01—Abstract
Summary
Summary of the 8-K filed April 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Teradyne (NASDAQ: TER) reported first quarter 2024 results on April 24, 2024 that beat the high end of its own guidance, with revenue of $599.8 milliona, down about 3% from $617.5 million in Q1 2023 and down about 11% sequentially from $670.6 million in Q4 2023.
GAAP diluted EPS was $0.40b and non-GAAP diluted EPS was $0.51, versus $0.50 and $0.55 respectively a year earlier. Management attributed the outperformance to stronger-than-expected memory and networking demand tied to AI applications, offset by continued weakness in mobility. Semiconductor Test generated $412 million of revenue, System Test $75 million, Wireless Test $25 million and Robotics $88 million.
GAAP operating income was $77.8 millionc (13.0% margin) and non-GAAP operating income was $88.6 million (14.8% margin). The outlook for Q2 2024 calls for revenue of $665 million to $725 million, GAAP diluted EPS of $0.90 to $1.10 and non-GAAP diluted EPS of $0.64 to $0.84. The GAAP guidance includes a gain on the anticipated sale of the Design Interface Solutions business to Technoprobe S.p.A.
(about $0.36d per share), which is excluded from non-GAAP results. CEO Greg Smith said visibility beyond Q2 remains limited, though he expects stronger first-half performance driven by memory and computing, and sees Robotics growth from new products and improved distribution through the rest of the year. Balance sheet and cash flow were softer in the quarter.
Cash and equivalents fell to $707.4 million from $757.6 million, and operating cash flow was only $7.3 million, reflecting a $105.5 million outflow in accounts payable and other liabilities. The company repurchased $22.1 million of stock and paid $18.4 million in dividends, with the quarterly dividend raised to $0.12 per share from $0.11. Shareholders' equity rose to $2.56 billion.
02—Key points
Key Highlights
- Q1 2024 revenue of $599.8M beat the high end of guidance but declined 3% year over year and 11% sequentially.
- GAAP diluted EPS of $0.40 vs. $0.50 a year ago; non-GAAP diluted EPS of $0.51 vs. $0.55, both reflecting the mix of adjustments such as a $13.9M FX option loss.
- Semiconductor Test ($412M) drove results on AI-related memory and networking demand, while mobility remained weak (Wireless Test only $25M).
- Q2 2024 guidance: revenue of $665M–$725M and non-GAAP diluted EPS of $0.64–$0.84, with GAAP EPS inflated by a divestiture gain.
- Pending sale of the Design Interface Solutions business to Technoprobe S.p.A. is expected to produce a gain of roughly $0.36 per share in Q2 2024.
- Operating cash flow fell to $7.3M from $19.3M a year earlier, and cash declined to $707M, a point investors should monitor.
- Quarterly dividend increased to $0.12 per share from $0.11, and the company repurchased $22.1M of stock during the quarter.
03—Questions
Frequently Asked Questions
Why did Teradyne beat its Q1 2024 guidance despite revenue declining year over year?
Management said greater-than-expected memory and networking demand driven by AI applications, along with Robotics shipments in line with expectations, pushed revenue and earnings above the high end of guidance. This offset continued weakness in mobility, which kept total revenue 3% below Q1 2023.
What is the Design Interface Solutions sale and how does it affect reported earnings?
Teradyne expects to sell its Design Interface Solutions business to Technoprobe S.p.A. The transaction is expected to generate a gain of about $0.36 per diluted share in Q2 2024, which inflates GAAP EPS guidance of $0.90–$1.10. Non-GAAP guidance excludes this gain, so the non-GAAP range is $0.64–$0.84.
Why is the non-GAAP EPS lower than GAAP EPS in Q2 2024 guidance?
The gain on the divestiture is a one-time item that boosts GAAP net income. Teradyne removes it, along with the tax effect and acquired intangible amortization, from non-GAAP results to show core operating performance, which is why non-GAAP guidance is lower.
How much visibility does management have into demand beyond Q2 2024?
CEO Greg Smith said visibility beyond the second quarter remains limited, even though strength in memory and computing is expected to drive stronger-than-expected first-half performance. Investors should expect limited forward guidance until demand trends become clearer.
Is Teradyne's cash position and cash generation a concern?
Cash and equivalents declined about $50 million in the quarter to $707.4 million, and operating cash flow was only $7.3 million because of a $105.5 million reduction in accounts payable and other liabilities. Shareholder returns of $22.1M in buybacks and $18.4M in dividends were also funded from cash, so cash generation bears monitoring.
04—Continue