Teradata (TDC) investor relations material

Executive summary

• Q2 2026 delivered total revenue of $410 million, flat year-over-year, with recurring revenue up 3% and public cloud ARR up 8%; net income rose to $46 million from $9 million in Q2 2025.

• Major product launches included the Autonomous Knowledge Platform and Teradata Factory, targeting AI workloads on-prem and in the cloud.

• Adjusted free cash flow reached $127 million, up 226% year-over-year, and cash flow from operations surged 147% to $106 million.

• Non-GAAP diluted EPS was $0.69, exceeding guidance, and GAAP diluted EPS was $0.48, both up significantly year-over-year.

• Customer wins across telecom, banking, government, and healthcare sectors highlight traction for new AI offerings.

Financial highlights

• Total ARR grew 1% year-over-year (2% in constant currency) to $1.509 billion; public cloud ARR reached $686 million, up 8% year-over-year (9% in constant currency).

• Recurring revenue was $363 million (88.5% of total), up 3% year-over-year.

• Non-GAAP operating margin improved to 21.5% from 16.4% a year ago; GAAP operating margin rose to 11.7% from 5.9%.

• Non-GAAP gross margin was 60.5%; GAAP gross margin improved to 59.3% from 56.4%.

• Adjusted free cash flow was $127 million, significantly higher than a year ago.

Outlook and guidance

• Full-year 2026 guidance: total ARR growth of 2–4%, adjusted free cash flow of $330–$350 million, recurring revenue flat to up 2%, non-GAAP diluted EPS of $2.65–$2.73, and total revenue flat to down 2%.

• Q3 2026 recurring revenue expected to decline 4% to 2% year-over-year; total revenue to decline 6% to 4%.

• FY 2026 cash flow from operations guided at $665–$685 million, including a $315 million SAP settlement benefit.

• Estimated annual effective tax rate for 2026 is approximately 23–24%.

• Q3 non-GAAP EPS expected in the range of $0.55–$0.59.