This was especially true for public cloud ARR, which exceeded $100 million.
Public cloud ARR of $106 million at the end of 2020 was a 165% increase from the prior year.
We signed a long-term agreement at a Fortune 100 insurer, as it modernizes its IT infrastructure, less competitive win against several cloud native vendors came after the customer recognized that Teradata provides significantly higher value and quality at significantly lower cost than others.
Our customer selected Teradata for unsurpassed workload management capabilities, platform ability and ability to reliably and securely execute company's more than 26 million queries per day.
A Fortune 50 healthcare company selected to Teradata on AWS to continue to run its business intelligence reporting and analytics for claims, case management and provider efficiency.
We will be investing 75% of all R&D spends or over $200 million in fiscal 2021 in our cloud initiatives.
Todd brings to Teradata more than 25 years of experience in global sales, marketing, channel and operations at large multinational technology organizations, including most recently at Apple and previously with Oracle, Rackspace and Microsoft.
We ended the year with $1.587 billion in ARR, which was 11% growth year-over-year at the beginning of the year, delivered $86 million.
And -- the $1.58 7 billion of ARR breaks down as follows; $960 million represents subscription and cloud ARR.
Public Cloud ARR totaled $106 million at the end of 2020, which was a 165% increase from the end of 2019.
The remaining subscription amount of $854 million represents on premises and private cloud subscriptions in grew 30% year-over-year.
The remaining ARR balance of $627 million represents; maintenance, software upgrade rights and other ARR down 14% year-over-year, and reflects our strategic move to subscription and the cloud.
In Q4, we generated $383 million in recurring revenue, which was above our guidance range of $371 million to $373 million and represented 9% growth year-over-year.
Consulting revenues declined 27% year-over-year, as expected, as we continue to refocus our Consulting business on higher margins engagements that also drive increased software consumption within our customer base.
Total gross margin came in at 59.3%, up 610 basis points a year-over-year.
Cost savings of about $6 million from the actions announced during our Q3 2020 earnings call aided our gross margin in the fourth quarter, and will also benefit our gross margin dollars in 2021.
Recurring revenue gross margins was 17.5%, up 190 basis points from the fourth quarter of 2019 and up 10 basis points sequentially.
Consulting gross margin was 8.4% versus 14.9% in the fourth quarter of 2019.
Turning to operating expenses, total operating expenses were up 4% year-over-year.
On our Q3 earnings call, we disclosed that the restructuring efforts we announced were expected to result in expense reduction between $80 million to $90 million on an annualized basis.
As an update, the actions taken resulted in approximately $80 million of total cost savings.
Of this amount, approximately $12 million benefited operating income in the fourth quarter.
Turning to earnings per share, earnings per share of $0.38 exceeded our guidance range of $0.23 to $0.25 provided last quarter.
We cleanly beat expectations as we generated about $0.09 from better than expected revenue growth and about $0.08 of earnings per share from the cost actions discussed on the Q3 earnings call, partially offset by the primarily lower consulting margins and higher incentive planning expenses as previously mentioned.
Free cash flow in the fourth quarter was $45 million, which contributed to full year free cash flow of $216 million, well ahead of the annual free cash flow guidance of $150 million we provided at the beginning of the year.
As a reminder, we expected to make cash payments of approximately $75 million related to the restructuring actions that we discussed during our Q3 earnings call, of which approximately $15 million were expected in the fourth quarter.
Our current forecast for total cash usage is now approximately $65 million, down $10 million from the prior estimate.
Of the $65 million, $23 million was paid in the fourth quarter.
The remaining $42 million is expected to be paid during 2021.
After reclassifying managed services and third-party software ARR, total AAR was $1.425 billion at the end of 2020 which still grew over 11% year-over-year.
And it consisted of the following $917 million of subscription and cloud related ARR, which increased 38% from the end of the prior year with public cloud ARR of $106 million of this total and $508 million of maintenance and software upgrade rights related ARR, which decreased 17% as expected, due to our shift to a subscription model.
With that said, our 2021 annual guidance, which considers the week is expected to grow total ARR is anticipated to grow in the mid to high single-digit percentage range year-over-year.
We anticipate total revenue to grow in the low single-digit percentage range year-over-year.
Non-GAAP earnings per share are expected to be in the range of a $1.50 to $1.58 which would be about 18% year-over-year growth at the midpoint and we expect free cash flow of at least $250 million.
And we also expect recurring revenue gross margins to be in the low 70% range.
Perpetual another gross margin is expected to be in the mid 20% range and consulting gross margin to be in the low teens percentage range.
We expect to improve operating margins by 100 to 150 basis points as we continue to drive efficiencies in our operating model to drive profitable growth, while increasing our investment in cloud sales and R&D capabilities.
As previously discussed, the majority of the $80 million of expected annual run rate cost savings are being reinvested back into R&D and go to market, cloud initiatives.
However on a net basis, we anticipate 5 to 10 said some benefit to 2021 EPS.
The free cash flow guide, I mentioned, reflection is reduced by the $42 million of restructuring cash payments previously discussed.
We anticipate approximately $27 million of the $42 million being paid during the first quarter.
We expect our non-GAAP effective tax rate to be approximately 23% for the full year and assume $112 million fully diluted shares outstanding.
They cloudy are is expected to grow 155% or more from the $44 million in Q1, 2020 probably cloud ARR or about 10 million to 15 million increase sequentially from the end of 2020.

Summary:
This was especially true for public cloud ARR, which exceeded $100 million.
Public cloud ARR of $106 million at the end of 2020 was a 165% increase from the prior year.
We signed a long-term agreement at a Fortune 100 insurer, as it modernizes its IT infrastructure, less competitive win against several cloud native vendors came after the customer recognized that Teradata provides significantly higher value and quality at significantly lower cost than others.
We ended the year with $1.587 billion in ARR, which was 11% growth year-over-year at the beginning of the year, delivered $86 million.
Public Cloud ARR totaled $106 million at the end of 2020, which was a 165% increase from the end of 2019.
In Q4, we generated $383 million in recurring revenue, which was above our guidance range of $371 million to $373 million and represented 9% growth year-over-year.
Turning to earnings per share, earnings per share of $0.38 exceeded our guidance range of $0.23 to $0.25 provided last quarter.
After reclassifying managed services and third-party software ARR, total AAR was $1.425 billion at the end of 2020 which still grew over 11% year-over-year.
With that said, our 2021 annual guidance, which considers the week is expected to grow total ARR is anticipated to grow in the mid to high single-digit percentage range year-over-year.
We anticipate total revenue to grow in the low single-digit percentage range year-over-year.
Non-GAAP earnings per share are expected to be in the range of a $1.50 to $1.58 which would be about 18% year-over-year growth at the midpoint and we expect free cash flow of at least $250 million.
We expect to improve operating margins by 100 to 150 basis points as we continue to drive efficiencies in our operating model to drive profitable growth, while increasing our investment in cloud sales and R&D capabilities.