TERADATA CORP /DE/ (TDC): what the price assumes

In the published model solve dated 2026-Q2, anchored at $28.77, TERADATA CORP /DE/ (TDC) is priced for +19.7% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/TDC

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.2% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Teradata is a legacy analytics-database company mid-transition to the cloud: total annual recurring revenue reached $1.492 billion in Q1 2026 with public cloud ARR of $686 million growing 13%, while total revenue keeps shrinking.
• The headline Q1 GAAP EPS of $3.47 is a mirage from a $480 million SAP litigation settlement; non-GAAP EPS was $0.88, and full-year non-GAAP EPS guidance is $2.53 to $2.57.
• The biggest risk is the arithmetic of the transition: cloud ARR must grow faster than the legacy on-premises base declines, and FY2026 guidance still calls for total revenue down 2% to 4%.

Bull Case

The trajectory that matters is inside the revenue line, not on top of it. Teradata's total revenue is shrinking, but the composition is shifting toward the recurring, cloud-based part of the business that carries higher margins and stickier economics. Public cloud ARR reached $686 million in Q1 2026, growing 13%, against total ARR of $1.492 billion. The FY2025 10-K frames Total ARR as the company's headline strategic metric, the "annual contract value for all active and" recurring contracts, precisely because the transition story is about mix, not top-line growth. As cloud grows double digits and legacy on-premises runs off, the blended business is becoming more valuable per dollar even as the dollar count falls.

The cash generation is the part the shrinking revenue hides. Gross margin expanded through the year, from 56.4% to 62.2% across the last four quarters, and free cash flow has climbed every quarter, from $39 million to $391 million (the last figure lifted by the SAP settlement, but the underlying trend is real). Trailing free cash flow of $670 million against a $3.25 billion market cap is a 20% free-cash yield, and cash flow converts at 159% of net income. A business throwing off this much cash relative to its market value has enormous latitude, and the balance sheet is net cash, so none of that cash is claimed by lenders.

Management is aiming the platform at the demand wave. The 10-K describes Teradata helping customers "manage, secure, and provide trustworthy data for AI and analytics across hybrid and multi-cloud environments", which positions the legacy enterprise data estate as the foundation AI workloads need to run against. The company is not trying to out-grow Snowflake; it is trying to keep large, entrenched enterprise customers on a modernized hybrid platform while harvesting the cash. In November 2025 the board authorized a new $500 million repurchase program effective January 2026. The bull case is a high-cash-yield transition where cloud ARR growth and margin expansion gradually outrun the legacy decline.

Bear Case

Look at how the company is spending its cash against what its business is actually doing, and a tension appears. In November 2025 the board authorized a $500 million share repurchase program per the 10-K, and Teradata bought back $130 million of stock over the trailing year, roughly 31% of net income. Returning capital is defensible, but this is a company whose total revenue "decreased by 5% in 2025 as compared to 2024, with a 2% decrease in recurring revenue", and whose own FY2026 guidance calls for total revenue down another 2% to 4%. Buying back stock is the easiest way to support per-share metrics when the underlying business is contracting, and it deserves scrutiny: is the capital going to buybacks because the cloud opportunity does not warrant more reinvestment, or because reinvestment has not been paying off?

The reported earnings compound the need for skepticism. Q1 2026 GAAP EPS of $3.47 looks spectacular until you see it was driven by a $480 million SAP litigation settlement; strip that out and non-GAAP EPS was $0.88, and full-year non-GAAP EPS guidance is $2.53 to $2.57. The quarterly operating margin was actually negative 8.1% in Q1 before the settlement flowed through below the line. Anyone anchoring on the trailing P/E near 8 is valuing the company on a one-time legal windfall rather than its operating earnings power.

The competitive backdrop is the structural problem. The 10-K names the field directly: the market includes "AWS, Databricks, Google Cloud, Microsoft Azure, Snowflake, and more", alongside traditional legacy competitors, and flags the risk of "aggressive price discounting and the use of different pricing models by our competitors". Teradata is a smaller incumbent defending an installed base against hyperscalers and cloud-native platforms with vastly larger R&D budgets. The transition math is unforgiving: cloud ARR grew 13% but total ARR grew only 3%, meaning the legacy runoff is eating most of the cloud gains. If cloud growth decelerates before the legacy base stabilizes, total revenue keeps falling and the buyback is funding a managed decline, not a turnaround.

Valuation

Begin with the number that is not what it looks like. At $33.69 (July 11, 2026), Teradata's trailing P/E near 8 is flattered by a $480 million SAP litigation settlement that lifted GAAP EPS to $3.47 in Q1 2026; the operating earnings power sits at the roughly $0.88 non-GAAP quarterly level, with full-year non-GAAP EPS guided to $2.53 to $2.57. On that recurring basis the multiple is closer to the low-to-mid teens, still below the software sector, but not the deep-value bargain the reported figure implies. The two operating-income bases in the data (a record basis near $115 million and an EDGAR trailing basis near $103 million) sit only about 12% apart, which is the honest read; the divergence in reported net income is a below-the-line settlement, not margin compression.

The valuation methods agree the price is well supported, which is itself the finding. Every family, asset value, earnings power, peer multiples, and the growth-oriented method, lands at or above today's price, so this is a value-and-asset-supported name rather than a growth bet. Inverting the price says the market is paying about 25x company-wide operating income and implicitly assuming growth to sustain it, but the margin requirement is undemanding: the business only has to hold roughly the operating margin it already earns. The tension is that the methods reading the price as cheap are trailing lenses, while the forward guidance points to total revenue continuing to decline, so the cheapness is real only if the recurring, cloud-weighted base stabilizes.

Solvency removes the tail risk from the equation. The balance sheet is net cash, so there is no financial pressure on the way to whatever the transition delivers, and free cash flow of $670 million trailing (a 20% yield) funds both the $500 million repurchase authorization and continued cloud investment. The price is not stretched against any method; the debate is entirely about whether cloud ARR growth of 13% eventually outpaces the legacy runoff that is holding total ARR growth to 3%. The cash yield pays you to wait for that question to resolve, but the answer is not yet visible in the total revenue line.

Catalysts

Q1 2026 was defined by two things: a legal windfall and steady cloud momentum. Total revenue of $444 million rose 6.2% year over year and beat consensus, but GAAP EPS of $3.47 was heavily shaped by a $480 million SAP litigation settlement; non-GAAP EPS was $0.88. The operating metrics that matter for the transition: total ARR reached $1.492 billion (up 3% as reported, 2% in constant currency), and public cloud ARR of $686 million grew 13% as reported, consistent with the company's cloud-led mix shift.

Guidance frames the year as continued transition rather than inflection. Teradata maintained its FY2026 outlook for recurring revenue between minus 2% and flat, total revenue between minus 4% and minus 2%, and non-GAAP diluted EPS of $2.53 to $2.57, pointing toward the higher end. For Q2 2026 it guided recurring revenue minus 2% to flat and non-GAAP EPS of $0.53 to $0.57. The things to watch are whether cloud ARR growth holds in the low double digits, whether the legacy on-premises runoff decelerates enough to stabilize total ARR, and how quickly the company deploys the $500 million repurchase authorization that became effective in January 2026. The Q2 2026 report is the next checkpoint on the transition math.

Peer Cohorts (Per Segment, With Filing Citations)

Product Sales (reported)

• SNOW (SNOWFLAKE INC.)
• FY2025 10-K: . We expect that our stock-based compensation will increase in absolute dollars as we continue to issue equity awards to our new and existing employees, but will decrease as a percentage of our revenue in fiscal 2026 and continue to decrease over time as we grow. 68 Table of Contents Comparison of the Fiscal Years…
• FY2025 10-K: …in cases where customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal. In addition, our historical customer consumption patterns are not necessarily indicative of future results. Product Revenue Product revenue is a key metric for us…
• MDB (MONGODB, INC.)
• FY2025 10-K: …marketing headcount to 2,542 employees as of January 31, 2025 from 2,338 employees and 2,249 employees as of January 31, 2024 and 2023, respectively. Components of Results of Operations Revenue Subscription Revenue. Our subscription revenue is comprised of term licenses and database-as-a-service solutions. Revenue…
• FY2025 10-K: …community. We have spent $2.5 billion on research and development since our inception. Our results of operations may fluctuate as we make these investments to drive increased customer adoption and usage. Growing Our Customer B ase and Expanding Our Global Reach We are intensely focused on continuing to grow our…
• ORCL (Oracle Corp)
• FY2025 10-K: …performance services and higher availability for Oracle products and services. 70 Table of Contents We apply the provisions of ASC 606, Revenue from Contracts with Customers (ASC 606) as a single standard for revenue recognition that applies to all of our cloud, license, hardware and services arrangements and…
• FY2025 10-K: …from a global workforce, provides stability to our operations and revenue streams to offset geography-specific economic trends and offers us an opportunity to take advantage of new markets for our offerings. Our international operations subject us to certain risks, which are more fully described in Risk Factors…
• DT (Dynatrace, Inc.)
• FY2025 10-K: …to increase sales to existing customers depends on several factors, including their experience with implementing and using our platform and the existing solutions they have implemented, their ability to integrate our solutions with existing technologies, and our pricing models, including our DPS licensing model. A…
• FY2025 10-K: …be delayed or cancelled. In addition, we are experiencing, and we may continue to experience, an increase in the number of large, strategic deals where customers are looking to make broader observability architecture decisions. These deals come with a higher degree of variability, longer sales cycles, greater…

Consulting Services (reported)

• SSNC (SS&C TECHNOLOGIES HOLDINGS, INC.)
• FY2025 10-K: …WorkHQ, AI Gateway and our AI Agent Solutions. • Banking and Lending Solutions o EVOLV - EVOLV is a comprehensive, cloud-based, end-to-end accounting solution for financial institutions that integrates and automates all risk and finance processes relating to a loan portfolio, from data capture to back-end reporting…
• FY2025 10-K: …on-demand software applications that are managed and hosted at our facilities. The software-enabled services arrangements provide an alternative for clients who do not wish to install, run and maintain complicated financial software. Under these arrangements, the client does not have the right to take possession of…
• NICE (NICE LTD.)
• FY2025 20-F: …fuels analytic precision to detect and prevent financial crimes. These offerings enable us to add value to our existing customers, as well as expand our reach and open up new opportunities, considerably increasing our total addressable market. Helping our on-premises customers and new customers migrate to the cloud…
• FY2025 20-F: …which enable our customers to quickly enjoy the benefits of our solutions, with multiple deployment models in the cloud or on-premises throughout the world and support for full value realization and customer success. • Our outcome-oriented white-glove services that enable our customers to achieve greater efficiency,…
• SPSC (SPS COMMERCE, INC.)
• FY2025 10-K: …us to offer new functionalities. Key Financial Terms, Metrics and Non-GAAP Financial Measures Sources of Revenues Recurring Revenues We primarily derive our revenues from subscription-based recurring revenue services, which are recognized on a ratable basis over the contract term. The following are our recurring…
• FY2025 10-K: …software, and services, as well as related maintenance and updates, may not continue to be available to us on commercially reasonable terms, or at all. If we lose the right to use or upgrade any of these licenses, our customers could experience delays or be unable to access our products until we can obtain and…
• MANH (MANHATTAN ASSOCIATES, INC.)
• FY2025 10-K: …training, education and system upgrades. We believe our Professional Services teams enable customers to implement our solutions knowledgeably and in the appropriate amount of time, help customers achieve expected results from system investments, continuously identify new opportunities for supply chain advancements…
• FY2025 10-K: …platforms, and Material Handling Equipment systems. At times, third-party consultants, such as those from major systems integrators, assist our customers with certain implementations. Training and Change Management Services We offer training and change management services for new and existing users, enabling our…
• BLKB (Blackbaud, Inc.)
• FY2025 10-K: …user guides, Blackbaud Community, our on-demand library of enablement sessions and have around-the-clock access to support resources for mission-critical needs. 2025 Form 10-K 11 Table of Contents Blackbaud, Inc. Professional and Managed Services Our expert consultants, and those in our partner program, provide…
• FY2025 10-K: …at onboarding and continuing through the customer lifecycle. Our Customer Success team develops and fosters relationships within all levels of the customer organization to help ensure that customers get the most value out of our AI-powered solutions and services, while helping them achieve their desired outcomes. Our…
• VERX (Vertex, Inc.)
• FY2025 10-K: …business outcomes. Services Solutions Implementation Services. Due to the ubiquitous nature of our software in our customers' technology environments, we also offer implementation services to enable our customers to realize the full benefit of our solution at initial deployment. These software implementation services…
• FY2025 10-K: …may need training or education in the proper use of, and the variety of benefits that can be derived from, our solutions to maximize their potential benefits. If our solutions are not implemented or used correctly or as intended, inadequate performance may result. Because our customers rely on our solutions to manage…
• GTM (ZoomInfo Technologies Inc.)
• FY2025 10-K: …services could provide greater appeal to our customers. The market for sales, marketing, and recruiting technology and data requires continuous innovation. Our industry is highly competitive, rapidly evolving, and fragmented. There are low barriers to entry, shifting customer needs and strategies, and frequent…
• FY2025 10-K: …could impact the demand for and use of our products. Market volatility, decreased consumer confidence, and diminished growth expectations in both the U.S. and global economy as a result of the foregoing events, or other unforeseen events, may affect the rate of information technology ("IT") spending and adversely…
• PCTY (PAYLOCITY HOLDING CORPORATION)
• FY2025 10-K: …and solutions and those of third parties in the operation of our business. This includes, among other things, human capital solutions, financial solutions, customer relationship management solutions, software development solutions and tools, cybersecurity solutions and tools, and data center processing. We have…
• FY2025 10-K: …employees and identify needs of underrepresented groups. Reporting - Clients can build and customize reports within our platform. We also offer hundreds of standard reports that clients can use as is or adjust to suit their needs. New reports are added regularly in response to regulatory changes, compliance updates…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.