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TERADYNE, INC (TER)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue $685.7M (+14% y/y) with non-GAAP EPS $0.75, both above Q1 guidance ranges; non-GAAP gross margin 60.6% and operating margin 20.5% driven by Semiconductor Test strength .
  • Versus Wall Street consensus, Q1 revenue beat by ~$7.6M* ($678.0M* est.) and EPS beat by ~$0.13* ($0.616* est. vs $0.75 actual); guidance for Q2 revenue $610–$680M and non-GAAP EPS $0.41–$0.64 . Values retrieved from S&P Global.*
  • Management highlighted transitory Mobile SOC demand, record UltraFLEX loading for AI accelerators, and an HBM4 wafer-level performance test win; visibility beyond Q2 remains limited due to trade-policy uncertainty .
  • Capital return stepped up: share repurchase program increased from a 2025 target of $400M to up to $1B by the end of 2026; quarterly dividend remained $0.12 per share .

What Went Well and What Went Wrong

What Went Well

  • Semiconductor Test drove results; “System-on-a-Chip (SOC), primarily for Mobile, was the strongest growth driver” .
  • AI momentum: “record loading on our UltraFLEX and UltraFLEXplus testers for AI accelerators” and acceptance for the new Titan HP in system-level test of AI accelerators .
  • Strategic wins: “secured a coveted HBM4 performance test win with a major DRAM manufacturer,” expected to begin shipping in 2H 2025 .

What Went Wrong

  • Robotics revenue declined sequentially and y/y; segment posted a GAAP operating loss of $37M and non-GAAP operating loss of $22M amid restructuring (150 employees impacted) .
  • Memory revenue expected to see a significant sequential decline in Q2 as customers digest 2024 HBM test capacity; mobile revenue also expected to be lower q/q in Q2 .
  • Limited visibility beyond Q2 amid tariff and trade-policy uncertainty; management will not reaffirm beyond Q2 .

Financial Results

Summary vs prior periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$737.3 $753.0 $685.7
GAAP EPS ($)$0.89 $0.90 $0.61
Non-GAAP EPS ($)$0.90 $0.95 $0.75
Non-GAAP Gross Margin %59.7% 59.4% 60.6%
Non-GAAP Operating Margin %22.4% 21.7% 20.5%

Q1 2025 vs prior year and prior quarter

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$599.8 $752.9 $685.7
GAAP EPS ($)$0.40 $0.90 $0.61
Non-GAAP EPS ($)$0.51 $0.95 $0.75
Non-GAAP Gross Margin %56.6% 59.4% 60.6%
Non-GAAP Operating Margin %14.8% 21.7% 20.5%

Q1 2025 vs consensus (S&P Global)

MetricConsensusActual
Revenue ($USD Millions)$678.0*$685.7
EPS ($, Primary)$0.616*$0.75

Values retrieved from S&P Global.*

Segment breakdown

SegmentQ4 2024Q1 2025
Semiconductor Test ($M)$561 $543
- SOC ($M)N/A$406
- Memory ($M)N/A$109
- IST ($M)$19 $27
Product Test ($M)N/A$74
Robotics ($M)$98 $69

Note: Segment reporting reorganized; IST moved into Semiconductor Test; Product Test formed in Q1 2025 .

KPIs

KPIQ1 2025
Cash from Operations ($M)$161.6
Free Cash Flow ($M)$98
Capital Expenditure ($M)$64.0
China Shipments (% of revenue)19% total; 12% to multinationals; 7% to indigenous Chinese customers
Non-GAAP Operating Expenses ($M)$275
Weighted Avg Diluted Shares (M)162.0
Dividend per Share ($)$0.12
Share Repurchases ($M)$157.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q2 2025N/A$610–$680 New
GAAP EPS ($)Q2 2025N/A$0.35–$0.58 New
Non-GAAP EPS ($)Q2 2025N/A$0.41–$0.64 New
Gross Margin % (non-GAAP)Q2 2025N/A56.5%–57.5% New
OpEx (% of sales)Q2 2025N/A40.5%–44.5% New
Diluted Shares (M)Q2 2025N/A~161 New
Tariff impact on EPSQ2 2025N/A~-$0.02 included in guide New
Dividend per Share ($)Q1 2025$0.12 (Q4 2024) $0.12 Maintained
Share Repurchase2025–2026$400M target in 2025 Up to $1B by end of 2026 Raised

Earnings Call Themes & Trends

TopicQ3 2024 (Prev-2)Q4 2024 (Prev-1)Q1 2025 (Current)Trend
AI Compute demand“record Memory revenue driven by HBM and compute demand for AI applications” “AI compute and related memory remained strong” Record UltraFLEX loading; SLT for AI; Titan HP acceptance Improving in AI compute
Memory marketRecord HBM revenue Strong AI-related memory Customers digest 2024 HBM capacity; HBM4 wafer-level perf test win Mixed near term
MobileN/AMobile exceeded expectations SOC mobile drove growth but “transitory” supply chain-related Near-term headwind into Q2
Tariffs/macroN/AN/APushouts; limited visibility; ~$0.02 EPS impact in Q2; minimal direct model impact Rising risk
Supply chain/utilizationN/AN/AImproved mobile utilization; order pushouts into later quarters Mixed
SLT (system-level test)N/AN/ASLT win for leading-edge AI accelerator; thermal/power solution differentiation Emerging growth driver
ISTN/AIST contributed $19M IST revenue $27M; first AI compute revenue; Titan HP acceptance Improving
Robotics$89M revenue $98M revenue $69M revenue; largest-ever order from global auto OEM; restructuring to lower breakeven Near-term weak; strategic realignment
Regional mixN/AN/A19% shipped to China (12% multinationals; 7% indigenous) Watch exposure
Legal/regulatoryLegal settlement in COGS No notable legal update Trade policy/tariffs dominate outlook Shifted from legal to trade policy

Management Commentary

  • “Teradyne delivered 14% year-over-year growth in the first quarter driven by strong results in Semiconductor Test. System-on-a-Chip (SOC), primarily for Mobile, was the strongest growth driver.” — CEO Greg Smith .
  • “We delivered first quarter revenue towards the high end of our guidance range with gross margin and earnings per share above the high end of our expectations.” — CEO Greg Smith .
  • “Our Compute revenue also grew year-over-year in Q1 with record loading on our UltraFLEX and UltraFLEXplus testers for AI accelerators.” — CEO Greg Smith .
  • “In the quarter, our Memory business unit secured a coveted HBM4 performance test win… expected to begin shipping in the second half of this year.” — CEO Greg Smith .
  • “Q2 sales are expected to be between $610 million and $680 million… Non-GAAP EPS expected to be in the range of $0.41 to $0.64.” — CFO Sanjay Mehta .
  • “We’ve increased our share buyback target from $400 million in 2025 to up to $1 billion through the end of 2026.” — CFO Sanjay Mehta .

Q&A Highlights

  • Tariffs dynamics: Pushouts primarily from auto/industrial customers; no significant pull-ins for capital equipment; concern is end-demand impact rather than direct cost .
  • HBM wafer-level performance test: Clarified the win is post-stack wafer-level test for HBM4 with a customer without prior HBM3/3E business; not all three dies in stack .
  • Margin outlook: Gross margin expected in a narrow range; first half tracking expectations (~59%); OpEx flexes with revenue; priority on Semi Test engineering and go-to-market .
  • SLT trajectory: SLT for AI accelerators is becoming economically necessary; Teradyne’s thermal/power solution is differentiating; meaningful revenue expected in 2026 .
  • Robotics order: Largest AMR order ever from a global auto OEM; combined UR+MiR go-to-market validated; shipments spread across Q1–Q2 .
  • Competitive impact: No evidence of customers switching vendors due to tariffs; competitive intensity remains but tariffs not a deciding factor .

Estimates Context

  • Q1 2025: Revenue $685.7M vs $678.0M* consensus; EPS $0.75 vs $0.616* consensus — both beats. Values retrieved from S&P Global.*
  • Q2 2025: Company guidance revenue $610–$680M vs $651.8M* consensus; EPS guidance $0.41–$0.64 vs $0.543* consensus midpoint roughly in line. Values retrieved from S&P Global.* .

Key Takeaways for Investors

  • Non-GAAP results beat on both revenue and EPS, supported by stronger mix and Semi Test demand; gross margin expanded to 60.6% .
  • AI compute remains a multi-year growth vector: record UltraFLEX loading, SLT acceptance, HBM4 wafer-level win; expect continued strategic wins as complexity rises .
  • Near-term headwinds: Q2 mobile lower and memory sequential decline; trade-policy uncertainty limits H2 visibility; tariffs embedded at ~$0.02 EPS impact in Q2 .
  • Robotics undergoing restructuring to reduce breakeven ($365M vs $440M prior) while pursuing large enterprise wins; near-term revenue weakness persists .
  • Capital return accelerates: share repurchases up to $1B through 2026 and dividend maintained, signaling confidence in FCF durability .
  • China exposure (19% of revenue in Q1) warrants monitoring amid evolving export controls and tariffs; management sees minimal direct operational impact but potential end-demand effects .
  • Trading setup: Strong AI-related test narrative and buyback support vs macro/tariff uncertainty and robotics drag; watch Q2 mix (gross margin guide 56.5–57.5%) and order cadence into H2 for directionality .

Notes: Values retrieved from S&P Global.*