Key Takeaways CRUS launched four new Pro Audio converters to bring premium sound quality at competitive prices. New ADCs and DACs target prosumer markets, with flexible integration and energy-efficient design. CRUS leverages proven IP and SoundClear Studio software to enhance ease of setup and customization.Cirrus Logic Inc. (CRUS) recently unveiled four new additions to its Pro Audio product family — two analog-to-digital converters (ADCs) and two digital-to-analog converters (DACs) — that aim to deliver ...

It has been about a month since the last earnings report for Cirrus Logic (CRUS) . Shares have added about 4.5% in that time frame, underperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Cirrus Logic due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.How Have Estimates Been Moving Since Then? ...

Group 1 - Cirrus Logic (CRUS) has established a strong working relationship with its owners under CEO Jason Rhode since 2007, emphasizing integrity and honesty [1] - The company has a history of integrity issues prior to Rhode's leadership, which has since been addressed [1] Group 2 - The author has a long-term beneficial position in CRUS shares, indicating confidence in the company's performance [2] - The article reflects the author's personal opinions and is not influenced by any business relationships with the company [2]

Customer Dependence - Cirrus Logic's major customers represented approximately 96% of net sales in fiscal years 2025, 2024, and 2023, with Apple, Inc. accounting for about 89%, 87%, and 83% of total net sales respectively[28] - For the twelve-month periods ending March 29, 2025, March 30, 2024, and March 25, 2023, the company's ten largest end customers represented approximately 96%, 95%, and 92% of net sales, respectively[59] - Apple Inc. accounted for approximately 89%, 87%, and 83% of the company's total net sales for the same periods[59] - The company faces risks related to dependence on a limited number of customers, with significant pricing pressure expected on certain products[61] Business Strategy - The company maintains a three-pronged strategy focusing on leadership in smartphone audio, increasing high-performance mixed-signal content in smartphones, and expanding into additional applications and markets[18] - Cirrus Logic's product lines are categorized into Audio and High-Performance Mixed-Signal (HPMS), with HPMS expected to drive significant growth opportunities in the coming years[21] - The company is exploring acquisitions to enhance market position and technological capabilities, which involves risks such as integration challenges and unexpected costs[122][126] Manufacturing and Supply Chain - The company utilizes a fabless manufacturing model, relying on third-party foundries for wafer fabrication and assembly, primarily using GLOBALFOUNDRIES and TSMC[29] - A long-term supply agreement with GlobalFoundries requires the company to purchase a certain number of wafers through 2026, which could lead to excess inventory if actual requirements differ[81][82] - The company relies on third-party manufacturing and supply chain relationships, which poses risks such as increased costs and delays in meeting customer demand[73] - The company has experienced industry-wide manufacturing capacity constraints, impacting its ability to meet demand and potentially leading to increased prices and lower revenues[75] - The company may need to invest in geographically diversified manufacturing to meet customer demands for supply chain resilience[71] Research and Development - Research and development efforts are concentrated on designing and developing new products, with a focus on timely market introduction and integration support for customers[36] - The company is investing in research and development for new markets, but faces risks related to technology adoption and market growth[140] Workforce and Talent - The company had a voluntary turnover rate of 8% in fiscal year 2025, which is below the technology industry benchmarks[48] - As of March 29, 2025, the company employed 1,660 individuals, with 71% engaged in research and product development activities[49] - The global workforce was composed of 81% male and 19% female as of March 29, 2025[50] - Competition for qualified personnel is intense, with increased recruiting and employee costs impacting operational results[100][102] - Changes in immigration laws may impair the ability to attract and retain qualified engineering personnel, particularly in the U.S.[101] Financial Performance and Risks - Global economic conditions, including inflation, could adversely impact the company's financial results and market price of shares[90][92] - The company faces risks of significant fluctuations in inventory and operating results due to shifts in industry-wide capacity and customer order cancellations[157] - The company may incur future inventory write-downs and charges to gross margin due to imbalances between product inventories and demand[158] - The company is exposed to foreign currency exchange rate fluctuations, particularly with the British Pound Sterling, which could adversely impact financial results[161] - The company has a $300 million senior secured revolving credit facility that matures on July 8, 2026, with no outstanding balance as of March 29, 2025[163] Regulatory and Compliance - The company is subject to export controls and trade sanctions, which may limit its ability to conduct business with certain customers[45] - The company is subject to fluctuations in consumer electronics and smartphone markets, which could affect demand and sales[80] - The company is subject to increased operational and reporting requirements related to environmental, social, and governance (ESG) matters, which may impose additional costs[181] - Changes in environmental regulations may increase manufacturing costs and impact future operating results[142][145] Cybersecurity - Cybersecurity threats pose risks to the company's operations and could result in significant costs and liabilities[87][88] - The company conducts regular risk assessments to identify cybersecurity threats and evaluate the effectiveness of its internal controls[187] - The Board of Directors oversees the company's cybersecurity risks, with the Audit Committee responsible for periodic reporting[190] - The company employs a dedicated Information Security team to manage its cybersecurity strategy and conducts regular training for personnel[186] Market Competition - The semiconductor market is highly competitive, with significant risks from competitors that may have greater resources and capabilities[94][96] - The company expects increasing competition in its markets, which will depend on recruiting engineering talent and executing new product developments[37] - Average selling prices in the semiconductor industry have historically declined, and the company may struggle to maintain or increase prices for existing products[113][114] Intellectual Property - The company held approximately 4,130 pending and issued patents worldwide as of March 29, 2025, including about 1,570 granted U.S. patents[31] - The company may face significant liability for damages due to potential intellectual property claims and litigation, which could divert management's attention[171] Environmental and Social Responsibility - The company has maintained compliance with applicable environmental and health regulations, despite the inherent risks associated with hazardous materials in its laboratories[44] - The company may need to modify its supply chain practices and incur capital investments to meet customer requests for carbon emission reductions and renewable energy commitments[179]

Core Insights - Cirrus Logic Inc. (CRUS) has partnered with Compal Electronics to develop AI-powered audio technology aimed at improving sound performance in laptops without sacrificing clarity or quality [1][3][4] - The partnership will showcase prototype demonstrations at Computex 2025, indicating a focus on next-generation laptop audio solutions [2] Group 1: Industry Challenge - Despite advancements in technology, audio quality in modern laptops remains inadequate, particularly at high volumes, leading to mechanical vibrations and audio distortion [3] - The compact design of laptops exacerbates these audio issues, affecting user experience [3] Group 2: Technological Innovation - Cirrus Logic is leveraging AI to address audio challenges, utilizing proprietary tools and rattle limiter algorithms to detect and reduce mechanical rattle [4] - This technology allows laptops to produce louder and clearer sound without physical compromises [4] Group 3: Manufacturing Integration - Compal will integrate this AI audio technology into its laptop production lines, enhancing quality assurance and consistency across production batches [5] - The integration aims to reduce defective units and improve overall user experience [5] Group 4: Benefits to the PC Ecosystem - OEMs can offer high-quality audio without compromising loudness and clarity, potentially reducing customer returns related to sound issues [7] - ODMs like Compal will benefit from simplified quality testing and more consistent audio performance across production batches [8] - End users will experience improved audio quality with louder sound and deeper bass, free from distracting rattles [8] Group 5: Company Growth and Innovation - Cirrus Logic has a strong history of innovation in audio processing, with its Rattle Limiter technology already mitigating distortion in various applications [9] - The company is focused on expanding its market presence in consumer electronics, with recent product launches enhancing audio performance for mobile devices [10] - Cirrus Logic anticipates steady revenue generation from its innovations, allowing R&D to explore new growth areas [11]

Core Viewpoint - Cirrus Logic's stock price has increased by 23% recently due to favorable tariff developments for its largest customer, Apple, which accounts for 89% of its revenue [1][2][3] Group 1: Company Performance - Cirrus Logic's revenue for fiscal 2025 grew by 6% year over year, while adjusted earnings increased by 14% to $7.54 per share [6] - Despite a slight decline in Apple's iPhone shipments in 2024, Cirrus Logic managed to gain more business from Apple, including supplying power management modules [7][8] - In Q1 of the current year, Apple's smartphone shipments rose by 10% year over year, significantly outpacing the overall smartphone market growth of 1.5% [9] Group 2: Future Growth Potential - The sales of AI-capable smartphones and PCs are projected to grow at a compound annual growth rate of nearly 35% through 2029, indicating a positive outlook for Cirrus Logic [9][11] - Cirrus Logic's sales in Q4 of fiscal 2025 increased by 14% year over year, with earnings growing at a stronger pace of 34% [10] Group 3: Valuation and Investment Opportunity - Cirrus Logic is currently trading at less than 18 times trailing earnings, making it an attractive investment given its recent earnings growth [12] - If Cirrus achieves expected earnings next fiscal year and trades at 29 times earnings, its stock price could potentially reach $221, more than double its current price [14]

Core Insights - Cirrus Logic Inc. reported fourth-quarter fiscal 2025 adjusted EPS of $1.67, exceeding the Zacks Consensus Estimate by 45.2% and up from $1.24 in the prior-year quarter [1] - Quarterly revenues reached $424.5 million, a 14% year-over-year increase, surpassing management's guidance of $350-$410 million, but a 24% sequential decline due to decreased smartphone shipment volumes [2] - For fiscal 2025, total revenues were $1.90 billion, reflecting a 6% year-over-year growth, driven by the launch of next-generation products [3] Revenue Breakdown - The largest customer accounted for 88% of total revenues in the fiscal fourth quarter [4] - The High-Performance Mixed-Signal segment contributed 40% to total revenues, with revenues growing 16.5% year over year to $169.1 million [5] - The Audio segment's sales increased 12.6% to $255.3 million, contributing 60% to total revenues [5] Margins and Expenses - Non-GAAP gross margin improved to 53.5% from 51.9% in the prior-year quarter, driven by a favorable product mix [6] - Non-GAAP operating expenses rose 3% year over year to $120 million, primarily due to higher employee-related costs [6] - Non-GAAP operating income soared 40% year over year to $107.1 million, with operating profit margin increasing to 25.2% from 20.6% [8] Balance Sheet and Cash Flow - The company ended the fiscal fourth quarter with cash and marketable securities of $595.8 million, up from $564 million as of December 28, 2024 [9] - Cash flow from operations was reported at $130.4 million, down from $170.5 million in the prior-year quarter [10] - Free cash flow for the quarter was $121.2 million [10] Share Repurchase and Future Guidance - Cirrus Logic repurchased nearly 927,000 shares worth $100 million in the reported quarter, with an additional $500 million share repurchase authorization approved [11] - For fiscal Q1 2026, management projects revenues between $330 million and $390 million, with anticipated non-GAAP operating expenses in the range of $119-$125 million [12][13]

Core Viewpoint - Cirrus Logic reported strong quarterly earnings, significantly exceeding expectations, indicating robust performance in the semiconductor industry [1][2]. Financial Performance - The company achieved earnings of $1.67 per share, surpassing the Zacks Consensus Estimate of $1.15 per share, and up from $1.24 per share a year ago, representing a 45.22% earnings surprise [1] - Revenues for the quarter reached $424.46 million, exceeding the Zacks Consensus Estimate by 11.70%, and up from $371.83 million year-over-year [2] - Over the last four quarters, Cirrus Logic has consistently surpassed consensus EPS and revenue estimates [2] Market Performance - Cirrus Logic shares have declined approximately 1.1% year-to-date, while the S&P 500 has decreased by 3.9% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - Current consensus EPS estimate for the upcoming quarter is $0.83 on revenues of $341.24 million, and for the current fiscal year, it is $6.82 on revenues of $1.87 billion [7] - The outlook for the semiconductor industry is positive, with the Electronics - Semiconductors sector ranking in the top 35% of Zacks industries, suggesting potential for outperformance [8] Industry Context - Marvell Technology, another player in the semiconductor industry, is expected to report earnings of $0.61 per share, reflecting a year-over-year increase of 154.2%, with revenues projected at $1.88 billion, up 61.6% from the previous year [9][10]

Financial Data and Key Metrics Changes - Cirrus Logic reported Q4 revenue of $424.5 million, exceeding guidance, and full fiscal year 2025 revenue of $1.9 billion, up 6% year over year, driven by new generation products and higher smartphone volumes [7][17] - Non-GAAP gross profit for Q4 was $227.1 million with a gross margin of 53.5%, while for the full year, non-GAAP gross profit was $997.4 million with a gross margin of 52.6% [17][18] - Non-GAAP net income for Q4 was $90.6 million, or $1.67 per share, and for the full year, it was $416.6 million, resulting in record earnings per share of $7.54, up from $6.59 in the previous year [20][21] Business Line Data and Key Metrics Changes - The flagship smartphone audio business saw the introduction of two new generation products, a boosted amplifier and a smart codec, which are expected to contribute to revenue in the coming years [11][12] - The camera controller product line experienced increased unit shipments, indicating success in this area [12][14] - Investments in high-performance mixed signal areas are expected to enhance customer products, with a focus on advanced battery technologies [12][13] Market Data and Key Metrics Changes - The company reported a customer concentration figure of 89% for its largest customer in fiscal year 2025 [30] - In the laptop market, Cirrus Logic expects to double its revenue from fiscal year 2025, with significant growth in design activity and SKU shipments anticipated [34][35] - The automotive market is viewed as a long-term opportunity, with potential for significant revenue growth, although the timeline for substantial revenue impact remains uncertain [42][43] Company Strategy and Development Direction - Cirrus Logic's long-term growth strategy focuses on maintaining leadership in smartphone audio, expanding mixed signal functionality, and leveraging expertise to grow in new markets [10] - The company aims to diversify its product portfolio and expand its addressable market, with ongoing investments in R&D for new applications [15][26] - The strategy includes geographic diversification of the supply chain to mitigate potential trade-related challenges [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the dynamic macroeconomic environment and potential impacts of tariffs, emphasizing careful monitoring and proactive supply chain management [9][25] - The outlook for Q1 fiscal year 2026 anticipates revenue between $330 million and $390 million, reflecting a 15% sequential decline and a 4% year-over-year decrease at the midpoint [25][26] - Management expressed confidence in the company's ability to continue delivering solid financial results while executing on strategic initiatives [26][65] Other Important Information - Cirrus Logic returned $261 million to shareholders through share repurchases in fiscal year 2025, with an additional $500 million authorized for future buybacks [8][24] - The company ended fiscal year 2025 with nearly $835 million in cash and investments, maintaining a strong balance sheet with no debt [21][22] Q&A Session Summary Question: What percentage of revenue did the largest customer represent for fiscal year 2025? - The largest customer represented 89% of revenue for fiscal year 2025, with limited pull forwards observed in Q4 due to anticipated tariffs [30][31] Question: What is the progress in the PC-related traction? - The company achieved low tens of millions in revenue from the laptop market in fiscal year 2025 and expects to double that in fiscal year 2026, with significant design activity growth [34][35] Question: Is there an expectation for HPMS to surpass audio? - Management sees this happening over time but has not set a specific timeframe, emphasizing the growth opportunities in HPMS [38][39] Question: What is the potential for the automotive market? - The automotive market presents a long-term opportunity, potentially adding nearly $1 billion to the serviceable addressable market, though significant revenue impact may take time [42][43] Question: What are the ambitions for general market products? - There is potential for general market products to represent 10% of revenues in the long run, with ongoing efforts to leverage IP and expand this segment [59][62]

Financial Data and Key Metrics Changes - Cirrus Logic reported Q4 revenue of $424.5 million, exceeding guidance, and full fiscal year 2025 revenue of $1.9 billion, up 6% year over year driven by new products and higher smartphone volumes [7][17] - Non-GAAP gross profit for Q4 was $227.1 million with a gross margin of 53.5%, while for the full year, non-GAAP gross profit was $997.4 million with a gross margin of 52.6% [17][18] - Non-GAAP net income for Q4 was $90.6 million, or $1.67 per share, and for the full year, it was $416.6 million, resulting in record earnings per share of $7.54, up from $6.59 in the previous year [20][21] Business Line Data and Key Metrics Changes - The flagship smartphone audio business saw the introduction of new generation products, including a boosted amplifier and a smart codec, which are expected to contribute to revenue in the coming years [10][11] - The camera controller product line experienced increased unit shipments, indicating growth in this segment [11][13] - Investments in high-performance mixed signal areas are expected to enhance customer products and contribute to future profitability [12][14] Market Data and Key Metrics Changes - The company noted a strong performance in the smartphone market, with higher unit volumes contributing to revenue growth [7][17] - The laptop market is anticipated to double revenue in fiscal year 2026, with significant design wins and increased engagement with PC OEMs [34][36] - The automotive market is viewed as a long-term opportunity, with potential for significant revenue growth in the coming years [43] Company Strategy and Development Direction - Cirrus Logic's long-term growth strategy focuses on maintaining leadership in smartphone audio, expanding mixed signal functionality, and leveraging expertise to enter new markets [9] - The company is actively investing in geographic diversification of its supply chain to mitigate potential trade-related challenges [8] - Continued investment in R&D is aimed at product diversification and expanding revenue opportunities [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the macroeconomic environment and potential impacts of tariffs, indicating close monitoring of developments [8][24] - The outlook for Q1 fiscal year 2026 anticipates revenue between $330 million and $390 million, reflecting a sequential decline but a slight year-over-year decrease [25][26] - Management emphasized the importance of ongoing investments in key areas to drive shareholder value [26] Other Important Information - The company returned $261 million to shareholders through share repurchases during the fiscal year, marking a record for Cirrus Logic [7][23] - The balance sheet remains strong with nearly $835 million in cash and investments, and no debt outstanding [21] Q&A Session Summary Question: What percentage of revenue did the largest customer represent for fiscal year 2025? - The largest customer represented 89% of revenue for the full year, with limited pull forwards observed in Q4 due to anticipated tariffs [30][31] Question: What is the progress in the PC-related traction? - The company achieved low tens of millions in revenue from the laptop space in fiscal year 2025 and expects to double that in fiscal year 2026 [34][36] Question: Is HPMS expected to surpass audio? - Management believes this will happen over time but has not set a specific timeframe, emphasizing growth opportunities in both areas [39][40] Question: What is the potential for the automotive market? - The automotive market is seen as a significant long-term opportunity, potentially representing $1 billion in additional serviceable available market [43] Question: What is the outlook for camera controller content? - There is considerable opportunity for growth in camera controllers, with ongoing development and increased processing capabilities expected to drive future value [48] Question: What are the ambitions for general market products? - The company aims to leverage its IP to grow the general market business, which could potentially represent 10% of revenues in the long run [60][62]