PresentationGood morning, everyone. Tyler Radke here at Citi's Co-Head of U.S. Software, and welcome to Day 2 of our tech conference. And we have Teradata, the new CFO, John Ederer, here. John, thank you very much for making it to the Citi Tech Conference. I thought it would be great if you could just give a quick background of yourself and what led you to join Teradata.John EdererCFO & Principal Accounting officer Yes. Absolutely. And thanks for having us. Really appreciate the opportunity to be here today ...

Teradata (TDC) 2025 Conference Summary Company Overview - **Company**: Teradata (TDC) - **Event**: Citi Tech Conference, September 4, 2025 - **Speaker**: John Ederer, CFO Key Points Company and Industry Context - Teradata is undergoing a business model transformation towards cloud and subscription services, with a focus on AI and data modernization [5][9][10] - The software market is experiencing challenges, particularly in application sectors, but data-related services are showing healthy results [12][13] Financial Performance and Strategy - FY '24 faced challenges, but the company is stabilizing in FY '25 and setting up for growth in FY '26 and beyond [9][11] - Priorities include driving a profitable growth strategy and improving the "Rule of 40" metric, which combines growth rate and profit margin [10][11] - The company aims to achieve durable free cash flow growth, with guidance indicating flat operating margins year-over-year despite headwinds [41][42] AI and Market Trends - Increased demand for AI is reshaping the market, leading to a natural rebalancing of IT investments [14][15] - Teradata is seeing a shift in customer demand towards secure and efficient AI deployment at scale, which bodes well for its business [15][16] - The company is experiencing enthusiasm around new product announcements, such as Enterprise Vector Store and AI Factory, which are positively influencing the sales pipeline [18][19] Customer Engagement and Retention - Improved customer engagement and retention strategies are yielding better results, with a focus on early identification of risk factors [25][26] - The company has seen a reduction in migration dependence, indicating a shift towards hybrid environments where customers can invest in AI without full migration [29][30] Competitive Landscape - Teradata is positioning itself uniquely with a hybrid solution that combines on-premise and cloud capabilities, appealing to customers' needs for efficiency and scalability [62][64] - The competitive landscape includes players like Databricks and Snowflake, but Teradata's focus on hybrid solutions is seen as a differentiator [62][66] Capital Allocation and Shareholder Returns - The company is committed to returning 50% of its free cash flow to shareholders through stock buybacks, indicating confidence in its financial health [79][80] - There is a recognition of the need to balance growth opportunities with shareholder returns [79] Organizational Changes - Recent restructuring efforts have optimized the marketing organization and improved alignment between product development and sales, enhancing overall execution [40][55] - New leadership has been brought in to drive improvements in go-to-market strategies and customer engagement [54][55] Future Outlook - The company is optimistic about returning to positive growth and achieving double-digit growth in the future, driven by AI and hybrid platform opportunities [37][38] - Continued investments in product development and market strategies are essential for long-term growth and shareholder value [46][47] Additional Insights - Teradata is actively pursuing new logo opportunities in both on-premise and cloud environments, indicating a balanced approach to market expansion [72][73] - The company is leveraging AI internally to improve efficiencies, although quantifying specific savings remains challenging [51][52] This summary encapsulates the key insights and strategic directions discussed during the Teradata conference, highlighting the company's focus on growth, AI integration, and shareholder value.

[PART I—FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section presents the company's unaudited financial statements, notes, and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Teradata's financial performance declined in the second quarter and first half of 2025 compared to the same periods in 2024, with total revenue, gross profit, operating income, and net income all decreasing year-over-year, primarily driven by lower recurring and consulting services revenue [Note 3. Revenue from Contracts with Customers](index=10&type=section&id=Note%203.%20Revenue%20from%20Contracts%20with%20Customers) Total revenue declined in both the US and International markets for the three and six months ended June 30, 2025, with remaining unsatisfied performance obligations of $1.841 billion, of which $1.233 billion is expected to be recognized within the next year Disaggregation of Revenue (in millions) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **United States** | $201 | $221 | $415 | $469 | | **International** | $207 | $215 | $411 | $432 | | **Total Revenue** | **$408** | **$436** | **$826** | **$901** | - As of June 30, 2025, the company had **$1.841 billion** in remaining unsatisfied performance obligations, with **$1.233 billion** expected to be recognized in the next year and **$608 million** thereafter[25](index=25&type=chunk) - Revenue recognized during the first six months of 2025 from deferred revenue at the beginning of the period was **$344 million**[24](index=24&type=chunk) [Note 6. Income Taxes](index=12&type=section&id=Note%206.%20Income%20Taxes) The effective tax rate for the first six months of 2025 was 25.4%, a significant decrease from 34.5% in the same period of 2024, with the full-year 2025 effective tax rate estimated at approximately 27.5% Effective Tax Rate | Period | 2025 | 2024 | | :--- | :--- | :--- | | **Three Months Ended June 30** | 30.8% | 32.7% | | **Six Months Ended June 30** | 25.4% | 34.5% | - The estimated annual effective tax rate for 2025 is approximately **27.5%**, considering the forecasted earnings mix by jurisdiction and discrete tax items[35](index=35&type=chunk) - The company does not expect the Pillar Two global minimum tax rules to have a material impact on its annual effective tax rate[34](index=34&type=chunk) [Note 8. Commitments and Contingencies](index=14&type=section&id=Note%208.%20Commitments%20and%20Contingencies) The company is involved in significant litigation, including an ongoing lawsuit against SAP where a favorable appeals court ruling has remanded antitrust and trade secret claims back to the district court, and new putative securities class action and shareholder derivative lawsuits - In the lawsuit against SAP, the Ninth Circuit overturned a lower court's summary judgment, reviving Teradata's antitrust and trade secret claims, with a trial scheduled for April 13, 2026[46](index=46&type=chunk) - A securities class action lawsuit was filed on June 14, 2024, alleging violations of federal securities laws related to the company's 2023 financial outlook for Total ARR and Public Cloud ARR[47](index=47&type=chunk) - A shareholder derivative lawsuit was filed on May 2, 2025, based on similar allegations as the securities class action, asserting claims for breach of fiduciary duty and unjust enrichment against the Board of Directors and former CFO[48](index=48&type=chunk) [Note 12. Segment and Other Supplemental Information](index=18&type=section&id=Note%2012.%20Segment%20and%20Other%20Supplemental%20Information) Effective August 5, 2024, Teradata realigned its business into two operating segments: Product Sales and Consulting Services, with Product Sales generating $492 million in gross profit for the first half of 2025, while Consulting Services reported a gross loss of $2 million - The company now manages its business under two new operating segments: (1) Product Sales and (2) Consulting Services[64](index=64&type=chunk) Segment Gross Profit (Six Months Ended June 30, in millions) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | **Product Sales** | $492 | $540 | | **Consulting Services** | $(2) | $20 | | **Total segment gross profit** | $490 | $560 | [Note 13. Reorganization and Business Transformation](index=20&type=section&id=Note%2013.%20Reorganization%20and%20Business%20Transformation) The company initiated a global restructuring plan in August 2024 to optimize operations, expecting to incur total charges of $20 million to $25 million, and recognized $7 million in restructuring-related expenses for the first six months of 2025 - A global restructuring was initiated on August 5, 2024, to optimize operations and reduce expenses, with actions expected to be completed by the end of 2025[67](index=67&type=chunk) - Total expected charges for the restructuring are approximately **$20 million to $25 million**, with total cash expenditures estimated at **$45 million to $50 million**[68](index=68&type=chunk) - In the first six months of 2025, the company recognized **$7 million** in restructuring costs (**$2 million** in COGS, **$5 million** in SG&A) and paid **$11 million** in cash related to these actions[69](index=69&type=chunk)[70](index=70&type=chunk) Condensed Consolidated Statements of Income (Unaudited) | In millions, except per share amounts | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total revenue** | $408 | $436 | $826 | $901 | | **Gross profit** | $230 | $265 | $478 | $549 | | **Income from operations** | $24 | $66 | $90 | $114 | | **Net income** | $9 | $37 | $53 | $57 | | **Diluted EPS** | $0.09 | $0.38 | $0.55 | $0.58 | Condensed Consolidated Balance Sheets (Unaudited) | In millions | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $757 | $749 | | **Total assets** | $1,737 | $1,704 | | **Total current liabilities** | $898 | $930 | | **Total liabilities** | $1,561 | $1,571 | | **Total stockholders' equity** | $176 | $133 | Condensed Consolidated Statements of Cash Flows (Unaudited) | In millions | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $51 | $70 | | **Net cash used in investing activities** | $(6) | $(13) | | **Net cash used in financing activities** | $(119) | $(220) | | **Decrease in cash, cash equivalents and restricted cash** | $(51) | $(185) | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strategic focus on its hybrid cloud platform, Teradata Vantage, and AI capabilities, highlighting a 17% increase in Public Cloud ARR but a 6% decrease in total Q2 revenue year-over-year, attributed to elongated deal cycles and lower consulting demand [Overview and Financial Metrics](index=21&type=section&id=Overview%20and%20Financial%20Metrics) Teradata is focused on its hybrid cloud analytics and data platform, Teradata Vantage, to address complex data challenges and AI, with Public Cloud ARR growing 17% to $634 million in Q2 2025 and a Cloud Net Expansion Rate of 112% - The company's strategic priorities include migrating customers to the cloud, accelerating innovation in its hybrid platform and ClearScape Analytics, and delivering new AI capabilities[76](index=76&type=chunk) Key Performance Metrics (as of June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | **Total ARR** | $1,489 million | $1,465 million | | **Public Cloud ARR** | $634 million | $542 million | | **Subscription ARR** | $756 million | $802 million | | **Cloud Net Expansion Rate** | 112% | 123% | [Results of Operations](index=23&type=section&id=Results%20of%20Operations) For Q2 2025, total revenue fell 6% to $408 million, driven by a 4% drop in recurring revenue and a 19% drop in consulting services, while gross margin declined from 60.8% to 56.4% due to a higher mix of public cloud revenue and lower consulting margins - Q2 2025 total revenue decreased by **6%** year-over-year, with recurring revenue down **4%** and consulting services revenue down **19%**[81](index=81&type=chunk) - Q2 2025 gross margin decreased to **56.4%** from **60.8%** in Q2 2024, primarily due to a higher mix of Public Cloud revenues and lower consulting services margins[80](index=80&type=chunk)[86](index=86&type=chunk) - For the first six months of 2025, SG&A expenses decreased **14%** and R&D expenses decreased **4%** compared to the prior year, primarily due to cost discipline[103](index=103&type=chunk)[104](index=104&type=chunk) [Financial Condition, Liquidity and Capital Resources](index=28&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) Cash from operations was $51 million for the first six months of 2025, down from $70 million in the prior year, with the company repurchasing 2.9 million shares for $72 million and maintaining $400 million available under its revolving credit facility Free Cash Flow (Six Months Ended June 30, in millions) | Component | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $51 | $70 | | Less: Expenditures for property and equipment | $(5) | $(9) | | Less: Additions to capitalized software | $— | $(1) | | **Free cash flow** | **$46** | **$60** | - In the first six months of 2025, the company repurchased approximately **2.9 million** shares of common stock for **$72 million**[113](index=113&type=chunk)[14](index=14&type=chunk) - As of June 30, 2025, the company had **$469 million** principal outstanding on its Term Loan and no borrowings under its **$400 million** Revolving Facility[119](index=119&type=chunk)[62](index=62&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports that there have been no material changes to the market risk factors previously disclosed in its 2024 Annual Report on Form 10-K - There have not been any material changes to the market risk factors previously disclosed in the 2024 Annual Report[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective, with a new global cloud ERP system implemented through Q1 2025 to enhance internal controls over financial reporting - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[127](index=127&type=chunk) - A new global cloud ERP system was implemented in phases through Q1 2025 to modernize financial processes and enhance internal controls, with ongoing evaluation of these control changes throughout 2025[128](index=128&type=chunk) [PART II—OTHER INFORMATION](index=31&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section provides details on legal proceedings, risk factors, equity transactions, and other required disclosures [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company incorporates by reference the information from Note 8 of the financial statements, which details ongoing litigation, including a significant lawsuit against SAP and newly filed securities class action and shareholder derivative lawsuits - Information regarding legal proceedings is incorporated by reference from Note 8, which discusses litigation with SAP and recent class action lawsuits[131](index=131&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2024 Annual Report have occurred[132](index=132&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) During the first six months of 2025, Teradata repurchased approximately 2.9 million shares, with $285.2 million remaining available for future repurchases under the open market share repurchase program expiring on December 31, 2025 Share Repurchases for the Six Months Ended June 30, 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | **First Quarter 2025** | 1,563,247 | $27.92 | | **Second Quarter 2025** | 1,297,308 | $21.74 | - As of June 30, 2025, a maximum of **$285.2 million** may yet be purchased under the open market share repurchase program[134](index=134&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2025, no director or officer of Teradata adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[136](index=136&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents, new offer letters for executives, stock incentive plans, and required certifications - Exhibits filed include offer letters for executives Sumeet Arora, John Ederer, and Scot Rogers, as well as details on the 2023 Stock Incentive Plan and the 2025 New Employee Stock Inducement Plan[137](index=137&type=chunk)

Teradata (TDC 6.70%), the enterprise data analytics company known for its hybrid cloud and artificial intelligence (AI) solutions, reported second-quarter results for fiscal 2025 (period ended June 30, 2025) on August 5, 2025. The release showed mixed results: the company's transition to cloud revenue continued with growth in public cloud annual recurring revenue (ARR), which increased 17% year over year as reported to $634 million, while overall revenue and profitability contracted. Revenue reached $408 mi ...

Teradata (TDC) reported second-quarter 2025 non-GAAP earnings of 47 cents per share, which beat the Zacks Consensus Estimate by 14.63%. The bottom line dropped 26.6% year over year. Revenues of $408 million beat the Zacks Consensus Estimate by 1.91%. The figure declined 6.4% year over year on a reported basis and 7% on a constant-currency (cc) basis. Total annual recurring revenues (ARR) at the second-quarter end increased 2% year over year to $1.489 billion. The figure was unchanged at cc. Key Takeaways Te ...

Core Insights - Teradata reported revenue of $408 million for the quarter ended June 2025, a decrease of 6.4% year-over-year, with EPS at $0.47 compared to $0.64 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $400.36 million by 1.91%, while the EPS surpassed the consensus estimate of $0.41 by 14.63% [1] Financial Performance Metrics - Annual recurring revenue (ARR) totaled $1.49 billion, exceeding the average estimate of $1.41 billion from two analysts [4] - Public Cloud ARR was reported at $634 million, slightly above the estimated $614.66 million [4] - Revenue from perpetual software licenses and hardware was $3 million, significantly below the average estimate of $4.7 million, reflecting a 40% year-over-year decline [4] - Recurring revenue was $354 million, slightly above the average estimate of $346.69 million, representing a year-over-year decrease of 3.8% [4] - Revenue from consulting services was $51 million, surpassing the average estimate of $48.96 million, but showing a year-over-year decline of 19.1% [4] - Gross profit from consulting services was reported at -$5 million, compared to an estimated profit of $0.23 million [4] - Gross profit from recurring revenue was $235 million, slightly above the estimated $232.94 million [4] Stock Performance - Teradata's shares have returned -10.8% over the past month, contrasting with a +1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - Teradata (TDC) reported quarterly earnings of $0.47 per share, exceeding the Zacks Consensus Estimate of $0.41 per share, but down from $0.64 per share a year ago, representing an earnings surprise of +14.63% [1] - The company posted revenues of $408 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 1.91%, but down from $436 million year-over-year [2] - Teradata has outperformed consensus EPS estimates in all four of the last quarters and has topped revenue estimates twice in the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.59 on revenues of $416.23 million, and for the current fiscal year, it is $2.16 on revenues of $1.63 billion [7] - The estimate revisions trend for Teradata was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Computer-Storage Devices industry, to which Teradata belongs, is currently ranked in the top 21% 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 - Total ARR for Q2 2025 was $1,490,000,000, representing a 2% year-over-year increase as reported [6] - Total revenue was $408,000,000, down 6% year-over-year as reported and 7% in constant currency [24] - Non-GAAP diluted earnings per share was $0.47, exceeding the top end of the outlook range [26] - Free cash flow generated in the quarter was $39,000,000, flat year-over-year [27] Business Line Data and Key Metrics Changes - Cloud ARR grew 17% reported and 15% in constant currency, with a net expansion rate of 112% [23] - Services revenue was $51,000,000, down 19% year-over-year as reported and 20% in constant currency [25] - Recurring revenue as a percentage of total revenue increased to 87%, up from 84% in Q2 last year [25] Market Data and Key Metrics Changes - The company experienced better deal execution in Q2, with some deals closing earlier than expected [7] - The cloud segment showed solid growth, with a 15% constant currency growth rate aligning with full-year guidance of 14% to 18% [8] Company Strategy and Development Direction - The company is focusing on integrating its marketing function into go-to-market and product organizations to enhance operational efficiency [10] - New executive leadership has been brought on to support strategic execution and drive long-term returns for investors [8] - The company is positioning itself to leverage AI as a value driver, emphasizing the importance of strong data management capabilities [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year targets due to improved execution and retention rates [6][22] - The company anticipates a modest sequential decline in total ARR from Q2 to Q3 but reaffirms its full-year guidance for total ARR and cloud ARR [29] - Management noted that the interest in AI and GenAI is driving growth across the industry, with a focus on hybrid deployment options [11] Other Important Information - The company announced new partnerships, including one with Fivetran to simplify data integration for AI insights [21] - The introduction of the Teradata AI factory aims to bring AI and machine learning capabilities on-premises, enhancing customer control over AI deployments [12] Q&A Session Summary Question: What does the company see as the opportunity for greater operating leverage and free cash flow? - Management indicated that optimizing costs and returning to growth are key drivers for future free cash flow growth [36][38] Question: What is the outlook for demand and client engagement moving forward? - Management highlighted solid execution and the importance of AI workloads in driving future growth [41][43] Question: What factors contributed to the outperformance in ARR for Q2? - The outperformance was attributed to better deal execution and customer demand for the Teradata platform [46][48] Question: How does the company view the impact of recent R&D tax changes? - Management acknowledged potential positive impacts on cash flow from the recent R&D tax changes [78] Question: How is the company monitoring success in AI initiatives? - Success is defined through partnerships, proof of concept engagements, and the opportunity pipeline influenced by AI workloads [73][75]

Financial Highlights - Public Cloud ARR reached $634 million, a 17% year-over-year increase, comprising 43% of Total ARR[9] - Total ARR increased by 2% year-over-year to $1.489 billion[9] - Q2'25 Recurring Revenue was $354 million, a 4% year-over-year increase[13] - Q2'25 Total Revenue was $408 million, a 6% year-over-year decrease[13] - Q2'25 GAAP Diluted EPS was $0.09, down from $0.38 in Q2'24[13] - Q2'25 Non-GAAP Diluted EPS was $0.47, down from $0.64 in Q2'24[13] - Q2'25 Cash Flow from Operations was $43 million, consistent with Q2'24[13] - Q2'25 Free Cash Flow was $39 million, consistent with Q2'24[13] Financial Outlook - The company projects FY25 Public cloud ARR growth of 14% to 18% YoY in CC[43] - The company projects FY25 Total ARR growth of flat to 2% YoY in CC[43]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Teradata's Q2 2025 performance exceeded expectations, driven by strong public cloud ARR growth and outperforming EPS, despite overall revenue declines, with full-year outlook reaffirmed - CEO Steve McMillan highlighted strong execution in Q2, building on cloud growth and on-premise strength to support customers' hybrid data and analytics environments for AI implementation[2](index=2&type=chunk) Q2 2025 Key Financial Metrics (vs. Q2 2024) | Metric | Q2 2025 (USD) | Q2 2024 (USD) | Change (Reported) | Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Public Cloud ARR | $634M | $542M | +17% | +15% | | Total ARR | $1.489B | $1.465B | +2% | 0% | | Recurring Revenue | $354M | $368M | -4% | -4% | | Total Revenue | $408M | $436M | -6% | -7% | | GAAP Diluted EPS | $0.09 | $0.38 | -76% | N/A | | Non-GAAP Diluted EPS | $0.47 | $0.64 | -27% | N/A | - The company reiterated its full-year 2025 outlook for Total ARR, Cloud ARR, and Free Cash Flow[3](index=3&type=chunk) [Business Outlook](index=2&type=section&id=Business%20Outlook) Teradata provided its Q3 and updated full-year 2025 financial outlook, projecting continued revenue declines for Q3, narrowing full-year revenue guidance, and reaffirming ARR and free cash flow targets Q3 2025 Outlook | Metric | Expected Range (YoY Growth, Constant Currency, %) | | :--- | :--- | | Recurring Revenue | -4% to -6% | | Total Revenue | -7% to -9% | | **Metric** | **Expected Range (USD)** | | GAAP Diluted EPS | $0.24 to $0.28 | | Non-GAAP Diluted EPS | $0.51 to $0.55 | Full-Year 2025 Updated & Reaffirmed Outlook | Metric | Updated Range | Reaffirmed Range | | :--- | :--- | :--- | | Total Revenue (YoY, CC, %) | -5% to -7% | - | | GAAP Diluted EPS (USD) | $1.04 to $1.12 | - | | Non-GAAP Diluted EPS (USD) | $2.17 to $2.25 | - | | Public Cloud ARR (YoY, CC, %) | - | 14% to 18% | | Total ARR (YoY, CC, %) | - | 0% to 2% | | Recurring Revenue (YoY, CC, %) | - | -3% to -5% | | Free Cash Flow (million USD) | - | $250 to $280 | [Financial Performance Analysis](index=3&type=section&id=Financial%20Performance%20Analysis) This section details Teradata's financial results, highlighting strong public cloud ARR growth amidst overall revenue and profitability declines for Q2 and the first six months of 2025 [Revenue and Annual Recurring Revenue (ARR)](index=3&type=section&id=Revenue%20and%20Annual%20Recurring%20Revenue%20(ARR)) Q2 2025 total revenue decreased, driven by declines in recurring revenue and consulting services, contrasting with strong growth in Public Cloud ARR and a modest increase in Total ARR Revenue Breakdown | Revenue Type | Q2 2025 (million USD) | Q2 2024 (million USD) | % Change (Reported) | | :--- | :--- | :--- | :--- | | Recurring revenue | 354 | 368 | -4% | | Consulting services | 51 | 63 | -19% | | **Total revenue** | **408** | **436** | **-6%** | Annual Recurring Revenue (ARR) as of June 30 | ARR Type | 2025 (USD) | 2024 (USD) | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Public cloud ARR | $634M | $542M | 17% | 15% | | Total ARR | $1.489B | $1.465B | 2% | 0% | [Profitability Analysis (GAAP vs. Non-GAAP)](index=4&type=section&id=Profitability%20Analysis%20(GAAP%20vs.%20Non-GAAP)) Q2 2025 profitability significantly declined across both GAAP and Non-GAAP measures, with GAAP Net Income experiencing a steep **76%** drop to **$9 million** Q2 Profitability Comparison | Metric | Q2 2025 (GAAP, million USD) | Q2 2024 (GAAP, million USD) | Q2 2025 (Non-GAAP, million USD) | Q2 2024 (Non-GAAP, million USD) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | 230 | 265 | 238 | 271 | | Operating Income | 24 | 66 | 67 | 96 | | Net Income | 9 | 37 | 45 | 62 | Q2 Margin Comparison | Margin | Q2 2025 (GAAP, %) | Q2 2024 (GAAP, %) | Q2 2025 (Non-GAAP, %) | Q2 2024 (Non-GAAP, %) | | :--- | :--- | :--- | :--- | :--- | | Gross Margin | 56.4 | 60.8 | 58.3 | 62.2 | | Operating Margin | 5.9 | 15.1 | 16.4 | 22.0 | [Earnings Per Share (EPS) Analysis](index=5&type=section&id=Earnings%20Per%20Share%20(EPS)%20Analysis) Q2 2025 saw a significant decrease in both GAAP and Non-GAAP diluted EPS, with the company providing Q3 and full-year 2025 guidance Diluted Earnings Per Share (EPS) Comparison | Period | GAAP EPS (USD) | Non-GAAP EPS (USD) | | :--- | :--- | :--- | | Q2 2025 | 0.09 | 0.47 | | Q2 2024 | 0.38 | 0.64 | | Q3 2025 Outlook | 0.24 - 0.28 | 0.51 - 0.55 | | FY 2025 Outlook | 1.04 - 1.12 | 2.17 - 2.25 | [Cash Flow Analysis](index=5&type=section&id=Cash%20Flow%20Analysis) Q2 2025 cash flow from operations and free cash flow remained flat year-over-year, while both metrics decreased for the first six months of 2025 Cash Flow Summary | Metric | Q2 2025 (million USD) | Q2 2024 (million USD) | Six Months 2025 (million USD) | Six Months 2024 (million USD) | | :--- | :--- | :--- | :--- | :--- | | Cash from Operations (GAAP) | 43 | 43 | 51 | 70 | | Free Cash Flow (Non-GAAP) | 39 | 39 | 46 | 60 | - The company reaffirmed its full-year 2025 free cash flow outlook of **$250 million to $280 million**[7](index=7&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) The unaudited consolidated financial statements reflect lower Q2 and six-month revenue and net income, an increase in total assets, and decreased net cash from operations for the six-month period [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q2 2025 income statement highlights include a decrease in total revenue to **$408 million**, a decline in gross profit, and a sharp fall in net income to **$9 million** Q2 2025 Income Statement Highlights | Line Item | Q2 2025 (million USD) | Q2 2024 (million USD) | | :--- | :--- | :--- | | Total Revenue | 408 | 436 | | Total Gross Profit | 230 | 265 | | Income from Operations | 24 | 66 | | Net Income | 9 | 37 | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Teradata's balance sheet shows total assets of **$1.737 billion**, total liabilities of **$1.561 billion**, and an increase in total stockholders' equity Balance Sheet Summary | Account | June 30, 2025 (USD) | Dec 31, 2024 (USD) | June 30, 2024 (USD) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $369M | $420M | $301M | | Total Current Assets | $757M | $749M | $665M | | Total Assets | $1.737B | $1.704B | $1.622B | | Total Current Liabilities | $898M | $930M | $889M | | Total Liabilities | $1.561B | $1.571B | $1.547B | | Total Stockholders' Equity | $176M | $133M | $75M | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities decreased, with significant cash used for stock repurchases and debt repayments, resulting in a net decrease in cash Six Months 2025 Cash Flow Highlights | Line Item | Six Months 2025 (million USD) | Six Months 2024 (million USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | 51 | 70 | | Net cash used in investing activities | (6) | (13) | | Net cash used in financing activities | (119) | (220) | | Net decrease in cash | (51) | (185) | [Segment Information](index=10&type=section&id=Segment%20Information) Teradata's Q2 2025 segment performance shows a **4%** decrease in Product Sales revenue and a **19%** decline in Consulting Services revenue, with the latter operating at a negative gross margin Q2 2025 Segment Performance | Segment | Revenue (million USD) | % Change (Reported) | Gross Profit (million USD) | Gross Margin % | | :--- | :--- | :--- | :--- | :--- | | Product Sales | 357 | -4% | 239 | 66.9 | | Consulting Services | 51 | -19% | (1) | -2.0 | | **Total** | **408** | **-6%** | **238** | **58.3** | [Notes and Disclosures](index=4&type=section&id=Notes%20and%20Disclosures) This section provides supplemental information, including the rationale for using non-GAAP financial measures and a disclaimer regarding forward-looking statements and associated risks - The company believes non-GAAP measures are useful for investors as they provide insight into underlying business trends, facilitate period-over-period comparisons, and offer consistency with past reports and future projections[11](index=11&type=chunk) - The forward-looking statements highlight risks including the global economic environment, supply chain issues, competitive pressures in the IT and AI industries, and risks associated with data privacy and cyberattacks[15](index=15&type=chunk)