Revenue Performance - Total Annual Recurring Revenue (ARR) reached $1.490 billion, a 1% increase from $1.482 billion in Q3 2024, with a 1% positive impact from foreign currency fluctuations [84]. - Public Cloud ARR increased by 11% to $633 million compared to $570 million in Q3 2024, with no impact from foreign currency fluctuations [84]. - Total revenue for Q3 2025 was $416 million, a decrease of $24 million or 5% from Q3 2024, with recurring revenue down 2% [84]. - Total revenue decreased by $99 million, or 7%, to $1,242 million for the first nine months of 2025 compared to $1,341 million in 2024 [1]. - Recurring revenue decreased by 4%, while Public Cloud revenue increased due to expansions and migrations [1]. - Revenue from perpetual software licenses, hardware, and other decreased by 20% year over year [2]. - Consulting services revenue decreased by 23% due to lower order booking activity in the second half of 2024 [2]. Profitability Metrics - Gross margin improved to 60.8% in Q3 2025 from 60.5% in Q3 2024, driven by a greater mix of recurring revenue [84]. - Operating income for Q3 2025 was $61 million, up from $56 million in Q3 2024 [84]. - Net income increased to $40 million in Q3 2025, compared to $32 million in Q3 2024 [84]. - Total gross profit decreased to $731 million, or 58.9% of revenue, down from $815 million, or 60.8% of revenue in 2024 [3]. - Selling, general and administrative expenses decreased by 13% to $373 million, representing 30.0% of revenue [6]. Cash Flow and Financial Position - Cash provided by operating activities was $145 million, a decrease of $2 million compared to the prior year [12]. - Free cash flow increased to $134 million for the first nine months of 2025, compared to $129 million in 2024 [14]. - The company had no outstanding borrowings on its $400 million Revolving Facility as of September 30, 2025 [22]. Taxation - The effective tax rate for Q3 2025 was 25.9%, down from 31.9% in Q3 2024 [94]. - The effective tax rate decreased to 25.6% for the nine months ended September 30, 2025, down from 33.6% in 2024 [10]. Market and Risk Factors - Cloud Net Expansion Rate was 109% in Q3 2025, down from 120% in Q3 2024 [84]. - No material changes to market risk factors were reported compared to the previous disclosures in the 2024 Annual Report [128]. - New accounting pronouncements are discussed in Note 2 of the Condensed Consolidated Financial Statements [127].

Core Insights - Teradata Corp reported better-than-expected third-quarter financial results, with earnings of 72 cents per share, surpassing the analyst consensus estimate of 54 cents per share [2] - The company also reported quarterly sales of $416 million, exceeding the analyst consensus estimate of $406.228 million [2] - Following the positive results, Teradata shares rose 14.6% to $23.73 in pre-market trading [2] - Additionally, Teradata raised its FY25 EPS guidance above estimates and issued fourth-quarter EPS guidance above estimates [1] Financial Performance - Teradata's quarterly earnings were 72 cents per share, beating the expected 54 cents per share [2] - Quarterly sales reached $416 million, surpassing the forecast of $406.228 million [2] Market Reaction - Teradata shares experienced a significant increase of 14.6%, reaching $23.73 in pre-market trading following the earnings report [2]

Core Insights - The article discusses the importance of enabling Javascript and cookies in browsers to ensure proper functionality and access to content [1] Group 1 - The article highlights that users may face access issues if they have an ad-blocker enabled [1] - It suggests disabling ad-blockers and refreshing the page to proceed [1]

Core Insights - Teradata reported $416 million in revenue for Q3 2025, a year-over-year decline of 5.5%, with an EPS of $0.72 compared to $0.69 a year ago, exceeding the Zacks Consensus Estimate of $405.7 million by 2.54% and delivering an EPS surprise of 35.85% against a consensus estimate of $0.53 [1] Financial Performance Metrics - Annual recurring revenue (ARR) totaled $1.49 billion, surpassing the two-analyst average estimate of $1.39 billion - Public Cloud ARR was reported at $633 million, closely matching the average estimate of $633.62 million - Revenue from perpetual software licenses and hardware was $3 million, significantly below the average estimate of $4.02 million, reflecting a 57.1% decline year-over-year - Recurring revenue stood at $366 million, slightly above the three-analyst average estimate of $352.45 million, representing a year-over-year change of -1.6% - Revenue from consulting services was $47 million, compared to the average estimate of $48.6 million, indicating a 23% year-over-year decline [4] Stock Performance - Teradata shares have returned -6.2% over the past month, contrasting with the Zacks S&P 500 composite's +2.1% change, and the stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Teradata (TDC) reported quarterly earnings of $0.72 per share, exceeding the Zacks Consensus Estimate of $0.53 per share, and showing an increase from $0.69 per share a year ago, resulting in an earnings surprise of +35.85% [1] - The company achieved revenues of $416 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.54%, although this represents a decline from year-ago revenues of $440 million [2] - Teradata has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance in earnings [2] Earnings Outlook - The future performance of Teradata's stock will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.53, with projected revenues of $395.28 million, while the estimate for the current fiscal year is $2.18 on $1.62 billion in revenues [7] Industry Context - The Computer-Storage Devices industry, to which Teradata belongs, is currently ranked in the top 17% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Non-GAAP earnings per share for Q3 was $0.72, exceeding expectations by $0.17 [26] - Total revenue was $416 million, down 5% year-over-year, but above the high end of the outlook due to higher recurring revenue [24] - Total ARR grew 1% as reported and flat in constant currency, marking the second consecutive quarter of positive growth [23][22] Business Line Data and Key Metrics Changes - Cloud ARR grew 11% on both an as-reported and constant currency basis, with a cloud net expansion rate of 109% [23][24] - Recurring revenue was $366 million, down 2% year-over-year, but represented 88% of total revenue, up from 85% in Q3 last year [24] - Services revenue was $47 million, consistent with recent performance, transitioning from migration projects to AI services [24] Market Data and Key Metrics Changes - The company was named a leader in the Forrester Wave data management for analytics platforms, highlighting its suitability for hybrid cloud deployments [9] - Interest in AI, particularly agentic AI, is growing across industries, with most companies still in early stages of deployment [5][6] Company Strategy and Development Direction - The company is shifting from classic EDW to autonomous AI and knowledge platforms, focusing on hybrid environments [5][6] - Investments are being prioritized to capitalize on opportunities as a leading AI and knowledge platform for autonomous enterprises [29] - The company aims to provide a trusted data foundation that enhances AI performance and governance [17][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the return to total ARR growth and expects this trend to continue into 2026 [20][22] - The company is focusing on cost efficiencies and operational improvements to drive free cash flow growth [29][58] - Management noted that the hybrid deployment model is becoming increasingly important for customers [32][48] Other Important Information - The company launched several new AI services and capabilities, including the Teradata Agent Builder and enhancements to Clearscape Analytics [10][11] - The company is on track to complete over 150 AI engagements with customers this year [12] Q&A Session Summary Question: Insights on cloud ARR performance - Management indicated that cloud ARR performance met expectations, with a nuanced decision-making process for customers regarding deployment options [31][32] Question: Confidence in future free cash flow growth - Management attributed confidence in free cash flow growth to ARR growth and operational efficiency initiatives [34][35] Question: AI influence on pipeline and competitive win rates - Management noted an increase in AI-influenced pipeline and highlighted the effectiveness of their technology platform for AI workloads [36][37] Question: Guidance consistency and leading indicators - Management confirmed a consistent approach to guidance, utilizing various KPIs to assess outlook [38] Question: Competitive advantages in the AI space - Management emphasized patented technology and hybrid capabilities as key differentiators in the competitive landscape [40][41][42] Question: Services gross margin improvement - Management explained that improvements in services gross margin were due to right-sizing the organization and aligning costs with revenue [44][45] Question: Trajectory of cloud ARR and on-prem growth - Management indicated stabilization in on-prem growth and an expectation for continued expansion in cloud ARR [47][48] Question: Impact of federal shutdown on revenues - Management confirmed no impact from the federal shutdown on revenues [58] Question: Future free cash flow margin potential - Management highlighted operational efficiency measures that will benefit future margin and cash flow [59]

Financial Performance - Q3'25 - Public Cloud ARR reached $633 million, an increase of 11% year-over-year (YoY) and comprises 42% of Total ARR[9, 15] - Total ARR was $1490 billion, up 1% YoY[9] - Recurring revenue was $366 million, a decrease of 2% YoY[13] - Total revenue was $416 million, a decrease of 5% YoY[13, 21] - GAAP Diluted EPS was $042, an increase from $033 in Q3'24[13] - Non-GAAP Diluted EPS was $072, an increase from $069 in Q3'24[13] - Cash Flow from Operations was $94 million, an increase from $77 million in Q3'24[13] - Free Cash Flow was $88 million, an increase from $69 million in Q3'24[13] Financial Outlook - FY25 - Public cloud ARR is expected to grow 14% to 18% YoY in constant currency[43] - Total ARR is expected to grow flat to 2% YoY in constant currency[43] - Free cash flow is projected to be in the range of $260 million to $280 million[45]

Revenue Performance - Total Annual Recurring Revenue (ARR) for Q3 2025 was $1.490 billion, a 1% increase year-over-year, remaining flat in constant currency[3] - Total revenue for Q3 2025 was $416 million, a decrease of 5% as reported and 6% in constant currency compared to Q3 2024[4] - Recurring revenue was $366 million, down 2% as reported and 3% in constant currency from the previous year[4] - Recurring revenue for the nine months ended September 30, 2025, was $1,078 million, down 4% from $1,128 million in the same period of 2024[18] - Total segment revenue decreased by 5% to $416 million for the three months ended September 30, 2025, down from $440 million in 2024[24] - Product sales revenue declined by 3% to $369 million in Q3 2025, compared to $379 million in Q3 2024[24] - Consulting services revenue saw a significant drop of 23%, falling to $47 million from $61 million year-over-year[24] Earnings and Margins - GAAP diluted EPS for Q3 2025 was $0.42, compared to $0.33 per share in Q3 2024, marking a 27% increase[7] - Non-GAAP diluted EPS for Q3 2025 was $0.72, up from $0.69 per share in the same quarter last year[7] - GAAP Earnings Per Share for Q3 2025 was $0.42, up from $0.33 in Q3 2024, representing a 27.3% increase[13] - Non-GAAP Diluted Earnings Per Share for Q3 2025 was $0.72, compared to $0.69 in Q3 2024, indicating a 4.3% increase[13] - GAAP gross margin improved to 60.8% from 60.5% year-over-year[4] - Non-GAAP operating margin increased to 23.6% from 22.5% in the prior year[7] Cash Flow and Capital Expenditures - Free cash flow for Q3 2025 was $88 million, compared to $69 million in Q3 2024, reflecting a 28% increase[7] - Free Cash Flow for Q3 2025 was $88 million, compared to $69 million in Q3 2024, reflecting a 27.5% increase[14] - The company anticipates free cash flow for 2025 to be between $260 million and $280 million[14] - Total capital expenditures for the nine months ended September 30, 2025, were $20 million, compared to $18 million in the same period of 2024[14] Net Income and Assets - The company reported a net income of $40 million for Q3 2025, an increase from $32 million in Q3 2024, representing a 25% increase[18] - Net income for the three months ended September 30, 2025, was $40 million, compared to $32 million for the same period in 2024, reflecting a year-over-year increase of 25%[22] - Total assets increased to $1,761 million as of September 30, 2025, up from $1,704 million at December 31, 2024, representing a growth of 3.35%[20] - Total current liabilities decreased slightly to $906 million as of September 30, 2025, from $930 million at December 31, 2024[20] - Total stockholders' equity rose to $219 million as of September 30, 2025, compared to $133 million at December 31, 2024[20] Guidance and Outlook - The company reaffirms its full-year 2025 outlook for Total ARR, Cloud ARR, and Free Cash Flow[5] - The company expects 2025 full-year GAAP EPS guidance to be between $1.22 and $1.26[13] - The non-GAAP effective tax rate for Q3 2025 was 23.3%, down from 25.6% in Q3 2024[13] Stock Repurchase - The company repurchased $30 million of common stock during the three months ended September 30, 2025, compared to $15 million in the same period of 2024[22]

Core Insights - Teradata Corporation (NYSE: TDC) is transitioning from traditional on-premises business to a cloud-based platform powered by AI and machine learning [1] Company Overview - Teradata is an enterprise analytics and data platform provider [1] - The company is focusing on hybrid platforms as part of its transition strategy [1]

Company Background - John Ederer has transitioned from a Wall Street analyst to the CFO of Teradata, bringing over 10 years of experience in the finance and enterprise software sectors [3][4] - Ederer has a diverse background, having worked with both public companies and private equity-backed businesses, which provides a comprehensive understanding of different business models [4] Previous Experience - Prior to joining Teradata, Ederer was at Model N, a vertical SaaS business, where he successfully implemented a profitable growth strategy over four years [4]