Teradata Reports Q1 2025 Revenue Decline to $418 Million, Net Income Increases to $44 Million

Teradata Corporation reported its financial results for the first quarter of 2025, revealing total revenue of $418 million, a decrease of $47 million or 10% compared to the same period in 2024. The decline was attributed to an 8% drop in recurring revenue, which was partially offset by a 25% increase in revenue from perpetual software licenses and hardware. Consulting services revenue saw a significant decrease of 28%, reflecting lower order booking activity in the latter half of 2024. The company’s net income for the quarter was $44 million, up from $20 million in the prior year, resulting in a diluted earnings per share of $0.45, compared to $0.20 in the same quarter last year.

In terms of operational metrics, Teradata's Total Annual Recurring Revenue (ARR) stood at $1.442 billion, down 3% from $1.480 billion a year earlier, with a negative impact of 1% from foreign currency fluctuations. Public Cloud ARR, however, increased by 15% to $606 million, driven by heightened market awareness and customer demand for Teradata VantageCloud. The Cloud Net Expansion Rate for the quarter was reported at 115%, down from 123% in the previous year, indicating a slight slowdown in growth momentum.

Strategically, Teradata has been undergoing a restructuring initiative aimed at optimizing operations and reducing non-revenue generating expenses. This restructuring, initiated in August 2024, is expected to incur total charges of approximately $20 to $25 million, with $14 million already recognized in 2024. The company anticipates that the majority of these costs will be realized by the end of 2025. Additionally, Teradata has realigned its sales function into two segments: Product Sales and Consulting Services, to better manage its operations.

The company reported a gross profit margin of 59.3%, down from 61.1% in the prior year, primarily due to lower margins in consulting services. Operating expenses decreased by 23% year-over-year, largely due to reduced employee compensation expenses and the impact of prior restructuring actions. Teradata's cash flow from operating activities was $8 million, a decrease from $27 million in the same quarter last year, reflecting changes in working capital dynamics.

Looking ahead, Teradata expects continued challenges with elongated deal closing cycles and customer migration activities being implemented in stages. The company anticipates that these factors will contribute to ongoing fluctuations in revenue, particularly in its consulting services segment. Despite these challenges, Teradata remains focused on expanding its cloud offerings and enhancing customer engagement through its hybrid cloud platform, aiming to drive future growth and profitability.