Teradata Corporation TDC delivered solid first-quarter 2026 results, with non-GAAP earnings of 88 cents per share, beating the Zacks Consensus Estimate by 14.29%. The metric rose 33.3% year over year.
Revenues of $444 million surpassed the consensus mark by 4.13% and increased 6.2% from the year-ago quarter. Public cloud ARR climbed 13% year over year and 12% in constant currency to $686 million, highlighting continued traction for the company’s cloud offerings.
TDC Posts Solid ARR Gains and Cloud Momentum
Teradata ended the quarter with total ARR of $1.492 billion, up 3% as reported and 2% in constant currency. The public cloud portion continued to do the heavy lifting, with cloud ARR rising at a double-digit rate year over year.
Management tied the momentum to customer demand for hybrid deployments, particularly for regulated and security-sensitive AI workloads. The company also pointed to rising interest in sovereign AI use cases, where enterprises prioritize governed data and infrastructure flexibility.
Teradata Corporation Price, Consensus and EPS Surprise
Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote
TDC Q1 Top Line in Detail
Recurring revenue reached $400 million, increasing 12% as reported and 9% in constant currency, and represented 90% of total revenue. Product sales increased 9% year over year, supported by strength in term-based subscription activity.
Perpetual software license and hardware revenues (0.2% of total revenues) dropped 90% year over year (down 88% at constant currency) to $1 million.
Consulting services’ revenues (9.7% of revenues) fell 14% year over year (down 15% at constant currency) to $43 million.
TDC Operating Details
Non-GAAP gross margin expanded to 63.7% from 60.3% in the year-ago quarter. The improvement reflected both a larger scale in the recurring base and better consulting margin performance versus the prior year.
Selling, general & administrative (SG&A) expenses increased 106.9% year over year to $240 million. Research & development (R&D) expenses were $72 million, up 9.1% year over year.
Non-GAAP operating margin also improved to 27.3% from 21.8%.
TDC’s Balance Sheet Remains Strong
As of March 31, 2026, Teradata had cash and cash equivalents of $816 million compared with $493 million as of Dec. 31, 2025.
Teradata generated $401 million in cash flow from operations and $390 million in free cash flow during the quarter, a sharp increase from the year-ago period. The reported cash flow performance included a pre-tax net benefit of $359 million tied to a settlement with SAP, which also lifted cash and cash equivalents to $816 million at the quarter-end.
To better reflect underlying performance, the company introduced adjusted free cash flow, which came in at $31 million for the quarter after excluding the settlement’s gross proceeds and including related litigation costs.
TDC Reaffirms Core 2026 Targets
For the second quarter of 2026, Teradata expects non-GAAP earnings between 53 cents and 57 cents per share, with total revenue expected to decline in the range of 4%-2% year over year and recurring revenue expected to range from down 2% to flat. The company also highlighted potential headwinds from reduced upfront recurring revenue and currency impacts in the near term.
For 2026, Teradata reaffirmed its non-GAAP earnings outlook in the range of $2.55-$2.65 per share, along with total ARR growth of 2%-4% year over year. The company expects total revenues to range from down 2% to flat year over year in constant currency. It increased its cash flow from operations outlook to $642-$662 million (including the settlement benefit) and raised its adjusted free cash flow outlook to $320-$340 million.
TDC Zacks Rank & Other Stocks to Consider
Teradata currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector include Analog Devices ADI, Applied Materials AMAT, and Audioeye AEYE. Each stock currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Analog Devices have gained 50.9% in the year-to-date period. Analog Devices is set to report the second quarter of fiscal 2026 results on May 20.
Applied Materials shares have gained 67% in the year-to-date period. Applied Materials is scheduled to report its second-quarter 2026 results on May 14.
Audioeye shares have lost 25.2% in the year-to-date period. Audioeye is set to report its first-quarter 2026 results on May 13.
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