Teradyne(US:TER)2023-04-27 17:18Financial Data and Key Metrics Changes - In Q1 2023, the company reported sales of $618 million, exceeding the midpoint of guidance by $28 million, with non-GAAP EPS of $0.55, above the high end of guidance [48][16] - Non-GAAP gross margins were 57.7%, improved due to favorable product mix and operational efficiencies [48][29] - The non-GAAP operating profit rate was 17% for the quarter, with a tax rate of 16.5% on a GAAP basis [11][29] Business Line Data and Key Metrics Changes - Semiconductor Test revenue was $415 million, with SoC revenue contributing $347 million and memory at $68 million [11][23] - Robotics revenue was $89 million, with Universal Robots (UR) contributing $72 million and MiR $17 million, showing a 14% decline compared to Q1 2022 [24][45] - System Test Group revenue was $75 million, impacted by reduced demand for HDDs and declining smartphone shipments [8][23] Market Data and Key Metrics Changes - The SoC market is estimated to be between $3.3 billion and $3.8 billion in 2023, down about 20% to 30% from last year's $4.7 billion [7][19] - The automotive and industrial segments are showing stronger demand, with higher tester utilization compared to Compute and Mobility markets [6][19] - The LitePoint sales are expected to decline by 20% to 25% from last year's levels, reflecting the overall market conditions [7][19] Company Strategy and Development Direction - The company is focusing on an omnichannel strategy to enhance growth potential, aiming for 20% to 30% annual growth over the midterm [21][50] - Investments are being made to strengthen the global supply chain while maintaining R&D and go-to-market focus [31][30] - The company anticipates solid free cash flow in 2023, which will be used for potential M&A, dividends, and share repurchases [31][53] Management's Comments on Operating Environment and Future Outlook - Management noted that the semiconductor test market is facing challenges due to low end-market demand and high channel inventory, with tester utilization at its lowest in over 10 years [5][19] - The automotive and industrial test markets are expected to remain strong, driven by new applications such as EVs and autonomous driving [6][19] - The company expects Q2 sales to be between $625 million and $685 million, with gross margins estimated at 57% to 58% [28][29] Other Important Information - The company ended the quarter with $859 million in cash and securities [28] - The ongoing realignment of the distribution system is expected to create short-term headwinds but is aimed at long-term growth potential [9][21] - The company is experiencing component shortages impacting about 25% of Tester revenue in Q2 [55][76] Q&A Session Summary Question: Opportunities in Wi-Fi 6 and Wi-Fi 7 - Management indicated that Wi-Fi 6 tooling is largely in place, with Wi-Fi 6E driving investments in 2023, while Wi-Fi 7 contributions are expected to ramp in 2024 [33][34] Question: 3-nanometer capacity ramp in 2024 - Management noted that there have been no substantial changes in the pace of moving to 3-nanometer technology, with expectations for stronger demand in 2024 as unit volumes increase [34][64] Question: Mobility market recovery assumptions - Management acknowledged that the Mobility segment is experiencing its worst level of spending in five years, with expectations for a base case recovery if handset units remain flat [38][42] Question: Competition in the robotics market - Management confirmed that Chinese competitors are performing well in their local market, leading to a shift towards premium tier products for international customers [82][100] Question: Impact of component shortages on revenue - Management clarified that component shortages are expected to impact semi-test revenue in Q2 by approximately $25 million, which is outside of their guidance range [76][79] Question: Future growth in the robotics business - Management emphasized that the transition to an omnichannel strategy is ongoing, with expectations for significant growth potential once established [134][135]