Teradata Corporation

What they do

Teradata operates a massively parallel analytics platform designed for mission-critical workloads, supporting public cloud, on-premises, private cloud, and hybrid environments. Its platform includes patented workload management, query optimization, and AI capabilities such as ClearScape Analytics, Teradata AI Factory, and AgentBuilder. The company also provides consulting services to help customers deploy and optimize these solutions.

Revenue drivers

• Recurring Revenue (Cloud, Subscriptions, Maintenance) — Represents 89% of total revenue in Q2 2026 ($363 million). Includes Public Cloud ARR of $686 million (up 8% YoY) as well as on-premises maintenance, software subscriptions, and recurring AI services. Growth in public cloud partially offsets declines in on-premises recurring revenue.
• Perpetual Software Licenses, Hardware and Other — A small and declining segment, contributing 2% of Q2 2026 revenue ($8 million). Revenue fell 26% in 2025 as the company shifts to recurring models. Q2 2026 saw a 167% increase from a very low base.
• Consulting Services — Contributed 9.5% of Q2 2026 revenue ($39 million), down 24% YoY. The company is reducing lower-margin consulting engagements and focusing on higher-value strategic partner-led implementations.

Recent performance

In Q2 2026, total revenue was $410 million (flat YoY), with recurring revenue up 3% to $363 million. GAAP operating margin improved to 11.7% from 5.9% a year earlier, and net income rose to $46 million from $9 million. Cash flow from operations was $106 million, up 147%. Total ARR reached $1.509 billion (up 1% as reported), and Public Cloud ARR was $686 million (up 8% as reported).

Strategy

Teradata is focused on enabling autonomous enterprise AI through its AI and knowledge platform, designed for agentic AI at scale. Key priorities include expanding public cloud adoption, driving hybrid deployments, and integrating with partners like AWS, Azure, Google Cloud, and Nvidia. The company is investing in product innovation such as the Autonomous Knowledge Platform, ClearScape Analytics, and AgentBuilder, while managing costs to improve operating margins and free cash flow.

Risks

• Cloud transformation execution — Failure to successfully migrate customers from on-premises to cloud or to scale cloud offerings as planned could impair revenue growth and margins.
• Dependence on cloud service providers — Teradata's public cloud offerings rely on AWS, Microsoft Azure, and Google Cloud; changes in partner relationships, pricing, or performance could disrupt operations.
• Competitive pressure — Intense competition from cloud-native data platforms and AI/analytics vendors could erode market share and pricing power.
• Foreign exchange fluctuation — A significant portion of revenue is generated outside the U.S., and adverse currency movements negatively impact reported results and ARR metrics.

Outlook

For Q3 2026, Teradata expects recurring revenue to decline 4% to 2% YoY and total revenue to decline 6% to 4% YoY. For full-year 2026, management reaffirmed Total ARR growth of 2% to 4% and recurring revenue flat to up 2%, while raising non-GAAP EPS guidance to $2.65–$2.73 and adjusted free cash flow to $330–$350 million. The improved outlook reflects operating leverage and a one-time $315 million after-tax benefit from an SAP settlement.