TEXAS INSTRUMENTS INC (TXN) Q1 2025 Earnings Summary

Executive Summary

Q1 revenue and EPS beat Street: $4.07B revenue vs $3.91B consensus* and $1.28 EPS vs $1.10 consensus*, aided by industrial recovery and mix; EPS included a $0.05 benefit not in original guidance [GetEstimates Q1 2025 Revenue/EPS Consensus Mean*]. Values retrieved from S&P Global.
Sequential acceleration broad-based: all end markets grew q/q except seasonal PE; industrial up upper single digits; auto up low single digits; enterprise mid-single digits; comms ~10% .
Q2 guide implies typical-to-upper-end seasonality: revenue $4.17–$4.53B (mid ~$4.35B) and EPS $1.21–$1.47; tax rate 12–13% (maintained) . CFO expects gross margin up q/q on slightly higher factory loadings .
Key narrative: “geopolitically dependable capacity” with dual-flow manufacturing/logistics flexibility to navigate tariffs; management sees no immediate near‑term tariff impact; customers running lean inventories, turns strong .

What Went Well and What Went Wrong

What Went Well
- Industrial recovery led the quarter; management: “industrial showing broad recovery… customer inventories are at low levels across all end markets” .
- Analog outperformed: Analog revenue +13% YoY, op profit +20% YoY; company GM ~57% and OM ~33% with mix help (industrial) .
- Capital returns and balance sheet: $1.24B dividends paid in TTM and $653M buybacks in Q1; $5B cash and short-term investments; repaid $750M debt .
What Went Wrong
- Embedded softness: revenue -1% YoY; op profit down 62% YoY; underutilization at LFAB disproportionately hurts Embedded margins .
- Gross margin still below peak levels given depreciation and earlier lower loadings; GM 57% in Q1 (down ~90 bps q/q) .
- Continued macro/tariff uncertainty; management remains cautious on 2H25/2026 visibility despite Q2 seasonality, and sees need for flexibility and inventory to navigate .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($B)	$4.151	$4.007	$4.069
Gross Profit ($B)	$2.474	$2.314	$2.313
Operating Profit ($B)	$1.554	$1.377	$1.324
Net Income ($B)	$1.362	$1.205	$1.179
Diluted EPS ($)	$1.47	$1.30	$1.28
Gross Margin (%)	60%	58%	57%
Operating Margin (%)	37%	34%	33%

Q1 2025 Actual vs S&P Global Consensus

Metric	Consensus*	Actual
Revenue ($B)	$3.911*	$4.069
Diluted EPS ($)	$1.10*	$1.28
Values retrieved from S&P Global.

Segment Performance

Segment ($MM)	Q1 2024	Q4 2024	Q1 2025
Analog Revenue	$2,836	$3,174	$3,210
Analog Operating Profit	$1,008	$1,237	$1,206
Embedded Revenue	$652	$613	$647
Embedded Operating Profit	$105	$58	$40
Other Revenue	$173	$220	$212
Other Operating Profit	$173	$82	$78

Key Operating/Financial KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Inventory ($B)	$4.296	$4.527	$4.687
Inventory Days	231	241	240
Cash & Equivalents ($B)	$2.589	$3.200	$2.763
Short-term Investments ($B)	$6.163	$4.380	$2.242
Cash From Operations (Quarter, $MM)	$1,732	$1,998	$849
Capital Expenditures (Quarter, $MM)	$1,316	$1,192	$1,123
Free Cash Flow (TTM, $MM)	$1,468	$1,498	$1,715
Dividend per Share ($)	$1.30	$1.36	$1.36
Total Debt Outstanding ($B)	$14.0	$13.7	$13.0 (approx)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q2 2025	n/a	$4.17–$4.53B	n/a
EPS (Diluted)	Q2 2025	n/a	$1.21–$1.47	n/a
Effective Tax Rate	Q2 2025 / FY25	~12% FY25 (as of Jan)	~12–13% for Q2	Maintained (range articulated)
Gross Margin	Q2 2025	n/a	Expected up q/q (qualitative)	Up (directional)
Factory Loadings	Q2 2025	n/a	Slightly higher vs Q1	Increasing
Dividend	Q2 2025	$1.36 declared Q4’24/Q1’25	$1.36 declared Apr 17 (payable May 13)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24, Q4’24)	Current Period (Q1’25)	Trend
Industrial demand & inventories	Q3: Industrial down; many sectors at/near bottom; FA still declining . Q4: Industrial down LSD; FA/energy infra not bottomed .	Industrial up upper single digits; broad recovery; customers lean inventories .	Improving
Automotive	Q3: Strong China (+20% q/q twice); RoW weaker . Q4: China up; RoW down; auto -MSD q/q .	Auto up LSD q/q; China ~20% of rev; flexible supply .	Stabilizing
Tariffs/geopolitics & supply chain	Q3: focus limited. Q4: China business details, competition normalizing .	Emphasis on “geopolitically dependable capacity”; dual flows, logistics flexibility; no near-term tariff impact seen .	Elevated focus
Pricing environment	Q3: n/a. Q4: Like-for-like price declines LSD, back to pre-COVID .	Growth driven by volume; no tariff price benefit .	Normal discipline
Capacity, depreciation, capex	Q3: Depreciation rising; SM1 building depreciation start . Q4: 2025 D&A $1.8–$2.0B; grants lower D&A trajectory; capex path intact .	GM to rise in Q2 on slightly higher loadings .	Managed ramp
Inventory/lead times & turns	Q3: Build inventory; lead times short; turns high . Q4: Inventory $4.5B/241 days; turns strong .	Inventory $4.7B/240 days; lead times short; linearity normal .	High service levels
Data center/power delivery (AI)	Q3: Server power delivery strength . Q4: Enterprise/comms recovering; data center aiding .	Enterprise +MSD; comms ~10% .	Gradual recovery

Management Commentary

“We continue to see recovery across our end markets, with industrial showing broad recovery… We believe customer inventories are at low levels across all end markets.” — CEO Haviv Ilan .
“It is a time of high uncertainty… tariffs and geopolitics are disrupting global supply chains… we will continue to rely on our three key ambitions… and provide geopolitically dependable capacity.” — CEO .
“Gross profit… $2.3B or 57% of revenue… GM decreased 90 bps q/q. Loadings were down vs Q4 but higher than originally expected… We expect factory loadings to increase slightly into second quarter and gross margin to be up versus first quarter.” — CFO Rafael Lizardi .
“Q2 outlook: revenue $4.17–$4.53B; EPS $1.21–$1.47; effective tax rate ~12–13%.” — CEO .

Q&A Highlights

Tariff pull-ins? Management doesn’t see evidence of abnormal pull-ins; Q2 guide reflects typical seasonality; no immediate near-term impact identified .
China exposure/mitigation: China ~20% of revenue; TI leverages consignment/near-customer inventory and dual internal/external flows to maintain competitiveness and flexibility .
Gross margin mechanics: Q1 GM better than expected on higher revenue and industrial mix; Q2 GM to improve modestly on slightly higher loadings .
Pricing vs volume: Q1 upside was volume-driven; no tariff-related pricing benefit .
Capital returns/liquidity: $653M buybacks in Q1; comfortable with ~$5B cash, willing to use balance sheet as needed .

Estimates Context

Q1 2025: Beat on both lines — Revenue $4.07B vs $3.91B consensus*; EPS $1.28 vs $1.10* . Values retrieved from S&P Global.
Q2 2025: Guide midpoint ~$4.35B revenue vs $4.32B consensus*; EPS midpoint ~$1.34 vs $1.37* — topline slightly above, EPS slightly below consensus midpoint, with management pointing to GM improvement on higher loadings . Values retrieved from S&P Global.
Implications: Street models likely push up revenue/Analog momentum (industrial-led) while fine-tuning EPS for mix, depreciation and Embedded underutilization; focus shifts to sustainability of industrial recovery and Q2 linearity amid tariff noise .

Key Takeaways for Investors

Industrial recovery is the swing factor: broad-based uptick and lean customer inventories drove Q1 and underpin Q2 seasonality; watch order linearity and FA/energy sub-sectors for confirmation .
Analog strength offset Embedded softness; Embedded margins pressured by LFAB underutilization near term, but mix shift to internal capacity should lift free cash flow longer term .
Guidance suggests typical-to-upper-end Q2 seasonality; CFO expects sequential GM improvement on slightly higher loadings — supportive for near-term EPS cadence .
Tariff/geopolitical risk buffered by TI’s dual-flow, global AT/fab footprint and inventory positioning; management sees no immediate Q2 impact, but remains cautious on 2H25/2026 .
Capital return remains intact with $1.36 dividend declared and opportunistic buybacks; balance sheet flexibility preserved .
Monitor China dynamics: auto remains strong; exposure ~20% of rev; competition intensifying but TI cites breadth, quality and supply reliability as competitive moats .
Estimate revision bias: revenue/Analog up modestly; EPS path tied to GM lift vs depreciation and Embedded utilization; Street likely nudges Q2 revenue up and holds EPS near guide midpoint pending visibility .

Footnote: Asterisked consensus figures are from S&P Global and may reflect point-in-time snapshots. Values retrieved from S&P Global.