TERADYNE, INC (TER)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue was $651.8M and non-GAAP EPS was $0.57, both above the midpoint of guidance; GAAP EPS was $0.49. Semiconductor Test (SoC for AI compute) drove outperformance, while Memory was lower sequentially and YoY due to shipment timing .
• Versus Wall Street consensus, non-GAAP EPS modestly beat ($0.57 vs $0.54*) and revenue was essentially in-line ($651.8M vs $651.8M*). Strength in AI compute was the key driver of the beat; Robotics remained weak and below breakeven .
• Q3 2025 guidance was raised sequentially: revenue $710–$770M, non-GAAP EPS $0.69–$0.87, GM 56.5–57.5%, with tax rate stepping up to 16.3% due to new legislation and a YTD catch-up; management’s tone turned more constructive on second-half demand driven by AI in both SoC and Memory .
• Stock-relevant catalysts: broadening AI compute opportunities (including potential merchant GPU dual-sourcing), new HBM4 test insertion points, and improving utilization that is shifting orders from upgrades to new systems; watch Q3/Q4 timing risk as ramps straddle quarters .

What Went Well and What Went Wrong

What Went Well

• “Semiconductor Test drove better than expected results in Q2,” led by SoC for AI compute; visibility improved with strengthening demand in compute, networking, and memory .
• SoC compute traction broadened, with significant UltraFLEXplus system orders and confidence that AI will be “the majority” of Semi Test revenue in 2H; management emphasized scalability and lower cost of test as differentiators .
• IST more than doubled YoY (HDD and mobile) and Product Test was up 7% YoY; Quantifi Photonics acquisition accelerates silicon photonics test leadership for AI compute .

What Went Wrong

• Memory revenue ($61M) was “considerably lower” sequentially and YoY, driven by timing of deliveries; snapback expected in 2H, heavily Q4 .
• Robotics ($75M) stayed weak YoY and will not break even in 2025; macro headwinds persist despite 9% QoQ growth post reorganization and a large plan-of-record win that will impact 2026, not 2025 .
• Tax rate will rise to 16.3% in Q3 on GAAP and non-GAAP due to new legislation and YTD catch-up, tempering EPS conversion despite higher volume .

Financial Results

Segment revenue breakdown

KPIs and cash returns

Versus Estimates (Wall Street Consensus — S&P Global)

Values marked with * retrieved from S&P Global.

Drivers and adjustments

• Non-GAAP EPS excludes amortization of acquired intangibles and equity-method investment, restructuring/other, ERP expenses, inventory step-up, and tax adjustments; Q2 non-GAAP EPS reconciliation totals to $0.57 .
• Q2 non-GAAP operating profit: 15.1%; non-GAAP GM: 57.3%; OPEX up YoY on higher R&D, flattish QoQ due to disciplined spend .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “System-on-a-Chip (SOC), primarily for artificial intelligence applications, was the strongest growth driver” and “AI will drive strong second half performance” .
• “We are gaining confidence in AI compute-related revenue inflecting in the second half… the relative size of AI compute… will represent the majority of our semitest revenue” .
• “We are opening these new opportunities because of the scalability of our newest systems… higher throughput that lowers the cost of test” .
• On Memory: “HBM suppliers are adding test coverage… post-stack singulated die win… important growth driver for the memory TAM” .
• On Robotics: “This new organization delivered 9% quarter-on-quarter growth… plan of record… expected to be a significant growth driver later in 2026” .

Q&A Highlights

• AI compute breadth and timing: Significant demand visibility, but quarterly shipment timing straddles Q3/Q4 and Q4/Q1; compute plus memory to dominate Semi Test in 2H .
• Merchant GPU opportunity: Not yet a win, but dual-vendor resiliency gives TER a “seat at the table”; advantage in throughput, reliability, and time-to-market could yield modest 2026 impact .
• Memory/HBM4: New insertion points (post-stack wafer, post-stack singulated die) to reduce accelerator fallout; majority HBM4 capacity adds in 2025/early 2026 .
• Robotics: Large-customer plan-of-record requires multi-geography production; US manufacturing to enhance resilience; expenses in 2H 2025, revenue needle-mover in 2026 .
• Tax rate: Rises to 16.3% in Q3 on both GAAP and non-GAAP due to new legislation and catch-up; full-year ~14.5% remains .

Estimates Context

• Q2 2025: Non-GAAP EPS $0.57 vs consensus $0.54* (beat); Revenue $651.8M vs consensus $651.8M* (inline) .
• Q3 2025: At the time of guidance, consensus was EPS ~$0.79* and revenue ~$744M*; management guided above midpoints, with stronger 2H expected on AI compute, while noting timing uncertainty between quarters .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• AI compute is the core growth engine; expect majority of Semi Test revenue in 2H from AI across SoC and Memory, with improving utilization shifting orders toward new systems — positive for top-line and margins .
• Memory digestion is a near-term headwind, but HBM4-related test insertions (post-stack wafer and singulated die) expand TAM; watch Q4/Q1 ramps and HBM4 timing .
• Robotics restructuring is executing; 9% QoQ growth and a 2026 plan-of-record suggest medium-term leverage, but 2025 remains below breakeven — maintain tempered expectations near term .
• Q3 guidance implies sequential acceleration with higher gross margins and operating leverage; monitor tax-rate step-up (16.3%) that will mute EPS conversion in Q3 .
• Potential merchant GPU dual-sourcing is a meaningful optionality; evidence of a level playing field could add 2026 upside beyond VIP compute .
• Capital returns remain robust (Q2 buybacks $117M; dividends maintained), underpinned by strong FCF ($132M in Q2) and disciplined OPEX .
• Trading lens: Near-term upside skew from 2H AI demand inflection and TAM-expanding test insertions; risk skew centered on shipment timing across quarters and weak Robotics until 2026 .