Teradata faces the prospect of a class action suit relating to statements to investors.

Two law firms have issued statements about the data platform and analytics company in a bid to attract clients to the case. The firms allege that the company misled investors with its statements about winning deals from users.

In separate statements, Pomerantz LLP and Bragar Eagel & Squire PC allege Teradata had misled investors about the prospects for its total Annual Recurring Revenue (ARR), an accounting metric subscription companies use to indicate returns from recurring contracts.

The Register has contacted Teradata to offer it the opportunity to respond.

The law firms focus on the period between February 13, 2023 and February 12, 2024. At the beginning of the period, Teradata forecast its public cloud ARR would increase by between 53 percent to 57 percent year-over-year. Its total ARR would increase in the range of six percent to eight percent year-over-year. However, by December, Teradata's chief financial officer Claire Bramley said some deals would be "pushed out [of Q4 2023]" resulting in a slightly lower cloud ARR.

The public statement then points out that on an investor call for Q4 and full year 2023, CEO Stephen McMillan said there had been an issue with deal timings.

"Despite a year of solid progress on our strategic and financial milestones, we ended the year below our 2023 outlook for cloud and total ARR. This was primarily due to deal timing issues… We are seeing that Teradata is becoming even more strategic to corporations and touching all levels of our customers' organizations. For example, we have historically dealt primarily with IT. Over time, we have moved beyond IT with multiple business units now relying on Teradata."

He added at the time: "This brings in more executive decision-makers, including the board, in order to close the deal. These dynamics cause a number of transactions to move into 2024. Of these, there was a handful of large deals that slipped out of December and each were worth $2 million or more of cloud ARR growth. We are already taking actions to address the miss in the ARR expectations we had set. We have reviewed the root causes of each slip.

"Our teams are executing plans to address each unique customer situation and are diligently working to close the majority of these deals in 2024. To be clear, we had uncertainty in timing, not uncertainty in demand," he said on the call.

However, the law firms point out that following the news of Teradata missing expectations on ARR growth, the company's shares fell nearly 22 percent. They allege Teradata had issued misleading statements and call for Teradata investors to join the class action.

Regardless of the merits of the claims, Teradata's performance can be taken in the context of the wider market. In February, Snowflake, which also provides data warehouse and platform technologies, saw its stock price fall after missing guidance.

In May, database company MongoDB saw its valuation dip after adjusting revenue forecasts, while CRM software company Salesforce disappointed investors by posting revenue below expectation. ®

https://www.theregister.com//2024/06/17/teradata_would_be_classactions/