Teradyne: Q4 Earnings Snapshot - Strong Semiconductor Test Segment Drives Growth

Teradyne, Inc. (TER) reported its fourth-quarter 2023 earnings on January 30, 2024, with revenues of $671 million, up 4.8% year over year. The company's earnings per share (EPS) of $0.72 surpassed the Zacks Consensus Estimate by 9.72% but declined 14.1% year over year. Revenues from Semiconductor Test platforms, System Test business, Wireless Test business, and Robotics were $431 million (64.2% of total revenues), $86 million (12.8%), $25 million (3.7%), and $129 million (19.2%), respectively. Robotics revenues increased 50% sequentially and 17% year over year.



Teradyne's gross margin was 56.6%, which contracted 90 basis points (bps) year over year. Selling and administrative expenses decreased 0.3% year over year to $142.3 million, while engineering and development expenses decreased 6.1% year over year to $102.2 million. As a percentage of revenues, selling and marketing expenses were 21.2%, up 170 bps year over year, and engineering and development expenses increased 40 bps on a year-over-year basis to 15.2%.



Teradyne's cash and cash equivalents (including marketable securities) were $819.7 million as of Dec 31, 2023, lower than $716.5 million as of Oct 1, 2023. Net cash provided by operating activities was $248.8 million for the fourth quarter, up from $174.3 million in the prior quarter.

For the first quarter of 2024, Teradyne expects revenues between $540 million and $590 million. Non-GAAP earnings are expected between $0.22 and $0.38 per share. The Zacks Consensus Estimate for the first quarter is pegged at $0.29 per share, unchanged in the past 30 days.

Teradyne's strong performance in the Semiconductor Test segment, driven by demand for memory test systems and the growth of DDR5 and HBM devices used in data center applications, is expected to continue in the coming quarters. The broader adoption of 3-nanometer technology in the mobility sector and the robust demand in the automotive industry's shift from internal combustion to electric vehicles are also expected to be favorable factors for the segment's growth. The company's focus on expanding its OEM solutions channel for Universal Robots and the ongoing expansion of high-payload cobots (UR20 and UR30) are expected to drive growth in the Robotics segment in the coming quarters. However, the weak demand environment and the decline in the hard disk drive (HDD) market may pose challenges to the company's overall performance in the near term.