01—Abstract
Summary
Summary of the 10-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
Teradyne, Inc. reported a challenging year in 2023, with total revenues decreasing by 15.2% to $2.68 billiona, primarily driven by a significant slowdown in its Semiconductor Test segment.
This decline was attributed to an industry-wide correction cycle and excess semiconductor inventory, particularly in the mobility sector. While demand from automotive and image sensor applications provided some offset, the overall semiconductor market downturn impacted the company's performance. The Robotics segment also experienced a revenue decline of 6.9%b due to softening global industrial activity and macroeconomic headwinds, compounded by the company's channel transformation efforts.
Despite these revenue pressures, Teradyne maintained a strong gross profit margin of 57.4%c in 2023. The company is strategically focusing on gaining market share in its test businesses through product innovation and accelerating growth in its Robotics segment, while also balancing capital allocation towards stock repurchases and dividends. Looking ahead, Teradyne anticipates continued demand for its products from emerging technologies such as DDR5 and High Bandwidth Memory (HBM) devices for data centers, and expects growth drivers from 3-nanometer process technology and increasing multi-chip packaging in the medium term.
In a significant strategic move, Teradyne announced a partnership with Technoprobe, a leader in probe cards, which includes an investment and the divestiture of Teradyne's Device Interface Solutions (DIS) business. This transaction, expected to close in the first half of 2024, aims to accelerate growth and enhance semiconductor test interfaces. The company also repurchased $397.2 milliond of its common stock in 2023 and paid dividends, demonstrating a commitment to returning capital to shareholders.
02—Key points
Key Highlights
- Teradyne's total revenues decreased by 15.2% in 2023 to $2.68 billion, primarily due to a 12.6% decline in Semiconductor Test revenues, impacted by industry inventory correction.
- The Robotics segment saw a 6.9% revenue decrease, attributed to macroeconomic headwinds and channel transformation efforts.
- Despite revenue declines, Teradyne maintained a robust gross profit margin of 57.4% in 2023.
- The company is strategically investing in its Robotics business and market share gains in test segments, driven by advanced technologies like DDR5 and HBM.
- A strategic partnership with Technoprobe was announced, involving a 10% equity investment in Technoprobe and the sale of Teradyne's Device Interface Solutions (DIS) business for $85 million, expected to close in H1 2024.
- Teradyne returned $400.5 million to shareholders through stock repurchases and paid dividends in 2023.
- Key customers, such as Texas Instruments, accounted for 10% of consolidated revenues in 2023, highlighting customer concentration risk.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Teradyne, Inc kept $0.17.
- Revenue$2.68B100.0%
- Cost of revenue−$1.14B42.6%
- Gross profit$1.54B57.4%
- Operating costs−$1.04B38.7%
- Operating income$501.1M18.7%
- Interest, other & tax−$52.3M2.0%
- Net income$448.8M16.8%
Where FY2023 revenue went
$2.68B- Cost of revenue: $1.14B, 43% of revenue
- SG&A: $577.3M, 22% of revenue
- Other operating costs: $458.4M, 17% of revenue
- Net income: $448.8M, 17% of revenue
- Interest, other & tax: $52.3M, 2.0% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 22, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $2.68B$3.16B | −15.2% |
| Cost of Revenue | $1.14B$1.29B | −11.5% |
| Gross Profit | $1.54B$1.87B | −17.7% |
| SG&A Expenses | $577.32M$558.10M | +3.4% |
| Operating Expenses | $1.04B$1.04B | 0.0% |
| Operating Income | $501.07M$831.94M | −39.8% |
| Interest Expense | $3.81M$3.72M | +2.3% |
| Net Income | $448.75M$715.50M | −37.3% |
| EPS (Basic) | $2.91$4.52 | −35.6% |
| EPS (Diluted) | $2.73$4.22 | −35.3% |
| Shares Outstanding (Basic) | 154.31M158.43M | −2.6% |
| Shares Outstanding (Diluted) | 164.30M169.73M | −3.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of Teradyne's revenue decline in 2023?
The primary driver was a significant downturn in the Semiconductor Test segment, caused by an industry-wide correction cycle and excess inventory, particularly in the mobility sector. The Robotics segment also contributed to the decline due to softer global industrial activity and macroeconomic headwinds, along with internal channel transformation efforts.
What is the significance of the strategic partnership with Technoprobe?
The partnership involves a €481 million investment for a 10% equity stake in Technoprobe and the sale of Teradyne's Device Interface Solutions (DIS) business for $85 million. This collaboration aims to accelerate growth for both companies and enhance semiconductor test interfaces for customers globally. The transaction is anticipated to close in the first half of 2024.
How did Teradyne manage its capital in 2023, and what are its plans?
In 2023, Teradyne returned $400.5 million to shareholders through stock repurchases and paid $67.9 million in dividends. The company plans to continue investing in growth, balancing capital allocation between stock repurchases and dividends, and strategic acquisitions. They intend to repurchase up to $90.0 million in 2024.
What are the key growth drivers Teradyne expects in the mid-term for its Semiconductor Test business?
Teradyne anticipates growth driven by the ramp-up of 3-nanometer and gate-all-around process technologies, increasing multi-chip packaging, and the continued complexity and unit growth of devices. Specifically, the demand for DDR5 and High Bandwidth Memory (HBM) devices for data center applications has been a strong driver.
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