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Second Quarter 2026 Financial Highlights

Revenue

• Total Revenue: Teradata Corporation reported total revenue of $410 million, which was flat as reported and in constant currency compared to $408 million in the prior year period.
• Recurring Revenue: Recurring revenue reached $363 million, marking a 3% increase as reported and 2% in constant currency year-over-year, and constituted 89% of total revenue, up from 87% in the prior year.
• Product Sales Revenue: Product Sales revenue was $371 million, an increase of 4% as reported and 3% in constant currency compared to $357 million in Q2 2025.
• Consulting Services Revenue: Consulting Services revenue was $39 million, a decrease of -24% as reported and -23% in constant currency compared to $51 million in Q2 2025.
• Perpetual software licenses, hardware and other revenue: This segment generated $8 million, a 167% increase as reported and 313% in constant currency compared to $3 million in Q2 2025.

Annual Recurring Revenue (ARR)

• Total ARR: Total Annual Recurring Revenue increased to $1.509 billion from $1.489 billion, representing a 1% increase as reported and 2% in constant currency.
• Public Cloud ARR: Public cloud ARR grew to $686 million from $634 million, an increase of 8% as reported and 9% in constant currency.

Gross Profit

• GAAP Gross Profit: GAAP gross profit was $243 million, a 6% increase from $230 million, with a GAAP gross margin of 59.3%, up from 56.4%.
• Non-GAAP Gross Profit: Non-GAAP gross profit was $248 million, a 4% increase from $238 million, with a non-GAAP gross margin of 60.5%, up from 58.3%.

Operating Income and Margin

• GAAP Operating Income: GAAP operating income was $48 million, a 100% increase from $24 million, resulting in a GAAP operating margin of 11.7%, up 580 basis points from 5.9%.
• Non-GAAP Operating Income: Non-GAAP operating income was $88 million, a 31% increase from $67 million, resulting in a non-GAAP operating margin of 21.5%, up 510 basis points from 16.4%.

Net Income

• GAAP Net Income: GAAP net income was $46 million, a 411% increase from $9 million, representing 11.2% of revenue, up from 2.2%.
• Non-GAAP Net Income: Non-GAAP net income was $66 million, a 47% increase from $45 million, representing 16.1% of revenue, up from 11%.

Cash Flow

• Cash Flow from Operations: Cash flow from operations was $106 million, a 147% increase from $43 million in the prior year period.
• Free Cash Flow: Free cash flow was $105 million compared to $39 million.
• Adjusted Free Cash Flow: Adjusted free cash flow was $127 million, a 226% increase from $39 million in the prior year period.

Operating Costs

• Selling, general and administrative expenses: These expenses decreased to $120 million from $135 million in Q2 2025.
• Research and development expenses: These expenses increased to $75 million from $71 million in Q2 2025.

Six Months Ended June 30, 2026 Financial Highlights

Revenue

• Total Revenue: Total revenue was $854 million, a 3% increase as reported and 2% in constant currency compared to $826 million in the prior year period.
• Recurring Revenue: Recurring revenue was $763 million, a 7% increase as reported and 5% in constant currency compared to $712 million.
• Product Sales Revenue: Product Sales revenue was $772 million, a 6% increase as reported and 5% in constant currency compared to $725 million.
• Consulting Services Revenue: Consulting Services revenue was $82 million, a -19% decrease as reported and in constant currency compared to $101 million.
• Perpetual software licenses, hardware and other revenue: This segment generated $9 million, a -31% decrease as reported and -26% in constant currency compared to $13 million.

Gross Profit

• GAAP Gross Profit: GAAP gross profit was $519 million, a 9% increase from $478 million, with a GAAP gross margin of 60.8%, up from 57.9%.
• Non-GAAP Gross Profit: Non-GAAP gross profit was $531 million, an 8% increase from $490 million, with a non-GAAP gross margin of 62.2%, up from 59.3%.

Operating Income

• GAAP Operating Income: GAAP operating income was $12 million, an -87% decrease from $90 million, with a GAAP operating margin of 1.4%, down from 10.9%.
• Non-GAAP Operating Income: Non-GAAP operating income was $209 million, a 32% increase from $158 million, with a non-GAAP operating margin of 24.5%, up from 19.1%.

Net Income

• GAAP Net Income: GAAP net income was $381 million, a 619% increase from $53 million, representing 44.6% of revenue, up from 6.4%.
• Non-GAAP Net Income: Non-GAAP net income was $151 million, a 39% increase from $109 million, representing 17.7% of revenue, up from 13.2%.

Cash Flow

• Cash Flow from Operations: Cash provided by operating activities was $507 million compared to $51 million in the prior year period.
• Free Cash Flow: Free cash flow was $495 million compared to $46 million.
• Adjusted Free Cash Flow: Adjusted free cash flow was $158 million compared to $46 million.

Outlook

Teradata Corporation is increasing its outlook for non-GAAP EPS and Adjusted Free Cash Flow for the full year 2026. For the third quarter of 2026, the company anticipates recurring revenue to be in the range of -4% to -2% year-over-year and total revenue in the range of -6% to -4% year-over-year. For the full year 2026, the company expects cash flow from operations to be between $665 million and $685 million, including an after-tax net benefit of $315 million related to a settlement with SAP, and adjusted free cash flow to be between $330 million and $350 million. Teradata Corporation reaffirms its full-year 2026 ranges for total ARR growth of 2% to 4% year-over-year, recurring revenue in the range of flat to 2% year-over-year, and total revenue in the range of -2% to flat year-over-year.