Abstract
Teradata will report fiscal third-quarter results on October 29, 2026 Post-Mkt; the company is scheduled to host its next quarterly release on November 05, 2026 Post-Mkt.
Market Forecast
Consensus modeled for the current quarter points to revenue of 395.74 million US dollars, adjusted EPS of 0.58, and EBIT of 77.84 million US dollars. On a year-over-year basis, the forecasts imply revenue down 2.58%, adjusted EPS up 8.04%, and EBIT down 3.25%. The quarter’s gross margin and net margin were not guided in the tool data; however, the company’s recent disclosure suggests a revenue mix anchored by recurring subscriptions, which typically supports margin resilience versus legacy license revenue. The company’s main revenue stream is recurring subscription and related services at 363.00 million US dollars last quarter, while the most promising growth lever remains recurring ARR-driven cloud consumption, with the mix continuing to rise year over year even as one-time license revenue of 8.00 million US dollars declines.
Last Quarter Review
Last quarter, Teradata delivered revenue of 410.00 million US dollars, a gross profit margin of 59.51%, GAAP net income attributable to shareholders of 46.00 million US dollars, a net profit margin of 11.22%, and adjusted EPS of 0.69, with revenue up 0.49% year over year and adjusted EPS up 46.81% year over year. Net income declined sequentially by 86.27% on the tool’s quarter-on-quarter metric. The quarter’s key highlight was the continued outperformance versus consensus on both EPS and EBIT, with adjusted EPS beating by 0.13 and EBIT of 88.00 million US dollars surpassing expectations by 10.73 million US dollars. Main business highlights: recurring revenue registered 363.00 million US dollars, consulting services contributed 39.00 million US dollars, and licenses/products delivered 8.00 million US dollars, with the mix favoring recurring models that have been steadily gaining share year over year.
Current Quarter Outlook
Main business: Recurring subscription and cloud consumption
Recurring subscription continues to be the core of Teradata’s model, positioned to deliver the bulk of quarterly revenue and underpin gross margin stability. The shift away from up-front licenses toward usage-based and term-based subscriptions supports improved visibility and less volatility in reported revenue. With consensus looking for a slight revenue contraction this quarter, execution on renewals and cloud consumption ramp will be the swing factors determining whether revenue stabilizes or slightly underperforms. The extent to which existing enterprise workloads migrate to cloud deployments affects both growth and margin, as cloud mix typically carries healthy gross profit characteristics when scaled.
Most promising growth lever: Cloud ARR and workload expansion
The company’s most promising path to expansion remains cloud ARR tied to VantageCloud and connected analytics workloads. The prior quarter’s mix shows licenses/products at only 8.00 million US dollars, underscoring the secular decline of one-time transactions and the importance of deepening wallet share in cloud environments. If ARR adds accelerate through enterprise expansions and new workloads, the pricing model should lift adjusted EPS despite tepid top-line growth. Conversely, if macro caution delays migrations or curtails incremental consumption, EBIT leverage could soften against the forecasted 77.84 million US dollars.
Key stock-price drivers this quarter
Near-term stock reaction will likely hinge on three factors: the magnitude of adjusted EPS versus the 0.58 forecast, momentum in recurring revenue against the 363.00 million US dollars prior run-rate, and qualitative commentary on cloud pipeline conversion. A positive EPS surprise paired with stable or improving recurring revenue mix would bolster confidence in margin durability despite a forecast revenue dip of 2.58% year over year. Any indication of slower cloud migrations, pressured consulting utilization relative to the 39.00 million US dollars baseline, or incremental competition in large analytics deals could tilt sentiment cautious and cap multiple expansion.
Analyst Opinions
Across the recent ratings and published commentary, the majority tilt is bullish. Morgan Stanley reiterated a Buy rating with a 40.00 US dollars target, emphasizing improving fundamentals and the potential for continued margin expansion as the revenue mix tilts toward recurring subscription and cloud workloads. A Hold stance from RBC Capital with a 29.00 US dollars target reflects more guarded expectations, but it is outnumbered by the constructive positioning anchored on mix-driven profitability. The bullish case centers on sustained adjusted EPS progression, supported by operational discipline and recurring revenue scale, with this quarter’s setup calling for adjusted EPS growth of 8.04% year over year even as revenue recedes slightly by 2.58%.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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