Executive Summary

Mixed quarter: revenue $409M (-11% YoY, -7% QoQ), non-GAAP EPS $0.53 (above prior Q4 guidance), and cloud ARR up to $609M (+15% YoY) while total ARR fell to $1.474B (-6% YoY) .
Management introduced FY 2025 guidance targeting cloud ARR growth of 14–18% CC, total ARR flat to +2% CC, non-GAAP EPS $2.15–$2.25, and FCF $250–$280M; Q1 2025 non-GAAP EPS $0.55–$0.59 .
Strategic narrative shifted decisively to hybrid AI: BYO‑LLM integrations, NVIDIA GPU acceleration, Amazon Bedrock linkage, and enterprise vector store preview; execution and retention improvements are emphasized to drive ARR growth return in 2025 .
CFO transition announced (Bramley departing, Smotherman named interim); management reiterated durable profitability and FCF focus—potential catalyst alongside an ARR growth inflection message for 2025 .

What Went Well and What Went Wrong

What Went Well

Cloud ARR reached $609M (+15% YoY reported, +18% CC); cloud net expansion rate was 117% and cloud ARR is now >40% of total, expected to approach ~50% by YE25 .
Q4 non‑GAAP EPS of $0.53 beat prior Q4 guidance ($0.40–$0.44), aided by cost optimization; FY non‑GAAP EPS $2.42 exceeded full-year guidance and FY operating margin expanded to 20.3% .
Strategic AI progress: “We delivered significant AI technology, including broad support for OTFs, BYO‑LLM and GPU‑accelerated compute…well positioned to return to growth this year” — Steve McMillan . “Execution is job #1” as GTM restructuring settles and AI use cases ramp .

What Went Wrong

Total ARR declined to $1.474B (-6% YoY reported), recurring revenue fell to $351M (-6% YoY), and total revenue dropped to $409M (-11% YoY) as consulting services and perpetual sales softened .
Margins compressed: non‑GAAP gross margin 60.9% (-100 bps YoY) and non‑GAAP operating margin 17.6% (-190 bps YoY), driven primarily by upfront revenue impacts; currency also a 2025 headwind .
FX and linearity: management flagged ~$20M operating income FX headwind vs three months prior and expects Q1 to be the largest renewal/erosion quarter, with sequential ARR declines before 2H acceleration .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Total Revenue ($USD Millions)	$436	$440	$409
Recurring Revenue ($USD Millions)	$368	$372	$351
GAAP Gross Margin (%)	60.8%	60.5%	59.4%
Non‑GAAP Gross Margin (%)	62.2%	61.6%	60.9%
GAAP Operating Margin (%)	15.1%	12.7%	9.5%
Non‑GAAP Operating Margin (%)	22.0%	22.5%	17.6%
GAAP Diluted EPS ($)	$0.38	$0.33	$0.26
Non‑GAAP Diluted EPS ($)	$0.64	$0.69	$0.53

Segment breakdown

Segment	Q3 2024 Revenue ($M)	Q4 2024 Revenue ($M)	Q4 2023 Revenue ($M)
Product Sales	$379	$354	$384
Consulting Services	$61	$55	$73
Segment Gross Profit (% of Revenue) – Product	69.9%	68.9%	70.6%
Segment Gross Profit (% of Revenue) – Consulting	9.8%	9.1%	16.4%

KPIs

KPI	Q3 2024	Q4 2024
Total ARR ($USD Billions)	$1.482B	$1.474B
Public Cloud ARR ($USD Millions)	$570	$609
Cloud Net Expansion Rate (%)	120%	117%
Recurring Revenue Mix (% of Total)	85%	86%
Cash from Operations ($USD Millions)	$77	$156
Free Cash Flow ($USD Millions)	$69	$148
Q4 Share Repurchases ($USD Millions)	$15 (Q3)	$29

Notes on non‑GAAP: Company excludes stock‑based compensation, reorganization/transformation costs, Argentina Blue Chip Swap, and tax adjustments; reconciliations provided in exhibits .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Non‑GAAP Diluted EPS ($)	Q4 2024	$0.40–$0.44 (set in Q3)	Actual $0.53	Beat vs guidance
GAAP Diluted EPS ($)	FY 2024	$1.02–$1.06 (Q3)	Actual $1.16	Beat vs guidance
Non‑GAAP Diluted EPS ($)	FY 2024	$2.30–$2.34 (Q3)	Actual $2.42	Beat vs guidance
Public Cloud ARR Growth (CC)	FY 2025	N/A	14%–18%	Introduced
Total ARR Growth (CC)	FY 2025	N/A	Flat to +2%	Introduced
Recurring Revenue Growth (CC)	FY 2025	N/A	-3% to -5%	Introduced
Total Revenue Growth (CC)	FY 2025	N/A	-4% to -6%	Introduced
GAAP Diluted EPS ($)	FY 2025	N/A	$1.05–$1.15	Introduced
Non‑GAAP Diluted EPS ($)	FY 2025	N/A	$2.15–$2.25	Introduced
Cash from Operations ($M)	FY 2025	N/A	$270–$300	Introduced
Free Cash Flow ($M)	FY 2025	N/A	$250–$280	Introduced
Non‑GAAP Diluted EPS ($)	Q1 2025	N/A	$0.55–$0.59	Introduced
GAAP Diluted EPS ($)	Q1 2025	N/A	$0.33–$0.37	Introduced
Recurring Revenue (CC)	Q1 2025	N/A	-4% to -6%	Introduced
Total Revenue (CC)	Q1 2025	N/A	-6% to -8%	Introduced

Additional 2025 modeling assumptions from management: non‑GAAP tax ~23%, other expense ~$43M, weighted average shares ~97.4M; Q1 non‑GAAP tax ~24.3% and shares ~97.9M .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Cost actions/restructuring	Workforce reduction; $75–$80M annualized OpEx savings; reinvest portions	On track; margins improved; segment realignment	Cost optimization supported EPS; maintain 2024 operating margin rate in 2025	Stable execution, margin defense
Hybrid AI strategy (BYO‑LLM, NVIDIA, CSPs)	Highlighted hybrid platform and AI analytics foundation	Innovations, new customers/partners, hybrid adoption	Deep push into hybrid AI: BYO‑LLM, NVIDIA GPU, Amazon Bedrock integration; enterprise vector store preview	Expanding capabilities and GTM
ARR retention and linearity	Total ARR down; seasonality noted	Total ARR down; cloud ARR up; higher recurring mix	Expect Q1 ARR decline; improved retention in 2H24 and 2025; return to ARR growth by Q4 2025	Improving retention; back‑half weighted
Consulting/Perpetual revenue	Consulting down; perpetual declining	Consulting down high‑teens; flat total revenue	Consulting down; total revenue -11% YoY; guidance for consulting to decline HSD in 2025 CC	Continued mix shift to recurring
FX headwinds	Noted FX impacts in KPIs	CC disclosures; some FX dynamics	~$20M OI headwind vs three months prior; ~100bps GM decline expected from FX/mix	FX worsening into 2025
Leadership changes	—	CPO role eliminated; CEO overseeing Product	CFO transition announced; interim CFO appointed	Organizational realignment continues

Management Commentary

“We are firmly focused on returning the company to growth in 2025 and execution is job #1.” — Steve McMillan .
“Last year, we delivered significant AI technology, including broad support for OTFs, BYO‑LLM and GPU‑accelerated compute…we are well positioned to return to growth this year.” — Steve McMillan .
“Non‑GAAP earnings per share exceeded our guidance range, primarily driven by continued cost optimization efforts…we repurchased $215M or 5.8M shares in 2024.” — Claire Bramley .
“We expect both total and cloud ARR decline sequentially in Q1 and anticipate a significant weighting of growth to the second half of 2025…we expect to return to total ARR growth in the fourth quarter.” — Claire Bramley .

Q&A Highlights

Cloud migrations and deal timing: Q4 saw deal elongation and staged migrations; Teradata’s hybrid capabilities (on‑prem + cloud consistency) support 30+ active gen‑AI POCs moving toward production .
ARR guidance confidence: Approach reduces reliance on large 8‑figure deals; drivers include improved retention across on‑prem and total ARR and better pipeline rigor post GTM changes .
Pipeline mix: Roughly 50/50 migrations vs expansions in 2025 (migrations earlier, expansions later); new logos are a small contributor; 2025 innovation not fully embedded in the outlook .
Open table formats (Iceberg, Delta): Early days but critical for TAM expansion; Teradata aims to be open/connected and apply analytics/AI engines against large OTF/lake datasets .
Cloud NRR: Finished 2024 in line; could decelerate before reaccelerating as the year progresses (2H expansion weighting) .

Estimates Context

S&P Global consensus estimates (EPS, revenue) for Q4 2024 and prior quarters were unavailable due to a data access limit; as a result, formal “vs estimates” comparisons cannot be presented at this time. Values would typically be retrieved from S&P Global; not available in this instance.
Company‑provided guidance comparisons indicate a Q4 non‑GAAP EPS beat vs prior guidance ($0.53 actual vs $0.40–$0.44 guided in Q3) .

Key Takeaways for Investors

Cloud ARR momentum and mix shift are intact; cloud now >40% of total ARR and guided to approach ~50% by YE25, supporting long‑term valuation re‑rating if retention improvements materialize .
Near‑term revenue/margin headwinds persist (consulting decline, FX, upfront revenue dynamics), but cost actions and disciplined OpEx underpin durable non‑GAAP profitability and FCF ($148M in Q4; FY $277M) .
The hybrid AI strategy is differentiating (BYO‑LLM, NVIDIA GPU, Bedrock integration, enterprise vector store), potentially expanding TAM and enabling POCs to transition into production in 2H 2025 .
2025 is back‑half weighted: expect sequential ARR declines in Q1 and modest 1H, then acceleration with a return to total ARR growth by Q4 2025; model linearity accordingly .
FX is a tangible earnings headwind (~$20M to OI vs three months prior); plan for ~100 bps gross margin pressure in 2025 from FX/mix, partly offset by cloud rate improvements .
Leadership transitions continue (CFO exit; interim CFO named) but management asserts a seamless handover; monitor for any incremental execution volatility in the near term .
With Q4 non‑GAAP EPS beating guidance and FY EPS above ranges, estimate revisions may skew cautiously positive on profitability, while top‑line outlook (2025 revenue -4% to -6% CC) tempers growth expectations .

Additional references (Q4 related press): Microsoft Fabric integration (AI Unlimited public preview), reinforcing the open/connected and serverless AI development narrative .

TERADATA CORP /DE/ (TDC)·Q4 2024 Earnings Summary