Texas Instruments (NASDAQ: TXN) delivered a clean beat in Q3. Revenue hit $6.06 billion, roughly 2% above the $5.94 billion consensus and 28% higher than a year ago. Earnings per share of $2.62 cleared the $2.43 estimate by nearly 8%.
The spread reflects operating leverage flowing through a much-improved gross margin. That margin expanded to 64.2% from 57.4% a year prior — a 680-basis-point gain that drove operating profit up 73% to $2.87 billion. Revenue grew 28% while cost of revenue rose only 7%. The mechanism is straightforward: 300mm wafer production scaling delivers higher output without proportional manufacturing cost increases.
TI's trailing 12-month free cash flow reached $8.4 billion, or 40.6% of revenue, up from 14.0% in the prior-year period. This cash generation is structural, not cyclical, tied to manufacturing footprint investments the company has pursued for years.
Demand strength cut across segments. Analog revenue jumped 32% to $4.91 billion, with operating profit up 69% to $2.51 billion. Embedded Processing grew 21% to $858 million; its operating profit more than doubled to $227 million.