Teradyne (TER) investor relations material

Executive summary

• Q4 2025 revenue grew 44% year-over-year and 41% sequentially, surpassing high guidance, with over 100% non-GAAP EPS growth, driven by strong AI demand across compute, memory, and robotics.

• Full-year 2025 revenue increased 13% to $3.19 billion, with non-GAAP EPS up 23% to $3.96; compute became the largest SoC segment, overtaking mobile.

• All business groups—Semiconductor Test, Product Test, and Robotics—delivered sequential growth in Q4 2025.

• Q4 2025 was the largest revenue quarter of the year and the second largest ever.

• AI-driven applications accounted for over 60% of Q4 revenue and are expected to drive up to 70% in Q1 2026.

Financial highlights

• Q4 2025 sales reached $1.083 billion, with non-GAAP EPS of $1.80, gross margin at 57.2%, and operating profit at 29%.

• Full-year 2025 gross margin was 58.3%, operating profit 22.3%, and non-GAAP net income $632.1 million ($3.96 per share).

• Free cash flow in 2025 was $450 million; operating cash flow was $674.4 million.

• Returned $785 million to shareholders in 2025, or 174% of free cash flow.

• Cash and cash equivalents at year-end 2025 were $293.8 million.

Outlook and guidance

• Q1 2026 sales expected between $1.15–$1.25 billion, with non-GAAP EPS of $1.89–$2.25 and gross margin guidance of 58.5%–59.5%.

• Q1 2026 revenue projected to be a new quarterly high, up 11% sequentially and 75% year-over-year.

• 2026 sales expected to be first-half weighted (60% in H1), reversing 2025's pattern.

• Target earnings model based on ATE TAM of $12–$14 billion, aiming for $6 billion revenue, 59%–61% gross margin, 30%–34% operating profit, and $9.50–$11 non-GAAP EPS.

• Management expects year-over-year growth across all business segments in 2026, with continued AI-driven momentum.