Teradata’s Q4 results were met with a strong positive market reaction, reflecting better-than-expected execution across key areas. Management attributed the upside to a resurgence of customer interest in hybrid cloud and on-premise deployments, with demand spurred by new AI-focused products and services. CEO Steve McMillan highlighted, “We stabilized the business, meaningfully improved retention, and saw customers choosing to expand their use of Teradata with a mix of both traditional and new types of workloads.” Operational discipline and improved consulting services margins also contributed to the solid quarter.
Is now the time to buy TDC? Find out in our full research report (it’s free for active Edge members).
Teradata (TDC) Q4 CY2025 Highlights:
- Revenue: $421 million vs analyst estimates of $399.6 million (2.9% year-on-year growth, 5.4% beat)
- Adjusted EPS: $0.74 vs analyst estimates of $0.56 (33.1% beat)
- Adjusted Operating Income: $96 million vs analyst estimates of $82.54 million (22.8% margin, 16.3% beat)
- Revenue Guidance for Q1 CY2026 is $426.4 million at the midpoint, above analyst estimates of $410.7 million
- Adjusted EPS guidance for the upcoming financial year 2026 is $2.60 at the midpoint, beating analyst estimates by 2%
- Operating Margin: 12.8%, up from 9.5% in the same quarter last year
- Annual Recurring Revenue: $1.52 billion (3.3% year-on-year growth, beat)
- Billings: $426 million at quarter end, down 2.3% year on year
- Market Capitalization: $3.13 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Teradata’s Q4 Earnings Call
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Erik Woodring (Morgan Stanley) asked about the role of on-premise AI workloads versus cloud, to which CEO Steve McMillan emphasized the growing importance of on-prem AI and highlighted a doubling of proof-of-concept projects moving into production.
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Radi Sultan (UBS) inquired about the main drivers behind the growth inflection, with McMillan attributing it to both improved go-to-market execution and a cascade of AI product launches that reposition Teradata in the market.
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Yitchuin Wong (Citi) questioned the sustainability of improved retention and deal momentum, and McMillan pointed to broad-based industry strength and enhanced product relevance as key factors for ongoing retention gains.
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Sheldon McMeans (Barclays) sought clarity on the expected impact of new AI solutions and hardware refreshes, with McMillan stating that while customer discussions are underway, limited incremental ARR from these initiatives is currently included in financial guidance.
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Nick (Citizens) raised concerns about Teradata’s ability to navigate the AI transition, and McMillan stressed the company’s unique position as the “data layer for AI,” focusing on enabling agent-driven value from enterprise data.
Catalysts in Upcoming Quarters
In the coming quarters, our team will be watching (1) the pace of adoption and monetization for Teradata’s new AI and agentic offerings, (2) sustained improvements in customer retention and consulting services mix, and (3) the impact of hybrid deployment trends on ARR and recurring revenue growth. Execution on major product launches and successful integration of new board members will also be important signposts.
Teradata currently trades at $33.77, up from $29.23 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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