Teradata Reports First Quarter 2026 Financial Results
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
SAP Litigation Settlement
On 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.
Outlook
For the second quarter of 2026:
For the full year 2026, Teradata increases the following ranges:
For the full year 2026, Teradata reaffirms the following ranges:
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 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 Q2
Guidance
2026 FY
Guidance
GAAP Earnings Per Share
$3.47
$0.45
$0.22 - $0.26
$4.22 - $4.32
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
$0.88
$0.66
$0.53 - $0.57
$2.55 - $2.65
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 $79 million discrete income tax effect of the SAP settlement recorded in the first quarter of 2026. Including the income tax effect assists investors in understanding the tax provision associated with those adjustments and the effective tax rate related to the underlying business and performance of the Company's ongoing operations. As a result of these adjustments, the Company's non-GAAP effective tax rate for the three months ended March 31, 2026, was 25.4% and March 31, 2025, was 22.9%.
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 the United States and therefore, Teradata's definitions may differ from other companies' definitions of this measure. Teradata defines free cash flow as cash provided by/used in operating activities, less total capital expenditures and adjusted free cash flow as free cash flow less the gross proceeds from the SAP settlement, plus the non-recurring legal and other expenses incurred in connection with the SAP litigation and resulting settlement, and taxes paid specific to the settlement agreement. Teradata's management uses free cash flow and adjusted free cash flow to assess the financial performance of the Company and believes they are useful for investors because they relate the operating cash flow of the Company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures which can be used for among other things, investments in the Company's existing businesses, strategic acquisitions, strengthening the Company's balance sheet, repurchase of Company stock and repay the Company's debt obligations and adjusted free cash flow adjusts the impact of the SAP settlement. Neither free cash flow or adjusted free cash flow represent the residual cash flow available for discretionary expenditures since there may be other non-discretionary expenditures that are not deducted from these measures. These non-GAAP measures should not be considered as a substitute for, or superior to, cash flows from operating activities under GAAP.
(in millions)
For the Three Months
ended March 31
Outlook
2026
2025
2026
Cash provided by operating activities (GAAP)
$401
$8
$642 to $662
Less total capital expenditures
(11)
(1)
(~20)
Free Cash Flow (non-GAAP measure)
$390
$7
$622 to $642
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)
$31
$7
$320 to $340
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 U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K, and subsequent quarterly reports on Forms 10-Q or current reports on Forms 8-K, as well as Teradata's annual report to stockholders. Teradata does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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 U.S. and worldwide.
INVESTOR CONTACT
Chad Bennett
[email protected]
MEDIA CONTACT
Jennifer Donahue
[email protected]
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
As Reported
% Change
Constant
Currency (2)
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
intangible assets and acquisition, integration and reorganization-related items.
(2)
The impact of currency is determined by calculating the prior period results using the current-year
monthly average currency rates.
SOURCE Teradata