TI(TXN) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $4.4 billion, a decrease of 7% sequentially but an increase of 10% year-over-year [4] - Gross profit was $2.5 billion, representing 56% of revenue, with a sequential decrease of 150 basis points [9] - Operating profit was $1.5 billion, or 33% of revenue, up 7% from the previous year [9] - Net income for the quarter was $1.2 billion, translating to $1.27 per share, which included a $0.06 reduction due to non-cash impairment of goodwill [9] Business Line Data and Key Metrics Changes - Analog revenue grew 14% year-over-year, while Embedded Processing grew 8% [4] - The Other segment declined compared to the previous year [4] - Industrial market revenue was $5.8 billion, up 12% year-over-year, accounting for 33% of total revenue [6] - Automotive revenue was also $5.8 billion, up 6% year-over-year, representing 33% of revenue [7] - Data center revenue reached $1.5 billion, up 64% year-over-year, making up 9% of total revenue [7] - Personal electronics revenue was $3.7 billion, up 7% year-over-year, accounting for 21% of revenue [7] - Communications equipment revenue was approximately $500 million, up about 20% year-over-year, representing 3% of total revenue [7] Market Data and Key Metrics Changes - The industrial market saw high teens growth year-over-year but was down mid-single digits sequentially [5] - The automotive market increased upper single digits year-over-year but was down low single digits sequentially [6] - Data center revenue grew around 70% year-over-year and mid-single digits sequentially [6] - Personal electronics declined upper teens year-over-year and mid-teens sequentially [6] - Communications equipment declined low single digits year-over-year and mid-teens sequentially [6] Company Strategy and Development Direction - The company reorganized its end markets to include data center, reflecting growth opportunities in analog and embedded products [4] - Strategic emphasis is placed on industrial, automotive, and data center markets, which now account for about 75% of total revenue [7] - The company aims to maximize long-term free cash flow per share growth, which is seen as the primary driver of long-term value [11] Management's Comments on Operating Environment and Future Outlook - Management noted a continuing recovery in the semiconductor market and expressed confidence in meeting customer demand with existing inventory and capacity [4] - The outlook for Q1 2026 anticipates revenue in the range of $4.32-$4.68 billion and earnings per share between $1.22-$1.48 [12] - Management highlighted the importance of disciplined capital allocation and investment in competitive advantages [12] Other Important Information - Cash flow from operations was $2.3 billion in Q4, with capital expenditures of $925 million [10] - The company returned $6.5 billion to shareholders over the past 12 months, including a 4% increase in dividends [10] - The company has a strong balance sheet with $4.9 billion in cash and short-term investments [10] Q&A Session Summary Question: What is driving the above-seasonal Q1 guidance? - Management indicated that the guidance is based on stronger bookings and improving orders, particularly in the industrial and data center markets, rather than pricing [15][16][41] Question: How are inventory levels expected to change? - Management expressed satisfaction with current inventory levels, indicating they are well-positioned to meet customer demand and support revenue growth [23][24] Question: What is the outlook for the automotive market? - The automotive market is expected to continue its secular growth, with management noting a slight decline in Q4 but overall strength in the second half of the year [56][60] Question: How is the data center business expected to grow? - Management expects continued growth in the data center segment, driven by ongoing CapEx investments and a strong demand for analog and embedded parts [72][75] Question: What are the expectations regarding pricing? - Management clarified that they do not anticipate significant pricing changes in Q1, with expectations of low single-digit declines in pricing for 2026 [62][63]