Sanjay Mehta
Vice President, Chief Financial Officer at Teradyne
Thank you, Greg. Good morning, everyone. Today, I'll cover the financial summary of Q1, provide our Q2 outlook and full-year planning assumptions.
Now to Q1. First quarter sales were $600 million, which was $10 million above the high-end of our guidance with non-GAAP EPS of $0.51, which was above the high-end of our guidance of $0.38. Non-GAAP gross margins were 56.6%, above our guidance due to favorable product mix, higher volumes and improved operational efficiencies. Non-GAAP operating expenses were $251 million, about flat year-over-year and up slightly compared to our fourth quarter. Non-GAAP operating profit was approximately 15%.
Turning to our revenue breakdown in Q1. Semi test revenue for the quarter was $412 million, with SOC revenue contributing $302 million and memory $110 million. In memory, our sales were strongest in DRAM as AI driven demand remain strong. Test for HBM is being prioritized by our customers and we are seeing customers transition capital spending for testers away from flash to DRAM, in part due to HBM and the return of capacity adds and other DRAM test. Historically, we've seen the split between flash and DRAM markets be more balanced.
In System Test group, Q1 revenue was $75 million, with $23 million in storage test on low SLT and HDD demand. Recall SLT has high exposure to the smartphone market and even as HDD end markets begin to recover, tester capacity utilization rates remain low.
In Wireless Test, revenue was $25 million in Q1, reflecting continued weakness in PC and mobile markets. In Q2, we expect wireless test to improve due to gaming end market and are now beginning to see the ramp of WiFi 7.
Now to Robotics. Revenue was $88 million as planned with UR contributing $68 million and MiR $20 million.
Shifting to some cash metrics. At a company level, our free cash flow was an outflow of $37 million in the quarter. We typically consume cash in the first quarter as we pay taxes and variable employee compensation. We repurchased $22 million of shares in the quarter and paid $18 million in dividends. We ended the quarter with $871 million in cash and marketable securities.
Some other financial information in Q1. We had one 10% customer in the quarter. The tax rate, excluding discrete items for the fourth quarter was 15% on a GAAP basis and 15.5% on a non-GAAP basis. In Q1, we incurred an FX loss on the fair value of the currency exchange hedge related to the expected investment in Technoprobe. This drove the larger than typical variance between our GAAP and non-GAAP earnings in the quarter.
Turning to our current operational environment. In semi test, supply lead times continue to decline as supply versus demand is more in line. Our lead times continue to hold at one to two quarters. However, in some cases, we have been able to service demand inside these lead times. As a result, our customers are moving back towards historical buying patterns with shorter lead times, thus yielding lower second half 2024 visibility consistent with the pre-pandemic environment. Robotics remains a quick turns business and our execution continues to deliver to these market conditions.
Now turning to our outlook for Q2. Q2 sales are expected to be between $665 million and $725 million, with non-GAAP EPS in a range of $0.64 to $0.84 on 162 million diluted shares. The second quarter guidance excludes the amortization of acquired intangibles and the anticipated gain on the expected sale of DIS, which is $0.29 in our GAAP forecast.
Some color around the forecasted increase to Q2 revenue versus our January view. The increase is driven by our semi test business where ADAS, compute networking and HBM demand has strengthened. As noted, this AI strength has continued into the second quarter and some orders initially scheduled for shipment in the third quarter have moved into the second quarter, improving our near term outlook. Second quarter gross margins are estimated at 57% to 58%. Opex is expected to run at 36% to 39% of second quarter sales, up modestly from Q1. Non-GAAP operating profit rate at the midpoint of our second quarter guidance is 20%.
A few points to assist you in modeling the rest of the year. I'll start with a few more details about the market estimates Greg provided. While our view of the SOC TAM is unchanged in total, under the cover, there are some puts and takes. Compute is up approximately $100 million, while mobile, auto and industrial are down a little over $100 million in aggregate. In anticipation of questions, let me provide the midpoint of our estimates by segment. Compute, $1.5 billion; Mobile, $0.9 billion; Auto MCU, $0.5 billion; Industrial, $0.3 billion and Service $0.7 billion. Summing up, to $3.9 billion for SOC. You'll notice the aggregate decline change has been allocated to the Industrial segment. Our memory estimate has increased $200 million, with the midpoint of $1.25 billion. Please note, our final estimate for the 2023 SOC TAM is $4 billion, up $100 million in the Compute segment from our January view.
Back to revenue. We expect Q3 sales to be similar to Q2 and Q4 to improve from there. Note that our flattish sequential growth in Q3 does not assume any revenue from DIS. Excluding the impact of the anticipated divestiture, we would expect revenue to grow sequentially in Q3. Our expectation for revenue distribution for the full-year is now less back-half weighted than our view in January. We currently expect around 47% of the company revenue to be in the first half and 53% in the second half. We expect full-year revenue to grow in low single-digit range compared to 2023.
Now to gross margins. Gross margins are expected to continue to improve as we progress through the year and should be at our target gross margin model for the fourth quarter. Full-year gross margins will likely be in the 58% to 59% range, unchanged from our January outlook.
Regarding opex for the full-year, we expect full-year 2024 opex to grow 5% to 7%, consistent with prior guide as we continue to make engineering and go-to-market investments. Our GAAP and non-GAAP tax rate, excluding discrete items are forecasted to be 15% to 15.5%, respectively, in 2024.
A quick update on our previously announced strategic partnership with Technoprobe. As a reminder, the agreement has several key components. First, Technoprobe will purchase Teradyne's DIS business, which provides advanced interfaces that connect our testers to customers' chips for test. Second, Teradyne will make an equity investment in Technoprobe acquiring 10% of the company. Third, Teradyne and Technoprobe will continue -- will work together on a series of projects to expand the performance of semiconductor device interfaces to enable customers to realize the full performance of our test systems. We continue to expect the transactions to close in the second quarter.
DIS revenue contribution for the first-quarter was approximately $21 million. Post closing, our cash position will decline as the transaction is expected to consume an estimated $440 million of net cash. We will continue to limit our share buybacks in 2024 to an amount necessary to offset dilution from equity compensation and our employee share purchase program in order to build cash back to a minimum goal of $800 million.
Summing up, we delivered sales and earnings above the high end of our guidance range as memory and networking exceeded our plan in semi test, mainly driven by AI. The mobile, industrial and legacy auto markets remain soft. Our robotics team delivered to plan for the third consecutive quarter as we continue to execute our new product development and go-to-market strategies. Overall, visibility beyond the second quarter is limited given the increased level of turns business in semi test. Our first quarter performance and the improvement in our second-quarter outlook elevates our confidence for the year. Mid-term fundamentals remained intact, yielding continued optimism beyond 2024.
With that, I'll turn the call back to Traci. Traci?
