Teradata Q4 Earnings Beat Estimates, Revenues Rise Y/Y, Shares Rise

Teradata TDC reported fourth-quarter 2025 non-GAAP earnings of 74 cents per share, which beat the Zacks Consensus Estimate by 35.04%. The bottom line increased 39.6% year over year.

Revenues of $421 million beat the Zacks Consensus Estimate by 6.52%. The figure appreciated 3% year over year on a reported basis and 1% on a constant-currency (cc) basis.

Total annual recurring revenues (ARR) at the fourth-quarter end increased 3% year over year to $1.52 billion and 1% on a constant-currency (cc) basis.

Teradata shares were up 3.32% at the time of writing this article. The company’s shares have decreased 5.4% in the trailing 12 months, underperforming the Zacks Computer & Technology sector’s appreciation of 22.9%.

TDC Q4 Top Line in Detail

Public cloud ARR increased 15% on a reported basis and 13% on a cc basis year over year to $701 million. The growth was driven by increasing demand for its cloud solutions. The cloud net expansion rate was 108% in the reported quarter.

Recurring revenues (87.2% of total revenues) increased 5% year over year on a reported basis and 3% on constant-currency (cc) to $367 million. Perpetual software license and hardware revenues (0.2% of total revenues) dropped 67% year over year (down 69% at constant currency) to $1 million.

Consulting services’ revenues (12.6% of revenues) fell 4% year over year (down 6% at constant currency) to $53 million. Product sales increased 4% year over year on a reported basis (up 2% at cc) to $368 million.

TDC Operating Details

Fourth-quarter gross margin on a non-GAAP basis was 62%, expanding 110 basis points (bps) year over year.

Selling, general & administrative (SG&A) expenses decreased 5.1% year over year to $129 million. Research & development (R&D) expenses were $73 million, up 7.4% year over year.

As a percentage of revenues, SG&A decreased 260 bps year over year to 30.6%, whereas R&D inched up 70 bps year over year to 17.3%.

The non-GAAP operating margin was 22.8%, up 520 bps year over year.

TDC’s Balance Sheet Remains Strong

As of Dec. 31, 2025, Teradata had cash and cash equivalents of $493 million compared with $406 million as of Sept. 30.

Long-term debt as of Dec. 31, 2025, was $431 million compared with $437 million as of Sept. 30.

In the fourth quarter, TDC generated $160 million in cash from operating activities compared with the previous quarter’s $94 million.

The company generated a free cash flow of $151 million in the reported quarter.

TDC Offers Q1 and 2026 Guidance

For first-quarter 2026, non-GAAP earnings are expected to be between 75 cents and 79 cents per share. 

Teradata expects recurring revenues to increase between 6% and 8% year over year, at cc. The company expects total revenues to be up 1-3% year over year. 

For 2026, TDC expects non-GAAP earnings between $2.55 and $2.65 per share. 

Public cloud ARR growth is projected at a low double-digit percentage year over year. Total ARR growth is expected between 2% and 4% year over year, at cc.

Teradata expects recurring revenues to be in the range of flat to 2% up, year over year, at cc. The company expects total revenues to be in the range of -2% to flat year over year at cc from 2025. 

Cash flow from operations is expected to be between $330 million and $350 million. Free cash flow is anticipated to be in the $310-$330 million range.

Zacks Rank & Other Stocks to Consider

Currently, Teradata carries a Zacks Rank #2 (Buy). 

Micron Technology MU, MongoDB MDB, and MKS MKSI are some other top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector.

Micron Technology shares have gained 307.1% in the past 12-month period. This Zacks Rank #1 (Strong Buy) company is scheduled to release second-quarter 2026 results on March 19, 2026. You can see the complete list of today’s Zacks #1 Rank stocks here.

MongoDB shares have returned 29% in the past 12-month period. MDB is scheduled to release its fourth-quarter 2026 results on March 2, 2026. The company sports a Zacks Rank #1 at present.  
 
MKS shares have gained 126.7% in the past 12-month period. MKSI is set to report its fourth-quarter 2025 results on Feb. 17, 2026. The company currently sports a Zacks Rank #1.

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This article originally published on Zacks Investment Research (zacks.com).

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