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Teradyne (TER, Financials) reported fourth-quarter earnings that met the high end of its guidance, driven by performance in its Semiconductor Test segment, particularly in artificial intelligence-focused markets such as Compute and Memory.
Key growth drivers according to CEO Greg Smith include artificial intelligence accelerator application-specific integrated circuits, networking, and high-bandwidth memory dynamic random-access memory.
Adjusting for the sale of its DIS business, the corporation reported 5% revenue increase in 2024or 8%. Demand from vertically integrated companies in Cloud AI helped to drive the 17% year-over-year rise in semiconductor test revenue. Though it lagged behind rivals in the industrial automation sector, the Robotics division failed expectations. From $440 million in 2024, a reorganization project is intended to lower the breakeven revenue of the Robotics division to $365 million in 2025.
Teradyne announced fourth-quarter sales of $753 million with non-GAAP profits per share of $0.95. The Robotics segment caused the non-GAAP gross margin to be 59.4%, rather below target. The quarter's operational profit margin came out to be 22%. With system-on-chip contributing $429 million, memory at $112 million, and integrated system test at $19 million, semiconductor test revenue came to $561 million. Revenue from robotics jumped 11% consecutively to $98 million.
Teradyne brought in $2.82 billion overall for the whole year; system-on- chip and Memory income increased 17% year over years. The business returned $275 million to owners and recorded $474 million in free cash flow. Demand in Compute and Memory markets was mentioned by management; high-bandwidth memory dynamic random-access memory demand brings $500 million in Memory Test income.
Driven by AI Compute and a modest rebound in Mobile, Automotive, and Industrial applications in the second half of the year, management anticipates the system-on-chip total addressable market to rise around 7% in 2025. In the sectors of system-on-chip and memory tests, the business expects low single-digit market share. For 2025 Teradyne projects revenue growth across all sectors and gross margins ranging from 59% to 60%. Revenue from robotics is expected to increase around 10% annually. From 2024 levels, the company's midterm projection shows sales of $4.5 billion to $5.5 billion and non-GAAP profits per share of $7.00 to $9.50 reflecting a 12% to 18% compound annual revenue growth rate and a 27% earnings per share compound annual growth rate.