Segment and Other Supplemental Information

Effective July 1, 2016, following the sale of the marketing applications business, Teradata is managing its business in two operating segments: (1) Americas region (North America and Latin America); and (2) International region (Europe, Middle East, Africa, Asia Pacific and Japan). 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 profit. For management reporting purposes assets are not allocated to the segments.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2017		2016		2017		2016
Segment revenue
Americas Data and Analytics	$	292	$	317	$	830	$	937
International Data and Analytics	234		235		700		690
Total Data and Analytics	526		552		1,530		1,627
Marketing Applications	—		—		—		69
Total revenue	526		552		1,530		1,696
Segment gross profit
Americas Data and Analytics	173		195		482		564
International Data and Analytics	97		118		304		341
Total Data and Analytics	270		313		786		905
Marketing Applications	—		—		—		34
Total segment gross profit	270		313		786		939
Stock-based compensation costs	3		3		10		11
Amortization of acquisition-related intangible asset costs	—		—		—		2
Acquisition, integration, reorganization and transformation-related costs	2		1		6		6
Amortization of capitalized software costs	15		15		54		47
Selling, general and administrative expenses	161		159		481		505
Research and development expenses	82		46		230		154
Impairment of goodwill, acquired intangibles and other assets	—		—		—		80
Income from operations	$	7	$	89	$	5	$	134

Prior period segment information has been reclassified to conform to the current period presentation. Certain items, including amortization of certain capitalized software costs, were excluded from segment gross profit to conform to the way the Company manages and reviews the results by segment.

The following table presents a further disaggregation of revenue for the Company:



	Three Months Ended September 30,				Nine Months Ended September 30,
In millions	2017		2016		2017		2016
Product - rights to upgrades, subscription and cloud	$	82	$	72	$	233	$	211
Maintenance - software and hardware	185		175		543		517
Total recurring revenue	267		247		776		728
Product - perpetual licenses and hardware	90		137		271		411
Consulting services	169		168		483		488
Marketing applications	—		—		—		69
Total revenue	$	526	$	552	$	1,530	$	1,696