Teradyne, Inc. (TER) — Q2 2026 Earnings Call — July 29, 2026

Source: Teradyne IR prepared remarks (PDF) + Quartr/Yahoo transcript (verbatim, lightly formatted). Non-GAAP measures unless noted.

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Operator:

Ladies and gentlemen, good morning and welcome to the Teradyne second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the prepared remarks. At that time, if you wish to ask a question, please press star one on your telephone keypad. As a reminder, today's call is being recorded. Please go ahead.

Amy McAndrews (VP, Corporate Relations):

Thank you, operator. Good morning everyone and welcome to our discussion of Teradyne's most recent financial results.

Replays of this call will be available via the same page after the call ends.

During today's call, we will refer to non-GAAP financial measures.

Looking ahead, between now and our next earnings call, Teradyne expects to participate in technology-focused investor conferences hosted by Goldman Sachs and Citi.

Following Greg and Michelle's comments this morning, we'll open up the call for questions. This call is scheduled for one hour.

Greg?

Greg Smith (CEO):

Good morning. For the second quarter in a row, we delivered record revenue and, once again, AI was the driver. Total company revenue topped $1.3 billion, up over 100% year-over-year, with non-GAAP EPS of $2.47, up over 300% year-over-year.

At more than 60%, AI-driven revenue is the key proof point that our wafer-to-AI-data-center strategy is delivering results.

First in Memory.

Now on to Compute.

We are working with

Our IST business grew revenue 2.5x quarter-over-quarter on strength in HDD fueled by AI.

With that, I'll turn the call over to Michelle.

Michelle Turner (CFO):

Thanks, Greg.

Both revenue and non-GAAP EPS came in above the high end of our guidance range, as strong AI-driven demand continued across all parts of our portfolio. For the first half of 2026, we delivered $2.6B in

revenue and $5.02 of non-GAAP EPS up close to 100% and 275% year-over-year respectively driven by all things AI.

Building on that, let's take a deeper look at revenue starting with Semi Test. The revenue breakdown within Semi Test was SoC at $843 million, memory at $212 million, and IST at $67 million.

Compute revenue grew nearly 600% year over year on strong AI related demand.

Now turning to memory. Our memory business delivered another strong quarter at $212 million in revenue. This represents our third consecutive quarter of revenue over $200 million driven by robust HBM and DRAM test solutions demand and a resurgence in NAND.

Revenue in the quarter was $67M up 94% from the prior year driven by AI-related HDD storage demand from all three major suppliers in this space.

Revenue was $107 million, up 26% year-over-year and 33% quarter-over-quarter. As a result, we anticipate their continued growth in the second half of the year.

Robotics revenue was $100 million, up 33% year-over-year and 9% quarter-over-quarter. Electronics manufacturing and semiconductor revenue increased by 50% from Q1 and is now

Strong earnings results continued in the second quarter driven by robust AI-driven volume and favorable product mix. Gross margins for the quarter were 59.8%, up 250 basis points year-over-year driven by strong Semi Test volume and product mix while sequentially gross margins were down 110 basis points driven in part by one-time benefits in the first quarter. OPEX increased as expected driven by more R&D and go-to-market investment for 2027 growth, plus higher variable compensation on stronger results. Finally, non-GAAP operating income was $448 million, with an operating margin of 33.7%.

For the first half of 2026, free cash flow was $579 million up 150% from the prior year period. As discussed last earnings call, capital expenditures increased $26 million from last quarter, driven by continued investments in innovation and operations scaling. We paid $20 million in dividends in the quarter, and our share buybacks were $69 million.

For the quarter we expect revenue in the range of $1.2 billion to $1.3 billion and non-GAAP EPS of $1.85 to $2.15. The non-GAAP operating profit rate is expected to be between 28% and 30%.

Based on current customer order visibility, we are updating our first half weighted revenue to 50% to 52% of annual revenue.

I'll close by thanking our Teradyne team for their execution and discipline this quarter, delivering for both our customers and shareholders.

With that, we'll open the call for questions. Operator?

Q&A

Operator:

At this time, if you wish to ask a question, please press star one on your telephone keypad. Your line is now open.

Analyst:

Thanks a lot. When some of us, like me, think that WFE is going to be $200 billion. It seems like that number holds next year. I guess the question is, in your mind when you think about it, is 8% the right number?

Greg Smith:

Yeah. Tim, first of all, I want to thank you. It's kind of this rocket trajectory.

Right now, we're not sure whether it's going to settle. We think it's going to settle somewhere in the 7%-9% range, but it's not going to continue to go up from there. I think we're kind of thinking it could settle down in the 7%-8%, but it could go up to 9%.

Analyst:

Okay, great. Thank you. Is 42% the right number? Thanks.

Greg Smith:

It's a socket-by-socket thing, and we are riding a big upward wave.

Operator:

Thank you. We'll take our next question from Mehdi Hosseini with SIG. Your line is now open.

Analyst:

Yes, thanks for taking my question and two from my end.

Greg Smith:

The same thing is true at every step.

Analyst:

Sure.

Greg Smith:

Did I get what you were talking about?

Analyst:

Yes. I'm not sure if there is a very concise answer. Does that summarize your answer?

Greg Smith:

It's one of the verticals.

Analyst:

Thank you.

Operator:

Thank you. Your line is now open.

Analyst:

Thank you for taking the question. I guess first question on memory, you talked about growth half on half.

Greg Smith:

[...]

Analyst:

Perfect. I guess as a follow-up, if you could speak to gross margin in the guide and what's driving the 130 basis points headwind. Thank you.

Michelle Turner:

It's Michelle, I'll start, then Greg, feel free to add any additional color. If you look at past the last five years, you'll see about 400 basis points swing when you look quarter on quarter.

As you look at going from Q2 to Q3 in the guide at 58%-59%, part of that is product mix. All of that netted together gets us to a full-year gross margin range, which is just shy of our target earnings model. Right around the 59%. There's going to be a product mix element. There's going to be the new product introductions.

Operator:

Thank you. Your line is now open.

Analyst:

I'm curious as to why that is.

Greg Smith:

[...]

Analyst:

It's possible that next year, that could revert down to 6%, 7% or so.

Greg Smith:

The thing is this is correlation, not causation, right? It's three quarters on from when the revenue for the fab equipment has happened to when the revenue for the test equipment happens.

Analyst:

$200 billion+ type TAM that different people have mentioned. I know historically, Teradyne has been more exposed to Arm rather than the x86 ecosystem. How do you see that developing? Thank you.

Greg Smith:

Yeah. [...]

Operator:

Thank you. Your line is now open.

Analyst:

Yeah. Hi. Thanks for taking my question. The first one, I just want to follow up on the CPU side.

Greg Smith:

It's a great question, Krish. I think that's a reasonable assumption.

Analyst:

Very helpful, Greg. Just a quick follow-up. A, is that correct? Any thoughts on that would be helpful.

Greg Smith:

Sure. I want to tell you a funny anecdote.

Analyst:

Got you. Thanks a lot, Greg. Very helpful.

Operator:

Thank you. We'll go next to James Schneider with Goldman Sachs. Your line is now open.

Analyst:

Thanks for taking my question. Obviously, that's a very wide range. Thank you.

Greg Smith:

Okay. The wide range, the $300 million-$700 million in 2028, that's our attempt to be as honest as we can be. If that goes well, it will drive it towards the $700 million. If it doesn't, it'll be closer to the $300 million. Next year, I think we're probably aiming towards more of the low side of that $300 million. If you draw a line from the $100 million to the $300 million, next year, the low end would be in the $200 million range.

It's not just CPO.

Analyst:

That's very helpful color, Greg. Thank you.

Operator:

Thank you. Our next question comes from Shane Brett with Morgan Stanley. Your line is now open.

Analyst:

Thank you for letting me ask a question. My first question is on memory. If I assume your memory test revenue grows half on half, we get to full year growth in order 70%. Thank you.

Greg Smith:

I think I'm going to need to take that question offline.

One is bit growth and the other is technology change. There's a lot of things going on.

Analyst:

Understood. Thank you. Thank you.

Operator:

At this time, we've reached our allotted time for questions. This will conclude today's Teradyne second quarter 2026 earnings call and webcast. You may now disconnect your line at this time, and have a wonderful day.

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Note:The verbatim transcript above reflects Teradyne's IR-posted prepared remarks (complete) plus the published Q&A. The Q&A excerpt is partially incomplete in the public source (portions of analyst questions and answers were redacted/garbled in the transcription); key figures are summarized in the companion results summary.