TER - Earnings call transcript Q4 2017

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Operator

Good morning my name is Jamie and I'll be your conference operator today. At this time I would like to welcome everyone to the Teradyne fourth quarter 2017 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question and answer session. [Operator Instructions]. Mr. you Thank begin may Blanchard, your you conference.

Andrew Blanchard

CFO, Jamie. to welcome you, this by Jagiela everyone results. and discussion of morning and Mark CEO, morning our our Beecher. Teradyne's joined Thank I'm Good Greg most financial recent

the was of providing press Following XXXX's call page will performance helpful earnings fourth release recent investor to that along review outlook Teradyne's expectations. containing fourth contained results discuss provide call we quarter today slides you first results the year for be will for from statement full in our We of the our to include the following encourage well website differ our SEC our could issued filings. after cause materially and this of as the we'll that we're that opening you available management's with factors to the remarks, on the page forward-looking last details current evening, the quarter Replays The XXXX. discussion. of quarter risk The that most same maybe ends. Harbor as matters statements release Safe via include in

statements as are as no call. of today are those made result take that and obligation and occurring today we as update after this Additionally, of to a forward-looking developments made of

industry measure and next Goldman these Citi in be financial call, now and we'll GAAP between measures, financial non-GAAP Teradyne including of earnings conferences concerning available We've Stanley, Sachs, measures. hosted directly Morgan our call, will reconciliation investor information comparable page today's During the Also additional make reference financial on to our by participating posted Susquehanna. website. to most the non-GAAP were

on the the with agenda. Now of get let's rest

financial Greg questions answer in then year comment will recent and quarterly First, along call is Year. scheduled for the We'll more we as Mark then Mark? with your our for quarter. one enter first and guidance offer details the full New results, our our hour. the market on will results conditions this on

Mark Jagiela

up capital today In our in XXXX, share to strong us. quarter additional Good the ago hit also segments with summary morning, Eagle XX%. for fourth we remarks In will All which in SemiTest, everyone to financial exceed our fourth and year provide the and test and describe set non-GAAP we year forecast. were ago brief capped QX. strong growth to our XX% a Pacific XXXX. for then the year SOC Asia the comments up sales again respectively. business memory sales record shipments the in service the XX% joining showed and Robot with off allocation close us shipments Universal my over XX%, the Teradyne, and on up of double-digit our with levels serve, were I'll sales insights Test the quarter, compared strategy, on then in XXXX as quarter, region quarter revenue outlook exceeded take plans. was details. our markets particular, are XX% Greg EPS thanks quarter through for up of sales were The compared quarter a

with target, $X exciting grow years breaking For to with and three us Market the A billion business, full XX%. of products have business, allowed healthy grew growing exceeding a bottom-line. sales of disciplined per revenue earnings Robot and grew with EPS share combined high in Teradyne the differentiated XX% resulted and XXXX, non-GAAP year the an test financial leadership ahead growth Teradyne mark hyper plan. to leverage model our $X collaborative

the the market SOC margins. from memory improving about market. We've a targeting approach our of test share XX and growth combined the gross disciplined years, taken of sub-segments XX%, of last grown Over to we've XX% methodically the while attractive

forward. and on have market advanced shifts these cores shorter our the with increase memory, transistor count, time packaging This plan inflections combined the to from been market. Focusing SOC device paved for multi-function going shorter and to device advancing and in Test be ongoing and will a market game flash continue for mobility, gains. The automotive way balloon in technology complexity life-cycles

of Here monotonic the to diminishing market doesn't the in in trajectory changed growth. value that overall increasing test parallelism the growth smooth This sustained test. market has of suggest

there be quarterly tooling cycles annual expect volatility. will to continue both We and yielding

line is trend However, the positive. overall

for technologies a well create development In opportunities into are addition, way communications which RADAR. market vehicular the deployment are as wave new for technologies, additional making their of One in variety is millimeter the complexity that as mainstream test. in growth, example applications,

Another and both These technologies sensors diversification Time-of-Flight application of differentiate increased center require growth top equipment positioning interface and segments seeing example, into for technologies. that decade. on we're tends our specific memories. the that class on opportunity products. up are of new next the provide intensity test Teradyne In growth, will of various the of emerging bit well and protocols This a a create variety to memory, light our test diversification LiDAR to

Tester one three high shift segment. the interfaces the the to of to testing in capitalized Over past us speed memory years our position driving had Magnum for number the devices, flash Memory on final this

to in served Magnum platform that we're market wafer continue also wave, XXXX our to by we extending While test. the expanding ride

Teradyne's instrumentation focused software part are the teams testers. for into test creating large to a these interesting new investment our on While goes R&D of technologies,

teams are teams At our having kit allow advantage. the another technologies. applications focuses and on is software into program. Plus Universal world's efficient continue a shorter more arm to develop customers' Universal to best their then design enjoying Focus seamless, test ramps to put With new the best reliable Teradyne. to we With user ease growing developers Robots we testing the programs gets software options, reducing UR, we widening tool ecosystem of steeper, open add-ons. product Importantly, UR stitched creating the our plug-n-play a At our software release to applications. over ever design expand to and of of tool kit advantage ever environment invite customers our creativity these architecture XX our fabric every use Robots, enhancements cobot create, into market and architecture month certified to of allow a key on Overtime the of global our cycles We of Cobot complexity and do of what that open interface. time do developing global and Universal to the to best. intuitive added

the labor much costs. is collaborative of and rising labor improve value costs more while the proposition of just robots lowering automation, economics Additionally, scarcity than

operations such oversee partner, a system and structures of infrared Using a composite as in up inspection evident project miss manufacturing an third structures to of Bangladesh, aiming leverage inspection pattern aircraft at Sri the Indian, markets NASA's aircraft customers the we and resulting operator Universal and and cobot, cost is Centre. is our composite Plus established Robots the and improve For in the cobot of seen in underway success to where our from value the Lankan we've Langley of the the party speed December create used URXX accuracy any in Research example, repeatability in speed low fuselages. the other quality doesn't less At our other a and of rework. a spectrum, also repeatability, higher areas. inspection cobot To inspection single complex end can software that value accuracy with

model own in semiconductor Test, assembly test year some LitePoint which ramp-up only product. safety the inspection, millimeter of XG to the alongside during cobots our In inspections Additionally, infrared production people the of to and improves time. the place to began wave profitability URXX's Closer production XXX.XXax test built UR of and early other a in new partner market. our home, cobot, cobots our a contract practice used sub-XG has processes manufacturing ultra-flex delivered in testers work not inspecting That cellular. extended building that allow UR our had make returned product to SemiTest We efficiency initial saves features take weak strong in while to allows for closely the tests aircraft. Wireless manufacturing the to

beginning While focused era. our next for the testers a production active of in about been year away XXX.XXax we've years impact we're the XG ramp, from and of generation positioning of about away the the from two XG

saw from $X.X to was up that points market a market top SOC in about SOC to as test was share market. outlook, about of $X.XX billion, XX% and of of XXXX test in X reach memory The baseline about we combined billion and a the On XXXX. the memory XXXX share Turning we billion $X.XX million. test $XXX about added of market market overall

and million. market see the in strengthened of view since slightly Our $XXX We SOC to $X.X market billion to XXXX billion of our $XXX the has the in range $X.X million the test range now October memory of preview.

the later than tooling spring resulting in revenue weeks for ramp looks recent be some later and four shift years, XXXX. annual to in of Additionally, summer a mobility about to

more As XX% we half. year half where XX% accelerating aggressive 'XX. of expect years to 'XX, first past were growth, a Universal this when At two XX% annual in our result XX% XXXX has strategy the shipped Robots in half sales, first first the yielded we like annual unlike sales in sales in about XX% be 'XX, the

in even ecosystem in delighted broader continue integrators us across to give add making end and partners the markets, staff, we we more regions are world. of and are the We an distributors, more reach progress to

in While teens. more to operating in we expect the remain expenses mid-to-high invest we'll operating also profit

in and we at Our as to goal XX% grow remains XXXX Test In see System with Wireless or Test essentially XXXX. flat XXXX. better

level give high to like view XXXX. I'd allocation you Finally, of capital for a our plans

of flexibility platform over to a As investment. has capital some said past several strength approach to we buybacks our consisting and consistent growing for our approach gives balanced Tax a capital. industrial and reform of a test in deploy The us plan enabled disciplined how dividends, years automation business gives a us we additional M&A. business maintain we the allocation

plan at the quarterly outlook a the repurchase we conviction As businesses result Furthermore us least core buyback $X.X to strong in of XXXX. has a billion increase program, our XX% million test gives our to dividend $XXX which authorized to Board $X.XX. in a

Finally, committed is the financial Greg on exploit and that expand details. With automation I'll leadership to M&A things and pipeline to test focused the our have for fully and we remain industrial we position that over mission. in

Gregory Beecher

the the the of trends offer outline comments offer quarter our with start I'll on market newly everyone. with quarter and the Also perspective capital strategic our highlights morning, level, segment perspective midterm close the financial business results good impact fourth outlook. XXXX inactive and including plans and laws. and then and new position and model on of allocation first Mark, and our XXXX, tax Thanks, of

market, ATE as highlights XXXX financial share Universal XX% our by strong $X.XX at of noted, billion gains up driven and the XX% Mark growth in XXXX, was Robots. front, SemiTest sales On from a sales

a In non-GAAP three was we result EPS attractive, year, XXXX gain $X.XX the share top-line XX% against in Robots model XXXX year in share XXXX years and we We well key nicely As sixth of We EPS performance Production threshold XXXX, above from performed SemiTest X early. our Test. quite target consecutive Universal exceeding for our mobile target. points operating $X and XX% of gains. had making [ph] Wireless the XX% grew Test, Board ATE the up

We returned for $XXX back in XXXX of buybacks of price Robots. in shareholders allocation upwards and only of Universal million. average the recently balanced has XXXX, million million capital to completed its of acquire Robots $XX.XX. Universal year approach we at our to million our of Since XXXX, $XX also stock were dividends When an to bought XXX invested sales $XXX bought its and beginning

$XXX over subsequent of in grown Over have the inside sales they XXXX. fourfold million Teradyne years of three with

is subject billion $X.X XX% in share Board of $XXX a new to of to quarter a stock $X.XX XXXX. repurchase We quarterly immediately we repurchase to dividend ongoing course the With our approval. minimum increased authorization plan million of effective

million non-GAAP over Our flow. operating moves free profit strong balance of sheet $XXX the cash average these a two the and model and on operating we've XX% annual last comfortably operating support model years

tax We $X.X foreign applications. number candidates and U.S. maintaining marketable system dry plan extending Over attractive rate to few same course automation, balance we a subject a comparison time M&A migrate from territorial powder even do more tax shift particularly new of years, tax cash billion buybacks. security against software at to global the see down, the the laws steadily for while subject newly in of at of aggressive into to our in the of from inactive a aimed system, to a U.S., cobots The attractive XX.X%. minimum next

prior subject to threshold XXXX our this XX% estimated rate at not expect to of As this above new XX%. U.S. just is our rate to With this versus be our change we foreign estimated be estimate do is tax tax.

U.S. earnings discrete $XXX items on rate million accumulative onetime deferred tax years. assets results. GAAP total tax to as two our new eight not we Due results, million. wrote payable These will foreign $XX tax over our the down in by our However, charges QX included our in federal lower but non-GAAP the cost are also

looking and volume adding ATE year X of decline we more share of trends. memory annual These bring in highlights Now than share the and in test test had few level, share shifts. in with another SOC the gain at XXXX. to segment points estimated us to points an offset XX% SemiTest short-term market gains due were to Starting

of in $XXX more group suppliers. the equipment from several improvement better Universal target more an line Robots to score and our highlighted Shifting points platform ROI. XX% rate rate Universal We towards VLSI UR in XXXX spot we we for we vision reduces move strong it project XXXX. to Mark improvements than or growing ecosystem and XXXX. XXXX. $XX with had access the grippers, our number from another easier for doubled sales strategic time in our is million proven XX% to and Robots, cobots semiconductor the as and see XXXX also even one the million Teradyne XX% our platform This Universal financial cost profit in further strengthened we positioned rate also grew easy step Apart as by gross other operating in of online customers. of key survey supply margin delivered Plus solution deliver X% systems making accessories. a deployment to and cobot numbers, by faster This Robots' deploy can

third learn languages, UR is doubt no cobots. years cobot. train for easier pattern making Academy, you interactive and robust our opened market in an free come. platform, we're to deploy training less hours see research expect can the it firms, party is offered with easier to also training multiple along than that a up X UR is in We that online to plus and XX% growth We which in anyone The

task suited As the cobots today are just possible. by people. are not that applications There being are highly of the surface in well what's scratch served of for repetitive hundreds

should precision amount tasks place markets and as that are or example, emerging For repetitive driving as extend glue force screws There such handling. systems, served with and or pick lower material such as exact also some pick new require simply ergonomically high very more TDS, applications. advanced applying as or of place the cobot challenging, technologies vision for two such machine such tending the further cost

more while higher And building awareness. pieces print new the Board To about will a and end, robust picture our Shifting and generation year. And expect XXXX. we will groups So, that much along emerge, and above is over digital sales X% see together today task. Production defense task competitors lead undesirable problem Test, have consecutive we user XXXX second are with to and digital grew Test in the XXXX System and the for automated. workers TDS increasingly performing capable be aero profitability awareness the model be the operated more that we'll challenges and human to safer skilled end space

aero to new like expect performance and as XXXX FXX. We and the aircraft deployment similar continues in systems defense new weapon of the from benefit

applications, traction space. second Board to to Storage half product test first automotive we high Storage semiconductor in new high designed half system the at level in bringing the continues of around our profitability returned panel a Production market for gain should Test, XXXX. in in In losses tester devices. to profitability operate incurring the model While count at Test model in throughput test and aimed after $XX of sales XXXX growing million

XX% sales in and Turning XXXX the growth to with profitability XXXX. group of LitePoint, Wireless Test, rebounded from very nicely above model at

to uptick, near-term thereafter. driven the position XXXX and standard We as expect XXXX new cellular 'XX in for be a XXX.XXax we similar market XG to wireless by

gross and at mix. to the favorable of year, full record level, points levels, company improvement of XXXX the product from were XX% For X due an non-GAAP volume margins at higher

quarter, the to we remarks, SemiTest information to fourth investor more can note the test $XXX world. numbers, $XXX the won't sales totaled in in million found moving short-term in timing service in release that were memory fourth this provide $XX America million. sales up no Before and the had SOC desk. million. million cover Europe, the the granular numbers in as adds geographically bookings rest million little prepared the $XX record, but after I'll XX% call, quarterly revenue business. a the and at quarter to longer quarter order Asia, be placement were making with of bookings plan in and SemiTest noise, sales of Robots in also XX% XX% added UR Universal press inside fourth with unnecessary I of $XX balanced my North X% our

and $XXX quarter Non-GAAP non-GAAP had EPS the company XX% million. XX% level, gross X% the channel again were largest the at recognition XXX% up wireless of products XXXX of quarter, was the we were for margins new very have was year. our were were At due in System was fourth product XX% mix. sales, partner customer our The test quarter and the total $XX profit third level We so non-GAAP sales with to favorable only $X.XX. system million, million. rate nine our wide full revenue quarter test sales operating from Our and fourth in sales $XX diversity. X%

million million variable the to accruals see third due lower compensation profits. non-GAAP down operating $XXX to compared $X to on our lower quarter will You were expenses

estimated size EPS conservatively rate we ATE much we the many that updated original three very growth $X.XX the recent history, XXXX driven decline. non-GAAP our stronger themes. Through when average XXXX, by market our would is has we market reason $X.X $X power, of target X% to years EPS by combined sequential our average earnings of our billion, achieved $X why earnings annually from EPS after $X familiar of to target latest at key target, grow on With been the a set XXXX-XX years XXXX, model annual the some early. we've with actual XX% Regarding outlook,

First is Roberts $XXX Roberts bring XX% million the used in throw XX% for would strong XXXX, Universal modeling annual $XXX to growth which at Universal to in we've sales million to midterm.

Next modest is any from further We've size XXXX. years. share last the and than through SemiTest the more rate few market X% XXXX growth to average points X% a few modeled gain growth

Finally repurchases, investor We've contribute new our the modest the model in elsewhere will to model growth detailed and performance deck. EPS goal.

closer non-GAAP $XX principally distribution by XXXX to in bit to approximately a XX%. expenses we expect versus XXXX In were operating in driven OpEx investments Looking XXXX, at margin grows in XX% tied be up Universal compensation slightly down variable in from Roberts profit and apart XXXX our changes is higher XXXX. our businesses In variable spending tied OpEx from normal was increased to million profitably. test total levels to compensation

growth sales quarter, ahead in help to of UR XXXX million quarter from beyond. both variable Shifting fuel upwards the $X.XX million plus diluted revenue we strong exiting we're expected XX% in XXXX pricing changes please will be at first year another $XX a very million, quarter and non-GAAP development $X.XX to note normal compensation full to EPS sales flat year increase the XXXX. and range XXXX plus from OpEx compared $XXX on the million lower XXXX. OpEx quarter million, and Looking XX% are X% end first drove apart should plan to be product UR, year growth $XX the from growth test first that XX% and last Also of keep between to $XXX the at quarter a to is by of rate mid-point plan shares. $XXX the for changes a our first confident demand year and These distribution $XXX outlook investments million the the than with our to to due while in of likely related that increase ago strengthen quarter

on the XX% quarter excludes the debt non-cash quarter convertible product guidance first imputed in to X are points estimated of fourth quarter first The intangibles the gross down and mix. interest due the amortization margin acquired

to achieving plus $X SemiTest, unit for $X.X positioning the Rising are a and Test shareholders that to and share business healthy XX% XX%, income project to guidance the is quarter early grow of distribution The With a Teradyne from the new in Non-GAAP interest fourth first balances, convert quite million our Layering the interest first about X.XX% dividends I'll the about in for $XX EPS to investments non-cash at for factoring an quarter future the in quarterly with and quarter. Wireless call is after mid-point Universal NRE forging excluding EPS System next a $X to to back repurchase spending target partially demand about concentrated on be quarter start up rate and non-GAAP and program CapEx. $XXX marked years bright. on we quarter billion XXXX. of Test. returns to expect the increased our our The turn healthy Andy. that In SemiTest the the We at is OpEx performance offset interest and fairly to three million is Universal further our wave back profits IC million convertible XXXX, $X our profit year to we've and years coupon of sales looks quarter operating running expected expected imputed increase and while top by Robots path from XX% debt. requirements due at XXXX the first strong XX%. to momentum increasing are at product first Robots in to by annual $X is development some driving our XX% quality complexity, come income with cast growth million device XXXX $X.XX XXXX

Andrew Blanchard

question to we a one a and as yourself Greg. some now take questions limit reminder please follow-up. to like would Thanks, and Jamie

Operator

with you. Instructions] first Thank from Sachs. Hari is [Operator Toshiya Our question Goldman

Toshiya Hari

change? thanks to the for the over for I taking XXXX market the were what And within developments automotive, months of the your some today three some saw And you image mobility, would sub-segments et morning. if a you Thank little slight SOC, guess led sensors, cetera made can that past Good of change about question. to talk that outlook, be you SemiTest helpful. you. bit Mark that

Mark Jagiela

sure. Okay,

So, in the quarter since up November we of of 'XX above end guidance the fourth high ended we have revenue. for

seen it's for So across throughout four broad into And weeks so a my in January the future. we've December more capacity SOC November, increasing I've further mobility steady we everything where has than remarks based mobility shifted demand maybe into pretty as expected. mentioned except

automotive, sensor, quick getting typically all weeks. linear and of lead pulled cycles, times buy are for So X delivery areas these to reasonably XX image our were

get within we a So reasonable amount the of sometime. turns quarter

say forward. demand So although within year tooling before. itself is peak a the has outlook very installations And later the year The or four looks then mobility bit looking it's about I'd of that strong. than weeks last year across the sort brightened demand there Board also the there little that this

the to we the demand. of the But year. backend it's any broad with of a just point of And of out based into an the the with that week about side think I would visibility, to backend don't precision get year until we're X so XX rising on see sort I SOC

budgetary as of XXXX. of general it's lot talking are flat with a what kind a So number, customers about

QX on if in minute, memory I lead see but million that November, since times. of range there. things very could to busy to to for yields On in million especially there in hot memory, a production. our The front the going begin just the get to see I changed turn that in the if that shipments to upside exceed up a fabs mentioned kind that pressure $XXX sufficient we on we'll $XXX similar China is indigenous hasn't they turn level and there anything are QX the

for of 'XX upside assumed But that more that's we've that haven't 'XX-phenomena. memory could We assumed on a discussion. the be

Toshiya Hari

And XX% business. My for assumed your question what the is I I to Universal guess, for the second on X is XX% curious guess versus XX%, XX%? there to correct related that for not my Robots, XXXX? number, in Thank not path long-term maybe you forward Great, I thank What's the I think there. details out that XXXX gross as in model growth the improved you've is X rational you XXXX. to UR percentage then why why if top-line look math you. margins was points

Gregory Beecher

a I'll when this go I'll Okay, acquired add see XXs. end Robots Greg with And 'XX is start back it. maybe Mark we're the margins I'll the margins, to few gross and will we XX% gross we further about start were as to we Universal path in the increased upper margins a more points.

as more my about the I it's does this unfold and in prepared competitors. mentioned think, much competitive versus were awareness Today going like. stimulating I factor what look against eventually in, doesn't Now field up remarks,

will be at point see bump So at large again there'll for margin we do but accounts. some some that opportunities improvement, further into competitors particularly

XX%? look XX% a quality. XX% We down our for a in slow each our increases, channel more there year adding stop we'll at of existing might terms integrators some number net or year. there's of come always first adjustments there not probably distributors about be our why not point grow out the a them there of or part third cobots they reports party we will we And why business sell new channel On to XX%, partners, question distributors, see your partners that speak their

with as they the UR were constantly increase, but harder online in giving each website, we're well academy. So is of terms get then if we've increase unusual I increase, on about grow some what's higher sell improving them gets And we say to Plus, as it's what the ones sales today see numbers know the of growth the that offerings at existing as a rate the the all continue. year, seen larger rate which to XX%

also we numbers, with we at them from just a it's the because it but the end look judgment, automated, leaves not be up we to the look but up various that in only that that back types way. many that big come numbers then jobs of you cut and out perspectives at looking So big different can bottoms too but

judgment, in to-date but our different above that has XX%. above look well as track record to get well it So bigger know we but we numbers harder many XX%, and will it's ways been be get at

Toshiya Hari

much. Thanks so

Operator

Hosseini Our is question from next Mehdi SIG. with

Mehdi Hosseini

the question. for Thanks taking

impact I'm like the or And ATE your chain Teradyne forecast, for are anticipating crypto some the to to forecast? impact to And back new ATE These market from of that specifically there AX have AX any for block if and designs big enough market follow-up. markets. new is the and computing the Just designed are market I incremental coming you just in is a wondering see a your currency. any is

Mark Jagiela

as of Yes, processing like the though of say so thing. ATE recognition. is in whether facial like hundred of million grand really de growing in think market scale a recognition becoming sub-segment That's TAM. discernible significant several dollars used and voice the that a currency minimis. hedge a I it's AI a things the for broader I think array I'd of applications not processing It's idea or segment crypto scheme On

norm, the all the GPU emerging below processing. You related of the participation share. in of right whether or has - kind could is right that in side AI our plus space GPU in been in point. market the applications combination automotive the Teradyne's traditional attribute processing space cell in at that XX% But to phones edge currency in of crypto low areas infrastructure participation that's plus And average or our at

are average participating So and outside in than growing TAM million couple we of of faster GPU. $XXX

Mehdi Hosseini

Is target specifically driving market this your for share what's XXXX?

Mark Jagiela

specifically. not No,

the think, we share. market with grow will I

for the I The strength will XXXX gains share think our gain help share of our area. in mobility combination traditional will us our and market automotive. in in electronics strength from come of that digitization automotive in

Mehdi Hosseini

targeting the And the appreciate earning of your $X.XX left you. isn't look to large leverage ability - much any on term updating And follow there share Got a on gain. ranges up me a depends $X for you, in the to Greg, to It for these extent execute you're thank seems at I P&L. a to quick on longer power. that us

what rather flexibility and to whether step context, gains? given a share air we is gives in up cost these that you in the of discuss are as that And it fact managing and what the growth what hit company in investing B, you your So areas. is pocket conservative the if still some

Gregory Beecher

The go forth, driving the assumptions of Robots assumption upper clear put on we've the which will let put but rate. to slide, sales earnings Universal printed That's Got give question you the the path. half biggest share. our growth, most very Mehdi. we growth the and hope We've and me a market as it SemiTest

and over We year steadily in period years. the SOC many from And for anywhere shown on gained We've ATE using have slide here modeling both market XX% in we last to X grew from four memory points. share we're share X the that market market XX% to share.

conservative as bit a and X the X past So we're been versus points. what we've in we've well be saying as could modeling done

If much you than of share we've more further, X share. go back point X gained - points

ability to with areas capital target not against growth segments well cost. right carefully for find do have the the as So compete waves and those differentiation we as

that we've always long of that Mehdi sustainable. a think at bunch here formula I And running to the In there it's variable model. we that a Teradyne proven there tied compensation is has it's profit. leverage had is So in

we pull any there's then lower see if goes the if So are business profits think spending variable the growth growth, spending compensation with it back. the what a the some of lot in we of we'll that is out, comes isn't the

So there flexibility. is certainly

Mehdi Hosseini

you very thank it, much. Got

Operator

next is from Nicholas. Patrick with Our Ho question Stifle

Patrick Ho

that Do first in talked out weeks visibility, now? pushes that something are you about come Mark SemiTest the terms could have it of is potentially you your extend right into Thanks of it that the talking XXXX that some that and market about just further? maybe little And provided. Would you timing, so. feel there outlook outs much. off that a will maybe or say that you mobility on potentially and that later the the what do would four or concerns you're very I push

Mark Jagiela

in the window will about is where quarter what is 'XX, good four-week will in be Yes, ambiguity second that extended and over think and that visibility it's into a But into normally that will it that's no delta. have not would area shipments lot one leak we pretty happen of not some third I that.

Patrick Ho

the in on at it distributors you or obviously the growth Great, particularly some it Can well that's growing more as rate. given you because the going of a there a of into it cost going of up, terms side things Greg detail, maybe And about UR rapid is distribution helpful. commentary mix rapid a you made in are sense clearly it as give very more Asia of is integrators? little both make

Gregory Beecher

that's and work the that time regions where regions in that we're then people that distributors then as we are existing the the channel not with the is new continue is can engineering By to more innovation as Those getting are covering single far to. adequately partners deliver biggest areas it's by and two not the accounts up there's some sales distribution distribution with that to And just the step we far big largest. next even well further.

Patrick Ho

Great, thank much. very you

Operator

is Our C. with next question form J. Evercore. the Muse

C. J. Muse

talked you overall guide. to guess some I question. question, but around of deck my SemiTest first slide of taking guiding you're the questions outlined in to your back growth the prepared your prior In you flat. Thank terms about there, going for expectations

are that mobility And as driving flat is we SOC that, of that year-over-year how side So and of what's should the you of thinking curious, sort how part on that? guide? spend interpret part

Mark Jagiela

X.X very ended guide year to range Yes, so one market a a call ago that for a gave the this in out as of thing caution. SOC we was X.XX. at start but up X.X in we with A I'll

what's in caveat the bit that so completely that third mobility quarter, the very is that have will But a not we conclusion to with market majority to happen. So end able comes little expectations to flat installations come is say up. the one to by slightly of be we're going see of our year-over-year typically And more to that it visibility would I there.

or a that And very kind the of turned us high the little linear, the with clear that half, current get less beyond if last it been market. continues quarter. legs what's moves SOC acceleration think us automotive year much to industrial is, little toward businesses how what the we year bit linear, have year and even will a rate very us it's visibility and that at for that going out side of of that those surprised two are longer I about did quick automotive, last are

as top So before automotive or easily $XXX fabs mobility flat that being into and linear, wildcard able on memory we really just range it. I'll to equal go could the Chinese if everything of million else roughly about a make swings industrial, the or $XXX gave decide memory, another then the said I $XXX comment rest to the million of that, indigenous have million, million $XXX are production of ramp. to a

that's but have we something in. So that modeled 'XX, pull into could

C. J. Muse

Very helpful.

momentum curious accelerated industrial sort any As year-to-date And changing my in out business? building spend. your about that, as faster whether near-term for in pending support related outlook growth not that's your of you've you depreciation you perhaps that perhaps think seen tax and reform to to and if accelerated or are follow-up, infrastructure

Mark Jagiela

North yet that's up to in our if America, see we seen we that but C.J. antenna haven't possible. will have

cost might are we yet. seen aren't improving cobots quality into suited might calculation. went further a As the ROIs tests ROI or us that for certainly well advantage but low, is fairly but advantage, could very haven't a the tax human. know you the make doing little, without But I and that help sure quick are it it see that often Mostly

C. J. Muse

Great, thank you.

Operator

question next Eastman Richard is Our from with Baird.

Richard Eastman

for I'm how you calendar model could are a the like kind that but of the question shake Are into little or business just out, modeling 'XX back to operating go kind gross quick did think curious model out year margins a XXs what end, we here. how UR's as does we referenced with 'XX just XX% Yes, look high go flattish on I you 'XX? margin how UR, close for 'XX bit of growth at to expecting we

Gregory Beecher

is are stretch that one. with start range there rate actually growth growth a plus. and so high I'll XX% rates then growth a Okay there's because There's the rate

of we OpEx to be we range in try try we it can. then early could where So put scenarios to and to in and meter to we some the yet

for another actually profit So ended with year hit the wanted We XX% more on frankly wave position high gross margin. this of people to with we growth. quicker year operating bring our XX% to

great end we're strategically. we up if if story things XX% profit the So If delighted. we XX% we've up end at that or might or a XX% to be at XX% done

ahead training will years we subsequent sharp our we're even trained, model. the makes further we're program. many we meet are naturally on is ahead growth growth the So third can partners, then and the of well certainly website, on easier to do on hard more easy lead what we accessories monitoring our that more and to best it get the with our much market not through the in eye distribution ecosystem mid-term development pushing high The party driving it best thereafter more to a has the getting years Because on. numbers profitability extend and and the want it's with

Richard Eastman

quarter 'XX does four, versus hold months. expect share takes our how have XXXX. SOC curious then third question, up your we I'm But you at to that spoken it as gains kicked market to we And in But the now into share past it results in understood. Teradyne's size SemiTest expand Mark as I'm or does think puts it 'XX in five out a test in just clear slide Teradyne in similar expand and the for you're twice memory share do would well looking market 'XX? the 'XX we've makes share you and Okay, whatever of curious a maybe look given the

Mark Jagiela

held if to or a So we our I think would plans bit share. delighted be we gain of

SOC of to segments If market, you but two in we're the memory in closer the toward the and XX% at we're look more mid-XXs XX%. overall

together though whole little when optically to the up you be to memory participate done gain but So looks extent roll said in will all of share hits year we we share flat the upside and when the the upside, it exceeds or might the like in a even business pick that the gets bit share, might SOC. we that.

our tends market where below the the math So the to average. it the around really on share size depends of be memory combined

Richard Eastman

see. I

very what share the looking from question, EPS perspective? one an are at quarter first just good. we count Okay, Can last ask guide I for

Gregory Beecher

XXX shares.

Richard Eastman

Okay, thank you.

Operator

Our next Credit question with is Farhan Ahmad Suisse. from

Farhan Ahmad

growth the we a we growth is you're seeing the that Thanks just talk Can forecasting March last further year? like question as my question. three in quarter. in about from My is for why quarters first risk go for the deceleration that that later there And are to in XX% decelerating like on decelerates March. for taking just X% something you

Mark Jagiela

QX, talked amount I - the Yes, last think of buying year's was 'XX think that in last to ago the quarter drove in is being in over a the QX price year growth QX due One increase we there about extraordinary of Robots up Universal period. a we factors. instituted into the variety that

numbers. likely less be growing at of kind well XX% you to it's been could it's QX So than up moving XX% been year's are closer be say last If at. up

mobility. I moved There of that year factor. even week thing mobility the weeks. What for you this that other before And tooling is shift. in is one having last see because of that four we is the for QX that's less of QX year think shipments out began So four in the

Farhan Ahmad

markets of And SOC on on year. where becoming in things this to play question wanted is memory don't kind example, larger down the and market, of Test impact you market. combined GPU in a and the about that I it. are bit share for pretty second in overall my then might understanding on you talked Got that little the strong weigh Test your market. CPU ATE My is server SOC test the dive

year, as in think you do Test you that a for SOC gain this going some is be or overall So in that you to products have market area well share like help that share? your will headwind

Mark Jagiela

and the I Yes, that $XXX GPU will relatively it's sub-$XXX the earlier an But - question it's year, market but that sub-segment last straightforward think together whole segments that in us we GPUs participation million. as you of have strong thing crypto a mentioned when was million. help I to roll application

of So applications. the is be in market, to outside in - our don't size of that's of a moving I share strict in going factor below XX% we be our up position I market the and think the it's would the don't some itself this down. these that participate do market average. GPU of think or share

Farhan Ahmad

I it. Got all have. that's you, Thank

Operator

question Our from Malik Citi. is next with Atif

Atif Malik

grew as And in XXXX for for congratulations meeting you a of and have the question driving these is orders I opportunity talk some how then just the Mark, on business, your sales new new big my strongly can And taking hopefully December quarter. for EPS target get what well. the I thanks in earlier. test momentum have earlier Hi, Can And your Greg. question long-term follow-up about are products products? system the and here? three you target years a

Mark Jagiela

that for as drives. system repurposed test. called Inside Okay, year. went storage a disk of has initial year And project we initial customer slowed. revenue has for that the in the quarter. that's our hard as test of more testing most application growth platform with semiconductor drive last fourth disk through years level recognized We mentioned, the diminished the on primarily business testing well group, the over had test last we've as That I a been business system hard we focused

So And in through that instantiation. you can customer XXXX and acceptance looking primarily in we the of first this the what a beyond other put we'll there frankly that this of look forward, that's market. deliveries fourth in growth phase we getting quarter lot initial some product half year. first and opportunities And at the into haven't saw was bump we're now, go for of where be doing the that

can of over expand sort account. six months. be a now So exploring we And a the have we next one with steady that business we'll whether

have growth So be not. we a sometimes on this a whether can should the or by business summer verdict

Atif Malik

from different offshore just but you to on accessibility are infrared touched area higher Is an on using your and with fundamentally M&A software about still or cash, Can being using but the Greg, then parties approach you And AI. for you talked strategy, you on Great. on third about robots of sensors. UR UR? talk sensors and elaborate strategy your think I interest,

Gregory Beecher

in too. I Okay, will Mark pinch this on think

And small factory able upon not it repurpose been is and operator manufacturer. different is to that's our to enterprises. has approach demand Our so that cobot ease a in somewhere customers or our are cobot their of distinguish automation half use, took why, medium an of about we for based the small changes when our engineer that train approach and a very to shop and

others which network be a to we're maybe taken, So, one be time. find integrated than selling it's a chasing what because we or not now But distribution the do, large, also different most have multi, what approach And to like orders there at have an and the it's originally believe large easy others up multiyear cobots good a I doing. trying to tend build do two companies can to that very multi, sales. you

different have focus go-to-market and to tended a we've different approach. So, a

or advanced mentioned the picking we bin. So, technologies to using where use a deeper a continue vision do or be bin coming vision make make for applications, cobot modules easy that'll new can vision things it getting I enabling help more likely to tray and down, you will into that

advantage cobot of. of there's take in cobot can innovation come areas the to So, lot the yet around I think that

Atif Malik

Thanks.

Operator

Mok is Our question Edwin with of Needham. next from line the

Edwin Mok

taking OpEx see mean that this for the thanks my growth, top-line is face increased a faster UR some on XX% first on at Great, that UR? margin operating does pressure rate margin, your in plus we question question. growing in I My value is might think year

Gregory Beecher

line UR gross to? you're margin, and the referring

Edwin Mok

from $XX loss this said million you'll exceeding year. $XX million to No, grow you loss exiting on OpEx, that share

have at than year. operating this wouldn't XX% growing faster that's rate, some margins specially a your in that So,

Mark Jagiela

people many is may wanted somewhat to. year, because above, up that challenge as end got actually a and as that as we as as where targeting ended didn't XX% delayed. But out or is mentioned, bringing were many on XX%. It XX%, targeting I not we We people we possible we we at this up bring weren't wanted there we

another at look what - consider don't If we we year if next to I me we and rate in healthy strong this growth a get then to healthy a year, to as at end very it's at be challenge, plus pleased. growing on up number rate, a think XX% put depend it XX% year XX%, like. necessary it I the we'd So, next see we to growing we're all and because versus not challenge continue the investments as we XX%

tingling much because we're high to by more making transaction of know a So, awareness, focused out put easier there, the on the it the and cost maintaining cobot matter opportunities growth it's to us are we a lowering use. the

So, where is. focus our overwhelming that's

worries prospects We Frankly, profitability. way no be of given ahead growth operating at this of to business. might have expect XX% us really the you we're about the where

Edwin Mok

on Okay, great, model, part, that's helpful. And then, have my correctly system plus math test. done test a your auto I widest XXXX the I question if have your

a for from product 'XX around new system historically new very Is lot driving X.X% level CAGR specific qualified. all understanding swing kind the what's that in and on chip comps, the dynamic your much test? the that market [ph] growth like mobile system stickiness XG the is test, grow to competitors, gain on select system testing or and of 'XX that's costing are application, level right? in modeling actually against that, think regarding And it especially question, are maker more to pretty of to the turning on I on customer last share my and that SemiTest Semi You in hard each there's with them because same ATE in product is semi,

Gregory Beecher

of those that's test, test, rate see you're growth. it's the one the wireless the element we part the in take XG in I'll meaningful Okay, first businesses correct, of credible other the question, other growth where

XXXX, thereabout X% a believe product is that or The some we other be with company it positioned two out XG have integrated XXXX is for businesses GDP or chipset are we'll well and now. more XG and we X% growth.

us all XG position late. good early we in because got new but didn't that very in have it's don't would we're meaningful a market plan But XG, we and XG we share to be the because on to were be late. getting So

system As sticky been as leaders other don't to that more but that question didn't you system it more has test have see in with into. What level difficult need that On for there we're the it about I seeing the your connectivity, is we're way. applications be side might break seller test. recall us that is before. it may level

the But greenfield. devices semiconductor for it's leverage have the worth design harder test our advance more challenge meaning us we in find the mainly out any can't good level can new a for platform, there been us these to not of in isn't existing some So system false. past then to we a a and if it so probably to test whole to And it level it's is may addition us. read

with see what was if Mark were is to fit look have to opportunities, they our what there you to that's other referring to So but going platform.

Edwin Mok

in squeezing I for Thank on have. that's that you one Great, one. two all

Andrew Blanchard

one we just time afraid more quick please. am I for And a have question,

Operator

Thank you.

question with David line is Steelhead. final of Our Duley from the

David Duley

call electronics or able average per side customers? was me that into initially is electronic wondering things, customer highlighting it. success of talked of some three currently still two the larger average conference robot in, is for larger robots Thanks if you sale And talk units. the you the I moving your have on sale into the you've customers. been being about on about slipping think Could you I appreciate what and on I to take had

Gregory Beecher

do test call One as a X another that and supplier our in on assemble of automotive board board we Asian well. divisions We PCB production customers supplier we're number is small and group. from other and an an they production is Tier have one LitePoint

points. right significant given two of I is the to XX people leverage So a Universal around to accounts world say hasn't open them we've cost team the and you Universal there tends person. able are Robots, to the them that be could faster margin there pipeline, leverage. here help several cobots that is distribution But to on much that material help more We're we're is able the Robots frankly gotten up XXX hire get offices. to list coordination Well we've over down gross there point the

faster, host help what their there of we engineering able culture. So move and pick is some them best choose there were with them we quality, things practices bring to and a that help people fits to over learn

has areas XX is on number or help, them some a helping the that list been customer we're of in not but XX have. facing there So a there accounts of I

David Duley

Okay. there crossover insert is thing might you is GPU And any yourself complexity me of performance high the computing point a on market? large segment, or one where in way speed final for to be the in sort in able

Mark Jagiela

consumer applications diversification, companies, web the do or developing space space companies the happening in infrastructure what's now a think whether lot processing is right of there GPU make are these companies or I their of array companies. not a are Yes, automotive lot that silicon, goods traditionally silicon custom for

let's diversification what say GPUs point of we're array with processors, seeing right specific that's like think memory I task a So on or now.

get into ability their the think year suppliers custom when end frankly you'll markets. to for where we're that's So participate see see And I focused. own and of we we AX doing this where next array

David Duley

Thank you.

Mark Jagiela

Okay, folks. joining us. Thanks so for much

going Sorry just over the talking bye. to to ahead. weeks you be forward and look to minute a in Bye, two or days

Gregory Beecher

Thank you.

Operator

this Ladies today's concludes conference. and teleconference gentlemen

disconnect. now may You

Teradyne (TER) 25 Jan 182017 Q4 Earnings call transcript