It has been about a month since the last earnings report for Teradata (TDC Quick QuoteTDC - Free Report) . Shares have added about 15.5% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Teradata due for a pullback? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent catalysts for Teradata Corporation before we dive into how investors and analysts have reacted as of late.

Teradata Q1 Earnings Surpass Estimates, Revenues Increase Y/Y

Teradata Corporation delivered solid first-quarter 2026 results, with non-GAAP earnings of 88 cents per share, beating the Zacks Consensus Estimate by 14.29%. The metric rose 33.3% year over year.

Revenues of $444 million surpassed the consensus mark by 4.13% and increased 6.2% from the year-ago quarter. Public cloud ARR climbed 13% year over year and 12% in constant currency to $686 million, highlighting continued traction for the company’s cloud offerings.

TDC Posts Solid ARR Gains and Cloud Momentum

Teradata ended the quarter with total ARR of $1.492 billion, up 3% as reported and 2% in constant currency. The public cloud portion continued to do the heavy lifting, with cloud ARR rising at a double-digit rate year over year.

Management tied the momentum to customer demand for hybrid deployments, particularly for regulated and security-sensitive AI workloads. The company also pointed to rising interest in sovereign AI use cases, where enterprises prioritize governed data and infrastructure flexibility.

TDC Q1 Top Line in Detail

Recurring revenue reached $400 million, increasing 12% as reported and 9% in constant currency, and represented 90% of total revenue. Product sales increased 9% year over year, supported by strength in term-based subscription activity.

Perpetual software license and hardware revenues (0.2% of total revenues) dropped 90% year over year (down 88% at constant currency) to $1 million.

Consulting services’ revenues (9.7% of revenues) fell 14% year over year (down 15% at constant currency) to $43 million.

TDC Operating Details

Non-GAAP gross margin expanded to 63.7% from 60.3% in the year-ago quarter. The improvement reflected both a larger scale in the recurring base and better consulting margin performance versus the prior year.

Selling, general & administrative (SG&A) expenses increased 106.9% year over year to $240 million. Research & development (R&D) expenses were $72 million, up 9.1% year over year.
Non-GAAP operating margin also improved to 27.3% from 21.8%.

TDC’s Balance Sheet Remains Strong

As of March 31, 2026, Teradata had cash and cash equivalents of $816 million compared with $493 million as of Dec. 31, 2025.

Teradata generated $401 million in cash flow from operations and $390 million in free cash flow during the quarter, a sharp increase from the year-ago period. The reported cash flow performance included a pre-tax net benefit of $359 million tied to a settlement with SAP, which also lifted cash and cash equivalents to $816 million at the quarter-end.

To better reflect underlying performance, the company introduced adjusted free cash flow, which came in at $31 million for the quarter after excluding the settlement’s gross proceeds and including related litigation costs.

TDC Reaffirms Core 2026 Targets

For the second quarter of 2026, Teradata expects non-GAAP earnings between 53 cents and 57 cents per share, with total revenue expected to decline in the range of 4%-2% year over year and recurring revenue expected to range from down 2% to flat. The company also highlighted potential headwinds from reduced upfront recurring revenue and currency impacts in the near term.

For 2026, Teradata reaffirmed its non-GAAP earnings outlook in the range of $2.55-$2.65 per share, along with total ARR growth of 2%-4% year over year. The company expects total revenues to range from down 2% to flat year over year in constant currency. It increased its cash flow from operations outlook to $642-$662 million (including the settlement benefit) and raised its adjusted free cash flow outlook to $320-$340 million.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -5.71% due to these changes.

VGM Scores

Currently, Teradata has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock has a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Teradata has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Teradata belongs to the Zacks Computer- Storage Devices industry. Another stock from the same industry, Sandisk Corporation (SNDK Quick QuoteSNDK - Free Report) , has gained 29.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.

Sandisk Corporation reported revenues of $5.95 billion in the last reported quarter, representing a year-over-year change of +251%. EPS of $23.41 for the same period compares with -$0.30 a year ago.

For the current quarter, Sandisk Corporation is expected to post earnings of $32.40 per share, indicating a change of +11072.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Sandisk Corporation. Also, the stock has a VGM Score of F.