Good morning. My name is Zetania and I will be your conference operator today. At this time I would like to welcome everyone to the Teradyne Q3 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Andy Blanchard, you may begin your conference.

Thank you, Zetania. Good morning, everyone and welcome to our discussion of Teradyne's most recent financial results. I'm joined this morning by our CEO, Mark Jagiela and CFO, Greg Beecher. Following our opening remarks we'll provide details of our performance for 2017's third quarter and our outlook for the fourth quarter. The press release containing our third quarter results was issued last evening and we're providing slides on the Investor page of the website that maybe helpful to you in following today's discussion. A replay of this call will be available via the same page after the call ends. The matters that we discuss today will include forward-looking statements that involve risk factors that could cause Teradyne's results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release as well as our most recent SEC filings. Additionally, those forward-looking statements are made as of today and we take no obligation to update them as a result of developments occurring after this call. During today's call, we'll make reference to non-GAAP financial measures. We've posted additional information concerning those non-GAAP financial measures, including reconciliation to the most directly comparable GAAP measure, where available on the Investor page of the website. Also between now and our next earnings call, Teradyne will be participating in investor conferences hosted by R. W. Baird, UBS, Goldman Sachs and Bank of America. Now let's get on with the rest of the agenda. First, Mark will comment on our recent results and the market conditions as we enter the fourth quarter. Greg will then offer more details on our quarterly financial results, along with our guidance for the fourth quarter. We'll then answer your questions, and this call is scheduled for one hour. Mark?

Good morning, everyone, and thanks for joining us today. In my prepared remarks, I'll cover four topics: our 2017 highlights, key trends which we expect to drive long-term growth in our test businesses, an update on Universal Robots expansion and strategy, and an early view on how we're thinking about 2018. Greg will then provide additional color, along with the financial details. As you saw in the release, our sales and earnings for the third quarter were above our guidance, and our fourth quarter outlook is substantially above our earlier view. This performance is a result of a very healthy Semiconductor Test market, especially in Memory Test. Seasonally, our third quarter Semiconductor Test orders were the highest level since Q3 of 2000. Additionally, Universal Robots continue to show strong growth, with sales up 70% from the same quarter of last year, well above our 50% baseline rate. Through nine months, we've generated over $1.65 billion in sales and non-GAAP earnings of $1.88 per share. For the full year, at the midpoint of our fourth quarter guidance, we expect sales of above $2 billion and non-GAAP earnings of around $2.22 per share. This puts us well ahead of our $2 per share EPS goal that we originally targeted for 2020. 2017 will be the second consecutive year of growth in the SOC Test market, with an estimated $2.6 billion market size, up 8% from last year. We expect Teradyne SOC test sales to grow above that rate at about 20%, and our market share will increase several points from 2016's 51%. In Memory Test, we expect the 2017 market to be about $650 million, up roughly 55% from last year. Q3 Memory Test orders of $65 million were at record levels, and our full year Memory Test sales will grow about…

Thanks, Mark, and good morning, everyone. I'll start with a quick summary of 2017 as the finish line is in sight. We'll also add some commentary on the trends in actions that are driving our growth, along with the third quarter results and fourth quarter guidance. Starting with the 2017 financial summary. Both our top line and non-GAAP EPS are projected to be up quite nicely over last year. Factoring in our fourth quarter guidance of the midpoint, sales are tracking to be up 19% over the last year while non-GAAP EPS is expected to be up 47%. For the full year, the projected non-GAAP EPS of $2.22 is three years ahead of our midterm $2 target outlined last year. This favorable polling is principally due to a stronger SemiTest market, along with ongoing share gains. We're also getting solid earnings lift and high growth from Universal Robots while managing our average share count. We'll update our model in 2018 capital return plans on our next Investor Conference Call in January after we complete our midterm planning. As Mark noted, we remain driven by rise in complexity and unit growth rather than new nodes. Semiconductors at the heart of today's connected world and ubiquitous in many products or services that we use in our daily lives. This central role fuels a constant flow of new designs and strengths and packaging advancements. These changes bring added complexity, which often leads to longer test times and initial yield degradation, both of which trigger added test capacity. The added complexity also drives the need for more robust test coverage to find the harder-to-detect faults earlier and in certain cases, to fine-tune electrical characteristics to hit optimal performance. In a more granular level, ATE customers have also have high switchover costs from one platform…

Thanks, Greg. Zetania, we'd now like to take some questions. And as a remainder please limit yourself to one question and a follow-up.

[Operator Instructions] Your first question comes from the line of Jagdish Iyer from Summit Redstone.

Yeah. Thanks for taking my question. Two questions. First, I was just wondering why is there a resurgence in Memory Test? Is there an inflection interesting that you can bring into light? And how should we think about DRAM and NAND split here? And I have a follow-up.

Yeah. So Memory Test really took off this year. It surprised us. If we go back this time last year we were estimating that the Memory Test market will be roughly $500 million. It's going to be perhaps $650-ish million. It's really driven not by a technology change per se. The bit density grow is one thing that drives Memory Test demand, the unit volume and then changes in device interface speeds, obsoletes, older equipment. So we do see obsolescence going on in Flash and DRAM test because of the higher speed interfaces. And then outside of that, most of it is just bit growth and unit growth. There's also a lot of construction going on of fabs for memory expansion in China. Those have actually not yet affected the Memory Test demand. Those are still to come online or probably be a late '18 or '19 heavy test equipment tooling cycle. So as we look out over the horizon, provided the bit demand remains robust, which looks like it will, we should have several good years for memory demand, Memory Test demand.

That's correct. And as a follow-up, will you continue to invest in UR, when can we see an inflection in the operating margins going forward? Seen some uptick in the gross margins but realistically, how should we think about the operating margin as we look at say over the next 12 to 24 months?

Jagadish, this is Greg. This year, for example we expect to be - meet our 50% operating target will be slightly above it so it's happening this year. We think long-term we'll get to 20%. And the long-term isn't 3 years away so it could be sooner than we earlier were modeling. The gross margins have improved nicely and we're going sales at a very high rate. So I'd expect the 20% operating margin will become more insight as we get further to the next years too.

Next question please.

Your next question comes from the line of Chris Shankar with Bank of America.

Yeah, hi. Thanks for taking my question. I have 2 of them. First one, Michael, Greg, this year out of $2.6 billion of SOC, Test market was $1 billion, $1.2 billion gpu $100 million and automotive $400 million. Can you give us similar compositions for what you think SOC looks like in 2018?

Yeah. For 2018, again it's a little bit of green tea leaf at this point but I do not expect that mix to change much. The automotive and mobility spaces that came on strong this year should continue to be strong next year memory again should be strong next year, so not a lot of change in the mix.

Got it, got it and then a follow-up on cobots business. Some of your competitors have higher payloads while you guys still have just 3 SKUs of URs. Do you plan on developing a higher payload for the cobot business?

No, we have no plans for higher-payload cobots. Our cobots are exactly human scale very flexible has redesigning itself. So we don't see the highest payload market that fits what we're trying to do.

Your next question comes from the line of Atif Malik of Citigroup.

Hi. Thanks for taking my question and congratulations on strong results in guide. Mark, if I look at the comment out of your peer in Japan, they're talking about the $3 billion market for next year. You guys are a little bit below that, $2.3 billion, $2.7 billion. You're generally more conservative. What takes us to the high end of the SOC test market next year? And then I have a follow-up.

Yeah, first of all, the peer advance test forecast for the market sizes exclude service. And our sizes include service. So actually, there are $3 billion excluding service and $800 million for memory and I believe $2.2 billion for SOC. In the service business, you have to add another $500 million to $600 million to that to their number. So in truth, we're pretty close to each other. And for us, this year, $2.6 billion market is a tale of a tape in a complete year. We could end up with a slightly higher market than $2.6 billion by the end of the year. But as we run into next year, the visibility we have at least through the early part of next year shows continued strong demand. We could easily be outside of north end of the range. We're talking about now, as we were last year, this time last year for the SOC market, we said to $2.1 billion to $2.5 billion, coming into $2.6 billion. So the message I really want to give is it's very difficult for us to create a precise forecast at this point in the year. We took a lot of top-down factors. Very few customers give us forecast because they're unable to forecast. So we're looking at what we see the pipeline around complexity trends for the devices that are coming out of design and into production to try to estimate next year's demand.

Got it. Thank you, very helpful. And then Greg, on the gross margins, you have made improvements this year. Can you talk a little bit more about what drove the margins higher this year? You mentioned product mix. And as Mark commented, you're looking at similar mix next year. How should we think about gross margin broadly for next year?

Yes. This was a very strong year for us gross margins. SOC was very strong. LitePoint was stronger than we expected. On the flipside, we have less Storage Test business, which pulls margins down. And when you turn that around, we expect next year more Storage Test business, so that would be one thing by itself that would move the margins a bit down. And there's probably helping on the memory business coming our way, too. And some of that might have lower margins as well. So margins are always a bit difficult to forecast. The good news is we're able to get material cost down year-after-year and make significant improvements at Universal Robots, for example. So we have a stronger starting spot, but we do see a couple of headwinds with Storage Test and for memory business. But apart from that, I thought two things, I can think of that could have a quantifiable impact.

Your next question comes from the line of Richard Eastman of Robert W. Baird.

Yes. Good morning. Just two quick questions on the SemiTest business. Mark, when you look into the fourth quarter here, we've had two years in 2015 and 2016 where we've had this pull-forward of orders into the queue given one of big mobility customer's plans for new products. As we move here into this fourth quarter, does that order trend on the mobility side for SemiTest, does it more look like 2013 and 2014 where we have normalized kind of order pattern? Or is there still this expectation that we'll see the big mobility vendors, chip vendors pull and make sure they get their test orders in the queue earlier?

Yes, that's always for the last several years been I'll be questioned. And it's really hard to call because the order window is about between these 2013, 2014,2015,2016, 2017, it's the eight-week window that can move depending on their internal planning cycles and their order release timing. So the timing isn't clear. It could be late Q4. It could be early Q1. I think the ship off schedule independent of when the orders book will be similar, meaning Q2, Q3 kind of concentration as it's been in the prior years.

Okay. And then just a question on the SemiTest. The orders here in the third quarter, I presume were kind of on the ultra-flex M side or Magnum test side given that you referenced memory. Does that impact the gross margin that's in backlog in the SemiTest side?

A little bit. Our Memory Test gross margins are a bit below the average in SemiTest. It's maybe 4 to 5 points of swing there. But given that relative size of memory at $65 million, let's say, to the total, it's not overly impactful.

And the fourth quarter gross margins, we've got it down because of Storage Test and memory. I should add that both of those businesses generally have lower OpEx. But the lower OpEx comes with lower gross margins, so they all have good PBIT.

Okay. And can I just - need to question on UR, could you just maybe speak a little bit to the 400 basis points of gross margin improvement year-over-year, is that coming from price, is it components cost down, supply chain stuff, just trying to understand maybe how do you get that kind of gross margin improvement year-over-year?

Most of it is from price. We announced a price increase early in the year, which is now we pulled through. Orders were shipping now. We've done material cost. That's a smaller part of the improvement. The good news is material cost continues next year and next year. So we do expect our supply line group from Teradyne should be able to help robots continue to lower material cost and get the best commercial terms and strategic sourcing in place. So that will continue. So we're very pleased with the performance overall with Universal Robots gross margin. In truth, it's largely software is what we're delivering here. It's very reliable, the chemical components. So we do see over time that the opportunities to keep the margins quite healthy.

Understand. Great, thank you.

Your next question comes from the line of Patrick Ho of Stifel.

This is Brian Cheng calling in for Patrick. Thanks for letting me ask a few questions. First question, just going back to the SemiTest business and the SOC business in particular. Could you just characterize the utilization environment right now at your customers from a strategic perspective now versus what you typically expect and how that again set you up maybe for your typical seasonality and the business into early next year?

Yes. This is always a strong utilization period after having installed a lot of equipment in summer period. Right now, new product, electronic products are keeping in production. So utilization is very high. It is, in compared to prior periods; it is running roughly close to where it's been prior period, a little bit stronger, Q4 to Q4 of prior period. Now that doesn't necessarily - we've not found that to be a prognosticator of what's coming next year, but that is where we are right now.

Okay, that's helpful. Switching over to the UR business. Just curious, what is your install base now for cobots? Curious how much of that still in Europe on a relative percent basis? And sort of, if you think those metrics, what from an install base perspective we are that could be exiting next year? And the second part of that is just the different tact on your margin growth in the business. Is it possible here that given the strength in the Semi Test side of the business that you're even under-investing in UR and you could even pump up investments even more and push up maybe some of the margin targets just to continue to set yourself up for really strong trajectory in that business moving forward?

Right. That's a good point, and we do expect to invest more in OpEx growth in next year. Obviously, as we continue to grow by 50%, the sales growth is higher on a bigger number. So the OpEx is going to probably grow up more than 20 million, it could increase of last two quarters. But we'll pencil that as we go towards the end of the year. So we see many opportunities to fan out Universal Robots in different regions, distributors, ecosystem partners, no short-term opportunities. In terms of where the cobots are, the mix that we described in the prepared remarks, it's been fairly consistent. Europe is about 43%, and I'm losing that a little bit. Asia is 26%. North America is 23%. This past quarter, 8% rest of the world. And all the regions are growing at a very high rate. Long term, we expect china to be very significant. But today, there's many applications in these higher-cost countries that are being deployed. And I mentioned in my remarks that in China, you have some subsidies from government entities, which could accelerate the cobots faster in china as policymakers see the advantage of bringing cobots to their workforce.

Great. Thank you.

Next, we have Toshiya Hari of Goldman Sachs.

Hey good morning and thanks for taking my questions. My first one is on Semi Test. Mark; you guys have talked about strength in the automotive and industrial end markets for I think several quarters now. I think historically, these end markets, whether it'd be digital or analog, would be on first several quarters and offer several quarters and kind of back on again. But I think at this time, it seems like the cycle is extended in a positive way. What did you see in these end markets, I guess, this Q3? And what are your expectations going forward?

You're correct. Typically, the pattern you mentioned has been true, and this one has extended longer. Third quarter was strong again. What happened in fourth quarter looks to be pretty good. I think there are several things that are new in the dynamic here. One is that the electrification of the automobile is something that, although in the past, it has been of slow bleed, it's starting to become an avalanche of electronics moving toward model years, let's say, one to three years away from now. Whether that's hybrid vehicles, EV or traditional vehicles with ADAS, all of that is fueling a lot of new designs and new complexity. I mean, the complexity of the semiconductors we're talking about next-generation in automotive are much higher than prior generations. So you have this double effect for test, where the high-test intensity environment to start with, plus a step-up in complexity and ubiquity has really changed that sort of bits and starts dynamics of things. So we're pretty positive on the next few years for automotive electronics.

Great. And then I have a follow-up on Memory Test. Can you remind us what percentage of the TAM you guys actively addressed today within Memory Test? And I know you have new initiatives in place to potentially expand your TAM, but where could a percentage number being 12 months to 24 months? Thank you.

Yeah. So the primary segment that we serve is Flash final test. And we think we have a pretty high share of that segment. It's roughly $200 million portion of that, let's say, $650 million TAM this year for Memory Test. So the concentration we have now is there. We are moving the Magnum product line now into more wafer applications, which is closer to a $350 million new market opportunity for us that we should start seeing next year as an adder.

Your next question comes from the line of Mehdi Hosseini of SIG.

Yeah. Thank you. I wanted to go back to, you briefly mentioned M&A, and given the prospect of changes in taxation, would that accelerate the M&A strategy? Or it has no impact which is pretty fair using any change in taxation to strengthen capital return program?

Mehdi, I don't see any possible tax changes would cause us doing any different in our M&A approach. So much of our M&A approach as is it like Trexler at Universal Robots growth with the differentiation, obviously, with the financial return. And if there's any sort of tax planning, that's more of a bonus thing that we think about, but we don't put that into or put that as something that should drive is on the direction. It's much more the fit in the advantage that can give us.

Okay. And then you mentioned new wafer application wafer test, is that driven by increased adoption of wafer level packaging? Or is there any other driver that you can help us understand?

Are you referring to memory wafer test?

Yes. Yes, you mentioned that you're looking at the additional wafer test yeah, I'm just trying to figure out what the driver for that.

Well, that segment of wafer test for memory is for many years been a relatively large segment. We, in introducing the Magnum, chose to focus on Flash final test because that is where we interface discontinuity first presented itself and gave us the opportunity to take market share. Now that we're established there, we've been able to take some of the architectural benefit of Magnum and see places in the wafer test, pre-existing wafer test market where we can exploit that technology. So I wouldn't say something is changing, but now we're in a position to take that platform into a pre-existing large wafer market.

Got it. And if I may just ask one clarification to your comment about the demand trend. In Q1 is when you typically have a strong backlog. This year, your backlog had a historical high of almost $870 million. Given the demand trend that you highlighted, the strength in the underlying trend for each business unit, should we assume that you can add the minimum hit similar backlog level by early next year?

No, I don't think you should assume that. It gets back to the discussion we had a bit earlier because the timing of the orders been in late Q4 versus early Q1 is one factor this year. But sometimes, the order is even shift in from Q1 to Q2. It's not a one lump order that typically drives the summer demand. There's an initial baseline order that takes place, and then follow-on incremental orders as true demand for, let's say, the summer peak starts to unfold. So those orders run from anywhere late Q4 all the way through, let's say, May, and they're spread across their periods. So it's hard to say that you snap align it backlog at the end of Q1 or at the end of Q4 and making meaningful judgments from that.

Your next question comes from C. J. Muse of Evercore.

Good morning. Thank you for taking my question. I guess first question, when I look at your sizing of the SOC market for '17, your expected revenue of Semi Test and when you talk about in memory, it looks like your market share is up about 600 bps, around 57%. So the first question is, is that the right math? And is that the kind of market share that you would expect to retain in SOC into 2018?

Well, yes, I think, first of all, the actual market share gains for 2017 will depend our shipments in Q4 and the market size. We said 2.6. It could be 2.65. It could be 2.7 when everything is done. But we will likely be up in share anywhere from 2 to 6 points, let's say, in SOC. Next year, I think what we'll end up doing is probably we'll be consolidating next year. Our plan typically is to try to pick off one to two points a year and beyond that pace. We've done much better this year. And so I think for next year, as we're looking at it now, we're going to try and maintain the share position. We're going to hit this year with and look for in the SOC side more market momentum. In the case of memory, we're going to see both market momentum and an expected share gain there to allow for growth.

Very helpful. And as a follow-up question, as you think about gross margin specifically for your SOC business, obviously, it's very early predicting what the margin size will be next year. But if I take kind of the midpoint, it's still roughly 5% year-on-year. As you think about kind of the mix shift going into this year next year, how should we think about it, again I know it's early, but how should we think about gross margins for the SOC business year-over-year?

I think the SOC margins will be generally similar. It's possible they're down half a point or so. We had a few credits that will reverse, meaning some inventory that was digitally reserve that we sold, so that comes out in profit. So we could have some charges we're anticipating, retrofit or - but we can't really forecast those, so there may be a little bit of moving there. But you just said, the product itself, ignoring the credit or the obsolete type charges, I don't think SOC would largely be similar get material cost, but there's a little bit price erosion this year. They tend to stay in some equilibrium over time. And I think the one thing that we can point out is that Storage Test and Memory, certainly Storage Test will be much bigger next year, and that will have a downward impact. Obviously, Universal Robots, which is improved their margin throughout the year, so the bunch of things in the mix as we get to think we'll have a better analytical sense as to what to guide for the year.

I guess, I was trying to get a read on how you're thinking about higher margin auto, industrial as opposed to lower margin, all things being equal, digital. Do you have an early read on that year-over-year?

Not really. Like I said, I think the mix next year isn't too different from this year in terms of those segments.

Okay. Very helpful. Thank you.

Your next question comes from the line of Edwin Mok of Needham.

Great. Thanks for taking my question. First question just I guess is on SemiTest. I think one of your customer with foundries talked about high-performance contributing potential become a big driver longer term? How do you see that driving the test market? Do you think that could become an incremental big driver for test market?

Any high complexity digital device is a driver. And so to the extent more, let's say, AI, deep learning applications require specialized, complex, processing-type digital, that will be a balloon, absolutely.

Are you seeing that right now? Or is that something callable in the long-term?

Well, I think, no, not right now. There's a lot of discussion and buzz around that type of application. But even if you look at places like GPUs, which are those kinds of processors, it somewhere in the $100 million to $200 million test market per year. So it's relatively small, anywhere from 5% to 10% of the market.

Okay, great. That's helpful. And then jumping on the UR, I think you guys talked about investing OpEx and has grown OpEx over the last two years as you comp your bigger distribution, right? I'm just curious as you look into 2018, do you see needs to further invest in R&D, especially software, things like that will most likely to be the next step for you guys to increase capability UR robot? Is there a way we should expect increased spending in 2018? Is there a way to kind of think about how you spend on your OpEx or how you could increase your OpEx going into 2018 OpEx between R&D SG&A?

I would expect in 2018, we're going to increase both the distribution and marketing. Similar to what we've done prior years to have more higher dollars because, again, last year 2020, our plan to grow 50% or greater from 2017 is considerably higher sales growth in dollars, so we're going to need more OpEx to field all of those distribution initiatives and programs. In terms of R&D, specifically, we are going to continue to up R&D. We see a number of opportunities to make the cobot extend into other spaces that it's not in today. And this goes back a little bit to the question earlier when we go to a different cobot size. Frankly, we see so many opportunities with the three cobots. The challenge for us is getting as many people that are talented onboard working in the right direction. That's the bigger challenge versus any shortage of attractive opportunities.

Your next question comes from the line of Weston Twigg of KeyBanc Capital Markets.

Hi. Thanks for taking my question. First, addressing universal a bit, on the SOC market outlook for next year, you have to down just a little bit midpoint. I'm wondering if you could be more specific on what you had a little bit concerned, which segment had you a little bit concerned about the market maybe being a bit lower next year?

I don't think it's any particular segment. It's just maybe a lot of experience over many years in the industry is that the visibility at this point being low, I would be reticent to be too aggressive. I think come January, we'll be able to have a better view of that. But maybe we'll stock it up to some stage conservatism at this point.

Okay. That makes sense. The other question I had was on the Universal Robots side. I'm wondering if he could update us on what you think your current market share is? And also, just why the Q3 revenue related to grow much sequentially. Was there anything that prevented is a bit faster growth quarterly or sequential quarterly growth?

So on the second point, the sequential quarterly compares were really tough in UR's case. Q3 tends to be a slow quarter because of vacations in Europe. Q4 tends to be a big quarter in the past because of people trying to meet year-end goals. I think I mentioned that this year's Q4 year-over-year compare will probably be closer to the 50% growth number, meaning the year for us we'll finish at about 60, mid-60s. That's because we changed our incentive programs to try to smooth out the end-of-year rush to buy that we've seen in prior years. So sequential ordering in UR is not something that's very meaningful, I would say. Year-over-year comparisons are better.

Okay. And market share?

So market share is a tough one because there's no reliable third-party reports on this, and there's a growing population of cobots. If you go out and Google cobots, every quarter, you'll see the a few more and a few more out there. None of them are competitive with us in terms of the situations that we're settling into. So it's still a pretty meaningful environment, but we said in the past roughly 60% share-based on reports that at this point are over a year old on market size estimates. I don't believe we lost any share. But I think it's going to be hard for us to be too precise on that until we get some reliable third-party reporting.

All right. Thank you.

Zetania, we have time for just one more question please.

Your final question comes from the line of Farhan Ahmad of Credit Suisse.

Hi. Thanks for taking my question. Can you just talk about how you are forecasting the SOC test market for next year? If I think about the SME revenue growth, it's been stronger this year since 2010 and almost tracking about 10%, excluding memory. Can you just give us a sense of how you're going about SOC Test market? And what kind of SemiTest growth are you assuming for next year?

So the things that drive our market, certainly unit growth is important for us, that generally correlates to SemiTest revenue growth, not always, but unit growth is important. Complexity growth is important. So at this stage, what we're looking at is, hard to forecast next year's unit growth, so we're looking at complexity growth. We're looking at devices that our major customers that are in preproduction that will grow, that will ramp next year trying to get a sense of do we see the same trends in terms of complexity, which means test intensity and test time. What do we see happening with parallel test? Next year's amount of parallel test kind of get sets clearly now through Q1 because the programs are in development. So we look at trends around complexity, parallel test, test time and tend think that we don't have a good read on right now is what is unit growth kind of look like.

I'll just add, inside the company, there isn't enormous amount of time trying to literally answer that those questions because they're really not answerable. There's so many uncertainties. And we're much more focused on are we executing our market share goals, our gross margin goals and so forth. And every time we speak to you guys, maybe to talk about the market. But it's not something that we put enormous energy and because it's something that it's not very notable.

Got it. But can you just give us a sense of what kind of unit growth are you assuming in the forecast, the acceleration this year or similar, at the high end maybe and maybe the deceleration at the low end?

I think that the high end, it will be similar unit growth to this year. The low end will obviously be a significant fall back. But again, as Greg said, there's not a lot of analytics that go into the ranges I'm giving you.

Got it. And then in terms of your margins, this year has been pretty phenomenal. The operating margin have been above 25%. Can you just maybe talk about at a high level, do you think these margins are sustainable and we can grow from here? As your revenue grows, should we expect somewhat of a moderation next year?

I think so much if it is tied to this prior conversation, where exactly is the market size next year for the point in time, but we feel good about the long-term trends. But calling any 12-month window is more difficult for us with precision. But that was what really drives our profitability because there are such good drop-through and higher sales in Semi Test. We don't need to add manufacturing people. We don't need to add engineers or sales people. So that's the biggest swing factor in our P&L is the market size. The things that we can control, obviously getting more market share, we've been doing that, improving robots we've been doing that and then improving our other system like LitePoint businesses we are doing that as well. But the wildcard in all of this is what is the Semi Test market, that's the biggest single thing to our profitability.

Thank you. That's all I had.

Okay, operator, we're going to close this up. Thanks, everybody, for joining us and closing the queue, I'll get back to you immediately after this call ends.

This concludes today's conference call. You may now disconnect.