01—Abstract
Summary
Summary of the 10-K filed February 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Texas Instruments Inc. (TXN) reported revenue of $17.52 billiona for the fiscal year ended December 30, 2023.
While overall revenue saw a decrease of 12.5%b compared to the prior year, driven primarily by a decline in the Analog segment, the company strategically emphasizes growth in the industrial and automotive markets, which are expected to offer the best long-term opportunities. The company's core strategy remains focused on maximizing long-term free cash flow per share growth through a robust business model centered on analog and embedded processing products, disciplined capital allocation, and operational efficiency.
Despite a challenging revenue environment, TXN continues to invest heavily in research and development and capital expenditures, particularly in expanding its 300mm manufacturing capacity, positioning itself for future demand and strengthening its competitive advantages. The company remains committed to returning capital to shareholders through dividends and share repurchases.
02—Key points
Key Highlights
- Revenue for fiscal year 2023 was $17.52 billion, a decrease of 12.5% compared to 2022, largely due to lower Analog segment revenue.
- The company's strategy prioritizes long-term free cash flow per share growth, focusing on its Analog and Embedded Processing segments, particularly in the industrial and automotive markets.
- Significant investments were made in capital expenditures ($5.07 billion) to expand 300mm manufacturing capacity, supporting future growth over the next 10-15 years.
- Free cash flow in 2023 was $1.35 billion, representing 7.7% of revenue, a decrease from 29.6% in 2022, influenced by increased inventory build-up and capital expenditures.
- The company returned $4.85 billion to shareholders in 2023 through dividends and share repurchases.
- Inventory levels increased significantly, with days of inventory rising to 219 from 157, as the company strategically built inventory ahead of anticipated demand.
- Operating expenses (R&D and SG&A) increased to $3.69 billion due to higher employee-related costs associated with strengthening competitive advantages.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Texas Instruments kept $0.37.
- Revenue$17.52B100.0%
- Cost of revenue−$6.50B37.1%
- Gross profit$11.02B62.9%
- Operating costs−$3.69B21.1%
- Operating income$7.33B41.8%
- Interest, other & tax−$821.0M4.7%
- Net income$6.51B37.2%
Where FY2023 revenue went
$17.52B- Net income: $6.51B, 37% of revenue
- Cost of revenue: $6.50B, 37% of revenue
- R&D: $1.86B, 11% of revenue
- SG&A: $1.82B, 10% of revenue
- Interest, other & tax: $821.0M, 4.7% of revenue
Kept 37% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 2, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $17.52B$20.03B | −12.5% |
| Cost of Revenue | $6.50B$6.26B | +3.9% |
| Gross Profit | $11.02B$13.77B | −20.0% |
| R&D Expenses | $1.86B$1.67B | +11.6% |
| SG&A Expenses | $1.82B$1.70B | +7.1% |
| Operating Income | $7.33B$10.14B | −27.7% |
| Net Income | $6.51B$8.75B | −25.6% |
| EPS (Basic) | $7.13$9.51 | −25.0% |
| EPS (Diluted) | $7.07$9.41 | −24.9% |
| Shares Outstanding (Basic) | 908.00M916.00M | −0.9% |
| Shares Outstanding (Diluted) | 916.00M926.00M | −1.1% |
05—Questions
Frequently Asked Questions
What is Texas Instruments' primary strategic focus for long-term growth?
Texas Instruments' primary strategic focus is to maximize long-term free cash flow per share growth. This is achieved through a business model centered on analog and embedded processing products, leveraging four competitive advantages: manufacturing/technology, product portfolio, market reach, and product/market diversity. The company also emphasizes disciplined capital allocation and operational efficiency.
How did the company's revenue perform in 2023, and what were the key drivers?
In 2023, Texas Instruments reported $17.52 billion in revenue, a decrease of 12.5% compared to the previous year. This decline was primarily attributed to lower revenue in the Analog segment. However, the Embedded Processing segment saw an increase in revenue.
What is the company doing to prepare for future demand, especially in key markets?
Texas Instruments is making substantial investments in its manufacturing capabilities, particularly by expanding its 300mm wafer fabrication capacity. This includes ramping up production at existing facilities and continuing construction on new ones. These investments are designed to strengthen its manufacturing and technology competitive advantages, provide lower costs, ensure supply chain control, and support anticipated growth in markets like industrial and automotive over the next 10-15 years.
How is Texas Instruments returning capital to shareholders?
Texas Instruments actively returns capital to shareholders through a combination of dividends and share repurchases. In 2023, the company returned a total of $4.85 billion to shareholders through these methods.
06—Continue