What Happened:

Shares of data and analytics software provider Teradata (NYSE:TDC) fell 7.1% in the afternoon session after Chief Financial Officer Claire Bramley issued a cautionary note during a Conference, indicating the possibility of a high-value deal facing a delay in the fourth quarter. Bramley added that the development could result in Cloud ARR (recurring revenue) falling towards the low end or slightly below the previous guidance range. Importantly, she emphasized that the deal is not lost but is expected to materialize in 2024. If the situation that Bramley plays out as planned, this is merely a short-term timing issue rather than a longer-term fundamental issue. Bramley then reaffirmed the company's commitment to achieve over $1 billion of cloud ARR by the end of 2025. Finally, she assured investors that the company has yet to observe any issues concerning other key metrics, including free cash flow, revenue, and profitability.

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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 biggest move we wrote about over the last year was 4 months ago, when the stock dropped 6.8% on the news that 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.

Teradata is up 29.6% since the beginning of the year, but at $43.30 per share it is still trading 24.6% 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 $1,176.

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