TERADATA CORP /DE/TDC
TERADATA CORP /DE/ Leases Disclosure
Leases
Lessee
The Company leases property and equipment under finance and operating leases. The Company's operating leases primarily consist of automobiles in certain countries and real estate, including office, storage and parking spaces. The duration of these leases range from approximately 1 to 7 years. The Company's finance leases primarily consist of equipment financed for the purpose of delivering services to our customers. For leases with terms greater than 12 months, the Company recorded the related asset and obligation at the present value of lease payments over the term. Many of our leases include variable rental escalation clauses which are recognized when incurred. Some of our leases also include renewal options and/or termination options that are factored into the determination of lease payments and lease terms when it is reasonably certain that the Company will exercise these options. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For real estate leases beginning in 2019 and later, we account for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components (e.g., common-area maintenance costs). For automobile leases we account for lease and non-lease components together.
When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, real estate leases do not typically provide a readily determinable implicit rate. Therefore, the Company must estimate the incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate used in the calculation of the lease liability is based on the secured rate associated with financed lease obligations for each location of leased property.
The table below presents the lease-related assets and liabilities recorded on the balance sheet at December 31:
| In millions, except weighted average calculations | Classification on the Balance Sheet | 2025 | 2024 | ||||||||||||||
| Assets | |||||||||||||||||
| Operating lease assets | Right of use assets - operating lease, net | $ | 7 | $ | 8 | ||||||||||||
| Finance lease assets | 118 | 109 | |||||||||||||||
| Total lease assets | $ | 125 | $ | 117 | |||||||||||||
| Liabilities | |||||||||||||||||
| Current | |||||||||||||||||
| Operating | Current portion of operating lease liability | $ | 2 | $ | 4 | ||||||||||||
| Finance | Current portion of finance lease liability | 50 | 57 | ||||||||||||||
| Non current | |||||||||||||||||
| Operating | Operating lease liability | 4 | 5 | ||||||||||||||
| Finance | Finance lease liability | 45 | 30 | ||||||||||||||
| Total lease liabilities | $ | 101 | $ | 96 | |||||||||||||
| Weighted-average remaining lease term | |||||||||||||||||
| Operating leases | 3.96 years | 3.49 years | |||||||||||||||
| Finance leases | 2.06 years | 1.65 years | |||||||||||||||
| Weighted-average discount rate | |||||||||||||||||
Operating leases(1) | 5.73 | % | 5.40 | % | |||||||||||||
| Finance leases | 6.25 | % | 6.83 | % | |||||||||||||
(1) Upon adoption of the new lease standard, discount rates used for existing leases were established based on the Company's incremental borrowing rate at January 1, 2019. For new leases entered after January 1, 2019, the discount rate was determined based on the Company's incremental borrowing rate at lease commencement.
Lessee Costs
The table below presents certain information related to the lease costs for finance and operating leases recognized in the Company's consolidated statements of income for the years ended December 31:
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||
| Finance lease cost | ||||||||||||||||||||
| Depreciation of leased assets | $ | 56 | $ | 61 | $ | 68 | ||||||||||||||
| Interest of lease liabilities | 6 | 7 | 7 | |||||||||||||||||
| Operating lease cost | 4 | 5 | 7 | |||||||||||||||||
| Sub-lease income from real estate properties owned and leased | (6) | (5) | (5) | |||||||||||||||||
| Total lease cost | $ | 60 | $ | 68 | $ | 77 | ||||||||||||||
Other Information
The table below presents supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities for the year ended December 31:
| In millions | 2025 | 2024 | |||||||||
| Operating cash flows for operating leases | $ | 5 | $ | 7 | |||||||
| Operating cash flows for finance leases | $ | 6 | $ | 7 | |||||||
| Financing cash flows for finance leases | $ | 69 | $ | 71 | |||||||
Undiscounted Cash Flows
The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet at December 31, 2025:
| In millions | Operating Leases | Finance Leases | ||||||||||||
| 2026 | $ | 4 | $ | 54 | ||||||||||
| 2027 | 2 | 33 | ||||||||||||
| 2028 | 1 | 14 | ||||||||||||
| 2029 | 1 | — | ||||||||||||
| 2030 | 1 | — | ||||||||||||
| Thereafter | — | — | ||||||||||||
| Total minimum lease payments | 9 | 101 | ||||||||||||
| Less: amount of lease payments representing interest | (3) | (6) | ||||||||||||
| Present value of future minimum lease payments | 6 | 95 | ||||||||||||
| Less: current obligations under leases | (2) | (50) | ||||||||||||
| Long-term lease obligations | $ | 4 | $ | 45 | ||||||||||
The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating lease obligations as of December 31, 2024:
| In millions | Operating Leases | Finance Leases | ||||||||||||
| 2025 | $ | 7 | $ | 61 | ||||||||||
| 2026 | 3 | 27 | ||||||||||||
| 2027 | 1 | 5 | ||||||||||||
| 2028 | 1 | — | ||||||||||||
| 2029 | 2 | — | ||||||||||||
| Thereafter | — | — | ||||||||||||
| Total minimum lease payments | 14 | 93 | ||||||||||||
| Less: amount of lease payments representing interest | (5) | (6) | ||||||||||||
| Present value of future minimum lease payments | 9 | 87 | ||||||||||||
| Less: current obligations under leases | (4) | (57) | ||||||||||||
| Long-term lease obligations | $ | 5 | $ | 30 | ||||||||||
Lessor
The Company receives rental revenue for leasing hardware offerings to its customers. For our hardware rental offering, the Company may own or lease the hardware. Leases sometimes include options to renew but typically do not include lessee purchase options. The revenue for these operating leases is generally recognized straight-line over the term of the contract and is included within the caption on the consolidated statements of income. Equipment used for this revenue is reported within Property and equipment, net on the consolidated balance sheet.
The following table includes rental revenue for the years ended December 31:
| In millions | 2025 | 2024 | 2023 | |||||||||||||||||
| Rental revenue* | $ | 212 | $ | 213 | $ | 216 | ||||||||||||||
*Rental revenue includes hardware maintenance.
The following table includes estimated rental revenue expected to be recognized in the future based on executed contracts at December 31, 2025:
| In millions | Rental Revenue | ||||
| 2026 | $ | 225 | |||
| 2027 | 85 | ||||
| 2028-29 | 66 | ||||
| Total | $ | 376 | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Feb 26, 2019 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.