Teradata Reports Fourth Quarter and Full-Year 2025 Financial Results

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 December 31

2025

2024

% Change as
Reported

% Change in CC

Recurring revenue

$367

$351

5 %

3 %

Perpetual software licenses, hardware and other

1

3

(67 %)

(69 %)

Consulting services

53

55

(4 %)

(6 %)

  Total revenue

$421

$409

3 %

1 %

Product Sales

$368

$354

4 %

2 %

Consulting Services

53

55

(4 %)

(6 %)

  Total revenue

$421

$409

3 %

1 %

Revenue

(in millions)

For the Twelve Months ended December 31

2025

2024

% Change as

Reported

% Change in CC

Recurring revenue

$1,445

$1,479

(2 %)

(3 %)

Perpetual software licenses, hardware and other

17

23

(26 %)

(25 %)

Consulting services

201

248

(19 %)

(19 %)

  Total revenue

$1,663

$1,750

(5 %)

(5 %)

Product Sales

$1,462

$1,502

(3 %)

(3 %)

Consulting Services

201

248

(19 %)

(19 %)

  Total revenue

$1,663

$1,750

(5 %)

(5 %)

As of December 31

2025

2024

% Change as
Reported

% Change in CC

Annual recurring revenue*

$1,522

$1,474

3 %

1 %

  Public cloud ARR**

$701

$609

15 %

13 %

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.

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, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP operating margin, 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

Twelve Months

(in millions, except per share data)

ended December 31

ended December 31

Gross Profit:

2025

2024

% Chg.

2025

2024

% Chg.

GAAP Gross Profit

$256

$243

5 %

$987

$1,058

(7 %)

   % of Revenue

60.8 %

59.4 %

59.4 %

60.5 %

 Excluding:

  Stock-based compensation expense

4

4

17

17

  Reorganization and other costs

1

2

6

5

Non-GAAP Gross Profit   

$261

$249

5 %

$1,010

$1,080

(6 %)

  % of Revenue

62.0 %

60.9 %

60.7 %

61.7 %

Operating Income

GAAP Operating Income

$54

$39

38 %

$205

$209

(2 %)

   % of Revenue

12.8 %

9.5 %

12.3 %

11.9 %

Excluding:

  Stock-based compensation expense

30

27

112

119

  Reorganization and other costs

12

6

35

28

Non-GAAP Operating Income   

$96

$72

33 %

$352

$356

(1 %)

  % of Revenue

22.8 %

17.6 %

21.2 %

20.3 %

Net Income

GAAP Net Income

$37

$25

48 %

$130

$114

14 %

  % of Revenue

8.8 %

6.1 %

7.8 %

6.5 %

Excluding:

  Stock-based compensation expense

30

27

112

119

  Reorganization and other costs

9

6

31

30

  Income tax adjustments⁽ⁱ⁾

(5)

(6)

(24)

(25)

  Non-GAAP Net Income   

$71

$52

37 %

$249

$238

5 %

% of Revenue

16.9 %

12.7 %

15.0 %

13.6 %

For the Three Months

ended December 31

For the Twelve Months

ended December 31

2026 Outlook

Earnings Per Share:

2025

2024

2025

2024

Q1
Guidance

FY
Guidance

GAAP Earnings Per Share

$0.38

$0.26

$1.35

$1.16

$0.36 – $0.40

$1.26 – $1.36

Excluding:

  Stock-based compensation expense

0.31

0.27

1.16

1.21

0.29

1.22

  Reorganization and other costs

0.10

0.06

0.32

0.30

0.18

0.34

  Income tax adjustments⁽ⁱ⁾

(0.05)

(0.06)

(0.25)

(0.25)

(0.08)

(0.27)

Non-GAAP Diluted Earnings Per Share

$0.74

$0.53

$2.58

$2.42

$0.75 – $0.79

$2.55 – $2.65

i. 

Represents 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 income tax effect assists investors in understanding the tax provision associated with those adjustments and the effective tax rate related to the underlying business and performance of the Company’s ongoing operations. As a result of these adjustments, the Company’s non-GAAP effective tax rate for the three months ended December 31, 2025, was 22.8% and December 31, 2024, was 17.5%. In addition, for the first quarter and full year 2025, we included a discrete tax adjustment of ($0.06) for the reversal of tax reserves due to the final settlement of an IRS audit in the first quarter of 2025. For the twelve months ended December 31, 2025, the Company’s non-GAAP effective tax rate was 22.4% and December 31, 2024, was 24.0%.

3.

As described below, the Company believes that free cash flow is a useful non-GAAP measure for investors. Free cash flow does not have a uniform definition under GAAP in the United States and therefore, Teradata’s definition may differ from other companies’ definitions of this measure. Teradata defines free cash flow as cash provided by/used in operating activities, less investing activities related to capital expenditures for property and equipment and additions to capitalized software (“total capital expenditures”). Teradata’s management uses free cash flow to assess the financial performance of the Company and believes it is useful for investors because it relates the operating 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. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other non-discretionary expenditures that are not deducted from the measure. This non-GAAP measure 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
Twelve Months

ended December 31

ended December 31

Outlook

2025

2024

2025

2024

2026

Cash provided by operating activities (GAAP)

$160

$156

$305

$303

$330 to $350

           Less total capital expenditures

(9)

(8)

(20)

(26)

(~20)

Free Cash Flow (non-GAAP measure)

$151

$148

$285

$277

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 first 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: the global economic environment and business conditions in general, including inflation, tariffs, and/or recessionary conditions; 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 the restructuring actions; risks inherent in operating in foreign countries, including sanctions, tariffs, foreign currency fluctuations, and/or acts of war; risks associated with data privacy, 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 the implementation of a new ERP system and 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.

Schedule A

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts – unaudited)

For the Period Ended December 31

Three Months

Twelve Months

2025

2024

% Chg

2025

2024

% Chg

Revenue

Recurring 

$       367

$        351

5 %

$            1,445

$1,479

(2 %)

Perpetual software licenses, hardware and other

1

3

(67 %)

17

23

(26 %)

Consulting services

53

55

(4 %)

201

248

(19 %)

Total revenue

421

409

3 %

1,663

1,750

(5 %)

Gross profit

Recurring

248

243

983

1,038

% of Revenue

67.6 %

69.2 %

68.0 %

70.2 %

Perpetual software licenses, hardware and other

–

(2)

4

–

% of Revenue

0.0 %

(66.7 %)

23.5 %

0.0 %

Consulting services

8

2

–

20

% of Revenue

15.1 %

3.6 %

–

8.1 %

Total gross profit

256

243

987

1,058

% of Revenue

60.8 %

59.4 %

59.4 %

60.5 %

Selling, general and administrative expenses

129

136

502

565

Research and development expenses

73

68

280

284

Income from operations

54

39

205

209

% of Revenue

12.8 %

9.5 %

12.3 %

11.9 %

Other expense, net

(1)

(9)

(27)

(45)

Income before income taxes

53

30

178

164

% of Revenue

12.6 %

7.3 %

10.7 %

9.4 %

Income tax expense

16

5

48

50

% Tax rate

30.2 %

16.7 %

27.0 %

30.5 %

Net income 

$         37

$          25

$               130

$   114

% of Revenue

8.8 %

6.1 %

7.8 %

6.5 %

Net income per common share

Basic 

$      0.40

$       0.26

$              1.38

$  1.18

Diluted

$      0.38

$       0.26

$              1.35

$  1.16

Weighted average common shares outstanding

Basic

93.0

95.5

94.4

96.4

Diluted

96.4

97.4

96.6

98.2

Schedule B

TERADATA CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions –  unaudited)

December 31,

 September 30, 

December 31,

2025

2025

2024

Assets

Current assets

Cash and cash equivalents

$              493

$              406

$              420

Accounts receivable, net

251

309

234

Inventories

13

5

18

Other current assets

80

91

77

Total current assets

837

811

749

Property and equipment, net

198

203

185

Right of use assets – operating lease, net

7

7

8

Goodwill

399

399

394

Capitalized contract costs, net

42

35

46

Deferred income taxes

209

212

226

Other assets

87

94

96

Total assets

$            1,779

$           1,761

$            1,704

Liabilities and stockholders’ equity

Current liabilities

Current portion of long-term debt

$                25

$                25

$                25

Current portion of finance lease liability

50

56

57

Current portion of operating lease liability

2

3

4

Accounts payable

96

100

106

Payroll and benefits liabilities

120

96

111

Deferred revenue

533

527

512

Other current liabilities

88

99

115

Total current liabilities

914

906

930

Long-term debt

431

437

455

Finance lease liability

45

47

30

Operating lease liability

4

5

5

Pension and other postemployment plan liabilities

114

104

104

Long-term deferred revenue

11

12

10

Deferred tax liabilities

12

10

9

Other liabilities

18

21

28

Total liabilities

1,549

1,542

1,571

Stockholders’ equity

Common stock

1

1

1

Paid-in capital

2,305

2,279

2,192

Accumulated deficit

(1,923)

(1,923)

(1,913)

Accumulated other comprehensive loss

(153)

(138)

(147)

Total stockholders’ equity

230

219

133

Total liabilities and stockholders’ equity

$            1,779

$           1,761

$            1,704

Schedule C

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions – unaudited)

For the Period Ended December 31

Twelve Months

2025

2024

2025

2024

Operating activities

Net income 

$                 37

$                 25

$                130

$                114

Adjustments to reconcile net income to net cash provided

  by operating activities:

Depreciation and amortization

23

22

90

100

Stock-based compensation expense

30

27

112

119

Deferred income taxes

7

(16)

31

(11)

Loss on Blue Chip Swap

–

1

1

4

Changes in assets and liabilities:

Receivables

58

13

(17)

52

Inventories

(8)

(2)

5

(5)

Current payables and accrued expenses

18

36

(48)

(1)

Deferred revenue

5

27

22

(70)

Other assets and liabilities

(10)

23

(21)

1

Net cash provided by operating activities

160

156

305

303

Investing activities

Expenditures for property and equipment

(9)

(7)

(19)

(24)

Additions to capitalized software

–

(1)

(1)

(2)

Business acquisitions and other investing activities, including loss on Blue Chip Swap

–

(1)

(1)

(6)

Net cash used in investing activities

(9)

(9)

(21)

(32)

Financing activities

Repurchases of common stock

(38)

(29)

(140)

(215)

Repayments of long-term borrowings

(6)

(6)

(25)

(19)

Payments of finance leases

(18)

(17)

(69)

(71)

Other financing activities, net

(2)

–

1

(1)

Net cash used in financing activities

(64)

(52)

(233)

(306)

Effect of exchange rate changes on cash and cash equivalents

–

(22)

22

(30)

Increase (decrease) in cash, cash equivalents and restricted cash

87

73

73

(65)

Cash, cash equivalents and restricted cash at beginning of period

407

348

421

486

Cash, cash equivalents and restricted cash at end of period

$                494

$                421

$                494

$                421

Supplemental cash flow disclosure:

Non-cash investing and financing activities:

Assets acquired by finance leases

$                 10

$                   4

$                 77

$                 29

Assets acquired by operating leases

$                    –

$                   4

$                   2

$                   5

Schedule D

TERADATA CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions – unaudited)

For the Three Months Ended December 31

For the Twelve Months Ended December 31

2025

2024

% Change
As Reported

% Change

Constant

Currency ⁽²⁾

2025

2024

% Change

As Reported

% Change

Constant

Currency ⁽²⁾

Segment Revenue

Product Sales

$          368

$          354

4 %

2 %

$        1,462

$        1,502

(3 %)

(3 %)

Consulting Services

53

55

(4 %)

(6 %)

201

248

(19 %)

(19 %)

Total segment revenue

421

409

3 %

1 %

1,663

1,750

(5 %)

(5 %)

Segment gross profit

Product Sales

251

244

998

1,049

% of Revenue

68.2 %

68.9 %

68.3 %

69.8 %

Consulting Services

10

5

12

31

% of Revenue

18.9 %

9.1 %

6.0 %

12.5 %

Total segment gross profit

261

249

1,010

1,080

% of Revenue

62.0 %

60.9 %

60.7 %

61.7 %

Reconciling items⁽¹⁾

(5)

(6)

(23)

(22)

Total gross profit

$          256

$          243

$          987

$        1,058

% of Revenue

60.8 %

59.4 %

59.4 %

60.5 %

⁽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.