Shares of Teradata sink on missed revenue and soft guidance

Shareholders bailed on the big-data analytics company Teradata Corp. today after it delivered fourth-quarter revenue that came up short of analysts’ expectations and offered weak guidance for the three months ahead.

The company reported earnings before certain costs such as stock compensation of 53 cents per share, beating the analyst forecast of 44 cents per share by a comfortable margin. However, its revenue slipped 11% from a year earlier, to just $409.1 million, below the Street’s target of $414.9 million.

All told, Teradata reported net income of $25 million during the quarter, up from a $7 million net loss one year ago.

Teradata is one of the oldest data analytics companies in the business, and is credited with helping to popularize the “big data” trend that emerged during the 2000s. It sells database software and other services, with its flagship offering being the Vantage data analytics platform for business intelligence. It allows workers to process information using analytics engines such as Spark and TensorFlow.

Like many legacy software companies, Teradata is in the midst of a transition to the cloud, and in recent years it has partnered with public cloud infrastructure giants such as Amazon Web Services Inc., Google LLC and Microsoft Corp. to host its software on their servers.

That transition is still a work in progress, with Teradata reporting public cloud-based annual recurring revenue of $609 million during the quarter, up 15% from one year ago. However, investors will note that its total ARR, which also includes services provided to on-premises customers, fell 6%, to $1.47 billion. Another sore point was the company’s gross margin, which is a measure of profitability after deducting the cost of goods sold. It fell to 59.4% during the quarter, down from 60.9% one year ago.

Holger Mueller of Constellation Research Inc. said investors will be concerned that Teradata’s growth appears to have stalled amidst its transition to the cloud. “The executive team deserves credit for preserving profitability, though it only managed to do this by reducing its expenses, rather than growing its revenue,” he pointed out. “Investors will want to see the company find a way to reignite growth in the new full year.”

Chief Executive Steve McMillan (pictured) said the company has taken decisive actions in the last year to improve its execution amid the ongoing transition, and believes it did well to meet its guidance ranges for cloud and total ARR.

“Last year we delivered significant AI technology, including broad support for bring-your-own LLMs and GPU-accelerated compute,” he said. “And we’re excited about our upcoming innovations in 2025, which will help customers extend their hybrid AI environments and build towards an agentic AI future.”

Investors weren’t fooled by the now-obligatory mention of AI buzzwords, though, as the company’s lower guidance stuck out like a sore thumb. For the current quarter, Teradata is forecasting earnings of just 55 to 59 cents per share, below the Street’s target of 64 cents. For the full year, it’s guiding for earnings of $2.15 to $2.25 per share, well off the Street’s $2.46 projection.

The company also announced the departure of its Chief Financial Officer Claire Bramley, who is set to leave at the end of March. She’ll be replaced by Charles Smotherman, who is currently Teradata’s chief accounting officer, on an interim basis while it searches for a permanent successor.

Photo: SiliconANGLE