Key Stats for Teradata Stock
- Pre-Market price change for Teradata stock: -13%
- $TDC Stock Price as of Aug. 4: $34
- 52-Week High: $42
- $TDC Stock Price Target: $36
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What Happened?
Teradata (TDC) stock dropped 13% after the company gave Q3 profit guidance that fell short of what Wall Street expected. The company guided to non-GAAP earnings of 55 to 59 cents per share for the quarter, below the 62 cents analysts were forecasting.
The disappointing guidance came despite a genuinely strong Q2.
- Teradata beat its own outlook on both revenue and earnings, with non-GAAP EPS of $0.69 topping the high end of its guidance range by $0.12.
- Recurring revenue grew 3% year-over-year, marking the third straight quarter of positive growth,
- Operating margin expanded significantly to 21.5% from 16.4% a year ago.
- Reported Revenue of $0.41 billion was in line with the consensus estimate of $.40 billion.
- EPS reported was $0.69, ahead of the consensus estimate of $0.56.
So why the weak guidance? Management explained it comes down to accounting timing.
Under standard revenue recognition rules, Teradata booked more revenue upfront in the first half of the year from its on-premise subscription business. That means less revenue is left to recognize in the third and fourth quarters.
CFO John Ederer called it a “displacement” of revenue from the second half into the first half, rather than any change in the company’s underlying business. He said full-year targets for total ARR (annual recurring revenue) and total revenue remain on track.
The company actually raised its full-year guidance in a couple of areas. Non-GAAP earnings per share guidance moved up to a range of $2.65 to $2.73, and adjusted free cash flow guidance rose to $330 million to $350 million.
Teradata also paid off the remaining $450 million balance on its term loan during the quarter, leaving its balance sheet in a stronger position.
On the product side, the company had a busy quarter.
It launched the Teradata Autonomous Knowledge Platform in May, its new foundation for deploying AI agents, and reached general availability on part of that platform in early Q3.
CEO Steve McMillan said the company is seeing strong customer interest in both its cloud and on-premise AI offerings, including a new on-prem system called Teradata Factory built with Dell Technologies.
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What the Market Is Telling Us About Teradata Stock
The sharp drop in Teradata stock shows investors are much more focused on the near-term earnings guidance than the underlying story management is telling.
Even with a beat-and-raise Q2 and reaffirmed full-year targets, a Q3 guide below consensus was enough to spook the market.
The revenue recognition explanation may well be accurate, but explaining away a miss is a hard sell right after a big guidance cut.
For Teradata stock to stabilize, investors will likely want to see the second half unfold the way management has described, with growth picking back up as new products like the Autonomous Knowledge Platform start contributing more meaningfully.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
