Teradyne beats third-quarter estimates and sets fourth-quarter forecast

Revenue of $1,306 million rose from $769 million a year earlier but fell from $1,329 million in the second quarter.

Non-GAAP earnings per share, which exclude acquired intangible amortization, restructuring and other charges, and the related tax effect, were $2.29. That was $0.23 above expectations. Revenue of $1,306 million was above the $1,280 million expected and above the top of the company's own forecast range of $1,200 million to $1,300 million.

Chief executive Greg Smith said demand extended across the AI value chain, from memory and hard disk drive test to high-speed interconnect and robotics. Semiconductor Test revenue was $1,072 million, Product Test $138 million and Robotics $96 million. Teradyne's release said Memory and Integrated Systems Test revenue was a record, driven by AI, and that Robotics had its highest third-quarter revenue to date and reached profitability. GAAP net income attributable to Teradyne was $342.4 million. Gross margin was 59.1 per cent, down from 59.8 per cent in the second quarter and up from 58.4 per cent a year earlier.

For the fourth quarter, Teradyne guided to revenue of $1,250 million to $1,350 million, non-GAAP earnings per share of $1.95 to $2.25, and GAAP earnings per share of $1.88 to $2.18. The revenue midpoint of $1,300 million is slightly below this quarter's $1,306 million.

On October 13, Teradyne shares fell nearly 5% after the market read its $300 million investment in FormFactor as dilutive, while FormFactor shares rose. The quarter's demand, spanning memory, hard disk drive test, high-speed interconnect and robotics, bears on the question that sell-off raised: whether the FormFactor tie-up reflects AI-driven test demand or a drag on capital.