Texas Instruments (TXN) Q2 2023 Earnings Call Transcript

For the period ending June 30, 2023

July 25, 2023 4:30 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Dave Pahl

Welcome to the Texas Instruments' Second Quarter 2023 Earnings Conference Call. I'm Dave Pahl, Head of Investor Relations, and I'm joined by our Chief Financial Officer, Rafael Lizardi.

For any of you who missed the release, you can find it on our website at ti.com/ir. This call is being broadcast live over the web and can be accessed through our website. In addition, today's call is being recorded and will be available via replay on our website.

This call will include forward-looking statements that involve risks and uncertainties that could cause TI's results to differ materially from management's current expectations. We encourage you to review the notice regarding forward-looking statements contained in the earnings release published today, as well as TI's most recent SEC filings for a more complete description.

Today, we'll provide the following updates. First, I'll start with a quick overview of the quarter. Next, I'll provide insight into second quarter revenue results with some details of what we're seeing with respect to our end markets.

And lastly, Rafael will cover the financial results and our guidance for the third quarter of 2023. Starting with a quick overview of the quarter. Revenue in the quarter came in about as expected at $4.5 billion, an increase of 3% sequentially and a decrease of 13% year-over-year.

Analog revenue declined 18%, Embedded Processing grew 9%, and our other segment declined 10% from the year ago quarter. Now, I'll provide some insight into our second quarter revenue by market.

During the quarter, we experienced continued weakness across all markets except Automotive. Similar to last quarter, I'll focus on sequential performance as it is more informative at this time.

First, the Industrial market was about flat. Next, the automotive market was up low-single digits. Personal Electronics was up low-single digits after several quarters of sequential declines. And next, communications equipment was down mid-teens, and finally, Enterprise Systems was down mid-single digits.

Rafael will now review profitability, capital management, and our outlook. Rafael?

Rafael Lizardi

Thanks, Dave, and good afternoon, everyone. As Dave mentioned, second quarter revenue was $4.5 billion, down 13% from a year ago. Gross profit in the quarter was $2.9 billion or 64% of revenue. From a year ago, gross profit decreased primarily due to lower revenue, increased capital expenditures, and the transition of LFAB-related charges to cost of revenue.