Teradata Q3 Earnings Beat Estimates, Revenues Fall Y/Y, Shares Rise

Teradata TDC reported third-quarter 2025 non-GAAP earnings of 72 cents per share, which beat the Zacks Consensus Estimate by 35.85%. The bottom line increased 4.3% year over year.Revenues of $416 million beat the Zacks Consensus Estimate by 2.54%. The figure declined 5.5% year over year on a reported basis and 6% on a constant-currency (cc) basis.Total annual recurring revenues (ARR) at the third-quarter end increased 1% year over year to $1.49 billion, flat at cc.Teradata shares were up 21.1% at the time of writing this article. The company’s shares have dropped 33.6% year to date, underperforming the Zacks Computer & Technology sector’s appreciation of 29.4%.TDC Q3 Top Line in DetailPublic cloud ARR increased 11% on a reported basis, as well as at cc year over year to $633 million. The growth was driven by increasing demand for its cloud solutions. The cloud net expansion rate was 112% in the reported quarter. Teradata Corporation Price, Consensus and EPS Surprise Teradata Corporation price-consensus-eps-surprise-chart | Teradata Corporation Quote Recurring revenues (88% of total revenues) decreased 2% year over year on a reported basis and 3% in cc to $366 million. Perpetual software license and hardware revenues (0.7% of total revenues) dropped 57.1% year over year (down 44% at cc) to $3 million.Consulting services’ revenues (11.3% of revenues) fell 23% year over year (down 22% at cc) to $47 million. Product Sales decreased 3% year over year on a reported basis (down 3% at cc) to $369 million.TDC Operating DetailsThird-quarter gross margin on a non-GAAP basis was 62.3%, expanding 70 basis points (bps) year over year.Selling, general & administrative (SG&A) expenses decreased 11% year over year to $122 million. Research & development (R&D) expenses were $70 million, down 4.1% year over year.As a percentage of revenues, SG&A decreased 180 bps year over year to 29.3%, whereas R&D inched up 20 bps year over year to 16.8%.The non-GAAP operating margin was 23.6%, up 110 bps year over year.TDC’s Balance Sheet Remains StrongAs of Sept. 30, 2025, Teradata had cash and cash equivalents of $406 million compared with $369 million as of June 30.Long-term debt as of Sept. 30, 2025, was $437 million compared with $443 million as of June 30.In the third quarter, TDC generated $94 million in cash from operating activities compared with the previous quarter’s $43 million.The company generated a free cash flow of $88 million in the reported quarter.TDC Offers Q4 and 2025 GuidanceFor fourth-quarter 2025, non-GAAP earnings are expected to be between 53 and 57 cents per share. Teradata expects recurring revenues to decline between 1% and 3% year over year, at cc. The company expects total revenues to be down 2-4% year over year. For 2025, TDC expects non-GAAP earnings between $2.38 and $2.42 per share. Public cloud ARR growth is projected to be between 14% and 18% on a year-over-year basis, at cc. Total ARR growth is expected between flat and up 2% year over year, at cc.Teradata expects recurring revenues to decline in the 3% to 5% range, year over year, at cc. The company expects total revenues to be down 5-7% at cc from 2024. Cash flow from operations is expected to be between $280 million and $300 million. Free cash flow is anticipated to be in the $260-$280 million range.Zacks Rank & Stocks to ConsiderCurrently, Teradata has a Zacks Rank #3 (Hold). Fair Isaac FICO, StoneCo STNE and Simulations Plus SLP are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector.Fair Isaac shares have dropped 19.3% year to date. This Zacks Rank #1 (Strong Buy) company is scheduled to release fourth-quarter fiscal 2025 results on Nov. 5. You can see the complete list of today’s Zacks #1 Rank stocks here.StoneCo shares have returned 136.2% year to date. StoneCo is scheduled to release third-quarter 2025 results on Nov. 6. StoneCo sports a Zacks Rank #1.   Simulations Plus shares have dropped 39% year to date. Simulations Plus is set to report its fourth-quarter fiscal 2025 results on Dec. 1. Simulations Plus currently flaunts a Zacks Rank #1. Zacks Names #1 Semiconductor StockThis under-the-radar company specializes in semiconductor products that titans like NVIDIA don't build. It's uniquely positioned to take advantage of the next growth stage of this market. And it's just beginning to enter the spotlight, which is exactly where you want to be.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $971 billion by 2028.See This Stock Now for Free >>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 Simulations Plus, Inc. (SLP): Free Stock Analysis Report Fair Isaac Corporation (FICO): Free Stock Analysis Report StoneCo Ltd. (STNE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks