Teradata (TDC) Q1 2026 earnings summary

Executive summary

• Q1 2026 total revenue was $444 million, up 6% year-over-year, driven by 12% recurring revenue growth and a 13% increase in Public Cloud ARR, with strong execution globally and a pivot to AI-led value.

• GAAP diluted EPS was $3.47, significantly boosted by a $359 million pre-tax net benefit from an SAP settlement; non-GAAP diluted EPS was $0.88, up over 30% year-over-year.

• Free cash flow was $390 million, including the SAP settlement; adjusted free cash flow was $31 million.

• Customer retention remained solid, with growing interest in hybrid and AI capabilities, especially in regulated industries.

• Announced significant product innovations, including AgentStack and MCP server, to simplify enterprise AI adoption and unify structured/unstructured data.

Financial highlights

• Total ARR at Q1 2026 end was $1.492 billion, up 3% year-over-year; Public Cloud ARR was $686 million, up 13%.

• Recurring revenue reached $400 million, up 12% year-over-year; consulting services revenue declined 14% to $43 million.

• Non-GAAP operating margin improved to 27.3% from 21.8% in Q1 last year; non-GAAP gross margin was 63.7%.

• Cash and cash equivalents at quarter-end were $816 million, up from $368 million a year ago.

• Free cash flow was $390 million, up from $7 million in Q1 2025, largely due to the SAP settlement.

Outlook and guidance

• Full-year 2026 guidance reaffirmed for total ARR, total revenue, recurring revenue, and non-GAAP EPS; non-GAAP EPS expected at the higher end of $2.55–$2.65.

• Adjusted free cash flow outlook raised to $320–$340 million, excluding the SAP settlement benefit.

• Q2 2026 recurring revenue expected to be -2% to flat year-over-year; total revenue expected to be -4% to -2% year-over-year.

• Q2 non-GAAP EPS expected in the range of $0.53–$0.57.

• Full-year total ARR growth reaffirmed at 2%–4% year-over-year.