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TERADATA CORP

TERADATA CORPTDCEarnings & Financial Report

NYSE · Information Technology · Services-Prepackaged Software

Teradata is a global enterprise software and data analytics provider offering cloud-native data platforms, advanced analytics tools, and professional consulting services. It primarily serves large enterprise clients across finance, retail, telecommunications and healthcare sectors, helping organizations leverage big data to drive data-driven business decisions and operational optimization.

What changed in TERADATA CORP's 10-K — 2023 vs 2024

Top changes in TERADATA CORP's 2024 10-K

306 paragraphs added · 309 removed · 249 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

77 edited+29 added−27 removed27 unchanged
Michael Hutchinson is the Company's Chief Customer Officer and has served in this role since January 2022. Previously, from June 2021 when he joined the Company until December 2022, he served as Senior Vice President World-Wide Customer Success, Consulting and Renewals. Prior to joining Teradata, Mr.
Michael Hutchinson. Michael Hutchinson is the Company's Chief Customer Officer and has served in this role since January 2022. Previously, from June 2021 when he joined the Company until December 2022, he served as Senior Vice President World-Wide Customer Success, Consulting and Renewals. Prior to joining Teradata, Mr.
We seek to extend our sales and marketing reach by partnering with cloud service providers, alliance partners (including independent software vendors, open-source software distributors, and resellers), leading global and regional systems integrators, consultants, and universities that we believe complement our differentiated offerings.
We seek to extend our sales and marketing reach by partnering with cloud service providers, alliance partners (including independent software vendors, open-source software distributors, and resellers), leading global and regional systems integrators, and consultants, that we believe complement our differentiated offerings.
Our global customer services organization is comprised of cloud operations, customer support, customer experience, consulting and managed services, and customer education. Our customer services organization supports our cloud-first strategy by facilitating a customer’s migration to the VantageCloud platform and managing the day-to-day operations of a customer’s VantageCloud environment.
Our global customer services organization is comprised of cloud operations, customer support, customer experience, consulting and managed services, and customer education. Our customer services organization supports our cloud strategy by facilitating a customer’s migration to the VantageCloud platform and managing the day-to-day operations of a customer’s VantageCloud environment.
Securities and Exchange Commission ("SEC") pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"). These reports and other information are available, free of charge, at www.sec.gov . Teradata will furnish, without charge to a security holder upon written request, the Notice of Meeting and Proxy Statement for the 2024 Annual Meeting of Stockholders.
Securities and Exchange Commission ("SEC") pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"). These reports and other information are available, free of charge, at www.sec.gov . Teradata will furnish, without charge to a security holder upon written request, the Notice of Meeting and Proxy Statement for the 2025 Annual Meeting of Stockholders.
We believe that the principal competitive factors for our products and services include: data and analytics experience; business outcome delivery; hybrid multi-cloud offerings and experience; total cost of ownership; customer references; technology leadership; product quality; performance, scalability, availability, integrity, security, and manageability; partner relationships; support and consulting services capabilities; management of technologies in a complex analytical ecosystem; delivery of a platform and tools that are designed to provide AI for our customers; and industry knowledge.
We believe that the principal competitive factors for our products and services include: data analytics and AI/ML experience; business outcome delivery; hybrid multi-cloud offerings and experience; total cost of ownership; customer references; technology leadership; product quality; performance, scalability, availability, integrity, security, and manageability; partner relationships; support and consulting services capabilities; management of technologies in a complex analytical ecosystem; delivery of a platform and tools that are designed to enable AI/ML for our customers; and industry knowledge.
Industry analysts forecast that the data management and analytics market will grow at a double-digit rate year-over-year for the next few years and it is expected that the market opportunity will continue to expand with the anticipated rapid and global adoption of AI.
Industry analysts forecast that the data management and analytics market will grow at a double-digit rate year-over-year for the next few years, and it is expected that the market opportunity will continue to expand with the anticipated rapid and global adoption and enablement of AI/ML.
We believe that these industries provide a good fit for our analytic solutions and services as they typically have the greatest analytic potential with large and growing data volumes, as well as complex data management requirements, and large and varied groups of users. We currently do not have any customer that represents 10% or more of our total revenue.
We believe that these industries provide a good fit for our analytic solutions and services as these industries typically have the greatest analytic potential with large and growing data volumes, complex data management requirements, as well as large and varied types of users. We currently do not have any customer that represents 10% or more of our total revenue.
We believe that, in addition to companies facing significant ongoing increases in data volumes and proliferation of data silos, there will also be an increasing expectation that this data be trusted, secured, and democratized.
We believe that, in addition to companies facing significant ongoing increases in data volumes and proliferation of data sources, there will also be an increasing expectation that this data be trusted, secured, and democratized.
Research and Development ("R&D"). We remain focused on designing and developing our analytics and data platform that anticipates our customers' evolving needs and supports solving their complex business challenges.
Research and Development ("R&D"). We remain focused on designing and developing our hybrid cloud analytics and data platform that anticipates our customers' evolving needs and supports solving their complex business challenges.
This organization focuses on delivering business value throughout the customer journey, enabling innovative use of the Vantage platform, extracting additional efficiencies, and maximizing customer impact and satisfaction—which are designed to retain customers and drive greater consumption of our technology. 9 Table of Contents Strategic Partnerships.
This organization focuses on delivering business value throughout the customer journey, enabling innovative use of the Vantage platform, extracting additional efficiencies, and maximizing customer impact and satisfaction—which are designed to retain customers and drive greater consumption of our technology. Strategic Partnerships.
Furthermore, with our strong partnerships, our R&D team is extending our platform to enable deeper integration with a broader range of solution and service providers. 10 Table of Contents Our extensive and talented R&D workforce is one of our core strengths. Our R&D team is globally dispersed to take advantage of global engineering talent.
Furthermore, with our strong partnerships, our R&D team is extending our platform to enable deeper integration with a broader range of solution and service providers. Our extensive and talented R&D workforce is one of our core strengths. Our R&D team is globally dispersed to take advantage of global engineering talent.
Teradata will furnish the Code of Conduct and any other exhibit at cost (the Code of Conduct is also available through Teradata’s website at http://www.teradata.com/about-us/corporate-governance/code-of-conduct/). Document requests are available by calling or writing to: Teradata - Investor Relations 17095 Via Del Campo San Diego, CA 92127 Phone: 858-485-2088 Website: www.teradata.com
Teradata will furnish the Code of Conduct and any other exhibit at cost (the Code of Conduct is also available through Teradata’s website at https://www.teradata.com/about-us/corporate-governance/code-of-conduct/). Document requests are available by calling or writing to: Teradata - Investor Relations 17095 Via Del Campo San Diego, CA 92127 Phone: 858-485-2088 Website: www.teradata.com 14 Table of Contents
While our portfolio of patents and patent applications in aggregate is of significant value to our Company, we do not believe that any individual patent is by itself of material importance to our business.
While our 11 Table of Contents portfolio of patents and patent applications in aggregate is of significant value to our Company, we do not believe that any individual patent is by itself of material importance to our business.
Strategic partnerships are a key element in our ability to leverage the value and expand the scope of our data and analytics platform offering in the marketplace. • Cloud Service Providers: Teradata has established partnerships with the top three global public cloud service providers: AWS, Microsoft Azure, and Google Cloud.
Strategic partnerships are a key element in our ability to leverage the value and expand the scope of our data and analytics platform offering in the marketplace. • Cloud Service Providers: We have established partnerships with the top three global public cloud service providers: AWS, Microsoft Azure, and Google Cloud.
We believe it is our responsibility to make a positive impact on and support important issues, such as addressing the climate crisis and environmental sustainability, responsible use of AI, promoting diversity, equity and inclusion, supporting communities where we live and work, protecting data privacy, and acting ethically in everything we do. Customers .
We believe it is our responsibility to make a positive impact on and support important issues, such as addressing the responsible use of AI, environmental sustainability, promoting belonging and inclusion, supporting communities where we live and work, protecting data privacy, and acting ethically in everything we do. Customers .
Furthermore, we provide our customers with the opportunity to de-risk their buying decisions with the ability to deploy across the top public clouds, private cloud and on-premises, coupled with flexibility in purchasing and portable licensing. For more information on competition, see Item 1A, Risk Factors, in this Annual Report.
Furthermore, we provide our customers with the opportunity to de-risk their buying decisions with our hybrid capabilities and helping them deploy across the top public clouds, private cloud and on-premises, coupled with flexibility in purchasing and portable licensing. For more information on competition, see Item 1A. Risk Factors, in this Annual Report.
For more information, see Item 1A, Risk Factors in this Annual Report. Human Capital Teradata operates with a fully flexible work environment, empowering employees to make decisions about where and how they can be most productive. Our global workforce is located in approximately 40 countries, and our corporate headquarters are in San Diego, California.
For more information, see Item 1A, Risk Factors in this Annual Report. Human Capital Teradata operates with a fully flexible work environment, empowering employees to make decisions about where and how they can be most productive. Our global workforce is located in approxim ately 40 count ries, and our corporate headquarters are in San Diego, California.
During fiscal 2023, our overall headcount decreased somewhat as we continue to align and optimize our talent needs to drive our cloud-first and profitable growth strategy. Culture and Engagement . At Teradata, we believe that people thrive when empowered with trusted information. We have designed our culture to be the guiding force behind our ability to deliver on that purpose.
During fiscal 2024, our overall headcount decreased as we continue to align and optimize our talent needs to drive our cloud and profitable growth strategies. Culture and Engagement. At Teradata, we believe people thrive when empowered with trusted information. We have designed our culture to be the guiding force behind our ability to deliver on that purpose.
Furthermore, the agility provided by cloud-based 7 Table of Contents technologies can bring significant benefits, yet also creates complexity, particularly with the increased need that data and analytics ecosystems span multiple environments.
Furthermore, the agility provided by cloud-based technologies can bring significant benefits, yet also creates complexity, particularly with the increased need that data and analytics ecosystems span multiple environments.
Cullen-Cote served in human resource leadership roles at PTC Inc., a global computer software and services company, from 2002 to June 2019, including Executive Vice President and Chief Human Resources Officer from April 2019 to July 2019; Corporate Vice President, Human Resources from 2012 until March 2019; Senior Vice President, Human Resources, from December 2010 to 2012; and Vice President, Human Resources, from October 2009 until December 2010. 13 Table of Contents Michael Hutchinson.
Cullen-Cote served in human resource leadership roles at PTC Inc., a global computer software and services company, from 2002 to June 2019, including Executive Vice President and Chief Human Resources Officer from April 2019 to July 2019; Corporate Vice President, Human Resources from 2012 until March 2019; Senior Vice President, Human Resources, from December 2010 to 2012; and Vice President, Human Resources, from October 2009 until December 2010.
Our global customer services organization is dedicated to creating and sustaining an optimal customer experience and working with our customers to help them achieve the best use and outcomes for the data that they produce in our Vantage platform so they are empowered with the full potential of Teradata’s data analytics solutions.
Our global customer services organization is dedicated to creating and sustaining an optimal customer experience and working with our customers to help them achieve the best outcomes from the data that is managed in our platform so they are empowered with the full potential of Teradata’s data analytics solutions.
These factors all contribute to the increased complexity, cost, and risk associated with managing data and analytic environments, as well as the rapidly emerging desire of customers to create and deliver value from AI.
These factors all contribute to the increased complexity, cost, and risk associated with managing data analytics and AI/ML environments, as well as the rapidly emerging desire of customers to create and deliver value from agentic and generative AI.
To further enable employees to support the charity of their choice, we afford every employee four days a year, during normal working hours, for volunteer efforts of their choice. Properties and Facilities. Our corporate headquarters is located in San Diego, California. As of December 31, 2023, we operated 44 facilities in 30 countries throughout the world.
To further enable employees to support the charity of their choice, we provide every employee four days a year, during normal working hours, for volunteer efforts of their choice. Properties and Facilities. Our corporate headquarters is located in San Diego, California. As of December 31, 2024, we operated 41 facilities in 29 countries throughout the world.
We also provide facilitated learning opportunities to help build specific capabilities and skills, such as Basics of Communication, Emotional Intelligence, Influence, and Time Management. Our executive and leadership development programs are designed to empower individuals to lead at every level. Community Engagement.
We also provide facilitated learning opportunities to help build specific capabilities and skills, such as Basics of Communication, Emotional Intelligence, Influence, and Time Management. We offer executive and leadership development programs designed to enable our leaders to role model our leadership principles and empower individuals to lead at every level. Community Engagement.
We anticipate that we will continue to have significant R&D expenditures, which may include complementary strategic acquisitions, to help support the flow of innovative, high-quality cloud-based data and analytic offerings. Intellectual Property and Technology. We own 594 patents in the United States.
We anticipate that we will continue to have significant R&D expenditures, which may include complementary strategic acquisitions, to help support the flow of innovative, high-quality data and analytic offerings. Intellectual Property and Technology. We ow n 565 patents in the United States.
That is why we built our open and connected cloud analytics and data platform for artificial intelligence ("AI").
That is why we built our open and connected hybrid cloud analytics and data platform for AI.
We own our San Diego complex, while all other facilities are leased. 12 Table of Contents Information About Our Executive Officers. The following table and biographies sets forth information as of February 23, 2024 regarding the individuals who are serving as our executive officers.
We own our San Diego complex, while all other facilities are leased. Information About Our Executive Officers. The following table and biographies sets forth information as of February 21, 2025 regarding the individuals who are serving as our executive officers.
From June 2015 until December 2018, she served as HP's Regional Head for Finance for EMEA, and from January 2013 to May 2015, she served as Vice President, Corporate Financial Planning and Analysis at HP. Ms. Bramley also serves on the Board of Directors of Ansys, Inc. Todd Cione .
From June 2015 until December 2018, she served as HP's Regional Head for Finance for EMEA, and from January 2013 to May 2015, she served as Vice President, Corporate Financial Planning and Analysis at HP. Ms. Bramley also serves on the Board of Directors of Ansys, Inc. On February 11, 2025, we announced that Ms.
AI requires significant high-quality data to create value, as such integrating and harmonizing data across the organization is crucial. Our analytics and data offering is designed to be scalable, secure, highly concurrent and resilient in order to help companies solve complex data challenges at scale.
AI requires significant high-quality data to create value; as such, integrating and harmonizing data across the organization is crucial. Our hybrid cloud platform is designed to be scalable, secure, highly concurrent, and resilient to help companies solve complex data challenges at scale.
Our platform differentiates Teradata in industries with high-data 8 Table of Contents requirements, including Financial Services, Government, Healthcare and Life Sciences, Manufacturing, Retail, Telecommunications, and Travel/Transportation.
Our platform differentiates Teradata in industries with high-data requirements, including Financial Services, Government, Healthcare and Life Sciences, Public Sector, Manufacturing, Retail, Telecommunications, and Travel/Transportation.
We deliver AI capabilities for our customers by providing a platform that is designed to integrate and harmonize data across the organization. • Building a flexible, open, and connected ecosystem: Teradata’s Vantage architecture is designed to provide a flexible, open, and connected ecosystem to allow companies freedom to use their preferred tools and technologies with public or custom large language models ("LLM") to produce generative AI. • Providing secure, trusted, and cost-effective AI: Teradata’s Vantage platform is designed to deliver a secure environment, while controlling costs.
We deliver AI capabilities for our customers by providing a platform that is designed to integrate and harmonize data across the organization and analytics capabilities that excel at scale. • Building a flexible, open, and connected ecosystem: We design our architecture to provide a flexible, open, and connected ecosystem to allow companies freedom to use their preferred tools and technologies with public or custom LLMs to produce AI. • Providing a secure, trusted, and cost-effective environment: Our hybrid analytics and data platform is designed to deliver a secure environment, while controlling costs.
As of December 31, 2023, we had approximately 6,500 employees globally, with approximately 30% e mployed in the United States and 70 % across the rest of the world. Our global workforce is critical to our overall business strategy across target markets.
As of December 31, 2024, we had approximately 5,700 employees globally, with approximately 30% employed in the United States and 70% across the rest of the world. Our global workforce is critical to our overall business strategy across target markets.
From 1990-2018, he held several positions with Oracle Corporation , a global software and services company, most recently as the Group Vice President, North America Customer Success from December 2015 to March 2018. Margaret Treese. Margaret Treese is the Company’s Chief Legal Officer and has served in this role since November 2020.
From 1990-2018, he held several positions with Oracle Corporation, a global software and services company, most recently as the Group Vice President, North America Customer Success from December 2015 to March 2018. Richard Petley . Richard Petley is the Company’s Chief Revenue Officer and has served in this role since April 2024. Previously, Mr.
In addition to our competitive base pay, these programs (which vary by country/region) include sales incentives, annual bonuses, stock awards, an Employee Stock Purchase Plan, a 401(k) Savings Plan with a company match, healthcare and insurance benefits, paid time off, family leave, and paid parental leave.
In addition to our competitive base pay, these programs, which vary by country/region, include sales incentives, annual bonuses, stock awards, an Employee Stock Purchase Plan, a Retirement Savings Plans, healthcare and insurance benefits, and paid time off.
These factors, among others as more fully described in Item 1A, Risk Factors, in this Annual Report, make forecasting more difficult and may adversely affect our ability to accurately predict financial results. We have transitioned the majority of our customers from perpetual to subscription-based purchasing options.
These factors, among others as more fully described in Item 1A, Risk Factors, in this Annual Report, make forecasting more difficult and may adversely affect our ability to accurately predict financial results. The majority of our customers pay for their Teradata offerings via subscription-based purchasing options.
Teradata Vantage comprises deployment options that are designed to address the full span of analytics and data needs while providing optimized total cost of ownership and financial governance: • Teradata VantageCloud: Our flexible, connected, and modern cloud platform and includes Teradata VantageCloud Lake, which is built on our cloud-native lake architecture, and Teradata VantageCloud Enterprise for managed enterprise workloads. • Teradata VantageCore: Our on-premises data and analytics offering, which seamlessly integrates with our cloud offerings to enable hybrid environments that many large enterprises currently demand.
Whether in public or private clouds, in multi-cloud, or on-premises, and at scale, Teradata Vantage comprises deployment options that are designed to address the full span of data analytics and AI needs while providing optimized total cost of ownership and financial governance: • Teradata VantageCloud: Our flexible, connected, and modern cloud platform and includes Teradata VantageCloud Lake, which is built on our cloud-native lake architecture, and Teradata VantageCloud Enterprise for managed enterprise workloads. • Teradata VantageCore: Our on-premises platform offering, which seamlessly integrates with our cloud offerings to enable hybrid environments for which we see increasing demand.
We have robust compensation and benefit programs designed to attract and retain talent and meet the varied and evolving needs of a global and diverse workforce.
Compensation and Benefits. Our compensation and benefits reflect our commitment to fairness and inclusion. We have robust compensation and benefit programs designed to attract and retain talent and meet the varied and evolving needs of a global workforce.
We also believe that we offer a competitive and compelling total cost of ownership by building out best-in-class capabilities that are designed to provide an easy experience for ingestion, exploration, development, consumption and operationalization of data and analytics.
We also believe that we offer a competitive and compelling total cost of ownership by building out best-in-class capabilities that are designed to provide an easy experience for ingestion, exploration, development, consumption, and operationalization of data analytics and AI/ML. Our strategy is further supported by our commitment to be a responsible corporate citizen.
QueryGrid serves as the connective tissue in multi-cloud and between cloud, and on-premises environments. This technology innovation is designed to reduce data silos, as it brings data together and enables consistent data access across the ecosystem, so that users can query data regardless of where it lies.
Query Grid serves as the connective tissue in multi-cloud, as well as between cloud and on-premises environments. This technology innovation is designed to bring data together and enable consistent data access across the ecosystem, so that users can query data regardless of where it lies, thereby reducing data silos, and potentially saving the expense of moving data.
Sales, Marketing, Customer Services and Partners Sales and Marketing. We primarily sell and market our solutions and services through a direct sales force. We have more than 80% of our employees in customer-facing and/or revenue-driving roles (including sales, marketing, consulting, customer services, and product engineering).
We have more than 80% of our employees in customer-facing and/or revenue-driving roles (including sales, marketing, consulting, customer services, and product engineering).
Previously, from 2018 until January 2020, she served as Teradata’s Deputy General Counsel and Secretary. From 2007 until 2018, she served as the Chief Corporate and Governance Counsel and Assistant Secretary and was named Corporate Secretary of Teradata in 2018. Jacqueline Woods.
Margaret Treese is the Company’s Chief Legal Officer and has served in this role since November 2020. Previously, from 2018 until January 2020, she served as Teradata’s Deputy General Counsel and Secretary. From 2007 until 2018, she served as the Chief Corporate and Governance Counsel and Assistant Secretary and was named Corporate Secretary of Teradata in 2018. Jacqueline Woods.
Claire Bramley is the Company's Chief Financial Officer and has served in this role since joining Teradata in June 2021. She served as the Global Controller for HP Inc., a multinational information technology company, from December 2018 until June 2021.
From May 2012 to September 2015, he served as Senior Vice President, Managed Cloud Services at Oracle. Claire Bramley. Claire Bramley is the Company's Chief Financial Officer and has served in this role since joining Teradata in June 2021. She served as the Global Controller for HP Inc., a multinational information technology company, from December 2018 until June 2021.
Teradata concentrates our marketing and go-to-market efforts on companies that are seeking to improve business performance and view data as a strategic asset in achieving that objective. We focus on business, analytics, and technology buyers and users.
Teradata concentrates our marketing and go-to-market efforts on companies that are seeking to improve business performance and view data analytics and AI/ML as strategic to achieving that objective. We focus on the key buying centers of business leaders, analytics buyers and users, as well as technology buyers and users.
Our Teradata Cares program empowers our employees to make a positive difference where we live and work through volunteerism and giving. We support our employees’ giving and volunteer efforts by providing matching donations for employee contributions to qualified not-for-profit agencies, project grants, Annual Days of Caring, and supporting communities where we have employee populations.
We support our employees’ giving and volunteer efforts by providing matching donations for employee contributions to qualified not-for-profit agencies, project grants, Annual Days of Caring, and supporting communities where we have employee populations.
Our Consulting Services and Third-Party Relationships Our experienced consultants offer a broad range of services, including helping organizations establish a data and analytics vision, enabling a modern, multi-cloud ecosystem architecture, and identifying and operationalizing opportunities to ensure their data and analytics ecosystem investments deliver significant value.
Our Consulting Services and Third-Party Relationships Our experienced consultants offer a broad range of services, including helping organizations establish a data analytics and AI/ML vision, enabling a modern, hybrid ecosystem architecture, and identifying and operationalizing opportunities.
We support our sales force with marketing and training programs that are designed to: • grow awareness of Teradata as a hybrid multi-cloud leader, highlighting our technology leadership and innovation, differentiation, cloud, and analytics and AI expertise; • lead customers on their migration to the cloud with the benefits of multi-cloud and hybrid cloud capabilities, and then help them easily expand their environment when needed; • create demand for, and adoption and expanded use of, our technologies, including Teradata VantageCloud Enterprise, Teradata VantageCloud Lake, ClearScape Analytics, and Teradata AI Unlimited, as well as related services; and • educate and enable the sales force with the skills and knowledge to deliver our value proposition.
We support our sales efforts with marketing designed to: • grow awareness of Teradata as a leading hybrid cloud analytics and data platform for trusted AI , highlighting our technology leadership and innovation, hybrid cloud differentiation, analytics and AI expertise; • lead customers on their migration to the cloud with the benefits of an open and connected ecosystem with hybrid and multi-cloud capabilities, and then help them easily expand their environment when needed; and • create demand for, and adoption and expanded use of, our technologies, including Teradata VantageCloud, ClearScape Analytics, and Teradata AI Unlimited, as well as related services.
We work to continuously strengthen these strategic partnerships so that Teradata can provide companies around the world access to Teradata VantageCloud Enterprise and VantageCloud Lake. • Alliance Partners: Teradata has a focus on working collaboratively with independent software vendors in several areas, including AI/ML and large language models ("LLMs"), tools, data and application integration solutions, data mining, analytics, business intelligence, and specific analytic and industry solutions.
We work to continuously strengthen these strategic 10 Table of Contents partnerships so that companies around the world can easily have access to the Teradata platform and our data analytics capabilities via the manner they prefer. • Alliance Partners: We have a focus on working collaboratively with independent software vendors in several areas, including AI/ML and LLMs, tools, data and application integration solutions, data mining, analytics, business intelligence, and specific analytic and industry solutions.
We believe that building connections between our employees, their families, and our communities creates a more meaningful, fulfilling, and enjoyable workplace. We support local STEM education programs to ensure emerging leaders in our communities have opportunities to explore their interests.
We believe building connections between our employees, their families, and our communities creates a more meaningful, fulfilling, and enjoyable workplace. We support local STEM education programs to ensure emerging leaders in our communities have opportunities to explore their interests. Our Teradata Cares program empowers our employees to make a positive difference where we live and work through volunteerism and giving.
Our differentiated approach spans deployments in the top public cloud service provider platforms of AWS, Microsoft Azure, and Google Cloud, as well as private cloud platform instances, on-premises, and hybrid environments.
We believe we are differentiated by providing our hybrid cloud analytics and data platform offering across an open and connected ecosystem. Our differentiated approach spans deployments in the top public cloud service provider platforms of AWS, Microsoft Azure, and Google Cloud, as well as private cloud platform instances, on-premises, and hybrid environments.
Our teams are extending Teradata technologies and innovations for the Teradata Vantage platform, including Teradata VantageCloud Enterprise, Teradata VantageCloud Lake, ClearScape Analytics, and Teradata AI Unlimited in order to have consistent and differentiated capabilities that meet the demands of todays’ multi-cloud and hybrid ecosystems. We have delivered significant innovations such as VantageCloud Lake.
Our teams are extending Teradata technologies and innovations for the Teradata platform, including ClearScape Analytics and Teradata AI Unlimited to have consistent and differentiated capabilities that meet the demands of todays’ hybrid ecosystems.
We empower our people to live our core principles: customer and market driven, agility in execution, and accountability to each other. We strive to cultivate a trusted environment where every individual feels not only valued, but truly empowered to thrive. Diversity, Equity, and Inclusion . Teradata’s core strength is our people.
We empower our people to live our core principles: customer and market driven, agility in execution, and accountability to each other. We strive to create a workplace that is free from discrimination where everyone feels they belong. We cultivate a trusted environment where every individual feels not only valued, but truly empowered to thrive. Health, Safety, and Wellness.
With companies pivoting to cloud-based environments, we believe it is essential for these enterprises to be able to integrate ecosystems across multi-cloud and on-premises environments, simplify access to trusted data wherever it resides, and accommodate analytics at massive scale and speed to derive significant business value.
We believe it is essential for enterprises to be able to integrate ecosystems across multi-cloud and on-premises environments, simplify access to trusted data wherever it resides, and accommodate analytics at massive scale and speed to derive significant business value. Teradata addresses the full spectrum of analytics needs and varying cloud adoption strategies—from cloud-only to multi-cloud to hybrid and on-premises.
Name Age Position(s) Stephen McMillan 53 President and Chief Executive Officer Hillary Ashton 52 Chief Product Officer Claire Bramley 46 Chief Financial Officer Todd Cione 54 Chief Revenue Officer Kathleen Cullen-Cote 59 Chief People Officer Michael Hutchinson 58 Chief Customer Officer Margaret Treese 57 Chief Legal Officer Jacqueline Woods 62 Chief Marketing Officer Stephen McMillan .
Name Age Position(s) Stephen McMillan 54 President and Chief Executive Officer Claire Bramley 47 Chief Financial Officer Kathleen Cullen-Cote 60 Chief People Officer Michael Hutchinson 59 Chief Customer Officer Richard Petley 48 Chief Revenue Officer Margaret Treese 58 Chief Legal Officer Jacqueline Woods 63 Chief Marketing Officer Stephen McMillan .
As AI is deployed across the enterprise, our data fabric is designed to provide our customers with the analytic capabilities to deliver trusted data, that is secure and well governed, while controlling costs. 5 Table of Contents Our Cloud Transformation Across Teradata, we are executing to advance in our transformation as a leading cloud analytics and data platform.
With our data fabric, we enable data analytics integration across public clouds for a multi-cloud experience. Our data fabric is designed to 5 Table of Contents provide our customers with the analytic capabilities to deliver trusted data—data that is secure and well governed—while controlling costs.
Teradata is recognized by industry analysts as offering a cloud analytics and data platform with next-generation, cloud-native deployment and expansive analytics capabilities . Whether their first move into the cloud or moving from other vendors, we help companies smoothly move to the cloud, offering a fast path to cloud modernization with our extensive cloud migration capabilities.
Whether their first move into the cloud or moving from other vendors, we help companies smoothly migrate to the deployment that is right for their business, offering a fast path to cloud modernization with our extensive cloud migration capabilities.
Key capabilities of Teradata Vantage across all deployments are: • ClearScape Analytics™: ClearScape Analytics provides the analytics capabilities of our Vantage platform and is designed to be a secure, highly concurrent, and resilient analytics offering that provides robust in-database analytics functionality across advanced calculations and data preparation to enable end-to-end AI and machine learning ("ML") capabilities.
Key capabilities of Teradata Vantage across all deployments are: • ClearScape Analytics™: ClearScape Analytics encompasses the end-to-end analytics capabilities integrated into our platform and is designed to be a secure, highly concurrent, and resilient analytics offering.
We believe that our technology innovations of the Teradata Vantage platform, including Teradata VantageCore, Teradata VantageCloud Enterprise, Teradata VantageCloud Lake, ClearScape Analytics, and Teradata AI Unlimited are highly differentiated, deliver scale and integration, and are positioned to provide business value to our customers.
We believe that our technology innovations are highly differentiated, deliver scale and integration, and are positioned to provide business value to our customers.
This is particularly true for our target market of global enterprise companies, and we believe that these companies require well integrated solutions that can accommodate significant agility, scale and speed.
This is particularly true for our target market of global enterprise companies, and we believe that these companies require well-integrated solutions that can accommodate significant agility, scale, and speed in an open and connected ecosystem. We are focused on supporting our customers, whether they are cloud-only, multi-cloud, on-premises, or a hybrid combination.
We believe that we can help enterprises accelerate AI value, including by: • Managing uncontrolled data growth: AI requires volumes of high-quality data.
As companies around the world are exploring and implementing AI applications, including agentic and generative AI, w e believe that we can help enterprises accelerate AI value, including by: • Managing uncontrolled data growth: AI requires extensive volumes of high-quality data.
Our support and maintenance services are designed to provide an optimal experience with Teradata and our managed services offerings are designed to provide an enhanced experience to our customers by helping their analytic environments operate efficiently. We also work closely with the top global systems integrators to accelerate innovation, enable digital transformation and maximize customer value from their Teradata technologies.
Our support and maintenance services are designed to provide an optimal experience with Teradata and our managed services offerings are designed to provide an enhanced experience to our customers by helping their analytic environments operate efficiently.
As a result, we believe that we empower our customers - and our customers' customers - to make better, more confident decisions, engage in faster innovation, and drive positive impact within the enterprise.
As a result, we believe that we empower our customers to make better, more confident decisions, engage in faster innovation, and drive positive impact within the enterprise. Our Hybrid Cloud Analytics and Data Platform Teradata Vantage is our open and connected platform that is designed to allow organizations to leverage all their data across an enterprise, in a hybrid environment.
Such seasonality causes our working capital cash flow requirements to vary from quarter to quarter depending on the variability in the volume, timing of invoices and subsequent collection, and mix of platform sales.
Such seasonality causes our working capital cash flow requirements to vary from quarter to quarter depending on the variability in the volume, timing of invoices and subsequent collection, and mix of platform sales. 9 Table of Contents In addition, contract bookings in the third month of each quarter have historically been significantly higher than in the first and second months, with the majority occurring in the last quarter of our fiscal year.
As a result, our revenue from sales is recurring which generally increases the predictability of our revenue and the durability of our cash flows in the future. The majority of our customer contracts are based on a blended pricing model which provides a fixed capacity but also offers the customer optional consumption for times when they experience increased activity.
The majority of our customer contracts are based on a blended pricing model which provides a fixed capacity and also offers the customer optional consumption for times when they experience increased activity. Sales, Marketing, Customer Services and Partners Sales and Marketing. We primarily sell and market our solutions and services through a direct sales force.
With our Teradata Vantage platform, underpinned by our extensive patented workload management optimization, we are well positioned to help enterprises solve business problems and deliver business breakthroughs with its capabilities to provide harmonized data, trusted AI, and faster innovation. • Harmonized data: We strive to empower our customers to make more confident decisions with integrated data using our cloud-native platform that is designed to be efficient, flexible, and secure. • Trusted AI: We believe that our platform provides our customers with powerful, open, and connected analytics that perform with speed and deliver better insights. • Faster innovation: Our Teradata Vantage platform is designed to fuel our customer’s growth opportunities with AI/ML innovation that's cost-effectively operationalized at scale.
We believe our platform provides companies with: • Harmonized Data: We strive to empower our customers to make more confident decisions with integrated data using our hybrid platform that has the capability to support both cloud and on-premises environments and is designed to be efficient, flexible, and secure. • Trusted AI: We believe that our platform provides our customers with powerful, open, and connected analytics – from ML and traditional analytics to enabling AI that is designed to provide actionable, differentiated insights and enhance enterprise value. • Faster Innovation: Our platform is designed to fuel our customer’s growth opportunities with AI/ML innovation that’s cost-effectively operationalized at scale.
As data volumes grow exponentially along with increasing sources of data, organizations are expected to increasingly move to cloud-based analytic and data technologies.
As data volumes grow exponentially along with increasing sources of data, we are seeing organizations increasingly adopt hybrid, multi-cloud, and on-premises data analytics and AI/ML technologies.
Prior to joining Apple, from 2016 until 2017, he was Senior Vice President, Oracle Digital, North America Applications, at Oracle Corporation, a global software and services company. Kathleen Cullen-Cote . Kathleen Cullen-Cote is the Company’s Chief People Officer and has served in this role since joining Teradata in July 2019. Prior to joining Teradata, Ms.
Kathleen Cullen-Cote is the Company’s Chief People Officer and has served in this role since joining Teradata in July 2019. Prior to joining Teradata, Ms.
With a focus on creating a truly open and connected platform, we continue to build a deep integration with cloud data and analytic ecosystems, including advanced analytics and AI/ML tools.
With extensive in-database functionality, seamless and expedited interconnectivity, and robust features for easy operationalization, ClearScape Analytics is designed to enable companies to scale AI/ML quicker and more cost effectively. With a focus on creating an open and connected platform, we continue to build a deep integration with cloud data and analytic ecosystems, including advanced analytics and AI/ML tools.
As customers increasingly grow their cloud-based analytic ecosystems, our strategy supports existing customers on that journey with a fast path to migration that is enabled through a data fabric that connects all environments, as well as data and workload migration tools and services.
As customers increasingly grow their data analytics ecosystems, we support customers with a data fabric in QueryGrid that connects all environments, as well as data and workload migration tools and services.
Furthermore, as demand shifts to the cloud, we provide enterprise customers with the flexibility to address their hybrid and multi-cloud data and analytics needs, empowering operational, ad-hoc analytic and mixed workloads, whether in the cloud or on-premises. We believe we are differentiated by providing our analytics and data platform offering across a secure, multi-cloud ecosystem.
We provide a data management solution that enables enterprises to support their data analytics and AI/ML ecosystems, enable consistent data across business units, and grow at scale. Furthermore, we provide enterprise customers with the flexibility to address their data analytics and AI/ML needs, empowering operational, ad-hoc analytics, and mixed workloads, whether in the cloud, on-premises, or in a hybrid combination.
These strategies include our global website, digital marketing, demos and trials of our software, webinars, conferences and events, public and media relations, social media, a customer reference program, and targeted account-based marketing. Customer Services.
To support our growth objectives, we employ a broad range of modern marketing strategies, including programs designed to inform, educate, and generate demand with customers and prospects. These strategies include our global website, digital marketing, paid media, demos and trials of our software, webinars, events, public relations, social media, a customer advocacy program, and targeted demand generation. Customer Services.
Health, Safety, and Wellness . We are committed to the health, safety, and wellness of our employees and their families. We provide flexible and inclusive programs that cater to diverse needs of well-being. Compensation and Benefits. Our compensation and benefits reflect our commitment to fairness and inclusion.
We are committed to the health, safety, and wellness of our employees and their families. We provide flexible and inclusive programs that cater to diverse needs of well-being. This includes quarterly well-being days, global paid holidays for all employees, as well as half-day Fridays, providing employees extra paid time off each week during 3 months of the year.
Our customers use Teradata technologies and innovations in leveraging data to solve their business challenges and drive business outcomes, which can include, among other things: • AI/ML, • digital identity management, • financial visibility, • resilient supply chains, • fraud prevention, • customer acquisition, experience and retention, • regulatory compliance, and • operational resilience.
Business use cases leverage the latest in Teradata AI/ML capabilities and can include, among other things: • augmented customer complaint analysis, • customer acquisition, experience and retention, • personalized product and action recommendations, • automated speech analysis, • financial visibility, • resilient supply chains, • fraud prevention, and • regulatory compliance and risk management.
In this regard, our strategic growth objectives are to: • further strengthen our cloud analytics and data platform, with Teradata VantageCloud Lake and ClearScape Analytics; • help our customers create enterprise value with harmonized data, trusted AI, and faster innovation; • enable end-to-end business outcomes through a seamless user experience; • accelerate our cloud-first strategy by supporting our customers on their cloud migration journeys; • expand customer footprints by increasing consumption and onboarding new workloads in existing and new business buying centers; • expand our product capabilities through deeper integration with cloud ecosystems; • focus on partner enablement to drive solution adoption and execution on our Vantage platform; • deepen relationships with strategic public cloud service providers, systems integrators, independent software vendors, and resellers; • expand our go-to-market reach by onboarding new customers, making vertical investments, enhancing customer success programs, and strengthening our partner relationships; and • deliver operational excellence through efficient cost management and execution.
We deliver on this strategy through leveraging our talented teams who are committed to our culture and executing the following strategic imperatives: • enabling faster innovation, better customer experiences, and improved productivity via the Teradata platform and ClearScape Analytics capabilities to enable AI/ML; • enhancing our ClearScape Analytics roadmap with incremental AI capabilities; • enabling AI on-premises by bringing additional data and AI/ML capabilities to our on-premises offerings; • broadening our platform to support OTF; • providing well-defined use cases that demonstrate the value of our products to solve real-world business challenges; • expand customer footprints by increasing consumption and onboarding new workloads in existing and new business buying centers; • deepening relationships with strategic public cloud service providers, systems integrators, independent software vendors, distributors, and resellers; • expanding our go-to-market reach by onboarding new customers, making vertical investments, enhancing customer success programs, extending our partner relationships; and • deliver operational excellence through efficient cost management and execution.
Our brand messaging is intended to highlight Teradata’s role as a leader in AI, analytics, and cloud data and on our strength as a leading connected multi-cloud data platform for enterprise analytics. To support our growth objectives, we employ a broad range of modern marketing strategies, including programs designed to inform, educate and generate demand with customers and prospects.
Our brand messaging is intended to highlight Teradata’s role as a leader in data analytics, AI, and hybrid cloud technology, as well as our strength as a leading open and connected hybrid cloud analytics and data platform for trusted AI.
Our Subscription Options Teradata offers subscription offerings that are flexibly priced ranging from capacity-based to consumption-based pricing. These flexible pricing options are designed to enable our customers to reduce complexity, risk, and cost and expand their analytics and data capabilities to fit their data and budget needs.
These flexible pricing options are designed to enable our customers to reduce complexity, risk, and cost and expand their data analytics and AI/ML capabilities to fit their data and budget needs. Our Segments For the calendar year ended December 31, 2024, we had total revenues of $1.750 billion .
Ashton served as the Executive Vice President of Teradata Products from November 2019, when she joined the Company, until August 2020. Prior to joining Teradata, she served as Executive Vice President and General Manager Augmented Reality, at PTC Inc., a global computer software and services company, from July 2018 until November 2019.
Petley served as Teradata’s Executive Vice President, Global Sales, from April 2022, when he joined the Company, until April 2024. He served as General Manager, Western Europe, for Oracle Cloud, at Oracle Corporation, a global software and services company, from 2021 until April 2022. From 2018 until 2021, he was the Managing Director, Oracle UK. Prior to Oracle, Mr.
As a result, we are jointly offering private cloud solutions that are designed to give the flexibility of the cloud with the control and security of on-premises environment. Market Dynamics with AI Focus Our target market focuses on organizations that are large-scale users of data.
These announcements highlight our commitment to a fully open and connected approach that allows enterprises to employ modern data strategies to enable and execute trusted AI at scale. Market Dynamics with AI Focus Our target market focuses on organizations that are large-scale users of data.
Removed
Our Complete Analytics and Data Platform Teradata Vantage is our open and connected platform that is designed to allow organizations to leverage all their data across an enterprise, whether in public or private clouds, in a multi-cloud environment, or on-premises, and at the scale.
Added
With our hybrid cloud platform, named Teradata Vantage, underpinned by our extensive patented workload management optimization technology, we are well positioned to help enterprises deliver business breakthroughs and solve business problems with our capabilities to provide harmonized data, trusted AI, and faster innovation, at scale. As companies embrace AI, they need data at scale.
Removed
We believe that our ClearScape Analytics capabilities provide the analytics enterprises need to improve business performance and drive profitable growth. ClearScape Analytics is available across all of our Vantage deployment options. • Query Grid: Query Grid is our "data fabric" is a data integration and management layer included with our Teradata Vantage offering.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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The risks associated with the geographic scope of our business operations include, among other things the following: • Cultural, management, and staffing challenges associated with operating in countries around the world, including developing countries; • Realignment of our international strategy and organization structure; • The imposition of additional and/or different country laws, governmental controls and regulations; • The ever-changing macro-economic and geo-political (including local conflicts and wars) environments we operate in; • Longer payment cycles for sales in certain foreign countries and difficulties in enforcing contracts and collecting accounts receivable; • Fluctuations in the value of local currencies and foreign currency controls in various jurisdictions where we operate, including Argentina; • Tariffs or other restrictions on foreign trade or investment; • Foreign trade policy changes, trade regulations, and/or disputes may adversely affect sales of our solutions and services and may result in longer sales cycles; • The imposition of sanctions against a country, company, person or entity with whom we do business that would restrict or prohibit our business; and • Foreign government activities that favor domestic companies, including those that may require companies to procure goods and services from locally-based suppliers.
The risks associated with the geographic scope of our business operations include, among other things the following: • Cultural, management, and staffing challenges associated with operating in countries around the world, including developing countries; • Realignment of our international strategy and organization structure; • The imposition of additional and/or different country laws, governmental controls and regulations; • The ever-changing macro-economic and geo-political (including local conflicts and wars) environments we operate in; • Longer payment cycles for sales in certain foreign countries and difficulties in enforcing contracts and collecting accounts receivable; • Fluctuations in the value of local currencies and foreign currency controls in various jurisdictions where we operate, including Argentina; • Tariffs or other restrictions on foreign trade or investment; • Foreign trade policy changes, trade regulations, and/or disputes may adversely affect sales of our solutions and services and may result in longer sales cycles; • The imposition of sanctions against a country, company, person or entity with whom we do business that would restrict or prohibit our business; and • Foreign or domestic government activities that favor domestic companies, including those that may require companies to procure goods and services from locally-based suppliers.
The Company's indebtedness could: • Expose us to interest rate risk; • Increase our vulnerability to general adverse economic and industry conditions; • Limit our ability to obtain additional financing or refinancing at attractive rates; • Require the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, our indebtedness, thereby reducing the availability of such cash flow to fund our growth strategy, working capital, capital expenditures, share repurchases and other general corporate purposes; • Limit our flexibility in planning for, or reacting to, changes in our business and the industry; and • Place us at a competitive disadvantage relative to our competitors with less debt.
The Company's indebtedness could: • Expose us to interest rate risk; • Increase our vulnerability to general adverse economic and industry conditions; • Limit our ability to obtain additional financing or refinancing at attractive rates and terms; • Require the dedication of a substantial portion of our cash flow from operations to the payment of principal of, and interest on, our indebtedness, thereby reducing the availability of such cash flow to fund our growth strategy, working capital, capital expenditures, share repurchases and other general corporate purposes; • Limit our flexibility in planning for, or reacting to, changes in our business and the industry; and • Place us at a competitive disadvantage relative to our competitors with less debt.
RISKS RELATED TO OUR INDUSTRY Our cloud and service offerings are designed to offer AI/ML capabilities, which exposes us to an uncertain regulatory environment and rapidly changing technology where any inability to comply with any such regulations may result in reputational harm, liability and disruption to our business operations.
RISKS RELATED TO OUR INDUSTRY Our cloud and service offerings are designed to offer AI/ML capabilities, which exposes us to an emerging and uncertain regulatory environment and rapidly changing technology where any inability to comply with any such regulations may result in reputational harm, liability and disruption to our business operations.
From time to time, we may conduct internal investigations to ensure compliance with such laws and regulations, the costs or results of which could impact our financial results. In addition, we may be subject to unexpected costs in connection with new public disclosure or other regulatory requirements that are issued from time to time.
From time to time, we may conduct internal investigations to ensure compliance with such laws and regulations, the costs or results of which could impact our financial results. In addition, we may be subject to unexpected costs in connection with new public disclosure or other accounting or regulatory requirements that are issued from time to time.
If we failed to properly design our ERP system or are unable to successfully implement the new ERP system as planned, we may experience increased expenditure and the diversion of personnel resources which could adversely affect our internal control over financial reporting, business operations and financial condition.
If we failed to properly design our ERP system or are unable to successfully implement and use the new ERP system as planned, we may experience increased expenditure and the diversion of personnel resources which could adversely affect our internal control over financial reporting, business operations and financial condition.
In the normal course of business, we are subject to proceedings, lawsuits, claims and other matters, including those that could relate to the environment, health and safety, employee benefits, export compliance, intellectual property, a variety of local laws and regulations, and other regulatory compliance and general matters.
In the normal course of business, we are subject to proceedings, lawsuits, claims and other matters, including those that could relate to the environment, health and safety, employee benefits, export compliance, shareholder matters, intellectual property, a variety of local laws and regulations, and other regulatory compliance and general matters.
In general, as a participant in the data analytic solutions market, we face: • Changes in customer spending preferences and other shifts in market demands, which drive changes in the Company's competition; • Changes in pricing, marketing and product strategies, such as potential aggressive price discounting and the use of different pricing models by our competitors; • Rapid changes in product delivery models, such as on-premises solutions versus cloud solutions; • Rapid changes in computing technology and capabilities that challenge our ability to maintain differentiation; • New and emerging analytic technologies, including for AI/ML, competitors, and business models; • Continued emergence of open-source software that often rivals current technology offerings at a much lower cost despite its limited functionality; • Changing competitive requirements and deliverables in developing and emerging markets; and • Continuing trend toward consolidation of companies, which could adversely affect our ability to compete, including if our key partners merge or partner with our competitors.
In general, as a participant in the data analytics and AI solutions market, we face: • Changes in customer spending preferences and other shifts in market demands, which drive changes in the Company's competition; • Changes in pricing, marketing and product strategies, such as potential aggressive price discounting and the use of different pricing models by our competitors; • Rapid changes in product delivery models, such as on-premises solutions versus cloud or hybrid solutions; • Rapid changes in computing technology and capabilities that challenge our ability to maintain differentiation; • New and emerging analytic technologies, including for AI/ML workloads, competitors, and business models; • Continued emergence of open-source software that often rivals current technology offerings at a much lower cost, despite its limited functionality; • Changing competitive requirements and deliverables in developing and emerging markets; and • Continuing trend toward consolidation of companies, which could adversely affect our ability to compete, including if our key partners merge or partner with our competitors.
Further, because we do not control our third-party service providers, or the processing of data by our third-party service providers, we cannot ensure the integrity or security of measures they take to protect customer information and prevent data loss.
Further, because we do not control our third-party service providers, or the processing of data by our third-party service providers, we cannot fully ensure the integrity or security of measures they take to protect customer information and prevent data loss.
Bringing new offerings to the market entails a costly and, at times, lengthy process, may increase our risk of liability and cause us to incur significant technical, legal or other costs.
Bringing new offerings to the market entails a costly and, at times, lengthy process, that may increase our risk of liability and cause us to incur significant technical, legal, or other costs.
This requires a high-level anticipation of customer needs and technology trends, as well as innovation by both our software developers and the suppliers of the third-party software components included in our solutions.
This requires high-level anticipation of customer needs and technology trends, as well as innovation by both our software developers and the suppliers of the third-party software components included in our solutions.
Such events could pose physical risks to our facilities and data warehouses, result in power outages and shortages, and/or result in failures of global critical infrastructure, telecommunication and security systems, natural resource availability, such as energy and water sources, employees’ ability to work, availability of supply chain and logistics, and the additional costs to maintain or resume operations such as costs to repair damages to our facilities, equipment, infrastructure, and business relationships, each of which could negatively impact our business and operations.
Such events could pose physical risks to our facilities and data center, result in power outages and shortages, and/or result in failures of global critical infrastructure, telecommunication and security systems, natural resource availability, such as energy and water sources, employees’ ability to work, availability of supply chain and logistics, and the additional costs to maintain or resume operations such as costs to repair damages to our facilities, equipment, infrastructure, and business relationships, each of which could negatively impact our business and operations.
Tax rules may change in a manner that adversely affects our future reported results of operations or the way we conduct our business. Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting project that was undertaken by the Organization for Economic Co-operation and Development ("OECD").
Tax rules may change in a manner that adversely affects our future reported results of operations or the way we conduct our business. Further changes in the tax laws could arise as a result of the base erosion and profit shifting project that was undertaken by the Organization for Economic Co-operation and Development ("OECD").
We may not successfully execute on our vision or strategy because of challenges we may face, including with regard to product planning and timing, technical hurdles that we fail to overcome in a timely fashion, cloud service provider costs or other requirements, or a lack of appropriate resources.
We may not successfully execute our strategy because of challenges we may face, including with regard to product planning and timing, technical hurdles that we fail to overcome in a timely fashion, cloud service provider costs or other requirements, or a lack of appropriate resources.
Consequently, such controls may not prevent or detect misstatements in our reported financial results as required under the Securities and Exchange Commission ("SEC") and the New York Stock Exchange ("NYSE") rules, which could increase our operating costs or impair our ability to operate our business.
Consequently, such controls may not prevent or detect misstatements in our reported financial results as required under the SEC and the New York Stock Exchange ("NYSE") rules, which could increase our operating costs or impair our ability to operate our business.
The costs of compliance with, and other burdens imposed by, privacy laws, regulations and standards may limit the use and adoption of our solutions and services, reduce overall demand for our solutions and services, make it more difficult to meet expectations from or commitments to customers, lead to significant fines, penalties or liabilities for noncompliance, or slow the pace at which we close sales transactions, any of which could harm our business.
The costs of compliance with, and other burdens imposed by, privacy laws, regulations and standards may limit the use and adoption of our solutions and services, reduce overall demand for our solutions and services, make it more 24 Table of Contents difficult to meet expectations from or commitments to customers, lead to significant fines, penalties or liabilities for noncompliance, or slow the pace at which we close sales transactions, any of which could harm our business.
These types of activities will recur and persist, one or more of them may be successful in the future, and one or more of them may have been or will be successful but not detected, prevented, remediated or mitigated by us, and the costs to us to eliminate, detect, prevent, remediate, mitigate or alleviate cyber security or security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could adversely impact our future results of operations.
These types of activities will recur and persist, one or more of them may be successful in the future, and one or more of them may have been or will be successful but not detected, prevented, remediated or 17 Table of Contents mitigated by us, and the costs to us to eliminate, detect, prevent, remediate, mitigate or alleviate cyber security or security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could adversely impact our future results of operations.
In particular, when we develop offerings with more advanced technology, the production of such offerings involve increased difficulty and complexity and as a result may increase the likelihood of reliability, quality, operability, and/or security issues with such offerings.
In particular, when we develop offerings with more advanced technology, the production of such offerings involves increased difficulty and complexity and as a result may increase the likelihood of reliability, quality, operability, and/or security issues with such offerings.
When such attacks occur, we could incur significant liability to our customers whose information was compromised, and our product platform may be perceived as less desirable, which could negatively affect our business and damage our reputation.
When cyber-attacks occur, we could incur significant liability to our customers whose information was compromised, and our product platform may be perceived as less desirable, which could negatively affect our business and damage our reputation.
In addition, we operate in certain jurisdictions that utilize foreign currency controls that may temporarily restrict access to foreign currency which results in excess cash in the jurisdiction that cannot be remitted outside of the country and is, therefore, subject to foreign currency exchange rate risk. For example, the Company has operations in Argentina.
In addition, we operate in certain jurisdictions that utilize foreign currency controls that may temporarily restrict access to foreign currency which results in excess cash in the jurisdiction that cannot be remitted outside of the country and is, therefore, subject to foreign currency exchange rate risk. For example, the Company has operations 27 Table of Contents in Argentina.
The pace and extent to which customers will continue to purchase, consume and renew our offerings on a subscription basis is variable and, therefore, has impacts on our results and operations. In addition, we have flexible pricing options for our cloud customers, including consumption-unit based, "pay as you go" pricing.
The pace and extent to which customers will continue to purchase, consume and renew our offerings on a subscription basis is variable and, therefore, has impacts on our results and operations. We also have flexible pricing options for our cloud customers, including consumption-unit based, "pay as you go" pricing.
In addition, there are geographies in which we operate that utilize alternative, local cloud-platform service providers where AWS, Google Cloud, and Microsoft Azure are inaccessible or not available. The cloud service providers maintain relationships 18 Table of Contents with certain of our competitors, and our competitors may in the future establish relationships with additional competing cloud data platform providers.
In addition, there are geographies in which we operate that utilize alternative, local cloud-platform service providers where AWS, Google Cloud, and Microsoft Azure are inaccessible or not available. The cloud service providers maintain relationships with certain of our competitors, and our competitors may in the future establish relationships with additional competing cloud data platform providers.
We believe that recognition and the reputation of our brand is key to our success, including our ability to retain existing customers and attract new customers. While we leverage our decades of experience in data analytics and database management services, we believe we have evolved to provide the modern offerings customers need.
We believe that recognition and the reputation of our brand is key to our success, including our ability to retain existing customers as well as attract new customers and partners. While we leverage our decades of experience in data analytics and database management services, we believe we have evolved to provide the modern offerings customers need.
Competition for highly skilled personnel and acquired talent in the IT industry is intense. We have experienced, and may continue to experience, voluntary workforce attrition, including the loss of senior management and key personnel, in part due to the highly-competitive job market in our industry.
Competition for highly skilled personnel and acquired talent in the current environment, specifically the IT industry is intense. We have experienced, and may continue to experience, voluntary workforce attrition, including the loss of senior management and key personnel, in part due to the highly competitive job market in our industry.
Delays in sales have caused, and could in the future cause, significant variability in our results for any particular period and have impacted, and could in the future impact, any financial guidance and forecasts that we may provide. We may experience variability in our operating results based on the purchasing behavior of our customers.
Delays in sales have caused, and could in the future cause, significant variability in our results for any particular period and have impacted, and could in the future impact, our ability to achieve any financial guidance and forecasts that we may provide. We may experience variability in our operating results based on the purchasing behavior of our customers.
Furthermore, we are required to attract and retain talent with expertise in cloud-based technologies, particularly with respect to our engineering and development teams. No assurance can be made that key personnel will remain with us, and it may be difficult and costly to replace such employees and/or obtain qualified talent who are not employees.
Furthermore, we are required to attract and retain talent with expertise in cloud-based technologies and AI/ML capabilities, particularly with respect to our engineering, development and services teams. No assurance can be made that key personnel will remain with us, and it may be difficult and costly to replace such employees and/or obtain qualified talent who are not employees.
In addition to government activity, privacy advocacy and other industry groups establish new self-regulatory standards that may place additional burdens on our ability to provide our solutions and services globally. Our customers expect us to meet voluntary certification and other standards established by third parties, such as related International Organization for Standardization ("ISO") standards.
In addition to government activity, privacy advocacy and other industry groups establish new self-regulatory standards that may place additional burdens on our ability to provide our solutions and services globally. Our customers expect us to meet voluntary certification and other standards established by third parties, such as related ISO standards.
Accordingly, adverse global economic, inflationary, recessionary, and market conditions, including in certain economic sectors in which many of our customers operate (such as retail, manufacturing, financial services or government), may adversely impact our business.
Accordingly, adverse global economic, inflationary, recessionary, and market conditions, including in 21 Table of Contents certain economic sectors in which many of our customers operate (such as retail, manufacturing, financial services or government), may adversely impact our business.
There is active enforcement and ongoing focus by the SEC and other governmental authorities on the United States Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar anti-bribery, anti-corruption laws in other countries.
There is active enforcement and ongoing focus by the Securities and Exchange Commission (the "SEC") and other governmental authorities on the United States Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010 and similar anti-bribery, anti-corruption laws in other countries.
In addition, we are subject to diverse and complex laws and regulations, including those relating to technology, including AI/ML, corporate governance, data privacy, public disclosure, and reporting, which are rapidly changing and subject to possible changes in the future.
In addition, we are subject to diverse and complex laws and regulations, including those relating to technology, including AI/ML, corporate governance, ESG reporting, environmental protection, data privacy, public disclosure, and reporting, which are rapidly changing and subject to possible changes in the future.
Controls may also become inadequate due to changes in circumstances, and it is necessary to replace, upgrade or modify our internal information systems from time to time. In addition, unforeseen risks may arise in connection with financial reporting systems due to inefficient business processes, business process reengineering projects, or changes in accounting standards.
Controls may also become inadequate due to changes in circumstances, and it is necessary to replace, upgrade or modify our internal information systems from time to time. In addition, unforeseen risks may arise in connection with financial reporting systems, including with our new ERP system, due to inefficient business processes, business process reengineering projects, or changes in accounting standards.
Any of these events, among others, could materially and adversely affect our financial condition and operating results. Our offerings are subject to United States export controls and, when exported from the United States, or re-exported to another country, must be authorized under applicable United States export regulations.
Any of these events, among others, could materially and adversely affect our financial condition and operating results. Our offerings are subject to United States export controls and, when exported from the United States, or re-exported to another country, must be authorized under applicable United States export regulations. Our offerings may also be subject to local country import controls.
A number of factors may adversely impact our future effective tax rates, such as: • The jurisdictions in which our profits are determined to be earned and taxed; 25 Table of Contents • The resolution of issues arising from tax audits with various tax authorities; • Changes in the valuation of our deferred tax assets and liabilities; • Adjustments to estimated taxes upon finalization of various tax returns; and • Changes in available tax credits, especially surrounding tax credits in the United States for our research and development activities and foreign tax credits.
A number of factors may adversely impact our future effective tax rates, such as: • The jurisdictions in which our profits are determined to be earned and taxed; • Changes in corporate tax rates in the jurisdictions in which we operate; • The resolution of issues arising from tax audits with various tax authorities; • Changes in the valuation of our deferred tax assets and liabilities; • Adjustments to estimated taxes upon finalization of various tax returns; and • Changes in available tax credits, especially surrounding tax credits in the United States for our research and development activities and foreign tax credits.
To meet expectations from our stakeholders, we are working to align our reporting with emerging ESG disclosure frameworks, new regulations, including those passed in the European Union and the state of California, and potential new disclosure requirements, while we also seek to report timely on progress toward our ESG objectives.
We are working to align our reporting with emerging ESG disclosure frameworks, new regulations, including those passed in the European Union and the state of California, and potential new disclosure requirements, while we also seek to report timely on progress toward our ESG objectives.
In addition, damage to the reputation of our brands could result in, among other things, customer cancellations or non-renewals, lower employee retention and productivity, vendor relationship issues, and investor and other stakeholder scrutiny, all of which could materially affect our revenue and profitability.
In addition, damage to the reputation of our brand could result in, among other things, customer cancellations or non-renewals, lower employee retention and productivity, vendor relationship issues, and investor and other stakeholder scrutiny, any of which could materially affect our revenue and profitability.
Historically, we have mitigated certain cost increases, in part, by increasing prices on 19 Table of Contents some of our products and collaborating with suppliers, in particular Flex, reviewing alternative sourcing options, and engaging in internal cost reduction efforts, all as appropriate. However, we may not be able to fully offset increased costs.
Historically, we have mitigated certain cost increases, in part, by increasing prices on some of our products and collaborating with suppliers, reviewing alternative sourcing options, and engaging in internal cost reduction efforts, all as appropriate. However, we may not be able to fully offset increased costs.
Current and evolving privacy laws and regulations regarding cloud computing, cross-border data transfer restrictions and other aspects of data privacy may impact the use and adoption of our solutions and services and adversely affect our business .
Current and evolving privacy laws and regulations, cross-border data transfer restrictions and other aspects of data privacy may impact the use and adoption of our solutions and services and adversely affect our business .
We operate in the intensely competitive IT industry, which is characterized by rapidly changing technology, evolving industry standards and models for consuming and delivering business and IT services, frequent new product introductions, and frequent price and cost reductions.
We operate in the intensely competitive IT industry, which is characterized by rapidly changing technology, evolving industry standards and models for consuming and delivering business and IT services, frequent new 23 Table of Contents product introductions, and frequent price and cost reductions.
We have established ESG goals, and we expect to continue to establish additional ESG goals in which our ESG goals and/or our ESG program performance may be reviewed by third-party providers such as raters and rankers who may unfavorably evaluate our ESG initiatives.
We have established ESG goals, and we expect to continue to establish additional ESG goals in which our ESG goals and/or our ESG program performance may be reviewed by third-party providers such as rating agencies who may unfavorably evaluate our ESG initiatives.
If we were unable to purchase necessary services, parts, components or offerings from a particular vendor and had to find an alternative supplier, our shipments and deliveries could be delayed.
If we were unable to purchase necessary services, parts, components or 19 Table of Contents offerings from a particular vendor and had to find an alternative supplier, our shipments and deliveries could be delayed.
Incidences of cyberattacks and other cybersecurity breaches and incidents have 16 Table of Contents increased and are likely to continue to increase. The occurrence of one or more of these events could result in data loss, system outages, and other interruptions in our operations, which could have a material adverse effect on our business, financial condition or results of operations.
Incidences of cyber-attacks and other cybersecurity breaches and incidents have increased and are likely to continue to increase. The occurrence of one or more of these events could result in data loss, system outages, and other interruptions in our operations, which could have a material adverse effect on our business, financial condition or results of operations.
Our success in periods of economic uncertainty may also be dependent, in part, on our ability to reduce costs in response to changes in demand, inflation or other activity. Generating substantial revenues from our international operations poses several risks. In 2023, the percentage of our total revenues from outside of the United States was 47% .
Our success in periods of economic uncertainty may also be dependent, in part, on our ability to reduce costs in response to changes in demand, inflation or other activity. Generating substantial revenues from our international operations pose several risks. In 2024, the percentage of our total revenues from outside of the United States was 49%.
The AI/ML regulatory environment is rapidly evolving, and it is difficult to predict the impact the evolving regulatory landscape may have on our business, results of operations and financial condition. Teradata VantageCloud Enterprise, Teradata VantageCloud Lake, and ClearScape Analytics are designed to deliver harmonized data, AI/ML, and faster innovation to facilitate better decision-making.
The AI/ML regulatory environment is rapidly evolving, and it is difficult to predict the impact the evolving regulatory landscape may have on our business, results of operations and financial condition. Teradata’s platforms and ClearScape Analytics are designed to deliver harmonized data, AI/ML, and faster innovation to facilitate better decision-making.
In addition, our account team has had difficulty in the past obtaining and assessing information as to whether a transaction is proceeding as planned or if a longer sales cycle will be required, and such difficulty may continue in the future.
In addition, our account teams have had difficulty in the past obtaining and assessing information as to whether a transaction is proceeding as planned or whether a longer sales cycle will be required, and such difficulty may continue in the future.
Changes in our offerings or changes in export regulations may create delays in the introduction of our offerings in international markets, prevent our customers with international operations from deploying our offerings throughout their global systems or, in some cases, prevent the export of our offerings to certain countries or customers altogether.
Changes in our offerings or changes in export or import regulations, including the implementation of adverse tariffs, may create delays in the introduction of our offerings in international markets, prevent our customers with international operations from deploying our offerings throughout their global systems or, in some cases, prevent the export or import of our offerings to certain countries or customers altogether.
Prior to our transition to a subscription-based business, our customers generally purchased or leased on-premises hardware systems used in connection with our software solutions, which our customers deployed and operated. With respect to these types of customer on-premises solutions, the customer, directly or through its selected services providers, has full control over its data security.
Prior to our transition to offering cloud- and hybrid-based platforms, our customers generally purchased or leased on-premises hardware systems used in connection with our software solutions, which our customers deployed and operated. With respect to these types of customer on-premises solutions, the customer, directly or through its selected services providers, has full control over its data security.
Teradata’s platform offerings have been expanded to include a variety of subscription options, which impact the timing of when revenues are recognized and related cash flows are collected. The IT industry generally has been experiencing increasing pricing pressure from customers when purchasing or renewing support agreements. In addition, we are in a transformation to a cloud-first company.
Teradata’s platform offerings have been expanded to include a variety of subscription options, which impact the timing of when revenues are recognized and related cash flows are collected. The IT industry generally has been experiencing increasing pricing pressure from customers when purchasing or renewing support agreements.
Similarly, our suppliers’ offerings and services have certain dependencies with respect to their own supply chain networks, and supply and/or inflation issues among our suppliers may also adversely impact our business. Demand for the offerings and services we sell could decline if we fail to maintain positive brand perception and recognition. In 2023, Teradata introduced a new brand identity.
Similarly, our suppliers’ offerings and services have certain dependencies with respect to their own supply chain networks, and supply and/or inflation issues among our suppliers may also adversely impact our business. Demand for the offerings and services we sell could decline if we fail to maintain positive brand perception and recognition.
Any change in export regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, or change in the countries, persons or technologies targeted by these regulations could result in decreased use of our offerings by, or in our decreased ability to export or sell our offerings to, existing or potential customers with 21 Table of Contents international operations.
Any change in export or import regulations or related legislation, shift in approach to the enforcement or scope of existing regulations, change in tariff policy, or change in the countries, persons or technologies targeted by these regulations could result in decreased use of our offerings by, or in our decreased ability to export, import or sell our offerings to, existing or potential customers with international operations.
During October of 2023, the Company began entering into Blue Chip Swap transactions (a foreign exchange mechanism which effectively results in a parallel U.S. dollar exchange rate) in order to remit cash from its Argentine operations and such action resulted in a pre-tax loss on investment of $13 million during the fourth quarter of 2023.
Commencing in October 2023 and continuing throughout 2024, the Company began entering into Blue Chip Swap transactions (a foreign exchange mechanism which effectively results in a parallel U.S. dollar exchange rate) in order to remit cash from its Argentine operations and such action resulted in a pre-tax loss on investment of $4 million and $13 million during 2024 and during 2023, respectively.
While the ERP system is intended to further improve and enhance our information management systems, the ongoing implementation of this new ERP system exposes us to integration complexities and challenges with our existing systems and processes, including the possible disruption of our financial reporting.
While the ERP system is intended to improve and enhance our information management systems, the ongoing implementation and initial use of this new ERP system exposes us to integration complexities and challenges with 20 Table of Contents our existing systems and processes, including the possible disruption of our financial reporting.
Even the perception of inadequate security, including as a result of delays or failure to obtain necessary security certifications, may damage our reputation and negatively impact our ability to win new customers and retain existing customers, consequently adversely impacting our financial performance and condition.
Even the perception of inadequate security, including delays or failure to obtain necessary security certifications such as FedRAMP, may damage our reputation and negatively 18 Table of Contents impact our ability to win new customers and retain existing customers, consequently adversely impacting our financial performance and condition.
Under such a pricing model, we generally recognize revenue based on consumption. To the extent that customers opt for such a flexible pricing model, we may not be able to accurately forecast the timing of customer consumption of our offerings. As a result, our actual results may differ from our projections.
Under such a pricing model, we generally recognize revenue based on consumption. To the extent that customers opt for such a flexible pricing model, we may not be able to accurately forecast the timing of customer consumption of our offerings.
The failure for the market to recognize our new brand or misperceptions in the market regarding our cloud, AI, or other capabilities could negatively impact our ability to upgrade existing on-premises customers to our cloud-based solutions or from VantageCloud Enterprise to VantageCloud Lake, drive expansion/consumption growth, and/or acquire new customers for our on-premises and cloud businesses.
The failure for the market to recognize our brand attributes or for there to be misperceptions in the market regarding our cloud, hybrid, AI, or other capabilities could negatively impact our ability to upgrade existing on-premises customers to our hybrid cloud-based solutions, drive expansion/consumption growth, and/or acquire new customers for our on-premises and hybrid cloud businesses.
Our go-to-market, cloud, and multi-cloud strategies also must adjust to customers' changing buying preferences, and there can be no assurance that our go-to-market approach will adequately and completely address such preferences.
Our go-to-market strategies, including for AI/ML, cloud, and hybrid also must adjust to customers’ changing buying preferences, and there can be no assurance that our go-to-market approach will adequately and completely address such preferences.
As part of our cloud-first strategy, the growth of our business is dependent primarily on our relationships with public cloud service providers, Amazon Web Services ("AWS"), Google Cloud, and Microsoft Azure. Our strategic partnerships with these cloud service providers for our cloud offerings on their platforms require significant investments to ensure that our solutions are optimized in these cloud environments.
As part of our strategy, our relationships with public cloud service providers, Amazon Web Services ("AWS"), Google Cloud, and Microsoft Azure, can impact our business. Our strategic relationships with these cloud service providers for our cloud offerings on their platforms require significant investments to ensure that our solutions are optimized in these cloud environments.
In particular, the OECD has issued its guidance on the Global Anti-Base Erosion rules, with the purpose of ensuring multinational companies pay a 15% global minimum tax on the income generated in each of the jurisdictions where they operate in, referred to as "Pillar Two." Many jurisdictions, including several European Union members and G20 countries, have now committed to an effective enactment date for Pillar Two starting January 1, 2024.
In particular, the OECD has issued its guidance on the Global Anti-Base Erosion rules, with the purpose of ensuring multinational companies pay a 15% global minimum tax on the income generated in each of the jurisdictions where they operate in, referred to as "Pillar Two." 26 Table of Contents Many jurisdictions, including several European Union members and G20 countries, have enacted Pillar Two as of January 1, 2024.
Given the breadth and scope of our international operations, we may not in all cases be able to detect improper or unlawful conduct by our partners, distributors, resellers, customers, and employees, despite our high ethics, governance and compliance standards, which could put the Company at risk regarding possible violations of such laws and could result in various civil or criminal fines, penalties or administrative sanctions, and related costs, which could negatively impact the Company's business, brand, results of operations or financial condition.
Given the breadth and scope of our international operations, we may not in all cases be able to detect improper or unlawful conduct by our partners, distributors, resellers, customers, and employees, despite our high ethics, governance and compliance standards, which could put the Company at risk regarding possible violations of such laws and could result in various civil or criminal fines, penalties or administrative sanctions, and related costs, which could negatively impact the Company's business, brand, results of operations or financial condition. 22 Table of Contents Inadequate internal control over financial reporting and accounting practices could lead to errors, which could adversely impact our ability to assure timely and accurate financial reporting.
Furthermore, as we migrate our customers from on-premises environments to the cloud, upgrade customers from VantageCloud Enterprise to VantageCloud Lake, and expand our customer's workloads we may incur unexpected costs or delays.
Furthermore, as we migrate our customers from on-premises environments to the cloud, upgrade customers’ VantageCloud environments, and expand our customers’ workloads in cloud, hybrid, and on-premises deployments, we may incur unexpected costs or delays.
Because we do 24 Table of Contents business in the government sector, we are generally subject to audits and investigations which could result in various civil or criminal fines, penalties or administrative sanctions, including debarment from future government business, which could negatively impact the Company’s results of operations or financial condition.
Because we do business in the government sector, we are generally subject to audits and investigations which could result in various civil or criminal fines, penalties or administrative sanctions, including debarment from future government business, which could negatively impact the Company’s results of operations or financial condition. 25 Table of Contents Gaps in protection of Teradata’s intellectual property or unlicensed use of third-party intellectual property could impact our business and financial condition.
With this brand we strive to be modern, innovative, and reflective of our vision for the future. Our updated brand is designed to highlight Teradata’s role as a leader in AI, analytics, and cloud data.
In 2023, Teradata introduced a new brand identity, including our messaging around trusted data and trusted AI. With this brand we strive to be modern, innovative, and reflective of our vision for the future. Our updated brand is designed to highlight Teradata’s role as a leader in AI and hybrid cloud data and analytics.
If we are unable to successfully execute on our cloud-first strategy and/or continue to respond to market demands, develop leading technologies, timely deliver offerings to the market, timely scale our cloud business to achieve gross margins comparable or better than our on-premises business, continue successful migrations for our customers, and maintain our leadership in analytic data solutions performance and scalability, our competitive position, business, brand and reputation, financial condition, guidance, and forecasts, results of operations, and cash flows may be adversely affected.
If we are unable to: successfully execute on our strategy and/or continue to respond to market demands; develop leading technologies; timely deliver offerings to the market; timely scale of our cloud business to achieve gross margins comparable or better than our on-premises business; continue successful migrations, expansions, and upgrades for our customers; maintain our industry leading hybrid-environment capabilities; and maintain our leadership in analytic data solutions’ performance and scalability; then our competitive position, business, brand and reputation, talent acquisition, financial condition, guidance, and forecasts, results of operations, future Total Annual Recurring Revenue ("ARR") growth potential, and cash flows may be adversely affected.
These inherent limitations include system errors, the potential for human error and unauthorized actions of employees or contractors, inadequacy of controls, temporary lapses in controls due to shortfalls in transition planning and oversight of resources, and other factors.
These inherent limitations include system errors, the potential for human error and unauthorized actions of employees or contractors, inadequacy of controls, temporary lapses in controls due to shortfalls in transition planning and oversight of resources, internal control failures as a result of the implementation and use of our new ERP system, and other factors.
A core component of our business strategy is to expand and enhance our product offerings, particularly for analytic solutions in a cloud-based environment with cloud service providers, to include newer market-relevant features, functionality, and cloud native options, including AI/ML, and to keep pace with price-to-performance gains.
A core component of our business strategy is to expand and enhance our product offerings, particularly for analytic solutions in cloud and hybrid environments, to include newer market-relevant features, functionality, and cloud-native options, including AI/ML, and to keep pace with price-to-performance gains. In this regard, please see Item 1. Business, for a description of our product offerings and innovations.
In such case, the trading price of our common stock could decline. 14 Table of Contents RISKS RELATED TO OUR BUSINESS AND OPERATIONS Our failure to successfully execute our cloud-first strategy and achieve the anticipated benefits of our business transformation, which includes successfully developing, launching, and scaling cloud-based products and product enhancements and/or enabling our data platform to operate effectively in cloud environments, including those of our cloud service provider partners, could have a material adverse effect on our competitive position, business, brand and reputation, financial condition, results of operations and cash flows.
RISKS RELATED TO OUR BUSINESS AND OPERATIONS Our failure to successfully execute our strategy and achieve the anticipated benefits of our business transformation, which includes successfully developing, launching, and scaling cloud- and on-premises-based products and product enhancements and/or enabling our data platform to operate effectively in various environments, including cloud, hybrid, and on-premises, or those of our cloud service provider partners, and/or for various uses, including artificial intelligence ("AI") and machine learning ("ML"), could have a material adverse effect on our business, brand and reputation, competitive position, financial condition, results of operations, and cash flows.
For example, existing and developing laws regarding how companies transfer personal data from the European Economic Area to the United States and other third-world countries can be unpredictable and could result in further limitations on the ability to transfer data 23 Table of Contents across borders, particularly if governments are unable or unwilling to create new, or maintain existing, mechanisms that support cross-border data transfers.
For example, existing and developing laws regarding how companies transfer personal data across borders can be unpredictable and subject to legal challenge and could result in further limitations on the ability to transfer data across borders, particularly if governments are unable or unwilling to create new, or maintain existing, mechanisms that support cross-border data transfers.
Our business and results of operations are affected by international, national and regional economic conditions. In particular, the IT industry in which we operate is susceptible to significant changes in the strength of the economy and the financial health of companies and governmental entities that make spending commitments for new technologies.
In particular, the IT industry in which we operate is susceptible to significant changes in the strength of the economy and the financial health of companies and governmental entities that make spending commitments for new technologies.
We are executing a multi-year initiative to transform and modernize our ERP system. The ERP system is designed to accurately maintain the Company’s financial records, enhance operational functionality, and provide timely information to the Company’s management team related to the operation of the business.
The ERP system is designed to accurately maintain the Company’s financial records, enhance operational functionality, and provide timely information to the Company’s management team related to the operation of the business.
If we fail, or are perceived to fail, to meet our stakeholders’ and/or raters’ expectations, including the achievement of the ESG goals that we establish, we could be exposed to increased risk of litigation, difficulty in attracting and retaining employees, negative investor sentiment, and an adverse impact on our reputation.
If we fail, or are perceived to fail, to meet our stakeholders’ and/or raters’ expectations or regulatory requirements, we could be exposed to increased costs associated with compliance or operational changes, risk of litigation, difficulty in attracting and retaining employees, negative investor sentiment, and an adverse impact on our reputation.
From time to time, errors or security flaws are identified in our offerings, which in certain cases are discovered after the offerings are introduced and delivered to customers. This risk is enhanced when offerings are first introduced or when new versions are released.
From time to time, errors or security flaws are identified in our offerings, which in certain cases can be discovered after the offerings are introduced and delivered to customers.
We operate in approximately 40 countries and are exposed to various foreign currencies in the Americas region (North America and Latin America), EMEA region (Europe, Middle East, and Africa) and APJ region (Asia Pacific and Japan). Accordingly, we face foreign currency exchange rate risk arising from transactions in the normal course of business.
We operate in approximately 40 countries and are exposed to various foreign currencies. Accordingly, we face foreign currency exchange rate risk arising from transactions in the normal course of business.
These include the cloud-native architecture of Teradata VantageCloud Lake, the end-to-end pipeline of AI/ML capabilities in ClearScape Analytics, and our AI and ML engine in the cloud that delivers a completely self-service and serverless experience of Teradata AI Unlimited.
These include the cloud-native architecture of Teradata VantageCloud Lake, the end-to-end pipeline of AI/ML capabilities in ClearScape Analytics, our on-demand AI/ML engine in the cloud that delivers a completely self-service experience with Teradata AI Unlimited, and our commitment to providing a platform compatible with OTFs to provide an open and connected ecosystem offering to our customers.
In addition, we are focused on expanding our customer's workloads in both our on-premises and cloud platforms. Shortened product life cycles due to customer demands and competitive pressures impact the pace at which we must introduce and implement new technology as part of our product offerings.
We expect that we will continue to enhance our cloud, hybrid, on-premises, and AI/ML offerings in the future. Shortened product life cycles due to customer demands and competitive pressures impact the pace at which we must develop, introduce, and implement new technology as part of our product offerings.
Furthermore, our on-premises subscription arrangements may provide the customers with the right to cancel our agreement upon certain notice periods, which we may change in the future. Such arrangements may impact the timing of revenue recognition for these customers and result in fluctuations in our quarterly operating results.
Furthermore, our on-premises subscription arrangements may provide the customers with the right to cancel our agreement upon certain notice periods, which we may change in the future.
Inadequate internal control over financial reporting and accounting practices could lead to errors, which could adversely impact our ability to assure timely and accurate financial reporting. Internal control over financial reporting, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control objectives will be met.
Internal control over financial reporting, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control objectives will be met.
Increased scrutiny from governments, investors, raters, customers, and others regarding our environmental, social, and governance ("ESG") practices and our inability to achieve any ESG goals we establish could impose additional costs, expose us to new risks, or negatively impact our reputation.
Increased scrutiny from governments, investors, rating agencies, customers, and other stakeholders regarding our environmental, social, and governance ("ESG") practices, commitments, and performance and our inability to achieve any ESG goals we establish could impose additional costs, expose us to new risks, or negatively impact our reputation. The ESG landscape is constantly changing, with regulatory requirements and stakeholder expectations continuously evolving.
We are monitoring developments and evaluating the impacts these new rules will have on our tax rate, including eligibility to qualify for these safe harbor rules.
Pillar Two did not have a material impact to our effective tax rate in 2024. We are continuing to monitor developments and evaluating the impacts these new rules will have on our future tax rate, including eligibility to qualify for the safe harbor rules.
As we develop new offerings with enhanced capacity, delivery and performance capabilities, the increased difficulty and complexity associated with producing these offerings may increase the likelihood of reliability, quality, operability, and/or security issues.
Such arrangements may impact the timing of revenue recognition for these customers and result in fluctuations in our quarterly operating results. 16 Table of Contents As we develop new offerings with enhanced capacity, delivery and performance capabilities, the increased difficulty and complexity associated with producing these offerings may increase the likelihood of reliability, quality, operability, and/or security issues.
Our ongoing transition from traditional on-premises hardware systems to cloud-based SaaS offerings has altered our information security risk landscape. Cloud-based SaaS offerings generally require us to deploy or operate solutions for our customers, directly or through the use of third-party services providers, either on-premises at customer-selected data center facilities, or at third-party-hosted data 17 Table of Contents center facilities.
Our cloud- and hybrid-based platforms generally require us to deploy or operate solutions for our customers, directly or through the use of third-party services providers, either on-premises at customer-selected data center facilities, or at third-party-hosted data center facilities.
AI/ML technologies are rapidly 22 Table of Contents changing, and with the evolving regulatory environment, we may be subject to increased regulatory requirements, as well as other risks such as data privacy concerns, intellectual property disputes, and exposure to litigation.
AI/ML technologies are rapidly changing, and with the evolving regulatory environment, we may be subject to increased regulatory requirements, as well as other risks such as data privacy concerns, intellectual property disputes, and exposure to litigation. The IT industry is intensely competitive and evolving, and competitive pressures could adversely affect our pricing practices or demand for our offerings and services.
As a result, more responsibility for data security has been transferred to us and our third-party service providers.
As a result, more responsibility for data security has been transferred to us and our third-party service providers due to the data security responsibilities allocated among us, our customers, and third-party providers that are inherent in cloud- and hybrid-based platforms.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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We continuously assess risks and changes in the cybersecurity environment and adjust our processes and cybersecurity investments as appropriate. • Our information security processes are built upon a foundation of advanced security technology, a trained team of security experts, and operations based on various global practices, standards, and frameworks, 27 Table of Contents including the International Organization for Standardization, International Electrotechnical Commission, and National Institute of Standards and Technology Cybersecurity Framework. • We maintain policies, procedures, and controls that are designed to identify, protect, detect, respond to, and recover from information security and cybersecurity threats and incidents.
We continuously assess risks and changes in the cybersecurity environment and adjust our processes and cybersecurity investments as appropriate. • Our information security processes are built upon a foundation of advanced security technology, a trained team of security experts, and operations based on various global practices, standards, and frameworks, including the International Organization for Standardization, International Electrotechnical Commission, and National Institute of Standards and Technology Cybersecurity Framework. • We maintain policies, procedures, and controls that are designed to identify, protect, detect, respond to, and recover from information security and cybersecurity threats and incidents.
Additionally, they possess various other certifications in specific technologies and cloud security from providers like AWS and Microsoft, along with numerous other industry-relevant security certifications. This diverse expertise underscores their comprehensive understanding of the cybersecurity landscape. ◦ The cybersecurity team attends training programs to update their skills and knowledge.
Additionally, they possess various other certifications in specific technologies and cloud security from providers like AWS and Microsoft, along with numerous other industry-relevant security certifications. This diverse expertise underscores their comprehensive understanding of the cybersecurity landscape. ◦ The cybersecurity team attends training programs to update their skills and knowledge. 30 Table of Contents
Our CISO has a Bachelor of Science in Information Technology and an MBA. 29 Table of Contents ◦ The team within the Information Security function (referred hereinto as the "cybersecurity team") possesses a robust blend of technical knowledge, practical skills, and strategic insight, gained through years of experience in the field of cybersecurity.
Our CISO has a Bachelor of Science in Information Technology and an MBA. ◦ The team within the Information Security function (referred hereinto as the "cybersecurity team") possesses a robust blend of technical knowledge, practical skills, and strategic insight, gained through years of experience in the field of cybersecurity.
Our CISO, Chief Legal Officer, and Chief Financial Officer comprise our Core Cybersecurity Management Team (the "CCMT") . The CCMT has oversight of Teradata’s CIRP and is informed and consulted on the response and resolution process for cybersecurity incidents .
Our CISO, Chief Legal Officer, and Chief Financial Officer comprise our Core Cybersecurity Management Team (the "CCMT") . The CCMT has oversight of 29 Table of Contents Teradata’s CIRP and is informed and consulted on the response and resolution process for cybersecurity incidents .
We require our providers to meet appropriate security requirements, controls, and responsibilities and comply with certain cybersecurity and data security standards that we have. We monitor compliance with these standards and investigate security incidents to take appropriate actions as necessary.
We require our providers to meet appropriate security requirements, controls, and responsibilities and comply with certain cybersecurity and data security standards that we 28 Table of Contents have. We monitor compliance with these standards and investigate security incidents to take appropriate actions as necessary.
Their qualifications include, but are not limited to, Certified Information Systems Security Professional ("CISSP") for general security practices, Certified Ethical Hacker ("CEH") for penetration testing capabilities, Certified Information Systems Auditor ("CISA") for information systems auditing, Certified Information Security Manager ("CISM") for overseeing enterprise security, Certified Risk and Information Systems Control ("CRISC") for risk management, and Certified Cloud Security Professional ("CCSP") for cloud security expertise.
Their qualifications include, but are not limited to, Certified Information Systems Security Professional for general security practices, Certified Ethical Hacker for penetration testing capabilities, Certified Information Systems Auditor for information systems auditing, Certified Information Security Manager for overseeing enterprise security, Certified Risk and Information Systems Control for risk management, and Certified Cloud Security Professional for cloud security expertise.
While the full Board has overall 28 Table of Contents responsibility for risk oversight, the Board has delegated oversight responsibility related to risks from cybersecurity threats to the Audit Committee.
While the full Board has overall responsibility for risk oversight, the Board has delegated oversight responsibility related to risks from cybersecurity threats to the Audit Committee.
He has experience with many different types of enterprises, including the federal government, private companies, and publicly listed companies.
He has experience with many different types of enterprises, including the federal government, private companies, and publicly listed companies. Our CISO was also a founding member of the U.S. Department of Homeland Security and is a veteran who served in the United States Marine Corps.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. PROPERTIES As of December 31, 2023, Teradata operated 44 facilities in 30 countries consisting of approximately 672 thousand square feet throughout the world. Approximately 69% of this square footage is our headquarters in San Diego, which is the only property that we own, the rest of our property is leased.
Item 2. PROPERTIES As of December 31, 2024, Teradata operated 41 facilities in 29 countries consisting of approximately 645 thousand square feet throughout the world. Approximately 71% of this square footage is our headquarters in San Diego, which is the only property that we own, the rest of our property is leased.
Within the total facility portfolio, Teradata operates 7 facilities where R&D activity occurs totaling approximately 253 thousand square feet, of which approximately 90% is owned. The remaining approximately 419 thousand square feet of space includes office, repair, warehouse and other miscellaneous sites, and is 55% owned and 45% leased.
Within the total facility portfolio, Teradata operates 7 facilities where R&D activity occurs totaling approximately 259 thousand square feet, of which approximately 88% is owned. The remaining approximately 386 thousand square feet of space includes office, repair, warehouse and other miscellaneous sites, and is 60% owned and 40% leased.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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This graph covers the five-year period from December 31, 2018 to December 31, 2023. In each case, assumes a $100 investment on December 31, 2018, and reinvestment of all dividends, if any.
This graph covers the five-year period from December 31, 2019 to December 31, 2024 . In each case, assumes a $100 investment on December 31, 2019 , and reinvestment of all dividends, if any.
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Teradata common stock trades on the New York Stock Exchange under the symbol "TDC." There were approximately 18,457 registered holders of Teradata common stock as of February 14, 2024.
Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Teradata common stock trades on the New York Stock Exchange under the symbol "TDC." There were approximately 16,811 registered holders of Teradata common stock as of February 14, 2025.
As of December 31, Company/Index 2018 2019 2020 2021 2022 2023 Teradata Corporation $ 100 $ 70 $ 59 $ 111 $ 88 $ 113 S&P 500 Index $ 100 $ 129 $ 150 $ 190 $ 153 $ 190 S&P Information Technology Index $ 100 $ 148 $ 211 $ 281 $ 200 $ 312 31 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchases Section 16 officers occasionally transfer vested shares earned under restricted share awards to the Company at the current market price to cover their withholding taxes.
As of December 31, Company/Index 2019 2020 2021 2022 2023 2024 Teradata Corporation $ 100 $ 84 $ 159 $ 126 $ 163 $ 116 S&P 500 Index $ 100 $ 116 $ 148 $ 119 $ 148 $ 182 S&P Information Technology Index $ 100 $ 142 $ 190 $ 135 $ 211 $ 286 32 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchases Section 16 officers occasionally transfer vested shares earned under restricted share awards to the Company at the current market price to cover their withholding taxes.
For the year ended December 31, 2023, the total of these purchases was 416,815 shares at an average price of $40.57 per share.
For the year ended December 31, 2024, the total of these purchases was 301,994 shares at an average price of $43.54 per share.
Removed
The following table provides information relating to the Company’s repurchase of common stock for the year ended December 31, 2023: Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Dilution Offset Program (1) Total Number of Shares Purchased as Part of Publicly Announced General Share Repurchase Program (2) Maximum Dollar Value that May Yet Be Purchased Under the Dilution Offset Program Maximum Dollar Value that May Yet Be Purchased Under the General Share Repurchase Program Period First quarter total 2,322,106 $ 37.69 137,380 2,184,726 $ 1,072,676 $ 758,232,193 Second quarter total 1,610,383 $ 44.93 56,144 1,554,239 $ 5,553,859 $ 688,873,071 Third quarter total 2,938,181 $ 48.02 253,402 2,684,779 $ 409,123 $ 560,227,734 October 2023 123,583 $ 43.23 7,800 115,783 $ 122,386 $ 555,227,916 November 2023 27,848 $ 43.00 — 27,848 $ 1,536,392 $ 554,030,560 December 2023 — $ — — — $ 2,200,413 $ 554,030,560 Fourth quarter total 151,431 $ 43.19 7,800 143,631 $ 2,200,413 $ 554,030,560 2023 Full year total 7,022,101 $ 43.79 454,726 6,567,375 $ 2,200,413 $ 554,030,560 1.
Added
The following table provides information relating to the Company’s repurchase of common stock for the year ended December 31, 2024: Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Dilution Offset Program (1) Total Number of Shares Purchased as Part of Publicly Announced General Share Repurchase Program (2) Maximum Dollar Value that May Yet Be Purchased Under the Dilution Offset Program Maximum Dollar Value that May Yet Be Purchased Under the General Share Repurchase Program Period First quarter total 3,169,262 $ 40.57 165,392 3,003,870 $ 2,145,031 $ 431,946,444 Second quarter total 1,186,097 $ 35.66 58,189 1,127,908 $ 44,982 $ 391,847,459 Third quarter total 553,862 $ 28.89 179,990 373,872 $ 317,370 $ 380,888,273 October 2024 306,968 $ 31.47 — 306,968 $ 317,370 $ 371,228,609 November 2024 301,660 $ 30.23 — 301,660 $ 317,370 $ 362,109,031 December 2024 326,251 $ 32.18 — 326,251 $ 421,044 $ 351,609,397 Fourth quarter total 934,879 $ 31.32 — 934,879 $ 421,044 $ 351,609,397 2024 Full year total 5,844,100 $ 36.99 403,571 5,440,529 $ 421,044 $ 351,609,397 1.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

58 edited+13 added−21 removed56 unchanged
Effective on January 1, 2022, the U.S. tax law changed to require that R&D expenses be capitalized and amortized for tax purposes under Internal Revenue Code Section 174; as a result of this law change, we recognized approximately $2 mi llion of tax expense related to global intangible low-taxed income ("GILTI") in our marginal effective tax rate for 2023 and approximately $4 mi llion for 2022.
Effective on January 1, 2022, the U.S. tax law changed to require that R&D expenses be capitalized and amortized for tax purposes under Internal Revenue Code Section 174; as a result of this law change, we recognized approximately $2 mi llion of tax expense related to global intangible low-taxed income ("GILTI") in our marginal effective tax rate for 2024 and approximately $2 mi llion for 2023.
Consulting services revenue decreased 5% , including a 3% adverse impact from foreign currency exchange rate fluctuations, as we continue to realign and focus our consulting resources on higher-margin engagements. In this regard, we are focused on both direct engagement with customers and joint engagement with partners that drive increased software consumption within our targeted customer base.
Consulting services revenue decreased 16%, including a 3% adverse impact from foreign currency exchange rate fluctuations, as we continue to realign and focus our consulting resources on higher-margin engagements. In this regard, we are focused on both direct engagement with customers and joint engagement with partners that drive increased software consumption within our targeted customer base.
We maintain internal controls over the establishment and updates of these estimates, which includes review and approval by management. For the year ended December 31, 2023 there was no material impact to revenue resulting from changes in the standalone selling price, nor do we expect a material impact from such changes in the near term.
We maintain internal controls over the establishment and updates of these estimates, which includes review and approval by management. For the year ended December 31, 2024 there was no material impact to revenue resulting from changes in the standalone selling price, nor do we expect a material impact from such changes in the near term.
However, these distributions may be subject to non-U.S. withholding taxes if profits are distributed from certain jurisdictions; accordingly, the Company has recorded $5 million of deferred foreign tax expense with respect to certain earnings that are not considered permanently reinvested. Deferred taxes have not been provided on earnings considered indefinitely reinvested.
However, these distributions may be subject to non-U.S. withholding taxes if profits are distributed from certain jurisdictions; accordingly, the Company has recorded $2 million of deferred foreign tax expense with respect to certain earnings that are not considered permanently reinvested. Deferred taxes have not been provided on earnings considered indefinitely reinvested.
In the normal course of business, we enter into operating and finance leases that impact, or could impact, our liquidity. Leases and minimum lease obligations as of December 31, 2023 are described in detail in Note 13 of Notes to Consolidated Financial Statements. Contractual and Other Commercial Commitments.
In the normal course of business, we enter into operating and finance leases that impact, or could impact, our liquidity. Leases and minimum lease obligations as of December 31, 2024 are described in detail in Note 13 of Notes to Consolidated Financial Statements. Contractual and Other Commercial Commitments.
Goodwill and Acquired Intangible Assets The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. For 2023, the Company performed a quantitative impairment test. In this test, the Company compared the fair value of each reporting unit to its carrying value.
Goodwill and Acquired Intangible Assets The Company reviews goodwill for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. For 2024, the Company performed a quantitative impairment test. In this test, the Company compared the fair value of each reporting unit to its carrying value.
If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company records an impairment loss equal to the difference. In the fourth quarter of 2023, the Company performed its annual impairment test of goodwill and determined that no impairment to the carrying value of goodwill was necessary.
If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then the Company records an impairment loss equal to the difference. In the fourth quarter of 2024, the Company performed its annual impairment test of goodwill and determined that no impairment to the carrying value of goodwill was necessary.
For additional information regarding our accounting policies and other disclosures required by GAAP, see "Note 1—Description of Business, Basis of Presentation and Significant Accounting Policies" in the Notes to Consolidated Financial Statements. 41 Table of Contents Revenue Recognition Revenue recognition for complex contractual arrangements requires judgment, including a review of specific contracts, past experience, creditworthiness of customers, international laws and other factors.
For additional information regarding our accounting policies and other disclosures required by GAAP, see "Note 1—Description of Business, Basis of Presentation and Significant Accounting Policies" in the Notes to Consolidated Financial Statements. Revenue Recognition Revenue recognition for complex contractual arrangements requires judgment, including a review of specific contracts, past experience, creditworthiness of customers, international laws and other factors.
Significant assumptions in valuing the intellectual property include, but are not limited to, internal revenue and expense forecasts, and the discount rate. The sustainability of our future tax benefits is dependent upon the acceptance of these valuation estimates and assumptions by the taxing authorities. 42 Table of Contents Stock-based Compensation We issue service-based and performance-based restricted share units.
Significant assumptions in valuing the intellectual property include, but are not limited to, internal revenue and expense forecasts, and the discount rate. The sustainability of our future tax benefits is dependent upon the acceptance of these valuation estimates and assumptions by the taxing authorities. Stock-based Compensation We issue service-based and performance-based restricted share units.
In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require significant management judgment in its application. There are also areas in which management’s judgment in selecting among available alternatives would not produce a materially different result.
In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require significant management judgment in its application. There are also areas in which management’s judgment 41 Table of Contents in selecting among available alternatives would not produce a materially different result.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report filed with the SEC for the fiscal year ended December 31, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report filed with the SEC for the fiscal year ended December 31, 2023.
Based on currency rates as of January 31, 2024, Teradata is estimating a 1.0 %-to-1.5% negative impact from currency translation on our 2024 full-year total revenues. 34 Table of Contents Financial and Performance Measures Total ARR is composed of three main categories: (1) Public Cloud ARR, (2) ARR related to on-premises subscription-based contracts and private cloud ("Subscription ARR"), and (3) ARR related to our legacy perpetual maintenance and software upgrade rights.
Based on currency rates as of December 31 , 2024, Teradata is estimating a 1.5%-to-2.0% negative impact from currency translation on our 2025 full-year total revenues. 35 Table of Contents Financial and Performance Measures Total ARR is composed of three main categories: (1) Public Cloud ARR, (2) ARR related to on-premises subscription-based contracts and private cloud ("Subscription ARR"), and (3) ARR related to our legacy perpetual maintenance and software upgrade rights.
See "Risk Factors" and "Forward-looking Statements." OVERVIEW At Teradata Corporation ("we," "us," "Teradata," or the "Company"), we believe that people thrive when empowered with trusted information. We are focused on helping organizations improve business performance, enrich customer experiences, and integrate data across the enterprise.
See "Risk Factors" and "Forward-looking Statements." OVERVIEW At Teradata Corporation ("we," "us," "Teradata," or the "Company"), we believe that people thrive when empowered with trusted information. We are focused on helping organizations improve business performance, 33 Table of Contents enrich customer experiences, and integrate data across the enterprise.
The actuarial assumptions that we use may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants.
The actuarial assumptions that we use may differ materially from actual results due to changing market and economic conditions, 43 Table of Contents higher or lower withdrawal rates, or longer or shorter life spans of participants.
Revenues from perpetual software licenses, hardware, and other were down 31% in 2023, including 2% of adverse impact from foreign currency exchange rate fluctuations, as customers continue to transition to our subscription-based offerings, consistent with our overall strategy towards recurring revenue.
Revenues from perpetual software licenses, hardware, and other were down 49% in 2024, including 2% of adverse impact from foreign currency exchange rate fluctuations, as customers continue to transition to our subscription-based offerings, consistent with our overall strategy towards recurring revenue.
Recurring gross profit as a percentage of revenue was flat from the prior year, primarily because the negative gross profit rate impact on increased Public Cloud revenue was offset by improved Public Cloud gross profit rates year-over-year.
Recurring gross profit as a percentage of revenue was down from the prior year, primarily because the negative gross profit rate impact on increased Public Cloud revenue, partially offset by improved Public Cloud gross profit rates year-over-year.
Diluted net earnings per share was $0.61 in 2023 compared to diluted earnings per share of $0.31 in 2022. RESULTS FROM OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 For discussion of fiscal year 2022 versus 2021 see "Item 7.
Diluted net earnings per share was $1.16 in 2024 compared to diluted earnings per share of $0.61 in 2023. RESULTS FROM OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 For discussion of fiscal year 2023 versus 2022 see "Item 7.
As of December 31, 2023, the Company has a total of $40 million of unrecognized tax benefits, of which $19 million is included in the other liabilities section of the Company’s consolidated balance sheet as a non-current liability and $21 million of uncertain tax positions relates to certain tax attributes generated by the Company which are netted against the underlying deferred tax assets recorded on the balance sheet.
As of December 31, 2024, the Company has a total of $44 million of unrecognized tax benefits, of which $21 million is included in the other liabilities section of the Company’s consolidated balance sheet as a non-current liability and $23 million of uncertain tax positions relates to certain tax attributes generated by the Company which are netted against the underlying deferred tax assets recorded on the balance sheet.
Additionally, we had $40 million of unrecognized tax benefits recorded on our balance sheet as of December 31, 2023, of which $19 million is recorded in non-current liabilities and $21 million is reflected as an offset to deferred tax assets related to certain tax attribute carryforwards. These items are not included in the table of obligations shown above.
Additionally, we had $44 million of unrecognized tax benefits recorded on our balance sheet as of December 31, 2024, of which $21 million is recorded in non-current liabilities and $23 million is reflected as an offset to deferred tax assets related to certain tax attribute carryforwards. These items are not included in the table of obligations shown above.
Our Maintenance and Software upgrade rights ARR declined 38% compared to 2022. This was expected as we continue to transition to a subscription model and customers increasingly purchased Teradata on a subscription and/or public cloud basis.
Our Maintenance and Software upgrade rights ARR declined 43% compared to 2023. This was expected as we continue to transition to a subscription model and customers increasingly purchased Teradata on a subscription and/or public cloud basis.
The last twelve-month dollar-based cloud net expansion rate is calculated by taking the average of the quarterly dollar-based cloud net expansion rate from the last fiscal quarter and the prior three fiscal quarters. 2023 FINANCIAL OVERVIEW As more fully discussed in later sections of this MD&A, the following are the financial highlights for 2023: • Revenue of $1,833 million increased by 2% in 2023 as compared to 2022, with a 5% in crease in recurring revenue.
The last twelve-month dollar-based cloud net expansion rate is calculated by taking the average of the quarterly dollar-based cloud net expansion rate from the last fiscal quarter and the prior three fiscal quarters. 2024 FINANCIAL OVERVIEW As more fully discussed in later sections of this MD&A, the following are the financial highlights for 2024: • Revenue of $1,750 million decreased by 5% in 2024 as compared to 2023, with a 1% decrease in recurring revenue.
We have recorded $90 million in 2023 and $69 million in 2022 for valuation allowances, $69 million of which offset our California R&D tax credit carryfoward, and $15 million of which relates to our US Foreign Tax Credit Carryforward, as the Company expects to continue to generate excess California R&D & Foreign tax credits into the foreseeable future.
We have recorded $101 million in 2024 and $90 million in 2023 for valuation allowances, $65 million of which offset our California R&D tax credit carryfoward, and $19 million of which relates to our US Foreign Tax Credit Carryforward, as the Company expects to continue to generate excess California R&D & Foreign tax credits into the foreseeable future.
The open market share repurchase program will expire on December 31, 2025. On November 1, 2021, our Board of Directors authorized an additional $1 billion for share repurchases under the open market share repurchase program. There is a total authority of $554 million remaining under the open market share repurchase program as of December 31, 2023.
The open market share repurchase program 39 Table of Contents will expire on December 31, 2025. On November 1, 2021, our Board of Directors authorized an additional $1 billion for share repurchases under the open market share repurchase program. There is a total authority of $352 million remaining under the open market share repurchase program as of December 31, 2024.
Our total cash and cash equivalents held outside the United States in various foreign subsidiaries was $428 million as of December 31, 2023 and $405 million as of December 31, 2022. The remaining balance held in the United States ("U.S.") was $58 million as of December 31, 2023 and $164 million as of December 31, 2022.
Our total cash and cash equivalents held outside the United States in various foreign subsidiaries was $350 million as of December 31, 2024 and $428 million as of December 31, 2023. The remaining balance held in the United States ("U.S.") was $70 million as of December 31, 2024 and $58 million as of December 31, 2023.
Other expense is higher in 2023, primarily due to a $13 million loss with respect to Argentina Blue Chip Swaps (a foreign exchange mechanism which effectively results in a parallel U.S. dollar exchange rate) in order to remit cash from our Argentine operations and $8 million higher losses resulting from foreign currency transactions compared to the prior year.
Other expense is lower in 2024, primarily due to $30 million less in losses resulting from foreign currency transactions compared to the prior year, and $9 million less in losses with respect to Argentina Blue Chip Swaps (a foreign exchange mechanism which effectively results in a parallel U.S. dollar exchange rate) in order to remit cash from our Argentine operations.
Teradata’s strategy is discussed under Part I, Item I of this Annual Report on Form 10-K.
Teradata’s business, key priorities, and strategy is discussed under Part I, Item I of this Annual Report on Form 10-K.
With our Teradata Vantage platform, underpinned by our extensive patented workload management optimization, we are well positioned to help enterprises solve business problems and deliver business breakthroughs with its capabilities to provide harmonized data, trusted AI, and faster innovation.
With our Teradata Vantage platform, underpinned by our extensive patented workload management optimization technology, we are well positioned to help enterprises deliver business breakthroughs and solve business problems with our capabilities to provide harmonized data, trusted AI, and faster innovation, at scale. As companies embrace AI, they need data at scale.
Revenues from perpetual software licenses, hardware and other decreased primarily due to our strategic shift towards recurring revenue.
Perpetual software licenses, hardware and other revenue decreased by 49% and consulting services revenue decreased by 16%. Revenues from perpetual software licenses, hardware and other decreased primarily due to our strategic shift towards recurring revenue.
For example, a higher mix of Teradata versus third-party products can positively impact profitability. 35 Table of Contents Gross profit for the following years ended December 31 was as follows: % of % of In millions 2023 Revenue 2022 Revenue Gross profit Recurring $ 1,074 72.0 % $ 1,022 72.0 % Perpetual software licenses, hardware and other 7 15.6 % 18 27.7 % Consulting services 34 11.5 % 41 13.2 % Total gross profit $ 1,115 60.8 % $ 1,081 60.2 % 2023 compared to 2022 - The increase in gross profit as a percentage of revenue was primarily driven by a higher mix of recurring revenue and improving cloud gross profit rates year-over-year.
For example, a higher mix of Teradata versus third-party products can positively impact profitability. 36 Table of Contents Gross profit for the following years ended December 31 was as follows: % of % of In millions 2024 Revenue 2023 Revenue Gross profit Recurring $ 1,038 70.2 % $ 1,074 72.0 % Perpetual software licenses, hardware and other — — % 7 15.6 % Consulting services 20 8.1 % 34 11.5 % Total gross profit $ 1,058 60.5 % $ 1,115 60.8 % 2024 compared to 2023 - The slight decrease in gross profit as a percentage of revenue was primarily driven by a higher mix of Public Cloud revenue, offset in part by improving Public Cloud gross profit rates year-over-year.
As such, we strive to innovate and deliver 32 Table of Contents trusted solutions for their toughest data and analytics challenges. That is why we built our comprehensive open and connected cloud analytics and data platform for artificial intelligence ("AI").
As such, we strive to innovate and deliver trusted solutions for their toughest data and analytics challenges. That is why we built our open and connected hybrid cloud analytics and data platform for AI.
Public Cloud ARR increased 48% versus the prior year primarily due to on-premises customers migrating to Teradata VantageCloud along with a strong net expansion rate of 124%. Foreign currency fluctuations had a positive 2% impact on Public Cloud ARR.
Public Cloud ARR increased 15% versus the prior year primarily due to on-premises customers migrating to Teradata VantageCloud along with a net expansion rate of 117%. Foreign currency fluctuations had a negative 3% impact on Public Cloud ARR.
Our financial and performance measures for the following years ended December 31 was as follows: ARR 2023 2022 In millions Public Cloud $ 528 $ 357 Subscription 869 844 Maintenance and Software upgrade rights 173 281 Total ARR $ 1,570 $ 1,482 Cloud Net Expansion rate 124 % 117 % Total ARR increased 6% versus the prior year, with declines in Maintenance and Software upgrade rights ARR, more than off-set by growth in Public Cloud ARR and Subscription ARR.
Our financial and performance measures for the following years ended December 31 was as follows: ARR 2024 2023 In millions Public Cloud $ 609 $ 528 Subscription 766 869 Maintenance and Software upgrade rights 99 173 Total ARR $ 1,474 $ 1,570 Cloud Net Expansion rate 117 % 124 % Total ARR decreased 6% versus the prior year, with declines in Subscription, and Maintenance and Software upgrade rights ARR off-set in part by growth in Public Cloud ARR.
The terms and definitions most often used are as follows: • Revenue Mix - The proportion of recurring, consulting, and perpetual software licenses, hardware and other revenue that generates the total revenue of the Company.
Gross Profit The Company often uses specific terms and definitions to describe variances in gross profit. The terms and definitions most often used are as follows: • Revenue Mix - The proportion of recurring, consulting, and perpetual software licenses, hardware and other revenue that generates the total revenue of the Company.
In the aggregate under the dilution offset share repurchase program and the open market share repurchase program, we repurchased approximately 7.0 million shares of our common stock at an average price per share of $43.79 in 2023 and approximately 9.4 million shares of our common stock at an average price per share of $41.16 in 2022.
In the aggregate under the dilution offset share repurchase program and the open market share repurchase program, we repurchased approximately 5.8 million shares of our common stock at an average price per share of $36.99 in 2024 and approximately 7.0 million shares of our common stock at an average price per share of $43.79 in 2023.
Public Cloud ARR growth and the improved Cloud Net Expansion rate were driven by customer demand for our differentiated offerings, resulting in new workloads for both migrations and expansions. Subscription ARR increased 3% in 2023 from the prior year primarily due to net expansions, and included a 1% positive impact from foreign currency fluctuations.
Public Cloud ARR growth and the Cloud Net Expansion rate were driven by customer demand for our differentiated offerings, resulting in new workloads for both migrations and expansions. Subscription ARR decreased 12% in 2024 from the prior year primarily due to migrations from on-premises to Public Cloud, and included a 2% adverse impact from foreign currency fluctuations.
The acquisition of Stemma Technologies was not financially material. In the fourth quarter of 2023, we entered into Blue Chip Swap transactions in order to remit cash from our Argentine operations that resulted in a pre-tax loss on investment of $13 million, the net purchases of which are reported in other investing activities in the Consolidated Statement of Cash Flows.
In 2024, we entered into Blue Chip Swap transactions in order to remit cash from our Argentine operations that resulted in a pre-tax loss on investment of $4 million, compared to $13 million of such pre-tax losses in 2023, the net purchases of which are reported in other investing activities in the Consolidated Statement of Cash Flows.
The decline in consulting service revenue was additionally due to our focus on higher-margin engagements and purposeful decrease in consulting services given the development of our strategic partner ecosystem. 33 Table of Contents • Gross profit as a percent of revenue was 60.8% in 2023, an increase from 60.2% in 2022, primarily due to a higher mix of recurring revenue and improving cloud gross profit rates year-over-year. • Operating expenses in 2023 decreased by 4% as compared to 2022, primarily driven by our cost discipline initiatives and a favorable impact from foreign currency fluctuations . • Operating income was $186 million in 2023, up from $118 million in 2022. • Net income was $62 million in 2023 versus net income of $33 million in 2022, primarily due to increased revenue and lower operating expenses.
The decline in consulting service revenue was additionally due to our focus on higher-margin engagements and purposeful decrease in consulting services given the development of our strategic partner ecosystem. • Gross profit as a percent of revenue was 60.5% in 2024, a slight decrease from 60.8% in 2023, primarily due to a higher mix of Public Cloud revenue, partially offset by an improvement in Public Cloud margins year-over-year. 34 Table of Contents • Operating expenses in 2024 decreased by 9% as compared to 2023, primarily driven by our cost discipline initiatives and a favorable impact from foreign currency fluctuations . • Operating income was $209 million in 2024, up from $186 million in 2023. • Net income was $114 million in 2024 versus net income of $62 million in 2023, primarily due to lower operating expenses and lower income tax expense.
Provision for Income Taxes The effective income tax rate for the following years ended December 31 was as follows: 2023 2022 Effective Tax Rate 47.0 % 50.7 % The 2023 effective tax rate included a net $18 million of discrete tax expense , of which $15 million of tax expense related to the foreign currency translation impact on deferred and payable balances for our Argentina operations due to hyperinflation in Argentina and $10 million of tax expense related to a valuation allowance recorded against deferred tax assets for our operations in Argentina and other reorganization and transformation activities.
The 2023 effective tax rate included a net $18 million of discrete tax expense, of which $15 million of tax expense related to the foreign currency translation impact on deferred and payable balances for our Argentina operations due to hyperinflation in Argentina and $10 million of tax expense related to a valuation allowance recorded against deferred tax assets for our operations in Argentina and other reorganization and transformation activities.
The table below shows net cash provided by operating activities and capital expenditures for the following periods: In millions 2023 2022 Net cash provided by operating activities $ 375 $ 419 Less: Expenditures for property and equipment (19) (14) Additions to capitalized software (1) (2) Free cash flow $ 355 $ 403 Financing activities and certain other investing activities, such as our strategic acquisition of Stemma Technologies during the third quarter of 2023, are not included in our calculation of free cash flow.
The table below shows net cash provided by operating activities and capital expenditures for the following periods: In millions 2024 2023 Net cash provided by operating activities $ 303 $ 375 Less: Expenditures for property and equipment (24) (19) Additions to capitalized software (2) (1) Free cash flow $ 277 $ 355 Financing activities and certain other investing activities are not included in our calculation of free cash flow.
Operating Expenses % of % of In millions 2023 Revenue 2022 Revenue Operating expenses Selling, general and administrative expenses $ 635 34.6 % $ 650 36.2 % Research and development expenses 294 16.0 % 313 17.4 % Total operating expenses $ 929 50.7 % $ 963 53.6 % 2023 compared to 2022 - The de crease in selling, general and administrative ("SG&A") expense was primarily driven by the favorable impact from foreign currency exchange rate fluctuations and continued cost discipline as compared to the prior year.
Operating Expenses % of % of In millions 2024 Revenue 2023 Revenue Operating expenses Selling, general and administrative expenses $ 565 32.3 % $ 635 34.6 % Research and development expenses 284 16.2 % 294 16.0 % Total operating expenses $ 849 48.5 % $ 929 50.7 % 2024 compared to 2023 - The decrease in selling, general and administrative ("SG&A") expense was primarily driven by the favorable impact from foreign currency exchange rate fluctuations and continued cost discipline as compared to the prior year.
Revenue % of % of In millions 2023 Revenue 2022 Revenue Recurring $ 1,492 81.4 % $ 1,419 79.1 % Perpetual software license, hardware and other 45 2.5 % 65 3.6 % Consulting services 296 16.1 % 311 17.3 % Total revenue $ 1,833 100.0 % $ 1,795 100.0 % 2023 compared to 2022 - Total revenue increased 2% in 2023, which included a 2% negative impact from foreign currency exchange rate fluctuations.
Revenue % of % of In millions 2024 Revenue 2023 Revenue Recurring $ 1,479 84.5 % $ 1,492 81.4 % Perpetual software license, hardware and other 23 1.3 % 45 2.5 % Consulting services 248 14.2 % 296 16.1 % Total revenue $ 1,750 100.0 % $ 1,833 100.0 % 2024 compared to 2023 - Total revenue decreased 5% in 2024, which included a 2% negative impact from foreign currency exchange rate fluctuations.
Purchase obligations are committed purchase orders and other contractual 40 Table of Contents commitments for goods and services and include non-cancelable contractual payments for fixed or minimum amounts to be purchased in relation to service agreements with various vendors for ongoing telecommunications, information technology, hosting and other services.
The payments associated with this deemed repatriation are being paid over seven years ending in 2025. Purchase obligations are committed purchase orders and other contractual commitments for goods and services and include non-cancelable contractual payments for fixed or minimum amounts to be purchased in relation to service agreements with various vendors for ongoing telecommunications, information technology, hosting and other services.
The components that are used to calculate free cash flow are GAAP measures taken directly from the Consolidated Statements of Cash Flows. We believe that free cash flow information is useful for investors because it relates the operating cash flow of the Company to the capital that is spent to continue and improve business operations.
We believe that free cash flow information is useful for investors because it relates the operating cash flow of the Company to the capital that is spent to continue and improve business operations.
The following table and discussion outline our material obligations at December 31, 2023, with projected cash payments in the periods shown: Total 2025- 2027- 2029 and In millions Amounts 2024 2026 2028 Thereafter Transition tax $ 52 $ 23 $ 29 $ — $ — Purchase obligations 848 255 412 181 — Total transition tax and purchase obligations $ 900 $ 278 $ 441 $ 181 $ — Transition tax is the remaining payable balance as of December 31, 2023 of the one-time tax on accumulated foreign earnings resulting from the 2017 Tax Act.
The following table and discussion outline our 40 Table of Contents material obligations at December 31, 2024, with projected cash payments in the periods shown: Total 2026- 2028- 2030 and In millions Amounts 2025 2027 2029 Thereafter Transition tax $ 29 $ 29 $ — $ — $ — Purchase obligations $ 844 312 474 56 2 Total transition tax and purchase obligations $ 873 $ 341 $ 474 $ 56 $ 2 Transition tax is the remaining current payable balance recorded on our balance sheet as of December 31, 2024, of the one-time tax on accumulated foreign earnings resulting from the 2017 Tax Act.
Our share repurchase activity depends on factors such as our working capital needs, our cash requirements for capital investments, our stock price, and economic and market conditions. 39 Table of Contents Other financing activities, including net share settlement for the payroll tax liability of section 16 officers (as discussed in Item 5 of this Annual Report on Form 10-K), offset by proceeds from the ESPP and the exercise of stock options, net of tax, was a net inflow of $7 million for 2023 and a net inflow of $5 million (including fees from the credit facility agreement) for 2022.
Other financing activities, including net share settlement for the payroll tax liability of section 16 officers (as discussed in Item 5 of this Annual Report on Form 10-K), offset by proceeds from the ESPP and the exercise of stock options, net of tax, was a net outflow of $1 million for 2024 and a net inflow of $7 million for 2023.
Foreign currency fluctuations had a 2% adverse impact on total revenue compared to the prior year. The recurring revenue increase was due primarily to an increase in Public Cloud revenue from migrations and expansions. Perpetual software licenses, hardware and other revenue decreased by 31% and consulting services revenue decreased by 5% .
Foreign currency fluctuations had a 2% adverse impact on total revenue and a 2% adverse impact on recurring revenue compared to the prior year. In addition to adverse foreign currency impact, the recurring revenue decline was primarily driven by a decrease in revenue from on-premises solutions, which was offset in part by an increase in Public Cloud revenue.
As a result, we believe that we empower our customers - and our customers' customers - to make better, more confident decisions, engage in faster innovation, and drive positive impact within the enterprise. Teradata is recognized by industry analysts as offering a cloud analytics and data platform with next-generation, cloud-native deployment and expansive analytics capabilities.
Data at scale is the foundation of generative AI applications, and data at scale is what Teradata provides. As a result, we believe that we empower our customers to make better, more confident decisions, engage in faster innovation, and drive positive impact within the enterprise.
We expect to balance these investments with cost discipline in non-revenue generating areas and productivity improvements. 36 Table of Contents Other Expense, net In millions 2023 2022 Interest income $ 25 $ 15 Interest expense (30) (24) Other (64) (42) Total Other Expense, net $ (69) $ (51) Other expense, net in 2023 and 2022, is comprised primarily of interest expense on long-term debt and finance leases, foreign currency transactions, as well as benefit costs for our pension and postemployment plans, partially offset by interest income earned on our cash and cash equivalents.
We intend to continue investing in R&D areas that we anticipate will generate growth, such as technologies that support AI/ML and OTF, including for on-premises environments. 37 Table of Contents Other Expense, net In millions 2024 2023 Interest income $ 11 $ 25 Interest expense (29) (30) Other (27) (64) Total other expense, net $ (45) $ (69) Other expense, net in 2024 and 2023, is comprised primarily of interest expense on long-term debt and finance leases, foreign currency transactions, as well as benefit costs for our pension and postemployment plans, partially offset by interest income earned on our cash and cash equivalents.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Teradata ended 2023 with $486 million in cash and cash equivalents, a $83 million decrease from December 31, 2022, after using approximately $308 million for repurchases of Company common stock during the year. Cash provided by operating activities decreased by $44 million to $375 million in 2023 compared to 2022.
Our segment information is presented in Note 14 of Notes to Condensed Consolidated Financial Statements. 38 Table of Contents FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Teradata ended 2024 with $420 million in cash and cash equivalents, a $66 million decrease from December 31, 2023, after using approximately $215 million for repurchases of Company common stock during the year.
For example, as of December 31, 2023, a one-half percent increase/decrease in the discount rate would change the projected benefit obligation of our pension plans by approximately $7 million, and a one-half percent increase/decrease in our involuntary turnover assumption would change our postemployment benefit obligation by approximately $5 million. 43 Table of Contents RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS A discussion of recently issued accounting pronouncements is described in "Note 1—Description of Business, Basis of Presentation and Significant Accounting Policies" in the Notes to Consolidated Financial Statements in this Annual Report, and we incorporate such discussion by reference.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS A discussion of recently issued accounting pronouncements is described in "Note 1—Description of Business, Basis of Presentation and Significant Accounting Policies" in the Notes to Consolidated Financial Statements in this Annual Report, and we incorporate such discussion by reference.
R&D expenses decreased in 2023 as compared to the prior year. R&D expenses were impacted by continued cost discipline initiatives as compared to the prior year. We intend to continue investing in areas that generate growth, such as AI/ML, demand creation, and brand awareness.
R&D expenses decreased in 2024 as compared to the prior year. R&D expenses were impacted by continued cost discipline initiatives as compared to the prior year.
In connection with the execution of the Credit Facility, the $400 million term loan outstanding under the Prior Agreements was repaid in full. Our long-term debt is discussed in Note 12 of Notes to Consolidated Financial Statements.
Our long-term debt is discussed in Note 12 of Notes to Consolidated Financial Statements.
There were no other material other investing activities in 2023 and 2022. Teradata’s financing activities for 2023 and 2022 primarily consisted of cash outflows for share repurchases and payments on our finance leases. At December 31, 2023, we had no outstanding borrowings on our $400 million Revolving Facility (as defined below).
In 2023, other investing activities also included our strategic acquisition of Stemma Technologies. The acquisition of Stemma Technologies was not financially material. There were no other material other investing activities in 2024 and 2023. Teradata’s financing activities for 2024 and 2023 primarily consisted of cash outflows for share repurchases, payments on our finance leases, and repayments on long-term borrowings.
We define free cash flow as net cash provided by operating activities less capital expenditures for property and equipment and additions to capitalized software. Free cash flow is one measure of assessing the financial performance of the Company, and this may differ from the definition used by other companies.
Teradata’s management uses a non-GAAP measure called "free cash flow," which is not a measure defined under GAAP. We define free cash flow as net cash provided by operating activities less capital expenditures for property and equipment and additions to capitalized software.
We expect that a majority of our foreign earnings will be repatriated to the U.S.
We expect that a majority of our foreign earnings will be repatriated to the U.S. Results by Operating Segment On August 5, 2024, Teradata announced that it realigned its sales function and initiated global restructuring to optimize operations.
Teradata used approximately $43 million of cash in 2023 for reorganization activities, including aligning our go-to-market function with our cloud-first strategy, and other activities to optimize our workforce, as compared to $26 million used in 2022 for similar purposes. 38 Table of Contents Teradata’s management uses a non-GAAP measure called "free cash flow," which is not a measure defined under GAAP.
This was offset in part by higher net income, adjusted for non-cash items, in 2024 as compared to 2023. Teradata used approximately $37 million of cash in 2024 for reorganization activities, including the re-alignment of our go-to-market function and other activities to optimize our workforce, as compared to $43 million used in 2023 for similar purposes.
We expect to see expansion as the primary contributor for Total ARR growth in 2024 and expansion and conversion as the primary contributors for Public Cloud ARR growth in 2024. Gross Profit The Company often uses specific terms and definitions to describe variances in gross profit.
We expect to see expansion as the primary contributor for Total ARR growth in 2025 and expansion and conversion as the primary contributors for Public Cloud ARR growth in 2025. In addition, we expect a slight negative impact from annual upfront software subscription revenue associated with on-premises recurring revenue in 2025.
Segment gross profit, as a percentage of revenue, increased due to higher gross profit associated with upfront license revenue compared to the prior year, partially offset by a higher mix of Public Cloud revenue. EMEA EMEA revenue increased 2%, which included a 1% unfavorable impact from foreign currency exchange rate fluctuations.
Recurring revenue declined 1% in 2024, which included a 2% negative impact from foreign currency exchange rate fluctuations. Within recurring revenue, a decline in revenue from on-premises solutions was partially offset by growth in Public Cloud revenue as we continued to migrate customers to the cloud.
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We are continuing to execute on our key priorities, including supporting our on-premises customers, migrating customers to the cloud, upgrading customers from VantageCloud Enterprise to VantageCloud Lake, expanding our Teradata Vantage analytics and data platform product offering (which includes VantageCloud Enterprise, VantageCloud Lake, and ClearScape Analytics), adding new customers and expanding our footprint with existing customers, informing our customers on our AI capabilities, increasing our focus on diversity and inclusiveness, and driving operational excellence and agility across the Company.
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Foreign currency fluctuations had a negative 2% impact on total ARR. Our overall ARR decline was primarily driven by on-premises erosions, elongated deal closing cycles and lower on-premises expansion activity, and was partially offset by growth in Public Cloud ARR.
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Total revenue growth was led by increased recurring revenue, offset in part by lower perpetual software license, hardware, and other revenue, as well as lower consulting revenue. Recurring revenue grew 5% in 2023, which included a 2% negative impact from foreign currency exchange rate fluctuations.
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We expect a decline in gross profit primarily due to negative foreign currency exchange rates and cloud mix, partially offset by cloud rate improvements.
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Recurring revenue growth was driven by an increase in cloud revenue as we continue our intentional shift to the cloud. All three regions experienced strong cloud revenue growth year-over-year.
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We also expect to continue our disciplined approach to managing our financial plan, investing in extending our technology strengths and promoting Teradata as a leader in data analytics, trusted AI, and hybrid cloud technology, while prudently managing costs.
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Foreign currency fluctuations had a positive 1% impact on total ARR. Our overall ARR growth was primarily driven by increased demand for our differentiated offerings, increasing partner involvement, and incremental workloads driving migrations and expansions.
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Provision for Income Taxes The effective income tax rate for the following years ended December 31 was as follows: 2024 2023 Effective Tax Rate 30.5 % 47.0 % The 2024 effective tax rate included a net $3 million of discrete tax expense, a majority of which related to additional tax expense from stock-based compensation vesting.
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We expect to continue investing in activities that generate growth in AI, enhance commercial awareness of our brand, and continue to drive increased adoption and consumption of the Teradata VantageCloud platform, including greater efficiencies with cloud service providers.
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Due to these organizational changes, Teradata now manages its business under two segments, which are also the Company’s new operating segments: (1) Product Sales and (2) Consulting Services.
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The 2022 effective tax rate included a net $1 million of discrete tax benefit, of which $2 million of tax benefit related to the reversal of a FIN 48 tax reserve due to the expiration of statute of limitations and $4 million of incremental tax benefit related to stock-based compensation.
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Teradata’s Product Sales segment represents the results for the Recurring Revenue and Perpetual Software Licenses, Hardware and Other line items and the Consulting Services segment represents the Consulting Services line item, each as disclosed in the Company’s financial statements and in the tables in this Form 10-K.
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These tax benefits were partially offset by $5 million of discrete tax expense related to valuation allowances recorded against deferred tax assets and current receivables in Russia that are not expected to be realized as a result of the discontinuation of our business in Russia in 2022.
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As the revenue and gross margin trends for these business categories are already discussed in the sections above, there is no separate segment discussion presented here.
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Revenue and Gross Profit by Operating Segment Teradata manages its business under three geographic regions, which are also the Company’s operating segments: (1) Americas region (North America and Latin America); (2) EMEA region (Europe, Middle East, and Africa) and (3) APJ region (Asia Pacific and Japan).
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Cash provided by operating activities decrease d by $72 million to $303 million in 2024 compared to 2023. The decrease in cash provided by operating activities was primarily due to lower billings year over year driving a decrease in deferred revenue and a lower receivables balance in 2024 as compared to the prior year.
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For purposes of discussing results by segment, management excludes the impact of certain items, consistent with the manner by which management evaluates the performance of each segment. This format is useful to investors because it allows analysis and comparability of operating trends.
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Free cash flow is one measure of assessing the financial performance of the Company, and this may differ from the definition used by other companies. The components that are used to calculate free cash flow are GAAP measures taken directly from the Consolidated Statements of Cash Flows.
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It also includes the same information that is used by Teradata management to make decisions regarding the segments and to assess financial performance. The chief operating decision maker, who is our President and Chief Executive Officer, evaluates the performance of the segments based on revenue and multiple profit measures, including segment gross profit.
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At December 31, 2024, we had no outstanding borrowings on our $400 million Revolving Facility (as defined below).
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For management reporting purposes, assets are not allocated to the segments.
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Share repurchases are reported on a trade date basis. Our share repurchase activity depends on factors such as our working capital needs, our cash requirements for capital investments, our stock price, and economic and market conditions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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The potential loss in fair value at December 31, 2023, for such contracts resulting from a hypothetical 10% adverse change in all foreign currency exchange rates is immaterial. Any loss would be mitigated by corresponding gains on the underlying exposures.
The potential loss in fair value at December 31, 2024, for such contracts resulting from a hypothetical 10% adverse change in all foreign currency exchange rates is immaterial. Any loss would be mitigated by corresponding gains on the underlying exposures.
The fair value of these contracts and swaps are measured at the end of each reporting period using observable inputs other than quoted prices, specifically market spot and forward exchange rates. The fair value of interest rate swaps recorded in other assets at December 31, 2023 was $8 million .
The fair value of these contracts and swaps are measured at the end of each reporting period using observable inputs other than quoted prices, specifically market spot and forward exchange rates. The fair value of interest rate swaps recorded in other assets at December 31, 2024 was $9 million .
A hypothetical 50 basis point increase/decrease in interest rates would result in an increase/decrease to the fair value of the hedge of approximately $6 million. The fair value of the net investment Euro currency hedge recorded in other liabilities at December 31, 2023 was $8 million .
A hypothetical 50 basis point increase/decrease in interest rates would result in an increase/decrease to the fair value of the hedge of approximately $4 million . The fair value of the net investment Euro currency hedge recorded in other assets at December 31, 2024 was approximately $1 million .
A hypothetical 50 basis point increase/decrease in currency exchange rates would result in an increase/decrease to the fair value of the hedge of approximately $2 million. For additional information regarding the Company’s foreign currency hedging strategy and interest rate swaps, see "Note 9 - Derivative Instruments and Hedging Activities" in the Notes to Consolidated Financial Statements in this Annual Report.
For additional information regarding the Company’s foreign currency hedging strategy and interest rate swaps, see "Note 9 - Derivative Instruments and Hedging Activities" in the Notes to Consolidated Financial Statements in this Annual Report. 44 Table of Contents
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A hypothetical 50 basis point increase/decrease in currency exchange rates would result in an increase/decrease to the fair value of the hedge of approximate ly $1 million.

Other TDC 10-K year-over-year comparisons