Cloud analytics platform Teradata (NYSE: TDC) reported Q1 CY2026 results exceeding the market’s revenue expectations, with sales up 6.2% year on year to $444 million. On the other hand, next quarter’s revenue guidance of $395.8 million was less impressive, coming in 1.5% below analysts’ estimates. Its non-GAAP profit of $0.88 per share was 14.2% above analysts’ consensus estimates.
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Teradata (TDC) Q1 CY2026 Highlights:
- Revenue: $444 million vs analyst estimates of $429.3 million (6.2% year-on-year growth, 3.4% beat)
- Adjusted EPS: $0.88 vs analyst estimates of $0.77 (14.2% beat)
- Revenue Guidance for Q2 CY2026 is $395.8 million at the midpoint, below analyst estimates of $401.9 million
- Management reiterated its full-year Adjusted EPS guidance of $2.60 at the midpoint
- Operating Margin: -8.1%, down from 15.8% in the same quarter last year
- Free Cash Flow Margin: 87.8%, up from 35.9% in the previous quarter
- Annual Recurring Revenue: $1.49 billion vs analyst estimates of $1.49 billion (3.5% year-on-year growth, in line)
- Market Capitalization: $2.77 billion
"Teradata delivered a strong first quarter, outperforming on key growth and performance metrics as we enter 2026. Enterprises are discovering that winning with AI requires context, governed data, codified industry knowledge, and a hybrid infrastructure that meets them wherever they operate," said Steve McMillan, President and CEO of Teradata.
Company Overview
Pioneering data warehousing technology in the 1980s before "big data" was a common term, Teradata (NYSE: TDC) provides cloud-based data analytics and AI platforms that help large enterprises integrate, analyze, and leverage their data across multiple environments.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Teradata struggled to consistently generate demand over the last five years as its sales dropped at a 2.3% annual rate. This was below our standards and is a sign of poor business quality.
Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Teradata’s recent performance shows its demand remained suppressed as its revenue has declined by 3.7% annually over the last two years. 
This quarter, Teradata reported year-on-year revenue growth of 6.2%, and its $444 million of revenue exceeded Wall Street’s estimates by 3.4%. Company management is currently guiding for a 3% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 2% over the next 12 months. While this projection is better than its two-year trend, it’s tough to feel optimistic about a company facing demand difficulties.
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Annual Recurring Revenue
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
Teradata’s ARR came in at $1.49 billion in Q1, and over the last four quarters, its growth was underwhelming as it averaged 2.2% year-on-year increases. However, this alternate topline metric grew faster than total sales, which likely means that the recurring portions of the business are growing faster than less predictable, choppier ones such as implementation fees. That could be a good sign for future revenue growth. 
Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
Teradata is efficient at acquiring new customers, and its CAC payback period checked in at 41.9 months this quarter. The company’s relatively fast recovery of its customer acquisition costs means it can attempt to spur growth by increasing its sales and marketing investments.
Key Takeaways from Teradata’s Q1 Results
It was encouraging to see Teradata beat analysts’ revenue expectations this quarter. On the other hand, its revenue guidance for next quarter missed and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 4% to $28.88 immediately following the results.
Teradata didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
