Slides
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Financial Results for Q4 and Full Year 2024 January 30, 2025
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This presentation contains forward-looking statements including statements regarding Teradyne’s future business prospects, financial performance or position and results of operations. You can identify forward-looking statements by their use of forward-looking words such as “anticipate,” “expect,” “plan,” “could,” “may,” “will,” “believe,” “estimate,” “goal” or other comparable terms. Forward-looking statements in this presentation address various matters, including statements regarding Teradyne’s financial guidance, future business prospects, results of operations, market size and conditions, earnings per share, mid-term earnings model, sales mix, customer product development, customer demand and sales expectations, the payment of a quarterly dividend, and the repurchase of Teradyne common stock pursuant to a share repurchase program. Investors are cautioned that such forward- looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements due to known and unknown risks, uncertainties, assumptions, and other factors. Such factors include, but are not limited to, macroeconomic factors and slowdowns or downturns in economic conditions generally and in the markets in which Teradyne operates; decreased or delayed product demand from one or more significant customers; a slowdown or inability in the development, delivery and acceptance of new products; the ability to grow the Robotics business; the impact of increased research and development spending; the impact of epidemics or pandemics such as COVID-19; the impact of a supply shortage on our supply chain and contract manufacturers; the consummation and success of any mergers or acquisitions; unexpected cash needs; the business judgment of the board of directors that a declaration of a dividend or the repurchase of common stock is not in Teradyne’s best interests; changes to U.S. or global tax regulations or guidance; the impact of any tariffs or export controls imposed by the U.S. or China; the impact of U.S. Department of Commerce or other government agency regulations relating to Huawei, HiSilicon and other customers or potential customers; the impact of U.S. Department of Commerce export control regulations for certain U.S. products and technology sold to military end users or for military end-use in China; the impact of the Israel-Hamas conflict; the impact of regulations published by the U.S. Department of Commerce relating to semiconductors and semiconductor manufacturing equipment destined for certain end uses in China; and the impact of trade regulations and restrictions that impact our ability to manufacture certain products to and support certain customers. The risks included above are not exhaustive. For a more detailed description of the risk factors associated with Teradyne, please refer to Teradyne’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Many of these factors are macroeconomic in nature and are, therefore, beyond Teradyne’s control. We caution readers not to place undue reliance on any forward-looking statements included in this presentation which speak only as of the date of this presentation. Teradyne specifically disclaims any obligation to update any forward-looking information contained in this presentation or with respect to the announcements described herein. SAFE HARBOR 2
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Business Update and Outlook 3 Greg Smith, President and CEO
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Q4’24 and 2024 Summary 4 (1) See appendix for GAAP to Non-GAAP reconciliation • Stronger SoC and Memory demand drove Q4’24 sales up ~16% excluding DIS from Q4'23 (12% as reported) • Robotics sales up 11% sequentially, down 24% YoY Q4 Sales of $753M, Non-GAAP EPS of $0.95, 2024 Sales of $2,820M, Non-GAAP EPS of $3.22 • Sales up 8% from 2023 excluding the impact from the DIS divestiture (5% as reported) • Full year 2024 Non-GAAP EPS of $3.22, up 10% from 2023 Quarterly Sales by Year ($M) Full Year Sales/Non-GAAP EPS(1) $2.1B $2.3B $3.1B $3.7B $3.2B $2.7B $2.8B $2.37 $2.86 $4.62 $5.98 $4.25 $2.93 $3.22 $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $0.0B $0.5B $1.0B $1.5B $2.0B $2.5B $3.0B $3.5B $4.0B 2018 2019 2020 2021 2022 2023 2024 Sales EPS $- $200 $400 $600 $800 $1,000 $1,200 Q1 Q2 Q3 Q4 2021 2022 2023 2024
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Q4’24 and 2024 Summary & 2025 Full Year Outlook 5 Q4 Summary Q4’24 sales of $753M and non- GAAP EPS of $0.95 (both at the high end of guidance range) • Semi Test strength on broad-based demand in Compute (AI, networking), Mobile, Auto/Industrial, and Memory (HBM, DRAM Final Test) • Robotics continues to facing on- going end market weakness but delivering on AI product portfolio (MiR 1200 Pallet Jack, UR AI Accelerator) 2024 Summary Total Company revenue $2.8B up 8% YoY excluding impact of DIS divestiture (5% as reported) Non-GAAP EPS $3.22, up 10% YoY SOC revenue growth of 13%, excluding DIS • Revenue product mix in SOC roughly equal for Compute, Mobile and Auto/Industrial (34%/32%/34%) • Compute revenue growth >3.5x YoY) • Compute Vertically Integrated Producer (VIP) TAM ~$300M in 2024 Memory revenue growth of 30% YoY on strong HBM / DRAM demand Robotics down 3% YoY , outperforming industrial automation peer group 2025 Outlook and Mid-Term Earnings Model 2025 ATE TAM growth ~5%, share growth low-single digits driven by VIP Compute and modest second half recovery in Mobile, Auto/Industrial Other product test businesses expected to improve double digits YoY Robotics focused on AI-enabled SAM expansion with a consolidated go-to-market strategy Mid-Term Outlook for Test • AI and electrification expected to be TAM drivers over the mid- term. 2nm/GAA enables growth of Edge AI applications • Expect balanced growth across SOC (Compute, Mobile, Auto/Industrial), and Memory • Expect significant growth in IST (System Level Test) driven by increasing quality requirements in Compute and Mobile applications Mid-Term Robotics • AI expands the range of applications and makes robotics solutions easier to implement • New products/services and channel improvements expected to drive above market growth through 2028+
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Fourth Quarter and Full Year 2024 Financial Results, Mid-Term Earnings Model Update and First Quarter 2025 Guidance 6 Sanjay Mehta, Vice President and Chief Financial Officer
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Q4’24 Business Unit Summary 7 Q4’24 Sales Q4’24 Key Highlights Sales up 14% vs Q4’23 Strength in connectivity as key WIFI 7 socket wins gain traction System Test sales of $58M Wireless Test sales of $36M Sales up 11% QoQ but down 24% from Q4’23 Continued end market weakness in Industrial Automation Sales up 28% vs Q4’23 excl. DIS, (22% as reported) SOC up 40% vs Q4’23 excl. DIS, (31% as reported) due to strength in Compute (VIPs and networking) and Mobile Memory Test sales up 8% vs Q4’23 driven by HBM and DRAM FT IST sales of $19M $94M$98M$561M Other Product Test (System Test and Wireless Test) Semiconductor Test (w/IST) Semi Test Sales Detail Total Company Product: $627M Total Company Service: $126M Semi Product $466M Semi Service $95M Robotics
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Q4’24 Non-GAAP Results (1) See attached appendix for GAAP to non-GAAP reconciliations 8 $ in millions, except EPS Q4’23 Actual(1) Q3’24 Actual(1) Q4’24 Actual(1) Sales $671M $737M $753M Gross Margin 56.6% $380M 59.7% $440M 59.4% $447M R&D 15.2% $102M 15.9% $117M 17.1% $128M SG&A 21.2% $142M 21.4% $158M 20.7% $156M OPEX 36.5% $245M 37.3% $275M 37.8% $284M Operating Profit 20.1% $135M 22.4% $165M 21.7% $163M Income Taxes (& effective tax rate) 12.6% $18M 13.8% $23M 7.6% $13M EPS $0.79 $0.90 $0.95 Diluted Shares 162M 164M 163M
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Annual Non-GAAP Results (1) See attached appendix for GAAP to non-GAAP reconciliations. (2) Share count is full year average. 9 $ in millions, except EPS 2023(1) 2024(1) Sales $2,676M $2,820M Gross Margin 57.4% $1,537M 58.6% $1,653M R&D 15.6% $418M 16.3% $461M SG&A 21.4% $571M 21.8% $615M OPEX 37.0% $990M 38.2% $1,076M Operating Profit 20.4% $547M 20.4% $576M Income Taxes (& effective tax rate) 15.5% $88M 12.6% $75M EPS $2.93 $3.22 Diluted Shares 164M 163M(2)
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2024 Business Unit Summary 10 2024 Sales 2024 Key Highlights Sales down 4% vs 2023 System Test sales of $201M, roughly flat YoY Wireless Test sales of $130M, down due to weaker UWB end market Sales down 3% from 2023 Continued end-market weakness in Industrial Automation Sales up 12.5% vs 2023, excl. DIS (9% as reported) SOC up 13% vs 2023, excl. DIS (7% as reported) due to growth in Mobile and continued momentum in Compute Memory Test sales up 30% vs 2023 driven by HBM DRAM IST sales of $85M $331M$365M$2,124M Other Product Test (System Test and Wireless Test) Semiconductor Test (w/IST) Semi Test Sales Detail Total Company Product: $2,295M Total Company Service: $525M Semi Product $1,712M Semi Service $412M Robotics
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Q1’25 Non-GAAP Guidance (1) See attached appendix for GAAP to non-GAAP reconciliations. 11 $ in millions, except EPS Q4’24 Actual(1) Q1’25 Guidance(1) Sales $753M $660M - $700M Gross Margin 59.4% 58.5% - 59.5% OPEX 37.8% 42.5% – 41.5% Operating Profit 21.7% 16.0% - 18.0% Effective Tax Rate 7.6% 15.0% EPS $0.95 $0.58 - $0.68 Diluted Shares 163M 163M
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Balance Sheet & Capital Allocation (1) Includes depreciation, stock-based compensation, amortization of acquired intangible assets (2) Teradyne calculates free cash flow as: GAAP Cash flow from operations, excluding discontinued operations, less property, plant and equipment additions; see GAAP to non–GAAP reconciliations. (3) Inclusive of excise taxes, as applicable12 $ in millions Q4’23 Actual Q3’24 Actual Q4’24 Actual Cash and Marketable Securities $937M $678M $724M Inventory $310M $297M $298M DSO 57 Days 60 Days 58 Days Capital Additions $44M $52M $57M Depreciation and Amortization(1) $40M $45M $49M Free Cash Flow(2) $204M $114M $225M Capital Return $51M $25M $144M $17M $20M $19M Buybacks(3) Dividends
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Teradyne Non-GAAP 2028 Earnings Model 27% EPS CAGR from ‘24 to ‘28 at Mid-Point Financial Model(1)(2) Model Assumptions 2024 Sales Mix 2028E Sales Mix(3) RoboticsAutomated Test =$2,820M =$5,000M (1) See attached appendix for GAAP to non-GAAP reconciliations (2) Financial Model Updated as of 1/30/2025 (3) 2028E sales mix is at mid-point of model range Metric Old Model New Model Comment Test RevenueCAGR 12-18% off 2023 12-17% off 2024 Drivers: AI – Compute and Memory growth, recovery in Mobility and Auto/Ind markets, IST growth tied to SLT Robotics Revenue CAGR 20-30% off 2023 18-24% off 2024 Drivers: AI expanding SAM and reducing implementation complexity. Persistent labor shortages in high wage countries 13 2024 TER Revenue ($M) $2,820 $4,500 $5,500 Growth off 2024 12% 18% Gross Margin % 59% 59% 60% OPEX % 38% 31% 28% Operating Profit % 20% 28% 32% Non-GAAP EPS $3.22 $7.00 $9.50 2028E (New Model)
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Q4’24 and 2024 Summary & 2025 Full Year Outlook 14 Q4 Summary Q4’24 sales of $753M and non- GAAP EPS of $0.95 (both at the high end of guidance range) • Semi Test strength on broad-based demand in Compute (AI, networking), Mobile, Auto/Industrial, and Memory (HBM, DRAM Final Test) • Robotics continues to facing on- going end market weakness but delivering on AI product portfolio (MiR 1200 Pallet Jack, UR AI Accelerator) 2024 Summary Total Company revenue $2.8B up 8% YoY excluding impact of DIS divestiture (5% as reported) Non-GAAP EPS $3.22, up 10% YoY SOC revenue growth of 13%, excluding DIS • Revenue product mix in SOC roughly equal for Compute, Mobile and Auto/Industrial (34%/32%/34%) • Compute revenue growth >3.5x YoY) • Compute Vertically Integrated Producer (VIP) TAM ~$300M in 2024 Memory revenue growth of 30% YoY on strong HBM / DRAM demand Robotics down 3% YoY , outperforming industrial automation peer group 2025 Outlook and Mid-Term Earnings Model 2025 ATE TAM growth ~5%, share growth low-single digits driven by VIP Compute and modest second half recovery in Mobile, Auto/Industrial Other product test businesses expected to improve double digits YoY Robotics focused on AI-enabled SAM expansion with a consolidated go-to-market strategy Mid-Term Outlook for Test • AI and electrification expected to be TAM drivers over the mid- term. 2nm/GAA enables growth of Edge AI applications • Expect balanced growth across SOC (Compute, Mobile, Auto/Industrial), and Memory • Expect significant growth in IST (System Level Test) driven by increasing quality requirements in Compute and Mobile applications Mid-Term Robotics • AI expands the range of applications and makes robotics solutions easier to implement • New products/services and channel improvements expected to drive above market growth through 2028+ Q1’25: Sales expected to be in the range of $660 - $700M | GAAP EPS of $0.48 - $0.59 | Non-GAAP EPS of $0.58 - $0.68
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Supplemental Information 15
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Semiconductor Test TAM Estimates 16 Source: Teradyne estimates ($ in billions) 2023 Historical Estimate Prior 2024 Estimate (October 2024) Current 2024 Estimate (Jan 2025) 2025 TAM Est as of 1/25 (at mid point) Total SOC $4.0 $4.2 $4.6 $4.9 Compute $1.4 $1.8 $2.2 $2.3 Mobile $0.9 $0.8 $0.8 $0.9 Industrial / Auto $1.0 $0.9 $0.9 $1.0 SOC Service $0.7 $0.7 $0.7 $0.7 Memory Test $0.9 $1.4 $1.4 $1.4 Total Semi ATE $4.9 $5.6 $6.0 $6.3 ($ in billions) 2023 Historical Estimate 2024 Historical Estimate 2025 TAM Est as of 1/25 SOC $4.0 $4.6 $4.7 – $5.1 Memory $0.9 $1.4 $1.3 – $1.5 Total Semi ATE $4.9 $6.0 $6.0 - $6.6 Semi ATE TAM Est. Mid-Point Semi ATE TAM Est. Ranges
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Historical Revenue (Segment Changes) 17 Q4’23 FY2023 Q1’24 Q2’24 Q3’24 Q4’24 FY2024 SemiTest $460M $1,957M $435M $560M $569M $561M $2,124M Robotics $129M $375M $88M $90M $89M $98M $365M All Other (Product Test): System Test Group $57M $200M $53M $43M $48M $58M $201M Wireless $25M $144M $25M $36M $33M $36M $130M Total: All Other (Product Test) $82M $344M $77M $80M $80M $94M $331M Total Company $671M $2,676M $600M $730M $737M $753M $2,820M
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History of Capital Allocation 18 (1) Inclusive of excise taxes, as applicable (2) Net acquisitions includes acquisitions, minority investments and divestitures (3) Teradyne calculates free cash flow as: GAAP Cash flow from operations, excluding discontinued operations, less property, plant and equipment additions net of gov’t subsidies; see GAAP to non–GAAP reconciliations. (4) Teradyne calculates % of FCF returned as Buybacks plus Dividends divided by Free Cash Flow Since 2015, 80M shares repurchased at an average price of ~$50 per share 19% 11% 70% Cumulative Capital Allocation Breakdown 2015 - 2024 Acquistions/Earn-out Payments Dividends Buybacks ($M) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cumulative Buybacks(1) 300 146 200 823 500 88 600 752 401 199 4,009 Dividends 51 49 55 67 61 66 66 70 68 76 630 Acquisitions/Investments (2) 283 15 1 194 115 9 12 - - 442 1,071 Total 633 210 257 1,085 676 163 678 822 468 717 5,711 Free Cash Flow (3) 323 370 521 370 444 684 966 415 426 474 4,993 % of FCF returned (4) 109% 53% 49% 240% 126% 23% 69% 198% 110% 58% 93%
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Semiconductor Test Market Growth Trends Are Favorable 19 Semiconductor Test SOC market powered by unit growth, complexity, new technology adoption Memory test driven by bit growth, diversity, higher bandwidth (1) (2) (2) (1) SOC data includes product and service; market data from SEMI WWSEMS report and internal estimates (2) Trendline reflects 9% and 11% CAGRs from 2016 for SOC and Memory, respectively
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In addition to disclosing results that are determined in accordance with GAAP , Teradyne also discloses in this presentation and on the earnings call non-GAAP results of operations that exclude certain income items and charges. These results are provided as a complement to results provided in accordance with GAAP . These non-GAAP performance measures are used to make operational decisions, to determine employee compensation, to forecast future operational results, and for comparison with the Company’s business plan, historical operating results and the operating results of the Company’s competitors. Management believes eachof these non-GAAP performance measures provides useful supplemental information for investors, allowing greater transparency to the information used by management in its operational decision making and in the review of the Company’s financial and operational performance, as well as facilitating meaningful comparisons of the Company’s results in the current period compared with those in prior and future periods. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this presentation is contained in the following slides and on the Teradyne website at www.teradyne.com by clicking on "Investors" and then selecting the "GAAP to Non-GAAP Reconciliation" link. The non-GAAP performance measures discussed in this presentation may not be comparable to similarly titled measures used by other companies. The presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to, financial measures or information provided in accordance with GAAP . Appendix | GAAP to Non-GAAP Reconciliation 20
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Appendix | GAAP to Non-GAAP Reconciliation 21
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Appendix | GAAP to Non-GAAP Reconciliation 22
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Appendix | GAAP to Non-GAAP Reconciliation 23
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Appendix | GAAP to Non-GAAP Reconciliation 37 Q1'25 GAAP Guidance Diluted Shares 163 Exclude dilutive shares from convertible note 0 Q1'25 Non-GAAP Guidance Diluted Shares 163 $'s % $'s % $'s % GAAP Income Tax $23 16% $12 8% $5 4% Exclude discrete tax adjustments -$3 -2% $9 6% $8 5% Tax effect of non-GAAP adjustments -$1 -1% $2 1% -$1 -1% Effect of Higher Non-GAAP PBT -1% -1% 0% Non GAAP Income Tax $18 13% $23 14% $13 8% Q4'23 Q3'24 Q4'24 $'s % of sales $'s % of sales GAAP Operating Expenses $1,036 39% $1,055 37% Intangible Asset Amortization -$19 -1% -$19 -1% Restructuring and Other -$21 -1% -$16 -1% Equity Modification Charge -$6 0% -$2 0% Loss (gain) on the sale of business $57 2% Non GAAP Operating Expenses $990 37% $1,076 38% 2023 2024 $'s % of sales $'s % of sales $'s % of sales $'s % of sales $'s % of sales GAAP Operating Expenses $255 38% $284 39% $294 39% $293 44% $299 43% Intangible Asset Amortization -$5 -1% -$5 -1% -$5 -1% -$5 -1% -$5 -1% Restructuring and Other -$6 -1% -$5 -1% -$5 -1% -$6 -1% -$6 -1% Equity Modification Charge Loss (gain) on the sale of business $0 0% Non GAAP Operating Expenses $245 36% $275 37% $284 38% $282 43% $288 41% Q4'23 Q3'24 Q4'24 Q1'25 Low Guidance Q1'25 High Guidance $'s % $'s % GAAP Income Tax $77 15% $60 10% Exclude discrete tax adjustments $3 1% $9 1% Tax effect of non-GAAP adjustments $8 1% $7 1% Effect of Higher Non-GAAP PBT -1% 0% Non GAAP Income Tax $88 16% $75 13% 2023 2024 FY 2025 GAAP estimated tax rate 15.25% Adjustment for Non GAAP items -0.25% FY 2025 Non GAAP estimated tax rate 15.00% Q1'25 Guidance: Low End High End GAAP Operating Profit as % of Sales 14% 17% Acquired intangible asset amortization 1% 1% Restructuring and Other 1% 1% Non-GAAP Operating Profit as % of Sales 16% 18%
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• Teradyne determines non-GAAP operating cash flow (“Free Cash Flow”) by adjusting GAAP cash flow from operations excluding discontinued operations, less property, plant and equipment additions. Free cash flow is considered a non-GAAP financial measure. Teradyne believes that free cash flow, which measures our ability to generate cash from our business operations, is an important financial measure for use in evaluating Teradyne’s financial performance. Free cash flow should be considered in addition to, rather than as a substitute for, income (loss) from continuing operations or net income (loss) as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. • Teradyne believes it is important to view free cash flow as a measure that provides supplemental information to Teradyne’s entire statement of cash flows. • Although other companies report their free cash flow, numerous methods may exist for calculating a company's free cash flow. As a result, the method used by Teradyne to calculate free cash flow may differ from the methods other companies use to calculate their free cash flow. • The following table sets forth a reconciliation of free cash flow, a non-GAAP financial measure, to net cash provided by operating activities, a GAAP measure, which we believe to be the GAAP financial measure most directly comparable to free cash flow. Appendix | GAAP to Non-GAAP Reconciliation 38 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Q4'23 Q3'24 Q4'24 GAAP Cash Flow from Operations, Excl Disc Ops 413$ 455$ 626$ 477$ 579$ 869$ 1,098$ 578$ 585$ 672$ 249 $ 166$ 283$ Less Property, Plant, and Equipment Additions net of Gov't Subsidy (90) $ (85)$ (105) $ (107) $ (135) $ (185) $ (132) $ (163) $ (160) $ (198) $ (44)$ (52) $ (57) $ Non-GAAP Operating Cash Flow ("Free Cash Flow") 323$ 370$ 521$ 370$ 444$ 684$ 966$ 415$ 426$ 474$ 204 $ 114$ 225$
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39 Appendix | GAAP to Non-GAAP Reconciliation 2028 Model Range FY 2028 Low FY 2028 Mid FY 2028 High 2028 Estimated GAAP Diluted EPS 6.81$ 8.06$ 9.31$ Add Back Intangible Asset Amortization 0.19$ 0.19$ 0.19$ 2028 Estimated Non-GAAP Diluted EPS 7.00$ 8.25$ 9.50$