TER 10-K & 10-Q changes, risk factors and insider trading

Descriptions of risks associated with our business are set forth below. Some of these risks are highlighted in the following discussion and in Management's Discussion and Analysis of Financial Condition and Results of Operations, Legal Proceedings, Controls and Procedures and Quantitative and Qualitative Disclosures About Market Risk of this Annual Report. The risks described below are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Capital equipment providers in the electronics, semiconductor industries and robotics, such as Teradyne, have, in the past, been negatively impacted by both sudden slowdowns in the global economies and recurring cyclicality within those industries. These cyclescycles, which can be driven by broad changes to Semiconductor buying patterns, or to specific markets within the Semiconductor industry, have resulted in periods of over-supply; a trend we believe will continue to occur. Our business and results of operations depend, in significant part, upon capital expenditures of manufacturers of semiconductors, electronics, and other industrial products, which in turn depend upon the current and anticipated market demand for those products. Disruption or deterioration in global or industry-specific economic conditions may reduce customer purchases of our products, thereby reducing our revenues and earnings. In addition, such adverse changes in economic conditions, and resulting slowdowns in the market for our products, may, among other things, result in increased price competition for our products, increased risk of excess and obsolete inventories, increased risk in the collectability of our accounts receivable from our customers, potential reserves for credit losses and write-offs of accounts receivable, increased risk of restructuring charges, and higher operating costs as a percentage of revenues, which, in each case and together, adversely affect our operating results. We are unable to predict the likely duration, frequency and severity of disruptions in financial markets, credit availability, and adverse economic conditions throughout the world, and we cannot ensure that the level of revenues or new orders for a fiscal quarter will be sustained in subsequent quarters. We have taken actions to address the effects of general economic variability and recurring industry cyclicality, including implementing cost control and reduction measures. We cannot predict whether these measures will be sufficient to offset global or market-specific disruptions that might affect our businesses and we may need to take additional or different measures in the future.

We face significant competition throughout the world in each of our reportable segments. Some of our competitors have substantial financial and other resources to pursue engineering, manufacturing, marketing and distribution of their products. In addition, we are subject to trade regulations imposed by the United States government, which may not impact some of our competitors. We also face competition from emerging Asian companies and internal development at several of our customers. Some of our competitors have introduced or announced new products with certain performance characteristics that may be considered equal or superior to those we currently offer. We expect our competitors to continue to improve the performance of their current products and to introduce new products or new technologies that provide improved cost of ownership and performance characteristics. NewIn productaddition, introductionsthe bysemiconductor industry has experienced significant consolidation over the past several years. Consolidation among our competitors or customers could causelead to a declinechanging competitive landscape, which could negatively impact our competitive position. If in revenuesthe orfuture we are unable to maintain our competitive position, we could experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities and a loss of market acceptance of our products.products, any of which could have a material adverse effect on our revenues and results of operations.

The market for our products is concentrated with a limited number of significant global customers accounting for a substantial portion of the purchases of test equipment. In each of the years, 2024,2025, 20232024 and 2022,2023, our five largest direct customers in aggregate accounted for 36%,44%, 32%36% and 26%32% of consolidated revenues, respectively.

We believe that our technological position depends primarily on the technical competence and creative ability of our engineers. In a rapidly evolving market, such as ours, the development or acquisition of new technologies, commercialization of those technologies into products and market acceptance and customer demand for those products are critical to our success. In the electronics, semiconductor, and robotics industries, products are often replaced by more technologically advanced substitutes and, as demand for older technology falls, the price at which such products can be sold drops. If we cannot advance new technologies to meet our customers’ demands, our revenues and financial condition may be adversely impacted. Successful product development or acquisition, introduction and acceptance depend upon a number of factors, including:

ability to meet customer requirements including with respect to safety and cyber securitycybersecurity;

changes in tariffs and foreign currency exchange rates;

compliance with anti-corruption laws, cybersecurity, data privacy regulations, customs and trade regulations;

compliance with customs and trade regulations; and compliance with international tax laws and regulations.

In JuneSince 2015, we acquiredhave completed the acquisitions of Universal Robots,Robots in 2018, we acquired(2015), Energid and MiR and, in 2019, we acquired(2018), Lemsys and AutoGuide.AutoGuide In(2019), and most recently, AET and Quantifi in 2025. Additionally, in May 2024, we closed on our strategic partnership agreement with Technoprobe which included Teradyneour acquiringacquisition of 10% of the equity in Technoprobe. We may not be able to realize the benefits of acquiring or successfully growing these businesses. We may continue to acquire additional businesses, form strategic alliances, or create joint ventures with third parties that we believe will complement or augment our existing businesses. We may not be able to realize the expected synergies and cost savings from the integration with our existing operations of other businesses or technologies that we may acquire. In addition, the integration process for our acquisitions may be complex, costly and time consuming and include unanticipated issues, expenses, and liabilities. We may have difficulty in developing, manufacturing, and marketing the products of a newly acquired company in a manner that enhances the performance of our combined businesses or product lines and allows us to realize value from expected synergies. Following an acquisition, we may not achieve the revenue or net income levels that justify the acquisition. Acquisitions may also result in one-time charges (such as acquisition-related expenses, write-offs or restructuring charges) or in the future, impairment of goodwill or acquired intangible assets, or adjustments to contingent consideration liabilities that adversely affect our operating results. Additionally, we may fund acquisitions of new businesses, strategic alliances, or joint ventures by utilizing our cash, incurring debt, issuing shares of our common stock, or by other means. Additionally, we may face restrictions pursuant to the terms of an acquisition or strategic alliance agreement.

We are subject to paying income taxes in the United States and other countries where we operate. Our effective tax rate is dependent on where our earnings are generated and the tax regulations and the interpretation and judgment of administrative tax or revenue authorities in the United States and other countries. We have pursued a global tax strategy that could be adversely affected by the mix of earnings and tax rates in the countries where we operate, changes to tax laws (including but not limited to Pillar Two), tax regulations or an adverse tax ruling by administrative authorities. Because of increasing focus by government taxing authorities on multinational corporations, the tax laws of certain countries in which we do business could change on a prospective or retroactive basis, and as a result our liabilities for taxes, interest and penalties, could significantly increase and adversely affect our financial results. We are also subject to tax audits in the countries where we operate. Any material change in our tax liability resulting from changes in tax laws, tax regulations, administrative rulings or audits from an administrative tax or revenue authority could negatively affect our financial results.

As a multinational corporation, we are subject to income taxes as well as non-income-based taxes, in both the United States and various foreign jurisdictions. In certain foreign jurisdictions, we qualify for tax incentives and tax holidays based on our ability to meet, on a continuing basis, various tests relating to our employment levels, research and development expenditures and other qualification requirements in a particular foreign jurisdiction. While we intend to operate in such a manner to maintain and maximize our tax incentives and tax holidays, no assurance can be given that we have so qualified or that we will qualify for any particular year or jurisdiction. If we fail to qualify or fail to remain qualified for certain foreign tax incentives and tax holidays, we may be subject to further taxation or an increase in our effective tax rate which would adversely impact our financial results. In NovemberDecember 2020,2025, we entered into an agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2020.2025. The new tax holiday is scheduled to expire on December 31, 2025.2035.

The tax savings attributable to the Singapore tax holiday for the years ended December 31, 2024,2025, 2024 and 2023 andwere 2022$21.6 weremillion or $0.14 per diluted share, $17.1 million or $0.10 per diluted share, and $1.4 million or $0.01 per diluted share, and $16.0 million or $0.09 per diluted share, respectively. These tax savings may not be achievable in subsequent years due to changes in Singapore’s tax laws,laws or the issuance of new global minimum tax laws, or the expiration of the tax holiday.laws.

From time to time, we make guarantees to customers regarding the delivery, price and performance of our products and guarantee certain indebtedness, performance obligations or lease commitments of our subsidiary and affiliate companies. We also have agreed to provide indemnification to our officers, directors, employees and agents, to the extent permitted by law, arising from certain events or occurrences, while the officer, director, employee or agent, is or was serving at our request in such capacity. Additionally, we have confidentiality obligations to certain customerscustomers, andwhich if breached would require the payment of significant penalties. If we become liable under any of these obligations, it could materially and adversely affect our business, financial condition or operating results. For additional information see Note NO: “Commitments and Contingencies-Guarantees and Indemnification ObligationsContingencies” in Notes to Consolidated Financial Statements.

Future cash dividends and share repurchases are subject to the discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition. While we have declared a quarterly cash dividend on our common stock and authorized a share repurchase program, weWe are not required to do either and may reduce or eliminate our cash dividend or share repurchase program in the future. The amount and frequency of our share repurchases may fluctuate and the reduction or elimination of our cash dividend or our share repurchase program could adversely affect the market price of our common stock.stock or reduce our cash reserves.

On May 1, 2020, we entered into a three-year, senior secured revolving credit facility of up to $400.0 million.million (the “Credit Facility”). On December 10, 2021, the credit agreement was amended to extend the maturity date of the creditCredit facilityFacility to December 10, 2026. On October 5, 2022, the credit agreement was amended to increase the amount of the creditCredit facilityFacility to $750.0 million from $400.0 million. The amended credit agreement provides that, subject to customary conditions, we may seek to obtain from existing or new lenders the available incremental amount under the credit facility, not to exceed the greater of $200.0 million or 15% of consolidated EBIDTA. We could borrow funds under this creditCredit facilityFacility at any time for general corporate purposes and working capital. On MaySeptember 16,4, 2024,2025, weSeptember 19, 2025, and October 7, 2025, Teradyne borrowed $185.0a combined $250.0 million under thisthe creditCredit facility, primarilyFacility to fundsupport ourthe acquisitionramp-up in manufacturing capabilities for Semiconductor Test and the strategy to return cash to shareholders through share repurchases, dividends, and inorganic growth opportunities. On December 31, 2025, we repaid $50 million of the 10%outstanding equityborrowings. interestFurther, we may incur significant additional secured and unsecured indebtedness in Technoprobe discussed above. By December 31, 2024, we had fully repaid all amounts borrowed under the credit facility. As of February 20, 2025, there are no outstanding borrowings under the credit facility.future.

require the dedication of a substantial portion of any cash flows from operations to service for indebtedness, thereby reducing the amount of cash flows available for other purposes, including capital expenditures,expenditures; and limit our flexibility in planning for or reacting to changes in our business and the industries in which we complete.complete and placing us at a disadvantage compared to competitors with less debt or debt on more favorable terms.

The agreement governing our seniorCredit secured revolving credit facilityFacility limits our ability, among other things, to incur additional secured indebtedness; sell, transfer, license or dispose of assets; consolidate or merge; enter into transactions with our affiliates; and incur liens. In addition, our seniorCredit secured revolving credit facilityFacility contains financial and other restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest, such as, subject to permitted exceptions, making capital expenditures in excess of certain thresholds, making investments, loans and other advances, and prepaying any additional indebtedness while our indebtedness under our seniorCredit secured revolving credit facilityFacility is outstanding. Our failure to comply with financial and other restrictive covenants could result in an event of default, which if not cured or waived, could result in the lenders requiring immediate payment of all outstanding borrowings or foreclosing on collateral pledged to them to secure the indebtedness.

If our cash flows are inadequate to meet our obligations, we could face substantial liquidity problems. If we are unable to generate sufficient cash flows or otherwise obtain funds necessary to make required payments on our seniorCredit secured revolving credit facilityFacility or certain of our other obligations, we would be in default under the terms thereof, which would permit the holders of those obligations to accelerate their maturity and also could cause defaults under future indebtedness we may incur. Any such default could have a material adverse effect on our business, prospects, financial position and operating results.

We hold cash balances in several large financial institutions significantly in excess of the Federal Deposit Insurance Corporation ("“FDIC"”) and global insurance limits. If banks and financial institutions with whom we have banking relationships enter receivership or become insolvent in the future, we may be unable to access, and we may lose some or all of our existing cash, cash equivalents and investments to the extent those funds are not insured or otherwise protected by the FDIC. For example, on March 10, 2023, Silicon Valley Bank ("SVB"), who is a lender in our revolving credit facility and where we maintain certain accounts and cash deposits, was placed into receivership with the FDIC, which resulted in all funds held at SVB being temporarily inaccessible by SVB’s customers. As of March 13, 2023, access to our cash and cash equivalents at SVB was fully restored. There is no guarantee that the FDIC or any other global insurer will provide access to uninsured funds in the future in the event of the closure of any other banks or financial institutions in a timely fashion or at all. Any inability to access or delay in accessing these funds could adversely affect our business, financial position, and liquidity.

ratings changes by any securities analysts who follow our company or the failure to achieve our financial guidance or targets;

macroeconomic conditions, a worldwide economic slowdown or disruption in the global financial or industrial markets;

disruption caused by health pandemics, thenatural successdisasters, ofor salesglobal channel expansion in Roboticsconflict;

The global supply shortage of electrical components, including semiconductor chips, impacted our supply chain in 2023. As a result, we experienced and may experience in the future, increases in our lead times and costs for certain components for certain products. We may also experience delays in the delivery of some orders placed by our customers. In addition, inflationary pressures have in the past contributed to increased costs for product components along with wage inflation which yielded a minimal impact to the costs of our products, gross margin and profit for the year. In an effort to mitigate these risks, we may in some cases, incur higher costs due to investment in supply chain resiliency and to secure available inventory or have extended or non-cancellable purchase commitments with semiconductor suppliers, which introduces inventory risk if our forecasts prove inaccurate. We have also sourced components from additional suppliers and multi-sourced and pre0orderedpre-ordered components and finished goods inventory in some cases in an effort to reduce the impact of the adverse supply chain conditions we have experienced in the past. However, if we are unable to secure manufacturing capacities from our current or new suppliers and contract manufacturers, on acceptable terms or at all, or successfully manage our purchase commitments and inventory for components, our ability to deliver our products to our customers in the desired quantities, at competitive prices or in a timely manner may be negatively impacted for 2025.impacted. We also have been, and may continue to attempt to, offset the effect of these inflationary pressures by increasing the prices of our products. However, we mayalso not be fully able to pass additional costs on to our customers, which could have a negative impact on our results of operations and financial condition.

We depend on Flex Ltd. (“Flex”) to manufacture and test our FLEX and J750 family of products from its facility in Malaysia; Plexus Corp. (“Plexus”) to manufacture and test our FLEX and Magnum products from its facilities in Malaysia and Thailand and our ETS family of products from its facility in Malaysia; SAM Meerkat to manufacture and test our storage test family of products from its facilities in Malaysia and Thailand and on other contract manufacturers to manufacture other products. If for any reason these contract manufacturers cannot provide us with these products in a timely fashion, or at all, we may not be able to sell these products to our customers until we enter a similar arrangement with an alternative contract manufacturer.

If we experience a problem with our supply of products from Flex, Plexus, SAM Meerkat, or our other contract manufacturers, it may take us significant time to either manufacture the product or find an alternate contract manufacturer, which could result in substantial expense and disruption to our business. We have, however, significantly invested in our internal manufacturing for FLEX products in our Cebu site.

We have also outsourced certain general and administrative functions to reputable service providers, many of which are in foreign countries, sometimes impacting communication with them because of language and time differences. Their presence in foreign countries also increases the risk they could be exposed to politicalpolitical, conflict and cybersecurity risk. Additionally, there may be difficulties encountered in coordinating the outsourced operations with existing functions and operations. If we fail in successfully coordinating and managing the outsourced service providers, it may cause an adverse effect on our operationsoperations, which could have a material adverse effect on our business, results of operations or financial condition.

Competition for employees with skills we require is intense in the high technology industry. We expect intense competition for employees towill continue in 2025.2026. Our success will depend on our ability to attract and retain key technical employees. The loss of one or more key or other employees, a decrease in our ability to attract additional qualified employees, or the delay in hiring key personnel could each have a material adverse effect on our business, results of operations or financial condition. In addition, existing or new immigration laws, policies or regulations in the U.S. may limit the pool of available talent in the highly skilled technical labor market.

Our business is international in nature, with our sales, service and administrative personnel and our customers and suppliers located in numerous countries throughout the world. Our operations, and those of our customers and suppliers, are subject to disruption for a variety of reasons, including work stoppages, acts of war,war and geopolitical conflict, terrorism, health epidemics, fires, earthquakes, hurricanes, typhoons, volcanic eruptions, energy shortages, telecommunication failures, tsunamis, flooding or other natural disasters.disasters, Suchincluding as a result of global climate change. Any disruptions from these events could require substantial expenditures and recovery time to fully resume operations and could also have a material adverse effect on our operations and financial results to the extent that losses are uninsured or exceed insurance recoveries, and to the extent that such disruptions adversely impact our relationships with our customers. Additionally, any such disruption could materially increase our costs and expenses as well as cause delays in, among other things, shipments of products to our customers, our ability to perform services requested by our customers, or the installation and acceptance of our products at customer sites. Any of these conditions could have a material adverse effect on our business, financial condition or results of operations.

We have been sued for patent infringement in the past and receive notifications from time to time that we may be in violation of patents held by others. An assertion of patent infringement against us, if successful, could have a material adverse effect on our ability to sell our products or it could force us to seek a license to the intellectual property rights of others or alter such products so that they no longer infringe the intellectual property rights of others. A license could be very expensive to obtain or may not be available at all. Similarly, changing our products or processes to avoid infringing the rights of others may be costly or impractical. Additionally, patent litigation has in the past and could in the future require a significant use of management resources and involve a lengthy and expensive defense, even if we eventually prevail. If we do not prevail, we might be forced to pay significant damages, obtain licenses, modify our products, or stop making our products; each of which could have a material adverse effect on our financial condition, operating results or cash flows.

We protect the technology that is incorporated in our products in several ways, including through patent, copyright, trademark and trade secret protection and by contractual agreement. However, even with these protections, our IP may still be challenged, invalidated or subject to other infringement actions. While we believe that our IP has value in the aggregate, we do not believe that any single element of our IP is in itself essential. If a significant portion of our IP is invalidated or ineffective, our business could be materially adversely affected.

We rely on various information technology networks and systems to process, transmit and store electronic information, including proprietary and confidential data, and to carry out and support a variety of business activities, including manufacturing, research and development, supply chain management, sales and accounting. We have experienced several attempted cyber-attacks of our network. None of the attempted attacks have caused a disruption to our operations or had a material adverse effect on our business or financial results. As a result of the attempts, we have taken further preventive security measures to protect our systems. Despite the preventativepreventive security measures we have implemented, we may continue to be vulnerable to attempts by third parties to gain unauthorized access to our networks or sabotage our systems. These attempts, which might be related to criminal hackers, industrial espionage or state-sponsored intrusions, include trying to covertly introduce malware to our computers, networks and systems and impersonating authorized users. Additionally, evolving geopolitical tensions or conflicts have created a heightened risk of cybersecurity attacks. In addition, third party suppliers and service providers that we rely on to manage our networks and systems and who process and store our proprietary and confidential data, including the data of our customers and suppliers, may also be subject to similar attacks. Employees and contractors may also attempt to gain unauthorized access to our systems and steal proprietary and confidential data. Such attempts could result in the misappropriation, theft, misuse, disclosure or loss or destruction of the intellectual property, or the proprietary, confidential or personal information, of Teradyne or our employees, customers, suppliers or other third parties, as well as damage to or disruptions in our information technology networks and systems. These threats are constantly evolving and expanding, such as through the increased use of artificial intelligence in our products and expanding remote work opportunities for our employees, thereby increasing the difficulty of defending against them or implementing adequate preventative measures. While we seek to detect and investigate all security incidents and to prevent their recurrence, attemptsAttempts to gain unauthorized access to our information technology networks and systems may be successful, and in some cases, we might be unaware of an incident or its magnitude and effects. A failure in or a breach of our operational or security systems or infrastructure, or those of our suppliers and other service providers, including as a result of cyber-attacks, could have a material adverse effect on our business or financial results, disrupt our business, result in the disclosure or misuse of proprietary or confidential information, damage our reputation, cause losses and increase our costs. We expect to continue to devote significant resources to the security of our information technology networks and systems. Furthermore, our efforts to comply with evolving laws and regulations related to cybersecurity may be costly and any failure to comply could result in investigations, proceedings, investor lawsuits and reputational damage.

Although we are evaluating, and where we believe appropriate, incorporating AI tools into our products and operations, ourOur use of AI tools may subject us to significant competitive, legal, regulatory and other risks, and there can be no assurance that our use of AI tools will enhance our products, business operations or result in a benefit to us. Our competitors may be more successful in their use of AI tools, including by developing superior products or improving their operations with the assistance of AI. Additionally, there could be adverse impacts from flawed algorithms.algorithms, including related to incorporation of third-party copyrighted materials into large language models; data quality and bias, as well as challenges implementing and maintaining AI tools, such as the complications arising from integrating such tools with existing systems and practices, and from reliance on third-party AI vendors. Our use of AI tools, or our customers uses of our products that incorporate AI, could also result in the loss of confidential information or intellectual property or an inability to claim or enforce intellectual property rights, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy, cybersecurity, and the unauthorized use of our data. The jurisdictions in which we conduct business have and may adopt laws and regulations related to AI, which could cause us to incur greater compliance costs, limit our use of AI tools, or subject us to legal liabilities.

We are a leading global supplierprovider of automated test equipment and robotics products. We design, develop, manufacture and sell automated test systems and robotics products. Our automated test systems are used to test semiconductors, wireless products, data storagestorage, silicon photonics, and complex electronics systems in many industries including consumer electronics, wireless, automotive, industrial, computing, communications, and aerospace and defense industries. Our Roboticsrobotics productsproduct includeofferings consist primarily of collaborative robotic arms and autonomous mobile robots (“AMRs”) used by global manufacturing, logistics and industrial customers to improve quality,quality and increase manufacturing and material handling efficiencyefficiency, while reducing costs. In the first quarter of 2025, we identified opportunities for operational synergies amongst our production board test, defense and decrease manufacturingaerospace, and logisticswireless costs.test businesses leading to the creation of the Product Test division as a new segment effective March 2025. Our automated test equipment and robotics products and services include:

robotics (“Robotics”) products; and defense/aerospaceproduct test (“Defense/AerospaceProduct Test”) testsystems, instrumentationwhich and systems,includes circuit-board test and inspection (“Production Board Test”) systems, and wireless test systems photonic integrated circuit (referred“PIC”) collectivelytest assolutions, "Alland Other").defense and aerospace test instrumentation and systems.

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 significantsizable demand for our productsofferings 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 significantmajor customers for the foreseeable future.

Our financial statements are denominated in U.S. dollars. While revenues in our test businesses are predominantly in U.S. dollars, the majority of our Robotics revenue is denominated in foreign currencies. Strengthening of the U.S. dollar wouldhas, and will continue to, negatively affect Robotics revenue growth in 2025.2025 and 2026, respectively.

We are subject to numerous United StatesU.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. Additionally, United StatesU.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 year ended December 31, 20242025 were not material, andhowever, we do not currently expect the cost of complyingcompliance with existing tradethese laws andhas regulationslimited our ability to have a material adverse effect on our capital expenditures or earnings or on our competitive positioncompete in anycertain one year.regions. It is possible, however,possible that future developments, including changes in laws and regulations or government policies, could lead to material costs, and such costs may have aan material adverse effect on our future business or prospects.

Critical Accounting Policies and Estimates

We have identified the policies and estimates discussed below as critical to understanding our business and our results of operations and financial condition. The impact and any associated risks related to these estimates on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. For a full description of our accounting policies related to the below items refer to Note B.B: “Accounting Policies,Policies”, included in the Notes to Consolidated Financial Statements in this Annual Report.

In accordance with ASC 606, “Revenue from Contracts with Customers” (“ASC 606”), we recognize revenues, when or as control is transferred to a customer. Our determination of revenue requires judgment in the determination of performance obligations and allocation of the transaction price to performance obligations. We often sell bundled orders that include both product and services or multiple different products within the same order. We evaluate each of the deliverables to determine if it meets the definition of a performance obligation, which requires that it is capable of being distinct and distinct within the context of the contract. This determination is based on an assessment of contractual rights of the contract and the ability of the performance obligation to perform on its own or with readily available resources. In bundled transactionstransactions, we estimate the standalone selling price of each identified performance obligation and use that estimate to allocate the transaction price among said performance obligations. The estimated standalone selling price is determined using all information reasonably available to us, including standalone transactions, market information and other observable inputs.

The discount rate that we utilized for determining future pension obligations for the U.S. Plan is based on the FTSE Pension Index adjusted for the U.S. Plan’s expected cash flows and was 5.30% at December 31, 2025, down from 5.45% at December 31, 2024, up from 4.75% at December 31, 2023.2024. We estimate that in 20252026 we will recognize approximately $0.1 million of pension expenseincome for the U.S. Plan. The U.S. Plan pension expenseincome estimate for 20252026 is based on a 5.45%5.30% discount rate and a 5.05%5.10% return on assets. Future pension expense or income will depend on future investment performance, changes in future discount rates and various other factors related to the employee population participating in our pension plans.

The increase in Semiconductor Test revenues of $166.7$399.8 million, or 8.5%,18.8%, was driven primarily by higher tester sales forin computing,compute ADAS,related to artificial intelligence applications and memoryin applications,Integrated partiallySystem offsetTest byprimarily lowerrelated testerto salessystem forlevel legacy automotive applications.testers. The decrease in Robotics revenues of $10.4$56.5 million, or 2.8%,15.5%, was drivenprimarily due to lower sales of collaborative robotic arms and autonomous mobile robots. The increase in Product Test revenues of $26.9 million, or 8.1%, was primarily bydue continuedto weaknesshigher insales theof Industrial Automation marketdefense and softeraerospace salestesting in Universal Robots.systems.

Our product revenues increased $198.6$365.3 million, or 9.5%,15.9%, driven primarily driven by higher tester sales for computing, ADAS, and memory applications, partially offset by lower tester sales for legacy automotive application. Our service revenues decreased $55.1 million, or 9.5%, primarily in Semiconductor Testcompute related to theartificial saleintelligence ofapplications theand DISin businessIntegrated onSystem MayTest 27,primarily 2024.related to system level testers.

Gross profit as a percent of total revenues increaseddecreased by 1.10.3 points, primarily due to a higher volume and product and service mix.

During the year ended December 31, 2023,2025, we recorded an inventory provision of $28.4$25.8 million included in cost of revenues, primarily due to downward revisions to previously forecasted demand levels for certain products. Of the $28.4$25.8 million of total excess and obsolete provisions, $22.5$17.5 million was related to Semiconductor Test, $2.3$6.0 million was related to Robotics, and $3.6$2.2 million was related to AllProduct Other.Test.

The increase of $39.7$31.8 million in selling and administrative expenses was primarily due to higher sales and marketing spending in Semiconductor Test.Test partially offset by lower spending in Robotics.

The increase of $42.8$43.7 million in engineering and development expenses was primarily due to higher spending in Semiconductor Test.Test partially offset by lower spending in Robotics.

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

Included in Corporate and Eliminations are gain on sale of business, interest income, interest expense, net foreign exchange gains (losses), intercompany eliminations, severance charges, pension and postretirement plan actuarial gains (losses), acquisition and divestiture related fees,expenses, legal and environmental fees, contract termination settlement charge, and modification of outstanding equity awards.

The increase in income before income taxes and equity in net earnings of affiliate in Semiconductor Test was driven primarily by higher tester sales forin computing,compute ADAS,related to artificial intelligence applications and memoryin applications,Integrated System Test primarily related to system level testers, partially offset by lowerhigher testerspending salesin forselling legacyand automotiveadministrative application.and engineering and development. The decrease in income before income taxes and equity in net earnings of affiliate in Robotics was primarily drivendue to lower sales of collaborative robotic arms, partially offset by continuedlower weaknessoperating in the Industrial Automation market and softer sales in Universal Robots along with higher selling and administrative costs.expenses. The decreasechange in income before income taxes and equity in Allnet Otherearnings of affiliate in Corporate and Eliminations was driven primarily bydue ato decreasethe in salessale of Wirelessthe TestDIS products.business on May 27, 2024.

We qualify for a tax holiday in Singapore by fulfilling the requirements of an agreement with the Singapore Economic Development Board under which certain headcount and spending requirements must be met. The tax savings attributable to the Singapore tax holiday for the years ended December 31, 20242025, and 20232024 were $21.6 million or $0.14 per diluted share and $17.1 million or $0.10 per diluted share and $1.4 million or $0.01 per diluted share, respectively. In NovemberDecember 2020,2025, we entered into an agreement with the Singapore Economic Development Board which extended our Singapore tax holiday under substantially similar terms to the agreement which expired on December 31, 2020.2025. The new tax holiday is scheduled to expire on December 31, 2025.2035.

Capital Resources and Material Cash RequirementsRequirement

Our cash, cash equivalents and marketable securities balance decreased by $213.4$275.5 million in 20242025 to $723.8$448.3 million. Cash decreased primarily due to investments in businesses for $532.1 million, stock repurchases in the amount of $198.6$702.1 million,million and quarterlyacquisitions cashof dividend paymentsbusinesses in the amount of $76.4$144.4 million, partially offset by proceeds from the sale of business andoperating cash generated by our global operations.proceeds.

In addition to other information set forth in this Form 10-Q, including the risk discussed below, you should carefully consider the factors discussed in Part I, “Item 1A: Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 19, 2026, which could materially affect our business, financial condition or future results. The risk factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, remain applicable to our business.

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, wireless, automotive, industrial, computing, communications, and aerospacedefense and defenseaerospace 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:

semiconductor test (“Semiconductor Test”) systems and instruments;

DuringFor the firstsecond quarterconsecutive of 2026,quarter, our  Semiconductor Test segment delivered record results, revenue, driven primarily by continued strength  sustained demand in Artificial Intelligence (“AI”)–related demand  applications across  both compute and memory markets, applicationshit resultinga innew Semiconductorrecord Testhigh. Continued revenue alone exceeding $1.0 billion for the first time. AI-related customer demand continues to be significant in the quarter, reflecting the investmentsinvestment by hyperscalers, vertically integrated producers, and merchant compute customers in AI data center infrastructure.infrastructure Memorysupported test revenue remained at near-record levels, driven bythe robust compute market revenue. In memory, revenue exceeded $200 million for the third consecutive quarter, reflecting strong demand for high bandwidth memory (“HBM”) and DRAM test solutions supporting AI compute deployments.deployments, as Thewell firstas quarterrenewed resultsdemand reflectfor NAND ourfinal ongoing focus on AI-dominant testing requirements. Ourtest applications. Strong Robotics revenue of segment$100 achievedmillion, marked its fourththe fifth consecutive  quarter  of sequential revenuegrowth, driven growth, which is notable given the typical seasonality associated with this business. Demand was supported primarily by customerdemand engagement across e‑commerce, from electronics manufacturing, semiconductor,manufacturing and AIsemiconductor datacustomers, centerwhich has end markets. In become the segment's largest end-market. Within Product Test Group, first quarter revenue  increased 26% year over year, supported by continued strength in defenseyear and aerospace33% sequentially, reflecting broad-based growth across multiple markets and applications. The Acrosscurrent quarter record performance is the company, our first quarter results reflect strong execution and the benefitsresult of prior investments inand productour development,current manufacturing capacity,strategy and strategicexecution partnerships,model. Looking ahead, we see significant future opportunities, and we are committed to judicious additional investments today, which we expectbelieve are required to continue to supportgrowing our performancebusiness overin the course of 2026.2027.

On April 8, 2026, we and HTP Holding SAL (“MultiLane”) formed a joint venture, MultiLane Test Products Holding LLP (“MLTP”), to which MultiLane contributed the assets of its test and measurement business. MLTPWe 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. In connection with the formation of MLTP, we obtained a controlling 75% ownership interest in MLTP for a totalThe purchase price of MLTP was approximately $157.8 million, subject to customary post-closing adjustments.adjustments, MLTPand the results will be 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 while maintaining cash balances to enable us to run the business.dividends. During the first threesix months of 20262026, 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 $25.9a combined $114.9 million to shareholders through $5.5$74.2 million of share buybacks and $20.4$40.7 million of dividend payments. In April 2026, we paid a combined $166.7 million towards the formation of MLTP and the acquisition of TestInsight.

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 threesix months ended MarchJune 29,28, 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. WhileDuring the quarter ended June 28, 2026, we havebegan submittedreceiving refundrefunds, requests,which the timing and impact of any potential refunds remain uncertain, however, we dodid not expecthave thea material impact to be material 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.

We have identified the policies which are critical to understanding our business and our results of operations. The impact and any associated risks related to these estimates on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. There have been no significant changes during the threesix months ended MarchJune 29,28, 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.

FirstSecond Quarter 2026 Compared to FirstSecond Quarter 2025

The increase in Semiconductor Test revenues of $568.3$629.9 million, or 104.8%,128.1%, was driven primarily by higher sales in compute and memory related to artificial intelligence applications. The increase in Product Test revenues of $22.1 million, or 26.0%, was driven by increased AI-related demand, combined with growth in Defense and Aerospace. The increase in Robotics revenues of $22.3$25.0 million, or 32.3%,33.4%, was primarily due to increasedhigher sales of collaborative robotic arms,arms partially offset by decreased sales ofand autonomous mobile robots. The increase in Product Test revenues of $6.2 million, or 8.4%, was driven primarily by higher Defense/Aerospace sales.

Gross profit as a percent of revenue increased by 0.32.6 points, primarily due to volumehigher increasesales and product mix in Semiconductor Test.

The increase of $9.4$34.7 million in selling and administrative expenses was primarily driven by strategic investments in Semiconductor Test.Test and from higher variable compensation across all segments.

The increase of $17.4$37.9 million in engineering and development expenses was primarily driven by strategic investments in Semiconductor Test.Test and from higher variable compensation across all segments.

During the three months ended MarchJune 29,28, 2026, we recorded $3.4$3.0 million of restructuring and other charges, $1.7 million of which $1.5 million were related to acquisition and divestiture related expenses.expenses Duringand the three months ended March 29, 2026, we made $4.3$1.4 million ofwere severance payments related to the 2025 Robotics restructurings.charges.

During the three months ended MarchJune 30,29, 2025, we consolidated our Robotics go-to-market functions to better serve our customers. As a result, we recorded $11.4$2.3 million of employee severance charges, $9.2$0.8 million of which is related to the Robotics restructuring which was initiated during the three months ended March 30, 2025, and impacted approximately 150 employees. Additionally,During the three months ended June 29, 2025, we recordedmade $2.0$3.9 million of acquisitionRobotics andseverance divestiture related costs and $1.1 million related to lease terminations.payments.

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 compute and memory related to artificial intelligence applications. The decreaseincrease in income before income taxes and equity in net earnings of affiliate in Product Test was driven primarily by strategic investments, partially offset by higher revenue. The decrease in loss before income taxes and equity in net earnings of affiliate in Robotics was primarily due to higher revenuesales volume and lower operating expenses primarily as a result of restructuring actions taken in 2025.actions.

The effective tax rate for the three months ended MarchJune 29,28, 2026, and MarchJune 30,29, 2025, was 13.3%15.1% and 12.2%,12.7%, respectively. The increase in the effective tax rate from the three months ended MarchJune 30,29, 2025, to the three months ended MarchJune 29,28, 2026, is primarily attributable to lower benefits from tax credits, lower benefits related to U.S. taxation of international income, and higher expense related to Pillar Two. These impacts werecredits partially offset by increased benefits from equity compensation and a projected shift in the geographic distribution of income.

Our cash, cash equivalents and marketable securities balances decreasedincreased by $54.3$68.8 million in the threesix months ended MarchJune 29,28, 2026, to $394.0$517.1 million. Cash decreasedincreased primarily dueas toa net repaymentsresult of borrowings on revolving credit facility of $200.0 million, partially offset by operating cash proceeds.inflows.

Our Third Amended and Restated Revolving Credit Agreement, amended as of November 7, 2023 (the “Credit Agreement”) provides a six-year, senior secured revolving credit facility of $750.0 million (the “Credit Facility”). As of MarchJune 29,28, 2026, Teradynewe did not have an outstanding balance under the Credit Agreement. The Credit Agreement is set to expire on December 10, 2026. See Note I: “Debt” for more information regarding our Credit Agreement. As of MarchJune 29,28, 2026, we were in compliance with all covenants under the Credit Agreement. We intend to extend the Credit Facility later in 2026.

Operating activities during the threesix months ended MarchJune 29,28, 2026, provided cash of $265.1$734.3 million. Changes in operating assets and liabilities, net of businesses acquired used cash of $195.5$142.1 million due to a $297.1$369.6 million increase in operating assets and a $101.7$227.6 million increase in operating liabilities. The increase in operating assets was primarily due to increases in accounts receivable of $322.0$302.2 million. The increase in operating liabilities was primarily due to increases in incomeaccounts taxespayable and other liabilities and in deferred revenue and customer advances of $66.3$121.8 million and $52.0$50.9 million, respectively.

Operating activities during the threesix months ended MarchJune 30,29, 2025, provided cash of $161.6$343.7 million. Changes in operating assets and liabilities usedprovided cash of $7.7$61.7 million due to a $12.0$56.7 million decrease in operating assets and a $5.0 million increase in operating liabilities, partially offset by a $4.3 million increase in operating assets.liabilities. The changedecrease in operating assets was primarily due to adecreases $31.0in accounts receivable and prepayments and other assets of $49.5 million increaseand in$30.9 inventories,million, respectively, partially offset by a $13.1$23.7 million and $13.7 million decreaseincrease in accounts receivable and other assets, respectively.inventories. The changeincrease in operating liabilities was due to growthincreases in accounts payable ofand $48.0other million, a $13.0 million uptick in income taxes,liabilities and a $10.2 million increase in deferred revenue and customer advanceadvances payments,of $17.1 million and $13.1 million, respectively, partially offset by adecreases $58.0in income taxes and retirement plans of $19.6 million decrease in accrued other and a$5.6 $1.3million, million decline in retirement plan contributions.respectively.

Investing activities during the threesix months ended MarchJune 29,28, 2026, included $64.7$165.6 million used for the acquisition of businesses, $155.4 million used for the purchases of property, plant & equipmentplant, and $40.8equipment, $48.2 million used for the purchases of marketable securities, and $10.0 million used for the purchase of investment in a business, partially offset by $27.3$29.6 million provided byin proceeds from sales of marketable securities and $10.9$11.0 million provided byin proceeds from maturities of marketable securities.

Investing activities during the threesix months ended MarchJune 30,29, 2025, includedused $64.0cash of $240.2 million due to $144.4 million used for the acquisition of businesses, $114.4 million used for the purchase of property, plant & equipment and equipment, $17.0 million used for the acquisition of business, net of cash acquired, $10.8$17.2 million used for the purchase of marketable securities, and $3.0 million used for investments in businesses, partially offset by $27.4$32.6 million and $8.5 million in proceeds from the maturities of marketable securities and $5.6 million in proceeds from the salesales of marketable securities.securities, respectively.

Financing activities during the threesix months ended MarchJune 29,28, 2026, included $200.0 million in net repayments of borrowings on the revolving credit facility, $39.4$74.2 million used for paymentsthe repurchase of common stock, $41.1 million used for payment related to net settlementsettlements of employee stock compensation awards, $20.4and $40.7 million usedutilized for dividend payments, and $5.5 million used for the repurchase common stock, partially offset by $15.1 million providedfrom bythe issuance of common stock under employee stock purchase and stock optionsoption plans.

Financing activities during the threesix months ended MarchJune 30,29, 2025, includedconsumed $157.5cash of $313.6 million due to $274.9 million used for the repurchase of 1.5approximately 3.0 million shares of common stock at an average price of $107.21$93.67 per share, $19.4$38.6 million usedutilized for dividend payments and $14.7$15.0 million used for paymentspayment related to net settlements of employee stock compensation awards, partially offset by $14.8 million in proceeds from the issuance of common stock under employee stock purchase and stock option plans.

In January 2026 and JanuaryMay 2025,2026, our Board of Directors declared a quarterly cash dividend of $0.13 and $0.12 per share, respectively.share. Dividend payments for the three and six months ended MarchJune 29,28, 2026, and March 30, 2025, were $20.4$20.3 million and $19.4$40.7 million, respectively.

In January 2023, our Board of Directors approved a repurchase program for up to $2.0 billion of common stock. During the threesix months ended MarchJune 29,28, 2026, we repurchased less than 0.10.2 million shares of common stock for $5.5$74.2 million, which excludes related excise tax, at an average price of $229.00$341.89 per share. The cumulative repurchases under the 2023 repurchase program as of MarchJune 29,28, 2026, were 12.012.2 million shares of common stock for $1,302.8$1,371.5 million, which excludes related excise tax, at an average price per share of $109.62.$113.52. During the threesix months ended MarchJune 30,29, 2025, we repurchased 1.5approximately 3.0 million shares of common stock for $157.5$274.9 million, which excludes related excise tax, at an average price of $107.21$93.67 per share.

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 MarchJune 29,28, 2026, we were in compliance with all covenants under the Credit Agreement.

In addition to our 1996 Employee Stock Purchase Program as discussed in Note SM: “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”).