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As the results continue to flow in from reporting season, one area that was expected to hold up fairly well in the recession was the business intelligence sector. After all, what better way for companies to look for ways to trim costs or generate new revenues than by figuring out how to better use the reams of business data at their disposal.
For that reason, I was waiting with interest to see how Teradata faired in its latest quarter. For those not familiar with the company, Teradata was spun off from parent NCR Corp. in 2007. It specializes in enterprise data warehousing systems and analytics applications that allow companies like Wal-Mart to comb through mountains of data to find insights into customer buying patterns.
In the end, the results turned out to moderately good, but certainly not an answer to the tech sectors wows. Teradata reported Thursday that second quarter sales came in at $421 million, a decrease of 7% compared to the same quarter a year earlier. However, when currency fluctuations were taken into account the revenue decrease was closer to 2%.
Net income slipped to $62 million, or 36 cents per share, compared to $69 million or 38 cents per share for the year ago quarter, while gross margin – a measurement of the profits the company earns from the products and services it provides – was up slightly to 55.3%, versus 54.7% in the second quarter of 2008. The results beat analysts’ estimates by a penny.
Teradata Chief Executive Mike Koehler said overall the results could be considered positive given the tough economy. “For the first half of 2009, revenues were up 1% in constant currency, and earnings per share were the same as prior year,” he said. “The entire organization executed well, delivering significant customer wins and expansions, improving gross margins and managing costs.”
Customer wins in the quarter included Bank of the West, casual dining chain Ruby Tuesday, and women’s apparel retailer, The Limited.
One of the key developments in the quarter was an expanded partnership with ERP giant SAP. The agreement paved the way to provide the SAP NetWeaver Business Warehouse running on the Teradata database, essentially eliminating the need for joint customers to run separate databases to conduct analytics.
Looking ahead, Teradata said it expects earnings for the full year to be in the $1.22 to $1.28 range, which is slightly better than the $1.18 expected by analysts.
So, the bottom line – at least from looking at the Teradata results – is that business intelligence appears to be holding up well in the recession, but it has not entirely avoided the fallout.
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