Public cloud ARR of $686 million, an increase of 13% as reported and 12% in constant currency from the prior year period(1)
Recurring Revenue of $400 million, up 12% as reported and 9% in constant currency(1)
Cash Flow from Operations of $401 million and Free Cash Flow of $390 million, which includes a pre-tax net benefit of $359 million related to a settlement with SAP(3)
SAN DIEGO, May 5, 2026 /PRNewswire/ -- Teradata (NYSE:TDC) today announced its first quarter 2026 financial results.
"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 from $1.442 billion, an increase of 3% as reported and 2% in constant currency(1)
Public cloud ARR increased to $686 million from $606 million, an increase of 13% as reported and 12% in constant currency(1)
Recurring revenue was $400 million versus $358 million, an increase of 12% as reported and 9% in constant currency(1)
Total revenue was $444 million versus $418 million, an increase of 6% as reported and 4% in constant currency(1)
Recurring revenue was 90% of total revenue versus 86%
GAAP gross margin was 62.2% versus 59.3%
Non-GAAP gross margin was 63.7% versus 60.3%(2)
GAAP operating margin was (8.1%) versus 15.8%
Non-GAAP operating margin was 27.3% versus 21.8%(2)
GAAP diluted EPS was $3.47 versus $0.45 per share
Non-GAAP diluted EPS was $0.88 versus $0.66 per share(2)
Cash flow from operations was $401 million compared to $8 million
Free cash flow was $390 million compared to $7 million(3)
Adjusted free cash flow was $31 million compared to $7 million(3)
SAP Litigation SettlementOn February 19, 2026, Teradata entered into a settlement agreement with SAP. From the settlement, Teradata received a gross payment of $480 million in the first quarter of 2026. After accounting for legal fees and other expenses for the litigation and resulting settlement, the pre-tax net amount was $359 million, with $79 million of tax expense being recognized as a discrete item for US GAAP purposes in the first quarter. The net after tax settlement positively impacted GAAP Diluted EPS by $2.90 in the first quarter of 2026. For both Cash flow from Operations and Free Cash Flow, the pre-tax amount of $359 million was reflected in the first quarter of 2026. In addition, an estimated $57 million of cash tax payments related to the settlement is expected to be paid by the end of 2026 which will change the Cash flow from Operations and Free Cash Flow linearity. Regarding the tax payments, approximately half is expected to be paid in second quarter of 2026, and the remaining half is expected to be split between the third and fourth quarters of 2026. On an after-tax net basis, the settlement is expected to provide a benefit of $302 million to Cash from Operations and Free Cash Flow.
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.
OutlookFor 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 to $0.26 per share
Non-GAAP diluted EPS is expected to be in the range of $0.53 to $0.57 per share(2)
For the full year 2026, Teradata increases the following ranges:
GAAP diluted EPS is now expected to be in the range of $4.22 to $4.32
Cash flow from operations of $642 million to $662 million, which includes an after-tax net benefit of $302 million related to a settlement with SAP
Adjusted free cash flow of $320 million to $340 million(3)
For the full year 2026, Teradata reaffirms the following ranges:
Total ARR growth of 2% to 4% 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 to $2.65 per share(2)
Earnings Conference CallThe 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 United States, see global dial-in numbers here, and use access code 852900969.
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 Reported
% Change in CC
Recurring revenue
$400
$358
12 %
9 %
Perpetual software licenses, hardware and other
1
10
(90 %)
(88 %)
Consulting services
43
50
(14 %)
(15 %)
Total revenue
$444
$418
6 %
4 %
Product Sales
$401
$368
9 %
6 %
Consulting Services
43
50
(14 %)
(15 %)
Total revenue
$444
$418
6 %
4 %
As of March 31
2026
2025
% Change as Reported
% Change in CC
Annual recurring revenue*
$1,492
$1,442
3 %
2 %
Public cloud ARR**
$686
$606
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.The following tables reconcile Teradata's actual and projected results and EPS under GAAP to the Company's actual and projected non-GAAP results and EPS for the periods presented, which exclude certain specified items. Our management internally uses supplemental non-GAAP financial measures, such as gross profit, operating income, net income, and EPS, excluding certain items, to understand, manage and evaluate our business and support operating decisions on a regular basis. The Company believes such non-GAAP financial measures (1) provide useful information to investors regarding the underlying business trends and performance of the Company's ongoing operations, (2) are useful for period-over-period comparisons of such operations and results, that may be more easily compared to peer companies and allow investors a view of the Company's operating results excluding stock-based compensation expense and special items, (3) provide useful information to management and investors regarding present and future business trends, and (4) provide consistency and comparability with past reports and projections of future results.
For the Three Months
(in millions, except per share data)
ended March 31
Gross Profit:
2026
2025
% Chg.
GAAP Gross Profit
$276
$248
11 %
% of Revenue
62.2 %
59.3 %
Excluding:
Stock-based compensation expense
4
4
Reorganization and other costs
3
-
Non-GAAP Gross Profit
$283
$252
12 %
% of Revenue
63.7 %
60.3 %
Operating Income
GAAP Operating (loss) / income
($36)
$66
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
$121
$91
33 %
% of Revenue
27.3 %
21.8 %
Net Income
GAAP Net Income
$335
$44
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
$85
$64
33 %
% of Revenue
19.1 %
15.3 %
For the Three Months
ended March 31
2026 Outlook
Earnings Per Share:
2026
2025
2026 Q2Guidance
2026 FYGuidance
GAAP Earnings Per Share
$3.47
$0.45
