Teradata (TDC) Q4 2025 earnings summary

Executive summary

• Exceeded expectations for Q4 and FY25 total revenue, recurring revenue, and free cash flow, driven by strong EPS, ARR growth, and operational discipline.

• Public cloud ARR grew 15% year-over-year to $701 million, now representing 46% of total ARR.

• Launched multiple AI-driven innovations and expanded partnerships, positioning the platform for autonomous AI and hybrid deployments.

• Customer engagement remained robust, with increased adoption of both traditional and new workloads, and a resurgence of interest in hybrid deployments.

• Industry recognition as a leader in data management and AI platforms by Forrester, Gartner, and Nucleus Research.

Financial highlights

• Q4 total revenue was $421 million, up 3% year-over-year; recurring revenue was $367 million, up 5% year-over-year.

• Q4 total ARR reached $1.522 billion, up 3% as reported and 1% in constant currency; cloud ARR grew 15%.

• Full-year 2025 total revenue was $1.663 billion, down 5% year-over-year; recurring revenue was $1.445 billion, down 2%.

• Q4 non-GAAP operating margin was 22.8%–24%; non-GAAP diluted EPS was $0.74, up from $0.53 last year.

• Free cash flow for FY25 was $285 million, with cash and equivalents at $493–494 million at year-end.

Outlook and guidance

• FY26 total ARR expected to grow 2%–4% year-over-year; recurring revenue to grow 0%–2%; total revenue expected between -2% and 0%.

• Non-GAAP diluted EPS for FY26 expected in the range of $2.55–$2.65; operating margin to expand by ~100 basis points.

• Free cash flow guidance for FY26 is $310–$330 million; Q1 expected to be slightly negative, with most growth in Q2 and Q3.

• Q1 2026 recurring revenue expected to grow 6%–8% year-over-year; total revenue to grow 1%–3%.

• Cloud ARR targeted for low double-digit percentage growth, though not formally guided due to mix variability.