Teradata Corporation (TDC): BCG Matrix [Dec-2025 Updated]

You're looking for a clear-eyed assessment of Teradata Corporation's (TDC) business segments as of late 2025, mapped to the classic BCG Matrix. This framework helps us see where capital is best deployed right now. The story is clear: the Public Cloud ARR, hitting $633 million in Q3 and growing 14% to 18%, is the Star engine, while the legacy base keeps the lights on, generating $260 million to $280 million in Free Cash Flow from a $1.490 billion total ARR base-that's the Cash Cow. But we can't ignore the Dogs dragging total revenue down by 5% to 7% or the high-stakes Question Marks in Agentic AI that need serious funding to graduate. Let's break down exactly where Teradata Corporation needs to place its bets for the next phase.

Background of Teradata Corporation (TDC)

You're looking at Teradata Corporation (TDC) right as they've reported their third quarter of 2025, which gives us a solid, real-time snapshot of where the business stands. Teradata Corporation is fundamentally positioned as a leader in the cloud analytics and data platform space, with a clear, stated focus on providing solutions that handle demanding Artificial Intelligence (AI) workloads. They emphasize their hybrid capability, letting customers run their platform where they choose-be that in the public cloud or on-premise, or both. That hybrid flexibility is a key part of their current strategy, especially as customers balance their cloud and on-prem footprints.

Let's look at the numbers from that Q3 2025 report, announced on November 4, 2025. Total Annual Recurring Revenue (ARR) hit $1.490 billion, which was only up 1% year-over-year as reported, essentially flat in constant currency. That tells us the overall base is stable but not accelerating quickly. The real growth engine is clearly the public cloud segment; Public Cloud ARR reached $633 million, showing a strong 11% increase year-over-year. Still, the total revenue figure for the quarter was $416 million, a 5% dip compared to the same period last year, which shows the ongoing transition away from legacy or non-recurring revenue streams.

To break down the revenue sources for Q3 2025, Product Sales-which bundles recurring revenue with perpetual licenses and hardware-accounted for $369 million. The Consulting Services arm brought in $47 million. It's important to note that Recurring Revenue, which is $366 million, now makes up 88% of the total revenue, up from 85% the prior year, showing the successful shift to subscription-like models. The Cloud Net Expansion Rate, a measure of how much existing cloud customers are spending more, was 109% in Q3 2025, which is a step down from 120% in Q3 2024, something we'll need to watch closely.

Management is sticking to its full-year 2025 guidance, which is telling. They are still projecting Public Cloud ARR growth to land between 14% and 18% for the full year. Total ARR is expected to be flat to up 2%. However, the overall Total Revenue outlook for the full year remains cautious, projecting a decline in the range of -5% to -7% year-over-year in constant currency. On the profitability side, Q3 delivered a GAAP diluted EPS of $0.42 and the company generated $88 million in Free Cash Flow for the quarter, reinforcing their focus on operational efficiency even as top-line revenue contracts.

Teradata Corporation (TDC) - BCG Matrix: Stars

You're looking at the engine driving Teradata Corporation's future growth, and right now, that's definitely the VantageCloud Public Cloud offering. This segment is the textbook definition of a Star in the Boston Consulting Group Matrix: it operates in a high-growth market and commands a significant, growing share of that market.

The numbers clearly show this focus. For the full fiscal year 2025, Teradata Corporation projects the Public Cloud Annual Recurring Revenue (ARR) to increase between 14% and 18% year-over-year, calculated in constant currency. This growth rate signals a strong market acceptance of their cloud-native platform, which is essential for maintaining leadership.

To give you a concrete snapshot, as of the third quarter of 2025, the Public Cloud ARR hit $633 million. Compare that to the total ARR of $1.490 billion for the same period, and you see the cloud component is rapidly becoming the majority of the recurring business. This shift is what management is betting on to eventually transition this segment into a Cash Cow when the overall market growth rate naturally decelerates.

Here's a quick look at how the Star segment's key metric stacks up:

This high growth, however, isn't cheap. You know that to compete against the hyperscalers, Teradata Corporation must pour significant capital into development, sales, and marketing to keep pace and secure market share. That investment keeps the cash flow neutral to slightly positive for the segment, even as it generates substantial revenue.

The strategic investments aren't just in the core cloud platform; they are heavily focused on next-generation capabilities. New AI-centric offerings are designed to lock in high-value customers who need trusted, secure AI environments. These include:

• Enterprise Vector Store: An in-database solution for vector data management, crucial for Retrieval-Augmented Generation (RAG) and agentic AI applications.
• AI Factory: An integrated solution bringing cloud-based AI/ML capabilities to secure, on-premises deployments, often leveraging partnerships like those with NVIDIA.

The Enterprise Vector Store, for instance, was expected to reach general availability around July 2025, showing the company is actively pushing new features into the market to capture the high-growth AI workload demand. This focus on AI integration within the cloud platform is exactly where Teradata Corporation needs to be to justify the investment required to keep this Star shining brightly.

The reality is this: high growth in a high-growth market means constant spending to maintain competitive parity. If Teradata Corporation sustains this success until the cloud market matures, this segment will become the primary Cash Cow for the entire business. Finance: draft the Q4 2025 investment allocation review by next Tuesday.

Teradata Corporation (TDC) - BCG Matrix: Cash Cows

You're looking at the core engine of Teradata Corporation (TDC), the segment that keeps the lights on and funds the future bets. These are the established products, primarily the legacy On-Premises Subscription and Maintenance base, which hold a commanding market share in a mature environment. This base is the primary cash generator for Teradata Corporation.

This established base, when combined with other recurring revenue streams, forms the foundation of the company's Annual Recurring Revenue (ARR). As of the third quarter of 2025, the total ARR stood at $1.490 billion. This recurring revenue component is significant; in Q3 2025, recurring revenue was $366 million, representing 88% of total revenue for the quarter. This high percentage shows how much of the business is locked into long-term contracts, which is the hallmark of a cash cow.

The financial output from this segment is what underpins the company's overall cash generation. Teradata Corporation projects its full-year 2025 Free Cash Flow to be in the range of $260 million to $280 million. This projected cash flow is largely derived from the stability and high margins of these mature offerings.

The market share aspect is tied to large, established enterprise customers. To be fair, these customers are known to be slow to migrate their critical workloads, providing a durable revenue base. Still, the growth profile for this segment is decidedly low. Teradata Corporation reaffirmed its guidance for total ARR growth for the full fiscal year 2025 to be in the range of flat to up only 2% in constant currency. That low growth rate is exactly why it sits in the Cash Cow quadrant, not the Star quadrant.

Here's a quick look at the key financial metrics supporting this category as of Q3 2025 and the full-year outlook:

The strategy here is to maintain productivity and 'milk' the gains passively, using the cash to fund other areas of the business. Investments are focused on efficiency rather than aggressive market expansion for these specific products.

• Recurring revenue was 88% of total revenue in Q3 2025.
• The CEO noted customers rely on Teradata Corporation to run workloads where they choose-the cloud or on-prem.
• The focus is on supporting infrastructure to improve efficiency and increase cash flow.
• Cloud ARR growth for FY 2025 is targeted higher, at 14% to 18%, highlighting the contrast with the total ARR guidance.

You want to keep the operational costs low to maximize the cash extraction from this segment. Finance: draft 13-week cash view by Friday.

Teradata Corporation (TDC) - BCG Matrix: Dogs

The Dogs quadrant in the Boston Consulting Group Matrix represents business units or product lines characterized by low market share in markets experiencing low growth. For Teradata Corporation (TDC), these are the legacy segments where investment should be minimized due to structural decline and poor returns on capital.

Traditional Consulting Services revenue is in a structural decline, reflecting a shift away from on-premises implementation and support services as customers move to cloud-native consumption models. This segment saw a significant contraction in the first quarter of fiscal year 2025. Specifically, Consulting Services revenue plunged 28% year-over-year in Q1 2025, falling to $50 million from $69 million in Q1 2024, as reported. This steep drop is consistent with the broader trend, as Q2 2025 saw consulting revenue decline by 19% year-over-year.

Product Sales, which includes perpetual software licenses and hardware, are also being actively de-emphasized by Teradata Corporation (TDC) as the company prioritizes recurring cloud revenue. In Q1 2025, Product Sales revenue was $368 million, marking a 7% year-over-year decrease as reported. The trend worsened in the second quarter, with perpetual licenses specifically dropping by 40% in Q2 2025.

These legacy segments contribute significantly to the overall top-line pressure. The company expects a total revenue decline of 5% to 7% for the full fiscal year 2025 in constant currency. The low market share and low growth environment for these offerings mean you should defintely minimize investment here, as expensive turn-around plans are unlikely to reverse these structural market shifts.

Here's a quick look at the segment performance that places these offerings in the Dogs category:

The market context reinforces the need to treat these as cash traps rather than growth engines. Analysts project Teradata Corporation (TDC)'s annual revenue growth to slow to just 0.6% per year, much weaker than the US market's 10.5%. The company's late entry into the cloud market has allowed competitors to gain significant market share, further cementing the low-share status of its traditional offerings.

The characteristics of these Dog segments include:

• Traditional Consulting Services revenue plunging 28% in Q1 2025.
• Product Sales declining 7% as reported in Q1 2025.
• Contribution to the overall FY 2025 total revenue decline guidance of -5% to -7%.
• Low expected annual revenue growth of 0.6% projected by analysts.
• High competition eroding market position in legacy areas.

You need to focus resources where the market is growing, which is clearly not here. Finance: draft the divestiture impact analysis for the legacy hardware maintenance contracts by next Wednesday.

Teradata Corporation (TDC) - BCG Matrix: Question Marks

You're looking at the newest bets Teradata Corporation is making, the ones that need serious cash infusion now to see if they can become the next big thing. These are the Question Marks, sitting in markets that are clearly exploding, but where Teradata hasn't yet captured a significant slice of the pie.

The core of this quadrant for Teradata Corporation centers on its aggressive push into Agentic AI and hybrid cloud deployments. Products like Teradata AgentBuilder, which entered private preview in Q4 2025, and the recently launched Autonomous Customer Intelligence package are the prime examples here. These offerings are designed to capitalize on the massive projected growth in AI-driven analytics, a market Teradata Corporation is targeting to reach $118.5 billion by 2029. The enthusiasm is real; a recent survey indicated that 77% of organizations are considering or evaluating agentic AI, and AI is attached to around 1/3 of Teradata Corporation's current deal pipeline.

The hybrid AI strategy, which includes the on-premises Teradata AI Factory launched in June 2025, is the high-risk, high-reward bet. It addresses immediate customer concerns around data sovereignty and governance, which are resurfacing as top priorities in the AI conversation. This strategic pivot is so central that the company is internally referring to its direction as Teradata 3.0.

The low market share and high cash consumption are reflected in the financial trade-offs. While Public Cloud ARR shows strong growth at 11% year-over-year in Q3 2025, reaching $633 million, the overall Total Revenue for Q3 2025 was $416 million, a year-over-year decrease of 5%. This dynamic-high growth in a specific segment versus contraction in the total business-is classic Question Mark territory. The investment required to push these new products into the Star quadrant is evident in the operating expenses.

Here's a quick look at the investment versus the growth indicator for the nine months ended September 30, 2025, compared to the same period in 2024, showing where the cash is being allocated to support these new initiatives:

The investment in R&D for the three months ended September 30, 2025, was $70 million, down slightly from $73 million the prior year, while SG&A was $122 million, down from $137 million. This suggests a focus on optimizing existing spend while channeling resources toward the AI roadmap, which is now supported by a dedicated Chief Data and AI Officer appointed in the past week. The company is actively trying to convert the consulting business, which was previously driven by cloud migration, into a new revenue stream via AI Services to support these agentic projects.

The path forward for these Question Marks involves clear action:

• Invest Heavily: Continue funding R&D and sales enablement for AgentBuilder and Autonomous Customer Intelligence to secure market adoption.
• Monitor Cloud ARR: The 14% to 18% full-year guidance for Cloud ARR is the primary measure of success for this strategy.
• Manage Overall Top Line: The risk is that continued overall revenue contraction, with Q3 Total Revenue down 5% year-over-year, consumes cash faster than the new products can generate returns.
• Leverage Hybrid Flexibility: Use the on-premises AI Factory capability to win deals where cloud-only solutions face governance hurdles.

If these new AI-centric offerings can quickly gain share and stabilize the Total ARR growth, which was flat in constant currency for Q3 2025, they transition to Stars. If not, the high cash burn associated with developing and selling these complex solutions will quickly turn them into Dogs. Finance: review the Q4 2025 R&D spend against the pipeline conversion rate for AI-attached deals by January 15th.