Teradata (TDC) Q3 2026 earnings summary

Executive summary

• Q3 revenue was $399M, down 4% YoY; Total ARR rose 1% reported and 2% in constant currency to $1.512B, while Public Cloud ARR grew 11% to $700M.

• Q3 non-GAAP diluted EPS was $0.70, above guidance; adjusted free cash flow was $96M, up 9% YoY. YTD recurring revenue rose 4% and adjusted free cash flow reached $254M, up from $134M.

• FY26 Total ARR growth guidance was reaffirmed at 2%–4%; non-GAAP EPS guidance increased to $2.86–$2.90.

Financial highlights

• Q3 recurring revenue was $359M, down 2% YoY; consulting revenue was $37M, down 21%.

• Q3 GAAP diluted EPS was $0.40 versus $0.42 a year earlier; non-GAAP diluted EPS was $0.70 versus $0.72.

• Q3 GAAP gross margin was 59.6%, versus 60.8%; non-GAAP gross margin was 60.7%, versus 62.3%.

• Q3 operating income was $54M versus $61M; net income was $38M versus $40M.

• YTD revenue was $1.253B, up 1%; non-GAAP EPS was $2.27 versus $1.84, and adjusted free cash flow was $254M versus $134M.

Outlook and guidance

• FY26 Total ARR growth guidance remains 2%–4%; recurring revenue growth is forecast at 1%–2%, and total revenue at down 1% to flat YoY.

• FY26 non-GAAP diluted EPS guidance increased to $2.86–$2.90; adjusted free cash flow guidance is $330M–$350M, with a midpoint of $340M versus $320M at the start of the year.

• Q4 recurring revenue is forecast down 2%–4% YoY and total revenue down 4%–6%; non-GAAP diluted EPS is forecast at $0.58–$0.62.

• FY26 operating margin expansion is expected to be ~200 bps, versus 100 bps initially anticipated; estimated FY26 effective tax rate is ~23%.

• FY26 operating cash flow guidance is $665M–$685M, including a $315M after-tax SAP settlement benefit.