Teradyne (TER) Q4 2024 earnings summary

Executive summary

• Q4 2024 revenue reached $753 million, at the high end of guidance, driven by strong AI and cloud demand in semiconductor test and customer-specific equipment in industrial and automotive.

• Full year 2024 revenue was $2.82 billion, with non-GAAP EPS up 10% year-over-year to $3.22 and over $470 million in free cash flow generated.

• The business shifted to a more balanced mix, with compute and auto/industrial each representing 34% of SOC revenue in 2024.

• Robotics underperformed expectations but outperformed peers, with strategic realignment planned to enhance efficiency and customer experience.

• Strategic partnerships, including the Infineon deal and DIS divestiture, and restructuring position the company for long-term growth.

Financial highlights

• Q4 2024 sales were $753 million, non-GAAP EPS $0.95, and gross margin 59.4%.

• Full year 2024 gross margin was 58.6%, operating profit margin 20.4%, and non-GAAP EPS $3.22.

• Free cash flow for 2024 was $474 million; $275 million (58% of FCF) returned to shareholders via buybacks and dividends.

• Semi test revenue (including IST) was $2.124 billion; SOC $1.537 billion, memory $502 million, IST $85 million.

• Robotics revenue was $365 million for the year, with a 13% non-GAAP operating loss.

Outlook and guidance

• Q1 2025 sales expected between $660 million-$700 million, non-GAAP EPS $0.58-$0.68, gross margin 58.5%-59.5%.

• Full year 2025 gross margin expected at 59%-60%, OpEx to rise 8%-10% year-over-year.

• Robotics revenue expected to grow ~10% in 2025, with efficiency gains from restructuring.

• Midterm model targets $4.5-$5.5 billion revenue and $7-$9.50 non-GAAP EPS by 2028, implying 15% and 27% CAGRs, respectively.

• Management expects year-over-year revenue acceleration in 2025, with continued investment in AI compute and memory.