Teradata Reports First Quarter 2026 Financial Results

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

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.