Teradyne’s Earnings Call: Record Revenue Amid Cautious Outlook

Teradyne ((TER)) has held its Q1 earnings call. Read on for the main highlights of the call.

Teradyne’s recent earnings call presented a mixed sentiment, reflecting both optimism and caution. The company celebrated a strong first-quarter performance with record revenue and strategic wins, yet expressed concerns over limited visibility, declining robotics revenue, and potential impacts from international trade policies and tariffs. These challenges have led to a cautious outlook for the second half of the year.

Record First Quarter Revenue

Teradyne reported impressive first-quarter sales of $686 million, reaching the high end of its guidance. The non-GAAP EPS stood at $0.75, surpassing the expected high-end guide of $0.68. This strong financial performance underscores the company’s ability to meet and exceed market expectations.

Strong Semi Test Performance

The Semi Test segment was a standout performer, generating $543 million in revenue. The System on Chip (SoC) revenue was a significant contributor, accounting for $406 million. This growth was primarily driven by the mobile sector, highlighting Teradyne’s robust presence in the semiconductor testing market.

Robotics Division Milestone

A major highlight for Teradyne’s Robotics division was securing the largest order in its history from a global automotive manufacturer. This order included both MiR Autonomous Mobile Robots (AMRs) and UR cobot arms, marking a significant milestone for the division.

Strategic Partnership with ADI

Teradyne announced a strategic partnership with Analog Devices Inc. (ADI), focusing on deploying UR cobots and MiR AMRs to support ADI’s collaborative automation initiatives. This partnership is expected to enhance automation capabilities and drive innovation.

First DRAM Wafer Sort Win

In a significant achievement for its Memory Business Unit, Teradyne secured a performance test win for HBM4 with a major DRAM manufacturer. This win is expected to begin contributing to revenue in the second half of the year.

Limited Visibility Beyond Q2

Teradyne expressed concerns about limited visibility beyond the second quarter due to trade policy uncertainties and customer unpredictability. As a result, the company has refrained from providing guidance for the latter half of the year.

Decline in Robotics Revenue

Despite the milestone order, the Robotics division faced challenges with revenue declining to $69 million, both sequentially and year-over-year, resulting in an operating loss of $22 million.

Weak Wireless Test End Market

The wireless test end market, particularly for the LitePoint business, has been weak since 2023. Despite winning all 13 Wi-Fi 7 test opportunities, the market’s overall weakness remains a concern.

Memory Revenue Decline Expected

Teradyne anticipates a significant sequential decline in Memory revenue as the market continues to adjust to the installed HBM test capacity. This expectation reflects ongoing market challenges.

Impact of International Trade Policy

International trade policies and tariffs are raising concerns about their impact on end market demand, particularly affecting the mobile, automotive, and industrial segments. These challenges could influence future performance.

Forward-Looking Guidance

Looking ahead to the second quarter, Teradyne forecasts sales between $610 million and $680 million, with gross margins expected to decrease to 56.5%-57.5% due to product mix and lower volume. The non-GAAP EPS for Q2 is projected to range from $0.41 to $0.64. Additionally, the company has increased its share buyback target to $1 billion by the end of 2026, reflecting confidence in its long-term growth prospects.

In summary, Teradyne’s earnings call highlighted a strong start to the year with record revenue and strategic wins. However, challenges such as declining robotics revenue, weak wireless test markets, and international trade policy impacts present hurdles. The company’s cautious outlook for the second half of the year underscores these concerns, while forward-looking guidance reflects a balanced approach to navigating these uncertainties.