Teradyne, Inc.

Good morning everyone and welcome to our discussion of Teradyne's most recent financial results. I'm joined this morning by our CEO Greg Smith and our CFO Sanjay Mehta. Following our opening remarks, we'll provide details of our performance for the first quarter of 2025 and our outlook for the second quarter of 2025. The press release containing our first quarter results was issued last evening. We are providing slides as well as a copy of this earnings script on the investor page of the Teradyne website that may be helpful in following the discussion. Replays of this call will be available via the same page after the call ends. The matters that we discuss today will include forward-looking statements that involve risks that could cause paradigm results to differ materially from management's current expectations. We caution listeners not to place undue reliance on any forward-looking statements included in this presentation. We encourage you to review the safe harbor statement contained in the slides accompanying this presentation, as well as the risk factors described in our annual report on Form 10-K for the fiscal year ended December 31, 2024, on file with the SEC. Additionally, these forward-looking statements are made only as of today, and we do not undertake any obligation to update forward-looking statements to reflect subsequent events or circumstances, except to the extent required by law. During today's call, we will refer to non-GAAP financial measures. We have posted additional information concerning these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP financial measures, where available on the investor page of our website. Looking ahead between now and our next earnings call, Teradyne expects to participate in a technology and industrial focused investor conferences hosted by J.P. Morgan, T.D. Cowan, and Stiefel. Our quiet period will begin at the close of business on June 20th, 2025. Following Greg and Sanjay's comments this morning, we'll open up the call for questions. This call is scheduled for one hour. Greg?

Thanks, Tracy. Good morning, everyone, and thanks for joining us. Today, I'll discuss our first quarter results and provide an update on the trends that we are seeing across our businesses. Sanjay will then provide more detail on our first quarter results and second quarter guidance. It's been seven weeks since our analyst day, and the long-term themes that we discussed, AI, verticalization and electrification remain the primary industry drivers that we expect will accelerate our growth trajectory in the years ahead. In the near term, the combination of trade policy and our customers' heightened uncertainty around end market demand has caused orders to push out, as we discussed last month. Although the direct impact of current and anticipated 90-day tariffs on our model is minimal, We are more concerned about the impact of tariffs on the end market demand. Many of our customers, primarily in the mobile, automotive, and industrial segments, are reviewing their capital acquisition plans, and we do not have firm forecasts from them at this time. Beyond the second quarter, our visibility is very limited. As such, we are not commenting on or reaffirming our expectations beyond the second quarter. We delivered first quarter revenue towards the high end of our guidance range with gross margin and earnings per share above the high end of our expectations. Strength in semi-test, specifically SOC for the mobile end market, drove year-over-year growth. This mobile demand is transitory and related to some supply chain transitions at our customers rather than a signal of end market recovery. Our compute revenue also grew year over year in Q1 with record loading on our Ultraflex and Ultraflex Plus testers for AI accelerators. Revenue in our product test and robotics test divisions were generally in line with our expectations in Q1. In Semitest, SOC delivered above our plan and memory was in line with our expectations as customers digest the HBM or high bandwidth memory capacity that was put in place last year. In the quarter, our memory business unit secured a coveted HBM4 performance test win with a major DRAM manufacturer, which is expected to begin shipping in the second half of this year. This is our first DRAM wafer sort win at this customer and a major milestone for our memory business. Our IST business, or integrated system test, delivered first quarter results in line with our expectations and achieved initial customer acceptance for the new Titan HP targeted at system level test of AI accelerators. We are seeing new opportunities emerging in the IST space with both new and existing customers. All of the businesses in our newly formed product test division delivered first quarter results in line with our expectations. While the wireless test and market for our LightPoint business has been generally weak since 2023, the team has continued to secure the majority of opportunities in wireless networking sockets. In the first quarter, LightPoint won 13 of 13 of the Wi-Fi 7 wireless test opportunities. A critical aspect of our strategy to gain share in high-performance computing is to establish a leadership position in silicon photonics tests. In support of that goal, we believe that we are on track to close the acquisition of Quantify Photonics in the second quarter. In the first quarter, our robotics division executed a structural reorganization, consolidating the customer-facing sales, marketing, and service organizations between UR and MIR. Our robotics team has responded with resilience in what continues to be a very challenging macro backdrop. In the quarter, Teradyne Robotics received the largest order in its history from a global automotive manufacturer for both MIR AMRs and UR Cobot arms. The new pallet jack, MIR 1200, is now in the hands of distributors and select lead customers and pilot installations are running. Moving on to Q2. As we discussed at our analyst day, we have seen customers push order delivery out from the second quarter into future quarters due to the uncertainty international trade policy could have on end market demand. Despite this, our view of Q2 remains in line with the expectations that we set in March. Given the lack of visibility and the impact that trade policy may have on the industry and our business, we are prudently managing expenses. While there are systematic OPEX savings that are delivered by our flexible business model and variable compensation strategy, We are also actively managing expenses with the objective of generating operating leverage. With our strong balance sheet, consistent free cash flow generation, low capital intensity, and variable operating model, we are continuing critical investments and are positioning ourselves to drive growth as customers figure out their strategy in the current macro environment. We see green shoots of evidence of this across Teradyne, as our business units address emerging opportunities and increasingly work across divisions to better solve customer problems. TAS, or Teradyne Automated Solutions, is a great example. Semiconductor customers are interested in automating, particularly their back end processes, which are still quite labor intensive. In the first quarter, we announced the strategic partnership with ADI, which will deploy UR cobots in mere AMRs to support ADI's collaborative automation initiative. The semiconductor market is one of the segments our robotics business is targeting to drive diversified growth. Within Semitest, IST is working hand-in-hand with our SOC team to help current and potential customers in the AI compute space cost-effectively optimize test insertion points. We are seeing this with our first Titan HP customer acceptance and revenue in Q1 from a hyperscaler customer. And in product test, our PBT or production board test business, which has historically been strongest in the automotive industry, is making gains in AI compute, where technologies pioneered by Semitest are being leveraged to help hyperscalers test server-level products. The increasing complexity and high cost of failure of these end products is creating sizable opportunities for us. In the mobile space, after years of overcapacity, utilization rates have improved considerably, as evidenced by new system orders for AI compute, complementing upgrades of underutilized mobile testers. We have started to see improvement in LPDDR for mobile applications and we started shipping our next generation image sensor testers for the mobile market in Q1 of 2025. We are also winning new opportunities in SLT in the mobile market. With two nanometer and gate all around on the horizon, we are optimistic that as demand recovers, the setup for our mobile business is good. We cannot predict the impact that dynamic trade policies will have on global end demand, but we know that Teradyne has historically emerged stronger coming out of challenging macroeconomic periods. We expect that to be the case in 2025 as well. With that, I'll turn the call over to Sanjay.

Thank you, Greg. Good morning, everyone. Today, I'll cover the financial summary of Q1 and provide our Q2 outlook. Now to Q1. First quarter sales were $686 million, which was towards the high end of our guidance with non-GAAP EPS of 75 cents above our high-end guide of $0.68. Non-GAAP gross margins were 60.6%. This was above our guidance due primarily to product mix. Non-GAAP operating expenses were $275 million, up year over year, as we have increased our investment in target opportunities to drive longer-term growth. That said, it's down sequentially as part of our implemented spending controls. Non-GAAP operating profit was 20.5%. Turning to our revenue breakdown and key one semi test revenue for the quarter was five hundred and forty three million dollars with revenue contributing four hundred and six million dollars. Memory hundred nine million dollars and twenty seven million dollars strength and was driven primarily by mobile as expected memory revenue was lower as customers digest the test equipment delivered in twenty, twenty four. We expect DRAM to dominate the memory mix in 2025, just as it did in 2024. IST revenue was $27 million, was up both sequentially and year over year, driven by new SLT shipments for mobile and our first AI compute revenue. In product test, Q1 revenue was $74 million, down 4% year over year, with wireless test revenue of $29 million, up 20% year over year. This growth in wireless tests was offset with weakness in production board tests tied to the automotive industry and timing of programs in defense and aerospace. Now to robotics. Revenue was $69 million, declining both sequentially and year-over-year. In the quarter, UR contributed $49 million and MIR contributed $20 million. While the long-term drivers of AI and onshoring in advanced robotics remain intact, Near-term macro factors continue to be a headwind. In robotics, the operating loss was $22 million, in line with our expectation. Given our restructuring, I'll share the gap to non-gap reconciliation of the loss. On a gap basis, our loss in Q1 was $37 million, including approximately $11 million in restructuring primarily associated with our go-to-market consolidation and $4 million of amortization of intangible assets, This restructuring has reduced our operating break-even revenue from $440 million to $365 million, as described in January. I'd like to highlight our life-to-date robotics gap results. Life-to-date, our gap losses are $231 million. Breaking that down, approximately $233 million of non-cash amortization of intangibles, $45 million of restructuring costs resulting and $47 million of cumulative non-GAAP operating profit. Some other financial information in Q1. We had one customer that directly or indirectly drove more than 10% of our revenue in the first quarter. In Q1, 19% of our revenue was shipped to China, 12% in support of multinational customers, and 7% in support of indigenous Chinese customers. For context, in the past two years, Shipments to Chinese indigenous customers has been 5% of Teradyne's revenue. The tax rate excluding the street items for the quarter was 13.5% on a GAAP and non-GAAP basis. At a company level, our free cash flow was $98 million, primarily driven by earnings and networking capital improvements in the quarter. We repurchased $157 million of shares in the quarter and paid $19 million in dividends. We ended the quarter with $622 million in cash and marketable securities. Now turning to our outlook for Q2. Q2 sales are expected to be between $610 and $680 million. Second quarter gross margins are estimated at 56.5 and 57.5%, a decrease quarter over quarter driven by product mix and lower volume. Q2 OpEx is expected to run at 40.5 to 44.5% of second quarter sales. The non-GAAP operating profit rate at the midpoint of our second quarter guidance is 14.5%, with non-GAAP EPS expected to be in the range of 41 to 64 cents on 161 million diluted shares. GAAP EPS is expected to be in the range of 35 to 58 cents. Moving to the topic of tariffs. As Greg noted, the primary concern of the tariffs is the impact on the end market demand. As our manufacturing footprint and the location of our customers, we expect only a minimal impact on the efficiency of our business model. The impact of the tariff will generally be passed along to customers in affected regions. In Q2, we expect to have a small increase of cost of sales and operating expenses, which amounts to approximately two cents of earnings for Q2, which is included in our guide. While we have assessed the financial impact due to tariffs in Q2, there is little ability to predict either the changes in tariff or trade policy or the magnitude of impact of the trade policy on end market demand. As such, please do not rely on prior financial guidance that extend beyond the second quarter. That said, I'd like to provide additional color on the dynamics we're seeing in some of our markets. In mobile, after two consecutive quarters of strength, driven by some supply chain shifts, we expect our Q2 revenue for mobile to be lower. In Q2, we also expect a significant sequential decline in memory revenue as the market continues to digest installed HBM test capacity. Looking out further, trade policy, including tariffs, are most likely to impact mobile, automotive, and industrial end markets. Significant changes to the AI diffusion rule or semiconductor trade restrictions may impact the compute market. Turning to share buybacks. As noted in our press release, we've increased our share buyback target from $400 million in 2025 to up to $1 billion through the end of 2026, reflecting our confidence in our long-term plans and free cash flow generation. Summing up, we delivered strong sales, earnings, and free cash flow in the first quarter. Our expectations for the second quarter are largely in line with our expectations provided at our analyst day. inclusive of the expected impact of tariffs. While visibility remains limited and there is a heightened uncertainty on the end market demand, we are confident in the long-term drivers of AI, electrification, and verticalization that will drive the industry and our businesses in the coming years. Our resilient variable business model and strong balance sheet enable us to continue to invest in areas of strategic importance as we await a broader end market recovery. With that, I'll turn the call back to the operator to open the line up for questions. Operator?

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Please ask one question and one follow-up question. One moment while we pull for questions. Our first question is from Krish Sankar with TD Cowen. Please proceed.

Putting my question. Greg, you kind of mentioned that, you know, how seven weeks ago at your analyst day, you saw tariff-related push-outs, but now it seems like some of your OSAT customers are seeing tariff-related pull-ins. I'm kind of curious, what are the dynamics you're seeing? It seems like you're only seeing push-outs no pull-ins, kind of like what end vertical is it coming from? Is it mostly auto analog industrials, or are you also seeing this trend with mobile and HPC? And then add a quick follow-up.

Yeah, Chris. I think the effects of pull-ins for end orders, you know, like people hurrying to get chips are mostly affecting capacity that's, you know, it's using capacity that's already in place. It is not significant. We haven't seen significant pull-ins into Q1 or into Q2 to provide additional capital equipment to support that. So that's not a factor. The push-outs, that we were talking about at Analyst Day are, you know, the situation is essentially the same as it was back then, and the pushouts are primarily coming from our customers that serve the auto and industrial space. We haven't seen significant pushouts associated with mobile, but we are concerned about the potential end market impact that, you know, like that is an effect yet to be seen that we don't have information about.

Got it, got it. Thanks, Greg. And then just to follow up on that HBM wafer sort win, is this an existing HBM customer or is it a new one? And also, typically, Teradyne has been better in final tests because speed is more important. So I'm kind of curious, what got you the wafer sort win? Thank you.

OK, so the important thing to remember is that with HBM memory, there is now a performance test that occurs at wafer level. So this is a post post-stack test. So you do a core test of all of the DRAM wafers, then you dice those wafers, you stack them up onto a substrate wafer, and then you do another wafer-level test of the entire stacked HBM memory. And that's a performance test that happens at higher speed. That's the insertion that we won, and that is a – that HBM4 win is with a customer we didn't have existing HBM3 or 3E business.

Thank you, Greg. Very helpful.

Our next question is from CJ Muse with Cantor Fitzgerald. Please proceed.

Yeah, good afternoon. Good morning. Thank you for taking the question. I guess I understand not guiding to the second half given lack of visibility, but I'm hoping you could kind of speak to what you can control. So, you know, how are you thinking about kind of what the new gross margin range would look like for the full calendar year? And do you have an updated view on how we should be thinking about OPEX?

Yeah. Hi, CJ. It's Sanjay. So for the full calendar year, you know, given the uncertainty on the top line, the impact of the tariffs or the trade policy, the revenue mix is really a large factor. So we're not providing any guide for the gross margin. I will share that, you know, our first half from a gross margin perspective is percentage-wise is roughly in line with where we expected, you know, Q1, a little bit better, and as we're guiding Q2, a little bit worse, but overall in the first half, percentage-wise, we're aligned, and given the uncertainty of the top line, we're not providing any guide for the second half. From an OBEX perspective, you know, the story is, it may sound a little bit redundant, but from a variable compensation model perspective, what we'll see is, depending on the revenue flux, if If the revenue comes down, we'll have a favorable impact, lower spend. If it goes up, we'll have more spend. But the kind of the narrative is consistent where we're going to prioritize our semi-test, our engineering, and our go-to-market. You saw the restructuring in robotics in Q1. You should see that decline year over year. an OpEx perspective and product test, it should be roughly flattish to the prior year.

So, if you don't mind, Sanjay, I'd like to add one sort of historical perspective to that for CJ. If you look into sort of past situations where we have had, you know, like a sharp downturn within a year, you know, like so in from 2022 to 2023 we had the you know in the middle of 23 we had a sharp slowdown in the mobile space that occurred mid-year and our margins went from 59 percent in 2022 to 57 percent in 2023. So we're not calling a gross margin for the full year because we don't have a good picture of the full year. The thing I want to emphasize is that it's probably going to move in a pretty narrow range.

Very helpful context. I guess as my follow-up, I was hoping you could speak to the SLT wins that you kind of highlighted in your prepared remarks. So can you kind of give us a little more color on what you're seeing with AI accelerators? And then also on the mobility side of two nanometer, is that just a win at your large existing customer or have you broadened your design wins in that arena? Thank you.

Yeah, so I'm glad you asked for clarification around the mobile, the mobile SLT win. So, in my script, it was sort of two separate thoughts that we have one additional mobile sockets that are driving that are going to drive business in 2025 and into 2026. a separate thought is the transition to two nanometer is going to be a positive demand tailwind in 2026 as well. I didn't mean to imply that we won an SLP two nanometer socket. So I just want to make sure that we're really clear about that. On AI accelerators, this is sort of a leading edge trend. What we're seeing is that AI accelerator devices when they're being incorporated into higher level assemblies, those assemblies have a higher than acceptable failure rate as they're being built into servers and It takes a significant amount of time to get the test coverage that you need for these devices and many of the failures can only be found when they are running actual training workloads. The most cost effective way to be able to run those training workloads is to do it in a system level test environment. And so we've implemented that for a leading edge AI accelerator. We've delivered that product. That product has been accepted and is being used in production right now. The trend that we believe is going to happen is that with next generation accelerators that are even more complex, that 100% SLT is going to be the most economic choice that these customers will make in order to achieve the quality levels that they need. So this is sort of the tip of the spear when it comes to SLT of these devices. And the key thing that we have is a great solution around the thermal control and power required to do this. So, it's an important strategic win that is going to deliver significant revenue in 2026.

Very helpful. Thank you.

Our next question is from Timothy Akary with UBS. Please proceed.

Thanks a lot. Greg, you talked about I think you said the biggest robotics order ever. I think you talked about that in the script. June has historically been kind of all over the map. It's been I mean, if you said it's normal seasonal, it's pretty flat, I guess, in June. So can you talk about that order? What was it for? What does it tell you about the business and when is it going to hit?

Yeah, sure. So as we said in the script, it's for an automotive customer. And this has been historically large strategic customer for us for both UR and MIR for a while. This is the first It's the largest order for our AMRs that we've ever received. And it's the first time that we've received an order where we dealt with this customer in a combined way as a robotics unit versus a UR and near unit. So it demonstrated the ability to transition the sales force to selling all of our products to these strategic customers. The product is primarily used in um so for the amrs they're primarily used in the the um material handling part of the factory so essentially they bring parts from uh from storage to line side and then the then the uh the other automation uh takes that and brings it into the product being assembled the the um cobot arms are generally used to automate manual processes in existing factories. So when they build a factory, they will design in the core automation for the assembly line. There is a significant amount of manual operations that occur, especially as the product gets further through the process. And after the factory is commissioned, this customer will continually look for process improvements And collaborative robotics is one of the key technologies that they use for those kinds of improvements because they don't have to make sure that the product and that the automation and the workers are separated. So it's, you know, an ongoing continuous improvement investment from this customer on the Cobot side.

And when does it help the business? Sanjay, can you give us some TAM updates from what you provided during the analyst day? You had said, you know, 4.9 SOC, you know, 1.4 memory, you know, and then you had all the, you know, breakdown within SOC. Is there any, you know, change to that that you would want to highlight? So, Tim, I didn't quite catch the first part of your question around that. Yeah, Greg, I was just trying to understand, like, I mean, if, like, this is such a big order, when does it help the business? Does it ship in the back half of the year? Does it ship in June? When does it ship?

Oh, no. So it's, it's shipments are spread out through from Q1 into Q2. So it's, you know, it wouldn't extend into the second half of this, this, this year. The lead times on the robotics products are generally pretty short.

And then maybe addressing your next request, you know, as we said in a prepared remarks, given the uncertainty, we're not providing an update on the town and the breakdown for the full year.

Okay, thanks. Our next question is from to me strategy with JP Morgan, please proceed.

Hi, this is Priyanka Thapa on for Sonic Chatterjee. My question is on secondary impacts for tariffs. Have you observed a shift among international customers towards non-U.S. competitors in the testing space, or have you noticed that your competitive positioning has remained stable?

Hi, Priyanka. In terms of competitive impact, so it especially you know the the key thing in the test market is we have uh you know two major international suppliers and then there are uh indigenous uh suppliers in china and korea that also serve the market um what we we have not seen any competitive impact you know customers that are deciding to buy from a different vendor because of the tariffs um and uh you know there are certainly you know it's a very competitive market so we're we're in in competing all the time their tariffs has not been the a deciding factor in any of those any of those competitions all right and one follow-up uh just to put on the uh gross margin impacts it was noticeably strong this uh on product mix this quarter

what measures are necessary in the long term to achieve this sort of 60% gross margin? Or is the narrow range that you spoke of, like, somewhat below that?

Yeah. Hi. It's Sanjay. Thanks for the question. You know, the strength, as we know from a pair of remarks, is really tied to product mix. And, you know, we, overall, when we make our investment decisions, we are looking to differentiate our solutions And we have an overall business model of 59 to 60%. And that's how we design our products in the markets we enter. I would say in the short run, when we talk about product mix, from a tester perspective, depending on what the needs are for a particular customer, it's really configuration dependent on what goes in there. But overall, in the first half, if you take a look at our guide, the first half were the 59%. um we we do believe over the mid and long term that we will continue to operate our business at 59 to 60 percent all right thank you so much our next question is from brian chin with stifo please proceed uh uh good morning thanks for uh letting us ask a few questions maybe to uh one for you greg um

When you've sized the VIP TAM at around 600 million in 26 and potentially 800 million in 2028, were you including SLT? And can you give us a sense, even if you don't want to necessarily reaffirm those targets at the moment, like how material to those TAM figures could SLT be?

Yeah, so the numbers that we cited for the VIP TAM are around semiconductor ATE, and it doesn't include SLT revenue. If there is a, you know, if the trend that I'm talking about plays out, then I don't think we've provided a formal estimate of that TAM. It would not, you know, it's not like going to be as big. But probably in the 10% to 30% of the total TAM would be the SLT TAM for that. We'll be updating that over time. And we'll let you know probably in January of next year when we start talking about the long term. But you should look at it as impactful, but not huge.

Okay, thanks. And then, I guess, kind of broadly, are you anticipating more meaningful advanced back-end tests and packaging lines to be onshore here in the States? And what timeframe seems realistic? And should this coincide with the next expansion of advanced logic wafer fab capacity in the U.S.?

Yeah. The thing that we have usually said, and we still believe, is that customers buy testers for the parts that they need to test. And where those parts are produced, whether it's in Taiwan or in China or in the US, doesn't affect the end market demand for those chips. Our ship to locations may change in the future if there's more onsite manufacturing in the US, but the total demand is unlikely to change in any meaningful way. There may be some additional inefficiency if yields are lower at first or if utilization is lower. But I think the onshoring of manufacturing is probably a bigger factor for front-end equipment where you need to make a large front-end investment whether or not you have the demand for the product. For things like testers, you're only going to buy testers essentially at the point in time when you know that you have the wafer volume that's going to require the test capacity.

Thank you.

Our next question is from Shane Brett with Morgan Stanley. Please proceed.

Thank you for taking my question. So firstly, on memory, you spoke about DRAM dominating the memory mix in 2025, just as it did in 2024, which would imply NAND remains at very low levels. What do you think is needed from customer utilization or technology transitions to see test orders again?

Thank you. So there are two factors that will drive a larger NAND demand. The first is really mobile phone unit volume. So if mobile phone unit volume inflects significantly, then we would see an increase in the demand. Also if the rise of AI-enabled smartphones requires a lot more local storage for model parameters. That would increase the amount of NAND per phone. So those are sort of the volume drivers for the market. The other important driver is interface standards. And this is true both in the mobile space and also in the compute space. In the mobile space, there are new protocols in both the iOS ecosystem and the Android ecosystem that require investment in new tester capacity to be able to verify those devices. So, as new phones adopt new standards, that does drive TAM in the mobile space. The last factor around the NAND market is As the NAND capacity continues to increase and the need for near-line storage for AI increases, there's a potential for very high demand in the cloud compute space for storage. And that's something that we think would be a a positive factor for demand for ATE, and we also think that that's an interesting market for us for our IST group.

Got it. Thank you. And as for my follow-up, you've previously mentioned that most of the VIP demand in 24 came from upgrades, and if they were system sales, revenue would have doubled. Do you have a gauge on what the utilization are for your testers, and at what point would customers have to purchase new testers rather than resorting to upgrades? Thank you.

So, we don't have an accurate enough measure of utilization that we can share sort of specific numbers. The trend is definitely upward, and we have already seen an increase in system orders associated with AI accelerators. In the early parts of 2024, it was really quite dominated by the upgrade sales. As we got into the latter half of 2024, we began to see significant system orders in addition to those upgrade orders. Also, the mobile business that we've transacted over Q4 and Q1 is consuming additional capacity. It's mobile of one type to mobile of another type, but it is definitely consuming idle testers. So, the best I can do is give you a qualitative answer that And we believe that the number of upgradable systems is much, much lower now than it was, say, six months ago. Got it.

Thank you very much.

Our next question is from Dave Dooley with Steelhead Securities. Please proceed.

Yes, thank you for taking my question. I guess I had one clarification. As far as the HBM staph dye test, Just to clarify, I guess you now have all three of the HBM guys for stacked eye test. Is that how we interpret this one?

No. No, we have – that is not a correct assumption. Okay.

And then as far as the – At the analyst day, you demonstrated a robot that was loading and unloading foops. And I was kind of wondering, and I think you mentioned that that was in production or in demonstration of one customer. Just help us understand the timing of, you know, when you expect to start to see revenue from that product and how big a market do you think that can be?

We had revenue in Q1 in association with the semiconductor vertical for our robotics business. And so that, you know, those are, and we also have semiconductor workflows similar to what we demonstrated at our analyst day in production at multiple sites for a different semiconductor customer. In terms of the revenue impact in 2025, it's kind of single digit millions of dollars and we expect it to grow over time. But, you know, it also is a key element of a like an enterprise level value proposition to these customers that we are already in their production facilities to provide support for our test equipment. We understand their workflows quite well and by being able to offer them the robotics that they need to automate some of these processes, we're able to do that quite efficiently, and we're also a trusted partner. So we think that this is an important way for us to demonstrate that we're the right test and robotics partner to these customers.

Thank you.

Our next question is from , Bank of America. Please proceed.

Hi. Thank you for taking our question. This is on behalf of . One on compute, I know you said you're not seeing a lot of push outs with this end market. And I know you won't guide the second half. But should we then expect this business to generally remain on track with your expectations from the Investor Day, just given you're not seeing any pushouts? Thank you.

Yeah, so we haven't seen significant pushouts in terms of affecting our Q1, Q2 results. There is uncertainty around the second half of the year, and I'd like to emphasize that it is uncertainty. potential upside factors and there are potential downside factors. And that's one of the reasons that we are not trying to guide the full year is that we, you know, we're not trying to subtly communicate a downward message or anything. We're just hearing a lot of uncertainty from our customers about the timing of projects and the need for capacity. But yeah, the view from, you know, the view from the analyst day to now is essentially the same.

Got it. And then one on robotics. Obviously, the sales side is a bit uncertain, but you've previously been assuming that this segment will outgrow your industrial peers by a significant margin. So is this still what you're expecting? That would be helpful. Thank you.

Yeah. So we are... You know, the way that we are typically thinking about our robotics business is that we would want to significantly outgrow traditional industrial automation peers in this space, mainly because we're addressing an under penetrated market, the advanced robotics. segment, and especially the segment of robotics where people are trying to automate processes that need to be in the presence of people or interact, interoperating with people. So that's a different market and we believe a market that is going to be accelerated by AI. We have not seen anything that changes our opinion that that's possible, but we definitely are struggling with an end market that's quite sluggish. And if people don't have money for projects, then it's difficult for you to achieve sort of an absolute level of growth in the business. So that's the key reason that we undertook the restructuring that we did to try and bring down our break even. So our break even was at $440 million in 2024. Our break even for this year is down at $365 million. And that was really a reaction to understanding that we don't have control over those end market conditions. And we needed to set ourselves up so that we could maintain our critical investments and still be more careful in terms of the investments that we are making around the go to market and achieve the synergies that we could between these two groups. Understood. Thank you.