Quarterly Report for Quarter Ending September 27, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Statements in this Quarterly Report on Form 10-Q which are not historical facts, so-called "forward-looking statements," are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in our filings with the Securities and Exchange Commission. See also Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2025. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management's analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.

Overview

We are a leading global provider of automated test equipment and robotics products. Our automated test systems are used to test semiconductors, wireless products, data storage, silicon photonics, and complex electronics systems in many industries including consumer electronics, automotive, industrial, computing, communications, and defense and aerospace industries. Our robotics product offerings consist primarily of collaborative robotic arms and autonomous mobile robots used by global manufacturing, logistics and industrial customers to improve quality and increase manufacturing and material handling efficiency, while reducing costs. Our automated test equipment and robotics products and services include:

The market for our test products is concentrated with a limited number of significant customers accounting for a substantial portion of the purchases of test equipment. A few customers drive significant demand for our products both through direct sales and sales to the customer's supply partners. We expect that sales of our test products will continue to be concentrated with a limited number of significant customers for the foreseeable future.

Our Semiconductor Test segment revenue exceeded $1.0 billion for the third consecutive quarter and increased 77% year over year, driven primarily by sustained demand in Artificial Intelligence ("AI") applications across compute, memory and storage markets. In memory, revenue reached a record $301 million, marking the fourth consecutive quarter above $200 million, reflecting strong demand. Within the Product Test Group, revenue was $138 million, up 56% year over year, reflecting broad-based growth tied to AI infrastructure build-outs across board test, optical and high-speed interconnect applications, including the addition of the MultiLane Test Products joint venture. Robotics achieved profitability in the quarter on $96 million of revenue, the highest third quarter revenue in the segment's history. Electronics and semiconductor customers represented Robotics' largest end-market during the quarter. Looking ahead, we see significant future opportunities, and we are committed to reinvesting in the business, particularly in research and development, to enable continued growth in 2027.

On October 6, 2026, we entered into a securities purchase agreement and a collaboration agreement with FormFactor, Inc. ("FormFactor"), a provider of semiconductor test and measurement technologies. Under the securities purchase agreement, we agreed to make a $300.0 million minority, non-controlling equity investment in FormFactor. The transaction is expected to close within the fourth quarter of 2026, subject to customary closing conditions and regulatory approvals. Under the collaboration agreement, we and FormFactor will collaborate on joint solutions that combine our test platforms with FormFactor's probe, contactor, and interface technologies to help semiconductor customers accelerate device validation and bring advanced devices to production, including in silicon photonics, high-performance compute, advanced packaging, and high-bandwidth memory.

On April 8, 2026, we and HTP Holding SAL ("MultiLane") formed a joint venture, MultiLane Test Products Holding LLC ("MLTP"), to which MultiLane contributed the assets of its test and measurement business. We obtained a controlling 75% ownership interest in MLTP, which is expected to serve the growing demand from the AI Data Center equipment market by accelerating the development of test solutions for critical high speed data connections. The purchase price of MLTP was approximately $157.8 million, subject to customary post-closing adjustments, and the results have been included in our Product Test segment.

Our capital allocation plan will continue to be balanced between investing in organic and inorganic growth and returning cash to shareholders through share repurchases and dividends. During the first nine months of 2026, the aggregate cash consideration paid for acquisitions, net of cash acquired, totaled $165.6 million, primarily due to the acquisition of a controlling interest in MLTP. Additionally, we returned a combined $234.5 million to shareholders through $173.5 million of share buybacks and $61.0 million of dividend payments.

Government Regulations

We are subject to numerous U.S. and foreign laws and regulations, including, without limitation, tariffs, trade sanctions, trade barriers, trade embargoes, regulations relating to import-export control, technology transfer restrictions, and other laws and regulations. However, our trade compliance program may not identify or prevent all potential violations, and gaps in our program could be discovered, possibly resulting in fines, penalties, or other sanctions as a result. Additionally, U.S. and foreign governmental authorities have taken, and may continue to take, administrative, legislative or regulatory action that could impact our operations. We believe that our operations are in material compliance with applicable trade regulations. The costs we incurred in complying with applicable trade regulations for the nine months ended September 27, 2026 were not material, however, compliance with these laws has limited our ability to compete in certain regions. It is possible that future developments, including changes in laws and regulations or government policies, could lead to material costs, and such costs may have a material adverse effect on our future business or prospects.

We have paid certain tariffs on imported products under the International Emergency Economic Powers Act ("IEEPA") since the inception of the IEEPA tariffs in 2025. On April 20, 2026, U.S. Customs and Border Protection ("CBP") began accepting refund claims related to these tariffs. During the quarter ended September 27, 2026, we received refunds, which did not have a material impact to our financial position or results of operations. We continue to monitor the situation, and we do not expect that any further refunds received will have a material impact on our financial position or results of operations.

For information regarding risks associated with import-export control regulations and similar applicable laws and regulations, see Part I - Item 1A "Risk Factors - Risks Related to Legal and Regulatory Compliance" included elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Critical Accounting Policies and Estimates

We have identified the policies which are critical to understanding our business and our results of operations. There have been no significant changes during the nine months ended September 27, 2026, to the items disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Critical accounting estimates are complex and may require significant judgment by management. Changes to the underlying assumptions may have a material impact on our financial condition and results of operations. These estimates may change, as new events occur and additional information is obtained. Actual results could differ significantly from these estimates under different assumptions or conditions.

Preparation of Financial Statements and Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and judgments that affect the amounts reported in the financial statements. Actual results may differ significantly from these estimates under different assumptions or conditions.

SELECTED RELATIONSHIPS WITHIN THE CONDENSED CONSOLIDATED

STATEMENTS OF OPERATIONS

Results of Operations

Third Quarter 2026 Compared to Third Quarter 2025

Revenues

Revenues by our reportable segments were as follows:

The increase in Semiconductor Test revenues of $466.1 million, or 76.9%, was driven primarily by higher sales in memory and compute related to artificial intelligence applications. The increase in Product Test revenues of $49.8 million, or 56.4%, was driven primarily by increased AI-related demand, combined with growth in Wireless and Defense and Aerospace. The increase in Robotics revenues of $20.7 million, or 27.6%, was primarily due to higher sales of collaborative robotic arms and autonomous mobile robots.

Revenues by country as a percentage of total revenues were as follows (1):

Gross Profit

Our gross profit was as follows:

Gross profit as a percent of revenue increased by 0.7 points, primarily due to higher sales and product mix.

Selling and Administrative

Selling and administrative expenses were as follows:

The increase of $29.9 million in selling and administrative expenses was primarily driven by strategic investments in Semiconductor Test and from higher variable compensation across all segments.

Engineering and Development

Engineering and development expenses were as follows:

The increase of $38.3 million in engineering and development expenses was primarily driven by strategic investments in Semiconductor Test and from higher variable compensation across all segments.

Restructuring and Other

During the three months ended September 27, 2026, we recorded $2.0 million of restructuring and other charges, of which $1.2 million were severance charges.

During the three months ended September 28, 2025, we recorded $4.8 million of severance charges, $3.6 million of which is related to headcount reductions in Robotics. During the three months ended September 28, 2025, we made $1.1 million of severance payments related to the Robotics business.

Interest and Other

Income (Loss) Before Income Taxes and Equity in Net Earnings of Affiliate

The increase in income before income taxes and equity in net earnings of affiliate in Semiconductor Test was driven primarily by higher sales volume in memory and compute related to artificial intelligence applications. The increase in income before income taxes and equity in net earnings of affiliate in Product Test was driven primarily by increased AI-related demand, combined with growth in Wireless and Defense and Aerospace. The increase in income before income taxes and equity in net earnings of affiliate in Robotics was primarily due to higher sales volume, improved product mix, and lower operating expenses primarily as a result of restructuring actions.

Income Taxes

The effective tax rate for the three months ended September 27, 2026 and September 28, 2025 was 14.8% and 15.8%, respectively. The decrease in the effective tax rate from the three months ended September 28, 2025 to the three months ended September 27, 2026 is primarily attributable to a reduction in U.S. taxation of international income. This reduction was partially offset by an increase from a projected shift in the geographic distribution of income.

Nine Months 2026 Compared to Nine Months 2025

Revenues

Revenues by our reportable segments were as follows:

The increase in Semiconductor Test revenues of $1,664.4 million, or 101.5%, was driven primarily by higher sales in compute and memory primarily related to artificial intelligence applications. The increase in Product Test revenues of $78.3 million, or 31.6%, was driven primarily by increased AI-related demand, improved product mix, combined with growth in Wireless and Defense and Aerospace. The increase in Robotics revenues of $68.1 million, or 31.1%, was primarily due to higher sales of collaborative robotic arms and autonomous mobile robots.

Revenues by country as a percentage of total revenues were as follows (1):

Gross Profit

Our gross profit was as follows:

Gross profit as a percent of revenue increased by 1.2 points, primarily due to higher sales volume and improved product mix.

Selling and Administrative

Selling and administrative expenses were as follows:

The increase of $74.0 million in selling and administrative expenses was primarily driven by strategic investments in Semiconductor Test and from higher variable compensation across all segments.

Engineering and Development

Engineering and development expenses were as follows:

The increase of $93.6 million in engineering and development expenses was primarily driven by strategic investments in Semiconductor Test and from higher variable compensation across all segments.

Restructuring and Other

During the nine months ended September 27, 2026, we recorded $8.5 million of restructuring and other charges, of which $4.5 million were related to acquisition and divestiture related expenses and $3.4 million were severance charges.

During the nine months ended September 28, 2025, we recorded $18.5 million of severance charges, $13.5 million of which is related to the Robotics restructuring which impacted approximately 150 employees, $2.2 million of which is related to Product Test and $1.4 million of which is related to Semiconductor Test. During the nine months ended September 28, 2025, we made $9.2 million of severance payments related to the Robotics business. Additionally, we recorded $2.0 million of acquisition and divestiture expenses related primarily to the Quantifi Acquisition and $1.5 million of charges related to lease terminations.

Interest and Other

Interest expense increased by $4.1 million primarily due to outstanding debt balances during portions of 2026.

Income (Loss) Before Income Taxes and Equity in Net Earnings of Affiliate

The increase in income before income taxes and equity in net earnings of affiliate in Semiconductor Test was driven primarily by higher compute and memory sales volume primarily related to artificial intelligence applications. The increase in income before income taxes and equity in net earnings of affiliate in Product Test was driven primarily by increased AI-related demand, combined with growth in Wireless and Defense and Aerospace. The increase in income before income taxes and equity in net earnings of

affiliate in Robotics was primarily due to higher sales volume, improved product mix, and lower operating expenses primarily as a result of restructuring actions.

Income Taxes

The effective tax rate for the nine months ended September 27, 2026 and September 28, 2025 was 14.4% and 13.8%, respectively. The increase in the effective tax rate from the nine months ended September 28, 2025 to the nine months ended September 27, 2026 is primarily attributable to lower benefits from tax credits and a projected shift in the geographic distribution of income. These increases were partially offset by a reduction related to U.S. taxation of international income.

Contractual Obligations

There have been no changes outside of the ordinary course of business to our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Liquidity and Capital Resources

Sources of Liquidity

Our cash, cash equivalents and marketable securities balances increased by $176.6 million in the nine months ended September 27, 2026, to $624.9 million. Cash increased primarily as a result of operating cash inflows.

In August 2026, we entered into a credit agreement (the "2026 Credit Agreement") providing for a five-year, $1.0 billion senior secured revolving credit facility (the "2026 Credit Facility"). The 2026 Credit Agreement replaced Teradyne's prior revolving credit facility, which, prior to our voluntary early termination, was set to expire in December 2026. As of September 27, 2026, we have no borrowings outstanding under the 2026 Credit Facility. The 2026 Credit Agreement is set to expire in August 2031. See Note I: "Debt" for more information regarding our 2026 Credit Agreement. As of September 27, 2026, we were in compliance with all covenants under the 2026 Credit Agreement.

Cash Flows

Operating Activities

Operating activities during the nine months ended September 27, 2026, provided cash of $1,047.9 million. Changes in operating assets and liabilities, net of businesses acquired, used cash of $218.3 million due to a $706.5 million increase in operating assets and a $488.2 million increase in operating liabilities. The increase in operating assets was primarily due to increases in accounts receivable, prepayments and other assets, and inventories of $302.7 million, $224.9 million and $178.8 million, respectively. The increase in operating liabilities was primarily due to increases in accounts payable and other liabilities of $347.6 million.

Operating activities during the nine months ended September 28, 2025, provided cash of $392.8 million. Changes in operating assets and liabilities used cash of $48.6 million due to a $169.0 million increase in operating assets and a $120.5 million increase in operating liabilities. The increase in operating assets was primarily due to increases in accounts receivable, inventories, and prepayments and other assets of $111.8 million, $34.6 million, and $22.6 million, respectively. The increase in operating liabilities was due to increases in accounts payable and other liabilities and in deferred revenue and customer advances of $121.4 million and $25.7 million, respectively, partially offset by decreases in income taxes and retirement plans of $19.7 million and $7.0 million, respectively.

Investing Activities

Investing activities during the nine months ended September 27, 2026, was primarily driven by $241.8 million used for the purchases of property, plant, and equipment and $165.6 million used for the acquisition of businesses, partially offset by $30.6 million in proceeds from sales of marketable securities.

Investing activities during the nine months ended September 28, 2025, used cash of $307.7 million due to $161.1 million used for the purchase of property, plant and equipment, $144.4 million used for the acquisition of businesses, $27.5 million used for the purchase of marketable securities, and $25.5 million used for the purchase of investments in businesses, partially offset by $41.6 million and $9.2 million in proceeds from the maturities and sales of marketable securities, respectively.

Financing Activities

Financing activities during the nine months ended September 27, 2026, included $200.0 million in net repayments of borrowings on our Credit Facilities, $173.5 million used for the repurchase of common stock, $42.2 million used for payment related to net settlements of employee stock compensation awards, and $61.0 million utilized for dividend payments, partially offset by $33.7 million from the issuance of common stock under employee stock purchase and stock option plans.

Financing activities during the nine months ended September 28, 2025, consumed cash of $361.4 million due to $518.7 million used for the repurchase of 5.1 million shares of common stock at an average price of $102.01 per share, $57.6 million utilized for dividend payments and $15.3 million used for payment related to net settlements of employee stock compensation awards, partially offset by $200.0 million from borrowings on our revolving credit facility and $30.1 million from the issuance of common stock under employee stock purchase and stock option plans.

Material Cash Requirements

In January 2026, May 2026, and August 2026, our Board of Directors declared a quarterly cash dividend of $0.13 per share. Dividend payments for the three and nine months ended September 27, 2026, were $20.3 million and $61.0 million, respectively.

In January 2025, May 2025, and August 2025, our Board of Directors declared a quarterly cash dividend of $0.12 per share. Dividend payments for the three and nine months ended September 28, 2025, were $19.0 million and $57.6 million, respectively.

In January 2023, our Board of Directors approved a repurchase program for up to $2.0 billion of common stock. During the nine months ended September 27, 2026, we repurchased 0.5 million shares of common stock for $173.5 million, which excludes related excise tax, when applicable, at an average price of $349.62 per share. The cumulative repurchases under the 2023 repurchase program as of September 27, 2026, were 12.5 million shares of common stock for $1,481.8 million, which includes related excise tax, when applicable, at an average price per share of $118.92. During the nine months ended September 28, 2025, we repurchased approximately 5.1 million shares of common stock for $518.7 million, which excludes related excise tax, when applicable, at an average price of $102.01 per share.

While we have previously declared a quarterly cash dividend and authorized a share repurchase program, we may reduce or eliminate the cash dividend or share repurchase program in the future. Cash dividends and stock repurchases are subject to the

discretion of our Board of Directors, which will consider, among other things, our earnings, capital requirements and financial condition.

On October 6, 2026, we entered into a securities purchase agreement and a collaboration agreement with FormFactor, Inc. ("FormFactor"). Under the securities purchase agreement, we agreed to make a $300.0 million minority, non-controlling equity investment in FormFactor. The transaction is expected to close within the fourth quarter of 2026, subject to customary closing conditions and regulatory approvals.

We believe our cash, cash equivalents, marketable securities and senior secured revolving credit facility will be sufficient to pay our quarterly dividend and meet our working capital and expenditure needs for at least the next twelve months. Inflation has not had a significant long-term impact on earnings. As of September 27, 2026, we were in compliance with all covenants under the 2026 Credit Agreement.

Equity Compensation Plans

In addition to our 1996 Employee Stock Purchase Plan as discussed in Note S: "Stock-Based Compensation" in our 2025 Annual Report on Form 10-K, we have a 2006 Equity and Cash Compensation Incentive Plan (the "2006 Equity Plan").

The purpose of the 1996 Employee Stock Purchase Plan is to encourage stock ownership by all eligible employees of Teradyne. The purpose of the 2006 Equity Plan is to provide equity ownership and compensation opportunities in Teradyne to our employees, officers and directors. Both plans were approved by our shareholders.

Recently Issued Accounting Pronouncements

For a description of accounting changes and recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see Note C: "Recently Issued Accounting Pronouncements" of this Form 10-Q.