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What changed in TERADATA CORP /DE/'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of TERADATA CORP /DE/'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+325 added−341 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-21)

Top changes in TERADATA CORP /DE/'s 2025 10-K

325 paragraphs added · 341 removed · 235 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+42 added−54 removed14 unchanged
Biggest changeWe 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.
Biggest changeWe support our sales efforts with marketing designed to: • grow awareness of Teradata as a leading AI and knowledge platform, highlighting our technology innovation, differentiation and leadership—all designed to help customers get rapid value from data and AI uses, as well as our analytics and AI services expertise, and • create demand for, and adoption and expanded use of, our technologies and related services.
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.
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 2026 Annual Meeting of Stockholders.
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.
Teradata concentrates our marketing and go-to-market efforts on enterprises 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 technology buyers and users, business leaders, as well as analytics buyers and users.
Over the last several years, we have evolved our talent practices to facilitate frequent conversations between managers and employees on performance and development. We have launched on-demand learning resources, such as LinkedIn Learning and Country Navigator, which give employees flexibility in when and how they learn.
Over the last several years, we have evolved our talent practices to facilitate frequent conversations between managers and employees on performance and development. We have launched on-demand learning resources, such as LinkedIn Learning, which give employees flexibility in when and how they learn.
One specific example of our 12 Table of Contents inclusive benefits includes parental leave, offering birthing and non-birthing parents up to 14 weeks of paid leave for bonding with a new child arriving through birth, adoption, placement, or foster care. Talent Development. Teradata is committed to supporting the professional development of our employees by providing resources and pathways for growth.
One specific example of our inclusive benefits includes parental leave, offering birthing and non-birthing parents up to 14 weeks of paid leave for bonding with a new child arriving through birth, adoption, placement, or foster care. Talent Development. Teradata is committed to supporting the professional development of our employees by providing resources and pathways for growth.
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
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
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.
Strategic partnerships are a key element in our ability to leverage the value and expand the scope of our platform 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.
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 .
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, 2025, we had total revenues of $1.663 billion .
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.
Michael Hutchinson is the Company's Chief Operating Officer and has served in this role since February 2025. Previously, from January 2022 until February 2025, he served as Chief Customer Officer. From June 2021, when he joined the Company until January 2022, he served as Senior Vice President World-Wide Customer Success, Consulting and Renewals. Prior to joining Teradata, Mr.
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.
Furthermore, we provide our customers with the opportunity to de-risk their buying decisions with our hybrid capabilities, so they can 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.
In addition, a significant change in the forecasts to any of these preferred suppliers could result in purchase obligations for components that may be in excess of demand. Although we have not experienced issues from inflationary challenges or otherwise, the current inflation environment could present potential supply chain uncertainty, and we have implemented programs to mitigate these potential risks.
In addition, a significant change in the forecasts to any of these preferred suppliers could result in purchase obligations for components that may be in excess of demand. Although we have not experienced issues from inflationary challenges or otherwise, the current inflation environment could present potential supply chain uncertainty.
Previously, he served as the Executive Vice President of Global Services for F5 Networks, Inc., a transnational company that specializes in application services and application delivery networking, from October 2017 when he joined F5 until May 2020.
Previously, he served as the Executive Vice President of Global Services for F5 Networks, Inc., a transnational company that specializes in application services and application delivery networking, from October 2017 when he joined F5 until May 2020. Prior to joining F5, Mr.
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.
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 focus on supporting our customers with the platform they require, whether cloud-only, multi-cloud, on-premises, or a hybrid combination.
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.
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, available for both cloud and on-premises deployments.
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.
From 1990-2018, he held several positions with Oracle, 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.
Our strategic partnerships with select global and regional consulting and systems integration firms provide broad industry and technology expertise in the design of business solutions that leverage Teradata technologies to enable enterprise analytics. Competition. We compete in a large and growing data management and analytics market that is attractive to both current and new competitors.
Our strategic partnerships with global and regional consulting and systems integration firms provide broad industry and technology expertise in the design of business solutions that leverage Teradata technologies. Competition. We compete in a large and growing market that is attractive to both current and new competitors.
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.
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; experienced engineering talent, 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 and expertise. 9 Table of Contents Research and Development ("R&D").
There is a large number of vendors in the analytics and data market and the market landscape of vendors is rapidly increasing with the introduction and increasing traction of cloud and AI. Participants include AWS, Databricks, Google Cloud, Microsoft Azure, Snowflake, and more; the competitive market also comprises traditional legacy competitors.
There is a large number of vendors in the market, and the landscape is rapidly growing with the increasing adoption of AI. Participants include AWS, Databricks, Google Cloud, Microsoft Azure, Snowflake, and more; the competitive market also comprises traditional legacy competitors.
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.
Industry analysts forecast that this 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 agentic and generative 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.
There is increased complexity, cost, and risk to companies 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.
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 have robust compensation and benefit programs designed to attract and retain talent and meet the varied and evolving needs of a global workforce.
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.
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, from 2021 until April 2022. From 2018 until 2021, he was the Managing Director, Oracle UK. Scot Rogers.
We are helping new and existing customers migrate to the cloud, expand workloads in the cloud, connect their hybrid environments, and capture the possibilities provided by enabling AI.
We are helping new and existing customers connect their hybrid environments, migrate to the cloud if desired, expand workloads across all deployment options, and capture the possibilities provided by enabling AI.
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.
In 2025, we announced AI Services as described previously. Strategic Partnerships. We seek to extend our sales and marketing reach by partnering with cloud service providers, alliance partners (including independent software vendors, technology partners, open-source software distributors, and resellers), leading global and regional systems integrators, and consultants, that we believe complement our differentiated offerings.
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 work to continuously strengthen these strategic partnerships so that organizations around the world can easily have access to the Teradata platform via the service provider they prefer. • Alliance Partners: We focus on working collaboratively with partners 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.
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.
Our AI services are described previously. 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 for our customers by helping their analytic environments 6 Table of Contents operate efficiently.
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.
Adding these partners to our already extensive ecosystem supports our commitment to a fully open and connected approach that allows enterprises to employ modern data strategies to enable and execute autonomous AI at scale. Market Dynamics Our target market focuses on organizations that are large-scale users of data.
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 believe Teradata is differentiated in industries with high-data requirements, including Financial Services, Healthcare and Life Sciences, Public Sector, Manufacturing, Retail, Telecommunications, and Travel/Transportation.
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).
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).
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.
We remain focused on designing and developing our platform that anticipates our customers' evolving needs and supports solving their complex business challenges.
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.
Our global customer services organization is dedicated to driving optimal customer experiences and maximizing customer value on Teradata technology. We believe in 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 solutions.
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.
Our global customer services organization is comprised of cloud operations, customer support, customer experience, consulting and managed services, and customer education. This organization focuses on delivering business value throughout the customer journey, enabling innovative use of our platform, extracting additional efficiencies, and maximizing customer impact and satisfaction—which are designed to retain customers and drive greater consumption of our technology.
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.
Many of the patents that we own are licensed to others, and we are licensed to use certain patents owned by others. While our portfolio of patents and patent applications in the 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.
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.
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.
Seasonality . Historically, our new contract bookings and renewals are seasonal, in line with customer spending patterns, with lower volume typically in the first quarter and higher volume generally in the fourth quarter of each calendar year.
We currently do not have any customer that represents 10% or more of our total revenue. Seasonality . Historically, our new contract bookings and renewals are seasonal, in line with customer spending patterns, with lower volume typically in the first quarter and higher volume generally in the fourth quarter of each calendar year.
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.
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. 5 Table of Contents Expertise, innovation, and industry leadership.
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 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 are also focused on growing the adoption of our hybrid platform, enabling AI on-premises by brining additional data and AI/ML capabilities to our on-premises offering, increasing software utilization, expanding partnerships with leading companies, and demonstrating our extensive AI capabilities. 8 Table of Contents Our Strategy.
We are also focused on growing the adoption of our hybrid platform, enabling AI in the deployment the customer chooses—whether cloud or on-premises— by bringing additional data and AI/ML capabilities offerings, increasing software utilization, expanding partnerships with leading companies, and demonstrating our extensive AI capabilities. Our Strategy.
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.
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. Together, we thrive – because when our people thrive, so does Teradata. Health, Safety, and Wellness.
As companies face mounting data demands, along with the need to extract value from this data, we believe that our opportunity to grow in the multi-billion dollar data management and analytics market will continue.
Teradata became a publicly traded company named Teradata Corporation (NYSE: TDC) on September 30, 2007. Industry and Market Opportunity. As companies face mounting data demands, along with the need to extract value from data, we believe that our opportunity to grow in the multi-billion dollar data management and analytics market will continue.
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.
Whether enterprises leverage hybrid, multi-cloud, and/or on-premises data analytics and AI/ML technologies, we believe it is essential for them to be able to integrate ecosystems across multi-cloud and on-premises environments, simplify access to data wherever it resides, and accommodate analytics at massive scale and speed to derive significant business value.
We additionally provide extensive training to educate and enable our sales force with the skills and knowledge to compete and win with our value proposition.
We additionally provide extensive training to educate and enable our sales force with the skills and knowledge to compete and win with our value proposition. Our brand messaging is intended to highlight Teradata’s role as a leading AI and knowledge platform.
We believe our focus on AI, hybrid and multi-cloud ecosystem simplification, providing solutions for the most scalable and complex workloads, and providing products designed to achieve desired business outcomes of our customers, enables us to successfully compete within our target market.
We believe our focus on AI, hybrid and multi-cloud ecosystem simplification, providing solutions for the most scalable and complex workloads, and services designed to achieve desired business outcomes of our customers, enable us to successfully compete. We believe that our technology innovations are highly differentiated, deliver scale and integration, and are positioned to provide business value to our customers.
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, and supporting communities where we have employee populations. 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.
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.
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, which includes quarterly well-being days, and global paid holidays for all employees. Compensation and Benefits. Our compensation and benefits reflect our commitment to fairness and inclusion.
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 these industries provide a good fit for our solutions and services, as these industries typically have the greatest analytic potential with large and growing data volumes, complex data management requirements, large and varied types of users, and operations and customer bases that span global geographies. Additionally, we are seeing increasing exploration of AI uses across these industries.
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.
The majority of our revenue from sales is recurring, which generally increases the predictability of our revenue and the durability of our future cash flows. 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.
For financial information about our segments and geographic information, see " Note 14-Segment, Other Supplemental Information and Concentrations " in the Notes to Consolidated Financial Statements in this Annual Report. History. Teradata was incorporated in 1979 as a Delaware corporation. Teradata became a publicly traded company named Teradata Corporation (NYSE: TDC) on September 30, 2007. Industry and Market Opportunity.
We manage our business under two operating segments: (1) Product Sales and (2) Consulting Services. For financial information about our segments and geographic information, see " Note 14-Segment, Other Supplemental Information and Concentrations " in the Notes to Consolidated Financial Statements in this Annual Report. History. Teradata was incorporated in 1979 as a Delaware corporation.
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.
The following table and biographies sets forth information as of February 27, 2026 regarding the individuals who are serving as our executive officers.
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.
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.
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.
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 and services sales.
There are no family relationships between any of the executive officers or directors of Teradata. There are no contractual obligations regarding the election of our executive officers or directors. Information.
From 2005 until 2013, he held various senior legal roles at F5. There are no family relationships between any of the executive officers or directors of Teradata. There are no contractual obligations regarding the selection of our executive officers. 12 Table of Contents Information.
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.
Our teams are extending Teradata technologies and innovations for the Teradata platform, in order to have consistent and differentiated capabilities that meet the performance and scale requirements of enterprise data, analytics and AI uses, moving towards fully autonomous enterprises.
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.
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 technologies that position Teradata to lead in autonomous AI and knowledge. Government Regulation and Compliance.
Our goal is to provide choices to our customers with partner offerings that are optimized and certified to work with the Teradata Vantage platform to deliver end-to-end analytic and data solutions and to provide comprehensive capabilities that support the customer’s business goals and work within their analytic ecosystem. • Systems Integrators and Consultants: We work with a range of systems integrators and consultants who engage in the design, implementation, and integration of analytic solutions for our joint customers.
Our goal is to provide choices through our open and connected approach and support customers’ choice with partner offerings that are optimized and certified to work with our platform to deliver end-to-end analytic and data solutions and to provide comprehensive capabilities that support the customer’s business goals. In 2025, we added new partnerships with ServiceNow and Salesforce.
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 provide guidance to customers on uses tailored to their needs and offer differentiated use case solutions that can accelerate growth. Our experienced consultants offer a broad range of services, including helping organizations establish a data analytics and AI vision, enabling a modern, hybrid ecosystem architecture, identifying and operationalizing opportunities, and realizing value in production.
We are also the exclusive licensee of four additional patents in the United States and counterpart patents in foreign countries. Many of the patents that we own are licensed to others, and we are licensed to use certain patents owned by others.
Risk Factors, in this Annual Report. Intellectual Property and Technology. We ow n 534 patents in the United States. We are also the exclusive licensee of four additional patents in the United States and counterpart patents in foreign countries.
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.
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. 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.
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.
Along with our fully flexible work environment, we offer competitive pay and comprehensive health and wellness benefits and programs designed to help our people thrive. As of December 31, 2025, we had approximately 5,100 employees globally, with approximately 30% employed in the United States and 70% across the rest of the world.
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.
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. On an ongoing basis, this team adds expertise to align with emerging market dynamics, for example, adding AI expertise to accelerate our momentum.
Jacqueline Woods is the Company's Chief Marketing Officer and has served in this role since joining Teradata in December 2021. Previously, she served as the Global Chief Marketing and Communications Officer for NeilsenIQ, a consumer intelligence company, from 2019 until November 2021. Prior to that, Ms.
John Ederer is the Company's Chief Financial Officer and has served in this role since joining Teradata in May 2025. Previously, Mr. Ederer served as the Chief Financial Officer for Model N, Inc., a cloud revenue management solutions provider, from January 2021 to May 2025.
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.
Scot Rogers is the Company’s Chief Administrative Officer and Corporate Secretary and has served in this role since joining Teradata in June 2025. Previously, from January 2014 until May 2025, he served as the Executive Vice President, General Counsel, Secretary and Chief Compliance Officer for F5 Networks, Inc., a transnational company that specializes in application services and application delivery networking.
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 .
Name Age Position(s) Stephen McMillan 55 President and Chief Executive Officer John Ederer 57 Chief Financial Officer Sumeet Arora 51 Chief Product Officer Michael Hutchinson 60 Chief Operating Officer Richard Petley 49 Chief Revenue Officer Scot Rogers 58 Chief Administrative Officer Stephen McMillan .
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.
Properties and Facilities. Our corporate headquarters is located in San Diego, California. As of December 31, 2025, we operated 40 facilities in 29 countries throughout the world. We own our San Diego complex, while all other facilities are leased. 11 Table of Contents Information About Our Executive Officers.
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.
With our AI and knowledge platform, underpinned by our extensive patented workload management optimization technology, we believe we are well positioned to help enterprises become autonomous enterprises, with a governance layer that is intended to provide the ability for customers to focus on managing, securing, and providing trustworthy data for AI and analytics across hybrid and multi-cloud environments.
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Item 1. BUSINESS 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. As such, we strive to innovate and deliver trusted solutions for their toughest data and analytics challenges.
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Item 1. BUSINESS Overview . At Teradata Corporation ("we," "us," "Teradata," or the "Company"), we are focused on helping organizations activate the intelligence in their enterprise and turn the insights from across their organization into outcomes. In the agentic future, AI agents have enterprise context, can act on it in milliseconds and address continuous decisions at enterprise scale.
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That is why we built our open and connected hybrid cloud analytics and data platform for AI.
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This new landscape demands a new system of intelligence, and we believe Teradata is uniquely suited to provide this with our autonomous AI and knowledge platform as well as our data and analytics capabilities.
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Data at scale is the foundation of agentic and generative AI applications, and data at scale is what Teradata provides.
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We believe that we have architected our platform for autonomous AI operations and organizations’ toughest data and analytics challenges, particularly as enterprises are evaluating how to cost effectively deploy agentic AI.
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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.
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We also saw a resurgence of hybrid environments that reflected a growing understanding of how enterprises can best leverage both on-premises and cloud deployment options to meet their diverse business needs.
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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.
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Our platform is designed for data and analytics that can give customers the opportunity to run agentic AI at scale wherever that data resides in their business – whether public cloud, on-premises, private cloud, or a combination.
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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.
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Our AI and Knowledge Platform We believe our technology strengths are the foundation for agentic AI at scale . Our platform is designed for enterprise-grade workloads. It is built on a massively parallel architecture, with patented workload management, query optimization, and predictable costs that are designed to deliver the most complex workloads.
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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.
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The industry data models available on our platform are built on decades of experience working with global organizations that are large-scale users of data, and can enable our customers to bring deep context to the language models they choose to use.
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ClearScape Analytics provides robust in-database engine analytics functionality, open and connected integrations, and operationalization at scale for more effective data preparation, advanced analytics, and AI/ML performance. • Query Grid™: Query Grid is our "data fabric," a data integration and management layer included with our hybrid platform.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf 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.
Biggest changeIf we are unable to successfully execute our strategy, respond to market and technological change, develop, deliver and scale our offerings on a timely and cost-effective basis, maintain our differentiated hybrid capabilities, or achieve competitive margins and growth, our business, brand and reputation, competitive position, financial condition, results of operations, growth prospects, and cash flows could be materially adversely affected.
Also, quality issues, commodity, transportation, wage, or other inflationary pressures, a disruption in our supply chain or the need to find alternative suppliers could impact the costs and/or timing associated with procuring necessary offerings, components and services. In any case, our operations could be adversely impacted.
Also, quality issues, commodity, tariffs, transportation, wage, or other inflationary pressures, a disruption in our supply chain or the need to find alternative suppliers could impact the costs and/or timing associated with procuring necessary offerings, components and services. In any case, our operations could be adversely impacted.
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.
Consequently, such controls may not prevent or detect misstatements in our reported financial results as required under rules of the SEC and the New York Stock Exchange ("NYSE"), which could increase our operating costs or impair our ability to operate our business.
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.
Pillar Two did not have a material impact to our effective tax rate in 2025 and 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.
In addition, from time to time, we may wind down certain business activities and/or facilities, cease doing business in certain geographic areas, and/or perform other organizational reorganization projects in an effort to reduce costs and optimize operations.
From time to time, we may wind down certain business activities and/or facilities, cease doing business in certain geographic areas, and/or perform other organizational reorganization projects in an effort to reduce costs and optimize 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.
Such events could pose physical risks to our facilities and data lab, 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.
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.
Commencing in October 2023 and continuing throughout 2024 and 2025, 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 $1 million, $4 million and $13 million during 2025, 2024 and 2023, respectively.
Such events and disruptions could make it difficult or impossible to deliver products and services to our customers or perform critical business functions and could adversely affect our business. Our headquarters and data center are located in California, a region with a history of seismic activity, wildfires and an extreme risk of drought, flooding, and vulnerability to future water scarcity.
Such events and disruptions could make it difficult or impossible to deliver products and services to our customers or perform critical business functions and could adversely affect our business. Our headquarters and data lab are located in California, a region with a history of seismic activity, wildfires and an extreme risk of drought, flooding, and vulnerability to future water scarcity.
Our strategic partners include cloud service providers, consultants and system integrators, software and technology providers, hardware support service providers, and indirect channel distributors in certain countries.
Our strategic partners include cloud service providers, alliance partners, system integrators and consultants, software and technology providers, hardware support service providers, and indirect channel distributors in certain countries.
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.
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; 24 Table of Contents • 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.
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.
As part of our strategy, our relationships with public cloud service providers, Amazon Web Services ("AWS"), Google Cloud, and Microsoft Azure , could 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.
Increases in the cost of components used in our product, and/or increases in our other costs of doing business, have, and could continue to, adversely affect our profit margins. Our cloud offerings are dependent on cloud service providers and require significant investments to ensure that our solutions are optimized in these cloud environments.
Increases in the cost, or reduced availability, of components used in our product, and/or increases in our other costs of doing business, have, and could continue to, adversely affect our profit margins. Our cloud offerings are dependent on cloud service providers and require significant investments to ensure that our solutions are optimized in these environments.
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 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 controls and trade compliance, shareholder matters, intellectual property, a variety of local laws and regulations, and other regulatory compliance and general matters.
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.
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.
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.
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 enacted Pillar Two as of January 1, 2024.
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.
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.
The distributed and multi-tenant nature of our cloud- and hybrid-based platforms can also complicate data governance and compliance. While customers handle application development and deployment within our platform, vulnerabilities stemming from various actions, including unsecure coding practices, data leakage, performance issues, or mismanagement of configurations, can impact the broader platform's integrity and security.
The distributed and multi-tenant nature of our cloud- and hybrid-based platforms can also complicate data governance and compliance. While customers handle application development and deployment within our platform, vulnerabilities stemming from various actions, including unsecure coding practices, data leakage, performance issues, or mismanagement of configurations, can impact the broader platform's 16 Table of Contents integrity and security.
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.
Such arrangements may impact the timing of revenue recognition for these customers and result in fluctuations in our quarterly operating results. 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.
Unanticipated delays or accelerations in our sales cycles makes accurate estimation of our Total ARR, Public Cloud ARR, and revenues difficult, and have resulted in, and could in the future result in, significant fluctuations in our quarterly operating results and have impacted, and could in the future impact, our ability to achieve any financial guidance and forecasts that we may provide.
Unanticipated delays or accelerations in our sales cycles makes accurate estimation of our Total Annual Recurring Revenue ("ARR"), Public Cloud ARR, and revenues difficult, and have resulted in, and could in the future result in, significant fluctuations in our quarterly operating results and have impacted, and could in the future impact, our ability to achieve any financial guidance and forecasts that we may provide.
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.
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.
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.
We operate in approximately 38 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.
Disruptions could occur as a result of supply chain challenges; decreases in work force availability; natural resources availability; natural disasters; inclement weather, including as exacerbated by global climate change; man-made disasters; or other external events, such as terrorist acts or acts of war, pandemics and/or epidemics, boycotts and sanctions, widespread criminal activities, or protests and/or social unrest, or other events, at or in proximity to any of our facilities or those of our customers, vendors, data warehouses, distribution channels, and public cloud service providers.
Disruptions could occur as a result of supply chain challenges; decreases in work force availability; availability of natural resources; natural disasters, including inclement weather, which can be exacerbated by global climate change; man-made disasters; or other external events, such as terrorist acts or acts of war, pandemics and/or epidemics, boycotts and sanctions, widespread criminal activities, protests and/or social unrest, or other events, at, or in proximity to, any of our facilities or those of our customers, vendors, distribution channels, and public cloud service providers.
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.
Even the perception of inadequate security, including delays or failure to obtain necessary security certifications such as FedRAMP, 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.
If we are unsuccessful in meeting performance requirements or obtaining future returns on these investments, or if we are otherwise unable to maintain adequate relationships with any of these cloud service providers, our financial results may be adversely impacted.
If we are unsuccessful in meeting performance requirements 17 Table of Contents or obtaining future returns on these investments, or if we are otherwise unable to maintain adequate relationships with any of these cloud service providers, our financial results may be adversely impacted.
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.
For example, existing and 22 Table of Contents 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.
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.
The pace 14 Table of Contents 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.
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%.
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 2025, the percentage of our total revenues from outside of the United States was 50%.
We may be unable to prevent third parties from using our technology without our authorization or independently developing technology that is similar to ours, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States (such as Iran, China and certain Eastern European countries who may use NSSAPC to advance their own industries).
We may be unable to prevent third parties from using our technology without our authorization or independently developing technology that is similar to ours, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States (such as Iran, China and certain Eastern European countries that may use Nation State Sponsored Advanced Persistent Code (" NSSAPC ") to advance their own industries).
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.
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.
As our on-premises customers migrate all or a portion of their data analytics solutions to a cloud-based environment, some customers have selected a cloud-based offering of one of our competitors and existing customers may do so in the future.
As some of our on-premises customers migrate all or a portion of their data analytics solutions to a cloud- or hybrid based platform, some customers have selected offerings of one of our competitors and existing customers may do so in the future.
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.
Accordingly, adverse global economic, inflationary, recessionary, and market conditions, including in certain economic sectors in which many of our customers operate (such as financial services, healthcare, manufacturing, or government), may adversely impact our business.
As a result, our ability to meet program goals and objectives may be challenged by a variety of factors, including the complexity of implementing ESG initiatives across our operations and supply chain, unforeseen economic or operational constraints, and shifts in market dynamics or regulatory frameworks.
Our ability to meet program goals and objectives may be challenged by a variety of factors, including the complexity of implementing ESG initiatives across our operations and supply chain, economic or operational constraints, shifts in market dynamics, and evolving regulatory frameworks and reporting standards.
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.
Increased scrutiny from governments, investors, rating agencies, customers, and other stakeholders regarding our environmental, social, and governance ("ESG") practices, commitments, goals and performance could impose additional costs, expose us to new risks, or negatively impact our reputation. The ESG regulatory landscape is constantly changing, with regulatory requirements and stakeholder expectations continuously evolving across multiple jurisdictions.
Laws and regulations impacting our customers, such as those relating to privacy, data protection and digital marketing, could also impact our future business.
Laws and regulations impacting our customers, such as those relating to privacy, data protection and digital marketing, could also impact our future 23 Table of Contents business.
Further, laws such as the European Union’s proposed e-Privacy Regulation are increasingly aimed at the use of personal information for marketing purposes, and the tracking of individuals’ online activities. These new or proposed laws and regulations are also subject to differing interpretations which may be inconsistent among jurisdictions.
Further, proposed and evolving European privacy and electronic communications regulations are increasingly aimed at the use of personal information for marketing purposes, and the tracking of individuals’ online activities. These new or proposed laws and regulations are also subject to differing interpretations which may be inconsistent among jurisdictions.
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.
Given the breadth and scope of our international 20 Table of Contents 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.
Furthermore, cloud service providers do and may in the future provide platforms that compete with VantageCloud and VantageCloud Lake.
Furthermore, cloud service providers do and may in the future provide platforms that compete with our platform.
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 operate in the intensely competitive IT industry, particularly for data analytics and AI solutions, 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.
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.
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.
As such, increased costs and/or commodity and other inflation, and/or increased tariffs on certain items imported from foreign countries have affected our profit margins and could continue to result in declines in our profit margins.
Components used in our products require commodities as part of their manufacturing. As such, increased costs and other inflation, and/or increased tariffs on certain items imported from foreign countries have affected our profit margins and could continue to result in declines in our profit margins.
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.
In addition, we are subject to diverse and complex laws and regulations relating to technology (including AI/ML), corporate governance, ESG reporting, environmental protection, privacy and data protection, taxation, public disclosure, and reporting, which are evolving and subject to change.
For example, we rely on Flex as a key single source contract manufacturer for our on-premises hardware systems. In addition, we buy servers from Dell Technologies Inc. and storage disk systems from NetApp, Inc.
For example, we rely on Flex as a key contract manufacturer for certain on-premises hardware offerings. In addition, we buy servers from Dell Technologies Inc., storage disk systems from NetApp, Inc., and graphics processing units ("GPU") from NVIDIA.
Despite robust data security measures and skilled computer programmers, nation state sponsored cyber attackers (including from countries such as Iran, China, Russia and certain Eastern European nations) and hackers may be able to penetrate our network security or that of our third-party providers and misappropriate or compromise our intellectual property or other confidential information or that of our customers, create system disruptions or cause shutdowns.
Despite robust data security measures and skilled computer programmers, nation-state sponsored cyber attackers and hackers deploying and advanced and persistent threats may be able to penetrate our network security or that of our third-party providers and misappropriate or compromise our intellectual property or other confidential information or that of our customers, create system disruptions or cause shutdowns.
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.
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.
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.
RISKS RELATED TO OUR INDUSTRY Our platform and service offerings incorporate AI/ML capabilities, which exposes us to an emerging and uncertain regulatory environment and rapidly changing technology, and any failure to comply with applicable requirements could result in reputational harm, liability and disruption to our business operations.
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.
In addition, damage to the reputation of our brand could result in, among other things, customer cancellations or non-renewals, challenges in attracting and retaining employees, vendor relationship issues, and increased scrutiny from investors and other stakeholders, any of which could materially affect our revenue and profitability.
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.
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. In addition, the needs of our customers have evolved from a cloud-only approach to considering hybrid platforms or remaining on-premises.
In addition, our ability to refinance any of our outstanding or future indebtedness will depend on market conditions and our financial condition at such time, which could result in our ability to engage in these activities on desirable rates and terms, or at all.
In addition, our ability to refinance any of our outstanding or future indebtedness will depend on market conditions and our financial condition at such time, which could result in our ability to engage in these activities on desirable rates and terms, or at all. 25 Table of Contents Fluctuations in foreign currency exchange rates have affected our operating results and could continue to impact our revenue and net earnings.
The significant purchasing and market power of these larger competitors, which have greater financial resources than we do, could allow them to surpass our market penetration and marketing efforts to promote and sell their offerings and services. In addition, many other companies participate in specific areas of our business, such as enterprise applications, analytic platforms and business intelligence software.
The significant purchasing and market power of these larger competitors, which have greater financial resources than we do, could allow them to surpass our market penetration and marketing efforts to promote and sell their offerings and services.
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.
In addition, we may be subject to increased regulatory requirements and related risks, including data privacy concerns, intellectual property disputes, and exposure to litigation. 21 Table of Contents The IT industry, particularly for data analytics and AI solutions, is intensely competitive and evolving, and competitive pressures could adversely affect our pricing practices or demand for our offerings and services.
In addition, phishing-scheme-perpetrators may be able to lure employees or contractors into providing such perpetrators with information that may enable them to avoid some of our network security controls or those of third-party providers which could result in system disruptions or a loss of confidential and proprietary information.
In addition, phishing-scheme-perpetrators may be able to lure employees or contractors into providing such perpetrators with information that may enable them to avoid some of our network security controls or those of third-party providers which could result in system disruptions or a loss of confidential and proprietary information. 15 Table of Contents While immaterial in impact, we have been subject to actual and threatened cyber-attacks, and there can be no assurance that our defensive measures will be adequate to prevent them in the future.
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.
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.
Failure to compete successfully with new or existing competitors in these and other areas could have a material adverse impact on our ability to generate additional revenues or sustain existing revenue levels.
In addition, we see additional competition from both established and emerging cloud-only data vendors, AI-focused companies, and open-source providers. Failure to compete successfully with new or existing competitors in these and other areas could have a material adverse impact on our ability to generate additional revenues or sustain existing revenue levels.
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.
Furthermore, as 13 Table of Contents we migrate our customers from on-premises environments to the cloud and hybrid deployments, expand our customers’ workloads or introduce new consumption or deployment models, we may incur unexpected, delays, or operational complexity.
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.
As a result, our actual results may differ from our projections, particularly for Public Cloud ARR and Total ARR. 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.
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.
If the market does not recognize our brand attributes or if there are misperceptions regarding our autonomous AI, cloud, hybrid, or other capabilities, our ability to upgrade existing customers, drive expansion or consumption growth, or acquire new customers could be adversely affected.
The world economy, including our business, realized significant disruption during the COVID-19 pandemic. The occurrence of future global pandemics and/or regional epidemics may disrupt our business in the future.
The occurrence of future global pandemics and/or regional epidemics may disrupt our business in the future.
In addition, market acceptance of new product and service offerings will be dependent in part on our ability to include functionality and usability that address customer requirements, and to optimally price our offerings and services to meet customer demand and cover our costs.
Market acceptance of our new offerings depends on our ability to include functionality and usability that address customer expectations, and to optimally price our offerings and services to meet customer demand across platforms and cover our costs. There can be no assurance that our go-to-market approach will successfully address these evolving preferences.
As part of our business strategy, we continue to dedicate a significant amount of resources to our R&D efforts in order to maintain and advance our competitive position. However, we may not receive significant revenues from 15 Table of Contents these investments for several years, if at all. R&D expenses represent a significant portion of our discretionary fixed costs.
However, we may not receive significant revenues from these investments for several years, if at all. R&D expenses represent a significant portion of our discretionary fixed costs. Please see Item 1.
Although many of these components are available from multiple sources, we utilize preferred supplier relationships to better ensure more consistent quality, cost and delivery. Components used in our products require commodities as part of their manufacturing. In addition, we have a global employee population.
Some of our key hardware components are assembled and configured by Flex. Flex also procures a wide variety of components used in the assembly process on our behalf. Although many of these components are available from multiple sources, we utilize preferred supplier relationships to better ensure more consistent quality, cost and delivery.
In some cases, we may partner with a company in one area of our business and compete with them in another. In particular, in delivering our Teradata VantageCloud offerings in a cloud environment to certain of our customers, we partner with each of Amazon Web Services, Google, and Microsoft, which are public cloud service providers.
In particular, in delivering our offerings in a cloud environment to certain of our customers, we partner with Amazon Web Services, Google Cloud, and Microsoft Azure, which are public cloud service providers. The status of our business relationships with these companies can influence our ability to compete for data analytics and related AI-enabled solutions opportunities in these areas.
Regardless of whether these claims have any merit, they can be burdensome to defend or settle and can harm our business, reputation, financial condition and results of operations. A change in our effective tax rate can have a significant adverse impact on our business.
Regardless of whether these claims have any merit, they can be burdensome to defend or settle and can harm our business, reputation, financial condition and results of operations. As is standard in the IT industry, our offerings are built primarily on our own proprietary technology and leverage third-party proprietary software and open-source components.
Failure to successfully complete reorganization activities in connection with our transformation activities or otherwise could negatively affect our operations. We have completed reorganization efforts in connection with our business transformation and we may continue to complete reorganization activity in furtherance of our strategy.
We have undertaken, and may continue to undertake, reorganization efforts in connection with our business transformation and broader cost optimization initiatives in furtherance of our strategy.
Our employees and access to talent are critical to our success. Our future success depends on our ability to attract, retain, develop, and motivate the services of senior management and key personnel in all areas of our Company, including engineering and development, marketing and sales professionals, and consultants.
Our employees and access to specialized talent are critical to our success. Our future success depends, in part, on our ability to attract, retain, develop, and motivate senior management and other key personnel, including in product engineering and development, go-to-market functions, information security and other roles requiring expertise in AI/ML and cloud-based technologies.
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.
Such shortages or cost increases could adversely affect our ability to meet customer demand, and we may not be able to fully mitigate these impacts through pricing actions, alternative sourcing, or design adjustments. Historically, we have mitigated certain cost increases by raising product prices, collaborating with suppliers, pursuing alternative sourcing options, and engaging in cost reduction efforts, all as appropriate.
Our competitors include established companies within our industry, including Amazon, Google, IBM, Oracle, Microsoft, and SAP, which are well-capitalized companies with widespread distribution, brand recognition and penetration of our product platforms and service offerings.
Our competitors include established companies within our industry, including AWS, Databricks, Google Cloud, Microsoft Azure, Snowflake, and others, many of which are well-capitalized companies with widespread distribution, brand recognition and a strong presence in the markets we serve.
Further, if any price increases we adopt are not accepted by our customers and the market, our net sales, profit margins, earnings, and market share could be adversely affected. Challenges with the design and implementation of our new enterprise resource planning ("ERP") system could adversely impact our business and operations.
However, these 18 Table of Contents actions may not be sufficient and if our customers resist price adjustments or market conditions limit our ability to offset cost pressures, our sales, margins, earnings, and market share could be adversely affected. Challenges with our new enterprise resource planning ("ERP") system could adversely impact our business and operations.
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.
Recognition and reputation of our brand are important to our success, including our ability to retain existing customers, attract new customers and partners, and achieve our growth expectations in the data management and analytics market.
Reorganization activities involve risks as they may divert management's attention from our core businesses, increase expenses on a short‑term basis or reduce revenues. We may also experience a loss of continuity, loss of accumulated knowledge, or loss of efficiency during such transitional periods, all of which may negatively impact our business, financial condition, operating results, and cash flows.
We may also experience a loss of continuity, loss of accumulated knowledge, or loss of efficiency during such transitional periods, all of which may negatively impact our business, financial condition, operating results, and cash flows. 19 Table of Contents Our business is affected by the global economies in which we operate and the economic climate of the industries we serve.
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.
The AI/ML regulatory environment is rapidly evolving, and it is difficult to predict the impact such changes may have on our business, results of operations and financial condition. Evolving AI-related regulations could require changes to our AI-enabled features or platforms, or limit customer use of our offerings, potentially delaying development, increasing costs, or reducing demand.
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.
Bringing new offerings or enhancements to market can be costly and time consuming and may increase our exposure to significant technical, legal, regulatory or other risks.
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.
Competition for highly skilled personnel has intensified as companies seek to accelerate AI adoption. As a result, there can be no assurance that key personnel will remain with us, and it may be difficult and costly to replace such personnel or hire qualified employees.
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In such case, the trading price of our common stock could decline.
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In such case, the trading price of our common stock could decline. RISKS RELATED TO OUR BUSINESS AND OPERATIONS Failure to successfully execute our strategy and realize the anticipated benefits of our business transformation, including R&D investments, could have a material adverse effect on our business.
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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.
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Our strategy and ongoing business transformation, including with regard to our cloud, hybrid, on-premises, AI/ML and related offerings, involve significant execution risk.
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The successful implementation of our strategy to be the hybrid cloud platform for trusted AI at scale, coupled with the continued execution of our business transformation can present organizational and infrastructure challenges.
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We may not successfully develop, launch, scale, or operate our offerings as planned, including enabling our platform and offerings to operate effectively across cloud, hybrid, on-premises environments , or within the environments of our cloud service provider partners .
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We may not be able to implement, execute, and realize some or all of the anticipated benefits from our strategy or our business transformation plan on a timely basis. Even if the anticipated benefits and savings are substantially realized, there may be unforeseen consequences, internal control issues, or business impacts.
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The execution of our strategy and transformation initiatives presents organizational, operational, and technological challenges, including those related to organizational alignment, technology integration, skilled personnel availability, resource allocation, cost management and internal controls. We may not be able to implement or execute all aspects of our strategy as planned, or realize the anticipated benefits within expected timeframes.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

11 edited+4 added−5 removed19 unchanged
Biggest changeThe primary responsibilities of the CIRC include, but are not limited to: ◦ receiving and tracking all reported potential cybersecurity threats; ◦ escalating incident response; ◦ determining relevant stakeholders of the Information Technology function and cybersecurity incident response team, which team is selected by CIRC to serve as the lead function for investigating and coordinating cybersecurity incidents; ◦ alerting the applicable support functions of the potential cybersecurity threat and any defensive action that would be required; and ◦ alerting management, as applicable and necessary, of the potential cybersecurity threat. • Members of our Information Security function have broad ranges of qualifications and experience in information technology and security. ◦ Our CISO has over 25 years of information security experience during which he has worked on various information technology and security programs, including privacy operations and security risk management.
Biggest changeThe primary responsibilities of the CIRC include, but are not limited to: ◦ receiving and tracking all reported potential cybersecurity threats; ◦ escalating incident response; ◦ determining relevant stakeholders of the Information Technology function and cybersecurity incident response team, which team is selected by CIRC to serve as the lead function for investigating and coordinating cybersecurity incidents; ◦ alerting the applicable support functions of the potential cybersecurity threat and any defensive action that would be required; and ◦ alerting management, as applicable and necessary, of the potential cybersecurity threat.
On an annual basis, our employees must complete cybersecurity awareness training. • We perform simulations and drills to review and test our information security program, including tabletop exercises, penetration and vulnerability testing, and other exercises to evaluate the effectiveness of our information security program and improve our security measures and planning. • We maintain insurance to provide coverage for certain losses from cybersecurity threats and incidents. • We have developed business continuity and disaster recovery capabilities to mitigate interruptions to critical information systems and the loss of data and services from the effects of natural or man-made disasters to Teradata systems.
On an annual basis, our employees must complete cybersecurity awareness training. • We perform simulations to review and test our information security program, including tabletop exercises, penetration and vulnerability testing, and other exercises to evaluate the effectiveness of our information security program and improve our security measures and planning. • We maintain insurance to provide coverage for certain losses from cybersecurity threats and incidents. • We have developed business continuity and disaster recovery capabilities to mitigate interruptions to critical information systems and the loss of data and services from the effects of natural or man-made disasters to Teradata systems.
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.
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. 26 Table of Contents • 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.
In the last three fiscal years, we have not experienced any material cybersecurity incident and the expenses we have incurred from security incidents were immaterial. As a result, we do not believe that cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially impacted our results of operations and financial condition.
In the last several fiscal years, we have not experienced any material cybersecurity incident and the expenses we have incurred from security incidents were immaterial. As a result, we do not believe that cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially impacted our results of operations and financial condition.
The Audit Committee receives quarterly reports as part of its meeting materials prepared by our CISO regarding the assessment of the status, adequacy, and effectiveness of our processes related to assessing, identifying, and managing cybersecurity risks and related mitigation plans.
The Audit Committee receives quarterly reports as part of its meeting materials prepared by our CISO regarding the assessment of the status, adequacy, and effectiveness of our processes related to assessing, identifying, and managing cybersecurity risks and related 27 Table of Contents mitigation plans.
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 .
Our CISO, Chief Administrative Officer, and Chief Operating 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 .
We maintain controls and procedures that are designed to ensure prompt escalation of certain cybersecurity incidents so that decisions regarding materiality of the incident and any necessary public disclosure and reporting of such incidents can be made in a timely manner.
We maintain controls and procedures that include escalation procedures based on the nature and severity of the incident to ensure prompt escalation so that decisions regarding materiality of the incident and any necessary public disclosure and reporting of such incidents can be made in a timely manner.
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.
Members of our Information Security function have broad ranges of qualifications and experience in information technology and security. The team within the Information Security function (referred hereinto as the "cybersecurity team") possesses technical knowledge, practical skills, and strategic insight, gained through years of experience in the field of cybersecurity.
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
Additionally, they possess various certifications in specific technologies and cloud security from providers like AWS and Microsoft, along with numerous other industry-relevant security certifications. The cybersecurity team periodically attends training programs to update their skills and knowledge. Our CISO is a seasoned cybersecurity executive with 20+ years of experience working with security programs across global technology organizations.
Such items are reviewed, approved, and maintained by our CISO on an ongoing basis. In addition, we engage external advisors periodically to review and assess our policies, procedures, and controls. • Our CIRP provides a documented framework for handling cybersecurity incidents.
In addition, we engage external advisors periodically to review and assess our policies, procedures, and controls. • We engage periodically independent security firms and other third-party experts, where appropriate, to assess, test, and certify components of our cybersecurity program, and to assist with aspects of our cybersecurity processes and controls. • Our incident response process provides a documented framework for handling cybersecurity incidents.
The CIRP addresses cybersecurity incident detection, containment, analysis, eradication, recovery, escalation protocols, and coordination across multiple functions of the organization. • We have processes to manage cybersecurity risks associated with third-party service providers. Such providers are subject to information security assessments at the time of onboarding and at certain other times during their engagement with us.
The program includes protocols for preventing, detecting and responding to cybersecurity incidents, and cross-functional coordination across multiple functions of the organization. • We have processes to manage cybersecurity risks associated with third-party service providers.
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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.
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Such items are reviewed, approved, and monitored by ou r CISO on an ongoing basis.
Removed
As part of our training plan, we regularly perform phishing tests of our employees. In addition, our security training incorporates awareness of cyber threats (including but not limited to malware, ransomware, and social engineering attacks), password hygiene, incident reporting process, as well as physical security best practices.
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Risk management process for third-party service providers and vendors includes due diligence and information security assessments in the selection process and periodic monitoring regarding adherence to applicable cybersecurity standards.
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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.
Added
As part of our training plan, we regularly perform phishing tests of our employees.
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Our cybersecurity team includes professionals certified in a wide array of cybersecurity disciplines.
Added
He brings experience in cloud security, regulatory compliance, and incident response. He has experience with many different types of enterprises, including, private companies, consumer platforms, and publicly listed companies. 28 Table of Contents
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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.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeTeradata believes its facilities are suitable and adequate to meet its current needs. Teradata’s corporate headquarters is in San Diego, California.
Biggest changeA majority of our properties are utilized by both operating segments and Teradata believes its facilities are suitable and adequate to meet its current needs. Teradata’s corporate headquarters is in San Diego, California.
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.
Item 2. PROPERTIES As of December 31, 2025, Teradata operated 40 facilities in 29 countries consisting of approximately 628 thousand square feet throughout the world. Approximately 73% 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 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.
Within the total facility portfolio, Teradata operates 9 facilities where R&D activity occurs totaling approximately 95 thousand square feet, of which approximately 75% is owned. The remaining approximately 533 thousand square feet of space includes office, repair, warehouse and other miscellaneous sites, and is 73% owned and 27% leased.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+4 added−1 removed3 unchanged
Biggest changeAs 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.
Biggest changeAs of December 31, Company/Index 2020 2021 2022 2023 2024 2025 Teradata Corporation $ 100 $ 189 $ 150 $ 194 $ 139 $ 136 S&P 500 Index $ 100 $ 129 $ 105 $ 133 $ 166 $ 196 S&P Information Technology Index $ 100 $ 135 $ 97 $ 153 $ 208 $ 258 30 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.
Share repurchases made by the Company are reported on a trade date basis. On November 1, 2021, Teradata's Board of Directors authorized an additional $1 billion to be utilized to repurchase Teradata common stock under this share repurchase program. The general share repurchase program expires on December 31, 2025.
Share repurchases made by the Company are reported on a trade date basis. On November 1, 2021, Teradata's Board of Directors authorized an additional $1 billion to be utilized to repurchase Teradata common stock under this share repurchase program. The general share repurchase program expired on December 31, 2025.
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.
This graph covers the five-year period from December 31, 2020 to December 31, 2025 . In each case, assumes a $100 investment on December 31, 2020 , 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 16,811 registered holders of Teradata common stock as of February 14, 2025.
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 15,336 registered holders of Teradata common stock as of February 13, 2026.
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.
For the year ended December 31, 2025, the total of these purchases was 388,910 shares at an average price of $24.03 per share.
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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.
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The following table provides information relating to the Company’s repurchase of common stock for the year ended December 31, 2025: 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 1,563,247 $ 27.92 238,163 1,325,084 $ 101,574 $ 313,419,831 Second quarter total 1,297,308 $ 21.74 — 1,297,308 $ 101,574 $ 285,210,524 Third quarter total 1,424,572 $ 21.56 222,887 1,201,685 $ 124,167 $ 259,180,240 October 2025 631,333 $ 21.42 — 631,333 $ 124,167 $ 245,656,757 November 2025 420,252 $ 26.57 — 420,252 $ 124,167 $ 234,489,046 December 2025 418,685 $ 30.58 14,826 403,859 $ 65,403 $ 222,141,736 Fourth quarter total 1,470,270 $ 25.50 14,826 1,455,444 $ 65,403 $ 222,141,736 2025 Full year total 5,755,397 $ 24.34 475,876 5,279,521 $ 65,403 $ 222,141,736 1.
Added
On November 17, 2025, the Board approved a new stock repurchase program (the "Repurchase Program") authorizing the Company to repurchase up to $500 million of its common stock. The Repurchase Program became effective on January 1, 2026, does not have an expiration date, and will continue until otherwise modified, suspended, or terminated.
Added
The purchases under the Repurchase Program may be made from time to time in the open market, in privately negotiated transactions, or by other means, including through Rule 10b5-1 trading plans, in accordance with applicable securities law and other regulatory requirements.
Added
The Repurchase Program does not obligate the Company to repurchase any shares under the authorization and the timing and amount of any repurchases will depend on a variety of factors, including the price of the Company’s common stock, general business and market conditions, and other investment considerations.

Item 7. Management's Discussion & Analysis

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

71 edited+15 added−16 removed40 unchanged
Biggest changeThe 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.
Biggest changeThese factors were partially offset by an improvement in Public Cloud margins year-over-year. • Operating expenses in 2025 decreased by 8% as compared to 2024, primarily driven by our cost discipline initiatives, primarily within selling, general and administrative ("SG&A") expenses . • Operating income was $205 million in 2025, down from $209 million in 2024. • Net income was $130 million in 2025 versus net income of $114 million in 2024, primarily due to lower expenses from foreign currency exchange rate fluctuations, and interest expense.
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.
Recurring gross profit as a percentage of revenue was down from the prior year, primarily because of the negative gross profit rate impact from increased Public Cloud revenue, partially offset by improved Public Cloud gross profit rates year-over-year.
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.
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, 2025 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 have two share repurchase programs that were authorized by our Board of Directors: • The dilution offset share repurchase program allows us to repurchase Teradata common stock to the extent (i) cash is received from the exercise of stock options and (ii) employees' purchase Teradata stock pursuant to the Teradata Employee Stock Purchase Plan ("ESPP").
We have two share repurchase programs that have been authorized by our Board of Directors: • The dilution offset share repurchase program allows us to repurchase Teradata common stock to the extent (i) cash is received from the exercise of stock options and (ii) employees' purchase Teradata stock pursuant to the Teradata Employee Stock Purchase Plan ("ESPP").
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.
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 2025, the Company performed its annual impairment test of goodwill and determined that no impairment to the carrying value of goodwill was necessary.
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.
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 $1 million for 2025 and a net outflow of $1 million for 2024.
On June 28, 2022, we entered into a Credit Agreement that provides for (i) a five-year unsecured term loan in an aggregate principal amount of $500 million (the "Term Loan"), and (ii) a five-year unsecured revolving credit facility in an aggregate principal amount of up to $400 million, including a $50 million sublimit for the issuance of standby letters of credit and a $50 million sublimit for swingline loans (the "Revolving Facility" and, collectively with the Term Loan, the "Credit Facility").
On June 28, 2022, we entered into a Credit Agreement that provides for (i) a five-year unsecured term loan in an aggregate principal amount of $500 million (the "Term Loan"), and (ii) a five-year unsecured revolving credit facility in an aggregate principal amount of up t o $400 million, including a $50 million sublimit for the issuance of standby letters of credit and a $50 million sublimit for swingline loans (the "Revolving Facility" and, collectively with the Term Loan, the "Credit Facility").
In addition, a significant change in the forecasts to any of these preferred suppliers could result in purchase obligations or components that may be in excess of demand. Postemployment and pension obligations are described in detail in "Note 8—Employee Benefit Plans" in the Notes to Consolidated Financial Statements. Off-Balance Sheet Arrangements.
In addition, a significant change in the forecasts to any of these preferred suppliers could result in purchase obligations or components that may be in excess of demand. Postemployment and pension obligations are described in detail in " Note 8—Employee Benefit Plans " in the Notes to Consolidated Financial Statements in this Annual Report. Off-Balance Sheet Arrangements.
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.
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.
Management believes current cash, cash generated from operations and the $400 million available under the Credit Facility will be sufficient to satisfy future working capital, research and development activities, capital expenditures, pension contributions, and other financing requirements for at least the next twelve months.
Management believes current cash, cash generated from operations and the $400 m illion available under the Credit Facility will be sufficient to satisfy future working capital, research and development activities, capital expenditures, pension contributions, and other financing requirements for at least the next twelve months.
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.
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, 2024.
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.
In 2025, 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 $1 million, compared to $4 million of such pre-tax losses in 2024, the net purchases of which are reported in other investing activities in the Consolidated Statement of Cash Flows.
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.
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 decrease in perpetual software licenses, hardware and other gross profit as a percentage of revenue was primarily driven by deal mix and a higher ratio of perpetual hardware to software revenue as compared to prior year as the vast majority of all customers have transitioned to our subscription-based offerings, consistent with our overall strategy.
The increase in perpetual software licenses, hardware and other gross profit as a percentage of revenue was primarily driven by deal mix as compared to prior year as the vast majority of all customers have transitioned to our subscription-based offerings, consistent with our overall strategy.
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.
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 in this Annual Report. 39 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.
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.
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, 2025 are described in detail in " Note 13-Leases " of Notes to Consolidated Financial Statements in this Annual Report. Contractual and Other Commercial Commitments.
If the Company is unable to generate sufficient cash flows from operations, or otherwise comply with the terms of the Credit Facility or its term loan agreement, the Company may be required to seek additional financing alternatives. Long-Term Debt .
If the Company is unable to generate sufficient cash flows from operations, or otherwise comply with the terms of the Credit Facility or its term loan agreement, the Company may be required to seek additional financing alternatives. Legal Settlement.
No shares will vest if the threshold objectives are not met. In the event the objectives are exceeded, additional shares will vest up to a maximum payout. The cost of our performance-based restricted share awards is expensed over the performance period based upon management’s estimate and analysis of the probability of meeting the performance criteria.
In the event the objectives are exceeded, additional shares will vest up to a maximum payout. The cost of our performance-based restricted share awards is expensed over the performance period based upon management’s estimate and analysis of the probability of meeting the performance criteria.
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.
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. 32 Table of Contents 2025 FINANCIAL OVERVIEW As more fully discussed in later sections of this MD&A, the following are the financial highlights for 2025: • Revenue of $1,663 million decreased by 5% in 2025 as compared to 2024, with a 2% decrease in recurring revenue.
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.
Diluted net earnings per share was $1.35 in 2025 compared to diluted earnings per share of $1.16 in 2024. RESULTS FROM OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 For discussion of fiscal year 2024 versus 2023 see "Item 7.
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.
Perpetual software licenses, hardware and other revenue decreased by 26% and Consulting Services revenue decreased by 19% . Revenues from perpetual software licenses, hardware and other decreased primarily due to our strategic shift towards recurring revenue.
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.
However, these distributions may be subject to non-U.S. withholding taxes if profits are distributed from certain jurisdictions; accordingly, the Company has recorde d $4 million o f 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.
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.
Based on currency rates as of December 31 , 2025, Teradata is estimating a 0.25%-to-0.75% positi ve impact from currency translation on our 2026 full-year total revenues. 33 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.
Our long-term debt is discussed in Note 12 of Notes to Consolidated Financial Statements.
Our long-term debt is discussed in " Note 12-Debt " of Notes to Consolidated Financial Statements in this Annual Report.
The Company expects that a majority of its foreign earnings will be repatriated to the U.S. Effective January 1, 2018, the U.S. moved to a territorial system of international taxation, and as such will generally not subject future foreign earnings to U.S. taxation upon repatriation in future years.
Effective January 1, 2018, the U.S. moved to a territorial system of international taxation, and as such will generally not subject future foreign earnings to U.S. taxation upon repatriation in future years.
In addition, as disclosed in Note 9 of Notes to Consolidated Financial Statements, Teradata entered into an interest rate swap to hedge approximately 90% of the floating interest rate of the total $500 million Term Loan and a cross currency swap to hedge a portion of Euro currency exposure of its net investment in certain foreign subsidiaries.
In addition, as disclosed in " Note 9-Derivative Instruments and Hedging Activities " of Notes to Consolidated Financial Statements in this Annual Report, Teradata entered into an interest rate swap to hedge approximatel y 90 % of the floating interest rate of the total $500 million Term Loan and a cross currency swap to hedge a portion of Euro currency exposure of its net investment in certain foreign subsidiaries.
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.
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 $24.34 in 2025 and approximately 5.8 million shares of our common stock at an average price per share of $36.99 in 2024.
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.
Other expense is lower i n 2025, primarily due to $10 million less in losses resulting from foreign currency transactions compared to the prior year, and $3 million 35 Table of Contents 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.
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.
Foreign currency fluctuations had no impact on total revenue and a 1% positive impact on recurring revenue compared to the prior year. T he re curring 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.
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.
We have record ed $110 million in 2025 and $101 million in 2024 for valuation allowances, $69 million of which offset our California R&D tax credit carryfoward, and $24 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.
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.
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.
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.
On November 1, 2021, our Board of Directors authorized an additional $1 billion for share repurchases under the open market share repurchase program. There was a total authority of $222 million remaining under the open market share repurchase program as of December 31, 2025.
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.
For example, a higher mix of Teradata versus third-party products can positively impact profitability. 34 Table of Contents Gross profit for the following years ended December 31 was as follows: % of % of In millions 2025 Revenue 2024 Revenue Gross profit Recurring $ 983 68.0 % $ 1,038 70.2 % Perpetual software licenses, hardware and other 4 23.5 % — — % Consulting services — — % 20 8.1 % Total gross profit $ 987 59.4 % $ 1,058 60.5 % 2025 compared to 2024 - T he decreas e 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.
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.
Revenues from perpetual software licenses, hardware, and other were down 26% in 2025, including 1% 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. Consulting Services revenue decreased 19%, with no significant impact from foreign currency exchange rate fluctuations.
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.
Our financial and performance measures for the following years ended December 31 was as follows: ARR 2025 2024 In millions Public Cloud $ 701 $ 609 Subscription 735 766 Maintenance and Software upgrade rights 86 99 Total ARR $ 1,522 $ 1,474 Cloud Net Expansion rate 108 % 117 % Total ARR increased 3% 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.
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.
As of December 31, 2025, the Company has a total o f $38 million o f unrecognized tax benefits, of which $13 million i s included in the other liabilities section of the Company’s consolidated balance sheet as a non-current liability an d $25 million o f 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.
Although many of these components are available from multiple sources, we utilize preferred supplier relationships to better ensure more consistent quality, cost, and delivery. T ypically, these preferred suppliers maintain alternative processes and/or facilities to ensure continuity of supply.
Flex procures a wide variety of components used in the manufacturing process on our behalf. Although many of these components are available from multiple sources, we utilize preferred supplier relationships to better ensure more consistent quality, cost, and delivery. T ypically, these preferred suppliers maintain alternative processes and/or facilities to ensure continuity of supply.
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.
Foreign currency exchange rate fluctuations had a positive 2% impact on Public Cloud ARR. Public Cloud ARR growth and the Cloud Net Expansion rate were primarily driven by customer demand for our differentiated offerings, resulting in new workloads for both migrations and expansions.
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 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.
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.
Revenue % of % of In millions 2025 Revenue 2024 Revenue Recurring $ 1,445 86.9 % $ 1,479 84.5 % Perpetual software license, hardware and other 17 1.0 % 23 1.3 % Consulting services 201 12.1 % 248 14.2 % Total revenue $ 1,663 100.0 % $ 1,750 100.0 % 2025 compared to 2024 - Total revenue decreased 5% in 2025, which included no impact from foreign currency exchange rate fluctuations.
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.
This non-GAAP measure should not be considered a substitute for, or superior to, cash flows from operating activities under GAAP. 36 Table of Contents The table below shows net cash provided by operating activities and capital expenditures for the following periods: In millions 2025 2024 Net cash provided by operating activities $ 305 $ 303 Less: Expenditures for property and equipment (19) (24) Additions to capitalized software (1) (2) Free cash flow $ 285 $ 277 Financing activities and certain other investing activities are not included in our calculation of free cash flow.
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.
Our total cash and cash equivalents held outside the United States in various foreign subsidiaries wa s $462 million as of December 31, 2025 and $350 million as of December 31, 2024.
As a portion of our operations and revenue occur outside the United States, and in currencies other than the U.S. dollar, we are exposed to fluctuations in foreign currency exchange rates.
The Consulting Services revenue decrease is an expected result of the lower order booking activity in the second half of 2024 and into 2025. As a portion of our operations and revenue occur outside the United States, and in currencies other than the U.S. dollar, we are exposed to fluctuations in foreign currency exchange rates.
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.
Recurring revenue declined 2% in 2025, which included a 1% positive 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, consistent with prior-year trends.
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.
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. Our segment information is presented in " Note 14-Segment, Other Supplemental Information and Concentrations " of Notes to Consolidated Financial Statements in this Annual Report.
The settlement period for the non-current income tax liabilities cannot be reasonably estimated as the timing and the amount of the payments, if any, will depend on possible future tax examinations with the various tax authorities. We also have postemployment and international pension obligations that may affect future cash flow.
These items are not included in the table of obligations shown above. The settlement period for the non-current income tax liabilities cannot be reasonably estimated as the timing and the amount of the payments, if any, will depend on possible future tax examinations with the various tax authorities.
ARR does not include managed services and third-party software. • Public Cloud ARR (included within Total ARR) - annual value at a point in time of all contracts related to public cloud implementations of Teradata VantageCloud and does not include ARR related to private or managed cloud implementations. • Cloud Net Expansion Rate - Teradata calculates its last-twelve months dollar-based cloud net expansion rate as of a fiscal quarter end as follows: ◦ We identify the ARR for active cloud customers in the fiscal quarter ending one year prior to the given fiscal quarter (the "base period"); ◦ We then identify the public cloud ARR in the given fiscal quarter (the "current period") from the same set of active cloud customers as the base period, including increases in usage, as well as reductions and cancellations, and additional conversions of on-premises revenues to the cloud for customers active in the base period, all in constant currency; and ◦ The quarterly dollar-based, cloud net expansion rate is calculated by taking the ARR from the current period and dividing by the ARR from the base period.
To allow for greater transparency regarding the progress we are making toward achieving our strategic objectives, we utilize the following financial and performance metrics: • Total Annual Recurring Revenue ("Total ARR") - annual contract value for all active and contractually binding term-based contracts at the end of the period, including cloud, recurring AI services, subscriptions, hardware rental, maintenance and software upgrade rights. • Public Cloud ARR (included within Total ARR) - annual contract value for all active and contractually binding term-based contracts at the end of the period that are operated in a public cloud environment. • Cloud Net Expansion Rate - Teradata calculates its last-twelve months dollar-based cloud net expansion rate as of a fiscal quarter end as follows: ◦ We identify the ARR for active cloud customers in the fiscal quarter ending one year prior to the given fiscal quarter (the "base period"); ◦ We then identify the public cloud ARR in the given fiscal quarter (the "current period") from the same set of active cloud customers as the base period, including increases in usage, as well as reductions and cancellations, and additional conversions of on-premises revenues to the cloud for customers active in the base period, all in constant currency; and ◦ The quarterly dollar-based, cloud net expansion rate is calculated by taking the ARR from the current period and dividing by the ARR from the base period.
We measure compensation cost for service-based restricted share unit awards at fair value and recognize compensation expense over the service period. Our performance-based restricted share units vest only if specific performance conditions are satisfied. The number of shares that will be earned pursuant to our performance-based restricted share unit awards will vary based on actual performance.
Our performance-based restricted share units vest only if specific performance conditions are satisfied. The number of shares that will be earned pursuant to our performance-based restricted share unit awards will vary based on actual performance. No shares will vest if certain objectives are not met.
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.
Results by Operating Segment On August 5, 2024, Teradata announced that it realigned its sales function and initiated global restructuring to optimize operations. Due to these organizational changes, Teradata now manages its business under two segments, which are also the Company’s operating segments: (1) Product Sales and (2) Consulting Services.
These items are not included in the table of obligations shown above. We are also potentially subject to concentration of supplier risk. Our hardware components are assembled primarily by Flex Ltd. ("Flex"). Flex procures a wide variety of components used in the manufacturing process on our behalf.
We also have postemployment and international pension obligations that may affect future cash flow. These items are not included in the table of obligations shown above. We are also potentially subject to concentration of supplier risk. Our hardware components are assembled primarily by Flex Ltd. ("Flex").
The remaining $17 42 Table of Contents million relates to certain of our operating entities with cumulative 3-year net operating losses whereby the future realization of their net deferred tax assets may not be realized.
The remaining $17 million relates to certain of our operating entities with cumulative 3-year net operating losses whereby the future realization of their net deferred tax assets may not be realized. On January 1, 2020, we transferred certain of our intellectual property among our wholly-owned subsidiaries, which resulted in the recognition of deferred tax assets o f $157 million.
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.
Other Expense, net In millions 2025 2024 Interest income $ 9 $ 11 Interest expense (26) (29) Other (10) (27) Total other expense, net $ (27) $ (45) Other expense, net in 2025 and 2024, 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.
Refer to Notes 1 and 3 in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for discussion of our revenue recognition policies. Income Taxes In accounting for income taxes, we recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities.
Income Taxes In accounting for income taxes, we recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities.
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.
Additionally, we h ad $38 million o f unrecognized tax benefits recorded on our balance sheet as of December 31, 2025, of wh ich $13 million is recorded in non-current liabilities and $25 million is reflected as an offset to deferred tax assets related to certain tax attribute carryforwards.
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.
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. We measure compensation cost for service-based restricted share unit awards at fair value and recognize compensation expense over the service period.
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.
This benefit was largely offset by $7 million of additional tax expense from stock-based compensation vesting. 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.
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.
There were no other material other investing activities in 2025 and 2024. Teradata’s financing activities for 2025 and 2024 primarily consisted of cash outflows f or share repurchases, payments on our finance leases, and repayments on long-term borrowings. At December 31, 2025, we had no outstanding borrowings on our $400 million Revolving Facility (as defined below).
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.
For example, as of December 31, 2025, a one-half percent increase/decrease in the discount rate would change the projected benefit obligation of our pension plans by approximately $6 million, and a one-half percent increase/decrease in our involuntary turnover assumption would change our postemployment benefit obligation by approximately $4 million. 41 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.
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.
Foreign currency exchange rate fluctuations had a positive 2% impact on total ARR. Our overall Total ARR increase reflects meaningful improvement in customer retention as compared to the prior year. Public Cloud ARR increased 15% versus the prior year primarily due to a net expansion rate of 108%, as well as on-premises customers migrating to Teradata's cloud platform .
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.
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. We expect to see expansion as the primary contributor for Total ARR growth in 2026 and expansion and conversion as the primary contributors for Public Cloud ARR growth in 2026.
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.
Operating Expenses % of % of In millions 2025 Revenue 2024 Revenue Operating expenses Selling, general and administrative expenses $ 502 30.2 % $ 565 32.3 % Research and development expenses 280 16.8 % 284 16.2 % Total operating expenses $ 782 47.0 % $ 849 48.5 % 2025 compared to 2024 - The decrease in SG&A expense was primarily driven by continued cost discipline, and the impact of cost actions initiated in late 2024 that continued in 2025 (as discussed in " Note 16-Reorganization and Business Transformation " in the Notes to Consolidated Financial Statements in this Annual Report).
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.
We recognized approximately $2 million of tax expense related to global intangible low-taxed income ("GILTI") in our marginal effective tax rate for 2025 and approximately $2 mi llion for 2024. We expect that a majority of our foreign earnings will be repatriated to the U.S.
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 following table and discussion outline our material obligations at December 31, 2025, with projected cash payments in the periods shown: Total 2027- 2029- 2031 and In millions Amounts 2026 2028 2030 Thereafter Total purchase obligations $ 553 $ 301 $ 246 $ 6 $ — 38 Table of Contents 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.
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 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.
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.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Teradata ended 2025 with $493 million in cash and cash equivalents, a $73 million i ncrease from December 31, 2024, after using approximately $140 million for repurchases of Company common stock during the year. Cash provided by operating activities increase d by $2 million to $305 million in 2025 compared to 2024.
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.
In addition, we expect a slight negative impact from annual upfront software subscription revenue associated with on-premises recurring revenue in 2026. Gross Profit The Company often uses specific terms and definitions to describe variances in gross profit.
On January 1, 2020, we transferred certain of our intellectual property among our wholly-owned subsidiaries, which resulted in the recognition of deferred tax assets of $157 million. The recognition of deferred tax assets from intra-entity transfers of intellectual property required us to make significant estimates and assumptions to determine the fair value of such intellectual property.
The recognition of deferred tax assets from intra-entity transfers of intellectual property required us to make significant estimates and assumptions to determine the fair value of such intellectual property. Significant assumptions in valuing the intellectual property include, but are 40 Table of Contents not limited to, internal revenue and expense forecasts, and the discount rate.
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.
See "Risk Factors" and "Forward-looking Statements." OVERVIEW At Teradata Corporation ("we," "us," "Teradata," or the "Company"), we are focused on helping organizations activate the intelligence in their enterprise and turn the insights from across their organization into outcomes.
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.
R&D expenses decreased in 2025 as compared to the prior year. R&D expenses were impacted by continued cost discipline initiatives as compared to the prior year, offset in part by targeted investments around new market opportunities. We intend to continue investing in R&D areas that we anticipate will generate growth, such as technologies that support AI/ML, including for on-premises environments.
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.
Cash provided by operating activities benefited from higher net income, adjusted for non-cash items, in 2025 as compared to 2024, as well as improved growth in deferred revenue balances, partially offset by higher receivables and lower payables balances in 2025 as compared to the prior year.
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.
Teradata used approximat ely $35 million of cash in 2025 for reorganization activities, and other activities to optimize our workforce, as compared to $37 million used in 2024 for similar purposes. Teradata’s management uses a non-GAAP measure called "free cash flow," which is not a measure defined under GAAP.
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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.
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We believe that we have architected our platform for autonomous AI operations and organizations’ toughest data and analytics challenges, particularly as enterprises are evaluating how to cost effectively deploy agentic AI.
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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.
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We’ve also seen a resurgence of hybrid environments that reflected a growing understanding of how enterprises can best leverage both on-premises and cloud deployment options to meet their diverse business needs.
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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.
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With our AI and knowledge platform, underpinned by our extensive patented workload management optimization technology, we believe we are well positioned to help enterprises become more autonomous, while enabling our customers to focus on managing, securing, and providing trustworthy data for AI and analytics across hybrid and multi-cloud environments.
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To allow for greater transparency regarding the progress we are making toward achieving our strategic objectives, we utilize the following financial and performance metrics: • Total Annual Recurring Revenue ("Total ARR") - annual value at a point in time of all recurring contracts, including subscription, cloud, software upgrade rights, and maintenance.
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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 59.4% in 2025, a decrease f rom 60.5% in 2024, primarily due to a higher mix of Public Cloud revenue, and declines in Consulting Services revenue outpacing associated cost reductions.
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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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Company uses interest rate swaps to manage interest rate risks on future interest payments caused by interest rate changes on its variable rate term loan facility. The notional amount of the hedge will step-down according to the amortization schedule of the term loan.
Biggest changeThe Company uses interest rate swaps to manage interest rate risks on future interest payments caused by interest rate changes on its variable rate term loan facility.
In June 2022, Teradata entered into a four-year interest rate swap to hedge approximately 90% of the floating interest rate of the total $500 million T erm Loan and a cross currency swap to hedge a portion of Euro currency exposure of its net investment in certain foreign subsidiaries as more fully described in "Note 12 - Debt" in the Notes to Consolidated Financial Statements in this Annual Report.
In June 2022, Teradata entered into a five-year interest rate swap to hedge approximately 90% of the floating interest rate of the total $500 million T erm Loan and a four-year cross currency swap to hedge a portion of Euro currency exposure of its net investment in certain foreign subsidiaries as more fully described in " Note 12 - Debt " in the Notes to Consolidated Financial Statements in this Annual Report.
The Company operates in approximately 40 countries and is 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). Exposures are hedged with foreign currency forward contracts with maturity dates of twelve months or less.
The Company operates in approximately 38 countries and is 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). Exposures are hedged with foreign currency forward contracts with maturity dates of twelve months or less.
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
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. 42 Table of Contents
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 .
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, 2025 was $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 approximate ly $1 million.
A hypothetical 50 basis point increase/decrease in currency exchange rates would result in an immaterial increase/decrease to the fair value of the hedge.
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 interest rates would result in an increase/decrease to the fair value of the hedge of approximately $2 million . The fair value of the net investment Euro currency hedge recorded in other liabilities at December 31, 2025 was approximately $18 million .
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 potential loss in fair value at December 31, 2025, for such contracts resulting from a hypothetical 10% adverse change in all foreign currency exchange rates amounts to approximately $1 million . Any loss would be mitigated by corresponding gains on the underlying exposures.
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Fair value of unrealized gains for open contracts are recorded in other assets and the fair value of unrealized losses are recorded in other liabilities in the Company's balance sheet (classified between current and long-term by their remaining duration). The notional amount of the hedge will step-down according to the amortization schedule of the term loan.

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