TI-Texas Instruments Stock Rises on Q1 Earnings and Revenue Beat

Core Insights - Texas Instruments (TXN) reported better-than-expected results for Q1 2025, with revenues and net income increasing year-over-year, surpassing both the Zacks Consensus Estimate and management's guidance [1][2]. Financial Performance - Earnings per share for Q1 2025 were $1.28, exceeding the Zacks Consensus Estimate by 20.8% and management's guidance of$ 0.94 to $1.16, marking a 6.7% increase year-over-year [1][2]. - Revenues reached$ 4.07 billion, beating the Zacks Consensus Estimate by 4.1% and management's guidance of $3.74-$ 4.06 billion, reflecting an 11.1% year-over-year growth [2]. Stock Market Reaction - Following the positive results, TXN stock rose by 3.5% in pre-market trading, although it had previously declined by 13% over the past month due to broader tech stock sell-offs [3]. Revenue Breakdown - The industrial and automotive markets drove revenue growth, contributing to 70% of total revenues [4]. - Segment performance included: - Analog: $3.21 billion (78.9% of total revenues), up 13% year-over-year, exceeding the Zacks Consensus Estimate of$ 3.04 billion [5]. - Embedded Processing: $647 million (15.9% of total revenues), down 0.8% year-over-year, missing the Zacks Consensus Estimate of$ 655.3 million [5]. - Other: $212 million (5.2% of total revenues), up 23% year-over-year, surpassing the consensus mark of$ 205.5 million [6]. Operating Metrics - Gross profit decreased by 4.8% year-over-year to $2.31 billion, with a gross margin of 56.8%, down 40 basis points from the previous year [7]. - Selling, general and administrative (SG&A) expenses rose by 3.7% year-over-year to$ 472 million, but as a percentage of revenues, they decreased by 80 basis points to 11.6% [7]. - Research and development (R&D) expenses increased by 8.2% to $517 million, with a percentage of revenues decreasing by 40 basis points to 12.7% [8]. - Operating profit grew by 3% year-over-year to$ 1.32 billion, with an operating margin of 32.5%, down 260 basis points from the prior year [8]. Balance Sheet and Cash Flow - As of March 31, 2025, cash and short-term investments totaled $5 billion, down from$ 7.6 billion at the end of 2024 [9]. - Long-term debt remained stable at $12.85 billion [9]. - Operating cash flow for Q1 was approximately$ 849 million [9]. Shareholder Returns - During the first quarter, TXN repurchased stocks worth $653 million and paid$ 1.24 billion in dividends [10]. Future Guidance - For Q2 2025, TXN expects revenues between $4.17 billion and$ 4.53 billion, with the Zacks Consensus Estimate at $4.13 billion, indicating an 8% increase year-over-year [11]. - Expected earnings per share for Q2 are projected between$ 1.21 and $1.47, with the consensus at$ 1.23, suggesting a 0.8% rise from the previous year [11]. - The effective tax rate is anticipated to be approximately 12% [12].