Teradata Holds Revenue Flat as Cloud Growth Slows
Second-quarter revenue totaled $410 million as stronger product sales offset a contracting consulting business.
Teradata Corporation (TDC), the cloud-data and analytics software company, reported flat quarterly revenue as public-cloud growth slowed and consulting-services sales declined.
The quarter interrupted an improving revenue trajectory. Revenue had risen 6% in the first quarter, while recurring-revenue growth slowed to 3% from 12%. Public-cloud annual recurring revenue growth decelerated to 8% from 13% in the prior quarter and 17% a year earlier.
Revenue fell 7.7% sequentially, while recurring revenue declined 9.3% from the first quarter to $363 million. GAAP diluted earnings increased to $0.48 a share from $0.09 a year earlier, and adjusted earnings rose to $0.69 from $0.47, though they declined from $0.88 in the preceding quarter.
Product sales increased 4% to $371 million, offsetting a 24% drop in consulting-services revenue to $39 million. Total annual recurring revenue edged 1% higher to $1.509 billion, while public-cloud ARR was unchanged sequentially at $686 million.
Profitability improved from a year earlier despite the softer sequential performance. GAAP gross margin expanded 290 basis points to 59.3%, and GAAP operating margin widened 580 basis points to 11.7%. Both measures contracted from the first quarter, as did the adjusted operating margin, which fell to 21.5% from 27.3%.
Adjusted free cash flow rose to $127 million from $39 million a year earlier and $31 million in the first quarter. First-half free cash flow was $495 million, though proceeds and costs tied to its SAP settlement continued to distort the comparison; adjusted free cash flow for the period was $158 million.
Teradata expects third-quarter recurring revenue to decline 2% to 4% and total revenue to fall 4% to 6%. It raised its full-year adjusted earnings forecast to $2.65 to $2.73 a share and adjusted free-cash-flow guidance to $330 million to $350 million, while reaffirming expectations for total ARR growth of 2% to 4% and total revenue ranging from a 2% decline to flat.
The company launched its Autonomous Knowledge Platform during the quarter to help enterprises deploy agentic artificial intelligence. That rollout enters its next phase as Teradata forecasts renewed revenue contraction in the third quarter.