Texas Instruments TXN reported better-than-expected results for fourth-quarter 2024. While the results revealed a decline in both revenues and net income on a year-over-year basis, the company surpassed the Zacks Consensus Estimate as well as management’s guidance.

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Texas Instruments’ fourth-quarter 2024 earnings of $1.30 per share surpassed the Zacks Consensus Estimate by 9.2% and came ahead of management’s guidance of $1.07-$1.29 per share. However, quarterly earnings declined 12.8% year over year, reflecting challenges associated with the rising expenses.

TXN’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 8.9%.

Texas Instruments reported revenues of $4.01 billion, which beat the Zacks Consensus Estimate by 3.5%. The figure surpassed management’s guidance of $3.70-$4 billion. However, the top line reduced marginally by 1.7% year over year and 3% sequentially.

Despite reporting stronger-than-expected fourth-quarter results, shares of Texas Instruments lost 4.8% during Thursday’s extended trading session as the earnings guidance for the current quarter fell short of the Zacks Consensus Estimate. TXN shares have lost 6.1% in the past three months compared with the Zacks Semiconductor - General industry’s growth of 3.3%.

Texas Instruments Incorporated Price, Consensus and EPS Surprise

Texas Instruments Incorporated price-consensus-eps-surprise-chart | Texas Instruments Incorporated Quote

Texas Instruments’ Q4 Top-Line Details

Texas Instruments’ revenues were primarily propelled by the strength in its industrial and automotive markets, which together accounted for a significant 70% of fourth-quarter revenues. The automotive market grew due to strength in the Chinese market, but relying solely on this may not ensure sustained growth for the industry. Additionally, recovery in communication equipment, personal electronics and enterprise systems is slow, showing only minor sequential improvements rather than a significant long-term rebound.

Segment-wise, Texas Instruments operates under three business divisions: Analog, Embedded Processing and Other. 

Analog: Revenues of $3.17 billion were generated from the segment (79.2% of total revenues), up 2% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.05 billion.

Embedded Processing: Revenues amounted to $613 million (15.3% of total revenues), down 18% year over year. The figure surpassed the Zacks Consensus Estimate of $576 million.

Other: Revenues totaled $220 million (5.5% of total revenues), up 7% from the prior-year quarter’s level. The figure lagged the consensus mark of $222.7 million.

Texas Instrument’s Operating Details

Texas Instruments’ gross profit declined 4.8% year over year to $2.31 billion. Gross margin of 58% contracted 200 basis points (bps) from the year-ago quarter’s 60%.

Selling, general and administrative (SG&A) expenses increased 1.8% year over year to $446 million. As a percentage of revenues, SG&A expenses expanded 40 bps year over year to 11.1%.

Research and development (R&D) expenses grew 6.7% to $491 million. As a percentage of revenues, it increased 100 basis points to 12.3%.

Operating expenses grew 4% year over year to $937 million in the fourth quarter. As a percentage of revenues, it expanded 140 basis points to 23.4%.

Operating profit declined 10% year over year to $1.38 billion due to lower gross profit and higher operating expenses. The operating margin was 34.4%, which contracted 320 bps from the prior-year quarter’s number.

TXN’s 2024 Performance in Brief

Texas Instruments’ 2024 revenues amounted to $15.64 billion, suggesting a decline of 12.01% from the prior year’s reported levels. However, the top line surpassed the Zacks Consensus Estimate of $15.49 billion.

Gross margin of 58.1% contracted 476 bps from the previous year's reported levels. The operating margin was 34.9%, which contracted 695 bps from the prior-year quarter’s number.

Texas Instruments reported 2024 earnings of $5.20 per share, indicating a fall of 36% from the previous year's reported figure. However, the bottom line came above the consensus mark of $5.08.

TXN’s Balance Sheet & Cash Flow

As of Dec. 31, 2024, the cash and short-term investment balance was $7.6 billion, down from $8.75 billion as of Sept. 30, 2024.

At the end of the reported quarter, TXN’s long-term debt of $12.85 billion remained almost the same compared to the previous quarter’s $12.84. The current portion of long-term debt was $750 million, down from $1.05 billion in the previous quarter.

Texas Instruments generated an operating cash flow of approximately $2 billion in the fourth quarter and $6.32 billion in full-year 2025.

During the fourth quarter, it repurchased stocks worth $537 million and paid $1.24 billion in dividends. In full-year 2025, it returned $5.72 billion to shareholders through repurchasing stocks worth $4.8 billion and paying $929 million in dividends.

TXN Initiates Guidance for Q1 2025

For the first quarter of 2025, TXN expects revenues between $3.74 billion and $4.06 billion. The Zacks Consensus Estimate for first-quarter 2025 revenues is currently pegged at $3.86 billion, indicating an increase of 5.5% from the year-ago quarter.

The company expects earnings per share between 94 cents and $1.16. The consensus mark for the same is pegged at $1.16 per share, indicating a fall of 3.3% from the year-ago quarter.

The company expects the effective tax rate to be approximately 12%.

Zacks Rank & Stocks to Consider

Currently, TXN carries a Zacks Rank #4 (Sell).

Fortinet FTNT, Planet Labs PBC PL and DXC Technology DXC are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. FTNT and PL sport a Zacks Rank #1 (Strong Buy) each, while DXC carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

FTNT shares have gained 21.3% for the past year. The Zacks Consensus Estimate for FTNT’s full-year 2025 earnings is pegged at $2.39 per share, up by a couple of pennies over the past 60 days, suggesting an increase of 6.5% from the year-ago quarter’s reported figure.

PL shares have surged 106% in the past year. The Zacks Consensus Estimate for PL’s full-year fiscal 2025 loss has contracted to 15 cents from the year-ago quarter’s loss of 50 cents.

DXC shares have gained 6.4% over the past year. The Zacks Consensus Estimate for DXC’s full-year 2025 earnings is pegged at $3.18 per share, up by a couple of pennies over the past 60 days, implying a rise of 1.6% from the year-ago quarter’s levels.

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