Image source: The Motley Fool. DATETuesday, July 22, 2025 at 4:30 p.
ETCALL PARTICIPANTSChief Executive Officer — Haviv IlanChief Financial Officer — Rafael LizardiHead of Investor Relations — Mike BeckmanNeed a quote from one of our analysts, in this volatile climate.
Moreover, In contrast, [ tected] RISKSManagement noted that the industrial segment "ran a little hot" in Q2 2025, and cited increased caution for future periods, suggesting possible normalization in subsequent quarters.
Furthermore, China's sequential (up 19%) and year-over-year (up 32%) revenue spike in Q2 2025 raised management's concern over possible short-term "pull-ins," complicating efforts to distinguish structural from temporary demand.
On the other hand, Management repeatedly identified tariff and geopolitical risks as disruptive for supply chains, highlighting the unpredictability in customer ordering behavior.
Automotive revenue decreased by low single digits sequentially in Q2 2025, and management described recovery as "shallow," emphasizing continued lack of broad-based rebound in this segment.
TAKEAWAYSRevenue: $4. 4 billion in GAAP revenue for Q2 2025, up 9% sequentially and 16% year over year, with all primary segments posting growth.
Analog Segment: Revenue increased 18% year over year in Q2 2025, leading overall growth.
Embedded cessing Segment: Revenue grew 10% year over year in the second quarter of 2025, continuing its upward trajectory.
Industrial Market: Revenue increased by upper teens percent year over year and mid-teens sequentially in Q2 2025, with growth reported across all subsegments (an important development).
Personal Electronics: Revenue expanded apximately 25% year over year and by upper single digits sequentially for personal electronics in Q2 2025.
Additionally, Enterprise Systems: Revenue grew 40% year over year and apximately 10% sequentially in Q2 2025.
Communications Equipment: Revenue rose over 50% year over year and increased 10% sequentially in the second quarter of 2025, in light of current trends.
Automotive Market: Revenue grew by mid-single digits year over year but declined by low single digits sequentially in the second quarter of 2025 (this bears monitoring). Gross fit: $2.
6 billion, representing 58% of revenue, with gross margin increasing 110 basis points sequentially in Q2 2025.
Operating Expenses: $1 billion, up 5% year over year in Q2 2025; trailing twelve-month operating expenses $3. Meanwhile, 9 billion, or 23% of revenue (an important development).
Operating fit: $1, in light of current trends. 6 billion, or 35% of revenue, up 25% year over year in Q2 2025, in this volatile climate. At the same time, Net Income: $1, in today's financial world.
Additionally, 3 billion, equal to $1. 41 per in Q2 2025 (GAAP); EPS included a $0. On the other hand, 02 benefit not in prior guidance for Q2 2025.
Cash Flow from Operations: Cash flow from operations was $1 (noteworthy indeed). 9 billion in the second quarter of 2025 and $6 (remarkable data).
4 billion on a trailing twelve-month basis ending Q2 2025, in this volatile climate. Capital Expenditures: Capital expenditures were $1.
On the other hand, 3 billion for Q2 2025 and $4, in light of current trends. 9 billion on a trailing twelve-month basis ending Q2 2025. Free Cash Flow: Free cash flow was $1.
Furthermore, 8 billion on a trailing twelve-month basis ending Q2 2025, reflecting a capital-intensive investment phase. Capital Return: $1, in today's market environment.
2 billion paid in dividends and $302 million in repurchases in Q2 2025; $6. 7 billion returned to holders trailing twelve months. However, Balance Sheet Strength: $5.
4 billion in cash and short-term investments at the end of Q2 2025, with $14. On the other hand, 15 billion of debt at a 4% weighted average coupon, and $1. 2 billion of new debt issued as of Q2 2025.
Additionally, Inventory: Inventory at the end of Q2 2025 was $4. 8 billion, up $125 million sequentially; inventory days 231, down nine days from prior quarter.
Q3 2025 Guidance: Revenue is jected between $4. 45 billion and $4. Meanwhile, 8 billion for Q3 2025; EPS is expected to be between $1 (remarkable data) (an important development).
60 for Q3 2025, excluding impacts from recent US tax law changes and assuming a 12%-13% tax rate.
China Revenue: Sequential growth of 19% and year-over-year growth of 32% in China for Q2 2025; primary drivers from industrial with all end- except automotive growing, in this volatile climate.
However, CapEx Outlook: Company maintains 2025 capital expenditure guidance at $5 billion; 2026 capital expenditures are jected to be in the range of $2 billion to $5 billion, pending further developments.
Depreciation Guidance: 2025 depreciation is expected to be between $1. Furthermore, 8 billion and $2, considering recent developments. 2 billion (GAAP); 2026 depreciation is jected to be between $2.
Meanwhile, 3 billion and $2. On the other hand, 7 billion, ly at the lower end.
In contrast, Tax Legislation: New US federal tax law not reflected in current guidance; the company expects a higher GAAP tax rate for 2025, ed by significantly lower cash tax rates from 2026 onward.
Capital Return Policy: Management stated intention to continue returning all free cash flow to holders via dividends and buybacks.
SUMMARYTexas Instruments Incorporated (TXN 0 (remarkable data), given the current landscape.
16%) reported double-digit top-line and bottom-line year-over-year growth for fiscal Q2 2025, with each core end market except automotive contributing to sequential revenue expansion.
Management highlighted that customer inventories remain low, the industrial segment witnessed unusually high growth both in China and globally in Q2 2025, and geopolitical uncertainties—particularly concerning tariffs—directly influenced customer ordering patterns (something worth watching).
While current results signal cyclical recovery across most, management cautioned that some demand in Q2 2025 may reflect temporary inventory loading tied to tariff risks, leading to a conservative tone for near-term guidance (something worth watching).
Management declined to forecast Q4, citing seasonal historical trends of sequential slowing and the need for more real-time data, in today's market environment.
CFO Rafael Lizardi clarified that gross margin guidance for Q3 is expected to be flat sequentially despite higher expected depreciation, and operating expenses are expected to remain stable (fascinating analysis).
What the data shows is company reiterated that capital allocation priorities are unchanged, but heightened capital expenditures are expected to persist through at least 2026.
Moreover, CEO Haviv Ilan said, "We're and will remain flexible to navigate, especially in the immediate term.
" referring to the company's manufacturing and supply chain strategy amid global uncertainty.
Net free cash flow and tax outflows are expected to benefit from recent US legislation, though impacts are not yet included in official guidance as of Q2 2025 (something worth watching).
Management noted delayed recovery in automotive, emphasizing real-time, consignment-driven inventory management and current lack of restocking from OEMs and Tier 1s, considering recent developments.
Management expects further gains from ramping new nologies, especially in Sherman, Texas, beginning in 2026.
INDUSTRY GLOSSARYTurns : Semiconductor industry orders dered in a short window, indicating real-time demand rather than advance booking.
Fab Loading: The degree to which manufacturing plant (fabrication facility) capacity is utilized, impacting inventory and cost structure.
ITC (Investment Tax Credit): US federal tax credit incentivizing capital investment; recent legislation increased the credit percentage for eligible jects.
FDII (Foreign-Derived Intangible Income): US tax vision allowing lower rates on income derived from serving foreign, relevant post-2025 tax changes (this bears monitoring).
Full Conference Call TranscriptHaviv Ilan: Thanks, Mike. Furthermore, Let me start with a quick overview of the second quarter. Revenue came in as expected at $4.
Additionally, 4 billion, an increase of 9% sequentially and an increase of 16% year over year. Additionally, Both analog and embedded grew year on year and sequentially.
Analog revenue grew 18% year over year, and embedded cessing grew 10%. Our other segment grew 14% from the year-ago quarter.
Let me vide some s on the current environment and what we saw in the second quarter. We continue to see two distinct dynamics at play.
Moreover, First, tariffs and geo are disrupting and reshaping global supply chains.
As we work closely with our customers, we are leveraging our global manufacturing capabilities to support their needs. We have flexibility and are prepared to navigate as things evolve.
Second, the semiconductor cycle is playing out. Cyclical recovery is continuing. While customer inventories remain at low levels (which is quite significant).
In times this, it is important to have capacity and inventory, and we are well-positioned. Now I'll some additional insights into second quarter revenue by end market.
First, the industrial market increased upper teens year on year and mid-teens sequentially, with recovery across all sectors.
The automotive market increased mid-single digits year on year and decreased low single digits sequentially, in today's financial world.
Nevertheless, Personal electronics grew around 25% year on year and grew upper single digits sequentially. Enterprise systems grew 40% year on year and grew 10% sequentially.
And lastly, communications equipment grew more than 50% year on year and was up 10% sequentially. With that, let me turn it over to Rafael to review fitability and capital management.
However, Rafael Lizardi: Thanks, Haviv, and good afternoon, everyone. Furthermore, As Haviv mentioned, second quarter revenue was $4. However, Gross fit in the quarter was $2.
6 billion or 58% of revenue. Sequentially, gross fit margin increased 110 basis points (noteworthy indeed). Operating expenses in the quarter were $1 billion, up 5% from a year ago and as expected.
On a trailing twelve-month basis, operating expenses were $3. However, 9 billion, or 23% of revenue. Operating fit was $1.
6 billion in the quarter, or 35% of revenue, and was up 25% from the year-ago quarter. Net income in the quarter was $1. 3 billion or $1 (something worth watching). Earnings per included a $0.
02 benefit not in our original guidance (fascinating analysis), in today's financial world. Let me now on our capital management results starting with our cash generation (an important development).
Cash flow from operations was $1, amid market uncertainty. 9 billion in the quarter and $6. 4 billion on a trailing twelve-month basis. Additionally, Capital expenditures were $1.
3 billion in the quarter and $4. 9 billion over the last twelve months. Moreover, Free cash flow on a trailing twelve-month basis was $1. In the quarter, we paid $1.
2 billion in dividends, and repurchased $302 million of our stock. Nevertheless, In total, we returned $6. 7 billion to our owners in the past twelve months.
Our balance sheet remains strong with $5, in light of current trends. Nevertheless, 4 billion of cash and short-term investments at the end of the second quarter. In the quarter, we issued $1.
2 billion of debt (remarkable data). Total debt outstanding is $14, given the current landscape. 15 billion with a weighted average coupon of 4% (noteworthy indeed), in today's financial world.
On the other hand, Inventory at the end of the quarter was $4. 8 billion, up $125 million from the prior quarter and days were 231, down nine days sequentially.
Moreover, Turning to our outlook for the third quarter, we expect Texas Instruments' revenue in the range of $4 (quite telling). Furthermore, 45 billion to $4.
8 billion and earnings per to be in the range of $1. Our earnings per outlook does not include changes related to recently enacted US tax legislation and assumes an effective tax rate of 12 to 13%.
On the other hand, In closing, as we transition into 2025 and going into 2026, we're prepared for a range of scenarios.
Moreover, We're and will remain flexible to navigate, especially in the immediate term. We will stay focused in the areas that add value in the long term.
We continue to invest in our competitive advantages, which are manufacturing and nology, a broad duct portfolio, reach of our channels, and diverse and long-d positions, in light of current trends.
We will continue to strengthen these advantages through disciplined capital allocation, and by focusing on the best opportunities.
Which we believe will enable us to continue to der free cash flow per growth over the long term (fascinating analysis). With that, let me turn it back to Mike, in today's financial world.
Additionally, Mike Beckman: Thanks, Rafael. Operator, you can now open the line for questions.
On the other hand, In order to vide as many of you as possible an opportunity to ask your questions please limit yourself to a single question.
After our response, we'll vide you an opportunity for an additional -up. Moreover, Operator: Thank you. We will now be conducting a question and answer session.
If you would to ask a question, please press 1 on your telephone keypad. Nevertheless, A confirmation tone will indicate your line is in the question queue.
You may press 2 to remove yourself from the queue, in light of current trends.
Participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys, in this volatile climate. One moment, while we pull for questions.
Our first question comes from the line of Stacy Rasgon with Bernstein Re, given current economic conditions. Please ceed with your question (this bears monitoring), in today's market environment.
Stacy Rasgon: Hi, guys. Thanks for taking my questions, in today's market environment.
Conversely, First, if I think how your tone sounded last quarter and frankly, even how you sounded kind of mid-quarter, you seemed really confident that the cyclical recovery was here, and we were kind of off to the races (which is quite significant).
Moreover, And now I'm hearing you kinda saying you're staying flexible, to go a range of scenarios. And, even in the quarter, auto was down sequentially. On the other hand, I guess, what's going on.
, how is your I guess, outlook and feeling where things are. Furthermore, How has that changed, over the last three months, given the current landscape.
Because it you sound I guess, based on tone and everything else, it doesn't sound maybe quite exuberant as maybe you sounded a few months ago. , what's going on, amid market uncertainty.
Haviv Ilan: Hey, Stacy. Furthermore, I'll I'll take this one. So first, as I said in my prepared remarks, we are seeing two dynamics at play (something worth watching), considering recent developments.
Moreover, And one of them is the cyclical recovery I think we talked through it in the second quarter call May back in April, in today's financial world.
And the discussion was all, you know, is joining the pack (which is quite significant). We're now one more quarter in.
However, And this is the third quarter that we see a signal of industrial recovering. Nevertheless, It's actually accelerated. So I can say we support five.
However, We now have it started with PE, then enterprise and comp, in light of current trends. Joined, and industrial is already in, in this volatile climate.
We have four out of five recovering in a in a nice pace. And this is part of the reason we've added ary on year over year performance to just show the dynamics over there.
In contrast, In terms of automotive, to your question, look, automotive, let's let's just remember that it's it's kind of a year delayed versus industrial.
Nevertheless, Industrial fixed for us at least in the third quarter of, of twenty two, automotive peaked one year later in the third quarter of twenty three.
At the same time, So one could expect automotive to be joining last The automotive recovery has been shallow, meaning we are running, you know, single digits versus the peak (quite telling).
Are running year over year. We're actually having some growth in second quarter. Additionally, From a near over year perspective, but at a very low level.
Moreover, So I will say that automotive is not recovered yet. On the other hand, But because of, you know, content growth, I think the cycle here is gonna be less nounced and more shallow.
Furthermore, Furthermore, The second point related to getting ready. On the other hand, We had some taste of it in the beginning of the second quarter, and we talked through it a lot during the call.
But I think all the situation of tariffs and geo is rough supply chains, I think that's that's not over. True that we pause right now on the semiconductor tariffs, both in The US and in China.
But, you know, we have to be prepared for what the future may hold. So we wanna make sure, and this is also the message to our customers, that we'll remain flexible.
On the other hand, And we'll know how to support our customers whatever the environment is moving forward. Have a -up, Stacy. Stacy Rasgon: I do. Maybe just a -up (this bears monitoring).
On the other hand, Actually, I think I wanna ask you gross m, given the current landscape.