Teradata (TDC) Q2 2026 earnings summary

Executive summary

• Q2 2026 delivered total revenue of $410 million, flat year-over-year, with recurring revenue up 3% to $363 million and public cloud ARR up 8% to $686 million; net income rose to $46 million.

• Major product launches included the Teradata Autonomous Knowledge Platform and AI Factory, supporting agentic AI workloads and driving early customer wins across key sectors.

• Operating leverage improved, with non-GAAP diluted EPS at $0.69 (up from $0.47), GAAP diluted EPS at $0.48 (up from $0.09), and adjusted free cash flow at $127 million, up 226% year-over-year.

• A $480 million SAP legal settlement in Q1 2026 significantly boosted six-month net income and cash flow, with a $315 million after-tax benefit included in FY 2026 guidance.

• Recognized as a visionary or leader in AI, data management, and analytics by Gartner, Forrester, ISG, and Nucleus Research.

Financial highlights

• Total ARR reached $1.509 billion, up 1% year-over-year (2% in constant currency); recurring revenue comprised 88.5% of total revenue.

• Consulting services revenue declined 24% year-over-year to $39 million, but bookings and backlog improved.

• GAAP gross margin improved to 59.3% (up from 56.4%), and non-GAAP gross margin reached 60.5%.

• Cash and cash equivalents at quarter-end were $414–$415 million, with net cash position at $323 million after repaying all term loan debt.

• Share repurchases totaled $40 million (1.3 million shares) in Q2; 2.5 million shares repurchased in H1 2026.

Outlook and guidance

• FY 2026 guidance reaffirmed for total ARR, total revenue, and recurring revenue; non-GAAP EPS raised to $2.65–$2.73 and adjusted free cash flow to $330–$350 million.

• Q3 2026 recurring revenue expected to decline 4%–2% year-over-year; total revenue to decline 6%–4% year-over-year.

• Q3 non-GAAP EPS expected at $0.55–$0.59; non-GAAP tax rate ~23%–24%.

• FY 2026 GAAP diluted EPS raised to $4.43–$4.51, including SAP settlement benefit.

• FY 2026 cash flow from operations guided at $665–$685 million, including SAP settlement.