Earnings release
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teradata . INVESTOR CONTACT Chad Bennett chad.bennett@teradata.com MEDIA CONTACT Jennifer Donahue jennifer.donahue@teradata.com • • • Teradata Reports Second Quarter 2026 Financial Results Recurring revenue of $ 363 million , an increase of 3 % as reported and 2 % in constant currency ( 1 ) GAAP Operating Margin of 11.7 % , up 580 basis points from the prior year period Non - GAAP Operating Margin of 21.5 % , up 510 basis points from the prior year period ( 2 ) Cash flow from operations of $ 106 million , up 147 % from the prior year period Adjusted free cash flow of $ 127 million , up 226 % from the prior year period ( 3 ) SAN DIEGO - August 4 , 2026 -- Teradata ( NYSE : TDC ) today announced its second quarter 2026 financial results . " Teradata again delivered a solid quarter , growing total ARR , recurring revenue , and meaningful free cash flow , " said Steve McMillan , president and CEO of Teradata . " We are pleased with our strong product innovation this quarter , highlighted by the launch of our Autonomous Knowledge Platform , bringing a powerful set of capabilities to help enterprises deploy agentic Al . With our differentiated hybrid platform , positive customer reaction , and tangible operating leverage , we remain confident in our future , and are increasing our outlook for non - GAAP EPS and Adjusted Free Cash Flow . " Second Quarter 2026 Financial Highlights Compared to Second Quarter 2025 • Total ARR increased to $ 1.509 billion from $ 1.489 billion , an increase of 1 % as reported and 2 % in constant currency ( 1 ) • Public cloud ARR increased to $ 686 million from $ 634 million , an increase of 8 % as reported and 9 % in constant currency ( 1 ) • • Total revenue was $ 410 million versus $ 408 million , flat as reported and in constant currency ( 1 ) Recurring revenue was $ 363 million versus $ 354 million , an increase of 3 % as reported and 2 % in constant currency ( 1 ) • Recurring revenue was 89 % of total revenue versus 87 % • GAAP gross margin was 59.3 % versus 56.4 % • Non - GAAP gross margin was 60.5 % versus 58.3 % ( 2 ) 1
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2 • GAAP operating margin was 11.7% versus 5.9% • Non-GAAP operating margin was 21.5% versus 16.4%(2) • GAAP diluted EPS was $0.48 versus $0.09 per share • Non-GAAP diluted EPS was $0.69 versus $0.47 per share(2) • Cash flow from operations was $106 million compared to $43 million • Free cash flow was $105 million compared to $39 million(3) • Adjusted free cash flow was $127 million compared to $39 million (3) Outlook For the third quarter of 2026: • Recurring revenue in the range of -4% to -2% year-over-year • Total revenue in the range of -6% to -4% year-over-year • GAAP diluted EPS is expected to be in the range of $0.27 to $0.31 per share • Non-GAAP diluted EPS is expected to be in the range of $0.55 to $0.59 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 $4.43 to $4.51 • Non-GAAP diluted EPS in the range of $2.65 to $2.73 per share(2) • Cash flow from operations of $665 million to $685 million, which includes an after-tax net benefit of $315 million related to a settlement with SAP • Adjusted free cash flow of $330 million to $350 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 Earnings Conference Call The conference call will begin at 1:30 p.m. PT on August 4, 2026. Investors and participants may attend the call by dialing (585) 542-9983 and entering access code 369709903. For investors and participants outside the United States, see global dial-in numbers here, and use access code 369709903. The live webcast, as well as a replay, will be available on the Investor Relations page of the Teradata website at investor.teradata.com.
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3 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 June 30 2026 2025 % Change as Reported % Change in CC Recurring revenue $363 $354 3% 2% Perpetual software licenses, hardware and other 8 3 167% 313% Consulting services 39 51 (24%) (23%) Total revenue $410 $408 0% 0% Product Sales $371 $357 4% 3% Consulting Services 39 51 (24%) (23%) Total revenue $410 $408 0% 0% Revenue (in millions) For the Six Months ended June 30 2026 2025 % Change as Reported % Change in CC Recurring revenue $763 $712 7% 5% Perpetual software licenses, hardware and other 9 13 (31%) (26%) Consulting services 82 101 (19%) (19%) Total revenue $854 $826 3% 2% Product Sales $772 $725 6% 5% Consulting Services 82 101 (19%) (19%) Total revenue $854 $826 3% 2% As of June 30 2026 2025 % Change as Reported % Change in CC Annual recurring revenue* $1,509 $1,489 1% 2% Public cloud ARR** $686 $634 8% 9% 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.
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4 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 For the Six Months (in millions, except per share data) ended June 30 ended June 30 Gross Profit: 2026 2025 % Chg. 2026 2025 % Chg. GAAP Gross Profit $243 $230 6% $519 $478 9% % of Revenue 59.3% 56.4% 60.8% 57.9% Excluding: Stock-based compensation expense 4 5 8 9 Reorganization and other costs 1 3 4 3 Non-GAAP Gross Profit $248 $238 4% $531 $490 8% % of Revenue 60.5% 58.3% 62.2% 59.3% Operating Income GAAP Operating Income $48 $24 100% $12 $90 (87%) % of Revenue 11.7% 5.9% 1.4% 10.9% Excluding: Stock-based compensation expense 33 31 62 53 Reorganization and other costs 7 12 14 15 SAP settlement costs - - 121 - Non-GAAP Operating Income $88 $67 31% $209 $158 32% % of Revenue 21.5% 16.4% 24.5% 19.1% Net Income GAAP Net Income $46 $9 411% $381 $53 619% % of Revenue 11.2% 2.2% 44.6% 6.4% Excluding: Stock-based compensation expense 33 31 62 53 Reorganization and other costs 6 12 13 15 SAP settlement - - (359) - Income tax adjustments(i) (19) (7) 54 (12) Non-GAAP Net Income $66 $45 47% $151 $109 39% % of Revenue 16.1% 11.0% 17.7% 13.2%
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5 For the Three Months ended June 30 For the Six Months ended June 30 2026 Outlook Earnings Per Share: 2026 2025 2026 2025 Q3 FY GAAP Earnings Per Share $0.48 $0.09 $3.95 $0.55 $0.27 - $0.31 $4.43 - $4.51 Excluding: 0.34 0.32 0.64 0 .54 0.31 1 .27 0.06 0.13 0.14 0.15 0.02 0.24 Stock-based compensation expense Reorganization and other costs SAP settlement - - (3.72) - - (3.72) Income tax adjustments(i) (0.19) (0.07) 0.56 (0.12) (0.05) 0.43 Non-GAAP Diluted Earnings Per Share $0.69 $0.47 $1.57 $1.12 $0.55 - $0.59 $2.65 - $2.73 i. R epresents 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 $67 million discrete income tax effect of the SAP settlement recorded in the first half 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 u nderlying business and performance of the Company’s ongoing operations. As a result of these adjustments, the C ompany’s GAAP effective tax rate and non-GAAP effective tax rate for the three months ended June 30, 2026, was 2.1% and 23.3%, respectively, and June 30, 2025, was 30.8% and 19.6%, respectively. For the six months ended June 30, 2026, the Company’s GAAP effective tax rate and non-GAAP effective tax rate was 21.3% and 24.5%, respectively and June 30, 2025, was 25.4% and 21.6%, respectively. 3. A s 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 U nited 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 op erating 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 fr ee c ash flow adjusts the impact of the SAP settlement. Neither free cash flow or adjusted free cash flow represent the r esidual 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 For the Six Months ended June 30 ended June 30 Outlook 2026 2025 2026 2025 2026 Cash provided by operating activities (GAAP) $106 $43 $507 $51 $665 to $685 Less total capital expenditures (1) (4) (12) (5) (~20) Free Cash Flow (non-GAAP measure) $105 $39 $495 $46 $645 to $665 Less SAP gross settlement proceeds - - (480) - (480) Plus legal and other expenses - - 121 - 121 Plus taxes specific to the settlement 22 - 22 - 44 Adjusted Free Cash Flow (non-GAAP Measure) $127 $39 $158 $46 $330 to $350
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6 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 third 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 Knowledge Platform puts AI into production across cloud, on-premises, and hybrid environments. See how 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.
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Schedule A TERADATA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts - unaudited) For the Period Ended June 30 Three Months Six Months 2026 2025 % Chg 2026 2025 % Chg Revenue Recurring 363$ 354$ 3% 763$ 712$ 7% Perpetual software licenses, hardware and other 8 3 167% 9 13 (31%) Consulting services 39 51 (24%) 82 101 (19%) Total revenue 410 408 0% 854 826 3% Gross profit Recurring 243 235 520 485 % of Revenue 66.9% 66.4% 68.2% 68.1% Perpetual software licenses, hardware and other 2 - 3 1 % of Revenue 25.0% 0.0% 33.3% 7.7% Consulting services (2) (5) (4) (8) % of Revenue (5.1%) (9.8%) (4.9%) (7.9%) Total gross profit 243 230 519 478 % of Revenue 59.3% 56.4% 60.8% 57.9% Selling, general and administrative expenses 120 135 360 251 Research and development expenses 75 71 147 137 Income from operations 48 24 12 90 % of Revenue 11.7% 5.9% 1.4% 10.9% Other (expense) income, net (1) (11) 472 (19) Income before income taxes 47 13 484 71 % of Revenue 11.5% 3.2% 56.7% 8.6% Income tax expense 1 4 103 18 % Tax rate 2.1% 30.8% 21.3% 25.4% Net income 46$ 9$ 381$ 53$ % of Revenue 11.2% 2.2% 44.6% 6.4% Net income per common share Basic 0.49$ 0.09$ 4.07$ 0.56$ Diluted 0.48$ 0.09$ 3.95$ 0.55$ Weighted average common shares outstanding Basic 93.9 95.3 93.5 95.2 Diluted 96.2 96.0 96.4 97.0
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Schedule B TERADATA CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in millions - unaudited) June 30, December 31, June 30, 2026 2025 2025 Assets Current assets Cash and cash equivalents 414$ 493$ 369$ Accounts receivable, net 256 251 293 Inventories 5 13 5 Other current assets 98 80 90 Total current assets 773 837 757 Property and equipment, net 191 198 205 Right of use assets - operating lease, net 8 7 9 Goodwill 397 399 400 Capitalized contract costs, net 39 42 37 Deferred income taxes 166 209 231 Other assets 84 87 98 Total assets 1,658$ 1,779$ 1, 737$ Liabilities and stockholders' equity Current liabilities Current portion of long-term debt -$ 25$ 25$ Current portion of finance lease liability 46 50 60 Current portion of operating lease liability 2 2 4 Accounts payable 55 96 115 Payroll and benefits liabilities 91 120 84 Deferred revenue 560 533 521 Other current liabilities 91 88 89 Total current liabilities 845 914 898 Long-term debt - 431 443 Finance lease liability 45 45 46 Operating lease liability 6 4 5 Pension and other postemployment plan liabilities 111 114 108 Long-term deferred revenue 12 11 12 Deferred tax liabilities 12 12 10 Other liabilities 34 18 39 Total liabilities 1,065 1,549 1, 561 Stockholders' equity Common stock 1 1 1 Paid-in capital 2,361 2,305 2, 244 Accumulated deficit (1,617) (1,923) ( 1,932) Accumulated other comprehensive loss (152) (153) ( 137) Total stockholders' equity 593 230 176 Total liabilities and stockholders' equity 1,658$ 1,779$ 1, 737$
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Schedule C TERADATA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions - unaudited) For the Period Ended June 30 Three Months Six Months 2026 2025 2026 2025 Operating activities Net income 46$ 9$ 381$ 53$ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23 23 48 43 Stock-based compensation expense 33 31 62 53 Deferred income taxes 4 (6) 40 4 Loss on Blue Chip Swap 1 - 1 - Changes in assets and liabilities: Receivables 66 14 (5) (59) Inventories - 8 8 13 Current payables and accrued expenses (32) (24) (47) (54) Deferred revenue (43) (28) 28 11 Other assets and liabilities 8 16 (9) (13) Net cash provided by operating activities 106 43 507 51 Investing activities Expenditures for property and equipment (1) (4) (11) (5) Additions to capitalized software - - (1) - Business acquisitions and other investing activities, including loss on Blue Chip Swap (1) (1) (1) (1) Net cash used in investing activities (2) (5) (13) (6) Financing activities Repurchases of common stock (40) (28) (74) (72) Repayments of long-term borrowings (450) (6) (456) (12) Payments of finance leases (15) (17) (32) (33) Other financing activities, net (2) - (7) (2) Net cash used in financing activities (507) (51) (569) (119) Effect of exchange rate changes on cash and cash equivalents 2 14 (4) 23 (Decrease) increase in cash, cash equivalents and restricted cash (401) 1 (79) (51) Cash, cash equivalents and restricted cash at beginning of period 816 369 494 421 Cash, cash equivalents and restricted cash at end of period 415$ 370$ 415$ 370$ Supplemental cash flow disclosure: Non-cash investing and financing activities: Assets acquired by finance leases 8$ 19$ 28$ 52$ Assets acquired by operating leases 2$ 1$ 3$ 2$
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Schedule D TERADATA CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions - unaudited) For the Three Months Ended June 30 For the Six Months Ended June 30 2026 2025 % Change As Reported % Change Constant Currency (2) 2026 2025 % Change As Reported % Change Constant Currency (2) Segment Revenue Product Sales 371$ 357$ 4% 3% 772$ 725$ 6% 5% Consulting Services 39 51 (24%) (23%) 82 101 (19%) (19%) Total segment revenue 410 408 0% 0% 854 826 3% 2% Segment gross profit Product Sales 248 239 529 492 % of Revenue 66.8% 66.9% 68.5% 67.9% Consulting Services - (1) 2 (2) % of Revenue 0.0% (2.0%) 2.4% (2.0%) Total segment gross profit 248 238 531 490 % of Revenue 60.5% 58.3% 62.2% 59.3% Reconciling items(1) (5) (8) (12) (12) Total gross profit 243$ 230$ 519$ 478$ % of Revenue 59.3% 56.4% 60.8% 57.9% (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.