Cloud analytics platform Teradata (NYSE: TDC) reported Q2 CY2026 results topping the market’s revenue expectations, but sales were flat year on year at $410 million. On the other hand, next quarter’s revenue guidance of $395.2 million was less impressive, coming in 2.1% below analysts’ estimates. Its non-GAAP profit of $0.69 per share was 23.1% above analysts’ consensus estimates.
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Teradata (TDC) Q2 CY2026 Highlights:
- 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
- Free Cash Flow Margin: 25.6%, down from 87.8% in the previous quarter
- 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: $3.02 billion
Company Overview
Pioneering data warehousing technology in the 1980s before "big data" was a common term, Teradata (NYSE: TDC) provides cloud-based data analytics and AI platforms that help large enterprises integrate, analyze, and leverage their data across multiple environments.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Teradata’s demand was weak and its revenue declined by 2.6% per year. This was below our standards and suggests it’s a low quality business.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Teradata’s annualized revenue declines of 3% over the last two years align with its five-year trend, suggesting its demand has consistently shrunk. 
This quarter, Teradata’s $410 million of revenue was flat year on year but beat Wall Street’s estimates by 3.5%. Company management is currently guiding for a 5% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 1.7% over the next 12 months, similar to its two-year rate. Although this projection is better than its two-year trend, it’s tough to feel optimistic about a company facing demand difficulties.
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Annual Recurring Revenue
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
Teradata’s ARR came in at $1.51 billion in Q2, and over the last four quarters, its growth was underwhelming as it averaged 2.2% year-on-year increases. This performance mirrored its total sales and suggests that increasing competition is causing challenges in securing longer-term commitments. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
It’s relatively expensive for Teradata to acquire new customers as its CAC payback period checked in at 76.1 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low.
Key Takeaways from Teradata’s Q2 Results
We were impressed by how significantly Teradata blew past analysts’ adjusted operating income expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed and its EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 17% to $28.54 immediately following the results.
Teradata’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
