Our objective and the best metric for owners to measure our progress is through the growth of free cash flow per share over the long term. In 2022, free cash flow margin was 30% and since 2004, free cash flow per share grew 11% compounded annually.
Free cash flow per share
Our strategy to maximize long-term free cash flow per share growth has three elements:
- First, we have a great business model focused on analog and embedded processing products and built around four sustainable competitive advantages. In combination, our four competitive advantages provide tangible benefits, are difficult to replicate and ultimately separate us from our best peers. They are:
- A strong foundation of manufacturing and technology
- A broad portfolio of analog and embedded processing products
- The reach of our market channels
- Diversity and longevity of our products, markets and customer positions
- The second element of our strategy to maximize long-term free cash flow per share growth is disciplined allocation of capital. This spans how we select R&D projects, develop new capabilities like TI.com, invest in new manufacturing capacity or how we think about acquisitions and returning cash to our owners.
- The third element of our strategy is efficiency, which we think of as always striving to get more output per dollar of cost. This is about getting our investments (spending) in the most impactful areas to maximize the growth of long-term free cash flow per share; it’s not just about optimizing cost-cutting to get the last dollar of expense. As owners, you will see this focus on efficiency contribute to revenue growth, improved gross margins, disciplined R&D and SG&A expense, free cash flow margins and ultimately to free cash flow per share growth.
We will remain focused on the belief that long-term growth of free cash flow per share is the ultimate measure to generate value. To achieve this, we will invest to strengthen our competitive advantages, be disciplined in capital allocation and stay diligent in our pursuit of efficiencies.