Segment and Other Supplemental Information

3 Months Ended

Mar. 31, 2015

Segment Reporting [Abstract]

Segment and Other Supplemental Information

Segment and Other Supplemental Information

Effective January 1, 2015, Teradata implemented an organizational change in which Teradata now manages its business in two divisions, which are also the Company’s operating segments: (1) data and analytics, and (2) marketing applications. This change will enable each division to be more sharply focused in rapidly addressing the dynamics of each market, and in bringing the best solutions to our customers. For purposes of discussing results by segment, management excludes the impact of certain items, consistent with the manner by which management evaluates the performance of each segment. This format is useful to investors because it allows analysis and comparability of operating trends. It also includes the same information that is used by Teradata management to make decisions regarding the segments and to assess financial performance. The chief operating decision maker evaluates the performance of the segments based on revenue and multiple profit measures, including segment gross margin. For management reporting purposes assets are not allocated to the segments. Prior period segment information has been reclassified to conform to the current period presentation.

The following table presents segment revenue and segment gross margin for the Company:

	Three Months Ended March 31,
In millions	2015			2014
Segment revenue
Data and Analytics	$	536		$	577
Marketing Applications	46			51
Total revenue	582			628
Segment gross margin
Data and Analytics	269			322
Marketing Applications	18			23
Total segment gross margin	287			345
Stock-based compensation expense	(4		)	(3		)
Amortization of acquisition-related intangible assets	(5		)	(5		)
Acquisition, integration and reorganization-related costs	(1		)	(4		)
Total gross margin	277			333
Selling, general and administrative expenses	184			188
Research and development costs	63			56
Income from operations	$	30		$	89

The following table presents revenue by product and services for the Company:

	Three Months Ended March 31,
In millions	2015		2014
Products (software and hardware)(1)	$	241	$	273
Consulting services	172		189
Maintenance services	169		166
Total services	341		355
Total revenue	$	582	$	628

⁽¹⁾ Our analytic database software and hardware products are often sold and delivered together in the form of a “node” of capacity as an integrated technology solution. Accordingly, it is impracticable to provide the breakdown of revenue from various types of software and hardware products.