Teradata Corporation reported non‑GAAP diluted earnings per share of $0.72 for the third quarter of 2025, a $0.19 beat over the consensus estimate of $0.53. The company’s total revenue reached $416 million, topping the $405.7 million forecast by $10.3 million. The earnings beat was driven largely by disciplined cost management and a favorable mix shift toward higher‑margin recurring revenue, which rose to 88 % of total revenue from 85 % in Q3 2024.
Revenue growth was offset by a 5 % year‑over‑year decline, largely driven by a contraction in traditional perpetual‑license and consulting services. In contrast, the public‑cloud ARR grew 11 % YoY to $X million, and total ARR increased 1 % to $Y million, underscoring the company’s strategic pivot to subscription‑based, cloud‑native offerings.
Gross margins improved to 60.8 % GAAP and 62.3 % non‑GAAP, up from 60.5 % and 61.6 % respectively in the prior year. The margin expansion reflects higher pricing power in the AI‑enabled cloud platform and lower variable costs associated with recurring revenue contracts. Operating margin also rose, indicating that the company is successfully leveraging scale while keeping operating expenses in check.
For the fourth quarter, Teradata guided non‑GAAP diluted EPS in the range of $0.53 to $0.57, a slight tightening from the prior guidance of $0.50 to $0.60. The company reaffirmed its full‑year 2025 outlook for total ARR, cloud ARR, and free cash flow, and raised its full‑year non‑GAAP EPS guidance to $2.38–$2.42, signaling confidence in continued profitability and the execution of its AI‑centric strategy.
CEO Steve McMillan highlighted the company’s “solid execution” and affirmed that the Teradata Knowledge Platform is well‑positioned for “today’s agentic AI workloads.” He emphasized that the shift toward hybrid AI and cloud‑native services is a key driver of the company’s transformation, while acknowledging that the revenue decline remains a headwind that the company is actively managing through portfolio realignment and cost discipline.
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