STMicroelectronics Q3 2025 Financial Results October 23, 2025 Forward looking information Some of the statements contained in this release that are not historical facts are statements of future expectations and other forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 or Section 21E of the Securities Exchange Act of 1934, each as amended) that are based on management's current views and assumptions, and are conditioned upon and also involve known and unknown risks and ...

Core Insights - Texas Instruments (TXN) reported revenue of $4.74 billion for the quarter ended September 2025, reflecting a year-over-year increase of 14.2% [1] - Earnings per share (EPS) for the quarter was $1.48, slightly up from $1.47 in the same quarter last year [1] - The reported revenue exceeded the Zacks Consensus Estimate of $4.65 billion by 2.06%, while the EPS also surpassed the consensus estimate of $1.47 by 0.68% [1] Revenue Breakdown - Revenue from Other segments was $304 million, below the average estimate of $319.55 million, with a year-over-year increase of 10.6% [4] - Revenue from Embedded Processing was $709 million, slightly below the estimated $717.85 million, representing an 8.6% increase year-over-year [4] - Revenue from Analog reached $3.73 billion, exceeding the average estimate of $3.6 billion, with a year-over-year change of 15.7% [4] Operating Profit Analysis - Operating profit for Embedded Processing was reported at $108 million, below the average estimate of $131.79 million [4] - Operating profit for Analog was $1.49 billion, slightly above the average estimate of $1.46 billion [4] Stock Performance - Texas Instruments' stock has remained unchanged over the past month, while the Zacks S&P 500 composite increased by 1.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $4.7 billion, reflecting a 7% sequential increase and a 14% year-over-year increase [3] - Gross profit was $2.7 billion, representing 57% of revenue, with a sequential decrease of 50 basis points in gross profit margin [5] - Operating profit was $1.7 billion, or 35% of revenue, up 7% from the previous year [5] - Net income for the quarter was $1.4 billion, translating to $1.48 per share, which included a $0.10 reduction due to restructuring charges [5][6] - Cash flow from operations was $2.2 billion for the quarter and $6.9 billion on a trailing 12-month basis [6] Business Line Data and Key Metrics Changes - Analog revenue grew 16% year-over-year, while Embedded Processing revenue increased by 9% [3] - The industrial market saw a 25% year-over-year increase and low single-digit growth sequentially [4] - The automotive market increased upper single digits year-over-year and around 10% sequentially [4] - Personal electronics grew low single digits year-over-year and upper single digits sequentially [4] - Enterprise systems grew about 35% year-over-year and 20% sequentially [4] - Communications equipment grew approximately 45% year-over-year and about 10% sequentially [4] Market Data and Key Metrics Changes - Customer inventories remain low, and inventory depletion appears to be behind the company [3] - The overall semiconductor market recovery is ongoing but at a slower pace than previous upturns due to macroeconomic dynamics [3] Company Strategy and Development Direction - The company plans to focus on long-term value creation through disciplined capital allocation and strengthening competitive advantages [9] - The company is winding down its 150mm fabs, with expected cost reductions through the first half of 2026 [15] - The company aims to continue investing in manufacturing, technology, and a broad product portfolio to enhance its market position [9][35] Management's Comments on Operating Environment and Future Outlook - Management noted a moderate recovery in the semiconductor market, with hesitancy among customers regarding new investments due to uncertainty in regulations [44] - The automotive sector is recovering well, while the data center market is experiencing strong growth [46] - The company expects Q4 revenue to be in the range of $4.22 to $4.58 billion, with EPS guidance of $1.13 to $1.39 [8] Other Important Information - The company returned $6.6 billion to shareholders over the past 12 months, including $1.2 billion in dividends and $119 million in stock repurchases [7] - The company has a strong balance sheet with $5.2 billion in cash and short-term investments and total debt of $14 billion [8] Q&A Session Summary Question: Can you talk about the linearity of bookings through the quarter? - Management indicated that Q3 was more stable compared to Q2, with no significant changes in bookings throughout the quarter [11] Question: Can you discuss the restructuring and its impact on expenses? - The restructuring is related to winding down 150mm fabs and consolidating R&D sites, with expected cost reductions in the future [15][16] Question: What are the expectations for gross margins in Q4? - Management indicated that gross margins are expected to decline due to lower revenue and increased depreciation [25][31] Question: How is the company addressing inventory levels? - The company is pleased with its current inventory position and aims to maintain it while ensuring high customer service levels [13][50] Question: What is the outlook for the data center market? - The data center market is growing rapidly, with no signs of slowdown, and the company plans to provide more details in future calls [54][55]

Core Insights - STMicroelectronics reported a significant decline in financial performance for Q1 2025, with net revenues of $2.52 billion, a decrease of 27.3% year-over-year and 24.2% quarter-over-quarter [3][5][6] - The gross margin fell to 33.4%, down 830 basis points from the previous year, primarily due to product mix and higher unused capacity charges [3][8] - Operating income plummeted to $3 million, a 99.5% decrease compared to the same quarter last year, resulting in an operating margin of only 0.1% [3][9] Financial Performance - **Net Revenues**: $2,517 million in Q1 2025, down from $3,321 million in Q4 2024 and $3,465 million in Q1 2024 [3][7] - **Gross Profit**: $841 million, a decrease of 41.7% year-over-year [8] - **Operating Income**: $3 million, down from $551 million in Q1 2024 [9] - **Net Income**: $56 million, an 89.1% decline from $513 million in the previous year [3][9] - **Diluted Earnings Per Share**: $0.06, compared to $0.54 in Q1 2024 [3][9] Segment Performance - **Analog, Power & Discrete, MEMS and Sensors (APMS)**: Net revenues of $1,466 million, down 28.0% year-over-year [7] - **Embedded Processing (EMP)**: Net revenues of $742 million, a decrease of 29.1% year-over-year [7] - **RF & Optical Communications (RF&OC)**: Net revenues of $306 million, down 19.2% year-over-year [7] Business Outlook - The company anticipates Q2 2025 net revenues of $2.71 billion, representing a sequential increase of 7.7% but a year-over-year decrease of 16.2% [5][21] - Gross margin is expected to remain around 33.4%, impacted by unused capacity charges [6][21] - The company is on track with a program to reshape its manufacturing footprint and aims for annual cost savings in the high triple-digit million-dollar range by the end of 2027 [5][17] Cash Flow and Financial Position - **Net Cash from Operating Activities**: $574 million, down 51.5% from $859 million in Q1 2024 [13] - **Free Cash Flow**: Positive at $30 million, compared to negative $134 million in the previous year [14] - **Net Capex**: $530 million in Q1 2025, down from $967 million in Q1 2024 [14] - **Inventory**: Increased to $3.01 billion, with days sales of inventory at 167 days [15] Corporate Developments - The company has made adjustments to its segment reporting effective January 1, 2025, to optimize resources and implement synergies [4][43] - STMicroelectronics is focused on innovation and cost management to enhance competitiveness in a challenging market environment [6][17]