Why did EPS decline even though revenue grew 10%?

Cost of revenue rose faster than revenue (up about 15% year over year) as depreciation climbed with new 300mm capacity, and interest and debt expense increased to $141M from $130M. Other income also fell to $40M from $112M, and the tax provision rose to $209M from $154M. Together these outpaced the revenue gains, and management noted a 6-cent EPS reduction not in original guidance.

How much of the free cash flow improvement was structural versus one-time?

Part of the improvement was lower capital spending and higher operating cash flow, but the comparison is flattered by $335M of CHIPS Act incentive proceeds received in 2025 that were added to free cash flow by definition. Investors should treat the 2025 increase as partly timing-dependent on incentive receipts and watch whether operating cash flow growth persists.

Is Texas Instruments still returning most of its cash to shareholders?

Yes. Cash returns of $6.48B over the trailing year were about 91% of the $7.15B operating cash flow, funded in part by new debt of $1.2B issued in 2025 and by drawing down short-term investments. Dividends of $5.0B represent the bulk of returns, and the dividend was declared at $5.50 per share for 2025, up from $5.26.

What should investors watch in the first-quarter 2026 outlook?

The guidance range of $4.32B to $4.68B in revenue and $1.22 to $1.48 in EPS is wide, so the midpoint implies a sequential decline in revenue from Q4's $4.42B. Investors should watch whether Analog's double-digit growth continues and whether depreciation from new fabs keeps pressuring margins and EPS.

Does this 8-K contain new financial guidance or unusual disclosures?

No new disclosure beyond the earnings release itself. Item 2.02 furnishes the press release, which includes the Q1 2026 outlook and non-GAAP free cash flow measures reconciled to GAAP operating cash flow. The filing references risk factors from TI's most recent Form 10-K for detail on cyclicality, tariffs, customer inventory adjustments and competitive pressures.

TXN 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed January 27, 2026. Cited figures are marked; the original filing is the authoritative source.

Texas Instruments reported fourth-quarter 2025 revenue of $4.42 billion^a, up 10% year over year but down 7% sequentially, with net income of $1.16 billion and diluted EPS of $1.27, down 2% from $1.30 a year earlier.

EPS included a 6-cent reduction that was not in the company's original guidance. Operating profit rose 7% to $1.47 billion^b, driven primarily by the Analog segment, which grew revenue 14% to $3.62 billion and operating profit 13% to $1.40 billion. Embedded Processing revenue rose 8%, while the Other category fell 34%.

Cash generation was the headline strength. Trailing-twelve-month cash flow from operations rose 13% to $7.15 billion, and free cash flow nearly doubled to $2.94 billion^c, or 16.6% of revenue for the quarter and 9.6% for the trailing year (the quarterly and annual percentages are not directly comparable). Free cash flow benefited from $335 million in CHIPS Act incentive proceeds received in 2025.

Capital expenditures were $4.55 billion^d for the year, down from $4.82 billion, and the company returned $6.48 billion to shareholders through dividends and buybacks, up 13%. Looking ahead, management guided first-quarter 2026 revenue to $4.32 billion to $4.68 billion and EPS to $1.22 to $1.48.

The filing is a routine Item 2.02 disclosure furnishing the earnings release; it includes non-GAAP free cash flow measures reconciled to GAAP cash flow from operations in the release. Investors should note that net income and EPS declined year over year despite higher revenue, reflecting higher cost of revenue, depreciation from the expanding 300mm manufacturing footprint, and higher interest expense.

02—Key points

Key Highlights

Q4 2025 revenue of $4.42B rose 10% year over year but fell 7% sequentially; net income of $1.16B declined 3% and diluted EPS of $1.27 declined 2%.
Analog segment drove growth: revenue up 14% to $3.62B and operating profit up 13% to $1.40B in Q4; full-year Analog revenue rose 15% to $14.0B.
Trailing-twelve-month free cash flow nearly doubled (up 96%) to $2.94B, aided by $335M of CHIPS Act incentive proceeds; cash flow from operations rose 13% to $7.15B.
Capital expenditures moderated to $4.55B for 2025 from $4.82B in 2024, while depreciation rose sharply to $1.92B from $1.51B, reflecting the 300mm build-out.
Shareholder returns totaled $6.48B over the trailing twelve months, with dividends of $5.0B (up 4%) and buybacks of $1.48B (up 59%).
Q1 2026 guidance calls for revenue of $4.32B to $4.68B and EPS of $1.22 to $1.48.
Total debt rose to about $14.05B from $13.60B, and cash plus short-term investments fell to $4.88B from $7.58B, a notable shift in liquidity to monitor.

03—Questions

Frequently Asked Questions

Why did EPS decline even though revenue grew 10%?
Cost of revenue rose faster than revenue (up about 15% year over year) as depreciation climbed with new 300mm capacity, and interest and debt expense increased to $141M from $130M. Other income also fell to $40M from $112M, and the tax provision rose to $209M from $154M. Together these outpaced the revenue gains, and management noted a 6-cent EPS reduction not in original guidance.
How much of the free cash flow improvement was structural versus one-time?
Part of the improvement was lower capital spending and higher operating cash flow, but the comparison is flattered by $335M of CHIPS Act incentive proceeds received in 2025 that were added to free cash flow by definition. Investors should treat the 2025 increase as partly timing-dependent on incentive receipts and watch whether operating cash flow growth persists.
Is Texas Instruments still returning most of its cash to shareholders?
Yes. Cash returns of $6.48B over the trailing year were about 91% of the $7.15B operating cash flow, funded in part by new debt of $1.2B issued in 2025 and by drawing down short-term investments. Dividends of $5.0B represent the bulk of returns, and the dividend was declared at $5.50 per share for 2025, up from $5.26.
What should investors watch in the first-quarter 2026 outlook?
The guidance range of $4.32B to $4.68B in revenue and $1.22 to $1.48 in EPS is wide, so the midpoint implies a sequential decline in revenue from Q4's $4.42B. Investors should watch whether Analog's double-digit growth continues and whether depreciation from new fabs keeps pressuring margins and EPS.
Does this 8-K contain new financial guidance or unusual disclosures?
No new disclosure beyond the earnings release itself. Item 2.02 furnishes the press release, which includes the Q1 2026 outlook and non-GAAP free cash flow measures reconciled to GAAP operating cash flow. The filing references risk factors from TI's most recent Form 10-K for detail on cyclicality, tariffs, customer inventory adjustments and competitive pressures.

04—Continue

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