TERADATA CORP /DE/ (TDC): Results of Operations and Financial Condition
TERADATA CORP /DE/ (TDC) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 INVESTOR CONTACT Chad Bennett chad.bennett@teradata.com MEDIA CONTACT Jennifer Donahue jennifer.donahue@teradata.com Teradata Reports Second Quarter 2026 Financial Results • Recurring revenue of $363 million, an increase of 3% as reported and 2% in constant currency
How this was made
The 30-second read
Why it matters
Updated guidance changes the forward earnings and cash flow distribution for TDC, with margin expansion and stronger operating cash flow in Q2 supporting the narrative, while Q3 YoY revenue contraction guidance introduces near-term caution.
Market read
Traders can reprice TDC based on the combination of Q2 margin/cash flow strength and the explicit Q3 and FY 2026 EPS and adjusted free cash flow ranges.
What to watch
The filing references an after-tax net benefit related to an SAP settlement in FY 2026 cash flow; traders may adjust for one-time items when assessing sustainable free cash flow.
Teradata Reports Second Quarter 2026 Financial Results
Second-quarter recurring revenue, Total ARR, public cloud ARR, operating margins, diluted EPS, operating cash flow and adjusted free cash flow all increased year over year, while third-quarter revenue guidance calls for year-over-year declines.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $410 million | – | —% |
| Recurring revenueGAAP | $363 million | – | 3% as reported and 2% in constant currency |
| Total ARRother | $1.509 billion | – | 1% as reported and 2% in constant currency |
| Public cloud ARRother | $686 million | – | 8% as reported and 9% in constant currency |
| GAAP gross profitGAAP | $243 million | – | 6% |
| GAAP gross marginGAAP | 59.3% | – | – |
| Non-GAAP gross profitnon-GAAP | $248 million | – | 4% |
| Non-GAAP gross marginnon-GAAP | 60.5% | – | – |
| GAAP operating incomeGAAP | $48 million | – | 100% |
| GAAP operating marginGAAP | 11.7% | – | – |
| Non-GAAP operating incomenon-GAAP | $88 million | – | 31% |
| Non-GAAP operating marginnon-GAAP | 21.5% | – | – |
| GAAP net incomeGAAP | $46 million | – | 411% |
| GAAP net income marginGAAP | 11.2% | – | – |
| Non-GAAP net incomenon-GAAP | $66 million | – | 47% |
| Non-GAAP net income marginnon-GAAP | 16.1% | – | – |
| GAAP diluted EPSGAAP | $0.48 | – | – |
| Non-GAAP diluted EPSnon-GAAP | $0.69 | – | – |
| GAAP effective tax rateGAAP | 2.1% | – | – |
| Non-GAAP effective tax ratenon-GAAP | 23.3% | – | – |
| Cash flow from operationsGAAP | $106 million | – | 147% |
| Free cash flownon-GAAP | $105 million | – | – |
| Adjusted free cash flownon-GAAP | $127 million | – | 226% |
| Six-month total revenueGAAP | $854 million | – | 3% as reported and 2% in constant currency |
| Six-month recurring revenueGAAP | $763 million | – | 7% as reported and 5% in constant currency |
| Six-month GAAP gross profitGAAP | $519 million | – | 9% |
| Six-month GAAP gross marginGAAP | 60.8% | – | – |
| Six-month non-GAAP gross profitnon-GAAP | $531 million | – | 8% |
| Six-month non-GAAP gross marginnon-GAAP | 62.2% | – | – |
| Six-month GAAP operating incomeGAAP | $12 million | – | (87)% |
| Six-month non-GAAP operating incomenon-GAAP | $209 million | – | 32% |
| Six-month GAAP net incomeGAAP | $381 million | – | 619% |
| Six-month non-GAAP net incomenon-GAAP | $151 million | – | 39% |
| Six-month GAAP diluted EPSGAAP | $3.95 | – | – |
| Six-month non-GAAP diluted EPSnon-GAAP | $1.57 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Recurring revenueNot disclosed | $363 million | – | 3% as reported and 2% in constant currency |
| Perpetual software licenses, hardware and otherNot disclosed | $8 million | – | 167% as reported and 313% in constant currency |
| Consulting servicesNot disclosed | $39 million | – | (24)% as reported and (23)% in constant currency |
| Product SalesNot disclosed | $371 million | – | 4% as reported and 3% in constant currency |
| Six-month recurring revenueNot disclosed | $763 million | – | 7% as reported and 5% in constant currency |
| Six-month perpetual software licenses, hardware and otherNot disclosed | $9 million | – | (31)% as reported and (26)% in constant currency |
| Six-month consulting servicesNot disclosed | $82 million | – | (19)% as reported and (19)% in constant currency |
| Six-month Product SalesNot disclosed | $772 million | – | 6% as reported and 5% in constant currency |
Third quarter of 2026 and full year 2026 outlook
- RevenueThird quarter of 2026: Recurring revenue in the range of -4% to -2% year-over-year; Total revenue in the range of -6% to -4% year-over-year. Full year 2026: 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.
- NoteThird quarter of 2026: GAAP diluted EPS is expected to be in the range of $0.27 to $0.31 per share.
- NoteThird quarter of 2026: Non-GAAP diluted EPS is expected to be in the range of $0.55 to $0.59 per share.
- NoteFull year 2026: Total ARR growth of 2% to 4% year-over-year.
- NoteFull year 2026: GAAP diluted EPS is now expected to be in the range of $4.43 to $4.51.
- NoteFull year 2026: Non-GAAP diluted EPS in the range of $2.65 to $2.73 per share.
- NoteFull year 2026: Cash flow from operations of $665 million to $685 million, which includes an after-tax net benefit of $315 million related to a settlement with SAP.
- NoteFull year 2026: Adjusted free cash flow of $330 million to $350 million.
What drove it
- Total ARR increased to $1.509 billion from $1.489 billion, an increase of 1% as reported and 2% in constant currency.
- Public cloud ARR increased to $686 million from $634 million, an increase of 8% as reported and 9% in constant currency.
- Recurring revenue was 89% of total revenue versus 87%.
- The company highlighted the launch of its Autonomous Knowledge Platform and stated that it brings capabilities to help enterprises deploy agentic AI.
- GAAP operating margin was 11.7% versus 5.9%, and non-GAAP operating margin was 21.5% versus 16.4%.
Concerns
- Third-quarter 2026 recurring revenue is guided to decline in the range of -4% to -2% year-over-year.
- Third-quarter 2026 total revenue is guided to decline in the range of -6% to -4% year-over-year.
- Consulting services revenue was $39 million versus $51 million, a change of (24)% as reported and (23)% in constant currency.
- Six-month GAAP operating income was $12 million versus $90 million, a change of (87)%, and the reconciliation includes $121 million of SAP settlement costs.
What to watch
- Whether Total ARR growth remains within the full-year 2026 range of 2% to 4% year-over-year.
- Whether recurring revenue and total revenue meet the third-quarter 2026 ranges of -4% to -2% year-over-year and -6% to -4% year-over-year, respectively.
- Delivery against full-year adjusted free cash flow guidance of $330 million to $350 million.
- The effect of the SAP settlement, including the stated after-tax net benefit of $315 million in full-year operating cash flow guidance.
- The trajectory of public cloud ARR, which was $686 million as of June 30, 2026.
Balance sheet and cash flow
- Cash flow from operations was $106 million compared to $43 million.
- Free cash flow was $105 million compared to $39 million.
- Adjusted free cash flow was $127 million compared to $39 million.
- Full year 2026 cash flow from operations guidance of $665 million to $685 million includes an after-tax net benefit of $315 million related to a settlement with SAP.
- For the six months ended June 30, 2026, SAP settlement costs were $121 million in the reconciliation of GAAP operating income to non-GAAP operating income.
- For the six months ended June 30, 2026, the SAP settlement adjustment was $(359) million in the reconciliation of GAAP net income to non-GAAP net income.
Analysis
Teradata reported flat second-quarter total revenue of $410 million versus $408 million, while recurring revenue rose to $363 million from $354 million. Recurring revenue represented 89% of total revenue versus 87%, and Total ARR increased to $1.509 billion from $1.489 billion. Public cloud ARR increased to $686 million from $634 million, outpacing Total ARR growth on both a reported and constant-currency basis.
Profitability improved materially in the quarter. GAAP gross margin was 59.3% versus 56.4%, while non-GAAP gross margin was 60.5% versus 58.3%. GAAP operating income was $48 million versus $24 million and non-GAAP operating income was $88 million versus $67 million. This lifted GAAP operating margin to 11.7% from 5.9% and non-GAAP operating margin to 21.5% from 16.4%.
GAAP net income was $46 million versus $9 million, and GAAP diluted EPS was $0.48 versus $0.09 per share. Non-GAAP net income was $66 million versus $45 million, while non-GAAP diluted EPS was $0.69 versus $0.47 per share. Cash flow from operations rose to $106 million from $43 million, and adjusted free cash flow rose to $127 million from $39 million. The quarter's GAAP effective tax rate was 2.1%, compared with 30.8% in the prior-year period.
Revenue mix showed growth in product sales, which were $371 million versus $357 million, while consulting services declined to $39 million from $51 million. Management highlighted the Autonomous Knowledge Platform launch and enterprise deployment of agentic AI. The six-month results include SAP settlement costs of $121 million in the operating-income reconciliation and a $(359) million SAP settlement adjustment in the net-income reconciliation, which coincided with six-month GAAP operating income of $12 million versus $90 million.
The outlook is mixed on growth but higher on specified full-year profitability and cash flow measures. Third-quarter recurring revenue is guided to decline in the range of -4% to -2% year over year and total revenue in the range of -6% to -4% year over year. Teradata reaffirmed full-year Total ARR growth of 2% to 4%, recurring revenue from flat to 2%, and total revenue from -2% to flat. It increased full-year GAAP diluted EPS to $4.43 to $4.51, non-GAAP diluted EPS to $2.65 to $2.73 per share, and guided adjusted free cash flow to $330 million to $350 million.
Management, verbatim
Teradata again delivered a solid quarter, growing total ARR, recurring revenue, and meaningful free cash flow.
Steve McMillan, president and CEO of Teradata
We are pleased with our strong product innovation this quarter, highlighted by the launch of our Autonomous Knowledge Platform, bringing a powerful set of capabilities to help enterprises deploy agentic AI.
Steve McMillan, president and CEO of Teradata
With our differentiated hybrid platform, positive customer reaction, and tangible operating leverage, we remain confident in our future, and are increasing our outlook for non-GAAP EPS and Adjusted Free Cash Flow.
Steve McMillan, president and CEO of Teradata
Not in the filing
stated, not guessed- Prior-quarter comparisons for revenue, ARR, margins, income, EPS and cash flow.
- Capital expenditures for the reported period.
- Cash balance, debt balance and other balance-sheet amounts.
- Share repurchases, dividends and other capital-return amounts.
- Segment drivers beyond the reported revenue classifications.
- Third-quarter and full-year guidance for gross margin, operating expenses and tax rate.
- Prior outlook for comparison with reported results.
- Six-month cash flow from operations, free cash flow and adjusted free cash flow amounts.
- Capital allocation and balance-sheet information may be contained in the portion of the exhibit not included in the provided filing text.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is Teradata’s SEC Form 8-K (Item 2.02) with Q2 2026 financial results and updated outlook, including GAAP and non-GAAP EPS and adjusted free cash flow ranges.
Ticker impact
Teradata reported Q2 2026 results and raised its outlook, including higher GAAP and non-GAAP EPS ranges and adjusted free cash flow guidance.
Likely positive near-term bias as guidance ranges and cash flow metrics improved, though the Q3 recurring revenue decline guidance may temper upside.
The filing includes specific Q2 operating margin expansion, cash flow/adjusted free cash flow growth, and explicit Q3 and FY 2026 EPS and cash flow ranges, which are direct inputs to valuation and positioning.
Market effects
Signals improving profitability and cash generation for data/analytics software vendors, potentially supporting sentiment toward enterprise AI infrastructure spend.
Limited direct regional read-through; primarily US-listed software earnings/guidance.
Moderate, as guidance and SAP settlement benefit are company-specific but can influence broader enterprise software cash flow expectations.
Counterpoint
Despite strong margins and cash flow, the Q3 recurring revenue and total revenue guidance implies continued top-line softness, which could cap multiple expansion.
Key entities
- companyTeradata
NYSE-listed data and analytics software provider reporting Q2 2026 results and raising FY 2026 guidance.
- counterpartySAP
Referenced as part of an after-tax net benefit related to a settlement included in FY 2026 cash flow guidance.
