Teradata (TDC) Q2 2026 earnings summary

Executive summary

• Q2 2026 delivered total revenue of $410 million, with recurring revenue up 3% year-over-year and public cloud ARR up 8% to $686 million; consulting services revenue declined 24%.

• Non-GAAP diluted EPS was $0.69, up from $0.47, and GAAP diluted EPS was $0.48, up from $0.09; net income rose to $46 million.

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

• Operating leverage and cost actions improved margins and free cash flow, with adjusted free cash flow reaching $127 million, up 226% year-over-year.

• Early customer wins and industry recognition highlight traction for new AI offerings.

Financial highlights

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

• Q2 recurring revenue was $363 million (88.5% of total), and product sales revenue was $371 million.

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

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

• Cash flow from operations was $106 million, up 147% year-over-year; adjusted free cash flow was $127 million.

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%; non-GAAP EPS forecasted at $0.55–$0.59.

• FY 2026 GAAP diluted EPS raised to $4.43–$4.51; non-GAAP tax rate expected at approximately 24%.

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