Teradata Reports First Quarter 2026 Financial Results
Rhea-AI Summary
Teradata (NYSE: TDC) reported Q1 2026 results: Total ARR $1.492B (+3% YoY, +2% CC), Public cloud ARR $686M (+13% YoY), recurring revenue $400M (+12% YoY). Total revenue was $444M (+6%). GAAP diluted EPS $3.47; non-GAAP diluted EPS $0.88. Cash from operations $401M; free cash flow $390M, reflecting a pre-tax $359M SAP settlement.
Company introduced Adjusted Free Cash Flow excluding settlement impacts and provided Q2 and full-year 2026 guidance ranges.
AI-generated analysis. Not financial advice.
Positive
- Total ARR $1.492B, up 3% year-over-year
- Public cloud ARR $686M, up 13% year-over-year
- Recurring revenue $400M, up 12% year-over-year
- Cash from operations of $401M in Q1 2026
Negative
- GAAP operating margin (loss) of (8.1%) in Q1 2026
- GAAP diluted EPS boosted by $2.90 from SAP settlement one-time benefit
- Q2 2026 revenue guidance implies year-over-year decline (total revenue -4% to -2%)
News Market Reaction – TDC
On the day this news was published, TDC gained 0.66%, reflecting a mild positive market reaction. Argus tracked a trough of -8.2% from its starting point during tracking. Our momentum scanner triggered 11 alerts that day, indicating notable trading interest and price volatility. This price movement added approximately $19M to the company's valuation, bringing the market cap to $2.84B at that time.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Market Reality Check
Peers on Argus
Peers show mixed moves: FIVN up 4.76%, EVTC up 1.34%, while APPN is down 0.66% and others are flat. This pattern diverges from TDC’s 4.86% gain, pointing to company-specific drivers.
Previous Earnings Reports
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Feb 10 | Q4 2025 earnings | Positive | +29.6% | Q4 and full-year 2025 beats with strong free cash flow and buybacks. |
| Nov 04 | Q3 2025 earnings | Positive | +32.6% | Cloud ARR growth and reiterated 2025 guidance despite softer revenue. |
| Aug 05 | Q2 2025 earnings | Negative | +8.0% | Revenue and EPS declines even as ARR grew modestly year over year. |
| May 06 | Q1 2025 earnings | Neutral | +1.8% | Cloud ARR growth and margin expansion offset by lower total revenue. |
| Feb 11 | FY 2024 earnings | Negative | -20.3% | ARR and revenue declines with guidance for further revenue contraction. |
Earnings releases have often triggered sizable moves, with several double‑digit gains following prior quarterly reports and one notable selloff on mixed full-year results.
Recent earnings history for Teradata shows recurring focus on ARR stabilization and public cloud growth. Prior reports highlighted public cloud ARR expansion, modest Total ARR growth, and mixed revenue trends, while maintaining or tightening guidance ranges. Market reactions have included large positive moves after the Q3 2025 and Q4 2025 earnings, and a sharp decline after the FY 2024 release that paired ARR contraction with revenue declines. Today’s Q1 2026 results continue this narrative with incremental ARR growth and detailed cash flow metrics.
Historical Comparison
Across 5 recent earnings releases, the average move was about 10.32%. Compared with that, today’s pre-news 4.86% gain is smaller but directionally consistent.
Same‑tag events show Teradata moving from ARR contraction in 2024 to low single‑digit Total ARR growth by late 2025, while public cloud ARR consistently grows double digits. Non‑GAAP EPS and free cash flow remain central focus points, with guidance typically reaffirmed or modestly adjusted around these metrics.
Market Pulse Summary
This announcement details Q1 2026 earnings with Total ARR of $1.492B, public cloud ARR of $686M, and total revenue of $444M. Results are heavily shaped by a $480M SAP settlement, lifting GAAP EPS to $3.47 while non-GAAP EPS stands at $0.88. Management introduces adjusted free cash flow, which was $31M, to strip out settlement-related flows. Historically, earnings have produced sizable moves, so tracking future quarters’ ARR growth, non-GAAP EPS within the $2.55–$2.65 range, and progression of cloud mix will be important for context.
Key Terms
annual recurring revenue financial
public cloud arr financial
free cash flow financial
adjusted free cash flow financial
gaap financial
non-gaap financial
constant currency financial
AI-generated analysis. Not financial advice.
- Total ARR of
$1.492 billion 3% as reported and2% in constant currency from the prior year period(1) - Public cloud ARR of
$686 million 13% as reported and12% in constant currency from the prior year period(1) - Recurring Revenue of
$400 million 12% as reported and9% in constant currency(1) - Cash Flow from Operations of
$401 million $390 million $359 million
"Teradata delivered a strong first quarter, outperforming on key growth and performance metrics as we enter 2026. Enterprises are discovering that winning with AI requires context, governed data, codified industry knowledge, and a hybrid infrastructure that meets them wherever they operate," said Steve McMillan, President and CEO of Teradata. "Our autonomous AI and knowledge capabilities are the proven foundation for this AI era, and with significant innovations ahead, we are well positioned to enable the world's leading organizations to rapidly deploy agentic AI. Our trajectory is clear, and we believe that the opportunity to create meaningful, lasting value for our shareholders is significant."
First Quarter 2026 Financial Highlights Compared to First Quarter 2025
- Total ARR increased to
$1.492 billion $1.442 billion 3% as reported and2% in constant currency(1) - Public cloud ARR increased to
$686 million $606 million 13% as reported and12% in constant currency(1) - Recurring revenue was
$400 million $358 million 12% as reported and9% in constant currency(1) - Total revenue was
$444 million $418 million 6% as reported and4% in constant currency(1) - Recurring revenue was
90% of total revenue versus86% - GAAP gross margin was
62.2% versus59.3% - Non-GAAP gross margin was
63.7% versus60.3% (2) - GAAP operating margin was (
8.1% ) versus15.8% - Non-GAAP operating margin was
27.3% versus21.8% (2) - GAAP diluted EPS was
$3.47 $0.45 - Non-GAAP diluted EPS was
$0.88 $0.66 - Cash flow from operations was
$401 million $8 million - Free cash flow was
$390 million $7 million - Adjusted free cash flow was
$31 million $7 million
SAP Litigation Settlement
On February 19, 2026, Teradata entered into a settlement agreement with SAP. From the settlement, Teradata received a gross payment of
Teradata is introducing Adjusted Free Cash Flow to provide a normalized free cash flow measure for the business. Adjusted Free Cash Flow will reflect adjustments for the impact from the SAP litigation and resulting settlement gross proceeds, legal and other expenses and incremental cash taxes specific to the settlement.
Outlook
For the second quarter of 2026:
- Recurring revenue in the range of -
2% to flat year-over-year - Total revenue in the range of -
4% to -2% year-over-year - GAAP diluted EPS is expected to be in the range of
$0.22 $0.26 - Non-GAAP diluted EPS is expected to be in the range of
$0.53 $0.57
For the full year 2026, Teradata increases the following ranges:
- GAAP diluted EPS is now expected to be in the range of
$4.22 $4.32 - Cash flow from operations of
$642 million $662 million $302 million - Adjusted free cash flow of
$320 million $340 million
For the full year 2026, Teradata reaffirms the following ranges:
- Total ARR growth of
2% to4% year-over-year - Recurring revenue in the range of flat to
2% year-over-year - Total revenue range in the range of -
2% to flat year-over-year - Non-GAAP diluted EPS in the range of
$2.55 $2.65
Earnings Conference Call
The conference call will begin at 1:30 p.m. PT on May 5, 2026. Investors and participants may attend the call by dialing (585) 542-9983 and entering access code 852900969. For investors and participants outside
The live webcast, as well as a replay, will be available on the Investor Relations page of the Teradata website at investor.teradata.com.
Supplemental Financial Information
Additional information regarding Teradata's operating results is provided below as well as on Teradata's website at investor.teradata.com.
1. | The impact of currency is determined by calculating the prior-period results using the current-year monthly average currency rates. See the foreign currency fluctuation schedule, which is used to determine revenue on a constant currency ("CC") basis, on the Investor Relations page of the Company's website at investor.teradata.com. |
Revenue | |||||||
(in millions) | |||||||
For the Three Months ended March 31 | |||||||
2026 | 2025 | % Change as | % Change in CC | ||||
Recurring revenue | 12 % | 9 % | |||||
Perpetual software licenses, hardware and other | 1 | 10 | (90 %) | (88 %) | |||
Consulting services | 43 | 50 | (14 %) | (15 %) | |||
Total revenue | 6 % | 4 % | |||||
Product Sales | 9 % | 6 % | |||||
Consulting Services | 43 | 50 | (14 %) | (15 %) | |||
Total revenue | 6 % | 4 % | |||||
As of March 31 | |||||||
2026 | 2025 | % Change as | % Change in CC | ||||
Annual recurring revenue* | 3 % | 2 % | |||||
Public cloud ARR** | 13 % | 12 % | |||||
The impact of currency on ARR is determined by calculating the prior period ending ARR using the current period end currency rates.
* Total Annual Recurring Revenue ("Total ARR") is defined as the annual contract value for all active and contractually binding term-based contracts at the end of the period, including cloud, recurring AI services, subscriptions, hardware rental, maintenance, and software upgrade rights. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q.
** Public cloud ARR is defined as the annual contract value for all active and contractually binding term-based contracts at the end of a period that are operated in a public cloud environment. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q. |
2. | Teradata reports its results in accordance with GAAP. However, as described below, the Company believes that certain non-GAAP measures such as free cash flow, adjusted free cash flow, non-GAAP gross profit, non-GAAP operating income, non-GAAP net income, and non-GAAP diluted earnings per share, all of which exclude certain items, and which may be reported on a constant currency basis, are useful for investors. Our non-GAAP measures are not meant to be considered in isolation to, as substitutes for, or superior to, results determined in accordance with GAAP, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Each of our non-GAAP measures do not have a uniform definition under GAAP and therefore, Teradata's definition may differ from other companies' definitions of these measures. |
For the Three Months | ||||||||||||
(in millions, except per share data) | ended March 31 | |||||||||||
Gross Profit: | 2026 | 2025 | % Chg. | |||||||||
GAAP Gross Profit | 11 % | |||||||||||
% of Revenue | 62.2 % | 59.3 % | ||||||||||
Excluding: | ||||||||||||
Stock-based compensation expense | 4 | 4 | ||||||||||
Reorganization and other costs | 3 | - | ||||||||||
Non-GAAP Gross Profit | 12 % | |||||||||||
% of Revenue | 63.7 % | 60.3 % | ||||||||||
Operating Income | ||||||||||||
GAAP Operating (loss) / income | ( | N/A | ||||||||||
% of Revenue | (8.1 %) | 15.8 % | ||||||||||
Excluding: | ||||||||||||
Stock-based compensation expense | 29 | 22 | ||||||||||
Reorganization and other costs | 7 | 3 | ||||||||||
SAP settlement costs | 121 | - | ||||||||||
Non-GAAP Operating Income | 33 % | |||||||||||
% of Revenue | 27.3 % | 21.8 % | ||||||||||
Net Income | ||||||||||||
GAAP Net Income | 661 % | |||||||||||
% of Revenue | 75.5 % | 10.5 % | ||||||||||
Excluding: | ||||||||||||
Stock-based compensation expense | 29 | 22 | ||||||||||
Reorganization and other costs | 7 | 3 | ||||||||||
SAP settlement | (359) | - | ||||||||||
Income tax adjustments(i) | 73 | (5) | ||||||||||
Non-GAAP Net Income | 33 % | |||||||||||
% of Revenue | 19.1 % | 15.3 % | ||||||||||
For the Three Months ended March 31 | 2026 Outlook | |||||||
Earnings Per Share: | 2026 | 2025 | 2026 Q2 | 2026 FY | ||||
GAAP Earnings Per Share | ||||||||
Excluding: | ||||||||
Stock-based compensation expense | 0.30 | 0.23 | 0.32 | 1.25 | ||||
Reorganization and other costs | 0.07 | 0.03 | 0.05 | 0.24 | ||||
SAP settlement | (3.72) | - | - | (3.72) | ||||
Income tax adjustments(i) | 0.76 | (0.05) | (0.06) | 0.56 | ||||
Non-GAAP Diluted Earnings Per Share | ||||||||
i. | Represents the income tax effect of the pre-tax adjustments to reconcile GAAP to Non-GAAP income based on the applicable jurisdictional statutory tax rate of the underlying item, including the |
3. | As described below, the Company believes that free cash flow and adjusted free cash flow are useful non-GAAP measures for investors. Free cash flow and adjusted free cash flow do not have a uniform definition under GAAP in |
(in millions) | For the Three Months | |||||
ended March 31 | Outlook | |||||
2026 | 2025 | 2026 | ||||
Cash provided by operating activities (GAAP) | ||||||
Less total capital expenditures | (11) | (1) | (~20) | |||
Free Cash Flow (non-GAAP measure) | ||||||
Less SAP gross settlement proceeds | (480) | - | (480) | |||
Plus legal and other expenses | 121 | - | 121 | |||
Plus taxes specific to the settlement | - | - | 57 | |||
Adjusted Free Cash Flow (non-GAAP Measure) | ||||||
Note to Investors
This release contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements generally relate to opinions, beliefs, and projections of expected future financial and operating performance, business trends, liquidity, and market conditions, among other things. These forward-looking statements are based upon current expectations and assumptions and often can be identified by words such as "expect," "strive," "looking ahead," "outlook," "guidance," "forecast," "anticipate," "continue," "plan," "estimate," "believe," "focus," "see," "commit," "should," "project," "will," "would," "likely," "intend," "potential," or similar expressions. Forward-looking statements in this release include our 2026 second quarter and 2026 full year financial outlook and product innovation and demand. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially, including those relating to: our strategy and ongoing business transformation, significant execution risk for our cloud, hybrid, on-premises, Artificial Intelligence ("AI") and Machine Learning ("ML") offerings, operational disruptions and unforeseen circumstances, impact of unanticipated delays or acceleration in our sales cycles to make accurate estimates impacting quarterly operating results, financial guidance and forecasts, the global economic environment and business conditions in general, including inflation, tariffs, and/or recessionary conditions; impact of price increase on our net sales, profit margins and earnings, the ability of our suppliers to meet their commitments to us; the timing of purchases, migrations, or expansions by our current and potential customers, including our ability to retain customers; the rapidly changing and intensely competitive nature of the information technology industry, the data analytics business, and artificial intelligence capabilities; fluctuations in our operating, capital allocation, and cash flow results; our ability to execute and realize the anticipated benefits of our refreshed brand, business transformation program or restructuring, sales and operational execution initiatives, and cost saving initiatives, including restructuring actions; risks inherent in operating in foreign countries, export controls and trade compliance, including sanctions, tariffs, foreign currency fluctuations, and/or acts of war; risks associated with data privacy, IP-enforcement actions, cyberattacks and maintaining secure and effective products for our customers, as well as, internal information technology and control systems; the timely and successful development, production or acquisition, availability and/or market acceptance of new and existing products, product features and services, including for our artificial intelligence, cloud, on-prem and hybrid offerings, tax rates; turnover of our workforce and the ability to attract and retain skilled employees; protecting our intellectual property; availability and successful execution of new alliance and acquisition opportunities; subscription arrangements that may be cancelled or fail to be renewed; the impact on our business and financial reporting from changes in accounting rules; and other factors described from time to time in Teradata's filings with the
About Teradata
Teradata empowers enterprises to turn intelligence into autonomous action, grounding AI agents in deep business context and trusted data. As AI agents multiply, Teradata is the context foundation, governance layer, and performance backbone that companies need now. The Teradata Autonomous AI and Knowledge platform puts AI into production across cloud, on-premises, and hybrid environments. Learn more at Teradata.com.
The Teradata logo is a trademark, and Teradata is a registered trademark of Teradata Corporation and/or its affiliates in the
INVESTOR CONTACT
Chad Bennett
chad.bennett@teradata.com
MEDIA CONTACT
Jennifer Donahue
jennifer.donahue@teradata.com
Schedule A | |||||||
TERADATA CORPORATION | |||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||
(in millions, except per share amounts - unaudited) | |||||||
For the Period Ended March 31 | |||||||
Three Months | |||||||
2026 | 2025 | % Chg | |||||
Revenue | |||||||
Recurring | $ 400 | $ 358 | 12 % | ||||
Perpetual software licenses, hardware and other | 1 | 10 | (90 %) | ||||
Consulting services | 43 | 50 | (14 %) | ||||
Total revenue | 444 | 418 | 6 % | ||||
Gross profit | |||||||
Recurring | 277 | 250 | |||||
% of Revenue | 69.3 % | 69.8 % | |||||
Perpetual software licenses, hardware and other | 1 | 1 | |||||
% of Revenue | 100.0 % | 10.0 % | |||||
Consulting services | (2) | (3) | |||||
% of Revenue | (4.7 %) | (6.0 %) | |||||
Total gross profit | 276 | 248 | |||||
% of Revenue | 62.2 % | 59.3 % | |||||
Selling, general and administrative expenses | 240 | 116 | |||||
Research and development expenses | 72 | 66 | |||||
(Loss) income from operations | (36) | 66 | |||||
% of Revenue | (8.1 %) | 15.8 % | |||||
Other income (expense), net | 473 | (8) | |||||
Income before income taxes | 437 | 58 | |||||
% of Revenue | 98.4 % | 13.9 % | |||||
Income tax expense | 102 | 14 | |||||
% Tax rate | 23.3 % | 24.1 % | |||||
Net income | $ 335 | $ 44 | |||||
% of Revenue | 75.5 % | 10.5 % | |||||
Net income per common share | |||||||
Basic | $ 3.60 | $ 0.46 | |||||
Diluted | $ 3.47 | $ 0.45 | |||||
Weighted average common shares outstanding | |||||||
Basic | 93.0 | 95.1 | |||||
Diluted | 96.6 | 97.4 | |||||
Schedule B | ||||||||
TERADATA CORPORATION | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in millions - unaudited) | ||||||||
March 31, | December 31, | March 31, | ||||||
2026 | 2025 | 2025 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ 816 | $ 493 | $ 368 | |||||
Accounts receivable, net | 322 | 251 | 307 | |||||
Inventories | 5 | 13 | 13 | |||||
Other current assets | 97 | 80 | 103 | |||||
Total current assets | 1,240 | 837 | 791 | |||||
Property and equipment, net | 202 | 198 | 201 | |||||
Right of use assets - operating lease, net | 6 | 7 | 8 | |||||
Goodwill | 397 | 399 | 396 | |||||
Capitalized contract costs, net | 39 | 42 | 40 | |||||
Deferred income taxes | 169 | 209 | 219 | |||||
Other assets | 89 | 87 | 97 | |||||
Total assets | $ 2,142 | $ 1,779 | $ 1,752 | |||||
Liabilities and stockholders' equity | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ 25 | $ 25 | $ 25 | |||||
Current portion of finance lease liability | 49 | 50 | 62 | |||||
Current portion of operating lease liability | 2 | 2 | 4 | |||||
Accounts payable | 58 | 96 | 100 | |||||
Payroll and benefits liabilities | 83 | 120 | 77 | |||||
Deferred revenue | 603 | 533 | 550 | |||||
Other current liabilities | 134 | 88 | 128 | |||||
Total current liabilities | 954 | 914 | 946 | |||||
Long-term debt | 424 | 431 | 449 | |||||
Finance lease liability | 49 | 45 | 43 | |||||
Operating lease liability | 4 | 4 | 5 | |||||
Pension and other postemployment plan liabilities | 112 | 114 | 105 | |||||
Long-term deferred revenue | 12 | 11 | 11 | |||||
Deferred tax liabilities | 12 | 12 | 10 | |||||
Other liabilities | 18 | 18 | 25 | |||||
Total liabilities | 1,585 | 1,549 | 1,594 | |||||
Stockholders' equity | ||||||||
Common stock | 1 | 1 | 1 | |||||
Paid-in capital | 2,330 | 2,305 | 2,214 | |||||
Accumulated deficit | (1,621) | (1,923) | (1,913) | |||||
Accumulated other comprehensive loss | (153) | (153) | (144) | |||||
Total stockholders' equity | 557 | 230 | 158 | |||||
Total liabilities and stockholders' equity | $ 2,142 | $ 1,779 | $ 1,752 | |||||
Schedule C | ||||
TERADATA CORPORATION | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(in millions - unaudited) | ||||
For the Period Ended March 31 | ||||
Three Months | ||||
2026 | 2025 | |||
Operating activities | ||||
Net income | $ 335 | $ 44 | ||
Adjustments to reconcile net income to net cash provided | ||||
by operating activities: | ||||
Depreciation and amortization | 25 | 20 | ||
Stock-based compensation expense | 29 | 22 | ||
Deferred income taxes | 36 | 10 | ||
Changes in assets and liabilities: | ||||
Receivables | (71) | (73) | ||
Inventories | 8 | 5 | ||
Current payables and accrued expenses | (15) | (30) | ||
Deferred revenue | 71 | 39 | ||
Other assets and liabilities | (17) | (29) | ||
Net cash provided by operating activities | 401 | 8 | ||
Investing activities | ||||
Expenditures for property and equipment | (10) | (1) | ||
Additions to capitalized software | (1) | - | ||
Net cash used in investing activities | (11) | (1) | ||
Financing activities | ||||
Repurchases of common stock | (34) | (44) | ||
Repayments of long-term borrowings | (6) | (6) | ||
Payments of finance leases | (17) | (16) | ||
Other financing activities, net | (5) | (2) | ||
Net cash used in financing activities | (62) | (68) | ||
Effect of exchange rate changes on cash and cash equivalents | (6) | 9 | ||
Increase (decrease) in cash, cash equivalents and restricted cash | 322 | (52) | ||
Cash, cash equivalents and restricted cash at beginning of period | 494 | 421 | ||
Cash, cash equivalents and restricted cash at end of period | $ 816 | $ 369 | ||
Supplemental cash flow disclosure: | ||||
Non-cash investing and financing activities: | ||||
Assets acquired by finance leases | $ 20 | $ 33 | ||
Assets acquired by operating leases | $ 1 | $ 1 | ||
Schedule D | ||||||||
TERADATA CORPORATION | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in millions - unaudited) | ||||||||
For the Three Months Ended March 31 | ||||||||
2026 | 2025 | % Change | % Change | |||||
Segment Revenue | ||||||||
Product Sales | $ 401 | $ 368 | 9 % | 6 % | ||||
Consulting Services | 43 | 50 | (14 %) | (15 %) | ||||
Total segment revenue | 444 | 418 | 6 % | 4 % | ||||
Segment gross profit | ||||||||
Product Sales | 281 | 253 | ||||||
% of Revenue | 70.1 % | 68.8 % | ||||||
Consulting Services | 2 | (1) | ||||||
% of Revenue | 4.7 % | (2.0 %) | ||||||
Total segment gross profit | 283 | 252 | ||||||
% of Revenue | 63.7 % | 60.3 % | ||||||
Reconciling items(1) | (7) | (4) | ||||||
Total gross profit | $ 276 | $ 248 | ||||||
% of Revenue | 62.2 % | 59.3 % | ||||||
(1) | Reconciling items include stock-based compensation, amortization of acquisition-related |
(2) | The impact of currency is determined by calculating the prior period results using the current-year |
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SOURCE Teradata