Teradata Corporation TDC

The business

Teradata sells Vantage, a data-analytics platform that lets very large enterprises integrate and query data at scale across cloud and on-premise environments. The customers are the most data-intensive organizations on earth, banks, telecoms, retailers, manufacturers, and governments, running mission-critical analytics on a small number of sticky, slow-moving accounts. The model is recurring: a shrinking legacy on-premise base and a public-cloud business running on the hyperscalers that compounds in the mid-teens. The engine carrying the franchise forward is cloud annual recurring revenue (ARR), which reached roughly $700M in FY25, about 46% of total ARR and growing around 15%; the drag is the on-premise base rolling off faster than cloud can replace it, which is why total revenue has fallen for four straight years.

The thing the income statement does not show is the transition math and the AI-data angle. On-premise erosion has outpaced cloud growth, so the bottoming thesis is that cloud is now large enough that FY26 total ARR returns to slight growth after years of decline. The AI angle is the kicker: enterprises building agentic AI need governed, integrated data, which is the Vantage pitch, and management has flagged that AI proof-of-concepts roughly doubled in 2025 and are moving toward production. What changed in the last two quarters is the cluster of bottoming signals: cloud ARR up mid-teens, total ARR guided back toward flat-to-slight growth, and free cash flow holding near $290M on a near-zero capex base.