What Happened:

Shares of data and analytics software provider Teradata (NYSE:TDC) fell 6.8% in the afternoon session after the company reported second quarter results, which missed analysts' expectations for billings and operating income. Free cash flow also missed and came in lower compared to the previous quarter and the same quarter last year, while gross margin deteriorated.The results were also likely impacted by the weak earnings released by peer, Alteryx. Alteryx's ARR, revenue, and non-GAAP operating income guidance for next quarter all missed expectations. 

On a positive note, revenue and ARR (annual recurring revenue) came in ahead of expectations during the quarter. Next quarter's non-GAAP EPS guidance was in line, and the company largely maintained its full year guidance. Overall, it was a weaker quarter for TDC, with the company missing analysts' estimates for some of the key performance metrics.

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What is the market telling us:

Teradata's shares are not very volatile than the market average and over the last year have had only 4 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The previous big move was 3 months ago, when the stock gained 6.26% on the news that the company reported first-quarter annual recurring revenue (ARR), revenue, gross margin, and free cash flow that exceeded analysts' expectations. Guidance for the next quarter came in ahead of Consensus and the full year outlook was largely maintained. Management highlighted the strong ARR growth, and customer's growing usage of its cloud offerings showed that the investments in the cloud are paying off, and the trend is inline with the positive results we've seen from bigger cloud players like Microsoft (Azure) and Amazon (AWS) this quarter.

Teradata is up 41.7% since the beginning of the year, but at $47.32 per share it is still trading 17.6% below its 52-week high of $57.41 from July 2023. Investors who bought $1,000 worth of Teradata's shares 5 years ago would now be looking at an investment worth $1,170.

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