by calling or writing to:
Teradata - Investor Relations
17095 Via Del Campo
San Diego, CA 92127
Phone: 858-485-2088
Website: www.teradata.com
Item 1A. RISK FACTORS
You should carefully consider each of the following risk factors and all other information set forth in this Annual
Report. Based on the information currently known to us, we believe that the following information identifies the
most significant risk factors affecting our company in each of these categories of risks. However, the risks and
uncertainties our Company faces are not limited to those set forth in the risk factors described below. Additional
risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely
affect our business.
In addition, past financial performance may not be a reliable indicator of future performance, and historical trends
should not be used to anticipate results or trends in future periods.
If any of the following risks and uncertainties develops into actual events or occurrences, these events could have a
material adverse effect on our business, financial condition or results of operations. In such case, the trading price
of our common stock could decline.
14
RISKS RELATED TO OUR BUSINESS AND OPERATIONS
Our failure to successfully execute our cloud-first strategy and achieve the anticipated benefits of our business
transformation, which includes successfully developing, launching, and scaling cloud-based products and
product enhancements and/or enabling our data platform to operate effectively in cloud environments, including
those of our cloud service provider partners, could have a material adverse effect on our competitive position,
business, brand and reputation, financial condition, results of operations and cash flows.
The successful implementation of our cloud-first strategy coupled with the continued execution of our business
transformation presents organizational and infrastructure challenges. We may not be able to implement, execute and
realize some or all of the anticipated benefits from our strategy or our business transformation plan on a timely
basis, or at all. Even if the anticipated benefits and savings are substantially realized, there may be unforeseen
consequences, internal control issues, or business impacts.
A core component of our business strategy is to expand and enhance our product offerings, particularly for analytic
solutions in a cloud-based environment with cloud service providers, to include newer market-relevant features,
functionality, and cloud native options, including AI/ML, and to keep pace with price-to-performance gains. In this
regard, we have launched our Teradata VantageCloud Lake and Teradata VantageCloud Enterprise components of
our Teradata Vantage platform, have focused on migrating our customers from on-premises environments to the
cloud and upgrading our customers from our VantageCloud Enterprise environment to our VantageCloud Lake
environment, and consistently released additional capabilities and new cloud platforms throughout 2023, and we
expect that we will continue to enhance our cloud offerings in the future. In addition, we are focused on expanding
our customer's workloads in both our on-premises and cloud platforms. Shortened product life cycles due to
customer demands and competitive pressures impact the pace at which we must introduce and implement new
technology as part of our product offerings. This requires a high-level anticipation of customer needs and
technology trends, as well as innovation by both our software developers and the suppliers of the third-party
software components included in our solutions. Bringing new offerings to the market entails a costly and, at times,
lengthy process, may increase our risk of liability and cause us to incur significant technical, legal or other costs.
Furthermore, as we migrate our customers from on-premises environments to the cloud, upgrade customers from
VantageCloud Enterprise to VantageCloud Lake, and expand our customer's workloads we may incur unexpected
costs or delays. New cloud offerings, migrations, expansions, upgrades, and deployment models that we rollout may
not be successful and we may not be able to develop the necessary business models, infrastructure and systems to
support and scale the business as our business evolves. This includes acquiring, retaining and developing the right
people to execute our business strategy in a competitive job market. In addition, market acceptance of new product
and service offerings will be dependent in part on our ability to include functionality and usability that address
customer requirements, and to optimally price our offerings and services to meet customer demand and cover our
costs. Our go-to-market, cloud, and multi-cloud strategies also must adjust to customers' changing buying
preferences, and there can be no assurance that our go-to-market approach will adequately and completely address
such preferences.
As part of our business strategy, we also continue to dedicate a significant amount of resources to our R&D efforts
in order to maintain and advance our competitive position, including our initiatives to provide and improve our
offerings for cloud environments and to enable our data platform to operate effectively in cloud environments.
However, we may not receive significant revenues from these investments for several years, if at all. R&D expenses
represent a significant portion of our discretionary fixed costs.
We may not successfully execute on our vision or strategy because of challenges we may face, including with
regard to product planning and timing, technical hurdles that we fail to overcome in a timely fashion, cloud service
provider costs or other requirements, or a lack of appropriate resources. If we are unable to successfully execute on
our cloud-first strategy and/or continue to respond to market demands, develop leading technologies, timely deliver
offerings to the market, timely scale our cloud business to achieve gross margins comparable or better than our on-
premises business, continue successful migrations for our customers, and maintain our leadership in analytic data
solutions performance and scalability, our competitive position, business, brand and reputation, financial condition,
guidance, and forecasts, results of operations, and cash flows may be adversely affected.
Unanticipated delays or accelerations in our sales cycles makes accurate estimation of our revenues difficult and
have resulted in, and could in the future result in, significant fluctuations in our quarterly operating results and
could impact any financial guidance and forecasts that we may provide.
15
The length of our sales cycle varies depending on several factors over which we may have little or no control,
including the size and complexity of a potential transaction, whether a sale involves a cloud offering, the level of
competition that we encounter in our selling activities, and our current and potential customers’ internal budgeting
and approval process, as well as overall macro-economic conditions. In addition, our account team has had
difficulty in the past obtaining and assessing information as to whether a transaction is proceeding as planned or if a
longer sales cycle will be required, and such difficulty may continue in the future. Because of a generally long sales
cycle, we may expend significant effort over a long period of time in an attempt to obtain an order, but ultimately
not complete the sale, or the order ultimately received may be smaller than anticipated. The long sales cycle for our
products also makes it difficult to predict the quarter in which sales will occur. For instance, in the fourth quarter of
2023, we experienced elongated sales cycles resulting in Teradata’s Public Cloud ARR for the 2023 fiscal year
falling below the 2023 Public Cloud ARR guidance range that had previously been provided. Delays in sales have
caused, and could in the future cause, significant variability in our results for any particular period and have
impacted, and could in the future impact, any financial guidance and forecasts that we may provide.
We may experience variability in our operating results based on the purchasing behavior of our customers.
Our business has substantially shifted from a traditional, perpetual pricing and revenue model to a subscription-
based model in which less revenue is recognized upfront at the time the customer enters into a transaction. The pace
and extent to which customers will continue to purchase, consume and renew our offerings on a subscription basis is
variable and, therefore, has impacts on our results and operations. In addition, we have flexible pricing options for
our cloud customers, including consumption-unit based, "pay as you go" pricing. Under such a pricing model, we
generally recognize revenue based on consumption. To the extent that customers opt for such a flexible pricing
model, we may not be able to accurately forecast the timing of customer consumption of our offerings. As a result,
our actual results may differ from our projections. Furthermore, our on-premises subscription arrangements may
provide the customers with the right to cancel our agreement upon certain notice periods, which we may change in
the future. Such arrangements may impact the timing of revenue recognition for these customers and result in
fluctuations in our quarterly operating results.
As we develop new offerings with enhanced capacity, delivery and performance capabilities, the increased
difficulty and complexity associated with producing these offerings may increase the likelihood of reliability,
quality, operability, and/or security issues.
From time to time, errors or security flaws are identified in our offerings, which in certain cases are discovered after
the offerings are introduced and delivered to customers. This risk is enhanced when offerings are first introduced or
when new versions are released. In particular, when we develop offerings with more advanced technology, the
production of such offerings involve increased difficulty and complexity and as a result may increase the likelihood
of reliability, quality, operability, and/or security issues with such offerings. Our products and services may also fail
to perform to the full specifications and expectations of our customers, including as part of transitioning customers
to the cloud, in particular those that involve customer and/or third-party dependencies. Additionally, third-party
components that we integrate into our solutions can have undetected quality issues that can impact the performance
of our offerings. We may not be able to detect or remedy all errors, including those that may be deemed critical by
our customers, prior to release or deployment.
Such reliability, quality, operability, and security issues may negatively impact our ability to retain current
customers, including due to customer cancellations or non-renewals, as well as our ability to obtain new customers
and could expose us to liability, performance and warranty claims, as well as harm our brand and reputation. These
and other risks associated with new offerings may have a material adverse impact on our results of operations and
future performance.
A cybersecurity incident, disruption, or failure of our information systems or those of our third-party providers
could adversely impact our reputation, business, and financial results.
Our operations are critically dependent on the security of our computer systems, the computer systems of our key
suppliers and third parties, and the information stored in such systems. We face risks from, among other things,
natural disasters (such as earthquakes and fires), technological threats (such as cyber-attacks, power outages, and
telecommunications failures), and human actions (such as unauthorized access or exploitations, insider actions,
phishing schemes, and other events). Increasingly, companies are subject to a wide variety of attacks on their
networks on an ongoing basis. Incidences of cyberattacks and other cybersecurity breaches and incidents have
16
increased and are likely to continue to increase. The occurrence of one or more of these events could result in data
loss, system outages, and other interruptions in our operations, which could have a material adverse effect on our
business, financial condition or results of operations.
Despite robust data security measures and skilled computer programmers, nation state sponsored cyber attackers
(including from countries such as Iran, China, Russia and certain Eastern European nations) and hackers may be
able to penetrate our network security or that of our third-party providers and misappropriate or compromise our
intellectual property or other confidential information or that of our customers, create system disruptions or cause
shutdowns. They may also be able to develop and deploy viruses, worms, and other malicious software programs
that attack our systems or products or otherwise exploit security vulnerabilities of our systems or products. In
addition, phishing-scheme-perpetrators may be able to lure employees or contractors into providing such
perpetrators with information that may enable them to avoid some of our network security controls or those of third-
party providers which could result in system disruptions or a loss of confidential and proprietary information.
While immaterial in impact, we have been subject to actual and threatened cyber-attacks, and there can be no
assurance that our defensive measures will be adequate to prevent them in the future. From time to time we discover
vulnerabilities in our software products, and while we routinely perform regular system updates and patches to our
various information systems and our products to address such vulnerabilities, our security measures may not be able
to detect and address each vulnerability, which if exploited by threat actors, can result in a cyber incident with
material impact to our business, financial condition and results of operations. When such attacks occur, we could
incur significant liability to our customers whose information was compromised, and our product platform may be
perceived as less desirable, which could negatively affect our business and damage our reputation. Further, because
we do not control our third-party service providers, or the processing of data by our third-party service providers,
we cannot ensure the integrity or security of measures they take to protect customer information and prevent data
loss. These types of activities will recur and persist, one or more of them may be successful in the future, and one or
more of them may have been or will be successful but not detected, prevented, remediated or mitigated by us, and
the costs to us to eliminate, detect, prevent, remediate, mitigate or alleviate cyber security or security vulnerabilities
could be significant, and our efforts to address these problems may not be successful and could adversely impact
our future results of operations. If as a result of these events, the information stored on our or our customers’
systems could be accessed, publicly disclosed, altered, lost or stolen, they can subject us to additional liability and
cause us financial harm. In addition, our disclosures concerning security incidents may become the subject of
litigation, and cause us, especially in the event of an adverse court ruling, additional financial strain and reputational
harm. While we take and will continue to take remediation steps, there is no guarantee that our preventative and
mitigation actions with respect to any cybersecurity incident will fully eliminate the risk of a malicious compromise
of our, our third-party service providers’ or our customers’ systems.
Additionally, we offer the ability for our employees to choose a remote work location which introduces additional
security challenges. The increase in endpoints to manage and reliance on employees to adhere to information
security policies and hygiene practices, heightens the vulnerability of our systems to security breaches.
While we maintain insurance coverage for certain liabilities related to cyber-attacks and/or data breaches, such
coverage may not adequately cover all costs, expenses, liability and damages that we or our customers may incur as
a result of such incidents.
The transition to cloud-based software-as-a-service (SaaS) and cloud solutions has increased our exposure to
information security risks related to the protection of sensitive information processed through these solutions
and any unauthorized access to or use of such systems could adversely impact our results of operation,
reputation, and relationships with our customers.
Prior to our transition to a subscription-based business, our customers generally purchased or leased on-premises
hardware systems used in connection with our software solutions, which our customers deployed and operated.
With respect to these types of customer on-premises solutions, the customer, directly or through its selected services
providers, has full control over its data security. Our ongoing transition from traditional on-premises hardware
systems to cloud-based SaaS offerings has altered our information security risk landscape. Cloud-based SaaS
offerings generally require us to deploy or operate solutions for our customers, directly or through the use of third-
party services providers, either on-premises at customer-selected data center facilities, or at third-party-hosted data
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center facilities. As a result, more responsibility for data security has been transferred to us and our third-party
service providers. Furthermore, in cloud environments, we are exposed to additional security risks (such as
compromised credentials, hijacked accounts, data breaches due to misconfigured cloud storage, inadequate security
practices by third-party providers, and vulnerabilities in shared technology) and bear greater responsibility for
securing data against unauthorized access, data breaches, and other cyber threats. This responsibility extends not
only to our infrastructure but also to third-party cloud service providers we engage. The transition to cloud-based
SaaS and cloud solutions has increased our exposure to risks related to the protection of sensitive information
processed through these solutions and the need to obtain various security certifications for our Vantage Cloud
platforms, such as the Federal Risk and Authorization Management Program ("FedRAMP®"), to remain
competitive in certain industries. The distributed nature of cloud computing can also complicate data governance
and compliance with various global data protection regulations. If unauthorized access to or use of such information
or systems occurs, despite data security measures and third-party commitments to protect them, our results of
operation, reputation, and relationships with our customers could be adversely impacted. Even the perception of
inadequate security, including as a result of delays or failure to obtain necessary security certifications, may damage
our reputation and negatively impact our ability to win new customers and retain existing customers, consequently
adversely impacting our financial performance and condition.
If our existing customers fail to renew, or cancel, their subscription license arrangements or support agreements,
or if customers do not renew on terms favorable to us, our business could be adversely affected.
Teradata’s platform offerings have been expanded to include a variety of subscription options, which impact the
timing of when revenues are recognized and related cash flows are collected. The IT industry generally has been
experiencing increasing pricing pressure from customers when purchasing or renewing support agreements. In
addition, we are in a transformation to a cloud-first company. As our on-premises customers migrate all or a portion
of their data analytics solutions to a cloud-based environment, some customers have selected a cloud-based offering
of one of our competitors and existing customers may do so in the future. As a result, such customers have cancelled
all or a portion of their arrangements with us and may continue to do so in the future. While customer cancellations
we have had to date have not been material to our business, they could become material in the future. Mergers and
acquisitions in certain industries that we serve could result in a reduction of the software and hardware being
supported and put pressure on our subscription and support terms with customers who have merged. Given these
factors, there can be no assurance that our current customers will migrate from on-premises to the cloud with
Teradata, renew their subscription and/or support agreements, or agree to the same terms when they renew, which
could result in our reducing or losing subscription and/or support fees which could adversely impact operating
results.
Our future results depend in part on our relationships with strategic partners, key suppliers, and other third
parties.
Our development, marketing, and distribution plans depend in part on our ability to form strategic alliances with
third parties that have complementary offerings, software, services, and skills. Our strategic partners include cloud
service providers, consultants and system integrators, software and technology providers, hardware support service
providers, and indirect channel distributors in certain countries. These relationships involve risks, including our
partners changing their business focus, entering strategic alliances with other companies, being acquired, including
by our competitors, failing to meet regulatory requirements, data privacy or other laws, or performance criteria,
improperly using our confidential information, exposing our data and/or customer information through the transfer
of data to the cloud or otherwise or through other security breaches, or their market reputation deteriorating. If we
fail to maintain or expand our relationships with strategic partners or if we are forced to seek alternative technology
or technology for new solutions that may not be available on commercially reasonable terms, our business may be
adversely affected.
As part of our cloud-first strategy, the growth of our business is dependent primarily on our relationships with
public cloud service providers, Amazon Web Services ("AWS"), Google Cloud, and Microsoft Azure. Our strategic
partnerships with these cloud service providers for our cloud offerings on their platforms require significant
investments to ensure that our solutions are optimized in these cloud environments. In addition, there are
geographies in which we operate that utilize alternative, local cloud-platform service providers where AWS, Google
Cloud, and Microsoft Azure are inaccessible or not available. The cloud service providers maintain relationships
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with certain of our competitors, and our competitors may in the future establish relationships with additional
competing cloud data platform providers. Furthermore, cloud service providers do and may in the future provide
platforms that compete with VantageCloud and VantageCloud Lake. Any of these cloud service providers may
decide to modify or terminate our business relationship, change the terms of any agreement or pricing terms that we
have with them, or may otherwise enter into preferred relationships with one or more competing cloud data platform
providers. If we are unsuccessful in meeting performance requirements or obtaining future returns on these
investments, or if we are otherwise unable to maintain adequate relationships with any of these cloud service
providers, our financial results may be adversely impacted.
Third-party vendors provide important elements to our solutions; if we do not maintain our relationships with these
vendors or if these vendors cease to be going concerns, interruptions in the supply of our offerings may result. There
are some components of our solutions that we purchase from single sources due to price, quality, technology or
other reasons. For example, we rely on Flex as a key single source contract manufacturer for our on-premises
hardware systems. In addition, we buy servers from Dell Technologies Inc. and storage disk systems from NetApp,
Inc. Some components supplied by third parties may be critical to our solutions, and several of our suppliers may
terminate their agreements with us without cause with 180-days' notice. In addition, we rely on certain vendors for
hardware support services and parts supply. If we were unable to purchase necessary services, parts, components or
offerings from a particular vendor and had to find an alternative supplier, our shipments and deliveries could be
delayed. Also, quality issues, commodity, transportation, wage, or other inflationary pressures, a disruption in our
supply chain or the need to find alternative suppliers could impact the costs and/or timing associated with procuring
necessary offerings, components and services. In any case, our operations could be adversely impacted. Similarly,
our suppliers’ offerings and services have certain dependencies with respect to their own supply chain networks,
and supply and/or inflation issues among our suppliers may also adversely impact our business.
Demand for the offerings and services we sell could decline if we fail to maintain positive brand perception and
recognition.
In 2023, Teradata introduced a new brand identity. With this brand we strive to be modern, innovative, and
reflective of our vision for the future. Our updated brand is designed to highlight Teradata’s role as a leader in AI,
analytics, and cloud data. We believe that recognition and the reputation of our brand is key to our success,
including our ability to retain existing customers and attract new customers. While we leverage our decades of
experience in data analytics and database management services, we believe we have evolved to provide the modern
offerings customers need. These include the cloud-native architecture of Teradata VantageCloud Lake, the end-to-
end pipeline of AI/ML capabilities in ClearScape Analytics, and our AI and ML engine in the cloud that delivers a
completely self-service and serverless experience of Teradata AI Unlimited. The failure for the market to recognize
our new brand or misperceptions in the market regarding our cloud, AI, or other capabilities could negatively
impact our ability to upgrade existing on-premises customers to our cloud-based solutions or from VantageCloud
Enterprise to VantageCloud Lake, drive expansion/consumption growth, and/or acquire new customers for our on-
premises and cloud businesses. In addition, damage to the reputation of our brands could result in, among other
things, customer cancellations or non-renewals, lower employee retention and productivity, vendor relationship
issues, and investor and other stakeholder scrutiny, all of which could materially affect our revenue and
profitability.
Increases in the cost of components used in our product, and/or increases in our other costs of doing business,
have, and could continue to, adversely affect our profit margins.
Our cloud offerings are dependent on cloud service providers and require significant investments to ensure that our
solutions are optimized in these cloud environments. In addition, our profit margins are currently adversely
impacted by the price we pay for cloud services and will continue to do so until we effectively scale our cloud
business.
Our hardware components are assembled and configured by Flex. Flex also procures a wide variety of components
used in the assembly process on our behalf. Although many of these components are available from multiple
sources, we utilize preferred supplier relationships to better ensure more consistent quality, cost and delivery.
Components used in our products require commodities as part of their manufacturing. In addition, we have a global
employee population. As such, increased costs and/or commodity and other inflation, and/or increased tariffs on
certain items imported from foreign countries have affected our profit margins and could continue to result in
declines in our profit margins. Historically, we have mitigated certain cost increases, in part, by increasing prices on
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some of our products and collaborating with suppliers, in particular Flex, reviewing alternative sourcing options,
and engaging in internal cost reduction efforts, all as appropriate. However, we may not be able to fully offset
increased costs. Further, if any price increases we adopt are not accepted by our customers and the market, our net
sales, profit margins, earnings, and market share could be adversely affected.
Challenges with the design and implementation of our new enterprise resource planning ("ERP") system could
adversely impact our business and operations.
We are executing a multi-year initiative to transform and modernize our ERP system. The ERP system is designed
to accurately maintain the Company’s financial records, enhance operational functionality, and provide timely
information to the Company’s management team related to the operation of the business. The implementation of the
new ERP system requires an investment in financial and personnel resources, including substantial expenditures for
outside consultants and system expenses in connection with the transformation of our financial and operating
processes. While the ERP system is intended to further improve and enhance our information management systems,
the ongoing implementation of this new ERP system exposes us to integration complexities and challenges with our
existing systems and processes, including the possible disruption of our financial reporting. If we failed to properly
design our ERP system or are unable to successfully implement the new ERP system as planned, we may
experience increased expenditure and the diversion of personnel resources which could adversely affect our internal
control over financial reporting, business operations and financial condition.
Any disruption, including as a result of natural disasters or climate change, at or near any of our facilities or
other operations or those of our customers, vendors, data warehouses, distribution channels, and public cloud
service providers could adversely affect our business.
Disruptions could occur as a result of supply chain challenges; decreases in work force availability; natural
resources availability; natural disasters; inclement weather, including as exacerbated by global climate change; man-
made disasters; or other external events, such as terrorist acts or acts of war, pandemics and/or epidemics, boycotts
and sanctions, widespread criminal activities, or protests and/or social unrest, or other events, at or in proximity to
any of our facilities or those of our customers, vendors, data warehouses, distribution channels, and public cloud
service providers. Such events and disruptions could make it difficult or impossible to deliver products and services
to our customers or perform critical business functions and could adversely affect our business.
Our headquarters and data centers are located in California, a region with a history of seismic activity and wildfires
and an extreme risk of drought, flooding, and vulnerability to future water scarcity. As such, we could experience
disruptions as a result of natural disasters and/or extreme weather conditions, including sea-level rise, earthquakes,
tornadoes, hurricanes, earthquakes, floods, tsunamis, typhoons, drought, and fire, that could impact our business and
operations. Such events could pose physical risks to our facilities and data warehouses, result in power outages and
shortages, and/or result in failures of global critical infrastructure, telecommunication and security systems, natural
resource availability, such as energy and water sources, employees’ ability to work, availability of supply chain and
logistics, and the additional costs to maintain or resume operations such as costs to repair damages to our facilities,
equipment, infrastructure, and business relationships, each of which could negatively impact our business and
operations. Furthermore, environmental regulations are increasing in their frequency of issuance and applicability to
our company, particularly due to our operations in California and the European Union. Such regulations may result
in changes in the demand for resources that could adversely impact the availability or cost of goods and services,
including natural resources necessary to run our business.
The world economy, including our business, realized significant disruption during the COVID-19 pandemic. The
occurrence of future global pandemics and/or regional epidemics may disrupt our business in the future. The extent
to which our business may be affected in the future is highly uncertain and cannot be predicted as it would be
dependent on factors such the duration and scope of the pandemic; governmental, business, and individuals' actions
in response to the pandemic; and the impact on economic activity such as financial market instability.
Failure to successfully complete reorganization activities in connection with our transformation activities or
otherwise could negatively affect our operations.
We have completed reorganization efforts in connection with our business transformation and we may continue to
complete reorganization activity in furtherance of our strategy. In addition, from time to time, we may wind down
certain business activities and/or facilities, cease doing business in certain geographic areas, and/or perform other
organizational reorganization projects in an effort to reduce costs and optimize operations. For example, in 2022, we
ceased our operations in Russia to comply with sanctions imposed as a result of Russia’s invasion of Ukraine and in
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2023 we ceased our direct operations in China. Reorganization activities involve risks as they may divert
management's attention from our core businesses, increase expenses on a short-term basis or reduce revenues. We
may also experience a loss of continuity, loss of accumulated knowledge, or loss of efficiency during such
transitional periods, all of which may negatively impact our business, financial condition, operating results, and
cash flows.
Our business is affected by the global economies in which we operate and the economic climate of the industries
we serve.
Our business and results of operations are affected by international, national and regional economic conditions. In
particular, the IT industry in which we operate is susceptible to significant changes in the strength of the economy
and the financial health of companies and governmental entities that make spending commitments for new
technologies. Accordingly, adverse global economic, inflationary, recessionary, and market conditions, including in
certain economic sectors in which many of our customers operate (such as retail, manufacturing, financial services
or government), may adversely impact our business. For example, adverse changes to the economy could impact the
timing of purchases by our current and potential customers or the ability of our customers to fulfill their obligations
to us. In addition, decreased or more closely scrutinized spending in our customers’ businesses and in the industries
we serve, may adversely impact our business. Uncertainty about future economic conditions may make it difficult
for us to forecast operating results and to make decisions about future investments. In addition, our inability or
failure to quickly respond to inflation and the resulting buying behaviors of our customers could harm our business,
results of operations and financial condition. Our success in periods of economic uncertainty may also be
dependent, in part, on our ability to reduce costs in response to changes in demand, inflation or other activity.
Generating substantial revenues from our international operations poses several risks.
In 2023, the percentage of our total revenues from outside of the United States was 47%. We have exposure to more
than 30 functional currencies. The risks associated with the geographic scope of our business operations include,
among other things the following:
• Cultural, management, and staffing challenges associated with operating in countries around the world,
including developing countries;
• Realignment of our international strategy and organization structure;
• The imposition of additional and/or different country laws, governmental controls and regulations;
• The ever-changing macro-economic and geo-political (including local conflicts and wars) environments we
operate in;
• Longer payment cycles for sales in certain foreign countries and difficulties in enforcing contracts and
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collecting accounts receivable;
Fluctuations in the value of local currencies and foreign currency controls in various jurisdictions where we
operate, including Argentina;
Tariffs or other restrictions on foreign trade or investment;
Foreign trade policy changes, trade regulations, and/or disputes may adversely affect sales of our solutions
and services and may result in longer sales cycles;
The imposition of sanctions against a country, company, person or entity with whom we do business that
would restrict or prohibit our business; and
Foreign government activities that favor domestic companies, including those that may require companies
to procure goods and services from locally-based suppliers.
Any of these events, among others, could materially and adversely affect our financial condition and operating
results.
Our offerings are subject to United States export controls and, when exported from the United States, or re-exported
to another country, must be authorized under applicable United States export regulations. Changes in our offerings
or changes in export regulations may create delays in the introduction of our offerings in international markets,
prevent our customers with international operations from deploying our offerings throughout their global systems
or, in some cases, prevent the export of our offerings to certain countries or customers altogether. Any change in
export regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or
change in the countries, persons or technologies targeted by these regulations could result in decreased use of our
offerings by, or in our decreased ability to export or sell our offerings to, existing or potential customers with
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international operations. There is active enforcement and ongoing focus by the SEC and other governmental
authorities on the United States Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar anti-
bribery, anti-corruption laws in other countries. Given the breadth and scope of our international operations, we may
not in all cases be able to detect improper or unlawful conduct by our partners, distributors, resellers, customers, and
employees, despite our high ethics, governance and compliance standards, which could put the Company at risk
regarding possible violations of such laws and could result in various civil or criminal fines, penalties or
administrative sanctions, and related costs, which could negatively impact the Company's business, brand, results of
operations or financial condition.
Inadequate internal control over financial reporting and accounting practices could lead to errors, which could
adversely impact our ability to assure timely and accurate financial reporting.
Internal control over financial reporting, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the control objectives will be met. These inherent limitations include system errors, the
potential for human error and unauthorized actions of employees or contractors, inadequacy of controls, temporary
lapses in controls due to shortfalls in transition planning and oversight of resources, and other factors.
Consequently, such controls may not prevent or detect misstatements in our reported financial results as required
under the Securities and Exchange Commission ("SEC") and the New York Stock Exchange ("NYSE") rules, which
could increase our operating costs or impair our ability to operate our business. Controls may also become
inadequate due to changes in circumstances, and it is necessary to replace, upgrade or modify our internal
information systems from time to time. In addition, unforeseen risks may arise in connection with financial
reporting systems due to inefficient business processes, business process reengineering projects, or changes in
accounting standards.
If management is not successful in maintaining a strong internal control environment, material weaknesses could
occur, causing investors to lose confidence in our reported financial information. This could lead to a decline in our
stock price, limit our ability to access the capital markets in the future, and require us to incur additional costs to
improve our internal control systems and procedures.
Increased scrutiny from governments, investors, raters, customers, and others regarding our environmental,
social, and governance ("ESG") practices and our inability to achieve any ESG goals we establish could impose
additional costs, expose us to new risks, or negatively impact our reputation.
The ESG landscape is constantly changing, with an increased focus from certain investors, raters, employees,
customers, and other stakeholders which could result in greater expectations of us and our ESG initiatives, goals,
efforts, transparency, and communications which may not satisfy our stakeholders.
To meet expectations from our stakeholders, we are working to align our reporting with emerging ESG disclosure
frameworks, new regulations, including those passed in the European Union and the state of California, and
potential new disclosure requirements, while we also seek to report timely on progress toward our ESG objectives.
We have established ESG goals, and we expect to continue to establish additional ESG goals in which our ESG
goals and/or our ESG program performance may be reviewed by third-party providers such as raters and rankers
who may unfavorably evaluate our ESG initiatives. If we fail, or are perceived to fail, to meet our stakeholders’ and/
or raters’ expectations, including the achievement of the ESG goals that we establish, we could be exposed to
increased risk of litigation, difficulty in attracting and retaining employees, negative investor sentiment, and an
adverse impact on our reputation.
RISKS RELATED TO OUR INDUSTRY
Our cloud and service offerings are designed to offer AI/ML capabilities, which exposes us to an uncertain
regulatory environment and rapidly changing technology where any inability to comply with any such
regulations may result in reputational harm, liability and disruption to our business operations.
The AI/ML regulatory environment is rapidly evolving, and it is difficult to predict the impact the evolving
regulatory landscape may have on our business, results of operations and financial condition. Teradata
VantageCloud Enterprise, Teradata VantageCloud Lake, and ClearScape Analytics are designed to deliver
harmonized data, AI/ML, and faster innovation to facilitate better decision-making. AI/ML technologies are rapidly
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changing, and with the evolving regulatory environment, we may be subject to increased regulatory requirements, as
well as other risks such as data privacy concerns, intellectual property disputes, and exposure to litigation.
The IT industry is intensely competitive and evolving, and competitive pressures could adversely affect our
pricing practices or demand for our offerings and services.
We operate in the intensely competitive IT industry, which is characterized by rapidly changing technology,
evolving industry standards and models for consuming and delivering business and IT services, frequent new
product introductions, and frequent price and cost reductions. In general, as a participant in the data analytic
solutions market, we face:
• Changes in customer spending preferences and other shifts in market demands, which drive changes in the
Company's competition;
• Changes in pricing, marketing and product strategies, such as potential aggressive price discounting and the
use of different pricing models by our competitors;
• Rapid changes in product delivery models, such as on-premises solutions versus cloud solutions;
• Rapid changes in computing technology and capabilities that challenge our ability to maintain
differentiation;
• New and emerging analytic technologies, including for AI/ML, competitors, and business models;
• Continued emergence of open-source software that often rivals current technology offerings at a much
lower cost despite its limited functionality;
• Changing competitive requirements and deliverables in developing and emerging markets; and
• Continuing trend toward consolidation of companies, which could adversely affect our ability to compete,
including if our key partners merge or partner with our competitors.
Our competitors include established companies within our industry, including Amazon, Google, IBM, Oracle,
Microsoft, and SAP, which are well-capitalized companies with widespread distribution, brand recognition and
penetration of our product platforms and service offerings. The significant purchasing and market power of these
larger competitors, which have greater financial resources than we do, could allow them to surpass our market
penetration and marketing efforts to promote and sell their offerings and services. In addition, many other
companies participate in specific areas of our business, such as enterprise applications, analytic platforms and
business intelligence software. In some cases, we may partner with a company in one area of our business and
compete with them in another. In particular, in delivering our Teradata VantageCloud offerings in a cloud
environment to certain of our customers, we partner with each of Amazon Web Services, Google, and Microsoft,
which are public cloud service providers. The status of our business relationships with these companies can
influence our ability to compete for analytic data solutions opportunities in such areas. In addition, we see additional
competition from both established and emerging cloud-only data vendors and open-source providers. Failure to
compete successfully with new or existing competitors in these and other areas could have a material adverse
impact on our ability to generate additional revenues or sustain existing revenue levels.
Current and evolving privacy laws and regulations regarding cloud computing, cross-border data transfer
restrictions and other aspects of data privacy may impact the use and adoption of our solutions and services and
adversely affect our business.
Federal, state and foreign governments continue to adopt new, or modify existing, laws and regulations addressing
data privacy and the collection, processing, storage, transfer and use of data. Some of these impose new obligations
directly on the Company as both a data controller and a data processor, as well as on many of our customers. New
laws also require us to evaluate any required changes to our solutions and services on an ongoing basis to enable
Teradata and/or our customers to comply with the new legal requirements and may also increase our potential
liability through higher potential penalties for non-compliance. Further, laws such as the European Union’s
proposed e-Privacy Regulation are increasingly aimed at the use of personal information for marketing purposes,
and the tracking of individuals’ online activities. These new or proposed laws and regulations are also subject to
differing interpretations which may be inconsistent among jurisdictions. These and other requirements could reduce
demand for our solutions and services, require us to take on more onerous obligations in our contracts, restrict our
ability to store, transfer and process data or, in some cases, impact our ability to offer our solutions and services in
certain locations or our customers' ability to deploy our solutions globally. For example, existing and developing
laws regarding how companies transfer personal data from the European Economic Area to the United States and
other third-world countries can be unpredictable and could result in further limitations on the ability to transfer data
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across borders, particularly if governments are unable or unwilling to create new, or maintain existing, mechanisms
that support cross-border data transfers. Additionally, certain countries have passed or are considering passing laws
requiring local data residency. The costs of compliance with, and other burdens imposed by, privacy laws,
regulations and standards may limit the use and adoption of our solutions and services, reduce overall demand for
our solutions and services, make it more difficult to meet expectations from or commitments to customers, lead to
significant fines, penalties or liabilities for noncompliance, or slow the pace at which we close sales transactions,
any of which could harm our business.
In addition to government activity, privacy advocacy and other industry groups establish new self-regulatory
standards that may place additional burdens on our ability to provide our solutions and services globally. Our
customers expect us to meet voluntary certification and other standards established by third parties, such as related
International Organization for Standardization ("ISO") standards. If we are unable to maintain these certifications or
meet these standards, it could adversely affect our ability to provide our solutions to certain customers and could
harm our business.
Furthermore, concerns regarding data privacy may cause our customers’ customers to resist providing the data
necessary to allow our customers to use our solutions and services effectively. Even the perception that the privacy
of personal information is not satisfactorily protected or does not meet regulatory requirements could inhibit sales of
our offerings or services and could limit adoption of our cloud-based solutions.
RISKS RELATED TO HUMAN CAPITAL
We depend on key employees and face competition in hiring and retaining qualified employees.
Our employees and access to talent are critical to our success. Our future success depends on our ability to attract,
retain, develop, and motivate the services of senior management and key personnel in all areas of our Company,
including engineering and development, marketing and sales professionals, and consultants. Competition for highly
skilled personnel and acquired talent in the IT industry is intense. We have experienced, and may continue to
experience, voluntary workforce attrition, including the loss of senior management and key personnel, in part due to
the highly-competitive job market in our industry. Furthermore, we are required to attract and retain talent with
expertise in cloud-based technologies, particularly with respect to our engineering and development teams. No
assurance can be made that key personnel will remain with us, and it may be difficult and costly to replace such
employees and/or obtain qualified talent who are not employees. We implemented a remote working policy to
expand our talent pool for key personnel and we cannot predict the longer-term workforce implications.
Competition is heightened for diverse talent as companies, including us, develop and enhance DEI initiatives. Our
failure to execute on our key culture initiatives, hire, retain or replace our key personnel could have a material
adverse impact on our business operations.
RISKS RELATED TO LEGAL AND REGULATORY MATTERS
We face uncertainties regarding legal proceedings, complex and changing laws and regulations, and other
related matters.
In the normal course of business, we are subject to proceedings, lawsuits, claims and other matters, including those
that could relate to the environment, health and safety, employee benefits, export compliance, intellectual property,
a variety of local laws and regulations, and other regulatory compliance and general matters. See "Note 10-
Commitments and Contingencies" in the Notes to Consolidated Financial Statements in this Annual Report.
Because such matters are subject to many uncertainties, their outcomes are not predictable. There can be no
assurances that the amounts required to satisfy alleged liabilities from such matters will not impact future operating
results.
In addition, we are subject to diverse and complex laws and regulations, including those relating to technology,
including AI/ML, corporate governance, data privacy, public disclosure, and reporting, which are rapidly changing
and subject to possible changes in the future. From time to time, we may conduct internal investigations to ensure
compliance with such laws and regulations, the costs or results of which could impact our financial results. In
addition, we may be subject to unexpected costs in connection with new public disclosure or other regulatory
requirements that are issued from time to time. Laws and regulations impacting our customers, such as those
relating to privacy, data protection and digital marketing, could also impact our future business. Because we do
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business in the government sector, we are generally subject to audits and investigations which could result in
various civil or criminal fines, penalties or administrative sanctions, including debarment from future government
business, which could negatively impact the Company’s results of operations or financial condition.
In addition, our facilities and operations, including former facilities and former operations for which we may have
liabilities, are subject to a wide range of environmental protection laws. There can be no assurances that the costs
required to comply with applicable environmental laws will not adversely impact future operating results.
Management time and resources are spent to understand and comply with changing laws, regulations and standards
relating to such matters as corporate governance, accounting principles, public disclosure, SEC regulations, and the
rules of the NYSE where our shares are listed. Rapid changes in accounting standards, and federal securities laws
and regulations, among others, may substantially increase costs to our organization, challenge our ability to timely
comply with all of them and could have a negative impact on our future operating results.
Gaps in protection of Teradata’s intellectual property or unlicensed use of third-party intellectual property could
impact our business and financial condition.
As a technology company, our intellectual property portfolio is crucial to our continuing ability to be a leading
multi-cloud data and analytics platform provider. We strive to enhance and, as much as is legally and reasonably
possible, protect our proprietary intellectual property rights through patent, copyright, trademark and trade secret
laws, as well as through technological safeguards and the actions of our people. These efforts include protection of
the offerings and application, diagnostic and other software we develop.
Where gaps exist in our intellectual property protection, even if such gaps are reasonable, our business could be
materially adversely impacted. We may be unable to prevent third parties from using our technology without our
authorization or independently developing technology that is similar to ours, particularly in those countries where
the laws do not protect our proprietary rights as fully as in the United States (such as Iran, China and certain Eastern
European countries who may use NSSAPC to advance their own industries). With respect to inventions for which
we choose to file patent applications, we may not be successful in securing patents for these claims, and our
competitors may already have applied for patents that, once issued, will prevail over our patent rights or otherwise
limit our ability to sell our offerings.
While we take steps to provide for confidentiality obligations of employees and third parties with whom we do
business (including customers, suppliers and strategic partners), there is a risk that such parties will breach such
obligations and jeopardize our intellectual property rights. Many customers have outsourced the administration and
management of their data and analytics environments to third parties, including some of our competitors, who then
have access to our confidential information. Although we have agreements in place to mitigate this risk, there can be
no assurance that such protections will be sufficient. In addition, our ability to capture and re-use field-based
developed intellectual property is important to future business opportunities and profits.
We are seeing an extended trend towards aggressive enforcement of intellectual property rights, especially by so-
called "patent assertion entities" ("PAEs") or "non-practicing entities" ("NPEs"), as the functionality of offerings in
our industry increasingly overlaps and the volume of issued software patents continues to grow. As a result, we
have been, and in the future could be, subject to infringement claims which, regardless of their validity, could:
• Be expensive, time consuming, and divert company resources and management attention away from normal
business operations;
• Require us to pay monetary damages or enter into non-standard royalty and licensing agreements;
• Require us to modify our product sales and development plans; or
• Require us to satisfy indemnification obligations to our customers.
Regardless of whether these claims have any merit, they can be burdensome to defend or settle and can harm our
business, reputation, financial condition and results of operations.
A change in our effective tax rate can have a significant adverse impact on our business.
A number of factors may adversely impact our future effective tax rates, such as:
•
The jurisdictions in which our profits are determined to be earned and taxed;
25
The resolution of issues arising from tax audits with various tax authorities;
•
• Changes in the valuation of our deferred tax assets and liabilities;
• Adjustments to estimated taxes upon finalization of various tax returns; and
• Changes in available tax credits, especially surrounding tax credits in the United States for our research and
development activities and foreign tax credits.
Tax rules may change in a manner that adversely affects our future reported results of operations or the way we
conduct our business. Further changes in the tax laws of foreign jurisdictions could arise as a result of the base
erosion and profit shifting project that was undertaken by the Organization for Economic Co-operation and
Development ("OECD"). The OECD, which represents a coalition of member countries, recommended changes to
numerous long-standing tax principles impacting how large multinational enterprises are taxed. In particular, the
OECD has issued its guidance on the Global Anti-Base Erosion rules, with the purpose of ensuring multinational
companies pay a 15% global minimum tax on the income generated in each of the jurisdictions where they operate
in, referred to as "Pillar Two." Many jurisdictions, including several European Union members and G20 countries,
have now committed to an effective enactment date for Pillar Two starting January 1, 2024. We are monitoring
developments and evaluating the impacts these new rules will have on our tax rate, including eligibility to qualify
for these safe harbor rules.
Further, the increased scrutiny on international tax and continuous changes to countries’ tax legislation may also
affect the policies and decisions of tax authorities with respect to certain income tax and transfer pricing positions
taken by the Company in prior or future periods. It is not uncommon for taxing authorities in different countries to
have conflicting views, for instance, with respect to, among other things, the manner in which the arm’s length
standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property. Our
income tax obligations are based partly on our corporate structure and inter-company arrangements, including how
we develop, value, and use our intellectual property and the valuations of our inter-company transactions. Tax
authorities may disagree with certain positions we have taken and assess additional taxes. We regularly assess the
likely outcomes of these audits to determine the appropriateness of our tax provision; however, there can be no
assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could
have a material impact on our financial condition or results of operations. In addition, governmental authorities in
the United States and throughout the world may increase or impose new income taxes or indirect taxes, or revise
interpretations of existing tax rules and regulations, as a means of financing the costs of stimulus and other
measures enacted or taken, or that may be enacted or taken in the future. Such actions could have an adverse effect
on our results of operations and cash flows.
RISKS RELATED TO OUR FINANCIAL CONDITION
Our indebtedness could adversely affect our financial condition and limit our financial flexibility.
The Company's indebtedness could:
Expose us to interest rate risk;
Increase our vulnerability to general adverse economic and industry conditions;
Limit our ability to obtain additional financing or refinancing at attractive rates;
•
•
•
• Require the dedication of a substantial portion of our cash flow from operations to the payment of principal
of, and interest on, our indebtedness, thereby reducing the availability of such cash flow to fund our growth
strategy, working capital, capital expenditures, share repurchases and other general corporate purposes;
Limit our flexibility in planning for, or reacting to, changes in our business and the industry; and
Place us at a competitive disadvantage relative to our competitors with less debt.
•
•
Further, our outstanding indebtedness is subject to financial and other covenants, which may be affected by changes
in economic or business conditions or other events that are beyond our control. If we fail to comply with the
covenants in any of our indebtedness, we may be in default under the loan, which may entitle the lenders to
accelerate the debt obligations. To avoid defaulting on our indebtedness, we may be required to take actions such as
reducing or delaying capital expenditures, reducing or eliminating stock repurchases, selling assets, restructuring or
refinancing all or part of our existing debt, or seeking additional equity capital, any of which may not be available
on terms that are favorable to us, if at all.
26
fluctuations in foreign currency exchange rates have affected our operating results and could continue to impact
our revenue and net earnings.
Because the functional currency of most of our foreign activities is the applicable local currency, but our financial
reporting currency is the U.S. dollar, we are required to translate the assets, liabilities, expenses, and revenues of our
foreign activities into U.S. dollars at the applicable exchange rate in preparing our Consolidated Financial
Statements. We operate in approximately 40 countries and are exposed to various foreign currencies in the
Americas region (North America and Latin America), EMEA region (Europe, Middle East, and Africa) and APJ
region (Asia Pacific and Japan). Accordingly, we face foreign currency exchange rate risk arising from transactions
in the normal course of business.
In addition, we operate in certain jurisdictions that utilize foreign currency controls that may temporarily restrict
access to foreign currency which results in excess cash in the jurisdiction that cannot be remitted outside of the
country and is, therefore, subject to foreign currency exchange rate risk. For example, the Company has operations
in Argentina. The Central Bank of Argentina maintains currency controls that limit the Company’s ability to access
U.S. dollars in Argentina and remit cash from its Argentine operations. During October of 2023, the Company
began entering into Blue Chip Swap transactions (a foreign exchange mechanism which effectively results in a
parallel U.S. dollar exchange rate) in order to remit cash from its Argentine operations and such action resulted in a
pre-tax loss on investment of $13 million during the fourth quarter of 2023.
Foreign currency exchange rates and foreign currency controls have affected our revenue and net earnings and could
continue to impact our revenue and net earnings. While we actively manage our foreign currency market risk in the
normal course of business by entering into various derivative instruments to hedge against such risk, these
derivative instruments involve risks and may not effectively limit our underlying exposure to foreign currency
exchange rate fluctuations or minimize our net earnings and cash volatility associated with foreign currency
exchange rate changes. Further, the failure of one or more counterparties to our foreign currency exchange rate
contracts to fulfill their obligations to us could adversely affect our operating results.
Item 1B.
UNRESOLVED STAFF COMMENTS
None.
Item 1C. CYBERSECURITY
Risk Management and Strategy
Our cybersecurity program is designed to protect information and information systems from unauthorized access,
use, disclosure, disruption, modification, or destruction.
Enterprise Risk Management. We have processes in place for assessing, identifying, and managing material risks
from cybersecurity threats, which are integrated into our Enterprise Risk Management ("ERM") program. Our ERM
program, which is coordinated through our Enterprise Risk and Internal Audit function ("ERAS team"), includes the
identification of risks relevant to Teradata’s business, including material risks from cybersecurity threats; assigning
personnel responsible for such risks; the development of strategies and plans to monitor, assess, and mitigate such
risks; and oversight of the identified risks through regular reporting and risk evaluations with management, our
Board, and/or relevant Board committee. Our ERAS team works closely with the Information Security function,
including our Chief Information Security Officer ("CISO"), in the cybersecurity risk management process that
informs the ERM program.
Cybersecurity Processes. The processes in place for managing cybersecurity threats, including threats associated
with our use of third-party service providers, include identifying potential cybersecurity threats; defining the roles
and responsibilities of our personnel pursuant to our Cybersecurity Incident Response Plan ("CIRP"); continuous
testing and training of our employees on cybersecurity risks and security hygiene; communication and escalation
protocols; and tools and technologies for incident detection and responses. We continuously assess risks and
changes in the cybersecurity environment and adjust our processes and cybersecurity investments as appropriate.
• Our information security processes are built upon a foundation of advanced security technology, a trained
team of security experts, and operations based on various global practices, standards, and frameworks,
27
including the International Organization for Standardization, International Electrotechnical Commission,
and National Institute of Standards and Technology Cybersecurity Framework.
• We maintain policies, procedures, and controls that are designed to identify, protect, detect, respond to, and
recover from information security and cybersecurity threats and incidents. Such items are reviewed,
approved, and maintained by our CISO on an ongoing basis. In addition, we engage external advisors
periodically to review and assess our policies, procedures, and controls.
• Our CIRP provides a documented framework for handling cybersecurity incidents. The CIRP addresses
cybersecurity incident detection, containment, analysis, eradication, recovery, escalation protocols, and
coordination across multiple functions of the organization.
• We have processes to manage cybersecurity risks associated with third-party service providers. Such
providers are subject to information security assessments at the time of onboarding and at certain other
times during their engagement with us. We require our providers to meet appropriate security requirements,
controls, and responsibilities and comply with certain cybersecurity and data security standards that we
have. We monitor compliance with these standards and investigate security incidents to take appropriate
actions as necessary. However, despite the controls that we have in place, we also rely on our third-parties
to implement security programs and we cannot ensure in all circumstances that their efforts will be
successful.
• We maintain an annual cybersecurity training plan including employee training on cybersecurity risks,
requirements, and incident reporting. As part of our training plan, we regularly perform phishing tests of our
employees. In addition, our security training incorporates awareness of cyber threats (including but not
limited to malware, ransomware, and social engineering attacks), password hygiene, incident reporting
process, as well as physical security best practices. On an annual basis, our employees must complete
cybersecurity awareness training.
• We perform simulations and drills to review and test our information security program, including tabletop
exercises, penetration and vulnerability testing, and other exercises to evaluate the effectiveness of our
information security program and improve our security measures and planning.
• We maintain insurance to provide coverage for certain losses from cybersecurity threats and incidents.
• We have developed business continuity and disaster recovery capabilities to mitigate interruptions to critical
information systems and the loss of data and services from the effects of natural or man-made disasters to
Teradata systems.
Cybersecurity Incidents. To protect our information systems from cybersecurity incidents and threats, we use
various security tools that help prevent, identify, escalate, investigate, resolve, and recover from identified
vulnerabilities and security incidents in a timely manner. We maintain controls and procedures that are designed to
ensure prompt escalation of certain cybersecurity incidents so that decisions regarding materiality of the incident
and any necessary public disclosure and reporting of such incidents can be made in a timely manner. In the last
three fiscal years, we have not experienced any material cybersecurity incident and the expenses we have incurred
from security incidents were immaterial. As a result, we do not believe that cybersecurity threats, including as a
result of any previous cybersecurity incidents, have materially impacted our results of operations and financial
condition. As cybersecurity threats become more sophisticated and coordinated, it is reasonably likely that we will
be required to expend greater resources to continue to modify and enhance our protective measures as we pursue our
business strategies.
Cybersecurity Risks. Notwithstanding the extensive approach we take to cybersecurity, we may not be successful
in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. While we
maintain cybersecurity insurance, the costs related to cybersecurity incidents may not be fully insured. See "Risk
Factors — A cybersecurity incident, disruption, or failure of our information systems or those of our third-party
providers could adversely impact our reputation, business, and financial results."
Governance
Board Oversight of Cybersecurity Risk. Our Board’s role is to engage in informed oversight of enterprise-wide
risks as managed through our ERM program, including cybersecurity. While the full Board has overall
28
responsibility for risk oversight, the Board has delegated oversight responsibility related to risks from cybersecurity
threats to the Audit Committee.
The Audit Committee is responsible for reviewing the adequacy and effectiveness of the Company’s information
security policies, the internal controls regarding information security and cybersecurity, and risks related to such
exposures and actions taken to monitor and/or mitigate such risks. The Audit Committee receives quarterly reports
as part of its meeting materials prepared by our CISO regarding the assessment of the status, adequacy, and
effectiveness of our processes related to assessing, identifying, and managing cybersecurity risks and related
mitigation plans. In addition, at least twice per year, the Audit Committee meeting agenda includes a presentation
by the CISO to review and discuss the CISO’s report on cybersecurity risks, mitigation plans and the steps the
security team has taken to monitor and control related exposures. The Audit Committee reports to the Board on
cybersecurity matters discussed at its meetings and the CISO’s quarterly reports are provided to the Board as part of
their meeting materials for their information as well.
Executive Oversight of Cybersecurity. Management is responsible for the Company’s planning, identification,
assessment, and mitigation of risks from cybersecurity threats. Our CISO, Chief Legal Officer, and Chief Financial
Officer comprise our Core Cybersecurity Management Team (the "CCMT"). The CCMT has oversight of
Teradata’s CIRP and is informed and consulted on the response and resolution process for cybersecurity incidents.
The CCMT is responsible for determining communications to inform relevant stakeholders of cybersecurity
incidents as applicable, relevant, and/or required, including the Board; Audit Committee; the executive leadership
team; investors; customers; employees; law enforcement; and regulators.
Depending on the nature and/or severity of the incident, additional stakeholders within the broader enterprise-wide
management team may be included in the assessment, response, and resolution of an incident by the CCMT. The
broader management team for this purpose may include, but is not limited to, executive and senior leaders in our
Product, Customer, People, Information Technology, and Law functions, as well as others that may be considered
necessary (collectively referred to as the "ECMT"). The ECMT provides oversight, perspective, and support from
their respective areas of expertise to assist in analyzing the cybersecurity incident, materiality of the incident, and
remediation considerations.
CISO and Cybersecurity Team. Our Information Security function is led by our CISO and is responsible for
executing our enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes.
•
•
The Information Security function consists of qualified professionals in cybersecurity. This team sets the
cybersecurity strategy for Teradata; develops Teradata’s cybersecurity architecture and deploys and
manages tools and technologies aligned with such architecture to safeguard our information systems;
manages the cybersecurity training required of our employees; monitors our cybersecurity threats and
incidents; escalates the occurrence of cybersecurity incidents pursuant to the CIRP; and addresses and
incorporates mitigation items.
The CISO appoints a Cybersecurity Incident Response Coordinator ("CIRC") to lead the management of
cybersecurity incidents. The primary responsibilities of the CIRC include, but are not limited to:
◦
◦
◦
◦
◦
receiving and tracking all reported potential cybersecurity threats;
escalating incident response;
determining relevant stakeholders of the Information Technology function and cybersecurity
incident response team, which team is selected by CIRC to serve as the lead function for
investigating and coordinating cybersecurity incidents;
alerting the applicable support functions of the potential cybersecurity threat and any defensive
action that would be required; and
alerting management, as applicable and necessary, of the potential cybersecurity threat.
• Members of our Information Security function have broad ranges of qualifications and experience in
information technology and security.
◦ Our CISO has over 25 years of information security experience during which he has worked on
various information technology and security programs, including privacy operations and security
risk management. He has experience with many different types of enterprises, including the federal
government, private companies, and publicly listed companies. Our CISO has a Bachelor of
Science in Information Technology and an MBA.
29
◦
The team within the Information Security function (referred hereinto as the "cybersecurity team")
possesses a robust blend of technical knowledge, practical skills, and strategic insight, gained
through years of experience in the field of cybersecurity. Our cybersecurity team includes
professionals certified in a wide array of cybersecurity disciplines. Their qualifications include, but
are not limited to, Certified Information Systems Security Professional ("CISSP") for general
security practices, Certified Ethical Hacker ("CEH") for penetration testing capabilities, Certified
Information Systems Auditor ("CISA") for information systems auditing, Certified Information
Security Manager ("CISM") for overseeing enterprise security, Certified Risk and Information
Systems Control ("CRISC") for risk management, and Certified Cloud Security Professional
("CCSP") for cloud security expertise. Additionally, they possess various other certifications in
specific technologies and cloud security from providers like AWS and Microsoft, along with
numerous other industry-relevant security certifications. This diverse expertise underscores their
comprehensive understanding of the cybersecurity landscape.
◦
The cybersecurity team attends training programs to update their skills and knowledge.
Item 2.
PROPERTIES
As of December 31, 2023, Teradata operated 44 facilities in 30 countries consisting of approximately 672 thousand
square feet throughout the world. Approximately 69% of this square footage is our headquarters in San Diego,
which is the only property that we own, the rest of our property is leased. Within the total facility portfolio, Teradata
operates 7 facilities where R&D activity occurs totaling approximately 253 thousand square feet, of which
approximately 90% is owned. The remaining approximately 419 thousand square feet of space includes office,
repair, warehouse and other miscellaneous sites, and is 55% owned and 45% leased. Teradata believes its facilities
are suitable and adequate to meet its current needs. Teradata’s corporate headquarters is in San Diego, California.
Item 3.
LEGAL PROCEEDINGS
The information required to be set forth under this Item 3 is incorporated by reference to Note 10, Commitments
and Contingencies—Legal Proceedings of the Notes to Consolidated Financial Statements included in this Annual
Report on Form 10-K.
Item 4.
MINE SAFETY DISCLOSURES
N/A.
30
PART II
Item 5.
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Teradata common stock trades on the New York Stock Exchange under the symbol "TDC." There were
approximately 18,457 registered holders of Teradata common stock as of February 14, 2024.
Teradata has not paid cash dividends and does not anticipate the payment of cash dividends to holders of Teradata
common stock in the immediate future. The declaration of dividends in the future would be subject to the discretion
of Teradata’s Board of Directors.
The information under the caption "Stock Ownership" and the caption "Current Equity Compensation Plan
Information" in Part III, Item 12 of this Annual Report on Form 10-K is also incorporated by reference in this
section.
The following graph compares the relative performance of Teradata stock, the Standard & Poor’s ("S&P") 500
Stock Index and the S&P Information Technology Index. This graph covers the five-year period from December 31,
2018 to December 31, 2023. In each case, assumes a $100 investment on December 31, 2018, and reinvestment of
all dividends, if any.
Company/Index
Teradata Corporation
S&P 500 Index
S&P Information Technology Index
As of December 31,
2018
2019
2020
2021
2022
2023
$
$
$
100 $
100 $
100 $
70 $
129 $
148 $
59 $
150 $
211 $
111 $
190 $
281 $
88 $
153 $
200 $
113
190
312
31
Comparison of 5 Year Cumulative Total ReturnTeradata CorporationS&P 500 IndexS&P Information Technology Index201820192020202120222023050100150200250300350 Purchases of Equity Securities by the Issuer and Affiliated Purchases
Section 16 officers occasionally transfer vested shares earned under restricted share awards to the Company at the
current market price to cover their withholding taxes. For the year ended December 31, 2023, the total of these
purchases was 416,815 shares at an average price of $40.57 per share.
The following table provides information relating to the Company’s repurchase of common stock for the year ended
December 31, 2023:
Period
First quarter total
Second quarter total
Third quarter total
October 2023
November 2023
December 2023
Fourth quarter total
2023 Full year total
Total
Number
of Shares
Purchased
Average
Price
Paid
per Share
2,322,106 $
1,610,383 $
2,938,181 $
123,583 $
27,848 $
— $
151,431 $
7,022,101 $
37.69
44.93
48.02
43.23
43.00
—
43.19
43.79
Total
Number
of Shares
Purchased
as Part of
Publicly
Announced
Dilution
Offset
Program (1)
137,380
56,144
253,402
7,800
—
—
7,800
454,726
Total
Number
of Shares
Purchased
as Part of
Publicly
Announced
General
Share
Repurchase
Program (2)
Maximum
Dollar
Value
that May
Yet Be
Purchased
Under the
Dilution
Offset
Program
Maximum
Dollar
Value
that May
Yet Be
Purchased
Under the
General Share
Repurchase
Program
2,184,726 $
1,554,239 $
2,684,779 $
115,783 $
27,848 $
— $
143,631 $
6,567,375 $
1,072,676 $ 758,232,193
5,553,859 $ 688,873,071
409,123 $ 560,227,734
122,386 $ 555,227,916
1,536,392 $ 554,030,560
2,200,413 $ 554,030,560
2,200,413 $ 554,030,560
2,200,413 $ 554,030,560
1.
2.
The dilution offset program allows the Company to repurchase Teradata common stock to the extent of cash received from the exercise
of stock options and the ESPP to offset dilution from shares issued pursuant to these plans.
The general share repurchase program authorized by the Board allows the Company to repurchase outstanding shares of Teradata
common stock. Share repurchases made by the Company are reported on a trade date basis. On November 1, 2021, Teradata's Board of
Directors authorized an additional $1 billion to be utilized to repurchase Teradata common stock under this share repurchase program.
The general share repurchase program expires on December 31, 2025.
Item 6.
[Reserved]
Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ("MD&A")
You should read the following discussion in conjunction with the consolidated financial statements and the notes to
those statements included in this Annual Report on Form 10-K ("Annual Report"). This Annual Report contains
certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of
1995. Certain statements contained in the MD&A are forward-looking statements that involve risks and
uncertainties. The forward-looking statements are not historical facts, but rather are based on current expectations,
estimates, assumptions and projections about our industry, business and future financial results. Our actual results
could differ materially from the results contemplated by these forward-looking statements due to several factors,
including those discussed in other sections of this Annual Report. See "Risk Factors" and "Forward-looking
Statements."
OVERVIEW
At Teradata Corporation ("we," "us," "Teradata," or the "Company"), we believe that people thrive when
empowered with trusted information. We are focused on helping organizations improve business performance,
enrich customer experiences, and integrate data across the enterprise. As such, we strive to innovate and deliver
32
trusted solutions for their toughest data and analytics challenges. That is why we built our comprehensive open and
connected cloud analytics and data platform for artificial intelligence ("AI"). With our Teradata Vantage platform,
underpinned by our extensive patented workload management optimization, we are well positioned to help
enterprises solve business problems and deliver business breakthroughs with its capabilities to provide harmonized
data, trusted AI, and faster innovation. As a result, we believe that we empower our customers - and our customers'
customers - to make better, more confident decisions, engage in faster innovation, and drive positive impact within
the enterprise.
Teradata is recognized by industry analysts as offering a cloud analytics and data platform with next-generation,
cloud-native deployment and expansive analytics capabilities. Teradata’s strategy is discussed under Part I, Item I of
this Annual Report on Form 10-K.
We are continuing to execute on our key priorities, including supporting our on-premises customers, migrating
customers to the cloud, upgrading customers from VantageCloud Enterprise to VantageCloud Lake, expanding our
Teradata Vantage analytics and data platform product offering (which includes VantageCloud Enterprise,
VantageCloud Lake, and ClearScape Analytics), adding new customers and expanding our footprint with existing
customers, informing our customers on our AI capabilities, increasing our focus on diversity and inclusiveness, and
driving operational excellence and agility across the Company.
To allow for greater transparency regarding the progress we are making toward achieving our strategic objectives,
we utilize the following financial and performance metrics:
•
•
Total Annual Recurring Revenue ("Total ARR") - annual value at a point in time of all recurring contracts,
including subscription, cloud, software upgrade rights, and maintenance. ARR does not include managed
services and third-party software.
Public Cloud ARR (included within Total ARR) - annual value at a point in time of all contracts related to
public cloud implementations of Teradata VantageCloud and does not include ARR related to private or
managed cloud implementations.
• Cloud Net Expansion Rate - Teradata calculates its last-twelve months dollar-based cloud net expansion
rate as of a fiscal quarter end as follows:
◦ We identify the ARR for active cloud customers in the fiscal quarter ending one year prior to the
given fiscal quarter (the "base period");
◦ We then identify the public cloud ARR in the given fiscal quarter (the "current period") from the
same set of active cloud customers as the base period, including increases in usage, as well as
reductions and cancellations, and additional conversions of on-premises revenues to the cloud for
customers active in the base period, all in constant currency; and
◦
The quarterly dollar-based, cloud net expansion rate is calculated by taking the ARR from the
current period and dividing by the ARR from the base period.
The last twelve-month dollar-based cloud net expansion rate is calculated by taking the average of the
quarterly dollar-based cloud net expansion rate from the last fiscal quarter and the prior three fiscal quarters.
2023 FINANCIAL OVERVIEW
As more fully discussed in later sections of this MD&A, the following are the financial highlights for 2023:
• Revenue of $1,833 million increased by 2% in 2023 as compared to 2022, with a 5% increase in recurring
revenue. Foreign currency fluctuations had a 2% adverse impact on total revenue compared to the prior year.
The recurring revenue increase was due primarily to an increase in Public Cloud revenue from migrations and
expansions. Perpetual software licenses, hardware and other revenue decreased by 31% and consulting
services revenue decreased by 5%. Revenues from perpetual software licenses, hardware and other decreased
primarily due to our strategic shift towards recurring revenue. The decline in consulting service revenue was
additionally due to our focus on higher-margin engagements and purposeful decrease in consulting services
given the development of our strategic partner ecosystem.
33
• Gross profit as a percent of revenue was 60.8% in 2023, an increase from 60.2% in 2022, primarily due to a
higher mix of recurring revenue and improving cloud gross profit rates year-over-year.
• Operating expenses in 2023 decreased by 4% as compared to 2022, primarily driven by our cost discipline
initiatives and a favorable impact from foreign currency fluctuations.
• Operating income was $186 million in 2023, up from $118 million in 2022.
• Net income was $62 million in 2023 versus net income of $33 million in 2022, primarily due to increased
revenue and lower operating expenses. Diluted net earnings per share was $0.61 in 2023 compared to diluted
earnings per share of $0.31 in 2022.
RESULTS FROM OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
For discussion of fiscal year 2022 versus 2021 see "Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations" in our Annual Report filed with the SEC for the fiscal year ended December
31, 2022.
Revenue
In millions
Recurring
Perpetual software license, hardware and other
Consulting services
Total revenue
2023
$
$
1,492
45
296
1,833
% of
Revenue
2022
81.4 % $
2.5 %
16.1 %
100.0 % $
1,419
65
311
1,795
% of
Revenue
79.1 %
3.6 %
17.3 %
100.0 %
2023 compared to 2022 - Total revenue increased 2% in 2023, which included a 2% negative impact from foreign
currency exchange rate fluctuations. Total revenue growth was led by increased recurring revenue, offset in part by
lower perpetual software license, hardware, and other revenue, as well as lower consulting revenue. Recurring
revenue grew 5% in 2023, which included a 2% negative impact from foreign currency exchange rate fluctuations.
Recurring revenue growth was driven by an increase in cloud revenue as we continue our intentional shift to the
cloud. All three regions experienced strong cloud revenue growth year-over-year.
Revenues from perpetual software licenses, hardware, and other were down 31% in 2023, including 2% of adverse
impact from foreign currency exchange rate fluctuations, as customers continue to transition to our subscription-
based offerings, consistent with our overall strategy towards recurring revenue.
Consulting services revenue decreased 5%, including a 3% adverse impact from foreign currency exchange rate
fluctuations, as we continue to realign and focus our consulting resources on higher-margin engagements. In this
regard, we are focused on both direct engagement with customers and joint engagement with partners that drive
increased software consumption within our targeted customer base.
As a portion of our operations and revenue occur outside the United States, and in currencies other than the U.S.
dollar, we are exposed to fluctuations in foreign currency exchange rates. Based on currency rates as of January 31,
2024, Teradata is estimating a 1.0%-to-1.5% negative impact from currency translation on our 2024 full-year total
revenues.
34
Financial and Performance Measures
Total ARR is composed of three main categories: (1) Public Cloud ARR, (2) ARR related to on-premises
subscription-based contracts and private cloud ("Subscription ARR"), and (3) ARR related to our legacy perpetual
maintenance and software upgrade rights. Our financial and performance measures for the following years ended
December 31 was as follows:
ARR
In millions
Public Cloud
Subscription
Maintenance and Software upgrade rights
Total ARR
Cloud Net Expansion rate
2023
2022
$
$
528 $
869
173
1,570 $
124 %
357
844
281
1,482
117 %
Total ARR increased 6% versus the prior year, with declines in Maintenance and Software upgrade rights ARR,
more than off-set by growth in Public Cloud ARR and Subscription ARR. Foreign currency fluctuations had a
positive 1% impact on total ARR. Our overall ARR growth was primarily driven by increased demand for our
differentiated offerings, increasing partner involvement, and incremental workloads driving migrations and
expansions.
Public Cloud ARR increased 48% versus the prior year primarily due to on-premises customers migrating to
Teradata VantageCloud along with a strong net expansion rate of 124%. Foreign currency fluctuations had a
positive 2% impact on Public Cloud ARR. Public Cloud ARR growth and the improved Cloud Net Expansion rate
were driven by customer demand for our differentiated offerings, resulting in new workloads for both migrations
and expansions. Subscription ARR increased 3% in 2023 from the prior year primarily due to net expansions, and
included a 1% positive impact from foreign currency fluctuations.
Our Maintenance and Software upgrade rights ARR declined 38% compared to 2022. This was expected as we
continue to transition to a subscription model and customers increasingly purchased Teradata on a subscription and/
or public cloud basis.
We expect to see expansion as the primary contributor for Total ARR growth in 2024 and expansion and conversion
as the primary contributors for Public Cloud ARR growth in 2024.
Gross Profit
The Company often uses specific terms and definitions to describe variances in gross profit. The terms and
definitions most often used are as follows:
• Revenue Mix - The proportion of recurring, consulting, and perpetual software licenses, hardware and
other revenue that generates the total revenue of the Company. Changes in revenue mix can have an impact
on gross profit even if total revenue remains unchanged.
• Recurring Revenue Mix - The proportion of various recurring revenue offerings that comprise the total of
recurring revenue. For example, a higher mix of cloud deals will have a negative impact on total recurring
gross profit until we achieve scale.
• Deal Mix - Refers to the type of transactions closed within the period that generate the total perpetual
software license, hardware and other revenue. For example, a higher mix of Teradata versus third-party
products can positively impact profitability.
35
Gross profit for the following years ended December 31 was as follows:
In millions
Gross profit
Recurring
Perpetual software licenses, hardware and other
Consulting services
Total gross profit
2023
% of
Revenue
2022
% of
Revenue
$
$
1,074
7
34
1,115
72.0 % $
15.6 %
11.5 %
60.8 % $
1,022
18
41
1,081
72.0 %
27.7 %
13.2 %
60.2 %
2023 compared to 2022 - The increase in gross profit as a percentage of revenue was primarily driven by a higher
mix of recurring revenue and improving cloud gross profit rates year-over-year.
Recurring gross profit as a percentage of revenue was flat from the prior year, primarily because the negative gross
profit rate impact on increased Public Cloud revenue was offset by improved Public Cloud gross profit rates year-
over-year.
The decrease in perpetual software licenses, hardware and other gross profit as a percentage of revenue was
primarily driven by deal mix and a higher ratio of perpetual hardware to software revenue as compared to prior year
as the vast majority of all customers have transitioned to our subscription-based offerings, consistent with our
overall strategy.
Consulting services gross profit as a percentage of revenue decreased as compared to the prior year primarily due to
lower consulting services revenue. We continue to refocus our consulting organization on Teradata Vantage-
oriented offerings and reduce our footprint in non-core consulting engagements, accompanied by our strategic
development of a partner ecosystem.
We expect to continue investing in activities that generate growth in AI, enhance commercial awareness of our
brand, and continue to drive increased adoption and consumption of the Teradata VantageCloud platform, including
greater efficiencies with cloud service providers.
Operating Expenses
In millions
Operating expenses
Selling, general and administrative expenses
Research and development expenses
Total operating expenses
2023
% of
Revenue
2022
% of
Revenue
$
$
635
294
929
34.6 % $
16.0 %
50.7 % $
650
313
963
36.2 %
17.4 %
53.6 %
2023 compared to 2022 - The decrease in selling, general and administrative ("SG&A") expense was primarily
driven by the favorable impact from foreign currency exchange rate fluctuations and continued cost discipline as
compared to the prior year.
R&D expenses decreased in 2023 as compared to the prior year. R&D expenses were impacted by continued cost
discipline initiatives as compared to the prior year.
We intend to continue investing in areas that generate growth, such as AI/ML, demand creation, and brand
awareness. We expect to balance these investments with cost discipline in non-revenue generating areas and
productivity improvements.
36
Other Expense, net
In millions
Interest income
Interest expense
Other
Total Other Expense, net
2023
2022
$
$
25 $
(30)
(64)
(69) $
15
(24)
(42)
(51)
Other expense, net in 2023 and 2022, is comprised primarily of interest expense on long-term debt and finance
leases, foreign currency transactions, as well as benefit costs for our pension and postemployment plans, partially
offset by interest income earned on our cash and cash equivalents. Other expense is higher in 2023, primarily due to
a $13 million loss with respect to Argentina Blue Chip Swaps (a foreign exchange mechanism which effectively
results in a parallel U.S. dollar exchange rate) in order to remit cash from our Argentine operations and $8 million
higher losses resulting from foreign currency transactions compared to the prior year.
Provision for Income Taxes
The effective income tax rate for the following years ended December 31 was as follows:
Effective Tax Rate
2023
2022
47.0 %
50.7 %
The 2023 effective tax rate included a net $18 million of discrete tax expense, of which $15 million of tax expense
related to the foreign currency translation impact on deferred and payable balances for our Argentina operations due
to hyperinflation in Argentina and $10 million of tax expense related to a valuation allowance recorded against
deferred tax assets for our operations in Argentina and other reorganization and transformation activities. These
expenses were offset by $4 million of tax benefit related to the reversal of a FIN 48 tax reserve due to the
expiration of statute of limitations and $3 million of incremental tax benefit related to stock-based compensation.
The 2022 effective tax rate included a net $1 million of discrete tax benefit, of which $2 million of tax benefit
related to the reversal of a FIN 48 tax reserve due to the expiration of statute of limitations and $4 million of
incremental tax benefit related to stock-based compensation. These tax benefits were partially offset by $5 million
of discrete tax expense related to valuation allowances recorded against deferred tax assets and current receivables
in Russia that are not expected to be realized as a result of the discontinuation of our business in Russia in 2022.
Effective on January 1, 2022, the U.S. tax law changed to require that R&D expenses be capitalized and amortized
for tax purposes under Internal Revenue Code Section 174; as a result of this law change, we recognized
approximately $2 million of tax expense related to global intangible low-taxed income ("GILTI") in our marginal
effective tax rate for 2023 and approximately $4 million for 2022. We expect that a majority of our foreign earnings
will be repatriated to the U.S.
Revenue and Gross Profit by Operating Segment
Teradata 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 our 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. Our segment
results are reconciled to total company results reported under GAAP in Note 14 of Notes to Consolidated Financial
Statements.
37
The following table presents revenue and operating performance by segment for the years ended December 31:
In millions
Segment revenue
Americas
EMEA
APJ
Total segment revenue
Segment gross profit
Americas
EMEA
APJ
Total segment gross profit
2023 compared to 2022
Americas
2023
% of
Revenue
2022
% of
Revenue
$
$
$
$
1,089
475
269
1,833
689
295
149
1,133
59.4 % $
25.9 %
14.7 %
100 % $
63.3 % $
62.1 %
55.4 %
61.8 % $
1,038
465
292
1,795
643
285
177
1,105
57.8 %
25.9 %
16.3 %
100 %
61.9 %
61.3 %
60.6 %
61.6 %
Americas revenue increased 5% including a 2% negative impact from foreign currency exchange rate fluctuations.
An increase in Americas recurring revenue of 7% and Americas consulting revenue of 2% was partially offset by a
decrease of 39% in Americas perpetual software licenses, hardware and other revenue. Segment gross profit, as a
percentage of revenue, increased due to higher gross profit associated with upfront license revenue compared to the
prior year, partially offset by a higher mix of Public Cloud revenue.
EMEA
EMEA revenue increased 2%, which included a 1% unfavorable impact from foreign currency exchange rate
fluctuations. The overall increase in revenue included an increase of 10% in EMEA recurring revenue offset by a
10% decrease in EMEA consulting revenue and a decrease of 39% in EMEA perpetual software licenses, hardware
and other revenue. EMEA segment gross profit, as a percentage of revenue, increased due to a higher mix of
recurring revenue, partially offset by the negative impact of ceasing operations in Russia in 2022.
APJ
APJ revenue decreased 8%, which included a 5% unfavorable impact from foreign currency exchange rate
fluctuations. The overall decrease in revenue included a decrease in APJ recurring revenue of 9% , an increase of
22% ($2 million) in APJ perpetual software licenses, hardware and other revenue and a decrease in APJ consulting
revenue of 8%. Overall APJ revenue was negatively impacted by the wind-down of direct operations in China that
started earlier in 2023. The decrease in consulting revenue was also consistent with our focus on higher-margin
Teradata Vantage-oriented engagements and purposeful decrease in consulting services given our strategic
development of a partner ecosystem. The decrease in APJ segment gross profit, as a percentage of revenue was
primarily due to reduced revenues.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Teradata ended 2023 with $486 million in cash and cash equivalents, a $83 million decrease from December 31,
2022, after using approximately $308 million for repurchases of Company common stock during the year. Cash
provided by operating activities decreased by $44 million to $375 million in 2023 compared to 2022. The decrease
in cash provided by operating activities was primarily due to the difference in cash taxes paid. Teradata had $65
million in net cash tax payments in 2023, compared to a net refund of $18 million in 2022, due primarily to a $50
million tax refund received the first quarter of 2022 related to our Cares Act carryback claim. Teradata used
approximately $43 million of cash in 2023 for reorganization activities, including aligning our go-to-market
function with our cloud-first strategy, and other activities to optimize our workforce, as compared to $26 million
used in 2022 for similar purposes.
38
Teradata’s management uses a non-GAAP measure called "free cash flow," which is not a measure defined under
GAAP. We define free cash flow as net cash provided by operating activities less capital expenditures for property
and equipment and additions to capitalized software. Free cash flow is one measure of assessing the financial
performance of the Company, and this may differ from the definition used by other companies. The components
that are used to calculate free cash flow are GAAP measures taken directly from the Consolidated Statements of
Cash Flows. We believe that free cash flow information is useful for investors because it relates the operating cash
flow of the Company to the capital that is spent to continue and improve business operations. In particular, free cash
flow indicates the amount of cash available after capital expenditures for, among other things, investments in the
Company’s existing businesses, strategic acquisitions, and repurchase of Teradata common stock. Free cash flow
does not represent the residual cash flow available for discretionary expenditures since there may be other non-
discretionary expenditures that are not deducted from the measure. This non-GAAP measure should not be
considered a substitute for, or superior to, cash flows from operating activities under GAAP.
The table below shows net cash provided by operating activities and capital expenditures for the following
periods:
In millions
Net cash provided by operating activities
Less:
375 $
2023
$
2022
Expenditures for property and equipment
Additions to capitalized software
Free cash flow
(19)
(1)
355 $
$
419
(14)
(2)
403
Financing activities and certain other investing activities, such as our strategic acquisition of Stemma Technologies
during the third quarter of 2023, are not included in our calculation of free cash flow. The acquisition of Stemma
Technologies was not financially material. In the fourth quarter of 2023, we entered into Blue Chip Swap
transactions in order to remit cash from our Argentine operations that resulted in a pre-tax loss on investment of $13
million, the net purchases of which are reported in other investing activities in the Consolidated Statement of Cash
Flows. There were no other material other investing activities in 2023 and 2022.
Teradata’s financing activities for 2023 and 2022 primarily consisted of cash outflows for share repurchases and
payments on our finance leases. At December 31, 2023, we had no outstanding borrowings on our $400 million
Revolving Facility (as defined below).
We have two share repurchase programs that were authorized by our Board of Directors:
•
The dilution offset share repurchase program allows us to repurchase Teradata common stock to the extent
(i) cash is received from the exercise of stock options and (ii) employees' purchase Teradata stock pursuant
to the Teradata Employee Stock Purchase Plan ("ESPP"). The purpose of the dilution offset share
repurchase program is to offset dilution from shares issued pursuant to the exercise of stock options and
shares purchased under the ESPP.
• Our open market share repurchase program provides for the repurchase of Teradata stock periodically on an
ongoing basis in open market transactions, through 10b5-1 programs, through accelerated share repurchase
programs, in privately negotiated transactions, or through the use of derivative instruments, in accordance
with applicable securities rules regarding issuer repurchases. The open market share repurchase program
will expire on December 31, 2025. On November 1, 2021, our Board of Directors authorized an additional
$1 billion for share repurchases under the open market share repurchase program. There is a total authority
of $554 million remaining under the open market share repurchase program as of December 31, 2023.
In the aggregate under the dilution offset share repurchase program and the open market share repurchase program,
we repurchased approximately 7.0 million shares of our common stock at an average price per share of $43.79 in
2023 and approximately 9.4 million shares of our common stock at an average price per share of $41.16 in 2022.
Share repurchases are reported on a trade date basis. Our share repurchase activity depends on factors such as our
working capital needs, our cash requirements for capital investments, our stock price, and economic and market
conditions.
39
Other financing activities, including net share settlement for the payroll tax liability of section 16 officers (as
discussed in Item 5 of this Annual Report on Form 10-K), offset by proceeds from the ESPP and the exercise of
stock options, net of tax, was a net inflow of $7 million for 2023 and a net inflow of $5 million (including fees from
the credit facility agreement) for 2022.
Our total cash and cash equivalents held outside the United States in various foreign subsidiaries was $428 million
as of December 31, 2023 and $405 million as of December 31, 2022. The remaining balance held in the United
States ("U.S.") was $58 million as of December 31, 2023 and $164 million as of December 31, 2022. The Company
expects that a majority of its foreign earnings will be repatriated to the U.S. Effective January 1, 2018, the U.S.
moved to a territorial system of international taxation, and as such will generally not subject future foreign earnings
to U.S. taxation upon repatriation in future years.
Management believes current cash, cash generated from operations and the $400 million available under the Credit
Facility will be sufficient to satisfy future working capital, research and development activities, capital
expenditures, pension contributions, and other financing requirements for at least the next twelve months. The
Company principally holds its cash and cash equivalents in bank deposits and highly-rated money market funds.
The Company’s ability to generate positive cash flows from operations is dependent on general economic
conditions, competitive pressures, and other business and risk factors described in this Annual Report. If the
Company is unable to generate sufficient cash flows from operations, or otherwise comply with the terms of the
Credit Facility or its term loan agreement, the Company may be required to seek additional financing alternatives.
Long-Term Debt. On June 28, 2022, we 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 our prior revolving credit
agreement in the maximum principal of $400 million and our prior term loan agreement in the 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. Our long-
term debt is discussed in Note 12 of Notes to Consolidated Financial Statements. In addition, as disclosed in Note 9
of Notes to Consolidated Financial Statements, Teradata entered into an interest rate swap to hedge approximately
90% 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.
On September 21, 2023, the Credit Agreement was 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.
Leases. In the normal course of business, we enter into operating and finance leases that impact, or could impact,
our liquidity. Leases and minimum lease obligations as of December 31, 2023 are described in detail in Note 13 of
Notes to Consolidated Financial Statements.
Contractual and Other Commercial Commitments. In the normal course of business, we enter into various
contractual obligations that impact, or could impact, our liquidity. The following table and discussion outline our
material obligations at December 31, 2023, with projected cash payments in the periods shown:
In millions
Transition tax
Purchase obligations
Total transition tax and purchase obligations
Total
Amounts
2024
2025-
2026
2027-
2028
2029 and
Thereafter
$
$
52 $
848
900 $
23 $
255
278 $
29 $
412
441 $
— $
181
181 $
—
—
—
Transition tax is the remaining payable balance as of December 31, 2023 of the one-time tax on accumulated
foreign earnings resulting from the 2017 Tax Act. The payments associated with this deemed repatriation are being
paid over seven years ending in 2025. Purchase obligations are committed purchase orders and other contractual
40
commitments for goods and services and include non-cancelable contractual payments for fixed or minimum
amounts to be purchased in relation to service agreements with various vendors for ongoing telecommunications,
information technology, hosting and other services.
Additionally, we had $40 million of unrecognized tax benefits recorded on our balance sheet as of December 31,
2023, of which $19 million is recorded in non-current liabilities and $21 million is reflected as an offset to deferred
tax assets related to certain tax attribute carryforwards. These items are not included in the table of obligations
shown above. The settlement period for the non-current income tax liabilities cannot be reasonably estimated as the
timing and the amount of the payments, if any, will depend on possible future tax examinations with the various tax
authorities.
We also have postemployment and international pension obligations that may affect future cash flow. These items
are not included in the table of obligations shown above. We are also potentially subject to concentration of supplier
risk. Our hardware components are assembled primarily by Flex Ltd. ("Flex"). Flex procures a wide variety of
components used in the manufacturing process on our behalf. Although many of these components are available
from multiple sources, we utilize preferred supplier relationships to better ensure more consistent quality, cost, and
delivery. Typically, these preferred suppliers maintain alternative processes and/or facilities to ensure continuity of
supply. Given our strategy to outsource 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 or components that may be in excess of demand. Postemployment and
pension obligations are described in detail in "Note 8—Employee Benefit Plans" in the Notes to Consolidated
Financial Statements.
Off-Balance Sheet Arrangements. We do not participate in transactions that generate relationships with
unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special
purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements
or for other contractually narrow or limited purposes.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our financial statements are prepared in accordance with GAAP. In connection with the preparation of these
financial statements, we are required to make assumptions, estimates and judgments that affect the reported amounts
of assets, liabilities, revenues, expenses and the related disclosure of contingent liabilities. These assumptions,
estimates and judgments are based on historical experience and assumptions that are believed to be reasonable at the
time. However, because future events and their effects cannot be determined with certainty, the determination of
estimates requires the exercise of judgment. Our critical accounting policies are those that require assumptions to be
made about matters that are highly uncertain. Different estimates could have a material impact on our financial
results. Judgments and uncertainties affecting the application of these policies and estimates may result in materially
different amounts being reported under different conditions or circumstances. Our management periodically reviews
these estimates and assumptions to ensure that our financial statements are presented fairly and are materially
correct.
In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not
require significant management judgment in its application. There are also areas in which management’s judgment
in selecting among available alternatives would not produce a materially different result. The significant accounting
policies and estimates that we believe are the most critical to aid in fully understanding and evaluating our reported
financial results are discussed in the paragraphs below. Teradata’s senior management has reviewed these critical
accounting policies and related disclosures with the Audit Committee of Teradata’s Board of Directors. For
additional information regarding our accounting policies and other disclosures required by GAAP, see "Note 1—
Description of Business, Basis of Presentation and Significant Accounting Policies" in the Notes to Consolidated
Financial Statements.
41
Revenue Recognition
Revenue recognition for complex contractual arrangements requires judgment, including a review of specific
contracts, past experience, creditworthiness of customers, international laws and other factors. Specifically, complex
arrangements with nonstandard terms and conditions may require significant contract interpretation to determine the
appropriate accounting. We must also apply judgment in determining all performance obligations in the contract and
in determining the standalone selling price of each performance obligation, considering the price charged for each
product when sold on a standalone basis and applicable renewal rates for services and subscriptions. Changes in
judgments about these factors could impact the timing and amount of revenue recognized between periods.
We review the standalone selling price on a periodic basis and update it, when appropriate, to ensure that the
practices employed reflect our recent pricing experience. We maintain internal controls over the establishment and
updates of these estimates, which includes review and approval by management. For the year ended December 31,
2023 there was no material impact to revenue resulting from changes in the standalone selling price, nor do we
expect a material impact from such changes in the near term. Refer to Notes 1 and 3 in the Notes to Consolidated
Financial Statements included in this Annual Report on Form 10-K for discussion of our revenue recognition
policies.
Income Taxes
In accounting for income taxes, we recognize deferred tax assets and liabilities based on the differences between the
financial statement carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities
are determined based on the enacted tax rates expected to apply in the periods in which the deferred tax assets or
liabilities are expected to be settled or realized. The Company made an accounting policy election in 2018 related to
the 2017 Tax Act to provide for the tax expense related to GILTI in the year the tax is incurred.
Effective January 1, 2018, the United States moved to a territorial system of international taxation, and as such will
generally not subject future foreign earnings to United States taxation upon repatriation in future years. The
Company considers a majority of its foreign earnings not indefinitely reinvested outside of the United States.
However, these distributions may be subject to non-U.S. withholding taxes if profits are distributed from certain
jurisdictions; accordingly, the Company has recorded $5 million of deferred foreign tax expense with respect to
certain earnings that are not considered permanently reinvested. Deferred taxes have not been provided on earnings
considered indefinitely reinvested.
We account for uncertainty in income taxes by prescribing thresholds and attributes for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. We may recognize the
tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the position. We record any interest and/or
penalties related to uncertain tax positions in the income tax expense line on our Consolidated Statements of
Income. As of December 31, 2023, the Company has a total of $40 million of unrecognized tax benefits, of which
$19 million is included in the other liabilities section of the Company’s consolidated balance sheet as a non-current
liability and $21 million of uncertain tax positions relates to certain tax attributes generated by the Company which
are netted against the underlying deferred tax assets recorded on the balance sheet.
We regularly review our deferred tax assets for recoverability and establish a valuation allowance if it is more likely
than not that some portion or all of a deferred tax asset will not be realized. We have recorded $90 million in 2023
and $69 million in 2022 for valuation allowances, $69 million of which offset our California R&D tax credit
carryfoward, and $15 million of which relates to our US Foreign Tax Credit Carryforward, as the Company expects
to continue to generate excess California R&D & Foreign tax credits into the foreseeable future.
On January 1, 2020, we transferred certain of our intellectual property among our wholly-owned subsidiaries, which
resulted in the recognition of deferred tax assets of $157 million. The recognition of deferred tax assets from intra-
entity transfers of intellectual property required us to make significant estimates and assumptions to determine the
fair value of such intellectual property. Significant assumptions in valuing the intellectual property include, but are
not limited to, internal revenue and expense forecasts, and the discount rate. The sustainability of our future tax
benefits is dependent upon the acceptance of these valuation estimates and assumptions by the taxing authorities.
42
Stock-based Compensation
We issue service-based and performance-based restricted share units. We measure compensation cost for service-
based restricted share unit awards at fair value and recognize compensation expense over the service period. Our
performance-based restricted share units vest only if specific performance conditions are satisfied. The number of
shares that will be earned pursuant to our performance-based restricted share unit awards will vary based on actual
performance. No shares will vest if the threshold objectives are not met. In the event the objectives are exceeded,
additional shares will vest up to a maximum payout. The cost of our performance-based restricted share awards is
expensed over the performance period based upon management’s estimate and analysis of the probability of
meeting the performance criteria. Because the actual number of shares to be awarded is not known until the end of
the performance period, the actual compensation expense related to our performance-based restricted share unit
awards could differ from our current expectations. We account for forfeitures for both service-based and
performance-based restricted share units as they occur instead of estimating forfeitures at the time of grant and
revising those estimates in subsequent periods if actual forfeitures differ from our estimates.
Goodwill and Acquired Intangible Assets
The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate
the carrying value of goodwill may not be recoverable. For 2023, the Company performed a quantitative impairment
test. In this test, the Company compared the fair value of each reporting unit to its carrying value. The Company
typically determines the fair value of its reporting units using a weighting of fair values derived from the income
and market approaches. Under the income approach, the Company calculates the fair value of a reporting unit based
on the present value of estimated future cash flows. The market approach estimates fair value based on market
multiples of revenue and earnings derived from comparable companies with similar operating and investment
characteristics as the reporting unit. If the fair value of the reporting unit exceeds the carrying value of the net assets
assigned to that unit, goodwill is not impaired. If the carrying value of the net assets assigned to the reporting unit
exceeds the fair value of the reporting unit, then the Company records an impairment loss equal to the difference. In
the fourth quarter of 2023, the Company performed its annual impairment test of goodwill and determined that no
impairment to the carrying value of goodwill was necessary.
Determining the fair value of goodwill and acquired intangibles is judgmental in nature and involves the use of
significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating
margins used to calculate projected future cash flows, discount rates and future economic and market conditions.
The Company’s estimates are based upon assumptions believed to be reasonable, but which are inherently uncertain
and unpredictable. These valuations require the use of management’s assumptions, which may not reflect
unanticipated events and circumstances that may occur.
Pension and Postemployment Benefits
We measure pension and postemployment benefit costs and credits using actuarial valuations. Actuarial
assumptions attempt to anticipate future events and are used in calculating the expense and liability relating to these
plans. These factors include assumptions we make about interest rates, expected investment return on plan assets,
total and involuntary turnover rates, and rates of future compensation increases. In addition, our actuarial
consultants also use subjective factors such as withdrawal rates and mortality rates to develop our valuations. We
review and update these assumptions on an annual basis at the beginning of each fiscal year. We are required to
consider current market conditions, including changes in interest rates, in making these assumptions. The actuarial
assumptions that we use may differ materially from actual results due to changing market and economic conditions,
higher or lower withdrawal rates, or longer or shorter life spans of participants. These differences may result in a
significant impact to the measurement of our pension and postemployment benefit obligations and to the amount of
pension and postemployment benefits expense we have recorded or may record. For example, as of December 31,
2023, a one-half percent increase/decrease in the discount rate would change the projected benefit obligation of our
pension plans by approximately $7 million, and a one-half percent increase/decrease in our involuntary turnover
assumption would change our postemployment benefit obligation by approximately $5 million.
43
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
A discussion of recently issued accounting pronouncements is described in "Note 1—Description of Business, Basis
of Presentation and Significant Accounting Policies" in the Notes to Consolidated Financial Statements in this
Annual Report, and we incorporate such discussion by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company employs a foreign currency hedging strategy to limit potential losses in earnings or cash flows from
adverse foreign currency exchange rate movements. Foreign currency exposures arise from transactions
denominated in a currency other than the Company’s functional currency and from foreign denominated revenue
and profit translated into U.S. dollars. The Company operates in approximately 40 countries and is exposed to
various foreign currencies in the Americas region (North America and Latin America), EMEA region (Europe,
Middle East, and Africa) and APJ region (Asia Pacific and Japan). Exposures are hedged with foreign currency
forward contracts with maturity dates of twelve months or less. The potential loss in fair value at December 31,
2023, for such contracts resulting from a hypothetical 10% adverse change in all foreign currency exchange rates is
immaterial. Any loss would be mitigated by corresponding gains on the underlying exposures.
In June 2022, Teradata entered into a four-year interest rate swap to hedge approximately 90% 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 as more fully described in "Note 12 - Debt" in the
Notes to Consolidated Financial Statements in this Annual Report. 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 facility.
The notional amount of the hedge will step-down according to the amortization schedule of the term loan. The fair
value of these contracts and swaps are measured at the end of each reporting period using observable inputs other
than quoted prices, specifically market spot and forward exchange rates. The fair value of interest rate swaps
recorded in other assets at December 31, 2023 was $8 million. A hypothetical 50 basis point increase/decrease in
interest rates would result in an increase/decrease to the fair value of the hedge of approximately $6 million. The
fair value of the net investment Euro currency hedge recorded in other liabilities at December 31, 2023 was $8
million. A hypothetical 50 basis point increase/decrease in currency exchange rates would result in an increase/
decrease to the fair value of the hedge of approximately $2 million.
For additional information regarding the Company’s foreign currency hedging strategy and interest rate swaps, see
"Note 9 - Derivative Instruments and Hedging Activities" in the Notes to Consolidated Financial Statements in this
Annual Report.
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Teradata Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Teradata Corporation and its subsidiaries (the
“Company”) as of December 31, 2023 and 2022, and the related consolidated statements of income, of
comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the
period ended December 31, 2023, including the related notes and financial statement schedule listed in the index
appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”). We also have
audited the Company's internal control over financial reporting as of December 31, 2023, based on criteria
44
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2023 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under
Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the
Company's internal control over financial reporting based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting
was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe
that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that (i)
45
relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Revenue Recognition - Evaluation of Nonstandard Terms and Conditions with Customers
As described in Notes 1 and 3 to the consolidated financial statements, the Company has $1,833 million of total
revenue for the year ended December 31, 2023, of which a significant portion is generated from revenue with
contracts which contain multiple performance obligations. When the Company enters into contracts with multiple
performance obligations, management allocates the contract’s transaction price to each performance obligation
using the relative standalone selling price of each distinct good or service in the contract. As disclosed by
management, revenue recognition for complex contractual arrangements requires judgment, including a review of
specific contracts and other factors. Specifically, complex arrangements with nonstandard terms and conditions may
require significant contract interpretation to determine the appropriate accounting, including the determination
whether promised goods or services are capable of being distinct and distinct within the context of the contract. If
these criteria are not met, the promised goods or services are combined with other goods or services and accounted
for as a combined performance obligation.
The principal considerations for our determination that performing procedures relating to revenue recognition,
specifically related to the evaluation of nonstandard terms and conditions with customers, is a critical audit matter
are the significant judgment by management in evaluating the impact of nonstandard terms and conditions with
customers on revenue recognition and determining the appropriate revenue recognition. This in turn led to
significant auditor judgment, subjectivity, and effort in performing procedures to evaluate the impact of nonstandard
terms and conditions on revenue recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of
controls relating to the revenue recognition process, including controls over the evaluation of the impact of
nonstandard terms and conditions with customers on revenue recognition. These procedures also included, among
others (i) evaluating and testing management’s process for determining whether the criteria for revenue recognition
have been met based on the specific terms and performance under the arrangement, and (ii) examining revenue
arrangements on a test basis, which included evaluating the impact of nonstandard terms and conditions with
customers on revenue recognition.
/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
February 23, 2024
We have served as the Company’s auditor since 2007.
46
TERADATA CORPORATION
Consolidated Statements of Income
In millions, except per share amounts
For the Years Ended December 31
2022
2021
2023
Revenue
Subscription software licenses
Services and other
Total recurring
Perpetual software licenses, hardware and other
Consulting services
Total revenue
Cost of revenue
Subscription software licenses
Services and other
Total recurring
Perpetual software licenses, hardware and other
Consulting services
Total cost of revenue
Gross profit
Operating expenses
Selling, general and administrative expenses
Research and development expenses
Total operating expenses
Income from operations
Other expense, net
Interest expense
Interest income
Other expense
Total other expense, net
Income before income taxes
Income tax expense
Net income
Net income per weighted average common share
Basic
Diluted
Weighted average common shares outstanding
Basic
Diluted
$
310 $
289 $
1,182
1,492
45
296
1,833
20
398
418
38
262
718
1,115
635
294
929
186
1,130
1,419
65
311
1,795
22
375
397
47
270
714
1,081
650
313
963
118
(30)
25
(64)
(69)
117
55
62 $
(24)
15
(42)
(51)
67
34
33 $
0.62 $
0.61 $
0.32 $
0.31 $
99.8
102.4
103.2
105.8
$
$
$
303
1,161
1,464
77
376
1,917
12
353
365
43
323
731
1,186
646
309
955
231
(26)
6
(19)
(39)
192
45
147
1.35
1.30
108.6
112.9
The accompanying notes are an integral part of the consolidated financial statements.
47
TERADATA CORPORATION
Consolidated Statements of Comprehensive Income
In millions
Net income
Other comprehensive income (loss):
Foreign currency translation adjustments
Unrealized loss on cross-currency net investment hedge, before tax
Unrealized loss on cross-currency net investment hedge, tax portion
Total currency translation adjustments
Derivatives:
Unrealized (loss) gain on derivatives, before tax
Unrealized (loss) gain on derivatives, tax portion
Unrealized (loss) gain on derivatives, net of tax
Defined benefit plans:
Reclassification of loss to net income
Defined benefit plan adjustment, before tax
Defined benefit plan adjustment, tax portion
Defined benefit plan adjustment, net of tax
Other comprehensive (loss) income
Comprehensive income
$
For the Years Ended December 31
2022
2021
2023
$
62 $
33 $
147
6
(7)
2
1
(5)
1
(4)
7
(17)
3
(7)
(10)
52 $
(30)
(1)
—
(31)
25
(6)
19
9
33
(11)
31
19
52 $
(12)
—
—
(12)
14
(3)
11
11
(2)
(3)
6
5
152
The accompanying notes are an integral part of the consolidated financial statements.
48
TERADATA CORPORATION
Consolidated Balance Sheets
In millions, except per share amounts
Assets
Current assets
Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets
Total current assets
Property and equipment, net
Right of use assets - operating lease, net
Goodwill
Capitalized contract costs, net
Deferred income taxes
Other assets
Total assets
Liabilities and stockholders’ equity
Current liabilities
Current portion of long-term debt
Current portion of finance lease liability
Current portion of operating lease liability
Accounts payable
Payroll and benefits liabilities
Deferred revenue
Other current liabilities
Total current liabilities
Long-term debt
Finance lease liability
Operating lease liability
Pension and other postemployment plan liabilities
Long-term deferred revenue
Deferred tax liabilities
Other liabilities
Total liabilities
Commitments and contingencies (Note 10)
Stockholders’ equity
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and
outstanding at December 31, 2023 and 2022, respectively
Common stock: par value $0.01 per share, 500.0 shares authorized, 97.9 and 101.1
shares issued and outstanding at December 31, 2023 and 2022, respectively
Paid-in capital
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
At December 31
2023
2022
486 $
286
13
84
869
239
9
398
68
221
69
1,873 $
19 $
66
6
100
130
570
105
996
480
63
6
102
22
8
61
1,738
569
364
8
87
1,028
244
13
390
92
213
42
2,022
—
67
8
94
137
589
112
1,007
498
54
10
101
8
7
79
1,764
—
—
1
2,074
(1,811)
(129)
135
1,873 $
1
1,941
(1,565)
(119)
258
2,022
$
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
49
TERADATA CORPORATION
Consolidated Statements of Cash Flows
In millions
For the Years Ended December 31
2022
2021
2023
Operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$
62 $
33 $
147
Depreciation and amortization
Stock-based compensation expense
Deferred income taxes
Loss on Blue Chip Swap
Changes in assets and liabilities:
Receivables
Inventories
Account payables and accrued expenses
Deferred revenue
Other assets and liabilities
Net cash provided by operating activities
Investing activities
Expenditures for property and equipment
Additions to capitalized software
Business acquisitions, other investing activities and proceeds on Blue Chip Swap, net
of purchases
Net cash used in investing activities
Financing activities
Repurchases of common stock
Proceeds from long-term borrowings
Repayments of long-term borrowings
Payments of finance leases
Other financing activities, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
(Decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
Reconciliation of cash, cash equivalents and restricted cash to the Consolidated
Balance Sheets
Cash and cash equivalents
Restricted cash
Total cash, cash equivalents and restricted cash
Supplemental data
Supplemental cash flow disclosure:
Assets acquired by finance lease
Assets acquired by operating lease
Annual variable incentive payout settled in equity
Cash paid during the year for:
Income taxes, net
Interest
116
126
(11)
13
78
(5)
7
(5)
(6)
375
(19)
(1)
(29)
(49)
134
126
(26)
—
(28)
18
35
18
109
419
(14)
(2)
(2)
(18)
(308)
—
—
(82)
7
(383)
(28)
(85)
571
486 $
(387)
500
(413)
(86)
5
(381)
(44)
(24)
595
571 $
149
112
14
—
(5)
3
17
42
(16)
463
(28)
(3)
—
(31)
(244)
—
(44)
(92)
24
(356)
(14)
62
533
595
486 $
—
486 $
569 $
2
571 $
592
3
595
90 $
6 $
— $
65 $
30 $
78 $
4 $
— $
(18) $
23 $
76
9
17
44
26
$
$
$
$
$
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
50
TERADATA CORPORATION
Consolidated Statements of Changes in Stockholders’ Equity
In millions
Common Stock
Shares
Amount
Paid-in
Capital
Retained
Earnings
(Accumulated
Accumulated
Other
Comprehensive
Deficit)
(Loss) income
Total
December 31, 2020
Net income
Employee stock compensation, employee stock
purchase programs and option exercises, net of
tax
Repurchases of common stock, retired
Pension and postemployment benefit plans, net of
tax
Unrealized gain on derivatives, net of tax
Currency translation adjustment
December 31, 2021
Net income
Employee stock compensation, employee stock
purchase programs and option exercises, net of
tax
Repurchases of common stock, retired
Pension and postemployment benefit plans, net of
tax
Unrealized gain on derivatives, net of tax
Currency translation adjustment
December 31, 2022
Net income
Employee stock compensation, employee stock
purchase programs and option exercises, net of
tax
Repurchases of common stock, retired
Pension and postemployment benefit plans, net of
tax
Unrealized loss on derivatives, net of tax
Currency translation adjustment
December 31, 2023
108 $
—
1 $ 1,656 $
—
—
(1,114) $
147
(143) $ 400
147
—
—
5
(6) —
152
—
—
(244)
—
—
152
(244)
—
—
—
107 $
—
—
—
—
—
—
—
1 $ 1,808 $
—
—
—
3
(9) —
133
—
—
—
—
—
—
—
101 $
—
—
—
—
1 $ 1,941 $
—
—
—
—
—
(1,211) $
33
—
(387)
—
—
—
(1,565) $
62
6
6
11
11
(12)
(12)
(138) $ 460
33
—
—
—
133
(387)
31
31
19
19
(31)
(31)
(119) $ 258
62
—
—
4
(7) —
133
—
—
(308)
—
—
133
(308)
—
—
—
—
—
—
—
—
—
1 $ 2,074 $
—
—
—
(1,811) $
(7)
(4)
1
(7)
(4)
1
(129) $ 135
98 $
The accompanying notes are an integral part of the consolidated financial statements.
51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Description of Business, Basis of Presentation and Significant Accounting Policies
Description of the Business. Teradata Corporation ("we," "us," "Teradata," or the "Company") is focused on
helping organizations improve business performance, enrich customer experiences, and integrate data across the
enterprise. As such, we strive to innovate and deliver trusted solutions for complex data and analytics challenges.
That's why we built our comprehensive open and connected cloud analytics and data platform for artificial
intelligence ("AI"). Our Teradata Vantage platform is designed to help enterprises solve business problems and
deliver business breakthroughs with its capabilities to provide harmonized data, trusted AI, and faster innovation.
Basis of Presentation. The financial statements are presented on a consolidated basis and include the accounts of
the Company and its wholly-owned subsidiaries in accordance with accounting principles generally accepted in the
United States of America ("GAAP").
Recurring revenue consists of our on-premises and cloud subscriptions, which have varying term lengths from one
month to five years. Recurring revenue is intended to depict the revenue recognition model for these subscription
transactions. The recurrence of these revenue streams in future periods depends on several factors, including
contractual periods and customers' renewal decisions. Perpetual software licenses, hardware and other revenue
consists of hardware and perpetual software licenses recognized upfront and revenue related to third party products.
Consulting services revenue consists of consulting, implementation and installation services.
Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make
estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and revenues and expenses during the period reported. On an
ongoing basis, management evaluates these estimates and judgments, including those related to allowances for
doubtful accounts, the valuation of inventory to net realizable value, impairments of goodwill and other intangibles,
stock-based compensation, leases, pension and other postemployment benefits, and income taxes and any changes
will be accounted for on a prospective basis. Actual results could differ from those estimates.
Revenue Recognition
The Company adopted Financial Accounting Standards Board ("FASB") Standards Update No. 2014-09, Revenue
from Contracts with Customers ("Topic 606") as of January 1, 2018 for all contracts not completed as of the date of
adoption. The core principle of Topic 606 is that an entity should recognize revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the Company expects
to be entitled in exchange for those goods or services. To achieve that core principle, the Company performs the
following five steps:
identify the contract with a customer,
identify the performance obligations in the contract,
1.
2.
3. determine the transaction price,
4. allocate the transaction price to the performance obligations in the contract, and
recognize revenue when (or as) the Company satisfies a performance obligation.
5.
The Company only applies the above five-step model to contracts when it is probable that the Company will collect
the consideration it is entitled to in exchange for goods or services it transfers to the customer. The Company
applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors
including the customer’s historical payment experience, published credit, and financial information pertaining to the
customer.
Revenue is measured based on consideration specified in a contract with a customer, and excludes any sales, value
add, and other taxes the Company collects concurrent with revenue-producing activities. A performance obligation
is a promise in a contract to transfer a distinct good or service to the customer. The Company recognizes revenue
when it satisfies a performance obligation by transferring control over a good or service to a customer. Estimates of
variable consideration are included in revenue to the extent that it is probable that a significant reversal of
cumulative revenue will not occur once the uncertainty is resolved. The Company uses the expected value method
or the most likely amount method depending on the nature of the variable consideration. Our estimates of variable
52
consideration and determination of whether to include estimated amounts in the transaction price are based largely
on an assessment of our anticipated performance and all information (historical, current and forecasted) that is
reasonably available to us. If actual results in the future vary from the Company’s estimates, the Company adjusts
these estimates in the period such variances become known. Typically, the amount of variable consideration is not
material.
For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each
performance obligation using the relative standalone selling price of each distinct good or service in the contract.
The Company must apply judgment to determine whether promised goods or services are capable of being distinct
and distinct within the context of the contract. If these criteria are not met, the promised goods or services are
combined with other goods or services and accounted for as a combined performance obligation. Revenue is then
recognized either at a point in time or over time depending on our evaluation of when the customer obtains control
of the promised goods or services. This evaluation requires significant judgment and the decision to combine a
group of contracts or separate the combined or single contract into multiple performance obligations could change
the amount of revenue recorded in a given period. In addition, the Company has developed assumptions that require
judgment to determine the standalone selling price for each performance obligation identified in the contract. The
Company determines the standalone selling price for a good or service by considering multiple factors including,
geographies, market conditions, product life cycles, competitive landscape, internal costs, gross margin objectives,
purchase volumes and pricing practices. The Company reviews the standalone selling price for each of its
performance obligations on a periodic basis and updates it, when appropriate, to ensure that the practices employed
reflect the Company’s recent pricing experience. The Company maintains internal controls over the establishment
and updates of these estimates, which includes review and approval by the Company’s management.
Teradata delivers its platform and services primarily through direct sales channels, as well as through other
independent software vendors and distributors and value-added resellers. Standard payment terms may vary based
on the country in which the contract is executed, but are generally between 30 days and 90 days. The following is a
description of the principal activities and performance obligations from which the Company generates its revenue:
•
•
•
Subscription software licenses, services and other - The Company sells on-premises and cloud
subscriptions to its customers through its subscription licenses, cloud and hardware rental offerings.
Teradata’s on-premises subscription licenses include a right-to-use license and revenue is recognized
upfront at a point in time unless the customer has a contractual right to cancel, where revenue is recognized
period-to-period based on the cancellation terms. Subscription licenses are reported within the subscription
software licenses caption on the Consolidated Statements of Income. The subscription software license
support and unspecified software license upgrade rights on a when-and-if-available basis that are included
in the subscription are reported within the recurring services and other caption and recognized ratably over
the contract term. Cloud arrangements include a right-to-access software license on third party hosted
hardware such as the public cloud. Revenue is recognized ratably, or as consumed, over the contract term
and included within the recurring services and other caption. Cloud arrangements typically include a
minimum fixed amount that is recognized ratably over the contract term and may include an elastic amount
for usage above the minimum, which is recognized monthly based on actual utilization. For the Company's
hardware rental offering, the Company owns the hardware and typically finances the hardware to more
closely align the use of cash with the expected cash inflows from contracts with customers. The revenue for
these arrangements is generally recognized straight-line over the term of the contract and is included within
the recurring services and other caption. Hardware rentals are generally accounted for as operating leases
and considered outside the scope of Topic 606.
Perpetual maintenance and software upgrade rights - Revenue for maintenance and unspecified
software upgrade rights on a when-and-if-available basis are recognized straight-line over the term of the
contract and included within the recurring services and other caption.
Perpetual software licenses, hardware and other - Revenue for software is generally recognized when
the customer has the ability to use and benefit from its right to use the license. Hardware is typically
recognized upon delivery once title and risk of loss have been transferred (when control has passed). Other
revenue includes the sale of all third-party related products.
53
• Consulting services - The Company accounts for individual services as separate performance obligations if
a service is separately identifiable from other items in a combined arrangement and if a customer can
benefit from it on its own or with other resources that are readily available to the customer. Revenue for
consulting, managed services, implementation and installation services is recognized as services are
provided by measuring progress toward the complete satisfaction of the Company’s obligation. Progress for
services that are contracted for at a fixed price is generally measured based on hours incurred as a portion of
total estimated hours. Progress for services that are contracted for on a time and materials basis is generally
based on hours expended. These input methods (e.g. hours incurred or expended) of revenue recognition are
considered a faithful depiction of our efforts to satisfy services contracts and therefore reflect the transfer of
services to a customer under such contracts.
Significant Accounting Policies and Practical Expedients
The following are the Company’s significant accounting policies not already disclosed elsewhere and practical
expedients relating to revenue from contracts with customers:
•
•
•
•
Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific
revenue-producing transaction, that are collected by the Company from a customer, are excluded from
revenue.
Shipping and handling costs associated with outbound freight after control over a product has transferred to
a customer are accounted for as fulfillment cost and are included in cost of revenues.
The Company does not adjust for the effects of a significant financing component if the period between
performance and customer payment is one year or less.
The Company expenses the costs to obtain a contract as incurred when the expected amortization period is
one year or less.
Shipping and Handling. Product shipping and handling are included in cost in the Consolidated Statements of
Income.
Cash and Cash Equivalents. All short-term, highly-liquid investments having original maturities of three months
or less are considered to be cash equivalents.
Allowance for Doubtful Accounts. Teradata establishes provisions for doubtful accounts using expected credit
losses methodology and specific provisions for known issues.
Inventories. Inventories are stated at the lower of cost or market. Cost of service parts is determined using the
average cost method. Finished goods inventory is determined using actual cost.
Long-Lived Assets
Property and Equipment. Property and equipment, leasehold improvements and rental equipment are stated at cost
less accumulated depreciation. Depreciation is computed over the estimated useful lives of the related assets
primarily on a straight-line basis. The Company's estimate of depreciation expense incorporates management
assumptions regarding the useful economic lives and residual values of its assets. Equipment is generally
depreciated over 3 to 5 years and buildings over 25 to 45 years. Leasehold improvements are depreciated over the
life of the lease or the asset, whichever is shorter. Customer rental equipment is typically depreciated over the
associated customer rental period, which is typically 3 years. Total depreciation expense on the Company’s property
and equipment for December 31 was as follows:
In millions
Depreciation expense
2023
2022
2021
$
110 $
127 $
139
54
Capitalized Software. Direct development costs associated with internal-use software are capitalized and amortized
over the estimated useful lives of the resulting software. The costs are capitalized when both the preliminary project
stage is completed and it is probable that computer software being developed will be completed and placed in
service. Teradata typically amortizes capitalized internal-use software on a straight-line basis over four years
beginning when the asset is substantially ready for use.
Costs incurred for the development of analytic database software that will be sold, leased or otherwise marketed are
expensed as incurred based on the frequency and agile nature of development. The Company uses agile
development methodologies to help respond to new technologies and trends and rapidly changing customer needs.
Agile development methodologies are characterized by a more dynamic development process with more frequent
and iterative revisions to a product release features and functions as the software is being developed. Due to the
shorter development cycle and focus on rapid production associated with agile development, the Company did not
capitalize any amounts for external-use software development costs in 2023, 2022 and 2021 due to the relatively
short duration between the completion of the working model and the point at which a product is ready for general
release.
The following table identifies the activity relating to capitalized internal-use software for the following periods:
In millions
Beginning balance at January 1
Capitalized
Amortization
Ending balance at December 31
Internal-use Software
2022
2021
2023
$
$
8 $
2
(5)
5 $
10 $
3
(5)
8 $
13
3
(6)
10
The aggregate amortization expense (actual and estimated) for internal-use software for the following periods is:
In millions
Internal-use software amortization expense
Actual
2023
2024
For the years ended (estimated)
2027
2026
2025
2028
$
5 $
4 $
2 $
2 $
2 $
2
Valuation of Long-Lived Assets. Long-lived assets such as property and equipment, acquired intangible assets and
internal capitalized software are reviewed for impairment when events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable. An impairment is calculated based on the present value of
future cash flows and an impairment loss would be recognized when estimated future undiscounted cash flows
expected to result from the use of the asset and its eventual disposition are less than the carrying amount. No
material impairment was recognized during 2023, 2022 and 2021.
Goodwill. Goodwill represents the excess of the purchase price in a business combination over the fair value of net
tangible and intangible assets acquired. Goodwill amounts are not amortized, but rather are tested for impairment
annually or upon occurrence of an event or change in circumstances that would more likely than not reduce the fair
value of a reporting unit below its carrying amount. See Note 5 for additional information.
Research and Development Costs. Research and development costs are expensed as incurred. Research and
development costs primarily include labor-related costs, contractor fees, and overhead expenses directly related to
research and development support.
Pension and Postemployment Benefits. The Company accounts for its pension benefit and its non-U.S.
postemployment benefit obligations using actuarial models. The measurement of plan obligations was made as of
December 31, 2023. Liabilities are computed using the projected unit credit method. The objective under this
method is to expense each participant’s benefits under the plan as they accrue, taking into consideration salary
increases and the plan’s benefit allocation formula. Thus, the total pension or postemployment benefit to which each
participant is expected to become entitled is broken down into units, each associated with a year of past or future
credited service.
55
The Company recognizes the funded status of its pension and non-U.S. and Japan postemployment plan obligations
in its consolidated balance sheet and records, in other comprehensive income, certain gains and losses that arise
during the period, but are deferred under pension and postemployment accounting rules. See Note 8 for additional
information.
Foreign Currency. Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment are
translated into U.S. dollars at period-end exchange rates. Income and expense accounts are translated at daily
exchange rates prevailing during the period. Adjustments arising from the translation are included in accumulated
other comprehensive income, a separate component of stockholders’ equity. Gains and losses resulting from foreign
currency transactions are included in determining net income.
Income Taxes. Income tax expense is provided based on income before income taxes in the various jurisdictions in
which the Company conducts its business. Deferred income taxes reflect the impact of temporary differences
between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax
purposes. These deferred taxes are determined based on the enacted tax rates expected to apply in the periods in
which the deferred assets or liabilities are expected to be settled or realized. The Company made an accounting
policy election in 2018 related to the 2017 Tax Act to provide for the tax expense related to global intangible low-
taxed income ("GILTI") in the year the tax is incurred. Teradata recognizes tax benefits from uncertain tax positions
only if it is more likely than not the tax position will be sustained on examination by taxing authorities, based on the
technical merits of the position. The Company records valuation allowances related to its deferred income tax assets
when it is more likely than not that some portion or all the deferred income tax assets will not be realized. See Note
6 for additional information.
Stock-based Compensation. Stock-based payments to employees, including restricted shares and restricted share
units, are recognized in the financial statements based on their fair value. See Note 7 for additional information.
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 added from stock options, restricted share awards and other stock awards. Refer to Note 7 for share
information on the Company’s stock compensation plans.
The components of basic and diluted earnings per share for the years ended December 31 are as
follows:
In millions, except earnings per share
Net income attributable to common stockholders
Weighted average outstanding shares of common stock
Dilutive effect of employee stock options, restricted shares and other stock awards
Common stock and common stock equivalents
Earnings per share:
Basic
Diluted
2023
2022
2021
$
62 $
33 $
99.8
2.6
102.4
103.2
2.6
105.8
147
108.6
4.3
112.9
$
$
0.62 $
0.61 $
0.32 $
0.31 $
1.35
1.30
Options to purchase an immaterial number of shares in 2023, 0.3 million shares in 2022 and 0.2 million shares in
2021 of common stock, were not included in the computation of diluted earnings per share because their exercise
prices were greater than the average market price of the common shares and, therefore, the effect would have been
anti-dilutive.
56
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures." This standard requires disclosure of significant segment expenses and other
segment items by reportable segment. This ASU becomes effective for annual periods beginning in 2024 and
interim periods in 2025. We are assessing the impact of this ASU and upon adoption expect that any impact would
be limited to additional segment expense disclosures in the footnotes to our Consolidated Financial Statements.
In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax
Disclosures." This standard enhances disclosures related to income taxes, including the rate reconciliation and
information on income taxes paid. This ASU becomes effective January 1, 2025. We are assessing the impact of this
ASU and upon adoption may be required to include certain additional disclosures in the footnotes to our
Consolidated Financial Statements.
57
Note 2 Supplemental Financial Information
In millions
Accounts receivable
Trade
Other
Accounts receivable, gross
Less: allowance for doubtful accounts
Total accounts receivable, net
Inventories
Finished goods
Service parts
Total inventories
Other current assets
Income tax receivable
Pre-paid expenses and Other
Total other current assets
Property and equipment
Land
Buildings and improvements
Finance lease assets
Machinery and other equipment
Property and equipment, gross
Less: accumulated depreciation
Total property and equipment, net
Other current liabilities
Sales and value-added taxes
Pension and other postemployment plan liabilities
Other
Total other current liabilities
Deferred revenue
Deferred revenue, current
Long-term deferred revenue
Total deferred revenue
Other long-term liabilities
Transition tax
Uncertain tax positions
Other
Total other long-term liabilities
In millions
Other expense
Foreign currency losses
Blue chip swap losses
Other
Total Other expense
At December 31
2023
2022
$
$
$
$
$
$
$
$
$
$
$
$
$
$
294 $
4
298
(12)
286 $
11 $
2
13 $
13 $
71
84 $
8 $
84
267
586
945
(706)
239 $
12 $
18
75
105 $
570 $
22
592 $
29 $
19
13
61 $
Twelve Months Ended December 31,
2022
2023
2021
38 $
13
13
64 $
30 $
—
12
42 $
$
$
58
360
16
376
(12)
364
5
3
8
13
74
87
8
86
257
553
904
(660)
244
26
13
73
112
589
8
597
52
22
5
79
8
—
11
19
Argentina Blue Chip Swap Transaction
The Central Bank of Argentina maintains currency controls that limit Teradata's ability to access U.S. dollars in
Argentina and remit cash from its Argentine operations. There is a foreign exchange mechanism known as Blue
Chip Swaps, which effectively results in a parallel U.S. dollar exchange rate. This parallel rate, which cannot be
used as the basis to remeasure Teradata's net monetary assets in U.S. dollars under U.S. GAAP, was approximately
168% higher than Argentina’s official exchange rate at September 30, 2023. During October of 2023, Teradata
entered into Blue Chip Swap transactions in order to remit cash from its Argentine operations that resulted in a pre-
tax loss on investment of $13 million during the fourth quarter of 2023.
59
Note 3 Revenue from Contracts with Customers
Disaggregation of Revenue from Contracts with Customers
The following table presents a disaggregation of revenue for the years ended December 31:
In millions
Americas
Recurring
Perpetual software licenses, hardware and other
Consulting services
Total Americas
EMEA
Recurring
Perpetual software licenses, hardware and other
Consulting services
Total EMEA
APJ
Recurring
Perpetual software licenses, hardware and other
Consulting services
Total APJ
Total Revenue
Contract Balances
2023
2022
2021
$
947 $
889 $
879
14
128
23
126
24
141
1,089
1,038
1,044
363
20
92
475
182
11
76
269
330
33
102
465
200
9
83
292
371
37
135
543
214
16
100
330
$ 1,833 $ 1,795 $ 1,917
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 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:
In millions
Accounts receivable, net
Contract assets
Current deferred revenue
Long-term deferred revenue
December 31,
2023
December 31,
2022
$
$
$
$
286
9
570
22
$
$
$
$
364
7
589
8
Revenue recognized during the year ended December 31, 2023 from amounts included in deferred revenue at the
beginning of the period was approximately $490 million.
60
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 December 31, 2023:
In millions
Remaining unsatisfied obligations
December 31,
2023
Year 1
Year 2
and
Thereafter
$
2,681
$
1,606
$
1,075
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 $1,442 million of the amount includes customer-only general cancellation for convenience terms that
the Company is contractually obligated to perform unless the customer notifies the Company otherwise. The
Company expects to recognize revenue of approximately $646 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.
Note 4 Contract Costs
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 on the Company’s balance sheet. The capitalized amounts are calculated based on the
sales commissions 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 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
December 31,
2023
Capitalized contract costs
$
92
$
16
$
(40) $
68
In millions
December 31,
2021
Capitalized
Amortization
December 31,
2022
Capitalized contract costs
$
111
$
37
$
(56) $
92
Note 5 Goodwill and Acquired Intangible Assets
The following table identifies the activity relating to goodwill by operating segment:
In millions
Goodwill
Americas
EMEA
APJ
Total goodwill
Balance
December 31,
2022
Additions
Currency
Translation
Adjustments
Balance
December 31,
2023
$
$
252 $
87
51
390 $
5 $
1
1
7 $
— $
2
(1)
1 $
257
90
51
398
During 2023, the Company recorded additional goodwill for the immaterial acquisition of Stemma Technologies
that occurred during the period.
In the fourth quarter of 2023, the Company performed its annual impairment test, utilizing the quantitative method,
and determined that no impairment to the carrying value of goodwill was necessary as each reporting units fair
value was above it carrying value. The Company reviewed its three reporting units in its 2023 goodwill impairment
61
assessment, as each of the geographic operating segments were considered separate reporting units for purposes of
testing.
Acquired intangible assets were specifically identified when acquired and are deemed to have finite lives. The gross
carrying amount and accumulated amortization for Teradata’s acquired intangible assets were as follows:
In millions
Acquired intangible assets
Intellectual property/developed technology
December 31,
2023
Amortization
Life (in Years)
Gross Carrying
Amount
Accumulated
Amortization
Amount
5
$
14 $
(2)
During 2023, the Company recorded intangibles for intellectual property related to the immaterial acquisition of
Stemma Technologies that occurred during the period.
The aggregate amortization expense (actual and estimated) for acquired intangible assets for the following periods
is:
In millions
Amortization expense
Actual
2023
2024
For the years ended (estimated)
2027
2026
2025
2028
$
2 $
3 $
3 $
3 $
3 $
—
62
Note 6 Income Taxes
For the years ended December 31, income before income taxes consisted of the
following:
In millions
Income before income taxes
United States
Foreign
Total income before income taxes
2023
2022
2021
$
$
35 $
82
117 $
17 $
50
67 $
67
125
192
For the years ended December 31, income tax expense consisted of the following:
In millions
Income tax expense
Current
Federal
State and local
Foreign
Deferred
Federal
State and local
Foreign
Total income tax expense
Effective income tax rate
2023
2022
2021
$
$
$
$
25
5
36
(12)
(2)
3
55
47.0%
$
$
29
6
25
(21)
(3)
(2)
34
50.7%
(1)
5
27
3
1
10
45
23.4%
The following table presents the principal components of the difference between the effective tax rate and the
United States federal statutory income tax rate for the years ended December 31:
2023
2022
2021
Income tax expense at the U.S. federal tax rate
Foreign income tax differential
U.S. tax on foreign earnings
State and local income taxes
U.S. permanent book/tax differences
U.S. research and development tax credits
Change in valuation allowance
Argentina hyperinflationary adjustment
Tax impact of stock compensation
Tax Impact of uncertain tax positions
Other, net
Effective income tax rate
21.0 %
1.5 %
(1.7) %
(3.2) %
3.7 %
(6.1) %
18.6 %
13.1 %
1.7 %
(0.8) %
(0.8) %
47.0 %
21.0 %
13.0 %
2.8 %
(4.2) %
4.8 %
(10.4) %
18.7 %
— %
3.6 %
1.5 %
(0.1) %
50.7 %
21.0 %
2.8 %
0.3 %
(1.3) %
(2.3) %
(2.6) %
3.2 %
— %
0.8 %
2.0 %
(0.5) %
23.4 %
The 2023 effective tax rate included a net $18 million of discrete tax expense, of which $15 million of tax expense
related to the foreign currency exchange translation impact on deferred tax and tax payable balances for Teradata's
Argentina operations due to hyperinflation in Argentina and $10 million of tax expense related to a valuation
allowance recorded against deferred tax assets for Argentina and other reorganization and transformation activities.
These were partially offset by $4 million tax benefit related to the reversal of a FIN 48 tax reserve due to the
expiration of statute of limitations and $3 million of incremental tax benefit related to stock-based compensation.
The 2022 effective tax rate included a net $1 million of discrete tax benefit, of which $2 million of tax benefit
related to the reversal of a capital FIN 48 tax reserve due to the expiration of statute of limitations and $4 million
incremental tax benefit related to stock-based compensation. These tax benefits were partially offset by $5 million
of discrete tax expenses related to valuation allowances recorded against deferred tax assets and current receivables
in Russia that are not expected to be realized as a result of the discontinuation of the Company's business in Russia.
63
The 2021 effective tax rate included a net $8 million of discrete tax benefit, of which $3 million of tax benefit was
related to true-up adjustments to reconcile the Company’s 2020 U.S. tax return versus the preliminary estimate as
booked in its tax provision for the year ended December 31, 2020 and $2 million of tax benefit related to a reduction
in the Transition Tax based on the Company’s amended 2017 tax return. In addition, the Company recognized
$4 million of incremental tax benefit related to stock-based compensation. These tax benefits were partially offset
by $1 million of discrete tax expense related to adjustments to the Company’s accrual for unrecognized tax benefits
in accordance with FIN 48.
Deferred income tax assets and liabilities included in the balance sheets at December 31 were as follows:
In millions
Deferred income tax assets
Employee pensions and other liabilities
Other balance sheet reserves and allowances
Operating lease liabilities
Tax loss and credit carryforwards
Deferred revenue
Intangibles and capitalized software
Total deferred income tax assets
Valuation allowance
Net deferred income tax assets
Deferred income tax liabilities
Right of use assets - operating lease
Property and equipment
Other
Total deferred income tax liabilities
Total net deferred income tax assets
2023
2022
$
$
59 $
15
3
109
4
178
368
(90)
278
2
32
31
65
213 $
47
19
5
99
6
172
348
(69)
279
3
35
35
73
206
As of December 31, 2023, Teradata has NOL and tax credit carryforwards totaling $112 million (tax effected and
before any valuation allowance offset and application of recognition criteria for uncertain tax positions). Of the total
tax carryforwards, $14 million are NOLs in the United States and certain foreign jurisdictions, a small portion of
which will begin to expire in 2024; $15 million are United States foreign tax credit carryforwards which expire in
2029, which have an $15 million valuation allowance offset; and $83 million are California R&D tax credits that
have an indefinite carryforward period, which have a $61 million valuation allowance offset and $21 million of FIN
48 reserve recorded.
The Company considers a majority of its foreign earnings to not be indefinitely reinvested outside of the United
States, and any distributions of profits from non-U.S. subsidiaries are not expected to cause a significant United
States tax impact in the future. However, these distributions may be subject to non-U.S. withholding taxes if profits
are distributed from certain jurisdictions. The Company has recorded $5 million of deferred foreign withholding tax
expense with respect to certain earnings which are not considered permanently reinvested as they would be taxable
upon remittance. Deferred taxes have not been provided on earnings considered indefinitely reinvested.
The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the
tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
The Company reflects any interest and penalties recorded in connection with its uncertain tax positions as a
component of income tax expense.
As of December 31, 2023, the Company’s uncertain tax positions totaled approximately $40 million, of which $19
million is reflected in the other liabilities section of the Company’s balance sheet as a non-current liability and $21
million of uncertain tax positions relates to certain tax attributes generated by the Company, which are netted
against the underlying deferred tax assets recorded on the balance sheet. The entire balance of $40 million in
uncertain tax positions would cause a decrease in the effective income tax rate upon recognition. Teradata has
recorded $3 million of interest accruals related to its uncertain tax liabilities as of December 31, 2023.
64
Below is a roll-forward of the Company’s liability related to uncertain tax positions at December 31:
2023
In millions
Balance at January 1
Gross increases for prior period tax positions
Gross increases for current period tax positions
Decreases due to the lapse of applicable statute of limitations
Decreases relating to settlements with taxing authorities
Balance at December 31
$
$
2022
43
1
3
(3)
(3)
41
41 $
1
3
(5)
—
40 $
The Company and its subsidiaries file income tax returns in the United States and various state jurisdictions, as well
as numerous foreign jurisdictions. As of December 31, 2023, the Company has ongoing tax audits related to its
2020 and 2015 U.S. Federal income tax return, as well as in a limited number of state and foreign jurisdictions.
However, no material adjustments have been proposed or made in any of these examinations to date, which would
result in any incremental income tax expense in future periods to the Company. The Company's tax returns for years
2020-2023 are still open for assessment by tax authorities in its major jurisdictions.
Note 7 Employee Stock-based Compensation Plans
The Company recorded stock-based compensation expense for the years ended December 31 as
follows:
In millions
Restricted share units
Employee stock purchase program
Total stock-based compensation before income taxes
Tax benefit
Total stock-based compensation, net of tax
2023
2022
2021
122
4
126
(23)
103 $
122
4
126
(23)
103 $
109
3
112
(19)
93
$
The Teradata Corporation 2012 Stock Incentive Plan (the "2012 SIP"), as amended, and the Teradata 2023 Stock
Incentive Plan (the "2023 SIP"), as amended, provide for the grant of several different forms of stock-based
compensation. The 2023 SIP was adopted and approved by stockholders in May 2023 and no further awards may be
made under the 2012 SIP after that time. Awards granted under the 2012 Plan prior to stockholder approval of the
2023 Plan will remain outstanding in accordance with their terms. A total of 3.75 million shares were authorized to
be issued under the 2023 SIP. In May 2020, the Teradata Board of Directors adopted the Teradata New Employee
Stock Inducement Plan (the "NESIP"), effective June 1, 2020. Pursuant to the NESIP, the Company may grant
equity incentive compensation as a material inducement for certain individuals to commence employment with
Teradata within the meaning of Rule 303A.08 of the NYSE Listed Company Manual. A total of 2.2 million shares
are reserved for grant under the NESIP, the Teradata Incentive Stock Purchase Plan, and new CEO award, subject to
adjustment as provided in the NESIP. The NESIP terminated on June 1, 2023.
New shares of the Company’s common stock are issued as a result of the vesting of restricted share units, upon
stock option exercises, and at the time of grant for restricted shares, for awards under all plans.
As of December 31, 2023, the Company’s primary types of stock-based compensation were restricted share units
and the employee stock purchase program (the "ESPP").
Stock Options
No stock options were granted in 2023, 2022, or 2021.
Restricted Shares and Ristricted Share Units
The 2023 SIP provides for the issuance of restricted shares, as well as restricted share units. These grants consist of
both service-based and performance-based awards. Service-based awards typically vest over a three-year period
beginning on the effective date of grant. These grants are not subject to future performance measures. The cost of
these awards, determined to be the fair market value at the date of grant, is expensed ratably over the vesting period.
Performance-based grants are subject to future performance measurements over a one-to three-year period. All
65
performance-based shares that are earned in respect of an award will become vested at the end of the performance
and/or service period provided the employee is continuously employed by the Company and applicable performance
measures and other vesting conditions are met. The fair value of each performance-based award is determined on
the grant date, based on the Company’s stock price, and assumes that performance targets will be achieved. Over
the performance period, the number of shares of stock that will be issued is adjusted upward or downward based
upon management’s assessment of the probability of achievement of performance targets. The ultimate number of
shares issued and the related compensation cost recognized as expense will be based on a comparison of the final
achievement of performance metrics to the specified targets. For substantially all restricted share grants, at the date
of grant, the recipient has all rights of a stockholder, subject to certain restrictions on transferability and risk of
forfeiture. A recipient of restricted share units does not have the rights of a stockholder and is subject to restrictions
on transferability and risk of forfeiture. For both restricted shares and restricted share units, any potential dividend
rights would be subject to the same vesting requirements as the underlying equity award. As a result, such rights are
considered a contingent transfer of value and consequently these equity awards are not considered participating
securities.
We did not issue restricted shares in 2023, 2022, or 2021. The following table reports restricted share unit activity
during the year ended December 31, 2023:
Shares in thousands
Unvested shares at January 1, 2023
Granted
Vested
Forfeited/canceled
Unvested shares at December 31, 2023
Weighted-
Average
Grant
Date Fair
Value
per Share
Number of
Shares
6,996 $
3,926 $
(3,542) $
(560) $
6,820 $
39.40
39.98
32.77
43.38
42.84
The following table summarizes the weighted-average fair value of restricted share units granted for Teradata equity
awards and the total fair value of shares vested.
Weighted-average fair value of restricted share units granted
Total fair value of shares vested (in millions)
2023
2022
2021
$
$
39.98 $
116 $
47.44 $
106 $
41.18
93
As of December 31, 2023, there was $165 million of unrecognized compensation cost related to unvested restricted
share unit grants. The unrecognized compensation cost is expected to be recognized over a remaining weighted-
average period of 1.0 years.
The following table represents the composition of Teradata restricted share unit grants in 2023
Shares in thousands
Service-based restricted share units
Performance-based restricted share units
Total restricted share unit grants
Employee Stock Purchase Program
Weighted-
Average
Grant
Date Fair
Value
Number of
Shares
3,065 $
861 $
3,926 $
40.90
36.69
39.98
The Company’s ESPP provides eligible employees of Teradata and its designated subsidiaries an opportunity to
purchase the Company’s common stock at a discount at the end of a 6-month purchase period. Additionally, the
ESPP has a look-back feature whereby the purchase discount is based off the lower of the market prices at the
66
beginning or end of each 6-month purchase period (September to February, and March to August). The ESPP
discount is 15% of the relevant market price and is considered compensatory.
Employees may authorize payroll deductions of up to 10% of eligible compensation for common stock purchases. A
total of 9.3 million shares were authorized to be issued under the ESPP, with approximately 2.6 million shares
remaining under that authorization at December 31, 2023. The shares of Teradata common stock purchased by a
participant on an exercise date (the last day of each month), for all purposes, are deemed to have been issued and
sold at the close of business on such exercise date. Prior to that time, none of the rights or privileges of a
stockholder exists with respect to such shares.
Employee purchases and aggregate cost were as follows at December 31:
In millions
Employee stock purchases
Aggregate cost
Note 8 Employee Benefit Plans
2023
2022
2021
0.4
13 $
0.4
12 $
0.3
10
$
Pension and Postemployment Plans. Teradata currently sponsors defined benefit pension plans for certain of its
international employees. For those international pension plans for which the Company holds asset balances, those
assets are primarily invested in common/collective trust funds (which include publicly traded common stocks,
corporate and government debt securities, real estate indirect investments, cash or cash equivalents) and insurance
contracts.
Postemployment obligations relate to benefits provided to involuntarily terminated employees and certain inactive
employees after employment but before retirement. These benefits are paid in accordance with various foreign
statutory laws and regulations, and Teradata’s established postemployment benefit practices and policies.
Postemployment benefits may include disability benefits, supplemental unemployment benefits, severance,
workers’ compensation benefits, continuation of health care benefits and life insurance coverage, and are funded on
a pay-as-you-go basis.
2021
Postemployment
11
1
7 $
1
—
—
8
—
20
Pension and postemployment benefit costs for the years ended December 31 were as
follows:
2023
2022
In millions
Service cost
Interest cost
Expected return on plan
assets
Curtailment gain
Amortization of actuarial
loss
Amortization of prior
service cost
Pension
$
Postemployment
12
2
4 $
3
$
(2)
—
—
—
—
—
6
1
Pension
Postemployment
Pension
6 $
2
(2)
—
1
—
13 $
1
—
—
8
—
(2)
(2)
3
—
Total costs
$
5 $
21
$
7 $
22 $
7 $
67
The underfunded amount of pension and postemployment obligations is recorded as a liability in the Company’s
consolidated balance sheet. The following tables present the changes in benefit obligations, plan assets, funded
status and the reconciliation of the funded status to amounts recognized in the consolidated balance sheets and in
accumulated other comprehensive income at December 31:
In millions
Change in benefit obligation
Benefit obligation at January 1
Service cost
Interest cost
Plan participant contributions
Actuarial loss (gain)
Benefits paid
Settlement
Plan Amendment
Currency translation adjustments
Benefit obligation at December 31
Change in plan assets
Fair value of plan assets at January 1
Actual return on plan assets
Company contributions
Benefits paid
Currency translation adjustments
Plan participant contribution
Settlements
Fair value of plan assets at December 31
Funded status (underfunded)
Amounts Recognized in the Consolidated Balance
Sheet
Non-current assets
Current liabilities
Non-current liabilities
Net amounts recognized
Amounts Recognized in Accumulated Other
Comprehensive Income (Loss)
Unrecognized Net actuarial (gain) loss
Unrecognized Prior service cost
Total
$
$
$
$
$
$
$
$
Pension
Postemployment
2023
2022
2023
2022
105
4
3
1
5
(3)
(2)
—
3
116
$
$
$
56
3
5
(4)
1
1
(2)
60
(56) $
$
8
(2)
(62)
(56) $
(4) $
—
(4) $
143
6
2
1
(28)
(2)
(8)
—
(9)
105
$
$
$
67
(3)
5
(1)
(5)
1
(8)
56
(49) $
$
7
(2)
(54)
(49) $
(8) $
—
(8) $
58
12
2
—
13
(29)
—
—
—
56
$
$
$
—
—
—
—
—
—
—
—
(56) $
$
—
(16)
(40)
(56) $
57
4
61
$
$
68
13
1
—
(12)
(15)
—
3
—
58
—
—
—
—
—
—
—
—
(58)
—
(11)
(47)
(58)
50
5
55
The following table presents the accumulated pension benefit obligation at December 31:
In millions
Accumulated pension benefit obligation
2023
2022
$
108 $
99
The following table presents pension plans with accumulated benefit obligations in excess of plan assets at
December 31:
In millions
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
2023
2022
$
$
$
92 $
87 $
28 $
81
76
25
68
The following table presents the pre-tax net changes in projected benefit obligations recognized in other
comprehensive income:
In millions
Actuarial loss (gain) arising during the year
Amortization of loss included in net periodic benefit cost
Prior service cost arising during the year
Foreign currency exchange
Total recognized in other comprehensive income (loss)
Pension
2023
2022
Postemployment
2022
2023
$
$
4 $
—
—
—
4 $
(23) $
(1)
—
(1)
(25) $
13 $
(7)
—
—
6 $
(12)
(8)
2
—
(18)
The weighted-average rates and assumptions used to determine benefit obligations at December 31, and net periodic
benefit cost for the years ended December 31, were as follows:
Discount rate
Rate of compensation increase
Expected return on plan assets
Interest crediting rate assumption
Discount rate
Rate of compensation increase
Involuntary turnover rate
Pension Benefit Obligations
2022
3.3%
3.1%
N/A
1.5%
2023
3.0%
3.2%
N/A
1.6%
Postemployment
Benefit Obligations
2022
2023
3.8%
4.6%
3.0%
3.0%
4.0%
4.5%
Pension Benefit Cost
2022
1.3%
3.0%
3.1%
0.9%
Postemployment
Benefit Cost
2022
2.0%
3.0%
4.0%
2023
3.1%
3.1%
3.9%
1.5%
2023
3.8%
3.0%
4.0%
2021
0.9%
2.9%
3.4%
0.9%
2021
1.6%
3.0%
3.5%
The Company determines the expected return on assets based on individual plan asset allocations, historical capital
market returns, and long-term interest rate assumptions, with input from its actuaries, investment managers, and
independent investment advisors. The company emphasizes long-term expectations in its evaluation of return
factors, discounting or ignoring short-term market fluctuations. Expected asset returns are reviewed annually, but
are generally modified only when asset allocation strategies change or long-term economic trends are identified.
International discount rates were determined by examining interest rate levels and trends within each country,
particularly yields on high-quality long-term corporate bonds, relative to our future expected cash flows. The
discount rate used for countries with individually insignificant benefit obligation at year-end was derived by
matching the plans’ expected future cash flows to the corresponding yields from the Citigroup Pension Liability
Index. This yield curve has been constructed to represent the available yields on high-quality fixed-income
investments across a broad range of future maturities.
Gains and losses have resulted from changes in actuarial assumptions and from differences between assumed and
actual experience, including, among other items, changes in discount rates and differences between actual and
assumed asset returns. These gains and losses (except those differences being amortized to the market-related value)
are only amortized to the extent that they exceed 10% of the higher of the market-related value of plan assets or the
projected benefit obligation of each respective plan. Amortization of deferred gains and losses are recognized in the
Consolidated Statements of Income as a component of Other expense.
69
Plan Assets. The weighted-average asset allocations at December 31, by asset category are as follows:
Equity securities
Debt securities
Insurance (annuity) contracts
Real estate
Other
Total
Actual Asset Allocation
as of December 31
2022
2023
31%
33%
51%
47%
16%
13%
2%
6%
—%
1%
100%
100%
Target Asset
Allocation
32%
49%
13%
4%
2%
100%
Investment Strategy. Teradata employs several investment strategies across its various international pension plans.
In some countries, particularly where Teradata does not have a large employee base, the Company may use
insurance (annuity) contracts to satisfy its future pension payment obligations, whereby the Company makes
pension plan contributions to an insurance company in exchange for which the pension plan benefits will be paid
when the members reach a specified retirement age or on earlier exit of members from the plan. In other countries,
the Company may employ local asset managers to manage investment portfolios according to the investment
policies and guidelines established by the Company, and with consideration to individual plan liability structure and
local market environment and risk tolerances. The Company’s investment policies and guidelines primarily
emphasize diversification across and within asset classes to maximize long-term returns subject to prudent levels of
risk, with the overall objective of enabling the plans to meet their future obligations. The investment portfolios
contain a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified
across domestic and international stocks, small and large capitalization stocks, and growth and value stocks. Fixed-
income assets are diversified across government and corporate bonds. Where applicable, real estate investments are
made through real estate securities, partnership interests or direct investment, and are diversified by property type
and location.
Fair Value. Fair value measurements are established utilizing a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value. These tiers are more fully described in Note 11.
The following is a description of the valuation methodologies used for pension assets as of December 31, 2023.
Common/collective trust funds (which include money market funds, equity funds, bond funds, real estate indirect
investments, etc.): Valued at the net asset value ("NAV") of shares held by the pension plan at year end, as reported
to the pension plan by the trustee, which represents the fair value of shares held by the pension plan. Because the
NAV of the shares held in the common/collective trust funds are derived by the value of the underlying investments,
the Company has classified these underlying investments as Level 2 fair value measurements.
Insurance contracts: Valued by discounting the related future benefit payments using a current year-end market
discount rate, which represents the fair value of the insurance contract. The Company has classified these contracts
as Level 3 assets for fair value measurement purposes.
70
The following table sets forth by level, within the fair value hierarchy, the pension plan assets at fair value as of
December 31, 2023:
December 31, 2023
$
Fair Value Measurements at Reporting Date Using
Significant
Quoted Prices
Other
in Active
Observable
Markets
Inputs
for Identical
Assets
Significant
Unobservable
Inputs
(Level 1)
(Level 2)
(Level 3)
1 $
20
28
3
8
60 $
— $
—
—
—
—
— $
1 $
20
28
3
—
52 $
—
—
—
—
8
8
In millions
Money market funds
Equity funds
Bond/fixed-income funds
Real estate indirect investments
Insurance contracts
Total assets at fair value
$
$
The table below sets forth a summary of changes in the fair value of the pension plan level 3 assets for the year
ended December 31, 2023:
In millions
Balance as of January 1, 2023
Purchases, sales and settlements, net
Balance as of December 31, 2023
Insurance
Contracts
$
$
7
1
8
The following table sets forth by level, within the fair value hierarchy, the pension plan assets at fair value as of
December 31, 2022:
December 31, 2022
$
Fair Value Measurements at Reporting Date Using
Significant
Quoted Prices
Other
in Active
Observable
Markets
Inputs
for Identical
Assets
Significant
Unobservable
Inputs
(Level 1)
(Level 2)
(Level 3)
2 $
17
27
3
7
56 $
— $
—
—
—
—
— $
2 $
17
27
3
—
49 $
—
—
—
—
7
7
In millions
Money market funds
Equity funds
Bond/fixed-income funds
Real estate indirect investments
Insurance contracts
Total assets at fair value
The table below sets forth a summary of changes in the fair value of the pension plan level 3 assets for the year
ended December 31, 2022:
In millions
Balance as of January 1, 2022
Purchases, sales and settlements, net
Balance as of December 31, 2022
Cash Flows Related to Employee Benefit Plans
Insurance
Contracts
$
$
7
—
7
Cash Contributions. In 2024, the Company expects to contribute approximately $2 million to the international
pension plans.
71
Estimated Future Benefit Payments. The Company expects to make the following benefit payments, estimated
based on the assumptions used to measure the Company's benefit obligation at the end of the year, reflecting past
and future service from its pension and postemployment plans:
In millions
Year
2024
2025
2026
2027
2028
2029 - 2033
Pension
Benefits
Postemployment
Benefits
$
$
$
$
$
$
5 $
6 $
6 $
7 $
7 $
40 $
16
10
10
10
10
51
Savings Plans. United States employees and many international employees participate in defined contribution
savings plans. These plans generally provide either a specified percent of pay or a matching contribution on
participating employees’ voluntary elections. The Company’s matching contributions typically are subject to a
maximum percentage or level of compensation. Employee contributions can be made pre-tax, after-tax or a
combination thereof. The following table identifies the expense for the United States and International subsidiary
savings plans for the years ended December 31:
In millions
U.S. savings plan
International subsidiary savings plans
Note 9 Derivative Instruments and Hedging Activities
2023
2022
2021
$
$
16 $
10 $
16 $
12 $
16
14
As a portion of Teradata’s operations is conducted outside the United States 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 involvement 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 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 will 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
72
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, as more fully described in Note 12. 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 December 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 interest rate 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 hedging instruments at December 31:
In millions
Contract notional amount of foreign exchange forward contracts
Net contract notional amount of foreign exchange forward contracts
Contract notional amount of foreign currency exchange (net investment hedge)
Contract notional amount of interest rate swap
2023
2022
$
$
$
$
178 $
1 $
150 $
450 $
46
7
150
450
All derivatives are recognized in the 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 11 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.
Note 10 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, including for
Foreign Corrupt Practices Act ("FCPA") and shareholder 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
73
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. That Court ruled the appeal should be heard by the Ninth Circuit Court
of Appeals; the appeal was transferred to the Ninth Circuit and the court heard oral arguments on February 12,
2024. 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 December 31,
2023 and December 31, 2022.
The Company is also potentially subject to concentrations of supplier risk. Our hardware components are assembled
primarily 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.
Note 11 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 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
74
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
using 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 to hedge the floating
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 contracts recorded in other
assets and other liabilities at December 31, 2023 and 2022 were not material. Realized gains and losses from the
Company’s fair value hedges net of corresponding gains or losses on the underlying exposures were immaterial for
years ended December 31, 2023, 2022 and 2021.
The Company’s assets and liabilities measured at fair value on a recurring basis and subject to fair value disclosure
requirements at December 31, 2023 and December 31, 2022 were as follows:
Fair Value Measurements at Reporting Date Using
Quoted Prices
in Active
Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
152
211
8
13
8
1
$
$
$
$
$
$
152 $
211 $
— $
— $
— $
— $
— $
— $
8 $
13 $
8 $
1 $
—
—
—
—
—
—
Total
In millions
Assets
Money Market Funds at December 31, 2023
Money Market Funds at December 31, 2022
Interest Rate Swap at December 31, 2023
Interest Rate Swap at December 31, 2022
$
$
$
$
Liabilities
Foreign Currency Swap at December 31, 2023 $
Foreign Currency Swap at December 31, 2022 $
Note 12 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 and due to mature in June 2023 (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
75
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 9, in June 2022, Teradata entered into an interest rate swap to hedge
approximately 90% (or $450 million as of December 31, 2022) 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. On September 21, 2023, the Credit Agreement was 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 December 31, 2023 and 2022, the Company had no borrowings outstanding under the Credit Facility, leaving
$400 million in additional borrowing capacity available under the Credit Facility. The Company was in compliance
with all covenants as of December 31, 2023 and 2022.
The term loan principal outstanding was $500 million at December 31, 2023 and $500 million at December 31,
2022. As disclosed in Note 9, Teradata entered into an interest rate swap to hedge the floating interest rate of the
term loan. As a result of the swap, Teradata’s fixed rate on approximately 90% of the term loan equals 3.25%
excluding the applicable leverage-based margin as defined in the term loan agreement. As of December 31, 2023
and 2022, the all-in fixed rates are 4.44% and 4.24%, respectively. Deferred issuance costs are amortized over the
five-year term of the Term Loan to interest expense. As of December 31, 2023 the remaining unamortized deferred
issuance costs are approximately $1 million.
Annual contractual maturities of outstanding principal on the Term Loan at December 31, 2023, are as follows:
In millions
2024
2025
2026
2027
Total
Principal payments
19
25
25
431
500
$
The Term Loan is recognized on the Company’s balance sheet at its unpaid principal balance and is not subject to
fair value measurement. However, given that the loan carries a variable rate, the Company estimates that the unpaid
principal balance of the Term Loan would approximate its fair value. If measured at fair value in the financial
statements, the Company’s Term Loan would be classified as Level 2 in the fair value hierarchy.
Note 13 Leases
Lessee
The Company leases property and equipment under finance and operating leases. The Company's operating leases
primarily consist of automobiles in certain countries and real estate, including office, storage and parking spaces.
The duration of these leases range from 1 to 4 years. The Company's finance leases primarily consist of equipment
financed for the purpose of delivering services to our customers. For leases with terms greater than 12 months, the
Company recorded the related asset and obligation at the present value of lease payments over the term. Many of
our leases include variable rental escalation clauses which are recognized when incurred. Some of our leases also
include renewal options and/or termination options that are factored into the determination of lease payments and
lease terms when it is reasonably certain that the Company will exercise these options. Lease agreements do not
76
contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12
months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a
straight-line basis over the lease term. For real estate leases beginning in 2019 and later, we account for lease
components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease
components (e.g., common-area maintenance costs). For automobile leases we account for lease and non-lease
components together.
When available, the Company uses the rate implicit in the lease to discount lease payments to present value.
However, real estate leases do not typically provide a readily determinable implicit rate. Therefore, the Company
must estimate the incremental borrowing rate to discount the lease payments based on information available at lease
commencement. The incremental borrowing rate used in the calculation of the lease liability is based on the secured
rate associated with financed lease obligations for each location of leased property.
The table below presents the lease-related assets and liabilities recorded on the balance sheet at December 31:
In millions, except weighted average calculations Classification on the Balance Sheet
Assets
2023
2022
Operating lease assets
Finance lease assets
Total lease assets
Liabilities
Current
Operating
Finance
Non current
Operating
Finance
Total lease liabilities
Weighted-average remaining lease term
Operating leases
Finance leases
Weighted-average discount rate
Operating leases(1)
Finance leases
Right of use assets - operating lease, net
Property and equipment, net
Current portion of operating lease
liability
Current portion of finance lease liability
Operating lease liability
Finance lease liability
$
$
$
$
9
156
165
6
66
6
63
141
$
$
$
$
13
149
162
8
67
10
54
139
2.16 years
2.06 years
2.37 years
2.03 years
5.00 %
6.28 %
5.00 %
4.97 %
(1) Upon adoption of the new lease standard, discount rates used for existing leases were established based on the Company's
incremental borrowing rate at January 1, 2019. For new leases entered after January 1, 2019, the discount rate was determined
based on the Company's incremental borrowing rate at lease commencement.
Lessee Costs
The table below presents certain information related to the lease costs for finance and operating leases recognized in
the Company's consolidated statements of income for the years ended December 31:
In millions
Finance lease cost
Depreciation of leased assets
Interest of lease liabilities
Operating lease cost
Sub-lease income from real estate properties owned and leased
Total lease cost
2023
2022
2021
$
$
68
7
7
(5)
77
$
$
69
5
12
(5)
81
$
$
78
6
17
(5)
96
77
Other Information
The table below presents supplemental cash flow information related to cash paid for amounts included in the
measurement of lease liabilities for the year ended December 31:
In millions
Operating cash flows for operating leases
Operating cash flows for finance leases
Financing cash flows for finance leases
Undiscounted Cash Flows
2023
2022
$
$
$
9 $
7 $
82 $
15
5
86
The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining
years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet at December 31,
2023:
In millions
2024
2025
2026
2027
2028
Thereafter
Total minimum lease payments
Less: amount of lease payments representing interest
Present value of future minimum lease payments
Less: current obligations under leases
Long-term lease obligations
Operating
Leases
Finance
Leases
$
$
8
4
2
—
—
—
14
(2)
12
(6)
6
$
$
72
50
16
—
—
—
138
(9)
129
(66)
63
The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating
lease obligations as of December 31, 2022:
In millions
2023
2024
2025
2026
2027
Thereafter
Total minimum lease payments
Less: amount of lease payments representing interest
Present value of future minimum lease payments
Less: current obligations under leases
Long-term lease obligations
Lessor
Operating
Leases
Finance
Leases
$
$
11
8
3
1
—
—
23
(5)
18
(8)
$
10
$
72
39
17
—
—
—
128
(7)
121
(67)
54
The Company receives rental revenue for leasing hardware offerings to its customers. For our hardware rental
offering, the Company owns or leases the hardware and may or may not provide managed services. Leases
sometimes include options to renew but typically do not include lessee purchase options. The revenue for these
operating leases is generally recognized straight-line over the term of the contract and is included within the
recurring revenue caption on the consolidated statements of income. Equipment used for this revenue is reported
within Property and equipment, net on the consolidated balance sheet.
78
The following table includes rental revenue for the years ended December 31:
In millions
Rental revenue*
*Rental revenue includes hardware maintenance.
2023
2022
2021
$
216 $
191 $
162
The following table includes estimated rental revenue expected to be recognized in the future based on executed
contracts at December 31, 2023:
In millions
2024
2025
2026-27
Total
Rental Revenue
180
110
66
356
$
$
Note 14 Segment, Other Supplemental Information and Concentrations
Teradata 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 our 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.
79
The following table presents segment revenue and segment gross profit for the Company for the years ended
December 31:
In millions
Segment revenue
Americas
EMEA
APJ
Total revenue
Segment gross profit
Americas
EMEA
APJ
Total segment gross profit
Stock-based compensation expense
Acquisition, integration and reorganization-related costs
Total gross profit
Selling, general and administrative expenses
Research and development expenses
Total income from operations
2023
2022
2021
$
$
1,089 $
475
269
1,833
689
295
149
1,133
17
1
1,115
635
294
186 $
1,038 $
465
292
1,795
643
285
177
1,105
16
8
1,081
650
313
118 $
1,044
543
330
1,917
690
337
188
1,215
18
11
1,186
646
309
231
Certain items, including reorganization-related costs, were excluded from segment gross profit to conform to the
way the Company manages and reviews the results by segment.
The following table presents revenues by geographic area for the years ended December 31:
In millions
United States
Americas (excluding United States)
EMEA
APJ
Total revenue
2023
2022
2021
$
973 $
914 $
116
475
269
124
465
292
922
122
543
330
$ 1,833 $ 1,795 $ 1,917
The following table presents property and equipment, net by geographic area at December 31:
In millions
United States
Americas (excluding United States)
EMEA
APJ
Property and equipment, net
2023
2022
$
$
170 $
11
38
20
239 $
172
15
37
20
244
Concentrations. No single customer accounts for more than 10% of the Company's revenue for any period
presented. As of December 31, 2023, the Company is not aware of any significant concentration of business
transacted with a particular customer that could, if suddenly eliminated, have a material adverse effect on the
Company’s operations. The Company's hardware components are assembled primarily by Flex. In addition, the
Company utilizes preferred supplier relationships to better ensure more consistent quality, cost, and delivery. There
can be no assurances that a disruption in production at Flex or at a supplier would not have a material adverse effect
on the Company's operations. In addition, a significant change in the forecasts to any of these preferred suppliers
could result in purchase obligations or components that may be in excess of demand.
80
Note 15 Accumulated Other Comprehensive (Loss) Income
The following table provides information on changes in accumulated other comprehensive (loss) income, net of tax
("AOCI"), for the years ended December 31:
In millions
Balance as of December 31, 2020
Derivatives
$
Other comprehensive income (loss) before reclassifications
Amounts reclassified from AOCI
Net other comprehensive income (loss)
Balance as of December 31, 2021
Other comprehensive income (loss) before reclassifications
Amounts reclassified from AOCI
Net other comprehensive income (loss)
Balance as of December 31, 2022
Other comprehensive (loss) income before reclassifications
Amounts reclassified from AOCI
Net other comprehensive (loss) income
Balance as of December 31, 2023
$
$
$
Defined
benefit
plans
Foreign
currency
translation
adjustments
Total
AOCI
(68) $
(1)
7
6
(62) $
25
6
31
(31) $
(12)
5
(7)
(38) $
(54) $
(12)
—
(12)
(66) $
(31)
—
(31)
(97) $
1
—
1
(96) $
(143)
(2)
7
5
(138)
13
6
19
(119)
(15)
5
(10)
(129)
(21) $
11
—
11
(10) $
19
—
19
9 $
(4)
—
(4)
5 $
The following table presents the impact and respective location of AOCI reclassifications in the Consolidated
Statements of Income for the years ended December 31:
In millions
AOCI Component
Other expense
Tax portion
Total reclassifications
Location
Other expense
Income tax benefit
Net loss (income)
2023
2022
2021
$
$
(7) $
2
(5) $
(9) $
3
(6) $
(11)
4
(7)
Further information on the Company’s defined benefit plans is included in Note 8.
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Teradata maintains a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of
the Securities Exchange Act of 1934 (the "Exchange Act")) that are designed to provide reasonable assurance that
information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to management, including, as appropriate, the chief executive officer and the
chief financial officer, to allow timely decisions regarding required disclosures. In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our
disclosure controls and procedures were effective to provide reasonable assurance as of December 31, 2023.
81
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting
as such term is defined in Rule 13a-15(f) under the Exchange Act. Teradata’s internal control over financial
reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the Company are being made only in accordance with authorizations of
management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree or compliance with the policies or
procedures may deteriorate.
Management assessed the effectiveness of Teradata’s internal control over financial reporting as of the end of the
period covered by this report. In making this assessment, management used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control – Integrated Framework
(2013). Based on its assessment and those criteria, management concluded that Teradata’s internal control over
financial reporting was effective as of December 31, 2023.
Teradata’s independent registered public accounting firm has issued their report on the effectiveness of Teradata’s
internal control over financial reporting as of December 31, 2023, which appears in this Annual Report.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the last fiscal
quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
Item 9B. OTHER INFORMATION
During the three months ended December 31, 2023, other than the director shown in the table below, no other director or officer
of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each
term is defined in Item 408(a) of Regulation S-K.
Name (Title)
Action
Date
Trading Arrangement
Non-Rule
Rule
10b5-1**
10b5-1*
Total Shares to be
Sold
Expiration
Date
Timothy C. K. Chou
(Director)
Adopt
11/30/2023
x
Up to 6,356
12/31/2024
* Intended to satisfy the affirmative defense of Rule 10b5-1(c).
**Not intended to satisfy the affirmative defense of Rule 10b5-1(c).
Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
82
PART III
Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information required to be included in Part III Item 10 is set forth under the captions "Election of Directors," "Our
Corporate Governance," and "Committees of the Board" in Teradata’s Notice of Annual Meeting of Stockholders
and Proxy Statement to be filed with the SEC within 120 days after the end of our fiscal 2023 year (the "2024 Proxy
Statement") and is incorporated herein by reference. The information under the heading "Executive Officers of the
Registrant" in Part I Item 1 of this Annual Report on Form 10-K is also incorporated by reference in this section.
Item 11.
EXECUTIVE COMPENSATION
Information required to be included in Part III Item 11 is set forth under the captions "Director Compensation,"
"Compensation Discussion and Analysis," "Compensation Tables," "Potential Payments Upon Termination or
Change in Control," "Compensation and People Committee" and "Board Compensation and People Committee
Report on Executive Compensation" in Teradata’s 2024 Proxy Statement and incorporated herein by reference.
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Information required to be included in Part III Item 12 is set forth under the caption "Stock Ownership" and the
caption "Current Equity Compensation Plan Information" under Item 3 of Teradata’s 2024 Proxy Statement and
incorporated herein by reference.
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Information required to be included in Part III Item 13 is set forth under the captions "Related Person Transactions"
and "Board Independence and Related Transactions" in Teradata’s 2024 Proxy Statement and incorporated herein
by reference.
Item 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required to be included in Part III Item 14 is set forth under the caption "Fees Paid to Independent
Registered Public Accounting Firm" in Teradata’s 2024 Proxy Statement and incorporated herein by reference.
83
Item 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Index
PART IV
1. Financial Statements: The consolidated financial statements of the Company and the Report of Independent
Registered Public Accounting Firm as set forth in Part II, Item 8 of this Annual Report:
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022
and 2021
Consolidated Balance Sheets at December 31, 2023 and 2022
Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31,
2023, 2022 and 2021
Notes to Consolidated Financial Statements
44
47
48
49
50
51
52
2. Financial Statement Schedule: Financial Statement Schedule II – Valuation and Qualifying Accounts is included
in this Annual Report on page 90. All other schedules are not required under the related instructions or are not
applicable.
Exhibits: See Index of Exhibits below for a listing of all exhibits to this Annual Report.
(b) Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits
hereto.
Reference
Number per
Item
601 of
Regulation S-K
3.1
3.2
4.1
4.2
10.1
10.2*
Description
Amended and Restated Certificate of Incorporation of Teradata Corporation as amended and
restated on September 24, 2007 (incorporated by reference to Exhibit 3.1 to the Current
Report on Form 8-K dated September 25, 2007 (SEC file number 001-33458)).
Amended and Restated By-Laws of Teradata Corporation, as amended and restated on
October 31, 2022 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-
K dated November 1, 2022).
Common Stock Certificate of Teradata Corporation (incorporated by reference to Exhibit 4.1
to the Quarterly Report on Form 10-Q dated November 13, 2007 (SEC file number
001-33458)).
Description of the Registrant’s Securities (incorporated by reference to Exhibit 4.2 to the
Annual Report on Form 10-K dated February 28, 2020).
Form of Technology Agreement (incorporated by reference to Exhibit 10.6 to the
Registration Statement on Form 10).
Teradata Employee Stock Purchase Plan (Amended and Restated as of February 24, 2023),
(incorporated by reference to Appendix B to Teradata Corporation’s 2023 Proxy Statement
on Schedule 14A dated March 22, 2023 (SEC File No. 001-33458).
84
10.3*
10.4*
10.5*
10.6
10.7*
10.8*
10.8.1*
10.8.2*
10.8.3*
10.8.4*
10.8.5*
10.8.6*
10.8.7*
Teradata Management Incentive Plan, as amended and restated on February 20, 2018
(incorporated by reference to Exhibit 10.3 to the Annual Report on Form 10-K dated
February 23, 2018).
Teradata Change in Control Severance Plan, as amended and restated on July 18, 2018
(incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated
November 5, 2018).
Teradata Executive Severance Plan, effective as of February 1, 2017 (amended and restated
as of May 8, 2023), (incorporated by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q dated November 7, 2023).
Teradata Corporation Director Compensation Program, as amended and restated and effective
on April 17, 2018 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form
10-Q dated August 6, 2018 (SEC file number 001-33458)).
Amended and Restated Teradata Corporation 2007 Stock Incentive Plan, dated February 3,
2009 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K dated
February 9, 2009 (SEC file number 001-33458)).
Teradata 2012 Stock Incentive Plan (Amended and Restated as of March 1, 2021)
(incorporated by reference from Appendix A to the Proxy Statement of Teradata Corporation
filed with the SEC on March 18, 2021).
Form of Stock Option Agreement Under the Teradata 2012 Stock Incentive Plan, approved
on November 28, 2016 (incorporated by reference to Exhibit 10.10.23 to the Annual Report
on Form 10-K dated February 27, 2017).
Form of Director Restricted Share Unit Grant Statement under the Teradata 2012 Stock
Incentive Plan, approved on April 26, 2016 (incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K dated April 29, 2016).
Form of Restricted Share Unit Agreement Under the Teradata 2012 Stock Incentive Plan,
approved on February 4, 2019 (incorporated by reference to Exhibit 10.29 to the Annual
Report, as amended, on Form 10-K/A dated March 1, 2019).
Form of Restricted Share Unit Agreement For Non-U.S. Employees Under the Teradata 2012
Stock Incentive Plan, approved on February 4, 2019 (incorporated by reference to Exhibit
10.30 to the Annual Report, as amended, on Form 10-K/A dated March 1, 2019).
Form of Restricted Share Unit Agreement Under the Teradata 2012 Stock Incentive Plan,
approved on February 27, 2020 (incorporated by reference to Exhibit 10.1 to the Quarterly
Report on Form 10-Q dated May 11, 2020).
Form of Restricted Share Unit Agreement for Non-U.S. Employees Under the Teradata 2012
Stock Incentive Plan, approved on February 27, 2020 (incorporated by reference to Exhibit
10.2 to the Quarterly Report on Form 10-Q dated May 11, 2020).
Form of Performance-Based Restricted Share Unit Agreement Under the Teradata 2012
Stock Incentive Plan, approved on February 27, 2020 (incorporated by reference to Exhibit
10.1 to the Quarterly Report on Form 10-Q dated May 11, 2020).
85
10.8.8*
10.8.9*
10.8.10*
10.8.11*
10.9*
10.9.1*
10.9.2*
10.9.3*
10.9.4*
10.9.5*
10.9.6*
10.9.7*
10.9.8*
Form of Restricted Share Unit Agreement for Non-U.S. Employees Under the Teradata 2012
Stock Incentive Plan, approved on February 27, 2020 (incorporated by reference to Exhibit
10.2 to the Quarterly Report on Form 10-Q dated May 11, 2020).
Form of Restricted Share Unit Agreement Under the Teradata 2012 Stock Incentive Plan,
approved on February 26, 2021 (incorporated by reference to Exhibit 10.2 to the Quarterly
Report on Form 10-Q dated May 7, 2021).
Form of Restricted Share Unit Agreement for Non-U.S. Employees Under the Teradata 2012
Stock Incentive Plan, approved on February 26, 2021 (incorporated by reference to Exhibit
10.3 to the Quarterly Report on Form 10-Q dated May 7, 2021).
Form of Performance-Based Restricted Share Unit Agreement Under the Teradata 2012
Stock Incentive Plan, approved on February 26, 2021 (incorporated by reference to Exhibit
10.4 to the Quarterly Report on Form 10-Q dated May 7, 2021).
Teradata 2023 Stock Incentive Plan Incorporated by reference to Appendix A to Teradata
Corporation’s 2023 Proxy Statement on Schedule 14A dated March 22, 2023 (SEC File No.
001-33458).
Form of Stock Option Agreement under the Teradata 2023 Stock Incentive Plan, approved on
May 8, 2023 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K
dated May 12, 2023).
Form of Stock Option Agreement for Non-U.S. Employees under the Teradata 2023 Stock
Incentive Plan, approved on May 8, 2023 (incorporated by reference to Exhibit 10.3 to the
Current Report on Form 8-K dated May 12, 2023).
Form of Restricted Share Unit Agreement under the Teradata 2023 Stock Incentive Plan,
approved on May 8, 2023 (incorporated by reference to Exhibit 10.4 to the Current Report on
Form 8-K dated May 12, 2023).
Form of Restricted Share Unit Agreement for Non-U.S. Employees under the Teradata 2023
Stock Incentive Plan, approved on May 8, 2023 (incorporated by reference to Exhibit 10.5 to
the Current Report on Form 8-K dated May 12, 2023).
Form of Performance-Based Restricted Share Unit Agreement under the Teradata 2023 Stock
Incentive Plan, approved on May 8, 2023 (incorporated by reference to Exhibit 10.6 to the
Current Report on Form 8-K dated May 12, 2023).
Form of Director Restricted Share Unit Grant Statement under the Teradata 2023 Stock
Incentive Plan, approved on May 8, 2023 (incorporated by reference to Exhibit 10.7 to the
Current Report on Form 8-K dated May 12, 2023).
Form of Restricted Share Unit Agreement (Cliff Vesting) under the Teradata 2023 Stock
Incentive Plan, approved on June 29, 2023 (filed herewith).
Form of Restricted Share Unit Agreement for Non-U.S. Employees (Cliff Vesting) under the
Teradata 2023 Stock Incentive Plan, approved on June 29, 2023 (filed herewith).
86
10.10
10.10.1
Purchase and Manufacturing Services Agreement, effective April 27, 1998, by and between
NCR Corporation and Solectron Corporation, now known as Flex Ltd. (filed as Exhibit 10.1
to NCR Corporation’s Form 10-Q (SEC File No. 001-00395) for the fiscal quarter ended
June 30, 1998 and incorporated herein by reference).
Amendment No. 1 to Purchase and Manufacturing Services Agreement, dated January 29,
2000, between NCR Corporation and Solectron Corporation, now known as Flex Ltd.
(incorporated by reference to Exhibit 10.19 to the Registration Statement on Form 10).
10.11*
Offer letter between Kathy Cullen-Cote and the Company dated June 21, 2019 (incorporated
by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q dated August 5, 2019).
10.11.1*
Amendment to Offer Letter between Kathy Cullen-Cote and the Company dated July 30,
2021 (incorporated by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q dated
August 6, 2021).
10.12*
Offer letter from Teradata Corporation to Stephen McMillan dated May 5, 2020 (incorporated
by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated August 10, 2020).
10.12.1*
10.12.2*
10.12.3*
Amendment to Offer Letter between Stephen McMillan and the Company dated April 29,
2022 (incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated
May 6, 2022).
Restricted Share Unit Agreement (Graded Vesting) Inducement Grant to new CEO, approved
on May 5, 2020 (incorporated by reference to Exhibit 4.7 to the Registration Statement on
Form S-8 dated June 2, 2020 (SEC file number 001-33458)).
Performance-Based Restricted Share Unit Agreement (2020-2022 Performance Period
Award) Inducement Grant to new CEO, approved on May 5, 2020 (incorporated by reference
to Exhibit 4.5 to the Registration Statement on Form S-8 dated June 2, 2020 (SEC file
number 001-33458)).
10.12.4*
Executive Severance Plan Participation Agreement to new CEO, approved on May 5, 2020
(incorporated by reference to Exhibit 10.5 to the Quarterly Report on Form 10-Q dated
August 10, 2020).
10.13*
10.14*
10.15*
10.16*
Offer Letter from Teradata Corporation to Hillary Ashton dated August 25, 2020
(incorporated by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated
November 6, 2020).
Offer letter from Teradata Corporation to Margaret Treese dated September 28, 2020.
(incorporated by reference to Exhibit 10.18 to the Annual Report on Form 10-K dated
February 26, 2021).
Teradata New Employee Stock Inducement Plan (incorporated by reference to Exhibit 10.3 to
the Current Report on Form 8-K dated June 2, 2020 (SEC file number 001-33458)).
Offer Letter from Teradata Corporation to Todd Cione dated December 4, 2020 (incorporated
by reference to Exhibit 10.23 to the Annual Report on Form 10-K dated February 26, 2021).
87
10.16.1*
Form of Restricted Share Unit Agreement (Special New Hire Grant) Under the Teradata New
Employee Stock Inducement Plan to new Chief Revenue Officer (incorporated by reference
to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated May 7, 2021).
10.17*
Offer Letter from Teradata Corporation to Claire Bramley dated May 18, 2021 (incorporated
by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q dated August 6, 2021).
10.17.1*
10.17.2*
10.18*
10.18.1*
10.19
10.20
Executive Severance Plan Participation Agreement to new CFO (incorporated by reference to
Exhibit 10.3 to the Quarterly Report on Form 10-Q dated August 6, 2021).
Restricted Share Unit Agreement (Graded Vesting New Hire Award) Inducement Grant to
new CFO (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q
dated August 6, 2021).
Offer Letter from Teradata Corporation to Jacqueline Woods dated November 8, 2021
(incorporated by reference to Exhibit 10.20 to the Annual Report on Form 10-K dated
February 25, 2022).
Form of Restricted Share Unit Agreement (Graded Vesting New Hire Award) Under the
Teradata 2012 Stock Incentive Plan to new Chief Marketing Officer (incorporated by
reference to Exhibit 10.20.1 to the Annual Report on Form 10-K dated February 25, 2022).
Offer Letter from Teradata Corporation to Michael Hutchinson dated December 22, 2021
(incorporated by reference to Exhibit 10.21 to the Annual Report on Form 10-K dated
February 25, 2022).
Credit Agreement dated as of June 28, 2022 among Teradata Corporation, the lenders party
thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, as amended and restated
effective as of September 21, 2023 (incorporated by reference to Exhibit 10.1 to the Quarterly
Report on Form 10-Q dated November 7, 2023).
10.21
Teradata Corporation Clawback Policy, effective as of October 2, 2023 (filed herewith).
21
23.1
31.1
31.2
32
Subsidiaries of Teradata Corporation.
Consent of Independent Registered Public Accounting Firm.
Certification pursuant to Rule 13a-14(a) dated February 23, 2024.
Certification pursuant to Rule 13a-14(a) dated February 23, 2024.
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 dated February 23, 2024.
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because
XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
88
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
Management contracts or compensatory plans, contracts or arrangements.
89
TERADATA CORPORATION
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(In millions)
Column A
Column B
Column C
Column D
Column E
Description
Allowance for doubtful accounts
Year ended December 31, 2023
Year ended December 31, 2022
Year ended December 31, 2021
Deferred tax valuation allowance
Year ended December 31, 2023
Year ended December 31, 2022
Year ended December 31, 2021
Balance at
Beginning
of Period
Provision/
reversals
Charged
to Costs &
Expenses
Charged
to Other
Accounts
Deductions
Balance
at End of
Period
$
$
$
$
$
$
12 $
9 $
14 $
69 $
58 $
51 $
1 $
5 $
(1) $
21 $
11 $
7 $
— $
— $
— $
— $
— $
— $
(1) $
(2) $
(4) $
— $
— $
— $
12
12
9
90
69
58
90
Item 16.
FORM 10-K SUMMARY
None.
91
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: February 23, 2024
By:
TERADATA CORPORATION
/s/ Claire Bramley
Claire Bramley
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the date indicated.
Signature
Title
/s/ Stephen McMillan
Stephen McMillan
/s/ Claire Bramley
Claire Bramley
/s/ Michael P. Gianoni
Michael P. Gianoni
/s/ Lisa R. Bacus
Lisa R. Bacus
/s/ Timothy C.K. Chou
Timothy C.K. Chou
/s/ Daniel R. Fishback
Daniel R. Fishback
/s/ Todd E. McElhatton
Todd E. McElhatton
/s/ Kimberly K. Nelson
Kimberly K. Nelson
/s/ Joanne B. Olsen
Joanne B. Olsen
/s/ John G. Schwarz
John G. Schwarz
President and Chief Executive Officer and Director
Chief Financial Officer
(Principal Financial and Accounting Officer)
Chairman of the Board
Director
Director
Director
Director
Director
Director
Director
92
Corporate Information
Annual Meeting of Stockholders
Board of Directors
Leadership
Stephen McMillan
President and Chief Executive
Officer
Hillary H. Ashton
Chief Product Officer
Claire Bramley
Chief Financial Officer
Todd M. Cione
Chief Revenue Officer
Kathleen R. Cullen-Cote
Chief People Officer
Michael D. Hutchinson
Chief Customer Officer
Margaret A. Treese
Chief Legal Officer
Jacqueline D. Woods
Chief Marketing Officer
Stockholders are invited to attend Teradata’s Annual Meeting
of Stockholders at 8:00 a.m. Pacific Time on Tuesday, May 14,
2024. The virtual meeting will be held at:
www.virtualshareholdermeeting.com/TDC2024
Stockholder Account Inquiries
Information regarding “registered” stockholder accounts is
available from Teradata’s stock transfer agent, Computershare
Shareholder Services, at www-us.computershare.com/investor
or by contacting:
Teradata Corporation
c/o Computershare Shareholder Services
P.O. Box 43078
Providence, RI 02940
E-mail: web.queries@computershare.com
Phone: 888-730-8825 (U.S.)
+1 781-575-4592 (International)
TDD for the hearing impaired:
800-952-9245 (U.S.)
+1 781-575-4592 (International)
Company Information
Information regarding Teradata’s filings with the U.S. Securities
and Exchange Commission (“SEC”), annual report on Form
10-K, quarterly reports, and other financial information can be
accessed at investor.teradata.com, or obtained without charge
by contacting:
Teradata Investor Relations
17095 Via Del Campo
San Diego, CA 92127
Phone: 858-485-2088
E-mail: investor.relations@teradata.com
CEO and CFO Certifications
In 2023, the Company’s CEO provided the New York Stock
Exchange (“NYSE”) with the annual CEO certification regarding
Teradata’s compliance with the NYSE’s corporate governance
listing standards. In addition, the Company’s CEO and CFO filed
with the SEC all required certifications regarding the quality of
Teradata’s public disclosures in its fiscal 2023 periodic reports.
Michael P. Gianoni
Chairman, Teradata
Corporation
President and Chief Executive
Officer
Blackbaud, Inc.
Lisa R. Bacus
Retired Executive Vice
President and
Chief Marketing Officer
Cigna Corporation
Timothy C.K. Chou
Former President
Oracle on Demand, a division
of Oracle Corporation
Daniel R. Fishback
Former Co-Chief Executive
Officer and Chairman of the
Board
UserZoom Inc.
Todd E. McElhatton
Chief Financial Officer
Zuora, Inc.
Stephen McMillan
President and Chief Executive
Officer
Teradata Corporation
Kimberly K. Nelson
EVP and Chief Financial
Officer
SPS Commerce, Inc.
Joanne B. Olsen
Former EVP, Cloud Services
and Support, Oracle
Corporation
John G. Schwarz
Co-Founder and Chairman of
the Board
Visier Inc.
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Teradata Corporation
17095 Via Del Campo
San Diego, CA 92127
www.teradata.com
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