Teradata Shares Drop Despite Beating Q3 Earnings Expectations Amid Weak Q4 Outlook

SAN DIEGO - Teradata Corporation (NYSE:TDC) reported third-quarter earnings that exceeded analyst expectations, but the company's stock fell 2% in after-hours trading due to a fourth-quarter forecast that fell short of expectations.

The data analytics company reported a adjusted earnings per share (EPS) of $0.69, surpassing the analyst consensus of $0.56 by $0.13. Quarterly revenue reached $440 million, exceeding the estimated $417.71 million. Compared to the same quarter last year, revenue remained flat, showing a 2% increase at constant currency.

Teradata's annual recurring revenue (ARR) from its cloud business increased by 26% year-over-year, reaching $570 million, with a 24% increase at constant currency. However, total ARR decreased by 3% to $1.482 billion.

For the fourth quarter, Teradata expects an adjusted EPS in the range of $0.40 to $0.44, below the analyst consensus of $0.48. This weaker forecast appears to trigger the stock's decline despite beating third-quarter expectations.

Teradata's President and CEO, Steve McMillan, commented on the results: "We grew our cloud business in the third quarter, delivered innovations that strengthen our market position, and added new customers and partners. We are seeing our hybrid capabilities increasingly leveraged as customers undergo transformation and engage with Teradata for the long term."

The company raised its full-year adjusted EPS guidance for 2024 to a range of $2.30 to $2.34, above previous projections and the analyst consensus of $2.25.

Teradata also reported strong cash flow performance; cash flow from operations increased by 88% year-over-year to $77 million, while free cash flow increased by 92% year-over-year to $69 million.

The company reiterated its expectations for total ARR to be down by -2% to -4% year-over-year at constant currency for the full year 2024.