TDC

NetApp, Inc. NTAP delivered a record first quarter of fiscal 2027, with non-GAAP earnings of $2.58 per share, up 66.5% year over year. The figure beat the Zacks Consensus Estimate of $2.13 by 21.1%. Net revenues rose 29.9% to $2,025 million and surpassed the $1,843 million consensus mark by 9.9%. Strong AI and modernization spending, accelerated purchases and pricing benefits supported growth. Billings increased 36.1% to $2,057 million. NetApp, Inc. price-consensus-eps-surprise-chart | NetApp, Inc. Quote Hybrid Cloud revenues advanced 30.1% year over year to $1,819 million. Product revenues climbed 50.9% to $987 million, while support revenues increased 11.3% to $720 million. Professional and Other Services revenues rose 15.5% to $112 million, mainly on continued Keystone growth. The quarter included an additional week, which contributed approximately $65 million to revenues, mainly from support and Public Cloud. Excluding that benefit, total revenues increased 26% year over year. Management also cited a healthier demand environment as customers invested in AI and infrastructure modernization. All-flash array revenues reached a record $1,309 million, up 46.6% from the prior-year quarter. Hybrid-flash and other revenues were $510 million versus $505 million a year ago. Together, all-flash and Public Cloud represented 75% of quarterly net revenues. Public Cloud revenues grew 28% to a record $206 million, reflecting strong first-party and marketplace storage demand. Adjusted for the extra week, Public Cloud growth was 19%. NetApp won approximately 350 AI and data lake modernization deals, with management noting larger deal sizes as customers moved from pilots to production. The company also acquired DataPelago to expand its AI data infrastructure capabilities. Non-GAAP gross margin was 70.6%, down 50 basis points year over year. The decline reflected a larger product mix, with product revenues accounting for 49% of sales versus 42% a year earlier. Product gross margin was 54.6%, pressured sequentially by higher component costs but partly offset by better pricing. Hybrid Cloud gross margin was 68.8%, while Public Cloud gross margin reached 86.4%. Support gross margin totaled 93.2%, and Professional Services gross margin was 36.6%. Year-over-year margin expansion across product, support, Professional Services and Public Cloud partly offset the product-mix headwind. Non-GAAP operating expenses rose 10.9% year over year to $784 million, driven primarily by variable compensation and the additional week, which added approximately $22 million. Even so, non-GAAP operating income increased 60.8% to $645 million. The non-GAAP operating margin expanded to 31.9% from 25.7%. Non-GAAP net income increased 64% to $515 million. On a GAAP basis, net income rose 60.9% to $375 million, while earnings increased 63.5% to $1.88 per share. Cash from operations fell 25.3% year over year to $503 million, while free cash flow declined 35.3% to $401 million. Free cash flow margin was 19.8% compared with 39.8% a year ago. Capital expenditures increased to $102 million from $53 million. NTAP ended the quarter with $3.58 billion in cash, cash equivalents and investments and $2.49 billion in gross debt, leaving net cash of $1.09 billion. Inventory increased to $375 million from $198 million at fiscal year-end as the company managed supply levels to support growing demand. NetApp returned $302 million through $200 million of repurchases and $102 million of dividends. For the second quarter of fiscal 2027, NetApp expects revenues of $2.025-$2.175 billion. Non-GAAP gross margin is projected at 67-68%, operating margin at 30.9-31.9% and earnings at $2.54-$2.64 per share. Management expects the sequential gross-margin decline mainly from a higher product revenue mix. For fiscal 2027, revenues are now forecast at $7.975-$8.225 billion, with the $8.10 billion midpoint representing 17% growth and a $650 million increase from prior guidance. Non-GAAP gross margin is expected at 68.1-69.1%, operating margin at 30.3-31.3% and earnings at $9.73-$10.03 per share. The $9.88 earnings midpoint represents 22% year-over-year growth. NetApp currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. SanDisk SNDK reported fourth-quarter fiscal 2026 non-GAAP earnings of $39.25 per share that beat the Zacks Consensus Estimate by 14.63% and jumped 68% sequentially. The company reported earnings of 29 cents per share in the year-ago quarter. Revenues surged 371.6% year over year to $8.97 billion and beat the consensus mark by 8%. Sequentially, SNDK’s revenues surged 51%. Stronger pricing, higher volumes and rapid Datacenter growth drove the upside, with Datacenter revenues hitting $2.98 billion in the reported quarter. Teradata Corporation TDC reported second-quarter 2026 non-GAAP earnings of 69 cents per share, up 46.8% year over year. The figure surpassed the Zacks Consensus Estimate by 25.46%. Revenues of $410 million increased 0.5% from the year-ago quarter and beat the consensus by 2.91%. TDC’s Total annual recurring revenues increased 1% as reported and 2% in constant currency to $1.509 billion. Super Micro Computer, Inc. SMCI reported fourth-quarter fiscal 2026 non-GAAP earnings of $1.70 per share, beating the Zacks Consensus Estimate of 68 cents. The bottom line increased 315% year over year. SMCI generated net sales of $11.12 billion, which increased 93% year over year and 9% sequentially. Revenues also beat the Zacks Consensus Estimate by 1.09%. The strong performance reflected continued demand for AI infrastructure, as well as a sharp pickup in enterprise and channel activity. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NetApp, Inc. (NTAP) : Free Stock Analysis Report Sandisk Corporation (SNDK) : Free Stock Analysis Report Teradata Corporation (TDC) : Free Stock Analysis Report Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

It has been about a month since the last earnings report for Teradata (TDC). Shares have added about 7.7% in that time frame, outperforming the S&P 500. But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Teradata due for a pullback? Well, first let's take a quick look at the latest earnings report in order to get a better handle on the recent drivers for Teradata Corporation before we dive into how investors and analysts have reacted as of late. Teradata Corporation reported second-quarter 2026 non-GAAP earnings of 69 cents per share, up 46.8% year over year. The figure surpassed the Zacks Consensus Estimate by 25.46%.Revenues of $410 million increased 0.5% from the year-ago quarter and beat the consensus by 2.91%. Total annual recurring revenues (ARR) increased 1% as reported and 2% in constant currency to $1.509 billion. Public cloud ARR advanced 8% year over year as reported and 9% in constant currency to $686 million. Cloud represented 45% of total ARR at quarter-end compared with 43% in the year-ago period.Subscription ARR reached $750 million, down from $756 million a year earlier but above $729 million in the first quarter. Maintenance and software upgrade rights ARR declined to $73 million from $99 million. Recurring revenues reached $363 million, up 3% as reported and 2% in constant currency and represented 89% of total revenues. Product sales rose 4% year over year and 3% in constant currency to $371 million. Perpetual software license, hardware and other revenues, accounting for 2% of total revenues, surged 167% year over year and 313% in constant currency to $8 million.Consulting services revenues, representing 9.5% of total revenues, fell 24% year over year and 23% in constant currency to $39 million. Non-GAAP gross margin expanded 220 basis points year over year to 60.5%, helped by a higher recurring-revenue mix. Recurring revenue gross margin improved 30 basis points to 67.8%, partly reflecting continued progress in cloud gross margin.Non-GAAP selling, general and administrative expenses declined 8.4% year over year to $98 million. Research and development expenses fell 3.1% to $62 million. Non-GAAP operating margin improved to 21.5% from 16.4%, reflecting higher gross margin and a more optimized cost structure. The company launched the Teradata Autonomous Knowledge Platform during the quarter and brought major components, including AI Studio, to general availability early in the third quarter. The platform combines cloud, on-premise and hybrid deployment options with governed data, AI tools and agent capabilities.Teradata also introduced Teradata Factory, a Dell-built on-premise system with integrated CPUs and GPUs for private AI workloads. Management highlighted early customer orders and interest, particularly among regulated organizations and customers with data sovereignty requirements. The partnership gives TDC access to Dell’s technology and go-to-market reach. As of June 30, 2026, Teradata had cash and cash equivalents of $414 million compared with $493 million as of Dec. 31, 2025. The company ended the quarter with net cash of $323 million after paying off the $450 million balance on its term loan. Teradata generated $106 million in cash flow from operations during the quarter, up from $43 million in the year-ago period. Free cash flow increased to $105 million from $39 million, while adjusted free cash flow rose to $127 million from $39 million. The company also repurchased approximately 1.3 million shares for $40 million during the quarter. Management continues to target the return of at least 50% of adjusted free cash flow through share repurchases. For the third quarter of 2026, Teradata expects non-GAAP earnings of 55-59 cents per share. Total revenues are projected to decline 6% to 4% year over year, while recurring revenues are expected to decrease 4% to 2%. Management attributed the second-half revenue pattern to the timing of upfront revenue recognition from on-premises subscriptions during the first half. For 2026, Teradata guided its non-GAAP earnings outlook to $2.65-$2.73 per share and adjusted free cash flow forecast to $330-$350 million. Cash flow from operations is expected to be between $665 million and $685 million, including an after-tax net benefit of $315 million from the SAP settlement.The company reaffirmed its forecast for total ARR growth of 2-4% year over year, recurring revenue growth of flat to 2%, and total revenue performance ranging from a 2% decline to flat. Since the earnings release, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -13.49% due to these changes. Currently, Teradata has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of A on the value side, putting it in the top quintile for value investors. Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in. Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Teradata has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Teradata Corporation (TDC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Teradata’s second quarter results disappointed investors despite exceeding Wall Street’s revenue and profit expectations. Management attributed the quarter’s performance to strong recurring revenue and improved operating margins, supported by platform innovations like the new Autonomous Knowledge Platform. However, CEO Stephen McMillan also highlighted a shift in revenue recognition due to on-premise contract timing, which contributed to flat year-on-year sales. The company’s focus on hybrid deployments and differentiated AI capabilities drove customer interest, but management acknowledged that consulting services revenue was notably soft, offset by growth in project backlog and recurring revenue. Is now the time to buy TDC? Find out in our full research report (it’s free). Revenue: $410 million vs analyst estimates of $396.1 million (flat year on year, 3.5% beat) Adjusted EPS: $0.69 vs analyst estimates of $0.56 (23.1% beat) Adjusted Operating Income: $88 million vs analyst estimates of $76 million (21.5% margin, 15.8% beat) Revenue Guidance for Q3 CY2026 is $395.2 million at the midpoint, below analyst estimates of $403.6 million Management raised its full-year Adjusted EPS guidance to $2.69 at the midpoint, a 3.5% increase Operating Margin: 11.7%, up from 5.9% in the same quarter last year Annual Recurring Revenue: $1.51 billion vs analyst estimates of $1.51 billion (1.3% year-on-year growth, in line) Billings: $367 million at quarter end, down 3.4% year on year Market Capitalization: $2.58 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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. Erik Woodring (Morgan Stanley): Asked why second-half revenue is guided lower despite strong product launches. CFO John Ederer explained that earlier on-premise revenue recognition, driven by contract timing, shifts reported revenue into the first half, not due to weakening demand. Radi Sultan (Barclays): Queried the expected impact of Teradata Factory on competitive positioning. CEO Stephen McMillan highlighted unique on-premise AI workloads and the Dell partnership, expecting differentiated appeal in regulated and international markets. Yitchuin Wong (J.P. Morgan): Inquired about the lag in AI monetization versus peers. McMillan attributed this to increased utilization of existing platform capacity rather than immediate new sales, expecting gradual revenue lift as customers expand usage. Patrick Walravens (JMP Securities): Asked if product launches affected sales team performance and customer buying behavior. McMillan responded that the sales force is energized by new offerings, but broad adoption is still in early stages, especially for Teradata Factory. Matthew Hedberg (RBC Capital Markets): Questioned supply chain risks and vertical market exposure. Ederer noted that inventory is secured for the year, and McMillan emphasized growing on-premise demand in regulated industries and international markets. In future quarters, the StockStory team will closely watch (1) the pace of adoption and customer feedback for new AI products such as Teradata Factory and AI Studio, (2) the impact of on-premise and hybrid deployments on recurring revenue and annual contract value, and (3) improvements in consulting services margin and project backlog conversion. Execution against these milestones will inform management’s ability to translate product launches into sustainable growth. Teradata currently trades at $27.51, down from $34.39 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 4:30 p.m. ET Investor Relations - Chad Bennett President and Chief Executive Officer - Stephen McMillan Chief Financial Officer - John Ederer Chad Bennett: Good afternoon, and welcome to Teradata's second quarter 2026 earnings call. Steve McMillan, Teradata's President and Chief Executive Officer, will lead our call today, followed by John Ederer, Teradata's Chief Financial Officer, who will discuss our financial results and outlook. Our discussion today includes forecasts and other information that are considered forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risks and uncertainties that could cause actual results to differ materially. These risk factors are described in today's earnings release and in our SEC filings. Please note that Teradata intends to file the Form 10-Q for the quarter ended June 30, 2026, within the next few days. These forward-looking statements are made as of today, and we undertake no duty or obligation to update them. On today's call, we will be discussing certain non-GAAP financial measures which exclude such items as stock-based compensation expense and other special items described in our earnings release. We will also discuss other non-GAAP items such as free cash flow, adjusted free cash flow, and constant currency comparisons. Unless stated otherwise, all numbers and results discussed on today's call are on a non-GAAP basis. A reconciliation of non-GAAP to GAAP measures is included in our earnings release, which is accessible on the Investor Relations page of our website at investor.teradata.com. A replay of this conference call will be available later today on our website. And now, I will turn the call over to Steve. Stephen McMillan: Thanks, Chad, and thanks to everyone for joining us today. We're pleased with our solid performance in the first half as Teradata delivered another good quarter with growth in total ARR, recurring revenue, and meaningful free cash flow improvement. Our total ARR growth reflects our belief that the hybrid capabilities we're delivering set Teradata apart. Additionally, our significant platform innovations, tangible operating leverage, and anticipated incremental gains in our retention rate underpin our confidence in the future. We are reaffirming our outlook for total ARR, total revenue, and recurring revenue. And we are increasing our non-GAAP earnings per share range to $2.65 to $2.73. We're also increasing the range for Adjusted Free Cash Flow to $330 million to $350 million. The global shift to AI is profoundly affecting every major industry, as enterprises face growing pressure to move AI into production. We recently surveyed 1,000 senior technology and data leaders around the globe about their use of agentic AI within the enterprise. We found that 90% expect to increase their agentic AI investments over the next year, yet nearly two-thirds have seen only small or emerging positive returns to date. In addition, 40% of technology leaders surveyed say more than 40% of their AI pilots have failed to reach production because their infrastructure was not built to support them. We are here to change that. We've set a clear vision for this agentic AI era. We call it Teradata 3.0, and we have retooled our business for this clear opportunity of autonomous intelligence. Teradata's robust hybrid data foundation, in use at many of the world's leading organizations, is essential to help enterprises deploy the business infrastructure needed to get ROI from their AI initiatives. The mission-critical nature of this work is not discretionary. Enterprises need it. And we believe we have the best data foundation to help organizations achieve real value from their AI initiatives. This brings me to our product innovations in Q2, which I consider one of the most significant chapters in Teradata's history. As organizations increasingly turn their attention to realizing value from AI, our product organization leaned in and accelerated the innovation pipeline to meet the market opportunity. In May, we launched the Teradata Autonomous Knowledge Platform, our foundation to deploy agentic AI without trading control for capability, governance, or performance. It runs where enterprise data already lives, on the customer's terms, and at costs that reflect how agents actually work. Most infrastructure was built to deliver one of those things at a time. Our platform is designed to deliver all three. It brings together a powerful set of new capabilities for customers, and I'll discuss the four main components. Teradata Cloud is purpose-built for the agentic era. The reality is that AI agents create computing demands unlike anything human users have generated before, and that informs how our cloud offering is designed. Active Compute and Elastic Compute give organizations always-on power for mission-critical workloads alongside on-demand capacity for everything else. Teradata Factory extends the platform on-prem for organizations where data sovereignty is preferred or required. It delivers private AI and enterprise-grade performance in a single integrated system built with Dell Technologies. And with integrated CPUs and GPUs built in, customers can run the models that fit their needs, including foundation models, entirely on-prem. Data never leaves their environment, while scale and performance remain fully intact. Teradata AI Studio unifies analytics, models, agents, and vector services in one environment, so customers no longer need to source, integrate, and manage those capabilities as separate tools. Combined with our AI services consultants who bring years of domain expertise in sophisticated analytics, AI initiatives can move reliably from concept to production-grade execution at speed. Trusted enterprise data and built-in governance travel with every project, allowing organizations to scale with confidence. Finally, Tera is our agentic coworker, the natural language interface that gives every user governed access to enterprise data and agents. Tera includes built-in modes for data analysis, coding, and multi-agent orchestration, giving business users, data teams, and developers a single place to interact with enterprise data and AI. The connectivity that makes this possible depends on open standards. Teradata joined the Agentic AI Foundation, where standards like the Model Context Protocol are being built. Our enterprise MCP server is already in action with customers, and our participation is intended to ensure that real-world enterprise requirements, including hybrid, on-prem, and sovereign deployments, are built into those standards from the start. I'm pleased to report that the Teradata Autonomous Knowledge Platform, including its AI Studio component, reached general availability in early Q3, a couple of months after we announced it. That execution velocity reflects the confidence we have in what we've built and the step change it makes possible for our customers. The quarter brought additional innovations to market as well. We made available our enterprise-grade Data Analyst Agent in AWS Marketplace, bringing AI-assisted conversational analytics directly into customers' existing AWS environments. The agent enables advanced multi-step analytics on data that's already there with no costly movement or integration complexity. We also delivered expanded data access through upgraded native Open Table Format support, enabling customers to query seamlessly across more distributed data without unnecessary movement or duplication. But access to data alone doesn't get enterprises to production AI. Our research shows that context fragmentation, data that exists but carries no usable meaning for agents, is the defining barrier holding organizations back. In fact, 77% of executives reported that 20% or less of their data is sufficiently described for agents to use reliably. It's a challenge we hear and one we are focused on helping customers change. We're proud of the broad set of product innovations we brought forth, yet these are just the first in a series of planned announcements we'll have this year. We're going to be delighted to tell our customers more at our upcoming Autonomous World Tour events. All of these offerings will continue to leverage our differentiated hybrid capabilities and the very real need for production AI that runs anywhere, grounded in governed data and context that is critical for agentic AI. As our teams take our new platform and AI narrative to the market, they are receiving positive responses from customers and support for the need to activate the intelligence across their enterprise. We're hearing that our capabilities with one platform that supports AI, sovereign data, security, and multiple deployment scenarios are generating increasing interest. We have already had early wins from the innovations we announced, and from both on-prem and cloud environments. I'll touch on a few examples. A major telecommunications company in South Asia selected Teradata Factory to power its broad AI modernization initiative. The customer deployed GPU-enabled infrastructure and Teradata AI Studio to support advanced analytics, vectorization, and RAG workloads. This demonstrates Teradata's growing ability to lead enterprise AI transformation conversations across emerging markets. We're not just a data platform, but foundational to our customers' AI ambitions. One of the largest banking groups in Japan and a longstanding Teradata customer implemented a cloud modernization project, selecting Teradata Cloud, AI Studio, and AI Services to enhance its profitability simulation and planning workloads. We expanded our relationship with a federal tax authority in Asia Pacific as it renewed its Teradata Cloud environment and balanced flexibility with the resilience and performance requirements of this critical government platform. This reinforces Teradata's ability to align customer success with long-term platform growth, while positioning us to support future workload expansion driven by legislative change. One of North America's largest financial institutions also expanded with us, incorporating Teradata AI Studio to accelerate AI adoption and demonstrate measurable value through use cases aligned to the bank's strategic priorities. And a major U.S. healthcare company expanded its on-prem production system in support of government regulations. Our increased engagement in the agentic AI space has not gone unnoticed. Gartner published its 2026 Magic Quadrant for AI Platforms for Data Science and Machine Learning, and Teradata was named a visionary in our first year of participation. We view it as validation of Teradata as a serious player in the AI platform market, and note that this evaluation did not even yet include our latest product announcements. As I hand the call to John, I'll close on this. This quarter we set out a clear vision for the next era of Teradata, Teradata 3.0, anchored by our new Autonomous Knowledge Platform built for the agentic age. And we backed that vision with delivery, bringing key components of the platform to general availability within a quarter. Our hybrid capabilities and our on-prem strength in particular continue to resonate with customers running the most demanding and regulated workloads where a solid data foundation is not discretionary. That combination of a differentiated platform and disciplined execution set the foundation for a solid first half and gives us confidence in our outlook for the year. John will cover in more detail, including the areas where we are raising our expectations. We remain focused on converting this momentum into durable, profitable growth and lasting value for our shareholders. Now, over to you, John. John Ederer: Thank you, Steve, and good afternoon, everyone. We delivered solid financial results in the second quarter, highlighted by continued improvement in recurring revenue, profitability, and free cash flow. Recurring revenue grew 3% year-over-year, marking our third consecutive quarter of positive growth. We also drove meaningful expansion in non-GAAP operating margin to 21.5% compared to 16.4% in Q2 last year, reflecting our continued focus on operational discipline and profitable growth. In addition, adjusted free cash flow was $127 million in the quarter, significantly higher than a year ago. At the midpoint of the year, we are pleased with the improvement we are making and believe these results reflect continued progress against our financial objectives and demonstrate our focus on driving sustainable shareholder value. In terms of our detailed financial results for the second quarter, total ARR grew 1% as reported and 2% in constant currency, while cloud ARR grew 8% as reported and 9% in constant currency. As we have said previously, our focus remains on driving total ARR growth, and we may see variability from quarter to quarter in the mix between cloud and on-premise growth. Second quarter total revenue was $410 million, flat as reported and in constant currency, which was 2 points above the high end of our outlook due to higher recurring revenue. Second quarter recurring revenue was $363 million, up 3% year-over-year as reported, and 2% in constant currency, which was 3 points above the high end of our outlook. The outperformance was primarily due to the timing of revenue recognition related to our on-premise business. Second quarter consulting services revenue was $39 million, down 24% year-over-year as reported and 23% in constant currency. While this was a softer quarter from a revenue standpoint, we have had improvement in our consulting services bookings and project backlog is growing. Additionally, we are continuing to optimize the cost structure to return the business to a low double-digit margin percentage. Looking at profitability and cash flow, please note that I will be referencing non-GAAP numbers for expenses and margins and a full reconciliation to GAAP results is provided in our press release. For the second quarter, total gross margin was 60.5%, which was up 220 basis points year-over-year, primarily driven by a higher mix of recurring revenue. Recurring revenue gross margin was 67.8%, which was up 30 basis points versus Q2 '25, driven in part by continued year-over-year improvement in our cloud gross margin. While recurring gross margin was lower on a sequential basis from Q1, this was in line with expectations due to the higher upfront revenue in Q1 '26. Consulting services gross margin was flat. As noted, consulting services revenue came in lower than expectations, which impacted the margin in the quarter. Operating margin improved significantly on a year-over-year basis, coming in at 21.5% versus 16.4% in Q2 last year. On a year-to-date basis, operating margin is at 24.5%, which is up 540 basis points versus the first half of 2025. The margin expansion was driven by a return to revenue growth, higher gross margin, and a more optimized cost structure. Non-GAAP diluted earnings per share were $0.69, exceeding the top end of our outlook range by $0.12. The outperformance was primarily driven by higher recurring revenue. We generated $127 million of adjusted free cash flow in the quarter. This increased our net cash position to $323 million at the end of Q2 '26. On a year-over-year basis, we have increased our net cash position by $528 million. Finally, we continue to return value to shareholders repurchasing approximately $40 million or about 1.3 million shares in the second quarter. We continue to target to use 50% of our adjusted free cash flow for share repurchases, which excludes the benefit from the SAP settlement. Also, we paid off the remaining $450 million balance on our term loan. Given the strengthened balance sheet, this will enable us to make future strategic investments in AI as well as continuing our stock buyback program and being opportunistic on strategic M&A. Before turning to our financial outlook, I'd like to provide some additional context. On total ARR, we expect modest sequential dollar growth from Q2 to Q3. We continue to anticipate the majority of our growth will come in Q4. For recurring revenue, we saw improved linearity over the first half of the year compared to our initial expectations at the beginning of the year. As we discussed on last quarter's earnings call, this is a factor of revenue recognition under ASC 606 and recognizing more upfront revenue related to the on-premise portion of the business. While our guidance for the year remains unchanged, we did experience higher growth over the first half of the year and expect slight declines on a quarterly basis over the second half of the year. Now, turning to our annual outlook for 2026, we reaffirm our ranges for total ARR, Total Revenue, and Recurring Revenue. For non-GAAP earnings per share, we are increasing the range to $2.65 to $2.73. For adjusted free cash flow, given the strong first half of the year, improved recurring revenue linearity, and the benefit of paying off the debt, we are increasing the range to $330 million to $350 million. For the third quarter of 2026, recurring revenue is expected to be in the range of -4% to -2% year-over-year. Total revenue is expected to be in the range of -6% to -4% year-over-year. And non-GAAP diluted earnings per share is expected to be in the range of $0.55 to $0.59. In terms of some of the other modeling assumptions, for the third quarter, we expect the non-GAAP tax rate to be approximately 23% and the weighted average shares outstanding to be 96.7 million. Also, we now anticipate FY '26 other expenses to be approximately $19 million. In summary, we are very pleased with the first half of the year and remain confident in our ability to achieve our full year objectives. We significantly strengthened our balance sheet, generated very strong free cash flow, and continue to execute our profitable growth strategy. By driving operational efficiencies while maintaining targeted investments in innovation, we are positioning the business to benefit from meaningful operating leverage as growth accelerates, supporting further margin expansion over time. Thank you all very much for your time today, now let's open up the call for questions. Operator: Your first question comes from the line of Erik Woodring. Erik Woodring: And I just have one other quick follow-up. So I guess, John and Steve, it's a combined question for you guys. And just you sound really positive on the kind of environment Teradata is operating in right now. Obviously, a number of key product launches in the second quarter, many of which go GA or have gone GA this quarter. As I think about your guide, just help us understand why the kind of shape of the year is first half growth versus second half declines when we're in this kind of really strong environment with new products coming out. We'd just love to get a little bit more context because I would think the direction of the year would go the opposite direction. You could see accelerating growth. Just help us understand some of the moving pieces that maybe would make us feel more at ease understanding the shape of the year. And then a quick follow-up. Stephen McMillan: Yes, Erik, I'll just talk to the customer and the demand environment that we're seeing in the market. We're seeing really great interest in terms of the Teradata value proposition and how we can process data workloads, especially in the world of agentic AI. Our first half product launches were really designed to capitalize on that. And I'll talk a little bit about our Teradata Factory, which is our new architecture for delivering AI workloads on-prem designed from the ground up. What we're seeing is customers with Teradata are able to make a choice. They can either deploy those workloads in the cloud or they can deploy those workloads on-prem. And as they are evaluating our new technologies, they are making those choices so that our overall total ARR is in a good position, and that's why we reaffirmed our guidance for the full year. Q4 continues to be our strongest quarter from a selling perspective. And from a market perspective, we do expect to have great interest in the new product launches. Although we haven't factored a lot of those new product upside opportunities into our guide so far. John, do you want to talk a little bit about? John Ederer: Yes, Erik, let me just add maybe a couple of points of clarification around the guidance specifically. So first off, if you look at the full year expectations, whether that's for ARR or revenue, we've been very consistent on those full year outlooks and feel like we're right in line and on target with achieving those. What has changed this year has been the linearity on the revenue side in particular, and even more specifically the recurring revenue side. And so due to the nature of ASC 606 accounting, which we talked a little bit about on the Q1 call, and again, in our prepared remarks today, we did see more upfront revenue coming from the on-premise subscriptions over the first half of the year. That means there's a little bit less revenue to be recognized in Q3 and Q4. So we are seeing, I'll call it a displacement almost, of revenue recognition more in the first half versus the second half, and that's reflected in our revenue guidance, but otherwise for the full year, total revenue and ARR are tracking very nicely with our initial ranges. Erik Woodring: Okay, I appreciate that color, guys. And then John, maybe just a quick follow-up. You just beat 2Q by $0.14. I think the full year earnings guide went $0.09 higher. Just what are some of the earnings headwinds that I guess you're encountering in the second half? Because inherently, if 2Q is beating by more than you're raising the full year, second half EPS needs to come down a little bit. So just what are the incremental headwinds we need to be taking into account? John Ederer: Yes, Erik, thanks for the follow-up. It's a little bit of the same answer, to be honest. And so when we look at the revenue performance over the first half, particularly the incremental recurring revenue coming in, that provides a big boost on the earnings side as well. And so as we balance that out, as we move through the year, again, our annual targets are generally going up for the earnings per share. We raised that again, but the timing of when those impacts hit has shifted on us. Operator: Your next question comes from the line of Radi Sultan. Radi Sultan: First for Steve, I wanted to drill into Teradata Factory a little bit more. Can you just walk through customer conversations there? And then I'm curious in like how you expect that to drive pull-through to other parts of the business? And how do you see it impacting this sort of competitive outlook in some of these shared accounts where maybe your cloud-native competitors obviously don't have on-prem offerings, and how that kind of impacts the retention outlook there. Stephen McMillan: Radi, thanks for the question. We certainly see Teradata Factory and our ability to execute these workloads on-prem as a really differentiating point against our competitors. Just to level set everybody, Teradata Factory is our next-generation architecture that's got GPUs built in from the ground up. Now, what does that mean? It means that AI workloads can run natively on both the GPUs and that infrastructure, but also on the CPUs and our massively parallel processing architecture. So that expands use cases and the footprint that we have. It allows organizations to run AI workloads right next to their data, and they can do that on-prem, which has got great use cases. For example, where data sovereignty is important, and some of the customer examples I gave in the prepared remarks point straight to that. The other great thing about Teradata Factory is it's been built in conjunction and in partnership with Dell, and building on those Dell Technologies not only gives us access to their advanced technologies, it also gives us access to their go-to-market. So even though Teradata Factory is still to go GA in the second half of the year, what we're looking at is we've already seen orders and interest for Teradata Factory, and working with the Dell teams, we expect to have a very successful offering in the marketplace that gives customers true choice. And that's why, as we look at the overall business, what's important to us is total ARR. So when customers make the choice to deploy on-prem or in the cloud, we can capture that growth with them. Radi Sultan: Got it. And then just a follow-up for John. The balance sheet is obviously in a great place post the SAP settlement, the debt paydown. Could you just walk through how you sort of stack rank highest ROI uses of capital here, stock buyback, bolt-ons, R&D, especially given the product launch cadence? I would love to just dig into your thinking there as you think about uses of capital from here. John Ederer: Yes, sure, Radi. Happy to. Appreciate the question. And yes, our balance sheet is in great shape. It's very strong following the retirement of our debt in the second quarter and also the strong free cash flow that we had over the first half of the year. So from a capital structure standpoint, I feel like we're in a very, very good position. In terms of the current allocation priorities, I would stack rank the ones that you mentioned with organic R&D first, followed by our stock buyback program, and then strategic M&A. I guess I'll also throw in the caveat that of course we always reserve our right to change our priorities in the future, but currently if you look at the model, we're investing quite a bit in R&D this year and we're also continuing to do 50% of our free cash flow towards the buyback. Operator: Your next question comes from the line of Yitchuin Wong. Yitchuin Wong: Steve, definitely good to see some of the call-outs among your AI use cases getting some traction for your customers. Like we certainly heard a lot of like rising concern from coding tools out there from your peers, like helping drive faster AI monetization and migration. With the launch of the autonomous platform, GA recently, could you kind of help us think about how these tools are helping your customer conversation and conversion within your base? And then why the AI monetization seems to lag behind what your peers are seeing with accelerating growth recently? Stephen McMillan: Yes, thanks for the question, YC. I think there's a couple of factors coming into play. One, I think our vision and the architecture that we have for a fully agentic and autonomous knowledge platform for AI is really resonating with our customers. And what that means is we're actually agentifying our entire stack and it's changing the way that customers can interact with our platform. We're also really excited about the work that we're doing from a context layer perspective, which really provides context around business data to these AI agents so that they can query the platform successfully. What we see in terms of a revenue model, and we will certainly be looking to monetize some of the new products that we have coming in the stack. But what we're really going to see is increased utilization of the existing Teradata platform. And so the lag essentially is as organizations utilize these new capabilities in the platform. It's essentially utilizing capacity and capability that they've already bought from Teradata. But not only that, one of the advantages of running these workloads on the Teradata platform is that costs and expense don't spiral out of control as these agentic workloads deploy on top of the platform. That's a unique competitive differentiation, but it does give a lag to the growth that we see from an ARR perspective, but certainly the opportunity is there. Our customers are excited about the offerings. We've had a great first half in terms of innovation, and we plan that to continue into the second half. And we'll certainly be monetizing that as we go along. Yitchuin Wong: That's helpful, Steve. John, I have a follow-up for you. Cloud ARR seems to came in a little below expectation given the double-digit guidance is out there. And then with this shift in, like some of your peers reported kind of shift in AI budget over the past couple of weeks, are you seeing any shift in your customer budget or any incremental impact from like the elongation of the Middle East situation? And then maybe get an update on kind of the stage migration from a year ago, any changes from that front? John Ederer: Yes. So there's a couple of topics in there, so I'll try to hit them all. But I think the first was really around cloud ARR growth. And you talked about the target that we had for double-digit growth there. As we've been saying for probably about a year now, I would say our focus is much more on total ARR growth, not just cloud growth. We are still seeing faster growth for cloud versus on-premise subscriptions, but in any given quarter, the mix of those deals may vary a little bit. And so we still think that low double-digit growth target is the right range and the right trend line growth for our cloud business, but again, there may be some quarterly variability. We continue to believe that the hybrid approach is resonating with customers as Steve just described, and that's reflected in the return of total ARR growth that you've seen in the model. And that's really what we're ultimately trying to drive towards. You also, I think, asked about migration activity. We are seeing less of that this year. We factored less migration activity into our model, into our forecast for this year. I would say peak cloud migrations was probably a year or two ago, and we're now on the other side of that bell curve. We still continue to see some of that activity, but much less going forward. Operator: Your next question comes from the line of Patrick Walravens. Patrick Walravens: Steve, I just want to get a sense for, and John, I guess, whoever wants to address it, forget the revenue recognition for a second. I mean, Steve, were you satisfied with the performance of your sales organization in the quarter? And does the fact that Teradata Factory, I'm sure people are excited about it, but it's not available yet, does that play into how you actually ended up doing? Stephen McMillan: Look, I think as I look through the quarter, our operational execution and discipline was really good. And you can see that in the results, Pat. From a go-to-market perspective, the teams have really embraced these new offers and new capabilities, are proactively taking them out to our customers. We're getting really good feedback about Teradata Factory, as we said. It's some early announcements and it's going GA. And the sales teams are excited. They're energized to take these messages to our customers. And I think they see the opportunity that, that's going to unlock. Especially if you look at it from an on-prem perspective and the workloads that we can uniquely offer and deliver on-prem from a GPU with the NVIDIA partnership, being able to run local language models. This is a whole new area for our sales teams to get involved in. And as they're taking these messages to our customers and exploring with them what they can do with the Teradata platform, with all of these new announcements, it's certainly opening up opportunities for us. Patrick Walravens: Okay. And then if I could ask a follow-up. I mean, it does seem like as enterprises are rolling agents out across more and more parts of their businesses, there's pressure to consolidate on a single data platform so you don't have to define things over and over again. And then at the same time, there's just a lot more consumption of data. How is that playing out for you guys? I mean, are there situations where companies are like, oh, sorry, we're just going to standardize on Databricks across this entire thing, or we're just going to standardize on Snowflake across this entire thing. Where does all that sit? Stephen McMillan: Yes, I think what we're seeing is that organizations don't want to get vendor lock-in. So whether it's vendor lock-in to an individual cloud provider or vendor lock-in to particular data providers, as they look at the AI stack that they are implementing, we think there are certain control points, if you will, or certain points of differentiation inside that stack. One is the agent harness so that organizations can utilize the right language model for the right workload. The second is the context layer within the AI platform or the AI stack. And we believe that we can provide real context and business context to data that's inside our customer's ecosystem better than anybody else. And then finally, to your point, Pat, these agents generate a set of workloads unlike any other workloads that we've come across before. But the pattern is clear. They're massive in terms of size and volume. They're massive in terms of concurrency, and they're massive in terms of query complexity. And just looking at those factors, the best platform in the world to solve them is Teradata and our advanced massively parallel processing architecture. And that's our differentiation when we go in front of customers, that's what's going to enable us to win. Operator: Your next question comes from the line of Matthew Hedberg. Matthew Hedberg: I guess, maybe for John, there's been a lot of talk, obviously, on memory price, storage, hardware, the likes, and given some of the strength that you're seeing on-prem, I'm just sort of curious of your perspective on any supply chain thoughts as we head into the second half or even calendar year '27? John Ederer: Yes, sure, Matt. So a couple of things on the hardware side, and I'll split my comments between our existing platform and then the new Teradata Factory that we've just rolled out or are about to roll out. So, on the existing platform, we actually have sufficient inventory for this year. We had actually pre-bought some inventory as we finished up fiscal '25. And so we're in good shape from a supply chain standpoint on the current platform. And as I look forward on Teradata Factory, there is where we could potentially see some of the pressures from the supply chain and the increased pricing. What we are very focused on is making sure that our pricing is adjusted to end customers so that we protect margins. And so we've got good visibility on how that's tracking. It's early today. And so it won't have a material impact on FY '26, but we're very focused on that as we head into '27. Matthew Hedberg: Got it. That's helpful. And then, I guess, from a vertical perspective, obviously, you guys, are well entrenched in the Global 2000. Can you talk about, sort of like, obviously, you talked about kind of on-premise strength in the first half. Can you talk about sort of thoughts on verticals, be it financial services, government, and then, how should we think about those in the second half? And I guess if that has any implication on potential on-prem cloud mix? Stephen McMillan: Yes, Matt, I think there's no doubt that in highly regulated industries, our Teradata offering shines through. The other thing that's becoming very apparent, and you can see it from the examples I gave in the prepared remarks, are, in the international marketplace, a lot of organizations are looking at how they can deploy these technologies without using a public cloud infrastructure. And we see that as a massive opportunity for us in terms of utilizing Teradata Factory to solve the data sovereignty challenge. So solve the fact that customers want to have data under their control and inside their environment, solve the operational challenge of making sure that they control and own the infrastructure that their data and AI solutions are sitting on, and that they can run that effectively, just as they could in a public cloud environment. And that's certainly the offer that we can take to these customers in these, not just the regulated and highly regulated industries, but also in those international marketplaces where they may be selecting different use cases that don't involve public cloud. Operator: Your next question comes from the line of J. Derrick Wood. James Wood: First, Steve, back on the hardware component costs. Just are you seeing any change in buying behavior, whether kind of a change in timing of hardware purchases or even a rethinking of migrating to the cloud versus staying on-prem? I mean, I know you guys haven't started pushing out any big pricing changes yet, but how are you seeing customers reacting to these elevated hardware costs in the market today? Stephen McMillan: Yes, in fact, we have adjusted our pricing for both our existing platform and of course, our new Teradata Factory has a new pricing model associated with that as well. But what our customers are really looking for at the end of the day is price performance. One thing I would say is we completely understand the buying habits of our customers, and we don't really see any change with respect to the Teradata platform. We don't require like large CapEx investments from our customers. Our recurring revenue model and our commercial model with customers give us some advantage in terms of how we're contracting and the offer that we're taking to those clients. What I would do as well is just expand upon the supply chain point and just say that the partnership with Dell has actually meant that we can leverage Dell's buying power when it comes to some of this componentry. And indeed some of the early orders that we've got for Teradata Factory has meant that we've actually been able to expedite delivery to some of our customers into this year. So from a number of different factors, Derrick, we've got a good handle on what's happening inside our customers. We're protecting our operating margin. We're delivering price performance at the same time. And the partnership with Dell, we look to is generating some significant value for us. James Wood: Great, helpful color there. And John, one quick one for you. I don't know if it's in supplemental disclosures here, but can you give us a sense around kind of your assumptions around FX impact to Q3 and full year? John Ederer: Yes, I think we do have that posted up on the site, Derrick. And rather than quote the numbers here, I'll just direct you to that document. Operator: Your next question comes from the line of Raimo Lenschow. Raimo Lenschow: Congrats from me as well. Can I stay on that subject of hardware prices and buying behavior? If you look at some of the other players in the market like IBM, there was a big theme of customers trying to buy stuff early to get ahead of price increases coming down the lane and kind of et cetera. Is that something, John and Steve, that drove the Q2 outperformance? Or can you just maybe explain one more time to us like why Q2 and then hitting you in Q3? Stephen McMillan: Yes, I'll let John talk to the linearity again, but just from a market perspective, we are early days in Teradata Factory. So we're excited about the future opportunity that we have with the platform. It didn't drive incremental revenue from that perspective into Q2. So that wasn't the reason for the outperformance, but Raimo, anytime you recognize that we've had good revenue performance and good recurring revenue performance in the quarter, I'll definitely take that. But we're really convinced that the Teradata Factory offer and the hardware refresh that we have, combined with what we've done from a forward buy perspective, means that we've got margin protection and we can offer a great choice of capabilities to our customers. John, did you want to talk a little bit about Q2? John Ederer: Yes, not a whole lot more to add other than the comments that we've already talked about with regards to recurring revenue. I guess, Raimo, to answer your question specifically, hardware was not a meaningful factor in the revenue upside in either Q1 or Q2. We did have an opportunity to increase our pricing on the existing platform at the end of Q2, but that would be more of a go-forward event for the second half of the year. Raimo Lenschow: Okay. Perfect. And then if you think about the new products, a lot of activity in Q2 and I'm excited to see more there. How should we think about the rollout in terms of like, do we now need to think there is going to be some early customers and everyone is going to wait how they are doing and then you have like more broad adoption next year? Or how do you think about the lifecycle there? Stephen McMillan: Yes, I think if I look and characterize the innovation that we've had in the first half, although I've talked a lot about Teradata Factory on this call, most of our innovation is actually in the software. It's actually in the brains and the approach and the overall architecture that we have. And we believe that we've got some real differentiating capabilities and capabilities that are making customers think about Teradata in a very different way. I use the term on the prepared remarks, Teradata 3.0. So not just being an open and connected multi-cloud data platform, which gave us some real differentiation, but really thinking about Teradata as a knowledge platform. And that's really all based in the fantastic software that our product team is creating every single day. And that's really going to make the difference in terms of the positioning that we have with our customers. And it will go through the usual product launch cycles in terms of how we're going to monetize that. We certainly see some of our customers picking up those capabilities early on in terms of, the agentic platform that we've got out there. And also in terms of our AI Studio and the capabilities that we have at the front end are generating some real interest, but it's early days. So it didn't really have a material impact to our very solid first half, but we're looking forward to it having some impact as we move into the future. Thanks for the question, Raimo. Operator: Your next question comes from the line of Wamsi Mohan. Wamsi Mohan: Steve, for the early AI wins discussed, are customers generating incrementally new spending? Are they expanding existing commitments? Are they reallocating current heritage spend to AI Studio and related products? Would love some color over there. And I have a follow up. Stephen McMillan: Yes, in Q2, we -- actually, I would say, we had all of those bars, Wamsi. We actually -- we got some new logo wins. We had the expansion in terms of workloads that we were delivering. We had expansions on-prem and in the cloud. So we were very happy with the variety of wins that we get from the AI platform. And again, I think, just reflecting back to one of the very first points that we had in Q&A, that's a unique differentiator for us. Being able to run these AI workloads close to the data, right next to the data, both on-prem and in the cloud, has given our customers some great choice. And it points to, again, the point that John made in terms of my total ARR growth is really what we're focused on. I've said in the past that over half the number of customers that we have in the cloud with us operate in a hybrid environment and we certainly see customers making deliberate choices where they're putting workload, whether they put it in the cloud or whether they put it on-prem. And that is especially true for financial services organizations. But we meet customers where they want, and that gives us some opportunity that I think our competitors find it difficult to compete with. Wamsi Mohan: Okay. And I think in your opening comments you cited anticipated incremental gains in retention as you go through the course of the year. What is driving that improvement? When should that become maybe more visible? And at what level of retention is actually embedded in your 2% to 4% ARR growth outlook? Stephen McMillan: Yes, I think our retention story for the year is going pretty much as we expected. So we saw, as we've said in the past, continued improvement of our retention rates through FY '25. We saw improvements in the first half of 2026. And we see that continuing into the second half of 2026. Our renewals success team is doing a great job. Q4 is our big quarter from a renewals perspective. And it's also the -- it gives us the opportunity to expand the relationship we have with our customers in that Q4 period, as we do that at the point of renewal. So that's our opportunity that's sitting ahead of us. We're confident in our outlook in the year. And I think it's all about disciplined execution to the point I made earlier. And I'm very proud of the Teradata team in terms of how they're executing. Operator: That now concludes today's Q&A session. I will now turn the call back over to Steve McMillan for his final remarks. Stephen McMillan: Thank you, Operator. And thanks everyone today for joining us. We're really pleased with the first half of the year, and I think you can tell from my comments that we are super enthusiastic about our differentiated hybrid capabilities, and we absolutely remain confident in our ability to achieve our full year objectives. And so with that, I thank you all for joining. Operator: This concludes today's conference call. You may now disconnect. Before you buy stock in Teradata, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Teradata wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Teradata. The Motley Fool has a disclosure policy. Teradata (TDC) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Teradata Corporation? Here are five stocks we like better. Teradata exceeded second-quarter expectations: Revenue was $410 million, recurring revenue rose 3% to $363 million, non-GAAP operating margin expanded to 21.5%, and diluted EPS reached $0.69. Adjusted free cash flow totaled $127 million, while the company ended the quarter with $323 million in net cash after repaying its term loan. AI platform expansion is central to Teradata’s strategy: The company launched its Autonomous Knowledge Platform, spanning cloud, on-premise and hybrid environments, as customers seek to move AI projects into production. Early customer deployments include telecommunications, banking and healthcare organizations. Teradata raised profitability and cash-flow guidance but expects near-term revenue declines: Full-year non-GAAP EPS guidance increased to $2.65–$2.73 and adjusted free-cash-flow guidance to $330–$350 million. Third-quarter revenue and recurring revenue are expected to decline year over year because of on-premise subscription revenue-recognition timing, not weaker annual demand. Snowflake Boosts Growth by Doubling Down on AI Teradata (NYSE:TDC) reported second-quarter results marked by growth in recurring revenue, expanded operating margins and higher free cash flow, while reaffirming its full-year outlook for total annual recurring revenue, total revenue and recurring revenue. The company raised its full-year non-GAAP earnings-per-share guidance and adjusted free-cash-flow forecast. President and Chief Executive Officer Steve McMillan said the company’s first-half performance reflected demand for its hybrid data platform as enterprises work to move artificial intelligence initiatives into production. “Our hybrid capabilities and our on-prem strength in particular, continue to resonate with customers running the most demanding and regulated workloads,” McMillan said. → No Hangover: Revisiting Microsoft One Week After Earnings Teradata Corporation Stock is a Turnaround Play Chief Financial Officer John Ederer said total ARR rose 1% year over year as reported, or 2% in constant currency. Cloud ARR increased 8% as reported and 9% in constant currency. Ederer said Teradata remains focused on total ARR growth, noting that the mix between cloud and on-premise subscriptions can vary by quarter. Total revenue was $410 million, flat year over year, exceeding the high end of company guidance by two percentage points. Recurring revenue rose 3% as reported to $363 million, or 2% in constant currency, and exceeded the high end of guidance by three percentage points. Consulting services revenue fell 24% year over year to $39 million, although the company said bookings improved and project backlog increased. Non-GAAP operating margin expanded to 21.5% from 16.4% a year earlier. Non-GAAP diluted EPS was $0.69, exceeding the top end of Teradata’s outlook by $0.12. Adjusted free cash flow was $127 million for the quarter. Ederer attributed the revenue outperformance primarily to the timing of revenue recognition in the on-premise business. Total gross margin increased 220 basis points year over year to 60.5%, aided by a greater mix of recurring revenue. Recurring revenue gross margin rose 30 basis points to 67.8%. → MarketBeat Week in Review – 08/03 - 08/07 Teradata ended the quarter with a net cash position of $323 million, an increase of $528 million from a year earlier. The company repurchased approximately $40 million of stock, or about 1.3 million shares, during the quarter and paid off the remaining $450 million balance on its term loan. McMillan highlighted the company’s May launch of the Teradata Autonomous Knowledge Platform, which is intended to support enterprise agentic AI deployments across cloud, on-premise and hybrid environments. He said the platform, including its AI Studio component, reached general availability in early in the third quarter. → Why the Landlord of the AI Boom Could Outlast the Chipmakers The platform includes Teradata Cloud capabilities designed to support always-on and elastic compute needs; Teradata Factory, an on-premise offering developed with Dell Technologies that combines CPUs and GPUs; Teradata AI Studio; and Tera, a natural-language interface for data analysis, coding and multi-agent orchestration. McMillan said enterprises are contending with production challenges in AI. Citing a company survey of 1,000 senior technology and data leaders, he said 90% expect to increase agentic AI investment over the next year, while nearly two-thirds have seen only small or emerging positive returns so far. He said 40% of surveyed technology leaders reported that more than 40% of their AI pilots had not reached production because their infrastructure was not designed to support them. The company also made its data analyst agent available through AWS Marketplace and expanded support for native open table formats. Teradata has joined the Agentic AI Foundation and said its Enterprise Model Context Protocol server is already in use with customers. McMillan cited several early customer engagements, including a South Asian telecommunications company that selected Teradata Factory for an AI modernization project; a Japanese banking group implementing Teradata Cloud, AI Studio and AI Services; and an expansion with a North American financial institution using AI Studio. He also said a U.S. healthcare company expanded its on-premise production system to support government regulations. Gartner named Teradata a “visionary” in its 2026 Magic Quadrant for AI platforms for data science and machine learning, according to McMillan. Teradata reaffirmed its full-year outlook ranges for total ARR, total revenue and recurring revenue. It increased its full-year non-GAAP diluted EPS outlook to $2.65 to $2.73 and raised adjusted free cash flow guidance to $330 million to $350 million. For the third quarter, the company expects recurring revenue to decline 4% to 2% year over year and total revenue to decline 6% to 4%. Teradata forecast non-GAAP diluted EPS of $0.55 to $0.59 for the quarter. Ederer said the anticipated second-half revenue declines reflect the accounting timing of on-premise subscriptions under ASC 606 rather than a change to the company’s annual expectations. More revenue from on-premise subscriptions was recognized upfront during the first half, leaving less revenue to recognize in the third and fourth quarters. Management said it expects modest sequential dollar growth in ARR from the second to third quarter and continues to anticipate that most of its annual ARR growth will occur in the fourth quarter. McMillan said the company has not included substantial upside from its newly launched products in its current guidance. Ederer said Teradata’s current capital-allocation priorities are organic research and development, followed by share repurchases and strategic mergers and acquisitions. The company continues to target 50% of adjusted free cash flow for buybacks, excluding the benefit from the SAP settlement. On hardware availability and pricing, Ederer said Teradata has sufficient inventory for its existing platform through 2026. He said potential supply-chain and pricing pressure could affect the newer Teradata AI Factory offering, but the company is focused on pricing the product to protect margins. McMillan added that the Dell partnership provides access to Dell’s purchasing capabilities and has helped expedite deliveries for some early AI Factory orders. Teradata Corporation is a global provider of enterprise analytics and data management solutions designed to help organizations unlock value from their data assets. The company offers both cloud-based and on-premises platforms that support data warehousing, big data analytics, and machine learning. Through its flagship analytics ecosystem, Teradata enables businesses to integrate, analyze, and manage large volumes of structured and unstructured data at scale. Central to Teradata's product suite is the Teradata Vantage analytics platform, which unifies diverse data types across multiple environments—including public and private clouds—into a single, coherent architecture. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Teradata Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Teradata stock has delivered a strong 70.0% return over the past year, and both the Discounted Cash Flow (DCF) intrinsic value estimate and market multiples currently point to the shares trading below what those models suggest they are worth. The question for investors is how comfortable that valuation gap looks once the recent run and the mixed broader checks are taken into account. Teradata's 70.0% 1 year return has sharply improved recent shareholder outcomes and puts extra focus on whether the current price still leaves enough upside versus intrinsic value. New enterprise AI customer engagements in global financial services can support expectations for future cash flows, while any slowdown in converting AI proof of concepts into scaled, paying deployments may limit how much value investors are willing to assign today. The stock scores 4 out of 6 on Simply Wall St's valuation checks, which is a mixed picture rather than a clear bargain or clear overvaluation, and you can see the breakdown at 4/6 valuation score. The issue now is whether Teradata's current share price properly reflects the intrinsic value indicated by the DCF work and the apparent discount on traditional multiples. Teradata delivered 70.0% returns over the last year. See how this stacks up to the rest of the Software industry. The Discounted Cash Flow (DCF) approach estimates what Teradata might be worth based on the cash it can generate for shareholders. For Teradata, the model starts from latest twelve month free cash flow of about $674.4 million and then assumes cash flows that generally ease back toward a steadier level rather than expand aggressively. On that basis, the 2 Stage Free Cash Flow to Equity model points to an estimated intrinsic value of about $42.66 per share. This compares to a current share price that sits about 19.4% below that DCF estimate, which means the stock screens as undervalued on this cash flow view. The recent enterprise AI customer wins in global financial services provide context, because they indicate why the market is still weighing how durable those projected cash flows might be, even with the apparent discount in place. Overall, Teradata stock appears undervalued relative to what its discounted cash flows imply today. Our Discounted Cash Flow (DCF) analysis suggests Teradata is undervalued by 19.4%. Track this in your watchlist or portfolio, or discover 52 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Teradata. P/E is usually a straightforward way to compare established software companies like Teradata, because it links what you pay directly to current earnings. Teradata currently trades on a P/E of about 7.7x, compared with an industry average of roughly 29.9x for software stocks and a peer average near 32.8x. The fair P/E ratio estimate for Teradata, which adjusts for the company’s growth profile, margins, size and risk, is around 12.4x. That remains above the current 7.7x level, indicating that the market is pricing Teradata’s earnings at a discount even after the recent share price strength. For investors who are comfortable with the business model and the recent AI oriented customer work, that gap shows how much of the company’s earnings power may not be fully reflected in the current multiple. On the P/E multiple, Teradata stock appears undervalued relative to what the company specific fair ratio suggests. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Teradata pick up where this valuation puzzle leaves off. They explain which assumptions about Teradata's future growth, margins and earnings would need to be true for the stock to be worth materially more or materially less than today's price. Each one ties a fair value to a clear story about potential catalysts and risks, so you can track over time which version of events appears to be unfolding on the Community page. One of the top community narratives on Teradata: roughly fairly valued Read one of the top narratives on Teradata Do you think there's more to the story for Teradata? Head over to our Community to see what others are saying! Teradata still screens as undervalued, with both the Discounted Cash Flow (DCF) view and the earnings multiple pointing to a discount at today’s price. The broader checks are mixed rather than emphatic, so the gap is not a simple green light. What matters now is whether Teradata can keep turning AI related interest into durable, paying deployments at a scale that sustains its cash flows and supports a higher P/E. The crux of the debate is whether the current discount reflects a genuine opportunity or the market’s caution on how consistently those AI workloads convert into long term earnings power. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TDC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Total ARR: Grew 1% as reported and 2% in constant currency. Cloud ARR: Grew 8% as reported and 9% in constant currency. Total Revenue: $410 million, flat as reported and in constant currency, two points above the high end of outlook. Recurring Revenue: $363 million, up 3% year over year as reported and 2% in constant currency, three points above the high end of outlook. Consulting Services Revenue: $39 million, down 24% year over year as reported and 23% in constant currency. Total Gross Margin: 60.5%, up 220 basis points year over year. Recurring Revenue Gross Margin: 67.8%, up 30 basis points versus Q2 25. Operating Margin: 21.5% compared to 16.4% in Q2 last year. Non-GAAP Diluted EPS: 69 cents, exceeding the top end of outlook range by 12 cents. Adjusted Free Cash Flow: $127 million in the quarter. Net Cash Position: $323 million at the end of Q2 26, up $528 million year over year. Share Repurchases: Approximately $40 million or about 1.3 million shares in the second quarter. Warning! GuruFocus has detected 3 Warning Signs with APPS. Is TDC fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Teradata Corp (NYSE:TDC) delivered solid Q2 2026 results with total ARR growth of 1% as reported and 2% in constant currency, and recurring revenue growth of 3% year-over-year, marking the third consecutive quarter of positive growth. The company significantly improved profitability, with non-GAAP operating margin expanding to 21.5% from 16.4% in Q2 2025, driven by higher gross margins and a more optimized cost structure. Teradata Corp (NYSE:TDC) raised its full-year non-GAAP EPS guidance to $2.65-$2.73 and adjusted free cash flow guidance to $330-$350 million, reflecting strong first-half performance and improved recurring revenue linearity. The launch of the Teradata Autonomous Knowledge Platform, including AI Studio, reached general availability in early Q3, with early customer wins in both on-prem and cloud environments, demonstrating strong market traction. Teradata Corp (NYSE:TDC) strengthened its balance sheet by paying off the remaining $450 million term loan, increasing its net cash position to $323 million, and continues to return value to shareholders through share repurchases. The company was named a Visionary in Gartner's 2026 Magic Quadrant for AI platforms for data science and machine learning, validating its position in the AI platform market. Teradata Corp (NYSE:TDC) is seeing strong demand for its hybrid capabilities, particularly Teradata Factory, which offers on-prem AI workloads with GPU support, and has partnered with Dell to leverage supply chain advantages. Teradata Corp (NYSE:TDC) reported a 24% year-over-year decline in consulting services revenue in Q2 2026, which impacted overall revenue and margins. The company expects a sequential decline in recurring revenue and total revenue in Q3 2026, with recurring revenue projected to decline 4% to 2% year-over-year, due to the timing of revenue recognition under ASC 606. Cloud ARR growth slowed to 8% as reported and 9% in constant currency, below the company's low double-digit growth target, reflecting a shift in focus to total ARR growth. The company faces potential supply chain pressures and increased hardware costs, particularly for Teradata Factory, which could impact margins in 2027 despite current pricing adjustments. AI monetization is lagging behind peers, as new product launches are expected to drive utilization of existing platform capacity rather than immediate incremental ARR growth. The company's total ARR growth remains modest at 1-2%, and the majority of growth is expected to come in Q4, indicating a back-end loaded year with potential execution risks. Teradata Corp (NYSE:TDC) is seeing reduced cloud migration activity from customers, which could limit future growth opportunities in the cloud segment. Q: Can you explain why the shape of the year shows first-half growth versus second-half declines, especially given the strong product launch environment?A: Steve McMillan (CEO) noted strong customer interest in Teradata's value proposition for agentic AI workloads, with Q4 remaining the strongest selling quarter. John Ederer (CFO) clarified that the full-year outlook for ARR and revenue remains unchanged, but the linearity of revenue recognition under ASC 606 has shifted. More upfront revenue from on-premise subscriptions was recognized in the first half, displacing some revenue recognition to Q3 and Q4, which explains the expected quarterly declines in the second half. Q: How should we think about the earnings headwinds in the second half, given the Q2 beat of 14 cents versus the full-year raise of only 9 cents?A: John Ederer (CFO) explained that the incremental recurring revenue in the first half provided a significant boost to earnings. As the year progresses, the timing of when these impacts hit has shifted, balancing out the full-year EPS guidance. The annual targets are generally increasing, but the quarterly distribution of earnings will be less front-loaded than the revenue performance. Q: Can you walk through customer conversations around Teradata Factory and how it impacts the competitive outlook, especially against cloud-native competitors without on-prem offerings?A: Steve McMillan (CEO) highlighted Teradata Factory as a key differentiator, built with GPUs from the ground up in partnership with Dell. It allows AI workloads to run natively on-prem, addressing data sovereignty needs and expanding use cases. The partnership with Dell provides access to advanced technology and go-to-market channels. Early orders and interest have been strong, and the focus on total ARR growth allows Teradata to capture growth whether customers choose on-prem or cloud deployments. Q: How do you stack-rank the highest ROI uses of capital given the strong balance sheet post-debt paydown?A: John Ederer (CFO) stated the current capital allocation priorities are: 1) organic R&D, 2) stock buyback program (targeting 50% of adjusted free cash flow), and 3) strategic M&A. The balance sheet is in a very strong position following the debt retirement and strong free cash flow, allowing for future strategic investments in AI while continuing shareholder returns. Q: Are you seeing any shift in customer budgets or incremental impact from AI budget allocation, and can you update us on cloud migration activity?A: John Ederer (CFO) noted that the focus is on total ARR growth rather than just cloud growth. Cloud ARR is still growing faster than on-premise subscriptions, but quarterly mix can vary. The low double-digit growth target for cloud remains the right trend line. Regarding migrations, the company is seeing less activity this year, with peak cloud migrations occurring a year or two ago. The hybrid approach continues to resonate with customers, reflected in the return of total ARR growth. Q: Were you satisfied with the sales organization's performance in the quarter, and did the unavailability of Teradata Factory impact results?A: Steve McMillan (CEO) expressed satisfaction with operational execution and discipline. The sales teams have embraced the new offers and capabilities, receiving positive feedback on Teradata Factory. The upcoming GA of Teradata Factory, with its on-prem GPU capabilities and NVIDIA partnership, is opening new opportunities for the sales teams, though it did not drive incremental revenue in Q2. Q: How is the trend of enterprises consolidating on a single data platform playing out, and where does Teradata fit against competitors like Databricks or Snowflake?A: Steve McMillan (CEO) observed that organizations want to avoid vendor lock-in. Teradata differentiates through its agent harness, context layer, and massively parallel processing architecture, which is uniquely suited for the massive workloads generated by AI agents. The company believes it can provide real business context to data better than anyone else, positioning it to win in this environment. Q: What are your thoughts on supply chain and hardware pricing pressures heading into the second half or 2027?A: John Ederer (CFO) stated that Teradata has sufficient inventory for the current platform this year due to pre-buying. For Teradata Factory, there could be supply chain pressures, but the company is focused on adjusting pricing to protect margins. This won't have a material impact on FY26 but is a focus for 2027. Steve McMillan (CEO) added that the Dell partnership provides buying power and has enabled expedited delivery for some early Teradata Factory orders. Q: Are you seeing any change in buying behavior due to elevated hardware costs, and how are customers reacting?A: Steve McMillan (CEO) noted that Teradata has adjusted pricing for both existing platforms and Teradata Factory. Customers are focused on price performance, and the recurring revenue model provides advantages in contracting. The Dell partnership has helped manage component costs and expedite deliveries. John Ederer (CFO) clarified that hardware was not a meaningful factor in the Q1 or Q2 revenue upside, though pricing increases on the existing platform were implemented at the end of Q2 for the second half. Q: For the early AI wins, are customers generating incrementally new spending, expanding existing commitments, or reallocating current spend?A: Steve McMillan (CEO) confirmed that Q2 saw all types of wins: new logos, workload expansions, and expansions both on-prem and in the cloud. The ability to run AI workloads close to the data, whether on-prem or in the cloud, provides customers with choice and is a unique differentiator. Over half of cloud customers operate in a hybrid environment, and this flexibility is difficult for competitors to match. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributes the solid first-half performance to the 'Teradata 3.0' strategy, focusing on a hybrid data foundation that supports both cloud and on-premise AI workloads. The launch of the Autonomous Knowledge Platform is framed as a critical response to the 'agentic AI era,' where enterprises struggle to move AI pilots into production due to infrastructure limitations. Management identifies 'context fragmentation'—where data lacks usable meaning for AI agents—as a primary market barrier that their new AI Studio and Data Analyst Agent are designed to solve. Operational discipline led to a significant expansion in non-GAAP operating margin to 21.5%, driven by a more optimized cost structure and a higher mix of recurring revenue. The partnership with Dell Technologies for 'Teradata Factory' is positioned as a strategic move to capture demand for private AI and data sovereignty in highly regulated industries. Management emphasizes that their massively parallel processing architecture is uniquely suited for the high concurrency and query complexity demands generated by AI agents. Full-year guidance for total ARR and revenue is reaffirmed, with management expecting the majority of growth to be back-weighted to the fourth quarter. The increased Adjusted Free Cash Flow guidance of $330 million to $350 million assumes continued benefit from debt retirement and improved recurring revenue linearity. Management expects a slight decline in recurring revenue on a quarterly basis over the second half of the year due to accelerated upfront revenue recognition in the first half under ASC 606. Future growth is expected to be driven by the general availability of the Autonomous Knowledge Platform, though management notes they have not yet factored significant 'upside' from these new products into current guidance. Retention rates are anticipated to show incremental gains through the second half of 2026, supported by a large volume of renewals scheduled for the fourth quarter. The company fully retired its remaining $450 million term loan balance, significantly strengthening the balance sheet for future strategic M&A or AI investments. Consulting services revenue declined 24% year-over-year, which management is addressing by optimizing the cost structure to return the segment to low double-digit margins. Management flagged potential supply chain pressures and increased pricing for hardware components in 2027, though they believe current inventory levels protect the 2026 outlook. Teradata was named a 'Visionary' in the 2026 Gartner Magic Quadrant for AI Platforms, which management views as external validation of their pivot toward data science and machine learning. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained that the projected second-half revenue decline is a function of ASC 606 accounting, where more on-premise subscription revenue was recognized upfront in H1. They clarified that while revenue recognition timing has shifted, the underlying demand environment remains strong and total ARR targets for the year are unchanged. Steve McMillan highlighted that cloud-native competitors lack the ability to offer sovereign, on-prem AI infrastructure with integrated GPUs. The Dell partnership allows Teradata to leverage Dell's buying power for components and provides access to a broader go-to-market channel for private AI deployments. Management expects AI monetization to initially manifest as increased utilization of existing platform capacity rather than immediate standalone software fees. They argued this provides a 'lag' to ARR growth but offers a competitive advantage by preventing customer costs from spiraling as AI agents increase query volume. John Ederer stack-ranked capital priorities as: 1) Organic R&D, 2) Stock buybacks (targeting 50% of adjusted free cash flow), and 3) Strategic M&A. The strengthened net cash position of $323 million provides flexibility to be 'opportunistic' on acquisitions that could accelerate the AI roadmap.

Teradata Corporation TDC reported second-quarter 2026 non-GAAP earnings of 69 cents per share, up 46.8% year over year. The figure surpassed the Zacks Consensus Estimate by 25.46%.Revenues of $410 million increased 0.5% from the year-ago quarter and beat the consensus by 2.91%. Total annual recurring revenues (ARR) increased 1% as reported and 2% in constant currency to $1.509 billion. Public cloud ARR advanced 8% year over year as reported and 9% in constant currency to $686 million. Cloud represented 45% of total ARR at quarter-end compared with 43% in the year-ago period.Subscription ARR reached $750 million, down from $756 million a year earlier but above $729 million in the first quarter. Maintenance and software upgrade rights ARR declined to $73 million from $99 million. Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote Recurring revenues reached $363 million, up 3% as reported and 2% in constant currency and represented 89% of total revenues. Product sales rose 4% year over year and 3% in constant currency to $371 million. Perpetual software license, hardware and other revenues, accounting for 2% of total revenues, surged 167% year over year and 313% in constant currency to $8 million.Consulting services revenues, representing 9.5% of total revenues, fell 24% year over year and 23% in constant currency to $39 million. Non-GAAP gross margin expanded 220 basis points year over year to 60.5%, helped by a higher recurring-revenue mix. Recurring revenue gross margin improved 30 basis points to 67.8%, partly reflecting continued progress in cloud gross margin.Non-GAAP selling, general and administrative expenses declined 8.4% year over year to $98 million. Research and development expenses fell 3.1% to $62 million. Non-GAAP operating margin improved to 21.5% from 16.4%, reflecting higher gross margin and a more optimized cost structure. The company launched the Teradata Autonomous Knowledge Platform during the quarter and brought major components, including AI Studio, to general availability early in the third quarter. The platform combines cloud, on-premise and hybrid deployment options with governed data, AI tools and agent capabilities.Teradata also introduced Teradata Factory, a Dell-built on-premise system with integrated CPUs and GPUs for private AI workloads. Management highlighted early customer orders and interest, particularly among regulated organizations and customers with data sovereignty requirements. The partnership gives TDC access to Dell’s technology and go-to-market reach. As of June 30, 2026, Teradata had cash and cash equivalents of $414 million compared with $493 million as of Dec. 31, 2025. The company ended the quarter with net cash of $323 million after paying off the $450 million balance on its term loan. Teradata generated $106 million in cash flow from operations during the quarter, up from $43 million in the year-ago period. Free cash flow increased to $105 million from $39 million, while adjusted free cash flow rose to $127 million from $39 million. The company also repurchased approximately 1.3 million shares for $40 million during the quarter. Management continues to target the return of at least 50% of adjusted free cash flow through share repurchases. For the third quarter of 2026, Teradata expects non-GAAP earnings of 55-59 cents per share. Total revenues are projected to decline 6% to 4% year over year, while recurring revenues are expected to decrease 4% to 2%. Management attributed the second-half revenue pattern to the timing of upfront revenue recognition from on-premises subscriptions during the first half. For 2026, Teradata guided its non-GAAP earnings outlook to $2.65-$2.73 per share and adjusted free cash flow forecast to $330-$350 million. Cash flow from operations is expected to be between $665 million and $685 million, including an after-tax net benefit of $315 million from the SAP settlement.The company reaffirmed its forecast for total ARR growth of 2-4% year over year, recurring revenue growth of flat to 2%, and total revenue performance ranging from a 2% decline to flat. Teradata currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Zacks Computer and Technology sector include Kimball Electronics KE, NVIDIA NVDA and Onto Innovation ONTO. Each stock currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Shares of Kimball Electronics have declined 2.5% in the year-to-date period. KE is set to report the fourth quarter of fiscal 2026 results on Aug. 12.Shares of NVIDIA have gained 13.7% in the year-to-date period. NVDA is slated to report second-quarter 2026 results on Aug. 26.Onto Innovation shares have jumped 82.2% in the year-to-date period. ONTO is set to report first-quarter fiscal 2027 results on Aug. 6, 2026. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Teradata Corporation (TDC) : Free Stock Analysis Report NVIDIA Corporation (NVDA) : Free Stock Analysis Report Kimball Electronics, Inc. (KE) : Free Stock Analysis Report Onto Innovation Inc. (ONTO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Teradata (TDC) stock is in focus after the company reported second quarter 2026 results with higher net income and earnings per share, alongside guidance that points to modest year over year revenue pressure ahead. See our latest analysis for Teradata. Teradata’s latest earnings release, new AWS Data Analyst Agent launch, updated guidance and recent board refresh have all landed against a backdrop of strong momentum, with a 1 day share price return of 7.2% and a 1 year total shareholder return of 70%, although the 3 year and 5 year total shareholder returns are still negative. If Teradata’s move has you looking for other ideas in AI infrastructure and analytics, it could be a good time to scan the market using the 55 AI infrastructure stocks After Teradata’s post earnings jump, the stock now sits only slightly below the average analyst target, while some intrinsic value estimates point to a wider discount. So where might fair value really lie in that spread? Teradata’s most followed narrative pegs fair value at about $34.88, just above the latest close of $34.39, which puts current pricing almost on top of that estimate while still leaving a small discount in play. Read the complete narrative. Want to see what sits behind that fair value for Teradata? The narrative focuses on recurring revenue mix, long term margin reset, and a richer P/E multiple on future earnings. The key assumptions are all laid out, but the numbers might surprise you. Result: Fair Value of $34.88 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, you still need to weigh that against risks for Teradata, including ongoing revenue pressure and competition from hyperscalers and open source analytics platforms. Find out about the key risks to this Teradata narrative. The mixed tone around Teradata might leave you with questions about how the risks and rewards really stack up. Act now, review the underlying data, and then weigh both sides for yourself with the 3 key rewards and 3 important warning signs If Teradata has sharpened your focus, do not stop here. Use the Simply Wall Street Screener to uncover fresh ideas that fit your goals before the market moves. Target higher quality opportunities by scanning 52 high quality undervalued stocks, which combine strong fundamentals with prices that still sit below their estimated worth. Strengthen your income stream by focusing on 7 dividend fortresses, which aim to pair meaningful yields with durability. Dial down potential volatility by zeroing in on 82 resilient stocks with low risk scores, which score well on financial resilience and stability. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TDC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Teradata Corporation TDC used its second-quarter call to pair operating progress with a broader pitch for its agentic artificial intelligence (AI) strategy. Management highlighted improving recurring revenues, expanding margins and stronger cash generation. The call also focused on why second-half revenue growth will soften despite positive product momentum, with executives attributing the pattern mainly to revenue-recognition timing. President and chief executive officer Steve McMillan reaffirmed Teradata’s 2026 outlook for total annual recurring revenues, recurring revenues and total revenues. The company still expects total ARR growth of 2% to 4%, recurring revenue growth of flat to 2%, and total revenues ranging from a 2% decline to flat. Management raised its non-GAAP earnings outlook to $2.65-$2.73 per share and adjusted free cash flow guidance to $330-$350 million. Chief financial officer John Ederer tied the increase to the strong first half, recurring-revenue timing and lower interest expense after debt repayment. For the third quarter, Teradata expects recurring revenues to decline 2% to 4%, total revenues to fall 4% to 6%, and non-GAAP earnings of $0.55-$0.59 per share. McMillan positioned the Autonomous Knowledge Platform as the centerpiece of “Teradata 3.0.” It combines Teradata Cloud, the on-premises Teradata Factory system, AI Studio and Tera, an agentic coworker offering natural-language access to enterprise data. Management said the platform reached general availability early in the third quarter, months after its May introduction. Teradata emphasized governance, hybrid deployment and running AI workloads close to customers’ existing data. McMillan cited early adoption across telecommunications, banking, government and health care. Wins included new logos, workload expansions and deployments in cloud and on-premises environments. A Morgan Stanley analyst questioned why first-half growth gives way to expected declines while new artificial intelligence (AI) products enter the market. Ederer said more on-premises subscription revenue was recognized upfront under ASC 606 during the first half. That timing shifted revenue recognition away from the third and fourth quarters without changing the full-year outlook. McMillan added that guidance includes little upside from the new product launches. Second-quarter recurring revenues rose 3% to $363 million, while total revenues were flat at $410 million. Revenues topped the Zacks Consensus Estimate of $398.4 million. The company reported non-GAAP earnings of $0.69 per share, which surpassed the $0.55 consensus estimate. Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote A UBS analyst asked how Teradata Factory could affect competition and retention. McMillan said its built-in GPU architecture and Dell partnership let customers run AI workloads beside regulated or sovereign data without relying exclusively on public cloud infrastructure. Citi pressed management on cloud ARR growth and AI monetization. Ederer said total ARR, rather than quarterly cloud mix, remains the central measure because customers can choose cloud or on-premises deployments. McMillan acknowledged that monetization may lag because customers initially use capacity they already purchased. He said higher utilization can support later growth while helping customers control agentic-workload costs. Non-GAAP operating margin reached 21.5%, up from 16.4% a year earlier. Ederer attributed the improvement to recurring-revenue growth, a richer mix and an optimized cost structure. Adjusted free cash flow reached $127 million. Teradata also repaid the remaining $450 million term loan and ended the quarter with a $323 million net cash position. In response to a UBS question, Ederer ranked organic research and development first among capital priorities, followed by share repurchases and strategic acquisitions. Teradata continues targeting 50% of adjusted free cash flow for buybacks. Management’s tone was confident about product differentiation but measured on the pace of financial impact. Priorities include customer retention, fourth-quarter selling execution and converting early platform interest into broader usage. The call left Teradata balancing AI investment with operating leverage. Management expects hybrid deployment, on-premises strength and improving retention to support its full-year objectives without immediate material revenue from the new platform. TDC carries a Zacks Rank #3 (Hold), a neutral near-term indicator based on earnings-estimate revisions. Its Growth Score of A, Value Score of B and VGM Score of A provide favorable style characteristics, while the Momentum Score of C is less supportive. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The combination points to stronger growth and value attributes than near-term momentum. The Zacks Rank can change as analysts update estimates after the latest results, so the current signal should not be viewed as permanent. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Teradata Corporation (TDC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research