Q2 2026 Teradata Corp Earnings Call Transcript
Key Points
- Teradata Corp (TDC) delivered solid Q2 2026 results with total ARR growth of 1% as reported and 2% in constant currency, and recurring revenue growth of 3% year-over-year, marking the third consecutive quarter of positive growth.
- The company significantly improved profitability, with non-GAAP operating margin expanding to 21.5% from 16.4% in Q2 2025, driven by higher gross margins and a more optimized cost structure.
- Teradata Corp (TDC) raised its full-year non-GAAP EPS guidance to $2.65-$2.73 and adjusted free cash flow guidance to $330-$350 million, reflecting strong first-half performance and improved recurring revenue linearity.
- The launch of the Teradata Autonomous Knowledge Platform, including AI Studio, reached general availability in early Q3, with early customer wins in both on-prem and cloud environments, demonstrating strong market traction.
- Teradata Corp (TDC) strengthened its balance sheet by paying off the remaining $450 million term loan, increasing its net cash position to $323 million, and continues to return value to shareholders through share repurchases.
- The company was named a Visionary in Gartner's 2026 Magic Quadrant for AI platforms for data science and machine learning, validating its position in the AI platform market.
- Teradata Corp (TDC) is seeing strong demand for its hybrid capabilities, particularly Teradata Factory, which offers on-prem AI workloads with GPU support, and has partnered with Dell to leverage supply chain advantages.
- Teradata Corp (TDC) reported a 24% year-over-year decline in consulting services revenue in Q2 2026, which impacted overall revenue and margins.
- The company expects a sequential decline in recurring revenue and total revenue in Q3 2026, with recurring revenue projected to decline 4% to 2% year-over-year, due to the timing of revenue recognition under ASC 606.
- Cloud ARR growth slowed to 8% as reported and 9% in constant currency, below the company's low double-digit growth target, reflecting a shift in focus to total ARR growth.
- The company faces potential supply chain pressures and increased hardware costs, particularly for Teradata Factory, which could impact margins in 2027 despite current pricing adjustments.
- AI monetization is lagging behind peers, as new product launches are expected to drive utilization of existing platform capacity rather than immediate incremental ARR growth.
- The company's total ARR growth remains modest at 1-2%, and the majority of growth is expected to come in Q4, indicating a back-end loaded year with potential execution risks.
- Teradata Corp (TDC) is seeing reduced cloud migration activity from customers, which could limit future growth opportunities in the cloud segment.
Thank you. Thank you. Good afternoon and welcome to Teradata's second quarter 2026 earnings call. Steve McMillan, Teradata's President and Chief Executive Officer, will lead our call today, followed by John Ederer, Teradata's Chief Financial Officer, who will discuss our financial results in Outlook.
Our discussion today includes forecasts and other information that are considered forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risks and uncertainties that could cause actual results to differ materially. These risk factors are described in today's earnings release and in our filings. Please note that Teradata intends to file the Form 10-Q for the quarter ended June 30, 2026 within the next few days. These forward-looking statements are made as of today and we undertake no duty or obligation to update them. On today's call, we will be discussing certain financial measures which exclude such items as stock based compensation expense and
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