Teradyne Q2 Earnings Beat Estimates, Revenues Decrease Y/Y

Teradyne TER reported second-quarter 2025 non-GAAP earnings of 57 cents per share, which beat the Zacks Consensus Estimate by 5.56% but plunged 33.7% year over year. The figure came in above the mid-point of Teradyne’s guidance range.

Revenues of $652 million beat the Zacks Consensus Estimate by 0.89% but declined 10.7% year over year. The figure also came in above the mid-point of Teradyne’s guidance range.

TER’s Q2 Top-line Details

Revenues from Semiconductor Test platforms, System Test business, Robotics and Product Test were $492 million (75.5% of total revenues), $75 million (11.5%) and $85 million (13%), respectively.

In the second quarter, Teradyne reported a non-GAAP gross margin of 57.3%, which contracted 110 basis points (bps) year over year.

Teradyne, Inc. Price, Consensus and EPS Surprise

Teradyne, Inc. price-consensus-eps-surprise-chart | Teradyne, Inc. Quote

In the reported quarter, selling and administrative expenses increased 2.1% year over year to $157.8 million. As a percentage of revenues, selling and marketing expenses were 24.2%, up 300 bps year over year.

Engineering and development expenses increased 5.9% year over year to $118.4 million. As a percentage of revenues, engineering and development expenses were 18.2%, up 280 bps year over year.

Non-GAAP operating income declined 38.5% year over year to $98.2 million. As a percentage of revenues, the operating margin contracted 680 bps year over year to 15.1%.

TER’s Balance Sheet & Cash Flow

As of June 29, 2025, Teradyne’s cash and cash equivalents (including marketable securities) were $367.9 million, lower than $507.8 million as of March 30, 2025.

In the reported quarter, net cash provided by operating activities was $182.1.

Teradyne’s board authorized an expansion of the company’s share repurchase program, increasing the target to $1 billion by the end of 2026.

TER’s Q3 Guidance

For the third quarter of 2025, Teradyne expects revenues between $710 million and $770 million.  The Zacks Consensus Estimate for third-quarter 2025 revenues is pegged at $764.4 million, suggesting 3.7% growth from the figure reported in the year-ago quarter.

Non-GAAP earnings are expected to be between 69 cents and 87 cents per share. The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at 91 cents per share, suggesting 1.1% growth from the figure reported in the year-ago quarter.

TER’s Zacks Rank & Stocks to Consider

Teradyne currently carries a Zacks Rank #3 (Hold).

Arista Networks ANET, Leidos LDOS and Enovix Corporation ENVX are better-ranked stocks in the broader Zacks Computer and Technology sector. Arista Networks currently sports a Zacks Rank #1 (Strong Buy), while Leidos and Enovix Corporation each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Arista Networks shares have gained 9.4% year to date. ANET is set to report its second-quarter 2025 results on Aug. 5.

Leidos shares have 12% year to date. LDOS is set to report its second-quarter 2025 results on Aug. 5.

Enovix shares have returned 26.9% year to date. ENVX is set to report its second-quarter 2025 results on July 31.

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This article originally published on Zacks Investment Research (zacks.com).

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