Texas Instruments (TXN) Financials

Texas Instruments (NASDAQ: TXN) showed a sharp improvement in its latest quarter. Q2 2026 revenue increased to $5.46 billion, up 23% from $4.45 billion in Q2 2025 and 13% sequentially. Net income rose 53% year over year to $1.98 billion, while operating income increased 48% to $2.31 billion. Gross margin also improved to approximately 61.4%, compared with 57.9% a year earlier.

The improvement extended to cash generation. Operating cash flow reached $2.70 billion in Q2 2026, up from $1.86 billion in Q2 2025. Capital expenditures declined to $514 million from $1.31 billion, producing estimated free cash flow of approximately $2.19 billion. This compares with roughly $555 million a year earlier. The latest result also represents a significant recovery from the weaker cash flow and earnings levels reported during 2024 and early 2025.

TXN’s balance sheet remains liquid, although its financial structure has changed as the company has invested heavily in manufacturing capacity. Cash and short-term investments totaled $7.00 billion at the end of Q2 2026, while total debt stood at approximately $14.05 billion. Net property, plant and equipment has grown from $8.53 billion in Q2 2023 to $11.91 billion, indicating continued investment in production capacity. Investors should also note that the supplied historical figures include several restated or calculated periods, so comparisons should be viewed as directional.

• Strong earnings recovery: Q2 2026 net income increased 53% year over year, and diluted EPS rose to $2.14 from $1.41.
• Improving operating leverage: Revenue grew faster than operating expenses, lifting operating margin to approximately 42.3% from 35.1% in Q2 2025.
• Higher-quality cash generation: Operating cash flow increased 45% year over year, while lower capital spending drove a substantial improvement in estimated free cash flow.
• Healthy liquidity: Cash and short-term investments increased to $7.00 billion from $5.36 billion in Q2 2025, supporting dividends and ongoing investment.
• Working-capital improvement: Q2 operating assets and liabilities provided $36 million of cash, a notable improvement from the $691 million use of cash in Q1 2026.
• Capacity expansion remains substantial: Gross property, plant and equipment increased to $17.86 billion from $11.66 billion in Q2 2023, which could support future growth but requires sustained demand and utilization.
• Share count is relatively stable: Diluted shares outstanding were 920 million in Q2 2026 versus 912 million in Q2 2025, limiting the benefit of recent repurchases.
• High shareholder distributions: TXN paid $1.30 billion in dividends during Q2 2026, representing roughly 65% of net income for the quarter and contributing to negative financing cash flow.
• Debt remains elevated: Total debt was approximately $14.05 billion, compared with $11.20 billion in Q2 2023. Interest expense of $141 million also remains a recurring drag on pretax earnings.
• Balance-sheet efficiency bears watching: Accounts receivable increased to $2.52 billion from $1.93 billion a year earlier, and current liabilities rose to $3.24 billion from $2.49 billion, creating additional working-capital and liquidity considerations.