Teradata Meets Q1 2025 Outlook, Reports Strong Growth in Public Cloud ARR and GAAP Net Income

Teradata (NYSE: TDC), a leading data analytics company, announced its first quarter 2025 financial results on May 6, 2025. The company reported a mixed performance, meeting its outlook across key metrics despite a challenging market environment. President and CEO Steve McMillan noted that Teradata's success is attributed to disciplined execution, sustained go-to-market strategies implemented in the previous year, and ongoing innovation efforts focused on trusted AI and hybrid platforms. Financial Highlights Total Revenue: $418 million for Q1 2025, down 10% from $465 million in Q1 2024. This decline is primarily due to a 28% decrease in consulting services revenue from $69 million to $50 million, although there was a slight increase in perpetual software licenses, hardware, and other revenue from $8 million to $10 million. Recurring Revenue: $358 million, a decrease of 8% compared to $388 million in the same period last year. Gross Profit: $248 million, representing a 13% drop from $284 million in Q1 2024. Both GAAP and non-GAAP gross profit percentages decreased slightly to 59.3% and 60.3%, respectively, from 61.1% and 62.2% in the previous year. Operating Income: GAAP operating income increased to $66 million from $48 million, marking a 38% improvement. Non-GAAP operating income showed a modest 2% increase to $91 million from $89 million. Net Income: GAAP net income saw a significant boost, rising to $44 million (10.5% of revenue) from $20 million (4.3% of revenue) in Q1 2024. Non-GAAP diluted earnings per share also increased, from $0.57 to $0.66. Cash Flow: Free cash flow was $7 million, down from $21 million in Q1 2024, reflecting a 67% decrease. Annual Recurring Revenue (ARR): Teradata's total ARR stood at $1,442 million, a 3% decrease from $1,480 million. However, public cloud ARR grew by 15% to $606 million from $525 million. Market and Product Performance McMillan emphasized that Teradata's hybrid platform and trusted AI solutions continue to resonate with industry leaders, especially during periods of economic uncertainty. The company's focus on helping clients make informed decisions and drive innovation remains paramount. Additionally, Teradata has been closely monitoring the dynamic market conditions and is prepared to adjust its strategies accordingly. Guidance and Outlook For the second quarter of 2025, Teradata expects: - Total revenue: $415 to $435 million - GAAP earnings per share: $0.02 to $0.06 - Non-GAAP diluted earnings per share: $0.37 to $0.41 For the full year 2025, the updated ranges are: - Total revenue: $1,755 to $1,825 million - GAAP earnings per share: $1.06 to $1.16 - Non-GAAP diluted earnings per share: $2.15 to $2.25 These projections consider several factors, including economic volatility, the competitive landscape, and the company's strategic initiatives to enhance its cloud and total ARR growth. Conference Call and Webcast Teradata will host an earnings conference call on May 6, 2025, at 1:30 PM PT. Participants can join the call by dialing (404) 975-4839 and entering access code 457141. International participants can find global dial-in numbers on Teradata’s website. The live webcast and replay will be available on the Investor Relations page of Teradata's website at investor.teradata.com. Industry Insights and Company Profile Industry analysts have largely viewed Teradata's Q1 performance positively, praising the company's resilience and strategic focus. Despite revenue declines, the growth in public cloud ARR and robust operating income are seen as promising indicators. Teradata's commitment to trusted AI and its hybrid platform positions the company favorably in a market increasingly driven by cloud-based solutions and advanced analytics. Teradata, founded in 1979 and headquartered in San Diego, California, is known for its comprehensive cloud analytics platform. The company's strong reputation for reliability and innovation makes it a trusted partner for businesses seeking to harness the power of data and AI. Teradata's continuous investments in new technologies and market expansion strategies underscore its dedication to staying ahead in the rapidly evolving tech sector. In summary, while Teradata faced some headwinds in the first quarter of 2025, its strategic initiatives and financial performance suggest a solid foundation for future growth, particularly in the cloud and AI segments. The company's proactive approach to market conditions and its emphasis on customer value are likely to continue driving positive outcomes.