Texas Instruments Incorporated Q4 FY2025 earnings call

Quarter Overview

• Revenue came in at $4.4 billion, a decrease of 7% sequentially and an increase of 10% from the same quarter a year ago. Analog revenue grew 14% year over year, embedded processing grew 8%, and the other segment declined from the year-ago quarter.

End Markets Update

• Reorganized end markets to include data center. Industrial market was up high teens year on year and down mid-single digits sequentially. Automotive market increased upper single digits year on year and was down low single digits sequentially. Data center grew around 70% year on year and mid-single digits sequentially. Personal electronics declined upper teens year on year and mid-teens sequentially. Communications equipment declined low single digits year on year and mid-teens sequentially.

2025 Annual Summary

• Industrial, automotive, and data center combined made up about 75% of revenue in 2025, up from 43% in 2013, with good opportunities in all markets and strategic emphasis on industrial, automotive, and data center.

Profitability

• Fourth quarter gross profit was $2.5 billion (56% of revenue), operating expenses were $967 million, operating profit was $1.5 billion (33% of revenue), and net income was $1.2 billion ($1.27 per share). Earnings per share included a 6¢ reduction due to non-cash impairment of goodwill and other tax-related items.

Capital Management

• Cash flow from operations was $2.3 billion in the quarter, capital expenditures were $925 million, $1.3 billion was paid in dividends, $403 million of stock was repurchased, and the dividend per share was increased by 4% to $1.42 per share, marking 22 consecutive years of dividend increases. Returned $6.5 billion in the past twelve months to owners.

Analog revenue grew 14% year over year. Embedded processing grew 8% year over year. The other segment declined from the year-ago quarter. For 2025, industrial revenue was $5.8 billion, up 12% year on year and 33% of revenue; automotive was $5.8 billion, up 6% year on year and 33% of revenue; data center was $1.5 billion, up 64% year on year and 9% of revenue; personal electronics was $3.7 billion, up 7% year on year and 21% of revenue; communications equipment was about $500 million, up about 20% year on year and 3% of revenue. Industrial, automotive, and data center combined made up about 75% of Texas Instruments' revenue in 2025, up from about 43% in 2013.

First Quarter 2026

• Expected revenue in the range of $4.32 billion to $4.68 billion and earnings per share to be in the range of $1.22 to $1.48. Continue to expect the effective tax rate in 2026 to be about 13 to 14%.

Q: First quarter guidance is significantly stronger than seasonal. Any unique end market or geography driving this?

A: Haviv Ilan mentions industrial recovery (grew close to 20% year over year) and data center growth (growing for seven consecutive quarters), with improving orders and backlog build. Mike Beckman adds on revenue linearity, backlog build, and higher levels of turns business.

Q: Gross margin implications given revenue beat in fourth quarter?

A: Rafael R. Lizardi notes fourth quarter came in a little better than expected, with revenue, end market mix, loadings, and OPEX contributing, and discusses first quarter OPEX and loadings dependent on demand.

Q: Inventory levels and management?

A: Haviv Ilan states inventory position is good, supports customer demand, and Rafael R. Lizardi adds no further action needed on inventory at present.

Q: Personal electronics and communications end markets outlook?

A: Haviv Ilan and Mike Beckman talk about personal electronics weak Q4 (home theater, entertainment, TV declined most, mobile phones best), and communications varied within the segment.

Q: Industrial orders pickup and outlook?

A: Haviv Ilan discusses industrial recovery, new highs expected, and order pickup, with Mike Beckman supporting the points made.

Q: Fab build-out and CapEx?

A: Haviv Ilan talks about Sherman fab ahead of schedule and high yield, with Rafael R. Lizardi commenting on CapEx range, ITC benefits, and depreciation expectations.

Q: Seasonality and data center impact on first quarter?

A: Haviv Ilan and Mike Beckman say Q1 above seasonal due to industrial recovery and data center growth being a bigger part of the business.

Q: Memory pricing impact on businesses?

A: Haviv Ilan and Mike Beckman state no significant implications seen yet from memory pricing on their businesses.

Q: CapEx and cycle outlook?

A: Haviv Ilan and Rafael R. Lizardi talk about CapEx range, maintenance CapEx, and ITC benefits, with CapEx expected between $2 and $3 billion in 2026.

Q: Auto market update?

A: Haviv Ilan discusses auto market low single digits Q4, secular growth, and typical Q1 seasonality in China due to New Year.

Q: Pricing and competitors?

A: Haviv Ilan states pricing expected to have low single digit decline, no step function planned in Q1.

Q: Data center exposure and growth?

A: Haviv Ilan talks about data center growth, its impact on revenue, and Texas Instruments' position in analog and embedded technology within data center.

Q: Cycle and market share?

A: Haviv Ilan discusses slow recovery, capacity and inventory supporting market share, with end equipments being redesigned with more semis continuing.

Q: Book to bill and backlog?

A: Mike Beckman talks about backlog build being reflected in guidance, with industrial recovery, data center growth, and improving orders factoring in.

Q: Loadings and demand?

A: Rafael R. Lizardi states no significant loading changes, with adjustments made as needed based on demand.

Q: Geographic revenue and seasonality?

A: Haviv Ilan and Mike Beckman talk about typical Q1 seasonality in China for automotive and even geographic backlog and revenue.