Teradata's Q3 Net Income Jumps 25% Despite Revenue Dip

TL;DR

**TDC's cost-cutting is boosting the bottom line, but revenue declines are a red flag for long-term growth; watch for subscription acceleration.**

AI Summary

Teradata Corporation reported a mixed financial performance for the three and nine months ended September 30, 2025. For the three-month period, total revenue decreased by 5.5% to $416 million from $440 million in the prior year, primarily due to a 16.7% decline in subscription software licenses to $60 million and a 22.9% drop in consulting services revenue to $47 million. Despite this, net income increased by 25% to $40 million from $32 million, driven by a reduction in total operating expenses by 8.6% to $192 million. For the nine-month period, total revenue fell by 7.4% to $1,242 million from $1,341 million, with subscription software licenses down 11.5% to $208 million and consulting services down 23.3% to $148 million. However, net income for the nine months rose by 4.5% to $93 million from $89 million, largely due to a 10.1% decrease in total operating expenses to $580 million and a lower effective tax rate of 25.6% compared to 33.6% in the prior year. The company's cash and cash equivalents decreased to $406 million at September 30, 2025, from $420 million at December 31, 2024, while total stockholders' equity increased to $219 million from $133 million.

Why It Matters

Teradata's ability to increase net income despite declining revenue signals effective cost management and operational efficiency, which is crucial for investor confidence in a competitive data analytics market. The shift from perpetual licenses to recurring subscription revenue, though showing a temporary dip, indicates a strategic pivot that could stabilize future income streams. For employees, this efficiency might mean a focus on high-value projects, while customers could benefit from more streamlined service delivery. The broader market will watch if Teradata can sustain profitability while navigating a challenging revenue landscape, especially against cloud-native competitors.

Risk Assessment

Risk Level: medium — The company faces medium risk due to consistent revenue declines across key segments, with total revenue down 5.5% for the quarter and 7.4% for the nine months ended September 30, 2025. Specifically, subscription software licenses decreased by 16.7% and consulting services by 22.9% in the quarter. While net income improved, this was largely driven by cost reductions, which may not be sustainable for long-term growth without a revenue rebound.

Analyst Insight

Investors should closely monitor Teradata's upcoming earnings calls for signs of stabilization or growth in recurring revenue streams, particularly subscription software licenses. While cost controls are positive, a sustained decline in top-line revenue could pressure future profitability. Consider holding existing positions but deferring new investments until a clear revenue growth strategy emerges.

Financial Highlights

debt To Equity

N/A

revenue

$416M

operating Margin

14.7%

total Assets

N/A

total Debt

N/A

net Income

$40M

eps

$0.42

gross Margin

60.8%

cash Position

$406M

revenue Growth

-5.5%

Revenue Breakdown

Key Numbers

• $416M — Total Revenue (Q3 2025) (Decreased from $440M in Q3 2024, a 5.5% decline.)
• $40M — Net Income (Q3 2025) (Increased from $32M in Q3 2024, a 25% rise.)
• $1,242M — Total Revenue (9M 2025) (Decreased from $1,341M in 9M 2024, a 7.4% decline.)
• $93M — Net Income (9M 2025) (Increased from $89M in 9M 2024, a 4.5% rise.)
• 25.9% — Effective Tax Rate (Q3 2025) (Decreased from 31.9% in Q3 2024.)
• $60M — Subscription Software Licenses Revenue (Q3 2025) (Decreased from $72M in Q3 2024, a 16.7% decline.)
• $47M — Consulting Services Revenue (Q3 2025) (Decreased from $61M in Q3 2024, a 22.9% decline.)
• $406M — Cash and Cash Equivalents (Sept 30, 2025) (Decreased from $420M at Dec 31, 2024.)
• $219M — Total Stockholders' Equity (Sept 30, 2025) (Increased from $133M at Dec 31, 2024.)
• $1,864M — Remaining Unsatisfied Obligations (Sept 30, 2025) (Represents future revenue from firm orders.)

Key Players & Entities

• Teradata Corporation (company) — Registrant
• SEC (regulator) — United States Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• $416 million (dollar_amount) — Total revenue for three months ended September 30, 2025
• $440 million (dollar_amount) — Total revenue for three months ended September 30, 2024
• $40 million (dollar_amount) — Net income for three months ended September 30, 2025
• $32 million (dollar_amount) — Net income for three months ended September 30, 2024
• $93 million (dollar_amount) — Net income for nine months ended September 30, 2025
• $89 million (dollar_amount) — Net income for nine months ended September 30, 2024
• Argentina (company) — Location of Blue Chip Swap transactions

FAQ

Risk Factors

• Declining Software License and Consulting Revenue [high — market]: Total revenue decreased by 5.5% to $416 million in Q3 2025, driven by a 16.7% drop in subscription software licenses to $60 million and a 22.9% decline in consulting services to $47 million. This trend continued for the nine-month period with total revenue down 7.4% to $1,242 million.
• Reduced Cash Position [medium — financial]: Cash and cash equivalents decreased to $406 million as of September 30, 2025, from $420 million at the end of 2024. While not a critical shortage, this downward trend warrants monitoring.
• Dependence on Recurring Revenue [medium — operational]: The company relies heavily on 'Total recurring' revenue, which was $366 million in Q3 2025. A decline in subscription software licenses, a key component of recurring revenue, poses a risk to future stability.
• Effective Tax Rate Fluctuations [low — financial]: The effective tax rate for Q3 2025 was 25.9%, down from 31.9% in Q3 2024. While a lower tax rate boosted net income, significant year-over-year changes can impact future profitability predictability.

Industry Context

Teradata operates in the data analytics and database management sector, facing competition from cloud-native providers and traditional enterprise software companies. The industry is characterized by a shift towards cloud-based solutions and subscription models, requiring companies to adapt their offerings and revenue streams.

Regulatory Implications

As a publicly traded company, Teradata must comply with SEC regulations and accounting standards (GAAP). Any misstatements or failures in financial reporting could lead to regulatory scrutiny and penalties. The company's disclosures on market risk and risk factors are crucial for investor protection.

What Investors Should Do

1. Monitor subscription revenue trends
2. Analyze operating expense management
3. Evaluate the shift to recurring revenue models

Key Dates

• 2025-09-30: End of Third Quarter 2025 — Reporting period for the Q3 and nine-month financial results, showing revenue decline but net income increase.
• 2024-12-31: End of Fiscal Year 2024 — Reference point for the decrease in cash and cash equivalents from $420M to $406M.

Glossary

Subscription software licenses

Revenue generated from customers paying for the right to use software for a specific period. (A key revenue stream for Teradata, its decline impacts overall revenue performance.)

Consulting services

Revenue from professional services provided to customers, such as implementation, integration, and support. (Another significant revenue component that experienced a notable decrease.)

Total recurring revenue

Revenue from ongoing customer contracts, primarily subscription software licenses and related services. (Represents the stable, predictable revenue base for the company.)

Effective tax rate

The actual percentage of pre-tax income paid in taxes by a company. (Changes in the effective tax rate can significantly impact net income, as seen in the nine-month period.)

Comprehensive income

Includes net income plus other comprehensive income (OCI), which consists of unrealized gains or losses on certain investments and foreign currency adjustments. (Provides a broader view of the company's financial performance beyond just net income.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, Teradata reported a decrease in total revenue for both the three-month (-5.5%) and nine-month (-7.4%) periods ended September 30, 2025. This decline was primarily driven by lower subscription software licenses and consulting services revenue. However, net income saw an increase in both periods (25% for Q3, 4.5% for 9M), largely due to significant reductions in total operating expenses and a lower effective tax rate in the nine-month period. Cash and cash equivalents decreased slightly, while total stockholders' equity showed a substantial increase.

Key Financial Figures

• $0.01 — nge on which Registered: Common Stock, $0.01 par value TDC New York Stock Exchange

Filing Documents

• tdc-20250930.htm (10-Q) — 1081KB
• tdc093025ex311.htm (EX-31.1) — 10KB
• tdc093025ex312.htm (EX-31.2) — 9KB
• tdc093025ex32.htm (EX-32) — 8KB
• 0001628280-25-049313.txt ( ) — 5566KB
• tdc-20250930.xsd (EX-101.SCH) — 36KB
• tdc-20250930_cal.xml (EX-101.CAL) — 63KB
• tdc-20250930_def.xml (EX-101.DEF) — 140KB
• tdc-20250930_lab.xml (EX-101.LAB) — 471KB
• tdc-20250930_pre.xml (EX-101.PRE) — 336KB
• tdc-20250930_htm.xml (XML) — 698KB

—FINANCIAL INFORMATION

PART I—FINANCIAL INFORMATION Description Page

Financial Statements

Item 1. Financial Statements Condensed Consolidated Statements of Income (Unaudited) Three and Nine Months Ended September 30, 2025 and 2024 4 Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three and Nine Months Ended September 30, 2025 and 2024 5 Condensed Consolidated Balance Sheets (Unaudited) September 30, 2025 and December 31, 2024 6 Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 2025 and 2024 7 Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) Three and Nine Months Ended September 30, 2025 and 2024 8 Notes to Condensed Consolidated Financial Statements (Unaudited) 10

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 22

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 32

Controls and Procedures

Item 4. Controls and Procedures 33

—OTHER INFORMATION

PART II—OTHER INFORMATION Description Page

Legal Proceedings

Item 1. Legal Proceedings 33

Risk Factors

Item 1A. Risk Factors 33

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 34

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 34

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 34

Other Information

Item 5. Other Information 34

Exhibits

Item 6. Exhibits 35

Signatures

Signatures 36 3 Table of Contents Part 1—FINANCIAL INFORMATION A

Financial Statements

Item 1. Financial Statements. Teradata Corporation Condensed Consolidated Statements of Income (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, In millions, except per share amounts 2025 2024 2025 2024 Revenue Subscription software licenses $ 60 $ 72 $ 208 $ 235 Services and other 306 300 870 893 Total recurring 366 372 1,078 1,128 Perpetual software licenses, hardware and other 3 7 16 20 Consulting services 47 61 148 193 Total revenue 416 440 1,242 1,341 Cost of revenue Subscription software licenses 5 4 15 14 Services and other 111 107 328 319 Total recurring 116 111 343 333 Perpetual software licenses, hardware and other — 5 12 18 Consulting services 47 58 156 175 Total cost of revenue 163 174 511 526 Gross profit 253 266 731 815 Operating expenses Selling, general and administrative expenses 122 137 373 429 Research and development expenses 70 73 207 216 Total operating expenses 192 210 580 645 Income from operations 61 56 151 170 Other expense, net Interest expense ( 7 ) ( 7 ) ( 20 ) ( 22 ) Interest income 2 3 7 9 Other expense ( 2 ) ( 5 ) ( 13 ) ( 23 ) Total other expense, net ( 7 ) ( 9 ) ( 26 ) ( 36 ) Income before income taxes 54 47 125 134 Income tax expense 14 15 32 45 Net income $ 40 $ 32 $ 93 $ 89 Net income per common share Basic $ 0.42 $ 0.33 $ 0.98 $ 0.92 Diluted $ 0.42 $ 0.33 $ 0.96 $ 0.91 Weighted average common shares outstanding Basic 94.2 96.1 94.9 96.7 Diluted 95.5 97.0 96.5 98.3 See Notes to Condensed Consolidated Financial Statements (Unaudited). 4 Teradata Corporation Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, In millions 2025 2024 2025 2024 Net income $ 40 $ 32 $ 93 $ 89 Other comprehensive income (loss): Foreign currency translation adjustments ( 2 ) 9 24 ( 6 ) Unrealized (loss) gain on cross-currency net investment hedge, before tax — ( 4 ) ( 18 ) 1 Unrealized (loss)

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