Teradata 2025 Q1 Earnings Strong Performance as Net Income Surges 120%

Teradata (TDC) reported its fiscal 2025 Q1 earnings on May 06th, 2025. Teradata's earnings beat analyst expectations for Q1 2025, with adjusted EPS surpassing estimates. While the company raised its full-year GAAP diluted EPS guidance, it anticipates a decline in total revenue for both the second quarter and the full year. The company remains focused on its public cloud ARR growth, projecting a 14% to 18% increase.

Revenue
Teradata's total revenue in 2025 Q1 dropped by 10.1% compared to the previous year, totaling $418 million. Recurring revenue accounted for $358 million, while perpetual software licenses, hardware, and other contributed $10 million. The consulting services segment generated $50 million, culminating in the overall revenue of $418 million.

Earnings/Net Income
Teradata's EPS surged by 119.0% to $0.46 in 2025 Q1 compared to $0.21 in 2024 Q1, reflecting continued earnings growth. Net income also rose significantly to $44 million, marking a 120.0% increase from $20 million in 2024 Q1. The EPS growth was notably strong, indicating positive financial performance.

Post Earnings Price Action Review
The strategy of purchasing teradata shares after a revenue drop and holding for 30 days has historically yielded poor returns, significantly underperforming the benchmark over the past five years. This approach resulted in a negative return of -10.38%, with an excess return of -93.51% against the benchmark return of 83.12%. The strategy demonstrated a high maximum drawdown of -15.25% and a low Sharpe ratio of -0.27, indicating considerable risk and negative returns. Investors experienced losses due to substantial volatility and underperformance, emphasizing the importance of reassessing such investment strategies in light of changing market dynamics.

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. McMillan highlighted that the company is assisting industry leaders in deriving value from trusted AI and its hybrid platform, emphasizing its relevance in uncertain times. He noted the importance of closely monitoring market dynamics while affirming the company's pragmatic growth outlook for 2025 regarding cloud and total ARR.

Guidance
For the second quarter of 2025, the company expects recurring revenue to decline between -5% to -7% year-over-year, and total revenue to decrease in the range of -7% to -9% year-over-year. GAAP diluted EPS is projected between $0.02 to $0.06, while non-GAAP diluted EPS is anticipated between $0.37 to $0.41. For the full year, Teradata revises its total revenue guidance to a decline of -4% to -7% year-over-year, and raises its GAAP diluted EPS forecast to $1.06 to $1.16, reaffirming public cloud ARR growth of 14% to 18%.

Additional News
In recent weeks, Teradata has seen several noteworthy developments. Dimensional Fund Advisors LP has reduced its holdings in Teradata Co. (NYSE:TDC), marking a shift in investment strategy. Meanwhile, Teradata has introduced the Teradata Enterprise Vector Store, enhancing its capabilities in AI and analytics, positioning the company as a leader in the Forrester Wave on data management for analytics platforms. The company continues to focus on profitable growth, optimizing investments across SG&A and R&D, with restructuring efforts aimed at pivoting towards analytics and AI. These strategic moves highlight Teradata's commitment to innovation and adapting to dynamic market conditions.