Texas Instruments' third quarter was met with a negative market reaction, as investors weighed the mixed signals from end-market performance and margin pressures. Management attributed revenue growth to ongoing recovery across most segments, especially strong gains in industrial, automotive, and data center-related enterprise systems. CEO Haviv Ilan noted, “Analog revenue grew 16% year over year, and embedded processing grew 9%,” while also acknowledging that the recovery is “continuing, though at a slower pace than prior upturns.” Cost controls, plant restructuring, and efforts to optimize inventory also shaped profitability this quarter.
Is now the time to buy TXN? Find out in our full research report (it’s free for active Edge members).
Texas Instruments (TXN) Q3 CY2025 Highlights:
- Revenue: $4.74 billion vs analyst estimates of $4.65 billion (14.2% year-on-year growth, 1.9% beat)
- EPS (GAAP): $1.48 vs analyst estimates of $1.49 (in line)
- Adjusted EBITDA: $2.16 billion vs analyst estimates of $2.27 billion (45.6% margin, 4.7% miss)
- Revenue Guidance for Q4 CY2025 is $4.4 billion at the midpoint, below analyst estimates of $4.52 billion
- EPS (GAAP) guidance for Q4 CY2025 is $1.26 at the midpoint, missing analyst estimates by 10%
- Operating Margin: 35.1%, down from 37.4% in the same quarter last year
- Inventory Days Outstanding: 218, down from 234 in the previous quarter
- Market Capitalization: $153.9 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Texas Instruments’s Q3 Earnings Call
- Timothy Arcuri (UBS) asked about the linearity of bookings and the path to improving cash margins given current inventory levels. CFO Rafael R. Lizardi explained that inventory is at a healthy level, so factory loadings are being reduced to maintain balance, impacting near-term margins but supporting long-term efficiency.
- Chris Danely (Citibank) inquired about restructuring catalysts and benefits to expenses. CEO Haviv Ilan detailed that plant closures and R&D consolidation are expected to gradually reduce costs, with OpEx remaining flat in the near term before longer-term savings materialize.
- Joe Moore (Morgan Stanley) questioned pricing trends and lead times. Ilan confirmed only low single-digit price declines are expected for the year and reported no significant changes in lead times, which remain competitive due to improved inventory management.
- Stacy Rasgon (Bernstein Research) pressed on gross margin expectations and seasonal trends. Lizardi indicated that increased depreciation and moderated loadings will pressure margins in the fourth quarter, characterizing the outlook as roughly seasonal in line with historical patterns.
- Ross Seymore (Deutsche Bank) asked about the impact of depreciation and OpEx strategy into next year. Lizardi reiterated OpEx will remain flat near term, excluding restructuring, and Ilan highlighted targeted R&D investments in industrial, automotive, and data center to support future growth.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace of demand recovery in industrial and automotive markets, (2) the continued expansion and reporting of the data center business as a distinct growth driver, and (3) the realization of cost savings from operational restructuring and plant closures. Effective inventory management and progress on new product launches in targeted end markets will also be important indicators of Texas Instruments’ ability to deliver on its long-term strategy.
Texas Instruments currently trades at $169.25, down from $181.06 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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