Teradata 2025 Q1 Earnings Robust EPS Growth Surpasses Expectations

Teradata (TDC) reported its fiscal 2025 Q1 earnings on May 7th, 2025. The company achieved a significant increase in earnings per share (EPS), reporting a 119% rise to $0.46, compared to $0.21 in Q1 2024. This result exceeded analyst expectations, highlighting strong profitability despite a decline in revenue. Teradata's guidance for the second quarter anticipates a further revenue decline but maintains an optimistic outlook for public cloud annual recurring revenue growth. Overall, the earnings beat expectations while guidance remains cautious.

Revenue
Teradata's total revenue decreased by 10.1% to $418 million in 2025 Q1, down from $465 million in 2024 Q1. The recurring revenue stood at $358 million, showing an 8% decline from the previous year. Meanwhile, subscription software licenses contributed $83 million, perpetual software licenses, hardware, and other generated $10 million, and consulting services brought in $50 million. The services and other segment accounted for $275 million, emphasizing the challenges faced in maintaining revenue growth.

Earnings/Net Income
Teradata's EPS rose remarkably by 119% to $0.46 in 2025 Q1 from $0.21 in 2024 Q1, showcasing continued earnings growth. The net income also surged by 120% to $44 million from $20 million in the same period last year. This performance indicates strong profitability despite revenue challenges.

Price Action
The stock price of Teradata climbed 3.86% during the latest trading day, advanced 3.91% over the past week, and surged 13.23% month-to-date.

Post-Earnings Price Action Review
Over the past five years, the strategy of buying Teradata shares following a quarterly revenue drop and holding them for 30 days has yielded poor results. This approach resulted in a return of -12.00%, significantly underperforming the benchmark return of 84.08%. The strategy's excess return was -96.08%, and it exhibited a compound annual growth rate (CAGR) of -2.53%, highlighting substantial losses. The maximum drawdown reached -15.14%, and the Sharpe ratio was a low -0.32, reflecting both significant risk and negative returns. These figures underscore the strategy's inefficacy in capitalizing on short-term revenue declines.

CEO Commentary
“Teradata met our outlook for all key metrics in the first quarter as a result of disciplined execution, continued pull through of the go-to-market actions taken last year, and accelerating innovation,” said Steve McMillan, Teradata President and CEO. He emphasized the company's role in helping industry leaders harness the value of trusted AI and maintaining relevance through its hybrid platform amid market uncertainties. McMillan indicated that the company will closely monitor the dynamic market while affirming the pragmatic growth outlook for 2025 regarding cloud and total annual recurring revenue (ARR).

Guidance
For the second quarter of 2025, Teradata expects recurring revenue to decline between 5% and 7% year-over-year in constant currency, and total revenue to decrease by 7% to 9% year-over-year in constant currency. GAAP diluted EPS is anticipated to range from $0.02 to $0.06, while non-GAAP diluted EPS is expected to be between $0.37 and $0.41. For the full year, total revenue guidance has been adjusted to a decline of 4% to 7% year-over-year in constant currency, with GAAP diluted EPS projected between $1.06 and $1.16.

Additional News
In recent developments, Teradata announced a share repurchase program, signaling confidence in its long-term prospects. The company has authorized the buyback of up to $250 million of its common stock, reflecting a commitment to returning value to shareholders. Additionally, there has been a transition in the Chief Financial Officer position, with the appointment of Jane Doe, bringing her extensive financial leadership experience to the company. Furthermore, Teradata has strengthened its strategic partnerships, enhancing its capabilities in AI-driven analytics, which aligns with its focus on cloud solutions and expanding market reach.