Teradata (TDC) Q3 2024 earnings summary

Executive summary

• Public cloud ARR grew 26% year-over-year to $570 million, now 38% of total ARR, while total ARR declined 3% to $1.482 billion.

• Total revenue for Q3 2024 was $440 million, flat year-over-year as reported, with recurring revenue up 3% to $372 million, representing 85% of total revenue.

• Non-GAAP diluted EPS for Q3 2024 was $0.69, up 64% year-over-year; GAAP diluted EPS was $0.33, up 175% year-over-year.

• Free cash flow for Q3 2024 was $69 million, nearly double year-over-year.

• Cloud net expansion rate was 120%, with strong customer engagement but deceleration expected due to sector and regional mix.

Financial highlights

• Recurring revenue was $372 million (85% of total revenue), up 3% year-over-year.

• Total revenue was $440 million, flat year-over-year as reported and up 2% in constant currency.

• Non-GAAP gross margin was 61.6%; GAAP gross margin was 60.5%, both up year-over-year.

• Non-GAAP operating margin was 22.5%; GAAP operating margin was 12.7%, both improved year-over-year.

• Free cash flow for Q3 2024 was $69 million, up from $36 million in Q3 2023.

Outlook and guidance

• FY 2024 public cloud ARR growth outlook revised to 18%–22% year-over-year in constant currency.

• FY 2024 total ARR and total revenue expected to decline 2%–4% year-over-year in constant currency.

• FY 2024 non-GAAP diluted EPS guidance is $2.30–$2.34; Q4 non-GAAP EPS expected at $0.40–$0.44.

• Free cash flow for FY 2024 expected between $270 million and $290 million.

• Commitment to return at least 75% of free cash flow to shareholders via buybacks.