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Teradata’s American Division: A Declining Business Trend

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Segment analysis

The Americas Data and Analytics segment of Teradata Corporation (TDC), which constitutes nearly 55.0% of the total revenue for the company, has posted a declining trend in the last four quarters. In the last three years, the company saw a nearly double-digit annual decline in revenues.

In the last three years, the revenues for Teradata’s Americas Data and Analytics segment fell at a CAGR (compound annual growth rate) of 6.7%. The bulk of the revenue is generated from the US market while only 45.0% of the total business is generated from outside the domestic market.

In the graph above, we can see the revenue growth for the Americas Data and Analytics division in the last five quarters for Teradata. During this period, it declined at a CAGR (compound annual growth rate) of 2.1%.

In fiscal 4Q17, the segmental revenue fell 8.1% YoY (year-over-year) to $365.0 million. For fiscal 2017, the segmental revenue came in at ~$1.2 billion, down 10.4% on an annualized basis.

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Headwinds and tailwinds

Teradata’s policy to change its business model from upfront payments to a subscriber-based revenue model has led to this decline in revenues. The revenues garnered from its deals are spread throughout the contract term. 

Stiff competition from other big players in the data analytics industry like International Business Machines (IBM), Oracle (ORCL), and SAP has pressured the company’s domestic business.

However, increased IT spending coupled with growing demand for data analytics services across all industries may act as the catalyst for the company’s Americas Data and Analytics segment going forward.

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