Teradata Reports Q3 2025 Revenue Decline to $416 Million, Net Income Rises to $40 Million

Teradata Corporation reported its financial results for the third quarter of 2025, revealing total revenue of $416 million, a decrease of 5% compared to $440 million in the same period last year. The decline was attributed to a 2% drop in recurring revenue, which totaled $366 million, and a significant 57% decrease in revenue from perpetual software licenses and hardware. Consulting services revenue also fell by 23%, reflecting lower order booking activity from the previous year. Despite these challenges, net income rose to $40 million, up from $32 million in the prior year, driven by a reduction in operating expenses, which decreased by 9% to $192 million.

In terms of profitability, Teradata's gross profit margin improved slightly to 60.8% from 60.5% year-over-year, primarily due to a higher mix of recurring revenue. The company reported operating income of $61 million, an increase from $56 million in the third quarter of 2024. The effective tax rate for the quarter was 25.9%, down from 31.9% in the previous year, contributing to the overall increase in net income.

Strategically, Teradata has been focusing on its hybrid cloud platform, Teradata Vantage, which has seen an 11% increase in Public Cloud Annual Recurring Revenue (ARR) to $633 million, compared to $570 million in the same quarter last year. The company’s Total ARR reached $1.490 billion, a modest increase of 1% year-over-year. The Cloud Net Expansion Rate was reported at 109%, down from 120% in the previous year, indicating a slight slowdown in growth but still reflecting strong customer engagement and expansion into cloud capabilities.

Operationally, Teradata has undergone significant restructuring efforts aimed at optimizing operations and reducing costs. The company has completed most of its restructuring actions, which are expected to result in total charges of approximately $20 to $25 million. As of September 30, 2025, Teradata had approximately 93.2 million shares of common stock outstanding and maintained a strong cash position with $406 million in cash and cash equivalents. The company continues to expect that its cash flow from operations, combined with available credit facilities, will be sufficient to meet its working capital and operational needs for the foreseeable future.

Looking ahead, Teradata anticipates continued growth in its Public Cloud ARR as customer demand for cloud solutions remains strong. The company is focused on enhancing its product offerings and driving innovation, particularly in artificial intelligence capabilities, to better serve its customers and adapt to evolving market conditions.