Teradata Corporation, a leading provider of hybrid cloud analytics and data platform solutions, has been at the forefront of empowering organizations to derive meaningful insights from their data. With a rich history spanning over four decades, the company has evolved to become a trusted partner in the rapidly transforming world of data analytics and artificial intelligence (AI).
Company Background and History
Teradata Corporation was incorporated in 1979 as a Delaware corporation and became a publicly traded company on September 30, 2007, listed on the New York Stock Exchange under the ticker symbol TDC. Since its inception, Teradata has focused on helping organizations improve business performance, enrich customer experiences, and integrate data across the enterprise. The company's journey has been marked by a relentless focus on innovation, strategic pivots, and a deep understanding of the evolving needs of its customer base.
Strategic Evolution and Challenges
Over the years, Teradata has evolved its technology offerings, transitioning from an on-premises data analytics platform to a comprehensive hybrid cloud analytics and data platform. A key milestone in this evolution was the company's strategic pivot to a cloud-first focus around 2020. This shift allowed Teradata to build a substantial cloud business, with cloud ARR growing to over $500 million by the end of 2024. However, this transition also presented challenges as the company navigated the shift in its business model from perpetual licenses to subscription-based offerings.
In 2024, Teradata underwent a significant reorganization of its sales function and initiated global cost reduction actions to optimize operations. These changes were implemented to improve execution and position the company to return to total ARR growth. Despite these challenges, Teradata continued to invest in innovation, introducing new capabilities around AI and open table formats to provide customers with a differentiated hybrid cloud platform.
Core Offerings and Technology
Teradata's flagship offering, Teradata Vantage, is a comprehensive hybrid cloud platform that enables organizations to leverage the power of data and AI to drive business breakthroughs. The company's long-standing expertise in managing complex data workloads and its transition to a hybrid cloud model have been key to its evolution in the rapidly changing technology landscape.
Financials and Liquidity
Teradata's financial performance has been a testament to its resilience and adaptability. In the fiscal year 2024, the company reported total revenue of $1.75 billion, with a net income of $114 million. The company's annual recurring revenue (ARR) stood at $1.474 billion, with a 15% year-over-year growth in public cloud ARR, reaching $609 million. Teradata's free cash flow for the year was a healthy $277 million, representing a 16% margin.
For the most recent quarter (Q4 2024), Teradata reported revenue of $409 million and net income of $25 million. Revenue decreased 11% year-over-year on a reported basis and 9% in constant currency. The revenue decline was primarily driven by a decrease in perpetual software licenses, hardware and other revenue, which decreased 49%, as well as a 16% decrease in consulting services revenue. These declines were partially offset by a 6% decrease in recurring revenue.
Teradata operates globally, with 49% of total 2024 revenue coming from outside the United States. No single country outside the US accounted for more than 10% of revenue or property and equipment.
In terms of liquidity, Teradata's debt-to-equity ratio was 4.33 as of December 31, 2024. The company had $420 million in cash and cash equivalents, as well as an undrawn $400 million revolving credit facility. The current ratio stood at 0.81, and the quick ratio was 0.79.
Product Segments and Revenue Breakdown
Teradata operates in two main business segments: Product Sales and Consulting Services.
The Product Sales segment, which includes recurring revenue from subscriptions, cloud offerings, and maintenance/upgrade rights, as well as perpetual software licenses and hardware, generated $1.50 billion in revenue in 2024, accounting for 86% of total revenue. Recurring revenue contributed $1.48 billion or 84.5% of total revenue, while perpetual software licenses, hardware, and other revenue added $23 million or 1.3%. The gross profit for this segment was $1.05 billion, representing a 70.2% gross margin.
The Consulting Services segment, which provides implementation and optimization services, generated $248 million in revenue, accounting for 14.2% of total revenue. The gross profit for this segment was $31 million, with a 12.5% gross margin.
Innovation and Customer Focus
One of the key drivers of Teradata's success has been its ability to anticipate and address the evolving needs of its customers. As the world increasingly embraces the transformative potential of AI, the company has positioned itself at the forefront of this technological revolution. In 2024, Teradata introduced several innovative offerings, including the Teradata Enterprise Vector Store, an in-database solution that brings the power of vector data management to enable Trusted AI applications at enterprise scale.
Strategic Partnerships
Recognizing the importance of open and connected ecosystems, Teradata has forged strategic partnerships with industry leaders such as NVIDIA, AWS, Google Cloud, and Microsoft. These collaborations have allowed the company to deliver seamless integration and synergies, empowering customers to leverage the best-in-class technologies for their data analytics and AI initiatives.
Resilience and Adaptation
Despite the challenges posed by the global pandemic and macroeconomic headwinds, Teradata has remained resilient. The company has demonstrated its ability to adapt and evolve, as evidenced by its strategic restructuring efforts and ongoing investments in product innovation. These actions have positioned Teradata for a return to total ARR growth in 2025, with an expected cloud ARR growth range of 14% to 18% and a flat to 2% growth in total ARR.
Industry Recognition and Market Trends
Teradata's commitment to innovation and customer success is further exemplified by its recognition in industry reports. In the 2025 Gartner Critical Capabilities report for Cloud Database Management Systems for Analytical Use Cases, Teradata placed among the top 5 companies across every evaluated use case, highlighting the company's technological prowess and relevance in the market.
The data management and analytics market, in which Teradata operates, is forecast to grow at a double-digit rate year-over-year for the next few years. This growth is driven by the anticipated rapid and global adoption of AI and machine learning, positioning Teradata well to capitalize on these industry trends.
Future Outlook and Guidance
As Teradata navigates the dynamic data analytics and AI landscape, the company's focus on delivering trusted, scalable, and innovative solutions positions it well to capitalize on the growing demand for enterprise-grade data management and analytics capabilities. With a strong foundation, a talented team, and a clear vision for the future, Teradata is poised to continue its transformation and solidify its position as a leader in the hybrid cloud analytics and data platform market.
For the full year 2025, Teradata has provided the following guidance: - Cloud ARR is anticipated to grow year-on-year in the range of 14% to 18%. - Total ARR is projected to grow year-on-year in the range of flat to 2%. - Total recurring revenue is expected to be in the range of minus 3% to minus 5% year-over-year. - Total revenue is anticipated to be in the range of minus 4% to minus 6% year-over-year. - Non-GAAP diluted earnings per share is expected to be in the range of $2.15 to $2.25. - Free cash flow is anticipated to be in the range of $250 million to $280 million.
For Q1 2025, Teradata expects: - Recurring revenue to be in the range of minus 4% to minus 6% year-over-year on a constant currency basis. - Total revenue to be in the range of minus 6% to minus 8% year-over-year on a constant currency basis. - Non-GAAP diluted earnings per share to be in the range of $0.55 to $0.59.
These projections reflect Teradata's ongoing transition to a cloud-first model and its efforts to stabilize and grow its recurring revenue base while managing the decline in legacy business segments.