Teradyne (TER) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $730 million, up 7% year-over-year and above guidance, driven by strong Semiconductor Test and Robotics growth, with AI applications accelerating demand in compute and memory.

• Robotics business delivered 26% year-over-year growth, with new products and OEM channel expansion, despite a weak macro environment.

• The company completed the sale of its DIS business to Technoprobe for $85 million, resulting in a $57.5 million pre-tax gain and a 10% equity stake.

• Revenue concentration remains high, with a few significant customers accounting for a substantial portion of test product sales.

• AI is a key secular growth driver across both test and robotics businesses, with significant opportunities expected in inference and edge AI for mobile and industrial markets.

Financial highlights

• Q2 2024 sales were $730 million, up from $684 million in Q2 2023 and $600 million in Q1 2024; non-GAAP EPS was $0.86, above guidance.

• Gross margin was 58.3% in Q2 2024, up from Q1 2024 and flat year-over-year; operating margin (GAAP) was 28.8%.

• Q2 2024 net income was $186.3 million; GAAP EPS was $1.14 (diluted), non-GAAP EPS was $0.86.

• Free cash flow was $171 million; cash and marketable securities at quarter end were $584 million.

• Robotics revenue was $90 million, up 26% year-over-year; UR contributed $75 million, MiR $16 million.

Outlook and guidance

• Q3 2024 sales expected between $680 million and $740 million; non-GAAP EPS guidance of $0.66–$0.86.

• Full-year 2024 revenue projected to grow in the low single-digit range year-over-year; Robotics revenue expected up 10–20%.

• Gross margins expected in the 58%-59% range for the year; OpEx to grow ~8% as investments accelerate.

• Robotics expected to be roughly break-even in 2024, with profitability anticipated in future years.

• Management expects edge AI deployment to strengthen demand in test and robotics over the mid-term.