Teradata(TDC) - 2025 Q2 - Quarterly Results

Financial Highlights 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] 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] Business Outlook 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 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) 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) 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 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 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] Consolidated Financial Statements 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 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 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 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 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 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] - 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]