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TERADATA CORP

TERADATA CORPTDCEarnings & Financial Report

NYSE · Information Technology · Services-Prepackaged Software

Teradata is a global enterprise software and data analytics provider offering cloud-native data platforms, advanced analytics tools, and professional consulting services. It primarily serves large enterprise clients across finance, retail, telecommunications and healthcare sectors, helping organizations leverage big data to drive data-driven business decisions and operational optimization.

What changed in TERADATA CORP's 10-K — 2022 vs 2023

Top changes in TERADATA CORP's 2023 10-K

326 paragraphs added · 317 removed · 231 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

79 edited+32 added−29 removed20 unchanged
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 technology 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.
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.
We also 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.
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 our data fabric, we enable analytics and data integration across public clouds for a true multi-cloud experience that large enterprises are investing in to leverage diverse capabilities across multiple ecosystems and mitigate risk.
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.
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 2023 Annual Meeting of Stockholders.
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.
We believe our focus on 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 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.
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, 2022, we operated 44 facilities in 31 countries throughout the world.
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.
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. 8 Table of Contents • Cloud Service Providers: Teradata has established partnerships with the top three global public cloud service providers: AWS, Microsoft Azure, and Google Cloud.
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.
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: • digital identity management, • financial visibility, • resilient supply chains, • fraud prevention, • customer acquisition and retention, • artificial intelligence and machine learning (AI/ML), • regulatory compliance, and • operational resilience.
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.
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. 9 Table of Contents Intellectual Property and Technology. We own 612 patents in the United States.
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.
With companies pivoting to invest in the cloud, we believe it is essential for these enterprises to be able to integrate ecosystems across multi-cloud and on-premises environments, simplify access to data wherever it resides, and accommodate analytics at massive scale and speed to derive significant business value.
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.
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.
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 Table of Contents Michael Hutchinson.
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 data and analytic solutions and to provide comprehensive capabilities that support the customer’s analytic ecosystem. • Systems Integrators and Consultants: We also work with a range of systems integrators and consultants who engage in the design, implementation, and integration of data warehouse and analytic solutions and analytic applications for our joint customers.
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.
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/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 13 Table of Contents
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
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. from December 2018 until June 2021.
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.
We support our sales force with marketing and training programs that are designed to: • grow awareness of Teradata as a multi-cloud leader, highlighting our technology leadership and innovation, differentiation, cloud, and analytics 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: Teradata VantageCloud, Teradata Vantage, and ClearScape Analytics, as well as related services; • educate and enable the sales force with the skills and knowledge to deliver our value proposition; and • provide a robust set of tools for use by our sales teams.
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 teams are extending Teradata technologies and innovations: the Teradata Vantage platform, including Teradata VantageCloud, and ClearScape Analytics, 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, our cloud-native analytics and data offering.
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.
We own our San Diego complex, while all other facilities are leased. Information About Our Executive Officers. The following table and biographies sets forth information as of February 24, 2023 regarding the individuals who are serving as our executive officers.
We own our San Diego complex, while all other facilities are leased. 12 Table of Contents 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.
Prior to joining F5, from September 2015 until October 2017, he was Senior Vice President, Customer Success and Managed Cloud Services at Oracle, 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.
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.
Name Age Position(s) Stephen McMillan 52 President and Chief Executive Officer Hillary Ashton 51 Chief Product Officer Claire Bramley 45 Chief Financial Officer Todd Cione 53 Chief Revenue Officer Kathleen Cullen-Cote 58 Chief People Officer Michael Hutchinson 57 Chief Customer Officer Margaret Treese 56 Chief Legal Officer Jacqueline Woods 61 Chief Marketing Officer Stephen McMillan .
Name Age Position(s) Stephen McMillan 53 President and Chief Executive Officer Hillary Ashton 52 Chief Product Officer Claire Bramley 46 Chief Financial Officer Todd Cione 54 Chief Revenue Officer Kathleen Cullen-Cote 59 Chief People Officer Michael Hutchinson 58 Chief Customer Officer Margaret Treese 57 Chief Legal Officer Jacqueline Woods 62 Chief Marketing Officer Stephen McMillan .
We believe that the principal competitive factors for our products and services include: data and analytics experience; business outcome delivery; multi-cloud offerings and experience; total cost of ownership; customer references; technology leadership; product quality; performance, scalability, availability, and manageability; partner relationships; support and consulting services capabilities; management of technologies in a complex analytical ecosystem; and industry knowledge.
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.
Hutchinson served as the Senior Vice President and Chief Customer Officer at Verint from August 2020 to May 2021 and as its Senior Vice President, Global Professional Services and Support from April 2018 until August 2020.
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.
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 tools that enable employees to manage their careers.
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.
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., from the time he joined the company in July 2017 until December 2020.
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.
As a result, our revenue from sales is ratable 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 an optional burst of consumption for seasonal activity.
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.
We work to continuously strengthen these partnerships so that Teradata can provide companies around the globe access to Teradata VantageCloud, our offering in the public cloud. • Alliance Partners: Teradata has a focus on working collaboratively with independent software vendors in several areas, including AI/ML, tools, data and application integration solutions, data mining, analytics, business intelligence, and specific analytic and industry solutions.
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.
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 and as Director, Customer Intelligence Solutions at SAS from 2003 to 2014. Claire Bramley.
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.
We believe that our technology innovations of the Teradata Vantage platform, including Teradata VantageCloud, and ClearScape Analytics are highly differentiated, deliver substantive scale and integration, and are uniquely positioned to provide significant business value to our customers.
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.
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, promoting diversity, equity and inclusion, being a company that does not tolerate racism, supporting communities where we live and work, protecting data privacy, and acting ethically in everything we do.
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 .
Woods was with IBM Corporation serving as the company's Chief Marketing Officer of IBM Global Partner Ecosystem Division from 2017 until 2019, the Chief Marketing Officer of IBM Global Financing from 2015 until 2017, and held other executive roles at IBM between 2010-2015. Ms. Woods also serves on the Board of Directors of Winnebago Industries, Inc.
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.
As customers increasingly grow their cloud-based analytic ecosystems, our strategy supports existing customers on that journey with the fastest path to migration that is enabled through license portability, the same software enabled whether on-premises or in the cloud, and a data fabric that connects all environments, as well as data and workload migration tools and services.
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.
From 1990-2018, he held several positions with Oracle Corporation 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 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.
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.
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.
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.
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.
As data volumes grow exponentially along with increasing sources of data, we see these enterprises increasingly move to cloud-based analytic and data technologies.
As data volumes grow exponentially along with increasing sources of data, organizations are expected to increasingly move to cloud-based analytic and data technologies.
For the calendar year ended December 31, 2022, we had total revenues of $1.795 billion , of which approximately 58% was derived from the Americas region (North America and Latin America) and 42% from the International regions (Europe, Middle East, Africa, Asia Pacific and Japan).
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).
Our differentiated approach spans deployments in any of the top public cloud offerings including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, as well as private cloud platform instances, on- premises, or hybrid environments.
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.
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, 7 Table of Contents and large and varied groups of users.
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.
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 of PTC’s Augmented Reality (AR) business unit from July 2018 until November 2019.
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.
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.
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.
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.
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.
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.
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.
We support our employees’ giving and volunteer efforts by providing matching donations for employee contributions to qualified not-for-profit 11 Table of Contents agencies, project grants, Annual Days of Caring, and supporting communities where we have employee populations.
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.
In this regard, our strategic objectives are to: • further strengthen our multi-cloud data platform offering, with our next generation cloud-native capabilities through Teradata VantageCloud Lake and Teradata VantageCloud Enterprise; • establish Teradata’s position as a cloud-native platform with leading advanced analytics capabilities; • enable end-to-end business outcomes through a seamless user experience; • expand our product capabilities through deeper integration with cloud ecosystems; • focus on partner enablement to drive solution execution on our open data platform; • accelerate our cloud-first strategy by supporting our customers on their cloud migration journeys; • expand customer footprints by onboarding new workloads in existing and new business buying centers; • 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, expanding customer success programs, and strengthening our partner relationships; and • deliver operational excellence through efficient cost management and execution. 6 Table of Contents Our analytics and data offering is a scalable, secure, highly concurrent and resilient data platform that is designed to help companies solve complex data challenges at scale.
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.
We have greater than 80% of our employees in customer-facing and/or revenue-driving roles (including sales, marketing, consulting, customer success, product engineering, and customer services).
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).
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. Prior to that, Ms. Bramley served as HP's Finance Director of Worldwide Personal Systems Financial Planning & Analysis from September 2011 to December 2012. Ms.
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 .
Our open platform, Teradata Vantage™, comprises deployment options that address the full span of analytics and data needs of: • Teradata VantageCloud, including Teradata VantageCloud Lake, built on our cloud-native lake architecture, Teradata VantageCloud Enterprise for IT-managed enterprise workloads, • ClearScape Analytics™, our broad analytics capabilities with in-database functionality, available across all of our deployment options, and • Teradata VantageCore, our on-premises data and analytics offering, which seamlessly integrates with our cloud offerings to enable hybrid environments that large enterprises currently demand.
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.
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. Prior to joining Teradata, from 1995 to 2007, Ms.
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.
These strategies include our global website, digital marketing, demos and trials of our software, webinars, conferences and events, public and media relations, social media, an extensive 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, while driving predictable growth in annual recurring revenue.
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.
These factors all contribute to the increased complexity, cost, and risk associated with managing data and analytic environments. This is particularly true for our target market of global enterprise companies, and we believe that these companies require tightly integrated solutions that can accommodate significant scale and speed.
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.
With a focus on creating a truly open 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 services providers.
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.
We have many people and culture initiatives, with a strong focus on diversity, equity, and inclusion ("DEI"). • Our executive team and employee allies have signed a pledge committing to DEI and anti-racism. • We have a DEI Advisory Board to support our mission to eradicate racism and inequality in the workplace. • We provide resources and tools for our employees to help them engage within culturally- and geographically-dispersed work teams to enable a culture of growth, learning, and collaboration. • We continue to empower our Inclusion Communities, which are networks of employees who unite based on shared characteristics, life experiences, or common interests.
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.
Previously, she served as the Global Chief Marketing and Communications Officer for NeilsenIQ from 2019 until November 2021. Prior to that, Ms.
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.
Our business consulting services include a broad range of offerings, including helping organizations establish a data and analytics vision, enable a multi-cloud ecosystem architecture, and identify and operationalize opportunities to ensure their data and analytics ecosystem investments deliver significant value. In addition, we offer robust support and maintenance services for our offerings.
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.
Teradata operates with a flexible work environment, offering employees the choice of working where they can be most productive. Our global workforce is located in approximately 40 countries, and our corporate headquarters are in San Diego, California.
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.
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.
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 Table of Contents 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.
In addition, contract bookings in the third month of each quarter has historically been significantly higher than in the first and second months. 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.
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.
ClearScape Analytics provides the holistic analytics capabilities of our portfolio, and is designed to be a secure, highly concurrent, and resilient analytics offering that provides in-database analytics functionality across advanced 5 Table of Contents calculations, data preparation, and significant machine learning capabilities. Our ClearScape Analytics capabilities provide the analytics enterprises need to improve business performance and drive profitable growth.
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.
Teradata offers a complete cloud analytics and data platform, with next-generation, cloud-native deployment and expansive analytics capabilities. Leading with Teradata VantageCloud, our technology platform uniquely allows companies to leverage all their data across an enterprise, whether in public or private clouds, in a multi-cloud environment, or on-premises.
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.
Our talent programs provide employees with the resources to develop their careers, build leadership skills, and lead within their organizations. We have launched on-demand learning resources, such as LinkedIn Learning and Country Navigator, which give employees flexibility in when and how they learn.
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.
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.
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.
We actively engage with our people in a way that we believe is supportive of a culture where they can feel comfortable bringing their authentic and genuine selves to work. Customers . Teradata concentrates our marketing and go-to-market efforts on enterprise companies that are seeking to improve business performance and view data as a strategic asset in achieving that objective.
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.
Prior to joining Oracle, Mr. McMillan spent 19 years at IBM, where he held a number of leadership roles focused on global managed services, consulting, and IT. Hillary Ashton . Hillary Ashton is the Company’s Chief Product Officer and has served in this role since August 2020. Prior to that Ms.
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.
These networks include Teradata Alliance of Black Employees, Blend (a community for employees in India), Veterans Community, Teradata Pride, HISPA (Hispanic and Latin Allies), Women of Teradata, Green Agenda, Terabytes (work-life integration), Toastmasters International, and Asian and Pacific Islander Inclusion Community. • In further support of the communities where we operate and live, we offer a global Diversity in Technology Scholarship Program for underrepresented minorities and women who are pursuing STEM-related degrees. • Teradata earned a score of 100 out of 100 in the Human Rights Campaign Corporate Equality Index 2022 (CEI), a benchmarking survey and report that measures corporate policies and practices related to LGBTQ+ equality.
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.
With extensive in-database functionality, seamless and expedited interconnectivity, and robust features for easy operationalization, ClearScape Analytics enables companies to scale AI/ML quicker and more effectively. We are simplifying our customers' journeys to cloud, empowering compelling analytics, as well as enabling a transformative cloud experience.
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.
Prior to joining Apple, from 2016 until 2017, he was Senior Vice President, Oracle Digital, North America Applications, and from 2013 to 2015, he served as Chief Revenue Officer at Rackspace. Prior to joining Rackspace, Mr.
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.
We provide our employees and their families a variety of flexible and convenient health and wellness programs. Compensation and Benefits. A key to our attraction, retention, and engagement strategies are the robust compensation and benefit programs we provide that are designed to meet the varied and evolving needs of a global and diverse workforce.
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.
The size and complexity of our sales transactions can make for lengthy sales cycles which can also lead to less predictability of quarterly transactions. However, we have transitioned the vast majority of our customers from perpetual to subscription-based purchasing options.
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.
To support our growth objectives, we employ a broad range of modern marketing strategies, including programs to inform, educate and generate demand with customers and prospects, as well as keep our leading technology position at the forefront of the media, industry analysts, academics, and other influencers.
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.
Teradata is unique in our ability to address the full spectrum of analytics needs—from cloud-only to multi-cloud to hybrid and on-premises. As a result, we believe that the market for our products and services is large and growing.
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. 6 Table of Contents Generative AI is ushering in new frontiers of creativity, productivity, and innovation.
We believe that companies are facing significant ongoing increases in data volumes and proliferation of data silos. Furthermore, the agility provided by cloud-based technologies provides significant benefit, but also creates complexity, with the rise of ecosystems that must span multiple cloud and on-premises environments.
Furthermore, the agility provided by cloud-based 7 Table of Contents technologies can bring significant benefits, yet also creates complexity, particularly with the increased need that data and analytics ecosystems span multiple environments.
Our strategy is to provide the leading connected multi-cloud data platform for enterprise analytics, in support of our purpose of transforming how companies work and people live through the power of data. Teradata is in a period of exciting transformation aligning our organization to be “cloud-first” across all parts of our business, as we consistently drive for profitable growth.
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.
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 help build strong and vibrant communities, improve quality of life, and make a positive difference where we live and work through volunteerism and giving.
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 global workforce is critical to our overall business strategy across target markets. During fiscal 2022, our overall headcount decreased slightly as we continue to align and optimize our talent needs to drive our cloud-first and profitable growth strategy. Culture Transformation . At Teradata, we transform how businesses work and people live through the power of data.
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.
Item 1. BUSINESS Overview . Teradata Corporation ("we," "us," "Teradata," or the "Company") is a leading connected multi-cloud data platform for enterprise analytics, focused on helping companies leverage all their data across an enterprise, at scale. In doing so, we help companies find answers to their toughest business challenges in order to help them improve performance and drive growth.
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.
We also provide complete flexibility to our workforce to choose whether they will work remote or hybrid, as well as offering competitive pay, and comprehensive health and wellness benefits and programs. As of December 31, 2022, we had approximately 7,000 employees globally, with approximately 30% employed in the United States and 70% across the rest of the world.
As of December 31, 2023, we had approximately 6,500 employees globally, with approximately 30% e mployed 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.
We are focused on helping our large base of customers migrate to the cloud, expanding customers’ workloads in the cloud, and growing software consumption within our customer base. We also focus on acquiring new customers. Our Strategy.
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 also work closely with the top global systems integrators to enable customers to derive value from their Teradata technologies. Teradata offers flexible purchase options for customers through our subscription offerings. We also offer "pay for what you use" consumption pricing. These flexible pricing options enable our customers to reduce complexity, risk, and cost.
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.
This organization focuses on ensuring that Teradata delivers business value and enables innovative use of our platform—ultimately retaining and driving greater consumption of our technology. Strategic Partnerships.
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 Table of Contents Strategic Partnerships.
We focus on business, analytics, and technology buyers. We particularly focus on the following industries: Financial Services, Government, Healthcare and Life Sciences, Manufacturing, Retail, Telecommunications, and Travel/Transportation.
Our platform differentiates Teradata in industries with high-data 8 Table of Contents requirements, including Financial Services, Government, Healthcare and Life Sciences, Manufacturing, Retail, Telecommunications, and Travel/Transportation.
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All of our efforts are in support of our purpose of transforming how businesses work and people live through the power of data. 4 Table of Contents With an ongoing commitment to profitable growth, Teradata has broadened its market opportunity by evolving into a leading connected multi-cloud data platform for enterprise analytics company from a provider of on-premises only, enterprise data warehouse solutions.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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If we fail to comply with the covenants under any of our indebtedness, we may be in default under the loan, which may entitle the lenders to accelerate the debt obligations.
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.
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 European Eastern Bloc countries who may use NSSAPC to advance their own industries).
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).
From time to time, we may conduct internal investigations in connection with our efforts 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.
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.
New laws 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 exposure through higher potential penalties for non-compliance.
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.
In the normal course of business, we are subject to proceedings, lawsuits, claims and other matters, including those that 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.
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.
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. 24 Table of Contents Fluctuations in foreign currency exchange rates have affected our operating results and could continue to impact our revenue and net earnings.
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 Table of Contents fluctuations in foreign currency exchange rates have affected our operating results and could continue to impact our revenue and net earnings.
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 platforms and service offerings.
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.
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 subject to differing interpretations and may be inconsistent among jurisdictions.
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.
The successful implementation of our cloud-first strategy and 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.
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.
As a result, we have been, and in the future could be, subject to infringement claims which, regardless of their validity, could: 23 Table of Contents • 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.
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.
Foreign currency exchange rates have affected our revenue and net earnings and could continue to impact our revenue and net earnings.
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.
Historically, we have mitigated certain cost increases, in part, by increasing prices on 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.
Historically, we have mitigated certain cost increases, in part, by increasing prices on 19 Table of Contents 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.
Furthermore, to advance our cloud-first strategy, 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.
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.
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 reeorganization projects in an effort to reduce costs and optimize operations.
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.
In general, as a participant in the data analytic solutions market, we face: • Changes in customer IT 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 at the lower range of business intelligence analytic functions; • New and emerging analytic technologies, 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.
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.
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; • 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.
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 Table of Contents • 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.
Current and evolving privacy laws and regulations regarding cloud computing, cross-border data transfer restrictions and other aspects of data privacy may limit the use and adoption of our solutions and services and adversely affect our business .
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 .
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 with certain of our competitors, and our competitors may in the future establish relationships with additional competing cloud data platform providers.
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 18 Table of Contents with certain of our competitors, and our competitors may in the future establish relationships with additional competing cloud data platform providers.
Some components supplied by third parties may be critical to our solutions, and several of our suppliers may 16 Table of Contents 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.
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.
Because we do 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.
Because we do 24 Table of Contents 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.
Given the breadth and scope of our international operations, we may not be able to detect improper or unlawful conduct by our international partners 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.
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.
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 international operations.
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 21 Table of Contents international operations.
See "Note 10- 22 Table of Contents 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.
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.
The pace 15 Table of Contents 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.
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.
Disruptions could occur as a result of supply chain challenges; decreases in work force availability; natural resources availability; natural disasters; inclement weather; 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.
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.
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 and ClearScape Analytics platforms 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.
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 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 governmental controls and regulations; • The ever-changing macro-economic and geo-political environment we operate in; • Longer payment cycles for sales in foreign countries and difficulties in enforcing contracts and collecting accounts receivable; • Fluctuations in the value of local currencies; • 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.
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 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.
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 14 Table of Contents business to achieve gross margins comparable or better than our on-premises business, 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.
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.
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.
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.
A core component of our business strategy is to expand and enhance our product offerings, particularly for analytic solutions in a cloud-based environment, to include newer market-relevant features, functionality, and cloud native options and to keep pace with price-to-performance gains.
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 addition, bringing new offerings to the market entails a costly and lengthy process, may increase our risk of liability and cause us to incur significant technical, legal or other costs.
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.
RISKS RELATED TO OUR INDUSTRY The IT industry is intensely competitive and evolving, and competitive pressures could adversely affect our pricing practices or demand for our offerings and services.
The IT industry is intensely competitive and evolving, and competitive pressures could adversely affect our pricing practices or demand for our offerings and services.
For example, in 2022, we ceased our operations in Russia and Belarus to comply with sanctions imposed as a result of Russia’s invasion of Ukraine. 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.
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 20 Table of Contents 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.
Unfavorable weather conditions 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, each of which could negatively 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.
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.
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.
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. 18 Table of Contents In 2022, the percentage of our total revenues from outside of the United States was 49% .
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 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, or a lack of appropriate resources.
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.
In addition, while we 17 Table of Contents maintain insurance coverage to cover 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.
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.
Given these factors, there can be no assurance that our current customers will 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.
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.
We have been subject to actual and potential cyber-attacks, and there can be no assurance that our defensive measures will be adequate to prevent them in the future.
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.
Privacy Shield framework. Additionally, certain countries have passed or are considering passing laws requiring local data residency.
Additionally, certain countries have passed or are considering passing laws requiring local data residency.
In addition, we are subject to diverse and complex laws and regulations, including those relating to corporate governance, public disclosure and reporting, which are rapidly changing and subject to many possible changes in the future.
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.
There is risk that these types of activities will recur and persist, that one or more of them may be successful in the future, that 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 or other security problems, viruses, worms, malicious software programs, phishing schemes and 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.
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.
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, could have a material adverse effect on our competitive position, business, brand and reputation, financial condition, results of operations and cash flows.
In such case, the trading price of our common stock could decline. 14 Table of Contents 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.
Any disruption 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.
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.
Experienced computer programmers, Nation State Sponsored Advanced Persistent Code ("NSSAPC") attackers (from countries such as Iran, China, Russia and certain European Eastern Bloc countries) 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.
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.
Any of these cloud service providers may decide to modify or terminate our business relationship or may otherwise enter into preferred relationships with one or more competing cloud data platform providers.
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.
Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our offerings or otherwise exploit any security vulnerabilities of our offerings.
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.
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.
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.
These relationships involve risks, including our partners changing their business focus, entering strategic alliances with other companies, being acquired by our competitors, failing to meet regulatory requirements or performance criteria, improperly using our confidential information or their market reputation deteriorating.
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.
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.
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.
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.
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.
For example, existing and developing laws regarding how companies transfer personal data from the European Economic Area to the United States could result in further limitations on the ability to transfer data across borders, particularly if governments are unable or unwilling to create new, or maintain existing, mechanisms that support cross-border data transfers, such as the long-awaited replacement for the EU-U.S. and Swiss-U.S.
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 23 Table of Contents across borders, particularly if governments are unable or unwilling to create new, or maintain existing, mechanisms that support cross-border data transfers.
It is uncertain whether these new cloud offerings and deployment models will prove successful or whether we will be able to develop the necessary business models, infrastructure and systems to support and scale the business. This includes acquiring, retaining and developing the right people to execute our business strategy in a competitive job market.
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.
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. Our business is affected by the global economies in which we operate and the economic climate of the industries we serve.
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.
In addition, we have established, and expect to continue to establish ESG goals. Our ESG program performance, including any ESG goals that we establish, may be reviewed by third-party providers of ESG assessment and ratings and such raters may unfavorably evaluate our ESG initiatives.
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.
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.
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 Table of Contents 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, as our on-premises customers migrate all or a portion of their data analytics solutions to a cloud-based environment, some customers may select a cloud-based offering of one of our competitors and consequently cancel all or a portion of their arrangements with us.
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.
In addition, damage to the reputation of our brands could result in, among other things, declines in customer loyalty, customer cancellations or non-renewals, lower employee retention and productivity, and vendor relationship issues, all of which could materially affect our revenue and profitability. Our future results depend in part on our relationships with key suppliers, strategic partners and other third parties.
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.
A misperception in the market regarding our cloud capabilities could negatively impact our ability to migrate existing on-premises customers to our cloud-based solutions, drive expansion/consumption growth, and/or acquire new customers for our cloud business.
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.
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.
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.
By contrast, our software-as-a-service or cloud 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 center facilities.
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 17 Table of Contents center facilities.
These and other risks associated with new offerings may have a material adverse impact on our results of operations and future performance. 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.
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.
In this regard, we launched our Teradata VantageCloud Lake and Teradata VantageCloud Enterprise components of our Teradata Vantage product offering in 2022. 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.
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.
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. 20 Table of Contents To meet expectations from our stakeholders, we are working to align our reporting with emerging ESG disclosures and potential new disclosure requirements from regulators, such as the SEC, while we also seek to report timely on progress toward our ESG objectives.
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.
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.
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.
For example, any disruption to our headquarters and data centers located in California, a region with potential seismic activity and wildfires and a region with an extreme risk of drought and vulnerability to future water scarcity due to climate change, may negatively impact our ability to respond to customers and provide services to maintain business continuity.
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.
Regulation related to the provision of services over the Internet is evolving, as 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.
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.
The occurrence of one or more of these events could result in system failures and other interruptions in our operations, which could have a material adverse effect on our business, financial condition or results of operations. Additionally, we offer the ability for our employees to choose a remote work location.
Incidences of cyberattacks and other cybersecurity breaches and incidents have 16 Table of Contents 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.
Increases in the cost of components used in our product, employee compensation, and/or increases in our other costs of doing business, have, and could continue to, adversely affect our profit margins. 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.
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.
This increases vulnerability to our systems as additional endpoints need to be managed. 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.
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.
Climate change and environmental 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. Additionally, any such disruption could cause us to incur costs to repair damages to our facilities, equipment, infrastructure, and business relationships.
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.
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. 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.
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.
The long sales cycle for our products also makes it difficult to predict the quarter in which sales will occur. Delays in sales could cause significant variability in our results for any particular period and could impact any financial guidance and forecasts that we may provide.
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.
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. A breach of security, disruption, or failure of our information systems or those of our third-party providers could adversely impact our business and financial results.
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.
We believe that recognition and the reputation of our brand is key to our success, including our ability to retain our existing customers and attract new customers. We have a distinguished history as an on-premises platform provider and one of our strategic objectives is to establish our position in the cloud market.
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.
Our global business operations, as well as those of our customers, supply chains, data warehouses, distribution channels, and public cloud service providers, are subject to interruptions by natural disasters, extreme weather conditions and the repercussions of climate change, which could include sea-level rise, tornadoes, hurricanes, earthquakes, floods, tsunamis, typhoons, drought, and fire, that could impact our business and operations.
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.
The OECD, which represents a coalition of member countries, recommended changes to numerous long-standing tax principles related to transfer pricing. Our income tax obligations are based in part on our corporate structure and inter-company arrangements, including the manner in which we develop, value, and use our intellectual property and the valuations of our inter-company transactions.
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.
Removed
In such case, the trading price of our common stock could decline.
Added
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.

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Item 2. Properties

Properties — owned and leased real estate

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Item 2. PROPERTIES As of December 31, 2022, Teradata operated 44 facilities in 31 countries consisting of approximately 776 thousand square feet throughout the world. Approximately 59% of this square footage is our headquarters in San Diego and is the only property that we own, the rest of our property is leased.
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 8 facilities where R&D activity occurs totaling approximately 283 thousand square feet, of which approximately 81% is owned. The remaining approximately 493 thousand square feet of space includes office, repair, warehouse and other miscellaneous sites, and is 47% owned and 53% 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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This graph covers the five-year period from December 31, 2017 to December 31, 2022. In each case, assumes a $100 investment on December 31, 2017, and reinvestment of all dividends, if any.
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.
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 23,156 registered holders of Teradata common stock as of February 3, 2023.
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.
For the year ended December 31, 2022, the total of these purchases was 172,199 shares at an average price of $40.27 per share.
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.
As of December 31, Company/Index 2017 2018 2019 2020 2021 2022 Teradata Corporation $ 100 $ 100 $ 70 $ 58 $ 110 $ 88 S&P 500 Index $ 100 $ 96 $ 126 $ 149 $ 192 $ 157 S&P Information Technology Index $ 100 $ 100 $ 150 $ 216 $ 290 $ 208 26 Table of Contents 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.
As of December 31, Company/Index 2018 2019 2020 2021 2022 2023 Teradata Corporation $ 100 $ 70 $ 59 $ 111 $ 88 $ 113 S&P 500 Index $ 100 $ 129 $ 150 $ 190 $ 153 $ 190 S&P Information Technology Index $ 100 $ 148 $ 211 $ 281 $ 200 $ 312 31 Table of Contents 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.
Removed
The following table provides information relating to the Company’s repurchase of common stock for the year ended December 31, 2022: Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Dilution Offset Program (1) 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 Period First quarter total 5,117,861 $ 48.85 — 5,117,861 $ 7,532,006 $ 962,770,572 Second quarter total 2,113,745 $ 31.84 246,525 1,867,220 $ 184,973 $ 904,270,266 Third quarter total 962,984 $ 32.41 158,335 804,649 $ 960,284 $ 878,200,294 October 2022 464,425 $ 30.15 — 464,425 $ 983,906 $ 864,200,122 November 2022 485,759 $ 32.43 30,085 455,674 $ 21,342 $ 849,446,095 December 2022 270,627 $ 34.16 — 270,627 $ 55,573 $ 840,200,146 Fourth quarter total 1,220,811 $ 31.95 30,085 1,190,726 $ 55,573 $ 840,200,146 2022 Full year total 9,415,401 $ 41.16 434,945 8,980,456 $ 55,573 $ 840,200,146 1.
Added
The following table provides information relating to the Company’s repurchase of common stock for the year ended December 31, 2023: Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Dilution Offset Program (1) 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 Period First quarter total 2,322,106 $ 37.69 137,380 2,184,726 $ 1,072,676 $ 758,232,193 Second quarter total 1,610,383 $ 44.93 56,144 1,554,239 $ 5,553,859 $ 688,873,071 Third quarter total 2,938,181 $ 48.02 253,402 2,684,779 $ 409,123 $ 560,227,734 October 2023 123,583 $ 43.23 7,800 115,783 $ 122,386 $ 555,227,916 November 2023 27,848 $ 43.00 — 27,848 $ 1,536,392 $ 554,030,560 December 2023 — $ — — — $ 2,200,413 $ 554,030,560 Fourth quarter total 151,431 $ 43.19 7,800 143,631 $ 2,200,413 $ 554,030,560 2023 Full year total 7,022,101 $ 43.79 454,726 6,567,375 $ 2,200,413 $ 554,030,560 1.
Removed
Accelerated Share Repurchase Agreement ("ASR") On February 9, 2022 we entered into an ASR agreement with JPMorgan Chase Bank, National Association ("JPMorgan Chase") to purchase shares of our common stock from JPMorgan Chase for an aggregate purchase price of $250 million.
Removed
Pursuant to the ASR, we received an initial delivery of 3,930,045 shares of common stock based on the closing price of the common stock of $50.89 on February 8, 2022. A final delivery of 1,635,863 shares was received on May 6, 2022 to complete the ASR agreement.
Removed
The ASR agreement was entered into pursuant to our open market share repurchase authorization.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Consulting services gross profit as a percentage of revenue decreased as compared to the prior year primarily due to lower 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.
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.
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.
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 $4 mi llion of tax expense related to global intangible low-taxed income ("GILTI") in our marginal effective tax rate for 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 mi llion of tax expense related to global intangible low-taxed income ("GILTI") in our marginal effective tax rate for 2023 and approximately $4 mi llion for 2022.
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. 37 Table of Contents 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.
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 Table of Contents 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.
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. 38 Table of Contents Stock-based Compensation We issue service-based and performance-based restricted share units.
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 Table of Contents Stock-based Compensation We issue service-based and performance-based restricted share units.
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, 2022 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.
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.
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, 2022 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 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.
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 2019, the Company performed a quantitative impairment test. In this test, the Company compared the fair value of each reporting unit to its carrying value.
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.
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 exclusively by Flex Ltd. ("Flex"). Flex procures a wide variety of components used in the manufacturing process on our behalf.
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.
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 2022, the Company performed its annual impairment test of goodwill and determined that no impairment to the carrying value of goodwill was necessary.
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.
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, 2021.
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.
As of December 31, 2022, the Company has a total of $41 million of unrecognized tax benefits, of which $22 million is included in the other liabilities section of the Company’s consolidated balance sheet as a non-current liability and $19 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.
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.
Additionally, we had $41 million of unrecognized tax benefits recorded on our balance sheet as of December 31, 2022, of which $22 million is recorded in non-current liabilities and $19 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.
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.
In addition, as disclosed in Note 9 of Notes to Consolidated Financial Statements, in June 2022, we 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 the Euro currency exposure of our net investment in certain foreign subsidiaries.
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.
We are continuing to execute on our key priorities, including migrating existing customers to the cloud, expanding our Teradata Vantage multi-cloud data platform product offering (which includes VantageCloud, VantageCloud Lake, VantageCloud Enterprise and ClearScape Analytics), adding new customers and expanding our footprint with existing customers, increasing our focus on diversity and inclusiveness, and driving operational excellence and agility across the Company.
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.
Management believes current cash, cash generated from operations, the net cash inflow from our refinancing as described above 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.
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.
If we are unable to generate sufficient cash flows from operations, or otherwise to comply with the terms of the credit facility and term loan agreement, we may be required to seek additional financing alternatives. Long-Term Debt .
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 .
Consulting services revenue decreased 17% , including a 6% adverse impact from foreign currency exchange rate fluctuations, as we continue to realign and focus our consulting resources on higher-margin engagements, both direct engagement with customers and joint engagement with partners that drive increased software consumption within our targeted customer base.
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.
We principally hold cash and cash equivalents in bank deposits and highly-rated money market funds. Our 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.
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.
We have recorded $69 million in 2022 and $58 million in 2021 for valuation allowances, a majority of which offset our California R&D tax credit carryfoward, as the Company expects to continue to generate excess California R&D tax credits into the foreseeable future.
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.
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 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.
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 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.
Our segment results are reconciled to total company results reported under GAAP in Note 14 of Notes to Consolidated Financial Statements. 33 Table of Contents The following table presents revenue and operating performance by segment for the years ended December 31: % of % of In millions 2022 Revenue 2021 Revenue Segment revenue Americas $ 1,038 57.8 % $ 1,044 54.5 % EMEA 465 25.9 % 543 28.3 % APJ 292 16.3 % 330 17.2 % Total segment revenue $ 1,795 100 % $ 1,917 100 % Segment gross profit Americas $ 643 61.9 % $ 690 66.1 % EMEA 285 61.3 % 337 62.1 % APJ 177 60.6 % 188 57.0 % Total segment gross profit $ 1,105 61.6 % $ 1,215 63.4 % 2022 compared to 2021 Americas Americas revenue decreased 1% including a 1% negative underlying impact from foreign currency exchange rate fluctuations.
Our segment results are reconciled to total company results reported under GAAP in Note 14 of Notes to Consolidated Financial Statements. 37 Table of Contents The following table presents revenue and operating performance by segment for the years ended December 31: % of % of In millions 2023 Revenue 2022 Revenue Segment revenue Americas $ 1,089 59.4 % $ 1,038 57.8 % EMEA 475 25.9 % 465 25.9 % APJ 269 14.7 % 292 16.3 % Total segment revenue $ 1,833 100 % $ 1,795 100 % Segment gross profit Americas $ 689 63.3 % $ 643 61.9 % EMEA 295 62.1 % 285 61.3 % APJ 149 55.4 % 177 60.6 % Total segment gross profit $ 1,133 61.8 % $ 1,105 61.6 % 2023 compared to 2022 Americas Americas revenue increased 5% including a 2% negative impact from foreign currency exchange rate fluctuations.
The following table and discussion outline our material obligations at December 31, 2022, with projected cash payments in the periods shown: Total 2024- 2026- 2028 and In millions Amounts 2023 2025 2027 Thereafter Transition tax $ 69 $ 17 $ 52 $ — $ — Purchase obligations 457 171 201 85 — Total transition tax and purchase obligations $ 526 $ 188 $ 253 $ 85 $ — 36 Table of Contents Transition tax is the remaining payable balance as of December 31, 2022 of the one-time tax on accumulated foreign earnings resulting from the 2017 Tax Act.
The following table and discussion outline our material obligations at December 31, 2023, with projected cash payments in the periods shown: Total 2025- 2027- 2029 and In millions Amounts 2024 2026 2028 Thereafter Transition tax $ 52 $ 23 $ 29 $ — $ — Purchase obligations 848 255 412 181 — Total transition tax and purchase obligations $ 900 $ 278 $ 441 $ 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.
Revenue % of % of In millions 2022 Revenue 2021 Revenue Recurring $ 1,419 79.1 % $ 1,464 76.4 % Perpetual software license, hardware and other 65 3.6 % 77 4.0 % Consulting services 311 17.3 % 376 19.6 % Total revenue $ 1,795 100.0 % $ 1,917 100.0 % 2022 compared to 2021 - Total revenue decreased 6% in 2022, which included a 4% negative impact from foreign currency exchange rate fluctuations.
Revenue % of % of In millions 2023 Revenue 2022 Revenue Recurring $ 1,492 81.4 % $ 1,419 79.1 % Perpetual software license, hardware and other 45 2.5 % 65 3.6 % Consulting services 296 16.1 % 311 17.3 % Total revenue $ 1,833 100.0 % $ 1,795 100.0 % 2023 compared to 2022 - Total revenue increased 2% in 2023, which included a 2% negative impact from foreign currency exchange rate fluctuations.
The table below shows net cash provided by operating activities and capital expenditures for the following periods: In millions 2022 2021 Net cash provided by operating activities $ 419 $ 463 Less: Expenditures for property and equipment (14) (28) Additions to capitalized software (2) (3) Free cash flow $ 403 $ 432 Financing activities and certain other investing activities are not included in our calculation of free cash flow.
The table below shows net cash provided by operating activities and capital expenditures for the following periods: In millions 2023 2022 Net cash provided by operating activities $ 375 $ 419 Less: Expenditures for property and equipment (19) (14) Additions to capitalized software (1) (2) Free cash flow $ 355 $ 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 payments associated with this deemed repatriation are being paid over seven years ending in 2025. Purchase obligations are committed purchase orders and other contractual 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.
Purchase obligations are committed purchase orders and other contractual 40 Table of Contents 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.
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.
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.
Our financial and performance measures for the following years ended 30 Table of Contents December 31 was as follows: ARR 2022 2021 In millions Public Cloud $ 357 $ 202 Subscription 844 898 Maintenance and Software upgrade rights 281 392 Total ARR $ 1,482 $ 1,492 Cloud Net Expansion rate 117 % 133 % Total ARR decreased 1% versus the prior year, with declines in Subscription ARR and Maintenance and Software upgrade rights ARR partially off-set by growth in Public Cloud ARR.
Our financial and performance measures for the following years ended December 31 was as follows: ARR 2023 2022 In millions Public Cloud $ 528 $ 357 Subscription 869 844 Maintenance and Software upgrade rights 173 281 Total ARR $ 1,570 $ 1,482 Cloud Net Expansion rate 124 % 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.
Total revenue is expected to increase in the range of 1% to 4% year-over-year. Revenues from perpetual software licenses, hardware, and other were down 16% in 2022, including 4% of adverse impact from foreign currency exchange rate fluctuations, as customers continue to transition to our subscription-based offerings, consistent with our overall strategy.
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.
Provision for Income Taxes The effective income tax rate for the following years ended December 31 was as follows: 2022 2021 Effective Tax Rate 50.7 % 23.4 % 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.
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.
Operating Expenses % of % of In millions 2022 Revenue 2021 Revenue Operating expenses Selling, general and administrative expenses $ 650 36.2 % $ 646 33.7 % Research and development expenses 313 17.4 % 309 16.1 % Total operating expenses $ 963 53.6 % $ 955 49.8 % 2022 compared to 2021 - The increase in selling, general and administrative ("SG&A") expense was primarily driven by higher stock-based compensation and ceasing operations in Russia as compared to the prior year, partially offset by favorable impact from foreign currency exchange rate fluctuations and continued cost discipline as compared to the prior year.
Operating Expenses % of % of In millions 2023 Revenue 2022 Revenue Operating expenses Selling, general and administrative expenses $ 635 34.6 % $ 650 36.2 % Research and development expenses 294 16.0 % 313 17.4 % Total operating expenses $ 929 50.7 % $ 963 53.6 % 2023 compared to 2022 - The de crease 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.
EMEA segment gross profit, as a percentage of revenue, was lower due to the negative impact of ceasing operations in Russia, which was partially offset by positive deal mix within perpetual software licenses, hardware and other revenue. APJ APJ revenue decreased 12% , which included a 10% unfavorable impact from foreign currency exchange rate fluctuations.
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.
Segment gross profit, as a percentage of revenue, decreased due to a decrease in the gross profit associated with upfront revenue, as well as a higher mix of cloud revenues, both as compared to the prior period. EMEA EMEA revenue decreased 14% , which included a 7% unfavorable impact from foreign currency exchange rate fluctuations.
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.
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, 2023, Teradata is estimating a 0.5%-to-1.0% negative impact from currency translation on our 2023 full-year total revenues.
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.
For example, a higher mix of Teradata versus third-party products can impact profitability. 31 Table of Contents Gross profit for the following years ended December 31 was as follows: % of % of In millions 2022 Revenue 2021 Revenue Gross profit Recurring $ 1,022 72.0 % $ 1,099 75.1 % Perpetual software licenses, hardware and other 18 27.7 % 34 44.2 % Consulting services 41 13.2 % 53 14.1 % Total gross profit $ 1,081 60.2 % $ 1,186 61.9 % 2022 compared to 2021 - The de crease in recurring gross profit as a percentage of revenue was primarily driven by decreased revenue as a result of foreign currency exchange rate fluctuations, ceasing operations in Russia, charges related to ceasing operations in Russia, and a higher recurring revenue mix that shifted to cloud.
For example, a higher mix of Teradata versus third-party products can positively impact profitability. 35 Table of Contents Gross profit for the following years ended December 31 was as follows: % of % of In millions 2023 Revenue 2022 Revenue Gross profit Recurring $ 1,074 72.0 % $ 1,022 72.0 % Perpetual software licenses, hardware and other 7 15.6 % 18 27.7 % Consulting services 34 11.5 % 41 13.2 % Total gross profit $ 1,115 60.8 % $ 1,081 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.
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.
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 Table of Contents 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.
Ceasing operations in Russia adversely affected Total ARR by approximately 4% and adverse foreign currency fluctuations had a negative 3% impact. Public Cloud ARR increased 77% versus the prior year primarily due to on-premises customers migrating to Teradata VantageCloud along with a strong net expansion rate of 117 %.
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.
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. Leases Leases with durations greater than twelve months are recognized on the balance sheet.
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.
An increase in Americas recurring revenue of 1% was offset by a decrease of 4% in perpetual software licenses, hardware and other revenue and a decrease in consulting revenue of 11% as compared to the prior year.
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.
We expect total operating e xpenses to decrease in 2023 as we c ontinue to focus on our cost discipline initiatives, and align and optimize our talent needs to drive our cloud-first and profitable growth strateg y. 32 Table of Contents Other Expense, net In millions 2022 2021 Interest income $ 15 $ 6 Interest expense (24) (26) Other (42) (19) Total Other Expense, net $ (51) $ (39) Other expense, net in 2022 and 2021, 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.
We expect to balance these investments with cost discipline in non-revenue generating areas and productivity improvements. 36 Table of Contents Other Expense, net In millions 2023 2022 Interest income $ 25 $ 15 Interest expense (30) (24) Other (64) (42) Total Other Expense, net $ (69) $ (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.
Teradata used approximately $26 million of cash in 2022 for reorganization activities, including ceasing our operations in Russia, aligning our go-to-market function with our cloud-first strategy, and other activities to optimize our workforce, as compared to $40 million used in 2021 for similar purposes.
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 Table of Contents Teradata’s management uses a non-GAAP measure called "free cash flow," which is not a measure defined under GAAP.
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.
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.
These proceeds are included in other financing activities, net in the Consolidated Statements of Cash Flows. Our total cash and cash equivalents held outside the United States in various foreign subsidiaries was $405 million as of December 31, 2022 and $401 million as of December 31, 2021.
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.
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.
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 Table of Contents 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.
Excluding foreign currency exchange rate fluctuations , our overall ARR growth was primarily driven by increased demand for our differentiated offerings, increasing partner involvement, and incremental workloads driving migrations and expansions. For the full year 2023, Public Cloud ARR is expected to increase in the range of 53% to 57% year-over-year.
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.
The first of these programs (the "dilution offset program") authorizes us to repurchase Teradata common stock to the extent of cash received from the exercise of stock options and the Teradata Employee Stock Purchase 35 Table of Contents Plan ("ESPP") to offset dilution from shares issued pursuant to these plans.
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").
This was partially offset by the receipt of a $50 million tax refund in 2022 related to our Cares Act carryback claim, which was included in our cash provided by operating activities.
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.
This growth was driven by customer demand for our differentiated offerings, resulting in new, incremental workloads for both migrations and expansions. Subscription ARR decreased 6% in 2022 from the prior year primarily due to the adverse impact of foreign currency exchange rate fluctuations and ceasing operations in Russia. Our Maintenance and Software upgrade rights ARR declined 28% compared to 2021.
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.
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, the decline is also due to foreign currency exchange rate fluctuations and ceasing operations in Russia.
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.
Foreign currency fluctuations had a 4% adverse impact on total revenue compared to the prior year. • Gross profit as a percent of revenue was 60.2% in 2022, a decrease from 61.9% in 2021, primarily due to adverse impact from foreign currency fluctuations, the loss of revenue due to exiting Russia operations, and an increasing mix of cloud revenue as our cloud business continues to scale as compared to the prior year. • Operating expenses in 2022 increased by 1% as compared to 2021, primarily driven by higher stock-based compensation expense and expenses associated with exiting our business in Russia, partially offset by favorable impact from foreign currency fluctuations, and our cost discipline initiatives . • Operating income was $118 million in 2022, down from $231 million in 2021. • Net income was $33 million in 2022 versus net income of $147 million in 2021, primarily due to reduced 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 Table of Contents • 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.
We are investing in activities that continue to drive increased adoption and consumption of the Teradata Vantage platform, including greater efficiencies with cloud service providers, offset by enhancements to our consumption pricing model. In addition, we are forecasting less of a positive impact from upfront recurring revenue as customers continue to migrate to the Cloud.
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.
APJ segment gross profit, as a percentage of revenue, was higher primarily due to a higher mix of recurring revenue, and the impact of cost-reduction efforts within the consulting organization. 34 Table of Contents FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Teradata ended 2022 with $569 million in cash and cash equivalents, a $23 million decrease from December 31, 2021, after using approximately $387 million for repurchases of Company common stock during the year.
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.
At December 31, 2022, we had no outstanding borrowings on our $400 million Revolving Facility (as defined below).
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).
The overall decrease in revenue included a decrease of 11% in EMEA recurring revenue, a 24% decrease in consulting revenue and a decrease of 11% in perpetual software licenses, hardware and other revenue. Overall revenue decreased due to the negative effects of foreign currency exchange rate fluctuations and ceasing operations in Russia.
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.
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.
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% in crease in recurring revenue.
In connection with the execution of the Credit Facility, the $400 million term loan then outstanding, which excluded the scheduled $13 million principal installment we paid during the first quarter of 2022 under the Prior Agreements, was repaid in full.
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.
We purchased 9.4 million shares of our common stock at an average price per share of $41.16 in 2022 and 5.8 million shares of our common stock at an average price per share of $41.94 in 2021. Share repurchases were made under two share repurchase programs initially authorized by our Board of Directors in 2008.
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.
This platform is supported by business consulting and support services that enable customers to extract insights from across a company’s entire data and analytics ecosystem. Teradata’s strategy is discussed under Part I, Item I of this Annual Report on Form 10-K.
Teradata’s strategy is discussed under Part I, Item I of this Annual Report on Form 10-K.
Total ARR is expected to increase in the range of 6% to 8% year-over-year. Gross Profit The Company often uses specific terms and definitions to describe variances in gross profit.
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.
Other expense is higher in 2022, primarily due to $22 million higher losses resulting from foreign currency transactions compared to the prior year.
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.
In addition, we 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 our accrual for unrecognized tax benefits in accordance with FIN 48.
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 overall decrease in revenue included a decrease in APJ recurring revenue of 7% , a decrease of 44% ($7 million) in perpetual software licenses and hardware revenue and a decrease in consulting revenue of 17% . Perpetual software licenses, hardware and other revenue was down as customers continued to transition to subscription-based offerings, consistent with our overall strategy.
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.
Perpetual software licenses, hardware and other revenue decreased by 16% and consulting services revenue decreased by 17% . Revenue was adversely impacted primarily by foreign currency fluctuations and lost revenue from ceasing our operations in Russia in the first quarter of 2022.
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% .
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See "Risk Factors" and "Forward-looking Statements." OVERVIEW Teradata is a leading connected multi-cloud data platform for enterprise analytics, focused on helping companies leverage all their data across an enterprise, at scale. In doing so, we help companies to find answers to their toughest business challenges.
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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.
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All of our efforts are in support of our purpose of transforming how businesses work and people live through the power of data. Our platform is composed of our data platform – Teradata Vantage – which is designed to run across public cloud, private cloud and on-premises environments.
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As such, we strive to innovate and deliver 32 Table of Contents 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").
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COVID-19 Update 28 Table of Contents During the twelve months ended December 31, 2022, there were some continued effects of the coronavirus pandemic ("COVID-19") and the related actions by governments around the world on our business, and economies generally. However, operationally we have been able to run our business without significant interruptions.
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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.
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Under our return-to-office plans, none of our employees are required to return to an office environment and can choose to continue to work remotely or under a hybrid model. There remains some uncertainty regarding the potential impact of COVID-19 and new variants on our business in the future, from both a financial and operational perspective.
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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.
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We will continue our diligent efforts to monitor and respond as appropriate to the impacts of the pandemic on our business, including the status of our workforce, supply chain, customers, suppliers, and vendors, based on the priorities described above. Our actions will continue to be informed by the requirements and recommendations of the federal, state or local authorities.
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Revenues from perpetual software licenses, hardware and other decreased primarily due to our strategic shift towards recurring revenue.
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We intend to remain agile and have contingency plans in place to appropriately respond to conditions as they unfold.
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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.
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For more information, see "Risk Factors" under Part I, Item 1A of this Annual Report on Form 10-K. 2022 FINANCIAL OVERVIEW As more fully discussed in later sections of this MD&A, the following are the financial highlights for 2022: • Revenue of $1,795 million decreased by 6% in 2022 as compared to 2021, with an underlying 3% decrease in recurring revenue.
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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.
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The decline in consulting service revenue was additionally due to our focus on higher-margin engagements and purposeful decrease in consulting services given our strategic development of a partner ecosystem.
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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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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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. 40 Table of Contents 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.
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.
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, 2022 was $13 million .
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 $7 million . The fair value of the net investment Euro currency hedge recorded in other liabilities at December 31, 2022 was $1 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 .
The potential loss in fair value at December 31, 2022, for such contracts resulting from a hypothetical 10% adverse change in all foreign currency exchange rates is approximately $1 million . This loss would be mitigated by corresponding gains on the underlying exposures.
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.

Other TDC 10-K year-over-year comparisons