Financial Instruments

6 Months Ended

Jun. 29, 2025

Fair Value Disclosures [Abstract]

Financial Instruments

I. FINANCIAL INSTRUMENTS

Cash Equivalents

Teradyne considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash equivalents.

Marketable Securities

Teradyne’s equity and debt mutual funds are classified as Level 1 and available-for-sale debt securities are classified as Level 2. The vast majority of Level 2 securities are fixed income securities priced by second party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available, use other observable inputs like market transactions involving identical or comparable securities.

During the three and six months ended June 29, 2025, and June 30, 2024, there were no transfers in or out of Level 1, Level 2, or Level 3 financial instruments.

Realized gains recorded in the three and six months ended June 29, 2025, were $0.4 million and $1.2 million, respectively. Realized gains recorded in the three and six months ended June 30, 2024, were $0.3 million and $1.3 million, respectively. Realized losses recorded in the three and six months ended June 29, 2025, were $0.1 million and $1.4 million, respectively. Realized losses recorded in the three and six months ended June 30, 2024, were $0.1 million and $0.3 million, respectively. Realized gains and losses are included in 'Other (income) expense, net' in the condensed consolidated statement of operations.

Unrealized gains on equity securities recorded in the three and six months ended June 29, 2025, were $4.1 million and $4.4 million, respectively. Unrealized gains on equity securities recorded in the three and six months ended June 30, 2024, were $1.0 million and $3.6 million, respectively. Unrealized losses on equity securities recorded in six months ended June 29, 2025, were $3.1 million. Unrealized losses on equity securities in the three and six months ended June 30, 2024, were $0.4 million and $0.4 million, respectively. Unrealized gains and losses on equity securities are included in 'Other (income) expense, net' in the condensed consolidated statement of operations.

Unrealized gains and losses on available-for-sale debt securities are included in 'Accumulated other comprehensive income (loss)' in the condensed consolidated balance sheet.

The cost of securities sold is based on average cost.

The following tables set forth by fair value hierarchy Teradyne’s financial assets and liabilities that were measured at fair value on a recurring basis as of June 29, 2025, and December 31, 2024.

	June 29, 2025
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in thousands)
Assets
Cash	$	146,193	$	—	$	—	$	146,193
Cash equivalents		189,910		3,149		—		193,059
Available-for-sale securities:
U.S. Treasury securities		—		41,910		—		41,910
Corporate debt securities		—		35,059		—		35,059
Debt mutual funds		12,350		—		—		12,350
U.S. government agency securities		—		4,040		—		4,040
Certificates of deposit and time deposits		—		1,694		—		1,694
Non-U.S. government securities		—		962		—		962
Equity securities:
Mutual funds		53,307		—		—		53,307
	$	401,760	$	86,814	$	—	$	488,574
Derivative assets		—		1,334		—		1,334
Total	$	401,760	$	88,148	$	—	$	489,908
Liabilities
Derivative liabilities		—		1,373		—	$	1,373
Total	$	—	$	1,373	$	—	$	1,373
Reported as follows:
	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	336,103	$	3,149	$	—	$	339,252
Marketable securities		—		28,638		—		28,638
Long-term marketable securities		65,657		55,027		—		120,684
Prepayments		—		1,334		—		1,334
Total	$	401,760	$	88,148	$	—	$	489,908
Liabilities
Other current liabilities	$	—	$	1,373	$	—	$	1,373
Total	$	—	$	1,373	$	—	$	1,373

	December 31, 2024
	Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in thousands)
Assets
Cash	$	261,176	$	—	$	—	$	261,176
Cash equivalents		283,037		9,141		—		292,178
Available-for-sale securities:
Corporate debt securities		—		35,696		—		35,696
U.S. Treasury securities		—		44,942		—		44,942
Certificates of deposit and time deposits		—		21,689		—		21,689
Debt mutual funds		8,951		—		—		8,951
U.S. government agency securities		—		3,970		—		3,970
Non-U.S. government securities		—		773		—		773
Equity securities:
Mutual Funds		54,412		—		—		54,412
	$	607,576	$	116,211	$	—	$	723,787
Derivative assets		—		1,665		—		1,665
Total	$	607,576	$	117,876	$	—	$	725,452
Liabilities
Derivative liabilities		—		1,324		—		1,324
Total	$	—	$	1,324	$	—	$	1,324
Reported as follows:
	(Level 1)		(Level 2)		(Level 3)		Total
	(in thousands)
Assets
Cash and cash equivalents	$	544,213	$	9,141	$	—	$	553,354
Marketable securities		—		46,312		—		46,312
Long-term marketable securities		63,363		60,758		—		124,121
Prepayments		—		1,665		—		1,665
Total	$	607,576	$	117,876	$	—	$	725,452
Liabilities
Other current liabilities	$	—	$	1,324	$	—	$	1,324
Total	$	—	$	1,324	$	—	$	1,324

The carrying amounts and fair values of Teradyne’s financial instruments at June 29, 2025, and December 31, 2024, were as follows:

	June 29, 2025				December 31, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(in thousands)
Assets
Cash and cash equivalents	$	339,252	$	339,252	$	553,354	$	553,354
Marketable securities		149,322		149,322		170,433		170,433
Derivative assets		1,334		1,334		1,665		1,665
Liabilities
Derivative liabilities		1,373		1,373		1,324		1,324

The fair values of accounts receivable, net and accounts payable approximate the carrying value due to the short-term nature of these instruments.

The following table summarizes the composition of available-for-sale marketable securities at June 29, 2025:

	June 29, 2025
	Available-for-Sale
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	46,656	$	37	$	(4,783	)	$	41,910	$	32,277
Corporate debt securities		39,262		186		(4,389	)		35,059		24,249
Debt mutual funds		12,564		—		(214	)		12,350		2,715
U.S. government agency securities		4,041		—		(1	)		4,040		2,318
Certificates of deposit and time deposits		1,694		—		—			1,694		—
Non-U.S. government securities		962		—		—			962		—
	$	105,179	$	223	$	(9,387	)	$	96,015	$	61,559

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	28,684	$	6	$	(52	)	$	28,638	$	19,524
Long-term marketable securities		76,495		217		(9,335	)		67,377		42,035
	$	105,179	$	223	$	(9,387	)	$	96,015	$	61,559

The following table summarizes the composition of available-for-sale marketable securities at December 31, 2024:

	December 31, 2024
	Available-for-Sale
	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
U.S. Treasury securities	$	49,879	$	14	$	(4,951	)	$	44,942	$	30,530
Corporate debt securities		40,395		79		(4,778	)		35,696		27,824
Certificates of deposit and time deposits		21,689		—		—			21,689		—
Debt mutual funds		9,299		—		(348	)		8,951		3,238
U.S. government agency securities		3,966		5		(1	)		3,970		1,946
Non-U.S. government securities		773		—		—			773		—
	$	126,001	$	98	$	(10,078	)	$	116,021	$	63,538

Reported as follows:

	Cost		Unrealized Gain		Unrealized (Loss)			Fair Market Value		Fair Market Value of Investments with Unrealized Losses
	(in thousands)
Marketable securities	$	46,349	$	16	$	(53	)	$	46,312	$	10,454
Long-term marketable securities		79,652		82		(10,025	)		69,709		53,084
	$	126,001	$	98	$	(10,078	)	$	116,021	$	63,538

As of June 29, 2025, the fair market value of investments with unrealized losses less than one year and greater than one year totaled $22.1 million and $39.4 million, respectively. As of December 31, 2024, the fair market value of investments with unrealized losses for less than one year and greater than one year totaled $22.6 million and $40.9 million, respectively.

Teradyne reviews its investments to identify and evaluate investments that have an indication of possible impairment. Based on this review, Teradyne determined that the unrealized losses related to these investments at June 29, 2025, and December 31, 2024, were not other than temporary.

The contractual maturities of investments in available-for-sale securities held at June 29, 2025, were as follows:

	June 29, 2025
	Cost		Fair Market Value
	(in thousands)
Due within one year	$	28,684	$	28,638
Due after 1 year through 5 years		20,756		20,560
Due after 5 years through 10 years		7,716		7,721
Due after 10 years		35,459		26,746
Total	$	92,615	$	83,665

Contractual maturities of investments in available-for-sale securities held at June 29, 2025, exclude debt mutual funds with a fair market value of $12.4 million as they do not have a contractual maturity date.

Derivatives

Teradyne conducts business in various foreign countries, with certain transactions denominated in local currencies. As a result, Teradyne is exposed to risks relating to changes in foreign currency exchange rates. Teradyne’s foreign currency risk management objective is to minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, and changes in its cash inflows attributable to the forecasted cash flows from certain foreign currency denominated revenues.

To minimize the effect of exchange rate fluctuations associated with the remeasurement of monetary assets and liabilities denominated in foreign currencies, Teradyne enters into foreign currency forward contracts. The change in fair value of these derivatives is recorded directly in earnings and is used to offset the change in value of monetary assets and liabilities denominated in foreign currencies.

Teradyne also enters into foreign currency forward and option contracts designated as cash flow hedges to hedge the risk of changes in its cash inflows attributable to changes in foreign currency exchange rates. The cash flow hedges have maturities of less than six months and mature in the period of revenue recognition for certain products and services in backlog and forecasted to be recognized in a future period. Teradyne evaluates cash flow hedges for effectiveness at inception based on the critical terms match method. The hedges are not expected to incur any ineffectiveness however a quarterly qualitative assessment of effectiveness is done to determine if the critical terms match method remains appropriate to use. The change in fair value of the contracts is recorded in accumulated other comprehensive income (loss) and reclassified to earnings at maturity date.

Teradyne does not use derivative financial instruments for speculative purposes.

At June 29, 2025, and December 31, 2024, Teradyne had the following contracts to buy and sell non-U.S. currencies for U.S. dollars and other non-U.S. currencies with the following notional amounts:

	Gross Notional Value
	June 29, 2025		December 31, 2024
	(in millions)
Currency Hedged (Buy/Sell)
U.S. dollar/Singapore dollar		35.6		—
U.S. dollar/Taiwan dollar		17.1		14.5
U.S. dollar/Japanese yen		13.6		12.6
U.S. dollar/Korean won		10.8		4.2
U.S. dollar/British pound sterling		1.7		1.2
U.S. dollar/Danish krone		0.2		—
Euro/U.S. dollar		21.6		22.3
Danish krone/Chinese yuan		7.4		10.5
Philippine peso/U.S. dollar		1.9		9.4
Chinese yuan/U.S. dollar		1.3		1.6
Danish krone/U.S. dollar		0.8		16.9
Singapore dollar/U.S. dollar		—		28.9
Total	$	112.0	$	122.1

The fair value of the outstanding contracts was a net loss of $0.1 million and a net loss of $0.6 million at June 29, 2025, and December 31, 2024, respectively.

Unrealized gains and losses on foreign currency forward contracts and foreign currency remeasurement gains and losses on monetary assets and liabilities are included in 'Other (income) expense, net' in the condensed consolidated statement of operations.

At June 29, 2025, and December 31, 2024, Teradyne had the following cash flow hedge contracts to buy and sell non-U.S. currencies for U.S. dollars with the following notional amounts:

	Gross Notional Value
	June 29, 2025		December 31, 2024
	(in millions)
Currency Hedged (Buy/Sell)
U.S. dollar/Japanese yen	$	—	$	15.6
Total	$	—	$	15.6

The fair value of the outstanding cash flow hedge contracts was a gain of $0.9 million at December 31, 2024.

Unrealized gains and losses on foreign currency cash flow hedge contracts are included in accumulated other comprehensive income (loss). At maturity, the gains or losses associated with cash flow hedge contracts are recorded to revenue.

On November 7, 2023, in connection with Teradyne's agreement to acquire a 10% investment in Technoprobe, Teradyne purchased a call option to buy 481.0 million Euros. The expiration date of the option was April 26, 2024. On April 12, 2024, Teradyne entered into a forward to buy 481.0 million Euros which expired on May 23, 2024. For the three and six months ended June 30, 2024, a realized gain of $4.2 million and a realized loss of $9.8 million was recorded in 'Other (income) expense, net' in the condensed consolidated statement of operations, respectively.

The following table summarizes the fair value of derivative instruments as of June 29, 2025, and December 31, 2024:

	Balance Sheet Location	June 29, 2025			December 31, 2024
		(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts	Other current assets		1,334			725
Foreign exchange forward contracts	Other current liabilities		(1,373	)		(1,324	)
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Other current assets		—			940
Total derivatives		$	(39	)	$	341

The following table summarizes the effect of derivative instruments recognized in the statement of operations for the three and six months ended June 29, 2025, and June 30, 2024:

		For the Three Months  Ended					For the Six Months  Ended
	Location of (Gains) Losses Recognized in Statement of Operations	June 29, 2025		June 30, 2024			June 29, 2025			June 30, 2024
		(in thousands)					(in thousands)
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts (1)	Other (income) expense, net	$	122	$	(2,444	)	$	(45	)	$	(4,144	)
Foreign exchange option contracts	Other (income) expense, net		—		(4,154	)		—			9,764
Derivatives designated as hedging instruments:
Foreign exchange forward and option contracts	Revenue		298		—			(449	)		(2,280	)
Total Derivatives		$	420	$	(6,598	)	$	(494	)	$	3,340

(1)The table does not reflect the corresponding gains and losses from the remeasurement of the monetary assets and liabilities denominated in foreign currencies. For the three and six months ended June 29, 2025, net losses from remeasurement of monetary assets and liabilities denominated in foreign currencies were $1.2 million and $3.4 million, respectively. For the three and six months ended June 30, 2024, net losses from remeasurement of monetary assets and liabilities denominated in foreign currencies were $3.3 million and $6.0 million, respectively.

See Note J: “Debt” regarding derivatives related to the convertible senior notes.