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TERADYNE, INC (TER)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $753M, at the high end of guidance, with GAAP EPS $0.90 and non-GAAP EPS $0.95; strength came from Semi Test (AI compute, HBM) while Robotics was seasonally muted .
  • Semi Test revenue was $561M; within Semi Test, SoC $429M, Memory $112M, and IST $19M, reflecting VIP share gains and HBM performance test qualification late in 2024 .
  • Q1 2025 guidance: revenue $660–$700M, GAAP EPS $0.48–$0.59, non-GAAP EPS $0.58–$0.68; gross margin 58.5–59.5%, OpEx ~41.5–42.5% of sales; plan up to $400M 2025 buybacks .
  • Wall Street consensus comparisons from S&P Global were unavailable at time of analysis (SPGI daily request limit exceeded); management noted results at high end of guidance .

What Went Well and What Went Wrong

What Went Well

  • “Our Q4 results were toward the high end of our guidance range, driven by demand in our Semi Test business. For the quarter, AI compute and related memory remained strong while Mobile and Auto/Industrial exceeded our expectations.” — CEO Greg Smith .
  • Memory business surpassed $500M in 2024 (+30% YoY), with late-2024 qualification for HBM performance test at a major supplier; VIP share ~50% achieved in compute .
  • Free cash flow and capital returns: Q4 cash from operations $282.6M; Q4 buybacks $143.5M; FY24 buybacks/dividends totaled $275M; cash & marketable securities year-end $724M (cash $553.4M, marketable $170.4M) .

What Went Wrong

  • Robotics underperformed seasonal expectations; non-GAAP operating loss ~13% in Q4 and FY24; restructuring moves breakeven down to $365M 2025 revenue .
  • Non-GAAP gross margin (59.4%) came in just below guidance due to Robotics mix; OpEx ($284M) ran higher on accelerated Semi Test engineering spend .
  • Q1 2025 outlook reflects sequential revenue step-down (seasonality and Robotics softness), with operating margin midpoint ~17% .

Financial Results

Quarterly Trend (sequential)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$729.9 $737.3 $752.9
GAAP Diluted EPS ($)$1.14 $0.89 $0.90
Non-GAAP Diluted EPS ($)$0.86 $0.90 $0.95
Gross Margin % (GAAP)58.3% 59.2% 59.4%
Operating Margin % (non-GAAP)21.9% 22.4% 21.7%
Vs Estimates (Revenue/EPS)N/A (SPGI unavailable)N/A (SPGI unavailable)N/A (SPGI unavailable)

Note: SPGI consensus data unavailable due to vendor limit; comparisons to consensus are not shown.

Year-over-Year (Q4)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$670.6 $752.9
GAAP Diluted EPS ($)$0.72 $0.90
Non-GAAP Diluted EPS ($)$0.79 $0.95

Segment and Mix

Segment ($USD Millions)Q2 2024Q3 2024Q4 2024
Semi Test (Total)$543 $543 $561
• SoC$414 $393 $429
• Memory$129 $150 $112
• ISTN/AN/A$19
Other Product Test (System + Wireless)$97 ($61+$36) $106 ($73+$33) $94
Robotics$90 $89 $98

KPIs

KPIQ2 2024Q3 2024Q4 2024
Cash from Operations ($USD Millions)$216.1 $166.3 $282.6
Share Repurchases ($USD Millions)$8.2 $24.7 $143.5
Cash & Equivalents ($USD Millions)$421.9 $510.0 $553.4
Non-GAAP Tax Rate (ex-discrete)15.0% 13.8% 7.6%
Customers ≥10% of revenue (count)N/A3 1

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
RevenueQ4 2024$710–$760M $752.9M High end achieved
Non-GAAP EPSQ4 2024$0.80–$0.97 $0.95 High end achieved
RevenueQ1 2025—$660–$700M New
GAAP EPSQ1 2025—$0.48–$0.59 New
Non-GAAP EPSQ1 2025—$0.58–$0.68 New
Gross MarginQ1 2025—58.5–59.5% New
OpEx (% of sales)Q1 2025—~41.5–42.5% New
OI&EFY 2025—~$1M income/quarter New
Tax RateFY 2025—GAAP 15.25%; non-GAAP 15% New
Share RepurchasesFY 2025—Up to $400M New
DividendQ1 2025—$0.12/share payable Mar 14, 2025 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
AI Compute & VIPsCompute TAM raised; VIP sockets loading hundreds of testers; ~50–60% share on loaded testers Maintain ~50% share; VIP TAM ~$300M in 2024, trending to ~$400–$500M in 2025 Positive, broadening
Memory/HBMMemory TAM lifted to ~$1.4B; strong HBM demand; plan to gain stack-die test share 2025 HBM digestion; upside if HBM4 pulls into late-2025; qualified in H2’24 for performance test Near-term digestion then recovery
Mobile/Auto/IndustrialWeak through 2024; inventory digestion; potential 2025 recovery Exceeded expectations in Q4; anticipate modest recovery back half 2025 Improving into 2H25
System-Level Test (SLT)Emerging in compute; stronger 2025 vs 2024 Align IST under Semi Test; SLT insertions expected as AI quality needs rise Structural growth lever
Robotics StrategyOEM channel + AI products (UR20/30, MiR1200); service pilots Consolidate GTM; reduce breakeven to $365M; ADI partnership; NVIDIA accelerator Efficiency now, growth later
China TAM & Local TestersVisibility improved; indigenous suppliers serving local demand Continued low exposure; TAM sizing refined Neutral backdrop

Management Commentary

  • “In 2025, we expect year-over-year revenue acceleration with improving conditions in our test businesses… we will continue to invest into [AI compute and memory]. Additionally, we plan to strategically realign our Robotics business to enhance customer experience and drive operational efficiency.” — Greg Smith, CEO .
  • “Non-GAAP gross margin was 59.4%, just below our guidance range due to robotics. Non-GAAP operating expenses were $284 million in Q4, higher than our guide… accelerated engineering spend in Semi Test.” — Sanjay Mehta, CFO .
  • “We are announcing a strategic partnership with Infineon… to accelerate our road map in power semiconductors… silicon carbide and gallium nitride.” — Greg Smith .

Q&A Highlights

  • Semi Test share gains: Management targets low single-digit share increases across SoC and Memory, driven by VIPs, complexity growth, and new HBM insertions .
  • Robotics plan: Unified sales/marketing/service across UR/MiR to sell more robots and lower breakeven; maintain ownership; focus on efficiency until macro improves .
  • Compute TAM trajectory: 2024 saw outsized growth; 2025 expected strong but not “mammoth” TAM increase as efficiency improves; VIP TAM ~$400–$500M in 2025 .
  • HBM timeline: Digestion in 2025; upside if HBM4 volume pulls into late-2025; otherwise recovery in 2026 .
  • Utilization & pipeline: Utilization up exiting 2024; shift from upgrades to system sales expected as capacity tightens; 2H25 skew .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for TER were unavailable at time of analysis due to SPGI daily request limit; as such, explicit beat/miss vs consensus cannot be shown. Management stated Q4 results were at the high end of guidance, implying upside vs internal expectations .
  • Where estimates comparisons matter (Q1 2025 outlook), we recommend refreshing S&P Global consensus before trading decisions.

Key Takeaways for Investors

  • AI compute and HBM remained the core Q4 driver; VIP share (~50%) plus late-2024 HBM performance test qualification support Semi Test momentum into 2025, albeit with near-term HBM digestion risk .
  • Robotics drag persisted; restructuring lowers breakeven and should reduce loss sensitivity; watch OEM channel growth and AI-enabled product ramps (MiR1200, UR accelerator) through 2025 .
  • Q1 2025 guide implies seasonal downtick; management points to stronger 2H 2025 as utilization tightens and cyclical markets (mobile/auto/industrial) recover modestly .
  • Margin cadence: gross margins at model (59%±) despite mix; OpEx elevated from accelerated Semi Test investments; operating leverage expected as top line improves in 2H .
  • Capital return: up to $400M buybacks planned for 2025 and $0.12 dividend declared; supports downside protection amid Robotics transition .
  • Monitoring list: HBM4 timing, VIP logo adds, SLT adoption in compute, China-local TAM dynamics, Robotics large-account service revenue conversion .