On this page of StockholderLetter.com we present the latest annual shareholder letter from TERADYNE, INC — ticker symbol TER. Reading current and past TER letters to shareholders can bring important insights into the investment thesis.

 •  3/28/2025 Letter Continued (Full PDF)
 •  3/31/2023 TER Stockholder Letter
 •  3/29/2024 TER Stockholder Letter
 •  4/3/2024 TER Stockholder Letter
 •  More "Semiconductors" Category Stockholder Letters
 •  TER Benford's Law Stock Score = 97

TER Shareholder/Stockholder Letter Transcript:

ANNUAL
REPORT TO
SHAREHOLDERS
2024
600 Riverpark Drive, North Reading, MA 01864 | www.teradyne.com | 2025 Teradyne, Inc. All rights reserved.

Fellow
Shareholders,
Teradyne is committed to delivering long-term shareholder value by
focusing on customer needs and aligning our business strategy to
benefit from the secular shifts that we believe will transform global
economies and the world. Over the course of Teradyne   s history, we
have seen the dynamics of the semiconductor industry change as
semiconductors have become the central technology that support
the entire digital economy.
Teradyne has emerged in what has now become largely a two-horse
race at the high end of the semiconductor test equipment market
with the ability to generate significant earnings and robust growth.
Teradyne is the only US-based test company with the capability to
test the most complex semiconductors.
at the chip, board, product, and system level. Our test businesses
will work closely together to serve common customers and leverage
instrument technologies to increase the pace of innovation.
Our full year financial results reflect an inflection in our business, both
in terms of semiconductor test cyclical recovery, but more importantly,
a successful pivot to diversify our customer base and reduce customer
concentration. Historically, our business was dominated by mobile with
high customer concentration in that market. Back then, we were highly
exposed to Mobile in SoC, Memory and Wireless Test. Today, we are a
much more diversified business as the investments we have made and
continue to make in the Compute space are yielding strong results.
2016 SoC / Memory Revenue
Our durable operating model enables us to deliver strong profitability
and positive cash flow through market cycles, and importantly, it
insulates our R&D and customer support investments from shortterm market volatility. For the year, total company sales were $2.82
billion, up 5% compared to 2023. Non-GAAP operating margins were
just above 20% and non-GAAP earnings per share was $3.22, up
10% compared to 2023. We generated $474M in free cash flow and
returned $275M or 58% of free cash flow to our shareholders through
share repurchases and dividends in the year.
In 2024, after two years of semiconductor test market declines, our
SoC and Memory test revenue grew 17% year-over-year, excluding the
divestiture of our Design Interface Solutions (DIS) business. Artificial
Intelligence, or AI, was the dominant driver of our growth, specifically
custom AI Accelerator ASICs, Networking and High Bandwidth
Memory (HBM) DRAM. Defense and Aerospace contributed to growth,
however, end market weakness continued to affect our Wireless and
System Test businesses in 2024 with revenue declines in both groups
for the year.
We believe there is increasing synergy across our businesses, both
in products and in our customers. Our increasingly verticalized
customers, or customers designing semiconductors for their own use
rather than buying commercially available silicon, need test capabilities
2.82Billion

Revenue
2024 SoC / Memory Revenue
(Millions)
(Millions)
Service
$219
Mobile
$151
$679
Service
Mobile
$347
$398
Memory
$502
$399
$231
$90
Compute
Memory
$393
Auto /
Industrial
Compute
Auto / Industrial
2024 was another difficult year for the robotics industry in general
and for our Advanced Robotics business as cyclical headwinds in
automotive and manufacturing and very weak economies in Europe
weighed on the Robotics segment results. For the year, revenue
declined 3% compared to 2023 but significantly outperformed the
industrial automation peer group which declined 13% on average.
Advanced robotics is an early-stage industry, with enormous future
potential. That sounds great, but Teradyne has seen first-hand what
that early stage looks like. Early-stage industries are cyclical, and
treacherous. This was the case in the semiconductor capital equipment
test space all the way up through the early 2000s. Our hard-won
experience from semiconductor history is now guiding our actions
in Robotics.
3.22

Non-GAAP Earnings
per Share
474Million

Free Cash Flow

Operating Principles for Teradyne Robotics
Focus on sustainable growth and long-term shareholder value
Marathon, Not a Sprint
Customer Success
Differentiation
Measures of Success
    Set up to enable sustained
profitable growth
    Disciplined, consistent
investment in R&D
    Leverage Teradyne
core capabilities for
cost-effective scaling
    Having the best
technology is not enough
    Need 24 / 7 / 365 support
for critical applications
    Leverage customer
support strategy using
SemiTest model
    Use Al, platform and
ecosystem to establish
competitive moats
    Unique advantage
to serve SemiTest
customers and VIPs
    Maintain best in class
gross margin
    Outpace growth of
"traditional" automation
peers
    50% leverage from
revenue growth to
operating margin
Looking ahead, we see three trends that will re-shape the world
in the same way that smartphones did in the 2010s. We believe
that Teradyne is ideally positioned to benefit from the changes that
these trends will cause. The first trend is the emergence of a group
of AI-oriented, vertically integrated customers. The second trend
is electrification, both for automotive, and to satisfy the exploding
power needs in data centers. And the third, and most impactful
trend, is the pervasive application of Artificial Intelligence in the
cloud and at the edge.
We know that the only constant is change, and since 2018, that
change is accelerating. We think that this plays to our strength. We
have a flexible, resilient business model, and we have demonstrated
an ability to execute through challenging circumstances. Teradyne is
well positioned to thrive in this environment of accelerating change
and will continue to push the technology and operating boundaries
to deliver the greatest value to our customers and attractive returns
to our shareholders.
While our business conditions improved year-over-year in 2024, we
expect growth in the years ahead to accelerate. We expect balanced
and robust growth through the mid-term driven by favorable trends
that begin to play into our core strengths.
Thank you for your continued support,
Greg S. Smith
Chief Executive Officer and President
Teradyne, Inc.
March 2025

Safe Harbor Forward Looking Statements (FLS)
This annual report contains forward-looking statements including statements regarding Teradyne   s future business prospects, financial
performance or position and results of operations. You can identify forward-looking statements by their use of forward-looking words such
as    anticipate,       expect,       plan,       could,       may,       will,       believe,       estimate,       goal    or other comparable terms. Readers are cautioned that
such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from the forward-looking
statements due to known and unknown risks, uncertainties, assumptions, and other factors. Such factors include, but are not limited to,
macroeconomic factors and slowdowns or downturns in economic conditions generally and in the markets in which Teradyne operates;
decreased or delayed product demand from one or more significant customers; a slowdown or inability in the development, delivery and
acceptance of new products; the ability to grow the Robotics business; the impact of increased research and development spending; the
impact of epidemics or pandemics; the impact of a supply shortage on our supply chain and contract manufacturers; the consummation
and success of any mergers or acquisitions; unexpected cash needs; the business judgment of the board of directors that a declaration of
a dividend or the repurchase of common stock is not in Teradyne   s best interests; changes to U.S. or global tax regulations or guidance;
the impact of any tariffs or export controls imposed by the U.S. or China or other countries; the impact of U.S. Department of Commerce
or other government agency regulations relating to customers or potential customers; the impact of U.S. Department of Commerce export
control regulations for certain U.S. products and technology sold to military end users or for military end-use in China; the impact of the
current or future armed conflicts; the impact of regulations published by the U.S. Department of Commerce relating to semiconductors
and semiconductor manufacturing equipment destined for certain end uses in China; and the impact of trade regulations and restrictions
that impact our ability to manufacture certain products to and support certain customers. The risks included above are not exhaustive. For
a more detailed description of the risk factors associated with Teradyne, please refer to Teradyne   s Annual Report on Form 10-K for the
fiscal year ended December 31, 2024. Many of these factors are macroeconomic in nature and are, therefore, beyond Teradyne   s control. We
caution readers not to place undue reliance on any forward-looking statements included in this shareholder letter which speak only as of
the date of this shareholder letter. Teradyne specifically disclaims any obligation to update any forward-looking information contained in
this shareholder letter.
Reconciliation of GAAP Measures to Non-GAAP Measures
Appendix A to Shareholder Letter, March 28, 2025
The non-GAAP performance measures discussed in this shareholder letter may not be comparable to similarly titled measures used by
other companies. The presentation of non-GAAP measures is not meant to be considered in isolation, as a substitute for, or superior to,
financial measures or information provided in accordance with GAAP. In addition to disclosing results that are determined in accordance
with GAAP, Teradyne also discloses non-GAAP results of operations that exclude certain income items and charges. These results are
provided as a complement to results provided in accordance with GAAP. Non-GAAP net income excludes acquired intangible assets
amortization, non-cash convertible debt interest, pension actuarial gains and losses, discrete income tax adjustments, fair value inventory
step-up, gain on sale of business, and restructuring and other, and includes the related tax impact on non-GAAP adjustments. GAAP
requires that these items be included in determining income from operations and net income. Non-GAAP net income per share is a nonGAAP performance measure presented to provide meaningful supplemental information regarding Teradyne   s baseline performance
before gains, losses or other charges that may not be indicative of Teradyne   s current core business or future outlook. These non-GAAP
performance measures are used to make operational decisions, to determine employee compensation, to forecast future operational
results, and for comparison with Teradyne   s business plan, historical operating results and the operating results of Teradyne   s competitors.
Management believes each of these non-GAAP performance measures provides useful supplemental information for investors, allowing
greater transparency to the information used by management in its operational decision making and in the review of Teradyne   s financial
and operational performance, as well as facilitating meaningful comparisons of Teradyne   s results in the current period compared with
those in prior and future periods. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this shareholder
letter is contained in this Appendix A and on the Teradyne website at www.teradyne.com by clicking on    Investor Relations    and then
selecting    Financials    and the    GAAP to Non-GAAP Reconciliation    link.

2024-2023
GAAP to Non-GAAP Earnings Reconciliation
(in millions, except per share amounts)
GAAP to Non-GAAP Earnings Reconciliation
Free Cash Flow
2024
GAAP Cashflow from Operations, Excl Disc Ops

Less Property, Plant, and Equipment Additions net of Gov't Subsidy
$ (198)
672
Non-GAAP Operating Cash Flow ("Free Cash Flow")

474



 3/28/2025 Letter Continued (Full PDF)