TDC's stock-based compensation is arguably out of control

https://seekingalpha.com/article/4455094-teradata-growth-profile-is-slowing-no-longer-a-compelling-investment

Stock-based Compensation
As is becoming more and more the rule rather than the exception these days, TDC's stock-based compensation is arguably out of control. As can be seen in the chart above, Teradata's stock-based compensation is expected to be $0.95/share for full-year fiscal 2021 - considerably above the midpoint of GAAP earnings ($0.80/share). It would appear that the executive management team is so busy patting itself on the back that the ordinary investors who actually own the company are taking a back seat.

Summary & Conclusion
With its FY22 guidance, Teradata poured cold water over the bullish growth profile I had assumed for the company going forward. In the meantime, share-based compensation is arguably out-of-control at Teradata and the share buyback program is doing nothing to reward ordinary shareholders because the share count keeps expanding.

Bottom line: I am reducing my rating on TDC from "Bullish" to "Neutral" as the company no longer presents the compelling investment opportunity I previously considered it to be.

Comment! It's anonymous!

5 replies (most recent on top)

They give out too much stock to the ELT, but have hardly any left for the employees. People who are not about to retire are leaving for other companies since there isn't much incentive to stay.

There is only 18 months of on-prem to cloud runway left. Then this plane is grounded. Vantage in public cloud is difficult to provision and not elastic. The system resets and all inflight queries die when resizing. No new customer will touch it. Even if they build an improved version, it’s too late.

"That isn't what investors expect out of a cloud-based platform that should be able to very cost-efficiently scale up as new customers are brought on board. Perhaps that is exactly the issue: TDC may be having difficulty attracting and winning new customers"

Great analysis! Difficulty indeed.

The words - pigs, snouts and trough.

Buying back shares, yet issuing more than you buy back. It’s not clever and it will all come crashing down. At least some of the analysts are figuring it out.

No new customers. No growth. Attrition.

Summary
Over the past year, Teradata has been an excellent turnaround play based on its Vantage cloud platform: the stock is up 125%.
However, recent guidance was quite disappointing and indicates the growth of the recent past is slowing.
Meanwhile, massive stock-based compensation is a warning sign for investors.

Thread regarding Teradata Corp. layoffs

TDC's stock-based compensation is arguably out of control

5 replies (most recent on top)

Post a reply