Key Points
- Q2 2024 revenue hit $730 million, above the top end of guidance.
- GAAP EPS was $1.14, surpassing expectations.
- Strong performance in semiconductor test and robotics segments.
Teradyne (TER -2.80%), a leading supplier of automated test equipment and industrial robotics, released its earnings report for the second quarter of 2024 on July 24, 2024.
The company's revenue was $730 million, topping the high end of management's guidance, which ranged from $665 million to $725 million. This figure also represents a 7% increase compared to Q2 2023 and a substantial jump from $600 million in the first quarter. The company's generally accepted accounting practices (GAAP) (EPS) were $1.14, exceeding the of $0.90 to $1.10. Non-GAAP EPS stood at $0.86, well above the expected range of $0.64 to $0.84.
Teradyne delivered a robust quarter overall, benefiting from increased demand for AI applications and improvements in its semiconductor test and robotics segments.
| Metric | Q2 2024 | Management's Guidance | Q2 2023 | Y/Y Change |
|---|---|---|---|---|
| Revenue (millions) | $730 | $665-$725 | $684 | 7% |
| GAAP EPS | $1.14 | $0.90-$1.10 | $0.73 | 56% |
| Non-GAAP EPS | $0.86 | $0.64-$0.84 | $0.79 | 9% |
| Semiconductor Test Revenue (millions) | $543 | N/A | $475 | 14% |
Source: Teradyne's SEC filings. Expectations were based on management's guidance in the first-quarter report.
Overview of Teradyne's business
Teradyne specializes in testing and automation equipment for various industries, including semiconductor manufacturing and industrial robotics. It operates in four primary business segments: Semiconductor Test, System Test, Wireless Test, and Robotics.
Key success factors include maintaining a competitive edge through new product introductions, expanding customer bases, and improving operational efficiencies. The company's reliance on significant customers, particularly in the semiconductor test segment, and its exposure to global market dynamics remain critical factors to monitor.
Notable developments in the quarter
In Q2 2024, Teradyne's revenue was boosted by an uptick in demand from artificial intelligence (AI) applications. The semiconductor test segment recorded revenue of $543 million, a 14% year-over-year increase, driven by strong demand recovery across memory and Systems on Chip (SoC). CEO Greg Smith highlighted that "memory and SoC delivered above our plan and showed strong performance in the quarter driven primarily by AI applications."
The robotics segment also saw meaningful growth, with revenue hitting $90 million, showing improvements both sequentially and year-over-year.
Teradyne's cost control measures and operational efficiencies were evident as its gross profit of $426 million translated into a gross margin of 58.3%, up from 56.6% in Q1 2024. Operating expenses were effectively managed at $215 million, including contributions from acquired intangible assets and restructuring charges. Though cost of revenues increased to $304 million from $282 million in the previous quarter, operational performance remained strong.
Looking ahead
For Q3 2024, Teradyne expects revenue between $665 million and $684 million, and GAAP EPS ranging from $0.62 to $0.82. Non-GAAP EPS is forecasted to be between $0.66 and $0.86. Management has maintained a cautious outlook for the second half of the year due to expected weaknesses in the mobile, legacy automotive, and industrial markets. However, the company remains optimistic about ongoing strong demand for AI applications.
Investors should pay attention to potential market dynamics and customer concentration within Teradyne's key segments. Continued innovation and strategic partnerships will be crucial for sustaining growth.
