### Title:
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, the 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 Q1 2024's $600 million. The company's GAAP earnings per share (EPS) were $1.14, exceeding the guidance range of $0.90 to $1.10. Non-GAAP EPS stood at $0.86, well above the expected range of $0.64 to $0.84. Overall, Teradyne delivered a robust quarter, 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 | $476 | 14% |
| Source: Expectations based on management's guidance, as provided in the 2024-04-24 earnings report. |
Overview of Teradyne's Business
Teradyne specializes in testing and automation equipment for various industries, including semiconductors and industrial robotics. It operates in four primary segments: Semiconductor Test, System Test, Wireless Test, and Robotics. Recently, the company has focused on expanding its market applications and enhancing technological capabilities through continuous innovation and strategic partnerships.
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 Quarterly Developments
In Q2 2024, Teradyne's revenue was positively impacted by an uptick in demand from 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. New product introductions and expanding market applications, coupled with significant orders like the one from MiR, contributed to this growth.
Teradyne's cost control measures and operational efficiencies were evident as its gross profit of $425.8 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 $281.9 million in Q1 2024, operational performance remained strong.
Strategically, the company invested $481 million in Technoprobe for a 10% equity stake, aiming to enhance technological capabilities and market reach. This aligns with Teradyne's plan to expand its service and software offerings and grow its OEM solution provider channels. As CEO Greg Smith noted, "This plan includes three elements: first is SAM expansion through new offerings. Second is growing our OEM solution provider in large account channels. Third is building increased recurring revenue through service and software offerings."
Looking Ahead
For Q3 2024, Teradyne expects revenue between $680 million and $740 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. Notably, CEO Greg Smith mentioned that "we are being cautious on the second half on what looks like continued weakness in the mobile market," emphasizing the need to monitor these market segments closely.
