Teradyne, Inc.
TER · Nasdaq
Next quarter
Reports Oct 27, 2026.
Consensus is $2.03 EPS for Sep 2026 across 6 estimates, ranging $1.99 to $2.11.
TER Jun 2026
- 21.08%
- -0.39%
- $2.04
- $2.47
- —
- $1.33B
Reported results
- $1.33B
- 59.79%
- $437.81M
- 32.94%
- $374.53M
- $2.38
Highlights
- Record revenue: Q2 revenue reached $1.329 billion, up 104% year over year and 3.6% sequentially, exceeding the high end of guidance for the second consecutive quarter.
- Earnings beat: Non-GAAP diluted EPS was $2.47 versus consensus of $2.04, a 21.1% surprise; GAAP diluted EPS was $2.38 versus $0.49 a year ago and $2.53 in Q1.
- Semiconductor Test led the print: Revenue rose 128% year over year to a record $1.122 billion, driven by AI-related compute and memory demand.
- Memory recovery: Memory revenue exceeded $200 million for the third consecutive quarter, supported by sustained DRAM and HBM demand and a resurgence in NAND final test.
- Broad-based growth: Product Test revenue increased 26% year over year to $107.2 million, while Robotics rose 33% to $99.9 million and recorded its fifth consecutive quarter of sequential growth.
- Strong profitability: GAAP gross margin was 59.8%, up from 57.2% a year ago, while operating income increased to $437.8 million from $90.7 million; operating margin was 32.9% versus 13.9%.
- AI-oriented investment: Selling and administrative expense rose $34.7 million year over year to $192.5 million, and engineering and development expense rose $37.9 million to $156.3 million, primarily reflecting strategic Semiconductor Test investment and higher variable compensation.
- Q3 outlook: Teradyne expects revenue of $1.20 billion to $1.30 billion and non-GAAP EPS of $1.85 to $2.15, with management citing robust AI-related demand.
- Cash generation and capital allocation: Six-month operating cash flow was $734.3 million; Teradyne ended June with $517.1 million of cash and marketable securities, no revolving debt, and returned $114.9 million through buybacks and dividends in the first half.
Analysis
Teradyne’s second quarter was another record AI-driven print, with revenue of $1.329 billion above the high end of guidance and non-GAAP EPS of $2.47 well ahead of the $2.04 consensus. Revenue rose 104% from $651.8 million a year ago and 3.6% from $1.282 billion in Q1, while GAAP EPS increased from $0.49 but declined from $2.53 sequentially. The sequential EPS decline reflected lower operating income and margin, not a reversal in demand: operating income was $437.8 million versus $473.0 million in Q1, and operating margin fell to 32.9% from 36.9%.
Semiconductor Test defined the quarter, with revenue up 128% year over year to $1.122 billion as AI infrastructure investment lifted compute, DRAM and HBM testing and revived NAND final test. Product Test and Robotics also expanded, with revenue up 26% and 33%, respectively. Gross margin improved 260 basis points year over year to 59.8%, more than offsetting increased investment in sales, engineering and development. Management’s Q3 revenue outlook of $1.20 billion to $1.30 billion implies a midpoint below Q2, but the range and non-GAAP EPS guidance of $1.85 to $2.15 still reflect continued robust AI demand and a longer-term setup from higher wafer-fab investment.
AI semiconductor demand
Semiconductor Test was the clear center of gravity. Revenue reached a second consecutive quarterly record of $1.122 billion, up $629.9 million, or 128.1%, year over year. Management attributed the increase to AI-related compute and memory demand, supported by investment from hyperscalers, vertically integrated producers and other AI data-center customers.
- Memory: Revenue exceeded $200 million for the third consecutive quarter, with continued strength in DRAM and high-bandwidth memory testing and renewed demand for NAND final test.
- Geographic mix: Asia Pacific represented $1.159 billion, or 87% of company revenue, including 40% from Taiwan and 20% from Korea; China contributed 12%, down from 16% a year ago.
- Profit contribution: Semiconductor Test income before taxes and affiliate earnings rose to $427.3 million from $95.8 million, despite higher strategic selling and engineering investment.
Product Test and Robotics
The non-semiconductor businesses also contributed to the broad market expansion, although their absolute contribution remained much smaller than Semiconductor Test.
- Product Test: Revenue increased 26.0% year over year to $107.2 million and 33% sequentially, reflecting growth across AI-related applications as well as Defense and Aerospace. Income before taxes rose to $18.0 million from $15.6 million.
- Robotics: Revenue rose 33.4% to $99.9 million and delivered a fifth consecutive quarter of sequential growth, led by collaborative robots and autonomous mobile robots sold into electronics manufacturing and semiconductor applications.
- Robotics profitability: The segment remained loss-making before taxes at negative $2.6 million, but improved from a negative $18.5 million a year ago as higher volume and prior restructuring reduced operating expenses.
Margins and investment
Scale and mix drove a meaningful year-over-year profitability improvement. Gross profit increased to $794.6 million from $373.0 million, and gross margin expanded to 59.8% from 57.2%, primarily because of higher Semiconductor Test volume and mix. GAAP operating income reached $437.8 million, versus $90.7 million a year ago, while non-GAAP operating income was $448.3 million, or 33.7% of revenue.
- Operating spending: Selling and administrative expense rose 22% to $192.5 million, while engineering and development expense increased 32% to $156.3 million. Management attributed both increases primarily to strategic Semiconductor Test investment and higher variable compensation.
- Sequential moderation: Operating margin declined from 36.9% in Q1 to 32.9% in Q2 as operating expenses increased and the quarter’s revenue growth was less pronounced sequentially.
- Tax and adjustments: The effective tax rate was 15.1%, versus 12.7% a year ago. Non-GAAP EPS exceeded GAAP EPS by $0.09, mainly reflecting amortization, restructuring, ERP costs and related tax adjustments.
AI data-center expansion
Teradyne increased its exposure to AI data-center testing through the April 8 formation of MultiLane Test Products, a joint venture in which it owns 75%. The venture combines Teradyne with MultiLane’s test and measurement assets and is intended to accelerate solutions for high-speed data connections. The transaction cost approximately $157.8 million and added $131.6 million of goodwill and $46.7 million of acquired intangible assets; its results are included in Product Test and were not material to reported revenue or income in the quarter.
- Strategic rationale: Management sees demand for test solutions expanding from wafer-level semiconductor testing through AI data-center equipment, with MultiLane adding capabilities in high-speed connectivity.
- Forward investment: Property additions were $90.7 million in Q2 and $155.4 million in the first half, while first-half sales and engineering investment increased alongside the demand ramp.
Cash flow and outlook
Cash generation was strong but working capital absorbed cash as the business scaled. Six-month operating cash flow was $734.3 million, up from $343.7 million a year ago, while accounts receivable increased $302.2 million. Cash, cash equivalents and marketable securities totaled $517.1 million at quarter-end, up $68.8 million from December 2025, and the company had no outstanding revolving debt.
- Q3 guidance: Revenue is expected at $1.20 billion to $1.30 billion, with GAAP EPS of $1.79 to $2.09 and non-GAAP EPS of $1.85 to $2.15. The revenue midpoint of $1.25 billion is below Q2’s $1.329 billion, while the range continues to incorporate robust AI-related demand.
- Longer-term setup: Management said rapidly increasing wafer-fab-equipment investment supports continued growth in 2027 and beyond.
- Shareholder returns: Teradyne paid $40.7 million in dividends and repurchased $74.2 million of stock in the first half, returning $114.9 million in total; the quarterly dividend increased to $0.13 per share from $0.12 a year ago.
